Mid-America Apartment Communities (MAA) is likely to see sequential improvement through the rest of 2025 as multifamily real estate investment trust fundamentals in the Sunbelt region begin to turn, Wedbush Securities said in a research note Tuesday.

The Sunbelt, which makes up more than 90% of the company's portfolio, is seeing a slowdown in new supply, helping narrow the gap between renewal and new lease spreads as the company enters the seasonally strong part of the year. Wedbush said this shift marks a favorable turn in fundamentals after years of oversupply in the region.

Despite current guidance projecting flat to slightly negative same-store net operating income growth in 2025, Wedbush sees the potential for positive momentum to emerge, possibly outpacing coastal markets by 2026.

The firm also noted that investor interest in the Sunbelt remains strong, with transaction cap rates at or below 5%, underscoring the intrinsic value of Mid-America Apartment Communities' existing portfolio-even as it limits external growth opportunities.

Wedbush views consensus FFO growth estimates of 3.5% to 4% for 2026 as conservative and believes they may prove to be a floor rather than a ceiling. Volatility in mortgage rates could further tilt housing demand toward rentals, benefiting the company.

The brokerage added the company to its Best Ideas list and reiterated its outperform rating.

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