MAA REPORTS THIRD QUARTER 2022 RESULTS

Rhea-AI Summary

Mid-America Apartment Communities, or MAA (NYSE: MAA), reported robust operating results for Q3 2022, with diluted earnings per share at $1.05 compared to $0.73 in 2021. Funds From Operations (FFO) per share rose to $2.19, from $1.85 last year. The Same Store Portfolio showed revenue growth of 14.6% and Net Operating Income (NOI) growth of 17.4%. MAA expanded its development pipeline and increased its revolving credit facility to $1.25 billion. The company declared its 115th consecutive quarterly dividend of $5.00 per share.

Positive

• Q3 2022 diluted EPS increased to $1.05 from $0.73 in 2021.
• FFO per share rose to $2.19, up from $1.85 year-over-year.
• Same Store Portfolio revenue grew by 14.6% and NOI increased by 17.4%.
• Acquired two communities and a land parcel for future development.
• Increased revolving credit facility to $1.25 billion.
• Declared 115th consecutive quarterly dividend at $5.00 per share.

Negative

• Operating expenses increased by 10.1%, affecting overall profitability.
• Storm-related expenses of $1.6 million are excluded from Same Store metrics.

GERMANTOWN, Tenn., Oct. 26, 2022 /PRNewswire/ -- Mid-America Apartment Communities, Inc., or MAA (NYSE: MAA), today announced operating results for the quarter ended September 30, 2022.

Third Quarter 2022 Operating Results		Three months ended September 30,								Nine months ended September 30,
		2022				2021				2022				2021
Earnings per common share - diluted		$	1.05			$	0.73			$	3.82			$	3.01
Funds from operations (FFO) per Share - diluted		$	2.19			$	1.85			$	6.08			$	5.19
Core FFO per Share - diluted		$	2.19			$	1.78			$	6.18			$	5.11

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, "We continue to see strong demand for apartment housing across our Sunbelt markets as steady growth in jobs and wages, along with positive new household formations and migration trends across our markets, fuels a growing need for housing.  Our new development pipeline continues to expand as we work to respond to this growing demand. As evidenced by affordable rent-to-income ratios, strong rent payment performance, low resident turnover and strong occupancy, MAA is well-positioned as we head into the new calendar year."

Highlights

• During the third quarter of 2022, MAA's Same Store Portfolio produced increases in property revenues, operating expenses and Net Operating Income (NOI) of 14.6%, 10.1% and 17.4%, respectively, as compared to the same period in the prior year.
• During the third quarter of 2022, MAA acquired two recently completed communities, a 196-unit multifamily community located in the Tampa, Florida market and a 344-unit multifamily community located in the Charlotte, North Carolina market, as well as a six acre land parcel in the Denver, Colorado market for future development expected to begin in late 2023.
• Subsequent to the end of the third quarter of 2022, MAA closed on the disposition of a 396-unit multifamily community in Maryland for gross proceeds of $103.5 million.
• As of the end of the third quarter of 2022, MAA had five communities under development, representing 1,759 units once complete, with a projected total cost of $444.0 million and an estimated $177.9 million remaining to be funded. Subsequent to the end of the third quarter of 2022, MAA began construction of a 495-unit multifamily community in the Tampa, Florida market with projected total costs of $197 million.
• As of the end of the third quarter of 2022, MAA had three recently completed development communities and the recently acquired Charlotte, North Carolina community in initial lease-up. Two communities are expected to stabilize in the fourth quarter of 2022 and two in the first quarter of 2023. 
• During the third quarter of 2022, MAA completed the initial lease-up of Sand Lake, located in the Orlando, Florida market.
• MAA completed the redevelopment of 2,305 apartment homes during the third quarter of 2022, capturing average rental rate increases of approximately 10% above non-renovated units.  
• During the third quarter of 2022, Mid-America Apartments, L.P. (MAALP), MAA's operating partnership, amended its unsecured revolving credit facility increasing borrowing capacity to $1.25 billion with an option to expand to $2.0 billion and amended its commercial paper program to increase the maximum aggregate principal amount of notes that may be outstanding under the program to $625.0 million.
• During the third quarter of 2022, Standard & Poor's Ratings Services upgraded MAA's long-term debt rating to A- with a Stable outlook.

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, 2022 as compared to the same periods in the prior year are summarized below:

		Three months ended September 30, 2022 vs. 2021								Nine months ended September 30, 2022 vs. 2021
		Revenues		Expenses (1)		NOI		Average Effective Rent per Unit		Revenues		Expenses (1)		NOI		Average Effective Rent per Unit
Same Store Operating Growth		14.6 %		10.1 %		17.4 %		16.7 %		13.5 %		7.6 %		17.2 %		14.5 %

(1)	Excludes $1.6 million in storm-related expenses related to Hurricane Ian that are recorded in Non-Same Store operating expenses.

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, 2022 are summarized below:

		Three months ended September 30, 2022						Nine months ended September 30, 2022						September 30, 2022
		Average Effective Rent per Unit				Average Physical Occupancy		Average Effective Rent per Unit				Average Physical Occupancy		Resident Turnover
Same Store Operating Statistics		$	1,614			95.8 %		$	1,537			95.8 %		45.6 %

Same Store Portfolio lease pricing for leases effective during the third quarter of 2022, as compared to the prior lease, increased 13.7% for leases to new move-in residents and increased 14.0% for renewing leases, which produced an increase of 13.9% for both new and renewing leases on a blended basis. The rent-to-resident-income relationship for new leases signed during the third quarter of 2022 remained consistent with recent trends in the range of 22%.

Same Store Portfolio lease pricing for leases effective during the nine months ended September 30, 2022, as compared to the prior lease, increased 15.7% for both leases to new move-in residents and renewing leases. 

Acquisition and Disposition Activity
In July 2022, MAA acquired a stabilized 196-unit multifamily community located in the Tampa, Florida market for $73.0 million. In September 2022, MAA acquired a 344-unit multifamily community located in the Charlotte, North Carolina market for $140.0 million and expects the property to stabilize during the first quarter of 2023.

During the third quarter of 2022, MAA also acquired a six acre land parcel in the Denver, Colorado market for approximately $23 million.  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.

During the third quarter of 2022, MAA closed on the disposition of a three acre land parcel located in the Huntsville, Alabama market. 

In October 2022, MAA closed on the disposition of a 396-unit multifamily community in Maryland. MAA received gross proceeds of $103.5 million.

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

				Units as of												Development Costs as of												Expected Project
Total				September 30, 2022												September 30, 2022												Completions By Year
Development																Expected				Spend				Expected
Projects				Total				Delivered				Leased				Total				to Date				Remaining				2022				2023				2024
	5				1,759				323				213			$	444,000			$	266,127			$	177,873				1				3				1

The expected average stabilized NOI yield on these communities is 5.7%. During the third quarter of 2022, MAA funded $62.6 million of costs for current and planned projects, including predevelopment activities related to land parcels located in the Denver, Colorado market, the Tampa, Florida market and the Orlando, Florida market.

A summary of the total units, cost and the average physical occupancy of MAA's lease-up communities as of the end of the third quarter of 2022 is set forth below (dollars in thousands):

Total				As of September 30, 2022												Expected Project Stabilizations By Year
Lease-Up				Total				Physical				Spend
Projects				Units				Occupancy				to Date				2022				2023
	4				1,327				89.5	%		$	372,930				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 third quarter of 2022 is set forth below:

		As of September 30, 2022
		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, 2022
Redevelopment			2,305				5,247			$	5,700			$	138			800 - 1,100
Smart Home			652				21,108			$	1,358			$	25		(1)	1,900 - 3,000

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

As of September 30, 2022, MAA had completed installation of the Smart Home technology (unit entry locks, mobile control of lights and thermostat and leak monitoring) in over 68,000 units across its apartment community portfolio since the initiative began during the first quarter of 2019.

During the third 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 nine months ended September 30, 2022, work continued on properties selected for this program in 2021. For the nine months ended September 30, 2022, MAA spent $13.1 million on this program.

Capital Expenditures
A summary of MAA's capital expenditures and Funds Available for Distribution (FAD) for the three and nine months ended September 30, 2022 and 2021 is set forth below (dollars in millions, except per Share data):

		Three months ended September 30,								Nine months ended September 30,
		2022				2021				2022				2021
Core FFO		$	259.5			$	211.3			$	733.5			$	605.5
Recurring capital expenditures			(38.7)				(26.4)				(84.3)				(61.8)
Core adjusted FFO (Core AFFO)			220.8				184.9				649.2				543.7
Redevelopment, revenue enhancing, commercial and other capital expenditures			(47.7)				(39.3)				(134.9)				(118.5)
FAD		$	173.1			$	145.6			$	514.3			$	425.2
Core FFO per Share - diluted		$	2.19			$	1.78			$	6.18			$	5.11
Core AFFO per Share - diluted		$	1.86			$	1.56			$	5.47			$	4.59

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, 2022, MAA had $1.2 billion of combined cash and available capacity under MAALP's unsecured revolving credit facility.

In July 2022, MAALP amended its unsecured revolving credit facility, increasing borrowing capacity to $1.25 billion with an option to expand to $2.0 billion. The amended facility has a maturity date of October 2026 with two six-month extension options, and bears interest at an adjusted Secured Overnight Financing Rate plus a spread based on an investment ratings grid, currently at 0.725%.

In September 2022, MAALP amended its unsecured commercial paper program, increasing the maximum aggregate principal amount of notes that may be outstanding from time to time under the program from $500.0 million to $625.0 million.

In September 2022, MAALP retired the remaining $125.0 million portion of the $250.0 million in aggregate principal amount of publicly issued unsecured senior notes due in December 2022. 

Dividends and distributions paid on shares of common stock and noncontrolling interests during the third quarter of 2022 were $148.3 million, as compared to $121.5 million for the same period in the prior year.

Balance sheet highlights as of September 30, 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
29.1 %		3.97x		$	4.5			3.4 %		97.2 %			8.0

(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, 2022.

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.

115th Consecutive Quarterly Common Dividend Declared
MAA declared its 115th consecutive quarterly common dividend, which will be paid on October 31, 2022 to holders of record on October 14, 2022. The current annual dividend rate is $5.00 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.

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. 

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		$5.65 to $5.89		$5.77			$5.59 to $5.75		$5.67
Core FFO per Share - diluted		$8.13 to $8.37		$8.25			$8.37 to $8.53		$8.45
Core AFFO per Share - diluted		$7.34 to $7.58		$7.46			$7.59 to $7.75		$7.67
MAA Same Store Portfolio:
Property revenue growth		11.5% to 12.5%		12.0 %			13.0% to 14.0%		13.5 %
Property operating expense growth		6.5% to 7.5%		7.0 %			7.0% to 7.5%		7.25 %
NOI growth		14.0% to 16.0%		15.0 %			16.0% to 18.0%		17.0 %

MAA expects Core FFO for the fourth quarter of 2022 to be in the range of $2.19 to $2.35 per Share, or $2.27 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.

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 27, 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 September 30, 2022, MAA had ownership interest in 101,769 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 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;
• 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, such as the COVID-19 pandemic, 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,
		2022				2021				2022				2021
Rental and other property revenues		$	520,783			$	452,575			$	1,491,901			$	1,314,507
Net income available for MAA common shareholders		$	121,389			$	83,557			$	441,049			$	345,384
Total NOI (1)		$	329,360			$	279,737			$	949,381			$	810,440
Earnings per common share: (2)
Basic		$	1.05			$	0.73			$	3.82			$	3.01
Diluted		$	1.05			$	0.73			$	3.82			$	3.01
Funds from operations per Share - diluted: (2)
FFO (1)		$	2.19			$	1.85			$	6.08			$	5.19
Core FFO (1)		$	2.19			$	1.78			$	6.18			$	5.11
Core AFFO (1)		$	1.86			$	1.56			$	5.47			$	4.59
Dividends declared per common share		$	1.2500			$	1.0250			$	3.5875			$	3.0750
Dividends/Core FFO (diluted) payout ratio			57.1	%			57.6	%			58.1	%			60.2	%
Dividends/Core AFFO (diluted) payout ratio			67.2	%			65.7	%			65.6	%			67.0	%
Consolidated interest expense		$	38,637			$	39,234			$	116,663			$	117,773
Mark-to-market debt adjustment			(19)				(67)				(90)				(234)
Debt discount and debt issuance cost amortization			(1,510)				(1,401)				(4,457)				(3,909)
Capitalized interest			2,253				2,448				6,146				7,781
Total interest incurred		$	39,361			$	40,214			$	118,262			$	121,411
Amortization of principal on notes payable		$	352			$	334			$	1,043			$	1,180

(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, 2022				December 31, 2021
Gross Assets (1)		$	15,543,024			$	15,133,343
Gross Real Estate Assets (1)		$	15,314,297			$	14,865,818
Total debt		$	4,519,151			$	4,516,690
Common shares and units outstanding			118,643,681				118,542,994
Share price		$	155.07			$	229.44
Book equity value		$	6,171,900			$	6,184,092
Market equity value		$	18,398,076			$	27,198,505
Net Debt/Adjusted EBITDAre (2)		3.97x				4.39x

(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,
		2022				2021				2022				2021
Revenues:
Rental and other property revenues		$	520,783			$	452,575			$	1,491,901			$	1,314,507
Expenses:
Operating expenses, excluding real estate taxes and insurance			117,390				106,412				328,514				304,124
Real estate taxes and insurance			74,033				66,426				214,006				199,943
Depreciation and amortization			136,879				134,611				404,761				397,938
Total property operating expenses			328,302				307,449				947,281				902,005
Property management expenses			16,262				13,831				48,429				40,522
General and administrative expenses			12,188				12,670				44,091				38,763
Interest expense			38,637				39,234				116,663				117,773
Loss (gain) on sale of depreciable real estate assets			1				313				(131,963)				(134,515)
Gain on sale of non-depreciable real estate assets			(431)				(170)				(809)				(202)
Other non-operating expense (income)			1,718				(10,344)				19,248				(14,557)
Income before income tax expense			124,106				89,592				448,961				364,718
Income tax benefit (expense)			1,256				(2,803)				5,750				(5,847)
Income from continuing operations before real estate joint venture activity			125,362				86,789				454,711				358,871
Income from real estate joint venture			341				258				1,129				915
Net income			125,703				87,047				455,840				359,786
Net income attributable to noncontrolling interests			3,392				2,568				12,025				11,636
Net income available for shareholders			122,311				84,479				443,815				348,150
Dividends to MAA Series I preferred shareholders			922				922				2,766				2,766
Net income available for MAA common shareholders		$	121,389			$	83,557			$	441,049			$	345,384
Earnings per common share - basic:
Net income available for common shareholders		$	1.05			$	0.73			$	3.82			$	3.01
Earnings per common share - diluted:
Net income available for common shareholders		$	1.05			$	0.73			$	3.82			$	3.01

 

SHARE AND UNIT DATA
Shares and units in thousands		Three months ended September 30,								Nine months ended September 30,
		2022				2021				2022				2021
Net Income Shares (1)
Weighted average common shares - basic			115,363				114,933				115,325				114,568
Effect of dilutive securities			205				296				267				305
Weighted average common shares - diluted			115,568				115,229				115,592				114,873
Funds From Operations Shares And Units
Weighted average common shares and units - basic			118,564				118,430				118,528				118,389
Weighted average common shares and units - diluted			118,643				118,540				118,626				118,511
Period End Shares And Units
Common shares at September 30,			115,448				115,138				115,448				115,138
Operating Partnership units at September 30,			3,196				3,403				3,196				3,403
Total common shares and units at September 30,			118,644				118,541				118,644				118,541

(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, 2022, expected to be filed with the SEC on or about October 27, 2022.

 

CONSOLIDATED BALANCE SHEETS
Dollars in thousands (Unaudited)
		September 30, 2022				December 31, 2021
Assets
Real estate assets:
Land		$	1,991,472			$	1,977,813
Buildings and improvements and other			12,787,864				12,454,439
Development and capital improvements in progress			297,416				247,970
			15,076,752				14,680,222
Less: Accumulated depreciation			(4,180,694)				(3,848,161)
			10,896,058				10,832,061
Undeveloped land			64,312				24,015
Investment in real estate joint venture			42,442				42,827
Real estate assets, net			11,002,812				10,898,903
Cash and cash equivalents			38,996				54,302
Restricted cash			14,558				76,296
Other assets			215,347				255,681
Assets held for sale			66,514				—
Total assets		$	11,338,227			$	11,285,182
Liabilities and equity
Liabilities:
Unsecured notes payable		$	4,154,820			$	4,151,375
Secured notes payable			364,331				365,315
Accrued expenses and other liabilities			647,176				584,400
Total liabilities			5,166,327				5,101,090
Redeemable common stock			20,145				30,185
Shareholders' equity:
Preferred stock			9				9
Common stock			1,152				1,151
Additional paid-in capital			7,196,504				7,230,956
Accumulated distributions in excess of net income			(1,219,599)				(1,255,807)
Accumulated other comprehensive loss			(10,321)				(11,132)
Total MAA shareholders' equity			5,967,745				5,965,177
Noncontrolling interests - Operating Partnership units			164,230				165,116
Total Company's shareholders' equity			6,131,975				6,130,293
Noncontrolling interests - consolidated real estate entities			19,780				23,614
Total equity			6,151,755				6,153,907
Total liabilities and equity		$	11,338,227			$	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 September 30,								Nine months ended September 30,
		2022				2021				2022				2021
Net income available for MAA common shareholders		$	121,389			$	83,557			$	441,049			$	345,384
Depreciation and amortization of real estate assets			135,023				132,803				399,366				392,586
Loss (gain) on sale of depreciable real estate assets			1				313				(131,963)				(134,515)
Depreciation and amortization of real estate assets of real estate joint venture			156				154				466				463
Net income attributable to noncontrolling interests			3,392				2,568				12,025				11,636
FFO attributable to the Company			259,961				219,395				720,943				615,554
Loss (gain) on embedded derivative in preferred shares (1)			425				(13,432)				10,364				(11,492)
Gain on sale of non-depreciable real estate assets			(431)				(170)				(809)				(202)
Loss (gain) on investments, net of tax (1)(2)			6,470				(7,985)				31,036				(14,231)
Net casualty (gain) loss and other settlement proceeds (3)			(7,046)				244				(29,171)				2,004
Loss on debt extinguishment (1)			47				13,354				47				13,391
Legal costs and settlements, net (1)			—				(700)				535				(716)
COVID-19 related costs (1)			60				492				502				911
Mark-to-market debt adjustment (4)			19				67				90				234
Core FFO			259,505				211,265				733,537				605,453
Recurring capital expenditures			(38,669)				(26,377)				(84,343)				(61,809)
Core AFFO			220,836				184,888				649,194				543,644
Redevelopment capital expenditures			(23,773)				(20,752)				(77,280)				(69,632)
Revenue enhancing capital expenditures			(16,172)				(11,402)				(39,100)				(29,488)
Commercial capital expenditures			(727)				(877)				(2,754)				(2,303)
Other capital expenditures (5)			(7,031)				(6,272)				(15,744)				(17,020)
FAD		$	173,133			$	145,585			$	514,316			$	425,201
Dividends and distributions paid		$	148,301			$	121,500			$	406,226			$	364,393
Weighted average common shares - diluted			115,568				115,229				115,592				114,873
FFO weighted average common shares and units - diluted			118,643				118,540				118,626				118,511
Earnings per common share - diluted:
Net income available for common shareholders		$	1.05			$	0.73			$	3.82			$	3.01
FFO per Share - diluted		$	2.19			$	1.85			$	6.08			$	5.19
Core FFO per Share - diluted		$	2.19			$	1.78			$	6.18			$	5.11
Core AFFO per Share - diluted		$	1.86			$	1.56			$	5.47			$	4.59

(1)	Included in Other non-operating expense (income) in the Consolidated Statements of Operations.
(2)	For the three and nine months ended September 30, 2022, loss (gain) on investments are presented net of tax benefit of $1.7 million and $8.3 million, respectively.  For the three and nine months ended September 30, 2021, loss (gain) on investments are presented net of tax expense of $2.1 million and $3.8 million, respectively.
(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. The gain is reflected in Other non-operating expense (income) in the Consolidated Statements of Operations. During the three and nine months ended September 30, 2021, MAA incurred casualty losses related to winter storm Uri. The majority of the casualty losses have been reimbursed through insurance coverage. A receivable was recognized in Other non-operating expense (income) 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 expense (income).
(4)	Included in Interest expense in the Consolidated Statements of Operations.
(5)	For the three and nine months ended September 30, 2021, $15.0 million and $28.3 million, respectively, of reconstruction-related capital expenditures relating to winter storm Uri are excluded from other capital expenditures. The majority of the storm costs have been reimbursed through insurance coverage.

 

RECONCILIATION OF NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON SHAREHOLDERS
Dollars in thousands		Three Months Ended												Nine Months Ended
		September 30, 2022				June 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Net Operating Income
Same Store NOI		$	315,616			$	300,238			$	268,882			$	910,496			$	777,147
Non-Same Store and Other NOI			13,744				13,125				10,855				38,885				33,293
Total NOI			329,360				313,363				279,737				949,381				810,440
Depreciation and amortization			(136,879)				(134,144)				(134,611)				(404,761)				(397,938)
Property management expenses			(16,262)				(15,630)				(13,831)				(48,429)				(40,522)
General and administrative expenses			(12,188)				(15,580)				(12,670)				(44,091)				(38,763)
Interest expense			(38,637)				(38,905)				(39,234)				(116,663)				(117,773)
(Loss) gain on sale of depreciable real estate assets			(1)				131,965				(313)				131,963				134,515
Gain on sale of non-depreciable real estate assets			431				355				170				809				202
Other non-operating (expense) income			(1,718)				(28,325)				10,344				(19,248)				14,557
Income tax benefit (expense)			1,256				3,052				(2,803)				5,750				(5,847)
Income from real estate joint venture			341				409				258				1,129				915
Net income attributable to noncontrolling interests			(3,392)				(5,858)				(2,568)				(12,025)				(11,636)
Dividends to MAA Series I preferred shareholders			(922)				(922)				(922)				(2,766)				(2,766)
Net income available for MAA common shareholders		$	121,389			$	209,780			$	83,557			$	441,049			$	345,384

 

RECONCILIATION OF EBITDA, EBITDAre AND ADJUSTED EBITDAre TO NET INCOME
Dollars in thousands		Three Months Ended								Twelve Months Ended
		September 30, 2022				September 30, 2021				September 30, 2022				December 31, 2021
Net income		$	125,703			$	87,047			$	646,756			$	550,702
Depreciation and amortization			136,879				134,611				540,256				533,433
Interest expense			38,637				39,234				155,771				156,881
Income tax (benefit) expense			(1,256)				2,803				2,040				13,637
EBITDA			299,963				263,695				1,344,823				1,254,653
Loss (gain) on sale of depreciable real estate assets			1				313				(217,876)				(220,428)
Adjustments to reflect the Company's share of EBITDAre of unconsolidated affiliates			341				337				1,357				1,352
EBITDAre			300,305				264,345				1,128,304				1,035,577
Loss (gain) on embedded derivative in preferred shares (1)			425				(13,432)				26,416				4,560
Gain on sale of non-depreciable real estate assets			(431)				(170)				(1,418)				(811)
Loss (gain) on investments (1)			8,197				(10,099)				5,576				(51,714)
Net casualty (gain) loss and other settlement proceeds (2)			(7,046)				244				(29,651)				1,524
Loss on debt extinguishment (1)			47				13,354				47				13,391
Legal costs and settlements, net (1)			—				(700)				(916)				(2,167)
COVID-19 related costs (1)			60				492				892				1,301
Adjusted EBITDAre		$	301,557			$	254,034			$	1,129,250			$	1,001,661

(1)	Included in Other non-operating expense (income) in the Consolidated Statements of Operations.
(2)	For the three and twelve months ended September 30, 2022, MAA recognized a gain of $7.2 million and $27.6 million from the receipt of insurance proceeds that exceeded its casualty losses related to winter storm Uri.  The gain is reflected in Other non-operating expense (income) in the Consolidated Statements of Operations. During the three months ended September 30, 2021 and the twelve months ended December 31, 2021, MAA incurred casualty losses related to winter storm Uri. The majority of the casualty losses have been reimbursed through insurance coverage.  A receivable was recognized in Other non-operating expense (income) 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 expense (income).

 

RECONCILIATION OF NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES PAYABLE
Dollars in thousands
		September 30, 2022				December 31, 2021
Unsecured notes payable		$	4,154,820			$	4,151,375
Secured notes payable			364,331				365,315
Total debt			4,519,151				4,516,690
Cash and cash equivalents			(38,996)				(54,302)
1031(b) exchange proceeds included in Restricted cash (1)			(1,178)				(64,452)
Net Debt		$	4,478,977			$	4,397,936

(1)	Included in Restricted cash in the Consolidated Balance Sheets.

 

RECONCILIATION OF GROSS ASSETS TO TOTAL ASSETS
Dollars in thousands
		September 30, 2022				December 31, 2021
Total assets		$	11,338,227			$	11,285,182
Accumulated depreciation			4,180,694				3,848,161
Accumulated depreciation for Assets held for sale (1)			24,103				—
Gross Assets		$	15,543,024			$	15,133,343

(1)	Included in Assets held for sale on the Consolidated Balance Sheets.

 

RECONCILIATION OF GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET
Dollars in thousands
		September 30, 2022				December 31, 2021
Real estate assets, net		$	11,002,812			$	10,898,903
Accumulated depreciation			4,180,694				3,848,161
Assets held for sale, net			66,514				—
Accumulated depreciation for Assets held for sale (1)			24,103				—
Cash and cash equivalents			38,996				54,302
1031(b) exchange proceeds included in Restricted cash (2)			1,178				64,452
Gross Real Estate Assets		$	15,314,297			$	14,865,818

(1)	Included in Assets held for sale on the Consolidated Balance Sheets.
(2)	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 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. 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 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 and Accumulated depreciation for Assets held for sale. 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.

Gross Real Estate Assets

Gross Real Estate Assets represents Real estate assets, net plus Accumulated depreciation, Assets held for sale, net plus Accumulated depreciation for Assets held for sale, 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 Hurricane Ian. 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 Hurricane Ian. 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.

 

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SOURCE MAA

FAQ

What were MAA's Q3 2022 earnings per share?

MAA reported Q3 2022 diluted earnings per share of $1.05.

How much did MAA's FFO per share increase in Q3 2022?

MAA's Funds From Operations (FFO) per share increased to $2.19, up from $1.85 in Q3 2021.

What is MAA's Same Store Portfolio revenue growth for Q3 2022?

The Same Store Portfolio achieved a revenue growth of 14.6% in Q3 2022.

How much was MAA's revolving credit facility increased to?

MAA increased its revolving credit facility to $1.25 billion.

What is the current annual dividend rate for MAA?

MAA declared an annual dividend rate of $5.00 per common share.