Mid-America Apartment Communities rated Neutral in new BofA coverage

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• Bank of America Securities initiated coverage of Mid-America Apartment Communities (NYSE:MAA) with a Neutral rating as analyst Joshua Dennerlein expects an increase in new apartments to largely offset long-term positives like growth in MAA's suburban locations and positive employment and migration trends in the Sunbelt.
• "Supply risk is the key reason we are Neutral on MAA," the analyst wrote in a note to clients.
• While he expects supply to peak in 2024, there's a risk that delivery delays could push that into 2025, he said. That offsets the apartment REIT's advantages. Dennerlein likes MAA's suburban locations, which he expects to outperform, the employment and migration patterns in the Sunbelt, and its low leverage vs. its peers.
• Besides the supply risk, cost pressure from real estate taxes and insurance and a slowing/reversal of inbound migration trends during COVID offset the REIT's strengths.
• The Neutral rating contrasts with the SA Quant rating of Buy and aligns with the average SA Analyst rating and the average Wall Street rating, both at Hold.

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