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What changed in Mid-America Apartment Communities's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Mid-America Apartment Communities's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+288 added−255 removedSource: 10-K (2024-02-09) vs 10-K (2023-02-14)

Top changes in Mid-America Apartment Communities's 2023 10-K

288 paragraphs added · 255 removed · 219 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeCommunication and Engagement At MAA, we place an emphasis on communication to ensure associates feel informed and connected as an organization. We utilize a variety of communications channels to provide associates with timely information that is relevant to their role in the company, to company-wide initiatives and their professional interests.
Biggest changeWe utilize a variety of communication channels to provide associates with timely information that is relevant to their role in the company, to company-wide initiatives and their professional interests. We also believe the best way to gain in-depth insight into how associates feel about working at MAA is to provide regular, frequent, and trusted opportunities to safely share feedback.
Reference to our website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this Annual Report on Form 10-K. All of the aforementioned materials may also be obtained free of charge by contacting our Investor Relations Department, 6815 Poplar Avenue, Suite 500, Germantown, Tennessee 38138.
Reference to our website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this Annual Report on Form 10-K. All of the aforementioned materials may also be obtained free of charge by contacting our Investor Relations Department, 6815 Poplar Avenue, Suite 500, Germantown, Tennessee 38138. 9
This group works collaboratively with our Chief Executive Officer and other members of our executive team to ensure our policies and actions are guided by our culture of inclusivity and are free from discriminatory practices and bias. 6 We recruit from a diverse range of sources including historically Black colleges and universities as well as technical/trade schools.
This group works collaboratively with our Chief Executive Officer and other members of our executive team to ensure our policies and actions are guided by our culture of inclusivity and are free from discriminatory practices and bias. We recruit from a diverse range of sources including historically Black colleges and universities as well as technical/trade schools.
We currently intend to target our total debt, net of cash held, to a range of approximately 30% to 36% of our adjusted total assets (as defined in the covenants for the bonds issued by MAALP). Our charter and bylaws do not limit our debt levels and our Board of Directors can modify this policy at any time.
We intend to target our total debt, net of cash held, to a range of approximately 30% to 36% of our adjusted total assets (as defined in the covenants for the bonds issued by MAALP). Our charter and bylaws do not limit our debt levels and our Board of Directors can modify this policy at any time.
We intend to continue using a combination of targeted recruiting, talent development and internal promotion strategies to expand the diversity of our employee base across all roles and functions. Well-being and Development We take a comprehensive approach to supporting our associates’ physical and emotional health as well as their financial and professional well-being.
We intend to continue using a combination of targeted recruiting, talent development and internal promotion strategies to expand the diversity of our employee base across all roles and functions. 6 Well-being and Development We take a comprehensive approach to supporting our associates’ physical and emotional health as well as their financial and professional well-being.
We continue to invest in technology to enable potential residents to examine their future homes both online (virtual touring) or by self-guided tour (self-touring) in addition to the more traditional guided tour. 4 Acquisitions and Development Our external growth strategy is to acquire existing apartment communities, utilize our internal development team to develop our own apartment communities and partner with local developers to develop apartment communities that we will own completely after stabilization, which we refer to as a pre-purchase transaction.
We continue to invest in technology to enable potential residents to examine their future homes both online (virtual touring) or by self-guided tour (self-touring) in addition to the more traditional guided tour. 4 Acquisitions and Development Our external growth strategy is to acquire existing apartment communities, utilize our internal development team to develop our own apartment communities and partner with select developers to develop apartment communities that we will own completely after stabilization, which we refer to as a pre-purchase transaction.
Compliance with the various laws and regulations we are subject to did not have a material effect on our capital expenditures, results of operations and competitive position for the year ended December 31, 2022 as compared to prior periods.
Compliance with the various laws and regulations we are subject to did not have a material effect on our capital expenditures, results of operations and competitive position for the year ended December 31, 2023 as compared to prior periods.
Item 1. B usiness. Overview MAA, an S&P 500 company, is a multifamily-focused, self-administered and self-managed real estate investment trust, or REIT. We own, operate, acquire and selectively develop apartment communities primarily located in the Southeast, Southwest and Mid-Atlantic regions of the United States.
Item 1. B usiness. Overview 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.
Also, as of December 31, 2022, females represented approximately 46% of our workforce, 56% of our collective corporate, regional and property leadership positions and 53% of our associates promoted during the year ended December 31, 2022.
Also, as of December 31, 2023, females represented approximately 46% of our workforce, 56% of our collective corporate, regional and property leadership positions and 53% of our associates promoted during the year ended December 31, 2023.
We plan to continue using unsecured debt to take advantage of the lower cost of capital and flexibility provided by these markets. We will evaluate opportunities to repurchase shares when we believe that our share price is significantly below our net present value.
We continuously review opportunities for lowering our cost of capital. We plan to continue using unsecured debt to take advantage of the lower cost of capital and flexibility provided by these markets. We will evaluate opportunities to repurchase shares when we believe that our share price is significantly below our net present value.
The program includes targeted plans to move all apartment units at such apartment communities to higher rents. For the year ended December 31, 2022, we spent $19.3 million on this program. Portfolio Strategy Our goal is to maintain a diversified, balanced portfolio that we believe provides the optimal path to maximizing operating performance over the full economic cycle.
The program includes targeted plans to move all apartment units at such apartment communities to higher rents. For the year ended December 31, 2023, we spent $17.0 million on this program. Portfolio Strategy Our goal is to maintain a diversified, balanced portfolio that we believe provides the optimal path to maximizing operating performance over the full economic cycle.
(2) Number of communities includes six communities under development as of December 31, 2022. (3) Number of units excludes development units not yet delivered as of December 31, 2022. Our business is conducted principally through the Operating Partnership.
(2) Number of communities includes five communities under development as of December 31, 2023. (3) Number of units excludes development units not yet delivered as of December 31, 2023. Our business is conducted principally through the Operating Partnership.
Human Capital As of December 31, 2022, we employed 2,387 associates. Our associates’ time, energy, creativity and passion are essential to our continued success as a company.
Human Capital As of December 31, 2023, we employed 2,427 associates. Our associates’ time, energy, creativity and passion are essential to our continued success as a company.
As of December 31, 2022, ethnic/cultural minorities represented approximately 50% of our workforce, 40% of our collective corporate, regional and property leadership positions and 51% of our associates promoted during the year ended December 31, 2022.
As of December 31, 2023, ethnic/cultural minorities represented approximately 53% of our workforce, 42% of our collective corporate, regional and property leadership positions and 50% of our associates promoted during the year ended December 31, 2023.
As of December 31, 2022, we maintained full or partial ownership of apartment communities, including communities currently in development, across 16 states and the District of Columbia, summarized as follows: Multifamily Communities (1) Units Consolidated 296 (2) 99,407 (3) Unconsolidated 1 269 Total 297 99,676 (1) As of December 31, 2022, 34 of the Company’s apartment communities included retail components.
As of December 31, 2023, we maintained full or partial ownership of apartment communities, including communities currently in development, across 16 states and the District of Columbia, summarized as follows: Multifamily Communities (1) Units Consolidated 295 (2) 100,625 (3) Unconsolidated 1 269 Total 296 100,894 (1) As of December 31, 2023, 34 of the Company’s apartment communities included retail components.
Typically, fixed price construction contracts are signed with unrelated parties to minimize construction risk. We may also engage in limited expansion development opportunities on existing communities in which we typically serve as the developer. During the year ended December 31, 2022, we incurred $172.1 million in development costs and completed three development projects.
Typically, fixed price construction contracts are signed with unrelated parties to minimize construction risk. We may also engage in limited expansion development opportunities on existing communities in which we typically serve as the developer. During the year ended December 31, 2023, we incurred $198.2 million in development costs and completed one development project.
Our associates are eligible for medical, dental and vision insurance, life and disability insurance, various wellness programs, an employee assistance program, for which we pay part or all the cost, as well as other benefits.
Our associates are eligible for many benefit plans and programs for which we pay part or all of the cost, such as medical, dental and vision insurance, life and disability insurance, various wellness programs and an employee assistance program.
During the year ended December 31, 2022, we installed smart devices in 24,029 apartment units at an average cost of $1,535 per apartment unit and a projected average monthly rent increase of approximately $25 per unit upon lease renewal or unit turnover.
During the year ended December 31, 2023, we installed smart devices in 21,159 apartment units at an average cost of $1,533 per apartment unit and a projected average monthly rent increase of approximately $20 per unit upon lease renewal or unit turnover.
As of December 31, 2022, we have completed installation of smart home technology at nearly 75% of our existing properties and are employing smart home technology in all of our new developments. Separately, we continued our property repositioning program to upgrade and reposition the amenity and common areas at many of our apartment communities.
As of December 31, 2023, we have completed installation of smart home technology at more than 90% of our existing apartment units and are employing smart home technology in all of our new developments. Separately, we continued our property repositioning program to upgrade and reposition the amenity and common areas at certain of our apartment communities.
During the year ended December 31, 2022, we disposed of four multifamily communities totaling 1,414 units, and two land parcels totaling approximately five acres. 5 Property Redevelopment and Repositioning Activity We focus on both interior unit upgrades and property amenity and common area upgrades above and beyond routine capital upkeep on our apartment communities that we believe have the ability to support additional rent growth.
During the year ended December 31, 2023, we disposed of one land parcel totaling approximately 21 acres. Property Redevelopment and Repositioning Activity We focus on both interior unit upgrades and property amenity and common area upgrades above and beyond routine capital upkeep on our apartment communities that we believe have the ability to support additional rent growth.
We regularly conduct surveys with all associates to measure associate engagement and capture topical feedback to guide current programs, projects and progress. We are also driven to prove that we are listening, and that real action and improvements are executed as a result.
From there, we are able to develop and continuously improve our work environment to enhance job satisfaction. We regularly conduct surveys with all associates to measure associate engagement and capture topical feedback to guide current programs, projects and progress. We are also driven to prove that we are listening, and that real action and improvements are executed as a result.
We may issue new equity to maintain our debt within the target range. Covenants for our unsecured senior notes limit our total debt to 60% or less of our adjusted total assets. As of December 31, 2022, our total debt was approximately 28.4% of our adjusted total assets. We continuously review opportunities for lowering our cost of capital.
We may issue new equity to maintain our debt within the target range. Covenants for our unsecured senior notes limit our total debt to 60% or less of our adjusted total assets. As of December 31, 2023, our total debt was 27.8% of our adjusted total assets.
MAA is the sole general partner of the Operating Partnership, holding 115,480,336 OP Units, comprising a 97.3% partnership interest in the Operating Partnership as of December 31, 2022.
MAA is the sole general partner of the Operating Partnership, holding 116,694,124 OP Units, comprising a 97.4% partnership interest in the Operating Partnership as of December 31, 2023.
Moreover, no assurance can be given concerning future laws, ordinances or regulations, or the potential introduction of hazardous or toxic substances by neighboring properties or residents. 8 Government Regulations We must own, operate, manage, acquire, develop and redevelop our properties in compliance with the laws and regulations of the United States, as well as state and local laws and regulations in the markets where our properties are located, which may differ among jurisdictions.
Moreover, no assurance can be given concerning future laws, ordinances or regulations, or the potential introduction of hazardous or toxic substances by neighboring properties or residents. 8 Government Regulations We must own, operate, manage, acquire, develop and redevelop our properties in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or are subject to limited judicial or regulatory interpretations.
The following multifamily projects were under development as of December 31, 2022 (dollars in thousands): Project Market Total Units Units Completed Cost to Date Budgeted Cost Estimated Cost Per Unit Expected Completion Novel West Midtown (1) Atlanta, GA 340 — $ 72,536 $ 89,500 $ 263 3rd Quarter 2023 Novel Daybreak (1) Salt Lake City, UT 400 — 74,195 94,000 235 4th Quarter 2023 Novel Val Vista (1) Phoenix, AZ 317 — 57,646 77,200 244 1st Quarter 2024 MAA Milepost 35 Denver, CO 352 — 41,324 125,000 355 4th Quarter 2024 MAA Nixie Raleigh, NC 406 — 13,445 145,500 358 3rd Quarter 2025 MAA Breakwater Tampa, FL 495 — 32,553 197,500 399 4th Quarter 2025 Total 2,310 — $ 291,699 $ 728,700 (1) This pre-purchase multifamily community development is being developed through a joint venture with a local developer.
The following multifamily projects were under development as of December 31, 2023 (dollars in thousands): Project Market Total Units Units Completed Cost to Date Budgeted Cost Estimated Cost Per Unit Expected Completion Novel Daybreak (1) Salt Lake City, UT 400 196 $ 91,620 $ 99,450 $ 249 3rd Quarter 2024 Novel Val Vista (1) Phoenix, AZ 317 3 71,227 79,800 252 4th Quarter 2024 MAA Milepost 35 Denver, CO 352 3 92,980 125,000 355 4th Quarter 2024 MAA Nixie Raleigh, NC 406 — 45,932 145,500 358 3rd Quarter 2025 MAA Breakwater Tampa, FL 495 — 89,851 197,500 399 4th Quarter 2025 Total 1,970 202 $ 391,610 $ 647,250 (1) This pre-purchase multifamily community development is being developed through a joint venture with a local developer.
Additionally, we encourage and provide financial assistance to our eligible associates to seek education and certification outside of the company through both apartment associations and accredited educational institutions. We encourage our associates to “embrace opportunities” including developing skills and knowledge needed for increased responsibilities as they promote within the company.
Our training and development programs are designed to provide continuous learning for associates in the flow of their workday. Additionally, we encourage and provide financial assistance to our eligible associates to seek education and certification outside of the company through both apartment associations and accredited educational institutions.
We have installed smart home technology (unit entry locks, mobile control of lights and thermostat and leak monitoring) at many of our apartment communities in order to provide additional resident value and increase rent growth.
During the year ended December 31, 2023, we renovated the kitchen and bathroom of 6,858 apartment units at an average cost of $6,453 per apartment unit, achieving average rental rate increases of 7.1% above the normal market rate for similar but non-renovated apartment units. 5 We have installed smart home technology (unit entry locks, mobile control of lights and thermostat and leak monitoring) at many of our apartment communities in order to provide additional resident value and increase rent growth.
We also offer discounted rent to associates, parental leave and financial assistance with adoption expenses as well as grant up to three scholarships for associates’ dependents each year. Our training and development programs are designed to provide continuous learning for associates in the flow of their workday.
We offer a 401(k) savings plan with an employer match as well as educational support for savings strategies. We also offer discounted rent to associates, parental leave and financial assistance with adoption expenses as well as grant up to three scholarships for associates’ dependents each year.
Even if MAA continues to qualify as a REIT, it will continue to be subject to certain federal, state and local taxes on its income and its property.
Even if MAA continues to qualify as a REIT, it will continue to be subject to certain federal, state and local taxes on its income and its property. For the year ended December 31, 2023, MAA paid total distributions of $5.600 per share of common stock to its shareholders, which was above the 90% REIT distribution requirement.
We strive to maintain an equitable compensation program for performance, designed to reward competitive levels of compensation based on employee contributions, performance and qualifications. We offer a 401(k) savings plan with an employer match as well as educational support for savings strategies.
In addition, we offer several supplemental and voluntary benefit plans, paid sick leave, paid vacation and other paid time off benefits to support our associates’ overall well-being. We strive to maintain an equitable compensation program for performance, designed to reward competitive levels of compensation based on employee contributions, performance and qualifications.
We acquired the following properties during the year ended December 31, 2022: Multifamily Acquisitions Market Units Date Acquired MAA Hampton Preserve II Tampa, FL 196 July 2022 MAA LoSo Charlotte, NC 344 September 2022 Land Acquisitions Market Acres Date Acquired MAA Florida Street Station Denver, CO 4 March 2022 MAA Packing District Orlando, FL 4 May 2022 MAA Panorama Denver, CO 6 July 2022 MAA Nixie Raleigh, NC 6 November 2022 Alta 10th (1) Charlotte, NC 3 December 2022 (1) Represents a pre-purchase multifamily development.
We acquired the following properties during the year ended December 31, 2023: Multifamily Acquisitions Market Units Date Acquired MAA Central Ave Phoenix, AZ 323 October 2023 MAA Optimist Park Charlotte, NC 352 November 2023 Land Acquisitions Market Acres Date Acquired MAA Packing District II Orlando, FL 6 February 2023 MAA Nixie Raleigh, NC 0.4 November 2023 Development activities may be conducted through wholly-owned entities or through joint ventures with our pre-purchase transaction partners.
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Approximately $10 million has been funded as of December 31, 2022, primarily related to land, with development expected to begin in the second half of 2023. MAA owns 95% of the joint venture that owns this property. Development activities may be conducted through wholly-owned entities or through joint ventures with our pre-purchase transaction partners.
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We encourage our associates to “embrace opportunities” including developing skills and knowledge needed for increased responsibilities as they promote within the company. Communication and Engagement We place an emphasis on communication to ensure associates feel informed and connected as an organization.
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During the year ended December 31, 2022, we renovated the kitchen and bathroom of 6,574 apartment units at an average cost of $6,109 per apartment unit, achieving average rental rate increases of 10.0% above the normal market rate for similar but non-renovated apartment units.
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We intend to target the ratio of our net debt to Adjusted EBITDA re to a range of 4.5x to 5.5x. We monitor our debt levels to a ratio of net debt to Adjusted EBITDA re in order to maintain our investment grade credit ratings.
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We continue to offer several measures to support our associates’ overall well-being in response to the pandemic, including supplemental leave and sick time policies, additional paid time off and coverage for testing and vaccination under our health plan.
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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 EBITDA re is measured on a trailing twelve-month basis. As of December 31, 2023, our net debt to Adjusted EBITDA re ratio was 3.6x.
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We also believe the best way to gain in-depth insight into how associates feel about working at MAA is to provide regular, frequent, and trusted opportunities to safely share feedback. From there, we are able to develop and continuously improve our work environment to enhance job satisfaction.
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For additional information on net debt and Adjusted EBITDA re , including reconciliations of the most directly comparable U.S. generally accepted accounting principles, or GAAP, measures to both net debt and Adjusted EBITDA re , see “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Non-GAAP Financial Measures - Net Debt, EBITDA, EBITDA re , and Adjusted EBITDA re ” in this Annual Report on Form 10-K.
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As of December 31, 2022, 19.2% of our total market capitalization consisted of debt borrowings, including 17.6% under unsecured borrowings and 1.5% under secured borrowings.
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These laws and regulation include landlord-tenant laws, employment laws, antitrust and other competition laws, laws benefitting disabled persons, privacy laws, tax laws, environmental laws, zoning laws, building codes and other laws regulating housing or that are generally applicable to our business and operations.
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For example, the Americans with Disabilities Act of 1990, the Fair Housing Act of 1988 and other federal, state and local laws generally require that public accommodations be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the government or the award of damages to private litigants.
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Noncompliance with laws and regulations could expose us to liability, such as the imposition of fines by the government or the award of damages to private litigants, and could require us to make significant unanticipated expenditures, such as making modifications to our existing apartment communities or increasing construction costs for development communities.
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These laws may require us to modify our existing apartment communities. These laws may also restrict renovations by requiring improved access to such buildings by disabled persons or may require us to add other structural features that increase our construction costs.
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Website Access to Our Reports MAA and the Operating Partnership file combined periodic reports with the SEC.
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For the year ended December 31, 2022, MAA paid total distributions of $4.675 per share of common stock to its shareholders, which was above the 90% REIT distribution requirement and was in excess of REIT taxable income. Website Access to Our Reports MAA and the Operating Partnership file combined periodic reports with the SEC.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

85 edited+22 added−13 removed112 unchanged
Biggest changeSuch adverse impacts will depend on, among other factors: • our residents’ ability or willingness to pay rent in full on a timely basis; • federal, state, local and industry-initiated efforts that may adversely affect the ability of landlords, including us, to collect rent and customary fees, adjust rental rates and enforce remedies for the failure to pay rent, such as the various orders that were issued by governmental authorities and public officials to temporarily halt residential evictions to prevent further spread of the disease; • the legacy of the regulatory focus on landlords during the public health event as distinguished from other providers of essential services; • our ability to renew leases or relet units on favorable terms, or at all, including as a result of unfavorable economic and market conditions in those markets where our apartment communities are located; • our ability to lease or relet units due to social distancing or other restrictions that may frustrate our leasing activities; • our ability to successfully complete the lease-up of properties in our lease-up portfolio and attain expected rental and occupancy rates due to social distancing or other restrictions that may frustrate our leasing activities; • our ability to continue our apartment unit redevelopment programs and attain increased rental rates for renovated or upgraded units due to social distancing or other restrictions; • our ability to complete the construction of properties in our development portfolio on schedule and on budget due to social distancing or other restrictions, labor shortages, supply chain disruptions and escalating labor and material costs; • the impact of supply chain disruptions and inflationary pressures on our normal business operations, including repair and maintenance work and unit renovations and upgrades; • severe and prolonged disruption and instability in the financial markets, including the debt and equity capital markets, which have already experienced and may continue to experience significant volatility, or deteriorations in credit and financing conditions (or a refusal or failure of one or more lenders under our unsecured revolving credit facility to fund their respective financing commitment to us), which may affect our ability to access capital necessary to fund our business operations or refinance maturing debt on a timely basis, on attractive terms, or at all, which would adversely affect our ability to meet liquidity and capital expenditure requirements; • sustained stock market volatility that negatively affects the market price of our securities, including market conditions unrelated to our operating performance or prospects; • the impact on our workforce of any vaccine mandate implemented by governmental authorities, which could result in employee attrition; and • our ability to manage our business to the extent our management or other personnel are impacted in significant numbers by such public health event and are not willing, available or allowed to conduct work.
Biggest changeThe impact of a disease outbreak or other public health event on our business, financial condition, results of operations and cash flows is difficult to predict and, as was demonstrated by the COVID-19 pandemic, will depend on a number of factors, including: • the duration and scope of the event in the U.S.; • our residents’ and commercial tenants’ ability or willingness to pay rent in full on a timely basis; • federal, state, local and industry-initiated efforts that may adversely affect the ability of landlords, including us, to collect rent and customary fees, adjust rental rates and enforce remedies for the failure to pay rent, such as the various orders that were issued by governmental authorities and public officials during the COVID-19 pandemic to temporarily halt residential evictions; • the regulatory focus on landlords as distinguished from other providers of essential services; 16 • our ability to renew leases or relet units on favorable terms, or at all, including as a result of unfavorable economic and market conditions in those markets where our properties are located; • our ability to lease or relet units due to social distancing or other restrictions that may frustrate our leasing activities; • our ability to successfully complete the lease-up of properties in our lease-up portfolio and attain expected rental and occupancy rates due to social distancing or other restrictions that may frustrate our leasing activities, which, for example, led us to temporarily close property amenities and temporarily prohibit public access in our property leasing offices during the COVID-19 pandemic; • our ability to continue our apartment unit redevelopment programs and attain increased rental rates for renovated or upgraded units due to social distancing or other restrictions, which, for example, caused us to temporarily suspend our apartment unit redevelopment activities during the COVID-19 pandemic; • our ability to complete the construction of properties in our development portfolio on schedule and on budget due to social distancing or other restrictions, labor shortages, supply chain disruptions and escalating labor and material costs; • the impact of supply chain disruptions and inflationary pressures on our normal business operations, including repair and maintenance work and unit renovations and upgrades; • disruption and instability in the financial markets, which experienced significant volatility during the COVID-19 pandemic, or deteriorations in credit and financing conditions (or a refusal or failure of one or more lenders under our unsecured revolving credit facility to fund their respective financing commitment to us), which could affect our ability to access capital necessary to fund our business operations or refinance maturing debt on a timely basis, on attractive terms, or at all, which would adversely affect our ability to meet liquidity and capital expenditure requirements; • stock market volatility that negatively affects the market price of our securities, including market conditions unrelated to our operating performance or prospects; • the impact on our workforce of any vaccine mandate implemented by governmental authorities, which could result in employee attrition; and • our ability to manage our business to the extent our management or other personnel are impacted in significant numbers and are not willing, available or allowed to conduct work.
The presence of, or failure to properly remediate, hazardous, toxic substances or petroleum product releases may adversely affect the owner’s or operator’s ability to sell or rent the affected property or to borrow using the property as collateral.
The presence of, or failure to properly remediate, hazardous or toxic substances or petroleum product releases may adversely affect the owner’s or operator’s ability to sell or rent the affected property or to borrow using the property as collateral.
In certain circumstances, as detailed in the partnership agreement of the Operating Partnership, the Operating Partnership may not sell or otherwise transfer certain properties unless a specified percentage of the limited partners who were partners in the limited partnership holding such properties at the time of its acquisition by us approves such sale or transfer.
In certain circumstances, as detailed in the limited partnership agreement of the Operating Partnership, the Operating Partnership may not sell or otherwise transfer certain properties unless a specified percentage of the limited partners who were partners in the limited partnership holding such properties at the time of its acquisition by us approves such sale or transfer.
The degree of our leverage creates significant risks, including the following: • we may be required to dedicate a substantial portion of our funds from operations to servicing our debt and our cash flow may be insufficient to make required payments of principal and interest; • debt service obligations will reduce funds available for distribution and funds available for acquisitions, development and redevelopment; • we may be more vulnerable to economic and industry downturns than our competitors that have less debt; • we may be limited in our ability to respond to changing business and economic conditions; • we may default on our indebtedness, which could result in acceleration of those obligations, assignment of rents and leases and loss of properties to foreclosure; and • if one of our subsidiaries defaults, it could trigger a cross default or cross acceleration provision under other indebtedness, which could cause an immediate default or could allow the lenders to declare all funds borrowed thereunder to be due and payable.
The degree of our leverage creates significant risks, including that: • we may be required to dedicate a substantial portion of our funds from operations to servicing our debt and our cash flow may be insufficient to make required payments of principal and interest; • debt service obligations will reduce funds available for distribution and funds available for acquisitions, development and redevelopment; • we may be more vulnerable to economic and industry downturns than our competitors that have less debt; • we may be limited in our ability to respond to changing business and economic conditions; • we may default on our indebtedness, which could result in acceleration of those obligations, assignment of rents and leases and loss of properties to foreclosure; and • if one of our subsidiaries defaults, it could trigger a cross default or cross acceleration provision under other indebtedness, which could cause an immediate default or could allow the lenders to declare all funds borrowed thereunder to be due and payable.
If an investor acquires shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs, MAA: • will consider the transfer to be null and void; • will not reflect the transaction on its books; • may institute legal action to enjoin the transaction; • will not pay dividends or other distributions with respect to those shares; • will not recognize any voting rights for those shares; • will consider the shares held in trust for its benefit; and • will either direct the holder to sell the shares and turn over any profit to MAA, or MAA will redeem the shares.
If an investor acquires shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs, MAA: • will consider the transfer to be null and void; • will not reflect the transaction on its books; • may institute legal action to enjoin the transaction; • will not pay dividends or other distributions with respect to those shares; • will not recognize any voting rights for those shares; • will consider the shares held in trust for its benefit; and 19 • will either direct the holder to sell the shares and turn over any profit to MAA, or MAA will redeem the shares.
Our development and construction activities are subject to the following risks: • we may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, which could result in increased development costs, could delay initial occupancy dates for all or a portion of a development community and could require us to abandon our activities entirely with respect to a project for which we are unable to obtain permits or authorizations; • we may be unable to obtain financing for development activities under favorable terms, which could cause a delay in construction resulting in increased costs, decreases in revenue and potentially cause us to abandon the opportunity; 13 • yields may be less than anticipated as a result of delays in completing projects, costs that exceed budget, higher than expected concessions for lease-up and lower rents than initially estimated; • bankruptcy of developers in our development projects could impose delays and costs on us with respect to the development of our communities and may adversely affect our financial condition and results of operations; • we may abandon development opportunities that we have already begun to explore, and we may fail to recover expenses already incurred in connection with exploring such opportunities; • we may be unable to complete construction and lease-up of an apartment community on schedule, or incur development or construction costs that exceed our original estimates and we may be unable to charge rents that would compensate for any increase in such costs; • occupancy rates and rents at a newly developed apartment community may fluctuate depending on a number of factors, including market and economic conditions, preventing us from meeting our profitability goals for that community; • when we sell to third parties apartment communities or properties that we developed or renovated, we may be subject to warranty or construction defects that are uninsured or exceed the limit of our insurance; • our failure to successfully enter into a joint venture agreement may prohibit an otherwise advantageous investment if we cannot raise the money through other means; and • adoption of laws and regulations designed to address climate change and its effects, including, for example, “green” building codes, could increase our costs of development and cause delays in the construction of our development communities.
Our development and construction activities are subject to the following risks: • we may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, which could result in increased development costs, could delay initial occupancy dates for all or a portion of a development community and could require us to abandon our activities entirely with respect to a project for which we are unable to obtain permits or authorizations; • we may be unable to obtain financing for development activities under favorable terms, which could cause a delay in construction resulting in increased costs, decreases in revenue and potentially cause us to abandon the opportunity; • yields may be less than anticipated as a result of delays in completing projects, costs that exceed budget, higher than expected concessions for lease-up and lower rents than initially estimated; • bankruptcy of developers in our development projects could impose delays and costs on us with respect to the development of our communities and may adversely affect our financial condition and results of operations; • we may abandon development opportunities that we have already begun to explore, and we may fail to recover expenses already incurred in connection with exploring such opportunities; • we may be unable to complete construction and lease-up of an apartment community on schedule, or incur development or construction costs that exceed our original estimates and we may be unable to charge rents that would compensate for any increase in such costs; • occupancy rates and rents at a newly developed apartment community may fluctuate depending on a number of factors, including market and economic conditions, preventing us from meeting our profitability goals for that community; 13 • when we sell apartment communities that we developed or renovated, we may be subject to warranty or construction defects that are uninsured or exceed the limit of our insurance; • our failure to successfully enter into a joint venture agreement may prohibit an otherwise advantageous investment if we cannot raise the money through other means; and • adoption of laws and regulations designed to address climate change and its effects, including, for example, “green” building codes, could increase our costs of development and cause delays in the construction of our development communities.
The redemption price may be paid, at MAA’s option, by delivering one common unit (subject to adjustment from time to time in the event of, among other things, stock splits, stock dividends or recapitalizations affecting its common stock or certain mergers, consolidations or asset transfers by MAA) issued by the Operating Partnership for each excess share being redeemed.
The redemption price may be paid, at MAA’s option, by delivering one OP Unit (subject to adjustment from time to time in the event of, among other things, stock splits, stock dividends or recapitalizations affecting its common stock or certain mergers, consolidations or asset transfers by MAA) issued by the Operating Partnership for each excess share being redeemed.
If a transaction intended to qualify as a Section 1031 exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of real properties on a tax deferred basis. Development and construction risks could impact our profitability.
If a transaction intended to qualify as a Section 1031 exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax deferred basis. Development and construction risks could impact our profitability.
See “Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to shareholders” above. 22 Certain dispositions of property by us may generate prohibited transaction income, resulting in a 100% penalty tax on any gain attributable to the disposition.
See “Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to shareholders” above. Certain dispositions of property by us may generate prohibited transaction income, resulting in a 100% penalty tax on any gain attributable to the disposition.
If we fail to satisfy the ESG expectations of investors and other stakeholders or our initiatives are not executed as planned, our reputation and financial results and the market price of MAA’s common stock could be adversely affected. 19 Market interest rates may have an adverse effect on the market value of MAA’s common stock.
If we fail to satisfy the ESG expectations of investors and other stakeholders or our initiatives are not executed as planned, our reputation and financial results and the market price of MAA’s common stock could be adversely affected. Market interest rates may have an adverse effect on the market value of MAA’s common stock.
We currently fund the acquisition and development of apartment communities partially through borrowings (including our commercial paper program and revolving credit facility) as well as from other sources such as sales of apartment communities which no longer meet our investment criteria. In addition, we may fund other of our capital requirements through additional debt.
We currently fund the acquisition and development of apartment communities partially through borrowings (including our commercial paper program and revolving credit facility) as well as from other sources such as sales of apartment communities which no longer meet our investment criteria. In addition, we may fund other of our capital requirements through debt.
The form, timing and amount of dividend distributions will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as our Board of Directors may consider relevant. Our Board of Directors may modify our dividend policy from time to time.
The form, timing and amount of dividend distributions will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as MAA’s Board of Directors may consider relevant. MAA’s Board of Directors may modify our dividend policy from time to time.
If MAA redeems the shares, the holder will be paid a price equal to the lesser of: o the principal price paid for the shares by the holder, o a price per share equal to the market price (as determined in the manner set forth in its charter) of the applicable capital stock, o the market price (as so determined) on the date such holder would, but for the restrictions on transfers set forth in its charter, be deemed to have acquired ownership of the shares, and o the maximum price allowed under the Tennessee Greenmail Act (such price being the average of the highest and lowest closing market price for the shares during the 30 trading days preceding the purchase of such shares or, if the holder of such shares has commenced a tender offer or has announced an intention to seek control of MAA, during the 30 trading days preceding the commencement of such tender offer or the making of such announcement).
If MAA redeems the shares, the holder will be paid a price equal to the lesser of: o the principal price paid for the shares by the holder, o a price per share equal to the market price (as determined in the manner set forth in MAA’s charter) of the applicable capital stock, o the market price (as so determined) on the date such holder would, but for the restrictions on transfers set forth in MAA’s charter, be deemed to have acquired ownership of the shares, and o the maximum price allowed under the Tennessee Greenmail Act (such price being the average of the highest and lowest closing market price for the shares during the 30 trading days preceding the purchase of such shares or, if the holder of such shares has commenced a tender offer or has announced an intention to seek control of MAA, during the 30 trading days preceding the commencement of such tender offer or the making of such announcement).
To the extent the economic conditions, job growth and 11 unemployment in any of these markets deteriorate or any of these areas experiences natural disasters, the value of our portfolio, our results of operations and our ability to make payments on our debt and to make distributions could be adversely affected.
To the extent the economic conditions, job growth and unemployment in any of these markets deteriorate or any of these areas experiences natural disasters, the value of our portfolio, our results of operations and our ability to make payments on our debt and to make distributions could be adversely affected.
We have obtained a separate pollution insurance policy that covers mold-related claims and have adopted programs designed to minimize the existence of mold in any of our apartment communities as well as guidelines for promptly 12 addressing and resolving reports of mold.
We have obtained a separate pollution insurance policy that covers mold-related claims and have adopted programs designed to minimize the existence of mold in any of our apartment communities as well as guidelines for promptly addressing and resolving reports of mold.
In addition, we may abandon opportunities to enter new markets that we have begun to explore for any reason and may, as a result, fail to recover expenses already incurred. Environmental problems are possible and can be costly.
In addition, we may abandon opportunities to enter new markets that we have begun to explore for any reason and may, as a result, fail to recover expenses already incurred. 11 Environmental problems are possible and can be costly.
If any one of these events was to occur, our financial condition and results of operations could be materially and adversely affected. 16 We may be unable to renew, repay or refinance our outstanding debt, which could negatively impact our financial condition and results of operations.
If any one of these events was to occur, our financial condition and results of operations could be materially and adversely affected. We may be unable to renew, repay or refinance our outstanding debt, which could negatively impact our financial condition and results of operations.
Provisions of MAA’s charter and Tennessee law may limit the ability of a third party to acquire control of MAA. Ownership Limit The 9.9% ownership limit discussed above may have the effect of precluding acquisition of control of MAA by a third party without the consent of our Board of Directors.
Provisions of MAA’s charter and Tennessee law may limit the ability of a third party to acquire control of MAA. Ownership Limit The 9.9% ownership limit discussed above may have the effect of precluding acquisition of control of MAA by a third party without the consent of MAA’s Board of Directors.
The market price of MAA’s publicly traded securities may be affected by many factors, including, but not limited to the following: • our financial condition and operating performance and the performance of other similar companies; • actual or anticipated differences in our quarterly and annual operating results; • changes in our revenues or earnings estimates or recommendations by securities analysts; • publication of research reports about us or our industry by securities analysts; • additions and departures of key personnel; • inability to access the capital markets; • strategic decisions by us or our competitors, such as acquisitions, dispositions, spin-offs, joint ventures, strategic investments or changes in business strategy; • the issuance of additional shares of MAA’s common stock, or the perception that such sales may occur, including under a forward sale agreement and MAA’s at-the-market share offering program, or ATM program; • the reputation of REITs generally and the reputation of REITs with portfolios similar to ours; • the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies); • an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for MAA’s common stock; • the passage of legislation or other regulatory developments that adversely affect us or our industry; • speculation in the press or investment community; • actions by institutional shareholders or hedge funds; • the issuance of ratings, reports and scores related to our corporate responsibility and ESG reports and disclosures; • changes in accounting principles; • terrorist acts; and • general market conditions, including factors unrelated to our performance.
The market price of MAA’s publicly traded securities may be affected by many factors, including: • our financial condition and operating performance and the performance of other similar companies; • actual or anticipated differences in our quarterly and annual operating results; • changes in our revenues or earnings estimates or recommendations by securities analysts; • publication of research reports about us or our industry by securities analysts; • additions and departures of key personnel; • inability to access the capital markets; • strategic decisions by us or our competitors, such as acquisitions, dispositions, spin-offs, joint ventures, strategic investments or changes in business strategy; 21 • the issuance of additional shares of MAA’s common stock, or the perception that such sales may occur, including under a forward sale agreement and MAA’s at-the-market share offering program, or ATM program; • the reputation of REITs generally and the reputation of REITs with portfolios similar to ours; • the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies); • an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for MAA’s common stock; • the passage of legislation or other regulatory developments that adversely affect us or our industry; • speculation in the press or investment community; • actions by institutional shareholders or hedge funds; • the issuance of ratings, reports and scores related to our corporate responsibility and ESG reports and disclosures; • changes in accounting principles; • terrorist acts; and • general market conditions, including factors unrelated to our performance.
At times, we have relied on external funding sources to fully fund the payment of distributions to shareholders and our capital investment program, including our existing property developments.
At times, we have relied on external funding sources to fully fund the payment of distributions to shareholders and our capital investment program, including our property developments.
As a result, we will be subject to risks inherent in investments in a single type of property. A downturn or slowdown in the demand for multifamily housing may have more pronounced effects on our results of operations or on the value of our assets than if we had diversified our investments into more than one asset class.
As a result, we will be subject to risks inherent in investments in a single type of property. A downturn or slowdown in the demand for multifamily housing will have more pronounced effects on our results of operations and on the value of our assets than if we had diversified our investments into more than one asset class.
We may be exposed to a variety of risks if we choose to enter new markets, including an inability to accurately evaluate local market conditions and local economies, to identify appropriate acquisition opportunities, to hire and retain key personnel and a lack of familiarity with local governmental and permitting procedures.
We may be exposed to a variety of risks if we choose to enter new markets, including an inability to accurately evaluate local market conditions and local economies, an inability to identify appropriate acquisition or development opportunities, an inability to hire and retain key personnel and a lack of familiarity with local governmental and permitting procedures.
Likewise, such conditions also may negatively impact the types and pricing of insurance we are able to procure.
Likewise, such conditions also may negatively impact the types, pricing and terms of insurance we are able to procure.
We are dependent on a concentration of our investments in a single asset class, making our results of operations more vulnerable to a downturn or slowdown in the sector or other economic factors. As of December 31, 2022, substantially all of our investments are concentrated in the multifamily sector.
We are dependent on a concentration of our investments in a single asset class, making our results of operations more vulnerable to a downturn or slowdown in the multifamily sector or other economic factors. As of December 31, 2023, substantially all of our investments are concentrated in the multifamily sector.
Short-term leases expose us to the effects of declining market rents and we may be unable to renew leases or relet units as leases expire. Our apartment leases are generally for a term of one year or less.
Short-term leases expose us to the effects of declining market rents, and we may be unable to renew leases or relet units as leases expire. Our apartment leases are generally for a term of approximately one year.
As of December 31, 2022, 867,846 shares of preferred stock were issued and outstanding, all of which shares were MAA Series I preferred stock. Tennessee Anti-Takeover Statutes As a Tennessee corporation, MAA is subject to various legislative acts, which impose restrictions on and require compliance with procedures designed to protect shareholders against unfair or coercive mergers and acquisitions.
As of December 31, 2023, 867,846 shares of preferred stock were issued and outstanding, all of which shares were MAA Series I preferred stock. 20 Tennessee Anti-Takeover Statutes As a Tennessee corporation, MAA is subject to various legislative acts, which impose restrictions on and require compliance with procedures designed to protect shareholders against unfair or coercive mergers and acquisitions.
Though our Board of Directors has a history of declaring dividends in advance of the quarter they are paid, the form, timing and amount of dividend distributions will be declared, and standing practice changed, at the discretion of the Board of Directors.
Though MAA’s Board of Directors has a history of declaring dividends in advance of the quarter they are paid, the form, timing and amount of dividend distributions will be declared, and standing practice changed, at the discretion of the Board of Directors.
Preferred Stock MAA’s charter authorizes our Board of Directors to issue up to 20,000,000 shares of preferred stock, 868,000 of which have been designated as 8.50% Series I Cumulative Redeemable Preferred Stock, which we refer to as MAA Series I preferred stock.
Preferred Stock MAA’s charter authorizes its Board of Directors to issue up to 20,000,000 shares of preferred stock, 868,000 of which have been designated as 8.50% Series I Cumulative Redeemable Preferred Stock, which we refer to as MAA Series I preferred stock.
Factors that may affect our occupancy levels, our rental revenues and/or the value of our apartment communities include the following, among others: • downturns in global, national, regional and local economic conditions, particularly increases in unemployment; 10 • declines in mortgage interest rates and home pricing, making alternative housing more affordable; • government or builder incentives with respect to home ownership, making alternative housing options more attractive; • local real estate market conditions, including oversupply of apartments or other housing available for rent, or a reduction in demand for apartments in the area; • declines in the financial condition of our residents, which may make it more difficult for us to collect rents from some residents; • declines in market rental rates; • declines in household formation; and • increases in operating costs, if these costs cannot be passed through to our residents.
Factors that may affect our occupancy levels, our rental revenues and/or the value of our properties include the following, among others: • downturns in global, national, regional and local economic conditions, particularly increases in unemployment; • declines in mortgage interest rates and home pricing, making alternative housing options more affordable; • government or builder incentives with respect to home ownership, making alternative housing options more attractive; • local real estate market conditions, including oversupply of apartments or other housing available for rent, or a reduction in demand for apartments in the area; • declines in the financial condition of our residents or commercial tenants, which may make it more difficult for us to collect rents from some residents or commercial tenants; • declines in market rental rates; • declines in household formation; and • increases in operating costs, if these costs cannot be passed through to our residents or commercial tenants.
Failure to succeed in new markets may have adverse consequences on our performance. We may make acquisitions outside of our existing market areas if appropriate opportunities arise. Our historical experience in our existing markets does not ensure that we will be able to operate successfully in new markets, should we choose to enter them.
Failure to succeed in new markets may have adverse consequences on our performance. We may make acquisitions or pursue developments outside of our existing market areas if appropriate opportunities arise. Our historical experience in our existing markets does not ensure that we will be able to operate successfully in new markets, should we choose to enter them.
As an owner, operator and developer of multifamily apartment communities, we may become involved in various legal proceedings, including, but not limited to, proceedings related to commercial, development, employment, competition, environmental, securities, shareholder, tenant or tort legal issues, some of which could result in a class action lawsuit.
As an owner, operator and developer of multifamily apartment communities, we may become involved in various legal proceedings, including, proceedings related to commercial, development, employment, competition, environmental, securities, shareholder, tenant or tort legal issues, some of which could result in a class action lawsuit.
We would expect that declines in our occupancy levels, rental revenues and/or the values of our apartment communities would cause us to have less cash available to make payments on our debt and to make distributions, which could adversely affect our financial condition or the market value of our securities.
We would expect that declines in our occupancy levels, rental revenues and/or the values of our properties would cause us to have less cash available to make payments on our debt and to make distributions, which could adversely affect our financial condition or the market value of our securities.
Such events or conditions could include: • weakness in the general economy, which lowers job growth and the associated demand for apartment housing; • competition from other apartment communities; • overbuilding of new apartments or oversupply of available apartments or alternative housing options (i.e. condominiums or single-family houses for rent or sale) in our markets, which might adversely affect occupancy or rental rates and/or require rent concessions in order to lease apartments; • increases in operating costs (including real estate taxes, utilities and insurance premiums) due to inflation and other factors, which may not be offset by increased rental rates; • inability to initially, or subsequently after lease terminations, rent apartments on favorable economic terms; • changes in governmental regulations and the related costs of compliance; • the enactment of rent control or rent stabilization laws in the areas in which we operate or other laws regulating multifamily housing; • other changes in laws, including, but not limited to, tax laws and housing laws; • an uninsured loss, including those resulting from a catastrophic storm, earthquake or act of terrorism; • changes in interest rate levels and the availability of financing, borrower credit standards and down-payment requirements which could lead renters to purchase homes (if interest rates decrease and home loans are more readily available) or increase our acquisition and operating costs (if interest rates increase and financing is less readily available); and • the relative illiquidity of real estate investments.
Such factors could include: • weakness in the general economy, which lowers job growth and the associated demand for apartment housing; • competition from other apartment communities or alternative housing options (including condominiums and single-family houses for rent or sale); • overbuilding of new apartments or oversupply of available apartments or alternative housing options in our markets, which might adversely affect occupancy or rental rates and/or require rent concessions in order to lease apartments; • increases in operating costs (including real estate taxes, utilities and insurance premiums) due to inflation and other factors, which may not be offset by increased rental rates; • inability to rent apartments on favorable economic terms; • changes in governmental regulations and the related costs of compliance; • the enactment of rent control or rent stabilization laws in the areas in which we operate or other laws regulating multifamily housing; • other changes in laws, including tax laws and housing laws; • an uninsured loss, including those resulting from a catastrophic storm, earthquake or act of terrorism; • changes in interest rate levels and the availability of financing, borrower credit standards and down-payment requirements which could lead renters to purchase homes (if interest rates decrease and home loans are more readily 10 available) or increase our acquisition and operating costs (if interest rates increase and financing is less readily available); and • the relative illiquidity of real estate investments.
Interest rates have increased, and to the extent that the current high interest rate environment increases further, we could experience higher interest expense on our variable-rate debt or increase interest rates when refinancing maturing fixed-rate debt, which could have a material adverse effect on us and our ability to make payments on our debt and to make distributions or cause us to be in default under certain debt instruments.
To the extent the current high interest rate environment continues or interest rates increase further, we could experience higher interest expense on our variable-rate debt or increase interest rates when refinancing maturing fixed-rate debt, which could have a material adverse effect on us and our ability to make payments on our debt and to make distributions or cause us to be in default under certain debt instruments.
For example, as described in more detail in Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K, we are currently a defendant in lawsuits filed by plaintiffs individually and on behalf of a purported class of plaintiffs, against the company, among other defendants, alleging that RealPage, Inc. and lessors of multifamily residential real estate conspired to artificially inflate the prices of multifamily residential real estate above competitive levels. 15 Legal proceedings, if decided adversely to or settled by us, and not covered by insurance, could result in liability material to our financial condition, results of operations or cash flows.
As described in more detail in Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K, we are currently a defendant, among other companies, in lawsuits filed by plaintiffs individually and on behalf of a purported class of plaintiffs alleging that RealPage, Inc. and lessors of multifamily residential real estate, including us, conspired to artificially inflate the prices of multifamily residential real estate above competitive levels. 15 Legal proceedings, if decided adversely to or settled by us, and not covered by insurance, could result in liability material to our financial condition, results of operations or cash flows.
This risk of a data breach or security failure, particularly through cyber-attacks or cyber-intrusion, has generally increased due to the rise in new technologies and the increased sophistication and activities of the perpetrators of attempted attacks and intrusions, including as a result of the intensification of state-sponsored cybersecurity attacks during periods of geopolitical conflict, such as the ongoing conflict in Ukraine. 14 The security measures put in place by us and our service providers cannot provide absolute security and there can be no assurance that we or our service providers will not suffer a data security incident in the future, that unauthorized parties will not gain access to sensitive information stored on our or our service providers’ systems, that such access will not, whether temporarily or permanently, impact, interfere with or interrupt our operations, or that any such incident will be discovered in a timely manner.
This risk of a data breach or security failure, particularly through cyber-attacks or cyber-intrusion, has generally increased due to the rise in new technologies and the increased sophistication and activities of the perpetrators of attempted attacks and intrusions, including as a result of the intensification of state-sponsored cybersecurity attacks during periods of geopolitical conflict, such as the ongoing conflicts involving Russia, Belarus, Ukraine, Israel and other countries in the Middle East. 14 The security measures put in place by us and our service providers cannot provide absolute security and there can be no assurance that we or our service providers will not suffer a data security incident in the future, that unauthorized parties will not gain access to sensitive information stored on our or our service providers’ systems, that such access will not, whether temporarily or permanently, impact, interfere with or interrupt our operations, or that any such incident will be discovered in a timely manner.
Changes in federal, state and local laws and regulations on climate change could result in increased operating costs and/or capital expenditures to improve the energy efficiency of our existing communities and could also require us to spend more on our new development communities without a corresponding increase in rental revenues.
Changes in federal, state and local laws and regulations on sustainable buildings could result in increased operating costs and/or capital expenditures to improve the energy efficiency of our existing communities and could also require us to spend more on our new development communities without a corresponding increase in rental revenues.
Many of our apartment communities are located in areas that may be subject to extreme weather and natural disasters, such as floods, tornados, hurricanes and earthquakes, the likelihood or frequency of which events could increase in part based on the impact of climate change.
Extreme weather or natural disasters may cause significant damage to our properties. Many of our apartment communities are located in areas that may be subject to extreme weather and natural disasters, such as floods, tornados, hurricanes and earthquakes, the likelihood or frequency of which events could increase in part based on the impact of climate change.
We have a significant institutional investor base, and there is an increasing focus from institutional investors and other stakeholders on corporate responsibility, specifically related to environmental, social and governance, or ESG, factors.
We have a significant institutional investor base, and there is a heightened focus from institutional investors and other stakeholders on corporate responsibility, specifically related to environmental, social and governance, or ESG, factors.
Likewise, regardless of outcome, legal proceedings could result in substantial costs and expenses, affect the availability or cost of some of our insurance coverage and significantly divert the attention of our management.
Likewise, regardless of outcome, legal proceedings could result in substantial costs and expenses, result in operational changes in our business, affect the availability or cost of some of our insurance coverage and significantly divert the attention of our management.
In addition, a downgrade may adversely impact our ability to borrow secured and unsecured debt and otherwise limit our access to capital, which could adversely affect our business, financial condition and results of operations. 17 Financing may not be available and could be dilutive.
In addition, a downgrade may adversely impact our ability to borrow secured and unsecured debt, increase our borrowing costs and otherwise limit our access to capital, which could adversely affect our business, financial condition and results of operations. Financing may not be available and could be dilutive.
Our ability to lease our apartment communities at favorable rates is adversely affected by the increase in supply in the multifamily and other rental markets and is dependent upon the overall level in the economy, which may continue to be adversely affected by, among other things, job losses and unemployment levels, personal debt levels, a downturn in the housing market, stock market volatility, inflationary conditions and uncertainty about the future.
Our ability to lease our properties at favorable rates is adversely affected by the increase in supply in the multifamily and other rental markets and is dependent upon the overall level in the economy, which is adversely affected by, among other things, job losses and unemployment levels, personal debt levels, a downturn in the housing market, stock market volatility, inflationary conditions and uncertainty about the future.
Accordingly, subject to limitations on indebtedness set forth in various loan agreements and the indentures governing our senior notes, we could become more highly leveraged, resulting in an increase in debt service and an increased risk of default on our obligations, which could have a material adverse effect on our financial condition, our ability to access debt and equity capital markets in the future and our ability to make payments on our debt and to make distributions.
Accordingly, subject to limitations on indebtedness set forth in various loan agreements and the indentures governing our unsecured senior notes, we could become more highly leveraged, resulting in an increase in debt service and an increased risk of default on our obligations, which could have a material adverse effect on our financial condition, our ability to access debt and equity capital markets in the future and our ability to make payments on our debt and to make distributions. 18 The restrictive terms of certain of our indebtedness may cause acceleration of debt payments.
We cannot assure you, however, that the Phase I environmental studies or other environmental studies undertaken with respect to any of our current or future apartment communities will reveal: • all or the full extent of potential environmental liabilities; • that any prior owner or operator of a property did not create any material environmental condition unknown to us; • that a material environmental condition does not otherwise exist as to any one or more of such apartment communities; or • that environmental matters will not have a material adverse effect on us and our ability to make payments on our debt and to make distributions.
However, there can be no assurance that the Phase I environmental studies or other environmental studies undertaken with respect to any of our current or future apartment communities will reveal: • all or the full extent of potential environmental liabilities; • that any prior owner or operator of a property did not create any material environmental condition unknown to us; • that a material environmental condition does not otherwise exist as to any one or more of such apartment communities; or • that environmental matters will not have a material adverse effect on us and our ability to make payments on our debt and to make distributions.
If the costs associated with real estate taxes, utilities and insurance premiums should rise, without being offset by a corresponding increase in revenues, our results of operations could be negatively impacted, and our ability to make payments on our debt and to make distributions could be adversely affected.
If the costs associated with real estate taxes, utilities and insurance premiums should rise, without being offset by a corresponding increase in rental revenues or (in the case of insurance) strategic self-retention of risk, our results of operations could be negatively impacted, and our ability to make payments on our debt and to make distributions could be adversely affected.
In addition, a further increase in market interest rates may lead holders of shares of our common stock to demand a higher yield on their shares from distributions by us, which could adversely affect the market price for our common stock.
In addition, the current high interest rate environment, or any further increase in interest rates, may lead holders of shares of our common stock to demand a higher yield on their shares from distributions by us, which could adversely affect the market price for our common stock.
As a result of all these factors, the failure by a Merged REIT to have qualified as a REIT could jeopardize MAA’s qualification as a REIT and require the Operating Partnership to provide material amounts of cash to MAA to satisfy MAA’s additional tax liabilities and, therefore, could have a material adverse effect on MAA’s business prospects, financial condition or results of operations and on MAA’s ability to make payments on our debt and to make distributions.
As a result of all these factors, the failure by a Merged REIT to have qualified as a REIT could jeopardize MAA’s qualification as a REIT and require the Operating Partnership to provide material amounts of cash to MAA to satisfy MAA’s additional tax liabilities and, therefore, could have a material adverse effect on MAA’s business prospects, financial condition or results of operations and on MAA’s ability to make payments on our debt and to make distributions. 23 The Operating Partnership may fail to be treated as a partnership for federal income tax purposes.
The Operating Partnership may fail to be treated as a partnership for federal income tax purposes. We believe that the Operating Partnership qualifies, and has so qualified since its formation, as a partnership for federal income tax purposes and not as a publicly traded partnership taxable as a corporation.
We believe that the Operating Partnership qualifies, and has so qualified since its formation, as a partnership for federal income tax purposes and not as a publicly traded partnership taxable as a corporation.
Increasing real estate taxes, utilities and insurance premiums may negatively impact operating results. As a result of our substantial real estate holdings, the cost of real estate taxes, utilities and insuring our apartment communities is a significant component of expense.
Increasing real estate taxes, utilities and insurance premiums, as well as changes in the terms and conditions of our insurance policies, may negatively impact operating results. As a result of our substantial real estate holdings, the cost of real estate taxes, utilities and insuring our apartment communities is a significant component of expense.
Unfavorable market and economic conditions could adversely affect occupancy levels, rental revenues and the value of our properties. General economic conditions in the U.S. have fluctuated significantly in recent quarters with the U.S. experiencing negative macroeconomic conditions such as increasing inflationary and labor market concerns.
Risks Related to Our Real Estate Investments and Our Operations Unfavorable market and economic conditions could adversely affect occupancy levels, rental revenues and the value of our properties. General economic conditions in the U.S. have fluctuated significantly in recent quarters with the U.S. experiencing negative macroeconomic conditions such as inflationary and labor market concerns.
Operations from new acquisitions, development projects and redevelopment activities may fail to perform as expected. We intend to acquire, develop and redevelop apartment communities as part of our business strategy. Newly acquired, developed or renovated properties may not perform as we expect. We may also overestimate the revenue (or underestimate the expenses) that a new or repositioned property may generate.
We intend to acquire, develop and redevelop apartment communities as part of our business strategy. Newly acquired, developed or renovated properties may not perform as we expect. We may also overestimate the revenue (or underestimate the expenses) that a new or repositioned property may generate.
As of December 31, 2022, we had six development communities under construction representing 2,310 units once complete. We may make further investments in these and other development communities as opportunities arise and may do so through joint ventures with unaffiliated parties.
As of December 31, 2023, we had five development communities under construction representing 1,970 units once complete. We may make further investments in these and other development communities as opportunities arise and may do so through joint ventures with unaffiliated parties.
In addition, we have seen an increase in state and local governments implementing, considering or being urged by tenant advocacy groups to consider rent control or rent stabilization laws and regulations as well as tenants’ rights laws and regulations.
Likewise, we have seen an increase in governments implementing, considering or being urged by tenant advocacy groups to consider rent control or rent stabilization laws and regulations and other tenants’ rights laws and regulations.
The imposition of such requirements could increase the costs of maintaining or improving our existing communities (for example by requiring retrofits of existing communities to improve their energy efficiency and/or resistance to inclement weather) and developing new communities without creating corresponding increases in rental revenues, which would have an adverse impact on our operating results.
The imposition of such requirements could increase the costs of maintaining or improving our existing communities (for example by requiring retrofits of existing communities to improve their energy efficiency and/or resistance to inclement weather) and developing new communities without creating corresponding increases in rental revenues, which would have an adverse impact on our operating results. 12 Operations from new acquisitions, development projects and redevelopment activities may fail to perform as expected.
The restrictive terms of certain of our indebtedness may cause acceleration of debt payments. As of December 31, 2022, we had outstanding borrowings of $4.4 billion. Our indebtedness contains financial covenants as to interest coverage ratios, maximum secured debt, maintenance of unencumbered asset value, and total debt to gross assets, among others, and cross default provisions with other material debt.
As of December 31, 2023, we had outstanding borrowings of $4.5 billion. Our indebtedness contains financial covenants as to interest coverage ratios, maximum secured debt, maintenance of unencumbered asset value, and total debt to gross assets, among others, and cross default provisions with other material debt.
To the extent a future disease outbreak or other public health event, such as the COVID-19 pandemic, adversely affect our business, financial condition, results of operation and cash flows, it may also have the effect of heightening many of the other risks described in this Annual Report on Form 10-K.
To the extent a disease outbreak or other public health event adversely affects our business, financial condition, results of operations and cash flows, it may also have the effect of heightening many of the other risk described in this Annual Report on Form 10-K.
Any such future enactments in the markets in which we operate could have a significant adverse impact on our results of operations and the value of our properties. Legal proceedings that we become involved in from time to time could adversely affect our business.
Therefore, any such new or changed legal requirements could have a significant adverse impact on our results of operations and the value of our properties. Legal proceedings that we become involved in from time to time could adversely affect our business.
This type of litigation could result in substantial costs and divert our management’s attention and resources. 20 Risks Related to the Operating Partnership’s Organization and Ownership of OP Units The Operating Partnership’s existing unitholders have limited approval rights, which may prevent the Operating Partnership’s sole general partner, MAA, from completing a change of control transaction that may be in the best interests of all unitholders of the Operating Partnership and all shareholders of MAA.
Risks Related to the Operating Partnership’s Organization and Ownership of OP Units The Operating Partnership’s existing unitholders have limited approval rights, which may prevent the Operating Partnership’s sole general partner, MAA, from completing a change of control transaction that may be in the best interests of all unitholders of the Operating Partnership and all shareholders of MAA.
The pandemic led governments and other authorities around the world, including federal, state and local governmental authorities in the U.S. to take extraordinary actions 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.
For example, in response to the COVID-19 pandemic, extraordinary actions were 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.
MAA’s failure to meet the market’s expectations with regard to future results of operations and cash distributions would likely adversely affect the market price of its shares and thus potentially reduce MAA’s ability to contribute funds from issuances down to the Operating Partnership, resulting in a lower level of cash available for investment, to make payments on its debt or to make distributions to its unitholders.
MAA’s failure to meet the market’s expectations with regard to future results of operations and cash distributions would likely adversely affect the market price of its shares and thus potentially reduce MAA’s ability to contribute funds from issuances down to the Operating Partnership, resulting in a lower level of cash available for investment, to make payments on its debt or to make distributions to its unitholders. 22 Risks Related to Tax Laws Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to shareholders.
Changes in laws and regulations could require us to make significant unanticipated expenditures and limit our ability to recover increases in operating expenses, impose limitations on our ability to increase rents or charge certain fees, impose limitations on our ability to enforce remedies for the failure to pay rent or otherwise adversely impact our operations.
New or changed legal requirements implemented in the markets in which we operate could require us to make significant unanticipated expenditures and limit our ability to recover increases in operating expenses, impose limitations on our ability to charge market rents, increase rents or charge certain fees, impose limitations on our ability to enforce remedies for the failure to pay rent or otherwise adversely impact our operations.
In addition, the adverse effects that actual or threatened terrorist attacks could have on national economic conditions, as well as economic conditions in the markets in which we operate, could similarly have a material adverse effect on our business and results of operations.
In addition, the adverse effects that actual or threatened terrorist attacks could have on national economic conditions, as well as economic conditions in the markets in which we operate, could similarly have a material adverse effect on our business and results of operations. 17 Risks Related to Our Indebtedness and Financing Activities Our substantial indebtedness could adversely affect our financial condition and results of operations.
We are subject to certain risks associated with selling apartment communities, which could limit our operational and financial flexibility. We plan to sell apartment communities that no longer meet our long-term strategy. However, adverse market conditions could limit our ability to sell properties when we want and to change our portfolio promptly to meet our strategic objectives.
We plan to sell apartment communities that no longer meet our long-term strategy. However, adverse market conditions could limit our ability to sell properties when we want and to change our portfolio promptly to meet our strategic objectives.
If an investor acquires shares in violation of the limits on ownership described above, the holder may: • lose its power to dispose of the shares; • not recognize profit from the sale of such shares if the market price of the shares increases; and • be required to recognize a loss from the sale of such shares if the market price decreases. 18 Future offerings of debt or equity securities, which may rank senior to MAA’s stock, may adversely affect the market price of MAA’s stock.
If an investor acquires shares in violation of the limits on ownership described above, the holder may: • lose its power to dispose of the shares; • not recognize profit from the sale of such shares if the market price of the shares increases; and • be required to recognize a loss from the sale of such shares if the market price decreases.
We take steps, and generally require third-party service providers to take steps, to protect the security of the information maintained in our and our service providers’ information technology systems, including the use of systems, software, tools and monitoring to provide security for processing, transmitting and storing of the information.
As described in more detail under the heading "Cybersecurity" in this Annual Report on Form 10-K, we take steps, and generally require third-party service providers to take steps, to protect the security of the information maintained in our and our service providers’ information technology systems, including the use of systems, software, tools and monitoring to provide security for processing, transmitting and storing of the information.
Also, MAA owns approximately 97.3% of the OP Units and as such, will have substantial influence on the outcome of substantially all matters submitted to the Operating Partnership’s unitholders for approval.
Also, as of December 31, 2023, MAA owned approximately 97.4% of the OP Units. As such, MAA has substantial influence on the outcome of substantially all matters submitted to the Operating Partnership’s unitholders for approval.
Risks Related to Our Indebtedness and Financing Activities Our substantial indebtedness could adversely affect our financial condition and results of operations. As of December 31, 2022, the amount of our total debt was $4.4 billion. We may incur additional indebtedness in the future in connection with, among other things, our acquisition, development and operating activities.
As of December 31, 2023, the amount of our total debt was $4.5 billion. We may incur additional indebtedness in the future in connection with, among other things, our acquisition, development and operating activities.
Unfavorable market and economic conditions, including as a result of public health events in the areas in which we operate may significantly affect our occupancy levels, our rental rates and collections, the value of our properties and our ability to acquire or dispose of apartment communities on economically favorable terms.
Unfavorable market and economic conditions may significantly affect our occupancy levels, our rental rates and collections, the value of our properties and our ability to acquire or dispose of properties on economically favorable terms.
Our operations are concentrated in the Southeast, Southwest and Mid-Atlantic regions of the U.S.; we are subject to general economic conditions in the regions in which we operate. As of December 31, 2022, approximately 41.1% of our portfolio was located in our top five markets: Atlanta, Georgia; Dallas, Texas; Austin, Texas; Orlando, Florida; and Charlotte, North Carolina.
As of December 31, 2023, approximately 41.4% of our portfolio (based on the number of completed apartment units) was located in our top five markets: Atlanta, Georgia; Dallas, Texas; Austin, Texas; Charlotte, North Carolina; and Orlando, Florida. In addition, our overall operations are concentrated in the Southeast, Southwest and Mid-Atlantic regions of the U.S.
Such events may cause significant damage to our properties, disrupt our operations and adversely impact our residents. There can be no assurances that such conditions will not have a material adverse effect on our properties, operations or business. We carry property insurance on our apartment communities and intend to obtain similar coverage for apartment communities we acquire in the future.
Such events may cause significant damage to our properties, disrupt our operations, and adversely impact our residents and rental revenue. There can be no assurances that such conditions will not have a material adverse effect on our properties, operations or business. We may incur losses that are not covered by our insurance .
In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price.
In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.
The additional tax liability resulting from the failure to qualify as a REIT would significantly reduce or eliminate the amount of funds available for distribution to MAA’s shareholders.
The additional tax liability resulting from the failure to qualify as a REIT would significantly reduce or eliminate the amount of funds available for distribution to MAA’s shareholders. MAA’s failure to qualify as a REIT also could impair its ability to expand its business and raise capital, and would adversely affect the value of MAA’s common stock.
We exercise our discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining what we believe is appropriate insurance on our investments at a reasonable cost and on suitable terms.
We exercise our discretion in determining amounts, coverage limits, deductibles and self-insured retention provisions of our insurance, with a view to maintaining what we believe is appropriate insurance at a reasonable cost and on suitable terms. Despite our insurance coverage, we may incur material losses due to uninsured risks, deductibles, self-insured retentions and/or losses in excess of coverage limits.
Likewise, we may acquire properties that are subject to liabilities or that have problems relating to environmental condition, state of title, physical condition or compliance with zoning laws, building codes or other legal requirements and in each case, our acquisition may be without any, or with only limited, recourse with respect to unknown liabilities or conditions and we may be obligated to pay substantial sums to settle or cure it, which could adversely affect our cash flow and operating results.
In each case, our acquisition may be without any, or with only limited, recourse with respect to unknown liabilities or conditions, and we may be obligated to pay substantial sums to settle or cure it, which could adversely affect our cash flow and operating results. Our implementation of long-standing succession planning could have adverse effects.
In addition, our overall operations are concentrated in the Southeast, Southwest and Mid-Atlantic regions of the U.S. Our performance could be adversely affected by economic conditions in, and other factors relating to, these geographic areas, including supply and demand for apartments in these areas, zoning and other regulatory conditions and competition from other communities and alternative forms of housing.
Our performance could be adversely affected by economic conditions in, and other factors relating to, these geographic areas, including supply and demand for apartments in these areas, zoning and other regulatory conditions and competition from other communities and alternative housing options. In particular, our performance is disproportionately influenced by job growth and unemployment.
MAA cannot assure, however, that it is qualified or will remain qualified as a REIT.
MAA believes that it is organized and qualified as a REIT, and MAA intends to operate in a manner that will allow it to continue to qualify as a REIT. MAA cannot assure, however, that it is qualified or will remain qualified as a REIT.
Any losses we experience that are not fully covered by our insurance may negatively impact our results of operations and may reduce the value of our properties. Acts of violence could decrease the value of our assets and could have an adverse effect on our business and results of operations.
Acts of violence could decrease the value of our assets and could have an adverse effect on our business and results of operations.
If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement value of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed.
Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed. In addition, certain casualties or losses incurred may expose us in the future to higher insurance premiums.
We cannot ascertain the costs of compliance with these laws, which may be substantial. We do not know whether the legal requirements we are subject to will change or whether new requirements will be imposed.
As our industry becomes increasingly regulated, we do not know whether the legal requirements we are subject to will change or whether new requirements will be imposed.
There can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, any pending or future legal proceedings to which we become subject. Extreme weather or natural disasters may cause significant damage to our properties and losses from catastrophes could exceed our insurance coverage.
There can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, any pending or future legal proceedings to which we become subject. In addition, other multifamily apartment owners could become involved in legal proceedings, the outcome of which could affect the way we conduct our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur strategic focus is to provide our residents high quality apartment units in attractive community settings, characterized by upscale amenities, extensive landscaping and attention to aesthetic detail. 23 The following schedule summarizes our apartment community portfolio and occupancy levels by location, as of December 31, 2022: Number of Communities (1) Number of Units (2) Average Physical Occupancy (3) Atlanta, GA 29 11,434 95.4 % Dallas, TX 27 9,767 95.6 % Austin, TX 20 6,829 95.2 % Charlotte, NC 20 5,867 95.8 % Raleigh/Durham, NC 15 5,350 95.6 % Orlando, FL 13 5,274 96.2 % Tampa, FL 15 5,220 96.0 % Houston, TX 15 4,867 95.6 % Nashville, TN 12 4,375 95.8 % Fort Worth, TX 9 3,519 95.5 % Jacksonville, FL 9 3,496 96.5 % Charleston, SC 11 3,168 95.9 % Phoenix, AZ 8 2,623 95.9 % Greenville, SC 10 2,355 96.3 % Richmond, VA 7 2,004 96.1 % Northern Virginia 4 1,888 95.7 % Savannah, GA 7 1,837 96.7 % Memphis, TN 4 1,811 95.0 % San Antonio, TX 4 1,504 95.6 % Birmingham, AL 5 1,462 95.8 % Fredericksburg, VA 4 1,435 96.3 % Huntsville, AL 3 1,228 95.6 % Kansas City, MO-KS 3 1,110 95.7 % Chattanooga, TN 4 943 96.5 % Lexington, KY 4 924 96.3 % Denver, CO 2 812 95.7 % Norfolk / Hampton / Virginia Beach, VA 3 788 96.9 % Las Vegas, NV 2 721 95.1 % Tallahassee, FL 2 604 96.2 % Columbia, SC 2 576 94.3 % South Florida, FL 1 480 95.4 % Gainesville, FL 2 468 95.6 % Louisville, KY 1 384 96.6 % Maryland 1 361 95.7 % Gulf Shores, AL 1 324 96.1 % Panama City, FL 1 254 96.1 % Charlottesville, VA 1 251 96.8 % Same Store 281 96,313 95.7 % Orlando, FL 2 633 80.7 % Austin, TX 1 350 54.8 % Dallas, TX — (4) 348 95.6 % Phoenix, AZ 2 345 93.7 % Charlotte, NC 1 344 88.8 % Houston, TX 1 308 70.8 % Denver, CO 2 306 80.9 % Tampa, FL 2 196 83.5 % Fort Worth, TX — (4) 168 96.4 % Gulf Shores, AL 1 96 97.7 % Salt Lake City, UT 1 — — Raleigh/Durham, NC 1 — — Atlanta, GA 1 — — Total (5) 296 99,407 95.3 % (1) Number of communities includes six communities under development as of December 31, 2022.
Biggest changeThe following schedule summarizes our apartment community portfolio and occupancy levels by location, as of December 31, 2023: Number of Communities (1) Number of Units (2) Average Physical Occupancy (3) Atlanta, GA 29 11,434 94.5 % Dallas, TX 27 10,116 95.6 % Austin, TX 20 6,829 95.1 % Charlotte, NC 19 5,651 95.6 % Raleigh/Durham, NC 15 5,350 95.9 % Orlando, FL 12 5,274 96.0 % Tampa, FL 14 5,220 95.8 % Houston, TX 15 4,867 95.6 % Nashville, TN 12 4,375 95.8 % Fort Worth, TX 9 3,687 95.6 % Jacksonville, FL 10 3,496 95.7 % Charleston, SC 11 3,168 95.9 % Phoenix, AZ 8 2,623 95.5 % Greenville, SC 10 2,355 96.1 % Northern Virginia 4 1,888 96.2 % Savannah, GA 6 1,837 96.2 % Memphis, TN 4 1,811 94.7 % Richmond, VA 6 1,732 95.9 % San Antonio, TX 4 1,504 95.8 % Birmingham, AL 5 1,462 96.2 % Fredericksburg, VA 4 1,435 96.4 % Huntsville, AL 3 1,228 95.3 % Kansas City, MO-KS 3 1,110 95.9 % Chattanooga, TN 4 943 95.7 % Lexington, KY 4 924 96.7 % Denver, CO 2 812 95.4 % Norfolk / Hampton / Virginia Beach, VA 3 788 95.9 % Las Vegas, NV 2 721 95.8 % Tallahassee, FL 2 604 95.2 % Gainesville, FL 2 468 95.7 % Louisville, KY 1 384 95.9 % Maryland 1 361 96.4 % Gulf Shores, AL 1 324 95.7 % Panama City, FL 1 254 95.5 % Charlottesville, VA 1 251 96.6 % Same Store 274 95,286 95.6 % Charlotte, NC 3 912 87.9 % Phoenix, AZ 3 671 91.1 % Orlando, FL 2 633 90.9 % Columbia, SC 2 576 95.2 % South Florida, FL 1 480 95.3 % Austin, TX 1 350 83.0 % Atlanta, GA 1 340 39.7 % Houston, TX 1 308 94.7 % Denver, CO 2 309 95.5 % Richmond, VA 1 272 96.5 % Tampa, FL 1 (4) 196 94.9 % Salt Lake City, UT 1 196 30.3 % Gulf Shores, AL 1 96 97.0 % Raleigh/Durham, NC 1 — — Total (5) 295 100,625 95.1 % (1) Number of communities includes five communities under development as of December 31, 2023.
Item 2. Pr operties. We own, operate, acquire and selectively develop apartment communities primarily located in the Southeast, Southwest and Mid-Atlantic regions of the United States with the potential for above average growth and return on investment. Approximately 70% of our apartment units are located in the Florida, Georgia, North Carolina, and Texas markets.
Item 2. Properties. We own, operate, acquire and selectively develop apartment communities primarily located in the Southeast, Southwest and Mid-Atlantic regions of the U.S. with the potential for above average growth and return on investment. Approximately 70% of our apartment units are located in the Florida, Georgia, North Carolina, and Texas markets.
(2) Number of units excludes development units not yet delivered. (3) Average physical occupancy is calculated by dividing the average daily number of units occupied in 2022 by the total number of units at each apartment community. (4) Represents a MAA multifamily apartment community expansion development. (5) Schedule excludes a 269 unit joint venture property in Washington, D.C.
(2) Number of units excludes development units not yet delivered. (3) Average physical occupancy is calculated by dividing the average daily number of units occupied in 2023 by the total number of units at each apartment community.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for a discussion of our Same Store and Non-Same Store and Other segments. 24 Mortgage Financing As of December 31, 2022, we had $367.2 million of indebtedness collateralized, secured and outstanding as set forth in Schedule III – Real Estate and Accumulated Depreciation included in this Annual Report on Form 10-K.
Mortgage Financing As of December 31, 2023, we had $363.3 million of indebtedness collateralized, secured and outstanding as set forth in Schedule III – Real Estate and Accumulated Depreciation included in this Annual Report on Form 10-K.
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Thirty-four of our apartment communities reflected in the above schedule also include retail components.
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Our strategic focus is to provide our residents high quality apartment units in attractive community settings, characterized by upscale amenities, extensive landscaping and attention to aesthetic detail.
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(4) Includes a completed MAA multifamily apartment community expansion development and a new multifamily apartment community development that has not yet delivered any units. (5) Schedule excludes a 269-unit joint venture property in Washington, D.C. 27 Thirty-four of our apartment communities reflected in the above schedule also include retail components.
Added
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for a discussion of our Same Store and Non-Same Store and Other segments.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison of Five-year Cumulative Total Returns The following graph compares the cumulative total returns of the shareholders of MAA since December 31, 2017 with the S&P 500 Index and the Dow Jones U.S. Real Estate Apartments Index. The graph assumes that the base share price for our common stock and each index is $100 and that all dividends are reinvested.
Biggest changeReal Estate Apartments Index. The graph assumes that the base share price for our common stock and each index is $100 and that all dividends are reinvested. The performance graph is not necessarily indicative of future investment performance.
During the year ended December 31, 2022, MAA issued a total of 41,184 shares of common stock upon redemption of OP Units.
During the year ended December 31, 2023, MAA issued a total of 41,184 shares of common stock upon redemption of OP Units.
Under the current ATM program, MAA has the authority to issue up to an aggregate of 4.0 million shares of its common stock, at such times to be determined by MAA. MAA has no obligation to issue shares through the ATM program.
Under the current ATM program, MAA has the authority to issue up to an aggregate of 4.0 million shares of its common stock, at such times to be determined by MAA.
The DRSPP also allows for the optional purchase of MAA common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. In our absolute discretion, we may grant waivers to allow for optional cash payments in excess of $5,000.
The DRSPP also allows for the optional purchase of MAA common stock of at least $250, but not more than $5,000 in any given month. In our absolute discretion, we may grant waivers to allow for optional cash payments in excess of $5,000.
As of February 9, 2023, there were approximately 2,200 holders of record of the common stock. MAA believes it has a significantly larger number of beneficial owners of its common stock. MAA has a history of declaring dividends to holders of MAA common stock.
As of February 6, 2024, there were approximately 2,100 holders of record of the common stock. MAA believes it has a significantly larger number of beneficial owners of its common stock. MAA has a history of declaring dividends to holders of MAA common stock.
Mid-America Apartments, L.P. Operating Partnership Units There is no established public trading market for the Operating Partnership’s OP Units. From time to time, we issue shares of MAA’s common stock in exchange for OP Units tendered to the Operating Partnership for redemption in accordance with the provisions of the Operating Partnership’s limited partnership agreement.
From time to time, we issue shares of MAA’s common stock in exchange for OP Units tendered to the Operating Partnership for redemption in accordance with the provisions of the Operating Partnership’s limited partnership agreement.
To fulfill our obligations under the DRSPP, we may either issue additional shares of common stock or repurchase common stock in the open market. We may elect to sell shares under the DRSPP at up to a 5% discount. During the year ended December 31, 2022 we had issuances with no discounts through our DRSPP of 6,547 shares.
To fulfill our obligations under the DRSPP, we may either issue additional shares of common stock or repurchase common stock in the open market. We may elect to sell shares under the DRSPP at up to a 5% discount.
From time to time, we may repurchase shares under this authorization when we believe that shareholder value would be enhanced. Factors affecting this determination include, among others, the share price and expected rates of return. As of December 31, 2022, no shares have been repurchased under the authorization.
Factors affecting this determination include, among others, the share price and expected rates of return. As of December 31, 2023, no shares have been repurchased under the authorization.
Purchases of Equity Securities The following table reflects repurchases of shares of MAA’s common stock during the three months ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs (1) October 1, 2022 - October 31, 2022 — $ — — 4,000,000 November 1, 2022 - November 30, 2022 — $ — — 4,000,000 December 1, 2022 - December 31, 2022 — $ — — 4,000,000 Total — — 4,000,000 (1) This column reflects the number of shares of MAA’s common stock that are available for purchase under the 4.0 million share repurchase program authorized by MAA’s Board of Directors in December 2015.
Purchases of Equity Securities The following table reflects repurchases of shares of MAA’s common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs (3) October 1, 2023 - October 31, 2023 62 $ 129.23 — 4,000,000 November 1, 2023 - November 30, 2023 — $ — — 4,000,000 December 1, 2023 - December 31, 2023 — $ — — 4,000,000 Total — — 4,000,000 (1) The shares reflected in this column are shares of MAA’s common stock surrendered by employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted shares.
As of December 31, 2022, there were 4.0 million shares remaining under the current ATM program. 25 Stock Repurchase Plan In December 2015, MAA’s Board of Directors authorized the repurchase of up to 4.0 million shares of MAA common stock, which represented approximately 5.3% of MAA’s common stock outstanding at the time of such authorization.
Stock Repurchase Plan In December 2015, MAA’s Board of Directors authorized the repurchase of up to 4.0 million shares of MAA common stock, which represented approximately 5.3% of MAA’s common stock outstanding at the time of such authorization. From time to time, we may repurchase shares under this authorization when we believe that shareholder value would be enhanced.
As of December 31, 2022, there were 118,645,269 OP Units outstanding in the Operating Partnership, of which 115,480,336 OP Units, or 97.3%, were owned by MAA and 3,164,933 OP Units, or 2.7%, were owned by limited partners.
As of December 31, 2023, there were 119,838,096 OP Units outstanding in the Operating Partnership, of which 116,694,124 OP Units, or 97.4%, were owned by MAA and 3,143,972 OP Units, or 2.6%, were owned by limited partners.
During the year ended December 31, 2022, MAA did not sell any shares of common stock under its ATM program.
MAA has no obligation to issue shares through the ATM program. 28 During the year ended December 31, 2023, MAA did not sell any shares of common stock under its ATM program. As of December 31, 2023, there were 4.0 million shares remaining under the current ATM program.
Year Ended December 31, 2017 2018 2019 2020 2021 2022 Mid-America Apartment Communities, Inc. $ 100.00 $ 98.94 $ 141.00 $ 140.10 $ 260.40 $ 182.93 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 DJ US REIT Apartment Index 100.00 102.19 130.92 115.30 186.51 126.67 Ite m 6. [Reserved]. 26
Year Ended December 31, 2018 2019 2020 2021 2022 2023 Mid-America Apartment Communities, Inc. $ 100.00 $ 142.52 $ 141.60 $ 263.20 $ 184.90 $ 164.44 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 DJ US REIT Apartment Index 100.00 128.11 112.83 182.52 123.96 132.77 Ite m 6. [Reserved]. 30
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The performance graph is not necessarily indicative of future investment performance.
Added
During the year ended December 31, 2023, we issued 9,787 shares through our DRSPP and no shares were issued at a discount. Mid-America Apartments, L.P. Operating Partnership Units There is no established public trading market for the Operating Partnership’s OP Units.
Added
(2) The price per share is based on the closing price of MAA’s common stock as of the date of determination of the statutory minimum for federal and state tax obligations.
Added
(3) This column reflects the number of shares of MAA’s common stock that are available for purchase under the 4.0 million share repurchase program authorized by MAA’s Board of Directors in December 2015. 29 Comparison of Five-year Cumulative Total Returns The following graph compares the cumulative total returns of the shareholders of MAA since December 31, 2018 with the S&P 500 Index and the Dow Jones U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe 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 from rental activities. 29 The following table presents a reconciliation of net income available for MAA common shareholders to FFO and Core FFO for the years ended December 31, 2022 and 2021, as we believe net income available for MAA common shareholders is the most directly comparable GAAP measure (dollars in thousands): Year ended December 31, 2022 2021 Net income available for MAA common shareholders $ 633,748 $ 530,103 Depreciation and amortization of real estate assets 535,835 526,220 Gain on sale of depreciable real estate assets (214,762 ) (220,428 ) Depreciation and amortization of real estate assets of real estate joint venture 621 616 Net income attributable to noncontrolling interests 17,340 16,911 FFO attributable to the Company 972,782 853,422 Loss on embedded derivative in preferred shares (1) 21,107 4,560 Gain on sale of non-depreciable real estate assets (809 ) (811 ) Loss (gain) on investments, net of tax (1)(2) 35,822 (40,875 ) Casualty related (recoveries) charges, net (3) (29,930 ) 1,524 Loss on debt extinguishment (1) 47 13,391 Legal costs and settlements, net (1) 8,535 (2,167 ) COVID-19 related costs (1) 575 1,301 Mark-to-market debt adjustment (4) 77 270 Core FFO $ 1,008,206 $ 830,615 (1) Included in “Other non-operating expense (income)” in the Consolidated Statements of Operations.
Biggest changeThe following table presents a reconciliation of net income available for MAA common shareholders to FFO and Core FFO for the years ended December 31, 2023 and 2022, as we believe net income available for MAA common shareholders is the most directly comparable GAAP measure (dollars in thousands): Year ended December 31, 2023 2022 Net income available for MAA common shareholders $ 549,118 $ 633,748 Depreciation and amortization of real estate assets 558,969 535,835 Loss (gain) on sale of depreciable real estate assets 62 (214,762 ) MAA’s share of depreciation and amortization of real estate assets of real estate joint venture 615 621 Net income attributable to noncontrolling interests 15,025 17,340 FFO attributable to common shareholders and unitholders 1,123,789 972,782 (Gain) loss on embedded derivative in preferred shares (1) (18,528 ) 21,107 Gain on sale of non-depreciable real estate assets (54 ) (809 ) (Gain) loss on investments, net of tax (1)(2) (3,531 ) 35,822 Casualty related charges (recoveries), net (1)(3) 980 (29,930 ) (Gain) loss on debt extinguishment (1) (57 ) 47 Legal (recoveries), costs and settlements, net (1) (4,454 ) 8,535 COVID-19 related costs (1) — 575 Mark-to-market debt adjustment (4) (25 ) 77 Core FFO attributable to common shareholders and unitholders $ 1,098,120 $ 1,008,206 (1) Included in “Other non-operating (income) expense” in the Consolidated Statements of Operations.
The expense for the year ended December 31, 2022 was driven by $45.4 million of non-cash loss from investments, $21.1 million of non-cash loss related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares, partially offset by $29.9 million in net casualty gain primarily due to winter storm Uri.
The expense for the year ended December 31, 2022 was driven by $45.4 million of non-cash loss from investments and $21.1 million of non-cash loss related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares, partially offset by $29.9 million in net casualty gain primarily due to winter storm Uri.
Significant Accounting Policies For more information regarding our significant accounting policies, including the accounting polices related to the critical accounting estimates discussed above as well as a brief description of recent accounting pronouncements that could have a material impact on our financial statements, see Note 1 to the consolidated financial statements included in this Annual Report on Form 10-K.
Significant Accounting Policies For more information regarding our significant accounting policies, including the accounting polices related to the critical accounting estimates discussed above as well as a brief description of recent accounting pronouncements that could have a material impact on our financial statements, see Note 1 to the consolidated financial statements included in this Annual Report on Form 10-K. 41
If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Management calculates the fair value of an asset by dividing estimated future annual cash flows by a market capitalization rate.
If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Management calculates the fair value of an asset by dividing estimated future annual cash flow by a market capitalization rate.
Under its current ATM program, MAA has the authority to issue up to an aggregate of 4.0 million shares of its common stock, at such times to be determined by MAA. MAA has no obligation to issue shares through the ATM program.
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.
In January 2023, MAA settled its two forward sale agreements with respect to a total of 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.
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.
For example, changes in the inputs of the trading data available on the preferred shares, estimated coupon yields on preferred stock instruments from REITs with similar credit ratings as MAA and treasury rates could cause the valuation of the embedded derivative to materially change from the recorded balance as of December 31, 2022.
For example, changes in the inputs of the trading data available on the preferred shares, estimated coupon yields on preferred stock instruments from REITs with similar credit ratings as MAA and treasury rates could cause the valuation of the embedded derivative to materially change from the recorded balance as of December 31, 2023.
No material impairment losses were recognized during the years ended December 31, 2022 and 2021. Our impairment assessments may contain uncertainties because they require management to make assumptions and to apply judgment to estimate future undiscounted cash flows and the fair value of the assets.
No material impairment losses were recognized during the years ended December 31, 2023 and 2022. Our impairment assessments may contain uncertainties because they require management to make assumptions and to apply judgment to estimate future undiscounted cash flows and the fair value of the assets.
The increase was primarily driven by the recognition of depreciation expense associated with our recently completed development communities and capital spend activities made in the normal course of business during the year ended December 31, 2022, partially offset from decreased depreciation expense from recently disposed communities.
The increase was primarily driven by the recognition of depreciation expense associated with our completed development communities and capital spend activities made in the normal course of business during the year ended December 31, 2023, partially offset from decreased depreciation expense from disposed communities during the year ended December 31, 2022.
For the year ending December 31, 2023, 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, 2022. We expect to have additional development projects in the future.
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.
Trends During the year ended December 31, 2022, revenue growth for our Same Store segment continued to be primarily driven by growth in average effective rent per unit.
Trends During the year ended December 31, 2023, revenue growth for our Same Store segment continued to be primarily driven by growth in average effective rent per unit.
As of December 31, 2022, we owned and operated 290 apartment communities (which does not include development properties 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.
As of December 31, 2023, 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.
Our Non-Same Store and Other segment includes recently acquired communities, communities being developed or in lease-up, communities identified for disposition, communities that have incurred a significant casualty loss and stabilized communities that do not meet the requirements to be Same Store communities.
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.
During the year ended December 31, 2022, we acquired two apartment communities and closed on the pre-purchase of a multifamily development community. During the year ended December 31, 2021, we closed on the pre-purchase of two multifamily development communities.
During the year ended December 31, 2023, we acquired two apartment communities. During the year ended December 31, 2022, we acquired two apartment communities, and closed on the pre-purchase of a multifamily development community.
During the year ended December 31, 2022, we experienced inflationary pressures that drove higher operating expenses, primarily in personnel, repairs and maintenance and real estate taxes. 34 Critical Accounting Estimates A critical accounting estimate is one that is both important to our financial condition and results of operations and that involves some degree of uncertainty.
During the year ended December 31, 2023, we experienced inflationary pressures that drove higher operating expenses, primarily in real estate taxes, building repairs and maintenance and personnel expenses. Critical Accounting Estimates A critical accounting estimate is one that is both important to our financial condition and results of operations and that involves some degree of uncertainty.
(2) Primarily comprised of a ground lease underlying one apartment community we own and the lease of our corporate headquarters. As of December 31, 2022, we also had obligations, which are not reflected in the table above, to make additional capital contributions to five technology-focused limited partnerships in which we hold equity interests.
(2) Primarily comprised of a ground lease underlying one apartment community we own and the lease of our corporate headquarters. As of December 31, 2023, we also had obligations, which are not reflected in the table above, to make additional capital contributions to six technology-focused limited partnerships in which we hold equity interests.
During the years ended December 31, 2022 and 2021, MAA did not sell any shares of common stock under its ATM program. As of December 31, 2022, there were 4.0 million shares remaining under the current ATM program.
During the years ended December 31, 2023 and 2022, MAA did not sell any shares of common stock under its ATM program. As of December 31, 2023, there were 4.0 million shares remaining under the ATM program.
In addition, as of December 31, 2022, we had six 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 December 31, 2022. We report in two segments, Same Store and Non-Same Store and Other.
In addition, as of December 31, 2023, 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 December 31, 2023. We report in two segments, Same Store and Non-Same Store and Other.
The increase in property revenues from the Non-Same Store and Other segment for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily the result of increased revenues from recently completed development communities and acquired communities, partially offset by decreased revenues from recently disposed communities.
The increase in property revenues from the Non-Same Store and Other segment for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily the result of increased revenues from completed development communities and acquired communities, partially offset by decreased revenues from disposed communities during the year ended December 31, 2022.
Item 7. 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 97.3% interest as of December 31, 2022.
Item 7. 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 December 31, 2023.
For instance, holding all other assumptions constant, a $1 decrease in the trading price of the preferred shares as of December 31, 2022 would result in a decrease in fair value of the embedded derivative asset of approximately $3 million.
For instance, holding all other assumptions constant, a $1 decrease in the trading price of the preferred shares as of December 31, 2023 would result in a decrease in fair value of the embedded derivative asset of approximately $9 million.
Property operating expenses, excluding depreciation and amortization, for the year ended December 31, 2022 increased by 7.8% as compared to the year ended December 31, 2021, driven by a 7.6% increase in our Same Store segment. The primary drivers of these changes are discussed in the “Results of Operations” section.
Property operating expenses, excluding depreciation and amortization, for the year ended December 31, 2023 increased by 6.1% as compared to the year ended December 31, 2022, driven by a 6.5% increase in our Same Store segment. The primary drivers of these changes are discussed in the “Results of Operations” section.
Funds from Operations and Core Funds from Operations Funds from operations, or FFO, a non-GAAP financial measure, represents net income available for MAA common shareholders (computed in accordance with the 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.
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 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.
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 year ended December 31, 2022, average physical occupancy for our Same Store segment was 95.7%, as compared to 96.1% for the year ended December 31, 2021.
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 year ended December 31, 2023, average physical occupancy for our Same Store segment was 95.6%, as compared to 95.8% for the year ended December 31, 2022.
The following discussion describes the primary drivers of the increase in net income available for MAA common shareholders for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The following discussion describes the primary drivers of the decrease in net income available for MAA common shareholders for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
We expect to pay quarterly dividends at an annual rate of $5.60 per share of MAA common stock during the year ending December 31, 2023.
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 increase in cash outflows for capital improvements and other was primarily driven by increased capital spend relating to our property redevelopment and repositioning activities and recurring capital replacements, partially offset by decreased reconstruction-related capital expenditures relating to winter storm Uri during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The increase in cash outflows for capital improvements and other was primarily driven by increased capital spend relating to our revenue enhancing capital expenditures and recurring capital replacements, partially offset by decreased property redevelopment and repositioning activities and decreased reconstruction-related capital expenditures relating to winter storms during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Overview For the year ended December 31, 2022, net income available for MAA common shareholders was $633.7 million as compared to $530.1 million for the year ended December 31, 2021.
Overview For the year ended December 31, 2023, net income available for MAA common shareholders was $549.1 million as compared to $633.7 million for the year ended December 31, 2022.
MAA has registered under the Securities Act the 3,164,933 shares of its common stock that, as of December 31, 2022, were issuable upon redemption of OP Units, in order for those shares to be sold freely in the public markets.
MAA has registered under the Securities Act the 3,143,972 shares of its common stock that, as of December 31, 2023, were issuable upon redemption of OP Units, in order for those shares to be sold freely in the public markets.
We own, operate, acquire and selectively develop apartment communities primarily located in the Southeast, Southwest and Mid-Atlantic regions of the United States.
We own, operate, acquire and selectively develop apartment communities primarily located in the Southeast, Southwest and Mid-Atlantic regions of the U.S.
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 costs and settlements, net; COVID-19 related costs and mark-to-market debt adjustments.
Adjusted EBITDA re is comprised of EBITDA re 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 charges (recoveries), net; gain or loss on debt extinguishment; legal (recoveries), costs and settlements, net; and COVID-19 related costs.
The Same Store segment generated a 13.5% increase in revenues for the year ended December 31, 2022, primarily the result of average effective rent per unit growth of 14.6% as compared to the year ended December 31, 2021, partially offset by lower average physical occupancy.
The Same Store segment generated a 6.2% increase in revenues for the year ended December 31, 2023, primarily the result of average effective rent per unit growth of 7.0% as compared to the year ended December 31, 2022, partially offset by lower average physical occupancy.
The average effective rent per unit for our Same Store segment continued to increase from the prior year, up 14.6% for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The average effective rent per unit for our Same Store segment continued to increase from the prior year, up 7.0% for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Other non-operating expense (income) for the year ended December 31, 2022 was $42.7 million of expense, as compared to $33.9 million of income for the year ended December 31, 2021.
Other non-operating (income) expense for the year ended December 31, 2023 was $31.2 million of income, as compared to $42.7 million of expense for the year ended December 31, 2022.
Interest expense for the year ended December 31, 2022 was $154.7 million, a decrease of $2.1 million as compared to the year ended December 31, 2021. The decrease was primarily due to a decrease in our average outstanding debt balance during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Interest expense for the year ended December 31, 2023 was $149.2 million, a decrease of $5.5 million as compared to the year ended December 31, 2022. The decrease was primarily due to a decrease in our average outstanding debt balance during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
During the year ended December 31, 2022, we disposed of two land parcels resulting in a gain on sale of non-depreciable real estate assets of $0.8 million. During the year ended December 31, 2021, we disposed of five land parcels resulting in a gain on sale of non-depreciable real estate assets of $0.8 million.
During the year ended December 31, 2023, we disposed of one land parcel, resulting in the recognition of a negligible gain on sale of non-depreciable real estate assets. During the year ended December 31, 2022, we disposed of two land parcels resulting in a gain on sale of non-depreciable real estate assets of $0.8 million.
Revenues for the year ended December 31, 2022 increased 13.6% as compared to the year ended December 31, 2021, driven by a 13.5% increase in our Same Store segment.
Revenues for the year ended December 31, 2023 increased 6.4% as compared to the year ended December 31, 2022, driven by a 6.2% increase in our Same Store segment.
Because net income attributable to noncontrolling interests is added back, FFO, when used in this Annual Report on Form 10-K, represents FFO attributable to the Company.
Because net income attributable to noncontrolling interests is added back, FFO, when used in this Annual Report on Form 10-K, represents FFO attributable to common shareholders and unitholders.
The decrease in cash outflows for development costs was driven by decreased development spend during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The increase in cash outflows for development costs was driven by increased development spend during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
The increase in cash outflows from dividends paid on common shares primarily resulted from the increase in the dividend rate to $4.675 per share during the year ended December 31, 2022 as compared to the dividend rate of $4.10 per share 31 during the year ended December 31, 2021.
The increase in cash outflows from distributions to noncontrolling interests and dividends paid on common shares primarily resulted from the increase in the dividend rate to $5.600 per share during the year ended December 31, 2023 as compared to the dividend rate of $4.675 per share during the year ended December 31, 2022.
As of December 31, 2022, we had $1.3 billion of combined unrestricted cash and cash equivalents and available capacity under our revolving credit facility. 30 Cash Flows from Operating Activities Net cash provided by operating activities was $1.1 billion for the year ended December 31, 2022 as compared to $895.0 million for the year ended December 31, 2021.
As of December 31, 2023, we had $791.8 million 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 $1.1 billion for the year ended December 31, 2023, an increase of $78.7 million as compared to the year ended December 31, 2022.
For the year ended December 31, 2022, we disposed of four apartment communities, resulting in a gain on sale of depreciable real estate assets of $214.8 million. For the year ended December 31, 2021, we disposed of seven apartment communities, resulting in a gain on sale of depreciable real estate assets of $220.4 million.
For the year ended December 31, 2023, we did not dispose of any apartment communities. For the year ended December 31, 2022, we disposed of four apartment communities, resulting in a gain on sale of depreciable real estate assets of $214.8 million.
The increase in cash outflows from the acquisition of noncontrolling interests resulted from the acquisition of the noncontrolling interest of a consolidated real estate entity for $43.1 million during the year ended December 31, 2022.
The decrease in cash outflows from the acquisition of noncontrolling interests resulted from the acquisition of a 5% noncontrolling interest of a consolidated real estate entity for $15.8 million during the year ended December 31, 2023 compared to the acquisition of a 20% noncontrolling interest of a consolidated real estate entity for $43.1 million during the year ended December 31, 2022.
Results of Operations For the year ended December 31, 2022, we achieved net income available for MAA common shareholders of $633.7 million, a 19.6% increase as compared to the year ended December 31, 2021, and total revenue growth of $241.8 million, representing a 13.6% increase in property revenues as compared to the year ended December 31, 2021.
Results of Operations For the year ended December 31, 2023, we achieved net income available for MAA common shareholders of $549.1 million, a 13.4% decrease as compared to the year ended December 31, 2022, and total revenue growth of $128.6 million, representing a 6.4% increase in property revenues as compared to the year ended December 31, 2022.
The increase in operating cash flows was primarily driven by our operating performance, partially offset by the timing of cash payments. Cash Flows from Investing Activities Net cash used in investing activities was $405.2 million for the year ended December 31, 2022 as compared to $253.6 million for the year ended December 31, 2021.
The increase in operating cash flows was primarily driven by our operating performance. Cash Flows from Investing Activities Net cash used in investing activities was $775.3 million for the year ended December 31, 2023 as compared to $405.2 million for the year ended December 31, 2022.
In November 2021, the Company entered into an equity distribution agreement to establish a new ATM program, replacing MAA’s previous ATM program and allowing MAA to sell shares of its common stock from time to time to or through its sales agents into the existing market at current market prices, and to enter into separate forward sales agreements to or through its forward purchasers.
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.
A worsening of the current environment could contribute to uncertain rent collections going forward and suppress demand for apartments and could drive lower rent growth on new leases and renewals than what we achieved during the year ended December 31, 2022.
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 year ended December 31, 2023. Current elevated supply levels are impacting rent growth performance in certain markets of our portfolio.
For the year ended December 31, 2022, MAA recognized $29.0 million from the receipt of insurance proceeds that exceeded its casualty losses related to winter storm Uri. The adjustments are primarily included in “Other non-operating expense (income)” in the Consolidated Statements of Operations. (4) Included in “Interest expense” in the Consolidated Statements of Operations.
(3) For the year ended December 31, 2022, we recognized a gain of $29.0 million from the receipt of insurance proceeds that exceeded its casualty losses related to winter storm Uri. (4) Included in “Interest expense” in the Consolidated Statements of Operations.
The decrease in cash outflows from principal payments on notes payable primarily resulted from the retirement of $125.0 million of unsecured senior notes during the year ended December 31, 2022 as compared to the retirement of $222.0 million of senior unsecured private placement notes, $125.0 million of unsecured senior notes and $118.6 million of property mortgages during the year ended December 31, 2021.
The increase in cash outflows from principal payments on notes payable primarily resulted from the retirement of $350.0 million of unsecured senior notes during the year ended December 31, 2023 as compared to the retirement of $125.0 million of unsecured senior notes during the year ended December 31, 2022.
Equity As of December 31, 2022, MAA owned 115,480,336 OP Units, comprising a 97.3% limited partnership interest in MAALP, while the remaining 3,164,933 outstanding OP Units were held by limited partners of MAALP other than MAA.
Equity As of December 31, 2023, MAA owned 116,694,124 OP Units, comprising a 97.4% limited partnership interest in MAALP, while the remaining 3,143,972 outstanding OP Units were held by limited partners of MAALP other than MAA.
A discussion of the results of operations for the year ended December 31, 2021 as compared to the year ended December 31, 2020 is found in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022, which is available free of charge on the SEC’s website at https://www.sec.gov and on our website at https://www.maac.com, on the “For Investors” page under “Filings and Financials—Annual Reports.” Property Revenues The following table reflects our property revenues by segment for the year ended December 31, 2022 (dollars in thousands): December 31, 2022 December 31, 2021 Increase % Change Same Store $ 1,924,709 $ 1,695,234 $ 229,475 13.5 % Non-Same Store and Other 95,157 82,848 12,309 14.9 % Total $ 2,019,866 $ 1,778,082 $ 241,784 13.6 % The increase in rental revenues for our Same Store segment for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was the primary driver of total property revenue growth.
A discussion of the results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021 is found in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 14, 2023, which is available free of charge on the SEC’s website at https://www.sec.gov and on our website at https://www.maac.com, on the “For Investors” page under “Filings and Financials—Annual Reports.” Property Revenues The following table reflects our property revenues by segment for the years ended December 31, 2023 and 2022 (dollars in thousands): December 31, 2023 December 31, 2022 Increase % Increase Same Store $ 2,024,751 $ 1,907,003 $ 117,748 6.2 % Non-Same Store and Other 123,717 112,863 10,854 9.6 % Total $ 2,148,468 $ 2,019,866 $ 128,602 6.4 % The increase in rental revenues for our Same Store segment for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was the primary driver of total property revenue growth.
The increase in cash outflows for contributions to affiliates was driven by investments in the technology-focused limited partnerships during the year ended December 31, 2022, while less limited partnership contributions were made during the year ended December 31, 2021.
The increase in cash outflows for contributions to affiliates was driven by a larger amount of investments made in the technology-focused limited partnerships during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
As a result of the adjustments recorded to reflect the change in fair value of the derivative asset, the fair value of the embedded derivative asset decreased to $13.4 million as of December 31, 2022 as compared to $34.5 million as of December 31, 2021, a decrease in value of the asset of $21.1 million.
As a result of the adjustments recorded to reflect the change in fair value of the derivative asset, the fair value of the embedded derivative asset increased to $31.9 million as of December 31, 2023 as compared to $13.4 million as of December 31, 2022, an increase in value of the asset of $18.5 million.
Other Income and Expenses Property management expenses for the year ended December 31, 2022 were $65.5 million, an increase of $9.7 million as compared to the year ended December 31, 2021. General and administrative expenses for the year ended December 31, 2022 were $58.8 million, an increase of $5.9 million as compared to the year ended December 31, 2021.
Other Income and Expenses Property management expenses for the year ended December 31, 2023 were $67.8 million, an increase of $2.3 million as compared to the year ended December 31, 2022. General and administrative expenses for the year ended December 31, 2023 were $58.6 million, a decrease of $0.3 million as compared to the year ended December 31, 2022.
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 year ended December 31, 2022, average daily borrowings outstanding under the commercial paper program were $34.9 million. (2) There were no borrowings outstanding under MAALP’s $1.25 billion unsecured revolving credit facility as of December 31, 2022.
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 December 31, 2023, there were $495.0 million of borrowings under the commercial paper program. For the year ended December 31, 2023, average daily borrowings outstanding under the commercial paper program were $95.1 million.
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.
While our definition of EBITDA re is in accordance with NAREIT’s definition, it may differ from the methodology utilized by other REITs to calculate EBITDA re and, accordingly, may not be comparable to such other REITs.
Core FFO for the year ended December 31, 2022 was $1.0 billion, an increase of $177.6 million as compared to the year ended December 31, 2021, primarily as a result of an increase in property revenues of $241.8 million, partially offset by increases in property operating expenses, excluding depreciation and amortization, of $52.5 million, property management expenses of $9.7 million and general and administrative expenses of $5.9 million.
Core FFO attributable to common shareholders and unitholders for the year ended December 31, 2023 was $1.1 billion, an increase of $89.9 million as compared to the year ended December 31, 2022, primarily as a result of an increase in property revenues of $128.6 million, partially offset by increases in property operating expenses, excluding depreciation and amortization, of $44.4 million and property management expenses of $2.3 million.
As of December 31, 2022, MAALP had $367.2 million of secured property mortgages outstanding. For more information regarding our debt capital resources, see Note 5 to the consolidated financial statements included in this Annual Report on Form 10-K.
As of December 31, 2023, MAALP had $363.3 million of secured property mortgages outstanding. In July 2023, MAALP retired $3.0 million remaining on a mortgage associated with an apartment community prior to its June 2025 maturity. For more information regarding our debt capital resources, see Note 5 to the consolidated financial statements included in this Annual Report on Form 10-K.
The primary drivers of the change were as follows (dollars in thousands): Primary drivers of cash (outflow) inflow during the year ended December 31, (Decrease) Increase 2022 2021 in Net Cash Purchases of real estate and other assets $ (271,428 ) $ (46,028 ) $ (225,400 ) Capital improvements and other (296,176 ) (279,635 ) (16,541 ) Development costs (172,124 ) (231,642 ) 59,518 Contributions to affiliates (13,849 ) (4,669 ) (9,180 ) Proceeds from real estate asset dispositions 320,491 293,071 27,420 Proceeds from insurance recoveries 27,312 14,820 12,492 The increase in cash outflows for purchases of real estate and other assets was driven by the nature of the real estate assets acquired during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The primary drivers of the change were as follows (dollars in thousands): Primary drivers of cash (outflow) inflow during the year ended December 31, Increase (Decrease) 2023 2022 in Net Cash Purchases of real estate and other assets $ (223,453 ) $ (271,428 ) $ 47,975 Capital improvements and other (341,224 ) (296,176 ) (45,048 ) Development costs (198,152 ) (172,124 ) (26,028 ) Contributions to affiliates (16,636 ) (13,849 ) (2,787 ) Proceeds from real estate asset dispositions 2,946 320,491 (317,545 ) Net proceeds from insurance recoveries 945 27,312 (26,367 ) The decrease in cash outflows for purchases of real estate and other assets was driven by the nature of the real estate assets acquired during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
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.
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. 31 Demand for apartments in our markets was solid during the fourth quarter of 2023, as evidenced by prospect traffic levels and the revenue growth achieved during the quarter.
These estimates are subjective and our ability to realize future cash flows and asset fair values is affected by factors such as ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance. 35 Valuation of embedded derivative The redemption feature embedded in the MAA Series I preferred stock is reported as a derivative asset and is adjusted to its fair value at each reporting date, with a corresponding non-cash adjustment to the income statement.
Valuation of embedded derivative The redemption feature embedded in the MAA Series I preferred stock is reported as a derivative asset and is adjusted to its fair value at each reporting date, with a corresponding non-cash adjustment to the income statement.
The following schedule reflects the interest rate maturities of our outstanding fixed rate debt, net of debt issuance costs, discounts, premiums and fair market value adjustments as of December 31, 2022 (dollars in thousands): Fixed Rate Debt Effective Rate 2023 $ 349,509 4.2 % 2024 398,842 4.0 % 2025 401,751 4.2 % 2026 297,202 1.2 % 2027 596,548 3.7 % 2028 396,695 4.2 % 2029 559,082 3.7 % 2030 297,542 3.1 % 2031 444,985 1.8 % 2032 — — Thereafter 652,747 3.8 % Total $ 4,394,903 3.4 % 32 Unsecured Revolving Credit Facility & Commercial Paper In July 2022, MAALP amended its unsecured revolving credit facility, increasing its borrowing capacity to $1.25 billion with an option to expand to $2.0 billion.
The following schedule reflects the maturities and average effective interest rates of our outstanding fixed rate debt, net of debt issuance costs, discounts, premiums and fair market value adjustments, as of December 31, 2023 (dollars in thousands): Fixed Rate Debt Average Effective Rate 2024 $ 399,659 4.0 % 2025 398,547 4.2 % 2026 297,973 1.2 % 2027 597,334 3.7 % 2028 397,303 4.2 % 2029 557,747 3.7 % 2030 297,887 3.1 % 2031 445,645 1.8 % 2032 — — 2033 — — Thereafter 653,130 3.8 % Total $ 4,045,225 3.4 % 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 increase in cash inflows from proceeds from insurance recoveries was driven by increased insurance reimbursements received for casualty claims related to winter storm Uri during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The decrease in cash inflows from net proceeds from insurance recoveries was driven by decreased insurance reimbursements received for storm-related casualty claims during the year ended December 31, 2023 as compared to the year ended December 31, 2022. 36 Cash Flows from Financing Activities Net cash used in financing activities was $367.9 million for the year ended December 31, 2023 as compared to $722.8 million for the year ended December 31, 2022.
The income for the year ended December 31, 2021 was driven by $51.7 million of non-cash gain from investments, partially offset by $13.4 million in debt extinguishment costs and $4.6 million of non-cash loss related to the fair value adjustment of the embedded derivative.
The income for the year ended December 31, 2023 was driven by $18.5 million of non-cash gain related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares, $4.4 million of non-cash gain from investments, $5.5 million of miscellaneous income and $3.4 million of interest income, partially offset by $1.0 million in net casualty loss.
Debt The following schedule reflects our outstanding debt as of December 31, 2022 (dollars in thousands): Principal Balance Average Years to Rate Maturity Effective Rate Unsecured debt Fixed rate senior notes $ 4,050,000 6.4 3.4 % Variable rate commercial paper 20,000 0.1 4.7 % Debt issuance costs, discounts, premiums and fair market value adjustments (19,090 ) Total unsecured debt $ 4,050,910 6.3 3.4 % Secured debt Fixed rate property mortgages $ 367,154 25.8 4.4 % Debt issuance costs (3,161 ) Total secured debt $ 363,993 25.8 4.4 % Total debt $ 4,414,903 7.9 3.4 % The following schedule presents the contractual maturity dates of our outstanding debt, net of debt issuance costs, discounts, premiums and fair market value adjustments as of December 31, 2022 (dollars in thousands): Commercial Paper & Revolving Credit Facility ⁽¹⁾ ⁽²⁾ Senior Notes Property Mortgages Total 2023 $ 20,000 $ 349,509 $ — $ 369,509 2024 — 398,842 — 398,842 2025 — 397,773 3,978 401,751 2026 — 297,202 — 297,202 2027 — 596,548 — 596,548 2028 — 396,695 — 396,695 2029 — 559,082 — 559,082 2030 — 297,542 — 297,542 2031 — 444,985 — 444,985 2032 — — — — Thereafter — 292,732 360,015 652,747 Total $ 20,000 $ 4,030,910 $ 363,993 $ 4,414,903 (1) There was $20.0 million outstanding under MAALP ’ s commercial paper program as of December 31, 2022.
Debt The following schedule reflects our outstanding debt as of December 31, 2023 (dollars in thousands): Principal Balance Average Years to Rate Maturity Weighted Average Effective Rate Unsecured debt Fixed rate senior notes $ 3,700,000 5.9 3.3 % Variable rate commercial paper 495,000 0.1 5.7 % Debt issuance costs, discounts, premiums and fair market value adjustments (14,916 ) Total unsecured debt $ 4,180,084 5.2 3.6 % Secured debt Fixed rate property mortgages $ 363,293 25.1 4.4 % Debt issuance costs (3,152 ) Total secured debt $ 360,141 25.1 4.4 % Total debt $ 4,540,225 6.8 3.6 % 37 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 December 31, 2023 (dollars in thousands): Commercial Paper ⁽¹⁾ & Revolving Credit Facility ⁽²⁾ Senior Notes Property Mortgages Total 2024 $ 495,000 $ 399,659 $ — $ 894,659 2025 — 398,547 — 398,547 2026 — 297,973 — 297,973 2027 — 597,334 — 597,334 2028 — 397,303 — 397,303 2029 — 557,747 — 557,747 2030 — 297,887 — 297,887 2031 — 445,645 — 445,645 2032 — — — — 2033 — — — — Thereafter — 292,989 360,141 653,130 Total $ 495,000 $ 3,685,084 $ 360,141 $ 4,540,225 (1) There was $495.0 million outstanding under MAALP ’ s commercial paper program as of December 31, 2023.
The following table reflects our property operating expenses by segment for the year ended December 31, 2022 (dollars in thousands): December 31, 2022 December 31, 2021 Increase % Change Same Store $ 682,014 $ 633,662 $ 48,352 7.6 % Non-Same Store and Other 41,680 37,503 4,177 11.1 % Total $ 723,694 $ 671,165 $ 52,529 7.8 % The increase in property operating expenses for our Same Store segment for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily driven by increases in real estate tax expense of $15.0 million, personnel expense of $9.6 million, building repairs and maintenance of $9.2 million, utilities expense of $6.9 million, office operations expense of $4.3 million, and insurance expense of $3.1 million.
The following table reflects our property operating expenses by segment for the years ended December 31, 2023 and 2022 (dollars in thousands): December 31, 2023 December 31, 2022 Increase % Increase Same Store $ 717,812 $ 674,110 $ 43,702 6.5 % Non-Same Store and Other 50,329 49,584 745 1.5 % Total $ 768,141 $ 723,694 $ 44,447 6.1 % The increase in property operating expenses for our Same Store segment for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily driven by increases in real estate tax expense of $13.6 million, building repairs and maintenance of $8.4 million, personnel expense of $7.9 million, utilities expense of $6.1 million, insurance expense of $3.8 million and office operations expense of $2.5 million. 32 Depreciation and Amortization Depreciation and amortization expense for the year ended December 31, 2023 was $565.1 million, an increase of $22.1 million as compared to the year ended December 31, 2022.
Supply chain and inflationary pressures have driven higher operating expenses during the year ended December 31, 2022, particularly in personnel, repairs and maintenance and real estate taxes, and this trend may continue going forward. Access to the financial markets remains available for high credit rated borrowers.
While we expect this pressure to persist for another few quarters, we expect the demand side to continue to be more impactful over the long term. Supply chain and inflationary pressures have driven higher operating expenses during the year ended December 31, 2023, particularly in personnel, repairs and maintenance and real estate taxes, and this trend may continue going forward.
As of December 31, 2022, there was no outstanding balance under the revolving credit facility, while $4.3 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.
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 December 31, 2023, there were $495.0 million of borrowings outstanding under the commercial paper program.
During the year ended December 31, 2022, we acquired two multifamily apartment communities for approximately $213 million, acquired four land parcels for future development for approximately $49 million, purchased the noncontrolling interest of a consolidated real estate entity for approximately $43 million and funded the pre-purchase of a multifamily community for approximately $10 million.
During the year ended December 31, 2023, we acquired two multifamily apartment communities for approximately $210 million, acquired two land parcels for future development for approximately $13 million, and purchased the noncontrolling interest of a consolidated real estate entity for approximately $16 million. These activities were funded from borrowings under the commercial paper program and available cash on hand.
We believe demand for apartments is primarily driven by general economic conditions in our markets and is particularly correlated to job 27 growth, population growth, household formation and in-migration. While our rent growth and rent collection trends during the year ended December 31, 2022 were strong, we continue to monitor pressures surrounding inflation trends, general economic conditions and housing supply.
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 intend to use these proceeds to fund our development and redevelopment activities, among other potential uses.
We have used these proceeds primarily to fund our development and redevelopment activities.
The primary drivers of the change were as follows (dollars in thousands): Primary drivers of cash inflow (outflow) during the year ended December 31, Increase (Decrease) 2022 2021 in Net Cash Net change in commercial paper $ 20,000 $ (172,000 ) $ 192,000 Proceeds from notes payable — 594,423 (594,423 ) Principal payments on notes payable (126,401 ) (467,153 ) 340,752 Dividends paid on common shares (539,605 ) (470,401 ) (69,204 ) Acquisition of noncontrolling interests (43,070 ) — (43,070 ) The increase in cash inflows related to the net change in commercial paper resulted from the increase in net borrowings of $20.0 million on our commercial paper program during the year ended December 31, 2022 as compared to the decrease in net borrowings of $172.0 million on our commercial paper program during the year ended December 31, 2021.
The primary drivers of the change were as follows (dollars in thousands): Primary drivers of cash inflow (outflow) during the year ended December 31, Increase (Decrease) 2023 2022 in Net Cash Net change in commercial paper $ 475,000 $ 20,000 $ 455,000 Principal payments on notes payable (353,861 ) (126,401 ) (227,460 ) Payment of deferred financing costs (2 ) (5,516 ) 5,514 Distributions to noncontrolling interests (17,671 ) (14,927 ) (2,744 ) Dividends paid on common shares (651,717 ) (539,605 ) (112,112 ) Proceeds from issuances of common shares 205,070 1,083 203,987 Acquisition of noncontrolling interests (15,757 ) (43,070 ) 27,313 Net change in other financing activities (5,279 ) (10,646 ) 5,367 The increase in cash inflows related to the net change in commercial paper resulted from the increase in net borrowings of $475.0 million on our commercial paper program during the year ended December 31, 2023 as compared to the increase in net borrowings of $20.0 million on our commercial paper program during the year ended December 31, 2022.
The increase in cash inflows from proceeds from real estate asset dispositions was driven by the nature and quality of the real estate assets sold during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The decrease in cash inflows from proceeds from real estate asset dispositions resulted from the disposition of one land parcel during the year ended December 31, 2023 as compared to the disposition of four multifamily communities and two land parcels during the year ended December 31, 2022.
Management estimates the market capitalization rate by analyzing the market capitalization rates for sold properties with comparable ages in similarly sized markets. Management allocates the purchase price of the asset acquisition based on the relative fair value of the individual components as a proportion of the total assets acquired.
Management estimates the market capitalization rate by analyzing the market capitalization rates for sold properties with comparable ages in similarly sized markets.
Impairment of long-lived assets We account for long-lived assets in accordance with the provisions of accounting standards for the impairment or disposal of long-lived assets. Management periodically evaluates long-lived assets, including investments in real estate, for indicators that would suggest that the carrying amount of the assets may not be recoverable.
Management periodically evaluates long-lived assets, including investments in real estate, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions and legal factors.
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. This diversity tends to mitigate exposure to economic issues in any one geographic market or area.
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.
We have other material cash requirements that do not represent contractual obligations, but we expect to incur in the ordinary course of our business. As of December 31, 2022, we had six development communities under construction totaling 2,310 apartment units once complete.
As of December 31, 2023, we had committed to make additional capital contributions totaling up to $33.6 million if and when called by the general partners of the limited partnerships. 39 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.
Results for the year ended December 31, 2021 included $221.2 million of gain related to the sale of real estate assets and $40.9 million of non-cash gain, net of tax, from investments.
Results for the year ended December 31, 2023 included $18.5 million of non-cash gain related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares and $3.5 million of non-cash gain, net of tax, from investments.
The capital contributions may be called by the general partners at any time after giving appropriate notice. As of December 31, 2022, we had committed to make additional capital contributions totaling up to $45.2 million if and when called by the general partners of the limited partnerships.
The capital contributions may be called by the general partners at any time after giving appropriate notice.
The decrease in cash inflows related to proceeds from notes payable primarily resulted from no issuance of unsecured senior notes during the year ended December 31, 2022 as compared to the issuance of $600.0 million of unsecured senior notes during the year ended December 31, 2021.
The decrease in cash outflows related to payment of deferred financing costs resulted from negligible deferred financing costs during the year ended December 31, 2023 as compared to the closing costs of $5.5 million during the year ended December 31, 2022 related to the amendment of our unsecured revolving credit facility.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe use our best efforts to have our debt instruments mature across multiple years, which we believe limits our exposure to interest rate changes in any one year. We do not enter into derivative instruments for trading or other speculative purposes. As of December 31, 2022, 99.5% of our outstanding debt was subject to fixed rates.
Biggest changeWe use our best efforts to have our debt instruments mature across multiple years, which we believe limits our exposure to interest rate changes in any one year. We do not enter into derivative instruments for trading or other speculative purposes. As of December 31, 2023, 89.1% of our outstanding debt was subject to fixed rates.
As of December 31, 2022, 19.2% of our total market capitalization consisted of debt borrowings. Our interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs.
As of December 31, 2023, 22.0% of our total market capitalization consisted of debt borrowings. Our interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs.

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