Q4 2024 Earnings Summary
- MAA is experiencing positive blended lease rates in 13 markets as of January, including both mid-tier and larger markets like Tampa and Orlando. This widespread improvement indicates stronger demand and potential for revenue growth in 2025.
- The CEO anticipates significant demand-supply tailwinds, highlighting that after a 50-year high level of supply, there will be an "incredibly dramatic fall off in the level of supply coming into the markets" starting late this year into 2026 and 2027. This sets up very favorable market conditions for substantial growth in performance.
- Occupancy levels are elevated, 25 to 30 basis points higher than last year, and with declining new supply, MAA is confident in maintaining steady occupancy around 95.6%. This positions the company to push on pricing during the spring and summer leasing seasons, supporting revenue growth.
- The company expects negative new lease pricing growth of around 1.5% on a lease-over-lease basis for the full year, indicating pressure on rental revenues.
- Elevated supply levels in many of their markets continue to be a headwind, which may negatively impact occupancy and limit pricing power.
- The company anticipates that new lease rates will only turn slightly positive for 2 or 3 months during late Q2 or early Q3, but will trend back down to negative afterward, suggesting limited improvement in the rental market.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +1.4% ( ) | The revenue increase to $549.83 million was primarily driven by slight rent growth and steady occupancy in MAA’s core markets, offset partially by flat Same Store growth ( ). Continued demand for multifamily housing in key regions supports stabilizing revenue, though pricing pressures remain a risk. |
Non-Same Store and Other | -185% YoY ( ) | The severe decline from $33.89 million to -$28.79 million was mainly due to property dispositions and reduced contributions from recently exited markets, overshadowing gains from acquisitions and developments ( ). Going forward, strategic reshuffling of the portfolio may normalize this segment. |
Cost of Goods Sold | +9% ( ) | Rising from $113.67 million to $123.85 million, these costs reflect higher property operating expenses, consistent with inflation and increased maintenance requirements ( ). Elevated utilities and labor costs are expected to persist, impacting margins. |
SG&A | -8% ( ) | Decreasing from $15.25 million to $14.07 million, this reduction stems from cost containment efforts and operational efficiencies ( ). Management’s focus on expense control may support stronger bottom-line performance if revenue growth remains stable. |
Operating Income | -38% ( ) | Dropping from $276.16 million to $172.28 million, the decline was driven by expense growth (including property taxes, insurance, and inflationary pressures) outpacing modest revenue gains ( ). Future recovery will hinge on balancing rent growth with rising costs in core and expansion markets. |
Interest Expense | +14% ( ) | Increasing from $38.58 million to $44.19 million, primarily due to higher average debt balances and rising interest rates in the broader market ( ). Should interest rate volatility persist, MAA may face pressured net income unless it refinances or hedges effectively. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Core FFO | FY 2024 | no prior guidance | $8.80 - $8.96 (midpoint $8.88) | no prior guidance |
Same-Store NOI | FY 2024 | no prior guidance | 1.3% | no prior guidance |
Effective Rent Growth | FY 2024 | no prior guidance | 0.35% | no prior guidance |
Total Same-Store Revenue | FY 2024 | no prior guidance | 0.5% | no prior guidance |
Real Estate Tax Expense | FY 2024 | no prior guidance | 2% | no prior guidance |
Property Operating Expense Growth | FY 2024 | no prior guidance | 3.75% | no prior guidance |
Storm Cleanup Costs | FY 2024 | no prior guidance | $0.08 - $0.09 | no prior guidance |
Core FFO | FY 2025 | no prior guidance | $8.61 - $8.93 (midpoint $8.77) | no prior guidance |
Same-Store Revenue Growth | FY 2025 | no prior guidance | 0.4% | no prior guidance |
Same-Store Operating Expenses | FY 2025 | no prior guidance | 3.2% | no prior guidance |
Same-Store NOI Growth | FY 2025 | no prior guidance | -1.5% | no prior guidance |
Occupancy | FY 2025 | no prior guidance | 95.3% - 95.9% (midpoint 95.6%) | no prior guidance |
Other Revenue Items Growth | FY 2025 | no prior guidance | 2.5% | no prior guidance |
Delinquencies | FY 2025 | no prior guidance | 30 - 35 bps | no prior guidance |
Blended Lease Pricing | FY 2025 | no prior guidance | New: -1.5%, Renewal: +4.5% | no prior guidance |
Turnover | FY 2025 | no prior guidance | consistent with 2024 | no prior guidance |
Acquisitions | FY 2025 | no prior guidance | $350m - $450m | no prior guidance |
Development Investments | FY 2025 | no prior guidance | $250m - $350m | no prior guidance |
Dispositions | FY 2025 | no prior guidance | $325m | no prior guidance |
Interest Expense | FY 2025 | no prior guidance | +13% | no prior guidance |
Overhead Expenses | FY 2025 | no prior guidance | $134.5m (+4.5%) | no prior guidance |
Refinancing | FY 2025 | no prior guidance | $400m at 5% | no prior guidance |
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Supply Outlook
Q: How is supply expected to impact the market in 2025 and beyond?
A: Supply is expected to decline significantly, with a 15-20% drop in units delivered from 2024 to 2025, and a further 30-40% decrease into 2026. This suggests a prolonged moderation in supply, which should positively affect market conditions. -
New Lease Pricing
Q: When will new lease rates turn positive?
A: We expect new lease pricing to reach slightly positive levels, around 1.25%, for a couple of months in the middle of the year—specifically in late Q2 to early Q3—before trending back down seasonally. -
Turnover Expectations
Q: How will turnover trend this year?
A: Turnover is expected to remain consistent with 2024 levels. Major move-out reasons like buying a home are down 20% in Q4 compared to last year due to high interest rates and home prices, so we don't anticipate much change. -
Concessions Impact
Q: How are concessions affecting new lease rates?
A: Concessions are included in our lease-over-lease rates and were down slightly in Q4 compared to Q3. Generally, concessions are about a month free in most markets. However, in tougher markets with high lease-up activity like downtown Austin, Midtown Atlanta, and uptown Charlotte, concessions can be up to three months free. -
Market Trends vs. Comps
Q: Is the improvement due to market trends or easier comps?
A: It's a combination of both. Lessening supply and easier comps contribute, but we're also observing stronger sequential trends in January compared to December and Q4. January new lease pricing is better than the full Q4, which is atypical and suggests genuine recovery beyond favorable comparisons. -
Renewals and Tenant Retention
Q: What percentage of tenants are renewing multiple times?
A: The average stay is around 21-22 months, slightly extended due to lower turnover. Typically, residents move out after the first renewal, so multiple renewals are uncommon. This helps prevent the rent gap from widening excessively.
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