Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 97.4% interest as of March 31, 2024. 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 U.S. As of March 31, 2024, we owned and operated 290 apartment communities (which does not include development communities under construction) through the Operating Partnership and its subsidiaries, and had an ownership interest in one apartment community through an unconsolidated real estate joint venture. In addition, as of March 31, 2024, we had five development communities under construction, and 34 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, 2024.

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 that have been disposed of or 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 and storm-related expenses related to hurricanes and winter storms. 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.

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 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,” “proforma,” “opportunity,” “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 Quarterly Report on Form 10-Q 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:

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, losses due to uninsured risks, deductibles and self-insured retentions, or losses from catastrophes in excess of coverage limits;

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 impact of adverse developments affecting the U.S. or global banking industry, including bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory responses thereto;

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 and natural disasters;

disease outbreaks and other public health events and measures that are taken by federal, state and local governmental authorities in response to such outbreaks and 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.

Overview of the Three Months Ended March 31, 2024

For the three months ended March 31, 2024, net income available for MAA common shareholders was $142.8 million as compared to $135.0 million for the three months ended March 31, 2023. Results for the three months ended March 31, 2024 included $13.1 million of non-cash gain 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, 2023 included $4.4 million of non-cash gain related to the embedded derivative in the MAA Series I preferred shares. Revenues for the three months ended March 31, 2024 increased 2.8% as compared to the three months ended March 31, 2023. Property operating expenses, excluding depreciation and amortization, for the three months ended March 31, 2024 increased by 8.2% as compared to the three months ended March 31, 2023, driven by a 5.4% increase in our Same Store segment. The primary drivers of these changes are discussed in the “Results of Operations” section.

Trends

During the three months ended March 31, 2024, 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 for our Same Store segment increased from the prior year, up 1.5% for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. 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.

For the three months ended March 31, 2024, average physical occupancy for our Same Store segment was 95.3%, as compared to 95.5% for the three months ended March 31, 2023. 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 of the U.S. We have multifamily assets in 39 defined markets, with a presence in approximately 150 submarkets and a mixture of garden-style, mid-rise and high-rise communities. This diversity helps to mitigate exposure to economic issues, including supply and demand factors, 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 economic up cycles as well as better weather economic down cycles.

Demand for apartments in our markets was solid during the first quarter of 2024, as evidenced by stable occupancy, high leasing traffic, low resident turnover and strong collections performance. We believe 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 over the long term. We continue to monitor pressures surrounding housing supply, inflation trends and general economic conditions. A worsening of the current environment could contribute to uncertain rent collections going forward, suppress demand for apartments and could drive lower rent growth on new leases and renewals than what we achieved in the three months ended March 31, 2024. Current elevated supply levels are impacting rent growth performance in certain markets of our portfolio. However, with continued solid demand and the resulting steady absorption of the new supply pipeline, we continue to believe that the decline in new supply deliveries expected late this year and into 2025 will fuel a strong and quick rebound in rent performance. Inflationary pressures have driven higher operating expenses during the three months ended March 31, 2024, particularly in real estate taxes and insurance cost, and this trend may continue going forward.

Access to the financial markets remains available for high-credit rated borrowers, such as ourselves. However, overall borrowing costs remain at elevated levels and we expect this trend to continue. As of March 31, 2024, we had $235.0 million of variable rate debt outstanding under our commercial paper program. Our continued exposure to elevated interest rates will be a result of additional variable rate borrowings or refinancing activities.

Results of Operations

Comparison of the three months ended March 31, 2024 to the three months ended March 31, 2023

For the three months ended March 31, 2024, we achieved net income available for MAA common shareholders of $142.8 million, a 5.8% increase as compared to the three months ended March 31, 2023, and total revenue growth of $14.6 million, representing a 2.8% increase in property revenues as compared to the three months ended March 31, 2023. 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, 2024 as compared to the three months ended March 31, 2023.

Property Revenues

The following table reflects our property revenues by segment for the three months ended March 31, 2024 and 2023 (dollars in thousands):

		Three months ended March 31,
		2024				2023				Increase				% Increase
Same Store		$	519,629			$	512,431			$	7,198				1.4	%
Non-Same Store and Other			23,993				16,602				7,391				44.5	%
Total		$	543,622			$	529,033			$	14,589				2.8	%

The Same Store segment generated a 1.4% increase in revenues for the three months ended March 31, 2024, primarily the result of average effective rent per unit growth of 1.5% as compared to the three months ended March 31, 2023, partially offset by lower average physical occupancy. The increase in property revenues from the Non-Same Store and Other segment for the three months ended March 31, 2024 as compared to three months ended March 31, 2023 was primarily the result of increased revenues from completed development communities and recently acquired communities.

Property Operating Expenses

Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes, insurance, utilities and other operating expenses. The following table reflects our property operating expenses by segment for the three months ended March 31, 2024 and 2023 (dollars in thousands):

		Three months ended March 31,
		2024				2023				Increase				% Increase
Same Store		$	185,046			$	175,502			$	9,544				5.4	%
Non-Same Store and Other			12,756				7,301				5,455				74.7	%
Total		$	197,802			$	182,803			$	14,999				8.2	%

The increase in property operating expenses for our Same Store segment for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was primarily driven by increases in real estate tax expense of $3.4 million, personnel expense of $1.8 million, office operations expense of $1.5 million, insurance expense of $1.1 million, and utilities expense of $1.0 million.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended March 31, 2024 was $143.0 million, an increase of $4.5 million as compared to the three months ended March 31, 2023. The increase was primarily driven by the recognition of depreciation expense associated with our completed development communities and capital spend activities completed after March 31, 2023 in the normal course of business through March 31, 2024.

Other Income and Expenses

Property management expenses for the three months ended March 31, 2024 were $20.0 million, an increase of $2.1 million as compared to the three months ended March 31, 2023. General and administrative expenses for the three months ended March 31, 2024 were $17.0 million, an increase of $1.1 million as compared to the three months ended March 31, 2023.

Interest expense for the three months ended March 31, 2024 was $40.4 million, an increase of $3.1 million as compared to the three months ended March 31, 2023. The increase was due to an increase of 18 basis points in our effective interest rate and an increase in our average outstanding debt balance during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Other non-operating income for the three months ended March 31, 2024 was $23.5 million of income as compared to $3.5 million of income for the three months ended March 31, 2023, an increase of $20.0 million. The income for the three months ended March 31, 2024 was driven by $13.1 million of non-cash gain related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares, $5.2 million of net non-cash gain from investments and $5.1 million in net casualty related recoveries. The income for the three months ended March 31, 2023 was driven by $4.4 million of non-cash gain related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares, partially offset by $1.0 million of net non-cash loss from investments.

Non-GAAP Financial Measures

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 U.S. 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 common shareholders and unitholders.

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 and gain on sale of depreciable 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 of tax; casualty related (recoveries) charges, net; gain or loss on debt extinguishment; legal (recoveries), costs and settlements, net; and mark-to-market debt adjustments. Because net income attributable to noncontrolling interests is added back to FFO, Core FFO, when used in this Quarterly Report on Form 10-Q, represents Core FFO attributable to common shareholders and unitholders.

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. Management believes 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 from rental activities. 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.

The following table presents a reconciliation of net income available for MAA common shareholders to FFO attributable to common shareholders and unitholders and Core FFO attributable to common shareholders and unitholders for the three months ended March 31, 2024 and 2023, 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,
		2024				2023
Net income available for MAA common shareholders		$	142,827			$	134,988
Depreciation and amortization of real estate assets			141,591				136,798
Loss (gain) on sale of depreciable real estate assets			2				(15	)
MAA’s share of depreciation and amortization of real estate assets of real estate joint venture			155				151
Net income attributable to noncontrolling interests			3,861				3,664
FFO attributable to common shareholders and unitholders			288,436				275,586
Gain on embedded derivative in preferred shares (1)			(13,092	)			(4,435	)
Gain on sale of non-depreciable real estate assets			—				(54	)
(Gain) loss on investments, net of tax (1) (2)			(4,090	)			806
Casualty related (recoveries) charges, net (1)			(5,085	)			296
Mark-to-market debt adjustment (3)			—				(13	)
Core FFO attributable to common shareholders and unitholders		$	266,169			$	272,186

(1)

Included in “Other non-operating income” in the Condensed Consolidated Statements of Operations.

(2)

For the three months ended March 31, 2024, gain on investments is presented net of tax expense of $1.1 million. For the three months ended March 31, 2023, loss on investments is presented net of tax benefit of $0.2 million.

(3)

Included in “Interest expense” in the Condensed Consolidated Statements of Operations.

Core FFO attributable to common shareholders and unitholders for the three months ended March 31, 2024 was $266.2 million, a decrease of $6.0 million as compared to the three months ended March 31, 2023, primarily as a result of increases in property operating expenses, excluding depreciation and amortization, of $15.0 million, interest expense of $3.1 million, property management expenses of $2.1 million and general and administrative expenses of $1.1 million, partially offset by an increase in property revenues of $14.6 million.

Net Debt, EBITDA, EBITDAre, and Adjusted EBITDAre

Net debt, a non-GAAP financial measure, represents unsecured notes payable and secured notes payable less cash and cash equivalents and 1031(b) exchange proceeds included in restricted cash. Management considers net debt a helpful tool in evaluating our debt position. Net debt should not be considered as an alternative to any 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.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, a non-GAAP financial measure, represents net income (computed in accordance with GAAP) plus depreciation and amortization, interest expense, and income taxes. As an owner and operator of real estate, management considers EBITDA to be an important measure of performance from core operations because EBITDA excludes various expense items that are not indicative of operating performance. EBITDA should not be considered as an alternative to net income, 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.

EBITDAre is composed of EBITDA adjusted for the gain or loss on sale of depreciable assets and adjustments to reflect our share of EBITDAre of an unconsolidated affiliate. As an owner and operator of real estate, management considers EBITDAre to be an important measure of performance from core operations because EBITDAre excludes various expense items that are not indicative of operating performance. While our definition of EBITDAre is in accordance with NAREIT’s definition, it may differ from the methodology utilized by other REITs to calculate EBITDAre and, accordingly, may not be comparable to such other REITs. EBITDAre should not be considered as an alternative to net income, 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.

Adjusted EBITDAre is comprised of EBITDAre further adjusted for items that are not considered part of our core 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; casualty related (recoveries) charges, net; gain or loss on debt extinguishment; and legal (recoveries), costs and settlements, net. As an owner and operator of real estate, management considers Adjusted EBITDAre to be an important measure of performance from core operations because Adjusted EBITDAre excludes various income and expense items that are not indicative of operating performance. Our computation of Adjusted EBITDAre may differ from the methodology utilized by other REITs to calculate Adjusted EBITDAre. Adjusted EBITDAre should not be considered as an alternative to net income, 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 monitors its debt levels to a ratio of net debt to Adjusted EBITDAre in order to maintain our investment grade credit ratings. We believe this is an important factor in the management of our debt levels to maintain an optimal capital structure, and it is also considered in the assignment of our credit ratings. Adjusted EBITDAre is measured on a trailing twelve-month basis.

The following table presents a reconciliation of unsecured notes payable and secured notes payable to net debt as of March 31, 2024 and December 31, 2023, as we believe unsecured notes payable and secured notes payable, combined, is the most directly comparable GAAP measure (dollars in thousands):

		March 31, 2024				December 31, 2023
Unsecured notes payable		$	4,264,290			$	4,180,084
Secured notes payable			360,173				360,141
Total debt			4,624,463				4,540,225
Cash and cash equivalents			(54,601	)			(41,314	)
Net debt		$	4,569,862			$	4,498,911

The following table presents a reconciliation of net income to EBITDA, EBITDAre and Adjusted EBITDAre for the trailing twelve months ended March 31, 2024 and December 31, 2023, as we believe net income is the most directly comparable GAAP measure (dollars in thousands):

		Twelve Months Ended
		March 31, 2024				December 31, 2023
Net income		$	575,867			$	567,831
Depreciation and amortization			569,582				565,063
Interest expense			152,314				149,234
Income tax expense			5,595				4,744
EBITDA			1,303,358				1,286,872
Loss on sale of depreciable real estate assets			79				62
Adjustments to reflect the Company’s share of EBITDAre of an unconsolidated affiliate			1,353				1,350
EBITDA****re			1,304,790				1,288,284
Gain on embedded derivative in preferred shares (1)			(27,185	)			(18,528	)
Gain on sale of non-depreciable real estate assets			—				(54	)
Gain on investments (1)			(10,645	)			(4,449	)
Casualty related (recoveries) charges, net (1)			(4,401	)			980
Gain on debt extinguishment (1)			(57	)			(57	)
Legal (recoveries), costs and settlements, net (1)			(4,454	)			(4,454	)
Adjusted EBITDA****re		$	1,258,048			$	1,261,722

(1)

Included in “Other non-operating income” in the Condensed Consolidated Statements of Operations.

Our net debt to Adjusted EBITDAre ratio as of March 31, 2024 was 3.6x, consistent with our net debt to Adjusted EBITDAre ratio as of December 31, 2023. Adjusted EBITDAre decreased $3.7 million for the trailing twelve months ended March 31, 2024 as compared to the trailing twelve months ended December 31, 2023, while net debt increased $71.0 million as of March 31, 2024 as compared to December 31, 2023. The decrease in Adjusted EBITDAre was primarily due to increases in property operating expenses, excluding depreciation and amortization, property management expenses and general and administrative expenses, partially offset by an increase in property revenues, while the increase in net debt was primarily due to an increase in unsecured notes payable, partially offset by an increase in cash and cash equivalents.

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, 2024, we had $1.1 billion of combined unrestricted cash and cash equivalents and available capacity under our revolving credit facility.

Cash Flows from Operating Activities

Net cash provided by operating activities was $200.3 million for the three months ended March 31, 2024, a decrease of $18.1 million as compared to the three months ended March 31, 2023. The decrease in operating cash flows was primarily driven by the timing of cash payments.

Cash Flows from Investing Activities

Net cash used in investing activities was $93.0 million for the three months ended March 31, 2024, a decrease of $45.4 million as compared to the three months ended March 31, 2023. 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,								Increase (Decrease)
		2024				2023				in Net Cash
Purchases of real estate and other assets		$	(20	)		$	(12,450	)		$	12,430
Capital improvements and other			(52,101	)			(75,622	)			23,521
Development costs			(45,512	)			(52,851	)			7,339
Proceeds from real estate asset dispositions			—				3,024				(3,024	)
Net proceeds from insurance recoveries			5,271				764				4,507

The decrease in cash outflows for purchases of real estate and other assets was driven by our acquisition activity during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. We did not acquire any real estate assets during the three months ended March 31, 2024 while we acquired one land parcel during the three months ended March 31, 2023. The decrease in cash outflows for capital improvements and other was primarily driven by decreased capital spend relating to our property redevelopment and repositioning activities during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease in cash outflows for development costs was primarily driven by decreased development activity during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease in cash inflows from proceeds from real estate asset dispositions resulted from no dispositions of real estate assets during the three months ended March 31, 2024 as compared to the disposition of one land parcel during the three months ended March 31, 2023. The increase in cash inflows from net proceeds from insurance recoveries was driven by increased insurance reimbursements received for property-related casualty claims during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Cash Flows from Financing Activities

Net cash used in financing activities was $94.3 million for the three months ended March 31, 2024, an increase of $109.3 million as compared to the three months ended March 31, 2023. 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
		2024				2023				in Net Cash
Net payments of commercial paper		$	(260,000	)		$	(20,000	)		$	(240,000	)
Proceeds from notes payable			346,567				—				346,567
Payment of deferred financing costs			(3,450	)			—				(3,450	)
Dividends paid on common shares			(171,570	)			(161,683	)			(9,887	)
Proceeds from issuances of common shares			303				204,077				(203,774	)

The increase in cash outflows related to net payments of commercial paper resulted from the decrease in net borrowings of $260.0 million on our commercial paper program during the three months ended March 31, 2024 as compared to the decrease in net borrowings of $20.0 million on our commercial paper program during the three months ended March 31, 2023. The increase in cash inflows from proceeds from notes payable resulted from the issuance of $350.0 million of unsecured senior notes during the three months ended March 31, 2024 as compared to no issuance of unsecured senior notes during the three months ended March 31, 2023. The increase in cash outflows related to payment of deferred financing costs resulted from the closing costs of $3.5 million related to the issuance of $350.0 million of unsecured senior notes during the three months ended March 31, 2024 as compared to no payments of deferred financing costs during the three months ended March 31, 2023. The increase in cash outflows from dividends paid on common shares primarily resulted from the increase in the dividend rate to $1.4700 per share during the three months ended March 31, 2024 as compared to the dividend rate of $1.4000 per share during the three months ended March 31, 2023. The decrease in cash inflows related to the proceeds from issuances of common shares resulted from the proceeds from the settlement of two forward sale agreements with respect to a total of 1.1 million shares at a forward price per share of $185.23 during the three months ended March 31, 2023.

Debt

The following schedule reflects our outstanding debt as of March 31, 2024 (dollars in thousands):

		Principal Balance				Average Years to Rate Maturity				Weighted Average Effective Rate
Unsecured debt
Fixed rate senior notes		$	4,050,000				6.0				3.4	%
Variable rate commercial paper program			235,000				0.1				5.6	%
Debt issuance costs, discounts and premiums			(20,710	)
Total unsecured debt		$	4,264,290				5.7				3.6	%
Secured debt
Fixed rate property mortgages		$	363,293				24.8				4.4	%
Debt issuance costs			(3,120	)
Total secured debt		$	360,173				24.8				4.4	%
Total debt		$	4,624,463				7.2				3.6	%

The following schedule presents the contractual maturity dates of our outstanding debt, net of debt issuance costs, discounts and premiums, as of March 31, 2024 (dollars in thousands):

		Commercial Paper⁽¹⁾ & Revolving Credit Facility**⁽²⁾**				Senior Notes				Property Mortgages				Total
2024		$	235,000			$	399,864			$	—			$	634,864
2025			—				398,745				—				398,745
2026			—				298,166				—				298,166
2027			—				597,531				—				597,531
2028			—				397,455				—				397,455
2029			—				557,411				—				557,411
2030			—				297,973				—				297,973
2031			—				445,809				—				445,809
2032			—				—				—				—
2033			—				—				—				—
Thereafter			—				636,336				360,173				996,509
Total		$	235,000			$	4,029,290			$	360,173			$	4,624,463

(1)

There was $235.0 million outstanding under MAALP’s unsecured commercial paper program as of March 31, 2024. Under the terms of the program, MAALP may issue up to a maximum aggregate amount outstanding at any time of $625.0 million. For the three months ended March 31, 2024, the average daily borrowings outstanding under the commercial paper program were $235.7 million.

(2)

There were no borrowings outstanding under MAALP’s $1.25 billion unsecured revolving credit facility as of March 31, 2024.

The following schedule reflects the maturities and average effective interest rates of our outstanding fixed rate debt, net of debt issuance costs, discounts and premiums, as of March 31, 2024 (dollars in thousands):

		Fixed Rate Debt				Average Effective Rate
2024		$	399,864				4.0	%
2025			398,745				4.2	%
2026			298,166				1.2	%
2027			597,531				3.7	%
2028			397,455				4.2	%
2029			557,411				3.7	%
2030			297,973				3.1	%
2031			445,809				1.8	%
2032			—				—
2033			—				—
Thereafter			996,509				4.2	%
Total		$	4,389,463				3.5	%

Unsecured Revolving Credit Facility & Commercial Paper

MAALP has entered into an unsecured revolving credit facility with a borrowing capacity of $1.25 billion and an option to expand to $2.0 billion. The revolving credit facility bears interest at an adjusted Secured Overnight Financing Rate plus a spread of 0.70% to 1.40% based on an investment grade pricing grid. The revolving credit facility has a maturity date in October 2026 with an option to extend for two additional six-month periods. As of March 31, 2024, there was no outstanding balance under the revolving credit facility, while $4.5 million of capacity was used to support outstanding letters of credit.

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 principal amount outstanding of $625.0 million. As of March 31, 2024, there were $235.0 million of borrowings outstanding under the commercial paper program.

Unsecured Senior Notes

As of March 31, 2024, MAALP had $4.1 billion of publicly issued unsecured senior notes outstanding.

In January 2024, MAALP publicly issued $350.0 million in aggregate principal amount of unsecured senior notes due March 2034 with a coupon rate of 5.000% per annum and at an issue price of 99.019%. Interest is payable semi-annually in arrears on March 15 and September 15 of each year, commencing September 15, 2024. The proceeds from the sale of the notes were used to repay borrowings on the commercial paper program. The notes have an effective interest rate of 5.123%.

Secured Property Mortgages

MAALP maintains secured property mortgages with various life insurance companies. As of March 31, 2024, MAALP had $363.3 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, 2024, MAA owned 116,728,052 OP Units, comprising a 97.4% limited partnership interest in MAALP, while the remaining 3,132,552 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 3,132,552 shares of its common stock that, as of March 31, 2024, 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. In January 2023, MAA settled its two forward sale agreements with respect to all 1.1 million shares at a forward price per share of $185.23, which is inclusive of adjustments made to reflect the then-current federal funds rate, the amount of dividends paid to holders of MAA common stock and commissions paid to sales agents, for net proceeds of $203.7 million. We have used these proceeds primarily to fund our development and redevelopment activities.

The Company has entered into an equity distribution agreement to establish an at-the-market, or ATM, share offering program, which allows 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 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, 2024 and 2023, MAA did not sell any shares of common stock under its ATM program. As of March 31, 2024, there were 4.0 million shares remaining under the ATM program.

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, 2024, we had $745.7 million of outstanding debt and debt service obligations payable in the year ending December 31, 2024, including the $400.0 million of publicly issued unsecured senior notes maturing in June 2024, the $235.0 million of commercial paper borrowings due April 2024, and $110.7 million of interest payments on fixed rate debt obligations in the year ending December 31, 2024. For a schedule of the maturity dates of our outstanding debt beyond 2024, see the “Liquidity and Capital Resources - Debt” section above. As of March 31, 2024, we also had obligations to make additional capital contributions to five 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, 2024, we had committed to make additional capital contributions totaling up to $32.8 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 that we expect to incur in the ordinary course of our business.

As of March 31, 2024, we had five development communities under construction totaling 1,970 apartment units once complete. Total expected costs for the five development projects are $647.3 million, of which $445.6 million had been incurred through March 31, 2024. In addition, our property redevelopment 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, 2024, 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, 2023. We expect to have additional development projects in the future.

We typically declare cash dividends on MAA’s common stock on a quarterly basis, subject to approval by MAA’s Board of Directors. We expect to pay quarterly dividends at an annual rate of $5.88 per share of MAA common stock during the year ending December 31, 2024. 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, 2023, see Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 9, 2024.

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 on our revenue. During the three months ended March 31, 2024, we experienced inflationary pressures that drove higher operating expenses, primarily in real estate taxes and insurance expenses.

Critical Accounting Estimates

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 9, 2024, for discussions of our critical accounting estimates. During the three months ended March 31, 2024, there were no material changes to these estimates.