Mid-Amer Apt Cmntys Inc earnings calls

October and Q4 leasing trends

Q (Eric Wolfe · Citi): They asked what 'pre-leasing' and October trends meant, and what blended rate growth to expect in Q4 and whether October gains carry into November and December.

A: They said October leasing was better than last year and better than September for new leases and renewals. Pre-leased units on notice have been re-rented at higher prices than last year, and November/December pre-lease volume and rates are trending better than last year. They expect some moderation from October into November/December but renewals to stay around 5%+.

"When we talk about pre-leasing, what we really mean there is units that are on notice to move out." — Tim Argo

Atlanta market performance

Q (Jamie Feldman · Wells Fargo): They asked whether Atlanta's Q3 drop was specific or a sign markets are stalling, and whether urban vs suburban differences matter.

A: They said Atlanta’s Q3 weakness was a temporary blip driven by lower traffic in July and higher concessions in some sub-markets like Brookhaven and Duluth, and occupancy has recovered above 95% in early Q4. Urban sub-markets (Buckhead, Midtown, Downtown) still lead performance while some suburban areas laged; overall they see broad improvement across markets and do not view Atlanta as a long-term problem.

"We did see in early 3Q, really the month of July, we saw traffic moderate a little bit." — Tim Argo

Link from low expirations to pricing power

Q (Austin Wurschmidt · KeyBanc): They wanted to know how current low lease expirations and seasonal trends translate to stronger fundamentals when expirations rise, and what thresholds drive pricing power.

A: They noted Q4 has fewer lease expirations and seasonally less demand, so seeing occupancy build and better pre-leasing and renewals in that season is encouraging. They said market-level occupancies are back near pre-supply-glut levels and around 95.5% is where they can start pushing on price, and there are fewer units in lease-up now than at the start of the year.

"For us being in that 95.5% range, somewhere around there is kind of where we want to be or where we think we can start pushing on price and balancing that trade-off a little bit." — Tim Argo

Floating-rate debt and interest expense

Q (Nick Yulico): They asked if the company plans to reduce floating-rate exposure and what the spread is on the $1.2 billion floating-rate debt, and thoughts on capitalized interest for next year.

A: They said they still expect some bond issuance, likely around five-year term rather than longer, and their commercial paper is a little over 4% on about $750 million, the $350 million term loan is about 4.7%, revolver about 4.5%, averaging a little lower than 4.5%. They expect capitalized interest next year to be a little lower than this year due to timing of deliveries and starts, so a small headwind into 2027.

"Whenever you look at our floating rate debt, and think about the weighted piece of that, our commercial paper all in, it's about a little over 4% for it." — Clay Holder

Capital priorities and buybacks

Q (Brad Heffern · RBC): They asked how the company ranks capital uses now and whether higher rates and lower stock might favor repurchases.

A: They said priority remains investing in the operating platform (Reimagine initiative) and redevelopment, and they will favor development while cap rates and returns make sense. Given current leverage and lack of planned dispositions, they are unlikely to be active in share repurchases in the near term.

"I'd say given where our current leverage is and our dispositions for the year that we've executed at about $150 million net to us, we have reinvested that $150 million into share repurchases." — Brad Hill

Dividend policy and metric

Q (John Kim · BMO): They asked what primary metric guides dividend policy given FAD down and a high payout ratio and whether dividend should be lowered.

A: They said they evaluate funds available for distribution on a pre-redevelopment CapEx basis because redevelopment spending typically yields returns above cost of capital. They plan to manage CapEx to be at least flat to slightly positive and do not want to lever up to fund other capital needs.

"It is running right around flat to slightly positive." — Clay Holder

Monthly lease cadence and Q4 occupancy

Q (Adam Kramer · Morgan Stanley): They wanted the monthly cadence of lease growth in Q3, October direction, and an occupancy target for Q4.

A: They said Q3 renewals were steady around 5.2%-5.4% and new leases showed normal seasonality with July > August > September, averaging about negative 6% for the quarter and September a little over negative 7%. October preliminarily trended slightly better than September and they expect Q4 occupancy to be better than 95.3%, closer to about 95.5%.

"If we think about October, I will say October preliminarily with a few days left, trending slightly better than September." — Tim Argo

Other 2027 earn-in building blocks

Q (Jana Galan · BofA): They asked what other drivers besides occupancy could help 2027, and whether other revenue or bad debt can improve.

A: They said a slightly positive earn-in into 2027 is expected and occupancy may be similar or a bit better, with 95.5% a balance point. The Wi-Fi initiative is the main other-income opportunity: Q3 contributed $1.35 million and the near-term group run rate is close to $2 million, with a full run rate for these projects nearer $3 million across about 14,000 units as rollout continues.

"The big one would be our Wi-Fi initiative that we continue to roll out." — Tim Argo

Demand, concessions, renter behavior

Q (Mike · Mizuho): They asked how demand and pricing power look and how concessions and AI agents affect renter negotiating behavior.

A: They said demand remains strong with lead volume up 10%-15% year over year, though it takes more leads to convert as prospects take longer to decide. Concessions have limited the speed of recovery but have begun to tick down slightly in late Q3 into early Q4 as occupancy stabilizes and fewer units are in lease-up.

"We've been seeing lead volume run 10%-15% higher this year over last year." — Tim Argo

Overall recovery shape and pace

Q (Rich Anderson · Cantor Fitzgerald): They asked whether the recovery is gradual or could be a sharp 'hockey stick' and what other factors slow recovery besides supply.

A: They said recovery pace depends on where each market is in its supply cycle; demand is not the issue, supply is. Some markets that have cleared supply show hockey-stick year-over-year recoveries, while others remain challenged. Job growth has been weaker than hoped, but population growth, migration, household formation, and reduced doubling-up could support a stronger recovery in spring leasing season next year.

"I think in terms of the pace of recovery next year, from a portfolio level perspective, I mean, it really depends on where each individual market is on that kind of supply curve." — Brad Hill

Q3 miss and guidance calibration

Q (Rich Hightower · Barclays): They asked whether something unexpected happened in Aug-Sep causing the Q3 miss and if guidance setting should be wider given uncertainty.

A: They said the Q3 pressure came from leasing more vacant units with pricing pressure and a slight uptick in concessions to compete with new supply, even though pre-leasing looked fine in July. They will review forecasting processes but noted some expected economic improvements and consumer sentiment gains did not materialize this year, which affected new lease pricing.

"You saw a slight uptick in our concessions in our portfolio in the third quarter as a result of us having to compete more with some of that new supply that's out there in order to gain residents in that quarter." — Brad Hill

Expense outlook for 2027

Q (Steve Sakwa · Evercore): They asked what to expect for expense growth next year after recent containment.

A: They said personnel savings from the Reimagine initiative will continue to be a positive and marketing may be elevated early but should decline as supply is absorbed. Insurance claims have been favorable so large increases are not expected, property tax growth is unlikely to be outsized given depressed valuations, and R&M and utilities will depend on inflationary cost trends.

"I would not expect a significant increase in insurance like we saw a couple of years ago." — Clay Holder

Competition from single-family rentals

Q (Anthony Paolone · JPMorgan): They asked how much single-family rentals compete with apartments versus move-outs to homeownership.

A: They said move-outs to rent a house are minimal and not a major competitive factor; in Q3 move-outs to rent a house were about 3%, down from 4% a year ago. They are not concerned about single-family rentals taking meaningful share from their residents.

"We look at Q3, for example, move-outs to rent a house was only about 3%, down from 4% a year ago." — Tim Argo

Development returns when cost of capital rises

Q (Alec Feygin · Baird): They asked how higher cost of capital changes views on ground-up development and expansions.

A: They said they underwrite conservatively and ensure projects meet current cost of capital; many pipeline deals still hit underwritten returns despite pressure in some markets like Charlotte. They continue to believe development yields and long-term growth from development exceed existing portfolio returns, but require adequate yields given higher capital costs.

"I think we've always been pretty conservative in the way that we've approached development, either through our return requirements, being sure that they meet our current cost of capital, or in our underwriting assumptions." — Brad Hill

New vs renewal rent spreads and turnover risk

Q (Ami Probandt · UBS): They asked how market rents and new-lease vs renewal spreads are trending and whether turnover could rise if consumers stay pressured.

A: They said new lease rents were about 2% higher in September versus December on an absolute basis, and year-to-date new leases are about negative 5.3% overall. When isolating units where a resident moved out, new-lease-over-lease is only negative 1.9%, a better proxy for market rents. The renewal gap has been wider than normal but stabilized at about $190-$200, and they do not see pressure from turnover rising now.

Regulatory risk in Sun Belt markets

Q (Alexander Goldfarb · Piper Sandler): They asked whether rising competitiveness and political shifts could bring rent control or other adverse policies into Sun Belt markets.

A: They said they are not broadly seeing that risk across their footprint, noting isolated legislative actions in a few markets like Colorado but overall the regulatory landscape in their markets remains relatively business-friendly and they are not seeing meaningful change that would increase regulatory risk.

"Broadly across our footprint, we continue to believe that the regulatory landscape in those markets is pretty positive for us." — Brad Hill

Demand views amid weak job growth and migration

Q (Michael Lewis · Truist): They asked whether weak job growth and lower immigration could be hidden demand headwinds and what supports the company's confidence in demand.

A: They said immigration impacts have not been evident in their portfolio and that other demand factors remain strong: population growth, migration into their footprint, and positive absorption numbers year to date. They continue to see more units absorbed than supplied in many markets, which supports confidence in demand going forward.

"If you look broadly across the board, all of the other demand factors that we talk about continue to be quite strong." — Brad Hill

Underwriting assumptions for new development yields

Q (Alex Kim · Zelman & Associates): They asked if underwriting assumptions for targeted stabilized yields are being adjusted given slower rent recovery and negative new-lease pricing.

A: They said underwriting is conservative and historically development rents and construction costs have outperformed expectations, often delivering yields above underwriting. Some Charlotte deals face lease-up pressure, but overall their developments over the last five years have tended to exceed underwriting and they remain comfortable with their process.

"But overall, generally what we find is the rents on our development deals, if you look over the last five years, have outperformed the expectations that we have and the way that we have underwritten these deals." — Brad Hill

Urban vs suburban rent spread

Q (John Pawlowski · Green Street): They asked how new-lease spreads compare between urban and suburban parts of the portfolio for full-year 2026.

A: They said on a blended basis urban outperforms suburban by about 40 basis points, and on new leases the urban premium is about 100 basis points; urban occupancy is roughly five basis points higher. Urban properties represent about 25% of the portfolio and the urban–suburban gap has narrowed from over 100 basis points earlier.

"On a blended basis, our urban is running probably 40 basis points better than our suburban." — Tim Argo

Supply outlook for 2027

Q (Peter Abramowitz · Deutsche Bank): They asked qualitatively what they think supply will look like in 2027 and any nuances for next year.

A: They said they are encouraged because starts have been below long-term averages for about three and a half years and this year deliveries were below long-term averages; most data sources show deliveries next year will be below long-term average in their footprint. Lower starts and constrained access to capital should keep supply below average and support absorption and occupancy improvements into next year and beyond.

"In all of those instances, the supply deliveries in our markets next year will be below the long-term average." — Brad Hill