MID-AMERICA APARTMENT COMMUNITY, INC. The following discussion analyzes the financial condition and results of operations of both MAA and theOperating Partnership , of which MAA is the sole general partner and in which MAA owned a 96.6% interest as ofMarch 31, 2020 . MAA conducts all of its business through theOperating Partnership and its various subsidiaries. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere 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 ofthe United States . As ofMarch 31, 2020 , we owned and operated 299 apartment communities through theOperating Partnership and its subsidiaries, and we had an ownership interest in one apartment community through an unconsolidated real estate joint venture and had seven development communities under construction. In addition, as ofMarch 31, 2020 , we owned four commercial properties, and 32 of our apartment communities included retail components. Our apartment communities and commercial properties are located across 16 states and theDistrict of Columbia . We report in two segments, Same Store andNon-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. OurNon-Same Store and Other segment includes recently acquired communities, communities being developed or in lease-up, communities undergoing extensive renovations, communities identified for disposition and communities that have incurred a significant casualty loss. Also included in ourNon-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 elsewhere in this Quarterly Report on Form 10-Q.
Risks Associated with Forward Looking Statements
We consider this and other sections of this Quarterly Report on Form 10-Q to 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, any statements regarding the potential impact of the COVID-19 pandemic on our business, any 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 any statements regarding lease pricing, revenue and expense growth, occupancy, interest rate or other economic expectations. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," 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.
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:
• 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, as a multifamily focused REIT, 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 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 new acquisitions to achieve anticipated results or be efficiently
integrated;
• 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;
• changes in operating costs, including real estate taxes, utilities and
insurance costs;
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• 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, and refinance
existing debt as it matures;
• level and volatility of interest or capitalization rates or capital market
conditions;
• loss of hedge accounting treatment for interest rate swaps;
• the continuation of the good credit of our interest rate swap providers;
• price volatility, dislocations and liquidity disruptions in the financial
markets and the resulting impact on financing;
• 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 by the end of 2021 and the transition to a
different benchmark interest rate;
• significant decline in market value of real estate serving as collateral for
mortgage obligations;
• significant change in the mortgage financing market that would cause
single-family housing, either as an owned or rental product, to become a
more significant competitive product;
• our 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;
• adverse legislative or regulatory developments;
• extreme weather, natural disasters, disease outbreak and public health
events;
• legal proceedings relating to various issues, which, among other things,
could result in a class action lawsuit;
• compliance costs associated with numerous federal, state and local laws and
regulations, including those costs associated with laws requiring access for
disabled persons; and
• other risks identified in this Quarterly Report on Form 10-Q and, from time
to time, in other reports we file with the Securities and Exchange
Commission, or the
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.
Overview of the Three Months Ended
For the three months endedMarch 31, 2020 , net income available for MAA common shareholders was$35.7 million as compared to$62.7 million for the three months endedMarch 31, 2019 . Results for the three months endedMarch 31, 2020 included$27.6 million of expense related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares. Results for the three months endedMarch 31, 2019 included$0.5 million of expense related to the adjustment of the embedded derivative. Revenues for the three months endedMarch 31, 2020 increased 4.2% as compared to the three months endedMarch 31, 2019 , driven by a 4.2% increase in our Same Store segment and a 4.4% increase in ourNon-Same Store and Other segment. Property operating expenses, excluding depreciation and amortization, for the three months endedMarch 31, 2020 increased by 2.5% as compared to the three months endedMarch 31, 2019 , driven by a 3.2% increase in our Same Store segment. The drivers of these increases are discussed below in the "Results of Operations" section.
Recent Developments - COVID-19
InMarch 2020 , theWorld Health Organization characterized COVID-19 as a pandemic, and the President ofthe United States proclaimed that the COVID-19 outbreak inthe United States constitutes a national emergency. Extraordinary actions have been taken by federal, state and local governmental authorities to combat the spread of COVID-19, including issuance of "stay-at-home" directives and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. These measures, while intended to protect human life, have led to significantly reduced economic activity and a surge in unemployment throughoutthe United States , including the markets where our properties are located, and there could be a sustained period of economic slowdown, the severity of which is uncertain. InMarch 2020 , we began to take steps to respond to the COVID-19 pandemic. Although closed to the public, our on-site property leasing offices have been open on a virtual basis, operating with full staff to serve existing residents and prospective new customers. In addition, to assist our residents who have lost wages or compensation due to the COVID-19 pandemic, we have offered these residents an amendment to their lease that provides payment flexibility of up to 60 days for April andMay 2020 rent, waives late fees and interest charges under the lease, and reflects our agreement not to pursue remedies for nonpayment of April andMay 2020 rent under the lease.
Our balance sheet remains very strong, with low leverage, significant availability from our unsecured revolving credit facility and limited near-term debt maturities and funding obligations.
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Trends During the three months endedMarch 31, 2020 , we continued to be favorably impacted by in-place rents and the contribution to average effective rent per unit growth. The average effective rent per unit for our Same Store portfolio continued to increase, up 4.2% for the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 . 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, during the three months endedMarch 31, 2020 , we maintained strong physical occupancy. Average physical occupancy for our Same Store portfolio was 95.7% for the three months endedMarch 31, 2020 , which compares to average physical occupancy of 95.9% achieved during the three months endedMarch 31, 2019 . 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 in the Southeast, Southwest and Mid-Atlantic regions ofthe 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 inner loop, suburban and downtown/central business district locations, with various monthly rent price points, will perform well in "up" cycles as well as weather "down" cycles better. 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 pricing points. The COVID-19 pandemic continues to disruptthe United States economy and we cannot predict when an economic recovery will occur. Demand for apartments is primarily driven by general economic conditions in our markets and is particularly correlated to job growth. The "stay-at-home" orders and social distancing implemented in response to the pandemic continue to drive unemployment higher and also limit the number of people looking to change their current living situation. We expect the current environment to contribute to lower rent collections than normal in the second quarter of 2020 and also reduce the demand for apartments, likely driving rents on new leases lower than rents in place as of the end of the first quarter. Current elevated supply levels could further impact rent growth for our portfolio, particularly for apartment communities located in urban submarkets. Properties in suburban submarkets have been impacted somewhat less by supply, primarily because less new development has occurred in those submarkets. Our focus during this challenging time is on working with residents who have been financially impacted by the pandemic on rent payment flexibility. At a portfolio level, our focus is on using our pricing system to maintain strong occupancy. As noted above, average physical occupancy for our Same Store portfolio for the three months endedMarch 31, 2020 was 95.7%, which we believe positions us well to manage through the current environment. Markets throughout the country have been impacted differently by the pandemic with certain markets expected to be in some level of "stay-at-home" for longer periods of time than other markets. As we move through this uncertain time, we believe that our portfolio strategy of maintaining a diversity of markets, submarkets, product types, and price points will serve the company better in this environment than a more concentrated portfolio profile. While access to the financial markets has been disrupted by the COVID-19 pandemic, we believe we currently have the ability to raise capital through the debt and equity markets. However, a prolonged disruption of the markets or a decline in credit and financing conditions could negatively impact our ability to access capital necessary to fund our operations or refinance maturing debt.
Results of Operations
For the three months endedMarch 31, 2020 , we achieved net income available for MAA common shareholders of$35.7 million , a 43.1% decrease as compared to the three months endedMarch 31, 2019 , and total revenue growth of$16.9 million , representing a 4.2% increase in property revenues as compared to the three months endedMarch 31, 2019 . The following discussion describes the primary drivers of the decrease in net income available for MAA common shareholders for the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 .
Property Revenues
The following table reflects our property revenues by segment for the three
months ended
Three months ended March 31,
2020 2019 Increase % Increase
Same Store $ 392,362 $ 376,531 $ 15,831 4.2 %
Non-Same Store and Other 25,736 24,647 1,089 4.4 %
Total $ 418,098 $ 401,178 $ 16,920 4.2 %
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The increase in property revenues for our Same Store segment for the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 was the primary driver of total property revenue growth.The Same Store segment generated a 4.2% increase in revenues for the three months endedMarch 31, 2020 , primarily a result of average effective rent per unit growth of 4.2% as compared to the three months endedMarch 31, 2019 . The increase in property revenues from theNon-Same Store and Other segment for the three months endedMarch 31, 2020 as compared to three months endedMarch 31, 2019 was primarily the result of continued lease-up of 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 endedMarch 31, 2020 and 2019 (dollars in thousands): Three months ended March 31, 2020 2019 Increase % Increase Same Store$ 143,075 $ 138,693 $ 4,382 3.2 %Non-Same Store and Other 10,097 10,684 (587 ) (5.5 )% Total$ 153,172 $ 149,377 $ 3,795 2.5 % The increase in property operating expenses for our Same Store segment for the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 was primarily driven by increases in real estate tax expense of$1.8 million .
Depreciation and Amortization
Depreciation and amortization expense for the three months endedMarch 31, 2020 was$126.4 million , an increase of$3.6 million as compared to the three months endedMarch 31, 2019 . The increase was primarily driven by the recognition of depreciation expense associated with our development and redevelopment activities made afterMarch 31, 2019 in the normal course of business throughMarch 31, 2020 . Other Income and Expenses Property management expenses for the three months endedMarch 31, 2020 were$14.6 million , an increase of$0.8 million as compared to the three months endedMarch 31, 2019 . General and administrative expenses for the three months endedMarch 31, 2020 were$13.3 million , an increase of$0.9 million as compared to the three months endedMarch 31, 2019 . Interest expense for the three months endedMarch 31, 2020 was$43.5 million , a decrease of$2.2 million as compared to the three months endedMarch 31, 2019 . The decrease was primarily due to decreased average daily debt outstanding as well as an increase in capitalized interest during the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 . The increase in the capitalized interest expense was due to an increase in the number of development projects. During the three months endedMarch 31, 2019 , we sold a land parcel resulting in a$9.0 million gain on sale of non-depreciable assets. No land parcels were sold during the three months endedMarch 31, 2020 . Other non-operating expense (income) for the three months endedMarch 31, 2020 was$28.5 million , an increase of$28.7 million as compared to the three months endedMarch 31, 2019 . The increase was primarily driven by$27.6 million of expense related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares during the three months endedMarch 31, 2020 , compared to the recognition of$0.5 million of expense related to the adjustment of the embedded derivative during the three months endedMarch 31, 2019 . During the three months endedMarch 31, 2020 , we recognized an immaterial amount of COVID-19 related expenses in other non-operating expense (income).
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 withthe 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 noncontrolling interest is added back, FFO, when used in this Quarterly Report on Form 10-Q, represents FFO attributable to the Company.
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FFO should not be considered as an alternative to net income available for MAA common stockholders 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 theNational 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, loss or gain on sale of non-depreciable assets, adjustments for gains or losses from unconsolidated limited partnerships, net casualty gain or loss, loss or gain on debt extinguishment, non-routine legal costs and settlements, 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 as an indicator of operating performance. 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. The following table presents a reconciliation of net income available for MAA common shareholders to FFO and Core FFO for the three months endedMarch 31, 2020 and 2019, 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, 2020 2019 Net income available for MAA common shareholders$ 35,726 $ 62,738 Depreciation and amortization of real estate assets 124,846 121,210 Loss on sale of depreciable real estate assets 29 13
Depreciation and amortization of real estate assets
of real estate joint venture 152 145 Net income attributable to noncontrolling interests 1,304 2,298 FFO attributable to the Company 162,057 186,404 Loss on embedded derivative in preferred shares(1) 27,638 524 Loss (gain) on sale of non-depreciable real estate assets 376 (8,963 ) Loss from unconsolidated limited partnerships(1) 77 145 Net casualty loss (gain) and other settlement proceeds(1) 847 (1,544 ) (Gain) loss on debt extinguishment(1) (1 ) 8 Non-routine legal costs and settlements(1) 40 816 COVID-19 related costs(1) 196 - Mark-to-market debt adjustment(2) (34 ) (85 ) Core FFO$ 191,196 $ 177,305 (1) Included in "Other non-operating expense (income)" in the Condensed Consolidated Statements of Operations.
(2) Included in "Interest expense" in the Condensed Consolidated Statements of
Operations.
Core FFO for the three months ended March 31, 2020 was $191.2 million , an
increase of $13.9 million as compared to the three months ended March 31, 2019 ,
primarily as a result of an increase in property revenues of $16.9 million and
decreased interest expense of $2.2 million . The increases to Core FFO were
offset by increases in property operating expenses, excluding depreciation and
amortization, of $3.8 million , general and administrative expenses of $0.9
million and property management expenses of $0.8 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.
Operating Activities
Net cash provided by operating activities was$160.6 million for the three months endedMarch 31, 2020 as compared to$154.7 million for the three months endedMarch 31, 2019 . The increase in operating cash flows was primarily driven by our operating performance, partially offset by the timing of cash payments. 30
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Investing Activities
Net cash used in investing activities was$90.0 million for the three months endedMarch 31, 2020 as compared to$52.9 million for the three months endedMarch 31, 2019 . The primary drivers of the change were as follows (dollars in thousands): Primary drivers of cash (outflow) inflow Increase during the three months ended March 31, (Decrease) 2020 2019 in Net Cash Purchases of real estate and other assets $ (5,004 ) $ (13,595 ) $ 8,591 Capital improvements, development and other (84,610 ) (53,214 ) (31,396 ) Proceeds from disposition of real estate assets 525 13,882 (13,357 ) The decrease in cash outflows for purchases of real estate and other assets was driven by the acquisition activity during the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 . The increase in cash outflows for capital improvements, development and other was primarily driven by increased development capital spend during the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 . The decrease in cash inflows related to proceeds from disposition of real estate assets was primarily due to the nature of the real estate assets sold during the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 .
Financing Activities
Net cash used in financing activities was$92.1 million for the three months endedMarch 31, 2020 as compared to$94.1 million for the three months endedMarch 31, 2019 . The primary drivers of the change were as follows (dollars in thousands): Primary drivers of cash inflow (outflow) Increase during the three months ended March 31, (Decrease) 2020 2019 in Net Cash Net change in revolving credit facility $ 100,000 $ (465,000 )$ 565,000 Net change in commercial paper (70,000 ) - (70,000 ) Proceeds from notes payable - 490,435 (490,435 ) Dividends paid on common shares (114,270 ) (109,324 ) (4,946 ) The increase in cash inflows related to the net change in revolving credit facility resulted from the increase in net borrowings of$100.0 million during the three months endedMarch 31, 2020 , as compared to the decrease in net borrowings of$465.0 million during the three months endedMarch 31, 2019 . The increase in cash outflows related to the net change in commercial paper resulted from the decrease in net borrowings of$70.0 million on our unsecured commercial paper program during the three months endedMarch 31, 2020 ; there was no commercial paper program in place during the three months endedMarch 31, 2019 . The decrease in cash inflows related to proceeds from notes payable primarily resulted from the issuance of$300.0 million of senior unsecured notes and$191.3 million of secured property mortgages during the three months endedMarch 31, 2019 ; no notes were issued during the three months endedMarch 31, 2020 . The increase in cash outflows from dividends paid on common shares primarily resulted from the increase in the dividend rate to$1.00 per share during the three months endedMarch 31, 2020 , as compared to the dividend rate of$0.96 per share during the three months endedMarch 31, 2019 .
Equity
As ofMarch 31, 2020 , MAA owned 114,279,662 OP Units, comprising a 96.6% limited partnership interest in MAALP, while the remaining 4,058,657 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 MAA may, at its 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. In addition, MAA has registered under the Securities Act 4,058,657 shares of its common stock that, as ofMarch 31, 2020 , were issuable upon redemption of OP Units, in order for those shares to be sold freely in the public markets. We have entered into separate distribution agreements with each ofJ.P. Morgan Securities LLC ,BMO Capital Markets Corp. andKeyBanc Capital Markets Inc. to establish an ATM program allowing MAA to sell shares of its common stock from time to time into the existing market at current market prices or through negotiated transactions. Under the 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. The ATM program currently has a maturity ofSeptember 28, 2021 . MAA has no obligation to issue shares through the ATM program.
During the three months ended
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For more information regarding our equity capital resources, see Note 8 and Note 9 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Debt
The following schedule reflects our fixed and variable rate debt outstanding as
of
Principal Average Years Effective
Balance to Rate Maturity Rate
Unsecured debt
Fixed rate senior notes $ 3,472,000 6.3 3.9 %
Variable rate revolving credit facility and
term loan 400,000 0.1 2.3 %
Debt issuance costs, discounts, premiums and
fair market value adjustments (12,960 )
Total unsecured rate maturity $ 3,859,040 5.7 3.7 %
Secured debt
Fixed rate property mortgages $ 628,077 17.1 4.5 %
Debt issuance costs and fair market value
adjustments (3,424 )
Total secured rate maturity $ 624,653 17.1 4.5 %
Total debt $ 4,483,693 7.3 3.8 %
Total fixed rate debt $ 4,084,085 7.9 4.0 %
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
Revolving Credit
Facility & Comm.
Paper ?¹? ?²? Public Bonds Other Unsecured Secured Total
2020 $ - $ - $ - $ 136,829 $ 136,829
2021 - - 72,686 120,352 193,038
2022 - 248,993 416,421 - 665,414
2023 100,000 347,657 12,227 - 459,884
2024 - 396,639 19,952 - 416,591
2025 - 395,676 - 7,774 403,450
2026 - - - - -
2027 - 594,395 - - 594,395
2028 - 395,022 - - 395,022
2029 - 562,761 - - 562,761
Thereafter - 296,611 - 359,698 656,309
Total $ 100,000 $ 3,237,754 $ 521,286 $ 624,653 $ 4,483,693 (1) There were no borrowings outstanding under MAALP's unsecured commercial
paper program as of
may issue up to a maximum aggregate amount outstanding at any time of
borrowings outstanding under the commercial paper program were $67.9
million .
(2) There was $100.0 million in outstanding borrowings under MAALP's $1.0
billion unsecured revolving credit facility as of March 31, 2020 . The
unsecured revolving credit facility has a maturity date of May 2023 plus
two six-month extensions.
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The following schedule reflects the interest rate maturities of our outstanding fixed rate debt, net of debt issuance costs, discounts, premiums and fair market value adjustments, as ofMarch 31, 2020 (dollars in thousands): Fixed Rate Effective Debt Rate 2020$ 136,829 4.3 % 2021 193,038 5.2 % 2022 365,806 3.6 % 2023 359,884 4.2 % 2024 416,591 4.0 % 2025 403,450 4.2 % 2026 - - 2027 594,395 3.7 % 2028 395,022 4.2 % 2029 562,761 3.7 % Thereafter 656,309 3.8 % Total$ 4,084,085 4.0 %
Unsecured Revolving Credit Facility & Commercial Paper
InMay 2019 , MAALP closed on a$1.0 billion unsecured revolving credit facility with a syndicate of banks led byWells Fargo Bank, National Association , or Wells Fargo, and fourteen other banks, which we refer to as the Credit Facility. The Credit Facility replaced our previous unsecured revolving credit facility and 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 inMay 2023 with an option to extend for two additional six-month periods. As ofMarch 31, 2020 , there was$100.0 million outstanding under the Credit Facility, while$2.7 million of capacity was being used to support outstanding letters of credit. The Credit Facility serves as our primary source of short-term liquidity. InMay 2019 , MAALP 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 ofMarch 31, 2020 , there were no borrowings outstanding under the commercial paper program. Unsecured Senior Notes
As of
As of
Unsecured Term Loan As ofMarch 31, 2020 , we maintained one unsecured term loan with a syndicate of banks, led by Wells Fargo. The term loan has a balance of$300.0 million , matures inMarch 2022 , and has a variable interest rate of LIBOR plus a spread of 0.90% to 1.75% based on the Company's credit ratings. As ofMarch 31, 2020 , this loan was bearing interest at a rate of one month LIBOR plus 0.95%.
Secured Property Mortgages
We maintain secured property mortgages with the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and various life insurance companies. These mortgages are usually fixed rate and can range from five to 30 years in maturity. As ofMarch 31, 2020 , we had$628.1 million of secured property mortgages with a weighted average interest rate of 4.50%. For more information regarding our debt capital resources, see Note 6 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
As of
As ofMarch 31, 2020 and 2019, we did not have any relationships, including those with unconsolidated entities or financial partnerships, for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to
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any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties other than those disclosed in Note 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 , filed with theSEC onFebruary 20, 2020 .
Insurance
We carry comprehensive general liability coverage on our apartment communities, with limits of liability we believe are customary within the multifamily apartment industry, to insure against liability claims and related defense costs. We also maintain insurance against the risk of direct physical damage to reimburse us on a replacement cost basis for costs incurred to repair or rebuild any property, including loss of rental income during the reconstruction period. We will renegotiate our insurance programs effectiveJuly 1, 2020 . We believe that the current property and casualty insurance program in place provides appropriate insurance coverage for financial protection against insurable risks such that any insurable loss experienced that can be reasonably anticipated would not have a significant impact on our liquidity, financial position or results of operations.
Inflation
Our resident leases at our apartment communities allow, at the time of renewal, for adjustments in the rent payable thereunder, and thus 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 Policies and Estimates
Please refer to our Annual Report on Form 10-K for the year endedDecember 31, 2019 , filed with theSEC onFebruary 20, 2020 , for discussions of our critical accounting policies. During the three months endedMarch 31, 2020 , there were no material changes to these policies. For more information on recent accounting pronouncements that could have a material impact on our condensed consolidated financial statements see Note 1 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
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