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It has been about a month since the last earnings report for Mid-America Apartment Communities (MAA). Shares have added about 3.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mid-America Apartment Communities due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Mid-America Apartment Q2 FFO Surpasses on Higher NOI
MAA reported second-quarter 2018 FFO of $1.55 per share, handily surpassing the Zacks Consensus Estimate of $1.48. Further, the figure compared favorably with the prior-year tally of $1.48.
This residential REIT’s quarterly results reflected growth in same-store net operating income (NOI) and rise in average effective rent per unit for the same-store portfolio.
Rental and other property revenues came in at $390.1 million in the quarter, 1.9% higher than the prior-year tally. However, the figure marginally missed the Zacks Consensus Estimate of $390.2 million.
Quarter in Detail
During the reported quarter, the company’s same-store NOI increased to $224.2 million, recording 1.7% year-over-year growth.
The same-store portfolio revenues inched up 1.5% as a result of an increase in average effective unit of 1.7%. Moreover, average physical occupancy for the same-store portfolio was 96%, reflecting a contraction of 10 basis points from the year-earlier quarter.
As of Jun 30, 2018, MAA held cash and cash equivalents of nearly $32.6 million, significantly up from $10.8 million as of Dec 31, 2017. Furthermore, as of the same date, around $920.1 million of combined cash and capacity were available under its unsecured revolving credit facility.
The Post Properties Merger
During second-quarter 2018, MAA incurred a total of 2 cents per share of merger and integration costs. Notably, the company expects full consolidation of MAA and Post Properties to be accomplished later this year. Additionally, MAA continues to project synergies of around $20 million in gross overhead costs to be realized from this merger.
Portfolio Activity
During the quarter under review, MAA purchased a new 374-unit multifamily apartment community — Sync36 — situated in Denver, CO. The acquisition agreement, which the company signed in December 2017, was subject to the completion of the construction of phase I. The development of phase II is expected to start in third-quarter 2018.