Mid-America Q4 FFO & Revenues Miss Estimates Amid High Supply

Shares of Mid-America Apartment Communities MAA, commonly known as MAA, witnessed a 1.13% fall in the pre-market trading hours today after it came up with lower-than-expected fourth-quarter 2024 results yesterday following market close. MAA reported fourth-quarter 2024 core funds from operations (FFO) per share of $2.23, which missed the Zacks Consensus Estimate of $2.24. The reported figure also fell 3.9% year over year from $2.32.See the Zacks Earnings Calendar to stay ahead of market-making news.Rental and other property revenues of $549.8 million for the fourth quarter missed the Zacks Consensus Estimate of $552.5 million. However, the reported figure was 1.4% higher than the year-ago quarter’s tally.Results reflected a record level of new supply deliveries, though continued strong demand provided some support. However, the company witnessed low levels of resident turnover. The REIT also provided its initial outlook for 2025.For the full-year 2024, the core FFO per share came in at $8.88, lower than the prior-year tally of $9.17 and below the Zacks Consensus Estimate of $8.89. However, rental and other property revenues increased 2% to $2.19 billion, in line with the consensus mark.Per Eric Bolton, the chairman and CEO of MAA, " We are encouraged by the performance trends captured in the fourth quarter and the early signs of improvement in pricing trends as the record level of new supply deliveries has now peaked.  Calendar year 2025 will be a transition year for revenue performance as the decline in new supply deliveries will provide for increasingly tighter market conditions and resulting rent growth.”MAA’s Q4 in DetailThe same-store portfolio’s revenues fell 0.2% on a year-over-year basis, with a decline of 0.5% in the average effective rent per unit. The same-store portfolio’s property operating expenses rose 3.4% on a year-over-year basis. The same-store portfolio’s net operating income (NOI) fell by 2.1% on a year-over-year basis.The average physical occupancy for the same-store portfolio in the fourth quarter was 95.6%, which was slightly up from 95.5% in the year-ago quarter. The figure was in line with our estimate.As of Dec. 31, 2024, resident turnover remained historically low at 42.0% on a trailing 12-month basis. This stemmed from record low levels of move-outs related to buying single-family homes.During the fourth quarter, same-store portfolio lease pricing for new leases declined 8.0%, while lease pricing for renewing leases increased 4.2%. As a result, there was a decrease of 2% for both new and renewing lease pricing on a blended basis in the fourth quarter of 2024 compared to the prior lease.MAA’s Portfolio ActivityIn October 2024, MAA bought a newly built 386-unit multifamily community in Dallas, TX for roughly $106 million. Moreover, in December, MAA acquired a 3-acre land parcel in the Raleigh, NC market for $5 million for future development.During the fourth quarter of 2024, MAA closed on the disposition of a 216-unit multifamily community in Charlotte, NC and a 272-unit multifamily community in Richmond, VA, for combined net proceeds of $85 million. This led to a combined gain on the sale of depreciable real estate assets of $55 million.As of Dec. 31, 2024, MAA had seven communities under development, with 2,312 units at a total projected cost of $851.5 million and an estimated $374.3 million remaining to be funded.In 2024, MAA has redeveloped 5,665 apartment units. As of Dec. 31, 2024, MAA completed the installation of Smart Home technology in more than 96,000 units across its apartment community portfolio. This move provided an increase in the average effective rent per unit of around $25 per month since the initiative started during the first quarter of 2019.MAA’s Balance Sheet PositionMAA exited 2024 with cash and cash equivalents of $43.0 million, up from $41.3 million recorded as of Dec. 31, 2023. As of Dec. 31, 2024, MAA had a strong balance sheet with $1.0 billion in combined cash and capacity available under its unsecured revolving credit facility. It had a net debt/adjusted EBITDAre ratio of 4.0 times.As of the same date, the total debt outstanding was $5.0 billion. Its total debt average years to maturity was 7.3 years. As of Dec. 31, 2024, unencumbered NOI was 95.9% of the total NOI.MAA’s 2025 GuidanceMAA projects a first-quarter 2025 core FFO per share in the band of $2.08-$2.24, with $2.16 at the midpoint. The Zacks Consensus Estimate of $2.20 lies within the range.This residential REIT expects its 2025 core FFO per share in the range of $8.61-$8.93, with the midpoint being $8.77. The Zacks Consensus Estimate for the same is currently pegged at $8.88 and lies within the range.For 2025, management anticipates same-store property revenue growth of -0.35% to 1.15% and operating expense growth of 2.45% to 3.95%. As a result, the same-store NOI growth is anticipated between -2.15% and -0.15%. Average physical occupancy for the same-store portfolio is guided in the range of 95.3% to 95.9%, with the midpoint being 95.60%.MAA currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Mid-America Apartment Communities, Inc. Price and EPS Surprise Mid-America Apartment Communities, Inc. price-eps-surprise | Mid-America Apartment Communities, Inc. QuotePerformance of Other Residential REITsEquity Residential EQR reported fourth-quarter 2024 normalized funds from operations (FFO) per share of $1.00, which was in line with the Zacks Consensus Estimate. The rental income of $766.8 million surpassed the consensus mark by 1.24%. Results reflected healthy same-store revenue performance and high occupancy. On a year-over-year basis, the normalized FFO per share remained unchanged, with rental income climbing 5.4%.Essex Property Trust Inc. ESS reported fourth-quarter 2024 core funds from operations (FFO) per share of $3.92, beating the Zacks Consensus Estimate of $3.90. The figure also improved 2.3% from the year-ago quarter. Results reflected favorable growth in same-property revenues and net operating income. Total revenues of $454.5 million outpaced the Zacks Consensus Estimate of $453.1 million. Revenues were up 7.8% year over year.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Equity Residential (EQR): Free Stock Analysis Report Mid-America Apartment Communities, Inc. (MAA): Free Stock Analysis Report Essex Property Trust, Inc. 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