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Mid-America Apartment (MAA) Q2 FFO & Revenues Top Estimates

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Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported second-quarter 2021 core funds from operations (FFO) per share of $1.69, surpassing the Zacks Consensus Estimate of $1.64. The reported number increased 6.3% from the year-ago figure of $1.59.

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 also increased year over year.

Rental and other property revenues came in at $436.9 million in the June-end quarter, outpacing the Zacks Consensus Estimate of $429.7 million.The reported figure is also 5.8% higher than the year-ago quarter’s $413 million.

Per management, “Strong rent growth and high occupancy, driven by a growing demand for housing across the Sunbelt region, drove solid second quarter results that were ahead of expectations. We believe our uniquely diversified portfolio across this high-growth region has MAA well positioned as the economy in our Sunbelt markets continues to recover, while these markets attract a growing number of employers, new jobs and households.”

Quarter in Detail

The same-store portfolio’s revenues grew 4.7% on a year-over-year rise of 3.1% in average effective rent per unit. Average physical occupancy for the same-store portfolio in the second quarter was 96.4%, up 1% year over year. In the second quarter, lease pricing at the company’s same-store portfolio for both new and renewing leases compared with the prior lease grew 8.2% on a combined basis. Same-store net operating income (NOI) reflects year-over-year growth of 3.6%.

However, same-store portfolio property operating expenses flared up 6.3%.

Balance Sheet Position

As of Jun 30, 2021, $748.4 million of combined cash and capacity were available under its unsecured revolving credit facility, net of commercial paper borrowings. As of the same date, the total debt outstanding was $4.6 billion.

As of Jun 30, 2021, unencumbered NOI was 94.6% of the total NOI.

As of the same date, MAA held cash and cash equivalents of $31.9 million, up from the $25.2 million reported at the end of 2020.

Portfolio Activity

In the reported quarter, MAA completed the construction of Novel Midtown in the Phoenix, AZ market.

During the second quarter, the company redeveloped 1836 units. As of Jun 30, 2021, it had eight development communities under construction, with a projected average stabilized NOI yield of 6%.

Outlook

MAA projects 2021 core FFO per share at $6.65-$6.85, the mid-point being $6.75. The Zacks Consensus Estimate for the same is pegged at $6.58.

It expects same-store property revenue growth of 3.75-4.25%, while same-store property operating expense growth is projected at 4.25-4.75%. The company anticipates same-store NOI growth of 3.25-4.25%.

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

Performance of Other Residential REITs

UDR Inc. (UDR - Free Report) reported second-quarter 2021 FFO as adjusted per share of 49 cents, in line with the Zacks Consensus Estimate. However, the figure is lower than the prior year’s 51 cents.

Equity Residential’s (EQR - Free Report) second-quarter 2021 FFO per share of 78 cents outpaced the Zacks Consensus Estimate of 70 cents. Rental income of $598.1 million also exceeded the consensus mark of $580.2 million.

We look forward to the earnings release of Essex Property Trust Inc. (ESS - Free Report) , which is slated to report second-quarter earnings on Jul 29, after market close.

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.