MAA Mid-America Apartment Communities
Price caught down to value; wait for Sunbelt supply to clear before paying up.
The story
MAA owns ~100k Sunbelt apartment units levered to migration and job growth, with low leverage and a proven development pipeline. But operating margin has compressed four straight years (39.7% to 29.2%) as Sunbelt supply deliveries and lagging new-lease rates outpace expense growth. The stock's fall from 132 to 124 has largely closed the gap to my prior 125.92 estimate; it now screens roughly fairly valued. Rate cuts are the swing factor for cap-rate re-rating, but lease pricing must inflect first.
Trimmed near-term FFO growth from 3.5% to 2.5% for continued margin compression and 'lease pricing lags' headlines; terminal eased slightly to 2.7% on a slower-rent-growth Sunbelt, still below the 4.94% risk-free ceiling. AFFO ratio held at 0.80 (capex/FFO ~35% total, recurring portion lighter) and beta/failure risk unchanged given the fortress balance sheet.
Value drivers
| AFFO growth (Y1) | 2.5% |
| Terminal AFFO growth | 2.7% |
| AFFO / FFO ratio | 80.0% |
| Beta | 0.90 |
| Failure probability | 0.5% |
| Cost of equity | 9.0% |
Valuation bridge
| PV of AFFO (explicit) | 6.07B |
| PV of terminal value | 7.45B |
| Equity value | 13.46B |
| ÷ shares → per share | $115.98 |
News
neutral -0.10 · 8 articles
- Mid-America Apartment Communities (MAA) Down 3.4% Since Last Earnings Report: Can It Rebound?
- Wall Street Moves on MAA, Rivian and Design Therapeutics: One Upgrade, One Target Trim and a Biotech on Watch
- Mid-America Apartment Communities Stock: Analyst Estimates & Ratings
- Apartment REITs Signal Recovery, but Lease Pricing Lags
- Mid-America Apartment Communities Q2 Earnings Call Highlights
- Mid-America Apartment Communities Inc (MAA) (Q2 2026) Earnings Call Highlights: Strong Demand ...
- Mid-America Apartment Q2 FFO Misses Estimates as Same-Store NOI Falls
- Mid America Apartment Communities (MAA) Stock Looks Below Fair Value With Cash Flow But Above Fair Value On Earnings
Projected AFFO
| Yr | FFO | AFFO | Growth | PV |
|---|---|---|---|---|
| 1 | 1.07B | 856.71M | 2.5% | 786.02M |
| 2 | 1.10B | 878.32M | 2.5% | 739.34M |
| 3 | 1.13B | 900.67M | 2.5% | 695.59M |
| 4 | 1.15B | 923.78M | 2.6% | 654.58M |
| 5 | 1.18B | 947.70M | 2.6% | 616.11M |
| 6 | 1.22B | 972.44M | 2.6% | 580.03M |
| 7 | 1.25B | 998.05M | 2.6% | 546.18M |
| 8 | 1.28B | 1.02B | 2.7% | 514.42M |
| 9 | 1.31B | 1.05B | 2.7% | 484.61M |
| 10 | 1.35B | 1.08B | 2.7% | 456.62M |
Key risks
- Persistent Sunbelt supply glut delaying rent and FFO recovery
- Expense inflation (insurance, taxes, repairs) sustaining margin compression
- Rate sensitivity: cost of equity near 9% caps multiple expansion absent Fed cuts
Catalysts
- 2026 supply deliveries rolling off, restoring pricing power
- Fed rate cuts compressing cap rates and refinancing costs
- Development lease-ups and expense normalization lifting same-store NOI