MID-AMERICA APARTMENT COMMUNITY, INC.

(MAA)
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MAA REPORTS FIRST QUARTER 2022 RESULTS

04/27/2022 | 04:16pm EDT

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.

 

Cision
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SOURCE MAA


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