MAA REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS - 07.02.24 - News

GERMANTOWN, Tenn., Feb. 7, 2024

Fourth Quarter 2023 Operating Results

Three months ended
December 31,

Year ended December 31,

2023

2022

ARIVA.DE Börsen-Geflüster

Kurse

Mid American Apartment

131,38 $

+1,66%

2023

2022

Earnings per common share - diluted

$

1.37

$

1.67

$

4.71

$

5.48

Funds from operations (FFO) per Share - diluted

$

2.53

$

2.12

$

9.39

$

8.20

Core FFO per Share - diluted

$

2.32

$

2.32

$

9.17

$

8.50

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, "Core FFO performance for the fourth quarter was ahead of expectations. Stable employment conditions, continued positive migration trends, and historically low resident move-outs continue to drive solid demand. As expected, the delivery of new apartment supply is currently impacting rent growth performance and will likely persist through the summer leasing season. We expect that the volume of new apartment deliveries will start to decline in late 2024, setting the stage for improved rent growth. We are encouraged by the stable demand trends and are optimistic about the longer-term outlook for rent growth and higher values. Compared to a year ago, we start 2024 with more certainty about the direction of interest rates, clear evidence that new supply trends are set to moderate, and a healthy demand for apartment housing across our markets. We are well positioned to continue working through the current new supply pipeline, as well as pursue new growth opportunities that are emerging."

Highlights

During the fourth quarter of 2023, MAA's Same Store Portfolio produced growth in revenues of 2.1%, as compared to the same period in the prior year, with Average Effective Rent per Unit up 2.2% while capturing strong Average Physical Occupancy of 95.5%.
During the fourth quarter of 2023, MAA's Same Store Portfolio property operating expense and Net Operating Income (NOI) increased by 5.9% and 0.1%, respectively, as compared to the same period in the prior year.
As of December 31, 2023, resident turnover remained low at 44.9% on a trailing twelve month basis driven by historically low levels of move-outs associated with buying single family-homes.
During the fourth quarter of 2023, MAA acquired two newly built multifamily apartment communities in initial lease-up, a 323-unit property located in the Phoenix, Arizona market and a 352-unit property located in the Charlotte, North Carolina market.
As of the end of the fourth quarter of 2023, MAA had five communities under development, representing 1,970 units once complete, with a projected total cost of $647.3 million and an estimated $255.6 million remaining to be funded.
As of the end of the fourth quarter of 2023, MAA had one recently completed development community and the two communities acquired during the fourth quarter of 2023 in lease-up. Two communities are expected to stabilize in the third quarter of 2024, and one is expected to stabilize in the fourth quarter of 2024.
During the fourth quarter of 2023, MAA completed the lease-up of MAA Windmill Hill, located in the Austin, TX market.
MAA completed the redevelopment of 1,394 apartment homes during the fourth quarter of 2023, capturing average rental rate increases of approximately 6% above non-renovated units.
Subsequent to the end of the fourth quarter of 2023, MAA's operating partnership, Mid-America Apartments, L.P. (referred to as MAALP or the Operating Partnership), issued $350.0 million of 10-year unsecured senior notes at a coupon of 5.000% and an issue price of 99.019%.
MAA's balance sheet remains strong with a Net Debt/Adjusted EBITDAre ratio of 3.6x and $791.8 million of combined cash and available capacity under MAALP's unsecured revolving credit facility as of December 31, 2023.

Same Store Portfolio Operating Results
To ensure comparable reporting with prior periods, the Same Store Portfolio includes properties that were owned by MAA and stabilized at the beginning of the previous year. Same Store Portfolio results for the three and twelve months ended December 31, 2023 as compared to the same period in the prior year are summarized below:

	Three months ended December 31, 2023 vs. 2022				Twelve months ended December 31, 2023 vs. 2022
	Revenues	Expenses	NOI	Average Effective Rent per Unit	Revenues	Expenses	NOI	Average Effective Rent per Unit
Same Store Operating Growth	2.1 %	5.9 %	0.1 %	2.2 %	6.2 %	6.5 %	6.0 %	7.0 %

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 twelve months ended December 31, 2023, which were in line with prior guidance expectations, are summarized below:

	Three months ended December 31, 2023			Twelve months ended December 31, 2023			December 31, 2023
	Average Effective Rent per Unit		Average Physical Occupancy	Average Effective Rent per Unit		Average Physical Occupancy	Resident Turnover
Same Store Operating Statistics	$	1,685	95.5 %	$	1,676	95.6 %	44.9 %

Same Store Portfolio lease pricing for new leases that were effective during the fourth quarter of 2023 was impacted by new supply pressures and typical fourth quarter seasonal factors. While new lease pricing declined 7.0% during the fourth quarter of 2023, the increase in renewal lease pricing remained steady, increasing 4.8% which produced a decrease of 1.6% for both new and renewing lease pricing on a blended basis. As expected, new lease pricing in January 2024 improved and renewal lease pricing held consistent, resulting in a decrease of 0.3% for both new and renewing lease pricing on a blended basis for leases that were effective during January 2024.

Same Store Portfolio lease pricing for both new and renewing leases effective during the year ended December 31, 2023, on a blended basis, increased 2.1% as compared to the prior lease, driven by a 6.1% increase for renewing leases, partially offset by a 1.9% decrease for leases to new move-in residents.

Acquisition Activity
In October 2023, MAA acquired a 323-unit multifamily community currently in lease-up and located in the Phoenix, Arizona market for approximately $103 million. In November 2023, MAA acquired a 352-unit multifamily community currently in lease-up and located in the Charlotte, North Carolina market for approximately $107 million.

During the fourth quarter of 2023, MAA also acquired a half-acre land parcel that is part of our current multifamily development property, MAA Nixie, in the Raleigh, North Carolina market.

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

Units as of

Development Costs as of

Expected Project

Total

December 31, 2023

Completions By Year

Development

Expected

Spend

Expected

Projects ⁽¹⁾

Total

Delivered

Leased

Total

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