Mid-america Apartment Communities, Inc. · NYSE:MAA
Mid-america Apartment Communities — Investor Presentation (May 2018)
30 slides from Mid-america Apartment Communities's investor presentation, May 15, 2018
Slide 1: Capital Markets Update May 2018
CAPITAL MARKETS UPDATE MAY 2018 JACKSONVILLE | BROOKLYN CHARLOTTE | THE SOUTH END ORLANDO | LAKE MARY
Slide 2: Forward Looking Statements
CAPITAL MARKETS UPDATE MAY 2018 2 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 statement
Slide 3: A Strategy Focused on Creating Value Through the Full Market Cycle
A STRATEGY FOCUSED ON CREATING VALUE THROUGH THE FULL MARKET CYCLE CAPITAL MARKETS UPDATE MAY 2018 3 FOCUSED ON HIGH - GROWTH REGION OF THE U.S. • MAA focuses exclusively on the high - growth Southeast, Southwest and Mid - Atlantic regions; high household formation driving consistently strong demand
Slide 4: Focus on High Growth Region of the U.S.
FOCUS ON HIGH GROWTH REGION OF THE U.S. CAPITAL MARKETS UPDATE MAY 2018 4 65% SECTOR 40% SECTOR 3% MAA 0% MAA • Superior JOB GROWTH VS. NATIONAL AVERAGES • Favorable MIGRATION TRENDS and HOUSEHOLD FORMATION • FAVORABLE TAX ENVIRONMENT attracts employers and drives job growth • BUSINESS - FRIENDLY in
Slide 5: Active Market Diversification and Submarket Balance Across the High Growth Region
49% 51% Diversified in Price Points 1,3 A to A+ B to B+ Multifamily Markets Regional Office Corporate Office ACTIVE MARKET DIVERSIFICATION AND SUBMARKET BALANCE ACROSS THE H IGH GROWTH REGION CAPITAL MARKETS UPDATE MAY 2018 5 50% 22% 18% 10% Diversified in Submarkets 1 Inner Loop Suburban Satellite
Slide 6: Portfolio Balanced to Serve the Largest Segments of the Apartment Rental Market
PORTFOLIO BALANCED TO SERVE THE LARGEST SEGMENTS OF THE APARTMEN T RENTAL MARKET… BETTER FULL CYCLE PERFORMANCE CAPITAL MARKETS UPDATE MAY 2018 6 0.9% 12.5% 44.0% 28.9% 9.4% 0.5% 3.7% 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%
Slide 7: Focus on High Growth Region and Markets
156,032 152,234 104,876 2017 2018F 2019F FOCUS ON HIGH GROWTH REGION AND MARKETS CAPITAL MARKETS UPDATE MAY 2018 7 Source: Company 1Q 2018 Filings; Moody’s economy.com; Axiometrics 1 Same Store Y TD NOI at 3/31/2018 MARKETS TOTAL COMPLETIONS JOB GROWTH 2017 2018F % of Stock 2019F % of Stock 2018F 20
Slide 8: Leasing Update – As of April 30, 2018; Improving Trends
1.6% 2.8% 1.2% 2.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Q1 April 2018 2017 AVERAGE DAILY OCCUPANCY Q1 2018 Q1 2017 APR 2018 APR 2017 Same Store 96.3% 96.0% 96.2% 96.1% Legacy MAA Same Store 96.4% 96.1% 96.3% 96.3% Legacy Post Same Store 95.8% 95.2% 95.6% 95.2% LEASING UPDATE – AS OF APRIL 30, 2018; I
Slide 9: 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 • Pipeline opportunities currently in pre - development: Dallas/McKinney, TX; Raleigh,
Slide 10: Operational Advantages Drive Value
MAA’s established expense management practice stands out among peers OPERATIONAL ADVANTAGES DRIVE VALUE CAPITAL MARKETS UPDATE MAY 2018 10 2012 2013 2014 2015 2016 2017 2018F MAA Peer Group MAA: 2.4% 2012 - 2018F Expense CAGR PEER GROUP 1 : 3.1% 2012 - 2018F Expense CAGR How do we do this? 1. Unique
Slide 11: Operational Strength: Same Store NOI Margin Improvement
63.0% 64.2% 66.5% 61.0% 62.0% 63.0% 64.0% 65.0% 66.0% 67.0% 2016 Actual Q1 2018 Full Synergy Capture PPS NOI Margin 3 OPERATIONAL STRENGTH CAPITAL MARKETS UPDATE MAY 2018 11 SAME STORE NOI MARGIN IMPROVEMENT • MAA platform capabilities applied to CLP and PPS portfolios drive meaningful margin expans
Slide 12: Operating Platform: Redevelopment = Strong Value Creation
• 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 kitchen and bath upgrades • Stainless appliances • Counter top replacement • U pdated cabinetry • P
Slide 13: Operating Platform: Future Opportunity to Capture
OPERATING PLATFORM: FUTURE OPPORTUNITY TO CAPTURE CAPITAL MARKETS UPDATE MAY 2018 13 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 $35.1M $668.3M $500.6M Le
Slide 14: PPS Merger Strengthens Platform and Provides Compelling Value
PPS MERGER STRENGTHENS PLATFORM AND PROVIDES COMPELLING VALUE CAPITAL MARKETS UPDATE MAY 2018 14 SYNERGY AND NOI UPSIDE OPPORTUNITY FFO COMMENTS IDENTIFIED AT MERGER IMPACT IN 2018 TOTAL SYNERGY OPPORTUNITY NOI Margin $13 - $15 million $ 8 - $ 9 million $ 1 3 - $15 million Expense synergies captured
Slide 15: Enhanced Investment Grade Balance Sheet and Manageable Debt Maturity Profile
ENHANCED INVESTMENT GRADE BALANCE SHEET AND MANAGEABLE DEBT MATU RITY PROFILE CAPITAL MARKETS UPDATE MAY 2018 15 CREDIT METRICS AT 3/31/2018 MAA SECTOR AVG 3 Total debt / total assets 1 33.1% 33.0% Total secured debt / total assets 1 6.8% 9.6% Unencumbered NOI / total NOI 85.2% 79.9% Net d ebt / rec
Slide 16: Solid Investment Grade Balance Sheet
SOLID INVESTMENT GRADE BALANCE SHEET CAPITAL MARKETS UPDATE MAY 2018 16 DEBT SUMMARY ($ IN MILLIONS) AT 3/31/2018 Unsecured Bonds $2,267 50.4% Unsecured Term Loans 850 18.9% Unsecured Credit Facility 450 10.0% Total Unsecured Debt $3,567 79.3% Total Secured Debt $932 20.7% TOTAL DEBT $4,499 Note : T
Slide 17: Differentiated Strategy and Superior Execution Drives Long-Term Value Creation
$2.46 $2.46 $2.46 $2.51 $2.64 $2.78 $2.92 $3.08 $3.28 $3.48 $3.69 82.30% 79.90% 79.60% 76.10% 66.70% 74.30% 66.70% 62.00% 66.10% 65.70% 68.50% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $2.00 $2.40 $2.80 $3.20 $3.60 $4.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F Dividends AFFO Payout
Slide 18: 2018 Considerations
2018 CONSIDERATIONS CAPITAL MARKETS UPDATE MAY 2018 18 SAME STORE REVENUE We expect: • L easing conditions to improve as supply moderates slightly as compared to 2017 and we enter the busy summer leasing season • Blended (renewals and new leases) lease over lease pricing in the 2.25% to 2.75 % range
Slide 19: • Focused on driving growing cash flow with lower levels of volatility through the
CAPITAL MARKETS UPDATE MAY 2018 19 • Focused on driving growing cash flow with lower levels of volatility through the cycle • B alanced capital allocation across the high - growth Southeast, Southwest and Mid - Atlantic regions • Largest owner/operator focused on high - growth Southeast, Southwest a
Slide 20: Appendix
CAPITAL MARKETS UPDATE MAY 2018 20 AT MARCH 31, 2018 APPENDIX Reconciliation of Non - GAAP Financial Measures Definitions of Non - GAAP Financial Measures and Other Key Terms
Slide 21: Reconciliation of FFO, AFFO and FAD to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES CAPITAL MARKETS UPDATE MAY 2018 21 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, 2018 2017 Net income available for MAA common s
Slide 22: Reconciliation of Net Operating Income to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES CAPITAL MARKETS UPDATE MAY 2018 22 RECONCILIATION OF NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON SHAREHOLDERS Dollars in thousands Three Months Ended March 31, 2018 December 31, 2017 March 31, 2017 Net Operating Income Same Store NOI $
Slide 23: Reconciliation of EBITDA, EBITDAre and Adjusted EBITDAre to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES CAPITAL MARKETS UPDATE MAY 2018 23 RECONCILIATION OF EBITDA, EBITDAre , ADJUSTED EBITDAre AND RECURRING ADJUSTED EBITDAre TO NET INCOME Dollars in thousands Three Months Ended Twelve Months Ended March 31, March 31, March 31, December 31, 2018 2017 201
Slide 24: Reconciliation of Net Debt and Gross Assets
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES CAPITAL MARKETS UPDATE MAY 2018 24 RECONCILIATION OF NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES PAYABLE Dollars in thousands As of March 31, December 31, 2018 2017 Unsecured notes payable $ 3,566,664 $ 3,525,765 Secured notes payable 932,187
Slide 25: Reconciliation of Gross Real Estate Assets
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES CAPITAL MARKETS UPDATE MAY 2018 25 RECONCILIATION OF GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET Dollars in thousands As of March 31, December 31, 2018 2017 Real estate assets, net $ 11,193,527 $ 11,261,924 Accumulated depreciation 2,194,915 2,
Slide 26: Definitions of Non-GAAP Financial Measures
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES CAPITAL MARKETS UPDATE MAY 2018 26 Adjusted EBITDA re For purposes of calculations in this release, Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization for rea l estate, or Adjusted EBITDA re , is composed of EBITDA re adjusted
Slide 27: Definitions of Non-GAAP Financial Measures
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES CAPITAL MARKETS UPDATE MAY 2018 27 EBITDA re For purposes of calculations in this release, Earnings Before Interest, Income Taxes, Depreciation and Amortization for real est ate, or EBITDA re , is composed of net income plus depreciation and amortization,
Slide 28: Definitions of Non-GAAP Financial Measures
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES CAPITAL MARKETS UPDATE MAY 2018 28 Gross Real Estate Assets Gross Real Estate Assets represents Real estate assets, net plus Accumulated depreciation and accumulated depreciation for As set s held for sale, which is included in "Assets held for sale" on t
Slide 29: Definitions of Other Key Terms
DEFINITIONS OF OTHER KEY TERMS CAPITAL MARKETS UPDATE MAY 2018 29 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
Slide 30: Definitions of Other Key Terms
DEFINITIONS OF OTHER KEY TERMS CAPITAL MARKETS UPDATE MAY 2018 30 Total Market Capitalization Total Market Capitalization equals the number of shares of common stock plus units not held by MAA at period end multiplied b y t he closing stock price at period end, plus total debt outstanding. Unencumbe
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