Mid-america Apartment Communities, Inc. · NYSE:MAA
Mid-america Apartment Communities — Investor Presentation (February 2020)
34 slides from Mid-america Apartment Communities's investor presentation, Feb 18, 2020
Slide 1: Capital Markets Update February 2020
CAPITAL MARKETS UPDATE FEBRUARY 2020
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: Strong. Building Momentum. Ready.
Strong. Building Momentum. Ready. 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: Strong, Building Momentum, Ready summary
Strong MAA has a differentiated approach, focused on the high growth Sun Belt region Portfolio is diversified among markets, submarkets, asset styles, and price points Portfolio size and market concentration create efficiencies and economies of scale Technology initiatives further strengthen platfor
Slide 5: 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 DC Metro New York Orange County Oakland-East Bay San Diego Inland Empire Public Apartment REIT Market Concentration % P
Slide 6: Diversified Portfolio in High-Growth Region (Markets 1-5)
1 WASHINGTON D.C. 4,080 Units | 6.6% NOI ATLANTA 10,664 Units | 12.3% NOI TOP 10 MARKETS BY % SAME STORE NOI FOR 4Q 2019 Diversified Portfolio in High-Growth Region CHARLOTTE 6,149 Units | 7.0% NOI TAMPA 5,220 Units | 6.7% NOI DALLAS-FORT WORTH 13,653 Units | 13.2% NOI 1 2 4 3 5 1
Slide 7: Diversified Portfolio in High-Growth Region (Markets 6-10)
NASHVILLE 4,055 Units | 4.5% NOI AUSTIN 6,475 Units | 6.1% NOI TOP 10 MARKETS BY % SAME STORE NOI FOR 4Q 2019 Diversified Portfolio in High-Growth Region HOUSTON 4,867 Units | 4.4% NOI RALEIGH/DURHAM 4,397 Units | 4.6% NOI ORLANDO 5,274 Units | 6.4% NOI 6 7 8 10 9 1
Slide 8: Market Diversification and Submarket Balance across the Sunbelt Region
Market Diversification and Submarket Balance across the High Growth Sunbelt Region Multifamily Markets Regional Office Corporate Headquarters Source: Company and Company 4Q 2019 Earnings Release Supplemental 1 Based on gross asset value at 12/31/2019 for total multifamily portfolio 2 Average effecti
Slide 9: 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 10: Operational Strength and Efficiencies Drive Value
Operational Strength and Efficiencies Drive Value MAA’s established expense management practice stands out among peers Since 2013, 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 maintenance and turn costs Proact
Slide 11: Smart Home and Double Play Bulk Internet Roll-out
2019 Test and 2020 Expansion Tests at 15 properties in 2019 were well received 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 Expect
Slide 12: Credit Metrics
Credit metrics At 12/31/2019 MAA SECTOR AVG4 Total debt / adjusted total assets1 31.4% 32.3% Total secured debt / adjusted total assets1 4.4% 5.3% Unencumbered NOI / total NOI 90.2% 91.1% Net debt / recurring adjusted EBITDAre2 4.62x3 5.05x Consolidated income available for debt service to total ann
Slide 13: Strong Trends Heading Into 2020
Strong Trends Heading Into 2020 2 2019 2020F Blended Lease Over Lease Rent Growth 4.4% 2.9% - 3.9% “Earned in” Rent Growth1 0.9% 1.7% 1 “Earned in” rent growth is calculated as December effective rent/unit as compared to the full year effective rent/unit and is intended to capture the carry over gro
Slide 14: Value Creation through Kitchen and Bath Redevelopment Program
Value Creation through Kitchen and Bath Redevelopment Program Approximately 25,000 units redeveloped during past 3 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 15: Future Opportunity: Pipeline of Units Yet to be Redeveloped
Future Opportunity to Capture Pipeline of Units Yet to be Redeveloped MAA REDEVELOPMENT PIPELINE Currently Identified Redevelopment Opportunity Future Value Opportunity Revenue At 5.0% Cap Rate Net Value Creation $17.3M $346.0M $264.5M Legacy MAA Legacy CLP Legacy PPS Total MAA Units 3,749 3,334 6,0
Slide 16: 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 17: Development Pipeline Poised To Deliver Value
Novel Midtown, Phoenix, AZ Current $490 million development pipeline Development Pipeline Poised To Deliver Value MAA Frisco Bridges II, Dallas, TX Jefferson Sand Lake, Orlando, FL 336 N Orange, Orlando, FL Started late 3Q 2019 Expected Completion 3Q 2020 Expected Completion 2Q 2021 Expected Complet
Slide 18: Active Developments and Lease-ups
6.2% AVERAGE EXPECTED STABILIZED NOI YIELD $30M - $31M TOTAL EXPECTED STABILIZED INCREMENTAL NOI ACTIVE DEVELOPMENTS AT 12/31/2019 PROPERTY MSA TOTAL UNITS TOTAL EXP COST (IN MILLIONS) EXPECTED INITIAL OCCUPANCY EXPECTED STABILIZATION2 Copper Ridge II Fort Worth, TX 168 $ 30.0 1Q 2020 1Q 2021 MAA Fr
Slide 19: 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, 02/09/2020 1 AFFO Payout Ratio is defined as annual dividends paid or forecasted to be paid divided by annual AFFO per Share diluted 2 Weighted average of AFFO Payout Rati
Slide 20: Balance Sheet Capacity With Multiple Capital Sources
2012 2019 37.0% 22.5% Balance Sheet Capacity With Multiple Capital Sources 2012 Total Debt/Total Assets 44.1% Fixed Charge Coverage 4.4x Annual Dividend/Share $2.64 Dividend/AFFO 66.7% Net Debt/Recurring Adj EBITDAre 6.48x Ratings BBB-/Baa2/BBB Unencumbered Gross Assets 53% Average Daily Trading Vol
Slide 21: Experienced, Tenured Management Team
Experienced, Tenured Management Team General Counsel & Commercial Property Operations Rob DelPriore EVP, General Counsel 25 years with MAA (includes outside tenure) Tom Grimes EVP, Chief Operating Officer 25 years with MAA Al Campbell EVP, Chief Financial Officer 22 years with MAA Melanie Carpenter
Slide 22: Strong Culture Serving All Stakeholders
Strong Culture Serving All Stakeholders 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 an ESG council of exec
Slide 23: 2020 Same Store Outlook
2020 Same Store Outlook REVENUE EXPENSE Property Revenue Growth Full Year 2020 Forecast 3.25% - 4.25% 3.75% Midpoint Property Expense Growth Full Year 2020 Forecast 3.75% - 4.75% 4.25% Midpoint Blended Lease Over Lease Pricing Full Year 2020 Forecast February 2020 YTD: 1.9% 2.9% - 3.9% 3.4% Midpoint
Slide 24: 2020 Core FFO and Investment Outlook
2020 Core FFO and Investment Outlook EXPECTED CORE FFO/SHARE1 CAPITAL INITIATIVES4 TRANSACTIONS4/FINANCING Full Year 20202 $6.38 - $6.62 $6.50 Midpoint Smart Home Investment 24k to 25k units installed in 2020 $35M - $38M Capital Spend Multifamily Acquisitions All in lease up, i.e. initially dilutive
Slide 25: Appendix: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Definitions of Non-GAAP Financial Measures and Other Key Terms APPENDIX At December 31, 2019
Slide 26: 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 (1) Results for the years ended December 31, 2019 and 2018 included $17.9 million of non-cash income and $2.6 million of non-cash expense, respectively, related to th
Slide 27: Reconciliation of Net Operating Income to Net Income
Reconciliation of Non-GAAP Financial Measures RECONCILIATION OF NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON SHAREHOLDERS Dollars in thousands Three Months Ended Year Ended December 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Net Operating Income
Slide 28: Reconciliation of EBITDA, EBITDAre and Adjusted EBITDAre
Reconciliation of Non-GAAP Financial Measures RECONCILIATION OF EBITDA, EBITDAre, ADJUSTED EBITDAre AND RECURRING ADJUSTED EBITDAre TO NET INCOME (1) Included in Other non-operating income in the Consolidated Statements of Operations. (2) Recurring Adjusted EBITDAre for the trailing twelve months en
Slide 29: Reconciliation of Net Debt, Gross Assets and 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 December 31, 2019 December 31, 2018
Slide 30: Reconciliation of Net Income per Share to Core FFO and Core AFFO
Reconciliation of Non-GAAP Financial Measures RECONCILIATION OF NET INCOME PER DILUTED COMMON SHARE TO CORE FFO AND CORE AFFO PER SHARE FOR 2019 RESULTS AND 2020 GUIDANCE Year ended 2020 Full Year Guidance Range December 31, 2019 Low High Earnings per common share - diluted $ 3.07 $ 3.02 $ 3.26 Real
Slide 31: Definitions of Non-GAAP Financial Measures: Adjusted EBITDAre
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 32: Definitions of Non-GAAP Financial Measures: EBITDAre
Definitions of Non-GAAP Financial Measures 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, as defined above, excluding the gain or loss on sale of depreciable asset sales
Slide 33: Definitions of Non-GAAP Financial Measures: Net Operating Income
Definitions of Non-GAAP Financial Measures Net Operating Income (NOI) Net Operating Income represents Rental and other property revenues less Total property operating expenses, excluding depreciation, for all properties held during the period, regardless of their status as held for sale. NOI should
Slide 34: 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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