GERMANTOWN, Tenn., Oct. 28, 2020 /PRNewswire/ -- Mid-America
Apartment Communities, Inc., or MAA (NYSE: MAA), today announced
operating results for the quarter ended September 30,
2020.
Net Income Available for Common Shareholders
For the
quarter ended September 30, 2020, net income available for MAA
common shareholders was $59.0
million, or $0.52 per diluted
common share, compared to $77.7
million, or $0.68 per diluted
common share, for the quarter ended September 30, 2019.
Results for the quarter ended September 30, 2020, included
$1.3 million, or $0.01 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. 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 embedded derivative in the
preferred shares.
For the nine months ended September 30, 2020, net income
available for MAA common shareholders was $168.9 million, or $1.47 per diluted common share, compared to
$201.5 million, or $1.77 per diluted common share, for the nine
months ended September 30, 2019. Results for the nine
months ended September 30, 2020, included $14.6 million, or $0.13 per diluted common share, of non-cash
expense related to the fair value adjustment of the embedded
derivative in the preferred shares. 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.
Core Funds from Operations (FFO) and FFO
Core FFO,
which adjusts FFO for items that are not considered part of MAA's
core business operations, for the quarter
ended September 30, 2020 was $185.9 million,
or $1.57 per diluted common share and unit, or per Share,
as compared to $185.0 million, or $1.57 per Share, for
the quarter ended September 30, 2019. For the quarter
ended September 30, 2020, FFO was $187.2 million, or $1.58 per Share, compared to $202.9 million, or $1.72 per Share, for the quarter ended
September 30, 2019. FFO results for the quarter ended
September 30, 2020, included $1.3
million, or $0.01 per Share,
of non-cash income related to the fair value adjustment of the
embedded derivative in the preferred shares. FFO 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.
Core FFO for the nine months ended September 30,
2020 was $565.9 million, or
$4.78 per Share, as compared to
$543.2 million, or $4.60 per
Share, for the nine months ended September 30, 2019. For
the nine months ended September 30, 2020, FFO was $551.8 million, or $4.66 per Share, compared to $575.0 million, or $4.87 per Share, for the nine months ended
September 30, 2019. FFO results for the nine months
ended September 30, 2020, included $14.6 million, or $0.13 per Share, of non-cash expense related to
the fair value adjustment of the embedded derivative in the
preferred shares. FFO 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.
A reconciliation of FFO and Core FFO to net income available for
MAA common shareholders, and an expanded discussion of the
components of FFO and Core FFO, can be found later in this
release.
Eric Bolton, Chairman and Chief
Executive Officer, said, "Our third quarter results were better
than expected. MAA's portfolio of high quality communities,
well diversified across the Sunbelt markets, supported by a strong
operating platform and a dedicated team of associates, is
performing well. While recovery in the economy and employment
markets from the impact of COVID-19 is still underway, we were
encouraged by the positive sequential revenue growth in the third
quarter as compared to the second quarter in each of our
markets."
Third Quarter 2020 Highlights
- Property revenues from the Same Store Portfolio increased 2.1%
during the third quarter of 2020 as compared to the same period in
the prior year. Results were driven by a 1.8% growth in Average
Effective Rent per Unit for the Same Store Portfolio.
- Property operating expenses for the Same Store Portfolio
increased 7.2% during the third quarter of 2020 as compared to the
same period in the prior year. As expected, growth in real estate
taxes, insurance expenses, and marketing costs drove the majority
of the increase.
- Net Operating Income, or NOI, from the Same Store Portfolio
decreased 1.1% during the third quarter of 2020 as compared to the
same period in the prior year.
- Resident turnover continued to decline and remained low as
resident move outs for the Same Store Portfolio for the third
quarter of 2020 was 45.9% on a rolling twelve month basis.
- As of the end of the third quarter of 2020, MAA had six
properties under development, representing 1,940 units once
complete, with a total projected cost of $459.5 million and an estimated $195.5 million remaining to be funded.
- As of the end of the third quarter of 2020, MAA had two
properties in their initial lease-up with physical occupancy
averaging 83.6%. One property is expected to stabilize in the
fourth quarter of 2020 and the other property is expected to
stabilize in the second quarter of 2021.
- During the third quarter of 2020, MAA's operating partnership,
Mid-America Apartments, L.P. (referred to as MAALP or the Operating
Partnership), issued $450.0 million
of 10-year senior unsecured notes at a coupon of 1.7% and an issue
price of 99.465%.
COVID-19 Developments
MAA believes the best way it
can continue to help its residents is to work with those who have
lost wages or compensation due to the COVID-19 pandemic so that
they can remain in their homes. MAA has offered these impacted
residents amendments to their leases that provided varying degrees
of payment flexibility with respect to rent and waived late fees
and interest charges under the original lease for rent that was
deferred under a lease amendment.
MAA's on-site leasing offices have remained open throughout the
COVID-19 pandemic while adhering to orders and directives issued by
state and local governments. During the third quarter of 2020, MAA
continued normal operations at its on-site leasing offices,
permitting public access and walk-in traffic, subject to social
distancing restrictions. Further, property amenities were open as
permitted by governmental orders, directives and guidelines.
MAA continues to support its on-site associates with enhanced
leave and sick time policies, enhanced flextime arrangements and
additional COVID-19 paid time off, among other benefits. MAA
continues to monitor and comply with the various federal, state and
local laws, orders and directives issued in response to the
COVID-19 pandemic that affect apartment owners and operators,
including the Temporary Halt in Residential Evictions to Prevent
the Further Spread of COVID-19 issued by the Centers for Disease
Control and Prevention in September
2020.
Operating metrics for the third quarter of 2020 and the month of
October (through October 26, 2020)
include the following:
- Through October 26, 2020, rent
cash collections and promises to pay under lease amendments signed
by residents financially impacted by COVID-19, combined,
represented 99.2% of billed residential rent for the third quarter
of 2020.
- Through October 26, 2020, rent
cash collections represented 98.6% of billed residential rent for
October 2020. This compares to 98.4%
average cash collections of July, August and September rents
through the 26th of each such month. Rent cash
collections and promises to pay under lease amendments signed by
residents financially impacted by COVID-19, combined, represented
98.8% of billed residential rent for October
2020. This compares to 98.6% average combined collections
and deferrals of July, August and September rents through the
26th of each such month.
- Through October 26, 2020, Average
Physical Occupancy for the Same Store Portfolio was 95.6% for the
month of October.
Additional metrics related to the impact of the COVID-19
pandemic on MAA's business are included in the supplemental
schedules accompanying this
release.
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 2.1% during the third
quarter of 2020 was primarily a result of a 1.8% 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 0.8% during the third
quarter of 2020. Average Physical Occupancy for the Same
Store Portfolio was 95.6% for the third quarter of 2020, as
compared to 96.1% in the same period in the prior year.
Property operating expenses for the Same Store Portfolio increased
7.2% for the third quarter of 2020 as compared to the same period
in the prior year. Growth in real estate taxes, insurance
expense, and marketing costs drove the majority of the increase. In
addition, MAA incurred $0.8 million
of storm costs during the third quarter of 2020. The rollout of the
new high-speed bulk cable internet package contributed 0.7% in
revenue growth and 0.5% in expense growth for the Same Store
Portfolio during the third quarter of 2020. All of this
resulted in a Same Store NOI decrease of 1.1% for the third quarter
of 2020 as compared to the same period in the prior year.
The Same Store Portfolio revenue growth of 2.8% during the nine
months ended September 30, 2020 was primarily a result of a
3.1% 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 1.4%
during the nine months ended September 30, 2020. Average
Physical Occupancy for the Same Store Portfolio was 95.6% for the
nine months ended September 30, 2020, as compared to 96.0%
in the same period in the prior year. Property
operating expenses for the Same Store Portfolio increased 4.3% for
the nine months ended September 30, 2020 as compared to the
same period in the prior year. All of this resulted in Same Store
NOI growth of 1.9% for the nine months ended September 30,
2020 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 2020, MAA had six development communities under
construction. MAA expects to complete construction of one of
these development communities in 2020, four in 2021 and one in
2022. Total development costs for the six communities are
projected to be $459.5 million, of
which an estimated $195.5 million
remained to be funded as of the end of the third quarter of
2020. The expected average stabilized NOI yield on these
communities is 6.1%. During the third quarter of 2020, MAA funded
$49.7 million of construction costs
on current development projects.
As of the end of the third quarter of 2020, MAA had two
apartment communities, representing a total of 439 units, remaining
in initial lease-up: The Greene,
located in Greenville, South
Carolina and Copper Ridge II, located in Ft. Worth, Texas. Physical occupancy for
these lease-up projects averaged 83.6% at the end of the third
quarter of 2020.
Acquisition and Disposition Activity
In September 2020, MAA closed on the disposition of
a 27 acre land parcel located in the Huntsville, Alabama market for net proceeds of
$2.6 million, resulting in a gain on
sale of non-depreciable real estate assets of $1.3 million.
MAA did not acquire any apartment communities, land parcels or
commercial properties during the three months ended
September 30, 2020.
Property Redevelopment and Repositioning Activity
MAA
continued its interior redevelopment program at select apartment
communities throughout the portfolio. During the third
quarter of 2020, MAA redeveloped the interior of 1,205 units,
bringing the total units renovated during the nine months ended
September 30, 2020 to 3,300 at an average cost of $5,939 per unit, achieving average rental rate
increases of approximately 9.3% above non-renovated units.
MAA restarted its SmartHome technology initiative (mobile
control of lights, thermostat and security, as well as leak
monitoring) in July 2020. During the third quarter of 2020,
13,887 units were installed, bringing the total units installed
during the nine months ended September 30, 2020 to 21,884 at
an average cost of approximately $1,350 per unit and achieved an average rent
increase of $25 per unit. MAA
expects to complete a total of 24,000 units by the end of
2020.
During the third quarter of 2020, MAA continued its program to
upgrade and reposition the amenity and common areas at select
properties. The program includes targeted plans to move all units
at the properties to higher rents that are expected to deliver
yields on cost averaging 8% beginning in calendar year 2021.
During the third quarter of 2020, repositioning work continued at
eight of these properties. For the nine months ended
September 30, 2020, MAA has spent $6.8
million on this program. MAA expects to begin work at two
additional properties later this year or early in 2021 as market
conditions stabilize.
Capital Expenditures
Recurring capital expenditures
totaled $19.7 million for the third
quarter of 2020, or approximately $0.17 per Share, as compared to $21.5 million, or $0.18 per Share, for the same period in the prior
year. These expenditures led to Core Adjusted Funds from
Operations, or Core AFFO, of $1.40
per Share for the third quarter of 2020, compared to $1.38 per Share for the same period in the prior
year.
Redevelopment, revenue enhancing, commercial and other capital
expenditures during the third quarter of 2020 were $26.9 million, as compared to $33.9 million for the same period in the prior
year. These expenditures led to Funds Available for Distribution,
or FAD, of $139.2 million for the
third quarter of 2020, compared to $129.6
million for the same period in the prior year.
Recurring capital expenditures totaled $59.4 million for the nine months ended
September 30, 2020, or approximately $0.50 per Share, as compared to $58.5 million, or $0.50 per Share, for the same period in the prior
year. These expenditures led to Core AFFO of $4.28 per Share for the nine months ended
September 30, 2020, compared to $4.10 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, 2020
were $79.5 million, as compared to
$89.6 million for the same period in
the prior year. These expenditures led to FAD of $427.0 million for the nine months ended
September 30, 2020, compared to $395.1
million for the same period in the prior year.
A reconciliation of FFO, Core FFO, Core AFFO and FAD to net
income available for MAA common shareholders, and an expanded
discussion of the components of FFO, Core FFO, Core AFFO and FAD,
can be found later in this release.
Financing Activities
In August
2020, MAALP issued $450.0
million of 1.70% senior unsecured notes due in 2031 at an
effective interest rate of 1.76%.
During the third quarter of 2020, MAALP retired a $300.0 million unsecured term loan before
maturity, $63.6 million of secured
property mortgages at maturity and $72.2
million of secured property mortgages before maturity with
proceeds received from borrowings under MAALP's unsecured
commercial paper program. Those commercial paper borrowings
were then repaid with the proceeds received from the senior
unsecured notes issued in August
2020.
As of September 30, 2020, MAA had approximately
$980.0 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 2020 were
$118.2 million, as compared to
$113.4 million for the same period in
the prior year.
Balance Sheet
As of September 30, 2020:
- Total debt to adjusted total assets (as defined in the
covenants for the bonds issued by MAALP) was 30.6%;
- Total debt outstanding was $4.4
billion with an average effective interest rate of
approximately 3.7%;
- 99.2% of total debt was fixed against rising interest rates for
an average of approximately 8.0 years; and
- Unencumbered NOI was 93.2% of total NOI.
107th Consecutive Quarterly Common Dividend
Declared
MAA declared its 107th consecutive quarterly common
dividend, which will be paid on October 30,
2020 to holders of record on October
15, 2020. The current annual dividend rate is
$4.00 per common
share.
2020 Net Income per Diluted Common Share, Core FFO and Core
AFFO per Share Guidance
As a result of the material change
in broad economic conditions in the U.S., in late March, MAA
withdrew its calendar year 2020 guidance for Net income per diluted
common share, Core FFO per Share and Core AFFO per
Share. Given continued higher than normal uncertainty in the
outlook for the U.S. economy and the number and timing of actions
enacted by federal, state and local governments to help stop the
spread of COVID-19, and the potential for wide-ranging impact on
rent collections, fees and occupancy, MAA is not providing guidance
for Net income per diluted common share, Core FFO per Share or Core
AFFO per Share for the remainder of the year. The supplemental
schedules accompanying this release include an update on certain
third quarter of 2020 operating metrics as well as certain
October 2020 operating metrics. MAA
will continue to monitor conditions related to the COVID-19
pandemic and expects to provide full year guidance for 2021 in its
fourth quarter 2020 earnings release.
Supplemental Material and Conference Call
Supplemental
data to this release can be found on the "For Investors" page of
our website at www.maac.com. MAA will host a conference call to
further discuss third quarter results on Thursday, October 29, 2020, 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, 2020, MAA had ownership interest in
102,105 apartment units, including communities currently in
development, across 16 states and the District of Columbia. For further details,
please visit the MAA website at www.maac.com or contact Investor
Relations at 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 regarding the potential impact of the
COVID-19 pandemic on our business, statements regarding expected
operating performance and results, property stabilizations,
property acquisition and disposition activity, joint venture
activity, development and renovation activity and other capital
expenditures, and capital raising and financing activity, as well
as lease pricing, revenue and expense growth, occupancy, interest
rate and other economic expectations. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks,"
"estimates," "forecasts," "projects," "assumes," "will," "may,"
"could," "should," "target," "outlook," "guidance" and variations
of such words and similar expressions are intended to identify such
forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors, as
described below, which may cause our actual results, performance or
achievements to be materially different from the results of
operations, financial conditions or plans expressed or implied by
such forward-looking statements. Although we believe that the
assumptions underlying the forward-looking statements contained
herein are reasonable, any of the assumptions could be inaccurate,
and therefore such forward-looking statements included in this
release may not prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as
a representation by us or any other person that the results or
conditions described in such statements or our objectives and plans
will be achieved.
The following factors, among others, could cause our actual
results, performance or achievements to differ materially from
those expressed or implied in the forward-looking statements:
- the COVID-19 pandemic and measures taken or that may be taken
by federal, state and local governmental authorities to combat the
spread of the disease;
- inability to generate sufficient cash flows due to unfavorable
economic and market conditions, changes in supply and/or demand,
competition, uninsured losses, changes in tax and housing laws, or
other factors;
- exposure, 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;
- 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 or
our service providers' information technology systems, or business
operations disruptions;
- potential liability for environmental contamination;
- adverse legislative or regulatory developments;
- extreme weather, natural disasters, disease outbreak and public
health events;
- legal proceedings relating to various issues, which, among
other things, could result in a class action lawsuit;
- compliance costs associated with numerous federal, state and
local laws and regulations, including those costs associated with
laws requiring access for disabled persons; and
- other risks identified in this release and in reports we file
with the SEC or in other documents that we publicly
disseminate.
New factors may also emerge from time to time that could have a
material adverse effect on our business. Except as required
by law, we undertake no obligation to publicly update or revise
forward-looking statements contained in this release to reflect
events, circumstances or changes in expectations after the date of
this release.
Dollars in
thousands, except per share data
|
|
Three months
ended
September 30,
|
|
|
Nine months
ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
|
|
2019
|
|
Rental and other
property revenues
|
|
$
|
423,199
|
|
|
$
|
415,632
|
|
|
$
|
1,254,323
|
|
|
|
|
$
|
1,224,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
for MAA common shareholders
|
|
$
|
58,988
|
|
|
$
|
77,723
|
|
|
$
|
168,854
|
|
|
|
|
$
|
201,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total NOI
(1)
|
|
$
|
253,385
|
|
|
$
|
256,093
|
|
|
$
|
773,866
|
|
|
|
|
$
|
761,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.52
|
|
|
$
|
0.68
|
|
|
$
|
1.48
|
|
|
|
|
$
|
1.77
|
|
Diluted
|
|
$
|
0.52
|
|
|
$
|
0.68
|
|
|
$
|
1.47
|
|
|
|
|
$
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
per Share - diluted: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
(1)
|
|
$
|
1.58
|
|
|
$
|
1.72
|
|
|
$
|
4.66
|
|
|
|
|
$
|
4.87
|
|
Core FFO
(1)
|
|
$
|
1.57
|
|
|
$
|
1.57
|
|
|
$
|
4.78
|
|
|
|
|
$
|
4.60
|
|
Core AFFO
(1)
|
|
$
|
1.40
|
|
|
$
|
1.38
|
|
|
$
|
4.28
|
|
|
|
|
$
|
4.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
1.00
|
|
|
$
|
0.96
|
|
|
$
|
3.00
|
|
|
|
|
$
|
2.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends/Core FFO
(diluted) payout ratio
|
|
|
63.7
|
%
|
|
|
61.1
|
%
|
|
|
62.8
|
%
|
|
|
|
|
62.6
|
%
|
Dividends/Core AFFO
(diluted) payout ratio
|
|
|
71.4
|
%
|
|
|
69.6
|
%
|
|
|
70.1
|
%
|
|
|
|
|
70.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated interest
expense
|
|
$
|
41,010
|
|
|
$
|
44,513
|
|
|
$
|
126,610
|
|
|
|
|
$
|
136,149
|
|
Mark-to-market debt
adjustment
|
|
|
(83)
|
|
|
|
51
|
|
|
|
9
|
|
|
|
|
|
222
|
|
Debt discount and
debt issuance cost amortization
|
|
|
(1,223)
|
|
|
|
(1,288)
|
|
|
|
(3,603)
|
|
|
|
|
|
(4,928)
|
|
Capitalized
interest
|
|
|
1,764
|
|
|
|
754
|
|
|
|
4,783
|
|
|
|
|
|
1,847
|
|
Total interest
incurred
|
|
$
|
41,468
|
|
|
$
|
44,030
|
|
|
$
|
127,799
|
|
|
|
|
$
|
133,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
principal on notes payable
|
|
$
|
1,055
|
|
|
$
|
1,796
|
|
|
$
|
4,538
|
|
|
|
|
$
|
5,468
|
|
|
|
(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, Core
FFO and Core AFFO to Net income available for MAA common
shareholders.
|
(2)
|
See the "Share and
Unit Data" section for additional information.
|
FINANCIAL
HIGHLIGHTS (CONTINUED)
|
Dollars in
thousands, except share price
|
|
|
|
|
|
|
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Gross Assets
(1)
|
|
$
|
14,445,414
|
|
|
$
|
14,185,703
|
|
Gross Real Estate
Assets (1)
|
|
$
|
14,263,492
|
|
|
$
|
13,996,700
|
|
Total debt
|
|
$
|
4,425,594
|
|
|
$
|
4,454,598
|
|
Common shares and
units outstanding
|
|
|
118,428,070
|
|
|
|
118,313,567
|
|
Share
price
|
|
$
|
115.95
|
|
|
$
|
131.86
|
|
Book equity
value
|
|
$
|
6,133,096
|
|
|
$
|
6,303,590
|
|
Market equity
value
|
|
$
|
13,731,735
|
|
|
$
|
15,600,827
|
|
Net Debt/Adjusted
EBITDAre (2)
|
|
4.66x
|
|
|
4.71x
|
|
|
|
(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)
|
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 and Adjusted EBITDAre 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
September 30,
|
|
|
Nine months
ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other
property revenues
|
|
$
|
423,199
|
|
|
$
|
415,632
|
|
|
$
|
1,254,323
|
|
|
$
|
1,224,200
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding real estate taxes and insurance
|
|
|
105,108
|
|
|
|
100,319
|
|
|
|
292,031
|
|
|
|
286,284
|
|
Real estate taxes and
insurance
|
|
|
64,706
|
|
|
|
59,220
|
|
|
|
188,426
|
|
|
|
176,774
|
|
Depreciation and
amortization
|
|
|
127,679
|
|
|
|
124,684
|
|
|
|
381,257
|
|
|
|
371,417
|
|
Total property
operating expenses
|
|
|
297,493
|
|
|
|
284,223
|
|
|
|
861,714
|
|
|
|
834,475
|
|
Property management
expenses
|
|
|
12,691
|
|
|
|
13,899
|
|
|
|
39,064
|
|
|
|
41,195
|
|
General and
administrative expenses
|
|
|
11,360
|
|
|
|
10,225
|
|
|
|
35,181
|
|
|
|
32,960
|
|
Interest
expense
|
|
|
41,010
|
|
|
|
44,513
|
|
|
|
126,610
|
|
|
|
136,149
|
|
(Gain) loss on sale of
depreciable real estate assets
|
|
|
(20)
|
|
|
|
(1,000)
|
|
|
|
7
|
|
|
|
(987)
|
|
Gain on sale of
non-depreciable real estate assets
|
|
|
(1,366)
|
|
|
|
—
|
|
|
|
(995)
|
|
|
|
(9,260)
|
|
Other non-operating
(income) expense
|
|
|
(242)
|
|
|
|
(18,800)
|
|
|
|
13,647
|
|
|
|
(23,494)
|
|
Income before income
tax expense
|
|
|
62,273
|
|
|
|
82,572
|
|
|
|
179,095
|
|
|
|
213,162
|
|
Income tax
expense
|
|
|
(665)
|
|
|
|
(1,491)
|
|
|
|
(2,532)
|
|
|
|
(2,814)
|
|
Income from
continuing operations before real estate joint venture
activity
|
|
|
61,608
|
|
|
|
81,081
|
|
|
|
176,563
|
|
|
|
210,348
|
|
Income from real
estate joint venture
|
|
|
428
|
|
|
|
378
|
|
|
|
1,153
|
|
|
|
1,210
|
|
Net income
|
|
|
62,036
|
|
|
|
81,459
|
|
|
|
177,716
|
|
|
|
211,558
|
|
Net income
attributable to noncontrolling interests
|
|
|
2,126
|
|
|
|
2,814
|
|
|
|
6,096
|
|
|
|
7,336
|
|
Net income available
for shareholders
|
|
|
59,910
|
|
|
|
78,645
|
|
|
|
171,620
|
|
|
|
204,222
|
|
Dividends to MAA
Series I preferred shareholders
|
|
|
922
|
|
|
|
922
|
|
|
|
2,766
|
|
|
|
2,766
|
|
Net income available
for MAA common shareholders
|
|
$
|
58,988
|
|
|
$
|
77,723
|
|
|
$
|
168,854
|
|
|
$
|
201,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
|
$
|
0.52
|
|
|
$
|
0.68
|
|
|
$
|
1.48
|
|
|
$
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
|
$
|
0.52
|
|
|
$
|
0.68
|
|
|
$
|
1.47
|
|
|
$
|
1.77
|
|
Shares and units
in thousands
|
|
Three months
ended
September 30,
|
|
|
Nine months
ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net Income Shares
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares - basic
|
|
|
114,216
|
|
|
|
113,877
|
|
|
|
114,177
|
|
|
|
113,814
|
|
Effect of dilutive
securities
|
|
|
252
|
|
|
|
260
|
|
|
|
310
|
|
|
|
238
|
|
Weighted average
common shares - diluted
|
|
|
114,468
|
|
|
|
114,137
|
|
|
|
114,487
|
|
|
|
114,052
|
|
Funds From
Operations Shares And Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares and units - basic
|
|
|
118,274
|
|
|
|
117,958
|
|
|
|
118,238
|
|
|
|
117,910
|
|
Weighted average
common shares and units - diluted
|
|
|
118,432
|
|
|
|
118,151
|
|
|
|
118,400
|
|
|
|
118,104
|
|
Period End Shares
And Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares at
September 30,
|
|
|
114,370
|
|
|
|
114,066
|
|
|
|
114,370
|
|
|
|
114,066
|
|
Operating Partnership
units at September 30,
|
|
|
4,058
|
|
|
|
4,074
|
|
|
|
4,058
|
|
|
|
4,074
|
|
Total common shares
and units at September 30,
|
|
|
118,428
|
|
|
|
118,140
|
|
|
|
118,428
|
|
|
|
118,140
|
|
|
|
(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, 2020,
expected to be filed with the SEC on or about October 29,
2020.
|
CONSOLIDATED
BALANCE SHEETS
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Assets
|
|
|
|
|
|
|
|
|
Real estate
assets:
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
1,909,343
|
|
|
$
|
1,905,757
|
|
Buildings and
improvements and other
|
|
|
12,037,042
|
|
|
|
11,841,978
|
|
Development and
capital improvements in progress
|
|
|
220,685
|
|
|
|
116,424
|
|
|
|
|
14,167,070
|
|
|
|
13,864,159
|
|
Less: Accumulated
depreciation
|
|
|
(3,316,710)
|
|
|
|
(2,955,253)
|
|
|
|
|
10,850,360
|
|
|
|
10,908,906
|
|
Undeveloped
land
|
|
|
34,548
|
|
|
|
34,548
|
|
Investment in real
estate joint venture
|
|
|
43,467
|
|
|
|
43,674
|
|
Real estate assets,
net
|
|
|
10,928,375
|
|
|
|
10,987,128
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
18,407
|
|
|
|
20,476
|
|
Restricted
cash
|
|
|
9,182
|
|
|
|
50,065
|
|
Other
assets
|
|
|
172,740
|
|
|
|
172,781
|
|
Total
assets
|
|
$
|
11,128,704
|
|
|
$
|
11,230,450
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Unsecured notes
payable
|
|
$
|
3,939,425
|
|
|
$
|
3,828,201
|
|
Secured notes
payable
|
|
|
486,169
|
|
|
|
626,397
|
|
Accrued expenses and
other liabilities
|
|
|
570,014
|
|
|
|
472,262
|
|
Total
liabilities
|
|
|
4,995,608
|
|
|
|
4,926,860
|
|
|
|
|
|
|
|
|
|
|
Redeemable common
stock
|
|
|
13,841
|
|
|
|
14,131
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
9
|
|
|
|
9
|
|
Common
stock
|
|
|
1,140
|
|
|
|
1,140
|
|
Additional paid-in
capital
|
|
|
7,173,391
|
|
|
|
7,166,073
|
|
Accumulated
distributions in excess of net income
|
|
|
(1,258,072)
|
|
|
|
(1,085,479)
|
|
Accumulated other
comprehensive loss
|
|
|
(12,396)
|
|
|
|
(13,178)
|
|
Total MAA
shareholders' equity
|
|
|
5,904,072
|
|
|
|
6,068,565
|
|
Noncontrolling
interests - Operating Partnership units
|
|
|
208,072
|
|
|
|
214,647
|
|
Total Company's
shareholders' equity
|
|
|
6,112,144
|
|
|
|
6,283,212
|
|
Noncontrolling
interests - consolidated real estate entities
|
|
|
7,111
|
|
|
|
6,247
|
|
Total
equity
|
|
|
6,119,255
|
|
|
|
6,289,459
|
|
Total liabilities and
equity
|
|
$
|
11,128,704
|
|
|
$
|
11,230,450
|
|
RECONCILIATION OF
FFO, CORE FFO, CORE 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,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net income available
for MAA common shareholders
|
|
$
|
58,988
|
|
|
$
|
77,723
|
|
|
$
|
168,854
|
|
|
$
|
201,456
|
|
Depreciation and
amortization of real estate assets
|
|
|
125,916
|
|
|
|
123,171
|
|
|
|
376,430
|
|
|
|
366,704
|
|
(Gain) loss on sale of
depreciable real estate assets
|
|
|
(20)
|
|
|
|
(1,000)
|
|
|
|
7
|
|
|
|
(987)
|
|
Depreciation and
amortization of real estate assets of real estate joint
venture
|
|
|
153
|
|
|
|
154
|
|
|
|
458
|
|
|
|
465
|
|
Net income
attributable to noncontrolling interests
|
|
|
2,126
|
|
|
|
2,814
|
|
|
|
6,096
|
|
|
|
7,336
|
|
Funds from operations
attributable to the Company
|
|
|
187,163
|
|
|
|
202,862
|
|
|
|
551,845
|
|
|
|
574,974
|
|
(Income) loss on
embedded derivative in preferred shares (1)
|
|
|
(1,342)
|
|
|
|
(15,522)
|
|
|
|
14,603
|
|
|
|
(19,592)
|
|
Gain on sale of
non-depreciable real estate assets
|
|
|
(1,366)
|
|
|
|
—
|
|
|
|
(995)
|
|
|
|
(9,260)
|
|
Loss (gain) from
unconsolidated limited partnerships, net of tax
(1)(2)
|
|
|
100
|
|
|
|
(3,493)
|
|
|
|
(4,085)
|
|
|
|
(3,169)
|
|
Net casualty loss
(gain) and other settlement proceeds (1)
|
|
|
511
|
|
|
|
(46)
|
|
|
|
1,207
|
|
|
|
(1,899)
|
|
Loss on debt
extinguishment (1)
|
|
|
345
|
|
|
|
5
|
|
|
|
344
|
|
|
|
60
|
|
Non-routine legal
costs and settlements (1)
|
|
|
—
|
|
|
|
1,260
|
|
|
|
40
|
|
|
|
2,276
|
|
COVID-19 related costs
(1)
|
|
|
376
|
|
|
|
—
|
|
|
|
2,983
|
|
|
|
—
|
|
Mark-to-market debt
adjustment (3)
|
|
|
83
|
|
|
|
(51)
|
|
|
|
(9)
|
|
|
|
(222)
|
|
Core funds from
operations
|
|
|
185,870
|
|
|
|
185,015
|
|
|
|
565,933
|
|
|
|
543,168
|
|
Recurring capital
expenditures
|
|
|
(19,720)
|
|
|
|
(21,543)
|
|
|
|
(59,412)
|
|
|
|
(58,461)
|
|
Core adjusted funds
from operations
|
|
|
166,150
|
|
|
|
163,472
|
|
|
|
506,521
|
|
|
|
484,707
|
|
Redevelopment capital
expenditures
|
|
|
(11,627)
|
|
|
|
(17,789)
|
|
|
|
(35,650)
|
|
|
|
(45,060)
|
|
Revenue enhancing
capital expenditures
|
|
|
(8,135)
|
|
|
|
(8,215)
|
|
|
|
(24,510)
|
|
|
|
(26,067)
|
|
Commercial capital
expenditures
|
|
|
(765)
|
|
|
|
(2,563)
|
|
|
|
(2,303)
|
|
|
|
(5,019)
|
|
Other capital
expenditures
|
|
|
(6,389)
|
|
|
|
(5,330)
|
|
|
|
(17,065)
|
|
|
|
(13,494)
|
|
Funds available for
distribution
|
|
$
|
139,234
|
|
|
$
|
129,575
|
|
|
$
|
426,993
|
|
|
$
|
395,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and
distributions paid
|
|
$
|
118,232
|
|
|
$
|
113,408
|
|
|
$
|
354,976
|
|
|
$
|
340,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares - diluted
|
|
|
114,468
|
|
|
|
114,137
|
|
|
|
114,487
|
|
|
|
114,052
|
|
FFO weighted average
common shares and units - diluted
|
|
|
118,432
|
|
|
|
118,151
|
|
|
|
118,400
|
|
|
|
118,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
|
$
|
0.52
|
|
|
$
|
0.68
|
|
|
$
|
1.47
|
|
|
$
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
per Share - diluted
|
|
$
|
1.58
|
|
|
$
|
1.72
|
|
|
$
|
4.66
|
|
|
$
|
4.87
|
|
Core funds from
operations per Share - diluted
|
|
$
|
1.57
|
|
|
$
|
1.57
|
|
|
$
|
4.78
|
|
|
$
|
4.60
|
|
Core adjusted funds
from operations per Share - diluted
|
|
$
|
1.40
|
|
|
$
|
1.38
|
|
|
$
|
4.28
|
|
|
$
|
4.10
|
|
|
|
(1)
|
Included in Other
non-operating (income) expense in the Consolidated Statements of
Operations.
|
(2)
|
For the nine months
ended September 30, 2020, $4.8 million of gains from
unconsolidated limited partnerships are offset by $0.7 million of
income tax expense. For the three and nine months ended
September 30, 2019, $4.3 million and $4.0 million,
respectively, of gains from unconsolidated limited partnerships are
offset by $0.8 million of income tax expense.
|
(3)
|
Included in Interest
expense in the Consolidated Statements of Operations.
|
RECONCILIATION OF
NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON
SHAREHOLDERS
|
|
Dollars in
thousands
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
2020
|
|
|
June 30,
2020
|
|
|
September 30,
2019
|
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
Net Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
NOI
|
|
$
|
238,702
|
|
|
$
|
242,713
|
|
|
$
|
241,362
|
|
|
$
|
730,702
|
|
|
$
|
717,216
|
|
Non-Same Store and
Other NOI
|
|
|
14,683
|
|
|
|
12,842
|
|
|
|
14,731
|
|
|
|
43,164
|
|
|
|
43,926
|
|
Total NOI
|
|
|
253,385
|
|
|
|
255,555
|
|
|
|
256,093
|
|
|
|
773,866
|
|
|
|
761,142
|
|
Depreciation and
amortization
|
|
|
(127,679)
|
|
|
|
(127,190)
|
|
|
|
(124,684)
|
|
|
|
(381,257)
|
|
|
|
(371,417)
|
|
Property management
expenses
|
|
|
(12,691)
|
|
|
|
(11,730)
|
|
|
|
(13,899)
|
|
|
|
(39,064)
|
|
|
|
(41,195)
|
|
General and
administrative expenses
|
|
|
(11,360)
|
|
|
|
(10,557)
|
|
|
|
(10,225)
|
|
|
|
(35,181)
|
|
|
|
(32,960)
|
|
Interest
expense
|
|
|
(41,010)
|
|
|
|
(42,118)
|
|
|
|
(44,513)
|
|
|
|
(126,610)
|
|
|
|
(136,149)
|
|
Gain (loss) on sale of
depreciable real estate assets
|
|
|
20
|
|
|
|
2
|
|
|
|
1,000
|
|
|
|
(7)
|
|
|
|
987
|
|
Gain on sale of
non-depreciable real estate assets
|
|
|
1,366
|
|
|
|
5
|
|
|
|
-
|
|
|
|
995
|
|
|
|
9,260
|
|
Other non-operating
income (expense)
|
|
|
242
|
|
|
|
14,643
|
|
|
|
18,800
|
|
|
|
(13,647)
|
|
|
|
23,494
|
|
Income tax
expense
|
|
|
(665)
|
|
|
|
(1,200)
|
|
|
|
(1,491)
|
|
|
|
(2,532)
|
|
|
|
(2,814)
|
|
Income from real
estate joint venture
|
|
|
428
|
|
|
|
318
|
|
|
|
378
|
|
|
|
1,153
|
|
|
|
1,210
|
|
Net income
attributable to noncontrolling interests
|
|
|
(2,126)
|
|
|
|
(2,666)
|
|
|
|
(2,814)
|
|
|
|
(6,096)
|
|
|
|
(7,336)
|
|
Dividends to MAA
Series I preferred shareholders
|
|
|
(922)
|
|
|
|
(922)
|
|
|
|
(922)
|
|
|
|
(2,766)
|
|
|
|
(2,766)
|
|
Net income available
for MAA common shareholders
|
|
$
|
58,988
|
|
|
$
|
74,140
|
|
|
$
|
77,723
|
|
|
$
|
168,854
|
|
|
$
|
201,456
|
|
RECONCILIATION OF
EBITDA, EBITDAre AND ADJUSTED EBITDAre TO NET
INCOME
|
|
Dollars in
thousands
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Net income
|
|
$
|
62,036
|
|
|
$
|
81,459
|
|
|
$
|
332,776
|
|
|
$
|
366,618
|
|
Depreciation and
amortization
|
|
|
127,679
|
|
|
|
124,684
|
|
|
|
506,683
|
|
|
|
496,843
|
|
Interest
expense
|
|
|
41,010
|
|
|
|
44,513
|
|
|
|
170,308
|
|
|
|
179,847
|
|
Income tax
expense
|
|
|
665
|
|
|
|
1,491
|
|
|
|
3,414
|
|
|
|
3,696
|
|
EBITDA
|
|
|
231,390
|
|
|
|
252,147
|
|
|
|
1,013,181
|
|
|
|
1,047,004
|
|
Gain on sale of
depreciable real estate assets
|
|
|
(20)
|
|
|
|
(1,000)
|
|
|
|
(79,994)
|
|
|
|
(80,988)
|
|
Adjustments to reflect
the Company's share of EBITDAre of unconsolidated
affiliates
|
|
|
337
|
|
|
|
338
|
|
|
|
1,345
|
|
|
|
1,351
|
|
EBITDAre
|
|
|
231,707
|
|
|
|
251,485
|
|
|
|
934,532
|
|
|
|
967,367
|
|
(Gain) loss on
embedded derivative in preferred shares (1)
|
|
|
(1,342)
|
|
|
|
(15,522)
|
|
|
|
16,309
|
|
|
|
(17,886)
|
|
Gain on sale of
non-depreciable real estate assets
|
|
|
(1,366)
|
|
|
|
—
|
|
|
|
(3,782)
|
|
|
|
(12,047)
|
|
Loss (gain) from
unconsolidated limited partnerships, net of tax
(1)(2)
|
|
|
100
|
|
|
|
(3,493)
|
|
|
|
(3,870)
|
|
|
|
(2,954)
|
|
Net casualty loss
(gain) and other settlement proceeds (1)
|
|
|
511
|
|
|
|
(46)
|
|
|
|
(284)
|
|
|
|
(3,390)
|
|
Loss on debt
extinguishment (1)
|
|
|
345
|
|
|
|
5
|
|
|
|
537
|
|
|
|
253
|
|
Non-routine legal
costs and settlements (1)
|
|
|
—
|
|
|
|
1,260
|
|
|
|
40
|
|
|
|
2,276
|
|
COVID-19 related costs
(1)
|
|
|
376
|
|
|
|
—
|
|
|
|
2,983
|
|
|
|
—
|
|
Mark-to-market debt
adjustment (3)
|
|
|
83
|
|
|
|
(51)
|
|
|
|
(43)
|
|
|
|
(256)
|
|
Adjusted
EBITDAre
|
|
$
|
230,414
|
|
|
$
|
233,638
|
|
|
$
|
946,422
|
|
|
$
|
933,363
|
|
|
|
(1)
|
Included in Other
non-operating (income) expense in the Consolidated Statements of
Operations.
|
(2)
|
For the three months
ended September 30, 2019, $4.3 million of gains from unconsolidated
limited partnerships are offset by $0.8 million of income tax
expenses. For the twelve months ended September 30,
2020, $4.7 million of gains from unconsolidated limited
partnerships are offset by $0.8 million of income tax
expense. For the twelve months ended December 31, 2019, $3.9
million of gains from unconsolidated limited partnerships are
offset by $0.9 million of income tax expense.
|
(3)
|
Included in Interest expense in the
Consolidated Statements of Operations.
|
RECONCILIATION OF
NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES
PAYABLE
|
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Unsecured notes
payable
|
|
$
|
3,939,425
|
|
|
$
|
3,828,201
|
|
Secured notes
payable
|
|
|
486,169
|
|
|
|
626,397
|
|
Total debt
|
|
|
4,425,594
|
|
|
|
4,454,598
|
|
Cash and cash
equivalents
|
|
|
(18,407)
|
|
|
|
(20,476)
|
|
1031(b) exchange
proceeds included in Restricted cash (1)
|
|
|
—
|
|
|
|
(33,843)
|
|
Net Debt
|
|
$
|
4,407,187
|
|
|
$
|
4,400,279
|
|
|
|
(1)
|
Included in Restricted cash in the
Consolidated Balance Sheets.
|
RECONCILIATION OF
GROSS ASSETS TO TOTAL ASSETS
|
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Total
assets
|
|
$
|
11,128,704
|
|
|
$
|
11,230,450
|
|
Accumulated
depreciation
|
|
|
3,316,710
|
|
|
|
2,955,253
|
|
Gross
Assets
|
|
$
|
14,445,414
|
|
|
$
|
14,185,703
|
|
RECONCILIATION OF
GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Real estate assets,
net
|
|
$
|
10,928,375
|
|
|
$
|
10,987,128
|
|
Accumulated
depreciation
|
|
|
3,316,710
|
|
|
|
2,955,253
|
|
Cash and cash
equivalents
|
|
|
18,407
|
|
|
|
20,476
|
|
1031(b) exchange
proceeds included in Restricted cash (1)
|
|
|
—
|
|
|
|
33,843
|
|
Gross Real Estate
Assets
|
|
$
|
14,263,492
|
|
|
$
|
13,996,700
|
|
|
|
(1)
|
Included in
Restricted cash in 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, represents EBITDAre further adjusted for
items that are not considered part of MAA's core operations such as
adjustments related to the fair value of the embedded derivative in
the MAA Series I preferred shares, gain or loss on sale of
non-depreciable assets, adjustments for gains or losses from
unconsolidated limited partnerships, net casualty gain or loss,
gain or loss on debt extinguishment, non-routine legal costs and
settlements, COVID-19 related costs and mark-to-market debt
adjustments. 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 as an indicator of operating performance.
Core Adjusted Funds from Operations (Core AFFO)
Core
AFFO is composed of Core FFO less recurring capital expenditures.
Core AFFO should not be considered as an alternative to Net income
available for MAA common shareholders as an indicator of operating
performance. As an owner and operator of real estate, MAA
considers Core AFFO to be an important measure of performance from
operations because Core AFFO measures the ability to control
revenues, expenses and recurring capital expenditures.
Core Funds from Operations (Core FFO)
Core FFO
represents FFO as adjusted for items that are not considered part
of MAA's core business operations such as adjustments related to
the fair value of the embedded derivative in the MAA Series I
preferred shares, gain or loss on sale of non-depreciable assets,
adjustments for gains or losses from unconsolidated limited
partnerships, net casualty gain or loss, gain or loss on debt
extinguishment, non-routine legal costs and settlements, COVID-19
related costs and mark-to-market debt adjustments. While MAA's
definition of Core FFO may be similar to others in the industry,
MAA's methodology for calculating Core FFO may differ from that
utilized by other REITs and, accordingly, may not be comparable to
such other REITs. Core 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 Core FFO
is helpful in understanding its core operating performance between
periods in that it removes certain items that by their nature are
not comparable over periods and therefore tend to obscure actual
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 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 as an indicator of
operating 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 further adjusted for 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 as an indicator of operating
performance.
Funds Available for Distribution (FAD)
FAD is composed
of Core 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 indicator of operating performance. 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.
NON-GAAP FINANCIAL MEASURES (Continued)
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 net
income attributable to noncontrolling interests 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.
Gross Assets
Gross Assets represents Total assets plus
Accumulated depreciation. 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 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 and amortization, 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.
Same Store NOI
Same Store NOI represents Rental and
other property revenues less Total property operating expenses,
excluding depreciation and amortization, 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.
Non-Same Store and Other NOI
Non-Same Store and Other
NOI represents Rental and other property revenues less Total
property operating expenses, excluding depreciation and
amortization, for all properties classified within the Non-Same
Store and Other Portfolio during the period. Non-Same Store and
Other NOI should not be considered as an alternative to Net income
available for MAA common shareholders. MAA believes Non-Same
Store and Other 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.
OTHER KEY DEFINITIONS (Continued)
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.
Non-Same Store and Other Portfolio
Non-Same Store and
Other Portfolio includes recently acquired communities, communities
in development or lease-up, communities that have been identified
for disposition, communities that have undergone a significant
casualty loss, stabilized communities that do not meet the
requirements defined by the Same Store Portfolio, retail properties
and commercial properties.
Same Store Portfolio
MAA reviews its Same Store
Portfolio at the beginning of each calendar year, or as significant
transactions or events 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