Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Core FFO for the third quarter exceeded expectations, driven by better-than-forecasted same-store NOI.
- Record low resident turnover and strong collections contributed positively to the quarter's performance.
- The company is seeing early positive trends in new lease pricing, suggesting that the worst of pricing pressures from new supply may be behind them.
- MAA's development pipeline is robust, with eight projects under construction, representing a significant investment and future growth potential.
- The company has a strong balance sheet with low leverage, providing flexibility for future investments and growth opportunities.
Negative Points
- New lease pricing growth continues to be impacted by elevated new supply deliveries, particularly in markets like Austin and Atlanta.
- Despite positive trends, the company still faces challenges from high supply levels, which are expected to moderate but remain a concern.
- The transaction market remains relatively low in volume, with cap rates trending down, which could impact acquisition opportunities.
- There are ongoing concerns about the impact of elevated supply on pricing growth, especially in high-supply markets.
- The company has incurred significant storm cleanup costs throughout the year, which have impacted financial results.
Q & A Highlights
Q: Can you talk about your 4Q expectations for blended rent growth and occupancy?
A: Timothy Argo, Executive Vice President, Chief Strategy and Analysis Officer, stated that occupancy is expected to remain consistent at around 95.4% to 95.5%. Renewal rates for November and December are projected to be in the 4% to 4.5% range. New lease pricing for October showed only a slight moderation from September, indicating less deceleration than typically seen.
Q: Is there any way to quantify the impact of deliveries on new lease rate growth?
A: Timothy Argo explained that Austin continues to be the most challenging market due to supply pressures, significantly impacting new lease rates. Excluding Austin, new lease rates would have shown a slight acceleration. Renewal rates are also affected, with Austin showing lower renewal rates compared to other markets.
Q: How are you thinking about the peaking of supply impacting market rent growth next year?
A: Timothy Argo noted that supply peaked in mid-2022, and the maximum pressure is being felt now. As supply moderates, particularly in 2025, normal seasonality is expected to return, with stronger lease conditions anticipated in the spring and summer.
Q: Are you seeing any change in the transaction market and acquisition opportunities?
A: A. Bradley Hill, President, Chief Investment Officer, mentioned that the company is finding compelling acquisition opportunities, particularly in properties that are new and just entering lease-up. These opportunities often come from off-market transactions, allowing MAA to leverage its operational platform for better returns.
Q: How are concession levels trending, and are you offering any concessions at stabilized properties?
A: Timothy Argo stated that concessions in Q3 were consistent with Q2, typically ranging from half-a-month to a month in stabilized submarkets. In high-supply areas like Austin and Atlanta, concessions can be up to three months. New supply is generally priced higher than MAA's average portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
