MAA - Earnings call transcript Q3 2018 | Mid-America Apartment Communities, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the MAA Third Quarter 2018 Earnings Conference Call.

During the presentation all participants will be in a listen-only mode. Afterwards, the company will conduct a question-and-answer session.

As a reminder this conference is being recorded today, November 1, 2018. I would now like to turn the conference over to Tim Argo, Senior Vice President of Finance for MAA. ahead. go Please

Tim Argo

Tom And Senior Chris. me everyone. is our This Eric DelPriore, and Thank General our President good of Argo, Counsel. CFO; Campbell, Al Vice our With our Finance Tim COO; Bolton, Rob you, CEO; morning, Grimes, for are MAA.

projections. want statements. filings in materially the that begin the management discussion be with I available will yesterday's this comments encourage Actual earnings These copy release that and website. future differ and out We be our impact on this prepared we point prepared refer our as which forward-looking forward-looking our results reports to company factors of from XX-Act an may risk section Before today's call with copy statements morning, a making with of morning's describe to will our to you results. part of along SEC, may the comments audio

Investors presentation financial we call, as will this The non-GAAP as the measures, GAAP reconciliations During can most www.maac.com. of and our certain be and For of well release measures differences financial our which over found are turn the on website earnings data, at the also now non-GAAP directly I GAAP available financial between comparable Eric. will measures. supplemental of call in comparable page to discuss the

Eric Bolton

for in in XX the third points as lease-over-lease On markets. grew quarter. This across ability moderating. last by the footprint occupancy our our our levels than compared demand housing positive X.X% of blended strong remained the shows several apartment in rents have The supply to and demand better growth time prior High the of leases, and morning. new year. low no capture basis despite and place same Good signs Tim. resident high Thanks, to basis rent supported is strong of turnover a

headwinds. opportunity offer strong not our we yet for budgeting up that for will next XXXX, expect momentum despite growth in we've demand rent continued new do the during year, supply While positive wrapped efforts the

assessment budgeting and to how across As performed portfolio. supply review across from our of research, immediate the deliveries our slightly and will portfolio robust submarket improvement -- new specifically lease moderate rent in we supply coming is property-by-property outlook pressures in likely information Supplementing the year. portfolio third-party Tom growth the a the more part a consider comments, fall we is a and our of to volume XXXX early our pressure of do in his assessment new improved the continued but new at that process, will detailed in share new in new level XXXX. support XXXX supply likely from leasing

various continue in Post merger the maintenance area repair to primarily capture and and of synergies of We Properties, from expense out with good our coming costs. initiatives new results the

As do that the begin year-over-year since of start XXXX. move year we'll to synergies we from as lift we approach basis, two to on into a expect mark moderate our expense the merger, some we initial see

cleanup. hurricane of see taxes started build to estate annual quarter, cap from in comments, with impact will our Al has real this the coming year, over past but last over further and The real the been tax compressing estate we did his pressure taxes in the During on corresponding couple as some speak rates months. evident.

expectation to capital bid updated not now pools our continue and do acquisitions down pulled our property pricing. expect the anything in profit guidance for As year, of year-end. aggressively to between on close and noted our Significant we for

accretion earnings for short rarely goal lease-up it goal in our or been built order. meeting initially accretive fairly As are our the for pricing capital Today's still point. even be has years, around properties earnings protocols are stabilized deployment though at to this in

continuing find we're and front, believe to accretive that development offer opportunities we NOI the will yields. attractive On

in million. during either property to our a noted third currently started we quarter, current expansion Denver, hope and coming Worth in these Phase development II We construction Houston, owned Fort point in on As pipeline pre-development. during the at have in started earnings are they currently $XXX get Denver SyncXX our or under to sites additional some projects in contract release, We bringing year. our with the Orlando

line development under with this another have in initial X,XXX performing currently pipeline, our to over we units addition all leased representing expectations. five up properties In in

so very new strong capital. on generating lease-up and pipelines, our pipeline on to X,XXX continue our development returns far redeveloped we to addition attractive capture year returns In this over units redevelopment with

that have we XX,XXX that year the expected this over three roughly work completed stabilizing trends pricing from toward years. platform the to two coming We and the summary and operating years are units coming two revenue transformative together improving our momentum been system associates. essentially redevelop every another all or as retooled Post expected. we MAA to expect of technology the former integrate the the busy It's in for company. operations platform team and worked a We've much portfolio our of replaced to In as

sheet policy this from along the all are created staffing team, procedural complete. activities changes report of The on the move the forward proud transformation balance now the fighting results ever. happy of levels As I'm and headwind stronger our and grow and and with imagine, lot also might higher opportunity that work I'm with existing a has new to of integration while than of portfolio more you our to work, now very operating I'm folks. are volume systems and to demands higher supply. our excited in accomplished MAA associated properties. platform by

of continuing drive And and on have, are development it XXXX over now. to We Tom look that's to value forward and year. pipelines I'll the I finishing momentum to over couple higher years. all turn strong all redevelopment poised the a note lease-up, over next coming Our the

Thomas Grimes

morning, you, Eric. Thank And everyone. good

rent we've momentum for the growth, performance continued operating outlook platform The just in evident steady building XXX effective the positive merger. strong our increase than the from in X.X%, quarter last year-to-date QX. came we operating We This leasing QX year. revenue blended range the per range. on quarter increase third same that us blended blended blended integration was in work for momentum trends unit which that is X.X% be our in rent increase improving to with Our up rent This our up occupancy drove to the meet positions as saw portfolio the the since to higher and year the average support of This in basis quarter. our third brought guidance within well X.XX% X.XX% our trend and Post XX the sequential the established sequential rent performance basis the seen time year. highest points to for lease-over-lease points grow to during combined expected pricing

third a to As revenues result, increased second the also the quarter. basis quarter XXX points from

pressured Richmond portfolios. our and steady markets. performance elevated our of good levels of While Jacksonville and in strongest particularly rent in a we're several have revenue Austin, Phoenix, number seeing still growth been in markets, both has supply growth Expense our were Orlando, Dallas revenue growth markets.

blended these increase marketing were X.X% storm All estate, points for year. X.X%, tax during is to into points year. October. quarter. indicators last ahead Average portfolio was were same-store the Overall than pressures, just quarter. the Despite overall move-ins by lease-over-lease personnel basis October and favorable key October year. XX cost, are a last October for than in better within and rates were expenses up last which trends daily is the real same-store up trending strong basis addition XX.X%, better occupancy which month of The affected of XX X% the the pressure continued In

all lower X.X%, is than Our XX exposure, day last move-out basis points units day for vacant XX of year. which and a is XX period represents just which notices

head We slower we good winter leasing are into season. in shape as the

turnover. comparable Move-outs low continued focus program customer expect down -- while with units X% and renewal $X,XXX a Our overall non-redeveloped low. building Momentum by per XX% Move-outs than X,XXX basis, of renting of were less strong increasing same-store drive flat this points respectively. month the rolling rents a is X%. and XX.X%. for low steady demand remains home remained year were over Post unit. across portfolio. a is the complete buying renter more residents retention by achieved Move-outs third our completed level redevelopment the and that XX% quarter, to the current turnover on portfolio Post On to a Through we're to move-outs legacy coupled the average to getting rent historic increase we've our X,XXX turnover on was strong quarter. basis on unit the spending turnover XX XX The to On the of portfolio. down and and move-outs essentially home at our resident service representing than for

compelling a redevelopment a units of As XX,XXX Post identified opportunity. have reminder, total we've that

interior For year. completed the X,XXX and X,XXX units we've upgrades over total portfolio, for complete expect the we to

On XX,XXX we combined robust the XX,XXX total to legacy pipeline now redevelopment legacy pipeline On continue with MAA to have in portfolio, to a stands neighborhood portfolio, of basis Post redevelopment our units. XX,XXX X,XXX the the a of units.

the West communities expectations. stabilized well during are lease-up third in performing quarter. active Lamar our and unscheduled South Our End Post Acklen and with line

track Our properties pipeline on of remaining to current are stabilize on five lease-up schedule.

by with data market process As the the a we and with deliveries. our our markets. part point, decline modestly at we're some for budgeting supply affecting our asset-by-asset vary, will deeper crosscheck third-party but our information. this look improve take own will XXXX, supply markets Performance believe taking of We overall in at then

expected in with Dallas range. Austin inventory are Our to X% assets levels supply to of X% challenging and remain the

supply soften We our as assets. to expect picks Charlotte near up

We in as decreasing. currently Phoenix supply all Jacksonville, to and expect Orlando, continue the shown strength Tampa

at budgeting momentum expect equation side we XXXX. this to rents the of positive While realized in in assuming remains strong, we've demand completed not XXXX our the point, the continue to see into process

our I'm years. are of with wrapped We and two momentum and effort over work the our up in the put are we to building in the integration revenues. the merger team have has last hard proud pleased encouraged

have on us XXXX this finishing well forward We in to Al? XXXX. moving and behind look work to are glad to and

Albert Campbell

everyone. Tom. morning, additional earnings the XXXX. good remainder then provide and sheet guidance I'll quarter the for of on Okay. activity some balance And finally company's Thank third performance, commentary you, on

guidance. in performance in with increase of the X.X% revenue line primarily quarter. midpoint the of overall effective FFO was $X.XX produced same-store which quarter As was our essentially to the in rents, the for Eric quarter, the for Total portfolio for the was average by with expectations. mentioned, in continued per X% from of second growth share accelerate line X.X% growth increase

of expectation effective for guidance acceleration for continued the average fourth revenue Our total and quarter is X.X% growth of both strong in our pricing our line levels lease-over-lease occupancy for and and the revenue with quarter. growth blended full year-to-date performance year support rent

cleanup by These and impacted from slightly expected a were quarter real the on the bit Hurricane pressure during to estate expenses Florence in costs pressures discuss taxes. just a which moment. operating same-store fourth mentioned quarter, are more into Tom As increased I'll continue

overall, few for one Centennial third we debt operating We volatile growth a However, of by the impacted despite quarters, of quarter in last adjustment is quarter completed below expense shares, the growth premier non-cash impact the were these rate. non-cash quarter third the the expense $XXX,XXX of valuation the high-end $XXX,XXX preferred X.X% of Park, average slightly full community pressures over impact quarter. for Atlanta. FFO which community brings results year. mark-to-market or for long-term located the Post year by expected estimate No during which produced full evaluation still just to development as been no also third our expense remains has

quarter complete contains also Denver. the in of units, to which million cost in located communities $XXX I remained active we units, which quarter pipeline. representing million. fund We XX We the second to projected on months total next XXX SyncXX, of In construction XX $XXX million remaining over of Phase expansion and phase an expected during last of community about another next to the completed the $XX by year. fourth XX We a acquired quarter now development, the of community expect have construction to is of cost began phase, funded which add be were this total months four lease-up. third the the

completed once We to up. portfolio fully stabilize of this leased expect NOI yield -- X.X% and

to Tom our portfolio lease-up mentioned, well. As continues perform

recently the During per completed of had XX% stabilization, an for at in lease-up, third all days. with the track the two the group remaining quarter-end. XX communities is end we five the reached which of At occupancy we communities community, occupancy XX.X% average quarter, quarter, development including

quarter communities portfolio of We XXXX. year are this fully these the stabilized to from expect during our earning two stabilized a during growing XXXX fourth strength our three with contribution lease-up as remaining

shape. balance Our sheet in remains great

maturities unsecured During $XXX using line the year credit. capacity of our current debt third of paid under million off quarter, we

additional the And do to an debt of current maturities. over of had We year cash we At remaining quarter, unsecured additional we during maturities pursuing debt next previously have under of of credit. quarter. and anticipate first the combined $XX the quarters couple and of remaining discussed, XXXX half the fourth capacity $XXX of as million refinance financing end our million over line

bond as leverage Our covenants by defined only our was XX.X%.

net EBITDAre X debt-to-recurring below quarter-end. Our just at times is

Texas other As release, for and and noted disclosed Texas in policy We with landlords defend X-K. our we what law. in late our in are our fee practices with the class recent late reserves fee in are those we comply action and believe earnings recorded have line Texas cost appropriate believe lawsuits that

have in lawsuits significant which toward result two legacy filings financial made the in of was third we settlement closed adjusted reserves case, case our and statements, well. as Post property's loss progress a previous quarter addition, In ERC our of DOJ as

portion Just our to don't we call. on plan to the lawsuits Q&A for of specific additional the details commentary provide pending during note,

third remainder updating are for expectations we quarter of year, Given certain guidance the and updated assumptions. the performance

both First, to same-store for property X.XX% as exposure We in now growth, is the pricing by which as range year tax entering and the expenses unforcasted state and full our to specific quarter full is right and Hurricane for to be for we're year guidance total expense combined X.XX% increase same-store especially fourth lease-over-lease Dallas. X.XX% Michael, year. Atlanta effective X.XX% cleanup and which performance growth, revenue expense expect well

As year rates information to obtained Atlanta, for very increases increases Dallas mileage are final our was tax the aggressive expected value portfolio. in impact in

as same-store midpoint. We our guidance X% increase to XX full estate will property of to revising combination these X%, the increases basis range to continue tax expenses for points expected full basis of guidance at the X.XX% to XX of a Real total well points to our revision range plus for X.XX% guidance costs, full which midpoint. is property the reduction expenses the while The guidance. NOI in expected as same-store included to total multi-family aggressively both estimated for Other our to And of for X% representing range notable X.X% to we these at range guidance in year projected of full year to property our SG&A the expense. our the change year items an for acquisitions produced operating to year. changes a overhead year, count management a fight previous

heavily competitive Given in of part included our change additional the acquisition lease-up close environment deals has effect year-end to little don't we any year. projections year. this approximately Since weighted latter the primary expect This the favorable the from year. the full timing expected several on items taxes, our to impact Favorable legal XXXX items cost, related earnings. costs, to produced project changes overhead franchise other in final recent including insurance staffing migration of at

year per is per be $X.XX $X.XX XXXX to non-recurring staffing has cost share less as $X.XX now for are share efforts to per summary, complete. related as unusual projected essentially to year. $X.XX the well $X.XX to activity, income common merger include projected this or now net impact $X.XX the midpoint. be share share expect is to at the of and to we the is per more AFFO timing and integration $X.XX at for overhead per full In normalized be share to been as Some diluted FFO projected midpoint. $X.XX fully full or

call turn for of back So We'll way to questions. you have comments. prepared we that's all the Operator? on now the

Operator

Scotiabank. Trent Trujillo ahead. with our first go Please question And Instructions]. comes from [Operator

Trent Trujillo

morning. taking the Thanks questions. Good for Hi.

is the alluded on for guidance -- you and comments you from most in likely to pretty visibility have leasing perspective First a of annual good what's complete year. the as prepared left your

you so can So the the maybe outcomes point I'm are wide fourth this for quarter, in if in variability have at range you year? why still given curious where relatively the the of frame we FFO

Albert Campbell

the Al. but particularly, in to We high end quarter, given the good that feel to in would transactions. We pretty down was big or about obviously change on be range. bottom the be end third range, a in but significant outcomes causes occupancy, that is just narrowed I had what a of This can that. change comment something we it it the

out quite I think and add one is the a well, fairly which shares that control of so volatile I'll thing our Trent can the as is swing has obviously. preferred that been over quarter, bit

Trent Trujillo

Okay. Thank in about XXXX. you supply, expected call, drop were markets XX% your earnings appreciate on deliveries you. And comments the to on mentioned last I your but in prepared

has because, of months it's because function a just ago. it out being a what few just pushed is pretty it' So supply material to change versus since the changed then like outlook seems

Eric Bolton

their add lot both I year I supply from -- more Well, begin And data more we're through over as in part is transpired. to saw that we pretty through And our everything still would we dig play new delivery budgeting third-party monitor supply great there from as going the over that that us One as start do sorry, bit. with began as our pretty yes, but few into on mentioned, with really of overall mentioned in as But process, and the in the began supply as go drop to have the of we couple to I'm still the third-party of a is down well in we that have budgeting detailed of well work during of But perhaps We radical our think the sort that the see we course into be quite information, dig regarding things is detailed do we months Tom -- we've change annual here. properties, to point. data of think Al research summer, we think or change are back. then to frankly outlook. get process. a candidly, a some this that the course some of at gone year is We process some at sources are and a seeing. that information of we saw as down the delays extent while these not deliveries thought a

Trent Trujillo

I'll color. the in Appreciate Alright. hop Thanks. queue. back

Operator

Capital And our from comes Wurschmidt ahead. Austin Please question Markets. with go next KeyBanc

Austin Wurschmidt

I morning, moderation through guys. the lease how blended was assuming of just Good much Hi. year? you rate curious pricing the are in balance

Albert Campbell

Austin, performance we Al. assumed talked We've all this did accelerate see our would we as about we revenue performance in We pricing always saw, to that QX. is blended the year. as accelerating revenue year in had we produce

I went X.X%. revenue think X.X% from overall to

think about So saw we the expected I in what saw October. his terms good talked through in comments and of we momentum. quarter We Tom in momentum a

So we pricing that was fourth in I saw seen performance always was that about suddenly third quarter. have performance And We've in think above far quarter. to what expected basis year's XX we points. so that last

a that's lot confidence gives end So of the it where up what about year. for our range we

Eric Bolton

pricing be assumption full say the that as recognize to the to I'll year it's of in on built lease-over-lease for going is an year. our the mentioned forecast X.XX% Well, that for was to range important X.XX% blended also Al

the above X.X% year-to-date, at range. of top Okay. the end Through September we're

the moderation that over some is there anticipate quarter. clearly, we next So

Albert Campbell

guidance important be Which seeing the performance feel the prior we good or over very which terms our we're in I year, think projected about. guidance and put and

Austin Wurschmidt

I kind was at. driving Right. that's of of And then, kind what

that range. of tracking You're ahead

through the a or October. spread spread widen level Do You've balance the expect of sustain in to you could it that year? a basis got even potentially of XX point

Eric Bolton

widen can I it Austin. believe

and We have we're want now November favorable that. see. we will guarantee We running to But comparisons in and December. don't XX%

Albert Campbell

activity repeat November, bit late in we may any on in last submarket, certainly last fairly recall year saw pricing that And unexpected effective is this big up, our year, don't that indication see in particularly You likely December significant to that, that hit of uptown portfolio months which year. put over pop candidly a we last and saw two particularly we concession November, in some Dallas really a the December quarter. the

So the it saying, by I going the think we're think level now pretty that into that confidence right of we trends up final seeing high quarter give the a we of us just year. sum

Austin Wurschmidt

just then capital acquisition and the between had of for With the development? Thanks and are some you decrease in Okay. all me. sourcing you've one for new rethinking that. more And guidance challenges deals, at acquisitions a allocation

Eric Bolton

Well, deals last in having at. years, I gotten the say one point so underwritten lot mean, is ever quarter more we've underwriting thing pricing any the deals to five ton mean of third the pulling we've up we're just than mean, quarter, I a sourcing just more over we're time ended we're But a a of deals I on we a -- out I'll trigger really I the as that hard these than looking there. that is mentioned justifying we're in

front. And opportunities the so to development yes, look on that, continuing having said are we for

we the land mentioned, number sites were sense made us, that as got recycle in -- we're some and of I external as well cycle contract pull we've projects looking development in our to we existing forward it's the to either growth as merger ability Post as one. of of on As Raleigh with alluded that probably for And are on third in we things that on in we one But one both another one terms own of is our the out sort things in. Denver, that that point one currently that capabilities we working Fort started that broaden quarter. yes, we've support land the Orlando in or arsenal have years we or a capital, came that coming merger I something in and of before Houston, the might another in at -- to mean thought the with the one we trigger Worth, two to, X.X of

certainly million going grow the to we're now, to it. year. see that's with crazy But you'll go going be pipeline. also going I development. yes, coming over $XXX the we're Right development to -- expect not we're So

now I at enterprise think value. enterprise $X.X to our of pipeline going right is billion that, about X% if be value you right look our

$XXX it than see must cycle. up certainly $XXX bigger million So but attractive I point to scale year. million at a the wouldn't in that, be over to surprised next becomes that doubt, be to I us this the or more

Austin Wurschmidt

So just may. if follow-up one quick I

Just some overruns curious how guess your seen from delays where certainly are risks thinking forecast the today and construction deliveries. about How in we've I development into cost yields? you your for incorporating that

Eric Bolton

right. on deals Well, I'll thoughtfully ourselves. the can, put pullback for some will that we we you're construction while as contracts, had cost mothballs at tell some on a build you if All that as so are some we don't cost we we through work you Yes, or issues. do that. were we while, guaranteed We've a projects looking it

approach rising actually we it. and to taking a to we're think cost opportunity on But environment approach. is consistently And we in at starting assumptions the yes, I cost that approach been to so surely be before we move lease-up to then we've actually we any with our and the about cost. commit commit generally able And in sure down we of on pretty terms lock of a today's that's we our how to careful for are thoughtful sort careful in effort lease-up velocity. lock the and good right our this nailing that outlook. pretty take of in time trigger a look before pull sort lot to And achieve take of we

Operator

from And Nick our Citi. next comes Joseph go ahead. with Please question

Nick Joseph

Thanks. into this would but in earnings Eric, sell on pressure? And strong pricing you focused the know, the I current opportunistically dynamic given just you're mentioned growth, the market. you strong

Eric Bolton

initially Nick, lot five earnings we've us. approaching that recycling. most And with capital a $X fairly recycled obviously for we that conceded recent of -- billion. over deal paid as a that the of with last consequence of course, quite a a was with the We've merger Post bit dilutive of years, something

we will real I footprint see you liked don't of much mix the profile year. of year we very think XXXX alter We're into So to we year We as the next market have. the this, is that tell sort first first radically need that any calendar the go I do have. year, much -- is portfolio. we this like the that very the

XX anything years in as and so. We I can to sold as long prior haven't remember

to obviously, I to won't pick think some get And little starts get this we to be back that some to development opportunity I it us redeployment do to year you'll and a and lot, likely easier capital recycling next next practice. probably a accomplish. back want of capital year that the will of but do up that becomes

year. think us you'll see a next do little I So bit more

Nick Joseph

removal impact Thanks. expenses, potential baseline do expense anything And then no that? cost is any you initial what like hurricanes just the same-store assume on or in guidance, and would do you

Albert Campbell

quarter next Nick into as we year? or fourth about talking look the for You're

Nick Joseph

on there'll you into do so costs hurricane? Going associated be guidance that the year, some the assume with initial

Albert Campbell

don't the something many and can something year That's no, certainly currently. beginning really not. any this don't that so we just we we something unfortunate do It's but year have we cost year, no significant we years we Nick. at we're last Hurricanes, do -- not anticipate of not think forecast the and

Operator

And our next question comes from with Stephenson Janney. go ahead. Rob Please

Robert Stevenson

Good guys. Thanks. morning,

cost You quarter roughly chunk a your X,XXX roughly year-to-date per of unit of a rehabs during over little guys versus did the X,XXX.

the mix rehab doing a six what especially, from mean versus that back have through Was material of paid heavy you do you're just is in or pressures I labor but year. days? as the that you standpoint you stuff third you those were from I seeing a also first in if the pretty a more months from the that what out quarter indicative of cost a jump substantial these So

Eric Bolton

answered Rob almost you've question, Fair and it.

specialize rehab not on The than issues glass. We different guys, set They're vendors vendors use its and It's not them. seeing are vendors our are redevelopment. rebuilding that construction are It's we concrete. materials not in And that jobs. arena. the heavy lumber. the of in cost escalation the not We're not local

we what dead-on go and So to about full had it more units correct.We just our -- from tops shifted cabinets XX% are counter talking mix just about that saw is as granite XX% like -- you around. and did actually

look at, by you of If and really this is side the driven things. Post

at dropped If just as side renovate a especially that in about per improving the basis, look and on our Post apples-to-apples in area. just on has sort of you it $XXX we've groove a unit an cost are gotten on

Thomas Grimes

coming of the increases mostly the and portfolios … into because But mix more Post the

Eric Bolton

it and is things two It's things. two

Robert Stevenson

stabilized Okay. projects it current construction I to do spread of projects? Is to to doesn't have us talk a guys over And peers then starting currently? think that a we you least at about yield some about under for on at MAA on the the Is it -- absolute does it how development not are anything new high you pipeline, sort your is mid Xs expected what's internally guys of get mean, that yield And the work comparable stabilized days? these acquisitions? that that going do how

Eric Bolton

product first the over it's Well, of XXX an think acquisition on tell the in quality about is portfolio, I X.X% about on Rob, which that we marketplace. you a similar yield today's has points can basis

Albert Campbell

we'd development we going the I see higher commented we're we want at that really reference to comfortable tell importantly, tell start assessing would and think yield. accretive more I stabilized that keep will going yields you really that we today, or be trend NOI the earnings yield a yield or I any analysis Rob we're stabilized we to prepared and comments between any accretive my as kind and today to and that looking on acquisition nature that the that actually comfortable the do earnings six you of by of yield on guided really And that And value fairly I asset. be would an in of be But spread accretive as or sort today made term to of company. not at with long that to

we six where of underwrite kind that's So of that. north

Robert Stevenson

the just is during under the six-three are that that Al And Okay. include does construction, currently that on that five four lease-up?

Albert Campbell

of than mixture still we are portfolio. but right so an a under four be better that and in it's ones yield have some it properties there, than Just lease-up, will acquisition higher construction a get low, bit The on some little now. acquired the

Eric Bolton

The other development. with there right it's five or the six-two, so

Robert Stevenson

six-two on Six-three Okay. the four five. and the on

Albert Campbell

Right.

Robert Stevenson

Alright. guys. Thanks

Operator

And ahead. Please question Drew from Babin our next Baird. go comes from

Andrew Babin

on sheet. of Al Obviously, balance for secured for lot year. maturities question next Quick a the

I and maybe still unsecured in talked would before quarter. those fourth year your flatter taking about think given need yield curve? possibly somewhere overall makes I any think potentially the out that there sense plans or with you the in offering Is the that Would like to extending anything a mixing in thought duration still that? XX be

Albert Campbell

-- in in right Yes. Drew. about, plans had our I Great question, $XXX QX. absolutely about million maturing We now, as talked we

million and that in of well want the about we ahead million $XXX have We may we XXXX $XX another to have get QX maturing half first in off.

activities. some to So And potentially you would sizable looking we'll strategy on take those. And are similar we push about pretty a I curve do think the keep given we'll that markets durations. your duration's for relatively help right open now XX cost expect several pursue we would our some replace the shape of say yield think that, us We the potentially that active deal. financing we thinking their that. assuming can we are and out year favorable and the at months. to of are And And next the over be a would you to pushing --

couple looking calls. to definitely have So next at and say of the hopefully we're more we'll that in quarters that

Andrew Babin

Okay.

that you swaps deal maybe Should be see sort likely the would the rate. be the looks we around, just -- today would year expect times like it that X maturing earnings? accretive X times to swap there Given spreads to debt of the and next

Albert Campbell

levels. mind mind what in our close mostly I value would -- a in say majority market from at value seeing in pretty -- has mergers market recently, debt and to you're keep pretty been that expense Keep of the fair current market our fair interest that's is rate so, already

had levels. absolutely, cash basis, be I because is We're similar mergers of current to a a rate benefit to at it cash think mark-to-market. our debt feeling two market a on a will on Now basis, we the lot absolutely us

Andrew Babin

assessments And the in property some and I and of you've how maybe one there assessors this the Okay. guess, question makes been negotiations taxes. the just both appeals year? I has mileage past just the and aggressive? different those on That on you with guess years later And the success rates What last municipalities this provided year. seeing sense. in did in go was NOI year? more benefit being Are kind just

Albert Campbell

fight this as we points right think got going XX pressure anything Georgia Texas, XX In very and it pressure now. the past that's we hard two got now. we is we've the I think, said we overall put unreasonable. losses We've in Texas way, --

this thing unusual really the think specific I was year areas. two

the offset themselves valuation. a mileage had tax take that across going significantly what mostly They do But very forward rates the the brought time. cross I'm Fulton amount. valuation part in a we believed, register. that second that put a and mileage talking range the in this everyone saw quarter. They You come for situation the out didn't down register down rates high out better believed, XX% level everyone in significantly in who put increase to raised to small so the Atlanta, and do and valuation position typically tax just County, they just maybe really that

so both certain they both. or -- pressure put late partitions additional can't maybe that it's where there in maybe on increase as think happened in for over had some fight or what situation a sure. it districts X% So was in mileage that unfortunately we the of that to districts rate fallout but is Atlanta. you And is in that from and X% It's XX% something districts, If their rates, next they some that mileage be have for to high the but have couple the over will have an even school year thing, in was this of it's years increase you do there so Dallas Texas. over share

But we and these system think of think it's of remainder we future work going a the of to through. some long reflect take certainly for the maybe a what reasonable we'll possible that is things year possible reserves adjusted way it's saying, and So work case. get to the lot our beyond some it's the to as of XXXX in we favorability

Andrew Babin

guys. Thanks, helpful. Great, Okay.

Operator

question next go Securities. from Mizuho Anderson Please ahead. Rich our And with comes

Richard Anderson

Thanks. Good morning, everybody.

the year. you So could development go next still to if Eric and I discussion pressure back slightly Al perhaps you around supply mentioned is less

You point than NOI. rising having are development faster rate careful REIT, to mentioned at in costs at be the cycle but the a this

as million. that can the to $XXX the rise type by can grow sorry, X next or million X% But that you things the all environment? pipeline plus curious just year you to how this much make $XXX get the I'm yet I'm you? you see development pressures would stabilized with degree think you in possible where I or around agree in well. those that could yields What's times MAA is X X% or times said of those that to it six work happening despite numbers the and two advantage

Eric Bolton

the infrastructure of are projects you and cases Phase mean, I at leverage staff in some we're it's of in-place in One, expansions amenities existing the the overhead communities, Well, and X. existing existing the where looking things. couple off of

an that then other efficiently know cost expansion had level are these you can think the existing to you sites and lower as margin the have land cases little opportunities. create over now. scale operate perspective executing in as better I a being basis investment think than our Two, we've a given if at an or it's able pretty probably on. stronger then some think we owned So we on and from And operating only history years gotten property will better of you that I that a on from I well

commit feel from project or that that, and sudden comfortable cost all I for side where on biggest certainly risk a a with you then then risk capital so guarantied not going level problem. run to to but deploy And all still contractor. an the a degree lot and that very fixed have we factors taking us the offers least sort been all at markets of And make price an probably in more of risk mean we levels those get development we come these are we me of those so say your the of case, factors the in we're the you construction to as is think executing with acquisition, started combination would a away in and take risk. and you I to our into we've contract in of we opportunity some an with deals numbers at in in regions ample together about. some the cushion that to I go we're ability of into talking -- in But create we that the put do markets the work are

Richard Anderson

Pergo as remember well.. floor Fake I Okay.

Eric Bolton

Yes.

Richard Anderson

to maybe is and not that that And value opportunity do Are question. of into next things add the year deals late starting then broken your correlate XXXX? if sort just of or year sort seen see scenes types to just yet? next down to or way an you those of come by back behind Eric, the road being for percolate

Eric Bolton

lot deals is we a mentioned, some bit. And waiting of trading I starting are volume people people are us and are hoop deal the a be any -- in to indication just things to around with strong deals. wings hearing that really as not early hoop these us hang that other is of volume the contract lot really We buyers around around there that jump The deploy sure, maybe about of around of there's private I to capital think, little fray lot think capital more starting huge a still estate. I But on are The I in to Rich, under deal -- there's and see right I'm previously. multifamily to high real course a very numbers challenge so. been the of to have hear now. now we that just used earmarked just -- on of specifically waiting the the do able as are sidelines

more seeing early that and pool So that. but But aggressive. little buyer deals think fall and opportunities starting pretty pick the hearing we indication I are think are deals the I is apart on pretty, up, still a flow the to

bit. So I'm turned see just the year, optimistic that we next may tide little a

Operator

question ahead. Please Markets. from next BMO go John with our Capital comes Kim And

John Kim

Good morning.

flat. that rents You trending or that better to Is sounds had It in have expected because mix? yield this due was quarter increase development a slight your been like than is

Albert Campbell

of It's it's that think common. had more really in properties there John. the we mix I of

to X.X% X% think the on seen. I deals we've yield pretty is that consistent

a properties a bit think of little I it's I mix a there. bit mix in of ago couple different X% and then think put little quarters there's different

John Kim

And I developments, think you but just the at to net sheet you and capital other in $X.XX with alluded this debt-to-EBITDA, in your redevelopments priorities can list these for your your to questions acquisitions? answer balance and remarks prepared

Eric Bolton

a redevelopment. money our without right Well, most doubt now, is accretive of use

getting that's lot Post as opportunity see of there. can. good capital. of yield is, into change opportunity So you much we're And now without going as where economics. really portfolio. push really agenda that continue it start news we to best push can't agenda aggressively you can far to a we we We're there's going redevelopment to the And that on -- But the our we're to as too and just push as that the some

that think looking of as development at that to we're accretively. the alluded out to continue after pretty deals some pencil I I

agenda. side. And So going that then pursue we're on remain be going the of but on acquisition to to just patient mindful that, to the risk continue we're

underwrite that the trigger of given an years. me come next we're particularly over pay The not accretion pulling just a earnings together perspective. now we is there on from appealing anything create growth for few and rent to that think now the lot, lot to two just a outlook is to an would continue have the We look the outlook right sort we and but pricing to

pricing we're there. dynamic just or for to something the and change so going wait on that to And wait

John Kim

new then And point MAA? the on blended XX Okay. Post also give and October. any legacy difference renewal basis legacy your versus in growth improvements, on and Can the X.X% leases you between

Thomas Grimes

Yes.

Okay.

So same In than better was both new the much was MAA a renewals. neck that X.X% XX Post October were on last basis year points. and the renewal and in neck on than improvement XXX points better Post X% last was on in basis leases MAA was pretty about and and And one. year.

John Kim

you. Thank

Operator

Bernstein next our with Daniel go comes One. ahead. question And from Capital Please

Daniel Bernstein

some instead development the -- loan sheet Hi. more to balance thought of Good on private own, of the the taking be maybe maybe to not in of point cycle? to flavor taking all the risk equity and doing risk the -- development on maybe day. off about the that morning. like any you something seems funding questions with or Sticking developers side this and sheet Have and at balance that's

Eric Bolton

We along of that, conversations working have the -- lines that much market had we're what the number about a in you with people we've an describe. and Phoenix of some opportunity currently

be -- these to with ownership felt are to needs funding always there and clear providing one and to to developer think with asset. come ultimately a things we We do I've the that for of I the conversations secure that pathway talk in focused the have as us we the wanted be on,

lender just so capital, really want not we deploying is what to think I do.

once we property the want control out. think at assets ultimately fully the the built that of I leased is the day and to end

working said, opportunity I together. a come that now as So kind those conversations. we're one right having number on we're may And of of

Daniel Bernstein

that on are in there a scale gain would right assuming particular that develop yield are that in conditions any -- you Okay. to that development investment Are of that scale to NOI, would particular or the market? be your X%, gain markets X%, markets in? would Some help want market X% of for

Eric Bolton

our so. Sure, But mean enhances to now. I why looking Denver in trying yes, grow at market, we given scale market right in operating we're that's certainly it a the grow our presence as efficiencies

have that one We currently, may one expansion point We've very initiated one other well project owned land both we've well quarter we third next under call, and on in -- mentioned trigger pull got that two at the got year. we sites in we actually in our Denver. -- the owned this

that find there. another the Orlando, high in any mentioned moment. So that is that of well. markets continued, of -- is lot a Houston, the those Denver alluding we've market we Raleigh, site is are we've our we on contract a list kind really market markets in site at control. to. They're that Florida target X%, X% a range there all got that a under of appeal the you're as in got

is those So all yes, markets offer create to more scale and and this little answer your to pursue efficiency. opportunity bit the a question operating

Daniel Bernstein

the some read quick But like we more of bucket question. and expenses of there taxes that terms up expense other anything ones. in One is that going-forward smaller much in know should seems went marketing Okay. I growth? that's It into sequentially and

Thomas Grimes

expect expenses quarter. a about line movements spent a four. it drove it be behind and back on higher more we little quarter to actually a expect and two and we'd the little of XX% in was more QX -- level during bit In Yes. and in in leads marketing But the

So through anything. REIT more just now on real than that timing

Daniel Bernstein

Okay.

just So normalizing?

Thomas Grimes

Sure. Yes.

Daniel Bernstein

it. Thank for my you That's Okay. questions. taking

Operator

Please And Stifel. ahead. our next go question comes from John Guinee with

John Guinee

price out forecast case. of played beginning growth Great. Every urban thoughts nine the at Thank and Any good. that one think of if MMHC on have About a months markets, greater you. the been A the seem ago, And And in at hasn't the I so research markets. you pretty top-line would maybe that the have that year the them REITs Orlando of my is point a to in revenue -- in doesn't than guys, quite research way? correct we for potential looking said secondary since had to the that lower year-to-date product were for listen B they're conference. product, recollection

Thomas Grimes

I'd be glad.

Corridor numbers. would it High Outside skew that's I been Corridor those rate. example performing Loop, experiences and Inner Midtown XX of affected a a Atlanta very the B more XX higher XXX at bit has Brookwood, The assets our Corridor has market. toward Atlanta and are suburban Our End, and much that little or give the the you and the Buckhead, perimeter pressure under

to pure REITs a at on A versus through And individually. looking read get so it's the hard B by

Operator

And next with go Greenstreet. comes ahead. our question from Pawlowski Please John

John Pawlowski

three better you or step underwrite Thanks. years When higher or smaller Eric your bigger growth know have metro metros or would a been operated revenue of two your we late. I metros? in growth bit little Tom smaller seeing the you

Thomas Grimes

the on in depends to smaller the the existing the robust you what another But supply. pressures think, as that it these markets over you're they're into level pressure more I as larger you have I growth smaller get larger then percent from markets a back think get markets environment a are supply, rent of some cycle point little more of seeing those tend time the cycle where cycle. going to growth stage And under some markets. they're seeing some markets that of bit to then the more the over of job time, larger have to where going I perspective of tend perhaps over supply quite think in current in the back where the be are the of you of not recognizing to pulled the a outperform see to stock where

in the cycle supply terms the are it in really in markets and perform. of broadly types cycle two different So on the you of economic sort depends where how of

creating a we that the continue little remained the struggle course supply larger pretty news think the over more. bit fabulous job are of But probably good next see I growth. years, think our I if to of will markets markets elevated is couple some

the so, performance it's is the supply you being the problematic really from elevated side strong equation is than more that might think. keeping the demand And of while so

a kind anything the than when do that's it's radically massive some or of happen, sort is plays environment. demand because interesting the markets things see different equation more me large is side where One on tend that's the and something recession really susceptible pause when do of big large -- a what change radically start gives hard of to recessionary to pullback just something usually that outperform that's the the to smaller to be markets of markets scenario out you anticipate. more always those If really much

I it's diversified each to segments to perform for to that just the two two factors, other be years on come better to ready whatever say three or than really and depends So diversified those will not hard over conclude but come. these be exactly other relative next may how

John Pawlowski

on equation market? side are I and any all headlines. sense. concerns Makes air know you all of markets, any of calls the for the the indicators backdrop you your demand supply look any these in leading time of And concerns, When your in the demand grabs seeing at

Thomas Grimes

But supply But can No. as We're is get are think B the point pullback. it At information We a hypothesis in goes. be for this what right I B not what our year number to momentum seeing on hypothetical. the going that more it more is. is the and steady now. supply feels better is growth any getting more good next is. But is a than job

Eric Bolton

rental sort other think of broadly favorable demographics housing Those are toward to to and you changes job single-family Yes. side equation factors also those affordability when of would think in other about not function all housing just only society but growth demand And and specifically. surrounding continue going factors and factors. that tell I be you being the the economy housing and the I of and the a apartment

expect I at what anytime about. something is think now as don't we job that's those to of say real So to next and I hit that this demand. equation but see degree right is hard demand that reason at one the to when the reason soon, think does it affect And going No side to think how pullback all. really and affected I any by coming it's handicap point, that we growth recession variable get that see the to the this

John Pawlowski

Okay. Thanks for comments. the

Operator

go our And Okusanya from Jeffries. with Omotayo ahead. comes next question Please

Omotayo Okusanya

morning. Good Hi.

way? your you of versus those For exposure year, used that you to selling think market that the your two do, Post I to the kind took markets over do kind -- at that refer still a markets if have And I thinking, most supplemental you larger possibly look pre years? think about to past guys I'm portfolio smaller you to you when there this your mean of secondary regards market secondary do just in not down you how some as maintaining about of acquisition. tend of

Eric Bolton

A last then now with Colonial, with consequence in of think and earnings of the As capital. really more in the really suburban submarkets transformation it's think interlude, balanced trying that diversified city. terms market in been urban, we've for way just Post the then or mostly B terms in to point about and think price of satellite market. diversification cater and starting balance really of We've it a a about -- about price sort different the recycling five And all and years a it through to point of in whether product the we

and And so portfolio that has our earnings of define think about increasingly to begun how we certainly, sort diversification.

for be of look these as some it's our age rising that typically moderating it's time. we a often reached driven translates tend older point redeploy at assets out we you assets smaller lifecycle, on neighborhoods think at I better look some had older that than reason. capital by in recycling rent it, assets put we've or CapEx into to age cities that to or the what issues got and often money whatever they think not more growth that and that some for factors in And it. And when have

we that opposed cities smaller legacy we see think I exit function of to any of or asset us to continue any sort that think have, may change as of diversification but just of really you about recycling some So change. as these that's specific more issues a strategy

Omotayo Okusanya

it. Alright. Thank Got you.

Operator

the remarks. ahead no time, back questions closing and for phone to put to are the it at there I any appears over like it would speakers And further this go

Eric Bolton

we'll you most NAREIT. everyone And see Okay. of you. I'm Well thanks us. Thank at for next week joining sure

Operator

you program. This Thank your for does participation. today's conclude

time. at disconnect any may You

Mid-America Apartment Communities (MAA) 1 Nov 182018 Q3 Earnings call transcript