Mid-America Reports Second Quarter Results

MEMPHIS, Tenn., July 31 /PRNewswire-FirstCall/ -- Mid-America Apartment
Communities, Inc. (NYSE: MAA), or Mid-America, reported net income available
for common shareholders for the quarter ended June 30, 2008, of $5,427,000, or
$0.20 per common share, as compared to net income available for common
shareholders of $5,628,000, or $0.22 per common share, for the second quarter
of 2007. In the second quarter of 2007, Mid-America recorded total gains of
$3,669,000 from the disposition of two properties and a small land parcel;
without these gains, net income available per common share in the second
quarter of 2007 would have been $0.08.
Funds from operations, or FFO, the widely accepted measure of performance
for real estate investment trusts, was $27,828,000, or $0.95 per share/unit,
for the second quarter of 2008, as compared to $23,396,000, or $0.84 per
share/unit, for the same quarter of 2007, a strong per share/unit increase of
13%. Second quarter 2008 FFO per share/unit was at the mid-point of Mid-
America's guidance. Results for 2007 include FFO of $226,000, or $0.01 per
share/unit, of gain from the sale of excess land. Excluding this, the increase
in FFO per share/unit for 2008 was 14%.
For the six months ended June 30, 2008, net income available for common
shareholders was $9,890,000, or $0.38 per common share, as compared to
$13,461,000, or $0.53 per common share, for the six months ended June 30,
2007. In the first six months of 2007, Mid-America recorded gains from the
disposition of two properties, the sale of land, gains from the sale of joint
venture assets and an incentive fee totaling $10,017,000; without these gains,
net income available per common share for the six months ended June 30, 2007
would have been $0.14.
For the six months ended June 30, 2008, FFO was $54,810,000, or $1.91 per
share/unit, compared to $47,488,000, or $1.70 per share/unit, for the six
months ended June 30, 2007, a per share/unit increase of 12%. Results for 2007
include FFO of $0.04 per share/unit of incentive fee from the sale of Mid-
America's interest in a joint venture property and $0.01 per share/unit from
the sale of excess land. Excluding this, the increase in FFO per share/unit
for 2008 was 15%.
A reconciliation of FFO to net income and an expanded discussion of the
components of FFO can be found later in this release.
Second Quarter Highlights:
-- Continued strength in operations and favorable interest rates helped to
generate a strong 13% increase in FFO per share/unit over the same quarter a
year ago.
-- FFO per share/unit of $0.95 was the highest second quarter result in
Mid-America's history.
-- Same store net operating income increased 3.6% over the same quarter in
the prior year.
-- Physical occupancy at the end of the first quarter for the same store
portfolio was a strong 95.0%. This compares to 95.3% in the same quarter a
year ago.
-- Leasing concessions declined 53% on a same store basis compared to the
same quarter a year ago.
-- The number of residents moving out to purchase a house declined by 21%
on a same store basis as compared to the same quarter a year ago dropping to
25% of total turnover, from 31% a year ago.
-- Mid-America acquired one wholly-owned property in lease-up during the
quarter.
-- Mid-America completed the renovation and repositioning of 1,100
apartments in the second quarter of 2008 with rent increases averaging 13%.
-- Mid-America's fixed charge coverage ratio for the quarter reached a
record high 2.52, up from 2.20 for the second quarter of 2007.
Acquisitions: Another High-End Property Added to Portfolio
On May 21, 2008, Mid-America purchased Providence at Brier Creek, a new
313-unit apartment community that was just completed in 2007. The property is
located in the affluent Brier Creek Planned Urban Development sub-market of
Raleigh, NC with close proximity to the Research Triangle Research Office
Park. This high quality community with large floor plans, resort style
amenities and unit garages continues to up-grade the quality and long-term
earnings outlook of the Mid-America portfolio.
Mid-America is conducting due diligence on three additional acquisition
prospects for 100% ownership which are all currently under contract. Should
negotiations be successful, closings are anticipated in the third or fourth
quarters.
Dispositions: Four Properties Targeted
Four properties which are located in Greensboro, NC; Memphis, TN; Grenada,
MS; and Atlanta, GA, totaling 990 apartments with an average age of 26 years,
have been targeted for disposition, with marketing commencing in late July.
Anticipated proceeds are $40 million to $45 million, with an approximate sales
cap rate of 61/2%.
New Development: Initial Leasing Started at Copper Ridge
St. Augustine II (124 apartments in Jacksonville, FL) and Copper Ridge I
(216 apartments in Dallas, TX) are scheduled for completion in late 2008 with
initial leasing and occupancy already beginning at Copper Ridge. We anticipate
that the first units at St. Augustine II will be available for lease in the
third quarter of 2008.
Brier Creek II (200 apartments completed in the fourth quarter of 2007, in
Raleigh, NC) was 81% occupied at quarter end and the property is scheduled to
stabilize in the fourth quarter of 2008.
Property Redevelopment: Expanding and Generating Strong Investment Returns
Redevelopment of 1,932 apartment units was completed in the first half of
2008, at an average cost of $4,672 per unit, compared to 2,075 units
redeveloped at $5,452 per unit for all of 2007. The average monthly rent
increase achieved on the renovated apartments in the first six months of 2008
was $88, representing a 12% increase from the average rent level of
non-renovated apartments. Mid-America anticipates completing the redevelopment
of approximately 3,000 apartments this year with a total investment of $14
million. Mid-America also anticipates undertaking exterior repositioning
projects at select communities in the second half of 2008, totaling
approximately $2 million.
Operating Results: Continued Strength and Stable Outlook
Eric Bolton, Chairman and CEO, said: "Our investment strategy focused on
the high-growth Sunbelt region, diversified across markets providing a solid
mix of growth and stability continues to generate good performance.
Mid-America's second quarter FFO result is a record for any second quarter in
our company's history. The long-term outlook for solid employment conditions
throughout our markets, low levels of new apartment construction, and less
pressure from the single-family housing market, all combine to support what we
believe will be stable operating fundamentals over the balance of this year
and more robust conditions in 2009. Our expectation of steady positive
performance is further supported by Mid-America's limited exposure to those
markets that are under pressure from an excess supply of condominiums and
single family homes.
"As a result of continued weakness in new employment trends and steady
pressure from rising fuel prices and inflation worries, some moderation in
leasing traffic was evident in June as compared to the very strong leasing
conditions of a year ago. As a result, we believe it is likely that rent
growth performance will moderate slightly over the balance of the year and are
now forecasting that same store net operating income growth in 2008 will range
3.0% to 3.5%, a modest downward adjustment to our earlier forecast.
Fortunately, we are seeing these same conditions lead to lower than previously
projected interest expense which, when coupled with lower expected
administrative costs, should largely offset this pressure.
"As anticipated, we are seeing evidence that the environment for making
attractive acquisitions is improving. We are excited about the improving and
growing prospects to generate higher returns from our operating platform
through additional property investments. In addition, we have approximately
$50 million of new development and redevelopment projects underway and expect
to capture steady new value growth from these initiatives, as well as our
three new properties in lease-up. Mid-America's balance sheet is in terrific
shape and very well positioned to take advantage of the improving
opportunities to capture accretive new growth."
Simon Wadsworth, Executive Vice-President and CFO, said: "We continue to
benefit from a strong balance sheet and a relatively benign interest rate
environment. Our record fixed charge coverage of 2.52, one of the best
dividend payout ratios in the apartment REIT sector, and very limited
development funding obligations place us in a strong financial position. We
further strengthened our balance sheet by raising $64 million of new common
equity, net of costs, through the sale of 1.18 million shares during the
second quarter. At quarter end, we had $309 million of unused debt capacity at
existing spreads, of which only $75 million is committed to planned
refinancings. Because of the improved opportunities for making attractive
acquisitions and its relatively attractive pricing, we have no present plans
to call the 8.30% Series H Cumulative Redeemable Preferred Stock, or Series H
Preferred.
"We have long-term credit agreements with Fannie Mae and Freddie Mac,
under which credit spreads have been previously established, and anticipate no
change in these arrangements. We are negotiating an expansion to our Freddie
Mac credit agreement to fund our 2009 growth plans, and expect that new
financings will reflect the new credit pricing environment.
"We have been successful in renewing our property and casualty insurance
program effective July 1, 2008 with anticipated annual expense savings of
approximately $1.3 million."

Second Quarter 2008 Same Store Results: Continued Good Performance

Percent Change From Three Months Ended June 30, 2007
(Prior Year):

Average
Physical Effective
Markets Revenue(1) Expense NOI(1) Occupancy Rent
--------------------- ----------- ------- ----- --------- ---------

High Growth 2.7 % 0.3 % 4.5 % -0.3 % 2.1 %
Growth & Income 1.5 % 3.1 % 0.4 % -0.6 % 1.6 %
Stable Income 2.3 % 0.1 % 3.7 % 0.1 % 1.7 %
----------- ------- ----- --------- ---------
Operating Same Store 2.2 % 1.3 % 2.7 % -0.3 % 1.8 %
Total Same Store 2.6 % 1.3 % 3.6 %

(1) Revenue and net operating income, or NOI, by market and for Operating
Same Store are presented before the impact of straight-line revenue
adjustments. Total Same Store includes straight-line revenue
adjustments.

A reconciliation of NOI to net income and an expanded discussion of the
components of NOI can be found later in this release.
Same store revenue growth for the second quarter of 2008 was 2.6% compared
to the second quarter of 2007, with ending physical occupancy of 95.0%.
Effective occupancy, which takes into account apartment unit turnover during
the quarter, increased to 94.6% from 94.0%. Revenue growth was particularly
strong in our Texas, Carolina, and Tennessee markets. Same store lease
concessions declined by 53% and dropped from 2.7% of net potential rent to
1.3%. Effective pricing was up 1.8% and average effective rent per unit now
stands at $736. Unit turnover for the quarter declined on an annualized basis
to 65.2% in 2008 from 66.6% in 2007. The number of residents leaving to buy a
house declined to 25.0% of move-outs from 30.8% in the second quarter of 2007,
and the number leaving us to rent a house increased only slightly from 3.2% of
move-outs to 4.3% (generating a total of only 241 move-outs).
Same store property expenses for the quarter increased by 1.3% compared to
the prior year period. Property insurance costs dropped by 21%, reflecting the
reduction in premiums effective July 1, 2007. Real estate tax expense
increased by only 0.1% compared to the same quarter a year ago, but we expect
the increase for the full year to be 5.5%.
NOI increased by 3.6% compared to the same quarter a year ago with
continued solid performance in most of our markets.
Excluded from the same store group are seven properties which are part of
Mid-America's redevelopment program, and which are going through an extensive
renovation. The supplementary schedules contain a report of same store
performance which includes this seven-property group. Also excluded are the
four disposition candidates.
Financing, Balance Sheet: Growing Flexibility
Mid-America's fixed charge coverage continues to strengthen and was 2.52
for the second quarter of 2008, a record, compared to 2.20 for the same
quarter a year ago, and above the apartment sector median. At quarter-end,
debt was 50% of gross total assets, compared to 51% at the end of June last
year, and Mid-America had approximately $309 million of unused debt capacity
available.
In August, Mid-America has the opportunity to redeem the $155 million of
the Series H Preferred that is currently outstanding. If called, Mid-America
will take a non-cash charge of $5,127,000 ($0.18 per share/unit) to write-off
the original issuance costs. Currently, Mid-America does not intend to redeem
the Series H Preferred.
AFFO and Capital Expenditures
Recurring capital expenditures totaled $7.2 million for the second quarter
of 2008, approximately $0.24 per share/unit, resulting in adjusted funds from
operations, or AFFO, of $0.71 per share/unit compared to AFFO of $0.62 per
share/unit in the second quarter of last year. Total property capital
expenditures on existing properties were $10.2 million, plus $5.2 million of
expenditures on the redevelopment program for the second quarter. Year to
date, total property capital expenditures on existing properties were $15.9
million, plus redevelopment expenditures of $9.2 million.
A reconciliation of AFFO to net income and an expanded discussion of the
components of AFFO can be found later in this release.
Common Dividend: $2.46 Annual Rate
Mid-America declared a quarterly common dividend of $0.615 per share/unit
payable on July 31, 2008, to holders of record on July 15, 2008. This
represents Mid-America's 58th consecutive quarterly dividend to
shareholders/unitholders.
2008 Forecast
Mid-America's management expects some moderation in property performance
for the balance of the year, offset by lower interest rates and administrative
expense. An increase in the number of common shares outstanding resulting from
equity sales will modestly dilute FFO per share/unit, and as a result Mid-
America has trimmed its forecast for 2008 FFO per share/unit back by $0.03 to
its initial guidance at the beginning of the year, a range of $3.65 to $3.85
per share/unit for the full year. The mid-point of Mid-America's FFO per
share/unit forecast represents a strong 6% growth rate. FFO per share/unit for
the third quarter is projected to be in a range of $0.84 to $0.94, and for the
fourth quarter to be in a range of $0.89 to $0.99.
Management is moderating slightly its forecast for same store performance
for the balance of the year, and anticipates for the full year that same store
revenues will now grow in a range of 23/4% to 31/4%, and same store NOI to
grow in a range of 3% to 31/2%. Offsetting this modest reduction in same
store NOI are reductions in interest expense due to lower than expected
interest rates and lower administrative costs. Job growth and employment
conditions, while moderating from 2007 performance, continue to reflect
positive momentum and with the expectation of only modest delivery of new
apartment supply, overall net positive absorption of apartment housing is
expected to continue in Mid-America's markets. Additionally, most of Mid-
America's markets and submarkets have experienced only limited competition
from rentals of over-supplied condominiums and single family houses over the
last few years.
Management projects $150 million to $200 million of wholly-owned
acquisitions, $100 million to $150 million of acquisitions in Fund I, and $40
million to $45 million of dispositions for all of 2008.
Supplemental Material and Conference Call
Supplemental data to this release can be found on the investor relations
page of the Mid-America web site at www.maac.net. Mid-America will host a
conference call to further discuss second quarter results and 2008 prospects
on Friday, August 1, 2008, at 9:15 AM Central Time. The conference call-in
number is 866-847-7859 and the moderator's name is Eric Bolton.
About Mid-America Apartment Communities, Inc.
Mid-America is a self-administered, self-managed apartment-only real
estate investment trust, which currently owns or has ownership interest in
41,633 apartment units throughout the Sunbelt region of the U.S. For further
details, please refer to the Mid-America website at www.maac.net or contact
Investor Relations at investor.relations@maac.net. 6584 Poplar Ave., Suite
300, Memphis, TN 38138.
Forward-Looking Statements
We consider portions of this press release to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, with respect to our
expectations for future periods. Forward looking statements do not discuss
historical fact, but instead include statements related to expectations,
projections, intentions or other items related to the future. Such forward-
looking statements include, without limitation, statements concerning property
acquisitions and dispositions, development activity and capital expenditures,
capital raising activities, rent growth, occupancy, and rental expense growth.
Words such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates," and variations of such words and similar expressions are
intended to identify such forward-looking statements. Such statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements to be materially different from
the results of operations or plans expressed or implied by such forward-
looking statements. Such factors include, among other things, unanticipated
adverse business developments affecting us, or our properties, adverse changes
in the real estate markets and general and local economies and business
conditions. Although we believe that the assumptions underlying the forward-
looking statements contained herein are reasonable, any of the assumptions
could be inaccurate, and therefore such forward-looking statements included in
this report may not prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that the results or conditions described in such
statements or our objectives and plans will be achieved. The following
factors, among others, could cause our future results to differ materially
from those expressed in the forward-looking statements:
-- inability to generate sufficient cash flows due to market conditions,
changes in supply and/or demand, competition, uninsured losses, changes in tax
and housing laws, or other factors,
-- inability to acquire funding through the capital markets,
-- inability to pay required distributions to maintain REIT status due to
required debt payments,
-- changes in variable interest rates,
-- loss of hedge accounting treatment for interest rate swaps due to
volatility in the financial markets,
-- unexpected capital needs,
-- significant disruption in the credit markets, including the inability
of Fannie Mae and Freddie Mac to continue as major suppliers of debt financing
for multi-family housing and for Mid-America, -- increasing real estate
taxes and insurance costs,
-- losses from catastrophes in excess of our insurance coverage
-- inability to meet loan covenants,
-- inability to attract and retain qualified personnel,
-- failure of new acquisitions to achieve anticipated results or be
efficiently integrated into Mid-America,
-- inability to timely dispose of assets,
-- potential liability for environmental contamination,
-- litigation and compliance costs associated with laws requiring access
for disabled persons,
-- inability of a joint venture to perform as expected,
-- the imposition of federal taxes if we fail to qualify as a REIT under
the Internal Revenue Code in any taxable year or foregone opportunities to
ensure REIT status,
Reference is hereby made to the filings of Mid-America Apartment
Communities, Inc., with the Securities and Exchange Commission, including
quarterly reports on Form 10-Q, reports on Form 8-K, and its annual report on
Form 10-K, particularly including the risk factors contained in the latter
filing.

----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
(in thousands except per share data)
----------------------------------------------------------------------

Three months ended Six months ended
June 30, June 30,
-----------------------------------------------
2008 2007 2008 2007
--------- ----------- ---------- ----------
Property revenues $92,773 $86,779 $184,889 $171,736
Management and fee
income, net 61 - 89 34
Property operating
expenses (38,680) (36,469) (76,296) (71,415)
Depreciation (22,420) (21,108) (44,688) (42,396)
Property management
expenses (4,387) (4,380) (8,645) (8,793)
General and
administrative (2,831) (2,556) (5,751) (5,228)
----------------------------------------------------------------------
Income from continuing
operations before
non-operating items 24,516 22,266 49,598 43,938
Interest and other
non-property income 116 51 224 145
Interest expense (15,145) (16,034) (31,479) (32,048)
Loss on debt
extinguishment - (52) - (52)
Amortization of
deferred
financing costs (486) (574) (1,114) (1,135)
Incentive fee from
real estate
joint ventures - - - 1,019
Net gains on insurance
and other settlement
proceeds 416 332 544 842
Gains (loss) on sale
of non-depreciable
assets - 226 (3) 226
----------------------------------------------------------------------
Income from continuing
operations before
minority interest and
investments in
real estate
joint ventures 9,417 6,215 17,770 12,935
Minority interest
in operating
partnership income (513) (763) (1,045) (1,801)
(Loss) gains from
real estate
joint ventures (199) (51) (282) 5,329
----------------------------------------------------------------------
Income from continuing
operations 8,705 5,401 16,443 16,463
Discontinued operations:
Income from discontinued
operations - 274 - 536
(Loss) gains on sales
of discontinued
operations (61) 3,443 (120) 3,443
----------------------------------------------------------------------
Net income 8,644 9,118 16,323 20,442
Preferred dividend
distribution (3,217) (3,490) (6,433) (6,981)
Net income available
for common
shareholders $5,427 $5,628 $9,890 $13,461
======================================================================
Weighted average
common shares
- Diluted 26,727 25,464 26,242 25,377
Net income per share
available for common
shareholders $0.20 $0.22 $0.38 $0.53

----------------------------------------------------------------------
FUNDS FROM OPERATIONS
(in thousands except per share data)
----------------------------------------------------------------------

Three months ended Six months ended
June 30, June 30,
--------------------------------------------------
2008 2007 2008 2007
--------- ----------- ---------- -------------
Net income $ 8,644 $ 9,118 $16,323 $20,442
Depreciation of
real estate assets 22,006 20,781 43,967 41,752
Net gains on
insurance and other
settlement proceeds (416) (332) (544) (842)
Gain on dispositions
within real estate
joint ventures (38) - (38) (5,387)
Depreciation of
real estate assets
of discontinued
operations (1) - (1) - 132
Loss (gains) on sales
of discontinued
operations 61 (3,443) 120 (3,443)
Depreciation of
real estate assets
of real estate
joint ventures 275 - 370 14
Preferred dividend
distribution (3,217) (3,490) (6,433) (6,981)
Minority interest
in operating
partnership income 513 763 1,045 1,801
-------------------------------------------------------------------------
Funds from operations 27,828 23,396 54,810 47,488
Recurring capital
expenditures (7,171) (6,106) (11,038) (9,064)
-------------------------------------------------------------------------
Adjusted funds
from operations $20,657 $17,290 $43,772 $38,424
-------------------------------------------------------------------------

Weighted average
common shares and
units - Diluted 29,146 27,951 28,663 27,865
Funds from operations
per share and
unit - Diluted $0.95 $0.84 $1.91 $1.70
Adjusted funds from
operations per share
and unit - Diluted $0.71 $0.62 $1.53 $1.38

(1) Amounts represent depreciation expense prior to communities being
classified as discontinued operations.

--------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (in thousands)
--------------------------------------------------------------------------

June 30, December 31,
2008 2007
---------------- -------------------
Assets
Real estate assets
Land $222,669 $214,743
Buildings and improvements 2,113,992 2,044,380
Furniture, fixtures and
equipment 60,694 55,602
Capital improvements in
progress 32,938 12,886
Accumulated depreciation (660,053) (616,364)
Land held for future
development 2,300 2,360
Commercial properties, net 7,910 6,778
Investments in and advances to
real estate joint ventures 6,745 168
--------------------------------------------------------------------------
Real estate assets, net 1,787,195 1,720,553
Cash and cash equivalents 9,977 17,192
Restricted cash 3,833 3,724
Deferred financing costs, net 15,698 15,219
Other assets 20,554 23,028
Goodwill 4,106 4,106
--------------------------------------------------------------------------
Total assets $1,841,363 $1,783,822
==========================================================================

Liabilities and Shareholders'
Equity
Liabilities
Notes payable $1,243,827 $1,264,620
Accounts payable 1,552 1,099
Accrued expenses and other
liabilities 85,499 77,252
Security deposits 8,851 8,453
--------------------------------------------------------------------------
Total liabilities 1,339,729 1,351,424
Minority interest 31,481 28,868
Redeemable stock 2,238 2,574
Shareholders' equity
Series H cumulative redeemable
preferred stock 62 62
Common stock 274 257
Additional paid-in capital 920,762 832,511
Accumulated distributions in
excess of net income (438,251) (414,966)
Accumulated other comprehensive
income (14,932) (16,908)
--------------------------------------------------------------------------
Total shareholders' equity 467,915 400,956
--------------------------------------------------------------------------
Total liabilities and
shareholders' equity $1,841,363 $1,783,822
==========================================================================

--------------------------------------------------------------------------
SHARE AND UNIT DATA (in thousands)
--------------------------------------------------------------------------

Three months ended Six months ended
June 30, June 30,
----------------------------------------
2008 2007 2008 2007
-------- ------- ------- --------

Weighted average common shares -
Basic 26,599 25,288 26,113 25,188
Weighted average common shares -
Diluted 26,727 25,464 26,242 25,377
Weighted average common shares
and units - Basic 29,017 27,775 28,535 27,676
Weighted average common shares
and units - Diluted 29,146 27,951 28,663 27,865
Common shares at June 30 - Basic 27,343 25,337 27,343 25,337
Common shares at June 30 -
Diluted 27,469 25,510 27,469 25,510
Common shares and units at June
30 - Basic 29,749 27,820 29,749 27,820
Common shares and units at June
30 - Diluted 29,876 27,992 29,876 27,992

--------------------------------------------------------------------------
NON-GAAP FINANCIAL AND OTHER DEFINITIONS
--------------------------------------------------------------------------

Funds From Operations (FFO)
FFO represents net income (computed in accordance with U.S. generally
accepted accounting principles, or GAAP) excluding extraordinary items,
minority interest in Operating Partnership income, gains or losses on
disposition of real estate assets, plus depreciation of real estate and
adjustments for joint ventures to reflect FFO on the same basis. This
definition of FFO is in accordance with the National Association of Real
Estate Investment Trust's definition.
Disposition of real estate assets includes sales of real estate included
in discontinued operations as well as proceeds received from insurance and
other settlements from property damage.
Our calculation of FFO may differ from the methodology for calculating FFO
utilized by other REITs and, accordingly, may not be comparable to such other
REITs. FFO should not be considered as an alternative to net income.
Mid-America believes that FFO is helpful in understanding our operating
performance in that FFO excludes depreciation expense of real estate assets.
Mid-America believes that GAAP historical cost depreciation of real estate
assets is generally not correlated with changes in the value of those assets,
whose value does not diminish predictably over time, as historical cost
depreciation implies.
In response to the SEC's Staff Policy Statement relating to Emerging
Issues Task Force Topic D-42 concerning the calculation of earnings per share
for the redemption of preferred stock, Mid-America has included the amount
charged to retire preferred stock in excess of carrying values in its FFO
calculation. We believe, however, that FFO before amount charged to retire
preferred stock in excess of carrying values is also an important measure of
operating performance as the amount charged to retire preferred stock in
excess of carrying values is a non-cash adjustment representing issuance costs
in prior periods for preferred stock.
Adjusted Funds From Operations (AFFO)
For purposes of these computations, AFFO is composed of FFO less recurring
capital expenditures and the amount charged to retire preferred stock in
excess of carrying values. As an owner and operator of real estate, we
consider AFFO to be an important measure of performance from core operations
because AFFO measures our ability to control revenues, expenses and recurring
capital expenditures.
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
For purposes of these computations, EBITDA is composed of net income
before net gain on asset sales and insurance and other settlement proceeds,
and gain or loss on debt extinguishment, plus depreciation, interest expense,
and amortization of deferred financing costs. EBITDA is a non-GAAP financial
measure we use as a performance measure. As an owner and operator of real
estate, we consider EBITDA to be an important measure of performance from core
operations because EBITDA does not include various income and expense items
that are not indicative of our operating performance. EBITDA should not be
considered as an alternative to net income as an indicator of financial
performance. Our computation of EBITDA may differ from the methodology
utilized by other companies to calculate EBITDA.
Same Store Portfolio
Apartment communities are generally added into our Same Store Portfolio
the quarter following 12 months of ownership. In the case of newly developed
apartment communities, or communities acquired in lease-up, they become part
of the Same Store Portfolio beginning the first full quarter 12 months after
achieving 90% occupancy for 90 days.
Communities which are being extensively renovated in which at least $5,500
per apartment unit is being invested on at least 50% of turns are excluded
from the Same Store Portfolio. Twelve months after the renovations at a
community are substantially complete, communities are returned to the Same
Store Portfolio beginning in the next full quarter.
Also excluded from our Same Store Portfolio are communities that have been
approved by the Board of Directors for disposition.
SOURCE Mid-America Apartment Communities, Inc.

Investor Relations of Mid-America Apartment Communities, +1-901-682-6600, or
investor.relations@maac.net