Mid-America Apartment Communities Inc. (NYSE:MAA) Q1 2018 Earnings Conference Call - Final Transcript

May 03, 2018 • 10:00 am ET


Mid-America Apartment Communities Inc. (NYSE:MAA) Q1 2018 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen. Welcome to the MAA First Quarter 2018 Earnings Conference Call. During the presentation all participants will be in a listen only mode. Afterwards the company's will conduct a Question-and-Answer session. As a reminder, this conference is being recorded today, May 3, 2018.

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

Tim Argo

Thank you, Savannah, and good morning. This is Tim Argo, Senior Vice President of Finance for MAA. With me are Eric Bolton, our CEO; Al Campbell, our CFO; and Tom Grimes, our COO. Before we begin with our prepared comments this morning, I would like to point out that as part of the discussion, company management will be making forward-looking statements. Actual results may differ materially from our projections. We encourage you to refer to the forward- looking statements section in yesterday's earnings release and our 34-Act filings with the SEC, which describe risk factors that may impact future results.

These reports, along with the copy of today's prepared comments and an audio copy of this morning's call will be available on our website. During this call, we will also discuss certain non-GAAP financial measures. Reconciliations to comparable GAAP measures can be found in our earnings release and supplemental financial data.

I'll now turn the call over to Eric.

Eric Bolton

Thanks, Tim, and good morning. First quarter results were slightly ahead of our expectation and reflect the continued solid demand for apartment housing across our markets. Occupancy is high, and rent growth on renewing leases is strong. However, elevated levels of new supply continue to weigh on our ability to drive rent growth on leases written for new residents. We expect the supply pressures will persist through most of this year, with trends moderating in 2019.

But as we enter this busy summer leasing season, we are encouraged, with the number of trends that we are capturing, and continue to believe that revenue trends have bottomed out for the cycle. Our expectations, moving forward, are supported by favorable trends in several key variables. These include the continued strong job growth and demand for our apartment housing across our markets; our high occupancy levels; the strong performance being captured on renewal lease pricing; the improving pricing trends within the legacy Post portfolio; and finally, the continued strong performance on same-store operating expenses and continued improvement in operating margins.

While supply pressures will remain evident in several of our markets for the next few quarters, continued favorable results in these key areas support belief, our belief, that we should see incremental improvement in NOI, moving forward, with better momentum in 2019 and supply pressures moderate.

Resident turnover remains very low at 49.6% on a running 12-month basis. This is despite continued healthy growth in renewal lease pricing of 5.5% during the first quarter. This level of strong pricing performance in the face of higher new supply is a testament to not only the continued healthy demand for apartment housing in