Mid-America Apartment Communities (MAA 0.02%) isn't widely known unless you're a renter in the South. The real estate investment trust (REIT) owns over 104,000 apartment units in major Sun Belt cities, such as Atlanta and Dallas, as well as in smaller markets like Charleston and Savannah. Although it's one of the country's largest landlords, it's often overshadowed by peers in major coastal markets.
The REIT has several major catalysts on the horizon that should boost its earnings and ability to continue growing its 4.3%-yielding dividend. Despite that, its share price is down nearly 10% this year. This combination of growth and value makes Mid-America Apartment Communities a screaming buy this September.
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A major headwind is fading
Shares of Mid-America have declined this year due to a dip in its earnings. The landlord's core funds from operations (FFO) have fallen from $4.44 per share through the first six months of last year to $4.35 per share during the first half of 2025. It has battled an increase in new apartment supply across many of its markets, which has weighed on occupancy and rent growth. The residential REIT has also faced growing cost headwinds, including higher interest rates.
Rival developers capitalized on lower interest rates a few years ago to start several new apartment development projects across the South. These new communities have been entering the market over the past few years, providing renters with more options. While demand for rental housing has remained high, new supplies have been high enough to slow rent growth.
However, higher interest rates in more recent years have significantly slowed the pace of new developments. As a result, the industry has passed the peak of new supply. This shift is coming at a time when demand for rental housing remains robust due to the high costs of buying homes. This should drive higher rental growth rates in the future, enabling Mid-America to generate more income from its existing apartment portfolio.
Going on the offensive
While other developers have been moving forward with fewer apartment projects, Mid-America has been ramping up. The REIT has recently completed four apartment development projects that are in the lease-up phase. It invested $385.6 million to build over 1,400 additional units. These projects are already approaching stabilization (90%+ occupied), which should occur by the end of this year.
In addition, the company currently has eight new apartment communities under construction. It's investing $942.5 million to build nearly 2,650 new units across seven markets. The company expects to complete two of these projects this year, four more in 2026, and one apiece in 2027 and 2028. It has already delivered nearly 550 units, with roughly 250 already leased. Mid America has the land to start eight more communities in the coming years, with plans to begin three to four this year. These development projects will provide Mid-America with significant incremental income in the coming years as they stabilize.
Mid America also has the financial flexibility to acquire apartment communities (stabilized properties, development projects, and recently completed communities in the lease-up phase). The REIT bought two properties with nearly 700 units for almost $190 million last year, and it purchased a 318-unit community this August. These deals are supplying the company with additional sources of growing rental income.
The REIT will also invest capital to refresh its existing properties. Mid-America plans to renovate between 5,500 and 6,500 apartment units this year. It also plans to start six or seven projects across its portfolio to upgrade exteriors, enhance fitness centers, and add other amenities. These projects will help make its existing properties more desirable to renters, driving occupancy and rent growth.
Robust total return potential
With rental growth poised to accelerate and strategic investments expanding the portfolio, Mid-America Apartment Communities offers investors enticing growth prospects to support its high-yielding dividend. These factors, combined with its lower share price, make the REIT a very compelling buy this month.
