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Mid-America Apartment Communities (MAA) Up 1.9% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Mid-America Apartment Communities (MAA - Free Report) . Shares have added about 1.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Mid-America Apartment Communities due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Mid-America Apartment Surpasses on Q1 FFO & Revenues

MAA reported first-quarter 2021 core FFO per share of $1.64, surpassing the Zacks Consensus Estimate of $1.61. Also, the reported figure increased 1.2% from the year-ago number of $1.62.

The residential REIT’s quarterly results were driven by an increase in average effective rent per unit for the same-store portfolio. Average physical occupancy for the same-store portfolio remained flat year over year.

Rental and other property revenues were $425.01 million in the March-end quarter, outpacing the Zacks Consensus Estimate of $423.9 million. The reported figure was also 1.7% higher than the year-ago quarter’s $418.1 million.

Per management, “We are encouraged with the trends in rent growth and continued strong occupancy, reflecting the growing demand for apartment housing across our Sunbelt markets.  We believe our uniquely diversified portfolio across this high-growth region has MAA well positioned as the economy and employment markets begin to recover.”

Quarter in Detail

The same-store portfolio’s revenues grew 1.4% on a year-over-year rise of 1.3% in average effective rent per unit. Average physical occupancy for the same-store portfolio for the first quarter was 95.7%, flat year over year. In the first quarter, lease pricing at the company’s same-store portfolio for both new and renewing leases compared with the prior lease grew 2.7% on a combined basis.

However, same-store portfolio property operating expenses flared up 5.4%, resulting in a year-over-year decline of 0.9% in same-store NOI.

Balance-Sheet Position

As of Mar 31, 2021, $644.2 million of combined cash and capacity were available under its unsecured revolving credit facility, net of commercial paper borrowings. Additionally, as of the same date, the total debt outstanding was $4.7 billion.

As of Mar 31, 2021, unencumbered NOI was 95.3% of the total NOI.

Furthermore, as of the same date, MAA held cash and cash equivalents of $32.6 million, up from $25.2 million as of 2020 end.

Portfolio Activity

In the reported quarter, MAA completed the development of MAA Frisco Bridges II situated in Dallas, TX.

In the first quarter, the company redeveloped 964 units. As of Mar 31, 2021, it had seven development communities under construction, with a projected average stabilized NOI yield of 6%.

Outlook

MAA projects 2021 core FFO per share at $6.35-$6.65, the mid-point being $6.50.

It expects 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%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Mid-America Apartment Communities has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Mid-America Apartment Communities has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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