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HomeInvestmentsMAA REPORTS THIRD QUARTER 2023 RESULTS

MAA REPORTS THIRD QUARTER 2023 RESULTS

GERMANTOWN, Tenn., Oct. 25, 2023 /PRNewswire/ — Mid-America Apartment Communities, Inc., or MAA (NYSE: MAA), today announced operating results for the quarter ended September 30, 2023.

Third Quarter 2023 Operating Results


Three months ended
September 30,



Nine months ended
September 30,




2023



2022



2023



2022


Earnings per common share – diluted


$

0.94



$

1.05



$

3.34



$

3.82















Funds from operations (FFO) per Share – diluted


$

2.16



$

2.19



$

6.85



$

6.08















Core FFO per Share – diluted


$

2.29



$

2.19



$

6.85



$

6.18


A reconciliation of FFO and Core FFO to Net income available for MAA common shareholders, and discussion of the components of FFO and Core FFO, can be found later in this release. FFO per Share – diluted and Core FFO per Share – diluted include diluted common shares and units. 

Eric Bolton, Chairman and Chief Executive Officer, said, “Third quarter results were ahead of our expectations supported by the continued solid demand for apartment housing.  Stable employment conditions along with continued positive migration trends to our markets and historically low resident move-outs are combining to drive solid demand.  The delivery of new apartment supply is currently impacting rent growth performance associated with new move-in residents, and we expect this pressure to persist for another few quarters.  The volume of new apartment starts has begun to decline, and we expect that leasing conditions will be supportive of higher rent growth in late 2024 as markets absorb the current development pipeline. MAA’s uniquely diversified portfolio, along with a strong operating platform and balance sheet, is well positioned to work through the current new supply pipeline, as well as pursue new growth opportunities that are emerging.”

Highlights

  • During the third quarter of 2023, MAA’s Same Store Portfolio produced growth in revenues of 4.1%, as compared to the same period in the prior year, with Average Effective Rent per Unit up 4.5% while capturing strong Average Physical Occupancy of 95.7%.
  • During the third quarter of 2023, MAA’s Same Store Portfolio property operating expense and Net Operating Income (NOI) increased by 4.7% and 3.7%, respectively, as compared to the same period in the prior year.
  • As of September 30, 2023, resident turnover remained low at 45.2% on a trailing 12 month basis driven by historically low levels of move-outs associated with buying single family-homes.
  • As of the end of the third quarter of 2023, MAA had five communities under development, representing 1,970 units once complete, with a projected total cost of $642.7 million and an estimated $296.4 million remaining to be funded.
  • As of the end of the third quarter of 2023, MAA had two recently completed development communities in lease-up. One community is expected to stabilize in the fourth quarter of 2023 and one in the third quarter of 2024. 
  • MAA completed the redevelopment of 2,258 apartment homes during the third quarter of 2023, capturing average rental rate increases of approximately 7% above non-renovated units. 
  • Subsequent to the end of the third quarter of 2023, MAA acquired a 323-unit multifamily community located in the Phoenix, Arizona market. 
  • MAA’s balance sheet remains strong with a historically low Net Debt/Adjusted EBITDAre ratio of 3.4x and $1.4 billion of combined cash and available capacity under MAALP’s unsecured revolving credit facility as of September 30, 2023. 

Same Store Portfolio Operating Results
To ensure comparable reporting with prior periods, the Same Store Portfolio includes properties that were owned by MAA and stabilized at the beginning of the previous year. Same Store Portfolio results for the three and nine months ended September 30, 2023 as compared to the same period in the prior year are summarized below:



Three months ended September 30, 2023 vs. 2022


Nine months ended September 30, 2023 vs. 2022



Revenues


Expenses


NOI


Average
Effective Rent
per Unit


Revenues


Expenses


NOI


Average
Effective Rent
per Unit

Same Store Operating Growth


4.1 %


4.7 %


3.7 %


4.5 %


7.6 %


6.7 %


8.2 %


8.7 %

A reconciliation of NOI, including Same Store NOI, to Net income available for MAA common shareholders, and discussion of the components of NOI, can be found later in this release.

Same Store Portfolio operating statistics for the three and nine months ended September 30, 2023 are summarized below:



Three months ended September 30,
2023


Nine months ended September 30,
2023


September 30, 2023



Average
Effective Rent
per Unit



Average Physical
Occupancy


Average
Effective Rent
per Unit



Average Physical
Occupancy


Resident Turnover

Same Store Operating Statistics


$

1,690



95.7 %


$

1,673



95.6 %


45.2 %
















Same Store Portfolio lease pricing for both new and renewing leases effective during the third quarter of 2023, on a blended basis, increased 1.6% as compared to the prior lease, driven by a 5.0% increase for renewing leases and a 2.2% decrease for leases to new move-in residents.

Same Store Portfolio lease pricing for both new and renewing leases effective during the nine months ended September 30, 2023, on a blended basis, increased 2.9% as compared to the prior lease, driven by a 6.4% increase for renewing leases and a 0.8% decrease for leases to new move-in residents.

Development and Lease-up Activity
A summary of MAA’s development communities under construction as of the end of the third quarter of 2023 is set forth below (dollars in thousands):




Units as of



Development Costs as of



Expected Project


Total



September 30, 2023



September 30, 2023



Completions By Year


Development












Expected



Spend



Expected





Projects (1)



Total



Delivered



Leased



Total



to Date



Remaining



2023



2024



2025



5




1,970




182




130



$

642,700



$

346,264



$

296,436







3




2











































(1)

Three of the development projects are currently leasing or are expected to begin leasing during the fourth quarter of 2023.  

During the third quarter of 2023, MAA funded $47.0 million of costs for current and planned projects, including predevelopment activities. MAA expects to begin multifamily development projects on four to six land parcels currently owned or under contract over the next 18 to 24 months.

A summary of the total units, physical occupancy and cost of MAA’s lease-up communities as of the end of the third quarter of 2023 is set forth below (dollars in thousands):

Total



As of September 30, 2023


Lease-Up



Total



Physical


Spend


Projects (1)



Units



Occupancy


to Date



2




690



60.1 %


$

150,071

















(1)

One of the lease-up projects is expected to stabilize in the fourth quarter of 2023.  

The current expected average stabilized NOI yield on the five communities either currently leasing or expected to begin leasing during the fourth quarter of 2023 is 6.7%.

Acquisition Activity
In October 2023, MAA acquired a 323-unit multifamily community currently in lease-up and located in the Phoenix, Arizona market for approximately $102 million

Property Redevelopment and Repositioning Activity
A summary of MAA’s interior redevelopment program and Smart Home technology initiative as of the end of the third quarter of 2023 is set forth below:



As of September 30, 2023






Units



Units



Average Cost



Increase in Average



Remaining Units



Completed



Completed



per Unit



Effective Rent per Unit



Expected to be Completed



QTD



YTD



YTD



YTD



Through December 31, 2023

Redevelopment



2,258




5,464



$

6,190



$

101



900 – 1,500
















Smart Home



413




20,943



$

1,425



$

20


 (1)

500 – 1,000



(1)

Projected increase upon lease renewal, opt in or unit turnover.

As of September 30, 2023, MAA had completed installation of Smart Home technology (unit entry locks, mobile control of lights and thermostat and leak monitoring) in over 92,000 units across its apartment community portfolio since the initiative began during the first quarter of 2019.

During the third quarter of 2023, MAA continued its property repositioning program to upgrade and reposition the amenity and common areas at select apartment communities resulting in higher and above market rent growth. The five active projects during the nine months ended September 30, 2023 are expected to deliver yields on cost averaging 8%. Two of the five projects are complete with the remainder expected to be completed in the fourth quarter of 2023. An additional six projects are expected to start in the fourth quarter of 2023. For the nine months ended September 30, 2023, MAA spent $9.7 million on this program.  As of September 30, 2023, for all projects completed and either fully or partially repriced, MAA has captured yields on cost averaging approximately 15%.

Capital Expenditures
A summary of MAA’s capital expenditures and Funds Available for Distribution (FAD) for the three and nine months ended September 30, 2023 and 2022 is set forth below (dollars in millions, except per Share data):



Three months ended
September 30,



Nine months ended
September 30,




2023



2022



2023



2022


Core FFO


$

274.9



$

259.5



$

820.4



$

733.5


Recurring capital expenditures



(36.4)




(38.7)




(85.4)




(84.3)


Core adjusted FFO (Core AFFO)



238.5




220.8




735.0




649.2


Redevelopment, revenue enhancing, commercial and other capital expenditures



(47.5)




(47.0)




(156.3)




(132.9)


FAD


$

191.0



$

173.8



$

578.7



$

516.3















Core FFO per Share – diluted


$

2.29



$

2.19



$

6.85



$

6.18


Core AFFO per Share – diluted


$

1.99



$

1.86



$

6.14



$

5.47


A reconciliation of FFO, Core FFO, Core AFFO and FAD to Net income available for MAA common shareholders, and discussion of the components of FFO, Core FFO, Core AFFO and FAD, can be found later in this release. 

Balance Sheet and Financing Activities
As of September 30, 2023, MAA had $1.4 billion of combined cash and available capacity under MAALP’s unsecured revolving credit facility. MAALP refers to Mid-America Apartments, L.P., which is MAA’s operating partnership.

Dividends and distributions paid on shares of common stock and noncontrolling interests during the third quarter of 2023 were $167.8 million, as compared to $148.3 million for the same period in the prior year.

Balance sheet highlights as of September 30, 2023 are summarized below (dollars in billions):

Total debt to adjusted
total assets (1)


Net Debt/Adjusted
EBITDAre (2)


Total debt
outstanding



Average effective
interest rate


Fixed rate debt as a
% of total debt


Total debt average
years to maturity


27.3 %


3.4x


$

4.4



3.4 %


100.0 %



7.2



















(1)

As defined in the covenants for the bonds issued by MAALP.

(2)

Adjusted EBITDAre is calculated for the trailing twelve month period ended September 30, 2023.

A reconciliation of Net Debt to Unsecured notes payable and Secured notes payable and a reconciliation of Adjusted EBITDAre to Net income, along with discussion of the components of Net Debt and Adjusted EBITDAre, can be found later in this release.

119th Consecutive Quarterly Common Dividend Declared
MAA declared its 119th consecutive quarterly common dividend, which will be paid on October 31, 2023 to holders of record on October 13, 2023. The current annual dividend rate is $5.60 per common share. The timing and amount of future dividends will depend on actual cash flows from operations, MAA’s financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986 and other factors as MAA’s Board of Directors deems relevant. MAA’s Board of Directors may modify the dividend policy from time to time.

2023 Earnings and Same Store Portfolio Guidance
MAA is updating its prior 2023 guidance for Earnings per common share, Core FFO per Share and Core AFFO per Share, along with its expectations for growth in Property revenue, Property operating expense and NOI for the Same Store Portfolio in 2023.

FFO, Core FFO and Core AFFO are non-GAAP financial measures. Acquisition and disposition activity materially affects depreciation and capital gains or losses, which combined, generally represent the majority of the difference between Net income available for common shareholders and FFO. As discussed in the definitions of non-GAAP financial measures found later in this release, MAA’s definition of FFO is in accordance with the National Association of Real Estate Investment Trusts’, or NAREIT’s, definition, and Core FFO represents FFO as adjusted for items that are not considered part of MAA’s core business operations. MAA believes that Core FFO is helpful in understanding operating performance in that Core FFO excludes not only depreciation expense of real estate assets and certain other non-routine items, but it also excludes certain items that by their nature are not comparable over periods and therefore tend to obscure actual operating performance.

2023 Guidance


Previous Range


Previous Midpoint



Revised Range


Revised Midpoint

Earnings:


Full Year 2023


Full Year 2023



Full Year 2023


Full Year 2023

Earnings per common share – diluted


$5.04 to $5.32


$5.18



$4.36 to $4.52


$4.44

Core FFO per Share – diluted


$9.00 to $9.28


$9.14



$9.06 to $9.22


$9.14

Core AFFO per Share – diluted


$8.08 to $8.36


$8.22



$8.14 to $8.30


$8.22











MAA Same Store Portfolio:










Property revenue growth


5.50% to 7.00%


6.25 %



5.75% to 6.75%


6.25 %

Property operating expense growth


5.30% to 6.80%


6.05 %



6.00% to 7.00%


6.50 %

NOI growth


5.60% to 7.10%


6.35 %



5.50% to 6.50%


6.00 %

MAA expects Core FFO for the fourth quarter of 2023 to be in the range of $2.21 to $2.37 per Share, or $2.29 per Share at the midpoint. MAA does not forecast Earnings per common share on a quarterly basis as MAA generally cannot predict the timing of forecasted acquisition and disposition activity within a particular quarter (rather than during the course of the full year). Additional details and guidance items are provided in the Supplemental Data to this release.

Supplemental Material and Conference Call
Supplemental data to this release can be found on the “For Investors” page of the MAA website at www.maac.com. MAA will host a conference call to further discuss third quarter results on October 26, 2023, at 9:00 AM Central Time. The conference call-in number is 877-830-2597. You may also join the live webcast of the conference call by accessing the “For Investors” page of the MAA website at www.maac.com. MAA’s filings with the Securities and Exchange Commission (SEC) are filed under the registrant names of Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.

About MAA
MAA, an S&P 500 company, is a real estate investment trust (REIT) focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development and redevelopment of quality apartment communities primarily in the Southeast, Southwest and Mid-Atlantic regions of the United States. As of September 30, 2023, MAA had ownership interest in 101,987 apartment units, including communities currently in development, across 16 states and the District of Columbia. For further details, please visit the MAA website at www.maac.com or contact Investor Relations at [email protected], or via mail at MAA, 6815 Poplar Ave., Suite 500, Germantown, TN 38138, Attn: Investor Relations.

Forward-Looking Statements
Sections of this release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Such forward-looking statements include, without limitation, statements regarding expected operating performance and results, property stabilizations, property acquisition and disposition activity, joint venture activity, development and renovation activity and other capital expenditures, and capital raising and financing activity, as well as lease pricing, revenue and expense growth, occupancy, interest rate and other economic expectations. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” “projects,” “assumes,” “will,” “may,” “could,” “should,” “budget,” “target,” “outlook,” “proforma,” “opportunity,” “guidance” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, as described below, which may cause our actual results, performance or achievements to be materially different from the results of operations, financial conditions or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such forward-looking statements included in this release may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.

The following factors, among others, could cause our actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements:

  • inability to generate sufficient cash flows due to unfavorable economic and market conditions, changes in supply and/or demand, competition, uninsured losses, changes in tax and housing laws, or other factors;
  • exposure to risks inherent in investments in a single industry and sector;
  • adverse changes in real estate markets, including, but not limited to, the extent of future demand for multifamily units in our significant markets, barriers of entry into new markets which we may seek to enter in the future, limitations on our ability to increase or collect rental rates, competition, our ability to identify and consummate attractive acquisitions or development projects on favorable terms, our ability to consummate any planned dispositions in a timely manner on acceptable terms, and our ability to reinvest sale proceeds in a manner that generates favorable returns;
  • failure of development communities to be completed within budget and on a timely basis, if at all, to lease-up as anticipated or to achieve anticipated results;
  • unexpected capital needs;
  • material changes in operating costs, including real estate taxes, utilities and insurance costs, due to inflation and other factors;
  • inability to obtain appropriate insurance coverage at reasonable rates, or at all, or losses from catastrophes in excess of our insurance coverage;
  • ability to obtain financing at favorable rates, if at all, or refinance existing debt as it matures;
  • level and volatility of interest or capitalization rates or capital market conditions;
  • the effect of any rating agency actions on the cost and availability of new debt financing;
  • the impact of adverse developments affecting the U.S. or global banking industry, including bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory responses thereto;
  • significant change in the mortgage financing market or other factors that would cause single-family housing or other alternative housing options, either as an owned or rental product, to become a more significant competitive product;
  • ability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax purposes, the ability of MAALP to satisfy the rules to maintain its status as a partnership for federal income tax purposes, the ability of our taxable REIT subsidiaries to maintain their status as such for federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;
  • inability to attract and retain qualified personnel;
  • cyber liability or potential liability for breaches of our or our service providers’ information technology systems, or business operations disruptions;
  • potential liability for environmental contamination;
  • changes in the legal requirements we are subject to, or the imposition of new legal requirements, that adversely affect our operations;
  • extreme weather and natural disasters;
  • disease outbreaks and other public health events and measures that are taken by federal, state, and local governmental authorities in response to such outbreaks and events;
  • impact of climate change on our properties or operations;
  • legal proceedings or class action lawsuits;
  • impact of reputational harm caused by negative press or social media postings of our actions or policies, whether or not warranted;
  • compliance costs associated with numerous federal, state and local laws and regulations; and 
  • other risks identified in this release and in reports we file with the SEC or in other documents that we publicly disseminate.

New factors may also emerge from time to time that could have a material adverse effect on our business. Except as required by law, we undertake no obligation to publicly update or revise forward-looking statements contained in this release to reflect events, circumstances or changes in expectations after the date of this release.

FINANCIAL HIGHLIGHTS 


Dollars in thousands, except per share data


Three months ended
September 30,



Nine months ended
September 30,




2023



2022



2023



2022


Rental and other property revenues


$

542,042



$

520,783



$

1,606,221



$

1,491,901















Net income available for MAA common shareholders


$

109,810



$

121,389



$

389,564



$

441,049















Total NOI (1)


$

342,819



$

329,360



$

1,029,862



$

949,381















Earnings per common share: (2)













Basic


$

0.94



$

1.05



$

3.34



$

3.82


Diluted


$

0.94



$

1.05



$

3.34



$

3.82















Funds from operations per Share – diluted: (2)













FFO (1)


$

2.16



$

2.19



$

6.85



$

6.08


Core FFO (1)


$

2.29



$

2.19



$

6.85



$

6.18


Core AFFO (1)


$

1.99



$

1.86



$

6.14



$

5.47















Dividends declared per common share


$

1.4000



$

1.2500



$

4.2000



$

3.5875















Dividends/Core FFO (diluted) payout ratio



61.1

%



57.1

%



61.3

%



58.1

%

Dividends/Core AFFO (diluted) payout ratio



70.4

%



67.2

%



68.4

%



65.6

%














Consolidated interest expense


$

36,651



$

38,637



$

110,655



$

116,663


Mark-to-market debt adjustment






(19)




25




(90)


Debt discount and debt issuance cost amortization



(1,501)




(1,510)




(4,562)




(4,457)


Capitalized interest



3,182




2,253




9,065




6,146


Total interest incurred


$

38,332



$

39,361



$

115,183



$

118,262















Amortization of principal on notes payable


$

124



$

352



$

854



$

1,043




(1)

A reconciliation of the following items and discussion of their respective components can be found later in this release: (i) NOI to Net income available for MAA common shareholders; and (ii) FFO, Core FFO and Core AFFO to Net income available for MAA common shareholders.

(2)

See the “Share and Unit Data” section for additional information.

Dollars in thousands, except share price









September 30, 2023



December 31, 2022


Gross Assets (1)


$

16,107,421



$

15,543,912


Gross Real Estate Assets (1)


$

15,878,181



$

15,336,793


Total debt


$

4,394,263



$

4,414,903


Common shares and units outstanding



119,834,510




118,645,269


Share price


$

128.65



$

156.99


Book equity value


$

6,321,622



$

6,210,419


Market equity value


$

15,416,710



$

18,626,121


Net Debt/Adjusted EBITDAre (2)


3.4x



3.7x




(1)

A reconciliation of Gross Assets to Total assets and Gross Real Estate Assets to Real estate assets, net, along with discussion of their components, can be found later in this release.

(2)

Adjusted EBITDAre is calculated for the trailing twelve month period for each date presented. A reconciliation of the following items and discussion of their respective components can be found later in this release: (i) Net Debt to Unsecured notes payable and Secured notes payable; and (ii) EBITDA, EBITDAre and Adjusted EBITDAre to Net income.

CONSOLIDATED STATEMENTS OF OPERATIONS 


Dollars in thousands, except per share data (Unaudited)


Three months ended
September 30,



Nine months ended
September 30,




2023



2022



2023



2022


Revenues:













Rental and other property revenues


$

542,042



$

520,783



$

1,606,221



$

1,491,901


Expenses:













Operating expenses, excluding real estate taxes and insurance



122,660




117,390




347,868




328,514


Real estate taxes and insurance



76,563




74,033




228,491




214,006


Depreciation and amortization



146,702




136,879




424,175




404,761


Total property operating expenses



345,925




328,302




1,000,534




947,281


Property management expenses



16,298




16,262




50,317




48,429


General and administrative expenses



13,524




12,188




43,329




44,091


Interest expense



36,651




38,637




110,655




116,663


Loss (gain) on sale of depreciable real estate assets



75




1




61




(131,963)


Gain on sale of non-depreciable real estate assets






(431)




(54)




(809)


Other non-operating expense (income)



16,493




1,718




(3,966)




19,248


Income before income tax benefit (expense)



113,076




124,106




405,345




448,961


Income tax benefit (expense)



209




1,256




(3,596)




5,750


Income from continuing operations before real estate joint venture activity



113,285




125,362




401,749




454,711


Income from real estate joint venture



447




341




1,214




1,129


Net income



113,732




125,703




402,963




455,840


Net income attributable to noncontrolling interests



3,000




3,392




10,633




12,025


Net income available for shareholders



110,732




122,311




392,330




443,815


Dividends to MAA Series I preferred shareholders



922




922




2,766




2,766


Net income available for MAA common shareholders


$

109,810



$

121,389



$

389,564



$

441,049















Earnings per common share – basic:













Net income available for common shareholders


$

0.94



$

1.05



$

3.34



$

3.82















Earnings per common share – diluted:













Net income available for common shareholders


$

0.94



$

1.05



$

3.34



$

3.82


SHARE AND UNIT DATA 


Shares and units in thousands


Three months ended
September 30,



Nine months ended
September 30,




2023



2022



2023



2022


Net Income Shares (1)













Weighted average common shares – basic



116,633




115,363




116,479




115,325


Effect of dilutive securities



78




205




134




267


Weighted average common shares – diluted



116,711




115,568




116,613




115,592


Funds From Operations Shares And Units













Weighted average common shares and units – basic



119,787




118,564




119,635




118,528


Weighted average common shares and units – diluted



119,833




118,643




119,683




118,626


Period End Shares And Units













Common shares at September 30,



116,687




115,448




116,687




115,448


Operating Partnership units at September 30,



3,148




3,196




3,148




3,196


Total common shares and units at September 30,



119,835




118,644




119,835




118,644




(1)

For additional information on the calculation of diluted common shares and earnings per common share, please refer to the Notes to Condensed Consolidated Financial Statements in MAA’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023, expected to be filed with the SEC on or about October 26, 2023.

CONSOLIDATED BALANCE SHEETS 


Dollars in thousands (Unaudited)









September 30, 2023



December 31, 2022


Assets







Real estate assets:







Land


$

2,008,523



$

2,008,364


Buildings and improvements and other



13,252,746




12,841,947


Development and capital improvements in progress



338,864




332,035





15,600,133




15,182,346


Less: Accumulated depreciation



(4,725,099)




(4,302,747)





10,875,034




10,879,599


Undeveloped land



73,861




64,312


Investment in real estate joint venture



42,290




42,290


Real estate assets, net



10,991,185




10,986,201









Cash and cash equivalents



161,897




38,659


Restricted cash



13,440




22,412


Other assets



215,800




193,893


Total assets


$

11,382,322



$

11,241,165









Liabilities and equity







Liabilities:







Unsecured notes payable


$

4,034,153



$

4,050,910


Secured notes payable



360,110




363,993


Accrued expenses and other liabilities



666,437




615,843


Total liabilities



5,060,700




5,030,746









Redeemable common stock



18,033




20,671









Shareholders’ equity:







Preferred stock



9




9


Common stock



1,168




1,152


Additional paid-in capital



7,410,109




7,202,834


Accumulated distributions in excess of net income



(1,285,428)




(1,188,854)


Accumulated other comprehensive loss



(9,244)




(10,052)


Total MAA shareholders’ equity



6,116,614




6,005,089


Noncontrolling interests – Operating Partnership units



163,950




163,595


Total Company’s shareholders’ equity



6,280,564




6,168,684


Noncontrolling interests – consolidated real estate entities



23,025




21,064


Total equity



6,303,589




6,189,748


Total liabilities and equity


$

11,382,322



$

11,241,165


RECONCILIATION OF FFO, CORE FFO, CORE AFFO AND FAD TO NET INCOME AVAILABLE FOR MAA COMMON SHAREHOLDERS 


Amounts in thousands, except per share and unit data


Three months ended
September 30,



Nine months ended
September 30,




2023



2022



2023



2022


Net income available for MAA common shareholders


$

109,810



$

121,389



$

389,564



$

441,049


Depreciation and amortization of real estate assets



145,278




135,023




419,532




399,366


Loss (gain) on sale of depreciable real estate assets



75




1




61




(131,963)


MAA’s share of depreciation and amortization of real estate assets of real estate joint venture



153




156




456




466


Net income attributable to noncontrolling interests



3,000




3,392




10,633




12,025


FFO attributable to common shareholders and unitholders



258,316




259,961




820,246




720,943


Loss on embedded derivative in preferred shares (1)



11,250




425




1,863




10,364


Gain on sale of non-depreciable real estate assets






(431)




(54)




(809)


Loss (gain) on investments, net of tax (1) (2)



5,166




6,470




(603)




31,036


Casualty related charges (recoveries), net (1) (3)



217




(7,046)




588




(29,171)


(Gain) loss on debt extinguishment (1)



(57)




47




(57)




47


Legal costs and settlements, net (1)









(1,600)




535


COVID-19 related costs (1)






60







502


Mark-to-market debt adjustment (4)






19




(25)




90


Core FFO attributable to common shareholders and unitholders



274,892




259,505




820,358




733,537


Recurring capital expenditures



(36,368)




(38,669)




(85,367)




(84,343)


Core AFFO attributable to common shareholders and unitholders



238,524




220,836




734,991




649,194


Redevelopment capital expenditures



(19,723)




(23,773)




(77,442)




(77,280)


Revenue enhancing capital expenditures



(19,123)




(16,172)




(51,168)




(39,100)


Commercial capital expenditures



(2,104)




(727)




(4,540)




(2,754)


Other capital expenditures (5)



(6,554)




(6,363)




(23,109)




(13,773)


FAD attributable to common shareholders and unitholders


$

191,020



$

173,801



$

578,732



$

516,287















Dividends and distributions paid


$

167,766



$

148,301



$

501,620



$

406,226















Weighted average common shares – diluted



116,711




115,568




116,613




115,592


FFO weighted average common shares and units – diluted



119,833




118,643




119,683




118,626















Earnings per common share – diluted:













Net income available for common shareholders


$

0.94



$

1.05



$

3.34



$

3.82















FFO per Share – diluted


$

2.16



$

2.19



$

6.85



$

6.08


Core FFO per Share – diluted


$

2.29



$

2.19



$

6.85



$

6.18


Core AFFO per Share – diluted


$

1.99



$

1.86



$

6.14



$

5.47




(1)

Included in Other non-operating expense (income) in the Consolidated Statements of Operations.

(2)

For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2022, loss on investments is presented net of tax benefit of $1.4 million, $1.7 million and $8.3 million, respectively.  For the nine months ended September 30, 2023, gain on investments is presented net of tax expense of $0.1 million.

(3)

For the three and nine months ended September 30, 2022, MAA recognized a gain of $7.2 million and $27.6 million, respectively, from the receipt of insurance proceeds that exceeded its casualty losses related to winter storm Uri. 

(4)

Included in Interest expense in the Consolidated Statements of Operations.

(5)

For the three and nine months ended September 30, 2022, $0.7 million and $2.0 million, respectively, of corporate related capital expenditures are excluded from other capital expenditures.

RECONCILIATION OF NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON SHAREHOLDERS 


Dollars in thousands


Three Months Ended



Nine Months Ended




September 30,
2023



June 30,
2023



September 30,
2022



September 30,
2023



September 30,
2022


Net Operating Income
















Same Store NOI


$

324,745



$

323,435



$

313,111



$

977,120



$

903,435


Non-Same Store and Other NOI



18,074




17,378




16,249




52,742




45,946


Total NOI



342,819




340,813




329,360




1,029,862




949,381


Depreciation and amortization



(146,702)




(138,972)




(136,879)




(424,175)




(404,761)


Property management expenses



(16,298)




(16,091)




(16,262)




(50,317)




(48,429)


General and administrative expenses



(13,524)




(13,882)




(12,188)




(43,329)




(44,091)


Interest expense



(36,651)




(36,723)




(38,637)




(110,655)




(116,663)


(Loss) gain on sale of depreciable real estate assets



(75)




(1)




(1)




(61)




131,963


Gain on sale of non-depreciable real estate assets









431




54




809


Other non-operating (expense) income



(16,493)




16,992




(1,718)




3,966




(19,248)


Income tax benefit (expense)



209




(2,861)




1,256




(3,596)




5,750


Income from real estate joint venture



447




382




341




1,214




1,129


Net income attributable to noncontrolling interests



(3,000)




(3,969)




(3,392)




(10,633)




(12,025)


Dividends to MAA Series I preferred shareholders



(922)




(922)




(922)




(2,766)




(2,766)


Net income available for MAA common shareholders


$

109,810



$

144,766



$

121,389



$

389,564



$

441,049


RECONCILIATION OF EBITDA, EBITDAre AND ADJUSTED EBITDAre TO NET INCOME 


Dollars in thousands


Three Months Ended



Twelve Months Ended




September 30,
2023



September 30,
2022



September 30,
2023



December 31,
2022


Net income


$

113,732



$

125,703



$

601,899



$

654,776


Depreciation and amortization



146,702




136,879




562,412




542,998


Interest expense



36,651




38,637




148,739




154,747


Income tax (benefit) expense



(209)




(1,256)




3,138




(6,208)


EBITDA



296,876




299,963




1,316,188




1,346,313


Loss (gain) on sale of depreciable real estate assets



75




1




(82,738)




(214,762)


Adjustments to reflect the Company’s share of EBITDAre of an unconsolidated affiliate



340




341




1,349




1,357


EBITDAre



297,291




300,305




1,234,799




1,132,908


Loss on embedded derivative in preferred shares (1)



11,250




425




12,606




21,107


Gain on sale of non-depreciable real estate assets






(431)




(54)




(809)


Loss on investments (1)



6,547




8,197




5,322




45,357


Casualty related charges (recoveries), net (1) (2)



217




(7,046)




(171)




(29,930)


(Gain) loss on debt extinguishment (1)



(57)




47




(57)




47


Legal costs and settlements, net (1)









6,400




8,535


COVID-19 related costs (1)






60




73




575


Adjusted EBITDAre


$

315,248



$

301,557



$

1,258,918



$

1,177,790




(1)

Included in Other non-operating expense (income) in the Consolidated Statements of Operations. 

(2)

For the three months ended September 30, 2022 and twelve months ended September 30, 2023 and December 31, 2022, MAA recognized a gain of $7.2 million, $1.4 million and $29.0 million, respectively, from the receipt of insurance proceeds that exceeded its casualty losses related to winter storm Uri. 

RECONCILIATION OF NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES PAYABLE 


Dollars in thousands









September 30, 2023



December 31, 2022


Unsecured notes payable


$

4,034,153



$

4,050,910


Secured notes payable



360,110




363,993


Total debt



4,394,263




4,414,903


Cash and cash equivalents



(161,897)




(38,659)


1031(b) exchange proceeds included in Restricted cash (1)






(9,186)


Net Debt


$

4,232,366



$

4,367,058




(1)

Included in Restricted cash in the Consolidated Balance Sheets.

RECONCILIATION OF GROSS ASSETS TO TOTAL ASSETS 


Dollars in thousands









September 30, 2023



December 31, 2022


Total assets


$

11,382,322



$

11,241,165


Accumulated depreciation



4,725,099




4,302,747


Gross Assets


$

16,107,421



$

15,543,912


RECONCILIATION OF GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET 


Dollars in thousands









September 30, 2023



December 31, 2022


Real estate assets, net


$

10,991,185



$

10,986,201


Accumulated depreciation



4,725,099




4,302,747


Cash and cash equivalents



161,897




38,659


1031(b) exchange proceeds included in Restricted cash (1)






9,186


Gross Real Estate Assets


$

15,878,181



$

15,336,793




(1)

Included in Restricted cash in the Consolidated Balance Sheets.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDAre

For purposes of calculations in this release, Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate, or Adjusted EBITDAre, represents EBITDAre further adjusted for items that are not considered part of MAA’s core operations such as adjustments related to the fair value of the embedded derivative in the MAA Series I preferred shares, gain or loss on sale of non-depreciable assets, gain or loss on investments, casualty related (recoveries) charges, net, gain or loss on debt extinguishment, legal costs and settlements, net and COVID-19 related costs. As an owner and operator of real estate, MAA considers Adjusted EBITDAre to be an important measure of performance from core operations because Adjusted EBITDAre does not include various income and expense items that are not indicative of operating performance. MAA’s computation of Adjusted EBITDAre may differ from the methodology utilized by other companies to calculate Adjusted EBITDAre. Adjusted EBITDAre should not be considered as an alternative to Net income as an indicator of operating performance.

Core Adjusted Funds from Operations (Core AFFO)

Core AFFO is composed of Core FFO less recurring capital expenditures. Because net income attributable to noncontrolling interests is added back, Core AFFO, when used in this release, represents Core AFFO attributable to common shareholders and unitholders. Core AFFO should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of operating performance. As an owner and operator of real estate, MAA considers Core AFFO to be an important measure of performance from operations because Core AFFO measures the ability to control revenues, expenses and recurring capital expenditures.

Core Funds from Operations (Core FFO)

Core FFO represents FFO as adjusted for items that are not considered part of MAA’s core business operations such as adjustments related to the fair value of the embedded derivative in the MAA Series I preferred shares, gain or loss on sale of non-depreciable assets, gain or loss on investments, net of tax, casualty related (recoveries) charges, net, gain or loss on debt extinguishment, legal costs and settlements, net, COVID-19 related costs, mark-to-market debt adjustments and other non-core items. Because net income attributable to noncontrolling interests is added back, Core FFO, when used in this release, represents Core FFO attributable to common shareholders and unitholders. While MAA’s definition of Core FFO may be similar to others in the industry, MAA’s methodology for calculating Core FFO may differ from that utilized by other REITs and, accordingly, may not be comparable to such other REITs. Core FFO should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of operating performance. MAA believes that Core FFO is helpful in understanding its core operating performance between periods in that it removes certain items that by their nature are not comparable over periods and therefore tend to obscure actual operating performance.

EBITDA

For purposes of calculations in this release, Earnings Before Interest, Income Taxes, Depreciation and Amortization, or EBITDA, is composed of net income plus depreciation and amortization, interest expense, and income taxes. As an owner and operator of real estate, MAA considers EBITDA to be an important measure of performance from core operations because EBITDA does not include various expense items that are not indicative of operating performance. EBITDA should not be considered as an alternative to Net income as an indicator of operating performance.

EBITDAre

For purposes of calculations in this release, Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate, or EBITDAre, is composed of EBITDA further adjusted for the gain or loss on sale of depreciable assets and adjustments to reflect MAA’s share of EBITDAre of an unconsolidated affiliate. As an owner and operator of real estate, MAA considers EBITDAre to be an important measure of performance from core operations because EBITDAre does not include various expense items that are not indicative of operating performance. While MAA’s definition of EBITDAre is in accordance with NAREIT’s definition, it may differ from the methodology utilized by other companies to calculate EBITDAre. EBITDAre should not be considered as an alternative to Net income as an indicator of operating performance.

Funds Available for Distribution (FAD)

FAD is composed of Core FFO less total capital expenditures, excluding development spending, property acquisitions, capital expenditures relating to significant casualty losses that management expects to be reimbursed by insurance proceeds and corporate related capital expenditures. Because net income attributable to noncontrolling interests is added back, FAD, when used in this release, represents FAD attributable to common shareholders and unitholders. FAD should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of operating performance. As an owner and operator of real estate, MAA considers FAD to be an important measure of performance from core operations because FAD measures the ability to control revenues, expenses and capital expenditures.

Funds From Operations (FFO)

FFO represents net income available for MAA common shareholders (calculated in accordance with GAAP) excluding gain or loss on disposition of operating properties and asset impairment, plus depreciation and amortization of real estate assets, net income attributable to noncontrolling interests, and adjustments for joint ventures. Because net income attributable to noncontrolling interests is added back, FFO, when used in this release, represents FFO attributable to common shareholders and unitholders. While MAA’s definition of FFO is in accordance with NAREIT’s definition, it may differ from the methodology for calculating FFO utilized by other companies and, accordingly, may not be comparable to such other companies. FFO should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of operating performance. MAA believes that FFO is helpful in understanding operating performance in that FFO excludes depreciation and amortization of real estate assets. MAA believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies.

Gross Assets

Gross Assets represents Total assets plus Accumulated depreciation. MAA believes that Gross Assets can be used as a helpful tool in evaluating its balance sheet positions. MAA believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies.

NON-GAAP FINANCIAL MEASURES (Continued)

Gross Real Estate Assets

Gross Real Estate Assets represents Real estate assets, net plus Accumulated depreciation, Cash and cash equivalents and 1031(b) exchange proceeds included in Restricted cash. MAA believes that Gross Real Estate Assets can be used as a helpful tool in evaluating its balance sheet positions. MAA believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies.

Net Debt

Net Debt represents Unsecured notes payable and Secured notes payable less Cash and cash equivalents and 1031(b) exchange proceeds included in Restricted cash. MAA believes Net Debt is a helpful tool in evaluating its debt position.

Net Operating Income (NOI)

Net Operating Income represents Rental and other property revenues less Total property operating expenses, excluding depreciation and amortization, for all properties held during the period, regardless of their status as held for sale. NOI should not be considered as an alternative to Net income available for MAA common shareholders. MAA believes NOI is a helpful tool in evaluating operating performance because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.

Non-Same Store and Other NOI

Non-Same Store and Other NOI represents Rental and other property revenues less Total property operating expenses, excluding depreciation and amortization, for all properties classified within the Non-Same Store and Other Portfolio during the period. Non-Same Store and Other NOI includes all storm-related expenses related to hurricanes. Non-Same Store and Other NOI should not be considered as an alternative to Net income available for MAA common shareholders. MAA believes Non-Same Store and Other NOI is a helpful tool in evaluating operating performance because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.

Same Store NOI

Same Store NOI represents Rental and other property revenues less Total property operating expenses, excluding depreciation and amortization, for all properties classified within the Same Store Portfolio during the period. Same Store NOI excludes storm-related expenses related to hurricanes. Same Store NOI should not be considered as an alternative to Net income available for MAA common shareholders. MAA believes Same Store NOI is a helpful tool in evaluating operating performance because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.

OTHER KEY DEFINITIONS

Average Effective Rent per Unit

Average Effective Rent per Unit represents the average of gross rent amounts after the effect of leasing concessions for occupied units plus prevalent market rates asked for unoccupied units, divided by the total number of units. Leasing concessions represent discounts to the current market rate. MAA believes average effective rent is a helpful measurement in evaluating average pricing. It does not represent actual rental revenue collected per unit.

Average Physical Occupancy

Average Physical Occupancy represents the average of the daily physical occupancy for an applicable period.

Development Communities

Communities remain identified as development until certificates of occupancy are obtained for all units under development. Once all units are delivered and available for occupancy, the community moves into the Lease-up Communities portfolio.

Lease-up Communities

New acquisitions acquired during lease-up and newly developed communities remain in the Lease-up Communities portfolio until stabilized. Communities are considered stabilized when achieving 90% average physical occupancy for 90 days.

Non-Same Store and Other Portfolio

Non-Same Store and Other Portfolio includes recently acquired communities, communities in development or lease-up, communities that have been disposed of or identified for disposition, communities that have experienced a significant casualty loss, stabilized communities that do not meet the requirements defined by the Same Store Portfolio, retail properties and commercial properties.

Resident Turnover

Resident turnover represents resident move outs excluding transfers within the Same Store Portfolio as a percentage of expiring leases on a rolling twelve month basis as of the end of the reported quarter.

Same Store Portfolio

MAA reviews its Same Store Portfolio at the beginning of each calendar year, or as significant transactions or events warrant. Communities are generally added into the Same Store Portfolio if they were owned and stabilized at the beginning of the previous year. Communities are considered stabilized when achieving 90% average physical occupancy for 90 days. Communities that have been approved by MAA’s Board of Directors for disposition are excluded from the Same Store Portfolio. Communities that have experienced a significant casualty loss are also excluded from the Same Store Portfolio.

SOURCE MAA

Originally published at https://www.prnewswire.com/news-releases/maa-reports-third-quarter-2023-results-301967869.html
Images courtesy of https://pixabay.com

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