Mid-america Apartment Communities, Inc. · NYSE:MAA
Mid-america Apartment Communities — Investor Presentation (May 2019)
32 slides from Mid-america Apartment Communities's investor presentation, May 13, 2019
Slide 1: Capital Markets Update May 2019
CAPITAL MARKETS UPDATE MAY 2019
Slide 2: Forward-Looking Statements
FORWARD - LOOKING STATEMENTS This presentation contains forward - looking statements within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended . These forward - looking statements, which are based on current ex
Slide 3: A Strategy Focused on Creating Value Through the Full Market Cycle
A STRATEGY FOCUSED ON CREATING VALUE THROUGH THE FULL MARKET CYCLE 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 3 2019 OUTLOOK • Leasing Update/Outlook • Supply
Slide 4: 2019 Same Store Leasing Outlook
2019 SAME STORE LEASING OUTLOOK LEASE OVER LEASE PRICING LEASE OVER LEASE PRICING FORECAST BLENDED LEASE OVER LEASE PRICING 2018 VS. 2019 4 0.7% 2.4% 7.3% 7.0% 3.9% 4.6% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Q1 2019 Apr 2019 New Lease Renewal Blended 1.5% 2.8% 3.9% 4.6% 0.0% 0.5% 1.0% 1.5% 2.
Slide 5: Targeted Supply Outlook
Supply Increasing YOY Supply Consistent YOY Supply Declining YOY 48% of Same Store NOI 8% of Same Store NOI 44% of Same Store NOI “Targeted Supply Outlook” is our internal review of third party supply data by market that is further segmented to identify new supply expected to most impact our propert
Slide 6: 2019 Same Store Outlook
2019 SAME STORE OUTLOOK 6 REVENUE EXPENSE Property Revenue Growth Full Year 2019 1.8% - 2.8% 2.3% Midpoint Property Expense Growth Full Year 2019 2.6% - 3.6% 3.1% Midpoint Blended Lease Over Lease Pricing Full Year 2019 2.2% - 3.2% 2.7% Midpoint Real Estate Tax Growth Full Year 2019 3.75% - 4.75% 4.
Slide 7: 2019 FFO Outlook
2019 FFO OUTLOOK 7 EXPECTED FFO/SHARE FINANCING TRANSACTIONS 3 Full Year 2019 1 $6.11 - $6.35 $6.23 Midpoint 10 - Year Unsecured Bond AMT $300M Multifamily Acquisitions NOTE: All lease up acquisitions initially dilutive $125M - $175M $150M Midpoint [TIMING: 2H 2019] EFF RATE 4.24% TIMING MAR 2019 Q2
Slide 8: 2019 Overhead Outlook
2019 OVERHEAD OUTLOOK OVERHEAD (G&A + PROPERTY MANAGEMENT ) • Full Year 2019: $96.5M to $98.5M ($97.5M at the midpoint) • Q1 2019: Expect overhead to be front - loaded in Q1 ( ∼ 28% of total overhead in Q1) due to seasonality of certain costs • Total 2019 overhead expected to be approximately 6% of
Slide 9: Focus on High Growth Region of the U.S.
FOCUS ON HIGH GROWTH REGION OF THE U.S. 64% SECTOR 39% SECTOR 3% MAA 0% MAA • 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 •
Slide 10: Market Diversification and Submarket Balance Across the High Growth Sunbelt Region
MARKET DIVERSIFICATION AND SUBMARKET BALANCE ACROSS THE HIGH GROWTH SUNBELT REGION TOP 20 MARKETS 1 % OF1Q 2019 NOI 2 Atlanta, GA 12.9% Dallas, TX 8.9% Charlotte, NC 7.0% Washington, DC 6.6% Orlando, FL 6.5% Tampa, FL 6.5% Austin, TX 5.7% Raleigh/Durham, NC 4.5% Nashville, TN 4.4% Houston, TX 4.3% F
Slide 11: Portfolio Balanced to Serve the Largest Segments of the Apartment Rental Market
0.4% 9.9% 44.5% 29.7% 12.0% 0.6% 2.8% 0.1% 0.0% 4.4% 15.8% 23.7% 20.9% 13.8% 7.6% 5.6% 4.6% 3.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Spread of Rents in MAA Portfolio Spread of Rents Paid by Apartment Renters • Provides downside protection • Helps mitigate new supply press
Slide 12: Operational Advantages Drive Value
$17,911 $36,833 $56,808 $77,881 $100,097 $123,506 $148,156 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 2013 2014 2015 2016 2017 2018 2019F MAA’S ESTABLISHED EXPENSE MANAGEMENT PRACTICE STANDS OUT AMONG P EERS Since 2013, including 2019 forecast expectations, the average an
Slide 13: Same Store NOI Margin Improvement
Same Store NOI Margin Improvement • MAA platform capabilities applied to CLP and PPS portfolios drive meaningful margin expansion • PPS margin improvement to date has been expense driven . Opportunities to be captured are associated with revenue management practices and unit interior redevelopment p
Slide 14: Strong Value Creation Through Redevelopment Program
STRONG VALUE CREATION THROUGH REDEVELOPMENT PROGRAM Over 28,000 units redeveloped during past 5 years Redevelopments are performed on turn at select communities, minimizing down time and allowing us to evaluate the effectiveness of the program for real - time improvements Standard program includes k
Slide 15: Future Opportunity to Capture: Redevelopment Pipeline
FUTURE OPPORTUNITY TO CAPTURE Robust Pipeline of Units Yet to be Redeveloped MAA REDEVELOPMENT PIPELINE Remaining Identified Redevelopment Opportunity Future Value Opportunity Revenue At 5.6% Cap Rate Net Value Creation $24.8M $443.3M $326.7M Legacy MAA Legacy CLP Legacy PPS Total MAA Units 3,749 5.
Slide 16: Capital Recycling for Value Capture
CAPITAL RECYCLING FOR VALUE CAPTURE 16 Transaction Activity Drives Value 2014 - 2018 TRANSACTIONS Over the last 5 years, our capital recycling program, excluding merger transactions, yielded assets with a younger age, higher rent profile, and improved after capex NOI margin, creating higher long - t
Slide 17: Development, Lease-Up and Recently Stabilized Properties Poised to Deliver Value
DEVELOPMENT, LEASE - UP AND RECENTLY STABILIZED PROPERTIES POISED TO DELIVER VALUE 17 Sync 36, Denver Post Centennial Park, Atlanta 1201 Midtown II, Charleston Post River North, Denver Post Midtown, Atlanta 5
Slide 18: Development Pipeline and Lease-Ups Poised to Deliver Value
• Established history and success of disciplined capital deployment will govern growth through new development • Manage the design and investment from an owner - operator perspective; optimize long - term margins • In pre - development stage on opportunities in Phoenix, Denver, Houston and Orlando D
Slide 19: Credit Metrics and Debt Maturity Profile
CREDIT METRICS AT 3/31/2019 MAA SECTOR AVG 3 Total debt / adjusted total assets 1 32.6% 31.9% Total secured debt / adjusted total assets 1 4.7% 7.2% Unencumbered NOI / total NOI 90.2% 85.4% Net d ebt / recurring adjusted EBITDA re 2 4.96x 4.97x Consolidated income available for debt service to total
Slide 20: Solid Investment Grade Balance Sheet
SOLID INVESTMENT GRADE BALANCE SHEET DEBT SUMMARY ($ IN MILLIONS) AT 3/31/2019 Unsecured Bonds $2,671 58.7% Unsecured Term Loans 1,140 25.1% Unsecured Credit Facility 75 1.6% Total Unsecured Debt $3,886 85.4% Total Secured Debt $662 14.6% TOTAL DEBT $4,548 Note : Total Enterprise Value equals common
Slide 21: Differentiated Strategy and Focused Execution Drives Results
$2.46 $2.46 $2.51 $2.64 $2.78 $2.92 $3.08 $3.28 $3.48 $3.69 $3.84 79.9% 79.6% 76.1% 66.7% 74.3% 66.7% 62.0% 66.1% 65.7% 68.2% 68.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% $- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F Di
Slide 22: Conserving Resources, Reducing Waste, Increasing Efficiency
CONSERVING RESOURCES • Low - flow plumbing fixtures • Irrigation efficiencies, rainwater harvesting, reclaimed water and well water usage • Community landscaping to minimize turf and include drought tolerant plant material REDUCING WASTE • On - site trash recycling options for residents • Online lea
Slide 23: Appendix
23 AT MARCH 31, 2019 APPENDIX • Reconciliation of Non - GAAP Financial Measures • Definitions of Non - GAAP Financial Measures and Other Key Terms
Slide 24: Reconciliation of FFO, AFFO and FAD to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 24 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, 2019 2018 Net income available for MAA common shareholders $ 62,738 $ 48,097 De
Slide 25: Reconciliation of Net Operating Income to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 25 RECONCILIATION OF NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON SHAREHOLDERS Dollars in thousands Three Months Ended March 31, 2019 December 31, 2018 March 31, 2018 Net Operating Income Same Store NOI $ 237,439 $ 238,258 $ 231,655 Non
Slide 26: Reconciliation of EBITDA to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES (1) Included in Other non - operating income on the Consolidated Statements of Operations 26 RECONCILIATION OF EBITDA, EBITDA re , ADJUSTED EBITDA re AND RECURRING ADJUSTED EBITDA re TO NET INCOME Dollars in thousands Three Months Ended Twelve Months E
Slide 27: Reconciliation of Net Debt, Gross Assets and Real Estate Assets
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 27 RECONCILIATION OF NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES PAYABLE Dollars in thousands March 31, 2019 December 31, 2018 Unsecured notes payable $ 3,886,236 $ 4,053,302 Secured notes payable 661,862 475,026 Total debt 4,548,098 4,528,32
Slide 28: Reconciliation of Net Income per Share Guidance to FFO and AFFO
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 28 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 $ 2.19 $ 2.43 Real estate depreciation 4.10 4.10 Amortization other 0.04 0.0
Slide 29: Definitions of Non-GAAP Financial Measures
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES Adjusted EBITDA re 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 - deprecia
Slide 30: 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 losse s o n disposition of operating properties and asset impairment, plus depreciation and amortization of
Slide 31: Definitions of Non-GAAP Financial Measures: Recurring Adjusted EBITDAre
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES Recurring Adjusted EBITDA re 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 bel
Slide 32: 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 occu pie d units plus prevalent market rates asked for unoccupied units, divided by the total number of units. Leasi
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