Mid-America Apartment (MAA) Tops Q2 FFO Estimates, Ups '22 View

Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported second-quarter 2022 core funds from operations (FFO) per share of $2.02, surpassing the Zacks Consensus Estimate of $2.00. The reported number improved 19.5% year over year.

This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA also increased its outlook for core FFO growth for the year.

Rental and other property revenues were $495 million, outpacing the Zacks Consensus Estimate of $491.4 million. The reported figure was 13.3% higher than the previous-year quarter’s $436.9 million.

Per Eric Bolton, the chairman and chief executive officer of MAA, "Leasing conditions across our Sunbelt markets remain robust as strong job growth, positive migration trends and the higher cost of single-family homeownership fuels a growing demand for apartment housing.”

Quarter in Detail

The same-store portfolio’s revenues grew 13.7% on a year-over-year basis due to a rise of 14.3% in the average effective rent per unit. However, the average physical occupancy for the same-store portfolio in the second quarter declined 70 basis points year over year to 95.7%. The resident turnover for the same period was 44.9%. However, same-store portfolio operating expenses were up 8.1%.

In the second quarter, lease pricing in MAA’s same-store portfolio for both new and renewing leases compared with the prior lease grew 17.2% on a blended basis. The same-store net operating income (NOI) reflected year-over-year growth of 17.1%.

Balance Sheet Position

MAA exited the second quarter of 2022 with cash and cash equivalents of $60.6 million, up from the $54.3 million reported at the end of 2021. As of Jun 30, 2022, MAA had $1.1 billion in combined cash and capacity available under its unsecured revolving credit facility.

As of the same date, the total debt outstanding was $4.5 billion. Net debt to adjusted EBITDA was reported at 3.97X in the quarter, while total debt average years to maturity was 8.2 years.

As of Jun 30, 2022, unencumbered NOI was 95.1% of the total NOI.

In the second quarter of 2022, Fitch Ratings upgraded MAA's long-term debt rating to A- with a Stable outlook.

Portfolio Activity

In the second quarter, MAA redeveloped 1,844 units.

As of Jun 30, 2022, MAA had five communities under development, with a total projected cost of $444 million and an estimated $213.6 million remaining to be funded. The projected average stabilized NOI yield was 5.7% for the same.

In June 2022, MAA closed the disposition of two multifamily communities in the Fort Worth, TX, market aggregating 730 units, receiving combined gross proceeds of approximately $167 million.

In the second quarter, MAA closed the acquisition of a four-acre land parcel in the Orlando, FL, market for roughly $12 million for future development.

Guidance

MAA revised its 2022 guidance.

This residential REIT estimates 2022 core FFO per share in the range of $8.13-$8.37, with a midpoint of $8.25, revised upward from the prior estimation in the band of $7.92-$8.24, with a midpoint of $8.08. The Zacks Consensus Estimate for the same is currently pegged at $8.22.

For 2022, management anticipates same-store property revenue growth of 11.5-12.5%, up from the previous range of 10.0-12.0%. The same-store property operating expense growth is projected between 6.5% and 7.5%, up from the prior range of 5.5-6.5%. The same-store NOI growth is anticipated between 14.0% and 16.0%, revised upward from the earlier range of 12.5-14.5%.

MAA projects third-quarter 2022 core FFO per share in the band of $1.99-$2.15, with $2.07 at the midpoint. The Zacks Consensus Estimate for the same is currently pegged at $2.06.

MAA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MidAmerica Apartment Communities, Inc. Price, Consensus and EPS Surprise

MidAmerica Apartment Communities, Inc. Price, Consensus and EPS Surprise

MidAmerica Apartment Communities, Inc. price-consensus-eps-surprise-chart | MidAmerica Apartment Communities, Inc. Quote

Performance of Other Residential REITs

Equity Residential’s EQR second-quarter 2022 normalized FFO per share of 89 cents outpaced the Zacks Consensus Estimate of 85 cents. The rental income of $687 million also exceeded the consensus mark of $670.6 million. Results reflected strong physical occupancy and sustained growth in pricing power. Equity Residential also benefited from the favorable real estate tax and payroll expenses. EQR raised its full-year guidance for same-store revenues, NOI and normalized FFO per share. Management noted that robust demand and continued strong cost controls have driven guidance improvements.

Essex Property Trust Inc. ESS reported second-quarter 2022 core FFO per share of $3.68, beating the Zacks Consensus Estimate of $3.55. The figure also surpassed the high-end of the company’s guidance range. The figure also improved 21.1% from the year-ago quarter. The results of Essex Property Trust highlighted better-than-expected operating results and lower property taxes in Washington. Following better-than-expected second-quarter results, ESS also raised the full-year 2022 guidance for the third time this year.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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