Germantown, Tennessee-based Mid-America Apartment Communities, Inc. (MAA) is a self-administered and self-managed real estate investment trust which owns, develops, acquires, and operates multi-family apartment communities in the southeast and mid-west U.S. and Texas. Valued at $19.3 billion by market cap, the company conducts third party property management, development, and construction activities through its service corporation.
Shares of this residential REIT giant have outperformed the broader market over the past year. MAA has gained 35.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 31.8%. However, in 2024, MAA’s stock rose 22.9%, compared to the SPX’s 25.8% rise on a YTD basis.
Zooming in further, MAA’s outperformance is apparent compared to the Residential REIT ETF (HAUS).The exchange-traded fund has gained about 35% over the past year. Moreover, MAA’s returns on a YTD basis outshine the ETF’s 22% gains over the same time frame.
MAA's strong performance can be credited to its strategic investment in expanding its apartment portfolio. With over $450 million invested in new properties that are currently being leased, and nearly $1 billion allocated to future development projects, the REIT is poised for continued growth in rental income. Additionally, recent acquisitions of new apartment communities demonstrate MAA's financial flexibility and ability to pursue further development opportunities. This proactive approach to portfolio expansion is expected to result in continued dividend growth for investors.
On Oct. 30, MAA shares closed up marginally after reporting its Q3 results. Its FFO of $2.21 surpassed Wall Street estimates of $2.18. The company’s revenue was $551.1 million, beating Wall Street forecasts of $549.4 million. For Q4, MAA expects its FFO to range from $2.15 to $2.31. The company expects full-year FFO to be between $8.80 and $8.96.
For the current fiscal year, ending in December, analysts expect MAA’s FFO to decline 3.2% to $8.88 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 25 analysts covering MAA stock, the consensus is a “Moderate Buy.” That’s based on nine “Strong Buy” ratings, one “Moderate Buy,” 12 “Holds,” and three “Strong Sells.”
This configuration is more bullish than three months ago, with seven analysts suggesting a “Strong Buy,” and two analysts recommending a “Strong Sell.”
On Nov. 14, Scotiabank analyst Nicholas Yulico kept a “Sector Perform” rating and lowered the price target on MAA to $173, implying a potential upside of 4.7% from current levels.
While MAA currently trades above its mean price target of $163.30, the Street-high price target of $187 suggests an upside potential of 13.2%.
