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Mid-America Apartment Communities (MAA - Free Report) , which is commonly known as “MAA”, reported second-quarter 2024 core funds from operations (FFO) per share of $2.22, which surpassed the Zacks Consensus Estimate of $2.20. However, the reported figure fell 2.6% year over year from $2.28.
Results reflect healthy demand despite elevated new supply and growth in the average effective rent per unit for the same-store portfolio. The company also experienced low levels of resident turnover. However, an increase in operating expenses partly marred the positives.
Rental and other property revenues were $546.4 million, which surpassed the Zacks Consensus Estimate of $544.9 million. The reported figure was 2.1% higher than the year-ago quarter’s nearly $535.1 million.
Per Eric Bolton, the chairman and CEO of MAA, "New supply delivering into several of our markets continues to be absorbed in a steady manner as the demand for apartment housing remains strong. We continue to believe that we will begin to see a decline in new apartment deliveries over the back half of this year and into 2025.”
Quarter in Detail
The same-store portfolio’s revenues grew 0.7% on a year-over-year basis, with a rise of 0.5% in the average effective rent per unit. The same-store portfolio’s expenses rose 3.7% on a year-over-year basis. Consequently, the same-store portfolio’s net operating income (NOI) fell by 1% on a year-over-year basis. Our estimate was a decline of 0.1% for the same.
The average physical occupancy for the same-store portfolio in the second quarter was 95.5% similar to the year-ago quarter as well as our estimates.
As of Jun 30, 2024, resident turnover remained historically low at 43.5% on a trailing 12-month basis. This stemmed from low levels of move-outs related to buying single-family homes.
During the second quarter, new lease pricing declined 5.1%, denoting a 1.1% improvement sequentially. However, the rise in renewal lease pricing remained steady, increasing by 4.6%. As a result, there was an increase of 0.1% for both new and renewing lease pricing on a blended basis in the second quarter of 2024. This marked a 70bps improvement sequentially.
During the second quarter, the company experienced an 8.2% increase in operating expenses, excluding real estate taxes and insurance. Moreover, real estate taxes and insurance were up 2.4% year over year. MAA also witnessed a 12.4% year-over-year jump in interest expenses.
Portfolio Activity
In May 2024, MAA bought out a 306-unit multifamily community in Raleigh, NC, for about $81 million. In April 2024, MAA also closed on the acquisition of a land parcel located in Phoenix, AZ, through its pre-purchase development program. The construction of a 345-unit multifamily apartment community on the above land began in June 2024.
As of Jun 30, 2024, MAA had seven communities under development, with a total projected cost of $866.3 million and an estimated $328.3 million remaining to be funded. The projected average stabilized NOI yield on the three in-progress development communities and one recently completed development community that is currently being leased is 6.5%.
As of Jun 30, 2024, MAA redeveloped 2,796 apartment units. As of the same date, MAA completed the installation of Smart Home technology in more than 94,000 units across its apartment community portfolio. This move provided an increase in the average effective rent per unit of around $25 since the initiative started during the first quarter of 2019.
MAA expects to begin four to six multifamily development projects over the next 18 to 24 months.
Balance Sheet Position
MAA exited the second quarter of 2024 with cash and cash equivalents of $62.8 million, up from $54.6 million recorded as of Mar 31, 2024.
As of Jun 30, 2024, MAA had a strong balance sheet with $1.0 billion in combined cash and capacity available under its unsecured revolving credit facility. Also, it had a Net Debt/Adjusted EBITDAre ratio of 3.7.
As of the same date, the total debt outstanding was $4.7 billion. Its total debt average years to maturity was 7.4 years. As of Jun 30, 2024, unencumbered NOI was 95.9% of the total NOI.
2024 Guidance
MAA projects a third-quarter 2024 core FFO per share in the band of $2.08-$2.24, with $2.16 at the midpoint. The Zacks Consensus Estimate of $2.20 lies within the range.
This residential REIT revised its guidance for 2024 core FFO per share and now expects it in the range of $8.74-$9.02, with the midpoint remaining unchanged at $8.88, compared with the $8.70-$9.06 range guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $8.88 and lies within the range.
For 2024, management anticipates same-store property revenue growth of 0.15%-1.15%, and operating expense growth is projected between 3.75%-4.75%. As a result, the same-store NOI growth is anticipated between -2.50% and -0.10%. Average physical occupancy for the same-store portfolio is guided in the range of 95.3%-95.7%, with the midpoint being 95.5%.
MAA currently carries a Zacks Rank #3 (Hold).
Mid-America Apartment Communities, Inc. Price, Consensus and EPS Surprise
Equity Residential (EQR - Free Report) reported a second-quarter 2024 normalized FFO per share of 97 cents, which surpassed the Zacks Consensus Estimate of 96 cents. The rental income of $734.16 million also marginally beat the consensus mark of $734.14 million. On a year-over-year basis, the normalized FFO per share grew 3.2% from 94 cents, with rental income climbing 2.3%.
Results reflected decent same-store performances, backed by healthy demand, modest supply and expense efficiency efforts. The company also raised its 2024 guidance. Currently, EQR carries a Zacks Rank of 2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Essex Property Trust Inc. (ESS - Free Report) reported a second-quarter 2024 core FFO per share of $3.94, which beat the Zacks Consensus Estimate of $3.84. The figure also improved 4.5% from the year-ago quarter.Total revenues of $442.36 million outpaced the Zacks Consensus Estimate of $433.26 million. Revenues were up 6.3% year over year.
ESS’ quarterly results reflected favorable growth in same-property revenues and NOI. This residential REIT also raised its 2024 core FFO per share, same-store residential revenue and NOI growth outlook following the second-quarter FFO beat. Currently, ESS carries a Zacks Rank of 2.
UDR Inc. (UDR - Free Report) reported second-quarter 2024 funds from operations as adjusted (FFOA) per share of 62 cents, which surpassed the Zacks Consensus Estimate of 61 cents. On a year-over-year basis, FFOA per share climbed 1.6%. Rental income and total revenues rose 2.5% and 2.7%, respectively.
Results reflected an increase in revenues from same-store communities.UDR also raised full-year 2024 FFOA per share guidance ranges. Currently, UDR carries a Zacks Rank of 2.
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
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Mid-America Apartment (MAA) Q2 FFO & Revenues Beat Estimates
Mid-America Apartment Communities (MAA - Free Report) , which is commonly known as “MAA”, reported second-quarter 2024 core funds from operations (FFO) per share of $2.22, which surpassed the Zacks Consensus Estimate of $2.20. However, the reported figure fell 2.6% year over year from $2.28.
Results reflect healthy demand despite elevated new supply and growth in the average effective rent per unit for the same-store portfolio. The company also experienced low levels of resident turnover. However, an increase in operating expenses partly marred the positives.
Rental and other property revenues were $546.4 million, which surpassed the Zacks Consensus Estimate of $544.9 million. The reported figure was 2.1% higher than the year-ago quarter’s nearly $535.1 million.
Per Eric Bolton, the chairman and CEO of MAA, "New supply delivering into several of our markets continues to be absorbed in a steady manner as the demand for apartment housing remains strong. We continue to believe that we will begin to see a decline in new apartment deliveries over the back half of this year and into 2025.”
Quarter in Detail
The same-store portfolio’s revenues grew 0.7% on a year-over-year basis, with a rise of 0.5% in the average effective rent per unit. The same-store portfolio’s expenses rose 3.7% on a year-over-year basis. Consequently, the same-store portfolio’s net operating income (NOI) fell by 1% on a year-over-year basis. Our estimate was a decline of 0.1% for the same.
The average physical occupancy for the same-store portfolio in the second quarter was 95.5% similar to the year-ago quarter as well as our estimates.
As of Jun 30, 2024, resident turnover remained historically low at 43.5% on a trailing 12-month basis. This stemmed from low levels of move-outs related to buying single-family homes.
During the second quarter, new lease pricing declined 5.1%, denoting a 1.1% improvement sequentially. However, the rise in renewal lease pricing remained steady, increasing by 4.6%. As a result, there was an increase of 0.1% for both new and renewing lease pricing on a blended basis in the second quarter of 2024. This marked a 70bps improvement sequentially.
During the second quarter, the company experienced an 8.2% increase in operating expenses, excluding real estate taxes and insurance. Moreover, real estate taxes and insurance were up 2.4% year over year. MAA also witnessed a 12.4% year-over-year jump in interest expenses.
Portfolio Activity
In May 2024, MAA bought out a 306-unit multifamily community in Raleigh, NC, for about $81 million. In April 2024, MAA also closed on the acquisition of a land parcel located in Phoenix, AZ, through its pre-purchase development program. The construction of a 345-unit multifamily apartment community on the above land began in June 2024.
As of Jun 30, 2024, MAA had seven communities under development, with a total projected cost of $866.3 million and an estimated $328.3 million remaining to be funded. The projected average stabilized NOI yield on the three in-progress development communities and one recently completed development community that is currently being leased is 6.5%.
As of Jun 30, 2024, MAA redeveloped 2,796 apartment units. As of the same date, MAA completed the installation of Smart Home technology in more than 94,000 units across its apartment community portfolio. This move provided an increase in the average effective rent per unit of around $25 since the initiative started during the first quarter of 2019.
MAA expects to begin four to six multifamily development projects over the next 18 to 24 months.
Balance Sheet Position
MAA exited the second quarter of 2024 with cash and cash equivalents of $62.8 million, up from $54.6 million recorded as of Mar 31, 2024.
As of Jun 30, 2024, MAA had a strong balance sheet with $1.0 billion in combined cash and capacity available under its unsecured revolving credit facility. Also, it had a Net Debt/Adjusted EBITDAre ratio of 3.7.
As of the same date, the total debt outstanding was $4.7 billion. Its total debt average years to maturity was 7.4 years. As of Jun 30, 2024, unencumbered NOI was 95.9% of the total NOI.
2024 Guidance
MAA projects a third-quarter 2024 core FFO per share in the band of $2.08-$2.24, with $2.16 at the midpoint. The Zacks Consensus Estimate of $2.20 lies within the range.
This residential REIT revised its guidance for 2024 core FFO per share and now expects it in the range of $8.74-$9.02, with the midpoint remaining unchanged at $8.88, compared with the $8.70-$9.06 range guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $8.88 and lies within the range.
For 2024, management anticipates same-store property revenue growth of 0.15%-1.15%, and operating expense growth is projected between 3.75%-4.75%. As a result, the same-store NOI growth is anticipated between -2.50% and -0.10%. Average physical occupancy for the same-store portfolio is guided in the range of 95.3%-95.7%, with the midpoint being 95.5%.
MAA currently carries a Zacks Rank #3 (Hold).
Mid-America Apartment Communities, Inc. Price, Consensus and EPS Surprise
Mid-America Apartment Communities, Inc. price-consensus-eps-surprise-chart | Mid-America Apartment Communities, Inc. Quote
Performance of Other Residential REITs
Equity Residential (EQR - Free Report) reported a second-quarter 2024 normalized FFO per share of 97 cents, which surpassed the Zacks Consensus Estimate of 96 cents. The rental income of $734.16 million also marginally beat the consensus mark of $734.14 million. On a year-over-year basis, the normalized FFO per share grew 3.2% from 94 cents, with rental income climbing 2.3%.
Results reflected decent same-store performances, backed by healthy demand, modest supply and expense efficiency efforts. The company also raised its 2024 guidance. Currently, EQR carries a Zacks Rank of 2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Essex Property Trust Inc. (ESS - Free Report) reported a second-quarter 2024 core FFO per share of $3.94, which beat the Zacks Consensus Estimate of $3.84. The figure also improved 4.5% from the year-ago quarter.Total revenues of $442.36 million outpaced the Zacks Consensus Estimate of $433.26 million. Revenues were up 6.3% year over year.
ESS’ quarterly results reflected favorable growth in same-property revenues and NOI. This residential REIT also raised its 2024 core FFO per share, same-store residential revenue and NOI growth outlook following the second-quarter FFO beat. Currently, ESS carries a Zacks Rank of 2.
UDR Inc. (UDR - Free Report) reported second-quarter 2024 funds from operations as adjusted (FFOA) per share of 62 cents, which surpassed the Zacks Consensus Estimate of 61 cents. On a year-over-year basis, FFOA per share climbed 1.6%. Rental income and total revenues rose 2.5% and 2.7%, respectively.
Results reflected an increase in revenues from same-store communities.UDR also raised full-year 2024 FFOA per share guidance ranges. Currently, UDR carries a Zacks Rank of 2.
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