MAA REPORTS FIRST QUARTER 2022 RESULTS

Rhea-AI Summary

Mid-America Apartment Communities, Inc. (MAA) reported strong first-quarter 2022 results, with diluted earnings per share of $0.95, up from $0.40 in 2021. Funds from operations (FFO) per share increased to $2.06, up from $1.50. Same Store Portfolio property revenues rose by 12.2%, while net operating income (NOI) grew by 16.9%. MAA continues to see high demand for apartments, leading to strong rent growth and occupancy rates. The company projects a Core FFO of $1.97 per share for Q2 2022 and has updated its 2022 guidance, expecting increased earnings and revenue growth across its portfolio.

Positive

• Earnings per share increased to $0.95 from $0.40 YoY.
• FFO per share rose to $2.06, a significant increase from $1.50.
• Core FFO expectations for Q2 2022 set at $1.89 to $2.05 per share.
• Same Store Portfolio property revenues increased by 12.2% YoY.
• NOI grew by 16.9% YoY, indicating strong operational performance.
• High occupancy rate of 95.9% across the Same Store Portfolio.
• Moody's affirmed MAA's Baa1 long-term debt rating with a positive outlook.

Negative

• Property operating expenses rose by 4.3% YoY, which could impact margins.

GERMANTOWN, Tenn., April 27, 2022 /PRNewswire/ -- Mid-America Apartment Communities, Inc., or MAA (NYSE: MAA), today announced operating results for the quarter ended March 31, 2022.

First Quarter 2022 Operating Results		Three months ended March 31,
		2022				2021
Earnings per common share - diluted		$	0.95			$	0.40
Funds from operations (FFO) per Share - diluted		$	2.06			$	1.50
Core FFO per Share - diluted		$	1.97			$	1.64

A reconciliation of FFO and Core FFO to Net income available for MAA common shareholders, and an expanded 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, "Results for the first quarter were ahead of expectations. Continued strong demand for apartment housing is supporting solid rent growth, high occupancy and low resident turnover. Leasing traffic across our portfolio continues to accelerate and we are carrying strong pricing momentum into the busy summer leasing season.  We expect leasing conditions will remain very favorable and as a result we have increased our expectations for growth in Core FFO for the year."

First Quarter 2022 Highlights

• During the first quarter of 2022, our Same Store Portfolio generated increases in property revenues, operating expenses and Net Operating Income (NOI) of 12.2%, 4.3% and 16.9%, respectively, as compared to the same period in the prior year.
• As of the end of the first quarter of 2022, MAA had five communities under development, representing 1,759 units once complete, with a total projected cost of $444.0 million and an estimated $251.2 million remaining to be funded. 
• During the first quarter of 2022, MAA completed the construction of two development communities, MAA Westglenn located in the Denver, Colorado market, and MAA Park Point located in the Houston, Texas market, and commenced development of MAA Central Park I located in the Denver, Colorado market.
• As of the end of the first quarter of 2022, MAA had four recently completed development communities in lease-up. One community is expected to stabilize in the third quarter of 2022, one in the fourth quarter of 2022 and two in the first quarter of 2023.
• During the first quarter of 2022, MAA completed the initial lease-up of MAA Midtown Phoenix (previously referred to as Novel Midtown), located in the Phoenix, Arizona market. 
• MAA completed redevelopment of 1,098 apartment homes during the first quarter of 2022, capturing average rental rate increases of approximately 11% above non-renovated units.  
• Moody's Investors Service affirmed MAA's long-term debt rating as Baa1 and revised their outlook from Stable to Positive. 

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 first quarter of 2022 as compared to the same period in the prior year are summarized below:

		Three months ended March 31, 2022 vs. Three months ended March 31, 2021
		Revenues		Expenses		NOI		Average Effective Rent per Unit
Same Store Operating Growth		12.2%		4.3%		16.9%		12.4%

Same Store Portfolio operating statistics for the first quarter of 2022 are summarized below:

		Three months ended March 31, 2022
		Average Effective Rent per Unit				Average Physical Occupancy		Resident Turnover
Same Store Operating Statistics		$	1,469			95.9%		44.7%

Same Store Portfolio lease pricing for leases effective during the first quarter of 2022, as compared to the prior lease, increased 16.1% for leases to new move-in residents and increased 17.5% for renewing leases, which produced an increase of 16.8% for both new and renewing leases on a blended basis.  

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

Development and Lease-up Activity
A summary of MAA's development communities under construction as of the end of the first quarter of 2022 is set forth below (dollars in thousands):

				Units as of												Development Costs as of												Expected Project
Total				March 31, 2022												March 31, 2022												Completions By Year
Development																Total				Spend				Expected
Projects				Total				Delivered				Leased				Expected				to Date				Remaining				2022				2023				2024
	5				1,759				46				29			$	444,000			$	192,775			$	251,225				1				3				1

The expected average stabilized NOI yield on these communities is 5.7%. During the first quarter of 2022, MAA funded $42.8 million of costs for current and completed projects, including predevelopment activities related to land parcels located in the Denver, Colorado market and the Tampa, Florida market.

During the first quarter of 2022, MAA completed the construction of MAA Westglenn and MAA Park Point, and those apartment communities moved into MAA's lease-up portfolio. A summary of the total units, cost and the average physical occupancy of MAA's lease-up communities as of the end of the first quarter of 2022 is set forth below (dollars in thousands):

Total				As of March 31, 2022												Expected Project Stabilizations By Year
Lease-Up				Total				Physical				Spend
Projects				Units				Occupancy				to Date				2022				2023
	4				1,247				65.1	%		$	296,358				2				2

Property Redevelopment and Repositioning Activity
A summary of MAA's interior redevelopment program and Smart Home technology initiative as of the end of the first quarter of 2022 is set forth below:

		As of March 31, 2022
						Average				Increase in				Remaining Units
		Units Completed				Cost				Average Effective				Expected to be Completed
		during Q1 2022				per Unit				Rent per Unit				Through December 31, 2022
Redevelopment			1,098			$	5,648			$	140			4,900 - 5,900
Smart Home			11,018			$	1,408			$	25		(1)	12,000 - 13,000
(1)   Projected increase upon lease renewal or unit turnover.

As of March 31, 2022, MAA had completed installation of the Smart Home technology (unit entry locks, mobile control of lights and thermostat and leak monitoring) in over 58,000 units across its apartment community portfolio since the initiative began.

During the first quarter of 2022, MAA continued its property repositioning program to upgrade and reposition the amenity and common areas at select apartment communities. The program includes targeted plans to move all units at the properties to higher rents that are expected to deliver yields on cost averaging 8%. During the three months ended March 31, 2022, work continued on properties selected for this program in 2021. For the three months ended March 31, 2022, MAA spent $3.8 million on this program.

Acquisition Activity
In March 2022, MAA acquired a four acre land parcel located in the Denver, Colorado market for future development.  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.

Capital Expenditures
A summary of MAA's capital expenditures and Funds Available for Distribution (FAD) for the first quarter of 2022 is set forth below (dollars in millions, except per Share data):

		Three months ended March 31,
		2022				2021
Core funds from operations		$	234.2			$	194.4
Recurring capital expenditures			(14.7)				(12.6)
Core adjusted funds from operations			219.5				181.8
Redevelopment, revenue enhancing, commercial and other capital expenditures			(23.5)				(34.4)
Funds available for distribution		$	196.0			$	147.4
Core funds from operations per Share - diluted		$	1.97			$	1.64
Core adjusted funds from operations per Share - diluted		$	1.85			$	1.54

A reconciliation of FFO, Core FFO, Core AFFO and FAD to net income available for MAA common shareholders, and an expanded 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 March 31, 2022, MAA had $1.0 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 first quarter of 2022 were $128.9 million, as compared to $121.4 million for the same period in the prior year.

Balance sheet highlights as of March 31, 2022, 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
29.9%		4.27x		$	4.5			3.4%		99.6%		8.4
(1)   As defined in the covenants for the bonds issued by MAALP.
(2)   Adjusted EBITDAre is calculated for the trailing twelve month period ended March 31, 2022.

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

113th Consecutive Quarterly Common Dividend Declared
MAA declared its 113th consecutive quarterly common dividend, which will be paid on April 29, 2022 to holders of record on April 14, 2022. The current annual dividend rate is $4.35 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.

2022 Earnings and Same Store Portfolio Guidance
MAA is updating its prior 2022 guidance for Net income per diluted common share, Core FFO per Share and Core AFFO per Share, along with its expectations for growth of Property revenue, Property operating expense and NOI for the Same Store Portfolio in 2022. MAA expects to update its 2022 Net income per diluted common share, Core FFO per Share and Core AFFO per Share guidance on a quarterly basis.

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 further 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.

MAA expects Core FFO for the second quarter of 2022 to be in the range of $1.89 to $2.05 per Share, or $1.97 per Share at the midpoint. MAA does not forecast Net income per diluted 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.

2022 Guidance		Previous Range		Previous Midpoint		Revised Range		Revised Midpoint
Earnings:		Full Year 2022		Full Year 2022		Full Year 2022		Full Year 2022
Earnings per common share - diluted		$4.87 to $5.23		$5.05		$5.96 to $6.28		$6.12
Core FFO per Share - diluted		$7.74 to $8.10		$7.92		$7.92 to $8.24		$8.08
Core AFFO per Share - diluted		$6.95 to $7.31		$7.13		$7.14 to $7.46		$7.30
MAA Same Store Portfolio:
Property revenue growth		8.0% to 10.0%		9.0%		10.0% to 12.0%		11.0%
Property operating expense growth		5.0% to 6.0%		5.5%		5.5% to 6.5%		6.0%
NOI growth		10.0% to 12.0%		11.0%		12.5% to 14.5%		13.5%

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 first quarter results on April 28, 2022, at 9:00 AM Central Time. The conference call-in number is 877-830-2598. 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 March 31, 2022, MAA had ownership interest in 101,959 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 investor.relations@maac.com, 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 the potential impact of the ongoing COVID-19 pandemic on our business, 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," "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:

• the COVID-19 pandemic and measures taken or that may be taken by federal, state and local governmental authorities to combat the spread of the disease; 
• 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 effect of the phase-out of the London Interbank Offered Rate (LIBOR) as a variable rate debt benchmark and the transition to a different benchmark interest rate;
• 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, natural disasters, disease outbreaks and other public health 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 March 31,
		2022				2021
Rental and other property revenues		$	476,078			$	425,005
Net income available for MAA common shareholders		$	109,880			$	46,271
Total NOI (1)		$	306,658			$	262,537
Earnings per common share: (2)
Basic		$	0.95			$	0.40
Diluted		$	0.95			$	0.40
Funds from operations per Share - diluted: (2)
FFO (1)		$	2.06			$	1.50
Core FFO (1)		$	1.97			$	1.64
Core AFFO (1)		$	1.85			$	1.54
Dividends declared per common share		$	1.0875			$	1.0250
Dividends/Core FFO (diluted) payout ratio			55.2	%			62.5	%
Dividends/Core AFFO (diluted) payout ratio			58.8	%			66.6	%
Consolidated interest expense		$	39,121			$	39,672
Mark-to-market debt adjustment			(36)				(83)
Debt discount and debt issuance cost amortization			(1,473)				(1,260)
Capitalized interest			1,836				2,550
Total interest incurred		$	39,448			$	40,879
Amortization of principal on notes payable		$	343			$	515

(1)	A reconciliation of the following items and an expanded 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
		March 31, 2022				December 31, 2021
Gross Assets (1)		$	15,180,853			$	15,133,343
Gross Real Estate Assets (1)		$	14,915,635			$	14,865,818
Total debt		$	4,537,505			$	4,516,690
Common shares and units outstanding			118,539,843				118,542,994
Share price		$	209.45			$	229.44
Book equity value		$	6,130,219			$	6,184,092
Market equity value		$	24,828,170			$	27,198,505
Net Debt/Adjusted EBITDAre (2)		4.27x				4.34x

(1)	A reconciliation of Gross Assets to Total assets and Gross Real Estate Assets to Real estate assets, net, along with an expanded 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 an expanded discussion of their respective components can be found later in this release: (i) EBITDA, EBITDAre and Adjusted EBITDAre to Net income; and (ii) Net Debt to Unsecured notes payable and Secured notes payable.

 

CONSOLIDATED STATEMENTS OF OPERATIONS
Dollars in thousands, except per share data (Unaudited)		Three months ended March 31,
		2022				2021
Revenues:
Rental and other property revenues		$	476,078			$	425,005
Expenses:
Operating expenses, excluding real estate taxes and insurance			101,117				95,961
Real estate taxes and insurance			68,303				66,507
Depreciation and amortization			133,738				131,503
Total property operating expenses			303,158				293,971
Property management expenses			16,537				12,939
General and administrative expenses			16,323				12,979
Interest expense			39,121				39,672
Loss on sale of depreciable real estate assets			1				—
Gain on sale of non-depreciable real estate assets			(23)				—
Other non-operating (income) expense			(10,795)				15,913
Income before income tax expense			111,756				49,531
Income tax benefit (expense)			1,442				(999)
Income from continuing operations before real estate joint venture activity			113,198				48,532
Income from real estate joint venture			379				332
Net income			113,577				48,864
Net income attributable to noncontrolling interests			2,775				1,671
Net income available for shareholders			110,802				47,193
Dividends to MAA Series I preferred shareholders			922				922
Net income available for MAA common shareholders		$	109,880			$	46,271
Earnings per common share - basic:
Net income available for common shareholders		$	0.95			$	0.40
Earnings per common share - diluted:
Net income available for common shareholders		$	0.95			$	0.40
SHARE AND UNIT DATA
Shares and units in thousands		Three months ended March 31,
		2022				2021
Net Income Shares (1)
Weighted average common shares - basic			115,259				114,263
Effect of dilutive securities			459				312
Weighted average common shares - diluted			115,718				114,575
Funds From Operations Shares And Units
Weighted average common shares and units - basic			118,462				118,318
Weighted average common shares and units - diluted			118,660				118,456
Period End Shares And Units
Common shares at March 31,			115,338				114,409
Operating Partnership units at March 31,			3,202				4,053
Total common shares and units at March 31,			118,540				118,462

(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 months ended March 31, 2022, expected to be filed with the SEC on or about April 28, 2022.

 

CONSOLIDATED BALANCE SHEETS
Dollars in thousands (Unaudited)
		March 31, 2022				December 31, 2021
Assets
Real estate assets:
Land		$	1,978,661			$	1,977,813
Buildings and improvements and other			12,589,537				12,454,439
Development and capital improvements in progress			215,055				247,970
			14,783,253				14,680,222
Less: Accumulated depreciation			(3,981,778)				(3,848,161)
			10,801,475				10,832,061
Undeveloped land			29,279				24,015
Investment in real estate joint venture			42,732				42,827
Real estate assets, net			10,873,486				10,898,903
Cash and cash equivalents			60,371				54,302
Restricted cash			12,253				76,296
Other assets			252,965				255,681
Total assets		$	11,199,075			$	11,285,182
Liabilities and equity
Liabilities:
Unsecured notes payable		$	4,172,513			$	4,151,375
Secured notes payable			364,992				365,315
Accrued expenses and other liabilities			531,351				584,400
Total liabilities			5,068,856				5,101,090
Redeemable common stock			26,857				30,185
Shareholders' equity:
Preferred stock			9				9
Common stock			1,151				1,151
Additional paid-in capital			7,198,474				7,230,956
Accumulated distributions in excess of net income			(1,268,827)				(1,255,807)
Accumulated other comprehensive loss			(10,860)				(11,132)
Total MAA shareholders' equity			5,919,947				5,965,177
Noncontrolling interests - Operating Partnership units			163,566				165,116
Total Company's shareholders' equity			6,083,513				6,130,293
Noncontrolling interests - consolidated real estate entities			19,849				23,614
Total equity			6,103,362				6,153,907
Total liabilities and equity		$	11,199,075			$	11,285,182

 

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 March 31,
		2022				2021
Net income available for MAA common shareholders		$	109,880			$	46,271
Depreciation and amortization of real estate assets			132,010				129,752
Loss on sale of depreciable real estate assets			1				—
Depreciation and amortization of real estate assets of real estate joint venture			154				155
Net income attributable to noncontrolling interests			2,775				1,671
Funds from operations attributable to the Company			244,820				177,849
(Gain) loss on embedded derivative in preferred shares (1)			(11,896)				15,108
Gain on sale of non-depreciable real estate assets			(23)				—
Loss (gain) on investments, net of tax (1)(2)			8,077				(1,284)
Net casualty (gain) loss and other settlement proceeds (3)			(7,712)				2,355
Loss on debt extinguishment (1)			—				37
Legal costs and settlements, net (1)			537				(16)
COVID-19 related costs (1)			337				310
Mark-to-market debt adjustment (4)			36				83
Core funds from operations			234,176				194,442
Recurring capital expenditures			(14,717)				(12,585)
Core adjusted funds from operations			219,459				181,857
Redevelopment capital expenditures			(11,114)				(22,732)
Revenue enhancing capital expenditures			(8,756)				(7,179)
Commercial capital expenditures			(921)				(1,054)
Other capital expenditures (5)			(2,703)				(3,441)
Funds available for distribution		$	195,965			$	147,451
Dividends and distributions paid		$	128,916			$	121,401
Weighted average common shares - diluted			115,718				114,575
FFO weighted average common shares and units - diluted			118,660				118,456
Earnings per common share - diluted:
Net income available for common shareholders		$	0.95			$	0.40
Funds from operations per Share - diluted		$	2.06			$	1.50
Core funds from operations per Share - diluted		$	1.97			$	1.64
Core adjusted funds from operations per Share - diluted		$	1.85			$	1.54

(1)	Included in Other non-operating (income) expense in the Consolidated Statements of Operations.
(2)	For the three months ended March 31, 2022 and 2021, loss (gain) on investments are presented net of tax benefit of $2.2 million and net of tax expense of $0.3 million, respectively.
(3)	For the three months ended March 31, 2022, MAA recognized a gain of $7.6 million from the receipt of insurance proceeds that exceeded its casualty losses related to winter storm Uri. The gain was reflected in Other non-operating (income) expense in the Consolidated Statements of Operations. For the three months ended March 31, 2021, MAA incurred casualty losses of $16.9 million related to winter storm Uri (primarily building repairs, landscaping and asset write-offs). The majority of the casualty losses have been reimbursed through insurance coverage. A receivable was recognized in Other non-operating (income) expense for the recorded losses that MAA expected to recover. Additional costs related to the storm that were not expected to be recovered through insurance coverage, along with other unrelated casualty losses and recoveries, are also reflected in this adjustment. The adjustment is primarily included in Other non-operating (income) expense.
(4)	Included in Interest expense in the Consolidated Statements of Operations.
(5)	For the three months ended March 31, 2021, $2.2 million of reconstruction-related capital expenditures relating to winter storm Uri are excluded from other capital expenditures. The majority of the storm costs are expected to be reimbursed through insurance coverage.

 

RECONCILIATION OF NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON SHAREHOLDERS
Dollars in thousands		Three Months Ended
		March 31, 2022				December 31, 2021				March 31, 2021
Net Operating Income
Same Store NOI		$	294,642			$	284,425			$	251,940
Non-Same Store and Other NOI			12,016				12,052				10,597
Total NOI			306,658				296,477				262,537
Depreciation and amortization			(133,738)				(135,495)				(131,503)
Property management expenses			(16,537)				(15,210)				(12,939)
General and administrative expenses			(16,323)				(14,121)				(12,979)
Interest expense			(39,121)				(39,108)				(39,672)
(Loss) gain on sale of depreciable real estate assets			(1)				85,913				—
Gain on sale of non-depreciable real estate assets			23				609				—
Other non-operating income (expense)			10,795				19,345				(15,913)
Income tax benefit (expense)			1,442				(7,790)				(999)
Income from real estate joint venture			379				296				332
Net income attributable to noncontrolling interests			(2,775)				(5,275)				(1,671)
Dividends to MAA Series I preferred shareholders			(922)				(922)				(922)
Net income available for MAA common shareholders		$	109,880			$	184,719			$	46,271

 

RECONCILIATION OF EBITDA, EBITDAre AND ADJUSTED EBITDAre TO NET INCOME
Dollars in thousands		Three Months Ended								Twelve Months Ended
		March 31, 2022				March 31, 2021				March 31, 2022				December 31, 2021
Net income		$	113,577			$	48,864			$	615,415			$	550,702
Depreciation and amortization			133,738				131,503				535,668				533,433
Interest expense			39,121				39,672				156,330				156,881
Income tax (benefit) expense			(1,442)				999				11,196				13,637
EBITDA			284,994				221,038				1,318,609				1,254,653
Loss (gain) on sale of depreciable real estate assets			1				—				(220,427)				(220,428)
Adjustments to reflect the Company's share of      EBITDAre of unconsolidated affiliates			338				339				1,351				1,352
EBITDAre			285,333				221,377				1,099,533				1,035,577
(Gain) loss on embedded derivative in preferred      shares (1)			(11,896)				15,108				(22,444)				4,560
Gain on sale of non-depreciable real estate assets			(23)				—				(834)				(811)
Loss (gain) on investments, net of tax (1)(2)			8,077				(1,284)				(31,514)				(40,875)
Net casualty (gain) loss and other settlement      proceeds (3)			(7,712)				2,355				(8,543)				1,524
Loss on debt extinguishment (1)			—				37				13,354				13,391
Legal costs and settlements, net (1)			537				(16)				(1,614)				(2,167)
COVID-19 related costs (1)			337				310				1,328				1,301
Mark-to-market debt adjustment (4)			36				83				223				270
Adjusted EBITDAre		$	274,689			$	237,970			$	1,049,489			$	1,012,770

(1)	Included in Other non-operating (income) expense in the Consolidated Statements of Operations.
(2)	For the three months ended March 31, 2022, loss on investments are presented net of tax benefit of $2.2 million.  For the three months ended March, 31, 2021 and the twelve months ended March 31, 2022 and December 31, 2021, gain on investments are presented net of tax expense of $0.3 million, $8.3 million and $10.8 million, respectively.
(3)	For the three and twelve months ended March 31, 2022, MAA recognized a gain of $7.6 million from the receipt of insurance proceeds that exceeded its casualty losses related to winter storm Uri.  The gain was reflected in Other non-operating (income) expense in the Consolidated Statements of Operations. During the three months ended March 31, 2021 and twelve months ended December 31, 2021 and March 31, 2022, MAA incurred casualty losses of  $16.9 million, $26.0 million and $9.1 million, respectively, related to winter storm Uri (primarily building repairs, landscaping and asset write-offs). The majority of the casualty losses have been reimbursed through insurance coverage.  A receivable was recognized in Other non-operating (income) expense for the recorded losses that MAA expected to recover. Additional costs related to the storm that were not expected to be recovered through insurance coverage, along with other unrelated casualty losses and recoveries, are also reflected in this adjustment. The adjustment is primarily included in Other non-operating (income) expense.
(4)	Included in Interest expense in the Consolidated Statements of Operations.

 

 

RECONCILIATION OF NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES PAYABLE
Dollars in thousands
		March 31, 2022				December 31, 2021
Unsecured notes payable		$	4,172,513			$	4,151,375
Secured notes payable			364,992				365,315
Total debt			4,537,505				4,516,690
Cash and cash equivalents			(60,371)				(54,302)
1031(b) exchange proceeds included in Restricted cash (1)			—				(64,452)
Net Debt		$	4,477,134			$	4,397,936
(1)   Included in Restricted cash in the Consolidated Balance Sheets.
RECONCILIATION OF GROSS ASSETS TO TOTAL ASSETS
Dollars in thousands
		March 31, 2022				December 31, 2021
Total assets		$	11,199,075			$	11,285,182
Accumulated depreciation			3,981,778				3,848,161
Gross Assets		$	15,180,853			$	15,133,343
RECONCILIATION OF GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET
Dollars in thousands
		March 31, 2022				December 31, 2021
Real estate assets, net		$	10,873,486			$	10,898,903
Accumulated depreciation			3,981,778				3,848,161
Cash and cash equivalents			60,371				54,302
1031(b) exchange proceeds included in Restricted cash (1)			—				64,452
Gross Real Estate Assets		$	14,915,635			$	14,865,818
(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, net casualty gain or loss, gain or loss on debt extinguishment, legal costs and settlements, net, COVID-19 related costs and mark-to-market debt adjustments. 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. 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 casualty gain or loss, gain or loss on debt extinguishment, legal costs and settlements, net, COVID-19 related costs and mark-to-market debt adjustments. 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 asset sales and plus adjustments to reflect MAA's share of EBITDAre of unconsolidated affiliates. 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 and capital expenditures relating to significant casualty losses that management expects to be reimbursed by insurance proceeds. 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 total 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 document, represents FFO attributable to the Company. 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 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 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 after 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 identified for disposition, communities that have undergone 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 after 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 undergone a significant casualty loss are also excluded from the Same Store Portfolio.

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/maa-reports-first-quarter-2022-results-301534667.html

SOURCE MAA

FAQ

What were MAA's earnings per share for Q1 2022?

MAA reported earnings per share of $0.95 for the first quarter of 2022.

How much did MAA's FFO per share increase in Q1 2022?

The FFO per share rose to $2.06 for Q1 2022, up from $1.50 in Q1 2021.

What is MAA's guidance for Core FFO per share in Q2 2022?

MAA expects Core FFO for Q2 2022 to be in the range of $1.89 to $2.05 per share.

How much did MAA's Same Store Portfolio revenues grow in Q1 2022?

The Same Store Portfolio revenues grew by 12.2% in the first quarter of 2022.

What is the average occupancy rate for MAA's Same Store Portfolio?

The average occupancy rate for MAA's Same Store Portfolio was 95.9% as of March 31, 2022.

What is MAA's dividend history for Q1 2022?

MAA declared its 113th consecutive quarterly common dividend, amounting to $128.9 million.