Mid-America Apartment (MAA) Beats Q1 FFO & Revenue Estimates
Zacks Investment Research | May 02, 2019 08:16AM ET
Mid-America Apartment Communities, Inc. (NYSE:MAA) , commonly referred as MAA, reported first-quarter 2019 funds from operations (FFO) of $1.58 per share, surpassing the Zacks Consensus Estimate of $1.50. The bottom line comes in higher than the prior-year quarter’s reported figure of $1.44.
This residential REIT’s quarterly results reflect growth in same-store net operating income (NOI) and rise in average effective rent per unit for the same-store portfolio. Further, during the March-end quarter the company recorded the strongest year-over-year rent growth of the past two years.
Rental and other property revenues came in at $401.2 million in the quarter, outpacing the Zacks Consensus Estimate of $400.7 million. Further, the reported tally comes in higher than the prior-year figure of $386 million.
Quarter in Detail
The same-store portfolio revenues increased 2.3%, backed by rise in average effective rent per unit of 3.1% year over year. During the first quarter, the company’s same-store NOI increased to $251.8 million, registering 2.5% year-over-year growth. Moreover, average physical occupancy for the same-store portfolio was 95.9%.
As of Dec 31, 2019, MAA held cash and cash equivalents of nearly $44.6 million, significantly up from approximately $34.2 million as of Dec 31, 2018.
Furthermore, as of the same date, around $967.2 million of combined cash and capacity were available under its unsecured revolving credit facility.
Portfolio Activity
During the quarter, MAA purchased a 345-unit multifamily apartment community development — Novel Midtown — in Phoenix, AZ.
During the March-end quarter, it closed on the sale of a 42,000-square-foot office property in Memphis, TN for proceeds of $3.3 million.
During the quarter ended Mar 31, 2019, MAA completed the renovation of 1,679 units under its redevelopment program. Notably, the company attained an increase in the average rental rate of 10.9%, above non-renovated units. Further, it expects to redevelop a total of 7,500-8,500 units in 2019.
At the end of the first quarter, MAA had five development community projects under construction, with total projected cost of $230.5 million. Notably, an estimated $171 million remained to be funded as of Mar 31, 2019.
Outlook
For second-quarter 2019, MAA expects FFO per share in the range of $1.45-$1.57. Currently, the Zacks Consensus Estimate for the same is pegged at $1.53.
MAA revised its guidance for 2019 FFO per share to $6.11-$6.35 from the previous estimate of $6.03-$6.27. Currently, the Zacks Consensus Estimate for the same is pinned at $6.16.
Our Viewpoint
MAA is witnessing favorable demand for its apartment communities on the back of strategic location in the high-growth Sunbelt markets. This has enabled the company to capture high tenant retention while maintaining strong occupancy rates.
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