Mid-America Apartment Communities, Inc.

Good morning, ladies and gentlemen, and welcome to the MAA third quarter 2022 earnings conference call. During the presentation, all participants will be in the listen-only mode. Afterward, the company will conduct a question and answer session. As a reminder, this conference call is being recorded today, October 27, 2022. I will now turn the call over to Andrew Schaefer, Senior Vice President, Treasurer, and Director of Capital Markets of MAA for opening comments.

Thank you, Raisa, and good morning, everyone. This is Andrew Schaefer, Treasurer and Director of Capital Markets for MAA. Members of the management team also participating on the call with me this morning are Eric Bolton, Tim Argo, Al Campbell, Rob DelPriori, Joe Fracchia, Tom Grimes, and Brad Hill. Before we begin with our prepared comments this morning, I want to point out that as part of this 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. 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. Our earnings release and supplement are currently available on the For Investors page of our website at www.maac.com. A copy of our prepared comments and audio recording of this call will be available on our website later today. After some brief prepared comments, the management team will be available to answer questions. I will now turn the call over to Eric.

Thanks, Andrew, and good morning. MAA posted solid results for the third quarter. A strong demand for apartment housing across our portfolio drove a 16% increase in leasing traffic volume as compared to last year's third quarter. The higher leasing traffic supported continued solid occupancy and rent growth, as was detailed in our earnings release. While, as expected, we are seeing a return to more normal seasonal leasing patterns, with slower leasing velocity that is typical during the coming holiday season, it's clear that leasing conditions have held up stronger than expected over the back half of this year. We are carrying solid momentum into calendar year 2023. We will have more details to share about our expectations for next year when we provide earnings guidance for 2023 as part of our fourth quarter earnings release. But absent a severe recession taking place with resulting weakness in the employment markets, we expect the demand for apartment housing across our portfolio to continue to be strong. At this point, we've not seen any evidence of weakness in the drivers of demand for apartment housing as it applies to our Sunbelt portfolio. Of the leases written in the third quarter, 15% of our new residents were relocating to the Sunbelt from coastal markets This is comparable to the trends we saw last year. It's also worth noting that of the moveouts we had in the third quarter, only 5% were moving out of the Sun Belt. This is also consistent with last year's trends. As noted earlier, leasing traffic is high and resident turnover or moveouts remain well below long-term trends. And importantly, we are seeing no signs of stress in terms of affordability with rent to income ratios on the leases completed in Q3 remaining consistent to Q3 of last year in the 22% range and resident payment practices remaining very strong with over 99% of bills rent being collected. As detailed in the earnings release, we are nearing full completion on several of our new development projects, and we have recently started construction on a new property located in Tampa, Florida. In addition, we expect to start construction during the fourth quarter on a new property located in the Research Triangle Park in Raleigh, North Carolina. During the third quarter, we also closed on two acquisitions where we had initiated negotiations and due diligence earlier in the year. The transaction market has become increasingly choppy as rising interest rates and economic uncertainty have presented more challenges. And as a result, seller activity has slowed. We are actively monitoring conditions but are not currently under contract at the moment with any additional acquisitions. Before turning the call over to Tim to recap more details associated with our property operations, I did want to acknowledge the announcement that we made last week concerning the planned retirement of Tom Grimes, who has been with our company for the past 28 years. Tom has played a large part in supporting MAA's long and established record of strong performance and steady growth. I'm grateful for Tom's contributions to our company, and we all wish him well. As outlined in last week's release, we have a strong team of leaders at our company with extensive experience, expertise, and a record of strong performance, and we are well positioned for continued progress as we move forward into 2023. That's all I have in the way of prepared comments, and we'll now turn the call over to Tim.