MEMPHIS, Tenn., April 26,
2017 /PRNewswire/ -- Mid-America Apartment Communities, Inc.,
or MAA, (NYSE: MAA) today announced operating results for the
quarter ended March 31, 2017.
Net Income Available for Common Shareholders
For the
quarter ended March 31, 2017, net income available for MAA
common shareholders was $41.0
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, or the Post Properties
Merger, with Post Properties, Inc., or Post Properties;
$6.2 million, or $0.05 per diluted common share, of merger and
integration costs related to the Post Properties Merger, as well as
$29.3 million, or $0.26 per diluted common share, of additional
depreciation and amortization expense related to the step-up in
asset values from the Post Properties Merger. 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.
Funds from Operations (FFO)
For the quarter ended
March 31, 2017, FFO was $171.7
million, or $1.46 per diluted
common share and unit, or per Share, compared to $119.4 million, or $1.50 per Share, for the quarter ended
March 31, 2016. Results for the quarter ended
March 31, 2017 included $2.3 million, or $0.02 per Share, of non-cash income related to an
embedded derivative in the preferred shares issued in the Post
Properties Merger and $6.2 million,
or $0.05 per Share, of merger and
integration costs related to the Post Properties
Merger. Also, results for the quarter ended
March 31, 2016 included $1.6 million, or $0.02 per Share, of gains on the sale of
non-depreciable real estate assets.
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, "Our portfolio of quality apartment homes
diversified across the high-growth Sunbelt markets captured solid
results in the first quarter. 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."
Highlights
- 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
twelve month basis.
- During the first quarter, MAA acquired one property, a newly
built 279-unit community in initial lease-up located in
Nashville, Tennessee.
- 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.
First Quarter Combined Adjusted Same Store Portfolio
Operating Results
To ensure comparable reporting with prior
periods, our same store portfolio, or MAA Same Store Portfolio,
includes properties which are stabilized and which were owned by us
at the beginning of the previous year. To provide relevant
operating metrics for the first quarter, stabilized communities
acquired from the Post Properties Merger that would otherwise have
met our requirements to be included in the MAA Same Store
Portfolio, are presented on a combined adjusted basis, as if owned
by MAA during the prior period. The Combined Adjusted Same Store
Portfolio presentation below represents the MAA Same Store
Portfolio and the Post Adjusted Same Store Portfolio considered as
a single portfolio. Those Post Properties communities will
not be eligible to enter the MAA Same Store Portfolio until
January 1, 2018. Operating
results for the Combined Adjusted Same Store Portfolio of 91,700
units in MAA's Large Market and Secondary Market segments of the
portfolio are presented below:
|
Percent Change
From
|
|
Three months
ended
|
|
Three months ended
March 31, 2016
|
|
March 31,
2017
|
|
|
|
|
|
|
|
Average
|
|
Average
|
|
|
|
|
|
|
|
Effective
|
|
Physical
|
|
Revenue
|
|
Expense
|
|
NOI
|
|
Rent per
Unit
|
|
Occupancy
|
Large
Market
|
2.9
|
%
|
|
0.3
|
%
|
|
4.5
|
%
|
|
2.9
|
%
|
|
95.9
|
%
|
Secondary
Market
|
2.4
|
%
|
|
4.4
|
%
|
|
1.3
|
%
|
|
2.9
|
%
|
|
96.2
|
%
|
Combined Adjusted
Same Store Portfolio
|
2.8
|
%
|
|
1.3
|
%
|
|
3.6
|
%
|
|
2.9
|
%
|
|
96.0
|
%
|
Combined Adjusted Same Store Portfolio revenue growth of 2.8%
during the first quarter of 2017 was primarily produced by a 2.9%
increase in Average Effective Rent per Unit, as compared to the
same period in the prior year. Average Physical
Occupancy for the Combined Adjusted Same Store Portfolio was 96.0%
for the first quarter of 2017, as compared to 96.1% in the same
period of the prior year. Property operating expenses increased
1.3% for the first quarter of 2017, with the largest portion of the
growth related to property taxes and building repair and
maintenance, partially offset by declining personnel, insurance and
office operations costs.
A reconciliation of NOI, including Combined Adjusted 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.
Acquisition and Disposition Activity
During the first
quarter of 2017, MAA acquired a newly developed apartment
community, Charlotte at Midtown, a 279-unit property located in the
highly desirable Downtown/West End submarket of Nashville, Tennessee, for a purchase price of
$62.5 million.
Development and Lease-up Activity
As of the end of
the first quarter of 2017, MAA had seven development communities
under construction, consisting of three expansion projects and four
new development communities. Total development costs for the
seven communities are projected to be $505.4
million, with an expected average stabilized NOI yield of
6.3%. During the first quarter of 2017, MAA funded $62.5 million of construction costs leaving an
estimated $128.7 million remaining to
be funded.
MAA had six communities remaining in initial lease-up as of the
end of the first quarter of 2017: Residences at Fountainhead,
located in the Phoenix, Arizona
market; Innovation Apartment Homes, located in Greenville, South Carolina; 1201 Midtown,
located in the Charleston, South
Carolina market; Retreat at West Creek II, a phase two
expansion of a community located in Richmond, Virginia; Colonial Grand at Randal
Lakes II, a phase two expansion of a community located in
Orlando, Florida; and Charlotte at
Midtown, located in Nashville,
Tennessee. Physical occupancy for the six lease-up projects
averaged 85.6% at the end of the first quarter of 2017.
Redevelopment Activity
MAA continues its interior
redevelopment program at select communities throughout the
portfolio. During the first quarter of 2017, MAA redeveloped
a total of 1,521 units at an average cost of $4,164 per unit, achieving average rental rate
increases of 8.9% above non-renovated units. We expect a
total of 6,000 to 7,000 units to be redeveloped in 2017.
Capital Expenditures
Recurring capital expenditures
totaled $11.2 million for the first
quarter of 2017, or approximately $0.10 per Share, as compared to $9.5 million, or $0.12 per Share, for the same period in
2016. These expenditures led to Adjusted Funds from
Operations, or AFFO, of $1.36 per
Share, for the first quarter of 2017, compared to $1.38 per Share for the same period in 2016.
Redevelopment, revenue enhancing and other capital expenditures
during the first quarter of 2017 were $15.3
million, as compared to $15.3
million for the same period in 2016. These expenditures led
to Funds Available for Distribution, or FAD, of $145.2 million for the first quarter of 2017,
compared to $94.5 million for the
same period in 2016.
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.
Balance Sheet
As of March 31, 2017:
- Total debt to total assets (as defined in our debt covenants)
was 34.1% compared to 33.9% as of December
31, 2016;
- Total debt outstanding was $4.6
billion at an average effective interest rate of 3.4%;
- 81.8% of total debt was fixed or hedged against rising interest
rates for an average of 4.1 years;
- Approximately $461.8 million
combined cash and capacity under MAA's unsecured revolving credit
facility was available; and
- Unencumbered assets increased to 80.7% of Gross Assets, as
compared to 80.3% as of December 31,
2016.
A reconciliation of Gross Assets to Total assets, and an
expanded discussion of the components of Gross Assets, can be found
later in this release.
Merger Related Activities
In connection with the
merger with Post Properties that was consummated on December 1, 2016, MAA incurred a total of
$2.9 million, or $0.02 per Share, of merger costs during the first
quarter of 2017, consisting primarily of severance, legal,
professional and advisory costs.
Integration efforts continue to progress well, with the Post
Properties portfolio consolidated into the company's operating
structure and with activities to combine the operating and
financial system platforms well underway. During the first quarter
of 2017, MAA incurred $3.3 million,
or $0.03 per Share, of integration
costs, which were primarily related to temporary systems, staffing,
facilities and consulting costs necessary for the integration of
the companies' business platforms. MAA expects to incur
additional integration costs through the remainder of 2017, as
integration efforts are projected to continue through early
2018.
Once the business platforms are fully integrated, MAA continues
to forecast expected synergies of approximately $20 million in gross overhead costs (combined
general and administrative costs and property management expense
savings) to be realized. MAA also anticipates additional
opportunities and savings to be gained from enhanced efficiencies
due to increased portfolio scale, from various improvements to
operating practices, from significant redevelopment opportunities
at a number of existing properties, and from an improved cost of
capital due to increased strength and liquidity of the combined
balance sheet.
93rd Consecutive Quarterly Common Dividend Declared
MAA declared its 93rd consecutive quarterly common dividend at an
annual rate of $3.48 per common
share, which will be paid on April 28,
2017 to holders of record on April
13, 2017.
2017 Net Income per diluted common share and FFO and AFFO per
Share Guidance
MAA is updating 2017 guidance for Net income
per diluted common share, as well as FFO per Share and AFFO per
Share, which are non-GAAP measures. Net income per diluted common
share is expected to be in the range of $2.54 to $2.74 per diluted common share for the
full year of 2017. FFO per Share for the year is expected to
be in the range of $5.74 to $5.94 per
Share, or $5.84 per Share at the
mid-point, as compared to a prior range of $5.72 to $5.92. FFO per Share for the
second quarter is expected to be in the range of $1.36 to $1.46 per share, or $1.41 per share at the midpoint. MAA does
not forecast net income available for common shareholders per
diluted common 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). Acquisition and
disposition activity materially affects depreciation and capital
gains or losses, which, combined, generally represent 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, 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.
Supplemental Material and Conference Call
Supplemental data to this release can be found under the "Financial
Results" navigation tab on the "For Investors" page of our website
at www.maac.com. MAA will host a conference call to further discuss
first quarter results on Thursday, April 27,
2017, at 9:00 AM Central
Time. The conference call-in number is
800-895-4790. 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 focused on delivering full-cycle and
superior investment performance for shareholders through the
ownership, management, acquisition, development and redevelopment
of quality apartment communities throughout the United States. As of March 31, 2017, MAA had ownership interest in
101,788 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, 6584 Poplar Ave.,
Memphis, 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 about the anticipated benefits from the
completed merger with Post Properties and statements concerning
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, operating performance and results
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 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. Such factors include,
among other things, unanticipated adverse business developments
affecting us, or our properties, adverse changes in the real estate
markets and general and local economies and business conditions.
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 future
results to differ materially from those expressed 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, if at all,
within budget and on a timely basis or to lease-up as
anticipated;
- unexpected capital needs;
- changes in operating costs, including real estate taxes,
utilities and insurance costs;
- 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 or
interest rate caps;
- the continuation of the good credit of our interest rate swap
and cap 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;
- 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 our operating partnership 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;
- cyberliability or potential liability for breaches of our
privacy or information security systems;
- potential liability for environmental contamination;
- adverse legislative or regulatory tax changes;
- litigation and compliance costs associated with laws requiring
access for disabled persons;
- risks associated with unexpected costs or unexpected
liabilities that may arise from the Post Properties Merger;
- risks associated with the Post Properties Merger, including the
integration of MAA's and Post Properties' businesses and achieving
expected revenue synergies and/or cost savings as a result of the
merger; and
- other risks identified in this press release and, from time to
time, in other reports we file with the SEC or in other documents
that we publicly disseminate.
We undertake no obligation to publicly update or revise these
forward-looking statements 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
March 31,
|
|
2017
|
|
2016
|
|
|
|
|
Total operating
revenues
|
$
|
378,908
|
|
|
$
|
269,016
|
|
|
|
|
|
Net income available
for MAA common shareholders
|
$
|
40,983
|
|
|
$
|
43,413
|
|
|
|
|
|
Total NOI
|
$
|
237,635
|
|
|
$
|
168,135
|
|
|
|
|
|
Earnings per common
share:(1)
|
|
|
|
Basic
|
$
|
0.36
|
|
|
$
|
0.58
|
|
Diluted
|
$
|
0.36
|
|
|
$
|
0.58
|
|
|
|
|
|
Funds from operations
per Share (diluted):(1)
|
|
|
|
FFO
|
$
|
1.46
|
|
|
$
|
1.50
|
|
AFFO
|
$
|
1.36
|
|
|
$
|
1.38
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.87
|
|
|
$
|
0.82
|
|
|
|
|
|
Dividends/ FFO
(diluted) payout ratio
|
59.6
|
%
|
|
54.7
|
%
|
Dividends/ AFFO
(diluted) payout ratio
|
64.0
|
%
|
|
59.4
|
%
|
|
|
|
|
Consolidated interest
expense
|
$
|
36,584
|
|
|
$
|
32,211
|
|
Mark-to-market debt
adjustment
|
4,417
|
|
|
3,851
|
|
Debt discount and
debt issuance cost amortization
|
(1,271)
|
|
|
(1,218)
|
|
Capitalized
interest
|
2,020
|
|
|
380
|
|
Total interest
incurred
|
$
|
41,750
|
|
|
$
|
35,224
|
|
|
|
|
|
Amortization of
principal on notes payable
|
$
|
3,074
|
|
|
$
|
1,874
|
|
|
|
|
|
(1) See
"Share and Unit Data" section for additional
information.
|
|
FINANCIAL
HIGHLIGHTS (CONTINUED)
|
|
|
Dollars in
thousands, except per share data
|
|
|
|
|
As
of
|
|
March 31,
2017
|
|
December 31,
2016
|
Gross
Assets(1)
|
$
|
13,347,590
|
|
|
$
|
13,279,292
|
|
Gross Real Estate
Assets(1)
|
$
|
13,192,998
|
|
|
$
|
13,108,458
|
|
Total debt
|
$
|
4,557,184
|
|
|
$
|
4,499,712
|
|
Common shares and
units outstanding
|
117,792,242
|
|
|
117,738,615
|
|
Share
price
|
$
|
101.74
|
|
|
$
|
97.92
|
|
Book equity
value
|
$
|
6,595,964
|
|
|
$
|
6,652,174
|
|
Market equity
value
|
$
|
11,984,183
|
|
|
$
|
11,528,965
|
|
Net Debt/Recurring
EBITDA (2)
|
5.61x
|
|
|
5.74x
|
|
|
|
|
|
|
|
(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 EBITDA in this calculation represents the trailing twelve
month period for each date presented. Since only four months
of Recurring EBITDA for the Post Properties communities is included
in the results for the twelve month period ended March 31, 2017 and
one month for the period ended December 31, 2016, in calculating
the ratio as of March 31, 2017 and December 31, 2016, we have
adjusted Net Debt by averaging the Net Debt for the prior four
quarters. A reconciliation of the following items and an
expanded discussion of their respective components can be found
later in this release: (i) EBITDA and Recurring EBITDA to net
income; and (ii) Net Debt to Unsecured notes payable and Secured
notes payable.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
Dollars in
thousands, except per share data
|
|
|
|
|
Three months ended
March 31,
|
|
2017
|
|
2016
|
Operating
revenues:
|
|
|
|
Rental
revenues
|
$
|
351,177
|
|
|
$
|
245,665
|
|
Other property
revenues
|
27,731
|
|
|
23,351
|
|
Total operating
revenues
|
378,908
|
|
|
269,016
|
|
Property operating
expenses:
|
|
|
|
Personnel
|
33,373
|
|
|
25,197
|
|
Building repairs and
maintenance
|
9,813
|
|
|
6,099
|
|
Real estate taxes and
insurance
|
53,973
|
|
|
35,172
|
|
Utilities
|
26,897
|
|
|
22,136
|
|
Landscaping
|
6,522
|
|
|
5,321
|
|
Other
operating
|
10,695
|
|
|
6,956
|
|
Depreciation and
amortization
|
129,997
|
|
|
75,127
|
|
Total property
operating expenses
|
271,270
|
|
|
176,008
|
|
Acquisition
expenses(1)
|
—
|
|
|
713
|
|
Property management
expenses
|
10,981
|
|
|
9,004
|
|
General and
administrative expenses
|
12,840
|
|
|
6,582
|
|
Merger related
expenses
|
2,871
|
|
|
—
|
|
Integration related
expenses
|
3,290
|
|
|
—
|
|
Income from
continuing operations before non-operating items
|
77,656
|
|
|
76,709
|
|
Interest and other
non-property income
|
2,679
|
|
|
32
|
|
Interest
expense
|
(36,584)
|
|
|
(32,211)
|
|
Gain on debt
extinguishment
|
123
|
|
|
3
|
|
Net casualty loss
after insurance and other settlement proceeds
|
(91)
|
|
|
(947)
|
|
(Loss) gain on sale
of depreciable real estate assets
|
(73)
|
|
|
755
|
|
Gain on sale of
non-depreciable real estate assets
|
—
|
|
|
1,627
|
|
Income before income
tax expense
|
43,710
|
|
|
45,968
|
|
Income tax
expense
|
(651)
|
|
|
(288)
|
|
Income from
continuing operations before joint venture activity
|
43,059
|
|
|
45,680
|
|
Gain from real estate
joint ventures
|
357
|
|
|
128
|
|
Net income
|
43,416
|
|
|
45,808
|
|
Net income
attributable to noncontrolling interests
|
1,511
|
|
|
2,395
|
|
Net income available
for shareholders
|
41,905
|
|
|
43,413
|
|
Dividends to
preferred shareholders
|
922
|
|
|
—
|
|
Net income available
for MAA common shareholders
|
$
|
40,983
|
|
|
$
|
43,413
|
|
|
|
|
|
Earnings per common
share - basic:
|
|
|
|
Net income available
for common shareholders
|
$
|
0.36
|
|
|
$
|
0.58
|
|
|
|
|
|
Earnings per common
share - diluted:
|
|
|
|
Net income available
for common shareholders
|
$
|
0.36
|
|
|
$
|
0.58
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.87
|
|
|
$
|
0.82
|
|
|
(1) MAA adopted ASU 2017-01,
Clarifying the Definition of a Business (Topic 805), during the
first quarter of 2017. Based on the adoption of this
guidance, MAA capitalized the acquisition costs related to the
property acquired during the first quarter of 2017.
|
SHARE AND UNIT
DATA
|
|
|
|
Shares and units
in thousands
|
|
|
|
|
Three months ended
March 31,
|
|
2017
|
|
2016
|
NET INCOME
SHARES (1)
|
|
|
|
Weighted average
common shares - basic
|
113,338
|
|
|
75,249
|
|
Weighted average
partnership units outstanding
|
4,219
|
|
|
—
|
|
Effect of dilutive
securities
|
307
|
|
|
240
|
|
Weighted average
common shares - diluted
|
117,864
|
|
|
75,489
|
|
FUNDS FROM
OPERATIONS SHARES AND UNITS
|
|
|
|
Weighted average
common shares and units - basic
|
117,557
|
|
|
79,411
|
|
Weighted average
common shares and units - diluted
|
117,802
|
|
|
79,614
|
|
PERIOD END SHARES
AND UNITS
|
|
|
|
Common shares at
March 31,
|
113,575
|
|
|
75,505
|
|
Partnership units at
March 31,
|
4,217
|
|
|
4,162
|
|
Total common shares
and units at March 31,
|
117,792
|
|
|
79,667
|
|
|
(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 months ended March 31, 2017,
expected to be filed with the SEC on or about April 27,
2017.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
Dollars in
thousands
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
Real estate
assets
|
|
|
|
Land
|
$
|
1,825,223
|
|
|
$
|
1,816,008
|
|
Buildings and
improvements
|
10,636,260
|
|
|
10,523,762
|
|
Furniture, fixtures
and equipment
|
307,463
|
|
|
298,204
|
|
Capital improvements
in progress
|
242,286
|
|
|
231,224
|
|
|
13,011,232
|
|
|
12,869,198
|
|
Accumulated
depreciation
|
(1,768,527)
|
|
|
(1,656,071)
|
|
|
11,242,705
|
|
|
11,213,127
|
|
Undeveloped
land
|
71,464
|
|
|
71,464
|
|
Corporate property,
net
|
12,350
|
|
|
12,778
|
|
Investments in real
estate joint ventures
|
44,629
|
|
|
44,493
|
|
Real estate assets,
net
|
11,371,148
|
|
|
11,341,862
|
|
Cash and cash
equivalents
|
33,959
|
|
|
33,536
|
|
Restricted
cash
|
24,540
|
|
|
88,264
|
|
Deferred financing
cost, net
|
4,679
|
|
|
5,065
|
|
Other
assets
|
124,134
|
|
|
134,525
|
|
Goodwill
|
1,239
|
|
|
1,239
|
|
Total
assets
|
$
|
11,559,699
|
|
|
$
|
11,604,491
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Liabilities
|
|
|
|
Unsecured notes
payable
|
$
|
3,260,686
|
|
|
$
|
3,180,624
|
|
Secured notes
payable
|
1,296,498
|
|
|
1,319,088
|
|
Accounts
payable
|
13,346
|
|
|
11,970
|
|
Fair market value of
interest rate swaps
|
5,001
|
|
|
7,562
|
|
Accrued expenses and
other liabilities
|
368,785
|
|
|
414,244
|
|
Security
deposits
|
19,419
|
|
|
18,829
|
|
Total
liabilities
|
4,963,735
|
|
|
4,952,317
|
|
Redeemable
stock
|
9,132
|
|
|
10,073
|
|
Shareholders'
equity
|
|
|
|
Preferred
stock
|
9
|
|
|
9
|
|
Common
stock
|
1,134
|
|
|
1,133
|
|
Additional paid-in
capital
|
7,111,445
|
|
|
7,109,012
|
|
Accumulated
distributions in excess of net income
|
(765,749)
|
|
|
(707,479)
|
|
Accumulated other
comprehensive income
|
4,223
|
|
|
1,144
|
|
Total MAA
shareholders' equity
|
6,351,062
|
|
|
6,403,819
|
|
Noncontrolling
interest - operating partnership units
|
233,464
|
|
|
235,976
|
|
Total Company's
shareholders' equity
|
6,584,526
|
|
|
6,639,795
|
|
Noncontrolling
interest - consolidated real estate entity
|
2,306
|
|
|
2,306
|
|
Total
equity
|
6,586,832
|
|
|
6,642,101
|
|
Total liabilities and
shareholders' equity
|
$
|
11,559,699
|
|
|
$
|
11,604,491
|
|
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
|
|
March
31,
|
|
2017
|
|
2016
|
Net income available
for MAA common shareholders
|
$
|
40,983
|
|
|
$
|
43,413
|
|
Depreciation and
amortization of real estate assets
|
128,968
|
|
|
74,322
|
|
Loss (gain) on sale
of depreciable real estate assets
|
73
|
|
|
(755)
|
|
Depreciation and
amortization of real estate assets of real estate joint
ventures
|
152
|
|
|
6
|
|
Net income
attributable to noncontrolling interests
|
1,511
|
|
|
2,395
|
|
Funds from operations
attributable to the Company
|
171,687
|
|
|
119,381
|
|
Recurring capital
expenditures
|
(11,169)
|
|
|
(9,525)
|
|
Adjusted funds from
operations
|
160,518
|
|
|
109,856
|
|
Redevelopment and
revenue enhancing capital expenditures
|
(11,369)
|
|
|
(13,062)
|
|
Other capital
expenditures
|
(3,972)
|
|
|
(2,279)
|
|
Funds available for
distribution
|
$
|
145,177
|
|
|
$
|
94,515
|
|
|
|
|
|
|
|
|
|
Dividends and
distributions paid
|
$
|
102,458
|
|
|
$
|
65,270
|
|
Weighted average
common shares - diluted
|
117,864
|
|
|
75,489
|
|
Weighted average
common shares and units - diluted
|
117,802
|
|
|
79,614
|
|
|
|
|
|
Earnings per common
share - diluted:
|
|
|
|
Net income available
for common shareholders
|
$
|
0.36
|
|
|
$
|
0.58
|
|
|
|
|
|
Funds from operations
per Share
|
$
|
1.46
|
|
|
$
|
1.50
|
|
Adjusted funds from
operations per Share
|
$
|
1.36
|
|
|
$
|
1.38
|
|
RECONCILIATION OF
NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON
SHAREHOLDERS
|
Dollars in
thousands
|
|
|
|
|
|
|
Three Months
Ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
NOI
|
|
|
|
|
|
Combined Adjusted
Same Store NOI
|
$
|
215,710
|
|
|
$
|
217,207
|
|
|
$
|
208,118
|
|
Combined Adjusted
Non-Same Store NOI
|
21,925
|
|
|
19,906
|
|
|
20,182
|
|
Total Combined
Adjusted NOI
|
237,635
|
|
|
237,113
|
|
|
228,300
|
|
Legacy Post
Properties Adjustment(1)
|
—
|
|
|
(42,789)
|
|
|
(60,165)
|
|
Total NOI
|
237,635
|
|
|
194,324
|
|
|
168,135
|
|
Depreciation and
amortization
|
(129,997)
|
|
|
(95,129)
|
|
|
(75,127)
|
|
Acquisition
expense
|
—
|
|
|
(761)
|
|
|
(713)
|
|
Property management
expenses
|
(10,981)
|
|
|
(8,872)
|
|
|
(9,004)
|
|
General and
administrative expenses
|
(12,840)
|
|
|
(8,782)
|
|
|
(6,582)
|
|
Merger related
expenses
|
(2,871)
|
|
|
(35,133)
|
|
|
—
|
|
Integration related
expenses
|
(3,290)
|
|
|
(1,790)
|
|
|
—
|
|
Interest and other
non-property income
|
2,679
|
|
|
565
|
|
|
32
|
|
Interest
expense
|
(36,584)
|
|
|
(33,529)
|
|
|
(32,211)
|
|
Gain (loss) on debt
extinguishment
|
123
|
|
|
(85)
|
|
|
3
|
|
(Loss) gain on sale
of depreciable real estate assets
|
(73)
|
|
|
31,825
|
|
|
755
|
|
Net casualty loss and
other settlement proceeds
|
(91)
|
|
|
(290)
|
|
|
(947)
|
|
Income tax
expense
|
(651)
|
|
|
(499)
|
|
|
(288)
|
|
Gain on sale of
non-depreciable real estate assets
|
—
|
|
|
—
|
|
|
1,627
|
|
Gain from real estate
joint ventures
|
357
|
|
|
214
|
|
|
128
|
|
Net income
attributable to noncontrolling interests
|
(1,511)
|
|
|
(2,672)
|
|
|
(2,395)
|
|
Preferred dividend
distributions
|
(922)
|
|
|
(307)
|
|
|
—
|
|
Net income available
for MAA common shareholders
|
$
|
40,983
|
|
|
$
|
39,079
|
|
|
$
|
43,413
|
|
|
(1) Amounts presented represent the
operating results for Legacy Post Properties prior to the Post
Properties Merger that have been included in Total Combined
Adjusted NOI. Prior year results have been adjusted for
consistency with MAA accounting policies and year over year
comparisons. These adjustments include the effect of moving
corporate property management expenses, exterior paint costs and IT
operating systems costs out of property expenses.
|
RECONCILIATION OF
EBITDA AND RECURRING EBITDA TO NET INCOME
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
March
31,
|
|
March
31,
|
|
March
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net income
|
$
|
43,416
|
|
|
$
|
45,808
|
|
|
$
|
222,011
|
|
|
$
|
224,402
|
|
Depreciation and
amortization
|
129,997
|
|
|
75,127
|
|
|
377,828
|
|
|
322,958
|
|
Interest
expense
|
36,584
|
|
|
32,211
|
|
|
134,320
|
|
|
129,947
|
|
(Gain) loss on debt
extinguishment
|
(123)
|
|
|
(3)
|
|
|
(38)
|
|
|
83
|
|
Net casualty loss
(gain) and other settlement proceeds
|
91
|
|
|
947
|
|
|
(1,304)
|
|
|
(448)
|
|
Income tax
expense
|
651
|
|
|
288
|
|
|
2,062
|
|
|
1,699
|
|
Gain on sale of
non-depreciable assets
|
—
|
|
|
(1,756)
|
|
|
(543)
|
|
|
(2,171)
|
|
Loss (gain) on sale
of depreciable real estate assets
|
73
|
|
|
(755)
|
|
|
(79,569)
|
|
|
(80,397)
|
|
Loss (gain) on
disposition within unconsolidated entities
|
—
|
|
|
—
|
|
|
101
|
|
|
(28)
|
|
EBITDA
|
210,689
|
|
|
151,867
|
|
|
654,868
|
|
|
596,045
|
|
Acquisition
expense
|
—
|
|
|
713
|
|
|
2,215
|
|
|
2,928
|
|
Merger related
expenses
|
2,871
|
|
|
—
|
|
|
41,904
|
|
|
39,033
|
|
Integration related
expenses
|
3,290
|
|
|
—
|
|
|
5,080
|
|
|
1,790
|
|
Recurring
EBITDA
|
$
|
216,850
|
|
|
$
|
152,580
|
|
|
$
|
704,067
|
|
|
$
|
639,796
|
|
RECONCILIATION OF
NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES
PAYABLE
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
As
of
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
Unsecured notes
payable
|
$
|
3,260,686
|
|
|
$
|
3,180,624
|
|
|
$
|
2,195,989
|
|
|
$
|
2,246,227
|
|
|
$
|
2,195,214
|
|
Secured notes
payable
|
1,296,498
|
|
|
1,319,088
|
|
|
1,238,168
|
|
|
1,243,198
|
|
|
1,247,749
|
|
Total debt
|
4,557,184
|
|
|
4,499,712
|
|
|
3,434,157
|
|
|
3,489,425
|
|
|
3,442,963
|
|
Cash and cash
equivalents
|
(33,959)
|
|
|
(33,536)
|
|
|
(27,817)
|
|
|
(26,279)
|
|
|
(28,184)
|
|
1031(b) exchange
proceeds included in Restricted Cash
|
—
|
|
|
(58,259)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net Debt
|
$
|
4,523,225
|
|
|
$
|
4,407,917
|
|
|
$
|
3,406,340
|
|
|
$
|
3,463,146
|
|
|
$
|
3,414,779
|
|
RECONCILIATION OF
GROSS ASSETS TO TOTAL ASSETS
|
Dollars in
thousands
|
|
|
|
|
As
of
|
|
March
31,
|
|
December
31,
|
|
2017
|
|
2016
|
Total
assets
|
$
|
11,559,699
|
|
|
$
|
11,604,491
|
|
Accumulated
depreciation
|
1,768,527
|
|
|
1,656,071
|
|
Accumulated
depreciation for corporate property(1)
|
19,364
|
|
|
18,730
|
|
Gross
Assets
|
$
|
13,347,590
|
|
|
$
|
13,279,292
|
|
|
(1)
Included in Corporate property, net on the Consolidated Balance
Sheets
|
RECONCILIATION OF
GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET
|
Dollars in
thousands
|
|
|
|
|
As
of
|
|
March
31,
|
|
December
31,
|
|
2017
|
|
2016
|
Real estate assets,
net
|
$
|
11,371,148
|
|
|
$
|
11,341,862
|
|
Accumulated
depreciation
|
1,768,527
|
|
|
1,656,071
|
|
Accumulated
depreciation for corporate property(1)
|
19,364
|
|
|
18,730
|
|
Cash and cash
equivalents
|
33,959
|
|
|
33,536
|
|
1031(b) exchange
proceeds included in Restricted Cash
|
—
|
|
|
58,259
|
|
Gross Real Estate
Assets
|
$
|
13,192,998
|
|
|
$
|
13,108,458
|
|
|
(1)
Included in Corporate property, net on the Consolidated Balance
Sheets
|
NON-GAAP FINANCIAL MEASURES
Adjusted Funds From Operations (AFFO)
AFFO is
composed of FFO less recurring capital expenditures. 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.
Combined Adjusted Same Store NOI
Combined Adjusted
Same Store NOI represents total operating revenues less total
property operating expenses, excluding depreciation, for all
properties classified within the Combined Adjusted Same Store
Portfolio during the period. MAA believes Combined Adjusted 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.
EBITDA
For purposes of calculations in this release,
Earnings Before Interest, Income Taxes, Depreciation and
Amortization, or EBITDA, is composed of net income before net gain
or loss on asset sales and insurance and other settlement proceeds,
and gain or loss on debt extinguishment, plus depreciation,
interest expense, income taxes, and amortization of deferred
financing costs. 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 income and
expense items that are not indicative of operating performance.
EBITDA should not be considered as an alternative to net income as
an indicator of financial performance. MAA's computation of EBITDA
may differ from the methodology utilized by other companies to
calculate EBITDA.
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 (computed in accordance with
U.S. generally accepted accounting principles, or GAAP) excluding
extraordinary items, asset impairment, gains or losses on
disposition of real estate assets, plus net income attributable to
noncontrolling interest, depreciation of real estate, and
adjustments for joint ventures to reflect FFO on the same
basis. 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
the National Association of Real Estate Investment Trusts'
definition, it may differ from the methodology for calculating FFO
utilized by other REITs and, accordingly, may not be comparable to
such other REITs. 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 expense 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.
Gross Assets
Gross Assets represents Total assets
plus Accumulated depreciation and the accumulated depreciation for
corporate properties, which is included in Corporate property, net
on the Consolidated Balance Sheets. 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
and the accumulated depreciation for corporate properties, which is
included in Corporate property, net on the Consolidated Balance
Sheets, plus Cash and cash equivalents plus 1031(b) exchange
proceeds included in Restricted cash on the Consolidated Balance
Sheets. 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 and
1031(b) proceeds included in Restricted cash on the Consolidated
Balance Sheets. MAA believes Net Debt is a helpful tool in
evaluating its debt position.
Net Operating Income (NOI)
Net operating income
represents total operating revenues less total property operating
expenses, excluding depreciation, for all properties held during
the period, regardless of their status as held for sale. 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 EBITDA
Recurring EBITDA represents EBITDA
further adjusted to exclude certain items that are not considered
part of our core business operations such as acquisition and merger
and integration expenses. MAA believes Recurring EBITDA 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. Recurring EBITDA should
not be considered as an alternative to net income as an indicator
of operating performance. MAA's computation of Recurring EBITDA may
differ from the methodology utilized by other companies to
calculate Recurring EBITDA.
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
quarter.
Combined Adjusted Same Store Portfolio
Combined
Adjusted Same Store Portfolio represents the MAA Same Store
Portfolio and the Post Adjusted Same Store Portfolio considered as
a single portfolio, as if the Post Adjusted Same Store Portfolio
was owned by MAA during all periods presented.
Development Portfolio
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 Portfolio.
Lease-up Portfolio
New acquisitions acquired during
lease-up and newly developed communities remain in the Lease-up
Portfolio until stabilized.
Other Non-Same Store Portfolio
Other Non-Same Store
Portfolio includes recent acquisitions, communities in development
or lease-up, communities that have undergone a significant casualty
loss, and commercial assets.
MAA 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 MAA
Same Store Portfolio if they were owned and stabilized at the
beginning of the previous year. Communities that have been
approved by MAA's Board of Directors for disposition are excluded
from the MAA Same Store Portfolio. Communities that have
undergone a significant casualty loss are also excluded from the
MAA Same Store Portfolio. Within the MAA Same Store Portfolio
communities are designated as operating in Large or Secondary
Markets:
Large Market Same Store
communities are generally those communities in markets with a
population of at least one million and at least 1% of the total
public multifamily REIT units.
Secondary Market Same Store
communities are generally those communities in markets with either
a population less than one million or less than 1% of the total
public multifamily REIT units, or both.
Post Adjusted Same Store Portfolio
Post Adjusted Same
Store Portfolio represents the Post Properties same store portfolio
that would have been in effect had the properties been owned by MAA
since January 1, 2016. Prior
year results have been adjusted for consistency with MAA accounting
policies and year over year comparisons. The primary
adjustments include moving corporate property management expenses,
exterior paint costs and IT operating systems costs out of property
expenses. Because these properties have only been owned by
MAA since December 1, 2016, they are
not included in the MAA Same Store Portfolio. See MAA Same
Store Portfolio for more information regarding inclusion.
These properties have been identified in certain tables to provide
Combined Adjusted Same Store results as if the properties had been
owned by MAA in prior periods. These properties will be
eligible to join the MAA Same Store portfolio in January 2018.
Stabilized Communities
Communities are considered
stabilized after achieving 90% occupancy for 90 days.
Total Market Capitalization
Total Market
Capitalization equals the number of shares of common stock plus
units not held by MAA at period end multiplied by the closing stock
price at period end, plus total debt outstanding.
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SOURCE MAA