Mid-america Apartment Communities, Inc. · NYSE:MAA
Mid-america Apartment Communities — NAREIT REIT Week 2019 Investor Conference
33 slides from Mid-america Apartment Communities's conference presentation, Jun 3, 2019
Slide 1: NAREIT REIT Week 2019 Investor Conference
NAREIT REIT Week 2019 Investor Conference JUNE 4 - 6, 2019
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 amende d, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward - looking statements, which are based on current expect
Slide 3: Stronger. Well Positioned. Proven.
Stronger. Well Positioned. Proven. 3 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 4 LEASE OVER LEASE PRICING BLENDED LEASE OVER LEASE PRICING 2018 VS. 2019 0.7% 2.4% 2.7% 7.3% 7.0% 6.9% 3.9% 4.6% 4.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Q1 2019 Apr 2019 May 2019 New Lease Renewal Blended 1.5% 2.8% 3.8% 3.9% 4.6% 4.8% 0.0% 1.0% 2.0% 3.0% 4.0
Slide 5: 2019 Supply Outlook
2019 Supply Outlook 5 Supply Increasing YOY Supply Declining or Unchanged YOY 52% of Same Store NOI 48% 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 properties, i.e
Slide 6: 2019 Same Store Update and Outlook
2019 Same Store Update and Outlook 6 REVENUE EXPENSE Property Revenue Growth Full Year 2019 Forecast 1.8% - 2.8% 2.3% Midpoint Property Expense Growth Full Year 2019 Forecast 2.6% - 3.6% 3.1% Midpoint Blended Lease Over Lease Pricing Full Year 2019 Forecast 2.2% - 3.2% 2.7% Midpoint Real Estate Tax
Slide 7: 2019 FFO Update and Outlook
2019 FFO Update and 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
Slide 8: 2019 Overhead Expense Update and Outlook
2019 Overhead Expense Update and Outlook 8 OVERHEAD EXPENSE ( GENERAL & ADMINISTRATIVE (G&A) EXPENSE + PROPERTY MANAGEMENT EXPENSE) • Full Year 2019: $96.5M to $98.5M ($97.5M at the midpoint) • Overhead front loaded in Q1 ( ∼ 28% of total annual overhead forecasted) due to seasonality of certain cos
Slide 9: Differentiated Portfolio Strategy and Scale Advantages
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 regio
Slide 10: A Differentiated Approach, Focus on High Growth Sunbelt Region
A Differentiated Approach, Focus on High Growth Sunbelt Region 10 TOP 10 MARKETS BY %NOI 1; OTHER CALIFORNIA MARKETS 1 ; 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 Apart
Slide 11: Market Diversification and Submarket Balance across the High Growth Sunbelt Region
11 Market Diversification and Submarket Balance across the High Growth Sunbelt Region Multifamily Markets Regional Office Corporate Office 50% 50% DIVERSIFIED IN PRICE POINTS 1,3 A to A+ B to B+ 49% 22% 18% 11% DIVERSIFIED IN SUBMARKETS 1 Inner Loop Suburban Satellite City Downtown/CBD Source: Compa
Slide 12: Diversified Portfolio in High-Growth Region
Diversified Portfolio in High - Growth Region 12 1.8% 2.2% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2012 2013 2014 2015 2016 2017 2018 Average U.S MAA Markets ANNUAL EMPLOYMENT GROWTH • Superior JOB GROWTH VS. NATIONAL AVERAGES • Favorable MIGRATION TRENDS and HOUSEHOLD FORMATIONS • FAVORABLE TAX ENVIRONM
Slide 13: Top 10 Markets by % Same Store NOI (1-5)
1 WASHINGTON, DC 4,080 Units | 6.6% NOI DALLAS - FORT WORTH 13,653 Units | 12.8 % NOI TOP 10 MARKETS BY % SAME STORE NOI FOR 1Q 2019 Diversified Portfolio in High - Growth Region 13 CHARLOTTE 6,149 Units | 7.0% NOI ORLANDO 5,274 Units | 6.5% NOI ATLANTA 10,664 Units | 12.9% NOI 1 2 4 3 5
Slide 14: Top 10 Markets by % Same Store NOI (6-10)
NASHVILLE 4,055 Units | 4.4% NOI AUSTIN 6,475 Units | 5.7% NOI TOP 10 MARKETS BY % SAME STORE NOI FOR 1Q 2019 Diversified Portfolio in High - Growth Region 14 RALEIGH/DURHAM 4,397 Units | 4.5% NOI HOUSTON 4,867 Units | 4.3% NOI TAMPA 5,220 Units | 6.5% NOI 6 7 9 8 10
Slide 15: Operational Strength: Same Store NOI Margin Improvement
Operational Strength 15 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
Slide 16: Operational Advantages Drive Value
Operational Advantages Drive Value 16 18,371 37,779 58,268 79,884 102,673 126,686 151,974 $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 expect
Slide 17: Strong Value Creation through Redevelopment Program
Strong Value Creation through Redevelopment Program 17 Over 28,000 units redeveloped during past 5 years Redevelopments are performed on turn at select communities, minimizing down time and allowing us to continually refine the program for real - time improvements Standard program includes kitchen a
Slide 18: Future Opportunity: Pipeline of Units Yet to be Redeveloped
Future Opportunity to Capture 18 Robust Pipeline of Units Yet to be Redeveloped MAA REDEVELOPMENT PIPELINE Remaining Identified Redevelopment Opportunity Future Value Opportunity Revenue At 5.3% Cap Rate Net Value Creation $23.0M $434.0M $326.5M Legacy MAA Legacy CLP Legacy PPS Total MAA Units 3,176
Slide 19: 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 3/31/2019 PROPERTY MSA TOTAL UNITS TOTAL EXP COST (IN MILLIONS) EXPECTED INITIAL DELIVERY EXPECTED STABILIZATION 1 Post Parkside at Wade III Raleigh, NC 150 $ 25.0 3Q 2019 1Q 2020
Slide 20: 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 21: Solid Investment Grade Balance Sheet
Solid Investment Grade Balance Sheet 21 DEBT SUMMARY ($ IN MILLIONS) AT 3/31/2019 Unsecured Bonds $2,671 58.7% Unsecured Term Loans 1,140 25.1% Unsecured Revolving Credit Facility 75 1.6% Total Unsecured Debt $3,886 85.4% Total Secured Debt $662 14.6% TOTAL DEBT $4,548 Note : Total Capitalization eq
Slide 22: Differentiated Strategy and Superior Execution Drives Long-term Value Creation
$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% 69.7% 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 23: Continuing & Enhanced Focus on ESG
Continuing & Enhanced Focus on ESG 23 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 counc
Slide 24: Appendix
• Reconciliation of Non - GAAP Financial Measures • Definitions of Non - GAAP Financial Measures and Other Key Terms APPENDIX 24 At March 31, 2019
Slide 25: Reconciliation of Non-GAAP Financial Measures: FFO, AFFO and FAD
Reconciliation of Non - GAAP Financial Measures 25 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 26: Reconciliation of Net Operating Income
Reconciliation of Non - GAAP Financial Measures 26 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 27: Reconciliation of EBITDA and EBITDAre
Reconciliation of Non - GAAP Financial Measures 27 (1) Included in Other non - operating income on the Consolidated Statements of Operations 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 28: Reconciliation of Net Debt, Gross Assets
Reconciliation of Non - GAAP Financial Measures 28 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 29: Reconciliation of Guidance to FFO and AFFO per Share
Reconciliation of Non - GAAP Financial Measures 29 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 30: Definitions of Non-GAAP Financial Measures: Adjusted EBITDAre
Definitions of Non - GAAP Financial Measures 30 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 - deprec
Slide 31: Definitions of Non-GAAP Financial Measures: FFO
Definitions of Non - GAAP Financial Measures 31 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
Slide 32: Definitions: Recurring Adjusted EBITDAre and Same Store NOI
Definitions of Non - GAAP Financial Measures 32 Recurring Adjusted EBITDA re Recurring Adjusted EBITDAre represents Adjusted EBITDAre further adjusted to exclude certain items that are not considered pa rt of MAA's core business operations such as acquisition and merger and integration expenses. MAA
Slide 33: Definitions of Other Key Terms
Definitions of Other Key Terms 33 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. Le
Mid-America Apartment Communities — NAREIT REIT Week 2019 Investor Conference on 6ix