Mid-america Apartment Communities, Inc. · NYSE:MAA
Mid-america Apartment Communities — NAREIT Institutional Investor Forum 2006
16 slides from Mid-america Apartment Communities's conference presentation, Jun 6, 2006
Slide 1: Mid-America Apartment Communities – NAREIT Institutional Investor Forum
Mid-America Apartment Communities NAREIT Institutional Investor Forum June
Slide 2: Safe Harbor Statement
Statements contained in this presentation, which are not historical facts, are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which can cause actual results to differ m
Slide 3: MAA Overview
Lighthouse Court, Jacksonville Silverado, Austin MAA Overview Ø Sunbelt Region Focus • Strong job growth, high household formation Ø Efficient Size • properties; 39,179 units • $2.6B total capitalization Ø Three-tier Diversification • Steady growth, lower volatility Ø High Quality Properties • A+ to
Slide 4: Positioned for Performance
Lanier Club, Atlanta Verandas, Dallas Positioned for Performance ü Focused on the Sunbelt …poised to capture growing demand for apartment housing in high job growth region. ü Repositioned portfolio …higher allocation to strong recovery markets; solid diversification across region. ü High asset quali
Slide 5: Current MAA Footprint
Current MAA Footprint Regional Focus Ø The “Demand” side of the equation leading recovery for the sector…favoring the southeast and sunbelt states Ø Encompasses two of the three states (TX, FL) with the greatest population growth over the next ten years Ø Competition from new construction may be mut
Slide 6: Repositioned Portfolio
Monthaven, Nashville Repositioned Portfolio Ø Allocated 29% of capital to large markets, up from 19% in 2003 Ø Increased exposure to more rapidly growing markets during early part of cycle Ø Average age of properties sold over last 3 years was 29 years versus 6 years for properties acquired Ø 20% of
Slide 7: Improved Operating Platform
Improved Operating Platform Ø Installed web-based property management system (MRI) Ø Yield management test (LRO) in offers rent improvement potential Ø Inventory management opportunities to reduce days vacant Ø New marketing initiatives – Regional pricing directors – On-line leasing – Direct rental
Slide 8: Repositioning Opportunity
Repositioning Opportunity Ø Interior improvement program – Up to 8,000 unit potential – 1,100 units targeted for – Focus on kitchen and bath – Average $4,200 per unit – Work performed as unit turns Ø Average rent increases of $107 (vs. target of $87) Ø Target 13% leveraged IRR (YTD: 4-year payback)
Slide 9: External Growth
External Growth Ø Acquisition program has continuously improved asset quality Ø Year 1 average NOI yield of approx. 6½% to 7½% Ø $150 million of acquisitions annually can add as much as 14 cents to FFO per share by year 3 Ø Must also pass IRR and replacement cost tests
Slide 10: External Growth: Expansion Units Under Construction
Preserve at Brier Creek, Raleigh New “Expansion” Units Under Construction External Growth Ø $50 million of added-value development underway: • Phase additions (3 locations) • apartments • Up to $16MM invested in Ø First year stabilized NOI yields of 8%+ expected
Slide 11: Improved Balance Sheet
* 2006 forecast: Morgan Stanley May 26 2006 FFO as reported, before Preferred original issuance cost write-off • Dividend payout ratio is below sector median • $60MM share offering brings debt + preferred ratio (as percent of market cap) to 48.6% (approximates sector median of 47.8%) • Fixed charge
Slide 12: Market Recovery Underway
Market Recovery Underway Ø Reported Q1 FFO per share was $0.84 vs. $0.79 for 2005, $0.04 ahead of initial guidance mid-point – Included $0.02 charge for debt refinancing – Strong property operations Ø Guidance raised to $3.20 to $3.38 – Same store growth forecast 5% +/- – Includes impact of tax chan
Slide 13: Sector Comparisons
AFFO growth estimates are “in line” with sector… Avg. Avg. Debt level as a percent of entity value is “in line” with peers… 41.1% Avg . Fixed charge coverage is “in line” with peers… Dividend as a percent of AFFO is “better than average”… Avg. 2.2x Avg. 93% Graph data taken from Morgan Stanley’s REA
Slide 14: Pricing
EBITDA Multiple Pricing FFO Multiple Pricing …however, pricing is currently at a 16% to 23% discount to the sector average pricing. MAA priced at sector average would support pricing of $60 to $63/share. Avg. 19.4 Avg. 2006; 18.6 Avg. 2007; 18.0 Graph data taken from Morgan Stanley’s REAL ESTATE INV
Slide 15: Recap
Watermark, Dallas Hunters Ridge, Jacksonville Recap ü Strong position in the high growth Sunbelt Region ü Repositioned to deliver more robust internal growth ü Strong operating capabilities positioned to full value ü Poised for competitive level of external growth ü Balance sheet significantly impro
Slide 16: End of Presentation
End of Presentation Mid-America Apartment Communities
Mid-America Apartment Communities — NAREIT Institutional Investor Forum 2006 on 6ix