Mid-america Apartment Communities, Inc. · NYSE:MAA
Mid-america Apartment Communities — Investor Presentation (September 2019)
36 slides from Mid-america Apartment Communities's investor presentation, Sep 9, 2019
Slide 1: Capital Markets Update September 2019
CAPITAL MARKETS UPDATE SEPTEMBER 2019 Exhibit 99.1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains 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. These forward-looking statements, which are based on current expectations,
Slide 3: Stronger. Well Positioned. Proven.
Stronger. Well Positioned. Proven. Transformative transactions over the last six years have enhanced our portfolio, our execution capabilities and our capacity to support new growth. We look forward to capturing the opportunities that lie ahead.
Slide 4: 2019 Same Store Leasing Update
2019 Same Store Leasing Update lease over lease Pricing Blended Lease over lease Pricing 2018 vs. 2019
Slide 5: 2019 Same Store Update and Outlook
2019 Same Store Update and Outlook REVENUE EXPENSE Property Revenue Growth Full Year 2019 Forecast 2.75% - 3.25% 3.0% Midpoint Property Expense Growth Full Year 2019 Forecast 2.5% - 3.5% 3.0% Midpoint Blended Lease Over Lease Pricing Full Year 2019 Forecast 3.4% - 4.4% 3.9% Midpoint Real Estate Tax
Slide 6: 2019 FFO Update and Outlook
2019 FFO Update and Outlook EXPECTED FFO/SHARE FINANCING TRANSACTIONS3 Full Year 20191 $6.20 - $6.36 $6.28 Midpoint 10-Year Unsecured Bond AMT $300M Multifamily Acquisitions NOTE: Decrease of $75M from prior guidance $50M - $100M $75M Midpoint [TIMING: 2H 2019] EFF RATE 4.24% TIMING MAR 2019 Q3 2019
Slide 7: Differentiated Portfolio Strategy
1 National Multifamily Housing Council (NMHC), 2019 NMHC 50, published April 12, 2019; ranked largest apartment owner in the U.S. based on number of apartment units owned and operated Differentiated Portfolio Strategy MAA has broad diversification and balance across the high-growth Sunbelt region, a
Slide 8: A Differentiated Approach, Focus on High Growth Sunbelt Region
A Differentiated Approach, Focus on High Growth Sunbelt Region l TOP 10 MARKETS BY %NOI1 l OTHER CALIFORNIA MARKETS1 l MAA MARKETS Seattle Los Angeles Boston San Jose San Francisco District of Columbia New York Orange County Oakland-East Bay Suburban Virginia San Diego Inland Empire Public Apartment
Slide 9: Diversified Portfolio in High-Growth Region (Top Markets 1-5)
1 CHARLOTTE 6,149 Units | 6.7% NOI ATLANTA 10,664 Units | 12.4% NOI TOP 10 MARKETS BY % SAME STORE NOI FOR 2Q 2019 Diversified Portfolio in High-Growth Region WASHINGTON, DC 4,080 Units | 6.9% NOI TAMPA 5,220 Units | 6.5% NOI DALLAS-FORT WORTH 13,653 Units | 13.0% NOI 1 2 4 3 5
Slide 10: Diversified Portfolio in High-Growth Region (Top Markets 6-10)
NASHVILLE 4,055 Units | 4.5% NOI AUSTIN 6,475 Units | 5.8% NOI TOP 10 MARKETS BY % SAME STORE NOI FOR 2Q 2019 Diversified Portfolio in High-Growth Region HOUSTON 4,867 Units | 4.6% NOI RALEIGH/DURHAM 4,397 Units | 4.4% NOI ORLANDO 5,274 Units | 6.4% NOI 6 7 9 8 10
Slide 11: Market Diversification and Submarket Balance across the High Growth Sunbelt Region
Market Diversification and Submarket Balance across the High Growth Sunbelt Region Multifamily Markets Regional Office Corporate Office Source: Company and Company 2Q 2019 Earnings Release Supplemental furnished with the SEC 1 Ranking of Top 20 Markets based on 2Q 2019 Same Store NOI 2 Based on gros
Slide 12: High Growth Region Favors Continued Strong Demand
High Growth Region Favors Continued Strong Demand Annual Employment Growth Superior JOB GROWTH VS. NATIONAL AVERAGES Favorable MIGRATION TRENDS and HOUSEHOLD FORMATIONS FAVORABLE TAX ENVIRONMENT attracts employers and drives job growth BUSINESS-FRIENDLY infrastructure attracts employers Source: US B
Slide 13: Operational Strength and Efficiencies Drive Value
Operational Strength and Efficiencies Drive Value MAA’s established expense management practice stands out among peers Since 2013, including 2019 expectations, the average annual property expense growth for MAA is 2.5% vs the sector average1 of 3.0% Unique shop stocking program that drives down main
Slide 14: Operational Strength Reflected in Steady Margin Improvement
Operational Strength Reflected in Steady Margin Improvement Same Store NOI Margin Growth 620bps improvement Effective expense management practices and optimized revenue focus are evident in results. Opportunities for additional margin expansion expected to come from a combination of emerging technol
Slide 15: Technology Advances Expected to Enhance Operations and Add Value
2019 Pilot Program Mobile control of lights, thermostat and security as well as leak monitoring provides additional value to residents Additional synergy opportunities in repairs and maintenance and vacant and house electric charges Currently testing at 15 properties in 8 markets Smart Home Technolo
Slide 16: Strong Value Creation through Kitchen and Bath Redevelopment Program
Strong Value Creation through Kitchen and Bath Redevelopment Program Nearly 30,000 units redeveloped during past 5 years Redevelopments are performed on turn at select communities (properties remain in same store group), minimizing down time and allowing us to continually refine the program for real
Slide 17: Future Opportunity to Capture Robust Pipeline of Units Yet to be Redeveloped
Future Opportunity to Capture Robust Pipeline of Units Yet to be Redeveloped MAA REDEVELOPMENT PIPELINE Remaining Identified Redevelopment Opportunity Future Value Opportunity Revenue At 5.0% Cap Rate Net Value Creation $20.0M $400.0M $306.0M Legacy MAA Legacy CLP Legacy PPS Total MAA Units 2,397 4,
Slide 18: Expanding the Redevelopment Program to Drive Additional Value
Expanding the Redevelopment Program to Drive Additional Value Property Repositioning Program Thoughtful Upgrades to Maximize Revenue Program differentiated from kitchen/bath redevelopment – includes upgrade of amenities, exteriors and common areas to keep pace with market demand Candidates evaluated
Slide 19: Development Pipeline Poised To Deliver Value
Sierra at Frisco Bridges, Dallas, TX Sync 36 II, Denver, CO Current $230 million development pipeline with additional starts expected in the back half of 2019 Development Pipeline Poised To Deliver Value Parkside at Wade III, Raleigh, NC Novel Midtown, Phoenix, AZ 336 North Orange, Orlando, FL Expec
Slide 20: Development Pipeline and Lease-ups Poised To Deliver Value
6.2% AVERAGE EXPECTED STABILIZED NOI YIELD $14M - $15M TOTAL EXPECTED STABILIZED INCREMENTAL NOI ACTIVE DEVELOPMENTS AT 6/30/2019 PROPERTY MSA TOTAL UNITS TOTAL EXP COST (IN MILLIONS) EXPECTED INITIAL DELIVERY EXPECTED STABILIZATION1 Post Parkside at Wade III Raleigh, NC 150 $ 25.0 3Q 2019 1Q 2020 S
Slide 21: Strong Balance Sheet and Manageable Debt Maturity Profile
Credit metrics At 6/30/2019 MAA SECTOR AVG3 Total debt / adjusted total assets1 32.3% 32.4% Total secured debt / adjusted total assets1 4.7% 5.7% Unencumbered NOI / total NOI 90.1% 88.6% Net debt / recurring adjusted EBITDAre2 4.92x 4.97x Consolidated income available for debt service to total annua
Slide 22: Solid Investment Grade Balance Sheet
Solid Investment Grade Balance Sheet Debt Summary ($ in millions) At 6/30/2019 Unsecured Public Bonds $2,672 58.9% Unsecured Private Bonds 242 5.4% Unsecured Term Loans 599 13.2% Commercial Paper 367 8.0% Total Unsecured Debt1 $3,880 85.5% Total Secured Debt $660 14.5% Total Debt $4,540 Note: Total
Slide 23: Differentiated Strategy and Superior Execution Drives Long-term Value Creation
Differentiated Strategy and Superior Execution Drives Long-term Value Creation SOURCE: S&P Global, Company, KeyBank Leaderboard, 08/09/2019 1 AFFO Payout Ratio is defined as annual dividends paid or forecasted to be paid divided by annual AFFO per Share diluted 2 Peer average includes multifamily pe
Slide 24: Differentiated Strategy and Superior Execution: Total Shareholder Return
Differentiated Strategy and Superior Execution Drives Long-term Value Creation Total Shareholder Return IPO – 06/28/2019 SOURCE: S&P Global, Company MAA Annual TSR 13.6% Since IPO 2556% 1899% 1304% 1012% Annual Dividends per Common Share IPO – 2019F Over 25 years of consecutive, quarterly, cash divi
Slide 25: Multiple Disparity Creates Opportunity
Multiple Disparity Creates Opportunity Price / 2019 Consensus FFO per Share and AFFO per Share At 08/09/2019 Peer average1 FFO multiple is equivalent to a $138.11 MAA share price, or 10.3% higher than 8/09/2019 share price MAA poised to deliver sustained, steady earnings growth as we continue to cap
Slide 26: Continuing & Enhanced Focus on ESG
Continuing & Enhanced Focus on ESG Our long-term commitment to sustainability and responsibly managing our relationships is an essential part of how we provide exceptional service and value for our stakeholders. We are dedicated to continuous progress and have established a sustainability council fo
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Definitions of Non-GAAP Financial Measures and Other Key Terms APPENDIX At June 30, 2019
Slide 28: Reconciliation of FFO, AFFO and FAD to Net Income
Reconciliation of Non-GAAP Financial Measures 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 June 30, Six months ended June 30, 2019 2018 2019 2018 Net income available for MAA common sha
Slide 29: Net Operating Income Reconciliation
Dollars in thousands Three Months Ended Six Months Ended June 30, 2019 March 31, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Net Operating Income Same Store NOI $ 237,305 $ 237,439 $ 230,414 $ 474,744 $ 462,069 Non-Same Store NOI 15,943 14,362 10,929 30,305 20,887 Total NOI 253,248 251,801 241,34
Slide 30: Reconciliation of EBITDA, EBITDAre and Adjusted EBITDAre to Net Income
Reconciliation of Non-GAAP Financial Measures (1) Included in Other non-operating income on the Consolidated Statements of Operations RECONCILIATION OF EBITDA, EBITDAre, ADJUSTED EBITDAre AND RECURRING ADJUSTED EBITDAre TO NET INCOME Dollars in thousands Three Months Ended Twelve Months Ended June 3
Slide 31: Reconciliation of Net Debt, Gross Assets and Gross Real Estate Assets
Reconciliation of Non-GAAP Financial Measures RECONCILIATION OF NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES PAYABLE RECONCILIATION OF GROSS ASSETS TO TOTAL ASSETS RECONCILIATION OF GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET Dollars in thousands June 30, 2019 December 31, 2018 Unse
Slide 32: Reconciliation of Net Income per Share Guidance to FFO and AFFO
Reconciliation of Non-GAAP Financial Measures RECONCILIATION OF NET INCOME PER DILUTED COMMON SHARE GUIDANCE TO FFO AND AFFO PER SHARE GUIDANCE 2019 Full Year Guidance Range Low High Earnings per common share - diluted $ 2.67 $ 2.83 Real estate depreciation 4.10 4.10 Amortization other 0.04 0.04 Gai
Slide 33: Definitions of Non-GAAP Financial Measures
Definitions of Non-GAAP Financial Measures Adjusted EBITDAre For purposes of calculations in this release, Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate, or Adjusted EBITDAre, is composed of EBITDAre adjusted for net gain or loss on non-depreciable as
Slide 34: Definitions of Non-GAAP Financial Measures: FFO
Definitions of Non-GAAP Financial Measures 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 rea
Slide 35: Definitions of Non-GAAP Financial Measures: Recurring Adjusted EBITDAre
Definitions of Non-GAAP Financial Measures Recurring Adjusted EBITDAre Recurring Adjusted EBITDAre represents Adjusted EBITDAre further adjusted to exclude certain items that are not considered part of MAA's core business operations such as acquisition and merger and integration expenses. MAA believ
Slide 36: Definitions of Other Key Terms
Definitions of Other Key Terms 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
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