Financial Data and Key Metrics Changes - Funds from operations (FFO) per share for Q3 2025 was $2.27, an increase of 6.6% compared to the same quarter last year [6][11] - Quarter-end leasing was at 96.7%, with occupancy at 95.9%, and average quarterly occupancy was 95.7%, down 100 basis points from Q3 2023 [6][7] - Cash same-store NOI rose 6.9% for the quarter and 6.2% year-to-date [7] Business Line Data and Key Metrics Changes - Quarterly releasing spreads were 36% GAAP and 22% cash for leases signed during the quarter, with year-to-date results at 42% and 27% GAAP and cash, respectively [6][11] - Retention rate rose to almost 80%, indicating tenants' cautious nature [8][19] Market Data and Key Metrics Changes - The market remains somewhat bifurcated, with improved activity in smaller spaces (50,000 square feet and below) but larger spaces experiencing delays in decision-making [7][19] - The supply pipeline continues to decline, with historically low starts this quarter, which is expected to put upward pressure on rents as demand stabilizes [9][10] Company Strategy and Development Direction - The company aims to capitalize on development opportunities earlier than private peers, leveraging its balance sheet strength and existing tenant expansion needs [10][15] - The focus remains on geographic and tenant diversity to stabilize earnings regardless of economic conditions [7][11] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving market conditions and the potential for increased leasing activity as macro uncertainties subside [13][15] - The company is reforecasting 2025 starts to $200 million based on current demand levels, with a focus on maintaining a strong balance sheet [9][12] Other Important Information - The company settled all outstanding forward equity agreements for gross proceeds of $118 million at an average price of $183 per share [11] - Tenant collections remain healthy, with uncollectible rents estimated to be in the 35 to 40 basis point range as a percentage of revenues [12][13] Q&A Session Summary Question: Can you expand on leasing and the development pipeline? - Management noted that conversations with prospects have improved since May, with a high retention rate indicating strong portfolio performance [19][20] Question: How have construction costs trended recently? - Construction pricing has come down by about 10% to 12%, but demand remains the primary constraint on starting new projects [24][25] Question: What is the status of the development pipeline and leasing activity? - Management indicated that while leasing activity has been muted, there is a growing number of prospects, and they are optimistic about future developments [28][33] Question: How do you view the market conditions for next year? - Management expressed hope for a stronger market next year, with potential for increased starts if demand picks up [76][78] Question: What is the current level of bad debt and tenant watchlist? - Bad debt remains low at around 30 to 35 basis points relative to total revenue, with a consistent watchlist [57] Question: How do you see the impact of interest rates on leverage levels? - The company is monitoring interest rates closely and plans to issue $200 million to $250 million in unsecured term loans in the fourth quarter [58][59]

Summary of Mid-America Apartment Communities (MAA) 2025 Conference Call Company Overview - Mid-America Apartment Communities (MAA) is an S&P 500 multifamily-focused Real Estate Investment Trust (REIT) with over 30 years of public company history, primarily focusing on high-demand regions in the Sunbelt and southwestern U.S. [3][4] Industry Insights - The company has observed a significant decline in new supply deliveries, with fourth-quarter deliveries dropping over 50% compared to the third quarter, following a peak in supply last year [4][5] - The trailing 12-month absorption numbers are the highest in 25 years, indicating robust demand in MAA's markets [4][5] - Average occupancy rates are only 30 basis points below pre-COVID levels, with a year-over-year increase of 190 basis points [5][6] Demand Dynamics - Demand drivers include strong job growth, migration trends, and population growth, with a net migration rate of 7% into the Sunbelt region [12] - The affordability of single-family homes has become a significant factor, with median home prices in the Sunbelt rising over 50% in the last five years, while rents have only increased by about 30% [13][14] - Retention rates have improved by 10 percentage points over the last decade, indicating a strong preference for rental living due to lifestyle choices and affordability concerns [14] Market Performance - The company is optimistic about job growth in 2026, with expectations of a decrease in tariff-related uncertainties and potential interest rate cuts by the Federal Reserve [17][18] - MAA anticipates a 30-40% decline in supply deliveries next year, which will be below long-term averages, supporting improved performance [21][22] - The company is focusing on customer service to enhance resident retention, with a current retention rate of 60% [59] Regional Performance - Strongest markets include Northern Virginia and mid-tier coastal markets like Charleston and Savannah, which have shown resilience against supply pressures [52][53] - Weaker markets include Austin, Nashville, Phoenix, and Jacksonville, which are experiencing high supply but are expected to recover as demand dynamics improve [54][55] Future Outlook - The company expects to maintain a low leverage ratio of 4x and plans to fund development and acquisitions through debt [61][62] - Property taxes are expected to remain flat year-over-year, reflecting stable operating performance [63] Key Takeaways - MAA is well-positioned for growth with strong demand fundamentals and declining supply pressures in its markets [21][22] - The company is focused on enhancing customer service and retention to drive future earnings growth [59] - Overall, the outlook for the multifamily housing market remains positive, with expectations for higher same-store net operating income in the coming year [70]