GERMANTOWN, Tenn., July 31, 2024 /PRNewswire/ -- Mid-America Apartment Communities, Inc., or MAA (NYSE:MAA), today announced operating results for the quarter ended June 30, 2024. Second Quarter 2024 Operating Results Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Earnings per common share - diluted $ 0.86 $ 1.24 $ 2.09 $ 2.40 Funds from operations (FFO) per Share - diluted $ 2.06 $ 2.39 $ 4.47 $ 4.70 Core FFO per Share - diluted $ 2.22 $ 2.28 $ 4.44 $ 4.56 A reconciliation of Net income available for MAA common shareholders to FFO and Core FFO, 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, "Results for the second quarter were ahead of expectations.  New supply delivering into several of our markets continues to be absorbed in a steady manner as the demand for apartment housing remains strong.  We continue to believe that we will begin to see a decline in new apartment deliveries over the back half of this year and into 2025. MAA's uniquely diversified portfolio, supported by a strong operating and resident service platform, offering an appealing apartment product at an affordable price point, continues to provide higher performance and lower volatility through the full apartment cycle." Highlights During the second quarter of 2024, MAA's Same Store Portfolio produced growth in revenues of 0.7%, as compared to the same period in the prior year, with Average Effective Rent per Unit up 0.5%. During the second quarter of 2024, MAA's Same Store Portfolio also captured strong Average Physical Occupancy of 95.5%, matching the performance in the same period in the prior year. During the second quarter of 2024, MAA's Same Store Portfolio property operating expense increased by 3.7% and MAA's Same Store Portfolio Net Operating Income (NOI) decreased by 1.0%, in each case as compared to the same period in the prior year. As of June 30, 2024, resident turnover remained historically low at 43.5% on a trailing twelve month basis with a record low level of move-outs associated with buying single family-homes. During the second quarter of 2024, MAA acquired a newly built 306-unit multifamily apartment community in initial lease-up located in Raleigh, North Carolina. As of the end of the second quarter of 2024, MAA had seven communities under development, representing 2,617 units once complete, with a projected total cost of $866.3 million and an estimated $328.3 million remaining to be funded. During the second quarter of 2024, MAA started construction on a 302-unit multifamily apartment community located in Charlotte, North Carolina and a 345-unit multifamily apartment community located in Phoenix, Arizona through its pre-purchase development program. As of the end of the second quarter of 2024, MAA had one recently completed development community and three recently acquired communities in lease-up. One community is expected to stabilize in the third quarter of 2024, one is expected to stabilize in the fourth quarter of 2024, one is expected to stabilize in the first quarter of 2025 and one is expected to stabilize in the second quarter of 2025. In May 2024, MAA's operating partnership, Mid-America Apartments, L.P. (referred to as MAALP or the Operating Partnership), issued $400.0 million of 7-year unsecured senior notes at a coupon of 5.300% and an issue price of 99.496%. MAA's balance sheet remains strong with a Net Debt/Adjusted EBITDAre ratio of 3.7x and $1.0 billion of combined cash and available capacity under MAALP's unsecured revolving credit facility as of June 30, 2024. Same Store Portfolio Operating ResultsTo 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 six months ended June 30, 2024 as compared to the same period in the prior year are summarized below: Three months ended June 30, 2024 vs. 2023 Six months ended June 30, 2024 vs. 2023 Revenues Expenses NOI Average Effective Rent per Unit Revenues Expenses NOI Average Effective Rent per Unit Same Store Operating Growth 0.7 % 3.7 % (1.0) % 0.5 % 1.0 % 4.5 % (0.8) % 1.0 % A reconciliation of Net income available for MAA common shareholders to NOI, including Same Store NOI, and discussion of the components of NOI, can be found later in this release. Same Store Portfolio operating statistics for the three and six months ended June 30, 2024, which were in line with prior guidance expectations, are summarized below: Three months ended June 30, 2024 Six months ended June 30, 2024 June 30, 2024 Average Effective Rent per Unit Average Physical Occupancy Average Effective Rent per Unit Average Physical Occupancy Resident Turnover Same Store Operating Statistics $ 1,690 95.5 % $ 1,690 95.4 % 43.5 % Same Store Portfolio lease pricing for new leases that were effective during the second quarter of 2024 declined 5.1%, representing a 110-basis point improvement from the first quarter of 2024.  Renewal lease pricing increased 4.6%, which in turn produced an increase of 0.1% for both new and renewing lease pricing on a blended basis in the second quarter of 2024, representing a 70-basis point improvement from the first quarter of 2024. Same Store Portfolio lease pricing for both new and renewing leases effective during the six months ended June 30, 2024, on a blended basis, declined 0.2% as compared to the prior lease, driven by a 5.5% decrease for leases to new move-in residents, partially offset by a 4.8% increase for renewing leases.  Brad Hill, President and Chief Investment Officer, said, "We continued to capture positive momentum in July with blended pricing on both new and renewal leasing improving 20-basis points as compared to the preceding second quarter.  Through July 29, 2024, new lease pricing for leases effective during July improved 90-basis points as compared to the second quarter of 2024, declining 4.2%, with renewal leases increasing by 4.0%. We are encouraged by continued strong demand across our portfolio as exemplified by our stable July occupancy, lower 60-day exposure and strong traffic and lead volumes." Acquisition ActivityIn May 2024, MAA acquired a 306-unit multifamily community currently in lease-up and located in Raleigh, North Carolina for approximately $81 million. In April 2024, MAA also closed on the acquisition of a land parcel located in Phoenix, Arizona through its pre-purchase development program. Construction on a 345-unit multifamily apartment community on that land parcel began in June 2024.  Development and Lease-up ActivityA summary of MAA's development communities under construction as of the end of the second quarter of 2024 is set forth below (dollars in thousands): Units as of Development Costs as of Expected Project Total June 30, 2024 June 30, 2024 Completions By Year Development Expected Spend Expected Projects (1) Total Delivered Leased Total to Date Remaining 2024 2025 2026 7 2,617 737 462 $ 866,250 $ 537,948 $ 328,302 3 2 2 (1) Three of the development projects are currently leasing.    During the second quarter of 2024, MAA funded $79.4 million of costs for current and planned projects, including predevelopment activities. In April 2024, MAA started construction on a 302-unit multifamily apartment community located in Charlotte, North Carolina on land previously acquired through its pre-purchase development program.  The development is expected to be completed in the fourth quarter of 2026 with an expected stabilization in the fourth quarter of 2027 and expected total cost of approximately $102 million. In June 2024, MAA also started construction on the 345-unit multifamily apartment community located in Phoenix, Arizona on the land acquired through its pre-purchase development program discussed above.  The development is expected to be completed in the fourth  quarter of 2026 with an expected stabilization in the fourth quarter of 2027 and expected total cost of approximately $118 million.  In July 2024, MAA agreed to finance a third party's development of a 239-unit multifamily apartment community currently under construction located in Charlotte, North Carolina.  This development is expected to deliver first units in the second quarter of 2025, to be completed in the first quarter of 2026 and to reach stabilization in the fourth quarter of 2026 at a total cost of approximately $112 million.  MAA has the option to purchase the development once it is stabilized. MAA expects to begin four to six multifamily development projects over the next 18 to 24 months. A summary of the total units, physical occupancy and cost of MAA's lease-up communities as of the end of the second quarter of 2024 is set forth below (dollars in thousands): Total As of June 30, 2024 Lease-Up Total Physical Spend Projects (1) Units Occupancy to Date 4 1,321 75.8 % $ 380,877 (1) One of the lease-up projects is expected to stabilize in the third quarter of 2024, one in the fourth quarter of 2024, one in the first quarter of 2025 and one in the second quarter of 2025.    The current expected average stabilized NOI yield on the three in progress development communities and one recently completed development community that are currently leasing is 6.5%. Property Redevelopment and Repositioning ActivityA summary of MAA's interior redevelopment program as of the end of the second quarter of 2024 is set forth below: As of June 30, 2024 Units Average Cost Increase in Average Completed per Unit Effective Rent per Unit YTD YTD YTD Redevelopment 2,796 $ 6,213 $ 107 As of June 30, 2024, MAA had completed installation of Smart Home technology (unit entry locks, mobile control of lights and thermostat and leak monitoring) in over 94,000 units across its apartment community portfolio providing an increase in Average Effective Rent per Unit of approximately $25 since the initiative began during the first quarter of 2019. During the second quarter of 2024, MAA continued its property repositioning program to upgrade and reposition the amenity and common areas at select apartment communities for higher and above market rent growth after projects are completed and units are fully repriced. For the six months ended June 30, 2024, MAA spent $1.0 million on this program.  MAA expects to begin six projects under this program in the second half of 2024.  Capital ExpendituresA summary of MAA's capital expenditures and Funds Available for Distribution (FAD) for the three and six months ended June 30, 2024 and 2023 is set forth below (dollars in millions, except per Share data): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Core FFO attributable to common shareholders and unitholders $ 266.6 $ 273.3 $ 532.8 $ 545.5 Recurring capital expenditures (36.3) (32.7) (55.3) (49.0) Core Adjusted FFO (Core AFFO) attributable to common shareholders and unitholders 230.3 240.6 477.5 496.5 Redevelopment, revenue enhancing, commercial and other capital expenditures (52.9) (57.4) (85.6) (108.8) FAD attributable to common shareholders and unitholders $ 177.4 $ 183.2 $ 391.9 $ 387.7 Core FFO per Share - diluted $ 2.22 $ 2.28 $ 4.44 $ 4.56 Core AFFO per Share - diluted $ 1.92 $ 2.01 $ 3.98 $ 4.15 A reconciliation of Net income available for MAA common shareholders to FFO, Core FFO, Core AFFO and FAD, and discussion of the components of FFO, Core FFO, Core AFFO and FAD, can be found later in this release.  Balance Sheet and Financing ActivitiesAs of June 30, 2024, MAA had $1.0 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 second quarter of 2024 were $176.3 million, as compared to $167.7 million for the same period in the prior year. In May 2024, MAALP publicly issued $400 million of unsecured senior notes due February 2032 with a coupon rate of 5.300% per annum, and at an issue price of 99.496%. Interest is payable semi-annually in arrears on February 15 and August 15 of each year, commencing August 15, 2024. The proceeds from the sale of the notes were used to repay borrowings on MAALP's commercial paper program. The notes have an effective interest rate of 5.382%. Balance sheet highlights as of June 30, 2024 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 28.1 % 3.7x $ 4.7 3.8 % 93.3 % 7.4 (1) As defined in the covenants for the bonds issued by MAALP. (2) Adjusted EBITDAre is calculated for the trailing twelve month period ended June 30, 2024. A reconciliation of Unsecured notes payable and Secured notes payable to Net Debt and a reconciliation of Net income to Adjusted EBITDAre, along with discussion of the components of Net Debt and Adjusted EBITDAre, can be found later in this release. 122nd Consecutive Quarterly Common Dividend Declared MAA declared its 122nd consecutive quarterly common dividend, which was paid on July 31, 2024 to holders of record on July 15, 2024. The current annual dividend rate is $5.88 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. 2024 Earnings and Same Store Portfolio Guidance MAA is updating its prior 2024 guidance for Earnings per diluted common share, Core FFO per diluted Share, Core AFFO per diluted Share and Same Store performance.  MAA expects to update its 2024 Earnings per diluted common share, Core FFO per diluted Share and Core AFFO per diluted 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 as 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. 2024 Guidance Previous Range Previous Midpoint Revised Range Revised Midpoint Earnings: Full Year 2024 Full Year 2024 Full Year 2024 Full Year 2024 Earnings per common share - diluted $4.66 to $5.02 $4.84 $4.37 to $4.65 $4.51 Core FFO per Share - diluted $8.70 to $9.06 $8.88 $8.74 to $9.02 $8.88 Core AFFO per Share - diluted $7.74 to $8.10 $7.92 $7.78 to $8.06 $7.92 MAA Same Store Portfolio: Property revenue growth 0.15% to 1.65% 0.90 % 0.15% to 1.15% 0.65 % Property operating expense growth 4.10% to 5.60% 4.85 % 3.75% to 4.75% 4.25 % NOI growth -2.80% to 0.20% -1.30 % -2.50% to -0.10% -1.30 % MAA expects Core FFO for the third quarter of 2024 to be in the range of $2.08 to $2.24 per diluted Share, or $2.16 per diluted Share at the midpoint. The projected difference between Core FFO per diluted Share for the second quarter of 2024 to the midpoint of MAA's guidance for the third quarter of 2024 is summarized below: Core FFO per diluted Share Q2 2024 reported results $ 2.22 Same Store Revenues 0.01 Same Store Expenses (0.05) Non-Same Store NOI, excluding Storm Costs 0.03 Storm Costs included in NOI (1) (0.03) General and administrative expenses (0.01) Interest expense and Other non-operating (expense) income (0.01) Q3 2024 guidance midpoint $ 2.16 (1) Projected storm costs related to Hurricane Beryl. MAA does not forecast Earnings 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.  Our property and casualty insurance programs renewed on July 1, 2024 with a total premium decrease of approximately 1%.  Our prior guidance had assumed an increase of approximately 15%. Supplemental Material and Conference CallSupplemental 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 second quarter results on August 1, 2024, at 9:00 AM Central Time. The conference call-in number is (800) 715-9871. 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 MAAMAA, 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 June 30, 2024, MAA had ownership interest in 103,614 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 or via mail at MAA, 6815 Poplar Ave., Suite 500, Germantown, TN 38138, Attn: Investor Relations. Forward-Looking StatementsSections 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, losses due to uninsured risks, deductibles and self-insured retentions, or losses from catastrophes in excess of coverage limits; 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 impact of adverse developments affecting the U.S. or global banking industry, including bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory responses thereto; 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 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. FINANCIAL HIGHLIGHTS Dollars in thousands, except per share data Three months ended June 30, Six months ended June 30, 2024 2023 2024