MAA Cuts 2026 Same-Store Revenue Growth Outlook to -0.25%
Key Facts
Mid-America Apartment Communities, known as MAA, cut the midpoint of its 2026 same-store revenue growth outlook by 35 basis points to -0.25% following its third-quarter results. The company said on its earnings call that third-quarter performance was the primary reason for lowering its full-year revenue estimate. It also cut the midpoint of its same-store net operating income growth outlook by 35 basis points to -1.25%, reflecting adjustments to its revenue and expense forecasts. Meanwhile, the company set a fourth-quarter Core FFO range of $2.12 to $2.24 per diluted share, with a midpoint of $2.18. The outlook puts the third-quarter result, the rent trajectory and financing costs at the center of assessments of the company's performance over the rest of the year.
Third-quarter Core FFO was $2.10 per diluted share, compared with $2.16 in the third quarter of 2025, and the CEO said the result matched the company's expectations. For same-store properties, revenue fell 0.4% year over year, while expenses rose 2.0%, bringing net operating income down 1.8%. The CFO said revenue was about $0.02 per share below the company's expectations, but expenses were about $0.02 per share better than expected, driven mainly by property taxes. Management cut the midpoint of its 2026 same-store expense growth outlook by 35 basis points to 1.4%, attributing the change mainly to lower property tax estimates. The improved expense estimate therefore partly offset weaker revenue, but did not prevent a reduction in the net operating income growth outlook.
Management said the revised outlook reflects higher interest rates and an improvement in new lease pricing that is about a quarter later than expected. Third-quarter rent data show a gap between new leases and renewals: new lease rates fell 6.0%, while renewal rates rose 5.3%. Blended lease rate growth was 0.4% over the same period. The CEO said year-over-year growth in renewal rents accelerated to 80 basis points in the third quarter, from 50 basis points in the second quarter. These indicators show that strength in renewals has not yet offset pressure on new lease pricing.
MAA cut the midpoint of its 2026 same-store revenue growth outlook to -0.25%, while lowering the midpoint of its expense growth outlook to 1.4%, after reducing each by 35 basis points. Management said the lower expense outlook was due mainly to a decline in property tax estimates. The combined revenue and expense revisions lowered the midpoint of the same-store net operating income growth outlook to -1.25%. In the company's bridge from its third-quarter result to the midpoint of its fourth-quarter Core FFO outlook, same-store net operating income added $0.09 per share, and non-same-store property income added $0.02. Interest expense reduced the result in the bridge by $0.04 per share, reflecting the effect of financing as the company moves between quarters.
Physical occupancy at same-store properties remained at 95.3% in the second and third quarters, and management said it expects a higher level in the fourth quarter. At the time of the earnings call, decisions had been made on more than 90% of fourth-quarter renewals, with rent growth above 5% year over year on accepted renewals. Management said absorption of housing units in the company's markets since the start of the year had exceeded new supply deliveries. It added that this reduced the number of communities still in the initial lease-up phase and helped gradually lower concessions. These developments could support operating revenue in the fourth quarter, alongside continued weakness in new lease pricing described by the company.
The CEO said new rental rates in October improved compared with September, and blended rate growth accelerated by more than 100 basis points year over year during the month. He added that the company expects the pricing trend to continue improving in the new year. MAA also said it will update its 2026 diluted EPS, Core FFO and Core AFFO guidance quarterly. The stock closed at $116.75 on October 28, compared with a close of $121.17 on October 22. Investing.com reported that the stock was down 11.78% in the three months through October 28, and 7.55% over the preceding twelve months.