Third Quarter 2026 Earnings Conference Call Transcript

MAA EARNINGS CONFERENCE CALL | THIRD QUARTER 2026

TRANSCRIPT | MANAGEMENT PREPARED COMMENTS | OCTOBER 29, 2026, 9:00 AM CT

Thank you, Samantha, and good morning, everyone. This is Andrew Schaeffer, Treasurer & 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 DelPriore.

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 statements 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 https://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. When we get to Q&A, please be respectful of everyone's time and in an attempt to complete our call within one hour due to other earnings calls today, we will limit questions to one per analyst. We ask that you rejoin the queue if you have any follow-up questions or additional items to discuss.

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. While expense discipline supported third-quarter results, the later recovery in new lease pricing is reflected in our revised full-year outlook that Clay will walk through. As we move further into the fourth quarter, we continue to see evidence of recovery across our markets. Based on current trends, we are optimistic we will see year-over-year improvement in new resident lease-over-lease rates for the full fourth quarter, slightly later than the previously expected third quarter. While the timing has shifted slightly, the underlying drivers of the recovery remain intact. Robust demand continues to absorb the elevated supply delivered over the past few years, and we are encouraged by the early signs of firming market conditions.

Our renewal performance strengthened further, with year-over-year improvement accelerating 80 basis points in the third quarter from 50 basis points in the second quarter, supporting our blended lease-over-lease and revenue performance as new resident pricing continues to recover. With more stable occupancy, we are seeing a strong start to the fourth quarter with preliminary October new resident lease-over-lease pricing improving sequentially from September. This improved new lease

performance combined with sustained strong renewals results in preliminary October blended lease-over-lease rates improving by more than 100 basis points compared to October 2025. We are optimistic this leasing momentum will continue to build into the busier spring leasing season.

Demand fundamentals across our footprint remain healthy and continue to outperform non-MAA markets. Job growth, household formation, inbound migration, and population growth along with persistent single family affordability challenges continue to support demand for rental housing across our footprint. The Sunbelt remains an attractive destination for employers and employees, supported by the high quality of life and relative affordability. These advantages reinforce our conviction in the long-term appeal of the Sunbelt, even as the near-term pace of recovery has been impacted by temporary supply pressure.

Robust demand coupled with lower supply levels is beginning to translate to a more balanced operating environment. Performance varies depending on the stage of the local supply cycle, but year to date absorption across our markets has exceeded new supply deliveries, reducing the number of communities in lease-up and supporting a gradual reduction in concessions. As lease-up communities stabilize and new starts remain low, the impact of elevated supply eases, and the balance between supply and demand shifts more toward demand. That process is occurring and provides a foundation for improving leasing conditions and, ultimately, should lead to stronger pricing power.

Our focus during this transition is to best position MAA to capture the benefits of that improvement. Our priorities remain disciplined expense management, investments in technology to support a stronger platform with increased centralization and specialization, and enhancements to our communities through redevelopment, repositioning, and property-wide Wi-Fi. Together, these initiatives are aimed at strengthening the resident experience to support our sector leading renewals, improving operating efficiency, and expanding our earnings growth opportunity as the operating environment further improves.

In addition to these initiatives to strengthen our operating platform, we remain focused on creating long-term shareholder value through disciplined capital allocation. Our strategy balances investments in our existing portfolio with selective external growth opportunities, while maintaining financial flexibility. During the quarter, we started construction on three projects, wrapping up on our four planned starts for the year. These projects include an 88-unit wholly owned Phase II development in Kansas City, a 306-unit pre-purchase joint venture development in Northern Virginia, and a 312-unit pre-purchase joint venture development in Nashville, TN. All three projects should reach stabilization in a much lower supply environment with stronger operating fundamentals in 2029 and are expected to deliver long-term shareholder returns above our current elevated cost of capital, even under conservative underwriting assumptions.

Looking ahead to 2027, we are optimistic that the balance will continue to shift more broadly from supply-driven competition toward demand-led improvement, supporting an acceleration in operating fundamentals. The timing and pace will vary by market, but with healthy demand, absorption exceeding new deliveries, and markets gradually firming, we see a favorable foundation for the next phase of recovery. As supply pressures ease, we believe the strength of our operating platform and the capabilities we have been building should become more evident in our performance.

To all our associates across our communities and corporate and regional offices, thank you for your continued service to our residents and to MAA.

With that I'll turn the call over to Tim.

Thanks Brad and good morning, everyone.

For the third quarter, same store NOI was in line with our expectations, with continued lower than projected property operating expenses offsetting lower than projected revenue, which was driven primarily by slightly weaker new lease pricing. As Brad mentioned, October and early fourth quarter trends for new lease pricing are encouraging, but while positive absorption is occurring, we continued to see consumers being selective in the third quarter, resulting in downward pressure on new lease rates. Despite these trends in new lease pricing, renewal retention rates and lease rates remained strong. Turnover remained at record lows, with 39.6% turnover on a rolling twelve-month basis and renewal lease-over-lease rates up 5.3% for the quarter. As a result, blended lease-over-lease rates were up 10 basis points from the blended rates of the third quarter of 2025. Our sector-leading net delinquency performance continued, with just 0.3% of billed rents outstanding, a level that has remained consistent for several quarters. Our average resident's financial health remained strong with our rent-to-income ratio at 18%, matching the second quarter and continuing at the lowest level we have seen since pre-COVID.

Individual market fundamentals broadly look similar to last quarter, with a lot of consistency in markets that are showing pricing strength and pricing improvement. Most of our markets in South Carolina and Virginia continue to outperform our broader portfolio from a pricing standpoint, with the Charleston and Norfolk, VA markets gaining even more momentum and leading the portfolio in third quarter blended lease-over-lease pricing performance. Dallas continues to outperform our portfolio and Austin, though still an under-performing market on an absolute basis, continued its relative improvement with a 420-basis point year-over-year increase in blended pricing. Orlando is another improving market with blended pricing up 100 basis points from the third quarter of 2025. Phoenix, Charlotte, and Savannah are relatively high concentration markets for us that are still working through heavy supply pressure and struggling to gain new lease momentum, despite continued strong demand.

During the quarter, MAA Val Vista in Phoenix and MAA Breakwater in Tampa stabilized, and MAA Milepost II in Denver completed construction and moved into our lease-up portfolio. Two additional lease-up properties, MAA Nixie in Raleigh and MAA Liberty Row in Charlotte, are expected to stabilize in the fourth quarter of this year. As with some of our same store portfolio properties, working through the excess supply is still a challenge, particularly in a market like Charlotte where 19% of inventory was delivered into the market over the last three years. Our two Charlotte lease-up properties have seen the heaviest concession usage, with up to 10-12 weeks offered on certain floor plans, but as with the overall lease-up portfolio, we feel good about the long-term NOI growth and value proposition as markets continue to improve. NOI contributions from this group will continue to build through the rest of this year and into 2027.

We continued to execute on our various targeted redevelopment and repositioning initiatives in the third quarter with strong results. During the third quarter of 2026, we completed 2,040 interior unit upgrades, bringing our year-to-date total to 5,544 units, 16% higher than the number of units renovated in the first three quarters of 2025. Through the third quarter year-to-date, we have achieved rent increases of $114 above non-upgraded units on an average per unit spend of $5,926, and the average cash-on-cash return is approximately 23% versus expected returns of 19%, and prior year returns of 20%. These units also continue to lease faster than non-renovated units when adjusted for the additional turn time. We would expect to further accelerate this program in 2027.

We also continue to make progress on our common area and amenity repositioning program. The last of six completed properties wrapped up the re-pricing phase in the third quarter, five properties are early in the re-pricing phase, and six additional are in the construction phase and will begin the

re-pricing phase in the spring of 2027. The completed group achieved an average cash-on-cash return in excess of 11%. We expect similar returns from the remaining active projects and are evaluating 8-12 additional projects for this initiative in 2027. Our community-wide Wi-Fi initiative that began in 2024 continues to expand. The existing 28 live properties where the service is rolling out to residents as leases are signed continue to gain momentum, and the additional 38 properties that commenced in 2026 will start going live this quarter. Revenue from the currently live properties is quickly increasing from $850k in the second quarter to $1.35 million in the third quarter and will continue to grow from here.

As Brad referenced, we are encouraged by what we have seen so far in October with only a few days left to close out the month. Additionally, the early pre-leasing pricing trends so far for November and December relative to last year are positive as well. While blended lease-over-lease pricing for each of the first three quarters of 2026 was higher than each of the three quarters of 2025, new lease-over-lease performance has continued to lag the prior year. However, we expect October new lease-over-lease pricing will exceed last October, which would represent the first year-over-year improvement in new lease pricing this year. Furthermore, pre-leasing volume for November and December is ahead of this same time last year with stronger lease-over-lease rates as well. The strong renewal trends continue into the fourth quarter as well. With decisions made on over 90% of our fourth quarter renewals, we are once again exceeding 5% lease-over-lease growth on accepted renewals and achieving higher accept rates than the prior year. These trends set us up to capture growing occupancy and carry a positive earn-in into 2027 for the first time in three years.

That is all I have in the way of prepared comments; I will now turn the call over to Clay.

Thank you, Tim, and good morning, everyone.

We reported Core FFO for the quarter of $2.10 per diluted share, which was in line with our third quarter guidance. Same store revenues were approximately two cents below our expectations, primarily related to pricing and occupancy, while same store expenses were approximately two cents favorable, driven primarily by real estate taxes. Below same store operations, favorability in overhead and other income and expense was offset by slightly lower-than-expected Non-Same Store NOI.

On the capital allocation front, we funded approximately $84 million of development and pre-development costs during the quarter. At quarter-end, we had approximately $367 million of remaining funding commitments on our development pipeline and expect to spend approximately

$320 million on total development costs for the full year.

Our balance sheet remains well positioned to support our development pipeline and other growth initiatives. At September 30th, we had approximately $661 million of combined cash and capacity under our revolving credit facility, and Net Debt to Adjusted EBITDAre was 4.7 times. Our outstanding debt had an average effective interest rate of 4.1% and an average maturity of 5.6 years.

During the quarter, we borrowed the remaining $250 million available under the delayed draw term loan we established in June, bringing total borrowings under that facility to $350 million at quarter end. The proceeds were used to help refinance $300 million of bonds that matured in September. We also continued our measured approach to share repurchases, repurchasing approximately 400 thousand shares of common stock at a weighted average price of $126.72 for a total investment of

$50 million.

In addition, during September, we settled a forward sale agreement under our ATM program and issued approximately 300 thousand shares at a forward sale price of $130.34 per share. Those

proceeds were used on October 1st to fund the approximately $43 million redemption of our Series I preferred shares.

Turning to our outlook for the remainder of the year, we have lowered the midpoint of our full-year Core FFO guidance by four cents to $8.49 per diluted share and established a revised range of $8.43 to $8.55. The change primarily reflects the impact of third-quarter same store revenue performance, along with lower projected Non-Same Store NOI, partially offset by favorable expense performance and lower projected overhead.

Within same store operations, we reduced our full-year revenue growth midpoint by 35 basis points to negative 0.25%, primarily reflecting third-quarter results. New lease pricing during the quarter was below our expectations, and while we built occupancy during the quarter, average occupancy for the quarter was also modestly lower than anticipated. As Brad discussed, more recent leasing trends support our view that the recovery we anticipated is developing, but approximately one quarter later than we originally expected. Accordingly, we reduced our expected full-year effective rent growth midpoint by 20 basis points to negative 0.10% and our expected average physical occupancy midpoint by 10 basis points to 95.4%.

We also lowered our same store expense growth midpoint by 35 basis points to 1.4%, driven primarily by lower projected real estate taxes. Together, the revisions to our revenue and expense outlook resulted in a 35-basis point reduction in our full year, same store NOI growth midpoint to negative 1.25%. We also lowered projected full year overhead by $1.5 million, reflecting our third quarter performance and expectations for the balance of the year.

For the fourth quarter, we expect Core FFO to be in the range of $2.12 to $2.24 per diluted share, or

$2.18 at the midpoint. The sequential increase from the third quarter primarily reflects the normal seasonal decline in operating expenses, along with higher contributions from our Non-Same Store portfolio and lower overhead costs, partially offset by higher interest expense.

That is all we have in the way of prepared comments, so, Samantha, we will now turn the call back to you for questions.