On its first quarter 2012 earnings call on Friday, Memphis-based MAA reported that it closed out the first quarter with the highest funds from operations (FFO) per share performance in its 18 year history. And like most every other REIT revealed in their earnings, renewals, new leases, occupancy, and revenues were all up year-over-year. Plus, same store net operating income (NOI) grew 4.5 percent since the first quarter last year and it had a 96.2 percent physical occupancy.
MAA’s second largest market, Jacksonville, seemed to go soft during the first quarter. MAA thinks it’s because the metro’s economy is slower to recover than other, more robust markets with stronger job growth and supply. “The signs of encouragement we see in Jacksonville are on the development side,” said chief operating officer Tom Grimes. “For the past three years they’ve only seen on average 200 units delivered a year, and that’s a market that used to see 2,200 a year. We expect job growth to pick up by 2013,” he added. Currently, the jobs-to-units ratio in Jacksonville is 6.5 to 1. It is expected to jump to 13 to 1 by 2013.
As the company had expected, resident turnover increased to 56.4 percent. This was a direct result of MAA’s strategy to generate even higher rental rates. “The way we think about forcing turnover versus not, is does the overall turnover level remain acceptable. We’re near our historic lows, so we’re comfortable with it” said Bolton. Move outs due to rent increases is now driving 12 percent of MAA’s resident turnover. “We captured, on average, close to a 9 percent rent increase from the new residents moving in, as compared to those resident moving out due to the rent increase,” added Bolton.
Looking forward to the remainder of 2012, MAA expects same store NOI growth to be somewhere between 5 percent and 6 percent for the year, and plans on anywhere between $250 and $300 million to be spent on wholly-owned acquisitions. And between $75 and $125 million is expected to be raised through dispositions during the year.