MAA - Multifamily REITs: Navigating The Sun Belt Amid Record Supply

2024-02-01 19:35:17 ET

Summary

• Multifamily REITs have underperformed the MSCI U.S. REIT Index due to rising interest rates and record-high apartment deliveries in Sun Belt markets.
• Coastal multifamily REITs are expected to perform better in 2024, but the market has already priced in the difference.
• Once new deliveries moderate, Sun Belt-focused multifamily REITs present a compelling opportunity for investors.

Following a spectacular year of total returns and relative outperformance in 2021, multifamily REITs have underperformed the MSCI U.S. REIT Index (Bloomberg: RMZ). The underperformance for multifamily REITs has been a product of both the macro environment (rising interest rates) and record high apartment deliveries, especially in Sun Belt markets. While the fears are for the most part justified, the underperformance looks to be overdone, especially for those predominantly with Sun Belt exposure....

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