Mid-America Apartment Communities, Inc. (NYSE:MAA) , commonly referred as MAA, reported first-quarter 2017 funds from operations (FFO) of $1.46 per share, beating the Zacks Consensus Estimate by 2 cents. However, the figure was down from $1.50 reported in the prior-year quarter.
The quarterly results reflected growth in same store property net operating income (NOI) and rise in average effective rent per unit for the same store portfolio.
Total operating revenue came in at $378.9 million in first-quarter 2017, exceeding the prior-year quarter figure by 40.8%. The Zacks Consensus estimate for revenues was $376.2 million.
Quarter in Detail
During the first quarter, adjusted same store NOI grew 3.6% compared with the same period in the prior year. This was the result of 2.8% growth in revenues and a 1.3% rise in operating expenses.
In the large market, 2.9% growth in revenues and a 0.3% increase in expenses resulted into NOI increase of 4.5%. Again, in the secondary market, 2.4% rise in revenues and 4.4% growth in expenses led to 2.9% growth in NOI.
The quarter witnessed 2.9% year-over-year rise in average effective rent per unit. Further, during the quarter, average physical occupancy for same store portfolio was 96%, down from 96.1% from the prior-year quarter.
As of Mar 31, 2017, MAA held cash and cash equivalent of $34 million, up from $33.6 million as of Dec 31, 2016. Further, as of the same date, around $461.8 million of combined cash and capacity was available under its unsecured credit facility.
Post Properties Merger
For the merger with Post Properties, Inc., MAA incurred merger costs of $2.9 million, or 2 cents per share, which mainly comprised severance, legal, professional and advisory costs.
Other Portfolio Activities
During the quarter, the company acquired one property, a newly built 279-unit community, situated in Nashville, TN. As of Mar 31, 2017, MAA had seven development projects underway.
2017 Outlook
MAA expects 2017 FFO per share to be in the range of $5.74–$5.94. Currently, the Zacks Consensus Estimate for 2017 FFO is $5.90 per share.
For the second-quarter 2017, FFO per share is anticipated to be in the range of $1.36–$1.46 per share. Presently, the Zacks Consensus Estimate for second-quarter 2017 FFO is $1.47 per share.
Our Viewpoint
MAA’s well-balanced portfolio and its focus on making strategic investments augur well for the company. However, concentration of its operations in certain markets is a concern for MAA.
Currently, MAA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We now look forward to the earnings releases of GGP Inc. (NYSE:GGP) , Vornado Realty Trust (NYSE:VNO) and HCP, Inc. (NYSE:HCP) , which are expected next week.
Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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