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1. Company Snapshot

1.a. Company Description

MAA, an S&P 500 company, is a real estate investment trust, or REIT, focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development and redevelopment of quality apartment communities in the Southeast, Southwest, and Mid-Atlantic regions of the United States.As of December 31, 2020, MAA had ownership interest in 102,772 apartment units, including communities currently in development, across 16 states and the District of Columbia.

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1.b. Last Insights on MAA

Mid-America Apartment Communities' recent performance was negatively impacted by persistent supply and demand headwinds, muted rental inflation, and higher-for-longer interest rates. The company's Q2 results reflected steady Sunbelt demand but faced headwinds from rent cuts and higher borrowing costs. MAA's same-store NOI declined year-over-year, driven by lower rent. Despite this, the company maintains a strong balance sheet and financial flexibility, positioning it for opportunistic acquisitions. A recent rating upgrade to "buy" cites an attractive 4.3% yield and solid income prospects.

1.c. Company Highlights

2. MAA's Q3 Earnings: A Resilient Performance Amidst Challenging Market Conditions

MAA reported core FFO of $2.16 per diluted share for the third quarter, slightly below the midpoint of their guidance at $2.17. Revenue performance was mixed, with same-store revenues experiencing a $0.05 unfavorable variance, while occupancy and renewal lease rates remained strong. The company's net debt-to-EBITDA ratio stood at 4.2x, and they had $815 million in combined cash and borrowing capacity under their revolving credit facility. As A. Holder noted, "Favorable overhead expenses of $0.01 and same-store expenses of $0.05 were offset by unfavorable same-store revenues of $0.05 and non-same-store expenses of $0.01."

Publication Date: Nov -03

📋 Highlights

Operational Highlights

The company's operational performance was marked by strong occupancy, with levels increasing 450 basis points over the past 5 quarters and now approaching pre-COVID levels. Demand across their markets remains healthy, and they are encouraged by the record level of lease-ups in their region. New starts remain below long-term averages, and they see no indication of an acceleration in starts. The company's diversified presence across high-growth markets and more affordable price points provides access to a broader segment of the rental market that is financially strong.

Lease Rate Performance

MAA experienced continued lack of traction in pushing new lease rates, with new lease-over-lease pricing at minus 5.2%, up 20 basis points compared to the third quarter of 2024. However, renewal lease-over-lease performance was strong at plus 4.5%, up 40 basis points over the prior year. Blended pricing for the quarter was positive 0.3%, improving 50 basis points from the third quarter of last year. As Tim Argo noted, "We believe broad economic uncertainty and slower job growth contributed to prospects being more cautious about making decisions to move and to operators prioritizing occupancy over new lease rents."

Valuation and Outlook

With a P/E Ratio of 26.69 and a Dividend Yield of 4.73%, the market is pricing in a certain level of stability and income generation. Analysts estimate next year's revenue growth at 3.1%. Given the current valuation multiples, it appears that the market is expecting a moderate growth trajectory. MAA's guidance for the year has been adjusted, and they expect lease rate growth to improve in 2026, driven by decreasing supply and relatively strong demand.

Development and Acquisition Strategy

The company is actively pursuing development opportunities, including a shovel-ready project in Scottsdale, Arizona, expected to begin construction in the fourth quarter. MAA's disposition strategy is focused on improving the quality of their portfolio while avoiding earnings volatility. They aim to dispose of around $300 million worth of assets per year and are open to share repurchases if it is the best use of capital.

3. NewsRoom

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Mid-America Apartment Communities, Inc. $MAA Shares Sold by 1832 Asset Management L.P.

Dec -03

Source: defenseworld.net

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MAA Announces Regular Quarterly Preferred Dividend

Dec -01

Source: prnewswire.com

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3 High-Yield Dividend Stocks I'm Buying to Boost My Passive Income in December

Dec -01

Source: fool.com

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The Dark Side Of High-Yield CEFs And Covered Call ETFs

Nov -30

Source: seekingalpha.com

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Mid-America Apartment: Market Rebound Isn't Imminent

Nov -29

Source: seekingalpha.com

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Buy The Dip: Giving Thanks For These Dirt Cheap Black Friday Bargains

Nov -27

Source: seekingalpha.com

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B&I Capital AG Sells 2,150 Shares of Mid-America Apartment Communities, Inc. $MAA

Nov -27

Source: defenseworld.net

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Comparing Centerspace (NYSE:CSR) and Mid-America Apartment Communities (NYSE:MAA)

Nov -17

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.56%)

6. Segments

Same Store

Expected Growth: 2.5%

Mid-America Apartment Communities, Inc.'s 2.5% same-store growth is driven by a combination of factors, including a strong job market, increasing wages, and low unemployment rates, leading to higher demand for apartments. Additionally, the company's focus on amenity-rich properties and strategic revenue management initiatives have contributed to the growth.

Non-Same Store and Other

Expected Growth: 3.5%

Mid-America Apartment Communities, Inc.'s 3.5% growth in Non-Same Store and Other segment is driven by strategic acquisitions, expansion into high-growth markets, and value-add initiatives. Additionally, the segment benefits from a strong demand for multifamily housing, favorable demographics, and a limited supply of new apartments, leading to increased occupancy and rental rates.

7. Detailed Products

Apartment Rentals

Mid-America Apartment Communities, Inc. offers a range of apartment rentals across the United States, providing residents with a comfortable and convenient living experience.

Property Management Services

The company provides property management services to property owners, including marketing, leasing, and maintenance of properties.

Real Estate Investment Trust (REIT) Services

Mid-America Apartment Communities, Inc. operates as a Real Estate Investment Trust (REIT), providing a way for individuals to invest in a diversified portfolio of apartments and other properties.

Development and Construction Services

The company offers development and construction services, including land acquisition, development, and construction of new apartment communities.

8. Mid-America Apartment Communities, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Mid-America Apartment Communities, Inc. operates in the real estate industry, which has relatively low substitutability. While there are alternative housing options, such as single-family homes, the demand for apartments is consistent, and the company's focus on luxury apartments provides a unique selling proposition.

Bargaining Power Of Customers

Mid-America Apartment Communities, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's focus on luxury apartments and high-quality amenities limits the ability of customers to negotiate prices.

Bargaining Power Of Suppliers

Mid-America Apartment Communities, Inc. relies on various suppliers for materials, labor, and services. While the company has some bargaining power due to its size, suppliers still have some negotiating power, particularly in markets with limited competition.

Threat Of New Entrants

The real estate industry has significant barriers to entry, including high capital requirements, regulatory hurdles, and the need for expertise in property management. These barriers limit the threat of new entrants and provide Mid-America Apartment Communities, Inc. with a relatively stable competitive landscape.

Intensity Of Rivalry

The real estate industry is highly competitive, with many established players competing for market share. Mid-America Apartment Communities, Inc. faces intense competition from other apartment REITs, which drives up marketing and operational costs.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 45.30%
Debt Cost 3.95%
Equity Weight 54.70%
Equity Cost 7.88%
WACC 6.10%
Leverage 82.81%

11. Quality Control: Mid-America Apartment Communities, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Mid-America Apartment Communities

A-Score: 5.6/10

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Apartment Income REIT

A-Score: 4.4/10

Value: 4.4

Growth: 4.3

Quality: 5.4

Yield: 4.0

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Volatility: 3.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

132.21$

Current Price

132.21$

Potential

-0.00%

Expected Cash-Flows