The call in brief

Mid-America Apartment Communities delivered second-quarter 2026 Core FFO of $2.08 per diluted share, $0.02 above the guidance midpoint, powered by exceptional expense control — same-store operating expenses grew just 80 basis points — and roughly a cent of incremental non-same-store NOI, which offset slightly soft same-store revenue. GAAP revenue rose about 1% to $555 million with a 25.4% operating margin and $1.04 of diluted EPS. Operating fundamentals continued to recover: blended lease-over-lease pricing improved 100 basis points sequentially (new-lease pricing up 170 bps, renewals at 5.2%), turnover fell to a record-low 39.6%, the rent-to-income ratio improved to 18%, and second-quarter inbound migration posted its largest-ever quarterly increase as absorption ran 1.8x new deliveries. Management reduced full-year same-store revenue assumptions on a slower-than-hoped new-lease pricing recovery amid cautious consumers and elevated supply in markets like Phoenix, Charlotte, Raleigh and Savannah, but offsetting favorability on expenses (guide cut ~90 bps to ~1.75%, helped by a 12%+ insurance-premium decline and lower property taxes) and non-same-store NOI allowed MAA to maintain its $8.53 full-year Core FFO midpoint. The team expressed unusual optimism about the back half, expecting Q3 blended pricing to exceed Q2 — a break from the last four years — on locked-in renewals above 5%, 10-15% higher lead volume and easier comps. Capital allocation stayed development-led (targeting a ~$1B pipeline, four starts on track, new-project yields of 6.25-6.5%), complemented by $50 million of buybacks, disciplined dispositions, and a $350 million term loan to cover a September maturity, with net debt/EBITDA at 4.5x. Accretive internal programs — interior renovations up 30% YoY at ~25% returns, amenity repositioning at ~13%, and rapidly growing community Wi-Fi revenue — round out a strategy management believes positions MAA to compound revenue and earnings as supply pressure fades.

What went well
  • Core FFO of $2.08 per diluted share came in $0.02 ahead of the second-quarter guidance midpoint, driven primarily by continued strength in expense management (same-store expenses ran $0.015 favorable) plus about $0.01 of incremental NOI from the non-same-store portfolio.
  • Same-store operating expense growth was held to just 80 basis points year over year, with repair-and-maintenance and personnel costs the primary drivers of the favorability, and the teams executing well on cost control across the platform.
  • Blended lease-over-lease rates rose 100 basis points from Q1 and were up 20 basis points versus Q2 2025, as new-lease pricing improved 170 basis points sequentially (20 bps ahead of the same Q1-to-Q2 acceleration a year ago) and renewal rates held at 5.2%.
  • Resident metrics stayed strong: turnover fell again to a record-low 39.6%, the rent-to-income ratio improved to 18%, net delinquency was just 0.3% of billed rents, and renewal rate growth improved 50 basis points year over year.
  • Second-quarter inbound migration to MAA properties (about 13%, up from 10% in Q1) was the strongest quarterly increase since the company began tracking the metric, and second-quarter absorption ran at 1.8x new deliveries, with units absorbed in the first half well outpacing new units delivered.
  • Accretive internal-growth initiatives outperformed: 2,118 interior unit upgrades in the quarter (3,504 YTD, up 30% year over year) earned a ~25% cash-on-cash return versus a 19% expectation, and community-wide Wi-Fi revenue jumped from $500K in Q1 to $850K in Q2.
What went wrong
  • The recovery in new-resident lease rates is progressing more slowly than management would like, held back by cautious consumer sentiment and still-elevated (though moderating) new supply in several high-concentration markets.
  • MAA reduced its full-year same-store effective rent growth and average occupancy assumptions, as the pace of new-lease pricing recovery has been somewhat slower than assumed in prior guidance (offset by favorable expense trends, leaving Core FFO unchanged).
  • Phoenix, Charlotte, Raleigh and Savannah remain challenged high-concentration markets still working through heavy supply pressure, and the two Charlotte lease-ups are the most challenged near-term assets with concessions running up to eight to ten weeks on certain floor plans.
  • Pre-leasing was down slightly in Q2 versus last year as cautious prospects shopped around longer and shifted toward more immediate, last-minute move-ins, the most volatile part of the new-lease pricing curve.
  • Same-store revenue came in slightly below the company's own Q2 expectations, partially offsetting the expense-driven beat.

Management Commentary

Andrew Schaeffer
SVP, Treasurer, and Director of Capital Markets, MAA

Thank you, Regina, and good morning, everyone. This is Andrew Schaeffer, Treasurer and Director of Capital Markets for MAA. Members of the management team participating on the call this morning are Brad Hill, Tim Argo, Clay Holder, and Rob DelPriore. Before we begin with prepared comments this morning, I want to point out that as part of this discussion, company management will be making forward-looking statements. Actual results may differ materially from our projections. We encourage you to refer to the forward-looking statements section in yesterday's earnings release and our '34 Act filings with the SEC, which describe risk factors that may impact future results. During this call, we will also discuss certain non-GAAP financial measures. A presentation of the most directly comparable GAAP financial measures, as well as reconciliations of the differences between non-GAAP and comparable GAAP measures, can be found in our earnings release and supplemental financial data.

Our earnings release and supplement are currently available on the For Investors page of our website at www.maac.com. A copy of our prepared comments and an audio recording of this call will be available on our website later today. After some brief prepared comments, the management team will be available to answer questions. When we get to Q&A, please be respectful of everyone's time. In an attempt to complete our call within one hour due to other earnings calls today, we will limit questions to one per analyst. We ask that you rejoin the queue if you have any follow-up questions or additional items to discuss. I will now turn the call over to Brad.

Brad Hill
President and CEO, MAA

Well, thanks, Andrew, and good morning, everyone. Core FFO results were ahead of our expectations with the sequential improvement in new resident and blended lease-over-lease rates exceeding the prior year sequential improvement. While recovery in new resident lease rates is showing improvement, the pace is slower than we would like given cautious consumer sentiment as we continue to work through the unprecedented high levels of new supply deliveries over the past couple of years in a few of our high concentration markets. We are seeing solid demand, including job growth, household formation, and population, and wage growth, and the increase in inbound migration to our properties in the second quarter was the strongest quarterly increase we have seen since we began tracking the metric, reflecting the broad appeal of our high-demand markets. As a result, units absorbed in the first half of the year significantly outpaced new units delivered.

As demand remains resilient and new deliveries continue to decline, we expect the recovery to expand and accelerate. Additionally, we're benefiting from our scale and operating discipline. We continue to focus on expense control, and with second quarter year-over-year same-store operating expense growth of just 80 basis points, the teams are excelling in this area. At the same time, the persistent single-family affordability and availability challenges are supporting resident demand for affordable and high-quality rental housing, two areas where MAA excels. Our customer service focus continues to differentiate the MAA experience, driving increased resident loyalty and contributing to our record low turnover and strong renewal rate growth, improving 50 basis points year-over-year.

We continue to invest in strategic areas of the business to drive future earnings growth, including various new technology initiatives to support our centralization and specialization efforts that will further strengthen our customer service and drive future margin expansion. As Tim will talk about, we are expanding our interior renovation and repositioning programs, which are supported by the new deliveries in our market stabilizing, where on average, the effective monthly rent per unit for a new community is over 30% higher than our existing rents, giving us substantial room to expand these highly accretive initiatives. Our property-wide Wi-Fi initiative is in high demand from our residents and is performing well. On the external growth front, the improving demand supply dynamic, combined with the decreased availability of capital for new projects, makes disciplined investing in new developments an attractive capital allocation option.

In addition to the Kansas City project we started construction on in the second quarter, we started construction on a project in Nashville, Tennessee, in July. Next month, we expect to start construction on a project on the land we recently purchased in Northern Virginia. With one more start later in the year, we are on track to hit our four development starts for the year. The acquisition market remains slow, with Cap rates in the mid to upper 4% range for high-quality communities that fit our profile. Should more compelling opportunities materialize, we have the balance sheet capacity to support growth in this area. Together, these initiatives reflect a disciplined approach to deploying capital across multiple growth opportunities while maintaining flexibility as market conditions evolve.

This same discipline is also evident in our ongoing portfolio recycling efforts, which remain focused on enhancing portfolio quality and supporting long-term earnings growth. In the second quarter, we sold a high CapEx 30-year-old property in Raleigh and have two additional properties that should close in the back half of the year, a 42-year-old property in Dallas and our one property in the District of Columbia. These transactions will wrap up our planned dispositions for 2026. With a track record of successfully navigating economic cycles for over 30 years, we remain confident in our ability to emerge from this recovery period with a stronger, more efficient, and higher growth operating platform.

We believe our focus on high demand and high growth markets will continue to lead to higher earnings and lower volatility over the full cycle, while our investments in accretive growth initiatives are well positioned to deliver increasing value and earnings contribution as the demand-supply balance improves. We are encouraged by the building blocks in place, resilient demand, strong absorption, potentially growing migration trends, and a financially strong resident base, all with the backdrop of decreasing supply pressure. As we wrap up July and head into August and September, we see the opportunity for growing momentum and remain confident in our ability to deliver compounding revenue and earnings performance as the recovery continues to accelerate. To all associates across our properties and in our corporate offices, thank you for your continued dedication and focus during this pivotal leasing season. With that, I'll turn it over to Tim.

Tim Argo
Chief Strategy and Analysis Officer, MAA

Thanks, Brad, and good morning, everyone. For the second quarter, same store NOI beat our expectations with continued lower than projected property operating expenses, more than offsetting slightly lower average daily occupancy. From a pricing standpoint, new lease, sublease growth improved 170 basis points sequentially from the first quarter, 20 basis points ahead of the acceleration achieved from the first quarter to second quarter of 2025. As Brad mentioned, new lease rates have been slower to recover due to lower consumer sentiment and still elevated but moderating new supply in some markets. We are encouraged by forward-looking trends. Renewal retention rates and lease rates remain strong. Turnover once again moved lower to 39.6%, and renewal lease and release rates were 5.2% for the quarter.

As a result, blended lease and release rates were up 100 basis points from the first quarter and up 20 basis points from the blended rates of the second quarter of 2025. Our resident health remained strong, as reflected in an improvement in our rent-to-income ratio to 18% and continued strong performance in collections, with net delinquency representing just 0.3% of bill grants, consistent with what we achieved in the last several quarters. Broadly, our stronger performing markets remain relatively consistent with the last few quarters, and we are starting to see some pockets of momentum in other markets. We continue to see strong performance in Virginia and South Carolina with Norfolk, Richmond, Charleston, Greenville, and the D.C. area markets continuing to outperform the broader portfolio from a pricing standpoint.

As with last quarter, our two largest concentration markets, Atlanta and Dallas, outperformed the portfolio in the second quarter in terms of blended lease or release pricing. Austin, though still an underperforming market, showed good momentum and achieved blended lease or release pricing that was 300 basis points better and occupancy that was 40 basis points better than the second quarter of 2025. Orlando is another improving market with blended pricing up 130 basis points from the second quarter of 2025. Phoenix, Charlotte, Raleigh, and Savannah are high concentration markets for us that are still facing challenges in the wake of heavy supply pressures despite continued strong demand. During the quarter, MAA Cathedral Arts in Dallas stabilized and MAA Plaza Midwood in Charlotte completed construction and moved into our lease-up portfolio.

MAA Val Vista will officially stabilize in the third quarter, though it achieved over 90% occupancy during the second quarter. We moved up the stabilization date of MAA Breakwater in Tampa by two quarters due to strong leasing velocity and rents well ahead of our pro forma expectations. We have an additional two properties under construction that are actively leasing. Given the supply pressure in Charlotte, our two lease-ups in this market remain the most challenged in the near term, with concessions running up to eight to 10 weeks on certain floor plans. With the overall lease-up portfolio, we expect to achieve our underwritten yields as markets continue to improve, retaining the expected long-term value creation opportunity. NOI contributions from this group will continue to build through the rest of this year and into 2027.

As Brad mentioned, we continue to accelerate and exceed expected returns on our various targeted redevelopment and repositioning initiatives. During the second quarter of 2026, we completed 2,118 interior unit upgrades, bringing our year-to-date total to 3,504 units, 30% higher than the number of units renovated in the first half of 2025. With year-to-date rent increases of $110 above non-upgraded units, an average per unit spend of $5,134, the average cash-on-cash return is approximately 25% versus expected returns of 19%. These units continue to lease faster than non-renovated units when adjusted for the additional turn time, averaging about 10 days quicker. We would expect to further accelerate this program in 2027.

For our common area and amenity repositioning program, we have six properties that are wrapping up the repricing phase, five properties that are just starting the repricing phase, and six additional that are in the early construction phase and will begin the repricing phase in the spring of 2027. The first group is 98% repriced with average cash-on-cash returns of 13%. We expect similar returns from the remaining active projects, and we look to expand our scope of this initiative in 2027. Our community-wide Wi-Fi initiative that began in 2024 continues to expand. We have 28 live properties where the service is rolling out to residents as leases are signed, and we are further expanding the initiative this year to an additional 38 properties.

Resident adoption at the first 28 properties is accelerating, with revenues quickly increasing from $500,000 in the first quarter to $850,000 in the second quarter and will continue to grow from here. Looking forward to the third quarter, we are encouraged by the early momentum we see in pricing and occupancy and early signs of potentially later seasonal peak. Our strategic decision to push new lease pricing where possible in late second quarter and into July has allowed us to maintain momentum in renewal pricing and new lease pricing. Combined with declining supply pressure, strong demand, and the broad market level absorption that occurred in the first and second quarters, our approach sets us up to capture momentum in new lease and release pricing later in the season and achieve renewal rates consistent with the second quarter and well above what we achieved in the third quarter of last year.

With an assumed backdrop of steady demand, fewer units in lease-up, and current pricing trends continuing, we expect third quarter blended pricing to be better than the second quarter, a trend not seen in the last four years since third quarter blended pricing typically trails the second quarter. That's all I have in the way of prepared comments. I'll turn the call over to Clay.

Clay Holder
EVP and CFO, MAA

Thank you, Tim, and good morning, everyone. We reported Core FFO for the quarter of $2.08 per diluted share, which was $0.02 ahead of our second quarter guidance. The outperformance was driven primarily by continued strength in expense management, with same store expenses coming in $0.015 favorable to our expectations and NOI from our non-same store portfolio contributing an additional $0.01, partially offset by same store revenues that were slightly below our expectations. As Brad and Tim highlighted, our teams continue to demonstrate an ability to control cost while maintaining strong resident retention and high resident satisfaction. That consistent execution remains a key strength of our operating platform and contributing meaningfully to our second quarter outperformance. Repair and maintenance and personnel costs were the primary drivers of our expense favorability during the quarter.

We funded approximately $81 million in development and pre-development costs during the quarter. At June 30th, our development pipeline totaled $598 million, leaving $237 million of remaining funding commitments over the next three years. Combined with the two projects that Brad referenced as starting in the third quarter, our development pipeline will total approximately $804 million. Looking ahead, we expect to add additional projects to the pipeline during the balance of the year and into early 2027, supporting our objective of building and sustaining a development pipeline of approximately $1 billion and reinforcing development as an important driver of long-term earnings growth. Our balance sheet is solid and is set to support our development pipeline, any acquisitions that may emerge, along with the other growth initiatives Tim discussed.

At the end of the quarter, we had over $880 million in combined cash and borrowing capacity under our revolving credit facility, and our net debt to EBITDA ratio was 4.5x. At June 30th, our outstanding debt had an average maturity of six years at an effective rate of 3.9%. During the quarter, we continued our measured approach to share repurchases and repurchased 383,000 shares of our common stock at a weighted average share price of $130.66 for a total of $50 million. In June, we entered into an unsecured delayed term loan with a committed principal amount of $350 million, with $100 million outstanding under the loan at quarter end.

Turning to our outlook for the year, we have maintained our Core FFO guidance and have updated our same store revenue and expense guidance to reflect our current view of leasing conditions for the balance of the year. While underlying demand remains healthy, the pace of recovery in new lease pricing has been somewhat slower than assumed in our prior guidance. We continue to prioritize long-term revenue performance through disciplined pricing decisions, which we believe support renewal performance and position us well to capture the coming new lease pricing momentum. As a result, we have slightly reduced our expectations for both effective rent growth and average occupancy for the year. As we updated our revenue assumptions for the balance of the year, we also recognized favorable trends developing in other areas of the business.

Expense performance has remained strong, driven by continued discipline across our operating platform, lower projected real estate taxes, and favorable anticipated insurance costs given our recent coverage renewal. Additionally, our non-same store portfolio continues to perform well with lease-up communities performing in line with, and in some cases, slightly ahead of our expectations in contributing incremental earning support. In 2026, we project over $25 million in incremental year-over-year NOI from the properties represented in this portfolio. Collectively, these favorable trends offset the revisions for our revenue outlook and support our maintained full year Core FFO midpoint of $8.53 per diluted share. That is all that we have in the way of prepared comments. Regina, we will now turn the call back to you for questions.

Analyst Q&A

Jamie Feldman — Analyst, Wells Fargo
Great. Thanks for taking the question. Just comparing some of your comments on July and thoughts on the third quarter versus what you delivered in the second quarter, the revenue cut. Can you give us some comfort or maybe talk us through how you decided to cut now, how much you decided to cut the revenue guide now, and what gives you comfort that this won't be the same situation third quarter, fourth quarter in terms of needing to pull back?
Tim Argo — Chief Strategy and Analysis Officer, MAA
Jamie, this is Tim. I'll talk a little bit about what we're seeing in July and Q3. I think that's really what is driving our optimism as we are starting to see some momentum as we look out into Q3. July itself, we expect will be pretty similar in terms of pricing to what we saw in Q2 with occupancy building as we have moved through July and ending in a good spot with July occupancy. Where we see the optimism and where we think we've made the right decisions is what we're seeing for August, September. First, if we look at renewals for the entire Q3, we have retention rates well above what we saw this time last year, well above what we saw in Q2, and we're continuing to see renewal rates in that five plus range.
We have visibility pretty much into all of Q3 at this point. Probably 98% of our renewals we have locked in at this point. When we look at where we stand with new lease pricing and what we've done on the pre-lease side, obviously still more to come in the rest of the quarter. We probably still have about 40% of our new leases or so will still come over the next two months. When we look at the pre-leasing for August, we're running 70, 80 basis points better than we were this time last year. We look out to September, even running higher than that. We think with this continued demand, what we're seeing, lead volume is up 10%-15% this time compared to this time last year. Visit volume's up close to 10%.
We do think all these factors lead to what potentially could be a little bit of an extended prime leasing season.
Clay Holder — EVP and CFO, MAA
Jamie, I'll just touch on the guide change. The one thing that, to Tim's point, we're still seeing very strong acceleration as we work into the back half of the year. What I would say it's just not quite at the same pace as what we had initially expected coming into the year. Still seeing the trajectory move in the direction we expected, just not quite to the same pace that we had synced in.
Brad Hill — President and CEO, MAA
Jamie, not to be left out here, I'm going to add a couple of comments to this one as well. This is Brad. What the guys have said here a little bit. I think it really starts with what we're seeing on the demand side in terms of our view for the back half of the year. Across the board, we're seeing really good demand really across our markets. In the markets where we do have heavier supply, you think of a Phoenix, a Charlotte, a Raleigh, Savannah, Nashville. Those markets are a little bit more difficult for us right now. We have a bigger hole that we have to dig out of for those, but we are showing progress. If you look at our entire portfolio for the second quarter, almost 80% of our markets posted positive blends in the second quarter.
You can see the recovery is pretty broad-based. Two-thirds of our markets are showing blends above our portfolio average. If you look at what is below average for us, a third of our portfolio, those are predominantly some of these higher supply markets. Again, we have a bigger hole that we have to dig out for those, but we're doing it. On the demand piece, you look at absorption the first half of the year that Tim talked about, second quarter absorption across our markets was 1.8x new delivery. We're seeing really strong demand. As we continue through the balance of this year, we certainly believe that more of our markets start to show some of that stronger pricing power, particularly as we look at the blended rates in the third and fourth quarter.
Eric Wolfe — Analyst, Citi
Hey, good morning. Maybe just to follow up on Jamie's question. Can you just discuss your guidance in the second half from a blended rent growth perspective? What you're forecasting in the second half specifically, and just to make sure I understood sort of the components of what you're seeing right now. You expect your August and September blends to increase from July because renewals are higher and your retention is higher. I just wanted to make sure I heard that correctly.
Tim Argo — Chief Strategy and Analysis Officer, MAA
This is Tim. To confirm on your second point, we would expect August, September pricing to get a little bit better from what we had in July for all the reasons we just talked about and the trends we are seeing so far. If you think about our full year blended in kind of the back half and how we hit our guidance, we are at positive 0.3 blended year to date through June, and our full year forecast is somewhere in the 50 basis point range blended for the full year. With a little more of our leases skewed to the back half of the year, somewhere around 0.6% blended is what we are tracking for the back half of the year.
To maybe put that in a little bit perspective, what that would look like from a blended standpoint is our Q3 blended performance to be a little bit better than what our Q2 performance was. Our Q4 performance to look a little bit better than what our Q1 performance was. That is kind of a way to think about it is the expectation that August, September show the strength that we are seeing right now. You see a little bit less of a moderation in Q4 based on, again, the demand, the moderating supply, and everything we are seeing, and not experience the same level of drop-offs that we saw in Q4 of last year.
Nicholas Yulico — Analyst, Scotiabank
Thanks. Good morning. I just wanted to go back to some of the commentary that you guys gave on the pricing for assets. I think, Brad, you were saying cap rates below 5%, you are still seeing in your markets. I guess my question is, if that is the case, we are still dealing with a sort of a slow recovery in certain markets, why not buy back more stock, sell assets, rather than put more money into the development pipeline right now?
Brad Hill — President and CEO, MAA
Well, thanks, Nick. I think first of all, what you have to consider, those four and a half to call it upper four cap rate range, are from the types of assets that we want to buy. Those are brand new assets in some of our higher growth markets. On average, what we've purchased the last few years has been a one-year-old, a lot of times in lease-up. That's a little bit different type of product than what we generally are looking to sell. The assets that we have sold this year, the property that we sold, as I mentioned in my opening comments, in the second quarter was an older asset, had a lot of CapEx needs. The cap rates that we're getting for those, market cap rates, are probably in the mid to upper six range on average.
I would say we've got four properties that we're selling this year. Those will be in the high fives to low sixes in terms of cap rates. There's a little different math on what we're selling. In terms of share buybacks, we've talked about this a lot. Our overall focus is about driving long-term TSR performance without introducing a lot of earnings volatility. It's very balanced. You've seen that in terms of what we've repurchased. We continue to believe in the merits of putting capital into the development market, into the properties that we are developing. The average yield expectation of those with conservative underwriting is still in the 6%-6.5% range. The NOI margins we've been able to Excuse me, NOI growth we've been able to generate from those, on average, exceeds what our overall portfolio delivers by 50 to 100 basis points.
Especially given the fact that supply continues to be lower than long-term averages this year, and projected to be that way for the next three years at least. We'll be delivering into a pretty strong operating fundamental market. We continue to believe that's the way that we want to allocate capital for long-term TSR performance at the moment.
Jana Galan — Analyst, Bank of America
Thank you. Good morning. I was hoping you could talk a little bit about the better than expected performance from the lease-up properties. Has there been any shift in strategy on pricing, concession usage, or job growth in those markets? Maybe if you could just talk to concession activity overall in your markets.
Tim Argo — Chief Strategy and Analysis Officer, MAA
This is Tim. I'll touch on that. On the lease-up portfolio, not really any change in strategy. We're starting to see some momentum. We're starting to see some good demand. If you look at some of the properties in our lease-up portfolio, MAA Nixie gained over 20% of occupancy over the last quarter. MAA Liberty Row over 30%. MAA Plaza Midwood over 20%. I think as we're seeing with the broader portfolio, the number of units in lease-up and the pressure on supply is starting to moderate, and we're starting to see that with the lease-up portfolio. The two Charlotte assets, as I mentioned, are the ones that are still a little bit behind on in terms of where Charlotte is in the supply pipeline. Those are the ones that we're watching, but we've seen really good momentum with the lease-up portfolio, as you mentioned.
On the broader concession market, not a lot of change from what we talked about last quarter. If you think about our overall portfolio, broadly four to five weeks is pretty consistent across most of our markets. We are seeing some improving concession activity in Orlando and Charleston are two markets I would point to that we're seeing concessions down. Charlotte, Austin are still where, not necessarily up from where they've been, but probably the broadest usage of what we're seeing is still in Charlotte and Austin. Overall, pretty consistent picture from what we've seen in the last few months.
Brad Heffern — Analyst, RBC
Yeah. Hey, everybody. Thanks. You mentioned in the prepared comments that second quarter in-migration was, I think you said the strongest ever, or strongest since you started tracking it. Are there any numbers that you can put around that or additional color?
Brad Hill — President and CEO, MAA
Yeah. The numbers that we could put around that, we saw in-migration go from, call it 10% in the first quarter to about 13% in the second quarter. It's not really one market that we can point to that's really driving that. It was generally an overall increase just in general. We have seen absolute levels of in-migration that's been higher than that, but we've never seen a quarterly increase that's matched that in the past. Certainly one quarter doesn't make a long-term trend. I certainly think in terms of incremental demand components for the business, that's something that we're continuing to watch as we go forward.
Austin Wurschmidt — Analyst, KeyBanc Capital Markets
Thanks. Good morning, everyone. Tim, I just wanted to clarify, is the expectation for blended rate growth in the third quarter, specifically from the lower turnover and stable renewal rate growth, or is you also seeing new lease rate growth improve? I know you had talked about the easier comps earlier in the year being a benefit. Can you also share what new lease rate growth and occupancy were for July? Thanks.
Tim Argo — Chief Strategy and Analysis Officer, MAA
Austin, to answer the first part of your question, it's a little bit of both. Obviously, the renewals are a huge part, and we're seeing, as I mentioned, the retention rates be higher in Q3 than it was both in Q2 of this year and Q3 of last year. Obviously more of those blending in, and we're running 5%+, whereas Q3 of last year we were in the 4.5% range. That obviously played a big part. We are seeing, as mentioned, the momentum on the new lease side as well. With everything we've seen on demand and what we've seen with pre-leasing, the August, September new lease pricing looks better than it did at the same time last year. Your point about the comps as well, we really saw pricing drop off pretty significantly around this time last year.
Last year, July to August, new leads pricing dropped about 70 basis points, August to September dropped 140 basis points. We don't expect that to recur this year for all of the things we mentioned. For July, I expect we'll end July around 95.4 in terms of occupancy. I think the new lease employment pricing probably looks pretty similar to what we reported for Q2.
Adam Kramer — Analyst, Morgan Stanley
Hey, thanks for the time. Just wanted to ask on the capital allocation side, it sounds like dispositions may be wrapped up for the year. Seems like acquisitions for the type of stuff you guys want to buy, probably shouldn't expect much here for the next little while at least. Just wondering, should we expect sort of more share repurchases? Maybe just an update sort of on the debt side. I know there's some moving pieces there. I guess just more generally, sort of what is capital allocation priorities here sort of for the next little bit?
Brad Hill — President and CEO, MAA
Hey, Adam, this is Brad. I can certainly kick that off. As I mentioned a moment ago, our approach is to have a pretty balanced approach about taking advantage of near-term opportunities as well as taking advantage of long-term opportunities. To your point, our disposition plans for the year are close to being wrapped up. We have sold two properties. We've got two more that should sell by the end of the year. That puts our proceeds. By the way, one of those properties is in a JV, the one that's in the D.C. market. The proceeds we'll get from those will be pretty similar to what we've used so far to repurchase shares. Very balanced in terms of how we're looking to allocate capital there. Our priority continues to be development.
That's number one, as Tim talked about, continuing to invest in our Wi-Fi initiative, which is highly accretive use of capital for us. We're growing our redevelopment and repositioning to drive earnings performance over the next year or so. That initiative continues to perform better as the new supply coming into the market stabilizes with rents that are over $500 a unit higher than our rents on average. That program continues to perform quite well. You'll see us continue to lean into that as well. Our property reposition continues to be an area of focus for us. That's kind of the prioritization that we have in terms of capital allocation. Clay, I don't know if there's anything you want to add on the debt piece you mentioned.
Clay Holder — EVP and CFO, MAA
This is Clay. As we've talked about in the past, we do have a maturity that's coming due in September of this year for $300 million. We've got plenty of capacity with this term loan in place and some of these other dispositions that Brad had alluded to, that'll help cover that maturity. That's our plan for the financing needs. Good chance that we come back into the market at some point late this year, potentially early next year, as we continue pushing our development pipeline. That's what we see right now for the next few months.
Haendel St. Juste — Analyst, Mizuho Securities
Hey, guys. Good morning. Thanks for taking the question. I wanted to go back to the markets that were underperforming. You outlined Charlotte, Raleigh, Nashville, where supply still seems to be a factor. Contrast that with some of the Sun Belt markets where you're seeing some improvement. You mentioned Austin a few times. I think you mentioned Orlando. I guess I'm curious if that's down to sub-market locations. Is it something else? Also maybe some color on the, you mentioned the top two-thirds of the portfolio blends are better than the bottom third. Maybe some color on the top two-third blends versus the bottom. Thank you.
Tim Argo — Chief Strategy and Analysis Officer, MAA
Yeah, Haendel, this is Tim. I'll touch on the first part of that. For the markets that are performing pretty well, it's generally pretty broad-based. We've talked a lot about the stronger markets here for several quarters. I would say it's those continue to be broad-based in most of the sub-markets. I think where we're starting to see some momentum and some green shoots is some of these improving markets where it's popping up in sub-markets. In Austin is a perfect example of that, where in some of the near south sub-markets, we've seen some momentum over the last couple of quarters.
I would say even into the second quarter. Some of the Round Rock and even some of the northern assets started to show some momentum where you had some of those properties that were mid to high teens negative new lease pricing just a couple quarters ago that are now at the mid negative single digits. 1,000 basis point types of improvement in new lease pricing, and that's where the opportunity lies in a lot of these highly supplied sub-markets, as those concessions burn off. That's where you start to see some pretty quick momentum. Still seeing broadly in our larger markets, more of the urban sub-markets do well, particularly the Dallas and Atlanta, even in a Tampa that's been a little bit weaker. We're seeing some good performance there. On the weaker markets, it's more broad based.
The Charlotte and the Raleigh, some of those as they were a little further along in the supply or a little bit later in the supply pipeline and get an extreme amount of supply. Those are ones where, if you have a market that's overall underperforming, it's because we're seeing it more broadly across a lot of sub-markets. I think those become more of a story as we head into next year.
Brad Hill — President and CEO, MAA
Haendel, this is Brad. I'll just add one comment there on your question about the top two third versus the bottom. I think in general, what you see playing out there is an indication of our overall diversification strategy where we are allocating capital between large markets as well as mid-tier markets. Generally, what you'll see on the top portion of that graph, so to speak, are a lot of our mid-tier markets. A higher proportion of those certainly are above the portfolio average. Generally, that's what you would expect right now as they face less supply pressure than some of these other markets, some of the larger markets that you mentioned and we've mentioned. The demand-supply balance weighs more to the demand. We're seeing strong demand in those markets, so you see obviously stronger performance out of those right now.
That's what we would expect to occur as demand continues, absorption continues in some of these more supplied markets like a Charlotte, a Phoenix, a Raleigh as that new supply continues to get absorbed. That's what I would say characterizes that breakdown to some degree.
Alexander Goldfarb — Analyst, Piper Sandler
Hey, morning down there. Just a sort of question on markets overall. Clearly Sunbelt has a long history of strong growth over time. The amount of oversupply is clearly a lot to deal with for anyone. The lack of supply just nationally, how is that affecting your thoughts on other markets? We've seen the Midwest become more popular from some of the coastal guys. Just as you guys look to allocate capital, are there other markets that maybe previous cycles you would've said no, but now you're increasingly interested in? Or is it sort of the basic reality that there's just a lack of supply of product on the market, and therefore, even markets that you'd like to enter, it's just hard to see a path to establishing a presence that's economic?
Brad Hill — President and CEO, MAA
Well, thanks, Alex. This is Brad. We've talked about it in the past. We do continue to look at new markets and evaluate new markets. I think certainly, excuse me, the key component of that is we want to maintain what our overall strategy is, and that's allocating capital markets that have high demand. If you look across our portfolio, our markets generally have that, particularly when you're comparing to other markets. I don't think we want to go into a market just because it's a low supply market. That's only a benefit to the extent that you have demand. We do think over time, the demand fundamental is what has the highest impact, and it has a higher correlation to overall performance, long-term performance. We'll continue to focus on the highest demand markets that we have.
There are markets that we're looking at that have similar dynamics. Columbus, Ohio, we've talked about that before as a market that we've considered given some of the dynamics there. We want certainly a business-friendly environment, and low taxes continues to be part of that. I think it's also important to remember, if you look at the demand drivers really across our markets, I think it was in the second quarter, 18 markets across the country showed greater than 1% job growth. 11 of those markets were in our footprint. Only five markets showed greater than 2% job growth, and four of those were in our markets. If you look at population growth, whether you're looking at one year, five year, 10 year, 14 of the top 15 markets are MAA markets.
I think we continue to be in the right markets and continue to allocate capital to the right markets for long-term performance. As the comment we were making about our markets and the number of markets that are performing above average and are showing positive blended lease rates being so broad, the recovery is coming. As the new supply continues to get absorbed in some of these other markets, this high demand that we continue to see will pay off, and we'll continue to see the long-term performance dynamics, I think that we've seen historically that you mentioned at the beginning of your question.
Ami Probandt — Analyst, UBS
Hi, thanks. The U.S. Census Bureau data has shown an uptick in permits across a handful of Sun Belt markets. Recognizing that some of these might not be directly competitive to your portfolio, I'm still wondering, is this a sign that developers are starting to get more comfortable with the trajectory of rent growth moving forward and getting back in and ramping up starts again?
Brad Hill — President and CEO, MAA
Well, I definitely think developers want to develop. From the developers that we talk to as part of our pre-purchase platform, where we have relationships with the top developers in the country, I would say broadly, we're not seeing an uptick in starts coming. In fact, we continue to find opportunities to partner with those developers on additional projects because their equity partners have backed out of projects. I think the ability to find capital, equity capital in particular for new developments continues to be challenged. We're not seeing that really change at the moment. I think to your point, permits kind of ebb and flow a bit, and the relationship between permits and construction starts can ebb and flow. We're not seeing from the folks we're talking to, and the data we're looking at, we're certainly not seeing an uptick.
If you go back and you look at new starts for the last 13 quarters have trended below long-term averages. We see that trend continue as we look out over the foreseeable future. We don't see a material pickup from this point right now.
Speaker — Analyst, JPMorgan
Good morning, guys. I'm on for Tony. Thanks for taking my question. Going back a little bit, I think Brad, in your prepared remarks, you mentioned the cautious consumer. Was there anything, I guess you guys were seeing specifically from a consumer perspective point of view that caused a slowdown in new lease pricing? I guess, were you seeing tenants shop around a bit more? Just curious on any color you could give as to what's driving that shift.
Brad Hill — President and CEO, MAA
This is Brad. I can start. Tim can give any other details. I think what we've seen is a very healthy resident, a very healthy prospect. Our rent-to-income ratios continue to be the decline. They're the best that we've seen in a long, long time at 18%. Our collections continue to be really strong. I think in markets where there are a lot of options, there is a lot of supply. We do see folks shopping around a bit more, looking at all their options in the market, and taking a little bit longer to make decisions. We have seen that.
I think the good news is, even to the point that Tim was mentioning earlier about the momentum we have in August and September, I think in part that does indicate a little bit more optimism from the prospect's perspective as they look out over the next couple of months. There is a level of, I think, optimism that we're seeing as we sign those pre-leases out for the next couple of months. Tim, anything you'd add to that?
Tim Argo — Chief Strategy and Analysis Officer, MAA
I think just to your point about the impact on new lease pricing. I think for Q2, we did see people just taking longer, shopping more. As Brad mentioned, our pre-leasing was down a little bit in Q2 relative to last year. That's more of an indication of people that are making decisions and feeling confident where they are. I think with people shopping around longer, they're making their decisions later. They're doing more immediate type of move-ins, and that is kind of the most volatile part of the new lease pricing curve. I think that plays into it. To Brad's point, we're seeing that change a little bit in Q3, and we're seeing a little more pre-leasing and a little more momentum, I guess, this confidence for the rest of the year.
Steve Sakwa — Analyst, Evercore ISI
Yeah, thanks. I just wanted to touch on expenses, which has obviously been a bright spot for the company this year. Are there things that we should be thinking about as we think about 2027 expense growth, any kind of one-timers or things that may not repeat that helped this year that may not be there next year?
Clay Holder — EVP and CFO, MAA
I see. This is Clay. I'll touch on that for a second. I think what you're seeing here this year is just our continued focus, as you alluded to, our continued focus on controlling expenses. We've shown a long history of that, and it continued to show that even in the current environment. As we look forward to next year, I don't see anything on the horizon at this point that would make me think that there are some one-time savings or any one-time large items coming our direction. I would expect next year to look somewhat similar. It could be a little bit higher growth rate just given where we are today. I would expect generally it would look not too far different than what we're seeing at the moment.
Michael Gorman — Analyst, BTIG
Thanks. Good morning. Maybe going back to Alex's question on markets for a second, take the flip side of it. As you've gone through this cycle, looking at any of your market exposure, maybe especially some of the smaller exposures, are there any markets that have changed structurally in your view or operated in such a way that your view of either expansion or even existing in those markets to begin with has changed? I'm thinking maybe even specifically like a Denver where the regulatory environment's gotten tougher. Any commentary there would be helpful. Thanks.
Brad Hill — President and CEO, MAA
This is Brad. I would say broadly, not really. I would say you mentioned the one market that we've seen the most change from a regulatory perspective. We've seen it in Nevada, we only have two properties there, which aren't core for us long term.
There's been certainly some talk in Virginia. I think some of that got pushed off another year or so. The District of Columbia, a lot of things going on in that market. With us selling our one property in the District, shouldn't be exposed to that. Not a lot of change from a just overall portfolio perspective. We still have some markets where we'd have one asset or two assets, which from a long-term perspective, aren't properties that we want to hold. I would say those markets also continue to do quite well. Another market that we'll have to consider long term that continues to perform very well from a demand perspective. It can get some supply, demand continues to be really strong is Dallas, it's also one of our largest markets.
That's a market that we could potentially look at adding to and certainly recycling capital out of longer term. For the most part, we're not seeing big changes in any market broadly. The Denver component that you talked about, the impact of that is supply in Denver is coming down very rapidly. I think performance will turn around in that market as a result of that.
Alex Kim — Analyst, Zelman & Associates
Hey, guys. Thanks for taking my question. I wanted to drill a little further into the same store expense growth guide to reduce by 90 basis points at the midpoint. I'm curious how much of the improvement reflects sustainable operating efficiencies versus timing items, and was wondering if you could discuss the outlook for some of the cost buckets, specifically insurance as well with the, I believe the repricing occurring in July at some point.
Clay Holder — EVP and CFO, MAA
Alex, this is Clay. As we're guiding to for the, as you mentioned, the total expense growth for the year for our same store portfolio is a little around 1.75%. Excuse me. What we're seeing there, where we're seeing some good benefits there is really across the board. We talked a little bit about repair and maintenance costs, personnel costs that we saw in the second quarter, that we're expecting that to continue out through the back half of the year. The teams have done a really good job of controlling those expenses. We've got a full staff, which in turn typically leads to lower costs whenever we need to turn a unit. You've got the increased retention rates, which are clearly moving in our favor. That's helping provide some benefit there as well.
I'll go back to the personnel costs real quick. We continue to pop some properties, so we are continuing to see some benefit there, and I expect that benefit to continue on over the course of the year and potentially even into next year as we look to do more of that. You mentioned insurance costs. We did have a renewal on July the 1st. It was a very successful renewal. We had premiums that in a total declined by over 12%. As you kind of layer that through what the impact is for this year, for the back half of the year, for the full year, we're expecting a little over a 6% decline in insurance costs year-over-year. That marks our third year of a reduction in premium and insurance costs. Continuing to see really good performance from that standpoint.
The last one I'll call out is property taxes. Given just the environment that we're operating in, the NOI decline that we've seen and others have seen in our markets obviously having an impact on real estate valuations. We are getting a little bit of benefit there. We continue to focus a lot on that area. It is the largest expense line in our stack there. We spend a lot of time focusing on that, making sure that the valuations that are assigned to us are appropriate and pushing back when we need to. We'll continue doing that to manage that aspect of it.
John Pawlowski — Analyst, Green Street
Hey, good morning. Thanks for the time. My question's on understanding the development economics for your pipeline right now in an environment where there's a potentially pretty big widespread between yields when you quote and others quote kind of gross yields based off of base rents and then net yields once you factor in concessions. Let's just take the lease-up pipeline. When these four or five projects actually stabilize second half of this year, early next year, what's like the true net effective cash yield on this vintage of deliveries, assuming no change in market rents? Just today, net effective rents, what kind of yields are we looking at?
Brad Hill — President and CEO, MAA
Got it. Hey, John, this is Brad. I think Clay's looking up some information now. I'll tell you, for our current lease-up pipeline, on average, the projected NOI yields, cash yields on those is a 6%. I would say today, what are those delivering? Probably close to a 5% yield because of the higher concessions that we have. I would say the good news about that is on our renewals for really across the board of all of our lease-up properties, we're getting about 9%-10% lease over lease increases on all those lease-up renewals. The concessions are burning off, which that's what gives us confidence in our ability to hit those yields that we originally underwrote, which were, call it about a 6%.
If you look at a new underwriting that we're doing today for a new project, we think the yields are somewhere in the 6.25%-6.5%. That will include about 4% or so contingency on construction costs. Today, we're delivering projects 2%-3% below cost of what our expectations are. That also does include some trending. Generally, what we do is we'll trend rents from today until we use today's market rents. We'll trend those to the stabilization period, which is three to four years, somewhere, call it in the 2% or so range a year. If you go and look at where we're trending rents versus sub-market expectations, we're normally 2%, 3%, 4% below market expectations in terms of rent growth over that period of time.
That gives you a little bit of a sense of where our revenues need to be or where we're expecting revenues to be versus where the market is expecting revenues to be. I certainly don't think that it's unrealistic to think that from today's market level rents, that they would increase a couple of percent over the next four years.
John Kim — Analyst, BMO Capital Markets
Thank you. I know you talked about this a bit, but I think there's still some confusion on your assumption that the rents will accelerate in August and September because July, you mentioned, is similar to the second quarter. Can you just clarify what momentum you saw in June and July, and what gives you confidence that it will accelerate towards the end of the quarter, given in a normal seasonal year, rents typically peak in August?
Tim Argo — Chief Strategy and Analysis Officer, MAA
Hey, John, this is Tim. Yeah. What we're seeing is, one, the demand side, as we talked about, on the ground, lead volume, visit volume is significantly higher this year compared to this time last year. With some of the strategic decisions we made late Q2, that was really geared towards maximizing pricing as we could in Q3. I think where we're seeing that play out first is on the renewal side, as we talked about, where again, retention is higher, and the actual renewal rates that we're getting are significantly higher than what we got in Q3 of last year. Then we spent a lot of time just looking at what our leasing velocity is and what are the leases on the books that we have for Q3 so far.
Obviously, still a lot of time to go with new move-ins over the next couple of months. When we compare where we are this time compared to the same time last year, the rates we're getting in the August, September new lease rates are pretty significantly better than, again, the same time last year. You combine that with moderating supply, the absorption that we saw in the first half of the year, but frankly, with a little bit easier comps at this time last year. All those factors play into what we're seeing and the momentum that we're seeing, and that we expect to play out over the back half of the year.
Brad Hill — President and CEO, MAA
All right. Well, no other comments from us. Certainly, if you guys have any follow-up questions, feel free to reach out. Thanks for joining us today.
Source: MID AMERICA APARTMENT COMMUNITIES INC. earnings call transcript (2026-07-30). Management commentary and analyst Q&A are reproduced as delivered; speaker roles as stated on the call.

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