Apartment REITs underperformed in the second quarter by 320 basis points, but the sector remains attractive despite what looks to be a looming rent slowdown, according to analysts from BTIG. 

"We understand the impetus, and historically a slowdown in SSNOI growth leads to decreased relative multiples for the group. However, in moving so far in advance of fundamentals we think that the sector has become attractive even in a potentially slowing environment," BTIG analysts Michael Gorman and Sarah Barcomb write in a new report, adding that "the group trades at 18.7x 2023 estimates heading into 2Q22 earnings, a 1.39x relative multiple compared to the long-term average premium of 1.20x. Yet 2Q22 reports for the apartment sector are likely still to be strong." 

The pair say March may have been the peak of annual rent growth (15.26%)—the metric hit 13.35% in June—but say that "doesn't tell the full story."