Goldman Sachs analyst Julien Blouin initiated coverage of several multifamily REITs and single-family rental REITs companies.
Initiating with a Buy rating, the analyst kept the price target for Invitation Homes Inc. (NYSE:INVH) at $46, Mid-America Apartment Communities, Inc. (NYSE:MAA) at $187 and American Homes 4 Rent (NYSE:AMH) at $48.
The analyst says that for single-family REITs like AMH and INVH, strong demand driven by demographics, home affordability, and migratory trends is expected to lead to re-accelerating same-store revenue growth in 2025 and 2026 as competitive rental supply pressures ease.
In particular, the analyst expects AMH and INVH to experience the highest same-store revenue growth among their covered stocks in 2025. Additionally, Blouin says that AMH's upcoming development projects will enable the company to achieve superior external growth.
On the other hand, Blouin started coverage at a Neutral rating on Camden Property Trust (NYSE:CPT), Equity Residential (NYSE:EQR), and Essex Property Trust, Inc. (NYSE:ESS), with a price target of $139, $81 and $318, respectively.
The analyst expects rent growth in ESS's markets to stay strong, driven by improving migration trends in the company's suburban areas (~60% of exposure based on GS estimates, 47% per CoStar).
However, they anticipate that EQR to encounter a significant supply challenge in its urban submarkets.
Apart from this, the analyst initiated coverage on UDR, Inc. (NYSE:UDR) at a Sell rating, with a price target of $42.
For UDR, Blouin expects solid rent growth for UDR, driven by improving migration in suburban areas (~70% exposure per GS and UDR's estimates, ~50% according to CoStar). This will be partially offset by outmigration from urban areas (~30% of the portfolio).
Also, same-store expense growth is projected to be in the low 4% range, about 100 basis points above consensus, adds the analyst.
Overall, the analyst writes that in residential REIT sector, declining supply is creating a favorable growth environment. For Sunbelt multifamily REITs, while suburban migration is moderating, Blouin anticipates a sharper decline in supply, which will drive accelerating same-store revenue growth.
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