Mid-america Apartment Communities, Inc. · NYSE:MAA
Mid-america Apartment Communities — NAREIT REIT Week 2018
30 slides from Mid-america Apartment Communities's conference presentation, Jun 4, 2018
Slide 1: Nareit REIT Week | June 5-7, 2018
NAREIT REIT WEEK | JUNE 5 - 7, 2018
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 expe
Slide 3: A Strategy Focused on Creating Value Through the Full Market Cycle
A STRATEGY FOCUSED ON CREATING VALUE THROUGH THE FULL MARKET CYCLE 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 UNIQUELY DIVERSIFIED AND BALANCED E
Slide 4: Focus on High Growth Region of the U.S.
FOCUS ON HIGH GROWTH REGION OF THE U.S. 66% SECTOR 40% 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 5: Active Market Diversification and Submarket Balance Across the High Growth Region
ACTIVE MARKET DIVERSIFICATION AND SUBMARKET BALANCE ACROSS THE HIGH GROWTH REGION TOP 20 MARKETS 1 % OF Q1 2018 NOI 2 Atlanta, GA 13.6% Dallas, TX 9.6% Charlotte, NC 7.4% Washington, DC 6.7% Tampa, FL 6.6% Austin, TX 5.9% Orlando, FL 5.7% Raleigh/Durham, NC 4.5% Nashville, TN 4.3% Fort Worth, TX 4.0
Slide 6: Portfolio Balanced to Serve the Largest Segments of the Apartment Rental Market
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% 50.0% Spread of Rents in MAA Portfolio Spread of Rents Paid by Apartment Renters • Provides downside protection • Helps mitigate new supply press
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 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 2019F Atlanta 12,081 10,506 2.1% 10,
Slide 8: Leasing Update as of June 1, 2018; Improving Trends
1.6% 2.8% 3.9% 1.2% 2.0% 2.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% Q1 April May 2018 2017 AVERAGE DAILY OCCUPANCY Q1 2018 Q1 2017 MAY QTD 2018 MAY QTD 2017 Same Store 96.3% 96.0% 96.1% 96.1% Legacy MAA Same Store 96.4% 96.1% 96.2% 96.3% Legacy Post Same Store 95.8% 95.2% 95.4% 95.3% LEA
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 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 1. Unique shop stocking program drives down maintenance and tur
Slide 11: 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 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 dr
Slide 12: Operating Platform: Redevelopment = Strong Value Creation
OPERATING PLATFORM: REDEVELOPMENT = STRONG VALUE CREATION 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 incl
Slide 13: Operating Platform: Future Opportunity to Capture
OPERATING PLATFORM: FUTURE OPPORTUNITY TO CAPTURE Robust Pipeline of Units Yet to be Redeveloped MAA REDEVELOPMENT PIPELINE Remaining Identified Redevelopment Opportunity Future Value Opportunity Revenue At 5.3% Cap Rate Net Value Creation $35.1M $668.3M $500.6M Legacy MAA Legacy CLP Legacy PPS Tota
Slide 14: Synergy and NOI Upside Opportunity
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 in 2017 - 2018; revenue opportunities in 2018 and beyond Stabilize PPS Development Pipeline $15
Slide 15: Credit Metrics and Debt Maturity Profile
CREDIT METRICS AT 3/31/2018 MAA SECTOR AVG 3 Total debt / total assets 1 33.1% 33.0% Total secured debt / total assets 1 6.8% 9.6% Unencumbered NOI / total NOI 85.2% 79.9% Net d ebt / recurring adjusted EBITDA re 2 5.03x 5.17x Consolidated income available for debt service to total annual debt servi
Slide 16: Solid Investment Grade Balance Sheet
SOLID INVESTMENT GRADE BALANCE SHEET DEBT SUMMARY ($ 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 : Total Market Capitalization equals c
Slide 17: Dividends and AFFO Payout Ratio; Total Shareholder Return
$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 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 • Occupancy in line with 2017 • Re
Slide 19: • Focused on driving growing cash flow with lower levels of volatility through the
• Focused on driving growing cash flow with lower levels of volatility through the cycle • Balanced capital allocation across the high - growth Southeast, Southwest and Mid - Atlantic regions • Largest owner/operator focused on high - growth Southeast, Southwest and Mid - Atlantic regions; competiti
Slide 20: Appendix
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 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 shareholders $ 48,097 $ 40,983 Depre
Slide 22: 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 March 31, 2018 December 31, 2017 March 31, 2017 Net Operating Income Same Store NOI $ 225,350 $ 227,369 $ 221,183 Non - S
Slide 23: 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 Dollars in thousands Three Months Ended Twelve Months Ended March 31, March 31, March 31, December 31, 2018 2017 2018 2017 Net income $ 50,820 $ 43,416
Slide 24: Reconciliation of Net Debt and Gross Assets
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 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 932,187 976,292 Total debt 4,498,851 4,502
Slide 25: Reconciliation of Gross Real Estate Assets
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 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 2,075,071 Cash and cash equivalents 5
Slide 26: Definitions of Non-GAAP Financial Measures: Adjusted EBITDAre
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 rea l estate, or Adjusted EBITDA re , is composed of EBITDA re adjusted for net gain or loss on non - depre
Slide 27: Definitions of Non-GAAP Financial Measures: EBITDAre
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES 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, interest expense, income taxes, ga
Slide 28: Definitions of Non-GAAP Financial Measures: Gross Real Estate Assets
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES 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 the Consolidated Balance Sheets, plu
Slide 29: 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 uni ts plus prevalent market rates asked for unoccupied units, divided by the total number of units. Leasin
Slide 30: Definitions of Other Key Terms: Total Market Capitalization
DEFINITIONS OF OTHER KEY TERMS Total Market Capitalization Total Market Capitalization equals the number of shares of common stock plus units not held by MAA at period end multiplied by the closing stock price at period end, plus total debt outstanding. Unencumbered NOI Unencumbered NOI represents N
Mid-America Apartment Communities — NAREIT REIT Week 2018 on 6ix