MID AMERICA APARTMENT COMMUNITIES INC. Q1 FY2025 earnings call

• Strong first quarter performance with occupancy, collections, and pricing trends ahead of expectations; renewal pricing remains strong with increasing retention rates.
• Portfolio resilient to new supply; positioned to capture summer leasing season improvement. High-growth markets show strong job, household formation, and investor demand.
• Development pipeline: $1.5 billion combined cost of lease-ups and active developments; expects 3-4 new starts this year, including a suburban development in Charleston, SC starting in Q2.
• Recycling efforts: Exited Columbia, SC with sale of two properties; expects more recycling later in the year.
• Balance sheet strong: $1 billion cash and borrowing capacity under revolving credit facility; net debt-to-EBITDA at 4 times; 94% of debt fixed with an average maturity of 7 years and effective rate of 3.8%.

Occupancy: Average physical occupancy was 95.6%, up 30 basis points year-over-year. Pricing: New lease-over-lease pricing in Q1 was negative 6.3%, while renewal lease-over-lease pricing was negative 0.5% (a 160 basis point improvement quarter-over-quarter). Blended lease pricing was ahead of expectations. Same-store revenue: Up 0.1% quarter-over-quarter. Lease-up portfolio: MAA Optimus Park stabilized; seven remaining lease-up properties had a combined occupancy of 71.6% at quarter-end, with six expected to stabilize in 2025. Redevelopment: Completed 1,102 interior unit upgrades, achieving rent increases of $90 above non-upgraded units and a cash-on-cash return of nearly 18%; expects to renovate ~6,000 units in 2025. Wi-Fi: Live on 4 property-wide Wi-Fi retrofit projects, with 23 additional projects in planning or construction for 2025.

• Core FFO for Q2 2025 expected in the range of $2.05 to $2.21 per diluted share (midpoint $2.13).
• Maintaining core FFO and same-store guidance for the year. Development pipeline: $852 million pipeline, with ~$67 million funded in Q1 and ~$305 million remaining to be funded over 2-3 years. Redevelopment/repositioning: Invested ~$17 million in Q1; expects to renovate ~6,000 units in 2025, with an even larger increase in 2026.

• Macroeconomic uncertainties including potential tariffs.
• Supply environment still above historical levels in some markets (e.g., Austin, Phoenix, Nashville).
• Impact of immigration changes and tariffs on construction costs (though not seen to date).
• Uncertainty in acquisition volumes and pricing due to market turmoil.

Q: Right now, at the beginning of May, is there visibility into new lease spreads in late May/early June?

A: Tim Argo says they have pretty good visibility, with pre-leasing activity showing new lease rates accelerating.

Q: Confidence in rent growth inflection?

A: Tim Argo says new lease rates are accelerating, expecting continuation into Q2 and Q3.

Q: Cost side of development and redevelopment?

A: Brad Hill says development costs locked in for pre-purchase and in-house developments; Tim Argo says redevelopment costs mostly locked in.

Q: Atlanta market improvement?

A: Tim Argo says Atlanta new lease pricing best since mid-2023, occupancy up 20 basis points.

Q: Concessions level?

A: Tim Argo says concessions broadly half a month to a month, lower than last year.