Sun Belt Microclimates: Green Shoots, Uneven Terrain

Research evidence excerpt

Sun Belt Microclimates: Green Shoots, Uneven Terrain

Idea

June 25, 2026 04:01 AM GMT

Morgan Stanley & Co. LLCMApartment REITs | North America Adam Kramer

Equity Analyst

Sun Belt Microclimates: Green Adam.Kramer@morganstanley.com +1 212 761-4623

Real Estate Investment Trusts

North America

Industry View In-LineShoots, Uneven Terrain

What’s Changed

Rally faded, but apartments now screen better than pre-rally. Essex Property Trust, Inc.

(ESS.N) From To

The first leg looked technical, next leg needs fundamentals; Price Target $293.00 $302.00

recovery only starting to play out. New Sun Belt analysis shows Camden Property Trust

(CPT.N) From To

green shoots, w/ meaningful submarket dispersion. UDR screens Price Target $117.00 $120.00

well, as does MAA. Raise PTs by 3% on avg, OW MAA. UDR, Inc. (UDR.N) From To

Price Target $43.00 $44.50

Key Takeaways Mid-America Apartment

Communities, Inc. (MAA.N) From To

The first leg was more technical: A low bar, light positioning/poor sentiment, Price Target $150.00 $155.00

short-covering helped apartments work post-1Q, but they've underperformed

since

Setup looks better than pre-rally: Apartments still trade at a ~20% NTM FFO

discount, and still early in supply relief with starts/pipeline at decade-plus lows

Market momentum is turning: Coastal CA still leads absolute growth, but Austin,

Tampa, Raleigh, Denver, DFW, Jacksonville, and Miami are improving

Sun Belt recovery still early but increasingly visible; new analysis shows select

submarkets w/ positive 2Q rent growth and 500bps+ sequential y/y

improvement

REIT exposure: UDR screens best (but much more limited Sun Belt exposure),

MAA has the most improving units, CPT is positive but mixed; raise PTs by 3%,

OW MAA

The Rally Faded, but the Setup Is Better