MAA Reports Second Quarter Results
Net Income Available for Common Shareholders
For the quarter ended
For the six months ended
Funds from Operations (FFO)
For the quarter ended
For the six months ended
A reconciliation of FFO to net income available for MAA common shareholders, and an expanded discussion of the components of FFO, can be found later in this release.
Highlights
- Net operating income, or NOI, from the Same Store Portfolio increased 1.7% during the second quarter of 2018 as compared to the same period in the prior year. The increase was generated by a 1.5% increase in property revenues and a 1.1% increase in property operating expenses.
- The growth in Same Store revenues for the second quarter of 2018 was captured as a result of 1.7% growth in Average Effective Rent per Unit, representing a 30 basis point improvement from the performance in the first quarter of 2018, and continued strong Average Physical Occupancy of 96.0%.
- Blended lease over lease pricing growth for the second quarter of 2018 (an average of all new leases and renewals that went into effect during the quarter) for the Same Store Portfolio was 3.3%, representing a 90 basis point improvement from the second quarter of 2017.
- Blended lease over lease pricing growth for July of 2018 for the Same Store Portfolio was 3.3%.
- Operating efficiencies and benefits associated with enhanced scale from the
Post Properties merger continue to generate cost savings and supported a low 1.1% increase in Same Store property operating expenses for the second quarter of 2018 as compared to the same period in the prior year. - Strong demand for apartment housing and superior resident service continue to support low resident turnover as resident move outs for the Same Store Portfolio for the second quarter of 2018 reached a historic low of 49.2% on a rolling twelve month basis while also supporting strong 5.9% growth in renewing lease rents.
- During the second quarter of 2018, MAA began two new multifamily projects resulting in four total projects under development at quarter-end, which included 1,076 units, with a total projected cost of
$219.8 million and an estimated$97.1 million remaining to be funded as ofJune 30, 2018 . - During the six months ended
June 30, 2018 , MAA completed renovation of 4,020 units under its redevelopment program, achieving average rental rate increases of 10.9% above non-renovated units. - During the second quarter of 2018, MAA acquired one property, a newly built 374-unit community in initial lease-up located in
Denver , Colorado. MAA expects to start on a phase II development at the property during the third quarter of 2018. - As of the end of the second quarter of 2018, six properties remained in lease-up, including the new property acquired during the quarter, with average quarter-end physical occupancy of 75.7% for the group.
- During the second quarter of 2018, MAA's primary operating partnership,
Mid America Apartments, L.P. , or MAALP or theOperating Partnership , issued$400.0 million of ten-year senior unsecured notes at a coupon of 4.2% and an issue price of 99.403%.
Second Quarter Same Store Portfolio Operating Results
To ensure comparable reporting with prior periods, the Same Store Portfolio includes properties which were stabilized and which were owned by the company at the beginning of the previous year.
The Same Store Portfolio revenue growth of 1.5% during the second quarter of 2018 was primarily a result of a 1.7% increase in Average Effective Rent per Unit, as compared to the same period in the prior year. Rent growth for both new and renewing leases, as compared to the prior lease, on a combined basis increased an average of 3.3% in the second quarter of 2018. This compares to 1.6% growth on the same basis in the first quarter of 2018 and is the best quarterly performance since closing the merger with
A reconciliation of NOI, including Same Store NOI, to net income available for MAA common shareholders, and an expanded discussion of the components of NOI, can be found later in this release.
Acquisition and Disposition Activity
During the second quarter of 2018, MAA acquired a new 374-unit multifamily apartment community, Sync36, located in
During the second quarter of 2018, MAA closed on the disposition of a 29 acre land parcel located in the
Development and Lease-up Activity
As of the end of the second quarter of 2018, MAA had four development communities under construction consisting of one new development community and three new expansion projects. Total development costs for the four communities are projected to be
MAA had six apartment communities, containing a total of 1,883 units, remaining in initial lease-up as of the end of the second quarter of 2018: Acklen West End, located in
Redevelopment Activity
MAA continues its interior redevelopment program at select apartment communities throughout the portfolio. During the second quarter of 2018, MAA redeveloped a total of 2,239 units at an average cost of
Capital Expenditures
Recurring capital expenditures totaled
Redevelopment, revenue enhancing and other capital expenditures during the second quarter of 2018 were
Recurring capital expenditures totaled
Redevelopment, revenue enhancing and other capital expenditures during the six months ended
A reconciliation of FFO, AFFO and FAD to net income available for MAA common shareholders, and an expanded discussion of the components of FFO, AFFO and FAD, can be found later in this release.
Financing Activities
During the second quarter of 2018, MAALP completed a public bond offering. MAALP issued
Balance Sheet
As of
- Total debt to total assets (as defined in the covenants for the bonds issued by MAALP) was 33.1%, compared to 33.2% as of
December 31, 2017 ; - Total debt outstanding was
$4.5 billion at an average effective interest rate of 3.7%; - 89.8% of total debt was fixed or hedged against rising interest rates for an average of 4.9 years;
- Approximately
$920.1 million combined cash and capacity under MAALP's unsecured revolving credit facility was available; and - Unencumbered NOI was 85.3% of total NOI, as compared to 84.8% as of
December 31, 2017 .
Merger Related Activities
Integration efforts associated with the merger of
MAA continues to forecast expected synergies of approximately
As part of the
98th Consecutive Quarterly Common Dividend Declared
MAA declared its 98th consecutive quarterly common dividend at an annual rate of
2018 Net Income per Diluted Common Share and FFO and AFFO per Share Guidance
MAA is revising prior 2018 guidance for Net income per diluted common share, as well as FFO per Share and AFFO per Share, which are non-GAAP measures. Acquisition and disposition activity materially affects depreciation and capital gains or losses, which combined, generally represent the majority of the difference between Net income available for common shareholders and FFO. As outlined in the definitions of non-GAAP measures accompanying this release, MAA's definition of FFO is in accordance with the
Net income per diluted common share is expected to be in the range of
Supplemental Material and Conference Call
Supplemental data to this release can be found under the "Financial Results" navigation tab on the "
About MAA
MAA, an S&P 500 company, is a real estate investment trust, or REIT, focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development and redevelopment of quality apartment communities throughout
Forward-Looking Statements
Sections of this release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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 about the anticipated benefits from the completed merger with
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 and sector;
- adverse changes in real estate markets, including, but not limited to, the extent of future demand for multifamily units in our significant 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;
- difficulty in integrating
MAA's and Post Properties' businesses; - 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 the
Operating Partnership 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;
- cyberliability or potential liability for breaches of our privacy or information security systems;
- potential liability for environmental contamination;
- adverse legislative or regulatory tax changes;
- litigation and compliance costs associated with laws requiring access for disabled persons;
- other risks identified in this press release and, from time to time, in other reports we file with the
SEC or in other documents that we publicly disseminate.
New factors may also emerge from time to time that could have a material adverse effect on our business. Except as required by law, 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 release.
FINANCIAL HIGHLIGHTS |
|||||||||||||||
Dollars in thousands, except per share data |
Three months ended |
Six months ended |
|||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Rental and other property revenues |
$ |
390,073 |
$ |
382,791 |
$ |
776,090 |
$ |
761,699 |
|||||||
Net income available for MAA common shareholders |
$ |
58,885 |
$ |
47,393 |
$ |
106,982 |
$ |
88,376 |
|||||||
Total NOI(1) |
$ |
241,343 |
$ |
236,822 |
$ |
482,956 |
$ |
474,457 |
|||||||
Earnings per common share:(2) |
|||||||||||||||
Basic |
$ |
0.52 |
$ |
0.42 |
$ |
0.94 |
$ |
0.78 |
|||||||
Diluted |
$ |
0.52 |
$ |
0.42 |
$ |
0.94 |
$ |
0.78 |
|||||||
Funds from operations per Share - diluted:(2) |
|||||||||||||||
FFO(1) |
$ |
1.55 |
$ |
1.48 |
$ |
2.99 |
$ |
2.94 |
|||||||
AFFO(1) |
$ |
1.33 |
$ |
1.28 |
$ |
2.69 |
$ |
2.66 |
|||||||
Dividends declared per common share |
$ |
0.9225 |
$ |
0.8700 |
$ |
1.8450 |
$ |
1.7400 |
|||||||
Dividends/ FFO (diluted) payout ratio |
59.5 |
% |
58.8 |
% |
61.7 |
% |
59.2 |
% |
|||||||
Dividends/ AFFO (diluted) payout ratio |
69.4 |
% |
68.0 |
% |
68.6 |
% |
65.4 |
% |
|||||||
Consolidated interest expense |
$ |
43,585 |
$ |
38,481 |
$ |
84,490 |
$ |
75,065 |
|||||||
Mark-to-market debt adjustment |
2,901 |
4,221 |
5,852 |
8,638 |
|||||||||||
Debt discount and debt issuance cost amortization |
(1,501) |
(1,376) |
(2,884) |
(2,647) |
|||||||||||
Capitalized interest |
488 |
2,207 |
1,283 |
4,227 |
|||||||||||
Total interest incurred |
$ |
45,473 |
$ |
43,533 |
$ |
88,741 |
$ |
85,283 |
|||||||
Amortization of principal on notes payable |
$ |
2,580 |
$ |
2,934 |
$ |
5,290 |
$ |
6,008 |
|||||||
(1) A reconciliation of the following items and an expanded discussion of their respective components can be found later in this release: (i) NOI to Net income available for MAA common shareholders; and (ii) FFO and AFFO to Net income available for MAA common shareholders. |
|||||||||||||||
(2) See the "Share and Unit Data" section for additional information. |
FINANCIAL HIGHLIGHTS (CONTINUED) |
|||||||
Dollars in thousands, except share price |
As of |
||||||
|
|
||||||
Gross Assets(1) |
$ |
13,763,324 |
$ |
13,566,990 |
|||
Gross Real Estate Assets(1) |
$ |
13,611,818 |
$ |
13,395,413 |
|||
Total debt |
$ |
4,548,635 |
$ |
4,502,057 |
|||
Common shares and units outstanding |
117,943,960 |
117,834,752 |
|||||
Share price |
$ |
100.67 |
$ |
100.56 |
|||
Book equity value |
$ |
6,488,890 |
$ |
6,584,302 |
|||
Market equity value |
$ |
11,873,418 |
$ |
11,849,463 |
|||
Net Debt/Recurring Adjusted EBITDAre (2) |
5.06x |
5.04x |
|||||
(1) A reconciliation of Gross Assets to Total assets and Gross Real Estate Assets to Real estate assets, net, along with an expanded discussion of their components, can be found later in this release. |
|||||||
(2) Recurring Adjusted EBITDAre in this calculation represents the trailing twelve month period for each date presented. A reconciliation of the following items and an expanded discussion of their respective components can be found later in this release: (i) EBITDA, EBITDAre, Adjusted EBITDAre and Recurring Adjusted EBITDAre to Net income; and (ii) Net Debt to Unsecured notes payable and Secured notes payable. |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||||||||||
Dollars in thousands, except per share data |
Three months ended |
Six months ended |
|||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Revenues: |
|||||||||||||||
Rental and other property revenues |
$ |
390,073 |
$ |
382,791 |
$ |
776,090 |
$ |
761,699 |
|||||||
Expenses: |
|||||||||||||||
Operating expense, excluding real estate taxes and insurance |
92,980 |
91,806 |
182,128 |
179,106 |
|||||||||||
Real estate taxes and insurance |
55,750 |
54,163 |
111,006 |
108,136 |
|||||||||||
Depreciation and amortization |
122,925 |
126,360 |
243,669 |
256,357 |
|||||||||||
Total property operating expenses |
271,655 |
272,329 |
536,803 |
543,599 |
|||||||||||
Property management expenses |
11,396 |
10,745 |
24,276 |
21,726 |
|||||||||||
General and administrative expenses |
9,211 |
9,534 |
19,343 |
22,374 |
|||||||||||
Merger and integration related expenses |
2,826 |
4,207 |
6,625 |
10,368 |
|||||||||||
Income before non-operating items |
94,985 |
85,976 |
189,043 |
163,632 |
|||||||||||
Interest expense |
(43,585) |
(38,481) |
(84,490) |
(75,065) |
|||||||||||
Gain on sale of depreciable real estate assets |
2 |
274 |
2 |
201 |
|||||||||||
Gain on sale of non-depreciable real estate assets |
2,761 |
48 |
2,911 |
48 |
|||||||||||
Other non-operating income |
8,032 |
2,627 |
5,691 |
5,338 |
|||||||||||
Income before income tax expense |
62,195 |
50,444 |
113,157 |
94,154 |
|||||||||||
Income tax expense |
(570) |
(618) |
(1,210) |
(1,269) |
|||||||||||
Income from continuing operations before real estate joint venture activity |
61,625 |
49,826 |
111,947 |
92,885 |
|||||||||||
Income from real estate joint venture |
356 |
329 |
854 |
686 |
|||||||||||
Net income |
61,981 |
50,155 |
112,801 |
93,571 |
|||||||||||
Net income attributable to noncontrolling interests |
2,174 |
1,840 |
3,975 |
3,351 |
|||||||||||
Net income available for shareholders |
59,807 |
48,315 |
108,826 |
90,220 |
|||||||||||
Dividends to MAA Series I preferred shareholders |
922 |
922 |
1,844 |
1,844 |
|||||||||||
Net income available for MAA common shareholders |
$ |
58,885 |
$ |
47,393 |
$ |
106,982 |
$ |
88,376 |
|||||||
Earnings per common share - basic: |
|||||||||||||||
Net income available for common shareholders |
$ |
0.52 |
$ |
0.42 |
$ |
0.94 |
$ |
0.78 |
|||||||
Earnings per common share - diluted: |
|||||||||||||||
Net income available for common shareholders |
$ |
0.52 |
$ |
0.42 |
$ |
0.94 |
$ |
0.78 |
|||||||
Dividends declared per common share |
$ |
0.9225 |
$ |
0.8700 |
$ |
1.8450 |
$ |
1.7400 |
SHARE AND UNIT DATA |
|||||||||||
Shares and units in thousands |
Three months ended |
Six months ended |
|||||||||
2018 |
2017 |
2018 |
2017 |
||||||||
Net Income Shares (1) |
|||||||||||
Weighted average common shares – basic |
113,646 |
113,403 |
113,595 |
113,371 |
|||||||
Weighted average partnership units outstanding |
— |
— |
— |
— |
|||||||
Effect of dilutive securities |
207 |
211 |
174 |
279 |
|||||||
Weighted average common shares – diluted |
113,853 |
113,614 |
113,769 |
113,650 |
|||||||
Funds From Operations Shares And Units |
|||||||||||
Weighted average common shares and units – basic |
117,782 |
117,619 |
117,754 |
117,588 |
|||||||
Weighted average common shares and units – diluted |
117,951 |
117,839 |
117,922 |
117,821 |
|||||||
Period End Shares And Units |
|||||||||||
Common shares at |
113,808 |
113,608 |
113,808 |
113,608 |
|||||||
Operating Partnership units at |
4,136 |
4,215 |
4,136 |
4,215 |
|||||||
Total common shares and units at |
117,944 |
117,823 |
117,944 |
117,823 |
(1) |
For additional information on the calculation of diluted common shares and earnings per common share, |
CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||||||
Dollars in thousands |
|||||||
|
|
||||||
Assets |
|||||||
Real estate assets: |
|||||||
Land |
$ |
1,868,828 |
$ |
1,836,417 |
|||
Buildings and improvements and other |
11,555,677 |
11,281,504 |
|||||
Development and capital improvements in progress |
68,784 |
116,833 |
|||||
13,493,289 |
13,234,754 |
||||||
Less: Accumulated depreciation |
(2,316,195) |
(2,075,071) |
|||||
11,177,094 |
11,159,683 |
||||||
Undeveloped land |
41,149 |
57,285 |
|||||
Investment in real estate joint venture |
44,770 |
44,956 |
|||||
Real estate assets, net |
11,263,013 |
11,261,924 |
|||||
Cash and cash equivalents |
32,610 |
10,750 |
|||||
Restricted cash |
28,193 |
78,117 |
|||||
Other assets |
122,563 |
135,807 |
|||||
Assets held for sale |
750 |
5,321 |
|||||
Total assets |
$ |
11,447,129 |
$ |
11,491,919 |
|||
Liabilities and equity |
|||||||
Liabilities: |
|||||||
Unsecured notes payable |
$ |
3,621,824 |
$ |
3,525,765 |
|||
Secured notes payable |
926,811 |
976,292 |
|||||
Accrued expenses and other liabilities |
409,604 |
405,560 |
|||||
Total liabilities |
4,958,239 |
4,907,617 |
|||||
Redeemable common stock |
9,410 |
10,408 |
|||||
Shareholders' equity |
|||||||
Preferred stock |
9 |
9 |
|||||
Common stock |
1,136 |
1,134 |
|||||
Additional paid-in capital |
7,130,902 |
7,121,112 |
|||||
Accumulated distributions in excess of net income |
(887,672) |
(784,500) |
|||||
Accumulated other comprehensive income |
7,986 |
2,157 |
|||||
Total MAA shareholders' equity |
6,252,361 |
6,339,912 |
|||||
Noncontrolling interests - Operating Partnership units |
224,813 |
231,676 |
|||||
|
6,477,174 |
6,571,588 |
|||||
Noncontrolling interest - consolidated real estate entity |
2,306 |
2,306 |
|||||
Total equity |
6,479,480 |
6,573,894 |
|||||
Total liabilities and equity |
$ |
11,447,129 |
$ |
11,491,919 |
RECONCILIATION OF FFO, AFFO AND FAD TO NET INCOME AVAILABLE FOR MAA COMMON |
|||||||||||||||
Amounts in thousands, except per share and unit data |
Three months ended |
Six months ended |
|||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Net income available for MAA common shareholders |
$ |
58,885 |
$ |
47,393 |
$ |
106,982 |
$ |
88,376 |
|||||||
Depreciation and amortization of real estate assets |
121,745 |
125,344 |
241,311 |
254,312 |
|||||||||||
Gain on sale of depreciable real estate assets |
(2) |
(274) |
(2) |
(201) |
|||||||||||
Depreciation and amortization of real estate assets of real estate joint venture |
144 |
150 |
289 |
302 |
|||||||||||
Net income attributable to noncontrolling interests |
2,174 |
1,840 |
3,975 |
3,351 |
|||||||||||
Funds from operations attributable to the Company |
182,946 |
174,453 |
352,555 |
346,140 |
|||||||||||
Recurring capital expenditures |
(25,551) |
(23,223) |
(35,559) |
(33,321) |
|||||||||||
Adjusted funds from operations |
157,395 |
151,230 |
316,996 |
312,819 |
|||||||||||
Redevelopment and revenue enhancing capital expenditures |
(25,652) |
(22,894) |
(41,619) |
(35,209) |
|||||||||||
Other capital expenditures |
(9,885) |
(3,970) |
(19,512) |
(8,067) |
|||||||||||
Funds available for distribution |
$ |
121,858 |
$ |
124,366 |
$ |
255,865 |
$ |
269,543 |
|||||||
Dividends and distributions paid |
$ |
108,787 |
$ |
102,476 |
$ |
217,528 |
$ |
204,934 |
|||||||
Weighted average common shares – diluted |
113,853 |
113,614 |
113,769 |
113,650 |
|||||||||||
FFO weighted average common shares and units – diluted |
117,951 |
117,839 |
117,922 |
117,821 |
|||||||||||
Earnings per common share - diluted: |
|||||||||||||||
Net income available for common shareholders |
$ |
0.52 |
$ |
0.42 |
$ |
0.94 |
$ |
0.78 |
|||||||
Funds from operations per Share – diluted |
$ |
1.55 |
$ |
1.48 |
$ |
2.99 |
$ |
2.94 |
|||||||
Adjusted funds from operations per Share – diluted |
$ |
1.33 |
$ |
1.28 |
$ |
2.69 |
$ |
2.66 |
RECONCILIATION OF NET OPERATING INCOME TO NET INCOME AVAILABLE |
|||||||||||||||||||
Dollars in thousands |
Three Months Ended |
Six Months Ended |
|||||||||||||||||
|
|
|
|
|
|||||||||||||||
Net Operating Income |
|||||||||||||||||||
Same Store NOI |
$ |
224,200 |
$ |
225,350 |
$ |
220,474 |
$ |
449,550 |
$ |
441,657 |
|||||||||
Non-Same Store NOI |
17,143 |
16,263 |
16,348 |
33,406 |
32,800 |
||||||||||||||
Total NOI |
241,343 |
241,613 |
236,822 |
482,956 |
474,457 |
||||||||||||||
Depreciation and amortization |
(122,925) |
(120,744) |
(126,360) |
(243,669) |
(256,357) |
||||||||||||||
Property management expenses |
(11,396) |
(12,880) |
(10,745) |
(24,276) |
(21,726) |
||||||||||||||
General and administrative expenses |
(9,211) |
(10,132) |
(9,534) |
(19,343) |
(22,374) |
||||||||||||||
Merger and integration expenses |
(2,826) |
(3,799) |
(4,207) |
(6,625) |
(10,368) |
||||||||||||||
Other non-operating income (expense) |
8,032 |
(2,341) |
2,627 |
5,691 |
5,338 |
||||||||||||||
Interest expense |
(43,585) |
(40,905) |
(38,481) |
(84,490) |
(75,065) |
||||||||||||||
Gain on sale of depreciable real estate assets |
2 |
— |
274 |
2 |
201 |
||||||||||||||
Income tax expense |
(570) |
(640) |
(618) |
(1,210) |
(1,269) |
||||||||||||||
Gain on sale of non-depreciable real estate assets |
2,761 |
150 |
48 |
2,911 |
48 |
||||||||||||||
Income from real estate joint venture |
356 |
498 |
329 |
854 |
686 |
||||||||||||||
Net income attributable to noncontrolling interests |
(2,174) |
(1,801) |
(1,840) |
(3,975) |
(3,351) |
||||||||||||||
Dividends to MAA Series I preferred shareholders |
(922) |
(922) |
(922) |
(1,844) |
(1,844) |
||||||||||||||
Net income available for MAA common shareholders |
$ |
58,885 |
$ |
48,097 |
$ |
47,393 |
$ |
106,982 |
$ |
88,376 |
RECONCILIATION OF EBITDA, EBITDAre, ADJUSTED EBITDAre AND RECURRING ADJUSTED EBITDAre TO |
|||||||||||||||
Dollars in thousands |
Three Months Ended |
Twelve Months Ended |
|||||||||||||
|
|
|
|
||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Net income |
$ |
61,981 |
$ |
50,155 |
$ |
359,767 |
$ |
340,536 |
|||||||
Depreciation and amortization |
122,925 |
126,360 |
481,020 |
493,708 |
|||||||||||
Interest expense |
43,585 |
38,481 |
164,176 |
154,751 |
|||||||||||
Income tax expense |
570 |
618 |
2,560 |
2,619 |
|||||||||||
EBITDA |
229,061 |
215,614 |
1,007,523 |
991,614 |
|||||||||||
Gain on sale of depreciable real estate assets |
(2) |
(274) |
(127,186) |
(127,385) |
|||||||||||
Adjustments to reflect the Company's share of EBITDAre of |
303 |
310 |
1,221 |
1,234 |
|||||||||||
EBITDAre |
229,362 |
215,650 |
881,558 |
865,463 |
|||||||||||
Gain on debt extinguishment (1) |
— |
(2,217) |
(1,075) |
(3,196) |
|||||||||||
Net casualty (gain) loss and other settlement proceeds (1) |
(794) |
240 |
(1,248) |
(114) |
|||||||||||
Gain on sale of non-depreciable assets |
(2,761) |
(48) |
(2,884) |
(21) |
|||||||||||
Adjusted EBITDAre |
225,807 |
213,625 |
876,351 |
862,132 |
|||||||||||
Merger and integration expenses |
2,826 |
4,207 |
16,246 |
19,990 |
|||||||||||
Recurring Adjusted EBITDAre |
$ |
228,633 |
$ |
217,832 |
$ |
892,597 |
$ |
882,122 |
|||||||
(1) Included in Other non-operating income on the Consolidated Statements of Operations |
RECONCILIATION OF NET DEBT TO UNSECURED NOTES PAYABLE AND SECURED NOTES PAYABLE |
|||||||
Dollars in thousands |
As of |
||||||
|
|
||||||
2018 |
2017 |
||||||
Unsecured notes payable |
$ |
3,621,824 |
$ |
3,525,765 |
|||
Secured notes payable |
926,811 |
976,292 |
|||||
Total debt |
4,548,635 |
4,502,057 |
|||||
Cash and cash equivalents |
(32,610) |
(10,750) |
|||||
1031(b) exchange proceeds included in Restricted cash |
— |
(47,668) |
|||||
Net Debt |
$ |
4,516,025 |
$ |
4,443,639 |
RECONCILIATION OF GROSS ASSETS TO TOTAL ASSETS |
|||||||
Dollars in thousands |
As of |
||||||
|
|
||||||
2018 |
2017 |
||||||
Total assets |
$ |
11,447,129 |
$ |
11,491,919 |
|||
Accumulated depreciation |
2,316,195 |
2,075,071 |
|||||
Gross Assets |
$ |
13,763,324 |
$ |
13,566,990 |
RECONCILIATION OF GROSS REAL ESTATE ASSETS TO REAL ESTATE ASSETS, NET |
|||||||
Dollars in thousands |
As of |
||||||
|
|
||||||
2018 |
2017 |
||||||
Real estate assets, net |
$ |
11,263,013 |
$ |
11,261,924 |
|||
Accumulated depreciation |
2,316,195 |
2,075,071 |
|||||
Cash and cash equivalents |
32,610 |
10,750 |
|||||
1031(b) exchange proceeds included in Restricted cash |
— |
47,668 |
|||||
Gross Real Estate Assets |
$ |
13,611,818 |
$ |
13,395,413 |
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDAre
For purposes of calculations in this release, Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate, or Adjusted EBITDAre, is composed of EBITDAre adjusted for net gain or loss on non-depreciable asset sales, insurance and other settlement proceeds, and gain or loss on debt extinguishment. As an owner and operator of real estate, MAA considers Adjusted EBITDAre to be an important measure of performance from core operations because Adjusted EBITDAre does not include various income and expense items that are not indicative of operating performance. MAA's computation of Adjusted EBITDAre may differ from the methodology utilized by other companies to calculate Adjusted EBITDAre. Adjusted EBITDAre should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of financial performance.
Adjusted Funds From Operations (AFFO)
AFFO is composed of FFO less recurring capital expenditures. In order to better align the classification of capital expenditures with business goals, certain capital expenditures related to commercial properties have been reclassified out of recurring capital expenditures for comparative purposes. AFFO should not be considered as an alternative to Net income available for MAA common shareholders. As an owner and operator of real estate, MAA considers AFFO to be an important measure of performance from operations because AFFO measures the ability to control revenues, expenses and recurring capital expenditures.
Same Store NOI
Same Store NOI represents total operating revenues less total property operating expenses, excluding depreciation, for all properties classified within the Same Store Portfolio during the period. Same Store NOI should not be considered as an alternative to Net income available for MAA common shareholders. MAA believes Same Store NOI is a helpful tool in evaluating the operating performance within MAA's markets because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.
EBITDA
For purposes of calculations in this release, Earnings Before Interest, Income Taxes, Depreciation and Amortization, or EBITDA, is composed of net income plus depreciation and amortization, interest expense, and income taxes. As an owner and operator of real estate, MAA considers EBITDA to be an important measure of performance from core operations because EBITDA does not include various expense items that are not indicative of operating performance. EBITDA should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of financial performance.
EBITDAre
For purposes of calculations in this release, Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate, or EBITDAre, is composed of EBITDA, as defined above, excluding the gain or loss on sale of depreciable asset sales and plus adjustments to reflect MAA's share of EBITDAre of unconsolidated affiliates. As an owner and operator of real estate, MAA considers EBITDAre to be an important measure of performance from core operations because EBITDAre does not include various expense items that are not indicative of operating performance. While MAA's definition of EBITDAre is in accordance with NAREIT's definition, it may differ from the methodology utilized by other companies to calculate EBITDAre. EBITDAre should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of financial performance.
Funds Available for Distribution (FAD)
FAD is composed of FFO less total capital expenditures, excluding development spending and property acquisitions. FAD should not be considered as an alternative to Net income available for MAA common shareholders. As an owner and operator of real estate, MAA considers FAD to be an important measure of performance from core operations because FAD measures the ability to control revenues, expenses and total capital expenditures.
Funds From Operations (FFO)
FFO represents net income available for MAA common shareholders (computed in accordance with GAAP) excluding extraordinary items, asset impairment, gains or losses on disposition of real estate assets, plus net income attributable to noncontrolling interest, depreciation and amortization of real estate assets, and adjustments for joint ventures to reflect FFO on the same basis. Because noncontrolling interest is added back, FFO, when used in this document, represents FFO attributable to the Company. While MAA's definition of FFO is in accordance with the NAREIT's definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs. FFO should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of operating performance. MAA believes that FFO is helpful in understanding operating performance in that FFO excludes depreciation and amortization of real estate assets. MAA believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies.
Gross Assets
Gross Assets represents Total assets plus Accumulated depreciation and accumulated depreciation for Assets held for sale, which is included in "Assets held for sale" on the Consolidated Balance Sheets. MAA believes that Gross Assets can be used as a helpful tool in evaluating its balance sheet positions. MAA believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies.
Gross Real Estate Assets
Gross Real Estate Assets represents Real estate assets, net plus Accumulated depreciation and accumulated depreciation for Assets held for sale, which is included in "Assets held for sale" on the Consolidated Balance Sheets, plus Cash and cash equivalents plus 1031(b) exchange proceeds included in "Restricted cash" on the Consolidated Balance Sheets. MAA believes that Gross Real Estate Assets can be used as a helpful tool in evaluating its balance sheet positions. MAA believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies.
Net Debt
Net Debt represents Unsecured notes payable and Secured notes payable less Cash and cash equivalents and 1031(b) proceeds included in "Restricted cash" on the Consolidated Balance Sheets. MAA believes Net Debt is a helpful tool in evaluating its debt position.
Net Operating Income (NOI)
Net Operating Income represents Rental and other property revenues less Total property operating expenses, excluding depreciation, for all properties held during the period, regardless of their status as held for sale. NOI should not be considered as an alternative to Net income available for MAA common shareholders. MAA believes NOI by market is a helpful tool in evaluating the operating performance within MAA's markets because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.
Recurring Adjusted EBITDAre
Recurring Adjusted EBITDAre represents Adjusted EBITDAre further adjusted to exclude certain items that are not considered part of MAA's core business operations such as acquisition and merger and integration expenses. MAA believes Recurring Adjusted EBITDAre 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. MAA's definition of Recurring Adjusted EBITDAre may differ from the methodology utilized by other companies to calculate Recurring Adjusted EBITDAre. Recurring Adjusted EBITDAre should not be considered as an alternative to Net income available for MAA common shareholders as an indicator of operating performance.
OTHER KEY 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. MAA believes average effective rent is a helpful measurement in evaluating average pricing. It does not represent actual rental revenue collected per unit.
Average Physical Occupancy
Average Physical Occupancy represents the average of the daily physical occupancy for the quarter.
Development Communities
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 Communities portfolio.
OTHER KEY DEFINITIONS (CONTINUED)
Lease-up Communities
New acquisitions acquired during lease-up and newly developed communities remain in the Lease-up Communities portfolio until stabilized. Communities are considered stabilized after achieving at least 90% occupancy for 90 days.
Non-Same Store Portfolio
Non-Same Store Portfolio includes recent acquisitions, communities that have been identified for disposition, and communities that have undergone a significant casualty loss.
Same Store Portfolio
MAA reviews its Same Store Portfolio at the beginning of each calendar year, or as significant transactions warrant. Communities are generally added into the Same Store Portfolio if they were owned and stabilized at the beginning of the previous year. Communities are considered stabilized after achieving at least 90% occupancy for 90 days. Communities that have been approved by MAA's Board of Directors for disposition are excluded from the Same Store Portfolio. Communities that have undergone a significant casualty loss are also excluded from the Same Store Portfolio.
Total Market Capitalization
Total Market Capitalization equals the number of shares of common stock plus units not held by MAA at period end multiplied by the closing stock price at period end, plus total debt outstanding.
Unencumbered NOI
Unencumbered NOI represents NOI generated by our unencumbered assets (as defined in MAALP's bond covenants).
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SOURCE MAA
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