Mid-America Apartment Communities, Inc.

Good morning ladies and gentlemen and welcome to the MAA Second Quarter 2021 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterward, the company will conduct a question and answer session. As a reminder, this call is being recorded July 29, 2021. I will now turn the call over to Tim Argo, Senior Vice President of Finance of MAA, for opening comments.

Thank you, Mallory, and good morning, everyone. This is Tim Argo, Senior Vice President of Finance for MAA. With me are Eric Bolton, our CEO, Al Campbell, our CFO, Rod DelPriori, our general counsel, Tom Grimes, our COO, and Brad Hill, our head of transactions. Before we begin with our prepared comments this morning, I want to point out that as part of the discussion, company management will be making forward-looking statements. Actual results may differ materially from our projections. We encourage you to refer to the forward-looking statement section in yesterday's earnings release and our 34-act filings with the SEC, which describe risk factors that may impact future results. These reports, along with a copy of today's prepared comments and an audio copy of this morning's call, will be available on our website. During this call, we will also discuss certain non-GAAP financial measures, a presentation of the most directly comparable GAAP financial measures, as well as reconciliations of the differences between non-GAAP and comparable GAAP measures can be found in our earnings release and supplemental financial data, which are available on the For Investors page of our website at www.maac.com. I will now turn the call over to Eric.

Thanks, Tim, and good morning, everyone. MAA had a strong second quarter with rent growth, same-store NOI, and core FFO results ahead of expectations. Strong job growth and positive migration trends continue to drive higher demand for housing across our Sunbelt markets, and we expect continued strong rent growth. As noted in our earnings release, we are adjusting our performance expectations for the year and meaningfully increasing guidance for core FFO performance. The various factors that were driving employers and households to the Sunbelt markets before the impact of COVID continue. In addition, the COVID-related recalibrating by both employers and employees about where they choose to do business and live continues to also fuel higher demand trends across the Sun Belt. And those trends are accelerating. The new residents that we moved in year to date from outside of our Sun Belt footprint increased significantly. another 265 basis points as compared to the first six months of last year during the peak of COVID-related relocations. New move-ins from renters relocating to the Sun Belt currently constitute almost 13% of our new leases so far this year and are trending higher During the second quarter, in a number of markets such as Phoenix, Tampa, Nashville, and Charleston, the percentage of new residents moving to our properties from outside the Sun Belt was even higher. As housing demand grows across the region, investor appetite for apartment real estate in the Sun Belt is also increasing. As Brad will touch on, we continue to see very aggressive bidding in the acquisition market with downward pressure on cap rates. MAA is well-positioned to harvest the opportunities surrounding our long-time focus on these Sunbelt markets, with a uniquely diversified strategy across the region. Strong leasing fundamentals, coupled with extensive redevelopment and repositioning opportunities, along with the continued rollout of new technology initiatives that will drive further margin expansion, have us excited about the momentum from the same store portfolio. In addition, as noted in our earnings release, we continue to expand our external growth platform with earnings accretive new development and have several other projects currently under contract and in pre-development. As always, I want to send a big thank you and message of well done to our team of MAA associates. Your dedication and commitment to serving our residents and supporting each other is critical to our success and is key in driving our strong performance.