GERMANTOWN, Tenn., Feb. 1, 2023 /PRNewswire/ -- Mid-America Apartment Communities, Inc., or MAA (NYSE: MAA), today announced operating results for the quarter ended December 31, 2022.

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 closed 2022 with better than expected results and carry good momentum into the new year.  As the broader economy adjusts to a higher interest rate environment, we believe that MAA is well positioned to capture another year of solid performance from our existing portfolio.  Supported by a strong balance sheet, the company is also in position to capture new growth opportunities that we believe are likely to emerge."

Highlights

• During the fourth quarter of 2022, MAA's Same Store Portfolio produced increases in property revenues, operating expenses and Net Operating Income (NOI) of 13.6%, 7.9% and 16.8%, respectively, as compared to the same period in the prior year.
• During the fourth quarter of 2022, MAA closed on the disposition of a 396-unit multifamily community in Maryland and a 288-unit multifamily community in the Austin, Texas market for combined gross proceeds of $157.7 million generating a gain on sale of depreciable real estate assets of $82.8 million.
• As of the end of the fourth quarter of 2022, MAA had six communities under development, representing 2,310 units once complete, with a projected total cost of $728.7 million and an estimated $437.0 million remaining to be funded.
• During the fourth quarter of 2022, MAA completed the construction of MAA Windmill Hill, a multifamily development community located in the Austin, Texas market and commenced development of multifamily communities MAA Breakwater located in the Tampa, Florida market and MAA Nixie located in the Raleigh/Durham, North Carolina market.
• During the fourth quarter of 2022, MAA closed on the pre-purchase of a multifamily community located in the Charlotte, North Carolina market with development expected to begin in the second half of 2023.
• As of the end of the fourth quarter of 2022, MAA had a recently completed development community and a recently acquired community in lease-up. One community is expected to stabilize in the second quarter of 2023 and one in the fourth quarter of 2023.
• During the fourth quarter of 2022, MAA completed the lease-up of MAA Westglenn, located in the Denver, Colorado market, MAA Park Point, located in the Houston, Texas market and MAA Robinson located in the Orlando, Florida market.
• MAA completed the redevelopment of 1,327 apartment homes during the fourth quarter of 2022, capturing average rental rate increases of approximately 10% above non-renovated units.
• MAA's balance sheet remains strong with a historically low Net Debt/Adjusted EBITDAre ratio of 3.71x and $1.3 billion of combined cash and available capacity under MAALP's unsecured revolving credit facility as of December 31, 2022.
• Subsequent to the end of the fourth quarter of 2022, MAA settled its forward sale agreements with respect to a total of 1.1 million shares of its common stock for net proceeds of approximately $204 million.

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

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, 2022 are summarized below:

Same Store Portfolio lease pricing for leases effective during the fourth quarter of 2022, as compared to the prior lease, increased 2.2% for leases to new move-in residents, reflecting typically slower seasonal leasing volumes, and increased 10.1% for renewing leases, which produced an increase of 5.7% for both new and renewing leases on a blended basis. The rent-to-resident-income relationship for new leases signed during the fourth quarter of 2022 remained consistent with recent trends in the range of 22%.

Same Store Portfolio lease pricing for leases effective during the year ended December 31, 2022, as compared to the prior lease, increased 13.0% for leases to new move-in residents and increased 14.8% for renewing leases, which produced an increase of 13.9% for both new and renewing leases on a blended basis. 

Acquisition and Disposition Activity
During the fourth quarter of 2022, MAA closed on the pre-purchase of a multifamily community, Alta 10th, located in the Charlotte, North Carolina market. The community will be developed through a joint venture with a local developer.  Approximately $10 million has been funded as of December 31, 2022, primarily related to land, with development expected to begin in the second half of 2023.  During the fourth quarter of 2022, MAA also acquired a six acre land parcel in the Raleigh, North Carolina market for approximately $9 million and started development of MAA Nixie on the property.  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 fourth quarter of 2022, MAA closed on the disposition of a 396-unit multifamily community in Maryland and a 288-unit multifamily community in the Austin, Texas market for combined gross proceeds of $157.7 million, resulting in a combined gain on the sale of depreciable real estate assets of $82.8 million.  

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

The expected average stabilized NOI yield on these communities is 5.6%. During the fourth quarter of 2022, MAA funded $67.0 million of costs for current and planned projects, including predevelopment activities.

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

Property Redevelopment and Repositioning Activity
A summary of MAA's interior redevelopment program and Smart Home technology initiative as of the end of the fourth quarter of 2022 is set forth below:

As of December 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 71,000 units across its apartment community portfolio since the initiative began during the first quarter of 2019.

During the fourth 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 year ended December 31, 2022, work continued on properties selected for this program in 2021. For the year ended December 31, 2022, MAA spent $19.3 million on this program capturing yields on cost averaging approximately 17% between completed projects and those current projects where properties have begun repricing units to higher rents. 

Capital Expenditures
A summary of MAA's capital expenditures and Funds Available for Distribution (FAD) for the three and twelve months ended December 31, 2022 and 2021 is set forth below (dollars in millions, except per Share data):

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 December 31, 2022, MAA had $1.3 billion of combined cash and available capacity under MAALP's unsecured revolving credit facility.

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

In January 2023, MAA physically settled its two forward sale agreements with respect to a total of 1.1 million shares of its common stock  and received net proceeds of approximately $204 million.

Balance sheet highlights as of December 31, 2022 are summarized below (dollars in billions):

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.

ESG
As of the end of 2022, MAA's corporate initiatives have led to significant progress in key social and environmental performance areas. We have achieved a 21.9% reduction in energy use intensity and a 30.8% reduction in GHG emissions intensity from our 2018 baseline, meeting our goal seven years before our original 2028 target, and we believe we are on track to achieve the same in indoor water use intensity. Additionally, we have updated 35% of our portfolio to maximize energy efficiency and now have 25 green-certified communities, with more in the pipeline.

We also have a number of community engagement efforts underway and have reported our progress through our annual Corporate Sustainability Report, CDP disclosure, and GRESB assessment, the latter of which we have now improved year over year since our first submission in 2020. We will continue to focus on deepening engagement, establishing new targets, and building an integrated pathway for ESG, which is an integral component of our continued resiliency and creates a positive impact for our residents, associates, and investors.

116th Consecutive Quarterly Common Dividend Declared
MAA declared its 116th consecutive quarterly common dividend, which was paid on January 31, 2023 to holders of record on January 13, 2023. The current annual dividend rate is $5.60 per common share, an increase of 12% from the immediately prior rate. 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.

2023 Earnings and Same Store Portfolio Guidance
MAA is providing initial 2023 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 2023. MAA expects to update its 2023 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 first quarter of 2023 to be in the range of $2.14 to $2.30 per Share, or $2.22 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 fourth quarter results on February 2, 2023, 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 December 31, 2022, MAA had ownership interest in 101,986 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.