May 3, 2013
Executives
Leslie Wolfgang – SVP, Director-IR and Corporate Secretary Eric Bolton – Chairman and CEO Al Campbell – EVP and CFO Tom Grimes – EVP and CFO
Analysts
David Toti – Cantor Fitzgerald Rob Stevenson – Macquarie Michael Salinsky – RBC Capital Markets Paula Poskon – Robert W. Baird Omotayo Okusanya – Jefferies Dave Bragg – Green Street Advisors Buck Horne – Raymond James
Operator
Good morning, ladies and gentlemen, and thank you for participating in the MAA First Quarter 2013 Earnings Conference Call. The company will first share its prepared comments followed by a question-and-answer session.
At this time, I would like to turn the call over to Leslie Wolfgang, Director of Investor Relations. Ms.
Wolfgang, you may begin.
Leslie Wolfgang
Thank you, Jonathan and good morning everyone. This is Leslie Wolfgang, Director of Investor Relations for MAA.
With me this morning are Eric Bolton, our CEO; Al Campbell, our CFO; and Tom Grimes, our COO. Before we begin with our prepared comments, 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 Safe Harbor language included in yesterday’s press release and our 34-X 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. I’ll now turn the call over to Eric.
Eric Bolton
Thanks, Leslie. We appreciate everyone joining us this morning.
FFO results for the first quarter of $1.25 per share were at the top end of our expectations and represented a record quarterly result. About half of the favorable performance was due to strong results in same-store operating expenses with the balance of the variance due to lower than expected G&A costs partially resulting from some timing differences versus our forecast.
As Al will recap for you in his comments, we have increased the midpoint of our FFO guidance for the year to $4.87 per share as a result of the favorable Q1 result with some offset driven by earlier timing of balance sheet and financing plans. Same-store revenues for the quarter were in line with our expectation as pricing performance drove the results with effective rents increasing in every market across the portfolio.
Top performances were captured in Austin, Dallas, Houston, and Nashville within our large market segment of the portfolio with Fredericksburg, Lexington, and Chattanooga delivering top results in our secondary markets. Resident turnover in the first quarter increased 3% as compared to Q1 last year and a 57% on a rolling 12-month basis.
Resident turnover continues to trend lower than our long-term average. Move-outs associated with single-family home buying represented 20% of our move-outs in Q1 only a slight increase from 18% in Q1 of last year.
Move-outs associated with single-family rental continue to not be a meaningful factor driving only 6% of our turnover in the quarter consistent with the results over the last several quarters. We continue to believe that a recovery in single-family market is a net positive factor for performance across our portfolio.
It’s interesting to note that the top three markets driving 63% of the increase in move-outs during the quarter due to home buying which were Austin, Nashville, and Dallas also posted the strongest rent growth during the quarter. Taking a look at permitting activity and new supply trends, we continue to believe that at this part of the cycle – as this part of the cycle matures, our secondary market segment of the portfolio will generate a more stable performance profile and serve to offset some of the moderation associated with higher levels of supply in the larger markets.
Permitting activity within our large market segment has clearly moved up, but it’s still about 10% below the peak level during 2006 and encouragingly permitting within our secondary market segment, it’s still only running at about 50% of where it was at the peak in 2006. More importantly, when looking at the demand side of the equation, job growth prospects continue to show improving trends and when compared to supply projections suggest that leasing fundamentals should continue to support healthy rent growth.
Looking at updated projections and the ratio forecast in new job growth and permitting activity at a healthy 10 to 1 relationship we continue to believe that while leasing fundamentals and pricing trends would show some moderation from last year’s record performance, net absorption across some markets should remain strong and pricing trends should continue to exceed historical averages. We are actively underway with efforts to sell 11 properties in the portfolio with four of those under contract and expected to close soon.
We continue to forecast total dispositions for the year in the $150 million to $160 million range. As noted in the earnings release during the quarter, we closed on the acquisition of Milstead Village in Atlanta from our Fund I joint venture and expect to close on the one remaining property within the fund located in Houston during the second quarter.
We are currently working on several other acquisition opportunities and remain comfortable with our guidance range for the year of $250 million to $300 million in wholly owned acquisitions. The market environment remains extremely competitive for fully and stabilized properties with cap rates holding steady.
We’ve clearly seen investment capital move increasingly into some of our secondary markets. We continue to believe that our long established record for performing for sellers and extensive deal flow really yield us additional acquisition opportunities this year, work environment is clearly very competitive.
As we enter the peak leasing season we feel good about the outlook for the year. We don’t see any evidence to suggest that the recovering single-family market is a meaningful threat to our ability to capture solid rent growth.
And while new apartment deliveries are clearly accelerating, so long as the employment markets continue to show recovery as we expect they will, we believe that absorption will remain strong. That’s all I have in the way of prepared comments and I’ll now turn the call over to Al.
Al?
Al Campbell
Thank you, Eric and good morning everyone. I’ll provide a few comments on earnings performance and balance sheet activity during the quarter and then I’ll highlight the key assumptions included in the updated guidance.
FFO for the fourth quarter was $55.2 or $1.25 per share which represents a 12% growth over the prior year and $0.06 per share above the midpoint of previous guidance. About half, as Eric said, or $0.03 per share of the favorable performance compared to the original forecast came from the same store portfolio which produced 7.7% NOI growth compared to the prior year versus an expectation of about 6%.
Revenue performance for the first quarter was in line with expectations supported by 4.7% growth in effective rents and stable occupancy levels. Operating expenses drove the favorability in the same store with personnel, repair and maintenance and real estate tax expenses combining to produce the majority of our performance for the quarter.
Real-estate tax expenses in the first quarter benefited from favorable prior year appeals, which is expected to be offset over the remainder of the year by continued pressure on taxes in several of the key areas discussed before. The majority of the remaining out performance in earnings for the quarter was produced by G&A as bonuses, health insurance and professional fees were all below projections for the first quarter with a portion of the favorability related to timing differences.
During the first quarter we acquired one community for Mid-America Multifamily Fund I, a 310 unit property located in Atlanta and entered an agreement to acquire the remaining community in the Fund, a 360 unit property located in Houston. And the gross combined purchase price is $59 million including an $18.3 million loans to be assumed by the company.
MAA owns a one-third interest in Fund I which will be closed following these transactions and the company continues to hold and pursue joint venture investments through Mid-America Multifamily Funds II and III in the future. We continue to make good progress on the development pipeline during the first quarter.
MAA now has three communities under construction with two others recently completing in the lease-up phase. Two lease-up communities both attained 82% occupancy during the quarter and they are expected to be stabilized in the second half of the year.
We funded an additional $12.4 million for the completion of the three communities remaining under construction during the quarter and we took delivery and leased the first half of 2025 South Church located in Charlotte. We expect delivery of the remaining units during the second quarter.
We also expect initial unit deliveries at River’s Walk in Charleston during the second quarter with 31 of the units already leased. Initial deliveries for 220 Riverside located in Jacksonville are expected in the second half of 2014.
Our balance sheet ended the quarter in a great position. During the first quarter, we issued around 325,000 common shares through the ATM program at an average process of 68, 62 per share with total net proceeds of $22 million, which was primarily used to fund acquisition and development activity.
We also repaid $75 million of additional secured borrowings during the quarter releasing the mortgages and increasing our unencumbered asset total over 57% of gross assets. The company is now in a good position to approach the public bond markets for future financing needs.
At the end of the first quarter, the company leverage defined as net debt to gross assets was 43.7%, total debt was 6.3 times EBITDA, and MAA’s fixed charge coverage ratio was 4.5 times. At the end of the quarter, 90% of our outstanding debt was fixed or hedged against rising interest rates supporting a total leverage interest rate of about 3.6% for the quarter.
We expect to increase our protection from rising interest rates with long-term fixed rate financings planned later this year. And just after quarter end, we executed $150 million of interest rate swaps effectively locking a portion of the interest rate on expected future financing transactions.
Finally, given the first quarter performance and updated expectations, we are increasing our FFO guidance for the full year by $0.04 per share to midpoint. We are maintaining our same store guidance, which continues to project strong price and performance and stable occupancy producing 4% to 5% revenue growth for the full year.
We expect operating expenses over the remainder of the year to increase in line with our original forecast as term costs begin to rise with growing leasing activity and re estate taxes reflect of upward pressure in key areas we discussed previously. We also expect timing of funding transactions for the year, primarily the planned bond financing and equity activity, to produce about $0.02 per share of dilution compared to the original forecast for the year as we move somewhat earlier than planned to lower execution risks.
We’ve outlined the major assumptions for our guidance in the press release. In summary, we now expect our project diluted FFO per share for the full year to be 477 to 497 or 487 at the midpoint.
Quarterly FFO per share is expected to be $1.16 to $1.28 for the second quarter, a $1.13 to a $1.25 for the third quarter and a $1.15 to $1.27 for the fourth quarter. Our quarterly guidance ranges continue to reflect the seasonality in our business as well as potential impact of timing on the significant acquisition, disposition and financing planned for the year.
AFO for the full year is expected to $4.10 to $4.30 per share which represents a 66% payout at the midpoint. That’s all we have in the way of prepared comments.
So, Jonathan I’ll turn the call over to you now for questions.
Operator
(Operator Instructions) Our first question comes from the line of David Toti from Cantor Fitzgerald. Your question please.
David Toti – Cantor Fitzgerald
Hey, good morning guys.
Eric Bolton
Hey, David.
David Toti – Cantor Fitzgerald
Just a couple of sort of kind of detail questions. Did you disclose what the rent mix was in the first quarter in terms of growth for new versus renewals?
Tom Grimes
Sure, David, it’s Tom. I’ll rattle those off on the first quarter on a year-over-year basis new lease rates were 3.8%, renewals 4.9%, blended 4.3%.
David Toti – Cantor Fitzgerald
Should we expect those kind of rates going forward through the rest of the year to be consistent with your total revenue expectation?
Tom Grimes
Total revenues were 4% to 5% for the year and it really is driven by pricing so, I would tell you that generally, yeah.
David Toti – Cantor Fitzgerald
Are you seeing any kind of convergence in those rates at this point or are they still – are they maintaining a relatively consistent spread?
Tom Grimes
Right now, they’re staying pretty balanced and consistent. We’re not seeing anything closed certainly on that.
David Toti – Cantor Fitzgerald
Okay, and then I guess how is that – how do we think about that versus the performance gap that we’re seeing between the (inaudible) group, the large and the secondary markets together from a revenue perspective. That gap seems to be closing a little bit at the revenue line.
Is that more of a function of occupancy then?
Tom Grimes
No, I mean, I think what you’ll see is the large margins begin to moderate as new construction comes and play and it will begin – you will begin to see the secondary markets begin to pick up a little bit as their advantage and deliveries begins to show. The timing on that couldn’t exactly predict for you, but we don’t think the Texas is going to roll the way Texas has been rolling for the infinite future is just being great for us, but at some point we’ll begin to moderate.
David Toti – Cantor Fitzgerald
And just one last question, so a year from now, maybe we expect that we could expect that the gap between the revenue performance for those two buckets to be a little bit closer than it is today, sounds like?
Tom Grimes
Yes, we would think that our crystal ball sometimes is foggy but that’s what we would anticipate at this point.
David Toti – Cantor Fitzgerald
Okay. Thanks for the detail.
Tom Grimes
Sure.
Operator
Thank you. Our next question comes from the line of Rob Stevenson from Macquarie.
Your question please.
Rob Stevenson – Macquarie
Good morning, guys. Can you talk a little bit about some of the markets that have been a bit of a surprise operationally to you to the upside and downside thus far in the year relative to expectations?
Tom Grimes
Sure, Rob, I mean, I have probably historically underestimated Texas’ strength a little bit, I mean, it is – it’s encouraging to see what it is continue to do and then I think Jacksonville is a real bright spot. I think a lot of folks have thought that it was not a great place to be and its performance was 5% revenue stable occupancy and growing rents is pretty encouraging.
On the little bit slower side and not really surprising seeing some of the things – we would have expected I think the secondary markets to come in a little stronger in places like Columbus, Georgia but that is a market that has the ability to do great things, it’s just been a little slow lately.
Eric Bolton
Yeah, I will tell you Rob, this is probably the biggest worry bead in the portfolio now to me would be Raleigh. I think that’s a market broadly just getting a lot of supply.
It’s kind of all over the city and I think that’s probably one of the weaker markets I would expect over the next 6 to 8 quarters, but as Tom says Texas just continues to be quite strong. There is a lot of supply picking up in the Texas markets, but the job growth engine there is so robust it just continues to handle it.
But all-in-all, we do think the secondary markets will continue to show growing strength as we get into next year in particular.
Rob Stevenson – Macquarie
Alright and then Al, I mean you guys did only 60 basis points of expense increase. When you look out over the year, I mean is – does this bode, is it just a timing issue or are you, sort of, at four months through the year now?
Are you guys running ahead of what your expectations were for expense growth for the full year?
Al Campbell
Well, thank you. First quarter was better than we expected.
There is no question, Rob, and as we talked about really that was couple of things real estate taxes and really turn costs. And taxes are somewhat timing and that we’ve got some favorable appeals in the first quarter and we continue to expect pressure in the back half of the year, so it is somewhat timing.
And on the turn costs we certainly have down in our forecast rising turn costs over this year as we talked about. We expect that will be the case in the second, third, and fourth quarters and especially as we get into more leasing activity in the second and third quarter.
So, we saw some benefit in the first quarter that was some timing and some unexpected favorable surprise. And in terms of our guidance we carry that through the back half of the year that performance, but our same-store performance as it was is intact and so we expect it from the second quarter on to be about what we thought.
Rob Stevenson – Macquarie
Okay, and then just the last question. Eric, when you take a look at the supply that’s coming online is some of your bigger – of the sort of larger markets, what’s going on with construction costs there?
I mean are the numbers still working for people if they stick a shovel in the ground today or six months from now from a numbers standpoint when you consider land costs and then plus what you have see in terms of inflation, in terms of material and labor?
Eric Bolton
I think it’s getting tougher Rob. I was at a meeting last week with a number of developers talking about the growing pressures surrounding lumber costs and labor costs in particular and if the single-family housing market continues to pick up and you continue to see building taking place there, the labor situation for the multifamily developers is only going to get tougher.
And I think that this rising pressure on construction costs and development costs could begin to act as a bit or a moderator to the level supply heading into ‘14, ‘15 kind of delivery. So, from a perspective of not being a big developer, I’m kind of encouraged to see these trends picking up.
I think it is starting to create pressure and these fields are not penciling out as well as they were a year ago.
Rob Stevenson – Macquarie
Okay, and then I lied. One last question, may I know have you guys given the tier in the market with the properties for sale, have you guys seen any sort of impact thus far from the presumed changes to Fannie and Freddie financing?
Al Campbell
Not really at this point Rob, we’re certainly seeing a lot of people bidding on projects we’re seeing pricing be about what we thought and as we reflect in our continued guidance. So, at this point we’ve really haven’t seen much impact in that.
Eric Bolton
And frankly we’re seeing some of the life companies coming in increasingly to some of these markets offering some incredibly attractive terms 7.5, seven year money. And so we’re not seeing any financing issues that cause us to worry about our ability to continue to cycle capital out of these secondary markets.
Rob Stevenson – Macquarie
Is that – are the life guys going to smaller and regional guys or is this basically available to you and the other sort of bigger players only?
Eric Bolton
They are certainly going broader than they have in the past I think because they see multifamily is a good industry in a pretty good yield and given the risk they are not going to go to some of the markets but they go broader than they have in the past which is supporting the market.
Rob Stevenson – Macquarie
Okay, thanks guys.
Operator
Thank you. Our next question comes from line of Michael Salinsky from RBC Capital Markets.
Your question please.
Michael Salinsky – RBC Capital Markets
Hi, good morning guys. Just, following-up on the disposition question, can you give us a sense how dispositions are going to play out for the year just based upon what your marketing – maybe how much you expect to close in the quarter and kind of what you think it’s going to close in the back half of the year?
Al Campbell
Yeah Mike, we’ve got as Eric mentioned I think in his comments we’ve got four assets under contract. I think we would expect us to close near the last part of the second quarter maybe one or two spill into the very first part of the third quarter and that’s about half of the plan for the year.
After that they are fairly evenly spread probably another group in the third quarter and another group in the fourth quarter of roughly equal sizes.
Michael Salinsky – RBC Capital Markets
And you’re still thinking late second quarter, early third quarter in terms of the unsecured debt issuance. And also just in terms of being a first time issuer, what kind of spread are you expecting at this point?
Al Campbell
Yeah Mike, we – as we’ve talk about I think in our original guidance we had it occurring late July, early August, we have moved that up a little bit just because the market is in really good shape obviously our balance sheet is in great shape. We are ready to go to the market and it’s just timing of when we need the money at this point.
The market is red hot. You’ve seen a lot of deals come through at very good spreads and obviously treasuries remain low.
So, we believe if we went to the market right now we can get of treasury somewhere in the 175 to 200 over treasuries for the applicable period, which if you do the math on that, at the high end of that, you are at 3.25% for a 10-year deal. And that’s pretty good, that’s inside of inside of Fannie Mae and Freddie Mac.
That’s a good pricing. We would hope to do that or even a little better assuming current conditions and so, we’re moving as quickly as we can given the dilution on how the other factors in our plan to execute on that strategy.
Michael Salinsky – RBC Capital Markets
Okay. Switching gears here to operations, did you get April leasing trends and I think you mentioned a 4.3% blended increase – average increase in the first quarter.
What was that versus the first quarter of 2012?
Tom Grimes
It was up versus 2012, excuse me, honestly I don’t have that, I think it’s down, we are expected there is some moderation there first quarter, it was down of – first quarter of ‘12 was a little around 7% blended.
Eric Bolton
We would definitely expect the rent growth trajectory to be a little lower this year then it was last year so, that’s not unexpected but blended 4.3%, I don’t know off the top of my head what it was for Q1 last year, but it was I’m sure north of that.
Tom Grimes
Yeah.
Michael Salinsky – RBC Capital Markets
Okay, fair enough. And finally, Eric, can you just touch upon, kind of, the acquisition pipeline, I know the first quarter is usually slow, but how is that firming and kind of, what are you seeing in terms of pricing difference right now between your primary and secondary markets?
Eric Bolton
Well, we are looking a lot of things right now, Mike, it’s – as I said pretty darn competitive. We still feel good about $250 million to $300 million guidance that we have out there.
We’ve got couple of deals under contract currently that are going to due diligence so, I can’t comment on the certainty that they’ll close but they’re looking pretty good. I would tell you that we’re routinely seeing for the quality of the assets that were after the pricing in the large markets versus secondary markets versus secondary markets, the GAAP is probably around 50 basis points, I mean, pricing running 5.5% to 6% in the secondary markets and 5% to 5.5% in the larger markets and it’s particularly for the stabilized deals it’s super competitive, but pricing is holding up real strong.
Michael Salinsky – RBC Capital Markets
I appreciate the color guys. Thank you.
Eric Bolton
Thanks, Mike.
Operator
Our next question comes from the line of Paula Poskon from Robert W. Baird.
Your question please.
Paula Poskon – Robert W. Baird
Eric, given your comments on construction costs, what is your appetite for continuing to do the one or two development deals a year and are you still getting a healthy volume of inbound calls from those private or regional developers with attractive projects that you’d be interested in?
Eric Bolton
But we definitely are feeling a lot of those phone calls, Paula and that continues to be our favored way pursing development opportunities. We – I’ll tell you I’m probably had a bit more cautious about it today then I would have been a year ago just given the volume that we are seeing – what we are seeing is increasing – increasingly more developers who are interested in a presale and taking the risk off the table sooner rather than later and so, we went to a period sort of towards the end of last year where the conversations were more around with the developers wanting to have a continued interest of some hype in the project sort of once we got stabilized, there were some sort of promoter, some sort of back-end opportunity that they could continue to participate in.
Today, the conversation at least from what we are seeing is a little bit more urgent and they are not as aggressive about wanting to stay in and they are little bit more interested in wanting to get a certainty of giving out, which I think says something and about, sort of, what the developers, I mean there is obviously a lot of talk about supply so, I just think it’s a time to be prudent and cautious and we have not – we don’t have any other development situation or opportunities underway right now and if someone comes to us with a really compelling opportunity we would certainly have an interest in it, but we are – I think a lot of the supply that it’s going to get delivered in ‘14 and ‘15 is going to create some good buying opportunities, and we are okay with being patient.
Paula Poskon – Robert W. Baird
Thanks very much. That’s all I have.
Eric Bolton
Thanks Paula.
Operator
Thank you. Our next question comes from the line of Omotayo Okusanya from Jefferies.
Your question please.
Omotayo Okusanya – Jefferies
Yeah quick question. Just in regards to transaction markets.
I mean, you guys are saying things are very competitive right now. Does that compel you to consider selling more assets and specifically selling more assets in primary rather than secondary markets?
Eric Bolton
Not really I mean our disposition strategy is really built around the idea of continuing to cycle capital out of investments that we feel like have margins that we can do better with. And that really is to process that we go through to decide where – which assets to sell and it’s not so much a market driven decision as much as it’s after CapEx almost if you will and AFFO margin decision that drives our selection process.
And so we’re selling in large markets and we’re selling in secondary markets but the idea that we need to monetize a bunch of investments because of some portfolios shift or strategic objective that we have we don’t really have that concern of that need. So we – that $150 million to $160 million maybe $175 million range it’s a level that we think is about what we’re very comfortable with, we’re comfortable with ability to redeploy that capital and keep manage the earnings process through this and so that’s kind of the way we’re approaching it and I think you will continue to see that over the next couple of years.
Omotayo Okusanya – Jefferies
That’s helpful. And when I just kind of think about guidance, this quarter, your prior guidance, the midpoint was $1.19, you guys came in at $1.25 which is a $0.06 beat, but you raised overall guidance for 2013, the midpoint by $0.04.
So, I was kind of curious why just the $0.04 raise versus at least the $0.06 just to account for the 1Q beat?
Al Campbell
Tayo, this is Al. The $0.06 as you mentioned $0.03 call it same-store performance, $0.03 G&A and other items did carry through the year, but that’s all set by couple of cents of items that as talked about earlier and mentioned the Mike’s question.
We are changing the timing of some of our transactions here, the bond transaction a little bit sooner, and if you saw we raised if you put together our plans this year and we talk about before we think we’ll need around $25 million in equity for the full year to maintain our leverage given the dispositions and everything we have going on. So, you can see we have done most of that in the first quarter.
So, that was a little bit earlier than we had originally planned. Those two things cost about $0.02 neg against the $0.06.
Omotayo Okusanya – Jefferies
Got it. Thank you very much.
Great quarter.
Eric Bolton
Thank you.
Al Campbell
Thanks Tayo.
Operator
Thank you. (Operator Instructions) Our next question comes from the line of Dave Bragg from Green Street Advisors.
Your question please.
Dave Bragg – Green Street Advisors
Thank you. Good morning.
In your press release you left the door open to more future joint venture purchases. Can you just talk about under what circumstances we should expect to see this from you and how the level of interest from partners compares to recent years?
Eric Bolton
Well, Dave, we have – we mentioned two funds. Fund II and fund III actually Fund II is a fund that is sort of kept off we really only have one investor that we do business with one probably capital investor and the only fund we really active if you will and looking to add new assets to Fund III.
Having said that, that fund in our strategy for using the fund is really get towards value add acquisitions looking for properties that we define is being seven years of age or older that we can go in we have and those particular types of transactions particularly in today’s market are very, very hard to find in terms of pricing that we feel comfortable with fully stabilize assets at that level are very easily financed. And so we really have not dialed into our forecast this year any expectation doing any more JV acquisitions this year.
Having said that, we’re still looking at them and we’re still being given opportunities to bid on them. But the pricing is just very, very frothy particularly in that market given the financing availability.
Dave Bragg – Green Street Advisors
Okay, thank you. And Eric, we have spoken about this many times in the past, but given the increased level of purchases from single-family rental investors, especially in Atlanta and Phoenix and it seems as though those two markets slowed disproportionately for you in the first quarter.
Are you observing more competition from the single-family rental asset class than you were, say, a year ago?
Tom Grimes
Hey, Dave, this is Tom. That hasn’t changed at all at this point in terms of move outs.
Atlanta, I think it has the ability to pick up steam here in the very near future, we have one property that was off which was really some people changes that we’ve made adjustments on that pulled the market down a little bit and that group closed at 95.7 and we’ve got a nice pop and occupancy which will hope to drive revenues in Atlanta. Phoenix is an encouraging story all around, I’m optimistic about where it’s going particularly our assets to the north is surrounded by the great deal of infrastructure in business construction.
So, well, with single family of rentals is the factor it is not at this point, the factor that’s changed much.
Eric Bolton
I think Dave just as you say talk about this lot. I do think that we continue to believe that the single family rental threat is not a meaningful threat for us.
We’ve been at 6% of our turnover due to move outs for home renting for now probably 8 to 10 quarters. If that number would have – let’s say it moves to 8% and it’s never been that I don’t see a giving proportionately a lot of worsen it is right now, I mean, going back several years ago, the lowest it’s ever been is about 4% so, it’s kind of hang in a very steady level and I continue to just believe that people make their decisions in terms of renting a home versus renting apartment for a lot of lifestyle reasons and the people we’re catering to just really I think are going to continue to favor the apartment rental over the home rental.
Dave Bragg – Green Street Advisors
Okay, fair enough. Thank you.
Eric Bolton
Thanks, Dave.
Tom Grimes
Thanks, Dave.
Operator
Thank you. Our next question comes from the line of Buck Horne from Raymond James.
Your question please.
Buck Horne – Raymond James
I was just wondering if you have any recent statistics on rent-to-income ratios for new leases signed.
Eric Bolton
Yeah, sure. The portfolio average for rent income ratio is about 17%, which is still down from the 19% or a peak sort of the part of the recession and then March is, sort of today’s incomes on today’s rents is 16.7.
Buck Horne – Raymond James
That’s great, thank you and any comment on foot traffic in the communities this leasing season and one quick one for Al. I just wondered if you could help quantify the magnitude of the property tax swing you’re thinking you’ll see later this year.
Al Campbell
Sure. On the first quarter foot traffic was right where we needed to be to so essentially flat with last year and then really look at April is that it’s picked up a little bit on – in the 3% range, but just still positive and exactly what we needed to be.
Eric Bolton
Buck, I’ll answer you on the taxes. In first quarter, given the – we have projected for the full year of about 6%, 5.5% to 6.5% guidance still believe that’s correct.
The first quarter was little over 3% because of some of the credits we got because of the assessments and appeals that were favorable. So you can do some math on that.
We are – we would say that the second, the third, and fourth quarter higher, probably second quarter 4% to 5% and little higher in the third and fourth, just because comparisons from credits and things we had in the prior year.
Buck Horne – Raymond James
Alright, that’s very helpful. Thank you guys.
Eric Bolton
Thank you.
Operator
Thank you. This does conclude the question-and-answer session of today’s program.
I would like to handle the program back to Eric for any further remarks.
Eric Bolton
Thank you. I appreciate everyone joining us this morning and we’ll look forward to seeing everyone at NAREIT in a few weeks.
Thanks.
Operator
Thank you. Thank you, ladies and gentlemen for your participation in today’s conference.
This does conclude the program. You may now disconnect.
Good day.