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VOL. 127 | NO. 23 | Friday, February 3, 2012

MAA CEO: Multifamily Sector ‘Pretty Darn Good’

By Sarah Baker

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MAA Chairman and CEO Eric Bolton says the multifamily sector is going to be “pretty darn good” over the next few years. He offered analysts that assessment during a conference call Friday, Feb. 3, in conjunction with the real estate investment trust’s fourth-quarter and full-year 2011 earnings report.

That’s because the sector is poised to capitalize from the housing market’s position at the bottom of the trough for 2012 and beyond.

“We captured strong leasing momentum in the traditionally slower fourth quarter, with leasing traffic growing more than 7 percent as compared to the prior year,” Bolton said. “With traffic patterns in January continuing to outpace the prior year, solid occupancy levels, and average pricing on new and renewal lease transactions running more than 5 percent ahead of a year ago, we’re encouraged with the momentum carrying into 2012.”

Net income for 2011 was $48.8 million, or $1.31 per diluted common share, compared to $18.1 million, or $0.56 per diluted common share, for the year prior.

About 26 percent of 2011’s net income – $12.8 million – was related to gains on the sale of two apartment communities during the year. Bolton said MAA’s disposition activity in 2012 will continue to be robust.

Formerly known as Mid-America Apartment Communities Inc., MAA is a self-administered, self-managed, apartment-only REIT that currently owns or has ownership interest in 48,813 apartment units throughout the Sunbelt region of the U.S.

MAA invested $101 million in three new communities during Q4, totaling 780 units in Nashville; Little Rock, Ark.; and Fredericksburg, Va.

The company also invested $16 million in development during Q4, bringing year-to-date investment volume to $425 million, including $24.8 million bought in a joint venture and $38 million in new development.

MAA is also under contract to purchase 10.7 acres and begin construction on a 270-unit community in Charleston, S.C. The construction cost is projected to be $32 million, including the land.

Bolton said the company’s investment in new development will continue to be conservative until 2014.

Q4 average effective rent across the same-store portfolio increased by 4.9 percent compared to Q4 2010.

Physical occupancy for the same-store portfolio ended the quarter at 95.2 percent, while resident turnover remained historically low at 55.9 percent on an annualized basis.

MAA ended the year with net-debt-to-gross assets of 46 percent and an asset pool of 31 percent of total gross assets.

Funds from operations – a widely accepted measure of REIT performance – were $43.1 million for Q4, compared to $34.6 million for Q4 2010. The FFO results were a record high for MAA, according to the company.

For full-year 2011, FFO was $155.5 million, compared to $123.9 million for the year prior.

“We expect same-store results will continue to improve over the prior year and overall FFO results will surpass the record result achieved in 2011,” Bolton said.

PROPERTY SALES 36 154 6,546
MORTGAGES 34 94 4,129
BUILDING PERMITS 201 554 15,915
BANKRUPTCIES 43 126 3,396