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Mid-America Apartment (MAA) Tops on Q4 FFO, Issues '21 View

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Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported fourth-quarter 2020 core funds from operations (FFO) per share of $1.65, surpassing the Zacks Consensus Estimate of $1.64. However, the reported figure marginally declined from the year-ago figure of $1.66.

The residential REIT’s quarterly results were driven by an increase in average effective rent per unit for the same-store portfolio. Positive rent growth also aided revenue growth for the same-store portfolio during the quarter.

Rental and other property revenues were $423.7 million during the December-end quarter, outpacing the Zacks Consensus Estimate of $422.3 million. The reported figure was also 1.7% higher than the year-ago quarter’s $416.8 million.

Per management, “We continue to capture strong demand for apartment housing across our Sunbelt markets.  Improving job growth and in-migration trends, that are higher than national trends, continue to support solid occupancy and positive rent growth in our portfolio.  We carry good momentum into 2021 and continue to believe that we are early in a multiyear recovery cycle.”

The company stated that as of Feb 1, 2021, rent cash receipts for the same-store portfolio aggregated 99.2% of billed residential rent for the fourth quarter.

For 2020, the company reported core FFO per share of $6.43, up 2.7% from $6.26 in the prior year and outpaced the Zacks Consensus Estimate of $6.42. Also, rental and other property revenues of $1.67 billion improved 2.3% year over year.

Quarter in Detail

The same-store portfolio’s revenues grew 1.8% on a year-over-year rise of 1.3% in average effective rent per unit. However, same-store portfolio property operating expenses flared up 6.9%, resulting in a year-over-year decline of 0.9% in same-store net operating income (NOI). Moreover, average physical occupancy for the same-store portfolio for the fourth quarter was 95.4%, contracting 10 basis points (bps) year over year.

Further, as of 2020 end, average physical occupancy for the same-store portfolio was 95.6%, contracting 30 bps year over year.

During the fourth quarter, lease pricing at the company’s same-store portfolio for both new and renewing leases compared with the prior lease grew 0.8% on a combined basis.

As of Dec 30, 2020, unencumbered NOI was 93.4% of total NOI.

As of Dec 30, 2020, MAA held cash and cash equivalents of $25.2 million, up from $20.5 million as of Dec 31, 2019. Additionally, as of the same date, total debt outstanding was $4.6 billion.

Furthermore, as of the same date, $849.8 million of combined cash and capacity were available under its unsecured revolving credit facility, net of commercial paper borrowings.

Portfolio Activity

During the October-December period, MAA closed the pre-purchase of a 317-unit multifamily apartment community development — Novel Val Vista —in Phoenix, AZ, and started development activities at the property.

During the fourth quarter, the company redeveloped 911 units. As of Dec 30, 2020, it had eight development communities under construction, with a projected average stabilized NOI yield of 6.1%.


MAA projects 2021 core FFO per share at $6.30-$6.60. The guided range is slightly below the Zacks Consensus Estimate of $6.61.

It forecasts same-store property revenue growth of 1-3%, while same-store property operating expense growth is projected at 3-5%. Moreover, the company anticipates same-store NOI growth of 0-2%.

MAA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Welltower Inc. (WELL - Free Report) , Highwoods Properties (HIW - Free Report) and Healthpeak Properties (PEAK - Free Report) . All three companies are slated to report fourth-quarter earnings on Feb 9.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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