Mid-America Apartment Communities, Inc.

Good morning, ladies and gentlemen, and welcome to the MAA Second Quarter 2025 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, the company will conduct a question and answer session. As a reminder, this conference call is being recorded today, July 31, 2025. As a reminder, in consideration of time, we have a two-question limit. 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, Regina, and good morning, everyone. This is Andrew Schaefer, Treasurer and Director of Capital Markets for MAA. Members of the management team participating on the call this morning are Brad Hill, Tim Argo, Clay Holder, and Rob DelProy. Before we begin with 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 Ford Investors page of our website at .mac.com. A copy of our prepared comments and an 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 Brad.

Thanks, Andrew, and good morning, everyone. As detailed in our release, second quarter core FFO results were ahead of our expectations, with the sequential improvement in new renewal and blended lease over lease rates all exceeding the prior year's sequential improvement. While the economic uncertainty has caused the pace of recovery in price and power to slow across the country, the recovery in our portfolio is underway. And as the economic uncertainty stabilizes and deliveries continue to decline, the recovery should accelerate. Demand remains resilient, with absorption across our markets reaching the highest level in over 25 years. Encouragingly, absorption has now outpaced new deliveries for four consecutive quarters, with the gap between the trailing 12-month absorption and new deliveries in our markets approaching the level lasting during COVID. The downward trend in new deliveries is helping market conditions to firm up, with market level occupancies improving in many of our markets. And we are seeing pockets of decreasing concessions, a combination that should lead to improved pricing power. With a stable employment sector and strong wage growth, our residents are financially healthy, leading to continued good collections and improving -to-income ratios. Our diversified portfolio, focused on high-growth markets, and operating scale continue to position MAA best to capitalize on these favorable trends to a greater degree as the demand-supply balance moves more in our favor. The resilience of our platform is evident. In the midst of still elevated supply, we have maintained stable occupancy, achieved higher renewal rates, and increased our retention. The result of our team's focus on customer service and operational consistency. On the external growth front, because of our access to capital, we continue to find select compelling development opportunities. We remain committed to the disciplined expansion of our development pipeline, and we are making progress toward that goal. In the second quarter, we started construction on a 336-unit suburban project in Charleston, South Carolina, which is expected to deliver a stabilized NOI yield of 6.1%, bringing our active pipeline to 2,648 units at nearly $1 billion.