管理層發言
Good morning, ladies and gentlemen, and welcome to the MAA Second Quarter 2026 Earnings Conference Call. During the presentation, all participants will be in listen-only mode. Afterward, the company will conduct a question-and-answer session. As a reminder, this conference call is being recorded today, July 30, 2026. And in consideration of time, we have a one-question limit. I will now turn the call over to Andrew Schaeffer, Senior Vice President, Treasurer and Director of Capital Markets at MAA, for opening comments.
Thank you, Regina, and good morning, everyone. This is Andrew Schaeffer, Treasurer and Director of Capital Markets for MAA. Members of the management team participating on the call this morning are Brad Hill, Timothy Argo, Clay Holder, and Robert DelPriore. Before we begin with prepared comments this morning, I want to point out that as part of the 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 1934 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.
Well, thank you, 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 unprecedentedly 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. 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 are 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 markets 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 dynamics, combined with the decreased availability of capital for new projects, make disciplined investing in new developments an attractive capital allocation option. In addition to the Kansas City project where we started construction in the second quarter, we started construction on a project in Nashville, Tennessee, in July. And next month, we expect to start construction on a project on the land we purchased in Northern Virginia.
With one more start later in the year, we are on track to get 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. But 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 contributions 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 against 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 will turn it over to Tim.
Thanks, Brad. 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-over-lease growth improved 170 basis points sequentially from the first quarter, 20 basis points ahead of the acceleration achieved from the first quarter to the 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-over-lease rates were 5.2% for the quarter. As a result, blended lease-over-lease 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 remains 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 billed rents, 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-over-lease pricing. Austin, though still an underperforming market, showed good momentum and achieved blended lease-over-lease 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 same 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 pressure 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 and 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 at 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. The 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 2,012 interior unit upgrades, bringing our year-to-date total to 3,500 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 and average per-unit spending of $5,130, 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 properties 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 will look to expand our scope in this initiative in 2027. Our community-wide Wi-Fi initiative, which began in 2024, continues to expand. We have 28 live properties where the service is rolling out to residents as leases are signed. 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 a potentially later seasonal peak. Our strategic decision to push new lease pricing where possible in the 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 current position sets us up to capture momentum in new lease pricing later in the season and achieve renewal rates consistent with the second quarter, 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. That is all I have in the way of prepared comments. Now I will turn the call over to Clay.
Thank you, Timothy. 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 Timothy highlighted, our teams continue to demonstrate an ability to control costs, maintain strong resident retention, and maintain high resident satisfaction. That consistent execution remains a key strength of our operating platform and contributed 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 predevelopment costs during the quarter. At June 30, 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 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 Timothy 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 4.5 times.
At June 30, 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-draw 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. In addition, 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 and contributing incremental earnings 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 to 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.
分析師問答
We will now open the call for questions. If you would like to ask a question, please press *, then 1, on your touch-tone phone. If you would like to withdraw your question, press *1 again. Our first question will come from the line of James Feldman with Wells Fargo. Please go ahead.
Great. Thanks for taking the question. Comparing some of your comments on July and thoughts on the third quarter to what you delivered in the second quarter and then the revenue revision, can you give us some comfort or talk us through how you decided to cut the revenue guide now, how much you decided to cut the revenue guide now, and what gives you comfort that this will not be the same situation in the third quarter or fourth quarter?
In terms of needing to pull back, I will talk about what we are seeing in July and Q3, and I think that is 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 have made the right decisions is what we are seeing for August and September. For renewals in the entire Q3, we have retention rates well above what we saw this time last year and well above what we saw in Q2, and we are continuing to see renewal rates in that 5%-plus range. We have visibility into pretty much all of Q3 at this point; probably 98% of our renewals are locked in. When we look at new lease pricing and what we have done on the pre-lease side, we still have about 40% of our new leases or so that will come over the next two months.
But when we look at the pre-leasing for August, we are running 70 to 80 basis points better than we were this time last year. For September, we are running even higher than that. With continued demand—lead volume is up 7% to 15% compared to this time last year, and visit volume is up close to 10%—all these factors point to what could be a little bit of an extended prime leasing season. Regarding the guidance change...
The one thing, to Timothy’s point, is we are still seeing very strong acceleration as we work into the back half of the year. But we are not seeing it at quite the same pace as what we had initially expected coming into the year. So we are still seeing the trajectory move in the direction we expected, just not at the same pace that we had expected.
James, I will add a couple of comments. I think it really starts with what we are seeing on the demand side for the back half of the year. Across the board, we are seeing really good demand across our markets. In the markets where we have heavier supply—Phoenix, Charlotte, Raleigh, Savannah, and Nashville—those markets are a bit more difficult for us right now. We have a bigger hole to dig out of for those, but we are showing progress. For the second quarter, almost 80% of our markets posted positive blends. The recovery is broad-based. Two-thirds of our markets are showing blends above our portfolio average. The markets below average are predominantly some of these higher-supply markets. We have a bigger hole to dig out of for those, but we are making progress. On the demand piece, second quarter absorption across our markets was 1.8 times new deliveries. We are seeing really strong demand, and as we continue through the balance of the year, we believe more of those poorer-performing markets will start to show stronger pricing power, particularly when we look at the blended rates in the third and fourth quarters.
Our next question will come from the line of Eric Wolfe with Citi. Please go ahead.
Maybe just to follow up on James’s question, can you discuss your guidance in the second half from a blended rent growth perspective, so what you are forecasting in the second half specifically? And to make sure I understood the components of what you are seeing now: you expect your August and September blends to increase from July because renewals are higher and your retention is higher. I just want to make sure I heard that correctly.
To confirm your second point, we would expect August and September pricing to be a bit better than July for all the reasons we discussed. For the full year, we are at positive 0.3% blended year to date through June. Our full-year forecast is somewhere in the 50-basis-point range blended for the full year. With 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 put that in perspective, Q3 blended performance would be a little better than Q2, and Q4 performance would look a bit better than Q1. That is how to think about it: expecting August and September to show the strength we are seeing now, a little less moderation in Q4 based on demand, moderating supply, and not experiencing the same level of drop-off we saw in Q4 of last year.
Our next question will come from the line of Nick Yulico with Scotiabank. Please go ahead.
Thanks. Good morning. Going back to commentary on pricing for assets, Brad, you mentioned cap rates below 5% are still being seen in your markets. If that is the case and you are still dealing with a slow recovery in certain markets, why not buy back more stock and sell assets rather than put more money into the development pipeline right now?
Nick, first consider that the mid-4% cap rate range is for the types of assets we want to buy—brand-new assets in higher-growth markets. What we have purchased in the last few years has often been one year old and sometimes in lease-up. That is different from the older assets we are selling. The property we sold this year in Raleigh was older and had significant CapEx needs; market cap rates for those are probably in the mid- to upper-6% range on average. We have four properties to sell this year, and those will be in the high-5% to low-6% range. Regarding share buybacks, our overall focus is on driving long-term TSR without introducing earnings volatility. We continue to believe in allocating capital to development; average yield expectations for development, with conservative underwriting, are in the 6% to 6.5% range. The NOI growth from those typically exceeds our overall portfolio by 50 to 100 basis points. Given that supply continues to be lower than long-term averages and is projected to remain so for several years, we expect to deliver into a strong operating fundamental market. We continue to believe development is the right allocation for long-term TSR at the moment.
Our next question will come from the line of Jana Galan with Bank of America. Please go ahead.
Thank you. Good morning. I was hoping you could talk a 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? And can you discuss concession activity overall in your markets?
On the lease-up portfolio, there has not been a change in strategy; we are starting to see momentum and good demand. Some lease-up properties gained significant occupancy over the last quarter: MAA Nixie gained over 20% occupancy, Liberty Row over 30%, and Plaza Midwood over 20%. The number of units in lease-up and supply pressure are starting to moderate, and we are seeing that with the lease-up portfolio. The two Charlotte assets are still a bit behind due to Charlotte's supply pipeline; those are the ones we are watching. On concessions broadly, there is not a lot of change from last quarter. Overall, four to five weeks is pretty consistent across most markets. We are seeing improving concession activity in Orlando and Charleston, while Charlotte and Austin still show broader usage of concessions. Overall, the picture is pretty consistent with recent months.
Our next question will come from the line of Brad Heffern with RBC. Please go ahead.
You mentioned in the prepared comments that second quarter in-migration was the strongest ever since you started tracking it. Can you provide any numbers or additional color?
We saw in-migration increase from about 10% in the first quarter to about 13% in the second quarter. It was an overall increase across markets rather than driven by one market. While one quarter does not constitute a long-term trend, this incremental demand component is something we are monitoring going forward.
Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.
Thanks. Good morning. Timothy, I want to clarify: Is the expectation for blended rate growth in Q3 specifically from lower turnover and stable renewal rate growth, or are you also seeing new lease rate growth improve? Also, can you share what new lease rate growth and occupancy were for July?
It is a bit of both. Renewals are a large part; retention rates in Q3 are higher than in Q2 and higher than Q3 of last year, and we are running 5%-plus renewals versus about 4.5% last year. That plays a big part. We are also seeing momentum on new leases. With demand and our pre-leasing, August and September new lease pricing looks better than the same time last year. Regarding comps, pricing dropped off significantly around this time last year, and we do not expect that to recur. For July, I expect we will end around 95.4% occupancy, and new lease and blended pricing will look similar to what we reported for Q2.
Our next question will come from the line of Adam Kramer with Morgan Stanley. Please go ahead.
Thanks. On capital allocation, dispositions seem wrapped up for the year and acquisitions are likely limited. Should we expect more share repurchases? And can you update the debt side? What are the capital allocation priorities for the near term?
Adam, our approach is balanced between near-term and long-term opportunities. Disposition plans for the year are nearly wrapped up: we sold two properties and have two more that should close by year-end. One of those is a JV property in D.C. The proceeds will be similar to what we've used so far to repurchase shares. Our priority continues to be development, and we are investing in the Wi-Fi initiative, which is highly accretive. We're growing redevelopment and repositioning programs to drive earnings performance. That initiative performs better as new supply stabilizes, where rents are, on average, over $500 per unit higher than our rents. We will continue to lean into these programs. Clay, do you want to add on the debt piece?
All in, we have a $300 million maturity coming due in September. We have plenty of capacity with the term loan in place, and proceeds from dispositions will help cover that maturity. There is a good chance we come back to the market late this year or early next year as we push our development pipeline, but that is our current plan for the next few months.
Our next question will come from the line of Haendel St. Juste with Mizuho Securities. Please go ahead.
Thanks. Going back to underperforming markets—Charlotte, Raleigh, and Nashville—contrast that with Sunbelt markets showing improvement like Austin and Orlando. Is this due to submarket location or something else? Also, some color on the top two-thirds of the portfolio where blends are better than the bottom third would be helpful.
For markets performing well, it is generally broad-based across submarkets. We are seeing momentum in improving markets on a submarket basis—Austin is a good example, where some near-south submarkets have gained momentum and Round Rock and northern assets have started to show improvement. We've had properties that were mid- to high-teens negative in new lease pricing a couple of quarters ago that are now mid-single-digit negative—roughly 1,000 basis points of improvement. As concessions burn off, we get quick momentum in supplied submarkets. In larger markets, urban submarkets generally do better, such as in Dallas and Atlanta. In weaker markets like Charlotte and Raleigh, the underperformance is more broad-based across submarkets due to extreme supply. Those will become more of a story as we head into next year.
Haendel, adding to that, our diversification strategy allocates capital across large and mid-tier markets. A lot of the markets in the top portion of performance are mid-tier markets that face less supply pressure, so the demand-supply balance favors demand and drives stronger performance. We expect that as demand and absorption continue, the more-supplied markets like Charlotte, Phoenix, and Raleigh will improve as new supply gets absorbed.
Our next question will come from the line of Alexander Goldfarb with Piper Sandler. Please go ahead.
The Sunbelt has a long history of growth but also an amount of oversupply to deal with. The lack of supply nationally—how does that affect your thoughts on other markets? Are there markets you would now consider where previously you might have said no? Or is it simply that a lack of product on the market makes it hard to establish a presence economically?
We continue to evaluate new markets but remain focused on high-demand markets. We would not enter a market just because it has low supply—demand is the key driver of long-term performance. We have considered markets like Columbus, Ohio. We want business-friendly environments and low taxes are part of that. Consider the demand drivers across our markets: in the second quarter, 18 markets showed greater than 1% job growth, and 11 of those are in our footprint. Only five showed greater than 2% job growth, and four were in our markets. For population growth across one, five, and ten years, 14 of the top 15 markets are MAA markets. We believe we are in the right markets to allocate capital for long-term performance. The recovery is broad, and as new supply gets absorbed in other markets, demand fundamentals should pay off.
Our next question comes from the line of Ami Probandt with UBS. Please go ahead.
The Census Bureau data has shown an uptick in permits across some Sunbelt markets. Is this a sign that developers are becoming more comfortable with rent growth trajectory and ramping up starts again?
Developers want to develop, but from the developers we engage with through our pre-purchase platform, we are not seeing an uptick in starts. Equity capital for new developments remains challenged, and some equity partners have backed out of projects, creating partnership opportunities for us. Permits can ebb and flow and the relationship between permits and starts is not always immediate, but new starts for the last 13 quarters have trended below long-term averages. We do not see a material pickup in starts from here in the near term.
Our next question will come from the line of Anthony Paolone with JPMorgan. Please go ahead.
Good morning, guys. Going back a bit, Brad, you mentioned the cautious consumer. Was there anything specific you were seeing from the consumer perspective that caused the slowdown in new lease pricing? Were tenants shopping around more? Any color on what is driving that shift would be appreciated.
We have a very healthy resident and prospect base: rent-to-income ratios are at 18%, our best in a long time, and collections remain strong. In markets with many options and lots of supply, prospects shop around and take longer to decide. We have seen that behavior, which affected new lease pricing. The positive is that, coming into Q3, we are seeing more optimism among prospects and pre-leases for the next couple of months, which indicates more confidence and supports pricing momentum.
On the impact to new lease pricing in Q2, we saw people taking longer and shopping more. Pre-leasing was down a bit relative to last year, indicating people are making decisions later and doing more immediate move-ins, which is the most volatile part of the new lease pricing curve. We are seeing that change in Q3 with a bit more pre-leasing and momentum, which gives us confidence for the rest of the year.
Our next question will come from the line of Steve Sakwa with Evercore ISI. Please go ahead.
Thanks. Expenses have been a bright spot this year. What should we think about for 2027 expense growth? Any one-time items or things that helped this year that may not repeat next year?
Steve, our continued focus is on controlling expenses, and we have a long history of that. I do not see any one-time savings or large items on the horizon that would materially change this. I would expect next year to look somewhat similar, though it could be a bit higher growth rate given where we are today. Overall, I expect expense trends to remain consistent with our current discipline.
Our next question will come from the line of Michael Gorman with BTIG. Please go ahead.
As you've gone through this cycle, have any of your market exposures changed structurally such that your view of expansion or even existing in those markets has changed? For example, Denver has had tougher regulation. Any commentary would be helpful.
Broadly, not really. We have seen some regulatory change in Nevada, but we only have two properties there and it is not core for us long term. There has been activity in Virginia; the D.C. market has many developments, but we are selling our one property there, so we will not be exposed to that. We do have some markets where we hold one or two assets that are not long-term holdings. Those markets continue to perform well. Dallas remains a very strong demand market and is one we could consider adding to or recycling capital from over time. Overall, we're not seeing large structural changes across our markets. In Denver, supply is coming down rapidly, and fundamentals should turn as a result.
Our next question will come from the line of Alex Kim with Zelman & Associates. Please go ahead.
On the same-store expense growth guide: year-to-date is about 90 basis points at the midpoint. How much of the improvement reflects sustainable operating efficiencies versus timing items? Also, can you discuss the outlook for insurance given the repricing that occurred in July?
For same-store expense growth for the year, we are guiding to about 1.75%. Benefits are coming across the board—repair and maintenance and personnel costs were favorable in Q2, and I expect that to continue into the back half of the year. Staffing levels are healthy, which typically lowers costs when turning units, and higher retention rates help as well. We continue to pilot properties to centralize and specialize efforts, which provides ongoing benefit. On insurance, we had a successful renewal on July 1: total premiums declined by over 12%, and for the back half of the year and full year, we expect a little over a 6% decline in insurance costs year over year. This marks our third consecutive year of declining premiums. Also, we continue to focus on property taxes; the NOI declines in some markets are impacting valuations, and we push back where valuations assigned to us are inappropriate.
Our next question will come from the line of John Pawlowski with Green Street. Please go ahead.
On development economics for the pipeline, given the spread between face yields and net yields after concessions, what is the true net effective cash yield on this vintage of deliveries, assuming no change in market rents? When these projects stabilize, what kind of yields are we looking at today at net effective rents?
For our current lease-up pipeline, projected NOI cash yields average in the 6% range. Today, because of higher concessions, those are delivering closer to a 5% yield. The good news is that on renewals across lease-up properties, we are getting about 9% to 10% lease-over-lease increases, so concessions are burning off and we expect to reach our underwritten yields of roughly 6%. For new underwriting today, we think yields are in the 6.25% to 6.5% range, including roughly 4% contingency on construction costs. We're delivering projects 2% to 3% below our expected costs, and we trend rents to stabilization over three to four years at about 2% per year. Our underwriting typically is 2% to 4% below market expectations for rent growth, which provides conservative assumptions.
Our next question will come from the line of John Kim with BMO Capital Markets. Please go ahead.
I know you touched on this, but can you clarify why you expect rents to accelerate in August and September if July was similar to Q2? What momentum did you see in June and July that gives confidence the acceleration will occur toward the end of the quarter, given rents typically peak in August?
We are seeing demand indicators such as lead and visit volume materially higher than last year. Strategic decisions we made in late Q2 were aimed at maximizing pricing in Q3, and that is playing out. On the renewal side, retention and renewal rates are significantly higher than a year ago. We have reviewed leases on the books for Q3 so far; while many move-ins remain over the next months, rates we are getting for August and September are significantly better than the same time last year. Combine that with moderating supply, first-half absorption, and easier comps from last year when pricing dropped substantially in August and September, and we expect the momentum to continue and not to experience last year's drop-off.
We have no further questions. I will turn the call back to MAA for closing comments.
No further comments from us. If you have any follow-up questions, feel free to reach out. Thanks for joining us today.
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