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Mid-America Apartment (MAA) Tops Q3 FFO Estimates, Ups '22 View

Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported third-quarter 2022 core funds from operations (FFO) per share of $2.19, surpassing the Zacks Consensus Estimate of $2.09. The reported number improved by 23% 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 increased its outlook for core FFO growth for the year.

Rental and other property revenues were $520.8 million, outpacing the Zacks Consensus Estimate of $506.2 million. The reported figure was 15.1% higher than the previous-year quarter’s $452.6 million.

Per Eric Bolton, the chairman and chief executive officer of MAA, “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.”

Quarter in Detail

The same-store portfolio’s revenues grew 14.6% on a year-over-year basis due to a rise of 16.7% in the average effective rent per unit.

However, the average physical occupancy for the same-store portfolio in the third quarter declined by 60 basis points year over year to 95.8%. The resident turnover for the same period was 45.6%. However, same-store portfolio operating expenses were up 10.1%.

In the third quarter, lease pricing in MAA’s same-store portfolio for both new and renewing leases compared with the prior lease grew 13.9% on a blended basis. The same-store net operating income (NOI) reflected year-over-year growth of 17.4%.

Balance Sheet Position

MAA exited the third quarter of 2022 with cash and cash equivalents of nearly $39 million, down from the $54.3 million reported at the end of 2021. As of Sep 30, 2022, MAA had $1.2 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 EBITDAre was reported at 3.97X in the quarter, while total debt average years to maturity was 8 years.

As of Sep 30, 2022, unencumbered NOI was 95.2% of the total NOI.

During the quarter, Standard & Poor’s Ratings Services upgraded MAA’s long-term debt rating to A- with a Stable outlook.

Portfolio Activity

In the third quarter, MAA redeveloped 2,305 units, while Smart Home technology installations were completed in 652 units.

As of Sep 30, 2022, MAA had five communities under development, with a total projected cost of $444 million and an estimated $177.9 million remaining to be funded. The projected average stabilized NOI yield was 5.7% for the same.

In the third quarter, MAA acquired a stabilized 196-unit multifamily community in the Tampa, FL market for $73.0 million. Also, it acquired a 344-unit multifamily community in the Charlotte, NC market for $140.0 million.

MAA also acquired a six-acre land parcel in the Denver, CO market for around $23 million. During the quarter, MAA closed the disposition of a three-acre land parcel in the Huntsville, AL market.

Guidance

MAA revised its 2022 guidance.

This residential REIT estimates 2022 core FFO per share in the range of $8.37-$8.53, with a midpoint of $8.45, revised upward from the prior estimation in the band of $8.13-$8.37, with a midpoint of $8.25. The Zacks Consensus Estimate for the same is currently pegged at $8.29.

For 2022, management anticipates same-store property revenue growth of 13.0-14.0%, up from the previous range of 11.5-12.5%. The same-store property operating expense growth is projected between 7.0% and 7.5% compared with the prior range of 6.5-7.5%. The same-store NOI growth is anticipated between 16.0% and 18.0%, revised upward from the earlier range of 14.0-16.0%.

MAA projects fourth-quarter 2022 core FFO per share in the band of $2.19-$2.35, with $2.27 at the midpoint. The Zacks Consensus Estimate for the same is currently pegged at $2.20.

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 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 third-quarter 2022 normalized FFO per share of 92 cents outpaced the Zacks Consensus Estimate of 91 cents. Rental income of $695.1 million also exceeded the consensus mark of $694.1 million.

On a year-over-year basis, the FFO per share grew 19.5% from 77 cents, while the rental income increased 11.5%. Results reflected healthy demand during the primary leasing season. Equity Residential benefited from the favorable real estate tax and payroll expenses.

Essex Property Trust Inc. ESS reported third-quarter 2022 core FFO per share of $3.69, beating the Zacks Consensus Estimate of $3.68. The figure also surpassed the midpoint of the company’s guidance range by 4 cents and improved by 18.3% from the year-ago quarter.

Essex Property Trust’s results reflected improving same-property NOI in the quarter. This residential REIT raised the full-year 2022 core FFO per share guidance.

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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