UPDATE: Stifel Nicolaus Downgrades AvalonBay Communities to Hold on Valuation, Equity Overhang

Stifel Nicolaus reduced its rating on AvalonBay Communities AVB from Buy to Hold and removed its previous $145 price target. Stifel Nicolaus commented, "We are downgrading AVB from Buy to Hold, as we believe the overhang from the $1.9 billion of AVB equity that will be held by Lehman post the closing of the Archstone transaction will weigh on shares. Additionally, AVB shares trade at a 7.9% discount to our $145 NAV, the lowest in the apartment sector (vs. the weighted average apartment REIT sector trading at a 14.5% discount). Upward movement in AVB's shares might be difficult. We remain cautious on the apartment sector heading into 2013." AvalonBay Communities closed at $133.40 on Wednesday.