MID-AMERICA APARTMEN

MAA
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MID AMERICA APARTMENT COMMUNITIES INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

04/28/2022 | 04:13pm


The following discussion analyzes the financial condition and results of
operations of both MAA and the Operating Partnership, of which MAA is the sole
general partner and in which MAA owned a 97.3% interest as of March 31, 2022.
MAA conducts all of its business through the Operating Partnership and its
various subsidiaries. This discussion should be read in conjunction with the
condensed consolidated financial statements and notes thereto included in this
Quarterly Report on Form 10-Q.

MAA
, an S&P 500 company, is a multifamily-focused, self-administered and
self-managed real estate investment trust, or REIT. We own, operate, acquire and
selectively develop apartment communities primarily located in the Southeast,
Southwest and Mid-Atlantic regions of the United States. As of March 31, 2022,
we owned and operated 292 apartment communities (which does not include
development communities under construction) through the Operating Partnership
and its subsidiaries, and we had an ownership interest in one apartment
community through an unconsolidated real estate joint venture and had five
development communities under construction. In addition, as of March 31, 2022,
33 of our apartment communities included retail components. Our apartment
communities, including development communities under construction, were located
across 16 states and the District of Columbia as of March 31, 2022.

We report in two segments, Same Store and Non-Same Store and Other. Our Same
Store segment represents those apartment communities that have been owned and
stabilized for at least 12 months as of the first day of the calendar year. Our
Non-Same Store and Other segment includes recently acquired communities,
communities being developed or in lease-up, communities identified for
disposition, communities that have incurred a significant casualty loss and
stabilized communities that do not meet the requirements to be Same Store
communities. Also included in our Non-Same Store and Other segment are
non-multifamily activities. Additional information regarding the composition of
our segments is included in Note 11 to the condensed consolidated financial
statements included in this Quarterly Report on Form 10-Q.


Note Regarding Forward-Looking Statements




This and other sections of this Quarterly Report on Form 10-Q may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, or the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect
to our expectations for future periods. Forward-looking statements do not
discuss historical fact, but instead include statements related to expectations,
projections, intentions or other items related to the future. Such
forward-looking statements include, without limitation, statements regarding the
potential impact of the ongoing COVID-19 pandemic on our business, statements
regarding expected operating performance and results, property stabilizations,
property acquisition and disposition activity, joint venture activity,
development and renovation activity and other capital expenditures, and capital
raising and financing activity, as well as lease pricing, revenue and expense
growth, occupancy, interest rate and other economic expectations. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
"forecasts," "projects," "assumes," "will," "may," "could," "should," "budget,"
"target," "outlook," "guidance" and variations of such words and similar
expressions are intended to identify such forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, as described below, which may cause our actual results,
performance or achievements to be materially different from the results of
operations, financial conditions or plans expressed or implied by such
forward-looking statements. Although we believe that the assumptions underlying
the forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore such forward-looking statements
included in this report may not prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by us or any other person that the results or conditions
described in such statements or our objectives and plans will be achieved.



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The following factors, among others, could cause our actual results, performance
or achievements to differ materially from those expressed or implied in the
forward-looking statements:





the COVID-19 pandemic and measures taken or that may be taken by federal, state
and local governmental authorities to combat the spread of the disease;

inability to generate sufficient cash flows due to unfavorable economic and
market conditions, changes in supply and/or demand, competition, uninsured
losses, changes in tax and housing laws or other factors;

exposure to risks inherent in investments in a single industry and sector;

adverse changes in real estate markets, including, but not limited to, the
extent of future demand for multifamily units in our significant markets,
barriers of entry into new markets which we may seek to enter in the future,
limitations on our ability to increase or collect rental rates, competition, our
ability to identify and consummate attractive acquisitions or development
projects on favorable terms, our ability to consummate any planned dispositions
in a timely manner on acceptable terms, and our ability to reinvest sale
proceeds in a manner that generates favorable returns;

failure of development communities to be completed within budget and on a timely
basis, if at all, to lease-up as anticipated or to achieve anticipated results;

unexpected capital needs;

material changes in operating costs, including real estate taxes, utilities and
insurance costs, due to inflation and other factors;

inability to obtain appropriate insurance coverage at reasonable rates, or at
all, or losses from catastrophes in excess of our insurance coverage;

ability to obtain financing at favorable rates, if at all, or refinance existing
debt as it matures;

level and volatility of interest or capitalization rates or capital market
conditions;

the effect of any rating agency actions on the cost and availability of new debt
financing;

the effect of the phase-out of the London Interbank Offered Rate, or LIBOR, as a
variable rate debt benchmark and the transition to a different benchmark
interest rate;

significant change in the mortgage financing market or other factors that would
cause single-family housing or other alternative housing options, either as an
owned or rental product, to become a more significant competitive product;

ability to continue to satisfy complex rules in order to maintain our status as
a REIT for federal income tax purposes, the ability of the Operating Partnership
to satisfy the rules to maintain its status as a partnership for federal income
tax purposes, the ability of our taxable REIT subsidiaries to maintain their
status as such for federal income tax purposes and our ability and the ability
of our subsidiaries to operate effectively within the limitations imposed by
these rules;

inability to attract and retain qualified personnel;

cyber liability or potential liability for breaches of our or our service
providers' information technology systems, or business operations disruptions;

potential liability for environmental contamination;

changes in the legal requirements we are subject to, or the imposition of new
legal requirements, that adversely affect our operations;

extreme weather, natural disasters, disease outbreaks and other public health
events;

impact of climate change on our properties or operations;

legal proceedings or class action lawsuits;

impact of reputational harm caused by negative press or social media postings of
our actions or policies, whether or not warranted;

compliance costs associated with numerous federal, state and local laws and
regulations; and

other risks identified in this Quarterly Report on Form 10-Q and in other
reports we file with the Securities and Exchange Commission, or the SEC, or in
other documents that we publicly disseminate.

New factors may also emerge from time to time that could have a material adverse
effect on our business. Except as required by law, we undertake no obligation to
publicly update or revise forward-looking statements contained in this Quarterly
Report on Form 10-Q to reflect events, circumstances or changes in expectations
after the date on which this Quarterly Report on Form 10-Q is filed.


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Overview of the Three Months Ended March 31, 2022




For the three months ended March 31, 2022, net income available for MAA common
shareholders was $109.9 million as compared to $46.3 million for the three
months ended March 31, 2021. Results for the three months ended March 31, 2022
included $11.9 million of non-cash income related to the fair value adjustment
of the embedded derivative in the MAA Series I preferred shares. Results for the
three months ended March 31, 2021 included $15.1 million of non-cash expense
related to the embedded derivative in the MAA Series I preferred shares.
Revenues for the three months ended March 31, 2022 increased 12.0% as compared
to the three months ended March 31, 2021, driven by a 12.2% increase in our Same
Store segment. Property operating expenses, excluding depreciation and
amortization, for the three months ended March 31, 2022 increased by 4.3% as
compared to the three months ended March 31, 2021, driven by a 4.3% increase in
our Same Store segment. The drivers of these changes are discussed in the
"Results of Operations" section.


Trends




During the three months ended March 31, 2022, revenue growth for our Same Store
segment continued to be primarily driven by growth in average effective rent per
unit. The average effective rent per unit in our Same Store segment continued to
increase from the prior year, up 12.4% for the three months ended March 31, 2022
as compared to the three months ended March 31, 2021. Average effective rent per
unit represents the average of gross rent amounts, after the effect of leasing
concessions, for occupied apartment units plus prevalent market rates asked for
unoccupied apartment units, divided by the total number of units. Leasing
concessions represent discounts to the current market rate. We believe average
effective rent per unit is a helpful measurement in evaluating average pricing;
however, it does not represent actual rental revenue collected per unit.

In addition, for the three months ended March 31, 2022, average physical
occupancy for our Same Store segment was 95.9%, as compared to 95.7% for the
three months ended March 31, 2021. Average physical occupancy is a measurement
of the total number of our apartment units that are occupied by residents, and
it represents the average of the daily physical occupancy for the period.

An important part of our portfolio strategy is to maintain diversity of markets,
submarkets, product types and price points primarily in the Southeast, Southwest
and Mid-Atlantic regions of the United States. This diversity tends to mitigate
exposure to economic issues in any one geographic market or area. We believe
that a well-balanced portfolio, including both urban and suburban locations,
with a broad range of monthly rent price points, will perform well in "up"
cycles as well as better weather "down" cycles. Through our investment in 36
defined markets, we are diversified across markets, urban and suburban
submarkets, and a variety of product types and monthly rent price points.

While the United States economy continues to recover from the effects of the
COVID-19 pandemic, demand for apartments during the first quarter of 2022 was
very strong, as evidenced by the accelerating rent growth we achieved. Demand
for apartments is primarily driven by general economic conditions in our markets
and is particularly correlated to job growth, population growth, household
formation and in-migration. While our rent growth and rent collection trends in
the first quarter of 2022 were strong, we continue to monitor pressures
surrounding supply chain challenges and inflation trends. A worsening of the
current environment could contribute to uncertain rent collections going forward
and suppress demand for apartments and would likely drive rent growth on new
leases and renewals lower than what we achieved in the three months ended March
31, 2022
. Current elevated supply levels could further affect rent growth for
our portfolio though we expect the demand side to continue to be more impactful
in the short term. Supply chain and inflationary pressures would likely drive
higher operating expenses, particularly in personnel and repairs and
maintenance.

Access to the financial markets remains strong, particularly for high-credit
rated borrowers. However, a prolonged disruption of the markets or a decline in
credit and financing conditions could negatively affect our ability to access
capital necessary to fund our operations or refinance maturing debt in the
future. Additionally, rising interest rates could negatively impact our
borrowing costs for any variable rate borrowings or refinancing activity.


Results of Operations



Comparison of the three months ended March 31, 2022 to the three months ended
March 31, 2021




For the three months ended March 31, 2022, we achieved net income available for
MAA common shareholders of $109.9 million, a 137.5% increase as compared to the
three months ended March 31, 2021, and total revenue growth of $51.1 million,
representing a 12.0% increase in property revenues as compared to the three
months ended March 31, 2021. The following discussion describes the primary
drivers of the increase in net income available for MAA common shareholders for
the three months ended March 31, 2022 as compared to the three months ended
March 31, 2021.


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Property Revenues



The following table reflects our property revenues by segment for the three
months ended March 31, 2022 and 2021 (dollars in thousands):




Three months ended March 31,
2022 2021 Increase % Increase
Same Store $ 454,477 $ 405,146 $ 49,331 12.2 %
Non-Same Store and Other 21,601 19,859 1,742 8.8 %
Total $ 476,078 $ 425,005 $ 51,073 12.0 %


The increase in property revenues for our Same Store segment for the three
months ended March 31, 2022 as compared to the three months ended March 31, 2021
was the primary driver of total property revenue growth. The Same Store segment
generated a 12.2% increase in revenues for the three months ended March 31,
2022
, primarily the result of average effective rent per unit growth of 12.4% as
compared to the three months ended March 31, 2021. The increase in property
revenues from the Non-Same Store and Other segment for the three months ended
March 31, 2022 as compared to three months ended March 31, 2021 was primarily
the result of increased revenues from recently completed development
communities.


Property Operating Expenses




Property operating expenses include costs for property personnel, building
repairs and maintenance, real estate taxes and insurance, utilities, landscaping
and other operating expenses. The following table reflects our property
operating expenses by segment for the three months ended March 31, 2022 and 2021
(dollars in thousands):

Three months ended March 31,
2022 2021 Increase % Increase
Same Store $ 159,835 $ 153,206 $ 6,629 4.3 %
Non-Same Store and
Other 9,585 9,262 323 3.5 %
Total $ 169,420 $ 162,468 $ 6,952 4.3 %


The increase in property operating expenses for our Same Store segment for the
three months ended March 31, 2022 as compared to the three months ended March
31, 2021
was primarily driven by increases in personnel expense of $1.8 million,
building repairs and maintenance of $1.5 million, office operations expense of
$1.3 million, utilities expense of $0.9 million and insurance expense of $0.8
million
.


Depreciation and Amortization




Depreciation and amortization expense for the three months ended March 31, 2022
was $133.7 million, an increase of $2.2 million as compared to the three months
ended March 31, 2021. The increase was primarily driven by the recognition of
depreciation expense associated with our development and capital spend
activities completed after March 31, 2021 in the normal course of business
through March 31, 2022.


Other Income and Expenses




Property management expenses for the three months ended March 31, 2022 were
$16.5 million, an increase of $3.6 million as compared to the three months ended
March 31, 2021. General and administrative expenses for the three months ended
March 31, 2022 were $16.3 million, an increase of $3.3 million as compared to
the three months ended March 31, 2021.

Interest expense for the three months ended March 31, 2022 was $39.1 million, a
decrease of $0.6 million as compared to the three months ended March 31, 2021.
The decrease was primarily due to a decrease in our effective interest rate as
well as a decrease in our average daily borrowings outstanding during the three
months ended March 31, 2022 as compared to the three months ended March 31,
2021
.

Other non-operating (income) expense for the three months ended March 31, 2022
was $10.8 million of income as compared to $15.9 million of expense for the
three months ended March 31, 2021, an increase of $26.7 million. The $10.8
million
in income for the three months ended March 31, 2022 was driven by $11.9
million
of non-cash income related to the fair value adjustment of the embedded
derivative in the MAA Series I preferred shares and $7.6 million in casualty
gains from winter storm Uri, partially offset by the recognition of $10.2
million
of non-cash expense from investments. The $15.9 million of expense for
the three months ended March 31, 2021 was driven by $15.1 million of non-cash
expense related to the fair value adjustment of the embedded derivative and $2.1
million
in casualty losses, partially offset by the recognition of $1.6 million
of non-cash income from investments.


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Funds from Operations and Core Funds from Operations




Funds from operations, or FFO, a non-GAAP financial measure, represents net
income available for MAA common shareholders (computed in accordance with the
United States
generally accepted accounting principles, or GAAP) excluding gains
or losses on disposition of operating properties and asset impairment, plus
depreciation and amortization of real estate assets, net income attributable to
noncontrolling interests and adjustments for joint ventures. Because net income
attributable to noncontrolling interests is added back, FFO, when used in this
Quarterly Report on Form 10-Q, represents FFO attributable to the Company.

FFO should not be considered as an alternative to net income available for MAA
common shareholders, or any other GAAP measurement, as an indicator of operating
performance or as an alternative to cash flow from operating, investing and
financing activities as a measure of liquidity. Management believes that FFO is
helpful to investors in understanding our operating performance, primarily
because its calculation excludes depreciation and amortization expense on real
estate assets. We believe that GAAP historical cost depreciation of real estate
assets is generally not correlated with changes in the value of those assets,
whose value does not diminish predictably over time, as historical cost
depreciation implies. While our calculation of FFO is in accordance with the
National Association of Real Estate Investment Trusts', or NAREIT's, definition,
it may differ from the methodology for calculating FFO utilized by other REITs
and, accordingly, may not be comparable to such other REITs.

Core FFO represents FFO as adjusted for items that are not considered part of
our core business operations such as adjustments related to the fair value of
the embedded derivative in the MAA Series I preferred shares, gain or loss on
sale of non-depreciable assets, gain or loss on investments, net casualty gain
or loss, gain or loss on debt extinguishment, legal costs and settlements, net,
COVID-19 related costs and mark-to-market debt adjustments. While our definition
of Core FFO may be similar to others in the industry, our methodology for
calculating Core FFO may differ from that utilized by other REITs and,
accordingly, may not be comparable to such other REITs. Core FFO should not be
considered as an alternative to net income available for MAA common
shareholders, or any other GAAP measurement, as an indicator of operating
performance or as an alternative to cash flow from operating, investing and
financing activities as a measure of liquidity. We believe that Core FFO is
helpful in understanding our core operating performance between periods in that
it removes certain items that by their nature are not comparable over periods
and therefore tend to obscure actual operating performance.


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The following table presents a reconciliation of net income available for MAA
common shareholders to FFO and Core FFO for the three months ended March 31,
2022
and 2021, as we believe net income available for MAA common shareholders is
the most directly comparable GAAP measure (dollars in thousands):

Three months ended


March 31,



2022


2021



Net income available for MAA common shareholders $ 109,880 $ 46,271
Depreciation and amortization of real estate assets 132,010



129,752



Loss on sale of depreciable real estate assets 1 -


Depreciation and amortization of real estate assets



of real estate joint venture 154


155



Net income attributable to noncontrolling interests 2,775


1,671



FFO attributable to the Company 244,820


177,849



(Gain) loss from embedded derivative in preferred
shares(1) (11,896 )


15,108



Gain on sale of non-depreciable real estate assets (23 ) -
Loss (gain) on investments, net of tax(1)(2) 8,077 (1,284 )
Net casualty (gain) loss and other settlement
proceeds(3) (7,712 )


2,355



Loss on debt extinguishment(1) - 37
Legal costs and settlements, net(1) 537 (16 )
COVID-19 related costs(1) 337


310



Mark-to-market debt adjustments(4) 36 83
Core FFO $ 234,176 $ 194,442


(1)



Included in "Other non-operating (income) expense" in the Condensed Consolidated
Statements of Operations.



(2)



For the three months ended March 31, 2022 and 2021, loss (gain) on investments
are presented net of tax benefit of $2.2 million and net of tax expense of $0.3
million
, respectively.
(3)
For the three months ended March 31, 2022, we recognized a gain of $7.6 million
from the receipt of insurance proceeds that exceeded our casualty losses related
to winter storm Uri. The gain is reflected in "Other non-operating (income)
expense" in the Consolidated Statements of Operations. For the three months
ended March 31, 2021, we incurred $16.9 million in casualty losses related to
winter storm Uri (primarily building repairs, landscaping and asset write-offs).
The majority of the casualty losses have been reimbursed through insurance
coverage. A receivable was recognized in "Other non-operating (income) expense"
for the recorded losses that we expected to recover. Additional costs related to
the storm that were not expected to be recovered through insurance coverage,
along with other unrelated casualty losses and recoveries, are also reflected in
this adjustment. The adjustment is primarily included in "Other non-operating
(income) expense" in the Condensed Consolidated Statements of Operations.


(4)



Included in "Interest expense" in the Condensed Consolidated Statements of
Operations.




Core FFO for the three months ended March 31, 2022 was $234.2 million, an
increase of $39.7 million as compared to the three months ended March 31, 2021,
primarily as a result of an increase in property revenues of $51.1 million
partially offset by increases in property operating expenses, excluding
depreciation and amortization, of $7.0 million, property management expenses of
$3.6 million and general and administrative expenses of $3.3 million.


Liquidity and Capital Resources




Our cash flows from operating, investing and financing activities, as well as
general economic and market conditions, are the principal factors affecting our
liquidity and capital resources.

We expect that our primary uses of cash will be to fund our ongoing operating
needs, to fund our ongoing capital spending requirements, which relate primarily
to our development, redevelopment and property repositioning activities, to
repay maturing borrowings, to fund the future acquisition of assets and to pay
shareholder dividends. We expect to meet our cash requirements through net cash
flows from operating activities, existing unrestricted cash and cash
equivalents, borrowings under our commercial paper program and our revolving
credit facility, the future issuance of debt and equity and the future
disposition of assets.

We historically have had positive net cash flows from operating activities. We
believe that future net cash flows generated from operating activities, existing
unrestricted cash and cash equivalents, borrowing capacity under our current
commercial paper program and revolving credit facility, and our ability to issue
debt and equity will provide sufficient liquidity to fund the cash requirements
for our business over the next 12 months and the foreseeable future.


As of March 31, 2022, we had $1.0 billion of combined unrestricted cash and cash
equivalents and available capacity under our revolving credit facility.



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Cash Flows from Operating Activities




Net cash provided by operating activities was $179.6 million for the three
months ended March 31, 2022 as compared to $148.1 million for the three months
ended March 31, 2021. The increase in operating cash flows was primarily driven
by our operating performance, partially offset by the timing of cash payments.


Cash Flows from Investing Activities




Net cash used in investing activities was $83.5 million for the three months
ended March 31, 2022 as compared to $112.5 million for the three months ended
March 31, 2021. The primary drivers of the change were as follows (dollars in
thousands):

Primary drivers of cash (outflow) inflow
during the three months ended March 31, (Decrease) Increase
2022 2021 in Net Cash
Purchases of real estate and other
assets $ (5,232 ) $ - $ (5,232 )
Capital improvements and other (38,212 ) (49,220 ) 11,008
Development costs (42,780 ) (64,291 ) 21,511
Contributions to affiliates (7,500 ) - (7,500 )
Proceeds from real estate asset
dispositions and insurance
recoveries 10,097 898 9,199



The increase in cash outflows for purchases of real estate and other assets was
driven by acquisition activity during the three months ended March 31, 2022 as
compared to the three months ended March 31, 2021. The decrease in cash outflows
for capital improvements and other was primarily driven by decreased
redevelopment capital spend during the three months ended March 31, 2022 as
compared to the three months ended March 31, 2021. The decrease in cash outflows
for development costs was primarily driven by decreased development spend during
the three months ended March 31, 2022 as compared to the three months ended
March 31, 2021. The increase in cash outflows for contributions to affiliates
was driven by an initial investment in a technology-focused limited partnership
during the three months ended March 31, 2022, while no limited partnership
contributions were made during the three months ended March 31, 2021. The
increase in cash inflows from proceeds from real estate asset dispositions and
insurance recoveries was driven by insurance reimbursements received for
casualty claims related to winter storm Uri during the three months ended March
31, 2022
.


Cash Flows from Financing Activities




Net cash used in financing activities was $154.1 million for the three months
ended March 31, 2022 as compared to $27.9 million for the three months ended
March 31, 2021. The primary drivers of the change were as follows (dollars in
thousands):

Primary drivers of cash inflow (outflow)
during the three months ended March 31, (Decrease) Increase
2022 2021 in Net Cash
Net change in commercial paper $ 20,000 $ 213,000 (193,000 )
Principal payments on notes payable (343 ) (119,154 ) 118,811
Dividends paid on common shares (125,432 ) (117,242 ) (8,190 )
Acquisition of noncontrolling interests (43,070 ) - (43,070 )



The decrease in cash inflows related to the net change in commercial paper
resulted from the increase in net borrowings of $20.0 million on our commercial
paper program during the three months ended March 31, 2022, as compared to the
increase in net borrowings of $213.0 million on our commercial paper program
during the three months ended March 31, 2021. The decrease in cash outflows from
principal payments on notes payable primarily resulted from the retirement of
$118.6 million of property mortgages during the three months ended March 31,
2021
. The increase in cash outflows from dividends paid on common shares
primarily resulted from the increase in the dividend rate to $1.0875 per share
during the three months ended March 31, 2022, as compared to the dividend rate
of $1.0250 per share during the three months ended March 31, 2021. The increase
in cash outflows from the acquisition of noncontrolling interests resulted from
the acquisition of the noncontrolling interest of a consolidated real estate
entity for $43.1 million during the three months ended March 31, 2022.


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Debt




The following schedule reflects our debt outstanding as of March 31, 2022
(dollars in thousands):

Principal Average Years to
Balance Rate Maturity Effective Rate
Unsecured debt
Fixed rate senior notes $ 4,175,000 6.9 3.3 %
Variable rate commercial paper 20,000 0.1 0.6 %
Debt issuance costs, discounts, premiums and
fair market value adjustments (22,487 )
Total unsecured debt $ 4,172,513 6.9 3.3 %
Secured debt
Fixed rate property mortgages $ 368,212 26.5 4.4 %
Debt issuance costs (3,220 )
Total secured debt $ 364,992 26.5 4.4 %
Total outstanding debt $ 4,537,505 8.4 3.4 %
Total fixed rate debt $ 4,517,505 8.5 3.4 %



The following schedule presents the contractual maturity dates of our
outstanding debt, net of debt issuance costs, discounts, premiums and fair
market value adjustments, as of March 31, 2022 (dollars in thousands):




Commercial Paper &
Revolving Credit
Facility ?¹? ?²? Public Bonds Secured Total
2022 $ 20,000 $ 124,874 $ - $ 144,874
2023 - 349,003 - 349,003
2024 - 398,229 - 398,229
2025 - 397,193 5,071 402,264
2026 - 296,623 - 296,623
2027 - 595,958 - 595,958
2028 - 396,239 - 396,239
2029 - 560,082 - 560,082
2030 - 297,282 - 297,282
2031 - 444,489 444,489
Thereafter - 292,541 359,921 652,462
Total $ 20,000 $ 4,152,513 $ 364,992 $ 4,537,505


(1)
The $20.0 million maturing in 2022 reflects the principal outstanding under
MAALP's unsecured commercial paper program as of March 31, 2022. Under the terms
of the program, MAALP may issue up to a maximum aggregate amount outstanding at
any time of $500.0 million. For the three months ended March 31, 2022, average
daily borrowings outstanding under the commercial paper program were $13.8
million
.


(2)



There were no borrowings outstanding under MAALP's $1.0 billion unsecured
revolving credit facility as of March 31, 2022. The unsecured revolving credit
facility has a maturity date of May 2023 plus two six-month extensions.




The following schedule reflects the interest rate maturities of our outstanding
fixed rate debt, net of debt issuance costs, discounts, premiums and fair market
value adjustments, as of March 31, 2022 (dollars in thousands):

Fixed Rate Debt Effective Rate
2022 $ 124,874 3.3 %
2023 349,003 4.2 %
2024 398,229 4.0 %
2025 402,264 4.2 %
2026 296,623 1.2 %
2027 595,958 3.7 %
2028 396,239 4.2 %
2029 560,082 3.7 %
2030 297,282 3.1 %
2031 444,489 1.8 %
Thereafter 652,462 3.8 %
Total $ 4,517,505 3.4 %




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Unsecured Revolving Credit Facility & Commercial Paper




MAALP has entered into a $1.0 billion unsecured revolving credit facility with a
syndicate of banks led by Wells Fargo Bank, National Association, and fourteen
other banks, which we refer to as the Credit Facility. The Credit Facility
includes an expansion option up to $1.5 billion. The Credit Facility bears an
interest rate of LIBOR plus a spread of 0.75% to 1.45% based on an investment
grade pricing grid. The Credit Facility matures in May 2023 with an option to
extend for two additional six-month periods. As of March 31, 2022, there was no
outstanding balance under the Credit Facility, while $4.0 million of capacity
was used to support outstanding letters of credit. The Credit Facility serves as
our primary source of short-term liquidity.

Certain tenors of the USD LIBOR (one-week and two-month) ceased publication as
of December 31, 2021, and all remaining tenors of the USD LIBOR (one, three, six
and 12-month) will cease to be published after June 30, 2023. Currently, our
exposure to the phase-out of LIBOR is limited to the Credit Facility. The terms
of the Credit Facility allow for the transition to an alternate benchmark
interest rate, including Secured Overnight Financing Rate, to replace any
outstanding USD LIBOR borrowings at the time USD LIBOR is no longer published.

MAALP has established an unsecured commercial paper program, whereby it can
issue unsecured commercial paper notes with varying maturities not to exceed 397
days up to a maximum aggregate amount outstanding of $500.0 million. As of March
31, 2022
, there was $20.0 million outstanding under the commercial paper
program.


Unsecured Senior Notes



As of March 31, 2022, we had $4.2 billion of publicly issued unsecured senior
notes outstanding.




Secured Property Mortgages


MAALP maintains secured property mortgages with various life insurance
companies. As of March 31, 2022, we had $368.2 million of secured property
mortgages outstanding.




For more information regarding our debt capital resources, see Note 6 to the
condensed consolidated financial statements included in this Quarterly Report on
Form 10-Q.

Equity

As of March 31, 2022, MAA owned 115,337,466 OP Units, comprising a 97.3% limited
partnership interest in MAALP, while the remaining 3,202,377 outstanding OP
Units were held by limited partners of MAALP other than MAA. Holders of OP Units
(other than MAA) may require us to redeem their OP Units from time to time, in
which case we may, at our option, pay the redemption price either in cash (in an
amount per OP Unit equal, in general, to the average closing price of MAA's
common stock on the NYSE over a specified period prior to the redemption date)
or by delivering one share of MAA's common stock (subject to adjustment under
specified circumstances) for each OP Unit so redeemed. MAA has registered under
the Securities Act the 3,202,377 shares of its common stock that, as of March
31, 2022
, were issuable upon redemption of OP Units, in order for those shares
to be sold freely in the public markets.

In August 2021, MAA entered into two 18-month forward sale agreements with
respect to a total of 1.1 million shares of its common stock at an initial
forward sale price of $190.56 per share, which is net of issuance costs. Under
the forward sale agreements, the forward sale price is subject to adjustment on
a daily basis based on a floating interest rate factor equal to a specified
daily rate less a spread and will be decreased based on amounts related to
dividends on MAA's common stock during the term of the forward sale agreements.
No shares had been settled under the forward sale agreements as of March 31,
2022
. Subject to certain conditions, we generally have the right to elect cash
or net share settlement under the forward sale agreements, although we expect to
settle the forward sale agreements entirely by the full physical delivery of
shares of MAA's common stock in exchange for cash proceeds. We intend to use any
cash proceeds upon settlement of the forward sale agreements to fund our
development and redevelopment activities, among other potential uses.

In November 2021, the Company entered into an equity distribution agreement to
establish a new ATM program, replacing MAA's previous ATM program and allowing
MAA to sell shares of its common stock from time to time to or through its sales
agents into the existing market at current market prices, and to enter into
separate forward sales agreements to or through its forward purchasers. Under
its current ATM program, MAA has the authority to issue up to an aggregate of
4.0 million shares of its common stock, at such times to be determined by MAA.
MAA has no obligation to issue shares through the ATM program. During the three
months ended March 31, 2022 and 2021, MAA did not sell any shares of common
stock under its ATM program. As of March 31, 2022, there were 4.0 million shares
remaining under the current ATM program.


34



--------------------------------------------------------------------------------





For more information regarding our equity capital resources, see Note 8 and Note
9 to the condensed consolidated financial statements included in this Quarterly
Report on Form 10-Q.

Material Cash Requirements

As of March 31, 2022, we had $126.1 million in debt obligations maturing in the
year ending December 31, 2022 as well as interest payments on fixed rate debt
obligations of $126.9 million. As of March 31, 2022, we also had obligations to
make additional capital contributions to three technology-focused limited
partnerships in which we hold equity interests. The capital contributions may be
called by the general partners at any time after giving appropriate notice. As
of March 31, 2022, we had committed to make additional capital contributions
totaling up to $33.5 million if and when called by the general partners of the
limited partnerships.


We have other material cash requirements that do not represent contractual
obligations, but we expect to incur in the ordinary course of our business.




As of March 31, 2022, we had five development communities under construction
totaling 1,759 apartment units once complete. Total expected costs for the five
development projects are $444.0 million, of which $192.8 million had been
incurred through March 31, 2022. We expect to have additional development
projects in the future. In addition, our property development and repositioning
activities are ongoing, and we incur expenditures relating to recurring capital
replacements, which typically include scheduled carpet replacement, new roofs,
HVAC units, plumbing, concrete, masonry and other paving, pools and various
exterior building improvements. For the year ending December 31, 2022, we expect
that our total capital expenditures relating to our development activities, our
property redevelopment and repositioning activities and recurring capital
replacements will be in line with our total capital expenditures for the year
ended December 31, 2021.

We typically declare cash dividends on MAA's common stock on a quarterly basis,
subject to approval by MAA's Board of Directors. The current annual dividend
rate is $4.35 per common share. The timing and amount of future dividends will
depend on actual cash flows from operations, our financial condition, capital
requirements, the annual distribution requirements under the REIT provisions of
the Internal Revenue Code of 1986 and other factors as MAA's Board of Directors
deems relevant. MAA's Board of Directors may modify our dividend policy from
time to time.


For information regarding our material cash requirements as of December 31,
2021
, see Item 7 of Part II of our Annual Report on Form 10-K for the year ended
December 31, 2021, filed with the SEC on February 17, 2022.



Inflation




Our resident leases at our apartment communities allow for adjustments in the
rental rate at the time of renewal, which may enable us to seek rent increases.
The majority of our leases are for one year or less. The short-term nature of
these leases generally serves to reduce our risk to adverse effects of
inflation.


Critical Accounting Estimates




Please refer to our Annual Report on Form 10-K for the year ended December 31,
2021
, filed with the SEC on February 17, 2022, for discussions of our critical
accounting estimates. During the three months ended March 31, 2022, there were
no material changes to these estimates.

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