GERMANTOWN, Tenn., Oct. 30, 2019 /PRNewswire/ -- Mid-America
Apartment Communities, Inc., or MAA (NYSE: MAA), today announced
operating results for the quarter ended September 30,
2019.
Net Income Available for Common Shareholders
For the
quarter ended September 30, 2019, net income available for MAA
common shareholders was $77.7
million, or $0.68 per diluted
common share, compared to $51.9
million, or $0.46 per diluted
common share, for the quarter ended September 30, 2018.
Results for the quarter ended September 30, 2019 included
$15.5 million, or $0.14 per diluted common share, of non-cash
income related to the fair value adjustment of the embedded
derivative in the MAA Series I preferred shares and $3.5 million, or $0.03 per diluted common share, of non-cash
income, net of tax, related to an unrealized gain recognized by an
unconsolidated affiliate. Results for the quarter ended
September 30, 2018 included negligible non-cash expense
related to the embedded derivative in the preferred shares and the
unconsolidated affiliate.
For the nine months ended September 30, 2019, net income
available for MAA common shareholders was $201.5 million, or $1.77 per diluted common share, compared to
$158.9 million, or $1.40 per diluted common share, for the nine
months ended September 30, 2018. Results for the nine months
ended September 30, 2019 included $19.6
million, or $0.17 per diluted
common share, of non-cash income related to the embedded derivative
in the preferred shares, $10.2
million, or $0.09 per diluted
common share, of gains related to the sale of real estate assets
and $3.2 million, or $0.03 per diluted common share, of non-cash
income, net of tax, related to an unrealized gain recognized by an
unconsolidated affiliate. Results for the nine months ended
September 30, 2018 included $4.4
million, or $0.04 per diluted
common share, of income related to the settlement of an executive
life insurance policy claim and $3.8
million, or $0.03 per diluted
common share, of gains related to the sale of real estate assets.
Non-cash expense related to the embedded derivative in the
preferred shares and the unconsolidated affiliate was negligible
for the nine months ended September 30, 2018.
Funds from Operations (FFO)
For the quarter ended
September 30, 2019, FFO was $202.9
million, or $1.72 per diluted
common share and unit, or per Share, compared to $177.2 million, or $1.50 per Share, for the quarter ended
September 30, 2018. Results for the quarter ended
September 30, 2019 included $15.5
million, or $0.13 per Share,
of non-cash income related to the embedded derivative in the
preferred shares and $3.5 million, or
$0.03 per Share, of non-cash income,
net of tax, related to an unrealized gain recognized by an
unconsolidated affiliate. The impact to FFO for the
three months ended September 30, 2019
relating to the non-cash income items totaled $0.16 per Share. Results for the quarter
ended September 30, 2018 included negligible non-cash expense
related to the embedded derivative in the preferred shares and the
unconsolidated affiliate.
For the nine months ended September 30, 2019, FFO was
$575.0 million, or $4.87 per Share, compared to $529.7 million, or $4.49 per Share, for the nine months ended
September 30, 2018. Results for the nine months ended
September 30, 2019 included $19.6
million, or $0.17 per Share,
of non-cash income related to the embedded derivative in the
preferred shares, $9.3 million, or
$0.08 per Share, of gains related to
the sale of non-depreciable real estate assets and $3.2 million, or $0.03 per Share, of non-cash income, net of tax,
related to an unrealized gain recognized by an unconsolidated
affiliate. Results for the nine months ended
September 30, 2018 included $4.4
million, or $0.04 per Share,
of income related to the settlement of an executive life insurance
policy claim and $3.8 million, or
$0.03 per Share, of gains related to
the sale of real estate assets. Non-cash expense related to the
embedded derivative in the preferred shares and the unconsolidated
affiliate was negligible for the nine months ended
September 30, 2018.
A reconciliation of FFO to net income available for MAA common
shareholders, and an expanded discussion of the components of FFO,
can be found later in this release.
Eric Bolton, Chairman and Chief
Executive Officer, said, "Improving trends in rent growth and solid
occupancy reflect continued favorable leasing conditions across our
well-diversified Sunbelt portfolio. Better than expected
results in the third quarter support our ability to again increase
performance expectations for the year. We are encouraged with
the leasing activity and results captured over the busy summer
leasing season and the momentum being carried into next year."
Highlights
- Property revenues from the Same Store Portfolio increased 4.0%
during the third quarter of 2019 as compared to the same period in
the prior year, which was an 80 basis point improvement from the
performance in the second quarter of 2019. Results were
driven by a 3.9% growth in Average Effective Rent per Unit for the
Same Store Portfolio and continued strong Average Physical
Occupancy for the Same Store Portfolio of 96.1%.
- Property operating expenses for the Same Store Portfolio
increased 3.2% during the third quarter of 2019 as compared to the
same period in the prior year.
- Net Operating Income, or NOI, from the Same Store Portfolio
increased 4.5% during the third quarter of 2019 as compared to the
same period in the prior year.
- Strong demand for apartment housing continues to support low
resident turnover as resident move outs for the Same Store
Portfolio for the third quarter of 2019 remained low at 47.4% on a
rolling twelve month basis.
- As of the end of the third quarter of 2019, MAA had six
development projects under construction, containing 1,686 units,
with a total projected cost of $389.5
million and an estimated $282.8
million remaining to be funded.
- As of the end of the third quarter of 2019, MAA had three
properties in their initial lease-up, and physical occupancy for
the lease-up portfolio averaged 82.8%. One property is
expected to stabilize in the fourth quarter of 2019, and the other
two properties are expected to stabilize over the first half of
2020.
- During the nine months ended September 30, 2019, MAA
completed renovation of 6,596 units under its redevelopment
program, achieving average rental rate increases of 9.8% above
non-renovated units.
Same Store Portfolio Operating Results
To ensure
comparable reporting with prior periods, the Same Store Portfolio
includes properties that were stabilized and owned by MAA at the
beginning of the previous year.
The Same Store Portfolio revenue growth of 4.0% during the third
quarter of 2019 was primarily a result of a 3.9% increase in
Average Effective Rent per Unit, as compared to the same period in
the prior year. Rent growth for the Same Store Portfolio for
both new and renewing leases, as compared to the prior lease, on a
combined basis increased an average of 4.9% during the third
quarter of 2019, a 190 basis point improvement over the performance
from the same period in the prior year. Average Physical
Occupancy for the Same Store Portfolio was strong at 96.1% for the
third quarter of 2019, a slight increase from the 96.0% in the same
period in the prior year. Property operating expenses
increased 3.2% for the third quarter of 2019 as compared to the
same period in the prior year, primarily driven by a 4.3% increase
in real estate property taxes and a 6.6% increase in building
repair and maintenance expense. This resulted in Same Store NOI
growth of 4.5% for the third quarter of 2019 as compared to the
same period in the prior year.
The Same Store Portfolio revenue growth of 3.2% during the nine
months ended September 30, 2019 was primarily a result of a
3.4% increase in Average Effective Rent per Unit, as compared to
the same period in the prior year. Rent growth for the Same
Store Portfolio for both new and renewing leases, as compared to
the prior lease, on a combined basis increased an average of 4.7%
during the nine months ended September 30, 2019, a 200 basis
point improvement over the performance from the same period in the
prior year. Average Physical Occupancy for the Same Store
Portfolio was strong at 96.0% for the nine months ended
September 30, 2019, a slight decrease from 96.1% in the same
period in the prior year. Property operating expenses
increased 3.0% for the nine months ended September 30, 2019 as
compared to the same period in the prior year, primarily driven by
a 5.0% increase in real estate property taxes. This resulted in
Same Store NOI growth of 3.4% for the nine months ended
September 30, 2019 as compared to the same period in the prior
year.
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
As of the end of the
third quarter of 2019, MAA had six development communities under
construction. Total development costs for the six communities
are projected to be $389.5 million,
of which an estimated $282.8 million
remained to be funded as of the end of the third quarter of
2019. The expected average stabilized NOI yield on these
communities is 6.2%. During the third quarter of 2019, MAA funded
$30.9 million of construction costs
on current and completed development projects. MAA expects to
complete one of these developments in the fourth quarter of 2019,
one development in the first half of 2020, one in the second half
of 2020, one in the first half of 2021 and two in the second half
of 2021.
As of the end of the third quarter of 2019, MAA had three
apartment communities, containing a total of 657 units, remaining
in initial lease-up: Post Centennial Park, located in Atlanta, Georgia; 1201 Midtown II, located in
Charleston, South Carolina and
Sync 36 II, located in Denver,
Colorado. Physical occupancy for these lease-up projects
averaged 82.8% at the end of the third quarter of 2019.
Acquisition and Disposition Activity
In August 2019, MAA acquired 14,941 square feet of
multi-tenant retail space located at MAA's 220 Riverside apartment
community in Jacksonville,
Florida.
In October 2019, a consolidated
real estate entity owned by MAA and a private real estate company
acquired a 25 acre land parcel located in Orlando, Florida. Predevelopment
work is underway with a development start date expected during the
fourth quarter of 2019.
In October 2019, MAA closed on the
disposition of a 45 acre land parcel located in the Gulf Shores, Alabama market for net proceeds
of $5.5 million, resulting in an
expected gain on sale of non-depreciable real estate assets of
approximately $3 million that will be
recorded in the fourth quarter of 2019.
In October 2019, MAA closed on the
disposition of Ridge at Chenal Valley, a 312 unit apartment
community located in the Little Rock,
Arkansas market resulting in an expected net gain on sale of
approximately $20 million that will
be recorded in the fourth quarter of 2019.
Redevelopment Activity
MAA continues its redevelopment
program at select apartment communities throughout the
portfolio. During the third quarter of 2019, MAA redeveloped
the interiors of 2,732 units at an average cost of $5,631 per unit, bringing the total units
renovated during the nine months ended September 30,
2019 to 6,596 at an average cost
of $5,748 per unit. MAA expects a total of 7,500 to
8,500 units to be redeveloped in 2019, achieving average
rental rate increases of approximately 9% to 10% above
non-renovated units.
Capital Expenditures
Recurring capital expenditures
totaled $21.5 million for the third
quarter of 2019, or approximately $0.19 per Share, as compared to $21.7 million, or $0.18 per Share, for the same period in the prior
year. These expenditures led to Adjusted Funds from
Operations, or AFFO, of $1.53 per
Share for the third quarter of 2019, compared to $1.32 per Share for the same period in the prior
year.
Redevelopment, revenue enhancing, commercial and other capital
expenditures during the third quarter of 2019 were $33.9 million, as compared to $31.6 million for the same period in the prior
year. These expenditures led to Funds Available for Distribution,
or FAD, of $147.4 million for the
third quarter of 2019, compared to $124.0
million for the same period in the prior year.
Recurring capital expenditures totaled $58.5 million for the nine months ended
September 30, 2019, or approximately $0.50 per Share, as compared to $56.1 million, or $0.47 per Share, for the same period in the prior
year. These expenditures led to AFFO of $4.37 per Share for the nine months ended
September 30, 2019, compared to $4.02 per Share for the same period in the prior
year.
Redevelopment, revenue enhancing, commercial and other capital
expenditures during the nine months ended September 30, 2019
were $89.6 million, as compared to
$93.9 million for the same period in
the prior year. These expenditures led to FAD of $426.9 million for the nine months ended
September 30, 2019, compared to $379.8
million for the same period in the prior year.
A reconciliation of FFO, AFFO and FAD to net income available
for MAA common shareholders, and an expanded discussion of the
components of FFO, AFFO and FAD, can be found later in this
release.
Financing Activities
In August
2019, MAA's operating partnership, Mid-America Apartments,
L.P. (referred to as MAALP or the Operating Partnership), issued
$250.0 million of 3.950% senior
unsecured notes due in 2029 with a reoffer yield of 2.985%.
These senior unsecured notes were issued as additional notes under
the same indenture and supplemental indenture pursuant to which
MAALP issued $300.0 million of 3.950%
senior unsecured notes due in 2029 in the first quarter of 2019.
The additional senior unsecured notes issued during the third
quarter of 2019 will be treated as a single series of securities
and will have the same CUSIP number as the notes issued in the
first quarter of 2019.
In August 2019, the Company
retired a $150.0 million unsecured
term loan and a $13.2 million secured
property mortgage before maturity.
As of September 30, 2019, MAA had approximately
$823.0 million of combined cash and
available capacity under MAALP's unsecured revolving credit
facility, net of commercial paper borrowings.
Dividends and distributions paid on shares of common stock and
noncontrolling interests during the third quarter of 2019 were
$113.4 million, as compared to
$108.6 million for the same period in
the prior year.
Balance Sheet
As of September 30, 2019:
- Total debt to adjusted total assets (as defined in the
covenants for the bonds issued by MAALP) was 31.6%;
- Total debt outstanding was $4.5
billion with an average effective interest rate of
approximately 3.8%;
- 92.2% of total debt was fixed or hedged against rising interest
rates for an average of approximately 7.6 years; and
- Unencumbered NOI was 90.6% of total NOI, as compared to 92.6%
as of December 31, 2018.
103rd Consecutive Quarterly Common Dividend
Declared
MAA declared its 103rd consecutive quarterly common
dividend, which will be paid on October 31,
2019 to holders of record on October
15, 2019. The current annual dividend rate is
$3.84 per common
share.
2019 Net Income per Diluted Common Share and FFO and AFFO per
Share Guidance
MAA is updating and increasing prior 2019
guidance for Net income per diluted common share, as well as FFO
per Share and AFFO per Share. FFO and AFFO are non-GAAP
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 outlined
in the definitions of non-GAAP measures accompanying this release,
MAA's definition of FFO is in accordance with the National
Association of Real Estate Investment Trusts', or NAREIT's,
definition. MAA believes that FFO is helpful in understanding
operating performance in that FFO excludes depreciation expense of
real estate assets and certain other non-routine items.
Net income per diluted common share is expected to be in the
range of $2.97 to $3.05 per diluted common share, or $3.01 per diluted common share at the midpoint,
for the full year of 2019. FFO per Share for the year is
expected to be in the range of $6.46
to $6.54 per Share, or $6.50 per Share at the midpoint. AFFO per
Share for the year is expected to be in the range of $5.82 to $5.90 per
Share, or $5.86 per Share at the
midpoint. MAA expects FFO for the fourth quarter of 2019 to
be in the range of $1.59 to
$1.67 per Share, or $1.63 per Share at the midpoint, excluding any
impact of the fair value adjustment of the embedded derivative in
the preferred shares or any gain or loss recognized by
unconsolidated affiliates, which MAA does not forecast. MAA
does not forecast Net income per diluted share on a quarterly basis
as it is not reasonable to accurately predict the timing of
forecasted acquisition and disposition activity within a particular
quarter (rather than during the course of the full year).
Supplemental Material and Conference Call
Supplemental
data to this release can be found under the "Filings and
Financials" navigation tab on the "For Investors" page of our
website at www.maac.com. MAA will host a conference call to further
discuss third quarter results Thursday,
October 31, 2019, at 9:00 AM Central
Time. The conference call-in number is
877-830-2596. You may also join the live webcast of the
conference call by accessing the "For Investors" page of our
website at www.maac.com. MAA's filings with the Securities
and Exchange Commission, or 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, or REIT, focused on delivering full-cycle
and superior investment performance for shareholders through the
ownership, management, acquisition, development and redevelopment
of quality apartment communities in the Southeast, Southwest, and
Mid-Atlantic regions of the United States. As of
September 30, 2019, MAA had ownership interest in 102,629
apartment units, including communities currently in development,
across 17 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 concerning forecasted operating performance
and results, property acquisitions and dispositions, joint venture
activity, development and renovation activity as well as other
capital expenditures, capital raising activities, rent and expense
growth, occupancy, financing activities, and interest rate and
other economic expectations. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks,"
"estimates," 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 market
conditions, changes in supply and/or demand, competition, uninsured
losses, changes in tax and housing laws, or other factors;
- exposure, as a multifamily focused REIT, 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 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 new acquisitions to achieve anticipated results or
be efficiently integrated;
- 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;
- changes in operating costs, including real estate taxes,
utilities and insurance costs;
- 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, and
refinance existing debt as it matures;
- level and volatility of interest or capitalization rates or
capital market conditions;
- loss of hedge accounting treatment for interest rate
swaps;
- the continuation of the good credit of our interest rate swap
providers;
- price volatility, dislocations and liquidity disruptions in the
financial markets and the resulting impact on financing;
- 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, or LIBOR, as a variable rate debt benchmark by the end of
2021 and the transition to a different benchmark interest
rate;
- significant decline in market value of real estate serving as
collateral for mortgage obligations;
- significant change in the mortgage financing market that would
cause single-family housing, either as an owned or rental product,
to become a more significant competitive product;
- our 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
privacy or information security systems, or business operations
disruptions;
- potential liability for environmental contamination;
- adverse legislative or regulatory tax changes;
- legal proceedings relating to various issues, which, among
other things, could result in a class action lawsuit;
- compliance costs associated with laws requiring access for
disabled persons or similar regulatory requirements; and
- other risks identified in this press release and, from time to
time, 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
September 30,
|
|
|
Nine months
ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
|
|
2018
|
|
Rental and other
property revenues
|
|
$
|
415,632
|
|
|
$
|
397,108
|
|
|
$
|
1,224,200
|
|
|
|
|
$
|
1,173,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
for MAA common shareholders
|
|
$
|
77,723
|
|
|
$
|
51,869
|
|
|
$
|
201,456
|
|
|
|
|
$
|
158,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total NOI
(1)
|
|
$
|
256,093
|
|
|
$
|
242,368
|
|
|
$
|
761,142
|
|
|
|
|
$
|
725,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.68
|
|
|
$
|
0.46
|
|
|
$
|
1.77
|
|
|
|
|
$
|
1.40
|
|
Diluted
|
|
$
|
0.68
|
|
|
$
|
0.46
|
|
|
$
|
1.77
|
|
|
|
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
per Share - diluted: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
(1)(3)
|
|
$
|
1.72
|
|
|
$
|
1.50
|
|
|
$
|
4.87
|
|
|
|
|
$
|
4.49
|
|
AFFO
(1)(3)
|
|
$
|
1.53
|
|
|
$
|
1.32
|
|
|
$
|
4.37
|
|
|
|
|
$
|
4.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
0.9600
|
|
|
$
|
0.9225
|
|
|
$
|
2.8800
|
|
|
|
|
$
|
2.7675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends/ FFO
(diluted) payout ratio
|
|
|
55.8
|
%
|
|
|
61.5
|
%
|
|
|
59.1
|
%
|
|
|
|
|
61.6
|
%
|
Dividends/ AFFO
(diluted) payout ratio
|
|
|
62.7
|
%
|
|
|
69.9
|
%
|
|
|
65.9
|
%
|
|
|
|
|
68.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated interest
expense
|
|
$
|
44,513
|
|
|
$
|
44,650
|
|
|
$
|
136,149
|
|
|
|
|
$
|
129,140
|
|
Mark-to-market debt
adjustment
|
|
|
51
|
|
|
|
2,815
|
|
|
|
222
|
|
|
|
|
|
8,667
|
|
Debt discount and
debt issuance cost amortization
|
|
|
(1,288)
|
|
|
|
(1,467)
|
|
|
|
(4,928)
|
|
|
|
|
|
(4,351)
|
|
Capitalized
interest
|
|
|
754
|
|
|
|
357
|
|
|
|
1,847
|
|
|
|
|
|
1,640
|
|
Total interest
incurred
|
|
$
|
44,030
|
|
|
$
|
46,355
|
|
|
$
|
133,290
|
|
|
|
|
$
|
135,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
principal on notes payable
|
|
$
|
1,796
|
|
|
$
|
2,617
|
|
|
$
|
5,468
|
|
|
|
|
$
|
7,907
|
|
|
(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 and AFFO to Net income available for MAA common
shareholders.
|
(2) See
the "Share and Unit Data" section for additional
information.
|
(3)
Results for the three and nine months ended September 30, 2019
included a total of $0.16 per Share and $0.20 per Share,
respectively, of non-cash income related to the fair value
adjustment of the embedded derivative in the MAA Series I preferred
shares and an unrealized gain, net of tax, recognized by an
unconsolidated affiliate. Results for the three and nine
months ended September 30, 2018 included negligible non-cash
expense related to both the embedded derivative in the preferred
shares and the unconsolidated affiliate.
|
FINANCIAL
HIGHLIGHTS (CONTINUED)
|
|
Dollars in
thousands, except share price
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Gross Assets
(1)
|
|
$
|
14,162,984
|
|
|
$
|
13,873,068
|
|
Gross Real Estate
Assets (1)
|
|
$
|
13,967,776
|
|
|
$
|
13,735,247
|
|
Total debt
|
|
$
|
4,476,114
|
|
|
$
|
4,528,328
|
|
Common shares and
units outstanding
|
|
|
118,140,136
|
|
|
|
117,955,568
|
|
Share
price
|
|
$
|
130.01
|
|
|
$
|
95.70
|
|
Book equity
value
|
|
$
|
6,250,266
|
|
|
$
|
6,381,603
|
|
Market equity
value
|
|
$
|
15,359,399
|
|
|
$
|
11,288,348
|
|
Net Debt/Recurring
Adjusted EBITDAre (2) (3)
|
|
4.73x
|
|
|
4.99x
|
|
|
(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)
Recurring Adjusted EBITDAre in this calculation represents
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, Adjusted EBITDAre and Recurring
Adjusted EBITDAre to Net income; and (ii) Net Debt to
Unsecured notes payable and Secured notes payable.
|
(3)
Recurring Adjusted EBITDAre for the trailing twelve months
ended September 30, 2019 included the impact of the non-cash income
related to the fair value adjustment of the embedded derivative in
the MAA Series I preferred shares and an unrealized gain, net of
tax, recognized by an unconsolidated affiliate. The inclusion
of the non-cash income items lowered Net Debt/Recurring Adjusted
EBITDAre by 11 basis points for the trailing twelve months
ended September 30, 2019. The non-cash expense related to the
embedded derivative in the preferred shares and the unconsolidated
affiliate for the trailing twelve months ended December 31, 2018
had a negligible impact to Net Debt/Recurring Adjusted
EBITDAre.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
Dollars in
thousands, except per share data
|
|
Three months
ended
September 30,
|
|
|
Nine months
ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other
property revenues
|
|
$
|
415,632
|
|
|
$
|
397,108
|
|
|
$
|
1,224,200
|
|
|
$
|
1,173,198
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense,
excluding real estate taxes and insurance
|
|
|
100,319
|
|
|
|
97,703
|
|
|
|
286,284
|
|
|
|
279,831
|
|
Real estate taxes and
insurance
|
|
|
59,220
|
|
|
|
57,037
|
|
|
|
176,774
|
|
|
|
168,043
|
|
Depreciation and
amortization
|
|
|
124,684
|
|
|
|
124,549
|
|
|
|
371,417
|
|
|
|
368,218
|
|
Total property
operating expenses
|
|
|
284,223
|
|
|
|
279,289
|
|
|
|
834,475
|
|
|
|
816,092
|
|
Property management
expenses
|
|
|
13,899
|
|
|
|
11,303
|
|
|
|
41,195
|
|
|
|
35,579
|
|
General and
administrative expenses
|
|
|
11,485
|
|
|
|
6,380
|
|
|
|
35,236
|
|
|
|
25,723
|
|
Merger and integration
related expenses
|
|
|
—
|
|
|
|
1,878
|
|
|
|
—
|
|
|
|
8,503
|
|
Interest
expense
|
|
|
44,513
|
|
|
|
44,650
|
|
|
|
136,149
|
|
|
|
129,140
|
|
(Gain) loss on sale of
depreciable real estate assets
|
|
|
(1,000)
|
|
|
|
23
|
|
|
|
(987)
|
|
|
|
21
|
|
Gain on sale of
non-depreciable real estate assets
|
|
|
—
|
|
|
|
(959)
|
|
|
|
(9,260)
|
|
|
|
(3,870)
|
|
Other non-operating
income
|
|
|
(20,060)
|
|
|
|
(374)
|
|
|
|
(25,770)
|
|
|
|
(6,065)
|
|
Income before income
tax expense
|
|
|
82,572
|
|
|
|
54,918
|
|
|
|
213,162
|
|
|
|
168,075
|
|
Income tax
expense
|
|
|
(1,491)
|
|
|
|
(616)
|
|
|
|
(2,814)
|
|
|
|
(1,826)
|
|
Income from
continuing operations before real estate joint venture
activity
|
|
|
81,081
|
|
|
|
54,302
|
|
|
|
210,348
|
|
|
|
166,249
|
|
Income from real
estate joint venture
|
|
|
378
|
|
|
|
402
|
|
|
|
1,210
|
|
|
|
1,256
|
|
Net income
|
|
|
81,459
|
|
|
|
54,704
|
|
|
|
211,558
|
|
|
|
167,505
|
|
Net income
attributable to noncontrolling interests
|
|
|
2,814
|
|
|
|
1,913
|
|
|
|
7,336
|
|
|
|
5,888
|
|
Net income available
for shareholders
|
|
|
78,645
|
|
|
|
52,791
|
|
|
|
204,222
|
|
|
|
161,617
|
|
Dividends to MAA
Series I preferred shareholders
|
|
|
922
|
|
|
|
922
|
|
|
|
2,766
|
|
|
|
2,766
|
|
Net income available
for MAA common shareholders
|
|
$
|
77,723
|
|
|
$
|
51,869
|
|
|
$
|
201,456
|
|
|
$
|
158,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
|
$
|
0.68
|
|
|
$
|
0.46
|
|
|
$
|
1.77
|
|
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
|
$
|
0.68
|
|
|
$
|
0.46
|
|
|
$
|
1.77
|
|
|
$
|
1.40
|
|
SHARE AND UNIT
DATA
|
|
Shares and units
in thousands
|
|
Three months
ended
September 30,
|
|
|
Nine months
ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net Income Shares
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares - basic
|
|
|
113,877
|
|
|
|
113,671
|
|
|
|
113,814
|
|
|
|
113,620
|
|
Effect of dilutive
securities
|
|
|
260
|
|
|
|
239
|
|
|
|
238
|
|
|
|
201
|
|
Weighted average
common shares - diluted
|
|
|
114,137
|
|
|
|
113,910
|
|
|
|
114,052
|
|
|
|
113,821
|
|
Funds From
Operations Shares And Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares and units - basic
|
|
|
117,958
|
|
|
|
117,795
|
|
|
|
117,910
|
|
|
|
117,768
|
|
Weighted average
common shares and units - diluted
|
|
|
118,151
|
|
|
|
117,970
|
|
|
|
118,104
|
|
|
|
117,939
|
|
Period End Shares
And Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares at
September 30,
|
|
|
114,066
|
|
|
|
113,838
|
|
|
|
114,066
|
|
|
|
113,838
|
|
Operating Partnership
units at September 30,
|
|
|
4,074
|
|
|
|
4,114
|
|
|
|
4,074
|
|
|
|
4,114
|
|
Total common shares
and units at September 30,
|
|
|
118,140
|
|
|
|
117,952
|
|
|
|
118,140
|
|
|
|
117,952
|
|
|
(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 and nine months ended
September 30, 2019, expected to be filed with the SEC on or
about October 31, 2019.
|
CONSOLIDATED
BALANCE SHEETS
|
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Assets
|
|
|
|
|
|
|
|
|
Real estate
assets:
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
1,898,509
|
|
|
$
|
1,868,828
|
|
Buildings and
improvements and other
|
|
|
11,825,934
|
|
|
|
11,670,216
|
|
Development and
capital improvements in progress
|
|
|
101,469
|
|
|
|
59,506
|
|
|
|
|
13,825,912
|
|
|
|
13,598,550
|
|
Less: Accumulated
depreciation
|
|
|
(2,906,677)
|
|
|
|
(2,549,287)
|
|
|
|
|
10,919,235
|
|
|
|
11,049,263
|
|
Undeveloped
land
|
|
|
41,149
|
|
|
|
58,257
|
|
Investment in real
estate joint venture
|
|
|
43,816
|
|
|
|
44,181
|
|
Real estate assets,
net
|
|
|
11,004,200
|
|
|
|
11,151,701
|
|
Cash and cash
equivalents
|
|
|
25,826
|
|
|
|
34,259
|
|
Restricted
cash
|
|
|
16,856
|
|
|
|
17,414
|
|
Other
assets
|
|
|
178,352
|
|
|
|
120,407
|
|
Assets held for
sale
|
|
|
22,520
|
|
|
|
—
|
|
Total
assets
|
|
$
|
11,247,754
|
|
|
$
|
11,323,781
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Unsecured notes
payable
|
|
$
|
3,830,708
|
|
|
$
|
4,053,302
|
|
Secured notes
payable
|
|
|
645,406
|
|
|
|
475,026
|
|
Accrued expenses and
other liabilities
|
|
|
521,374
|
|
|
|
413,850
|
|
Total
liabilities
|
|
|
4,997,488
|
|
|
|
4,942,178
|
|
Redeemable common
stock
|
|
|
13,656
|
|
|
|
9,414
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
9
|
|
|
|
9
|
|
Common
stock
|
|
|
1,138
|
|
|
|
1,136
|
|
Additional paid-in
capital
|
|
|
7,149,889
|
|
|
|
7,138,170
|
|
Accumulated
distributions in excess of net income
|
|
|
(1,119,714)
|
|
|
|
(989,263)
|
|
Accumulated other
comprehensive loss
|
|
|
(14,870)
|
|
|
|
(212)
|
|
Total MAA
shareholders' equity
|
|
|
6,016,452
|
|
|
|
6,149,840
|
|
Noncontrolling
interests - Operating Partnership units
|
|
|
213,547
|
|
|
|
220,043
|
|
Total Company's
shareholders' equity
|
|
|
6,229,999
|
|
|
|
6,369,883
|
|
Noncontrolling
interest - consolidated real estate entities
|
|
|
6,611
|
|
|
|
2,306
|
|
Total
equity
|
|
|
6,236,610
|
|
|
|
6,372,189
|
|
Total liabilities and
equity
|
|
$
|
11,247,754
|
|
|
$
|
11,323,781
|
|
RECONCILIATION OF
FFO, AFFO AND FAD TO NET INCOME AVAILABLE FOR MAA COMMON
SHAREHOLDERS
|
|
Amounts in
thousands, except per share and unit data
|
|
Three months
ended
September 30,
|
|
|
Nine months
ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net income available
for MAA common shareholders
|
|
$
|
77,723
|
|
|
$
|
51,869
|
|
|
$
|
201,456
|
|
|
$
|
158,851
|
|
Depreciation and
amortization of real estate assets
|
|
|
123,171
|
|
|
|
123,230
|
|
|
|
366,704
|
|
|
|
364,541
|
|
(Gain) loss on sale of
depreciable real estate assets
|
|
|
(1,000)
|
|
|
|
23
|
|
|
|
(987)
|
|
|
|
21
|
|
Depreciation and
amortization of real estate assets of
real estate joint venture
|
|
|
154
|
|
|
|
154
|
|
|
|
465
|
|
|
|
443
|
|
Net income
attributable to noncontrolling interests
|
|
|
2,814
|
|
|
|
1,913
|
|
|
|
7,336
|
|
|
|
5,888
|
|
Funds from operations
attributable to the Company (1)
|
|
|
202,862
|
|
|
|
177,189
|
|
|
|
574,974
|
|
|
|
529,744
|
|
Recurring capital
expenditures
|
|
|
(21,543)
|
|
|
|
(21,671)
|
|
|
|
(58,461)
|
|
|
|
(56,073)
|
|
Adjusted funds from
operations (1)
|
|
|
181,319
|
|
|
|
155,518
|
|
|
|
516,513
|
|
|
|
473,671
|
|
Redevelopment capital
expenditures
|
|
|
(17,789)
|
|
|
|
(16,718)
|
|
|
|
(45,060)
|
|
|
|
(41,147)
|
|
Revenue enhancing
capital expenditures
|
|
|
(8,215)
|
|
|
|
(7,997)
|
|
|
|
(26,067)
|
|
|
|
(22,005)
|
|
Commercial capital
expenditures
|
|
|
(2,563)
|
|
|
|
(2,236)
|
|
|
|
(5,019)
|
|
|
|
(6,575)
|
|
Other capital
expenditures
|
|
|
(5,330)
|
|
|
|
(4,617)
|
|
|
|
(13,494)
|
|
|
|
(24,129)
|
|
Funds available for
distribution (1)
|
|
$
|
147,422
|
|
|
$
|
123,950
|
|
|
$
|
426,873
|
|
|
$
|
379,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and
distributions paid
|
|
$
|
113,408
|
|
|
$
|
108,592
|
|
|
$
|
340,052
|
|
|
$
|
326,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares - diluted
|
|
|
114,137
|
|
|
|
113,910
|
|
|
|
114,052
|
|
|
|
113,821
|
|
FFO weighted average
common shares and units - diluted
|
|
|
118,151
|
|
|
|
117,970
|
|
|
|
118,104
|
|
|
|
117,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
|
$
|
0.68
|
|
|
$
|
0.46
|
|
|
$
|
1.77
|
|
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
per Share - diluted (2)
|
|
$
|
1.72
|
|
|
$
|
1.50
|
|
|
$
|
4.87
|
|
|
$
|
4.49
|
|
Adjusted funds from
operations per Share - diluted (2)
|
|
$
|
1.53
|
|
|
$
|
1.32
|
|
|
$
|
4.37
|
|
|
$
|
4.02
|
|
|
(1) Results for the three and
nine months ended September 30, 2019 included a total of $19.0
million and $22.8 million, respectively, of non-cash income related
to the fair value adjustment of the embedded derivative in the MAA
Series I preferred shares and an unrealized gain, net of tax,
recognized by an unconsolidated affiliate. Results for the
three and nine months ended September 30, 2018 included
negligible non-cash expense related to both the embedded derivative
in the preferred shares and the unconsolidated
affiliate.
|
(2) Results for the three and
nine months ended September 30, 2019 included a total of $0.16
per Share and $0.20 per Share, respectively, of non-cash income
related to the fair value adjustment of the embedded derivative in
the MAA Series I preferred shares and an unrealized gain, net of
tax, recognized by an unconsolidated affiliate. Results for
the three and nine months ended September 30, 2018 included
negligible non-cash expense related to both the embedded derivative
in the preferred shares and the unconsolidated
affiliate.
|
RECONCILIATION OF
NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON
SHAREHOLDERS
|
|
Dollars in
thousands
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
2019
|
|
|
June
30,
2019
|
|
|
September 30,
2018
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
Net Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
NOI
|
|
$
|
238,137
|
|
|
$
|
235,070
|
|
|
$
|
227,861
|
|
|
$
|
708,336
|
|
|
$
|
685,274
|
|
Non-Same Store
NOI
|
|
|
17,956
|
|
|
|
18,178
|
|
|
|
14,507
|
|
|
|
52,806
|
|
|
|
40,050
|
|
Total NOI
|
|
|
256,093
|
|
|
|
253,248
|
|
|
|
242,368
|
|
|
|
761,142
|
|
|
|
725,324
|
|
Depreciation and
amortization
|
|
|
(124,684)
|
|
|
|
(123,944)
|
|
|
|
(124,549)
|
|
|
|
(371,417)
|
|
|
|
(368,218)
|
|
Property management
expenses
|
|
|
(13,899)
|
|
|
|
(13,454)
|
|
|
|
(11,303)
|
|
|
|
(41,195)
|
|
|
|
(35,579)
|
|
General and
administrative expenses
|
|
|
(11,485)
|
|
|
|
(10,598)
|
|
|
|
(6,380)
|
|
|
|
(35,236)
|
|
|
|
(25,723)
|
|
Merger and integration
expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,878)
|
|
|
|
—
|
|
|
|
(8,503)
|
|
Interest
expense
|
|
|
(44,513)
|
|
|
|
(45,936)
|
|
|
|
(44,650)
|
|
|
|
(136,149)
|
|
|
|
(129,140)
|
|
Gain (loss) on sale of
depreciable real estate
assets
|
|
|
1,000
|
|
|
|
—
|
|
|
|
(23)
|
|
|
|
987
|
|
|
|
(21)
|
|
Gain on sale of
non-depreciable real estate
assets
|
|
|
—
|
|
|
|
297
|
|
|
|
959
|
|
|
|
9,260
|
|
|
|
3,870
|
|
Other non-operating
income
|
|
|
20,060
|
|
|
|
4,775
|
|
|
|
374
|
|
|
|
25,770
|
|
|
|
6,065
|
|
Income tax
expense
|
|
|
(1,491)
|
|
|
|
(682)
|
|
|
|
(616)
|
|
|
|
(2,814)
|
|
|
|
(1,826)
|
|
Income from real
estate joint venture
|
|
|
378
|
|
|
|
435
|
|
|
|
402
|
|
|
|
1,210
|
|
|
|
1,256
|
|
Net income
attributable to noncontrolling interests
|
|
|
(2,814)
|
|
|
|
(2,224)
|
|
|
|
(1,913)
|
|
|
|
(7,336)
|
|
|
|
(5,888)
|
|
Dividends to MAA
Series I preferred shareholders
|
|
|
(922)
|
|
|
|
(922)
|
|
|
|
(922)
|
|
|
|
(2,766)
|
|
|
|
(2,766)
|
|
Net income available
for MAA common shareholders
|
|
$
|
77,723
|
|
|
$
|
60,995
|
|
|
$
|
51,869
|
|
|
$
|
201,456
|
|
|
$
|
158,851
|
|
RECONCILIATION OF
EBITDA, EBITDAre, ADJUSTED EBITDAre AND RECURRING
ADJUSTED EBITDAre TO NET
INCOME
|
|
Dollars in
thousands
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Net income
|
|
$
|
81,459
|
|
|
$
|
54,704
|
|
|
$
|
275,075
|
|
|
$
|
231,022
|
|
Depreciation and
amortization
|
|
|
124,684
|
|
|
|
124,549
|
|
|
|
492,958
|
|
|
|
489,759
|
|
Interest
expense
|
|
|
44,513
|
|
|
|
44,650
|
|
|
|
180,603
|
|
|
|
173,594
|
|
Income tax
expense
|
|
|
1,491
|
|
|
|
616
|
|
|
|
3,599
|
|
|
|
2,611
|
|
EBITDA
|
|
|
252,147
|
|
|
|
224,519
|
|
|
|
952,235
|
|
|
|
896,986
|
|
(Gain) loss on sale of
depreciable real estate
assets
|
|
|
(1,000)
|
|
|
|
23
|
|
|
|
(969)
|
|
|
|
39
|
|
Adjustments to reflect
the Company's share of
EBITDAre of unconsolidated affiliates
|
|
|
338
|
|
|
|
313
|
|
|
|
1,336
|
|
|
|
1,242
|
|
EBITDAre
|
|
|
251,485
|
|
|
|
224,855
|
|
|
|
952,602
|
|
|
|
898,267
|
|
Loss (gain) on debt
extinguishment (1)
|
|
|
5
|
|
|
|
—
|
|
|
|
(1,900)
|
|
|
|
(2,179)
|
|
Net casualty gain and
other settlement proceeds (1)
|
|
|
(46)
|
|
|
|
(841)
|
|
|
|
(979)
|
|
|
|
(724)
|
|
Gain on sale of
non-depreciable assets
|
|
|
—
|
|
|
|
(959)
|
|
|
|
(9,922)
|
|
|
|
(4,532)
|
|
Adjusted
EBITDAre
|
|
|
251,444
|
|
|
|
223,055
|
|
|
|
939,801
|
|
|
|
890,832
|
|
Merger and integration
expenses
|
|
|
—
|
|
|
|
1,878
|
|
|
|
609
|
|
|
|
9,112
|
|
Recurring Adjusted
EBITDAre (2)
|
|
$
|
251,444
|
|
|
$
|
224,933
|
|
|
$
|
940,410
|
|
|
$
|
899,944
|
|
|
(1)
Included in Other non-operating income in the Consolidated
Statements of Operations.
|
(2)
Recurring Adjusted EBITDAre for the trailing twelve months
ended September 30, 2019 included the impact of the non-cash income
related to the fair value adjustment of the embedded derivative in
the MAA Series I preferred shares and an unrealized gain, net of
tax, recognized by an unconsolidated affiliate. The inclusion
of the non-cash income items lowered Net Debt/Recurring Adjusted
EBITDAre by 11 basis points for the trailing twelve months
ended September 30, 2019. The non-cash expense related to the
embedded derivative in the preferred shares and the unconsolidated
affiliate for the trailing twelve months ended December 31, 2018
had a negligible impact to Net Debt/Recurring Adjusted
EBITDAre.
|
RECONCILIATION OF
NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES
PAYABLE
|
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Unsecured notes
payable
|
|
$
|
3,830,708
|
|
|
$
|
4,053,302
|
|
Secured notes
payable
|
|
|
645,406
|
|
|
|
475,026
|
|
Total debt
|
|
|
4,476,114
|
|
|
|
4,528,328
|
|
Cash and cash
equivalents
|
|
|
(25,826)
|
|
|
|
(34,259)
|
|
Net Debt
|
|
$
|
4,450,288
|
|
|
$
|
4,494,069
|
|
RECONCILIATION OF
GROSS ASSETS TO TOTAL ASSETS
|
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Total
assets
|
|
$
|
11,247,754
|
|
|
$
|
11,323,781
|
|
Accumulated
depreciation
|
|
|
2,906,677
|
|
|
|
2,549,287
|
|
Accumulated
depreciation for Assets held for
sale (1)
|
|
|
8,553
|
|
|
|
—
|
|
Gross
Assets
|
|
$
|
14,162,984
|
|
|
$
|
13,873,068
|
|
|
(1)
Included in Assets held for sale on the Consolidated Balance
Sheets
|
RECONCILIATION OF
GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET
|
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Real estate assets,
net
|
|
$
|
11,004,200
|
|
|
$
|
11,151,701
|
|
Accumulated
depreciation
|
|
|
2,906,677
|
|
|
|
2,549,287
|
|
Assets held for sale,
net
|
|
|
22,520
|
|
|
|
—
|
|
Accumulated
depreciation for Assets held for
sale (1)
|
|
|
8,553
|
|
|
|
—
|
|
Cash and cash
equivalents
|
|
|
25,826
|
|
|
|
34,259
|
|
Gross Real Estate
Assets
|
|
$
|
13,967,776
|
|
|
$
|
13,735,247
|
|
|
(1)
Included in Assets held for sale on 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, is composed of EBITDAre adjusted for net
gain or loss on non-depreciable asset sales, insurance and other
settlement proceeds and gain or loss on debt extinguishment.
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 available for MAA common shareholders as an indicator of
financial performance.
Adjusted Funds From Operations (AFFO)
AFFO is composed
of FFO less recurring capital expenditures. In order to better
align the classification of capital expenditures with business
goals, certain capital expenditures related to commercial
properties have been reclassified out of recurring capital
expenditures and revenue enhancing capital expenditures for
comparative purposes. AFFO should not be considered as an
alternative to Net income available for MAA common
shareholders. As an owner and operator of real estate, MAA
considers AFFO to be an important measure of performance from
operations because AFFO measures the ability to control revenues,
expenses and recurring capital expenditures.
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 available for MAA
common shareholders as an indicator of financial 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, as defined above, excluding 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 available for MAA common
shareholders as an indicator of financial performance.
Funds Available for Distribution (FAD)
FAD is composed
of FFO less total capital expenditures, excluding development
spending and property acquisitions. FAD should not be considered as
an alternative to Net income available for MAA common
shareholders. 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 gains or losses 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
noncontrolling interest 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.
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Gross Assets
Gross Assets represents Total assets plus
Accumulated depreciation and accumulated depreciation for
Assets held for sale, which is included in Assets held for
sale. 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.
Gross Real Estate Assets
Gross Real Estate Assets
represents Real estate assets, net plus Accumulated depreciation,
Assets held for sale, net, accumulated depreciation for Assets held
for sale and Cash and cash equivalents. 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. 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, 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 by market is a
helpful tool in evaluating the operating performance within MAA's
markets because it measures the core operations of property
performance by excluding corporate level expenses and other items
not related to property operating performance.
Recurring Adjusted EBITDAre
Recurring Adjusted
EBITDAre represents Adjusted EBITDAre further
adjusted to exclude certain items that are not considered part of
MAA's core business operations such as acquisition and merger and
integration expenses. MAA believes Recurring Adjusted
EBITDAre is an important performance measure as it adjusts
for certain items that by their nature are not comparable over
periods and therefore tend to obscure actual operating
performance. MAA's definition of Recurring Adjusted
EBITDAre may differ from the methodology utilized by other
companies to calculate Recurring Adjusted EBITDAre.
Recurring Adjusted EBITDAre should not be considered as an
alternative to Net income available for MAA common shareholders as
an indicator of operating performance.
Same Store NOI
Same Store NOI represents Rental and
other property revenues less Total property operating expenses,
excluding depreciation, 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 the operating performance within MAA's markets
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 the
respective 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 at least 90% occupancy for 90
days.
OTHER KEY DEFINITIONS (CONTINUED)
Non-Same Store Portfolio
Non-Same Store Portfolio
includes recent acquisitions, communities that have been identified
for disposition, communities that have undergone a significant
casualty loss, and stabilized communities that do not meet the
requirements defined by the Same Store Portfolio.
Same Store Portfolio
MAA reviews its Same Store
Portfolio at the beginning of each calendar year, or as significant
transactions 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 at least 90% 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.
Unencumbered NOI
Unencumbered NOI represents NOI
generated by unencumbered assets (as defined in MAALP's bond
covenants).
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SOURCE MAA