Alex Kim • Zelman & Associates

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Chairman and CEO Ric Campo believes the opportunity will persist for a while, especially in markets like Austin and Nashville that will take longer to recover. He noted that general economic uncertainty is keeping institutional investors on the sidelines, and pressure on merchant builders to sell will likely increase supply. This combination should keep the acquisition environment reasonable, with the largest discounts remaining in the most challenged markets.

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President and CFO Alexander Jessett reported that the two single-family rental communities are experiencing a slower lease-up pace, which is typical for that product type. The third property, Camden Durham, saw seasonally slower leasing in Q4. He provided occupancy updates (Woodmill Creek at 89%, Durham at 78%, Long Meadow Farms at 53%) and noted that the first two are nearing stabilization, which should contribute positively to 2025 revenue.

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COO Sean Breslin reported that lease-up velocity was solid at 22-23 leases per month in Q1 with about a half-month of concessions on average. He stated that concession usage will not necessarily moderate, as it is driven by the market environment and the need to lease up entire communities quickly, and he doesn't see a reason for it to change at this time.

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CIO Matthew Birenbaum confirmed that DFP is included in the development start figures, likely accounting for 2-3 of the planned starts in 2025. He noted that mixing townhomes into garden communities is a successful formula they use often. He also clarified that the DFP model does not require incremental internal overhead, as they pay fees to the third-party developers who carry their own overhead, making it a capital-efficient way to grow.

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COO Mike Lacy confirmed the program, which includes ID and income verification, is paying dividends. He pointed to improved metrics for new residents, including a 17% increase in average deposits, a 1% increase in the use of co-signers, and a 20-point increase in average credit scores to 730. CFO Joe Fisher quantified the remaining opportunity, stating that reducing bad debt from the current ~100 bps to the pre-COVID level of 40-50 bps represents a $15-20 million bottom-line cash flow opportunity, including savings on turnover and other expenses.

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EVP & COO Tim Argo explained that despite the percentage gap, the absolute dollar difference is manageable. He attributed strong renewal performance (4.7-4.8% for May/June) and record acceptance rates to MAA's customer service, detailed renewal process, and strong brand reputation (e.g., high Google scores). He added that this dynamic is relatively consistent across most of their markets.

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Tim Argo, EVP and COO, attributed the occupancy gain to strong absorption and noted that the company balances pricing and occupancy at a property level. He explained that the current record-low exposure of 6.3% provides stability and allows for pushing prices where possible. Brad Hill, EVP and President, reiterated that acquiring properties in lease-up is a core strategy because it's harder for others to finance, allowing MAA to use its all-cash ability to secure higher returns than on stabilized assets.

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CIO Alec Brackenridge confirmed they are optimistic and well-positioned to act on such opportunities, citing their ability to execute large transactions quickly. CEO Mark Parrell stated that their primary expansion focus remains on Atlanta, Dallas, and Denver, with Austin on hold due to supply, and that no new markets are being announced at this time.

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CIO Alex Brackenridge stated the strategy is to follow their high-earning customers to markets with growing tech and finance job bases, such as Denver, Dallas, and Atlanta. He identified Charlotte and Raleigh as other potential targets but noted they are currently on the sidelines due to the 'daunting' amount of new supply in those markets.

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Executive Angela Kleiman expressed confidence, citing multiple factors: no concession headwinds, abating overhang from LA evictions, easier new lease rate comps, and strong renewals. Executive Barb Pak projected full-year bad debt would be around 1%. She also noted that other income will see a sequential decline in Q4 because a non-recurring lease break fee from a corporate tenant in Q3 will not repeat.

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