Mid-America Apartment Communities (MAA) 2 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Tim Argo	Senior Vice President, Finance
Eric Bolton	Chairman, President & Chief Executive Officer
Thomas Grimes	Executive Vice President, Chief Operating Officer
Al Campbell	Chief Financial Officer
Austin Wurschmidt	KeyBanc Capital.
Trent Trujillo	Scotiabank
Nicholas Joseph	Citi
John Kim	BMO Capital Markets
Haendel St. Juste	Mizuho
Drew Babin	Baird
Rob Stevenson	Janney
John Guinee	Stifel
Hardik Goel	Zelman & Associates
Wes Golladay	RBC Capital Markets
John Pawlowski	Green Street
Buck Horne	Raymond James
Rich Anderson	SMBC

Call transcript

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Operator

Good morning, ladies and gentlemen. Welcome to the MAA Second Quarter 2019 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. [Operator Instructions].

As a reminder, this conference is being recorded today August 1, 2019.

the for to MAA. turn Vice Argo, now Finance President, will conference Tim over Senior I

Tim Argo

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

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

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

turn now the I'll call over to Eric.

Eric Bolton

Thanks Tim, morning. good and

continues benefits price growth positive lease-over-lease demand is is seen of particularly encouraged and trends portfolio, than this rent in both job with trends the to resulting we've from effective our higher and trends. what point, demand and diversified the and growth in across pricing as strong really combined expectation. our for QX climb, in We our benefits our growth operating in as line these the results platform are well-positioned We're terms quarter region to several anticipated, coupled merger the Strong of This a housing was driving X%, ahead rent to is of with bear is fruit strong capture Second higher our starting with were Sunbelt retooling expectations. sub-markets of which apartment in believe across markets. our our years.

growth expense from over past we've up merger years, a transaction, as the expense of couple than higher harvested seen QX what we Same-store year. our for this comparison more was in synergies setting us challenging

expense we However, yesterday's maintain full from operation, revise our on custom, a efficiencies focus did for slightly we as earnings driving been has into as rigorous our down you growth. will release, and our expectation year note

NOI of with quarter Overall, trends. in X% expectations growth overall and well second same-store captured as the ahead encouraged in the our original the we're

FFO year-to-date overall we our the raising well and and summer revenues, full leasing into net growth. we same-store operating Given are that income, season, year strong are for busy expectations the performance

change seen On level transaction much high front, a the stable and not few past from of appetite. the quarters rates with we've cap buyer

aggressive on our the back starts. we good complete while the funding to year level continue We this and, level pulled committed as our in expect earnings have investment increasing flow, remains development of capital. see to guidance plan noted deploy disciplines remain update, we new to we acquisitions allocate the We private their buyer in efforts equity to but to deal of to

plans You Arkansas Little we to month our by this and note the we year-end. marketing to exit Rock, five Earlier increased initiated will we this in that market volume. dispositions market properties planned also expect sell with efforts

Denver. new our lease-up properties the quarter During of at two in completed we

Our initial this remaining Charleston lease-up in located late two in should remain and Atlanta on and stabilize properties track year.

remain on under track. projects development currently new Our also five construction

we just yields these north pipelines. NOI of X% over of continue total a two to from stabilized At $XXX investment million, forecast

Denver in pre-development activities on land sites in Houston to also We work our owned Orlando. continue at existing

addition, a are close finalizing we Orlando. located JV In project development new in to

year-end. under by expect new these construction projects four to way have all at of We

over Before to home offices, associated big properties. associates regional to want serving and in at turning at our office, the of of and Tom, at send to I call our here a the our thank team those you each

Our capturing over challenging folks operating systems work have of quarters. done two working job the we results, in and forward merging a is last and Tom? The couple our years transforming the show long-established of tremendous coming hard to additional companies through large, opportunity over look starting the to and process two programs.

Thomas Grimes

Eric, everyone. and morning you, good Thank

original performance and for operating by demand expectation, platform. quarter improved Our second strong the and our the driven than better strong was

trends. momentum daily strong continued rent have We average growth, improving in occupancy and

rent improving ERU Same-store Xth of was for quarter. quarter the unit per the growth. X.X% straight effective was growth This

the As our XX year-over-year revenue growth XX a rate points in rate XXX The been largest first and growth the since increased it's exceeded quarter rate revenue The of revenues was growth highest revenues sequentially. quarter in result, our XXXX year-over-year the markets. was of acceleration basis widespread. the second for

blended Dallas XX%. on blended up in strong great As raise, daily signaled recently. average we the a Atlanta, Even basis points XXX during particularly in improvement traction time been new our at but is Blended acceleration they is momentum line last quarter, X% continue. from impactful. led were were prices and expenses this which and blended by to pricing. pricing have higher and The Austin, than lease-over-lease with This lease-over-lease remained the this guidance, Operating renewal steady for occupancy rents Charlotte, expect by with guidance or better year. the than quarter,

expense management comparisons the of now the now As we expense more and are difficult. calls, X.X%. we growth prior have mentioned the the Year-to-date is on on post portfolio captured have platform benefits improved

of X.X%, same-store year. expense July. ahead well rents were well X.X% annual which lease another since the XXXX has for blended sector in The a below into just July track strong operating posted been As growth last lease-over-lease on our We're X.X%, month pricing. continued reminder, blended over favorable of the average. July up is trends lease of

strong for the a year. XX at occupancy XX.X%, July points last Average basis which was continued month than higher of daily

basis is a X.X%, which exposure, just units is and which than XX-day period notices Our time all XX points year. represents this move-outs better last vacant XX-day for

through the is X,XXX track of of quarter, average, on keeps XX% spent in $X,XXX year-one a front, we units cash-on-cash This capital. second excess X,XXX and units, return approximately which On unit in which in completed an XXXX. XX%. second redevelop on best achieved rent, uses to us generates quarter redevelopment our the one the about additional around Through of we per

units. pipeline stands Our in neighborhood now redevelopment of to XX,XXX XX,XXX total the

expand. technology continues to Our platform

engage, results are evident website our our our for The and operating system overhauled aided blended have residents. value in Our new create traction. in to pricing ability attract,

customers. Our tests technology received installed with has are minimum homes smart on going and by The our disruption well well. been

a to new and We apartment our are platform. continuing customer resource tools. incorporate look AI, range management, operating the prospect also chat, to engagement space and We're forward excited exploring technology of in the innovations about into

Our have operational. the teams the growth We're in rear in and and mirror. with Al? are pleased momentum transformed excited to the rent XXXX to view work encouraged platform fully of our XXXX have

Al Campbell

FFO of embedded guidance the of additional per the to derivatives share Thank earnings everyone. on finally provide our non-cash and income year. the for then updated in remainder company's preferred the some our sheet $XXXX the I'll activity, quarter share quarter you, for second shares. per and of related morning balance Tom, included second on good performance, commentary $X.XX

continued was the this the primarily of share was mentioned, Excluding was our result operating for strong Tom FFO pricing during item, quarter above guidance. $X.XX year-to-date. as performance $X.XX to of related the achieved which per the And favorable quarter, and That midpoint a performance. lease-over-lease

projected strong the in same remainder X.X% operating X.X% XX growth of points to quarters NOI combined X%, produced expenses with store continue to for growing and combined the in the acceleration Our with pricing is growth. basis occupancy for the the growth performance X year. highest which over of continued performance, drove the revenue revenues quarter a This quarter, total is

Additional year. expect couple the pressure real valuation expense Texas, primarily in X.XX we and information continue last real growth to over full range for tax gain tax Atlanta, quarter from the through X.XX the of second Georgia, years. work estate increases as to significant We now during confirmed estate

half this the of for allowed midpoint year the performance Despite year. expenses the full strong same-store first guidance the increase, to lower in slightly in expense our us overall of

make toward the progress million development additional lease-up of current continue completion on to our during We portfolio pipeline. $XX an funded the development we our quarter,

and currently as expect million. We with $XXX Eric projects projects now two year around we have million these we later fund of cost remaining complete the under year of construction mentioned, on four to total this this communities a estimated $XXX fully new begin to expect X to and

completed once X.X% We our leased expect up. yields X% projects, continue to and on stabilized and fully between development

and due credit extending financing front, the loan, fairly the $XXX completed second of quarter X-month was $X paid were, facility, our until During June, million the which unsecured billion term active on renewal XXXX. were we off maturity in

We our capital paper also costs capture routine quarter commercial during program to working lower borrowings. the our on financing established

commercial credit and our facility. capped fully by borrowings Our paper be $XXX backed will our million

which low last total sheet end, and used company. further And rate strong. rising the of low of or is in maturity balance our of balance an fixed few had remains rates times. quarter with Our for total protect the below high we to environment XX% debt proactively Leverage to remains we assets average sheet. years debt XX% to years, interest debt eight against hedged and EBITDA our five At our historical almost

capacity of is the also our We of cash had and year. current our $XXX credit line leverage-neutral under for and over million forecast funding

$X.XX increase guidance operating a strong based is $X.XX remainder projecting for as per performance, Finally, entirely half a our on our year. or a FFO now $X.XX we $X.XX performance. for for to first We're midpoint, range are of which projections be year per the and increased our well of share to of same-store full year share the to the per revising FFO share, at previous the in reflect as full the guidance, updated

interest projecting earnings impact of valuation rates, X. on Given related later primary changes the we're the shares the valuation bringing full preferred to which reverse our the preferred the to volatility favorable driver to year, in is of year

X.XX%, from our performance continued XX midpoint, our are first revenue which year of X.XX% is the increase full the at same-store a to guidance. of we the the range previous strong X% or points guidance to revising midpoint half our With basis pricing of year, for

for This year. taxes, in range though midpoint. for for year, will our above midpoint performance earlier, or estate X.X%, or X.X% expectation we the range continued the which of to now initial expenses total pressure be points in real X.X% the a mentioned full from same-store expect at year full project X% as at the basis the we is to XXX X% produce NOI And operating of X.X% to a

turn the you now have back That's we'll we in over questions. all so that to call of prepared way comments, the Aaron, for

Operator

[Operator Capital. question We from can first take Instructions] with Austin Certainly. Wurschmidt our KeyBanc

Your line is open.

Austin Wurschmidt

Hi, continued same-store good or that at year. July Tim, growth highlighted discussed Al, revised on expect or basis, the Occupancy markets, you above a second your Tom morning, assumes I'm year-over-year in guidance acceleration consistent the level everybody. sorry you maybe, last achieved in up a rates Tom lease well with quarter. is remain or but stabilizes you you revenue what

what So or is in same-store are back can half growth in you just drive your stabilization could see year? give the revenue us of you that the the pieces moving it

Al Campbell

forecast- we wants start I'll can if to. that I some add is he this and with the about Austin, Tom think, if and think Al,

be the trends trends, think that it proud I to the we back but about half see we and the the have over that first on what pricing. we good occupancy of in aggressive half give to really think in due expect we pricing remember is, points about we've and up expect dialed seen to basis to we're continue to XX continue remaining to have will

ahead put we think And have so season slower of leasing all I and given together, that the us. obviously

decline will we quarter, Xth traffic Xth think into get late quarters. the Xrd as I and

a you I I any think if we have all feel good we that. don't that feel in we about that more. together expectation and us like tells know good have place

Tim Argo

with growth say, Yes, make I ERU that. pricing on to I'd blended we'll continue month above progress in of another X-X at just think the

Austin Wurschmidt

peak you perspective? month a typically from do What seasonality

Tim Argo

where we August now, the year in year be be. Last peak July, May. and would peaked too to say This will right early

Austin Wurschmidt

done year analysis, Okay. Based front. supply kind first compares then half curious But the the lot for supply the just last how that a guys of half? refined one work And of have the me. back of in on the you on versus

Eric Bolton

half. what Austin, you the the think would we this little the, we of that is in first year saw levels probably higher tell than Eric. the back that bit I over are half a the supply

see a shortage to really of lot have that processes others with of a processes. right in oversight continue A regulatory done, cities the these get these evidence and of a of coupled lot occurring labor the We our lot construction combination that now. of construction to backlogged inspections cities delays

seen expected and this have the year first in really we less half we come than over just a So supply delayed. of little that's

mount also the the that all the levels, deals supply a unlikely. I at getting we're I a by usually that fact we're continue that, think around bit think now period is to mentioned. just just I a point said it's am high, in We going on I in reasons I where continuing So little supply bit, right pencil. to the fairly little for to delayed be moving we're a comforted see it's given to a material that think are Having increase challenges

detailed than little saw this the our think year So we to later now, a as we guess this you if first I this half half bit back will more complete analysis. over as tell of that, that higher of year. just I XXXX a right have that say be lot to what more the about I had consequence year, a it We'll would of

Operator

Scotiabank. And question take we from with our can next Trujillo Trent

is line Your open.

Trent Trujillo

Hi, Good morning.

to following of previous the lower second have about your your going the question quickly you think dynamic half figures shift on is XX% in in disclosures, about impacting Do updated how happen about year about higher, have supply in and the roughly. mentioned supply Just there XX% change. to earlier you would X of was your NOI? up that same, does at with the NOI really That supply Austin's supply

Thomas Grimes

don't stuff, back going lot tell is a a be as numbers budgeting you front way on to the just little over of percentage is to the going our the to detailed lot more And going percentage get in we've under seen be gets later What just have a but fall. shifting that the this little I higher. as that's it's process But bit I around of I the a would specifics little toward And the of that is put tell year, this me. here as those mentioned, more course The I would you, of take the a that going Trent, doing better is in part we'll that analysis I get are, lower. place of of to bit half be worse, delays the say some year.

Trent Trujillo

that appreciate forward next look and Okay, I context to the update.

your Why in pricing to and like that terms decision relates are and deals? cited it As you're other exiting completely. market that considering guidance, given dispositions it strength markets Arkansas you you're making are the exiting you sounded of updated are

Thomas Grimes

in CapEx with comparing fine may be built prospect and Our sort strategy long-term that growth capital. be around starting an to or considering of of to surrounding that is, not that we really able almost growing what might asset, asset the age is really that may and alternatives dispositions value level requirements

we've began been an five we of years we, our properties age roughly the days since of there market, As Rock's our we old. XX in that average about Little have that have IPO,

just the So pulling these life that just or like market out think market, out exit out we the need the market. we reached better in altogether three are that size have of a And assets to assets of. felt versus we to their rotate point that two of cycle, given

drove So that's what that. on really us

this Going every been approach, our I at will forward, as we look mean has year.

of some lot as of forward at be will we year. to every a strive in an going tend of that our inefficiency we assets into that smaller look from of capital out next have, older it important have it's where And our the we There'll out year. some assets cycle perspective. also think be we older that of bit to frankly, markets little turns overhead a I

couple up the over you'll So think to of to work clean see that years. next I us continuing

Operator

our And can Citi. with take Nicholas from next Joseph we question

line open. is Your

Nicholas Joseph

Thanks.

basis. the your It's within to trend an on back does strong of absolute spread year? last for lover-lease year expectations going that lease this versus pricing. But and Just half obviously back how year-over-year

Al Campbell

Nick, This Al. is is this

we look spread half over great couple the of seen for Tom year at think the have and a the for reasons, I last back talk a and of momentum a lot to as certainly lot of we quarters about reasons the of that.

a think expecting I we at bit. half year, look the when the spread to of tighten back are year-over-year that we

season basis have total Primarily into you softer look to remember the related, the XX moving leasing the more as leasing that, still we challenging maybe when point and talked season, about you've we revenue, at and or occupancy. got

in summary, hope but We on. tightening. to we've what outperform So think it I plans continue to that's our expect we that, outlined

Thomas Grimes

to to legacy market with coupled occurring year. coming just I side would think it's some trends emerging that, out the add lift the a post some just really is to a to now And and dynamics degree more platform of operating right of some as stability began now of little the late I is of combination those just that some that properties. the of it frankly pertains bit of on we last early locations see

basis. year, Al's that we'll of I suggesting, And little see will as compression a a support a what that consequence think that going so now further on full that a year-over-year of

Nicholas Joseph

Thanks. basis go spread back where the was the If in it in half? XXX second to points that quarter, could

Thomas Grimes

is we in challenging, to over we quarter, a I which prior think most spread the the tight your kind what year, expect. fourth be expect pretty is of

continue what's is over happening remember but lease-over-lease happening we lease important we're and the what really ultimately about consequence six momentum per or momentum the here, in drives what's to release rent with that, months. again now that that so that matters And talking has that's, last frankly of that's with really that as which a revenue. five will And think ERU unit, been effective

Tim Argo

in And as the certainly guidance, contemplated see. you

expected math and on for is the You can quarter but back and half. X-X Nick, a year-to-date X X do year, the range average revenue that the for

have But the that, we bit gap have narrow this trends to we in over So trend, of get the into a portfolio. that, playing improvement so that we expect to a prior end the still of strengthen our of just year. to as the year terms

Nicholas Joseph

Excellent, thanks.

line? Program then funding the you the how CP perspective, balance expect use about So the do short-term and a of from using think versus to

Thomas Grimes

put it, day We've program going borrowings borrowings and got of it would of we're all, you a our we first and the we one little can costs to sort of But do done at way strength our using lower discussion happy the to ways to have of and and that same of the them, in, essentially and we're line cheaper. its the credit. on end we just use that working that targeting. as do put it's on mean that just tell the think the we're is to borrowing use of balance is we our that we're I sheet it capital final

see up, stay go of and And paper to you'll just our down, credit credit see zero. of like closer you commercial come it seen so the have would you'll will line our on borrowings would our line we

comments, our sheet. we're savings marginal doing increasing, We maturity extending in that pretty we and the think not out. because of average about you our And we're so debt, the we're so taking and strong not we're significant on now actually, to improving it level some little balance just we've gotten debt talked that, there's using

that's that feel we we sheet how your not program. risk we're the use getting Hopefully savings, that adding or to balance question. where expect and answered So cost like we're

Nicholas Joseph

It does.

the in any line case essentially the the on use is side? as backstop you'll a CPE Program issues to there ever So CP

Thomas Grimes

we're And your to our fully paper a cap right. going billion to stopping borrowings line, $X commercial of the that. with have Exactly program $XXX million, capping and point,

program So or we haven't, we that see no to risk. risk low

Operator

Markets. our And BMO Kim take from will John question we with Capital next

is open. line Your

John Kim

at looks rate because your this second midpoint assumption in year, of in quarter, least probably the quarter like for Xrd will get Xnd how got On achieve X% quarter. lease the growth what first you even it X.X% realistic blended you. is did you quarter, Thank the

guidance, need huge you to on even you So midpoint to down just a really reach comment about of the drop-off X% you if can your have that?

Thomas Grimes

be a that year. to We think do as think the I pressure conditions and a half very be we continue of the certain things see half supply of do the we've couple first about it's some ago, going conceivable. to Well, degree, it's of consequence what markets bit We we competitive. market that little that a a year of see in at back in to in talked what delay locations is certain more the supply that moment

with to into legacy that performance some the momentum lease of I as recovery really get last our lease back a bit, the So the of the lot coupled that that, factors being second thinking in the year. little over think here fact, of post half was place asset locations. And on began the point a taking and we said I

trend the now come year that improvement full we get a little full tougher. bit As will on comparisons cycle,

think that regard. lease-over-lease little just of couple a the challenging more that I you'll get So in reasons comparisons see bit a for

Tim Argo

to good we a a part comparison compared just that you slower we've model moderating past, traffic typical to will we but the fourth have And blended is lease expect very to quarter in of the because expect common and year, business our expected in in our, and over things that seen our our lease that sure prior is business. in it have of add in make

that in I think occupancy decline get that that that when to points your revenue. total you drives built a plus continue basis pricing think XX the about to to, we

Eric Bolton

year-to-date Yes, through midpoint lease-over-lease X.X, we I I'll add June. X.X the John. of our pricing mean are

a six it's of the half. full months growth lease-over-lease it call the back strong, still X.X So pretty implying

John Kim

wide And portfolio is there rebranding? any update on the

Thomas Grimes

into about and talk substance It's to about continue point. refine that something work we of next at Nothing at to as we and say We'll more on. year. as really look this go to to we, have

John Kim

event. XXXX of more It's

Thomas Grimes

Yeah.

John Kim

you. Thank

Thomas Grimes

Thanks, John.

Operator

our question from next Haendel take will St. we And

Mizuho. with Juste

is now Your open. line

Haendel St. Juste

morning. good Hey,

investment So on a your question activity.

capital full-year versus by of your $XX improved you here the of despite year. acquisition an lowered start cost million the So expectations

it quite And reached levels given pricing with. comfortable has sounds comments market like your earlier, you're not

here more So an may on Any opportunistic Little that rock exiting opportunistic markets perhaps beyond consider what's mindset dispositions? basis? other a your you on

Eric Bolton

Hi, to Rock have plans is for I Haendel, dispositions. Little limited and Eric. is the this the we year, our mean, focus really, the

think We cash we about continue ways it to continue our asset that looking for covers the to deploy in to to capital growth triggering, free flow are that and. and between capture sales

I mean diversification, broadly, And the larger to markets. of have we we like the some the the so, both in we footprint, some and our between of portfolio. like like We smaller balance

just nothing I how be combination and So about always think think should portfolio or do be that we what that changed. supporting asset to and to there the fundamental really today growth needs for our needs capital is of composition new fund It's Just effort. we that altered part a sales needs growth, of a be

at the moment, that other works at all we built, need seem asset that cash balance capital, proceeds finding to flow cash right be the coupled development of pre-purchasing redevelopment it sales, on when some uses to the we look we best we're doesn't doing something sheet, keeps effort doing at the that free beyond as JV what in-house do. from the really to of kind be doing. have, moment, so and opportunities generated have to that doing just the the as something the development of the are And strong than we're we capital we in deploy with essentially and and that anything the We're were we're well now centers

Haendel St. Juste

acquisitions it, Got commentary thanks more helpful, got on Eric. land quarter. the maybe it, the And in some

track on Huntsville late in Orlando like start. Sounds for you're XXXX

mentioned X.X. previously in I think target yield development you X, your

how cap pipeline in on the for to current to curious some specific those markets. how compared I'm underwriting the those overall rates two compares yields projects then prevailing So maybe those and color

Eric Bolton

that Orlando. mentioned we an downtown Just asset be the in in Huntsville. site a land clear, buying to hunt did was Huntsville, not sale. We're buy you But

to our to based latest we've that with We X continue stabilized underwriting that to range. the deliver we're on and that to be to those, others believe that's along forecasted and a start able going property yield is that X.X

at effort what that we're is deploying manner that the look a will, value-accretive we take the, in of in an capital a that make we cap look rate One at we things to that management is basis could, that development if the we're today's make fee using regarding assumptions looking at, what a we is new and all-in be. then and to delivering, at going CapEx rents, are you will, sure

And we spread the at where today easily. versus market a the points tee this start think to or of And if year of to an in up trading deliver today, out into are we're these a one add. can cap assets asset the properties terms market XXX rate in every more fit basis we that's looking that value that hurdle

the So are doing. we we still think development with ahead that it makes sense moving to that continue

Haendel St. Juste

growth what the, and embedded for yield assumptions the but rent expense that within are growth stabilized within for clarification, protection? Thanks

Eric Bolton

you that assume always you anything, by by rent some units. or be when market, And of year it, to starting zero get down guess, a it by may kind Usually what will we know to course to the deliver we the growth X%. it in to X% will again if t effective X%, less. or project, delivering X% of first very assume two. I brings year actually the time And in but bring vary lease-up we factor that we first concessions into units, we're

location. to where,- leasing normalized we on concessions it particular can and get X before X.X, depending situation the the stabilized period a get then in whatever, be the and during market. fairly you the lease-up of modest assumptions on So to off construction is a burned Depending obviously into more

Haendel St. Juste

the expense the On side, locked fairly trending any or cost in? there

Eric Bolton

that during the first on mean the expense development X.X% in during, at consistent mean, growth pretty start period, kind that year of and modeling rate day two I We usually our X%, one. we or to revenue I the in generally trend our rate. growth exceeds

Haendel St. Juste

you. Thank

Operator

question And take Baird. our from Drew can Babin we with next

open. Your line is

Drew Babin

you what if Post guys one on for for important really hoping This just Drew, hear those in and break us. impressive curious the year-to-date? performance point. assets Dallas is MAA given you is Charlotte morning. really were and on leasing curious is could flowing this Atlanta, to performance markets just Good We're the and the Post at of P&L to and one quick are position Alex down the through legacy We

Eric Bolton

I they're than Post when a for helped X.X certainly you basis, Austin, overall Blended Dallas, movement Yes, so great helped last Atlanta, America like us. that's, X.X, the and has year, the take Mid Charlotte for but an XXX just in mean is assets better deal. on points Post Post basis is

Drew Babin

helpful. very That's Thanks.

Operator

And next Rob with we take question from can Stevenson Janney. our

Your open. line is

Rob Stevenson

most Tom, or of see among pockets the do sort your of where of are markets you outperformance guys. morning, level outperforming smallest this weakness major your markets? expectations, Good but of

Thomas Grimes

we and well. I progress of Rob, The expected those is, than sort doing you look got. than are know, really it's weaker Dallas a of those numbers expected We of I blended markets can mean and being fairly you at sort still it two the the we there first a moved both half of say, would pace. along comparative a Orlando. were out little are at is And they but good Yeah, weaker, pretty, just were little the Houston that year more in

Rob Stevenson

redevelopment per-unit were You Okay. than And unit the first in quarter? $XXX low the cost lower the why quarter. was then so per second about

Thomas Grimes

change on but I whether shift renovate, with lower cost time did just comes where changes high than on more mix it real it strategy Rob. this real no mean, around. and But no it's the It's availability again. it, we just a on likely higher depends will that, just it,

Rob Stevenson

So you skinny redevelopments? did

Thomas Grimes

block a your again, say sorry, there little bit. I'm

Rob Stevenson

or and were, kitchen into and of not and no things bath, Yes, That where that the bath mix? nature. you so-called did a no factor do kitchen so just redevelopments, you skinny

Thomas Grimes

our No, we didn't, we didn't change there. strategy

just what the which turn Just, difference. units to or generated

Rob Stevenson

Okay. And then sort or last the that one is a for me. amortizing derivative is numbers, preferred Al, one-time a recurring that thing? item of

Al Campbell

but happen nine is because recorded rate it's will on and you built have volatile It was what it asset Rob. it the that, balance initially. time years, that's amortized, an changes. Yeah, primarily to up slowly for slowly, going we know, of more with off, in the now will about very be interest over sheet will amortize favorability

no mean there's it's So us. our frustrating change business. in cash that, I really, value it's no

favorable who we rates we But what we the in this that happen. our like out. to just going change knows take very amount related guidance, you what's to in thought had saw quarter do, We purely volatile, to interest a that as

how in That's took prefer we it so guys we out it, zero we quarter, said this earnings think And for impact the $X.XX Xth about Xth the that's in and it. favorability you has year-to-date quarter the year. the of really think about on way we

And how do so of that's it. kind we

Rob Stevenson

thanks guys. Okay,

Operator

from And Stifel. John take Guinee with our we will question next

Your line is now open.

John Guinee

podium construction Great, you nice I'm think now, the got to phases you you've strategy lease-up, thank you, what and in quarter. about announce were more said at development mostly your to movement could some in and at on from away under Is X,XXX right S-X. in I there more industry and number. high-rise you see Any units four you've locations got looking is and secondary then addition and going early trends, and what garden, where reasonable comment more maybe page be a move wrap on? into into land more a Because can acquired throughout the trend? we

Eric Bolton

more locations we of begin right. less garden-style are mid-rise out in will downtown the these seeing you're I one city-type. in of satellite John, later Development wrap think that cities and/or or year, this of Orlando. four projects think I is area and some suburban suburban downtown,

and Orlando. market other Denver out in three cities in The are satellite Houston in satellite, and

you're think some right, to, more just the more inner capital locations. you're of some away the type you're think I from seeing city So migrate I of

John Guinee

comment any to return versus terms you're right what now? of cost wraps you getting, a in better it see where podium, build on and And

Eric Bolton

now. is park. wrap little bit to going us a but for right better, of mean the locations be three that are surface I we're looking at Usually all the

course impact. it a cost varies we, the make as tariffs bit. are, of So of are a little an to numbers bit start some other impact things start around the the In to moving and

Operator

our Associates. question from can we with Hardik take next Goel Zelman & And

Your open. line is

Hardik Goel

quarter. guys, for Hi my nice Thanks taking question.

or think maybe before January I in guys, March. was, You it that

margin maybe the put you term? your longer it quite do go, portfolio over today years, Post the of and to next expect spread just You What legacy and guys there. that a out spread the where portfolio, for the was and couple MAA is

Thomas Grimes

now, have that front it moment at would anticipate right I mean but don't margin legacy tell will in us point. the we you, Post the, of I closing. the where We it margin MAA on right is at fully gap obviously some the is asset Post margin, the surpass legacy

through redevelopment the as what probably couple expense that, the gains ready work lot I that got and close portfolio. its that's are a way another the We of from and continues help of effort think that, gap. away to that we're years

alluded great I over now, the more or Post on work As pricing seeing and year to of next legacy to will gap we're so. that out continue think momentum to, Tom's the it close is locations going and

then side ultimately that the to I the when rent And it kick one higher average We basis will, compelled some the that you there will that the next more in, things merger what the than years. And is transaction point surpass opportunity it $XXX of it. XXX it per had over side, redevelopment look itself, a portfolios commanding, MAA couple structure emerge MAA of two was will, that us by point the but legacy was continues an legacy think continue that there. margin. operating month knew recognizing we'll on commanded Post see to yet mean, that is was I at at was locations

Operator

Wes And Markets. with we Capital will go next RBC to Golladay

line Your open. is

Wes Golladay

guys. morning good Yes,

to push are look the your of you the year, any variance a risk, biggest causing may end would sub-markets we know, offering to stand seeing a in half developers available second to maybe As as of like forecast the at any rate, and the not from ago? the lot that even, years of that, uptown out few be of we concessions sort year occupancy Texas had not you

Thomas Grimes

a that right exception in kind of this the any Wes, year, in is I'm I now and first, an edge Uptown think it see we market, it cliff at seasonally, always of on see off half supply happen places. and of pipeline I I taper leading over most to That pricing of point. but the steady market the one going as trying the think and does as think us in pretty don't hit deal will The I can't. back

Wes Golladay

progressing Dallas for you? Okay. starting year? to supply markets? Is as move gradually And we the different how improving through is a now to market get Do you see next

Thomas Grimes

I but progress It of is, there. system. making better there Dallas the mean a fair through competitive, we supply is is The, moving are amount

is pricing points. XXX basis as a blended Dallas So group, up

and we're uptown to excellent, demand demand for well, but intact Dallas, the we So like going . handling But we're made is progress it to in need particularly in stay we've continue. to that

Wes Golladay

residents? to and then just portfolio new rent trending is for level, income how the Okay for

Thomas Grimes

and It right hasn't very, steady. XX% It's and there very really to range, budged. XX% that

Wes Golladay

Great, thank you.

Operator

John will Street. And we take next our with Green Pawlowski question from

is open. line Your

John Pawlowski

Thanks. think Eric, Arkansas do what of portfolio could type fetch rate blended on you the cap sale? you

Eric Bolton

but You see. market I mean the range. something know, we we in are I the X.X will anticipate right now, in would

John Pawlowski

the same-store guys anything on concession XX%. Are pull? Okay. your missed I front this. different if Tom, you doing costs up were for stabilized apologies Marketing

Eric Bolton

the ramp cards. being new to appreciate half trend marketing. one-time and that to platform. for asking It question, of that you and for down No, the some asking year is related Thank of that. to John. that had to occurred way, last in we with, normalized We never address over expenses Expect me our more really the range that I gift are not, that marketing not you

John Pawlowski

and coupons, gift it's not -- cards, not Not

Eric Bolton

none let those of will do any those It Al of things. me things. is

John Pawlowski

you. thank Alright, Okay.

Operator

take question open. James, from with And Horne final will is Buck our your Raymond line

Buck Horne

appreciate Hey, thanks the time, for it.

I guess the from Just the against about tougher know year, a operating the following a those a more here. I property more Post comp know bit last to savings have guidance up I were achieved out I operating taxes synergies but a savings the kind at an I'm expense weren't question comment sustainable control level and those why been your of you're and year-over-year on why on understand expenses, little overall And year-over-year of but weren't degree basis? here, historically, elevated is sustainable? the wondering, that just level

Thomas Grimes

They were sustained.

point into I think will, we if you is, system. efficiencies, our memorialized that now, captured our they mean are I those

of we absolutely much believe came years that synergies in And so intact. margin that we the the improvement the that last captured that very is from couple

cost some, and taking and material, apartments some have that and to rise, rework it's, the we think just I have ability some for there point place captured did offset line level but I staffing they this these is those model really that seeing much or some model inflation, how wage on it's already to to the taking mean, see you're rework you're so turn that not material so gains inflation we some don't the is we to year the year gain other there, how degree, is items. seeing been we staff place of our that, rise still last of we and in are maintenance

much point that gains years absolute certain last the are But, that over making. very we made intact. we're really have that's the for but So the

Eric Bolton

mentioned, some I'll other average, that year one X.X% that things taxes the the is on we've X%. control this pressure some is has half year a expense to good that. been this the the of on Tom will very bit book, to little are In know X% the lines moderate our history in from as really us expense about seen and you real long-term of going of a and estate and back of get is

with we remain impact term think I as stable. X.X% range moderates that taxes So long rates couple as hopefully from still a the a years of next expect short-term over cap

Buck Horne

in in there? rates there having but cap earlier your compressing things improved you're, think reduce and with competitive appreciate be capital are suggest much. of seems little were any how and you're extra it the competitive call of there, have you on may the real if the bidders out mentioned that's very I color if like stable it I seeing of that you how to and very cost yields just It in you a to the guidance. is if just And you're color, helpful add how can out quick thoughts Just, acquisition just reduction, guidance bit just what might that competitive maybe wondering out seems Now, are? terms there

Eric Bolton

I do compressing. are think yields

at return a terms compromising some of line underwriting per them, yields a to they a other point that on deployed in aggressive earlier. shift perhaps growth forcing or to think the material as modest don't get capital se, their they're a that that for lot think they're efforts of or consequence there either we're than where hoping are that been private item of much a on they seeing just I expectations, I of other more they're bit. little cost equity in has equity of by I we assumptions they a are getting mean, get rent are, capital more the

little So bit. yields I a are think compressing

Buck Horne

you A days? chance think kind Any Southeastern is these could for B you going of Class Class markets quantify what and or core

Eric Bolton

on it's, X I mean Class but the routinely to compressed older range B is are it's we're range. seeing on mean of bit, the the X.XX X.XX in X.X trading in A I be cases lower Bs. rate, good in asset some to may cap that It a assets market, than depends terms even

get of that's see XX redevelopment a where they're you after sub cost, you aggressive go a big trade opportunity occurring you'll upfront. out asset the at the is a where a massive plan pay they get time year some is XX do a activity the I old they'll think to returns massive growth and a see and result therefore in to think cases, repositioning X, in lot and or as they'll and there rent If upgrade

Buck Horne

Great, very helpful, you. thank

Operator

take And SMBC. Anderson from another comes will with we question. Rich It

line is Your open.

Richard Anderson

Was call a the it. on all rent thanks late. at of Hi, brought on I for taking control up jumped yet? topic

Thomas Grimes

No, it not, Rich. was

Richard Anderson

It's do down and in if any, terms have And coming your have in California be to defend? item that could you through New pike anywhere. curious big that of something of you question I percolating the York. guess that just news so portfolio any that's I'm happening is the

Thomas Grimes

alert little much we've housing to seen but lines. there, be the any In we're Right, are very in out Denver, do along our not think conversation no, seeing taking really any with honest of a those affordability. markets place I to that are you, we happening issue dialog of growing

closely. requiring of rent in kind limited part new and throughout of the attuned that development markets not where the component most terms of state is staying we're be our to charged can up see have the we a they associations that certain percent point the the For is a to of we're anything that lot at units do, be something certain coming something we actively it's all very and very starts local and this watching closely see what being talked beyond about. associations But to apartment Southeast affordability and issue

Richard Anderson

That's I great. Okay, all Thanks have. very much

Thomas Grimes

Thanks, Rich. much. Thanks so

Operator

turn like conclude the I to comments. does for Q&A the would session. back presenters to our program This any over additional

Tim Argo

Nothing else this everyone right. year. Thank on this everyone, All you. our I'm end appreciate will later see joining sure us and morning

Operator

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

any at disconnect may You time.

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