Good morning, ladies and gentlemen. Thank you for participating in the MAA Second Quarter 2015 Earnings Conference Call. At this time, we would like to turn the conference over to Mr. Tim Argo, Senior Vice President of Finance. Mr. Argo, you may begin.

Thank you, Erika. Good morning. This is Tim Argo, SVP of Finance for MAA. With me are Eric Bolton, our CEO; Al Campbell, our CFO; and Tom Grimes, our COO. Before we begin with our 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 Safe Harbor language included in yesterday's press release and our 1934 Act filings with the SEC, which describe risk factors that may impact future results. These reports, along with a copy of today's prepared comments and an audio copy of this morning's call, will be available on our website. During this call, we will also discuss certain non-GAAP financial measures. Reconciliations to comparable GAAP measures can be found in our earnings release and supplemental financial data. When we reach the question-and-answer portion of the call, I would ask for everyone to please limit their questions to no more than two in order to give everyone ample opportunity to participate. Should you have additional questions, please re-renter the queue or you're certainly welcome to follow-up with us after we conclude the call. Thank you. I'll now turn the call over to Eric.

Thanks, Tim, and we appreciate everyone joining us this morning. MAA posted strong second quarter results with same store NOI increasing 7.5% over the prior year, generating core FFO per share of a $1.36 which is a record performance for the company. I’ll tribute the strong results to three factors. First, the demand for apartment housing is strong across our high growth region. The steady improvement and employment conditions coupled with the surge and new renter household formations are more than offsetting to higher levels of new supply. We feel that our approach is diversifying capital across a number of markets in the high growth Sunbelt region coupled with also diversifying the portfolio across suburban inner loop and a growing number of more urban locations provides a more balanced platform that is better positioned for deflecting new supply pressure. This is worth noting that the 5.3% revenue growth captured this quarter from our secondary market segment of the portfolio, is the strongest performance we’ve seen since of third quarter of 2011 and we’re encouraged with the trends that we’re seeing. Secondly, our strong Q2 performance reflects various opportunities and synergies harvested from our merger with Colonial Properties. The 60 basis point improvement in same store NOI margin reflects improvements in revenue management practices and unit turn efficiencies within the legacy Colonial portfolio as well as a number of opportunities driven by the largest scale of the company. As we’ve noted for the last couple of quarters, now that we’ve completed a full year harvesting merger related operating benefits and while there are still some additional opportunities left to squeeze, there will be some year-over-year moderation for merger lift taking place over the back half of this year. However, it’s important to note as outlined in our earnings guidance, we certainly…

Thank you, Eric, and good morning everyone. Our record results were driven by an increase in revenue per occupied unit of 5.3% up to a $1,100 and a 100 basis point increase in average physical occupancy. July trends continue to be steady. Our 60-day exposure which is current vacant, plus all notices for a 60-day period is just 7.1%, down a 130 basis points from the same time last year. July blended rents on a lease-over-lease basis from 5.6% or 20 basis points better than the same time last year. The great results for the quarter did pressure our personnel expenses is more of our property teams are on track to meet their performance based compensation targets. Personnel costs less [indiscernible] were up just 3.7%. Property taxes also pressured expenses up 7% as municipalities particularly in Texas were aggressive in their valuations. The benefits of our strong operating platform on the legacy Colonial communities continues to pay dividends. The more robust approach of our revenue management practices has allowed the Colonial communities to capture rent growth of more than a 180 basis points above their market peers. Our long-term focus on average [indiscernible] to this group plus the portfolio average down 20% for the quarter and to 22.8 days for the month of June. On the market front, the vibrant job growth of the large markets is driving strong revenue results. In this group 11 of our 13 markets had at least 6% revenue growth. Large market leaders included Atlanta, Orlando, Austin and Raleigh. The secondary markets which have lower supply pressure achieved 5.3% revenue growth. In these markets we also benefited from improved job growth, the Colonial operating improvements as well as the advantage of a robust re-operating platform in markets that don’t see many recap our platform. Notably…

Okay, thank you Tom, and good morning, everyone. Off about some additional commentary on the company’s second quarter earnings performance, balance sheet activity and on our rise got us for the full year. FFO for the second quarter was $112.4 million or $1.41 per share, and core FFO which excludes certain non-cash and non-routine items was $118 million or $1.36 per shares, that’s compared to $93.9 million or $1.18 per share for the prior year, which is $0.07 per share above the midpoint of our previous guidance and represents a 15% growth over the prior year. Recurring capital expenditures for the quarter were $21.9 million or $0.28 per share, which produced core AFFO for the second quarter $86.1 million or $1.8 per share compared to quarterly dividend of $0.77 per share which is strong coverage. As Tom discussed, we were pleased with the strong operating performance for the quarter which produced the majority of the favorability to our forecast as pricing, occupancy levels and fee income are above our quarterly projects. During the second quarter we acquired two new communities for a combined purchase price of $111.3 million, bringing our total acquisition investment for the full year today to approximately $158 million for three new properties. During the second quarter we also sold 14 of our communities for growth proceeds of $180 million and recorded book gains of about $105 million. Immediately following the end of the quarter with closing [Audio Gap] traditional of our communities. For gross communities of $121 million and expect to record additional book gains approximately $54 million during the third quarter. These sales complete our full year disposition plans with 21 properties averaging 25 years of age being sold for $354.3 million, representing a 5.8% economic cap rate based on last 12 months NOI with…

Thank you. [Operator Instructions] And we’ll go first to side of Austin Wurschmidt from KeyBanc Capital. Please go ahead.

Hey good morning. Just touching on the guidance little bit, with the – you guys have walked in 5.7% growth year-to-date and where are you standing in terms of versus the full year the 4.5% to 5.5%, you’re tracking ahead of that and I know that comps get more difficult in the back half of the year but with occupancy in the high 96% range and the blended rate growth of 5.6%, I mean is there something that you’re seeing in July or further out that is concerning or that you think that there could be some significant deceleration in the second half of the year?

Austin, this is Al, I’ll take the first part of that per share, and the poor thing here is to know what are guidance is, we’re actually not projecting a deceleration in the back half of the year. And what you’ll see as you looked to the numbers are really, we’re projecting strong pricing performance, continued to stabile occupancy at last year’s level which was very high call it 95%, 96% range. And then really just hitting the impact of the tougher comps, from the first half and back half of last year, and so that’s really what’s underscoring the guidance. And then matter of fact, do the math you’ll look at pricing at 4% to 5% - 4.5% for the back half.

What do you guys sending out in terms of renewal offers? And where is occupancy as of the end of July?

So, it’s Tom, Austin. The average physical occupancy through July is 96.3% and for August we got 6% except and September 5.2%, October is a little too early to talk about at this point.

And I would just add just systematically here, the point is, is that the moment that we’re seeing we expect that to continue. We don’t anticipate any sort of deceleration taking place. The tougher comps is solely the issue here that would suggest or implied some weaker performance if you will over the back half of the year, on a year-over-year basis only. I mean the strong trends that we’re seeing we certainly expect those to continue and as Tom just pointed out, occupancy remains very strong, turnover remains very low and your rent growth is very much in line with what we’ve been seeing, is just that the back half of last year’s win, the lift really began to be harvested out of our merger and so the comps just get little tougher. And that’s all that took play here.

And primarily in occupancy and fee marginal lifts.

Okay. And then second question, just vis-a-via your comments about development underwriting becoming a bit more difficult. How comfortable are you guys with ground up development today and is it something that you’re considering beyond the two expansion opportunities that you announced this quarter?

We continued to talk to numbers of developers as I think, I mean we’re not really a development company ourselves. So our approach has always been to find arrangements, partnerships if you will where we could work with the developer to bring out a ground an opportunity that we’ve feel like would make sense for us. We’re looking at lot of deals right now but I would just tell you that with most of the deals that we’ve been seeing the lease-up assumptions that we feel comfortable that underwriting to given other supply that we see coming into the market is not creating the kind of returns on cap where that we feel good with right now. So, it’s tough to make those numbers to work as it is to make deals – make sense for us right now on the buy side. Typically where we’re finding our best opportunities as represented in the three deals that we’ve done thus far this year are situations where the properties are in some state of lease-up. And it maybe a local developer, regional developer that is anxious to put capital out and get going on another project or there is some sort of financing pressure that’s building. And that’s typically where we’re finding our best buying opportunities right now, best deployment opportunities as deals that are in lease-up. We’re talking and we’ll continue to look at development deals but we’re being pretty cautious about it right now.

So in terms of you starting or commencing a ground up development that’s unlikely, you’re more focused on looking at potential acquisition opportunities that are in lease-up.

That’s we’re finding our best opportunity, I would tell you that we may find an opportunity for ground up development later this year. We’re looking at several – I’m not sure I would say it’s unlikely, but I would say it’s going to be – there is a challenge to it. The deals we’ve looked at thus far have not comment without force.

Great. Thanks for the time.

We’ll take our next question from the side of Gaurav Mehta from Cantor Fitzgerald. Please go ahead.

Hi, good morning. Eric, I think in your prepared remarks you talked about strong operating trends further improved. Can you elaborate on that, is that – does that mean that you expect the quarter growth trajectory to continue for the next couple of years or just more color on that?

Well, I think that the further improvement comment was really applied to really all three aspects of sort of the factors that I felt like really propelled our performance this quarter. I mean we still see some more lift that we think will squeeze out of our merger with Colonial, particularly in the redevelopment or rehab effort on unit interior renovation, much of our focus now is on the Colonial portfolio, legacy Colonial portfolio for that effort. We continue to see some opportunity with renters insurance and some other things that fee programs that we’re rolling out. Certainly the market fundamentals broadly continue to suggest that we’re actually going to – if you look at sort of job growth to supply projections, most markets that we’re looking at look to be stronger next year as compared to this year. And we think that as we continue to harvest the opportunity or the redeployment of capital this year in some of these lease-up deals that we’re going to continue to see a boost in next year’s performance from those deals as well. So, there is a number of things that all suggest to us that further improvement is likely in the card for us.

Okay. And my second question is on commercial and land sales, it seems like you guys reduced the guidance for 2015. Can you comment on that?

Yeah, we had one retail asset that it was a legacy Colonial property that fell out of contract in the second quarter, and we’ve juts opted to sort of pull back on that deal at this point. And we’ve got some things that we’re working on at the property, so we think stabilize it, enhance value and we may look it bringing that back to market at some point in the future, but we just decided when the deal fell out to just pull back on it and that’s really all that’s happened. There is just one asset is what we’re talking about, so it’s a fairly insignificant part of the balance sheet overall.

Okay, thanks for taking my questions.

You bet.

We’ll go next to the side of Rob Stevenson from Janney. Please go ahead.

Good morning, guys.

Hey Rob.

Eric, I mean given the success in pricing on the year-to-date dispositions, what – and these – I had conversation with the board about it putting another $100 million, $200 million of the bottom to your assets out for sale and monetizing them today?

Yeah Rob, it is, I mean it’s something we talked about a lot. I would tell you, I mean we feel pretty good about where we have the portfolio at this point, I mean it’s important to recognize that over the last five years we’ve sold almost 50 properties of our 13,000 apartments. We have made a massive amount of sort of repositioning of the portfolio over the last five years and of course, this was a big year for us. And with the sales that had been consummated this year we really like where we’ve got the portfolio, so we don’t feel any pressure if you will to accelerate or do anything other than as we move forward now. And we’re perfectly content to – continue to own and operate the existing portfolio for some time. Having said that, we’re always going to be looking at opportunities to cycle capital and continue to improve the growth profile, the company or the portfolio. But we’re at a point now where I feel like that sort of matched funding the dispositions with redeployment opportunity is something we’re little bit more sensitive to right now. We don’t feel – we sort of discounted that worry a little bit over the past couple of years in an effort to just harvest the opportunity to cycle it out at pretty good pricing in this very low interest rate and low cap rate environment. And so we feel pretty good with what we’ve got right now, we’re going to be a little bit more focused on looking at match funding going funding, of course, it’s tough to put money out right now. So we’re going to, as opportunities and the market comes our way from an acquisition’s perspective that may create an opportunity to recycle little bit more later this year and to next year but we’re pretty set with where we are right now.

Okay. And then question for Tom, I mean Houston, I mean people [Audio Gap] worried about falling energy prices and all of the supply that’s coming online in that market and been looking for the cracks and the fall. I mean is it – when I look at your results I know they’re pretty good, I don’t know with Houston, I mean is it high on the expense side but revenue seems to be doing decently. Is there anything that you’re seeing in that market that’s causing you any concern as you think about the back half of this year and into 2016?

I mean, I agree with what you said there Rob, and sometimes the performance of a market on sort of rent growth especially at 06/06 is [indiscernible] looking because it’s reflective of the re-pricing that we’ve done over the past year or so. It is something that we’re monitoring, it’s 3% of our portfolio but turnover for the quarter there was down. What I would tell you is, we expect to maintain occupancy levels around 95% but expect rents to soften a bit. New rents are already flat there and renewal acceptances are coming back in the 3.5% range. So, given the slowdown in jobs and the steady supply there that’s how on our list of worrying markets.

I would tell you Rob, I mean I think to suggest that there is not, I mean there is going to be moderation in Houston there is just no question. I think we see it coming and we’re going to continue to watch it but as Tom mentioned, it’s only 3% of our NOI so it’s not a big worry beat for us per se but that’s the market that I think you’ve got to see softness, more softness over the next several quarters.

Okay. And specifically on the expense side there, would that just property taxes when you’re looking at the year-to-date numbers?

Right, that’s absolutely right. I mean all those taxes came out aggressive as we kind of alluded to in our press release. Houston unbelievably was one of the most aggressive and the poor thing there is, you fight of all these, Houston we’re not done fighting, it’s some of the other places we’ve completed, we’ve kind of gotten some of the winds and know we’re going to lose. Houston, we still have some to go, it is high right and hopefully we’ll work on that but that’s the point for expenses.

All right, thanks guys.

Thank you, Rob.

And we’ll take our next question from the side of Omotayo Okusanya from Jefferies. Please go ahead.

Yeah hey guys. This is actually George on for Omotayo. Just wondering if you can just comment on the acquisition environmental, so in terms of the buyers that are out there, is there any change in the financing environment for the buyers of some of the properties in the treasury markets?

No, I don’t think there is any real change other than potentially just capital willing to take a little lower rate of return. I mean the financing environment is very strong, these are institutional buyers that are involved in acquiring these assets that we’ve sold. Agency financing being used in all cases and then looking at deals that we’ve been chasing in the market place that have gone to someone else. Again, these are all institutional buyers, in many cases again using agency financing. So I would tell you there has been no real change per se other than just I feel like that there is probably a little bit more aggressive of underwriting taking place today versus a year ago. And I think at some level those probably are returns on capital that are trending lower and people are willing to accept that today versus where they were a year ago.

Okay. And then just on development front in what you guys are sort of hearing in your markets, is there assume it can change in development costs and is it harder for people to get labor to do builds?

Well, from the developers that we talk to, yes. We hear that land cost and labor cost continue to be a challenge and I think that it is hopefully going to create some level of discipline in terms of the amount of supply that ultimately will be brought to market because the deals are just getting a little bit harder to pencil out. What we’re finding is that the yields and the margins in these deals are starting to go down a little bit, someone willing to be a lot more aggressive on the lease-up assumptions and the pricing assumptions because the cost have gone up. And so people would just getting increasingly aggressive on lease-up and pricing and with supply coming into number of these markets, depending on the submarket situation some of the underwriting that would be required to make the numbers work, or things that we just didn’t get comfortable with and backed away from most of the deals that we’ve been looking at.

And to support Eric’s comments just a little, in 2015 in our markets we expect 94,700 units to be delivered. In 2016 we expect 95,500 units to be delivered, so where it’s flattening out with that.

All right, thanks guys.

Thanks, George.

We’ll go next to the side of Greg [indiscernible] with Morgan Stanley. Please go ahead.

Hey guys, how are you doing?

Hey, Greg.

So my first one is, how much of your acquisition volume in the range of the year do you think will be stabilized versus the recently delivered on a stabilized stuff you’re talking about, where you see the best opportunity? And then what are the return hurdles and underwriting assumptions you’ve used when you underrate the un-stabilized comp product?

Well, I would tell you overwhelmingly we would expect the acquisitions to be non-stabilized deals, that’s where to find the best opportunity. And I have no reason to believe at this point that, I mean we’re looking at several other deals right now that are all either non-stabilized or just approaching it stabilize. So it’s – I think that overwhelming is still going to be that. And the assumptions of course vary quite a bit by market, I mean what we underwrote in Scottsdale, Arizona is going to be a lot different than what we assume to Richmond, Virginia but it’s going to vary quite a bit. But in terms of return requirements, I mean we typically are looking for deals that are going to create stabilized yields, NOI yields approaching six, returns on capital, 10 are better is generally what we’re looking at. And it’s hard to find the deals out there that meet those criteria right now but, what where we’re finding it is again in these non-stabilized deals or in the case of as an example to the properties that we’ve acquired this year in every single case they were under contract previously and they came back to us. And so that’s my comment about requiring a lot of patience right now, that’s where it takes.

And just to add in the forecasting, we’ve – our acquisition assumptions for the rest year pretty low for the backend of the year. So if we’re not able to close those deals of share, really it won’t have a big impact in the forecast, maybe half a penny or so more 2016 will be the fall.

Okay. And then I mean you guys have talked obviously in your prepared remarks about how strong the momentum is, fundamentals are great. So as the years progressed, have you guys become willing at all the lower the cap rate hurdles or the return profiles you’re looking for to get acquisitions done given that things are fundamentally so strong and looks like the cycle may or less or longer than people’s thought?

No, the answer is no.

Okay.

Our cost to capital in our share price is a big part of that obviously, so no, we’re not lowering our return [indiscernible].

All right, that’s good to hear. And then just one more follow-up, in the event that you can’t get all the acquisitions done you’re hoping to back half of the year would you considering doing a stock buyback instead?

It depends on where our share price is. I mean every time we get ready to deploy capital out we have to ask ourselves is this the best use for that money. And if instead of acquiring an existing lease-up or something could be built and looking at that as an investment alternative versus buying our own portfolio, what sort of return expectations do we have out of our existing portfolio. So it’s – we’ve done share buyback in the past, we know what we understand the concept, we have a program in place and something we look at all the time.

All right, great. Thanks guys.

Thank you.

We’ll go next to the side of John Kim from BMO Capital Markets. Please go ahead.

Thank you. I was going to ask if you can venture an estimate that you could share with us on what you think the value of your portfolio is on a per unit basis. This is all mid context of your acquiring at a 180,000 per unit, developing at a 147,000 per unit, selling at 69,000 per unit but these are all relatively small compared to your overall portfolio?

Well, I mean we don’t publish an NAV. I would tell you that at $77, $78 a share I don’t know where we are today right now, but it’s $77, $78 a share that’s based on our math that’s an imply cap rate of around 5.8%, 5.9% economic cap rate. And considering that we just sold 21 properties 25 years of age in treasury markets at an economic cap rate of 5.8%, I mean clearly we think there is some upsides there. And so in terms of the per unit cost that works out to right now at about or around a 110,000, 115,000 units somewhere in that range in terms of the implied price per unit.

And what you’re seeing in the market is I would mention higher than that?

Oh yeah, absolutely.

Okay. Also wanted to ask for just some clarification on the increase in same store expenses for the year. I can understand same store revenue increasing because the rents are going up but the same store expenses seems like a pretty big increase, realizing a part of that is tax driven but what are the other components of that higher?

John, this is Al, I’ll give you color on that. Taxes are biggest piece of that for sure as the line of share, I mean you got remember it’s over third of our expenses. And so we’ve talked about that a little bit pressure from Texas and Florida, it was little more than we have thought going into the year, so we raise our guidance there for 100 basis points or real estate taxes. I think the other largest piece is really personnel and that’s really we had a very good performance in the first half of the year, and certainly [indiscernible] paying our folks for the very good performance. But those are two biggest things and without personnel I think – without the incentive cost to personnel…

3.7.

3.7, so it’s not a significant pressure for me other than the good news that we’ve had. So those are two primary items.

What about repair and maintenance, are you expensing some more given the [indiscernible]?

I mean at our NIM we had 1% tick-up and moves-ins and that changed a little bit but our cost per move is still basically the same.

The other areas are pretty much a normalized growth rate.

2% to 3% on everything else, it’s really real estate taxes, it’s the big issue and incentive compensation but we’re getting that more than paid back on the top line. So from a margin perspective where the pressure is, is taxes.

Okay, thank you.

Okay, thanks John.

We’ll take our next question from the side of Rich Anderson with Mizuho Securities. Please go ahead.

Thanks, good morning. So, on the guidance, how much of the increase to 2015 was basically just a roll forward of the outperformance in the second quarter and how much if any, did you adjust third and fourth quarter because of the performance – the outperformance in the second quarter?

Well, Rich, this is Al, I’ll just give you the highlights of that. We obviously raised guidance $0.12, $0.07 comes from the second quarter so we added five to the back half of the year from our previous guidance, I think three in the third quarter, two in the fourth quarter. And so there we certainly, some of that was carry forward of that momentum, I mean it’s underwritten as we said, we’ve had strong pricing, that strong pricing will continue, will be 4% to 4.5% through the back half year and occupancy very stable, basically flat, the last year it was very high. If you remember, if you go back a year we really started capturing strong occupancy in the back half of last year, so our compassions on that will be a little more challenging, we’ll have that marginal lift but those are the drivers of that forecast in that increase.

Okay. So, I mean my logic is, if you beat by – increase by $0.12, $0.07 in the second quarter and you added $0.03 to the third quarter then you should be able to beat by $0.04 when reported three months from now, right?

Well I’ll tell you, let me [indiscernible] the overall arching point I think is really one of the take years, we’re certainly not saying the back half is going to decelerate it anyway. But one of the big thing to understand about the performance in the first half of this year, if we really got strong performance on a marginal lift from occupancy and fees from the Colonial portfolio really rung out the synergies there. So that was a part of the first half performance that really – we’ll hold that gain, we’ll hold that water level in the tank but we certainly will have a tougher year-over-year comp going forward to think about it in the projections.

Rich, I mean we feel good about the back half of the year forecast and the $0.05 that’s implied lift and the improvement in our original forecast. But we still got – the Q3 is a big quarter, I mean we still got a lot of leasing to do, there is still some more tax bills to come in and we don’t really have good clarity on yet. So, there is still some wildcards out there but we feel good about the forecast we got.

Okay. And my second question is, having sold $350 million of assets, is there any kind of sense of obligation I guess to almost have to redeploy that capital. You kind of put yourself in a position where you had to and in the midst of a very competitive market and new supply coming in. And I guess that my question is, has it crossed your mind at all to just lot – really significantly reduce your acquisition activity, and maybe even consider a special dividend if you had to.

Well, I will say this Rich. The one thing we won’t do is just put money out because we need to put money out. And if every single deal that we take a look at, we’ve edit it pretty thoroughly, we discuss it pretty actively with our board of directors and we’re very disciplined on every dollar we put out. And it very well maybe that we won’t buy anything else this year, I don’t think that’s the case, and I’m optimistic given the volume of opportunities that we’re looking at that in fact we will do some more acquisitions but it’s hard, no question about it. Having said that, if we wind up at the end of the year not putting any more capital out and we just wind up strengthening the balance sheet and getting ready for what I believe is going to be some great buying opportunities later this year and into 2016. We’re perfectly content to have that happen. We think we’ll be able to avoid any kind of special dividend requirement this year but we’ve got enough sort of 1031 shield opportunities to cover that this year. But there is certainly no pressure that we are feeling at all to just put the money out because we sold all these assets, and we’ll see what the future holds.

So, why you think there’ll be better opportunities in 2016 to acquire versus now?

Because there is got to be more product coming in, more new product coming into the market place, more lease-up stress is the consequence of that. We likely are going to be looking at higher interest rates, we’re going to be looking at developers and capital probably more interest than they’re not. I mean as you know, a lot of these development deals that take place in the Southeast, the ones that we bought this year are all kind of smaller regional, developers, players they don’t build these things with the intent of owning them for very long. And they’re all about getting in and getting out. And I think getting – as volume picks up, interest rates pick up I think the getting out becomes a little bit – people get a little bit more nervous about it. And so I just think that, we’ve been through this – I’ve been here for 21 years, we’ve been to periods of time where putting money out is hard. And we’ve always stuck to our discipline during those periods, we’ve never put it out and we’ve always then win and it’s always cycle through that we’ve been running to some great buying opportunities, and I feel that that’s exactly what’s going to happen here.

Got you. Thank you.

Thanks, Rich.

Thanks, Rich.

We’ll take our next question from the side of Dan Oppenheim from Zelman & Associates.

Thanks very much. Just staying on those acquisitions for a second, with both West Creek and Skysong buying those near 80% occupancy and there is still some lease-up to do but now tremendous amount given your comment in terms of potentially more supply coming from lease-up strips next year but also your generally bullish outlook in terms of the demand environment. Would you look to potentially get better stabilized yields and buying assets over the coming time if they were below 80%, maybe if you look at Skysong with the innovation center there, should see pretty strong demand there at Scottsdale, what would you think?

Yeah, I think that if you get into opportunities where the project is either just coming out of the ground and leasing has just started, usually our yield opportunities are better, are higher. And so I think that we very well may find situations later this year and next year where the yield opportunities actually going to be better than what we’ve done so far this year. It’s hard to say but I think that there is reason to believe that that’s likely to be the case.

Okay, thanks very much.

And we’ll take our question from the side of [indiscernible] from Green Sheet. Please go ahead.

Good morning.

Good morning, [indiscernible].

So you mentioned earlier Eric in your opening comments the desire to be a little bit more inner loop and more urban. Will that – is that something that you’re going to look for in your acquisitions or it’ll be more acquiring when it comes to market?

Well, to a large degree it’s more acquiring what comes to market, it just happens that that’s where a lot of the opportunity is, that’s where as you know, a lot of the development has been going on and I think that’s where some of the greatest stress is likely to be over the next couple of years. And just as a consequence of being opportunistic in our buying we think that we likely will see more opportunities in the inner loop or urban areas. And we’re – we would like to see some of that happen and get a little bit more balance in the portfolio. At the end of the day, what we’re really – as I said in my earlier comments, we’re really all about trying to have a very balance portfolio of investments in an effort to sort of whether all various points of the cycle. And I think that obviously we’ve had a heavier weight towards more suburban locations historically, but if you look at some of the deal – really over the last three or four years much increasingly much more of a product has been were urban oriented, inner loop oriented. And I think that that’s where we’re going to continue to see more opportunity.

Okay, thank you. And then given the success that you highlighted with the Colonial portfolio and getting the synergies and the revenue management, how do you think about future portfolio opportunities?

We would be interested in those opportunities if they make sense for us. I mean we talked to lot of folks and we do look at opportunities from time-to-time and historically lot of things we’ve looked at is not either been product quality or the market mix that would make sense for us but we certainly are – we’ve learned a lot through this process that we went through the last two and a half years or so and we feel very comfortable and confident executing on another portfolio transaction should the opportunity present itself.

Great. Thank you very much.

You bet.

And we’ll take our next question from the side of Drew Babin from Robert W. Baird.

Good morning, guys. Great quarter.

Thanks, Drew.

Good morning, Drew. Thanks.

Question on dispositions, considering that you’re selling your non-core, more treasury assets [indiscernible] cap rated, it’s not inconceivable to me that the cap rates on – not your best assets but maybe a little up the quality spectrum could go perceivably in the low 5s or something like that. With selling slightly better assets the cap rates like that possibly the repurchase stock be anything that you would consider?

Well, again I think that we’re at a point right now where we are scratching and clawing and finding what we feel like are some pretty good investment opportunities in the deals, in the expansions and so forth that we’ve talked about that where we’ve put out money this year. And I think that the opportunities for, perhaps even better yields and returns are on the horizon. We’re very comfortable with the portfolio we have today, and so I mean we’re going to continue to look at it Drew, and think about what’s the right sort of plan to continue to improve the quality of the portfolio, but as I say we feel pretty good with what we’ve got right now. And so, commencing some effort right now to just continue to sell off a bunch of assets in an effort to buy back stock is not – it doesn’t seem justified right now, it doesn’t seem warranted. I think that conditions may change that would cause the math to differ from what it is and we may very well go in a different direction but right now, we’re just going to continue to be patient with putting capital out and see where we get to. And meanwhile continue to harvest the value out of the existing portfolio that we have, and continue to put forth what we believe is likely to be pretty good core effort for growth.

Portfolio improvement, obviously some of your assets with – and it’s up for CapEx needs are around the door now. And as you go forward, I mean is there any way you can quantify your maintenance CapEx spend per unit and where that may go next year relative to this year on a percentage basis?

I think this year recurring capital is $600 to $650 per unit and I think that obviously reflects some of the assets we sell this year. Likely it’ll maintain around that $600 unit range as we continue to invest what we need in our portfolio. Overtime it is conceived that would come down as we continue to put new rack that…

That came down from last year’s same store group change.

Yes, that’s a good point, it did come down from last year. And so we would expect that general trends to continue probably slowly as we continue to recycle though, Drew.

Great, thank you.

And we’ll take our next question from the side of Buck Horne from Raymond James. Please go ahead, sir.

Hey, thanks. I wanted to go back to the comment about the portfolio mix, the urban loop discussion versus suburban and I was wondering if you could just help us quantify where the portfolio stands today in terms of what you would consider, how much NOI is coming from urban core versus suburban and then ideally what would you like the longer term or ideal mix of that urban versus suburban to look like?

Well, today I mean I would put it at close to suburban locations I’ll put probably 60%, 65%, inner loop probably in the 20% range and more traditional urban as a balance. But there is not a specific goal per se, I mean for the – it really starts with where are the best opportunities to deploy cap and create it’s best return on capital and I just believe that some of the better buying opportunities are going to be in some of the more urban locations over the next couple of years, because that’s where all the supply is largely coming out online. I think it’s also important to recognize that in a lot of these Southeast markets in particular, some of the more attractive apartment submarkets are in these suburban locations and I can – I mean that’s where a lot of the employment base presides. You’ve tend to see a lot newer retail, newer entertainment, restaurant venues and high quality product some of the better school systems. And so I think that we like having a very healthy sort of suburban component to our portfolio given the region of the country we do business in, because that’s where people want to live and that’s where some of the best apartments, submarkets exists. So, I think that on overtime just as a consequence of looking for the better investment opportunities I wouldn’t be surprised to see our suburban mix going a little down to close to 50%, and the inner loop and the urban sort of split 25% of piece and that probably be a pretty good mix, and I think that that’s I would be surprised to see there is trend in that direction but I think it’s important to – there is not a specific target for the portfolio as a whole as much as it’s more of a market driven kind of an analysis.

Okay, that’s helpful. And then secondly, just going to an affordability kind of question, no offense that Charleston [indiscernible] over the world but you don’t quite generate the same level of income as you would out in Southern California or the Bay Area. So, how do you think about the rent increases you guys are generating and how are you seeing the rent income ratio as trend and how much further do you think you can keep saying aggressive on price before you run into some affordability issues?

Yeah. I think affordability in the country is an issue and it certainly is to agree in our market but on a comparative basis, we have a long way to run. So probably in 2011 Buck, we peaked at our rent income ratio at about 18.5% and I think the national average is closer to 30%. It’s dropped since then and frankly there is not really much of a trend, it’s just sort of balance between 17% and 18%. Given the turnovers at in all time low move-outs to rent increases are low, and as a steady stream of people willing to move in, I just don’t worry about it much on this point, but at a social level it’s a point of concern, but as a – it’s an issue that our company is dealing with well at this point. Our markets are handling very well.

Okay, thank you. Great quarter.

Sure. Thanks, Buck.

And we’ll take our next question from the side of John Benda from National Securities. John, your line is open.

Hey, good morning [indiscernible].

Hey John, good morning.

So just a really quick question for you, can you guys talk about the current expansion opportunities in your distant portfolio, maybe for assets that were – that kind of came online in 7, 8, 9 and going to downturn and then the second phase it starts to roll out. Is that a big opportunity for you?

We have a few more – I put maybe a handful of additional opportunities but not much. We’ve capture most of that. We’re always, we’re looking at a couple of acquisitions right now that has some expansion components to it but most of that has been captured at this point.

Okay, and then just secondly, who you’re seeing as the main sellers when you’re looking at [indiscernible]? There is a lot of banks – is the banks finally unloading ROE that they put back and kind of waited your turn around before they have to take the mark on there or?

No, it’s really small regional developers or smaller regional or local developers is typically who we’re dealing with. On the acquisition front really I can’t think of anything that we’ve acquired the last five years, it’s been bought out of a foreclosure or bankruptcy or anything of that nature. So it’s really just small developers, private equity that kind of thing.

All right, thank you very much.

Yeah.

We’ll take our next question from the side of Carol Kemple from Hilliard W.L. Lyons. Please go ahead.

Good morning.

Hey Carol.

Hey Carol.

I noticed your property management expenses dropped year-over-year and quarter-over-quarter. Was there anything specific or should that be a good run rate going forward?

I think the important thing to notice there, there is some noise year-over-year given the merger and all the things we had gone on from IT cost and inner changes and all those things I think Carol, if we’re to point to capture on that and if you look at property management expenses and the G&A, we think of that as overhead together, we combine those buckets together in our minds and our projects and think about it. Those two lines together, the year-to-date run rate you’re seeing is right on for the year. And so if you take that year-to-date run rate those two double it, you’ll come up right at the midpoint of our guidance for overhead which is our property management and G&A for the year. So we’re right on track, that’s fully inclusive of capturing all the $25 million in same synergies that we talked about over the last year or two. And so it’s on track and we feel good about that.

Okay, thanks.

Thanks Carol.

And at this time, we do have no further questions.

All right, well thank you very much for being on the call this morning. And I hope to talk to everyone soon, thanks.