MAA Reports Second Quarter Results
PR Newswire Association LLC |
Merger and integration activities surrounding our combination with
Funds from Operations
For the quarter ended June 30, 2014, Funds from Operations, or FFO, was
A reconciliation of FFO and Core FFO to net income attributable to MAA and an expanded discussion of the components of FFO and Core FFO can be found later in this release.
Net Income Available to Common Shareholders
For the quarter ended June 30, 2014, MAA recorded net income available to common shareholders of
Second Quarter Highlights
- Multifamily portfolio revenue (on a proforma combined same store basis as described below) increased 2.6% as compared to the same period in the prior year, with operating expenses increasing 3.8%, generating an increase in net operating income, or NOI, of 1.8%.
- Average effective rent per unit for the proforma combined same store portfolio increased 3.1% during the quarter, partially offset by a 35 basis point decline in effective occupancy compared to prior year.
- Physical occupancy for the proforma combined same store portfolio ended the quarter at 95.7% as compared to 95.6% at the same point in the prior year.
- Resident turnover for the proforma combined same store portfolio remained low for the second quarter of 2014, at 55.7% on a rolling twelve month basis, 2.2% below the prior year.
- Acquired two new wholly-owned communities during the quarter, totaling 705 units, for a combined purchase price of
$118.1 million . - Sold two wholly-owned communities during the quarter, containing 540 units, for combined gross proceeds of
$32 million . - Sold a 294-unit community owned by
MAA Multifamily Fund II, LLC (or "Fund II"), MAA's joint venture fund, located inMacon, GA during the quarter for$25.8 million in gross proceeds. - Completed construction on new developments in
Charlotte andOrlando which were transferred to the lease-up portfolio now comprising 1,701 units, all of which are expected to fully stabilize by the first quarter of 2015. - Our operating partnership,
Mid-America Apartments, L.P. (MAALP), issued$400 million of new ten year senior unsecured notes at a coupon rate of 3.75% and issuance price of 98.873%.
Second Quarter Same Store Operating Results
To ensure comparable reporting periods, our same store portfolio, or
Operating results for the
Percent Change From |
As of |
|||||||||||||
Three months ended |
|
|||||||||||||
Average |
Period End |
|||||||||||||
Effective |
Physical |
|||||||||||||
Revenue |
Expense |
NOI |
Rent per Unit |
Occupancy |
||||||||||
Proforma Large Markets |
3.4 |
% |
3.3 |
% |
3.5 |
% |
4.1 |
% |
95.7 |
% |
||||
Proforma Secondary Markets |
1.3 |
% |
4.4 |
% |
(0.6) |
% |
1.7 |
% |
95.8 |
% |
||||
|
2.6 |
% |
3.8 |
% |
1.8 |
% |
3.1 |
% |
95.7 |
% |
Rent per unit for the second quarter increased 4.1% within the Large Market segment of the portfolio and increased 1.7% within the Secondary Market segment from the same point in prior year. Effective occupancy for the quarter was 94.2%, 35 basis points below the prior year, but overall physical occupancy ended the quarter at 95.7%, in a strong position for the second half of the year, and up slightly from 95.6% at the same point in the prior year. Operating expenses increased 3.8% for the quarter, with real estate taxes and seasonal landscaping expenses representing the majority of the increase for the quarter.
On a year-to-date basis, revenue for the
A reconciliation of NOI, including same store NOI, to net income attributable to MAA and an expanded discussion of the components of NOI can be found later in this release.
Multifamily Acquisition and Disposition Activity
During the second quarter, we acquired two recently developed communities,
During the second quarter, we sold two wholly-owned communities,
During July, MAA also acquired the remaining two-thirds interest in the final community owned by Fund II, Verandas at Southwood, a 300-unit community located in
During July, we also sold three wholly-owned communities, Greenbrook, a 1,037-unit community located in
Development and Lease-up Activity
During the second quarter,
We had two multifamily development projects remaining under construction at the end of the second quarter: 220 Riverside, located in
Redevelopment Activity
We are continuing our redevelopment program at select communities throughout our portfolio. During the second quarter, we renovated a total of 1,339 units at an average cost of
Capital Expenditures
Recurring capital expenditures for the combined portfolio totaled
Total property capital expenditures for the combined portfolio during the second quarter were
A reconciliation of Core AFFO to net income attributable to MAA and an expanded discussion of the components of Core AFFO can be found later in this release.
Financing Activity
During the second quarter, MAALP completed a public bond offering to refinance virtually all 2014 debt maturities. MAALP issued
On
In July, MAA amended the terms of its
Balance Sheet
As of June 30, 2014,
- Debt to total capitalization was 37.5% (based on the June 30, 2014 closing stock price of
$73.05 ), - Net debt to gross assets (based on gross book value at June 30, 2014) was 42.8%,
- Total debt outstanding was
$3.5 billion at an average interest rate of 3.8%, - 98.8% of the total debt was fixed or hedged against rising interest rates for an average of 4.9 years,
- Fixed charge coverage ratio (Recurring EBITDA divided by interest expense adjusted for mark-to-market debt adjustment) was 3.57x and net debt to Recurring EBITDA was 6.43x,
- Approximately
$487.7 million combined cash and capacity was available under our unsecured credit facility, and - Unencumbered assets represented 66.9% of gross real estate assets.
A reconciliation of EBITDA and Recurring EBITDA to consolidated net income and an expanded discussion of the components of EBITDA and Recurring EBITDA can be found later in this release.
Merger Related Activities
In connection with the merger with Colonial that was consummated on
The majority of integration activities are now completed, as all operating and financial systems were converted and consolidated onto one platform by the end of the second quarter. During the second quarter, we incurred
82nd Consecutive Quarterly Common Dividend Declared
Our Board of Directors voted to continue the quarterly dividend at an annual rate of
2014 Core FFO per Share Guidance
Based on MAA's performance in the second quarter and revised expectations for both apartment operations and transaction activity over the remainder of the year, we are updating our earnings guidance for 2014. Management now believes a Core FFO per Share range for the full-year 2014 of
We expect recurring capital expenditures of approximately
Management now expects NOI growth for the
Additional information on our 2014 financial outlook and Core FFO guidance is included in the supplemental data accompanying this press release.
Supplemental Material and Conference Call
Supplemental data to this release can be found on the investor relations page of our website at www.maac.com. MAA will host a conference call to further discuss second quarter results on
About MAA
MAA is a self-administered, self-managed real estate investment trust, which owned or had ownership interest in 83,663 apartment units throughout the Sunbelt region of
Forward-Looking Statements
Sections of this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Such forward-looking statements include, without limitation, statements concerning property acquisitions and dispositions, joint venture activity, development and renovation activity as well as other capital expenditures, capital raising activities, revenue and expense growth, occupancy, financing activities and interest rate and other economic expectations and statements about the benefits of our merger with Colonial. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from the results of operations, financial conditions or plans expressed or implied by such forward-looking statements. Such factors include, among other things, unanticipated adverse business developments affecting us, or our properties, adverse changes in the real estate markets and general and local economies and business conditions. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such forward-looking statements included in this press release may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.
The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:
- inability to generate sufficient cash flows due to market conditions, changes in supply and/or demand, competition, uninsured losses, changes in tax and housing laws, or other factors;
- exposure, as a multifamily focused REIT, to risks inherent in investments in a single industry;
- difficulty in completing the integration of Colonial's operations, systems and personnel with ours and certain uncertainties associated with our ability to sell our commercial asset portfolio;
- adverse changes in real estate markets, including, but not limited to, the extent of future demand for multifamily units in our primary markets, barriers of entry into new markets which we may seek to enter in the future, limitations on our ability to increase rental rates, competition, our ability to identify and consummate attractive acquisitions or development projects on favorable terms, our ability to consummate any planned dispositions in a timely manner on acceptable terms, and our ability to reinvest sale proceeds in a manner that generates favorable returns;
- failure of new acquisitions to achieve anticipated results or be efficiently integrated;
- failure of development communities to be completed, if at all, within budget and on a timely basis or to lease-up as anticipated;
- unexpected capital needs;
- changes in operating costs, including real estate taxes, utilities and insurance costs;
- losses from catastrophes in excess of our insurance coverage;
- ability to obtain financing at favorable rates, if at all, and refinance existing debt as it matures;
- level and volatility of interest or capitalization rates or capital market conditions;
- loss of hedge accounting treatment for interest rate swaps or interest rate caps;
- the continuation of the good credit of our interest rate swap and cap providers;
- price volatility, dislocations and liquidity disruptions in the financial markets and the resulting impact on financing;
- the effect of any rating agency actions on the cost and availability of new debt financing;
- significant decline in market value of real estate serving as collateral for mortgage obligations;
- significant change in the mortgage financing market that would cause single-family housing, either as an owned or rental product, to become a more significant competitive product;
- our ability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax purposes, the ability of MAALP to satisfy the rules to maintain its status as a partnership for federal income tax purposes, the ability of our taxable REIT subsidiaries to maintain their status as such for federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;
- inability to attract and retain qualified personnel;
- potential liability for environmental contamination;
- adverse legislative or regulatory tax changes;
- litigation and compliance costs associated with laws requiring access for disabled persons; and
- other risks identified in this press release and, from time to time, in reports we file with the
Securities and Exchange Commission , or theSEC , or in other documents that we publicly disseminate.
We undertake no obligation to publicly update or revise these forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.
FINANCIAL HIGHLIGHTS |
||||||||
Dollars in thousands, except per share data |
||||||||
Three months ended June 30, |
Six months ended |
|||||||
2014 |
2013 |
2014 |
2013 |
|||||
Total property revenue |
$ 244,493 |
$ 131,659 |
$ 487,883 |
$ 259,402 |
||||
Multifamily property revenue |
$ 243,115 |
$ 227,821 |
$ 482,324 |
$ 449,732 |
||||
Multifamily property NOI |
$ 145,432 |
$ 136,520 |
$ 290,337 |
$ 270,842 |
||||
Management & leasing fee revenue |
$ 61 |
$ 142 |
$ 158 |
$ 319 |
||||
Recurring EBITDA |
$ 133,016 |
$ 73,109 |
$ 268,381 |
$ 145,282 |
||||
Net income per share: |
||||||||
Basic |
$ 0.42 |
$ 1.38 |
$ 0.62 |
$ 1.89 |
||||
Diluted |
$ 0.42 |
$ 1.37 |
$ 0.62 |
$ 1.87 |
||||
Funds from operations per share (diluted): |
||||||||
FFO |
$ 1.20 |
<br /> |
$ 1.14 |
$ 2.43 |
$ 2.40 |
|||
Core FFO |
$ 1.18 |
$ 1.28 |
$ 2.39 |
$ 2.53 |
||||
Core AFFO |
$ 0.94 |
$ 1.05 |
$ 2.07 |
$ 2.17 |
||||
Dividends declared per share |
$ 0.7300 |
$ 0.6950 |
$ 1.4600 |
$ 1.3900 |
||||
Dividends/FFO (diluted) payout ratio |
60.83% |
60.96% |
60.08% |
57.92% |
||||
Dividends/AFFO (diluted) payout ratio |
77.66% |
66.19% |
70.53% |
64.06% |
||||
Consolidated interest expense |
$ 30,163 |
$ 15,189 |
$ 60,839 |
$ 30,734 |
||||
Mark-to-market debt adjustment |
7,094 |
280 |
14,235 |
505 |
||||
Capitalized interest |
337 |
424 |
850 |
872 |
||||
Consolidated interest income |
(921) |
(23) |
(1,081) |
(70) |
||||
Total interest incurred |
$ 36,673 |
$ 15,870 |
$ 74,843 |
$ 32,041 |
||||
Principal payments on notes payable |
$ 2,504 |
$ 1,429 |
$ 5,055 |
$ 2,799 |
FINANCIAL HIGHLIGHTS (CONTINUED) |
|||
Dollars in thousands, except per share data |
|||
As of |
|||
|
|
||
Total gross assets |
$ 8,056,286 |
$ 7,980,240 |
|
Total debt |
$ 3,475,413 |
$ 3,472,718 |
|
Common shares and units, outstanding end of period |
79,401,933 |
79,058,110 |
|
Share price, end of period |
$ 73.05 |
$ 60.74 |
|
Book equity value, end of period |
$ 3,062,609 |
$ 3,118,587 |
|
Market equity value, end of period |
$ 5,800,311 |
$ 4,801,990 |
|
Debt to total market capitalization ratio |
37.5% |
42.0% |
|
Total net debt/total gross assets |
42.8% |
42.4% |
|
Unencumbered real estate assets (at cost) to unsecured debt ratio |
274.9% |
295.1% |
|
Recurring EBITDA/Debt Service |
3.35x |
3.37x |
|
Fixed Charge Coverage (1) |
3.57x |
3.59x |
|
Total Net Debt (2)/Recurring EBITDA (3) |
6.43x |
6.32x |
|
(1) Fixed charge coverage represents Recurring EBITDA divided by interest expense adjusted for mark-to-market debt adjustment and any preferred dividends. |
|||
(2) Total Net Debt equals Total Debt less Cash and Cash Equivalents. |
|||
(3) Recurring EBITDA represents the six months ended June 30, 2014 on an annualized basis. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
Dollars in thousands, except per share data |
|||||||
Three months ended |
Six months ended |
||||||
2014 |
2013 |
2014 |
2013 |
||||
Operating revenues: |
|||||||
Rental revenues |
$ 222,610 |
$ 121,128 |
$ 443,598 |
$ 238,833 |
|||
Other property revenues |
21,883 |
10,531 |
44,285 |
20,569 |
|||
Total property revenues |
244,493 |
131,659 |
487,883 |
259,402 |
|||
Management fee income |
61 |
142 |
158 |
319 |
|||
Total operating revenues |
244,554 |
131,801 |
488,041 |
259,721 |
|||
Operating Expenses: |
|||||||
Property operating expenses |
97,622 |
52,821 |
194,985 |
103,342 |
|||
Depreciation and amortization |
69,631 |
32,222 |
159,644 |
64,417 |
|||
Acquisition expense |
947 |
489 |
958 |
499 |
|||
Property management expenses |
9,579 |
5,223 |
16,590 |
10,331 |
|||
General and administrative expenses |
5,212 |
3,389 |
9,554 |
6,628 |
|||
Merger related expenses |
795 |
5,737 |
2,871 |
5,737 |
|||
Integration related expenses |
3,151 |
— |
6,993 |
— |
|||
Income from continuing operations before non-operating items |
57,617 |
31,920 |
96,446 |
68,767 |
|||
Interest and other non-property income |
921 |
23 |
1,081 |
70 |
|||
Interest expense |
(30,163) |
(15,189) |
(60,839) |
(30,734) |
|||
Loss on debt extinguishment/modification |
— |
— |
— |
(169) |
|||
Amortization of deferred financing costs |
(1,174) |
(803) |
(2,485) |
(1,607) |
|||
Net casualty (loss) gain after insurance and other settlement proceeds |
(295) |
439 |
(305) |
455 |
|||
Income before income tax expense |
26,906 |
16,390 |
33,898 |
36,782 |
|||
Income tax expense |
(523) |
(223) |
(793) |
(446) |
|||
Income from continuing operations before joint venture activity |
26,383 |
16,167 |
33,105 |
36,336 |
|||
Gain from real estate joint ventures |
2,919 |
47 |
2,895 |
101 |
|||
Income from continuing operations |
29,302 |
16,214 |
36,000 |
36,437 |
|||
Discontinued operations: |
|||||||
Income from discontinued operations before gain on sale |
449 |
1,697 |
865 |
3,479 |
|||
Net casualty loss after insurance and other settlement proceeds on discontinued operations |
(1) |
(4) |
(3) |
(4) |
|||
Gain on sale of discontinued operations |
— |
43,121 |
5,481 |
43,121 |
|||
Income before gain (loss) on sale of properties |
29,750 |
61,028 |
42,343 |
83,033 |
|||
Gain on sale of depreciable real estate assets excluded from discontinued operations |
3,658 |
— |
6,222 |
— |
|||
(Loss) gain on sale of non-depreciable real estate assets |
(22) |
— |
535 |
— |
|||
Consolidated net income |
33,386 |
61,028 |
49,100 |
83,033 |
|||
Net income attributable to noncontrolling interests |
1,773 |
1,939 |
2,621 |
2,764 |
|||
Net income available for MAA common shareholders |
$ 31,613 |
$ 59,089 |
$ 46,479 |
$ 80,269 |
|||
Earnings per common share - basic: |
|||||||
Income from continuing operations available for common shareholders |
$ 0.42 |
$ 0.37 |
$ 0.54 |
$ 0.82 |
|||
Discontinued property operations |
— |
1.01 |
0.08 |
1.07 |
|||
Net income available for common shareholders |
$ 0.42 |
$ 1.38 |
$ 0.62 |
$ 1.89 |
|||
Earnings per common share - diluted: |
|||||||
Income from continuing operations available for common shareholders |
$ 0.42 |
$ 0.36 |
$ 0.54 |
$ 0.82 |
|||
Discontinued property operations |
— |
1.01 |
0.08 |
1.05 |
|||
Net income available for common shareholders |
$ 0.42 |
$ 1.37 |
$ 0.62 |
$ 1.87 |
|||
Dividends declared per common share |
$ 0.7300 |
$ 0.6950 |
$ 1.4600 |
$ 1.3900 |
|||
SHARE AND UNIT DATA |
|||||||
Shares and units in thousands |
|||||||
Three months ended |
Six months ended |
||||||
2014 |
2013 |
2014 |
2013 |
||||
NET INCOME SHARES(1) |
|||||||
Weighted average common shares - Basic |
74,948 |
42,690 |
74,876 |
42,523 |
|||
Weighted average partnership units outstanding |
— |
— |
— |
1,711 |
|||
Effect of dilutive securities |
— |
— |
162 |
60 |
|||
Weighted average common shares - Diluted |
74,948 |
42,690 |
75,038 |
44,294 |
|||
FUNDS FROM OPERATIONS SHARES AND UNITS |
|||||||
Weighted average common shares and units - Basic |
79,156 |
44,398 |
79,090 |
44,234 |
|||
Weighted average common shares and units - Diluted |
79,351 |
44,436 |
79,292 |
44,273 |
|||
PERIOD END SHARES AND UNITS |
|||||||
Common shares at |
75,195 |
42,736 |
75,195 |
42,736 |
|||
Partnership units at |
4,207 |
1,708 |
4,207 |
1,708 |
|||
Total shares and units at |
79,402 |
44,444 |
79,402 |
44,444 |
|||
(1) For additional information on the calculation of diluted shares and earnings per share, please refer to the Notes to |
|||||||
FUNDS FROM OPERATIONS |
|||||||
Dollars in thousands, except per share data |
|||||||
Three months ended |
Six months ended |
||||||
|
|
||||||
2014 |
2013 |
2014 |
2013 |
||||
Net income attributable to MAA |
$ 31,613 |
$ 59,089 |
$ 46,479</span> |
$ 80,269 |
|||
Depreciation and amortization of real estate assets |
69,044 |
31,708 |
158,493 |
63,441 |
|||
Depreciation and amortization of real estate assets of discontinued operations |
— |
973 |
42 |
2,210 |
|||
Gain on sale of discontinued operations |
— |
(43,121) |
(5,481) |
(43,121) |
|||
Gain on sale of depreciable real estate assets excluded from discontinued operations |
(3,658) |
— |
(6,222) |
— |
|||
Gain on disposition within unconsolidated entities |
(3,414) |
— |
(3,414) |
— |
|||
Depreciation and amortization of real estate assets of real estate joint ventures |
155 |
247 |
354 |
491 |
|||
Net income attributable to noncontrolling interests |
1,773 |
1,939 |
2,621 |
2,764 |
|||
Funds from operations |
95,513 |
50,835 |
192,872 |
106,054 |
|||
Acquisition expense |
947 |
489 |
958 |
499 |
|||
Merger related expenses |
795 |
5,737 |
2,871 |
5,737 |
|||
Integration related expenses |
3,151 |
— |
6,993 |
— |
|||
(Loss) gain on sale of non-depreciable real estate assets |
22 |
</td> |
— |
(535) |
— |
||
Mark-to-market debt adjustment |
(7,094) |
(280) |
(14,235) |
(505) |
|||
Loss on debt extinguishment (1) |
540 |
— |
540 |
169 |
|||
Core funds from operations |
93,874 |
56,781 |
189,464 |
111,954 |
|||
Recurring capital expenditures |
(19,606) |
(10,147) |
(25,659) |
(15,752) |
|||
Core adjusted funds from operations |
$ 74,268 |
$ 46,634 |
$ 163,805 |
$ 96,202 |
|||
Weighted average common shares and units - Diluted |
79,351 |
44,436 |
79,292 |
44,273 |
|||
Funds from operations per share and unit - Diluted |
$ 1.20 |
$ 1.14 |
$ 2.43 |
$ 2.40 |
|||
Core funds from operations per share and unit - Diluted |
$ 1.18 |
$ 1.28 |
$ 2.39 |
$ 2.53 |
|||
Core adjusted funds from operations per share and unit - Diluted |
$ 0.94 |
$ 1.05 |
$ 2.07 |
$ 2.17 |
|||
(1) The loss on debt extinguishment for 2014 is MAA's share of debt extinguishment costs incurred by our joint venture, Mid- |
|||||||
America Multifamily Fund II. |
|||||||
CONSOLIDATED BALANCE SHEETS |
|||
Dollars in thousands |
|||
|
|
||
Assets |
|||
Real estate assets |
|||
Land |
$ 877,368 |
$ 871,316 |
|
Buildings and improvements |
6,602,860 |
6,366,701 |
|
Furniture, fixtures and equipment |
206,877 |
199,573 |
|
Capital improvements in progress |
84,502 |
166,048 |
|
7,771,607 |
7,603,638 |
||
Accumulated depreciation |
(1,258,554) |
(1,124,207) |
|
6,513,053 |
6,479,431 |
||
Undeveloped land |
59,195 |
63,850 |
|
Corporate property, net |
8,285 |
7,523 |
|
Investments in real estate joint ventures |
3,295 |
5,499 |
|
Real estate assets, net |
6,583,828 |
6,556,303 |
|
Cash and cash equivalents |
26,318 |
89,333 |
|
Restricted cash |
64,683 |
44,361 |
|
Deferred financing cost, net |
18,262 |
17,424 |
|
Other assets |
51,789 |
91,637 |
|
Goodwill |
4,106 |
4,106 |
|
Assets held for sale |
34,135 |
38,761 |
|
Total assets |
$ 6,783,121 |
$ 6,841,925 |
|
Liabilities and Shareholders' Equity |
|||
Liabilities |
|||
Secured notes payable |
$ 1,563,014 |
$ 1,790,935 |
|
Unsecured notes payable |
1,912,399 |
1,681,783 |
|
Accounts payable |
15,297 |
15,067 |
|
Fair market value of interest rate swaps |
17,997 |
20,015 |
|
Accrued expenses and other liabilities |
201,997 |
206,190 |
|
Security deposits |
9,808 |
9,270 |
|
Liabilities associated with assets held for sale |
— |
78 |
|
Total liabilities |
3,720,512 |
3,723,338 |
|
Redeemable stock |
5,407 |
5,050 |
|
Shareholders' equity |
|||
Common stock |
751 |
747 |
|
Additional paid-in capital |
3,613,221 |
3,599,549 |
|
Accumulated distributions in excess of net income |
(717,642) |
(653,593) |
|
Accumulated other comprehensive losses |
(1,395) |
108 |
|
Total MAA shareholders' equity |
2,894,935 |
2,946,811 |
|
Noncontrolling interest |
162,267 |
166,726 |
|
Total equity |
3,057,202 |
3,113,537 |
|
Total liabilities and shareholders' equity |
$ 6,783,121 |
$ 6,841,925 |
|
NON-GAAP FINANCIALS AND OTHER DEFINITIONS
Average Effective Rent per Unit
Average effective rent per unit represents the average of gross rent amounts after the effect of leasing concessions for occupied units plus prevalent market rates asked for unoccupied units, divided by the total number of units. Leasing concessions represent discounts to the current market rate. We believe average effective rent is a helpful measurement in evaluating average pricing. It does not represent actual rental revenue collected per unit.
Average Total Revenue per Occupied Unit
Average total revenue per occupied unit represents total revenue divided by the average daily physical occupancy per unit.
Core Adjusted Funds From Operations (Core AFFO)
For purposes of these computations, AFFO is composed of Core FFO less recurring capital expenditures. As an owner and operator of real estate, we consider AFFO to be an important measure of performance from core operations because AFFO measures our ability to control revenues, expenses and recurring capital expenditures.
Core Funds From Operations (Core FFO)
Core FFO represents FFO excluding certain non-cash or non-routine items such as acquisition, merger and integration expenses, mark-to-market debt adjustments, loss or gain on debt extinguishment, and loss or gain on sale of non-depreciable assets. While our definition of Core FFO is similar to others in our industry, our precise methodology for calculating Core FFO may differ from that utilized by other REITs and, accordingly, may not be comparable to such other REITs. Core FFO should not be considered as an alternative to net income. We believe that Core FFO is helpful in understanding our operating performance in that it removes certain items that by their nature are not comparable over periods and therefore tend to obscure actual operating performance.
Development Portfolio
Communities remain identified as development until certificates of occupancy are obtained for all units under development. Once all units are delivered and available for occupancy, the community moves into the Lease-up Portfolio.
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
For purposes of these computations, EBITDA is composed of net income before net gain on asset sales and insurance and other settlement proceeds, and gain or loss on debt extinguishment, plus depreciation, interest expense, income taxes, and amortization of deferred financing costs. EBITDA is a non-GAAP financial measure we use as a performance measure. As an owner and operator of real estate, we consider EBITDA to be an important measure of performance from core operations because EBITDA does not include various income and expense items that are not indicative of our operating performance. EBITDA should not be considered as an alternative to net income as an indicator of financial performance. Our computation of EBITDA may differ from the methodology utilized by other companies to calculate EBITDA.
Effective Occupancy
Effective occupancy represents contract rents on occupied units divided by the sum of market rents on vacant units and contract rents on occupied units.
Funds From Operations (FFO)
FFO represents net income (computed in accordance with U.S. generally accepted accounting principles, or GAAP) excluding extraordinary items, net income attributable to noncontrolling interest, asset impairment, gains or losses on disposition of real estate assets, plus depreciation of real estate and adjustments for joint ventures to reflect FFO on the same basis. While our definition of FFO is in accordance with the
Lease-up Portfolio
New acquisitions acquired during lease-up and newly developed communities remain in the Lease-up Portfolio until stabilized.
Net Operating Income (NOI)
Net operating income represents total property revenues less total property operating expenses, excluding depreciation, for all properties held during the period, regardless of their status as held for sale. We believe NOI by market is a helpful tool in evaluating the operating performance within our markets because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.
Other Non-Same Store Portfolio
Other
Proforma Combined Same Store Portfolio
Recurring Earnings Before Interest Taxes Depreciation and Amortization (Recurring EBITDA)
Recurring EBITDA represents EBITDA excluding certain non-cash or non-routine items such as acquisition and merger and integration expenses. We believe Recurring EBITDA is an important performance measure as it adjusts for certain items that by their nature are not comparable over periods and therefore tend to obscure actual operating performance. Recurring EBITDA should not be considered as an alternative to net income as an indicator of financial performance. Our computation of Recurring EBITDA may differ from the methodology utilized by other companies to calculate Recurring EBITDA.
Same Store Portfolio
We review our Same Store Portfolio at the beginning of each calendar year. Communities are generally added into the Same Store Portfolio if they were owned and stabilized at the beginning of the previous year. Communities that have been approved by the Board of Directors for disposition are excluded from our Same Store Portfolio. Communities that have undergone a significant casualty loss are also excluded from our Same Store Portfolio. Within our Same Store Portfolio communities are designated as operating in Large or Secondary markets:
Large Market Same Store communities are generally those communities in markets with a population of at least one million and at least 1% of the total public multifamily REIT units.
Secondary Market Same Store communities are generally those communities in markets with either a population less than one million or less than 1% of the total public multifamily REIT units, or both.
Stabilized Communities
Communities are considered stabilized after achieving 90% occupancy for 90 days.
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SOURCE MAA
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