Mid-America Apartment Communities, Inc.

Good morning, ladies and gentlemen, and welcome to the MAA third quarter 2023 earnings conference call. During the presentation, all participants will be in a listening mode. Afterward, the company will conduct a question and answer session. As a reminder, this conference call is being recorded today, October 26, 2023. I will now turn the call over to Adam Schaefer, Senior Vice President, Treasurer, and Director of Capital Markets of MAA for opening comments.

Thank you, Brittany, 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 DelFrori, Joe Fracchia, Brad Hill, and Clay Holder. 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 projection. 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 also 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's third quarter FFO performance was ahead of our expectations as the demand side of our business continues to capture good leasing traffic, low resident turnover, positive migration trends, and strong collections performance. During the quarter, we did see a higher impact from new supply deliveries across several of our larger markets, with the resulting impact showing up in pricing associated with new move-in residents. While we continue to believe that MAA's unique market diversification, a more affordable rent structure, and an experienced and capable operating platform will enable us to push back against some of this supply pressure, the high volume of new deliveries in several markets will continue to weigh on rent growth associated with new resident move-ins for the next few quarters. Encouragingly, there is now clear evidence emerging that new supply deliveries are poised to meaningfully drop late next year into 2025. We have certainly worked through these supply cycles before and continue to believe that MAA's more extensive market and submarket diversification, new AI and technology tools, and an experienced operating team has us in a position to outperform our markets. As we have discussed previously, one of the benefits that typically emerges from a heavy supply cycle, particularly one that is characterized by higher interest rates, is an increasing volume of acquisition and external growth opportunities. We have seen a shift take place with seller and developer pricing expectations. The more challenging lease-up conditions coupled with higher interest rates that are likely to be with us for a while are generating more buying opportunities. As Brad will recap in his comments, the property acquisition we completed after quarter end is a good example of where we expect more opportunities to emerge, specifically a recently completed new development that is still in initial lease up with seller requirements to close within a short timeframe. Before turning the call over to the team to provide details surrounding our performance and market conditions, Let me summarize what I believe are the four key takeaways in our report. First, demand across our markets remains solid and supportive of steady absorption of the new supply. Secondly, current high levels of new supply coupled with developer pressures related to a higher interest rate environment will cause the leasing environment to remain competitive for the next few quarters with new supply pressures expected to then decline. We expect to see an increasing number of compelling external growth opportunities in 2024. And fourth, MAA's long track record of performance and experience in working with markets with higher demand and supply dynamics, now further supported by a stronger technology platform and a strong balance sheet with significant capacity, has the company very well positioned as we work through the current cycle. And with that, I'll now turn the call over to Brad.