Mid-America Apartment Communities Inc. (NYSE: MAA) has a new investment partnership it plans to use for making acquisitions. The $250 million fund may be a bit misleading on the size, mainly because its partner seems to be a 10% contribution by Mid-America itself. Here is the basic criteria and the investment goals of the fund for Mid-America:
Mid-America’s primary operating unit called Mid-America Apartments, L.P. entered into an agreement with TPRF II/Memphis Investor L.L.C. This TPRF II is an affiliate of Thackeray Partners. The two have established a joint venture called the Mid-America Multifamily Fund II, LLC. Mid-America will own one-third of the fund, while TPRF II/Memphis Investor L.L.C. will own the rest.
The fund will acquire up to $250 million of multi-family apartment communities over an eighteen-month period. The total equity contribution by Mid-America is approximately $25 million and this will be Mid-America’s exclusive investment vehicle for acquisitions 7 years of age or older during the investment period.
Mid-America will receive a management fee of 4.25% of revenues, an asset management fee of 0.5% on equity invested, a 0.5% acquisition fee of the purchase price of each acquisition. It will also receive a promote fee for investment returns above 15%. Mid-America anticipates an investment life for Fund II of a period of 6 to 8 years.
Mid-America shares are trading a tad lower by 1.9% at $35.01 on fairly thin trading volume, while its 52-week range is $22.22 to $60.66. Its market cap on last look was listed as $988 million.
Jon C. Ogg
June 29, 2009
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