Here's Why You Should Hold on to Mid-America Apartment (MAA) Stock
Mid-America Apartment Communities MAA, also known as MAA, is seeing growth in demand and rent in its Sun Belt-focused portfolio, backed by favorable in-migration trends of jobs and households in the region. However, elevated supply, particularly in urban submarkets, and the pandemic-led choppy scenario might hinder its momentum in the upcoming period.
Notably, the residential real estate investment trust’s (REIT) portfolio is diversified in terms of markets, submarkets, product types and price points. Moreover, a high-quality resident profile has resulted in solid collection performance, even amid the pandemic.
Also, the pandemic has accelerated employment shifts and population inflow into the company’s footprint in Sun Belt markets, as renters seek more business-friendly, lower-taxed and low-density cities. These favorable longer-term secular dynamic trends are increasing the desirability of its markets. Amid this, MAA is well-poised to capture recovery in demand and leasing as compared to expensive coastal markets.
The company is also focusing on redevelopment initiatives and smart-home installations to generate accretive returns and boost earnings from its existing asset base. Further, such efforts add value to its properties and enable it to achieve decent rental rate growth.
The company’s solid balance sheet, with low leverage and ample availability under its revolving credit facility, enables it to pursue external growth opportunities.
While the company is faring better than its peers, the pandemic-led issues are likely to suppress the demand for apartments and affect the rent-paying capability of tenants. Also, the new supply of residential properties continues to be at high levels. This high supply adversely impacts the landlord’s capability to demand more rents and results in lesser absorption, particularly at apartment communities located in urban submarkets.
Also, MAA has a significant active development pipeline, with eight development communities under construction as of the end of fourth-quarter 2020, with $259.4 million of development costs remaining unfunded. Such initiatives increase the company’s operational risks by exposing it to construction cost overruns, entitlement delays and lease-up risks.
Additionally, rising real estate taxes are likely to continue producing pressure on expenses in the ongoing year.
Shares of this Zacks Rank #3 (Hold) company have rallied 17.6% over the past three months compared with the industry’s growth of 14.7%.
Stocks to Consider
Alpine Income Property Trust, Inc.’s PINE funds from operations (“FFO”) per share estimates for the current year have moved up 3.8% to $1.61 in the past month. The company sports a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
BRT Apartments Corp.’s BRT Zacks Consensus Estimate for 2021 FFO per share has moved up 8.6% to $1 in the past month. The company currently carries a Zacks Rank of 2 (Buy).
Spirit Realty Capital, Inc. SRC has a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2021 FFO per share has been revised 1% upward to $3.02 in a month’s time.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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MidAmerica Apartment Communities, Inc. (MAA) : Free Stock Analysis Report
BRT Apartments Corp. (BRT) : Free Stock Analysis Report
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Alpine Income Property Trust, Inc. (PINE) : Free Stock Analysis Report
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