Mid-america Apartment Communities, Inc. · NYSE:MAA
Mid-america Apartment Communities — Investor Presentation (February 2019)
31 slides from Mid-america Apartment Communities's investor presentation, Feb 11, 2019
Slide 1: Capital Markets Update | February 2019
CAPITAL MARKETS UPDATE | FEBRUARY 2019
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 ex
Slide 3: A Strategy Focused on Creating Value Through the Full Market Cycle
A STRATEGY FOCUSED ON CREATING VALUE THROUGH THE FULL MARKET CYCLE 1 National Multifamily Housing Council (NMHC), 2018 NMHC 50, published April 13, 2018; ranked largest apartment owner in the U. S. based on number of apartment units owned and operated 3 2019 OUTLOOK • Leasing Update/Outlook • Supply
Slide 4: 2019 Same Store Leasing Outlook
2019 SAME STORE LEASING OUTLOOK LEASE OVER LEASE PRICING LEASE OVER LEASE PRICING FORECAST BLENDED LEASE OVER LEASE PRICING 2018 VS. 2019 4 - 0.7% 7.6% 3.5% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% January 2019 New Lease Renewal Blended 0.6% 3.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.
Slide 5: Targeted Supply Outlook
Supply Increasing YOY Supply Consistent YOY Supply Declining YOY 48% of Same Store NOI 8% of Same Store NOI 44% 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 propert
Slide 6: 2019 FFO Outlook
2019 FFO OUTLOOK 6 EXPECTED FFO/SHARE SAME STORE 3 TRANSACTIONS 3 Full Year 2019 1 $6.03 - $6.27 [$6.15] Midpoint Revenue Growth $1.8% - 2.8% [2.3%] Midpoint Acquisitions (Lease - up Acquisitions) TIMING: 2H 2019 $125M - $175M [$150M] Midpoint Q1 2019 2 $1.41 - $1.53 [$1.47] Midpoint • Blended Lease
Slide 7: 2019 Overhead Outlook
2019 OVERHEAD OUTLOOK OVERHEAD (G&A + PROPERTY MANAGEMENT ) • Full Year 2019: $96.5M to $98.5M ($97.5M at the midpoint) • Q1 2019: Expect overhead to be front loaded in Q1 ( ∼ 28% of total overhead in Q1) due to seasonality of certain costs • Total 2019 overhead expected to be approximately 6% of to
Slide 8: Focus on High Growth Region of the U.S.
FOCUS ON HIGH GROWTH REGION OF THE U.S. 64% SECTOR 39% 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 9: Market Diversification and Submarket Balance Across the High Growth Sunbelt Region
MARKET DIVERSIFICATION AND SUBMARKET BALANCE ACROSS THE HIGH GROWTH SUNBELT REGION TOP 20 MARKETS 1 % OF 2018 NOI 2 Atlanta, GA 13.4% Dallas, TX 9.3% Charlotte, NC 7.2% Washington, DC 6.8% Tampa, FL 6.7% Austin, TX 5.9% Orlando, FL 5.8% Raleigh/Durham, NC 4.5% Nashville, TN 4.3% Fort Worth, TX 4.1%
Slide 10: Portfolio Balanced to Serve the Largest Segments of the Apartment Rental Market
0.4% 9.8% 44.4% 30.5% 10.9% 1.3% 2.6% 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 11: MAA's Established Expense Management Practice Stands Out Among Peers
$17,911 $36,833 $56,808 $77,881 $100,097 $123,506 $148,156 $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 forecast expectations, the average an
Slide 12: Same Store NOI Margin Improvement
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 interior redevelopment p
Slide 13: Strong Value Creation Through Redevelopment Program
STRONG VALUE CREATION THROUGH REDEVELOPMENT PROGRAM 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 includes k
Slide 14: Future Opportunity to Capture: Redevelopment Pipeline
FUTURE OPPORTUNITY TO CAPTURE Robust Pipeline of Units Yet to be Redeveloped MAA REDEVELOPMENT PIPELINE Remaining Identified Redevelopment Opportunity Future Value Opportunity Revenue At 5.6% Cap Rate Net Value Creation $24.8M $443.3M $326.7M Legacy MAA Legacy CLP Legacy PPS Total MAA Units 3,749 5.
Slide 15: Capital Recycling for Value Capture
CAPITAL RECYCLING FOR VALUE CAPTURE 15 Transaction Activity Drives Value 2014 - 2018 TRANSACTIONS Over the last 5 years, our capital recycling program, excluding merger transactions, yielded assets with a younger age, higher rent profile, and improved after capex NOI margin, creating higher long - t
Slide 16: Development, Lease-Up and Recently Stabilized Properties Poised to Deliver Value
DEVELOPMENT, LEASE - UP AND RECENTLY STABILIZED PROPERTIES POISED TO DELIVER VALUE 16 Sync 36, Denver Post Centennial Park, Atlanta 1201 Midtown II, Charleston Post River North, Denver Post Midtown, Atlanta 5
Slide 17: Development Pipeline and Lease-Ups Poised to Deliver Value
• Established history and success of disciplined capital deployment will govern growth through new development • Manage the design and investment from an owner - operator perspective; optimize long - term margins • Began construction January 2019 on Copper Ridge II in Fort Worth • In pre - developme
Slide 18: Credit Metrics and Debt Maturity Profile
CREDIT METRICS AT 12/31/2018 MAA SECTOR AVG 3 Total debt / total assets 1 32.6% 32.3% Total secured debt / total assets 1 3.4% 7.8% Unencumbered NOI / total NOI 85.3% 83.8% Net d ebt / recurring adjusted EBITDA re 2 4.99x 5.02x Consolidated income available for debt service to total annual debt serv
Slide 19: Solid Investment Grade Balance Sheet
SOLID INVESTMENT GRADE BALANCE SHEET DEBT SUMMARY ($ IN MILLIONS) AT 12/31/2018 Unsecured Bonds $2,613 57.7% Unsecured Term Loans 900 19.9% Unsecured Credit Facility 540 11.9% Total Unsecured Debt $4,053 89.5% Total Secured Debt $475 10.5% TOTAL DEBT $4,528 Note : Total Enterprise Value equals commo
Slide 20: MAA Dividends and AFFO Payout Ratio
$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 21: Conserving Resources, Reducing Waste, Increasing Efficiency
CONSERVING RESOURCES • Low - flow plumbing fixtures • Irrigation efficiencies, rainwater harvesting, reclaimed water and well water usage • Community landscaping to minimize turf and include drought tolerant plant material REDUCING WASTE • On - site trash recycling options for residents • Online lea
Slide 22: Appendix
22 AT DECEMBER 31, 2018 APPENDIX • Reconciliation of Non - GAAP Financial Measures • Definitions of Non - GAAP Financial Measures and Other Key Terms
Slide 23: Reconciliation of FFO, AFFO and FAD to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 23 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 December 31, Year ended December 31, 2018 2017 2018 2017 Net income available for MAA com
Slide 24: Reconciliation of Net Operating Income to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 24 RECONCILIATION OF NET OPERATING INCOME TO NET INCOME AVAILABLE FOR MAA COMMON SHAREHOLDERS Dollars in thousands Three Months Ended Year Ended December 31, 2018 September 30, 2018 December 31, 2017 December 31, 2018 December 31, 2017 Net Operating In
Slide 25: Reconciliation of EBITDA and Adjusted EBITDAre to Net Income
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES (1) Included in Other non - operating income on the Consolidated Statements of Operations 25 RECONCILIATION OF EBITDA, EBITDA re , ADJUSTED EBITDA re AND RECURRING ADJUSTED EBITDA re TO NET INCOME Dollars in thousands Three Months Ended Year Ended Dece
Slide 26: Reconciliation of Net Debt and Gross Assets
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 26 RECONCILIATION OF NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES PAYABLE Dollars in thousands As of December 31, December 31, 2018 2017 Unsecured notes payable $ 4,053,302 $ 3,525,765 Secured notes payable 475,026 976,292 Total debt 4,528,328
Slide 27: Reconciliation of Net Income per Share Guidance to FFO and AFFO
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES 27 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 $ 2.11 $ 2.35 Real estate depreciation 4.09 4.09 Amortization other 0.04 0.0
Slide 28: Definitions of Non-GAAP Financial Measures: Adjusted EBITDAre
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES Adjusted EBITDA re For purposes of calculations in this presentation, Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate, or Adjusted EBITDA re , is composed of EBITDA re adjusted for net gain or loss on non - d
Slide 29: Definitions of Non-GAAP Financial Measures: Funds From Operations
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES Funds From Operations (FFO) FFO represents net income available for MAA common shareholders (computed in accordance with GAAP) excluding extraordinary it ems , asset impairment and gains or losses on disposition of operating properties, plus net income at
Slide 30: Definitions of Non-GAAP Financial Measures: Recurring Adjusted EBITDAre
DEFINITIONS OF NON - GAAP FINANCIAL MEASURES Recurring Adjusted EBITDA re Recurring Adjusted EBITDA re represents Adjusted EBITDA re further adjusted to exclude certain items that are not considered part of MAA's core business operations such as acquisition and merger and integration expenses. MAA b
Slide 31: 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 occu pie d units plus prevalent market rates asked for unoccupied units, divided by the total number of units. Leasi
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