What's in Store for Mid-America Apartment Stock in Q1 Earnings?

Mid-America Apartment Communities MAA — commonly known as MAA — is a real estate investment trust (REIT) that focuses on owning, operating and acquiring apartment communities throughout the southeast, southwest and mid-Atlantic regions of the United States. MAA is slated to report first-quarter 2025 results on April 30, after market close.

In the last reported quarter, this Germantown, TN-based residential REIT reported core FFO per share of $2.23, which missed the Zacks Consensus Estimate of $2.24. Results reflected a record level of new supply deliveries, though continued strong demand provided some support.

Over the trailing four quarters, MAA surpassed the Zacks Consensus Estimate on two occasions for as many misses, the average beat being 0.35%. This is depicted in the chart below:

Mid-America Apartment Communities, Inc. Price and EPS Surprise

Mid-America Apartment Communities, Inc. price-eps-surprise | Mid-America Apartment Communities, Inc. Quote

Let’s see how things have shaped up before this announcement.

US Apartment Market in Q1

The first quarter of 2025 brought a wave of strong apartment demand, offering a lift to occupancy and rent growth as the supply surge begins to wane. Per RealPage data, from January through March 2025, more than 138,000 market-rate apartment units were absorbed nationally. This marks the highest first-quarter demand on record in the RealPage data set covering more than three decades. Combined with the robust demand seen over the last three quarters of 2024, annual absorption reached nearly 708,000 units — essentially matching the absorption from the early 2022 demand boom.

Demand in the year-ending first quarter of 2025 exceeded concurrent supply. Though nearly 577,000 units were delivered in the said period — just shy of last quarter’s record high of about 589,000 units — annual supply volume is forecasted to decline in the coming months, indicating that the construction cycle may have peaked.

Occupancy rose modestly to 95.2% in March, the highest reading since October 2022. While still within long-term norms, the uptick provides confidence that the rental market is not materially oversupplied. Rent growth has also regained traction. Effective rents rose 0.75% in March and 1.1% in the year-ending March 2025 — the highest 12-month reading since June 2023. All of the nation’s 50 largest apartment markets recorded rent increases on a monthly basis, signaling broad-based strength. The average effective rent was $1,848. 

However, the recovery is regionally uneven. The Midwest and Rust Belt regions led annual rent gains, with cities like Kansas City, MO, Chicago, IL, and Pittsburgh, PA, outperforming. In contrast, high-supply Sun Belt metros, such as Austin, TX, and Phoenix, AZ, continued to experience rent cuts. However, these markets saw monthly rent growth in March, suggesting momentum is returning ahead of the prime leasing season.

Factors to Consider Ahead of MAA’s Upcoming Results

MAA's diverse Sunbelt portfolio is expected to have gained from solid demand across its markets. The region's pro-business environment, lower taxes and less dense cities continue to drive job growth and in-migration, boosting rental demand. 

MAA is expected to have benefited from its implementation of three internal investment programs — interior redevelopment, property repositioning projects and Smart Home installations. The programs are aimed at helping the company capture the upside potential in rent growth, generate accretive returns and boost earnings from its existing asset base. 

However, elevated supply in several Sunbelt markets may have constrained the company's ability to raise rents or improve occupancy during the first quarter. Additionally, high interest rates present a challenge by driving up MAA's borrowing costs, potentially affecting its acquisition and development strategies.

Projections for MAA

Per the March presentation, since the beginning of 2025 through Feb. 27, new lease pricing improved in most of its top 10 NOI markets (including Austin) and is up 140 bps on a portfolio basis from the fourth quarter of 2024. The company also noted that blended lease pricing is trending in line with expectations. Per the presentation, since the beginning of the first quarter through Feb. 27, 2025, MAA’s average daily physical occupancy was 95.6%, the same as in the fourth quarter of 2024.

For the same period, the same-store effective lease-over-lease average pricing change for new leases was a decline of 6.7% compared with a fall of 8.1% in the fourth quarter. For renewals, it was up 4.6% compared with 4.2% in the fourth quarter. The blended lease rate was a decline of 0.7% for the said period compared to a 2.1% decrease in the fourth quarter.

The Zacks Consensus Estimate for quarterly revenues is pegged at $552.49 million. This suggests a 1.63% rise from the year-ago quarter’s reported figure. 

For the first quarter, we expect same-store property net operating income to fall 0.5% year over year. Meanwhile, we project an average physical occupancy of 95.5%, down 10 basis points from the prior quarter. Moreover, our estimate indicates a 16.5% year-over-year increase in the company’s interest expenses.

MAA projected first-quarter 2025 core FFO per share in the band of $2.08-$2.24, with $2.16 at the midpoint. Before the first-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly core FFO per share has been revised a cent south to $2.16 in the past month. This also suggests a year-over-year decline of 2.7%.

Here is What Our Quantitative Model Predicts for MAA:

Our proven model does not conclusively predict a surprise in terms of FFO per share for MAA this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here. 

MAA currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT sector — Welltower Inc. WELL and Camden Property Trust CPT — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Welltower, scheduled to report quarterly numbers on April 28, has an Earnings ESP of +1.69% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Camden Property Trust is slated to report quarterly numbers on May 1. CPT has an Earnings ESP of +0.26% and carries a Zacks Rank of 3 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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