MAA Apartment REIT Rent Growth High, With or Without PPS
Deal Completed on Dec. 1
By Dave Sorter | Friday, December 16, 2016
Mid-America Apartments (MAA) passed Milestone Apartments (MST.UN) in November as the publicly traded apartment REIT with the highest annual effective rent growth on a year-over-year (YoY) basis. MAA’s 4.5% YoY rate was 76 basis points (bps) ahead of the 3.8% of MST.UN, which had topped the chart for the past several months, according to Axiometrics' apartment data.
But as of Dec. 1, MAA became a lot bigger. That was the day when the apartment REIT announced it had completed its merger with Post Properties (PPS), making MAA by far the largest publicly traded apartment REIT in terms of number of units.
MAA’s 4.5% YoY rent growth reflects the old MAA’s primary concentration in suburban submarkets, which have generally outperformed urban-core areas for the past couple of years. PPS, on the other hand, focused mainly on the urban core, which explains its 0.5% rent growth in November. While low, Post had the fifth highest rent growth among the 10 REITs, the apartment data showed.
Combining MAA and PPS metrics, we find that the rent-growth line for the past year trends similarly to, while just below, the MAA line. That’s because pre-merger MAA has almost four times the number of units as PPS.
Had the two companies been combined in November, its YoY rent growth would have been 3.7%, just 8 bps lower than MST.UN’s rate. So, the new MAA would have had the second highest rent growth among the REITs.
Pre-merger MAA’s annual trailing 12-month (ATTM) effective rent growth also was 4.5%, placing it second behind MST.UN’s 6.4%. Combining MAA with PPS’s November ATTM rate of 2.3% would have resulted in 4.0% ATTM rent growth, lowering it to third behind the 4.2% of Essex Property Trust (ESS).