Grade: F — Major Red Flags (REIT-Structural)
Framework: Schilit *Financial Shenanigans* + Beneish M-Score + forensic accounting principles
Data: SEC EDGAR 10-K (Filed 2026-02-06, FY ended December 31, 2025) + Yahoo Finance
Auditor: Ernst & Young LLP — Unqualified opinion
CIK: 0000036519
One-line verdict: MAA's F grade is driven by cash of $23M covering 1% of $5.4B debt. The Sunbelt apartment REIT otherwise screens well: zero goodwill, CFFO/NI of 2.41, FCF of $719M, and Debt/EBITDA of 4.3x. Revenue grew just 0.8% to $2.2B — the slowest growth among residential REITs in this batch — reflecting supply pressure in Southeast and Southwest apartment markets. Net income of $447M at a 20.2% net margin is healthy. Gross margin of 30.5% is the lowest among residential REITs, reflecting MAA's property-management-heavy model and geographic concentration in markets with higher property taxes and insurance costs.
| Metric | Result |
|---|---|
| Red Flags | **1** (Cash-to-debt 1%) |
| Watch Items | **1** (Debt/EBITDA 4.3x) |
| Checks Completed | **14/18** (4 N/A) |
| Beneish M-Score | N/A (insufficient data) |
| Auditor | Ernst & Young LLP — Unqualified opinion |
Sunbelt Apartment Market
Revenue of $2,209M grew only 0.8% — essentially flat. This reflects the supply wave hitting Sunbelt apartment markets (Nashville, Dallas, Phoenix, Atlanta, Tampa) where new construction has been elevated. Per the filing, same-store revenue and occupancy trends are the primary operating metrics, with "lease pricing, revenue and expense growth, occupancy activity, joint venture activity, development and renovation activity and other capital expenditures" as key drivers.
The portfolio spans markets across the Southeast and Southwest, with the filing showing occupancy rates generally above 95%. Individual market performance varies — some markets like Louisville (95.7%) and Rockville, MD (96.4%) perform well, while others face more competition from new supply.
CFFO/NI of 2.41 is the highest among residential REITs in this batch, reflecting heavy depreciation on a large, diversified apartment portfolio. FCF of $719M comfortably covers dividend obligations.
The 18-Point Screening
| # | Check | Result | Detail |
|---|---|---|---|
| A1-A2 | Revenue Quality | — | Insufficient data |
| A3 | Revenue vs CFFO | ✅ | Revenue +0.8%, CFFO -1.8% |
| B1-B4 | Expense Quality | ✅ | 30.5% gross margin, 8.1% SG&A |
| C1-C3 | Cash Flow | ✅ | CFFO/NI 2.41, FCF $719M, accruals -5.3% |
| C4 | Cash vs Debt | ❌ | Cash $23M = 1% of $5.4B |
| D1 | Goodwill | ✅ | Zero goodwill |
| D2 | Leverage | ⚠️ | Debt/EBITDA = 4.3x |
| D3-D4 | Balance Sheet | ✅ | Normal |
| E1-E2 | Acquisition Risk | ✅ | Clean |
Summary
Grade: F is REIT-structural. MAA's near-flat revenue growth is the primary operational concern — if Sunbelt supply continues to outpace absorption, rents and occupancy could face further pressure. But the balance sheet is clean (zero goodwill, healthy cash flow), and the $23M cash balance is standard for apartment REITs with revolving credit access.
**Disclaimer**: This report is based on MAA's FY2025 10-K filed with SEC EDGAR on February 6, 2026. This is NOT investment advice.
Data: SEC EDGAR 10-K + Yahoo Finance
Auditor: Ernst & Young LLP (Unqualified opinion)
Fiscal year ended: December 31, 2025