Mid America Apartment Communities Inc. Q1 FY2026 Earnings Call

Good morning, ladies and gentlemen, and welcome to the MAA First Quarter 2026 Earnings Conference Call. As a reminder, this conference call is being recorded today, April 30, 2026. I will now turn the call over to Andrew Schaeffer, Senior Vice President, Treasurer and Director of Capital Markets at MAA for opening comments.

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 and present the most directly comparable GAAP financial measures; reconciliations between non-GAAP and comparable GAAP measures can be found in our earnings release and supplemental financial data. Our earnings release and supplement are currently available on the Investors page of our website at www.maa.com. A copy of our prepared comments and an audio recording of this call will also be available on our website later today. After some brief prepared comments, the management team will be available to answer questions. I will now turn the call over to Brad.

Well, thanks, Andrew, and good morning, everyone. As highlighted in our release, we delivered first quarter results that exceeded our expectations, driven by the resilient demand in our footprint, strong resident retention as well as our focus on expense management and some timing-related items. New lease pricing continued to reflect supply pressure in several markets, but despite this pressure, new lease pricing improved sequentially and supported by our continued strong renewal performance, blended lease-over-lease pricing improved 140 basis points from the fourth quarter. With the bulk of the leasing season ahead, we like our positioning and momentum going into summer with stable occupancy and better 60-day exposure than a year ago. Our high-growth markets are producing solid demand to absorb the new supply in a steady manner that we believe will enable continued stable occupancy, favorable renewal pricing, strong collections and overall earnings performance in line with the outlook we provided in our prior guidance. Our leasing traffic remains strong and positive migration trends, strong wage growth and stable employment conditions across our diversified portfolio and markets combined to drive solid demand, as evidenced by first quarter absorption exceeding new supply deliveries in our footprint. Operationally, our on-site teams, actively supported by our asset management team, continue to execute at a high level, controlling expenses while delivering an excellent resident experience as reflected in our sector-leading Google scores. As a result of our strong customer service and the ongoing single-family affordability challenges, renewals remain consistent, helping to deliver year-over-year blended lease improvement for five consecutive quarters. We continue to allocate capital in a balanced and disciplined manner, taking advantage of the current pricing dislocation of our existing portfolio in the public market to buy back shares as well as executing on initiatives to deliver long-term earnings growth while protecting our strong balance sheet. With acquisition cap rates around 4.5% for high-quality properties in our footprint, our growth efforts are predominantly focused on new development through our existing pipeline of owned and controlled land sites, representing over 4,300 units of future growth. We started construction on our first project for the year in April, a 286-unit community in the Kansas City market. Based on our current approval and construction timelines, we now expect to start construction on four projects this year, reducing our expected development spend for the year to $350 million. While this is down from the $400 million in our original forecast, it's up from the $315 million we invested in the two projects we started in 2025. The projects we expect to start this year will deliver in 2028 and 2029 during what we believe will be a more favorable supply-demand environment. As we look forward, we remain encouraged by underlying demand across our markets, declining new deliveries and the strength of our resident base with continued strong collections and affordable rents at a 20% rent-to-income ratio. Our high-growth markets continue to offer attractive long-term appeal for employers, households and investors. With positive absorption, stable demand and market-level occupancy improving, we are optimistic we will continue to build momentum through the spring and summer, supporting improved new lease pricing as the year progresses. In addition to capturing increased organic growth from our existing asset base through the year, we expect a growing NOI contribution from a number of areas, including new initiatives to drive efficiencies and higher operating margin from our existing portfolio, our growing redevelopment opportunities as well as a growing development pipeline that continues to lease up. Today, we believe our more diversified and higher-quality portfolio, our stronger operating platform and our stronger balance sheet position us to capture improving performance and to deliver meaningful shareholder value over the approaching recovery cycle. We're excited about the outlook over the next few years. To all our associates across our properties and corporate offices, thank you for your continued dedication and focus. And with that, I'll turn the call over to Tim.

Thank you, Brad, and good morning, everyone. For the first quarter, same-store NOI beat our expectations with in-line same-store revenue, combining with lower same-store expenses to drive the favorability. From a pricing standpoint, new lease-over-lease growth improved 110 basis points sequentially from the fourth quarter, but continues to be under pressure due to elevated, but moderating new supply combined with more macro-level economic uncertainty. On the renewal side, similar to the last several quarters, retention rates and lease rates remain strong. Renewal lease-over-lease growth improved 70 basis points sequentially from the fourth quarter driving blended lease-over-lease growth up 140 basis points from the fourth quarter. Average physical occupancy remained strong at 95.5% for the quarter. Additionally, we had another quarter of strong collections with net delinquency representing 0.3% of billings, in line with the last several quarters. From a market standpoint, many of the markets where we saw a strong performance in the fourth quarter and most of last year continued to show strength in the first quarter. We have noted on several occasions the performance of our mid-tier markets, particularly in Virginia and South Carolina. Richmond, Greenville, the D.C. area markets and Charleston all demonstrated strong pricing power and strong occupancy in the quarter. Encouragingly, our three largest markets in terms of same-store NOI contribution, Atlanta, Dallas and Orlando, all outperformed the portfolio in the first quarter and blended lease-over-lease pricing. Austin, though improving, is still a challenge, particularly on the new lease pricing side. Charlotte and Savannah are two other markets facing challenges in the wake of heavy supply pressure. In our lease-up portfolio, Liberty Row in Charlotte and Breakwater in Tampa completed construction in the fourth quarter and moved into our lease-up portfolio. We now have five properties in lease-up with a combined occupancy of 68.3% as of the end of the first quarter and an additional two development properties that are actively leasing units. Elevated concessions remain the case for some of these lease-up properties with up to eight weeks on certain floor plans. However, these projects are still expected to achieve our underwritten yields as markets continue to improve and, therefore, retain their long-term value-creation opportunity. We're off to a quick start in the first quarter on our various targeted redevelopment and repositioning initiatives. During the first quarter of 2026, we completed 1,386 interior unit upgrades, up from just over 1,100 units that we renovated in the first quarter of 2025. We achieved rent increases of $104 above non-upgraded units on average unit-level spend of $7,349, representing a cash-on-cash return of approximately 17%. These units continue to lease faster than non-renovated units when adjusted for the additional turn time, averaging about nine days quicker. For our common area and amenity repositioning program, we are over 90% repriced at six recent projects with an average NOI yield above 10% and rent growth exceeding peer MAA properties. Five additional projects were nearing construction and completion and will begin repricing between May and August. And then six additional properties are in the planning phase with expectations to be complete in time for repricing in the spring of 2027. Our WiFi retrofit initiative that began in 2024 and expanded in 2025 continues to grow. We have 27 live properties where the service is rolling out to residents as leases are signed. We are further expanding this initiative in 2026 to an additional 35-plus properties. As we head into the busier part of the leasing season, we are well positioned. Average physical occupancy for April is 95.5%, in line with April 2025 and 60-day exposure is currently 8.3%, 20 basis points better than where we ended April 2025. With increased absorption in our markets in the first quarter where the number of incrementally occupied units exceeded new deliveries, supply pressure continues to moderate. And despite the previously mentioned economic uncertainty, lead volume remained strong and ahead of last year. Strong renewal performance continued in the second quarter with retention rates and lease-over-lease growth rates on renewals accepted remaining consistent with what we have seen in the last few quarters. With an assumed backdrop of steady demand, we expect gradual seasonal improvement in new lease rates through the second and early third quarters along with consistent renewal growth and retention. As we get later in the year, improving fundamentals will become even more impactful to setting up a stronger 2027. That's all I have in the way of prepared comments. Now I'll turn the call over to Clay.

Thank you, Tim, and good morning, everyone. We reported core FFO for the quarter of $2.13 per diluted share, which was $0.02 ahead of our first quarter guidance. For the quarter, same-store expenses were favorable to our guidance by $0.015 along with non-same-store NOI favorable by $0.01, offset by unfavorable interest expense of $0.005. Same-store repair and maintenance expenses, personnel costs and marketing costs were all below our expectations and were reflected by our disciplined expense control along with expense timing. During the quarter, we funded approximately $100 million in development cost. At quarter end, our development pipeline was at $623 million, leaving an expected $234 million to be funded on the current pipeline over the next three years. As previously discussed, we did adjust the number of development starts from our initial guidance and accordingly lowered our development spend for the year by $50 million. While the size of our pipeline at a point in time can vary based on starts and deliveries during the quarter, we expect the pipeline to grow throughout the year as we begin construction on new projects. Our balance sheet remains in great shape to support this and other growth initiatives. At the end of the quarter, we had nearly $840 million in combined cash and borrowing capacity under our revolving credit facility, and our net debt-to-EBITDA ratio was 4.5x. At quarter end, our outstanding debt had an average maturity of 6.1 years at an effective rate of 3.9%. During February, we issued $200 million of seven-year public bonds at an effective rate of just over 4.6% using proceeds to repay borrowings under our commercial paper program. Also during the quarter, we repurchased 558,000 shares of our common stock at a weighted average share price of $130.46 for a total of $73 million. As for our full year outlook with the bulk of the leasing season ahead of us, we are reaffirming the midpoint of our same-store and core FFO guidance for the year while tightening the core FFO range. For the quarter, we expect core FFO to be in the range of $2.00 and $2.12 per diluted share or $2.06 per share at the midpoint. Our second quarter guidance reflects the typical seasonal increase in leasing as well as higher maintenance-related operating costs. The increase in interest expense from first to second quarter is largely attributable to the delivery of additional developed units and incremental borrowings associated with share repurchases and the litigation settlement. These impacts on interest expense are expected to be partially offset by proceeds from property dispositions. That is all that we have in the way of prepared comments. So Virginia, we will now turn the call back to you for questions.

Operator Instructions. Our first question will come from the line of Eric Wolfe with Citi.

Based on your guidance, you're expecting blended rates to ramp through the year. I think you just said a moment ago that you're expecting a typical seasonal impact in the second quarter. Could you just talk about specifically what you expect to see over the next couple of months? I think last quarter, you actually gave guidance for first quarter blends. So I was hoping you could do the same for the second quarter blends and talk about whether you're finally starting to see some of the supply impact easing in some of your markets?

Yes, Eric, this is Tim. I'll answer that, and I'll walk you through kind of how we're thinking about our blended guidance for the year. So guidance remains 1% to 1.5% blended for the full year. As we reported, we did negative 0.3% blended in Q1, but we are starting to see some steady incremental improvement on the new lease side and then continue to see the steady renewals. So as we think about the rest of the year, to your point, we expect new lease pricing to continue to accelerate through to about July and then start to moderate seasonally. Though we expect that seasonal moderation to be less so in the back part of the year than it typically is, as we continue to see the supply impact moderate, continue to think that renewals will be in that 5-plus range and stay pretty consistent. So if you look through all that to get to our 1% to 1.5%, you're kind of at 1.3% to 1.8% blended for the last three quarters of the year. So you can kind of think about how that trajectory will work out from where we are here and using that seasonal curve that I've talked about.

Our next question will come from the line of Jana Galan with Bank of America.

Sorry, Tim, a question for you again. Can you maybe speak to performance on both the concessions and supply absorption in Atlanta and in Dallas?

Yes. So Atlanta and Dallas, we continue to see some pretty solid performance, particularly in Dallas. If I look at Dallas for a moment and you look at where we are from a pricing standpoint right now on an occupancy standpoint compared to, say, this time last year, we saw about a 240 basis point improvement in blended pricing from Q1 '25 to Q1 '26 and steady occupancy along with that. Similarly, in Atlanta, we saw about a 50 basis point increase in blended pricing year-over-year and about a 20 basis point increase in occupancy. So Atlanta probably started to recover for us a little bit early, and we've seen that continue to stabilize and move forward. Dallas was a little bit later, but we're seeing some good strength out of that. As I just mentioned, we expect Dallas to be one of our stronger performing markets this year. We're seeing it pretty broad-based. There's still some pressure in McKinney areas, but towns performing well, some of the other suburban markets. And then similar in Atlanta, we're seeing still some of the in-town submarkets like Downtown, Midtown, Buckhead outperform some of the suburbs; some of those suburban submarkets are still a little weaker and still seeing higher concessions for now. We're seeing concessions come down a little bit; they're not as broad-based in Dallas as in some other markets. So we have seen some relief there, particularly in the urban areas. In Atlanta, concessions were coming down a little bit last quarter and are pretty consistent with where they were last quarter. You still had a month or so out there on average, but the submarket concessions that I've talked about have come down quite a bit.

Our next question comes from the line of Austin Wurschmidt with KeyBanc.

Kind of sticking with Tim here. One on new lease rate growth. I know you had some weather disruption in the first quarter. I guess, were you surprised at the pace of improvement in new lease rate growth versus the fourth quarter? And are you seeing that pace improve or accelerate into the second quarter? Or is it more similar to what you saw from the fourth quarter of last year into the first quarter of this year?

Yes. If you remember last year, we were seeing some strong acceleration in new lease rates through about April and then it really kind of plateaued around late spring, and we saw it sort of peak and not really get momentum past May. I think what we're seeing this year is more of a steady acceleration. To your point, February kind of stalled out for a little bit and brought Q1 new lease pricing a little bit down from where we expected, but then we saw it quickly return in March and then we're seeing some momentum play out in April as well. And then considering where we are with exposure and occupancy I would expect May to outperform where we were in May last year, where we were kind of stalled out. So I would say we're seeing a more seasonal or more normal acceleration of new lease rates this year. Last year, it was a little quicker early, but then it slowed to a complete halt. I think we would expect that not to continue. In all the metrics we look at — where we are with exposure, where we are with lead volume, where we are with occupancy and what's out there with pre-leasing — we would expect that momentum to continue beyond May, unlike it did last year.

Yes, and I would just add a couple of points to what Tim is saying. Speaking more broadly, one of the things that gives us encouragement about the trajectory as we go throughout the balance of the year: first, if you look at just the broad demand fundamentals in our region of the country, they continue to look quite well really across the board. Job growth continues to be resilient. The other demand factors — migration trends, population growth — all continue to be very resilient within our region of the country. And then if you look at just the momentum that Tim was just talking about, market-level occupancies in the first quarter continue to firm up. You look at absorption numbers exceeding deliveries in the first quarter. With the renewal positioning that we have right now, as Tim mentioned, our occupancy is stable and our exposure is in a better position than it was this time last year, which puts us in a really good position to continue the momentum that we've seen in April as we get into May and June. So we feel like the momentum is building from the dashboards that we have to date. That momentum continuing into the second quarter is what we need to see in order to continue to see new lease progression throughout the year, which aligns with our expectations for the year.

Our next question will come from the line of Haendel St. Juste with Mizuho.

Maybe a question on capital deployment. I understand the decision to lower the acquisition guide given market pricing and your cost of capital, but maybe expound a bit more on the decision to pull back on some of the new development starts. And with that lower use of capital, lower capital deployment overall, does that suggest you might be more open to doing more stock buybacks here in the near term given the compelling yield on that side?

Haendel, this is Brad. As I mentioned in my opening comments, the pullback in development spend is a little bit fluid with timing of when deals can start — approvals can take a little bit longer than you expect. So that's the nature of the reduction from our prior call. As we mentioned on the prior call, we could start between five and seven deals this year; based on where we are in the approval cycle, it looks like we'll be closer to four. But you never know — some of those could get approvals earlier and if the economics make sense, we could start those toward the back part of the year. That's where we certainly expect to be in terms of development for the year. We continue to believe development is one of the best uses of our capital to deliver long-term value for shareholders. We'll continue to focus on that. As Clay mentioned in his comments, we expect the size of that pipeline to continue to grow; our spend for the year is down from what we originally expected, but still up from where it was last year, and we expect that on an ongoing basis to be in that $300 million to $400 million range. So no real change in terms of that. In terms of share repurchases, as we think about how best to allocate capital, we're really focused on generating high-quality compounding earnings growth that supports a steady and growing dividend. We really think that's the best way to drive total shareholder return over the full cycle. When we do that, there are three things we're considering when we decide where to put our capital. First, we want to take a very balanced approach. That balanced approach helps us take advantage of near-term opportunities, which right now happens to be share buybacks, and you've seen us be active in that space. But we also want to take advantage of opportunities that contribute to long-term TSR performance, which is where development comes in. We still think development is the best opportunity for us to drive long-term TSR performance. We're getting accretive returns; today those are in the mid-6s. Our development importantly has been able to deliver higher NOI growth — about 50 to 100 basis points on a long-term basis versus our existing portfolio. So we want to be balanced. Second, we want to protect our balance sheet capacity, and you're not going to see us leverage up our balance sheet because we want to protect what we're able to do with it. Third, we like our portfolio and where we're located; we don't have a need to materially reallocate capital among our markets, which can drive higher dispositions and redeployment. That's really how we're looking at our various opportunities for capital allocation and where share repurchases fall within that.

Our next question comes from the line of Alexander Goldfarb with Piper Sandler.

Just a question on the guidance. You guys talked pretty optimistically about the balance of the year, acceleration. You're talking about this year's leasing trends not looking to stall like last year did, but yet you adjusted guidance — you basically tightened the range. A lot of your peers sort of left it open ended to revisit guidance in the second quarter. So based on your commentary, it would sound like you think there's potential for upside, yet you trimmed the top end and tightened the range. Can you just talk a little bit more about your decision to revisit guidance now versus waiting to the second quarter?

Yes, Alex, this is Clay. The real reason we tightened the guidance range while keeping the midpoint the same is that earlier in the year we put out a wider range than we typically do because of macro uncertainty that Tim mentioned earlier and some demand concerns out there at that time. As we sit here today, we've gotten one quarter behind us. So we tightened the range down to a range that we would typically go out the year with. That's really all that we were reflecting by tightening the range. We still feel very confident in our overall guidance as we move through the year.

Our next question comes from the line of Adam Kramer with Morgan Stanley.

Just wanted to ask a little bit about the renewal growth with regards to concessions. Is there any way to disaggregate what percentage of the renewal growth you get each quarter comes from concession burn-off versus gross rent increases? And then maybe a second part with regards to concessions across the portfolio: what are you offering today in terms of concessions, and how does that compare to the same period a year ago?

This is Tim. For the first part of your question, there's not a lot to separate there. With our portfolio, we don't use a ton of concessions; we're mostly in net-effective pricing. If you look at our financials, concessions represent about 0.6% of our net potential rent. So for us, the burn-off of concessions in our same-store renewal base is very minimal, probably maybe 10 basis points or so. It's more impactful in our lease-up properties, where we're getting 8%, 9%, 10% on lease-ups and that burn-off of concessions is driving part of that, so you can distinguish between those two. As far as concession usage across our markets, for Q1 it's pretty consistent with what it was in Q4. We're seeing roughly 60% to 65% of our competitors offering some level of concession, somewhere between four and five weeks is sort of the standard, and that's broadly across the portfolio. We've seen it tick down just slightly as we got into April — both the percentage of competitors offering concessions came down a little and there's a little decrease in the overall average concession. That perhaps is a sign of momentum to come: absorption was positive this quarter, so fewer lease-up units out there. So we are starting to see it come down just a little bit.

Our next question will come from the line of Michael Goldsmith with UBS.

This is Ami on with Michael. We were wondering how much of an impact does hiring from new college grads have on your peak leasing season? Do you tend to see more people trading up into MAA units? Or are they more first-time renters?

It's pretty consistent. We've been looking at that younger age demographic with all the talk around unemployment rates for that group in particular. If we look at Q1, about 20% of our move-ins are 25 or under in age. That's been really consistent over the last several years; it hasn't really picked up or down. We also look at whether more residents need guarantors, which could indicate economic pressure, and that has actually come down a little bit. So on average, about 20% of our move-ins are in that 25-and-under age group, but we're not seeing any notable pressure or changes in that as of yet.

Our next question will come from the line of Jamie Feldman with Wells Fargo.

Great. I think you mentioned pulling back on development starts this year. Obviously supply has come down in a pretty meaningful way, and some of your competitors are actually talking about ramping up into '28 and '29. Can you talk about that decision and how we should be thinking about development going forward? Is it more project-specific? Or is there a bigger picture story we should be thinking about?

Jamie, the reduction in development spend for the year of $50 million really is just a couple of months' delay on average in terms of starts for deals, and that's deal-specific. That does not signal any change in our posture toward development. We continue to believe in the merits of developing, in particular the benefits for long-term TSR performance. We own or control 16 sites with approvals for over 4,000 units, so that will remain a continued focus. We'll continue to focus on spending $300 million to $400 million a year. The start-level numbers for each year can vary and be a little lumpy; approvals can take longer than expected. Our strategy and focus on development remains the same, and we'll continue to expand that pipeline toward the $1 billion to $1.2 billion range that we've talked about previously.

Our next question will come from the line of Steve Sakwa with Evercore ISI.

I guess kind of a big picture question. If I told you that you could double the size of your portfolio today, what are the pluses and minuses of managing a substantially larger portfolio than what you currently have? Is the data flow that much better that gives you better insight on pricing? Are there just more operational challenges? How do you think about size and whether you need to be much bigger than you currently are?

I think size isn't everything. We've been through significant events in our recent history, and those events are difficult and take a lot of time; there's risk associated with them, but there can be a lot of upside if they're done right and cultures align. At the scale we are today, doubling our portfolio size wouldn't necessarily produce a material improvement in information flow or data flow. Cost of capital would likely be similar. It really depends on operational efficiencies. Some of the things we're doing on the operating side — centralization, specialization, and how we're approaching podding properties — are meaningful. Having scale near one another within a particular market helps drive operating efficiencies depending on where properties are located.

Our next question will come from the line of Rich Anderson with Cantor Fitzgerald.

So about a year ago, Brad, we had a dinner with the group and there was some indication that this time a year later we'd be talking about more in the way of stabilized new lease rate growth. Obviously it hasn't quite happened yet. I'm curious: in your mind, taking over as CEO around that time 13 months ago, are you surprised by the tail of supply impacting that line item in particular? Or is everything kind of lining up the way you thought? We all know the biblical nature of the supply that came online in your markets over the past couple of years. I just wanted to get your take.

I recall our dinner. Certainly, we believed we'd see better improvement on new lease pricing over the past year, which was our expectation going into last year and this year. I think it's important to put the supply in perspective: over a three-year period we had about five years' worth of supply delivered into our markets, so there is a lingering impact associated with that supply. The good news is absorption is happening and market-level occupancies are improving. I did not think new lease rates would take as long to improve as they have. But the good news is we are seeing improvement. Demand within our region continues to hold up well, outperforming other regions of the country in many cases. The other good news is the supply pipeline is significantly declining; deliveries in our region this year are down about 40% from last year. So while it's taking a bit longer, given the magnitude of the decline in supply in our region and resilient demand, we're excited about the trajectory from here. Yes, I would have hoped it would have improved a little quicker, but we're optimistic based on supply and demand fundamentals.

Our next question comes from the line of Mason Guell with Baird.

Do you expect to continue buying additional land parcels for the balance of the year?

I think it depends. We will likely have additional land parcel purchases later in the year. But the way we are approaching buying land right now is we are not land-banking speculative sites. We want to buy land that we have a clear and near-term path to putting into production. So you could see us buy a piece of land this year that maybe starts construction next year, but we don't intend to buy and hold land for several years before starting construction. We want to keep the balance sheet efficient and be able to put land into production quickly after purchase.

Our next question comes from the line of Julien Blouin with Goldman Sachs.

Maybe following on from Steve's question. You guys are probably the best authorities in the space on public-to-public apartment deals, given the Post and Colonial deals. Obviously there's initial G&A and overhead benefit that can be realized. You mentioned podding benefits — how long does that take to realize? And what's different today versus when you did the Post and Colonial transactions — are there additional benefits today on the technology front, AI, WiFi rollout and vendor scale that would make a deal make more sense today?

In terms of podding, that's more related to the quality of property managers you have and opportunities present themselves in how quickly those can manifest. They can be relatively quick endeavors, but you need the right people. Any merger is very people-intensive; that determines success at a property level, so you must be careful. On the technology front, costs of technology today continue to increase, but the ability to spread that cost across a bigger platform helps. One of the things we've focused on is improving our platform capabilities to drive more out of our portfolio than others. Part of that is technology, part is the centralization and specialization we're focused on so that the marginal G&A and technology costs associated with adding additional units are lower. So that is a difference today versus 10 years ago when we went through mergers.

Our next question will come from the line of Alex Kim with Zelman & Associates.

I wanted to ask about how lease-up velocity has trended so far year-to-date and fitting that into the context of acquiring projects that are in lease-up. Is that still a strategy you maintain going forward?

We have seen lease-up velocity pick up, particularly as we got into late Q1 and into April. It's a little slower in Q4 and Q1 due to seasonal patterns, but in April the properties in our lease-up bucket averaged about 23 move-ins on average for the month. We're starting to see momentum pick up with good lead volume and not seeing slower activity or higher concessions. As we get into the spring and summer, much like our same-store portfolio, we would expect continued momentum in that group.

In terms of acquisitions and lease-ups, at this point the best use of our capital is not acquiring; we're not active in that market today. We continue to evaluate projects. We haven't seen as many lease-up trades come to market as historically; sellers tend to bring properties to market leased up and occupied so buyers face less risk and can pay better pricing. We'll continue to look at lease-ups as they come to market and if we find an attractive opportunity at the right price, we wouldn't hesitate to execute, but we're not seeing many opportunities today that make sense.

Next question will come from the line of Ann Chan with Green Street.

Going back to other income, were there any unusual or nonrecurring items that caused a drag or a boost on other income in the first quarter? And related, when do you expect the benefit from the delayed WiFi rollout in 2025 to start flowing into 2026, if not already?

And just to confirm, are you referring to same-store other income? In Q1 we have seen the continued rollout of WiFi that we saw, but it didn't really drive a meaningful impact in the quarter itself. We would expect to really begin to see that benefit showing up in the numbers as we move into the spring and summer leasing seasons and leases turn; that would be when we push the WiFi revenue to residents along with the expense. So that should come forward in the middle toward the latter part of the year.

I'll just add one point: we're expecting somewhere in the neighborhood of $5 million to $10 million of revenue in 2026 related to those WiFi projects, which is certainly backloaded. Most of these projects were completed late Q4 and early Q1, and we price those out as leases expire and units turn. So expect a lot more impact from those as we get through the year, and then it will compound in 2027 and beyond.

Our next question will come from the line of Nick Yulico with Scotiabank.

This is Elemer on with Nick. I wanted to go back to the concession topic. How is concession burn-off trending in some of your underperforming markets of late like Charlotte, Austin, Nashville, etc.? When do you expect you'll reach a normalized level of concessions in those markets this year? I know you mentioned concession usage ticking down through April and that you expect new lease rates to improve throughout the year, but is that outlook mostly driven by your stronger markets like Atlanta, Dallas and Orlando?

We have started to see concessions come down a little bit in some weaker markets. Some of the more urban submarkets that had a lot of lease-up were averaging closer to three months; now that's more in the eight- to ten-week range. In Austin, we started to see concessions come down slowly — previously closer to almost two months broadly in the market, and that has started to tick down. We're seeing better performance in southern and northern Austin, though some areas like Georgetown still see pressure. Phoenix is another market where concessions have started to come down a bit; occupancy stabilized for us over the last couple of quarters and now we are seeing some momentum out of Phoenix, though it still underperforms broadly. Charlotte is a market that received double-digit percent of inventory delivered over the last couple of years; I think that one will be a struggle through 2026 and is more of a 2027 recovery story, but long term we feel great about that market given demand trends.

We have no further questions. I'll return the call to MAA for closing comments.

All right. We appreciate everyone joining, and we'll see you soon at various conferences. Thank you.

This concludes today's program. Thank you for your participation. You may disconnect at any time.