Apartment REIT MAA Pruning Portfolio

Eric Bolton, chairman and CEO of MAA (NYSE: MAA), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

MAA focuses on the acquisition, development and management of apartment properties throughout the Southeast and Southwest regions of the United States. Bolton said the company is continuing to see positive rent growth across its portfolio.

“Permitting trends and new delivery trends are actually starting to show some level of moderation on a year-over-year basis. Job growth trends, meanwhile, continue to be quite strong,” particularly for MAA’s  millennial target group, Bolton said.

At the same time, Bolton noted that MAA is actively pruning its portfolio.

“We’re selling more properties this year than we’ve ever sold as a public company in our 21-year history,” he said. MAA has sold almost $750 million of real estate in the last five years. Bolton said he expects to continue to see a “healthy” level of asset recycling given current pricing levels and demand from investment capital.

MAA has sold 18 properties so far this year with three more properties expected to close in the third quarter.

“We may still be at an elevated level of disposition activity next year, depending on market conditions, but at this point we’ve completed a lot of the transformation we were after. Clearly, capital is very attracted to apartment real estate these days,” he said.

Meanwhile, Bolton said MAA has the right mix between primary and secondary markets. About 65 percent of the firm’s assets are in large markets, and 35 percent are in secondary. “We really believe over a full cycle that’s about the right blend.”

Five years ago, MAA’s portfolio was split evenly between primary and secondary markets.  Bolton said the share of primary assets could climb to 70 percent as recycling efforts continue, but he does not anticipate the balance altering much beyond that point in the next several years.

Bolton also pointed out that secondary markets are starting to show more solid growth trends, without the supply pressure present in larger markets. As a result, rent growth is accelerating faster in these markets, he said.