MAA(US:MAA)2024-02-08 20:50Financial Data and Key Metrics Changes - Core FFO for Q4 was reported at $2.32 per share, exceeding the midpoint of guidance by $0.03, contributing to a full-year core FFO of $9.17 per share, an approximate 8% increase year-over-year [83] - Same-store revenue growth for the quarter was slightly below expectations, with effective rent growth impacted by lower lease pricing [84] - Average physical occupancy was 95.5%, with collections remaining strong, and delinquency representing less than 0.5% of bill grants [73] Business Line Data and Key Metrics Changes - Same-store NOI growth was in line with expectations, with slightly lower operating expenses offsetting lower blended lease-over-lease pricing growth [71] - New lease rates declined by 7%, while renewal rates increased by 4.8%, resulting in a blended lease-over-lease pricing of -1.6% for the quarter [72] - The company completed nearly 1,400 interior unit upgrades in Q4, bringing the full-year total to just under 6,900 units [75] Market Data and Key Metrics Changes - Mid-tier markets such as Savannah, Richmond, Charleston, and Greenville performed well, while larger metros like Austin and Jacksonville faced more negative impacts from supply [74] - The company expects new supply to continue to pressure pricing for much of 2024, but believes the maximum impact on new lease pricing has likely been seen [78] - Job growth is expected to moderate in 2024 compared to 2023, but remains strongest in Sunbelt markets [80] Company Strategy and Development Direction - The company plans to start 3 to 4 projects in 2024, with a focus on ensuring costs are in line before proceeding [29] - The company is actively evaluating acquisition opportunities, forecasting $400 million in new acquisitions, likely in lease-up and dilutive until stabilization [56] - The company aims to enhance its leasing platform and technology initiatives to outperform local market leasing metrics during the supply cycle [68] Management's Comments on Operating Environment and Future Outlook - Management expressed a more positive outlook compared to the previous year, with expectations for new lease pricing performance to improve later in 2024 and into 2025 [52] - The company noted that inflation pressures on operating expenses are declining, and demand for apartment housing remains steady [60] - Management highlighted the importance of maintaining a strong balance sheet while monitoring public pricing for potential buybacks if conditions warrant [11] Other Important Information - The company has a buyback program in place and is prepared to act if market conditions become favorable [11] - The company has a strong balance sheet with low leverage, ending the year with nearly $792 million in combined cash and borrowing capacity [87] - The company has a history of never suspending or reducing quarterly dividends over the past 30 years, which is a key component of delivering long-term returns to shareholders [59] Q&A Session Summary Question: Can you provide details on same-store revenue growth outlook? - Management indicated that renewal rates have been steady, while new lease rates will determine the high and low ends of guidance, expecting new lease rates to be in the negative 3% to 3.25% range for the year [95][96] Question: What is the expected impact of acquisitions on earnings? - Management expects acquisitions to be similar to previous ones, with an assumed 4.5% NOI yield contribution at the time of closing, leading to some dilution in earnings over 2024 [101][102] Question: When do you expect new lease rate growth to turn positive? - Management believes new lease pricing may not turn positive until 2025, with expectations of it getting close to flat in the middle of 2024 [109]