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Redevelopment Initiatives Continue to Roll for MAA

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Mid-America Apartment Communities Inc. or MMA recently released its Q1 earnings. Net income available for MAA common shareholders was $41 million, or $0.36 per diluted common share, compared to $43.4 million, or $0.58 per diluted common share, for the quarter ended March 31, 2016.

Results for the quarter ended March 31, 2017 included $2.3 million, or $0.02 per diluted common share, of non-cash income related to an embedded derivative in the preferred shares issued in the merger transaction with Post Properties Inc. Also, results for the quarter ended March 31, 2016 included $2.4 million, or $0.03 per diluted common share, of gains on the sale of real estate assets.

Eric Bolton, chairman and CEO said, “Our portfolio of quality apartment homes diversified across the high-growth Sunbelt markets captured solid results in the first quarter.”

Bolton explained that “Integration activities surrounding the merger of MAA and Post Properties platforms are going smoothly and the value proposition that we have previously outlined is very much intact. As the current apartment real estate cycle continues to play out, we believe MAA is well positioned to capture steady results as well as take advantage of attractive new opportunities that are presented.”

According to analyst company RBC Capital Markets, redevelopment initiatives will continue to roll for the REIT. The company continued to execute on its external growth strategy, acquiring newly developed Charlotte at Midtown, a 279-unit building in Downtown Nashville for $62.5 million.

The RBC analyst said that the $1.46 per share was $.06 per share ahead of its expectations. That beat, the firm said, was due largely to stronger than expected NOI as well as non-cash derivative income related to the PPS merger.

Key highlights from the Q1 report were are as follows:

  • Combined Adjusted Same Store NOI for the first quarter increased 3.6% as compared to the same period in the prior year, based on a 2.8% increase in revenue and a 1.3% increase in property operating expenses.
  • Average Effective Rent per Unit for the Combined Adjusted Same Store Portfolio increased to $1,153 during the first quarter, a 2.9% increase as compared to the same period in the prior year, while Average Physical Occupancy was at 96.0% for the first quarter.
  • Resident turnover for the Combined Adjusted Same Store Portfolio remained low for the first quarter at 50.5% on a rolling 12 month basis.
  • During the first quarter, MAA acquired one property, a newly built 279-unit community in initial lease-up located in Nashville.
  • As of the end of the first quarter, MAA had seven development projects underway. In total, MAA’s development projects contain 2,420 units, with a total projected cost of approximately $505.4 million, of which approximately $128.7 million remained to be funded as of the end of the first quarter.
  • As of the end of the first quarter, six properties remained in lease-up, including the new property acquired during the quarter, with average quarter-end physical occupancy of 85.6% for the group.
  • During the first quarter, MAA completed renovation of 1,521 units under its redevelopment program, achieving average rental rate increases of 8.9% above non-renovated units.
  • During the first quarter, Moody’s Investors Service upgraded the senior unsecured rating of MAA’s primary operating partnership, Mid-America Apartments, L.P., to Baa1 with a stable outlook.