Mid-America Apartment Communities, Inc.

This conference call is being recorded today, October 30th, 2025, and 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 DelPriori. 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 For Investors page of our website at www.maac.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.

Thank you, Andrew, and good morning, everyone. As highlighted in our earnings release, our third quarter core FFO results met our expectations, reinforcing the resilience of our platform and strategy. While the broader economic environment has introduced some challenges, including slower job growth and tempered pricing power in new leases, we are still seeing recovery. Strong occupancy, solid collections, and year-over-year improvements in new renewal and blended lease rates in the third quarter demonstrate our momentum. Demand across our markets remains healthy, and we are encouraged that the record level of lease ups in our region are being absorbed with occupancy levels increasing 450 basis points over the past five quarters, and now approaching pre-COVID levels. Supply levels in our markets, though elevated historically, are trending down at a faster pace than many other regions. As new deliveries continue to decline each quarter, we anticipate a strengthening recovery in pricing power and operating performance. Importantly, new starts remain below long-term averages and have for the past 10 quarters, and we see no indication of an acceleration in starts. In fact, per our third-party data provider, our market saw just 0.2% of inventory in new starts in the third quarter. And starts over the trailing four quarters were just 1.8% of inventory, roughly half the historical norm, positioning us for sustained improvement. Our diversified presence across high growth markets and more affordable price point provides access to a broader segment of the rental market that is financially strong, supporting continued strong collections. Additionally, our region continues to capture one of the highest levels of annual wage growth, as evidenced by the increasing incomes of our new residents, driving favorable rent to income ratios, which remain at a healthy low of 20%. Improving leasing conditions also bolster our redevelopment pipeline, offering residents a newly renovated unit at a more affordable price as compared to the higher price new multifamily supply. Due to persistent single family affordability challenges, our strong customer service and demographic trends that support renting Residents are choosing to stay longer, with only 10.8% of our move-outs occurring due to home purchases. Our balance sheet remains a key strength with our recent credit facility expansion, which Clay will discuss in a moment, providing exceptional flexibility. While the transaction market has been active at sub-5% cap rates, we continue to identify select accretive opportunities, such as our recent Kansas City acquisition. A stabilized suburban 318 unit property that we purchased for approximately $96 million and is expected to deliver a year one NOI yield of 5.8%. Subsequent to quarter end, we purchased an adjacent land parcel for an ADA unit phase two that will expand the stabilized NOI yield on our total investment to nearly 6.5% after capturing additional scale and efficiencies from the phase two development. We are also advancing our development pipeline and securing additional attractive long-term investment opportunities. In today's equity-constrained environment, our access to capital and development expertise remain competitive advantages. Following quarter end, we acquired land, plans and permits for a shovel-ready project in Scottsdale, Arizona, scheduled to begin construction in the fourth quarter. This project, like others we've recently launched, It reflects our ability to capitalize on situations where developers faced equity challenges, allowing us to secure projects at a compelling basis. The Scottsdale development is expected to deliver a stabilized NOI yield of 6.1%. In total, we now own or control 15 development sites with approvals for over 4,200 units. And if market conditions remain supportive, we anticipate starting construction on six to eight projects over the next six quarters. driving meaningful earnings contribution in the years ahead. With a 30-year track record of delivering through economic cycles, we remain confident in our ability to execute during this transition. Our focus on high demand, high growth markets, significant redevelopment opportunities, efficiency gains from technology initiatives rolling out in 26 and beyond, and a growing external growth strategy position us for stronger earnings growth. Our portfolio will continue to benefit from job growth, wage growth, household formation, and migration and population trends that outpace other regions. We are encouraged by the building blocks that are in place and what we expect will be an acceleration of the recovery cycle in 2026, leading to sustained revenue and earnings growth as new deliveries continue to decline and the recovery advances. To all our associates across our properties and corporate offices, Thank you for your unwavering dedication and commitment during this busy leasing season. Your efforts continue to drive our success. So with that, I'll turn the call over to Tim. Thank you, Brad, and good morning, everyone. For the third quarter, we saw increasing occupancy and strong retention and renewal lease rates, but experienced continued lack of traction and the ability to push on new lease rates. We believe broad economic uncertainty and slower job growth, as evidenced by a downward revision to the job growth numbers, contributed to prospects being more cautious about making decisions to move and to operators prioritizing occupancy over new lease rents. Despite the challenging environment for new leases, we continue to see new lease over lease pricing improve over the prior year at minus 5.2%, about 20 basis points as compared to the third quarter of 2024. The market put strong renewal lease-over-lease performance of plus 4.5%, which was up 40 basis points over the prior year. Blended pricing for the quarter was positive 0.3%, improving 50 basis points from the third quarter of last year. As mentioned, average physical occupancy sequentially improved to 95.6% in the third quarter, representing a 20 basis point increase from the second quarter. Additionally, we had another quarter of strong collections, with net delinquency representing just 0.3% of billed rents. A number of our mid-tier markets, particularly in the mid-Atlantic region, continue to be outperformers relative to the portfolio. Richmond and the D.C. area markets remain strong, and other markets such as Savannah, Charleston, and Greenville all demonstrated strong pricing power in the quarter. Of our larger markets, Houston continued to be steady, and we're seeing encouraging progress in Atlanta and the Dallas-Fort Worth area properties, where blended pricing in both of these markets improved sequentially from the second quarter and outperformed the same-store portfolio. The lagging markets we have noted for the past few quarters remain consistent, with Austin continuing to work through its record supply pressure, resulting in weak new lease pricing and Nashville facing significant pricing pressure as well. In our lease-up portfolio, we had three properties, West Midtown, Daybreak, and Milepost 35 reached stabilization in the third quarter. We continue to make progress with our other four lease-up properties, which have a combined occupancy of 66.1% as of the end of the third quarter, and the two development properties that are currently leasing units. We have seen the uncertainty and higher leasing pressure impact a portion of our lease-up portfolio and push the stabilization date by one quarter for Val Vista and Phoenix. While Liberty Road just started leasing, the other five properties with units delivered are well into the lease-up process and rents are in line with the original performance. This helps preserve the long-term value creation opportunity, despite the overall leasing velocity being a little bit behind original expectations. Our various targeted redevelopment and repositioning initiatives continued in the third quarter, and we still expect to accelerate these programs into 2026. During the third quarter of 2025, we completed 2,090 interior unit upgrades, achieving rent increases of $99 above non-upgraded units and a cash-on-cash return in excess of 20%. This was an acceleration of both volume of completed units and rent growth achieved from the second quarter. Despite this more competitive supply environment, these units leased on average 10 days faster than non-renovated units when adjusted for the additional turn times. We still expect to renovate approximately 6,000 units in 2025. And for our common area and amenity repositioning program, we continue the repricing phase at six recent projects with five of the six past the halfway point in repricing. So far, the results are encouraging with double-digit NOI yields and rent growth far exceeding peer and MAA properties. Five additional projects are now underway with anticipated repricing to coincide with the prime 2026 leasing season. We are live on five 2025 retrofit projects for community-wide Wi-Fi with go-live dates planned through the remainder of 2025 at an additional 15 communities. As we approach the end of October, our current occupancy is 95.6% and 60-day exposure is 6.1%, 20 basis points and 30 basis points respectively better than this time last year, which keeps us in a position for stable occupancy heading into the slower traffic season. As Brad referenced, new supply pressure continues to moderate, and the structure remains strong with market-level occupancies, including lease-ups, at the highest level since mid-2019. Our theme of strong renewal performance continues in the fourth quarter with high retention rates and lease-over-lease growth rates on renewals accepted for October, November, and December, ranging between plus 4.5% and plus 4.9%. Moderating construction starts, Sunbelt market demand dynamics, and high retention rates underlie our optimism for an improving leasing environment, particularly as we get into the spring and summer leasing season of 2026. That's all I have in the way of prepared comments, and now I'll turn the call over to Clay. Thank you, Jim, and good morning, everyone.