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Mid-America Apartment (MAA) Beats Q1 FFO Estimates, Ups '22 View

Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported first-quarter 2022 core funds from operations (FFO) per share of $1.97, surpassing the Zacks Consensus Estimate of $1.92. The reported number increased 20.1% year over year.

The residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. The average physical occupancy for the same-store portfolio also increased year over year.

The rental and other property revenues came in at $476.1 million, outpacing the Zacks Consensus Estimate of $474.20 million. The reported figure was 12% higher than the previous-year quarter’s $425 million.

Quarter in Detail

The same-store portfolio’s revenues grew 12.2% on a year-over-year basis due to a rise of 12.4% in the average effective rent per unit. The average physical occupancy for the same-store portfolio in the first quarter was 95.9%, up from the prior-year quarter’s 95.7%. The resident turnover for the same period was 44.7%.

In the first quarter, lease pricing in MAA’s same-store portfolio for both new and renewing leases compared with the prior lease grew 16.8% on a combined basis. The same-store net operating income (NOI) reflects year-over-year growth of 16.9%.

However, the same-store portfolio property operating expenses were up 4.3%.

Balance Sheet Position

As of Mar 31, 2022, $1.0 billion of combined cash and capacity was available under its unsecured revolving credit facility. As of the same date, the total debt outstanding was $4.5 billion. Net debt to adjusted EBITDAre was reported at 4.27X in the quarter, while total debt average years to maturity is 8.4 years.

MAA exited first-quarter 2022 with cash and cash equivalents of $60.4 million, up from $54.3 million reported at the end of 2021.

As of Mar 31, 2022, unencumbered NOI was 95.2% of the total NOI.
MAA enjoys a long-term debt rating of Baa1 from Moody’s Investors Service, which revised its outlook from stable to positive.

Portfolio Activity

During the first quarter, MAA redeveloped 1,098 units.

As of Mar 31, 2022, MAA had five development communities under construction, with a total projected cost of $444 million and an estimated $251.2 million remaining to be funded. The projected average stabilized NOI yield is 5.7% for the same.

In March, MAA acquired a four-acre land parcel located in the Denver, CO, market for future development.

Revised Outlook

MAA revised its 2022 guidance.

The company estimates 2022 core FFO per share in the range of $7.92 -$8.24, with a midpoint of $8.08, revised upward from the prior estimation of $7.74-$8.10 with a midpoint of $7.92. The Zacks Consensus Estimate for the same is pegged at $8.02.

For 2022, management forecasts same-store property revenue growth of 10.0-12.0% having a midpoint of 11%, up from the previous range of 8-10% with a midpoint of 9.0%. Same-store property operating expense growth is projected between 5.5% and 6.5% with a midpoint of 6.0%, up from the prior range of 5-6% with a midpoint of 5.5%. Moreover, same-store NOI growth is anticipated to lie between 12.5% and14.5% with a midpoint of 13.5%, revised upward from the earlier range of 10-12% with a midpoint of 11%.

MAA projects second-quarter 2022 core FFO per share at $1.89-$2.05 with $1.97 per share at the midpoint. The Zacks Consensus Estimate for the same is pegged at $1.97.

MAA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MidAmerica Apartment Communities, Inc. Price, Consensus and EPS Surprise

MidAmerica Apartment Communities, Inc. Price, Consensus and EPS Surprise
MidAmerica Apartment Communities, Inc. Price, Consensus and EPS Surprise

MidAmerica Apartment Communities, Inc. price-consensus-eps-surprise-chart | MidAmerica Apartment Communities, Inc. Quote

Performance of Notable REITs

UDR Inc. UDR reported first-quarter 2022 FFO as adjusted per share of 55 cents, in line with the Zacks Consensus Estimate. The figure is 17% higher than the prior-year quarter’s 47 cents.

UDR’s quarterly revenues climbed 18.5% year over year to $357.3 million. The top line surpassed the Zacks Consensus Estimate of $353.8 million.

An increase in revenues from rental income fueled the quarter’s top-line growth. Robust operating trends and strong pricing power were major contributing factors.

Essex Property Trust Inc. ESS reported first-quarter 2022 core FFO per share of $3.37, beating the Zacks Consensus Estimate of $3.34. The figure also improved 9.8% from the year-ago quarter. Additionally, total revenues of $381.9 million surpassed the Zacks Consensus Estimate of $376.3 million. The figure increased 7.5% year over year.

Improvement in same-property revenues and net operating income during the quarter supported growth in ESS’ core FFO.

Equity Residential’s EQR reported first-quarter 2022 normalized FFO per share of 77 cents, missing the Zacks Consensus Estimate of 80 cents. Rental income came in at $653.3 million, lagging the consensus mark of $658.07 million. Nonetheless, on a year-over-year basis, normalized FFO per share improved 13.2%, while rental income climbed 9.3%.

EQR’s normalized FFO grew based on strong lease demand, while same-store revenue witnessed growth driven by strong physical occupancy and improvement in pricing power.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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