Limited Supply, High Demand Driving Rent Growth for Apartment REIT MAA

7/12/2011 | By Matthew Bechard

H. Eric Bolton, Jr., chairman and chief executive officer of MAA (NYSE: MAA), sat down with during REITWeek 2011: NAREIT's Investor Forum to discuss the state of the apartment market and the supply/demand balance in the sector.

MAA's operating results were better than expected to start 2011, and Bolton said revenues continue to exceed expectations driven by rent growth. He said he expects that trend to continue in the second half of the year.

Bolton said MAA's portfolio contains relatively new assets so the company has not had to invest in upgrading assets to meet the changing needs of its tenant base. However, he said the way the company attracts and communicates with its tenants has continued to evolve.

"Close to 60 percent of all of our leasing traffic now originates via the Internet. We have more than half of our residents paying their rent over the Internet," Bolton said. "Renters come in much more educated, much more informed about what a community offers. So our business strategy continues to change to cater more to today's tech-savvy users."

MAA focuses on the Sunbelt region and Bolton said all demographic trends point to an increased name for multifamily housing going forward.

"In past recovery cycles, we began to see recovery on the demand side and supply got ramped up pretty quickly. This time, given the lack of construction financing in a lot of our markets we continue to see supply remaining at historically low levels," Bolton said. "We will deliver fewer units this year than we have delivered in decades in terms of an annual delivery rate."

Bolton said he thinks supply will continue to be muted for a couple of years, likely not until late 2013 or 2014.