Mid-America Apartment Communities, Inc.: 11 Things We Learned In Chicago

Research evidence excerpt

Mid-America Apartment Communities, Inc.: 11 Things We Learned In Chicago

Update

Exhibit 3 : MAA major employment sectors,Myears, proving to be far more resilient than expected. This was also a major topic in

total portfolio & by market

the meetings with management. Management emphasized that renewal strength is

not limited to specific markets or asset types; rather, it has been broad-based, with

renewals generally ranging from 4% to 6%+ across markets. Management attributed

this strength to the relatively low absolute dollar rent burden compared with the

cost of moving, amenities and benefits of MAA assets, with limited benefit from

concession burn-off. Some investors have expressed concern that negative new

lease growth alongside positive low- to mid-single-digit renewal growth could create

a gain-to-lease dynamic, causing MAA to experience a continuous roll-down in new

lease rents even after supply pressures fade. Management pushed back on this

concern, noting that even if the concept were theoretically valid, the company’s

average resident length of stay is approximately 22 months, meaning residents are Source: Company filings; Morgan Stanley Research

generally not experiencing multiple rounds of renewal increases, plus there's a

range of renewal growth between shorter- and longer-tenured residents.

3) How Could The Recovery Play Out? Historical Analogs. Management viewed

the COVID period as unique, and likely not a useful historical analog for the next few

years. A better comparison may be the post-GFC period, when the company was

able to generate above-trend NOI growth. One important difference this time is the

rent-versus-buy differential in the Sun Belt. Pre-COVID, there was minimal

difference between the cost to rent and the cost to buy.