Q2 2026 Mid America Apartment Communities Inc Earnings Call

July 30, 2026

Speaker #1: Afterward, the company will conduct a question-and-answer session. As a reminder, this conference call is being recorded today. July 30, 2026, and in consideration of time, we have a one-question limit.

Speaker #1: I will now turn the call over to Andrew Schaeffer, Senior Vice President, Treasurer, and Director of Capital Markets of MAA, for opening comments.

Speaker #2: Thank you, Regina, and good morning, everyone. This is Andrew Schaeffer, 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 Del Flori.

Andrew Schaeffer: Thank you, Regina, and good morning, everyone. This is Andrew Schaeffer, 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 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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 be available on our website later today.

Andrew Schaeffer: 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 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. In an attempt to complete our call within 1 hour due to other earnings calls today, we will limit questions to 1 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #3: Well, thanks, Andrew. And good morning, everyone. Core FFO results, we're ahead of our expectations with the sequential improvement in new resident and blended lease-over-lease rates exceeding the prior year's sequential improvement.

Brad Hill: Well, thanks, Andrew, good morning, everyone. Core FFO results were ahead of our expectations, with the sequential improvement in new resident and blended leaseover lease rates exceeding the prior year sequential improvement. While recovery in new resident lease rates is showing improvement, the pace is slower than we would like, given cautious consumer sentiment as we continue to work through the unprecedented high levels of new supply deliveries over the past couple of years in a few of our high concentration markets. We are seeing solid demand, including job growth, household formation, and population and wage growth. The increase in inbound migration to our properties in Q2 was the strongest quarterly increase we have seen since we began tracking the metric, reflecting the broad appeal of our high-demand markets. As a result, units absorbed in H1 significantly outpaced new units delivered.

Speaker #3: While recovery in new resident lease rates is showing improvement, the pace is slower than we would like given cautious consumer sentiment as we continue to work through the unprecedented high levels of new supply deliveries over the past couple of years in a few of our high concentration markets.

Speaker #3: We are seeing solid demand, including job growth, household formation, and population and wage growth. The increase in inbound migration to our properties in the second quarter was the strongest quarterly increase we have seen since we began tracking the metric.

Speaker #3: Reflecting the broad appeal of our high-demand markets, as a result, units absorbed in the first half of the year significantly outpaced new units delivered.

Speaker #3: As demand remains resilient and new deliveries continue to decline, we expect the recovery to expand and accelerate. Additionally, we're benefiting from our scale and operating discipline.

Brad Hill: As demand remains resilient and new deliveries continue to decline, we expect the recovery to expand and accelerate. Additionally, we're benefiting from our scale and operating discipline. We continue to focus on expense control, with Q2 year-over-year same-store operating expense growth of just 80 basis points, the teams are excelling in this area. At the same time, the persistent single-family affordability and availability challenges are supporting resident demand for affordable and high-quality rental housing, two areas where MAA excels. Our customer service focus continues to differentiate the MAA experience, driving increased resident loyalty and contributing to our record low turnover and strong renewal rate growth, improving 50 basis points year-over-year.

Speaker #3: We continue to focus on expense control and, with second quarter year-over-year same-store operating expense growth of just 80 basis points, the teams are excelling in this area.

Speaker #3: At the same time, the persistent single-family affordability and availability challenges are supporting resident demand for affordable and high-quality rental housing. Two areas where MAA excels: our customer service focus continues to differentiate the MAA experience driving increased resident loyalty and contributing to our record low turnover, and strong renewal rate growth.

Speaker #3: Improving 50 basis points year over year. We continue to invest in strategic areas of the business to drive future earnings growth, including various new technology initiatives to support our centralization and specialization efforts that will further strengthen our customer service and drive future margin expansion.

Brad Hill: We continue to invest in strategic areas of the business to drive future earnings growth, including various new technology initiatives to support our centralization and specialization efforts that will further strengthen our customer service and drive future margin expansion. As Tim will talk about, we are expanding our interior renovation and repositioning programs, which are supported by the new deliveries in our market stabilizing, where on average, the effective monthly rent per unit for a new community is over 30% higher than our existing rents, giving us substantial room to expand these highly accretive initiatives. Our property-wide Wi-Fi initiative is in high demand from our residents and is performing well. On the external growth front, the improving demand-supply dynamic, combined with the decreased availability of capital for new projects, makes disciplined investing in new developments an attractive capital allocation option.

Speaker #3: As Tim will talk about, we are expanding our inter-year renovation and repositioning programs which are supported by the new deliveries in our market stabilizing.

Speaker #3: We're on average the effective monthly rent per unit for a new community is over 30% higher than our existing rents. Giving us substantial room to expand these highly accretive initiatives.

Speaker #3: Our property-wide Wi-Fi initiative is in high demand from our residents and is performing well. On the external growth front, the improving demand-supply dynamic, combined with the decreased availability of capital for new projects, makes disciplined investing in new developments an attractive capital allocation option.

Speaker #3: In addition to the Kansas City project we started construction on in the second quarter, we started construction on a project in Nashville, Tennessee, in July, and next month we expect to start construction on a project on the land we recently purchased in Northern Virginia.

Brad Hill: In addition to the Kansas City project we started construction on in Q2, we started construction on a project in Nashville, Tennessee, in July. Next month, we expect to start construction on a project on the land we recently purchased in Northern Virginia. With one more start later in the year, we are on track to hit our four development starts for the year. The acquisition market remains slow, with cap rates in the mid to upper 4% range for high-quality communities that fit our profile. Should more compelling opportunities materialize, we have the balance sheet capacity to support growth in this area. Together, these initiatives reflect a disciplined approach to deploying capital across multiple growth opportunities while maintaining flexibility as market conditions evolve.

Speaker #3: With one more start later in the year, we are on track to hit our forward development starts for the year. The acquisition market remains slow, with cap rates in the mid to upper 4% range for high-quality communities that fit our profile.

Speaker #3: But should more compelling opportunities materialize, we have the balance sheet capacity to support growth in this area. Together, these initiatives reflect a disciplined approach to deploying capital across multiple growth opportunities while maintaining flexibility as market conditions evolve.

Speaker #3: This same discipline is also evident in our ongoing portfolio recycling efforts, which remain focused on enhancing portfolio quality and supporting long-term earnings growth. In the second quarter, we sold a high capex 30-year-old property in Raleigh and have two additional properties that should close in the back half of the year.

Brad Hill: This same discipline is also evident in our ongoing portfolio recycling efforts, which remain focused on enhancing portfolio quality and supporting long-term earnings growth. In Q2, we sold a high CapEx 30-year-old property in Raleigh and have two additional properties that should close in H2, a 42-year-old property in Dallas and our one property in the District of Columbia. These transactions will wrap up our planned dispositions for 2026. With a track record of successfully navigating economic cycles for over 30 years, we remain confident in our ability to emerge from this recovery period with a stronger, more efficient, and higher growth operating platform.

Speaker #3: A 42-year-old property in Dallas and our one property in the District of Columbia. These transactions will wrap up our planned dispositions for 2026. With a track record of successfully navigating economic cycles for over 30 years, we remain confident in our ability to emerge from this recovery period with a stronger, more efficient, and higher growth operating platform.

Speaker #3: We believe our focus on high demand and high growth markets will continue to lead to higher earnings and lower volatility over the full cycle, while our investments in accretive growth initiatives are well positioned to deliver increasing value and earnings contribution as the demand-supply balance improves.

Brad Hill: We believe our focus on high demand and high growth markets will continue to lead to higher earnings and lower volatility over the full cycle, while our investments in accretive growth initiatives are well positioned to deliver increasing value and earnings contribution as the demand-supply balance improves. We are encouraged by the building blocks in place, resilient demand, strong absorption, potentially growing migration trends, and a financially strong resident base, all with the backdrop of decreasing supply pressure. As we wrap up July and head into August and September, we see the opportunity for growing momentum and remain confident in our ability to deliver compounding revenue and earnings performance as the recovery continues to accelerate. To all associates across our properties and in our corporate offices, thank you for your continued dedication and focus during this pivotal leasing season. With that, I'll turn it over to Tim.

Speaker #3: We are encouraged by the building blocks in place: resilient demand, strong absorption, potentially growing migration trends, and the financially strong resident base all with the backdrop of decreasing supply pressure.

Speaker #3: As we wrap up July and head into August and September, we see the opportunity for growing momentum and remain confident in our ability to deliver compounding revenue and earnings performance as the recovery continues to accelerate.

Speaker #3: To all associates across our properties and in our corporate offices, thank you for your continued dedication and focus during this pivotal leasing season. With that, I'll turn it over to Tim.

Speaker #4: Thanks for having me. Good morning, everyone. For the second quarter, same-store NOI beat our expectations, with continued lower-than-projected property operating expenses more than offsetting slightly lower average daily occupancy.

Tim Argo: Good morning, everyone. For Q2, same-store NOI beat our expectations with continued lower than projected property operating expenses more than offsetting slightly lower average daily occupancy. From a pricing standpoint, new lease over lease growth improved 170 basis points sequentially from Q1, 20 basis points ahead of the acceleration achieved from Q1 to Q2 of 2025. As Brad mentioned, new lease rates have been slower to recover due to lower consumer sentiment and still elevated but moderating new supply in some markets. We are encouraged by forward-looking trends. Renewal retention rates and lease rates remain strong. Turnover once again moved lower to 39.6%, and renewal lease over lease rates were 5.2% for the quarter.

Speaker #4: From a pricing standpoint, new lease-over-lease growth improved 170 basis points sequentially from the first quarter, 20 basis points ahead of the acceleration achieved from the first quarter to second quarter, of 2025.

Speaker #4: As Brad mentioned, new lease rates have been slower to recover due to lower consumer sentiment and still elevated but moderating new supply in some markets, but we are encouraged by forward-looking trends.

Speaker #4: Renewal retention rates and lease rates remain strong. Turnover once again moved lower to 39.6%, and renewal lease-over-lease rates were 5.2% for the quarter. As a result, blended lease-over-lease rates were up 100 basis points from the first quarter, and up 20 basis points from the blended rates of the second quarter of 2025.

Tim Argo: As a result, blended lease-over-lease rates were up 100 basis points from Q1 and up 20 basis points from the blended rates of Q2 2025. Our resident health remained strong, as reflected in an improvement in our rent-to-income ratio to 18% and continued strong performance in collections with net delinquency representing just 0.3% of billed rents, consistent with what we achieved in the last several quarters. Broadly, our stronger performing markets remain relatively consistent with the last few quarters, and we are starting to see some pockets of momentum in other markets. We continue to see strong performance in Virginia and South Carolina with Norfolk, Richmond, Charleston, Greenville, and the DC area markets continuing to outperform the broader portfolio from a pricing standpoint.

Speaker #4: Our resident health remains strong as reflected in an improvement in our rent-to-income ratio to 18% and continued strong performance in collections with net delinquency representing just 0.3% of billed rents.

Speaker #4: Consistent with what we achieved in the last several quarters. Broadly, our stronger performing markets remain relatively consistent with the last few quarters, and we are starting to see some pockets of momentum in other markets.

Speaker #4: We continue to see strong performance in Virginia and South Carolina, with Norfolk, Richmond, Charleston, Greenville, and the DC area markets continuing to outperform the broader portfolio from a pricing standpoint.

Speaker #4: As with last quarter, our two largest concentration markets, Atlanta and Dallas, outperformed the portfolio in the second quarter in terms of blended lease-over-lease pricing.

Tim Argo: As with last quarter, our two largest concentration markets, Atlanta and Dallas, outperformed the portfolio in Q2 in terms of blended lease-over-lease pricing. Austin, though still an underperforming market, showed good momentum and achieved blended lease-over-lease pricing that was 300 basis points better and occupancy that was 40 basis points better than Q2 2025. Orlando is another improving market with blended pricing up 130 basis points from Q2 2025. Phoenix, Charlotte, Raleigh, and Savannah are high concentration markets for us that are still facing challenges in the wake of heavy supply pressures despite continued strong demand. During the quarter, MAA Cathedral Arts in Dallas stabilized and MAA Plaza Midwood in Charlotte completed construction and moved into our lease-up portfolio.

Speaker #4: Austin, though still an underperforming market, showed good momentum and achieved blended lease-over-lease pricing that was 300 basis points better and occupancy that was 40 basis points better than the second quarter of 2025.

Speaker #4: Orlando is another improving market, with blended pricing up 130 basis points from the second quarter of 2025. Phoenix, Charlotte, Raleigh, and Savannah are high-concentration markets for us that are still facing challenges in the wake of heavy supply pressure, despite continued strong demand.

Speaker #4: During the quarter, MAA Cathedral Arts in Dallas stabilized and MAA Plaza Midwood in Charlotte completed construction and moved into our lease-up portfolio. MAA Val Vista will officially stabilize in the third quarter, though it achieved over 90% occupancy during the second quarter.

Tim Argo: MAA Val Vista will officially stabilize in Q3, though it achieved over 90% occupancy during Q2. We moved up the stabilization date of MAA Breakwater in Tampa by two quarters due to strong leasing velocity that ramps well ahead of our pro forma expectations. We have an additional two properties under construction that are actively leasing. Given the supply pressure in Charlotte, our two lease-ups in this market remain the most challenged in the near term, with concessions running up to eight to 10 weeks on certain floor plans. With the overall lease-up portfolio, we expect to achieve our underwritten yields as markets continue to improve, retaining the expected long-term value creation opportunity. NOI contributions from this group will continue to build through the rest of this year and into 2027.

Speaker #4: We moved up the stabilization date of MAA Breakwater in Tampa by two quarters due to strong leasing velocity at rents well ahead of our pro forma expectations.

Speaker #4: We have an additional two properties under construction that are actively leasing. In the supply pressure in Charlotte, our two lease-ups in this market remain the most challenged in the near term, with concessions running up to 8 to 10 weeks on certain floor plans, but with the overall lease-up portfolio, we expect to achieve our underwritten yields as markets continue to improve, retaining the expected long-term value creation opportunity.

Speaker #4: NOI contributions from this group will continue to build through the rest of this year, and into 2027. As Brad mentioned, we continue to accelerate and exceed expected returns on our various targeted redevelopment and repositioning initiatives.

Tim Argo: As Brad mentioned, we continue to accelerate and exceed expected returns on our various targeted redevelopment and repositioning initiatives. During Q2 2026, we completed 2,118 interior unit upgrades, bringing our year-to-date total to 3,504 units, 30% higher than the number of units renovated in H1 2025. With year-to-date rent increases of $110 above non-upgraded units, an average per unit spend of $5,134, the average cash-on-cash return is approximately 25% versus expected returns of 19%. These units continue to lease faster than non-renovated units when adjusted for the additional turn time, averaging about 10 days quicker. We would expect to further accelerate this program in 2027.

Speaker #4: During the second quarter of 2026, we completed 2,118 interior unit upgrades, bringing our year-to-date total to 3,504 units, 30% higher than the number of units renovated in the first half of 2025.

Speaker #4: With year-to-date rent increases of 110 dollars above non-upgraded units and average per-unit spend of $5,134, the average cash-on-cash return is approximately 25%, versus expected returns of 19%.

Speaker #4: These units continue to lease faster than non-renovated units when adjusted for the additional turn time, averaging about 10 days quicker. We would expect further accelerate this program in 2027.

Speaker #4: For our common area and amenity repositioning program, we have six properties that are wrapping up the repricing phase. Five properties that are just starting the repricing phase, and six additional that are in the early construction phase and will begin the repricing phase in the spring of 2027.

Tim Argo: For our common area and amenity repositioning program, we have six properties that are wrapping up the repricing phase, five properties that are just starting the repricing phase, and six additional that are in the early construction phase and will begin the repricing phase in the spring of 2027. The first group is 98% repriced with average cash-on-cash returns of 13%. We expect similar returns from the remaining active projects and will look to expand our scope of this initiative in 2027. Our community-wide Wi-Fi initiative that began in 2024 continues to expand. We have 28 live properties where the service is rolling out to residents as leases are signed, and we are further expanding the initiative this year to an additional 38 properties.

Speaker #4: The first group is 98% repriced with average cash-on-cash returns of 13%. We expect similar returns from the remaining active projects and will look to expand our scope in this initiative in 2027.

Speaker #4: Our community-wide Wi-Fi initiative that began in 2024 continues to expand. We have 28 live properties where the service is rolling out to residents as leases are signed, and we are further expanding the initiative this year to an additional 38 properties.

Speaker #4: Resident adoption at the first 28 properties is accelerating, with revenues quickly increasing from $500,000 in the first quarter to $850,000 in the second quarter, and will continue to grow from here.

Tim Argo: Resident adoption at the first 28 properties is accelerating, with revenues quickly increasing from $500,000 in Q1 to $850,000 in Q2 and will continue to grow from here. Looking forward to Q3, we are encouraged by the early momentum we see in pricing and occupancy and early signs of potentially later seasonal peak. Our strategic decision to push new lease pricing where possible in late Q2 and into July has allowed us to maintain momentum in renewal pricing and new lease pricing. Combined with declining supply pressure, strong demand, and the broad market level absorption that occurred in Q1 and Q2, our approach sets us up to capture momentum in new lease or re-lease pricing later in the season and achieve renewal rates consistent with Q2 and well above what we achieved in Q3 of last year.

Speaker #4: Looking forward to the third quarter, we are encouraged by the early momentum we see in pricing and occupancy and early signs of potentially later seasonal peak.

Speaker #4: Our strategic decision to push new lease pricing where possible in late second quarter and into July has allowed us to maintain momentum in renewal pricing and new lease pricing.

Speaker #4: Combined with declining supply pressure, strong demand, and the broad market-level absorption that occurred in the first and second quarters, our approach sets us up to capture momentum in new lease-over-lease pricing later in the season and achieve renewal rates consistent with the second quarter and well above what we achieved in the third quarter of last year.

Speaker #4: With an assumed backdrop of steady demand, fewer units in lease-up, and current pricing trends continuing, we expect third-quarter blended pricing to be better than the second quarter, a trend not seen in the last four years, since third-quarter blended pricing typically trails the second quarter.

Tim Argo: With an assumed backdrop of steady demand, fewer units in lease-up, and current pricing trends continuing, we expect Q3 blended pricing to be better than Q2, a trend not seen in the last four years since Q3 blended pricing typically trails Q2. That's all I have in the way of prepared comments. Now I'll turn the call over to Clay.

Speaker #4: That's all I have in the way of prepared comments. Now I'll turn the call over to Clay.

Speaker #3: Thank you, Tim. And good morning, everyone. We reported core effort for the quarter of $2.08 per diluted share. Which was $0.02 ahead of our second-quarter guidance.

Clay Holder: Thank you, Tim, and good morning, everyone. We reported Core FFO for the quarter of $2.08 per diluted share, which was $0.02 ahead of our Q2 guidance. The outperformance was driven primarily by continued strength in expense management, with same-store expenses coming in $0.015 favorable to our expectations and NOI from our non-same store portfolio contributing an additional $0.01, partially offset by same-store revenues that were slightly below our expectations. As Brad and Tim highlighted, our teams continue to demonstrate an ability to control cost while maintaining strong resident retention and high resident satisfaction. That consistent execution remains a key strength of our operating platform and contributing meaningfully to our Q2 outperformance. Repair and maintenance of personnel costs were the primary drivers of our expense favorability during the quarter. We funded approximately $81 million in development and pre-development costs during the quarter.

Speaker #3: The outperformance was driven primarily by continued strength and expense management, with same-store expenses coming in 1.5 cents favorable to our expectations and NOI from our non-same-store portfolio contributing an additional penny, partially offset by same-store revenues that were slightly below our expectations.

Speaker #3: As Brad and Tim highlighted, our teams continue to demonstrate an ability to control costs while maintaining strong resident retention and high resident satisfaction. That consistent execution remains a key strength of our operating platform and is contributing meaningfully to our second-quarter outperformance.

Speaker #3: Repair and maintenance of personnel costs were the primary drivers of our expense favorability during the quarter. We funded approximately $81 million in development and pre-development costs during the quarter.

Speaker #3: At June 30th, our development pipeline totaled $598 million, leaving $237 million of remaining funding commitments over the next three years. Combined with the two projects that Brad referenced as starting in the third quarter, our development pipeline will total approximately $804 million.

Clay Holder: At 30 June, our development pipeline totaled $598 million, leaving $237 million of remaining funding commitments over the next 3 years. Combined with the 2 projects that Brad referenced as starting in Q3, our development pipeline will total approximately $804 million. Looking ahead, we expect to add additional projects to the pipeline during the balance of the year and into early 2027, supporting our objective of building and sustaining a development pipeline of approximately $1 billion and reinforcing development as an important driver of long-term earnings growth. Our balance sheet is solid and is set to support our development pipeline, any acquisitions that may emerge, along with the other growth initiatives Tim discussed. At the end of the quarter, we had over $880 million in combined cash and borrowing capacity under our revolving credit facility, and our net debt to EBITDA ratio was 4.5x.

Speaker #3: Looking ahead, we expect to add add additional projects to the pipeline during the balance of the year and into early 2027, supporting our objective of building and sustaining a development pipeline of approximately $1 billion and reinforcing development as an important driver of long-term earnings growth.

Speaker #3: Our balance sheet is solid and is set to support our development pipeline, any acquisitions that may emerge, along with the other growth initiatives Tim discussed.

Speaker #3: At the end of the quarter, we had over 880 million in combined cash and borrowing capacity under our revolving credit facility, and our net debt-to-EBITDA ratio was 4.5 times.

Speaker #3: At June 30th, our outstanding debt had an average maturity of six years, at an effective rate of 3.9%. During the quarter, we continued our measured approach to share repurchases and repurchased 383,000 shares of our common stock at a weighted average share price of $130.66, for a total of $50 million.

Clay Holder: At 30 June, our outstanding debt had an average maturity of 6 years at an effective rate of 3.9%. During the quarter, we continued our measured approach to share repurchases and repurchased 383,000 shares of our common stock at a weighted average share price of $130.66, for a total of $50 million. In June, we entered into an unsecured delayed term loan with a committed principal amount of $350 million, with $100 million outstanding under the loan at quarter end. Turning to our outlook for the year, we have maintained our Core FFO guidance and have updated our same-store revenue and expense guidance to reflect our current view of leasing conditions for the balance of the year. While underlying demand remains healthy, the pace of recovery in new lease pricing has been somewhat slower than assumed in our prior guidance.

Speaker #3: In June, we entered into an unsecured delayed term loan with a committed principal amount of $350 million, with $100 million outstanding under the loan at quarter end.

Speaker #3: Turning to our outlook for the year, we have maintained our core FIFO guidance and have updated our same-store revenue and expense guidance to reflect our current view of leasing conditions for the balance of the year.

Speaker #3: While underlying demand remains healthy, the pace of recovery in new lease pricing has been somewhat slower than assumed in our prior guidance. We continue to prioritize long-term revenue performance through disciplined pricing decisions, which we believe support renewal performance and position us well to capture the coming new lease pricing momentum.

Clay Holder: We continue to prioritize long-term revenue performance through disciplined pricing decisions, which we believe support renewal performance and position us well to capture the coming new lease pricing momentum. As a result, we have slightly reduced our expectations for both effective rent growth and average occupancy for the year. As we updated our revenue assumptions for the balance of the year, we also recognized favorable trends developing in other areas of the business. Expense performance has remained strong, driven by continued discipline across our operating platform, lower projected real estate taxes, and favorable anticipated insurance costs given our recent coverage renewal. In addition, our non-same-store portfolio continues to perform well, with lease-up communities performing in line with, and in some cases slightly ahead of, our expectations in contributing incremental earnings support. In 2026, we project over $25 million in incremental year-over-year NOI from the properties represented in this portfolio.

Speaker #3: As a result, we have slightly reduced our expectations for both effective rent growth and average occupancy for the year. As we updated our revenue assumptions for the balance of the year, we also recognized favorable trends developing in other areas of the business.

Speaker #3: Expense performance has remained strong, driven by continued discipline across our operating platform, lower projected real estate taxes, and favorable anticipated insurance costs given our recent coverage renewal.

Speaker #3: In addition, our non-same-store portfolio continues to perform well, with lease-up communities performing in line with and, in some cases, slightly ahead of our expectations and contributing incremental earnings support.

Speaker #3: In 2026, we project over $25 million in incremental year-over-year NOI from the properties represented in this portfolio. Collectively, these favorable trends offset the revisions for our revenue outlook and support our maintained full-year core FIFO midpoint of $8.53 per diluted share.

Clay Holder: Collectively, these favorable trends offset the revisions to our revenue outlook and support our maintained full-year Core FFO midpoint of $8.53 per diluted share. That is all that we have in the way of prepared comments. Regina, we will now turn the call back to you for questions.

Speaker #3: That is all that we have in the way of prepared comments, so Regina, we will now turn the call back to you for questions.

Speaker #1: We will now open the call up for questions. If you'd like to ask a question, please press star, then 1, on on your touch-tone phone.

Operator: We will now open the call up for questions. If you'd like to ask a question, please press star then one on your touch-tone phone. If you'd like to withdraw your question, press star one again. Our first question will come from the line of Jamie Feldman with Wells Fargo. Please go ahead.

Speaker #1: If you'd like to withdraw your question, press star, 1 again. Our first question will come from the line if Jamie Feldman with Wells Fargo.

Speaker #1: Please go ahead.

Speaker #4: Great, thanks for taking the question. I mean, just comparing some of your comments on July and thoughts on the third quarter versus what you delivered in the second quarter, and then the revenue cut—can you give us some comfort or maybe talk us through how you decided to cut now, how much you decided to cut the revenue guide now, and what gives you comfort that this won't be the same situation in the third quarter or fourth quarter?

Jamie Feldman: Great. Thanks for taking the question. Just comparing some of your comments on July and thoughts on Q3 versus what you delivered in Q2, and the revenue cut. Can you give us some comfort or maybe talk us through how you decided to cut now, how much you decided to cut the revenue guide now, and what gives you comfort that this won't be the same situation, Q3, Q4, in terms of needing to pull back?

Speaker #4: In terms of needing to pull back?

Speaker #5: Yeah. James, Tim, I mean, I'll talk a little bit about what we're seeing in July, Q3, and I think that's really what is driving our optimism as we are starting to see some momentum as we look out into Q3.

Tim Argo: Jamie, this is Tim. I'll talk a little bit about what we're seeing in July and Q3, and I think that's really what is driving our optimism as we are starting to see some momentum as we look out into Q3. July itself we expect will be pretty similar in terms of pricing to what we saw in Q2 with occupancy building as we have moved through July and ending in a good spot with July occupancy. Where we see the optimism and where we think we've made the right decisions is what we're seeing for August, September. First, if we look at renewals for the entire Q3, we have retention rates well above what we saw this time last year, well above what we saw in Q2, and we're continuing to see renewal rates in that 5-plus range.

Speaker #5: July itself, we expect will be pretty similar in terms of pricing to what we saw in Q2, with occupancy building as we have moved through July and ending in a good spot with July occupancy.

Speaker #5: But what we see the optimism and where we think we've made the right decisions is what we're seeing for August, September. First, if we look at renewals for the entire Q3, we have retention rates well above what we saw this time last year, well above what we saw in Q2, and we're continuing to see renewal rates in that 5-plus range.

Speaker #5: I mean, we have visibility pretty much into all of Q3 at this point, probably 98% of our renewals we have locked in at this point.

Clay Holder: We have visibility pretty much into all of Q3 at this point. Probably 98% of our renewals we have locked in at this point. When we look at where we stand with new lease pricing and what we've done on the pre-lease side, obviously still more to come in the rest of the quarter. We probably still have about 40% of our new leases or so will still come over the next 2 months. When we look at the pre-leasing for August, we're running 70, 80 basis points better than we were this time last year. We look out to September even running higher than that. We think with this continued demand, what we're seeing, lead volume is up 10%, 15% this time compared to this time last year. Visit volume's up close to 10%.

Tim Argo: We have visibility pretty much into all of Q3 at this point. Probably 98% of our renewals we have locked in at this point. When we look at where we stand with new lease pricing and what we've done on the pre-lease side, obviously still more to come in the rest of the quarter. We probably still have about 40% of our new leases or so will still come over the next 2 months. When we look at the pre-leasing for August, we're running 70, 80 basis points better than we were this time last year. We look out to September even running higher than that. We think with this continued demand, what we're seeing, lead volume is up 10%, 15% this time compared to this time last year. Visit volume's up close to 10%.

Speaker #5: And then when we look at where we stand with new lease pricing and what we've done on the pre-lease side, obviously, still more to come in the rest of the quarter.

Speaker #5: We've probably still have about 40% of our new leases or so will still come over the next two months, but when we look at the pre-leasing for August, we're running 70, 80 basis points better than we were this time last year, and when we look out to September, even running higher than that.

Speaker #5: So we think with this continued demand, what we're seeing, lead volume is up, 10 or 15 percent this time compared to this time last year, visit volume's up close to 10%.

Speaker #5: So we do think all these factors lead to what potentially could be a little bit of an extended prime leasing season.

Clay Holder: We do think all these factors lead to what potentially could be a little bit of an extended prime leasing season. Jamie, I'll just touch on the guide change. The one thing that, to Tim's point, we're still seeing very strong acceleration as we work into the H2 of the year. What I would say is just not quite at the same pace as what we had initially expected coming into the year. Still seeing the trajectory move in the direction we expected, just not quite to the same pace that we had synced in. Jamie, not to be left out here, I'm going to add a couple of comments to this one as well. This is Brad. To what the guys have said here a little bit.

Tim Argo: We do think all these factors lead to what potentially could be a little bit of an extended prime leasing season.

Speaker #3: And Jamie, I'll just touch on the guide change. I mean, the one thing that Tim's point, and we're still seeing very strong acceleration as we work into the back half of the year, but what I would say is just not quite at the same pace as what we had initially expected coming into the year.

Clay Holder: Jamie, I'll just touch on the guide change. The one thing that, to Tim's point, we're still seeing very strong acceleration as we work into the H2 of the year. What I would say is just not quite at the same pace as what we had initially expected coming into the year. Still seeing the trajectory move in the direction we expected, just not quite to the same pace that we had synced in.

Speaker #3: So still seeing the trajectory, move in the direction we expected, just not quite to the same pace that we had seen then.

Speaker #5: And Jamie, not to be left out here, I'm going to add a couple of comments to this one as well. This is Brad. What the guys have said here a little bit.

Brad Hill: Jamie, not to be left out here, I'm going to add a couple of comments to this one as well. This is Brad. To what the guys have said here a little bit.

Speaker #5: And I think it really starts with what we're seeing on the demand side. In terms of our view for the back half of the year, across the board, we're seeing really good demand really across our markets.

Brad Hill: I think it really starts with what we're seeing on the demand side in terms of our view for the H2 of the year. Across the board, we're seeing really good demand really across our markets. In the markets where we do have heavier supply, you think of a Phoenix, a Charlotte, a Raleigh, Savannah, Nashville, those markets are a little bit more difficult for us right now. We have a bigger hole that we have to dig out of for those, but we are showing progress. If you look at our entire portfolio for the Q2, almost 80% of our markets posted positive blends in the Q2. You can see the recovery is pretty broad-based. Two-thirds of our markets are showing blends above our portfolio average.

Speaker #5: And in the markets where we do have heavier supply—you think of a Phoenix, a Charlotte, a Raleigh, Savannah, Nashville—those markets are a little bit more difficult for us right now.

Speaker #5: We have a bigger hole that we have to dig out of for those, but we are showing progress. I mean, if you look at our entire portfolio, for the second quarter, almost 80% of our markets posted positive blends in the second quarter.

Speaker #5: So you can see the recovery is pretty broad-based. Two-thirds of our markets are showing blends above our portfolio average. So if you look at what is below average for us, a third of our portfolio, those are predominantly some of these higher supply markets.

Clay Holder: If you look at what is below average for us, a third of our portfolio, those are predominantly some of these higher supply markets.

Brad Hill: If you look at what is below average for us, a third of our portfolio, those are predominantly some of these higher supply markets.

Speaker #5: So again, we have a bigger hole that we have to dig out for those, but we're doing it. On the demand piece, you look at absorption, the first half of the year that Tim talked about, second quarter absorption across our markets was 1.8 times new deliveries.

Tim Argo: We have a bigger hole than we have to dig out for those, but we're doing it. On the demand piece, you look at absorption the H1 of the year that Tim talked about, Q2 absorption across our markets was 1.8x new delivery. We're seeing really strong demand. As we continue through the balance of this year, we certainly believe that more of our markets start to show some of that stronger pricing power, particularly as we look at the blended rates in the Q3 and Q4.

Brad Hill: We have a bigger hole than we have to dig out for those, but we're doing it. On the demand piece, you look at absorption the H1 of the year that Tim talked about, Q2 absorption across our markets was 1.8x new delivery. We're seeing really strong demand. As we continue through the balance of this year, we certainly believe that more of our markets start to show some of that stronger pricing power, particularly as we look at the blended rates in the Q3 and Q4.

Speaker #5: So we're seeing really strong demand and as we continue through the balance of this year, we certainly believe that more of those our markets start to show some of that stronger pricing power, particularly as we get if we look at the blended rates in the third and fourth quarter.

Speaker #1: Our next question will come from the line of Eric Wolf with Citi. Please go ahead.

Operator: Our next question will come from the line of Eric Wolfe with Citi. Please go ahead.

Speaker #6: Hey, good morning. Maybe just a follow-up on Jamie's question. Can you just discuss your guidance in the second half from blended rent growth perspective?

Eric Wolfe: Hey, good morning. Maybe just to follow up on Jamie's question. Can you just discuss your guidance in the H2 from a blended rent growth perspective, so what you're forecasting in the H2 specifically? Just to make sure I understood sort of the components of what you're seeing right now, you expect your August and September blends to increase from July because renewals are higher and your retention is higher. I just wanted to make sure I heard that correctly.

Speaker #6: So what your forecasting in the second half specifically? And just to make sure I understood, sort of the components of what you're seeing right now, you expect your August and September blends to increase from July because renewals are higher, and your retention is higher.

Speaker #6: I just wanted to make sure I heard that correctly.

Speaker #5: Yeah, this is Tim. And to confirm on your second point, yeah, I mean, we would expect August, September pricing to get a little bit better from what we had in July for all the reasons.

Tim Argo: Yeah, this is Tim. To confirm on your second point, yeah, we would expect August, September pricing to get a little bit better from what we had in July for all the reasons we just talked about and the trends we're seeing so far. If you think about our full-year blended and kind of the H2 and how we hit our guidance, we're at +0.3 blended year-to-date through June, and our full-year forecast is somewhere in the 50 basis point range blended for the full year. With a little more of our leases skewed to the H2 of the year, somewhere around 0.6% blended is what we're tracking for the H2 of the year.

Speaker #5: We just talked about in the trend we're seeing so far, but if you think about our full year blend in kind of the back half and how we hit our guidance, we're at positive 0.3 blended year-to-date through June, and our full year forecast is somewhere in the 50 basis point range blended for the full year.

Speaker #5: So with a little more of our leases skewed to the back half of the year, somewhere around 0.6% blended is what we're tracking for the back half of the year.

Speaker #5: And so to maybe put that in a little bit of perspective with that would look like from a blended standpoint is our Q3 blended performance to be a little bit better than what our Q2 performance was, and then our Q4 performance to look a little bit better than what our Q1 performance was.

Tim Argo: To maybe put that in a little bit perspective, what that would look like from a blended standpoint is our Q3 blended performance to be a little bit better than what our Q2 performance was, our Q4 performance to look a little bit better than what our Q1 performance was. That's kind of a way to think about it's the expectation that August, September show the strength that we're seeing right now, you see a little bit less of a moderation in Q4 based on, again, the demand, the moderating supply, and everything we're seeing, not experience the same level of drop-offs that we saw in Q4 of last year.

Speaker #5: So that's kind of a way to think about it, and it's the expectation that August and September show the strength that we're seeing right now. Then you see a little bit less of a moderation in Q4 based on, again, the demand, the moderating supply, and everything we're seeing.

Speaker #5: And not experience the same level of drop-off that we saw in Q4 of last year.

Speaker #1: Our next question will come from the line of Nick Ulicka with Scotiabank. Please go ahead.

Operator: Our next question will come from the line of Nicholas Yulico with Scotiabank. Please go ahead.

Speaker #4: Oh, thanks. Good morning. I just wanted to, I guess, go back to some of the commentary that you gave on the pricing for assets.

Nicholas Yulico: Oh, thanks. Good morning. I just wanted to go back to some of the commentary that you guys gave on the pricing for assets. I think, Brad, you were saying cap rates below 5%, you are still seeing in your markets. And I guess my question is, if that is the case and we are still dealing with sort of a slow recovery in certain markets, why not buy back more stock, sell assets, rather than put more money into the development pipeline right now?

Speaker #4: I think, Brad, you were saying cap rates below 5%. You're still seeing in your markets. And I guess my question is, if that's the case, and we're still dealing with a sort of a slow recovery in certain markets, why not buy back more stock, sell assets, rather than put more money into the development pipeline right now?

Speaker #5: Well, thanks, Nick. Yeah, I mean, I think first of all, what you have to consider those four and a half to call it upper four cap rate range, are from the types of assets that we want to buy.

Brad Hill: Well, thanks, Nick. Yeah, I think first of all, what you have to consider, those four and a half to call it upper four cap rate range, are from the types of assets that we want to buy. So those are brand-new assets in some of our higher growth markets. On average, what we have purchased the last few years have been 1 year old, a lot of times in lease up. So that is a little bit different type of product than what we generally are looking to sell. The assets that we have sold this year, the property that we sold, as I mentioned in my opening comments, in the Q2 was an older asset, had a lot of CapEx needs. The cap rates that we are getting for those are market cap rates, are probably in the mid to upper six range on average.

Speaker #5: So those are brand new assets, and some of our higher growth markets on average, what we've purchased the last few years have been one year old.

Speaker #5: A lot of times in lease-up, so that's a little bit different type of product than what we generally are looking to sell. The assets that we have sold this year—the property that we sold, as I mentioned in my opening comments, in the second quarter—was an older asset that had a lot of capex needs.

Speaker #5: The cap rates that we're getting for those are probably market cap rates are probably in the mid to upper six range. On average, I would say we've got four properties that we're selling this year.

Tim Argo: I would say we have got four properties that we are selling this year. Those will be in the high fives to low sixes in terms of cap rates. So there is a little different math on what we are selling. But in terms of share buybacks, we have talked about this a lot. Our overall focus is about driving long-term TSR performance without introducing a lot of earnings volatility, and so it is very balanced. You have seen that in terms of what we have repurchased. We continue to believe in the merits of putting capital into the development market, into the properties that we are developing. The average yield expectation of those with conservative underwriting is still in the 6% to 6.5% range. The NOI margins we have been able to, excuse me, NOI growth we have been able to generate from those on average exceeds what our overall portfolio delivers by 50 to 100 basis points.

Brad Hill: I would say we have got four properties that we are selling this year. Those will be in the high fives to low sixes in terms of cap rates. So there is a little different math on what we are selling. But in terms of share buybacks, we have talked about this a lot. Our overall focus is about driving long-term TSR performance without introducing a lot of earnings volatility, and so it is very balanced. You have seen that in terms of what we have repurchased. We continue to believe in the merits of putting capital into the development market, into the properties that we are developing. The average yield expectation of those with conservative underwriting is still in the 6% to 6.5% range. The NOI margins we have been able to, excuse me, NOI growth we have been able to generate from those on average exceeds what our overall portfolio delivers by 50 to 100 basis points.

Speaker #5: Those will be in the high fives to low sixes in terms of cap rates. So there's a little different math on what we're selling.

Speaker #5: But in terms of share buybacks, we've talked about this a lot. Our overall focus is on driving long-term TSR performance without introducing a lot of earnings volatility.

Speaker #5: And so it's very balanced. You've seen that in terms of what we've repurchased we continue to believe in the merits of putting capital into the development market, into the properties that we're developing the average yield expectation of those with conservative underwriting is still in the six to six and a half percent range.

Speaker #5: The NOI margins we've been able to or, excuse me, NOI growth we've been able to generate from those on average exceeds what our overall portfolio delivers by 50 to 100 basis points.

Speaker #5: And especially given the fact that supply continues to be lower than long-term averages this year, and projected to be that way for the next three years, at least, we'll be delivering into a pretty strong operating fundamental market.

Tim Argo: Especially given the fact that supply continues to be lower than long-term averages this year and projected to be that way for the next three years at least, we'll be delivering into a pretty strong operating fundamental market. We continue to believe that's the way that we want to allocate capital for long-term TSR performance at the moment.

Brad Hill: Especially given the fact that supply continues to be lower than long-term averages this year and projected to be that way for the next three years at least, we'll be delivering into a pretty strong operating fundamental market. We continue to believe that's the way that we want to allocate capital for long-term TSR performance at the moment.

Speaker #5: So we continue to believe that's the way that we want to allocate capital for long-term TSR performance at the moment.

Speaker #1: Our next question will come from the line of Yana Gallen with Bank of America. Please go ahead.

Operator: Our next question will come from the line of Jana Galan with Bank of America. Please go ahead.

Speaker #2: Thank you. Good morning. I was hoping you could talk a little bit about the better-than-expected performance from the lease-up properties. Has there been any shift in strategy on pricing, concession usage, or job growth in those markets?

Jana Galan: Thank you. Good morning. I was hoping you could talk a little bit about the better-than-expected performance from the lease-up properties. Has there been any shift in strategy on pricing, concession usage, or job growth in those markets? Maybe if you could just talk to concession activity overall in your markets.

Speaker #2: And then maybe if you could just talk to concession activity overall in your markets.

Speaker #5: Yeah, this is Tim. I'll touch on that. So, on the lease-up portfolio, I mean, not really any change in strategy. I mean, we're starting to see some momentum.

Tim Argo: Yeah, this is Tim. I'll touch on that. On the lease-up portfolio, not really any change in strategy. We're starting to see some momentum. We're starting to see some good demand. If you look at some of the properties that are leased up portfolio, MAA Nixie gained over 20% of occupancy over the last quarter, MAA Liberty Row over 30%, MAA Plaza Midwood over 20%. I think as we're seeing with the broader portfolio, the number of units in lease up and the pressure on supply is starting to moderate, and we're starting to see that with the leased up portfolio. The two Charlotte assets, as I mentioned, are the ones that are still a little bit behind in terms of where Charlotte is in the supply pipeline. Those are the ones that we're watching, but we've seen really good momentum with the leased up portfolio, as you mentioned.

Speaker #5: We're starting to see some good demand, if you look at some of the properties our lease-up portfolio. Nixie, gained over 20% of all I can see over the last quarter.

Speaker #5: Liberty Row, over 30%. Plaza Midwood, over 20%. So I think as we're seeing with the broader portfolio, the number of units in lease-up and the pressure on supply is starting to moderate, and we're starting to see that with the lease-up portfolio.

Speaker #5: The two Charlotte assets that I mentioned are the ones that are still a little bit behind on in terms of where Charlotte is in the supply pipeline.

Speaker #5: So, those are the ones that we're watching. But we've seen really good momentum with the lease-up portfolio, as you mentioned. And then, on the broader concession market, not a lot of change from what we talked about last quarter.

Tim Argo: On the broader concession market, not a lot of change from what we talked about last quarter. If you think about our overall portfolio, broadly, 4 to 5 weeks is pretty consistent across most of our markets. We are seeing some improving concessions activity in Orlando and Charleston are 2 markets I would point to that we're seeing concessions down. Charlotte, Austin are still where, not necessarily up from where they've been, but probably the broadest usage of what we're seeing is still in Charlotte and Austin. Overall, pretty consistent concession picture from what we've seen in the last few months.

Speaker #5: If you think about our overall portfolio, broadly, four to five weeks is pretty consistent across most of our markets. We are seeing some improving concessioned activity in Orlando and Charleston are two markets I would point to that we're seeing concessions down.

Speaker #5: And then Charlotte, Austin are still where not necessarily up from where they've been, but probably the broadest usage of what we're seeing is still in Charlotte and Austin.

Speaker #5: But overall, pretty consistent concession picture from what we've seen the last few months.

Speaker #1: Our next question will come from the line of Brad Heffern with RBC. Please go ahead.

Operator: Our next question will come from the line of Brad Heffern with RBC. Please go ahead.

Speaker #4: Yeah. Hey, everybody. Thanks. You mentioned in the prepared comments that second quarter, in migration, was I think you said the strongest ever, strongest since you started tracking it.

Brad Heffern: Yeah. Hey, everybody. Thanks. You mentioned in the prepared comments that Q2 in-migration was, I think you said the strongest ever, or strongest since you started tracking it. Are there any numbers that you can put around that or additional color?

Speaker #4: Are there any numbers that you can put around that or additional color?

Speaker #5: Yeah. I mean, the numbers that we could put around that—we saw in-migration go from, call it, 10% in the first quarter to about 13% in the second quarter.

Tim Argo: Yeah. The numbers that we could put around that, we saw in-migration go from, call it 10% in Q1 to about 13% in Q2. It's not really 1 market that we can point to that's really driving that. It was generally an overall increase just in general. We have seen absolute levels of migration, in-migration that's been higher than that, but we've never seen a quarterly increase that's matched that in the past. Certainly 1 quarter doesn't make a long-term trend. I certainly think in terms of incremental demand components for the business, that's something that we're continuing to watch as we go forward.

Speaker #5: And that it's it's not really one market that we can point to that's really driving that. It was generally an overall increase just in general.

Speaker #5: So we have seen absolute levels of migration in migration that's been higher than that, but we've never seen a quarterly increase that's matched that in the past.

Speaker #5: So certainly, one quarter doesn't make a long-term trend, but certainly think in terms of incremental demand components for the business, that's something that we're continuing to watch as we go forward.

Speaker #1: Our next question comes from the line of Austin Worsmith with KeyBank Capital Markets. Please go ahead.

Operator: Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.

Speaker #6: Thanks. Good morning, everyone. Tim, I just wanted to clarify. Is the expectation for blended rate growth in the third quarter specifically from the lower turnover and stable renewal rate growth, or are you also seeing new lease rate growth improve?

Austin Wurschmidt: Thanks. Good morning, everyone. Tim, I just wanted to clarify, is the expectation for blended rate growth in Q3, specifically from the lower turnover and stable renewal rate growth, or are you also seeing new lease rate growth improve? I know you had talked about the easier comps earlier in the year being a benefit. Can you also share what new lease rate growth and occupancy were for July? Thanks.

Speaker #6: Because I know you had talked about the easier comps earlier in the year being a benefit. And then can you also share what new lease rate growth and occupancy were for July?

Speaker #6: Thanks.

Speaker #5: Yeah. Austin, to answer the first part of your question, I mean, it's a little bit of both. Obviously, the renewals are a huge part, and we're seeing, as I mentioned, the retention rates be higher in Q3 than it was both in Q2 of this year and Q3 of last year.

Tim Argo: Yeah. Austin, to answer the first part of your question, it's a little bit of both. Obviously, the renewals are a huge part, and we're seeing, as I mentioned, the retention rates be higher in Q3 than it was both in Q2 of this year and Q3 of last year. Obviously more of those blending in and we're running 5%+, whereas Q3 of last year, we were in the 4.5% range. That obviously plays a big part. We are seeing, as mentioned, the momentum on the new lease side as well. With everything we've seen on demand and what we've seen with pre-leasing, the August, September new lease pricing looks better than it did at the same time last year. Your point about the comps as well. We really saw pricing drop off pretty significantly around this time last year.

Speaker #5: So obviously, more of those blending in, and we're running five-plus percent, whereas Q3 of last year, we were in the four-and-a-half-percent range. So that obviously plays a big part.

Speaker #5: But we are seeing, as mentioned, the momentum on the new lease side as well. With everything we've seen on demand and what we've seen with pre-leasing, the August-September new lease pricing looks better than it did at the same time last year.

Speaker #5: And then your point about the comps as well, I mean, we really saw pricing drop off pretty significantly around this time last year. So last year, July to August new lease pricing dropped about 70 basis points, and then August-September dropped 140 basis points.

Tim Argo: Last year, July to August, new lease pricing dropped about 70 basis points, August to September dropped 140 basis points. We don't expect that to recur this year for all the things we mentioned. For July, I expect we'll end July around 95.4 in terms of occupancy, and I think the new lease and blended pricing probably looks pretty similar to what we reported for Q2.

Speaker #5: And we don't expect that to recur this year for all of the things we mentioned. But for July, I expect we'll end July around 95.4 in terms of occupancy, and the I think the new lease and blended pricing probably looks pretty similar to what we reported for Q2.

Speaker #1: Our next question will come from the line of Adam Kramer with Morgan Stanley. Please go ahead.

Operator: Our next question will come from the line of Adam Kramer with Morgan Stanley. Please go ahead.

Speaker #7: Hey, thanks for the time. Just wanted to ask on the capital allocation side. It sounds like dispositions may be wrapped up for the year.

Adam Kramer: Hey, thanks for the time. Just wanted to ask on the capital allocation side, it sounds like dispositions may be wrapped up for the year. Seems like acquisitions for the type of stuff you guys want to buy, probably shouldn't expect much here for the next little while, at least. Just wondering, should we expect sort of more share repurchases? Maybe just an update sort of on the debt side. I know there's some moving pieces there. I guess just more generally, sort of what is capital allocation priorities here sort of for the next little bit?

Speaker #7: It seems like acquisitions for the type of stuff you guys want to buy probably shouldn't be expected much here for the next little while, at least.

Speaker #7: So, just wondering, should we expect sort of more share repurchases? Maybe just an update, sort of, on the debt side. I know there are some moving pieces there.

Speaker #7: But I guess just more generally, sort of what is capital allocation priorities here? Sort of for the next little bit.

Speaker #5: Yeah. Hey, Adam. This is Brad. I could certainly kick that off. I mean, as I mentioned a moment ago, I mean, our approach is to have a pretty balanced approach about taking advantage of near-term opportunities as well as taking advantage of long-term opportunities.

Brad Hill: Yeah. Hey, Adam, this is Brad. I can certainly kick that off. As I mentioned a moment ago, our approach is to have a pretty balanced approach about taking advantage of near-term opportunities as well as taking advantage of long-term opportunities. To your point, yeah, our disposition plans for the year are close to being wrapped up. We have sold 2 properties. We've got 2 more that should sell by the end of the year. That puts our proceeds. By the way, one of those properties is in a JV, the one that's in the DC market. The proceeds we'll get from those will be pretty similar to what we've used so far to repurchase shares. Very balanced in terms of how we're looking to allocate capital there. Our priority continues to be development. That's number 1. As Tim talked about

Speaker #5: To your point, yeah, I mean, our disposition plans for the year are close to being wrapped up. We have sold two properties. We've got two more that should sell by the end of the year.

Speaker #5: That puts our proceeds—by the way, one of those properties is in a JV, the one that's in the D.C. market. But the proceeds we'll get from those will be pretty similar to what we've used so far to repurchase shares.

Speaker #5: So very balanced in terms of how we're looking to allocate capital there. But our priority continues to be development. That's number one. And as Tim talked about, continuing to invest in our Wi-Fi initiative, which is highly accretive use of capital force.

Brad Hill: Continuing to invest in our Wi-Fi initiative, which is highly accretive use of capital for us. We're growing our redevelopment and repositioning to drive earnings performance over the next year or so. That initiative continues to perform better as the new supply coming into the market stabilizes with rents that are over $500 a unit higher than our rents on average. That program continues to perform quite well. You'll see us continue to lean into that as well. Our property reposition continues to be an area of focus for us. That's kind of the prioritization that we have in terms of capital allocation. Clay, I don't know if there's anything you want to add on the debt piece you mentioned.

Speaker #5: We're growing our redevelopment and repositioning to drive earnings performance over the next year or so. That initiative continues to perform better as the new supply coming into the market stabilizes.

Speaker #5: With rents that are over $500 a unit higher than our rents on average, that program continues to perform quite well. So you'll see us continue to lean into that as well.

Speaker #5: Our property reposition continues to be an area of focus for us. So that's kind of the prioritization that we have in terms of capital allocation.

Speaker #5: Clay, I don't know if there's anything you want to add on the debt piece you mentioned.

Speaker #6: Yeah. This is Clay. I mean, as we've talked about in the past, we do have a maturity that's coming due in September of this year, a $300 billion.

Clay Holder: Yeah. This is Clay. As we've talked about in the past, we do have a maturity that's coming due in September of this year for $300 million. We've got plenty of capacity with this term loan in place and some of these other dispositions that Brad had alluded to you that'll help cover that maturity. That's our plan for the financing needs. Good chance that we come back into the market at some point late this year, potentially early next year, as we continue pushing our development pipeline. That's what we see right now for the next few months.

Speaker #6: So we've got plenty of capacity with this term loan in place, and some of these other dispositions that Brad had alluded to that will help cover that maturity.

Speaker #6: So that's our plan for the financing needs. Good chance that we come back into the market at some point late this year, potentially early next year, as we continue pushing on our development pipeline.

Speaker #6: But that's what we see right now over the next few months.

Speaker #1: Our next question will come from the line of Handel, St. Just with Mizuho Securities. Please go ahead.

Operator: Our next question will come from the line of Haendel St. Juste with Mizuho Securities. Please go ahead.

Speaker #8: Hey, guys. Good morning. Thanks for taking the question. I wanted to go back to the markets that were underperforming. You outlined Charlotte, Raleigh, and Nashville, where supply still seems to be a factor.

Haendel St. Juste: Hey, guys. Good morning. Thanks for taking the question. I wanted to go back to the markets that were underperforming. You outlined Charlotte, Raleigh, Nashville, where supply still seems to be a factor. Contrast that with some of the Sun Belt markets where you're seeing some improvement. You mentioned Austin a few times. I think you mentioned Orlando. I guess I'm curious if that's down to sub-market locations, is it something else? Also maybe some color. You mentioned the top two-thirds of the portfolio blends are better than the bottom third. Maybe some color on the top two-third blends versus the bottom. Thank you.

Speaker #8: In contrast that with some of the Sunbelt markets where you're seeing some improvement, you mentioned Austin a few times. I think you mentioned Orlando.

Speaker #8: I guess I'm curious if it's that's down to submarket locations. Is it something else? And also maybe some color on the you mentioned the top two-thirds of the portfolio blends are better than the bottom third.

Speaker #8: So maybe some color on the top two-third blends versus the bottom. Thank you.

Speaker #5: Yeah, Handel, this is Tim. I'll touch on the first part of that. For the markets that are performing pretty well, it's generally pretty broad-based.

Tim Argo: Yeah, Haendel, this is Tim, and I'll touch on the first part of that. For the markets that are performing pretty well, it's generally pretty broad-based. We've talked a lot about the stronger markets here for several quarters. I would say for those, continue to be broad-based in most of the sub-markets. I think where we're starting to see some momentum and some green shoots is some of these improving markets where it's popping up in sub-markets. Austin is a perfect example of that, where some of the near South sub-markets, we've seen some momentum over the last couple of quarters.

Speaker #5: We've talked a lot about the stronger markets here for several quarters. So I would say for those, continue to be broad-based. And most of the submarkets, I think where we're starting to see some momentum and some green shoots is some of these improving markets where it's popping up in submarkets.

Speaker #5: So in Austin is a perfect example of that where some of the near-South submarkets, we've seen some momentum over the last couple of quarters.

Speaker #5: And then I would say, even into the second quarter, some of the Round Rock and even some of the northern assets started to show some momentum, where you had some of those properties that were mid to high teens negative new lease pricing just a couple of quarters ago, that are now in the mid- to negative-single digits.

Tim Argo: I would say even into the Q2, some of the Round Rock and even some of the northern assets started to show some momentum where some of those properties that were mid to high teens negative new lease pricing just a couple of quarters ago that are now at the mid negative single digits. 1,000 basis point types of improvement in new lease pricing, and that's where the opportunity lies in a lot of these highly supplied sub-markets. As those concessions burn off, that's where you start to see some pretty quick momentum. We're still seeing broadly in our larger markets, more of the urban sub-markets do well, particularly in a Dallas and Atlanta, even in a Tampa that's been a little bit weaker. We're seeing some good performance there. On the weaker markets, it's more broad-based.

Speaker #5: So thousand basis point types of improvement in new lease pricing. And that's where the opportunity lies in a lot of these highly supplied submarkets as those concessions burn off.

Speaker #5: That's where you start to see some pretty quick momentum. But we're still seeing, broadly, in our larger markets, more of the urban submarkets do well, particularly in Dallas and Atlanta.

Speaker #5: Even in the Tampa, that's been a little bit weaker, we're seeing some good performance there. And then on the weaker markets, it's more just it's more broad-based.

Speaker #5: So Charlotte and Raleigh, some of those as they were a little further along in the supply or a little bit later in the supply pipeline and get an extreme amount of supply.

Tim Argo: Charlotte and Raleigh, some of those as they were a little further along in the supply or a little bit later in the supply pipeline and get an extreme amount of supply. Those are ones where if you have a market that's overall underperforming, it's because we're seeing it more broadly across a lot of sub-markets. I think those become more of a story as we head into next year.

Speaker #5: So those are ones where if you have a market that's overall underperforming, it's because we're seeing it more broadly across a lot of submarkets.

Speaker #5: So I think those are become more of a story as we head into next year. And now, this is Brad. I'll just add one comment there.

Brad Hill: Haendel, this is Brad. I'll just add one comment there on your question about the top two-thirds versus the bottom. I think in general, what you see playing out there is an indication of our overall diversification strategy, where we are allocating capital between large markets as well as mid-tier markets. Generally, what you'll see on the top portion of that graph, so to speak, are a lot of our mid-tier markets. A higher proportion of those certainly are above the portfolio average, and generally, that's what you would expect right now as they face less supply pressure than some of these other markets, some of the larger markets that you mentioned and we've mentioned. The demand-supply balance weighs more to the demand. We're seeing strong demand in those markets, so you see obviously stronger performance out of those right now.

Speaker #5: On your question about the top two-third versus the bottom, I mean, I think in general, what you see playing out there is an indication of our overall diversification strategy where we are allocating capital between large markets as well as mid-tier markets.

Speaker #5: And generally, what you'll see on the top portion of that graph, so to speak, are a lot of our mid-tier markets. A higher proportion of those, certainly, are above the portfolio average.

Speaker #5: And generally, that's what you would expect right now as they face less supply pressure than some of these other markets some of the larger markets that you mentioned and we've mentioned.

Speaker #5: And so the demand-supply balance weighs more toward demand. We're seeing strong demand in those markets, so you see obviously stronger performance out of those right now.

Speaker #5: And that's what we would expect to occur as demand continues absorption continues in some of these more supplied markets like a Charlotte, a Phoenix, a Raleigh.

Brad Hill: That's what we would expect to occur as demand continues, absorption continues in some of these more supplied markets like a Charlotte, a Phoenix, a Raleigh, as that new supply continues to get absorbed. That's what I would say characterizes that breakdown to some degree.

Speaker #5: As that new supply continues to get absorbed. But that's what I would say characterizes that breakdown to some degree.

Speaker #1: Our next question will come from the line of Alexander Goldfarb with Piper Sandler. Please go ahead.

Operator: Our next question will come from the line of Alexander Goldfarb with Piper Sandler. Please go ahead.

Speaker #8: Hey, morning down there. Just sort of question on markets overall. Clearly, Sunbelt has a long history of strong growth over time. The amount of oversupply is clearly a lot to deal with for anyone.

Alexander Goldfarb: Hey, morning down there. Just sort of question on markets overall. Clearly, Sun Belt has a long history of strong growth over time. The amount of oversupply is clearly a lot to deal with for anyone. The lack of supply just nationally, how is that affecting your thoughts on other markets? We've seen the Midwest become more popular from some of the coastal guys. Just as you guys look to allocate capital, are there other markets that maybe previous cycles you would've said no, but now you're increasingly interested in? Is it sort of the basic reality that there's just a lack of supply of product on the market, and therefore, even markets that you'd like to enter, it's just hard to see a path to establishing a presence that's economic?

Speaker #8: But the lack of supply just nationally how is that affecting your thoughts on other markets? I mean, we've seen the Midwest become more popular from some of the coastal guys.

Speaker #8: And just as you guys look to allocate capital, are there other markets that maybe previous cycles you said you would have said no, but now you're increasingly interested in?

Speaker #8: Or is it sort of the basic reality that there’s just a lack of supply of product on the market, and therefore, even markets that you’d like to enter, it’s just hard to see a path to establishing a presence that’s economic?

Speaker #5: Well, thanks, Alex. This is Brad. I mean, we've talked about it in the past. We do continue to look at new markets and evaluate new markets.

Brad Hill: Well, thanks, Alex. This is Brad. We've talked about it in the past. We do continue to look at new markets and evaluate new markets, and I think certainly, excuse me, the key component of that is we want to maintain what our overall strategy is, and that's allocating capital to markets that have high demand. If you look across our portfolio, our markets generally have that, particularly when you're comparing to other markets. I don't think we want to go into a market just because it's a low-supply market. That's only a benefit to the extent that you have demand. We do think over time, the demand fundamental is what has the highest impact, and has a higher correlation to overall performance, long-term performance. We'll continue to focus on the highest demand markets that we have.

Speaker #5: And I think certainly the excuse me, the key component of that is we want to maintain what our overall strategy is. And that's allocating capital to markets that are have high demand and if you look across our portfolio, our markets generally have that, particularly when you're comparing to other markets.

Speaker #5: I don't think we want to go into a market just because it's a low-supply market. That's only a benefit to the extent that you have demand.

Speaker #5: And so, we do think over time, the demand fundamental is what has the highest impact, and it has the highest correlation to overall long-term performance.

Speaker #5: So we'll continue to focus on the highest demand markets that we have. There are markets that we're looking at that have similar dynamics—Columbus, Ohio, for example.

Brad Hill: There are markets that we're looking at that have similar dynamics. Columbus, Ohio, we've talked about that before, is a market that we've considered, given some of the dynamics there. We want certainly a business-friendly environment, and low taxes continues to be part of that. I think, it's also important to remember, if you look at the demand drivers really across our markets, I think it was in Q2, 18 markets across the country showed greater than 1% job growth. 11 of those markets were in our footprint. Only five markets showed greater than 2% job growth, and four of those were in our markets. If you look at population growth, whether you're looking at 1-year, 5-year, 10-year, 14 of the top 15 markets are MAA markets.

Speaker #5: We've talked about that before as a market that we've considered, given some of the dynamics there. We certainly want a business-friendly environment, and low taxes continue to be part of that.

Speaker #5: But I think it's also important to remember if you look at the demand drivers, really across our markets, I think it was in the second quarter, 18 markets across the country showed greater than 1% job growth.

Speaker #5: 11 of those markets were in our footprint. Only 5 markets showed greater than 2% job growth. And 4 of those were in our markets.

Speaker #5: If you look at population growth, whether you're looking at one-year, five-year, 10-year 14 of the top 15 markets are MAA markets. So I think we continue to be in the right markets and continue to allocate capital to the right markets for long-term performance.

Brad Hill: I think we continue to be in the right markets and continue to allocate capital to the right markets for long-term performance. It has the comment we were making about our markets and the number of markets that are performing above average and are showing positive blended lease rates being so broad. The recovery is coming. As the new supply continues to get absorbed in some of these other markets, this high demand that we continue to see will pay off, and we'll continue to see the long-term performance dynamics, I think, that we've seen historically that you mentioned at the beginning of your question.

Speaker #5: And as the comment we were making about our markets and the number of markets that are performing above average and are showing positive blended lease rates being so broad, the recovery is coming.

Speaker #5: And so, as the new supply continues to get absorbed in some of these other markets, this high demand that we continue to see will pay off, and we'll continue to see the long-term performance dynamics that I think we've seen historically, as you mentioned at the beginning of your question.

Speaker #1: Our next question comes from the line of Amy Proband with UBS. Please go ahead.

Operator: Our next question comes from the line of Ami Probandt with UBS. Please go ahead.

Speaker #3: Hi, thanks. The Census Bureau data has shown an uptick in permits across a handful of Sunbelt markets. So recognizing that some of these might not be directly competitive to your portfolio, I'm still wondering is this a sign that developers are starting to get more comfortable with the trajectory of rent growth moving forward?

Ami Probandt: Hi, thanks. The Census Bureau data has shown an uptick in permits across a handful of Sunbelt markets. Recognizing that some of these might not be directly competitive to your portfolio, I'm still wondering, is this a sign that developers are starting to get more comfortable with the trajectory of rent growth moving forward and getting back in and ramping up starts again?

Speaker #3: And getting back in and ramping up starts again?

Speaker #5: Well, I definitely think developers want to develop. And from the developers that we talk to as part of our pre-purchase platform, we have relationships with the top developers in the country.

Brad Hill: Well, I definitely think developers want to develop. From the developers that we talk to as part of our pre-purchase platform, where we have relationships with the top developers in the country, I would say broadly, we're not seeing an uptick in starts coming. In fact, we continue to find opportunities to partner with those developers on additional projects because their equity partners have backed out of projects. I think the ability to find capital, equity capital in particular, for new developments continues to be challenged. We're not seeing that really change at the moment. I think to your point, permits kind of ebb and flow a bit, and the relationship between permits and construction starts can ebb and flow. We're not seeing from the folks we're talking to, and the data we're looking at, we're certainly not seeing an uptick.

Speaker #5: I would say broadly, we're not seeing an uptick in starts coming in fact. We continue to find opportunities to partner with those developers on additional projects because they're equity partners have backed out of projects.

Speaker #5: I think the ability to find capital equity capital in particular for new developments continues to be challenged. And we're not seeing that really change at the moment.

Speaker #5: I think, to your point, permits kind of ebb and flow a bit, and the relationship between permits and construction starts can ebb and flow.

Speaker #5: But we're not seeing from the folks we're talking to and the data we're looking at, we're certainly not seeing an uptick. If you go back and you look at new starts for the last 13 quarters have trended below long-term averages.

Brad Hill: If you go back and you look at new starts for the last 13 quarters have trended below long-term averages. We see that trend continue, as we look out over the foreseeable future, we don't see a material pickup from this point right now.

Speaker #5: So we see that trend continue. As we look out over the foreseeable future, we don't see a material pickup from this point right now.

Speaker #1: Our next question will come from the line of Anthony Paolone with JPMorgan. Please go ahead.

Operator: Our next question will come from the line of Anthony Paolone with J.P. Morgan. Please go ahead.

Operator: Our next question will come from the line of Anthony Paolone with JPMorgan. Please go ahead.

Speaker #8: Good morning, guys. You have Naum on for Tony. Thanks for taking my question. Going back a little bit, I think Brad, in your prepared remarks, you mentioned the cautious consumer. Was there anything, I guess, you guys were seeing specifically from a consumer perspective point of view that caused a slowdown in new lease pricing?

[Analyst] (J.P. Morgan): Good morning, guys. I'm on for Tony. Thanks for taking my question. Going back a little bit, I think Brad, in your prepared remarks, you mentioned the cautious consumer. Was there anything, I guess you guys were seeing specifically from a consumer perspective point of view that caused a slowdown in new lease pricing? I guess, were you seeing tenants shop around a bit more? Just curious on any color you could give as to what's driving that shift.

[Analyst] (JPMorgan): Good morning, guys. I'm on for Tony. Thanks for taking my question. Going back a little bit, I think Brad, in your prepared remarks, you mentioned the cautious consumer. Was there anything, I guess you guys were seeing specifically from a consumer perspective point of view that caused a slowdown in new lease pricing? I guess, were you seeing tenants shop around a bit more? Just curious on any color you could give as to what's driving that shift.

Speaker #8: I guess were you seeing tenants shop around a bit more just curious on any color you could give us to what's driving that shift?

Speaker #5: Yeah, this is Brad. I can start, and Tim can give any other details. But yeah, I mean, I think what we've seen is a very healthy resident and a very healthy prospect.

Brad Hill: Yeah. This is Brad. I can start, Tim can give any other details. Yeah, I think, what we've seen is a very healthy resident, a very healthy prospect. Our rent-to-income ratios continue to be the decline. They're the best that we've seen in a long, long time, at 18%. Our collections continue to be really, really strong. I think in markets where there are a lot of options, there is a lot of supply. We do see folks shopping around a bit more, looking at all their options in the market, and taking a little bit longer to make decisions. We have seen that.

Speaker #5: Our rent-to-income ratios continue to be the decline. They're the best that we've seen in a long, long time at 18%. Our collections continue to be really, really strong.

Speaker #5: But I think in markets where there are a lot of options, where there is a lot of supply, we do see folks shopping around a bit more—looking at all their options in the market.

Speaker #5: And taking a little bit longer to make decisions, so we have seen that. I think the good news is—even to the point that Tim was mentioning earlier about the momentum we have in August and September—I think, in part, that does indicate a little bit more optimism from the prospects’ perspective as they look out over the next couple of months.

Brad Hill: I think the good news is, even to the point that Tim was mentioning earlier about the momentum we have in August and September, I think in part that does indicate a little bit more optimism from the prospects perspective as they look out over the next couple of months. There is a level of, I think, optimism that we're seeing as we sign those pre-leases out for the next couple of months. Tim, anything you'd add to that?

Speaker #5: There is a level of, I think, optimism that we're seeing as we sign those pre-leases out for the next couple of months. Tim, anything you'd add to that?

Speaker #4: Yeah. I think to your point about the impact on new lease pricing, I mean, I think for Q2, we did see people just taking longer shopping more as Brad mentioned.

Tim Argo: Yeah, I think just to your point about it's the impact on new lease pricing. I think for Q2, we did see people just taking longer, shopping more. As Brad mentioned, our pre-leasing was down a little bit in Q2 relative to last year. That's more of an indication of people that are making decisions and feeling confident where they are. I think with people shopping around longer, they're making their decisions later. They're doing more immediate type of move-ins, and that is kind of the most volatile part of the new lease pricing curve. I think that plays into it. To Brad's point, we're seeing that change a little bit in Q3. We're seeing a little more pre-leasing and a little more momentum that gives us confidence for the rest of the year.

Speaker #4: Our pre-leasing was down a little bit in Q2 relative to last year. And that's more of an indication of people that are making decisions and feeling confident where they are.

Speaker #4: I think when people are shopping around longer, they're making decisions later. They're doing more immediate-type move-ins, and that is kind of the most volatile part of the new lease pricing curve.

Speaker #4: And so I think that plays into it. But to Brad's point, we're seeing that change a little bit in Q3. We're seeing a little more pre-leasing and a little more momentum that gives us confidence for the rest of the year.

Speaker #1: Our next question will come from the line of Steve Sokwa with Evercore ISI. Please go ahead.

Operator: Our next question will come from the line of Steve Sakwa with Evercore ISI. Please go ahead.

Speaker #2: Yeah, thanks. I just wanted to touch on expenses. Which is obviously been a bright spot for the company this year. Are there things that we should be thinking about as we think about 27 expense growth?

Steve Sakwa: Yeah, thanks. I just wanted to touch on expenses, which has obviously been a bright spot for the company this year. Are there things that we should be thinking about as we think about 2027 expense growth, any kind of one-timers or things that may not repeat that helped this year that may not be there next year?

Speaker #2: Any kind of one-timers or things that may not repeat that help this year that may not be there next year?

Clay Holder: Hey, Steve, this is Clay. I'll touch on that for a second. I think what you're seeing here this year is just our continued focus, as you alluded to, our continued focus on controlling expenses. We've shown a long history of that, and it continued to show that even in the current environment. As we look forward to next year, I don't see anything on the horizon at this point that would make me think that there are some one-time savings or any one-time large items coming our direction. I would expect next year to look somewhat similar. It could be a little bit higher growth rate just given where we are today. I would expect generally it would look not too far different than what we're seeing at the moment.

Speaker #5: I'd say the display I'll touch on that for a second. I mean, I think what you're seeing here this year is just a continued focus, as you alluded to, our continued focus on controlling expenses.

Speaker #5: And we've shown a long history of that and continue to show that even in the current environment. As we look forward to next year, I don't see anything on the horizon at this point that would make me think there are some one-time savings or any one-time large items coming our direction.

Speaker #5: I would expect next year to look somewhat similar. It could be a little bit higher growth rate, just given where we are today. But I would expect generally, it would look not too far different than what we're seeing at the moment.

Speaker #1: Our next question will come from the line of Michael Gorman with BTIG. Please go ahead.

Operator: Our next question will come from the line of Michael Gorman with BTIG. Please go ahead.

Speaker #8: Yeah, thanks. Good morning. Maybe going back to Alex's question on markets for a second, and taking the flip side of it—as you've gone through this cycle, looking at any of your market exposure, maybe especially some of the smaller exposures—are there any markets that have changed structurally in your view, or operated in such a way, that your view of either expansion, or even existing in those markets to begin with, has changed?

Michael Gorman: Thanks. Good morning. Maybe going back to Alex's question on markets for a second, and take the flip side of it. As you've gone through this cycle, looking at any of your market exposure, maybe especially some of the smaller exposures, are there any markets that have changed structurally in your view or operated in such a way that your view of either expansion or even existing in those markets to begin with has changed? I'm thinking maybe even specifically like at Denver, where the regulatory environment's gotten tougher. Any commentary there would be helpful. Thanks.

Speaker #8: I'm thinking maybe even specifically like a Denver where the regulatory environment's gotten tougher. So any commentary there would be helpful. Thanks.

Speaker #5: Yeah, this is Brad. I would say broadly, not really. I would say you mentioned the one market that we've seen the most change from a regulatory perspective.

Brad Hill: This is Brad. I would say broadly, not really. I would say you mentioned the one market that we've seen the most change from a regulatory perspective. We've seen it in Nevada, but we only have two properties there, which aren't core for us long term. There's been certainly some talk in Virginia. I think some of that got pushed off another year or so. The District of Columbia, a lot of things going on in that market. With us selling our one property in the district, shouldn't be exposed to that. Not a lot of change. From a just overall portfolio perspective, we still have some markets where we have one asset or two assets, which, from a long-term perspective, aren't properties that we want to hold. I would say those markets also continue to do quite well.

Speaker #5: We've seen it in Nevada, but we only have two properties there, which aren't core for us long-term. But there's definitely been some talk in Virginia.

Speaker #5: I think some of that got pushed off another year or so. That District of Columbia, a lot of things going on in that market.

Speaker #5: But with us selling our one property in the district, we shouldn't be exposed to that, so not a lot of change. From an overall portfolio perspective, we still have some markets where we have one asset or two assets, which, from a long-term perspective, aren't properties that we want to hold.

Speaker #5: But I would say those markets also continue to do quite well. Another market that we'll have to consider long-term that continues to perform very, very well from a demand perspective it can get some supply, but demand continues to be really, really strong.

Brad Hill: Another market that we'll have to consider long term that continues to perform very well, from a demand perspective, it can get some supply, but demand continues to be really strong, is Dallas, but it's also one of our largest markets. That's a market that we could potentially look at adding to and certainly recycle capital out of longer term. For the most part, we're not seeing big changes in any market broadly. The Denver component that you talked about, the impact of that is supply in Denver is coming down very rapidly. I think performance will turn around in that market as a result of that.

Speaker #5: It's Dallas, but it's also one of our largest markets. So that's a market that we could potentially look at adding to and certainly recycling capital out of longer term.

Speaker #5: But for the most part, we're not seeing big changes in any market broadly. The Denver component that you talked about—the impact of that is supply in Denver is coming down very, very rapidly.

Speaker #5: So I think performance will turn around in that market as a result of that.

Speaker #1: Our next question will come from the line of Alex Kim with Zelman & Associates. Please go ahead.

Operator: Our next question will come from the line of Alex Kim with Zelman & Associates. Please go ahead.

Speaker #6: Hey guys, thanks for taking my question. I wanted to drill a little further into the same storage expense growth guide. You reduced it by 90 basis points at the midpoint.

Alex Kim: Hey, guys. Thanks for taking my question. I wanted to drill a little further into the same-store expense growth guide. It was reduced by 90 basis points at the midpoint. I was curious how much of the improvement reflects sustainable operating efficiencies versus timing items, and was wondering if you could discuss the outlook for some of the cost buckets, specifically, insurance as well with the, I believe the repricing occurring in July at some point.

Speaker #6: And I was curious, how much of the improvement reflects sustainable operating efficiencies versus timing items? And I was wondering if you could discuss the outlook for some of the cost buckets, specifically insurance, as well, with the repricing occurring in July, I believe, at some point.

Speaker #5: Yeah, Alex, this is Clay. Yeah, as we're getting to for the as you mentioned, the total expense growth for the year, for our same store portfolios, about around 1.7 1.75%, excuse me.

Clay Holder: Yeah, Alex, this is Clay. Yeah, as we're guiding to for the, as you mentioned, the total expense growth for the year for our same-store portfolio is a little around 1.75%. Excuse me. What we're seeing there, where we're seeing some good benefits there is really across the board. We talked a little bit about repair and maintenance costs, personnel costs that we saw in Q2. We're expecting that to continue out through H2. The teams have done a really good job

Speaker #5: And what we're seeing there, where we're seeing some good benefits, is really across the board. We talked a little bit about repair and maintenance costs, personnel costs that we saw in the second quarter.

Speaker #5: We're expecting that to continue through the back half of the year. The teams have done a really good job of controlling those expenses.

Clay Holder: Of controlling those expenses. We've got a full staff, which in turn typically leads to lower costs whenever we need to turn a unit. You've got the increased retention rates, which are clearly moving in our favor. That's helping provide some benefit there as well. I'll go back to the personnel costs real quick. We continue to pod some properties, so we are continuing to see some benefit there, and I expect that benefit to continue on over the course of the year and potentially even into next year as we look to do more of that. You mentioned insurance costs. We did have a renewal on 1 July, and it was a very successful renewal. We had premiums that in a total declined by over 12%.

Speaker #5: We've got a full staff, which in turn typically leads to lower cost whenever we need to turn a unit. And then you've got the increased retention rates, which are clearly moving in our favor.

Speaker #5: And so that's helping provide some benefit there as well. You mentioned and then I'll go back to the personnel costs real quick. I mean, we continue to pod some properties.

Speaker #5: So we are continuing to see some benefit there. I expect that benefit to continue over the course of the year, and potentially even into next year, as we look to do more of that.

Speaker #5: You mentioned insurance costs. We did have a renewal in July 1st. And it was a very successful renewal. We had premiums that in a total declined by over 12%.

Speaker #5: As you kind of layer that through—what the impact is for this year, for the back half of the year, for the full year—we're expecting a little over a 6% decline in insurance costs year over year.

Clay Holder: As you kind of layer that through, what the impact is for this year, for H2, for the full year, we're expecting a little over a 6% decline in insurance cost year over year. That marks our third year of a reduction in premium and insurance costs. Continue to see really, really good performance from that standpoint. The last one I'll call out is property taxes. Given just the environment that we're operating in, the NOI decline that we've seen and others have seen in our markets, obviously having an impact on real estate valuations. We are getting a little bit of benefit there. We continue to focus a lot on that area. It is the largest expense line in the stack there.

Speaker #5: That marks our third year of a reduction in premium and insurance costs. So continue to see really, really good performance from that standpoint. And then the last one I'll call out is property taxes.

Speaker #5: Given just the environment that we're operating in, the NOI decline that we've seen and others have seen in our markets, obviously having an impact on real estate valuations.

Speaker #5: And so we are getting a little bit of benefit there. We continue to focus a lot on that area. It's one of the largest is the largest expense line on our in the stack there.

Speaker #5: And so we spend a lot of time focusing on that, making sure that the valuations that are assigned to us are appropriate and pushing back when we need to.

Clay Holder: We spend a lot of time focusing on that, making sure that the valuations that are assigned to us are appropriate and pushing back when we need to. We'll continue doing that to manage that aspect of it.

Speaker #5: So, we'll continue to do that to manage that aspect of it.

Speaker #1: Our next question will come from the line of John Palowski with Green Street. Please go ahead.

Operator: Our next question will come from the line of John Pawlowski with Green Street. Please go ahead.

Speaker #4: Hey, good morning. Thanks for the time. My question's on understanding the development economics for your pipeline right now in an environment where there's potentially a pretty big spread between yields when you quote and others quote kind of gross yields based off of face rents, and then net yields once you factor in concessions.

John Pawlowski: Hey, good morning. Thanks for the time. My question's on understanding the development economics for your pipeline right now in an environment where there's potentially a pretty big wide spread between yields when you quote and others quote kind of gross yields based off of base rents, and then net yields once you factor in concessions. Let's just take the lease-up pipeline. When these four or five projects actually stabilize H2 of this year, early next year, what's like the true net effective cash yield on this vintage of deliveries, assuming no change in market rents? Just today, net effective rents, what kind of yields are we looking at?

Speaker #4: So let's just take the lease-up pipeline. When these four or five projects actually stabilize, second half of this year, early next year, what's the true net effective cash yield in this vintage of deliveries?

Speaker #4: Assuming no change in market rents, just today's net effective rents, what kind of yield are we looking at?

Speaker #5: Got it. Hey, John, this is Brad. Clay, I think Clay's looked up some information now. But I'll tell you, for our current lease-up pipeline, on average, the projected NOI yields, cash yields on those, is 6%.

Brad Hill: Got it. Hey, John, this is Brad. Clay, I think Clay's looking up some information now. I'll tell you, for our current lease-up pipeline, on average, the projected NOI yields, cash yields on those, is a 6%. I would say today, what are those delivering? Probably close to a 5% yield because of the higher concessions that we have. I would say the good news about that is on our renewals for really across the board of all of our lease-up properties, we're getting about 9% to 10% lease over lease increases on those lease-up renewals. The concessions are burning off, which that's what gives us confidence in our ability to hit those yields that we originally underwrote, which we're calling about a 6%.

Speaker #5: I would say today, what are those delivering? Probably close to a 5% yield because of the higher concessions that we have. I would say the good news about that is, on our renewals for, really across the board of all of our lease-up properties, we're getting about 9% to 10% lease-over-lease increases on those lease-up renewals.

Speaker #5: So the concessions are burning off, which that's what gives us confidence in our ability to hit those yields that we originally underwrote, which were call it about a 6.

Speaker #5: If you look at a new underwriting that we're doing today for a new project, we think the yields are somewhere in the 6 and a quarter to 6 and a half.

Clay Holder: If you look at a new underwriting that we're doing today for a new project, we think the yields are somewhere in the 6.25% to 6.5%. That will include about 4% or so contingency on construction costs. Today, we're delivering projects 2% to 3% below cost of what our expectations are. That also does include some trending. Generally, what we do is we'll trend rents from today. We use today's market rents. We'll trend those to the stabilization period, which is 3 to 4 years, somewhere call it in the 2% or so range a year. If you go and look at where we're trending rents versus sub-market expectations, we're normally 2%, 3%, 4% below market expectations in terms of rent growth over that period of time.

Brad Hill: If you look at a new underwriting that we're doing today for a new project, we think the yields are somewhere in the 6.25% to 6.5%. That will include about 4% or so contingency on construction costs. Today, we're delivering projects 2% to 3% below cost of what our expectations are. That also does include some trending. Generally, what we do is we'll trend rents from today. We use today's market rents. We'll trend those to the stabilization period, which is 3 to 4 years, somewhere call it in the 2% or so range a year. If you go and look at where we're trending rents versus sub-market expectations, we're normally 2%, 3%, 4% below market expectations in terms of rent growth over that period of time.

Speaker #5: That will include about 4% or so contingency on construction costs today. We're delivering projects 2 to 3 percent below cost of what our expectations are.

Speaker #5: That also does include some trending. Generally, what we do is we'll trend rents from today—using today's market rents—and we'll trend those to the stabilization period, which is three to four years. Call it in the 2% or so range per year.

Speaker #5: If you go and look at where we're trending rents versus sub-market expectations, we're normally 2%, 3%, 4% below market expectations in terms of rent growth over that period of time.

Speaker #5: So that gives you a little bit of a sense of where our revenues need to be or where we're expecting revenues to be versus where the market is expecting revenues to be.

Clay Holder: That gives you a little bit of a sense of where our revenues need to be or where we're expecting revenues to be versus where the market is expecting revenues to be. I certainly don't think that it's unrealistic to think that from today's market-level rents, that they would increase a couple of percent over the next 4 years.

Brad Hill: That gives you a little bit of a sense of where our revenues need to be or where we're expecting revenues to be versus where the market is expecting revenues to be. I certainly don't think that it's unrealistic to think that from today's market-level rents, that they would increase a couple of percent over the next 4 years.

Speaker #5: And I certainly don't think that it's unrealistic to think that, from today's market-level rents, they would increase a couple of percent over the next four years.

Speaker #1: Our next question will come from the line of John Kim with BMO Capital Markets. Please go ahead.

Operator: Our next question will come from the line of John Kim with BMO Capital Markets. Please go ahead.

Speaker #4: Thank you. I know you talked about this a bit, but I think there's still some confusion on your assumption that the rents will accelerate in August and September because July you mentioned is similar to the second quarter of the year second quarter.

John Kim: Thank you. I know you talked about this a bit, I think there's still some confusion on your assumption that the rents will accelerate in August and September because July you mentioned is similar to Q2. Can you just clarify what momentum you saw in June and July, and what gives you confidence that it will accelerate towards the end of the quarter given in a normal seasonal year, rents typically peak in August?

Speaker #4: So, can you just clarify what momentum you saw in June and July? And what gives you confidence that it will accelerate towards the end of the quarter, given that in a normal seasonal year, rents typically peaked in August?

Speaker #5: Hey, John. This is Tim. Yeah, I mean, what we're seeing is, one, the demand side, as talked about. On the ground, lead volume, visit volume, is significantly higher at this time.

Tim Argo: Hey, John, this is Tim. Yeah, what we're seeing is one, the demand side, as we talked about, on the ground, lead volume, visit volume is significantly higher this time this year compared to this time last year. With some of the strategic decisions we made late Q2, that was really geared towards maximizing pricing as we could in Q3. I think where we're seeing that play out first is on the renewal side, as we talked about, where again, retention is higher and the actual renewal rates that we're getting are significantly higher than what we got in Q3 of last year. We spent a lot of time just looking at what our leasing velocity is and what are the leases on the books that we have for Q3 so far.

Speaker #5: This time, this year, compared to this time last year. And with some of the strategic decisions we made, like Q2, I was really geared towards maximizing pricing as we could in Q3.

Speaker #5: And I think we're seeing that play out first on the renewal side, as we've talked about, where again, retention is higher, and the actual renewal rates that we're getting are significantly higher than what we got in Q3 of last year.

Speaker #5: And then we spend a lot of time just looking at what our leasing velocity is and what are the leases on the books that we have for Q3 so far.

Speaker #5: Obviously, still a lot of time to go with new move-ins over the next couple of months. But when we compare where we are this time compared to the same time last year, the rates we're getting in August, September, new lease rates are pretty significantly better.

Clay Holder: Obviously, still a lot of time to go with new move-ins over the next couple of months. When we compare where we are this time compared to the same time last year, the rates we're getting in the August, September new lease rates are pretty significantly better than same time last year. You combine that with moderating supply, the absorption that we saw in H1, and frankly, with a little bit easier comps at this time last year. All those factors play into what we're seeing and the momentum that we're seeing, and that we expect to play out over the back H2.

Tim Argo: Obviously, still a lot of time to go with new move-ins over the next couple of months. When we compare where we are this time compared to the same time last year, the rates we're getting in the August, September new lease rates are pretty significantly better than same time last year. You combine that with moderating supply, the absorption that we saw in H1, and frankly, with a little bit easier comps at this time last year. All those factors play into what we're seeing and the momentum that we're seeing, and that we expect to play out over the back H2.

Speaker #5: Same time last year. So you combine that with moderating supply, the absorption that we saw in the first half of the year, and, frankly, with a little bit easier comps at this time last year.

Speaker #5: So, all of those factors play into what we're seeing in the momentum that we're experiencing and that we expect to play out in the back half of the year.

Speaker #1: We have no further questions. I'll turn the call back to MAA for closing comments.

Operator: We have no further questions. I'll turn the call back to MAA for closing comments.

Brad Hill: All right. Well, no other comments from us. Certainly, if you guys have any follow-up questions, feel free to reach out. Thanks for joining us today.

Speaker #5: All right. Well, no other comments from us. Certainly, if you guys have any follow-up questions, feel free to reach out. Thanks for joining us today.

Operator: This concludes today's program. Thank you for joining. You may disconnect at any time.

Q2 2026 Mid America Apartment Communities Inc Earnings Call

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