10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005
 
OR

[    ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________
 
Commission File Number: 1-12762

MID-AMERICA APARTMENT COMMUNITIES, INC.

(Exact name of registrant as specified in its charter)

TENNESSEE (State or other jurisdiction of incorporation or organization)	62-1543819 (I.R.S. Employer Identification No.)
6584 POPLAR AVENUE, SUITE 300 MEMPHIS, TENNESSEE (Address of principal executive offices)	38138 (Zip Code)

 

(901) 682-6600
(Registrant’s telephone number, including area code)

[None]

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $.01 per share	New York Stock Exchange
Series F Cumulative Redeemable Preferred Stock, par value $.01 per share Series H Cumulative Redeemable Preferred Stock, par value $.01 per share	New York Stock Exchange New York Stock Exchange

 

Securities registered pursuant to Section 12(g) of the Act: [None]

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   [X] Yes  [  ] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. [  ]Yes    [X] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. [X] Yes   [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  [X] Accelerated filer   [  ] Non-accelerated filer [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [  ] Yes   [X] No

As of June 30, 2005, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $917,646,240, based on the closing sale price as reported on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class	Outstanding at February 10, 2006
Common Stock, $.01 par value per share	22,174,518 shares

 

DOCUMENTS INCORPORATED BY REFERENCE

Document	Parts Into Which Incorporated
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held May 16, 2006	Part III

 

MID-AMERICA APARTMENT COMMUNITIES, INC.
TABLE OF CONTENTS

Item		Page
	PART I
1.	Business		2
1A.	Risk Factors		7
1B.	Unresolved Staff Comments		10
2.	Properties		10
3.	Legal Proceedings		16
4.	Submission of Matters to Vote of Security Holders		16
	PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		16
6.	Selected Financial Data		18
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
7A.	Quantitative and Qualitative Disclosures About Market Risk		31
8.	Financial Statements and Supplementary Data		32
9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		32
9A.	Controls and Procedures		32
9B.	Other Information		33
	PART III
10.	Directors and Executive Officers of the Registrant		34
11.	Executive Compensation		34
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		34
13.	Certain Relationships and Related Transactions		34
14.	Principal Accountant Fees and Services		34
	PART IV
15.	Exhibits, Financial Statement Schedules		35

 

PART I

ITEM 1.  BUSINESS

WEBSITE ACCESS OF REGISTRANT’S REPORTS

The Company files annual and periodic reports with the Securities and Exchange Commission. All filings made by the Company with the SEC may be copied or read at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC as the Company does. The website is http://www.sec.gov.

Additionally, a copy of this Annual Report on Form 10-K, along with the Company’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to the aforementioned filings, are available on the Company’s website free of charge. The filings can be found on the Investor Relations page under SEC Filings. The Company’s website also contains its Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the committees of the Board of Directors. These items can also be found on the Investor Relations page under Company Info and Governance. The Company’s website address is www.maac.net. Reference to the Company’s website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this document. All of the aforementioned materials may also be obtained free of charge by contacting the Investor Relations Department at Mid-America Apartment Communities, Inc., 6584 Poplar Avenue, Suite 300, Memphis, TN 38138.

OVERVIEW OF THE COMPANY

Founded in 1994, Mid-America Apartment Communities, Inc. (the “Company”) is a Memphis, Tennessee-based self-administered and self-managed umbrella partnership real estate investment trust (“REIT”) that focuses on acquiring, owning and operating apartment communities. As of December 31, 2005, the Company owned 100% of 131 properties representing 37,705 apartment units. The Company has from time to time participated in various joint ventures including, as of December 31, 2005, a joint venture with Crow Holdings, Mid-America CH/Realty II LP, (the “Crow JV”). The Crow JV owned one property with 522 apartment units at December 31, 2005. The Company has a 33.33% ownership interest in the Crow JV and is paid a management fee of 4% of revenues from the property owned by the Crow JV. In total, the Company owned or had an ownership interest in 132 properties with 38,227 apartment units at December 31, 2005.

The Company’s business is conducted principally through Mid-America Apartments, L.P. (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership, holding 234,017 common units of partnership interest (“Common Units”) comprising a 1% general partnership interest in the Operating Partnership as of December 31, 2005. The Company’s wholly-owned qualified REIT subsidiary, MAC II of Delaware, Inc., a Delaware corporation, is a limited partner in the Operating Partnership and, as of December 31, 2005, held 20,496,954 Common Units, or 87.59% of all outstanding Common Units.

The Company operated apartment communities in 12 states in 2005, employing 1,148 full time and 97 part time employees at December 31, 2005.

OPERATING PHILOSOPHY

The Company’s primary objectives are to protect and grow existing property values to maintain a stable and increasing cash flow that will fund its dividend through all parts of the real estate investment cycle and create new shareholder value by growing the Company in a disciplined manner. The Company focuses on growing shareholder value through operating its existing investments and, when accretive to cash flow and shareholder value, through new investments.

INVESTMENT FOCUS.    The Company’s primary investment focus is on apartment communities in the Southeastern United States. Between 1994 and 1997, the Company grew largely through the acquisition and redevelopment of existing communities. Between 1998 and 2002, its concentration was on development of new communities. The Company’s present focus is on the acquisition of properties that it believes can be

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repositioned with appropriate use of capital and its operating management skills. The Company is currently focusing on increasing its investment in properties in larger and faster growing markets within its current geographic area, and intends to do this through acquiring apartment communities with the potential for above average growth. On a small scale, the Company is beginning to develop expansions at existing communities. The Company will continue its established process of selling mature assets, and will adapt its investment focus to opportunities and markets.

HIGH QUALITY ASSETS.    The Company strives to maintain its assets in excellent condition, believing that continuous maintenance will lead to higher long-run returns on investment. It believes that being recognized by civic and industry trade organizations for the high quality of its properties, landscaping, and property management will lead to higher rents and profitability and further supports the high quality of its properties and operations. The Company periodically and selectively sells assets to ensure that its portfolio consists primarily of high quality, well-located properties within its market area.

DIVERSIFIED MARKET FOCUS.    The Company believes the stability of its cash flow is enhanced and it will generate higher risk adjusted cash flow returns, with lower volatility, through its diversified strategy of investments over large, middle and small-tier markets throughout the southeastern United States.

INTENSIVE MANAGEMENT FOCUS.    The Company strongly emphasizes on-site property management. Particular attention is paid to opportunities to increase rents, raise average occupancy rates, and control costs. Property managers, area managers and regional managers are given the responsibility for monitoring market trends and the discretion to react to such trends. The Company, as part of its intense management focus, has established a number of training programs to produce highly competent property managers, leasing consultants and service technicians who work on-site at the Company’s apartment communities (the “Communities”) to generate the highest possible income from the Company’s assets. At December 31, 2005, the Company employed approximately 103 Certified Apartment Managers, a designation established by the National Apartment Association which provides training for on-site manager professionals. The Company has enhanced its focus on asset management over the last several years by increasing regional staffing in the areas of maintenance, capital improvement oversight, landscaping, marketing and pricing management.

DECENTRALIZED OPERATIONAL STRUCTURE.    The Company operates in a decentralized manner. Management believes that its decentralized operating structure capitalizes on specific market knowledge, provides greater personal accountability than a centralized structure and is beneficial in the acquisition and redevelopment processes. To support this decentralized operational structure, senior and executive management, along with various asset management functions, are proactively involved in supporting and reviewing property management through extensive reporting processes and frequent on-site visitations. In 2004, the Company completed the installation of the property and accounting modules of a new web-based property management system that increased the amount of information shared between senior and executive management and the properties on a real time basis, improving the support provided to on-site property operations. In 2005, the Company made significant improvements to its operating platform and expects these enhancements will help capture more operating efficiencies, continue to support effective expense control and provide for various expanded revenue management practices.

PROACTIVE BALANCE SHEET AND PORTFOLIO MANAGEMENT

The Company focuses on improving the value of each share of the Company’s common stock. It routinely evaluates each asset and sells those that no longer fit its strategy. The Company makes new investments and issues new equity when management believes it can add to value per share. In the past, the Company has sold assets to fund share repurchases when, in management’s view, shareholder value would be enhanced.

STRATEGIES

The Company seeks to increase operating cash flow and earnings per share to maximize shareholder value through a balanced strategy of internal and external growth.

OPERATING GROWTH STRATEGY.    Management’s goal is to maximize the Company’s return on investment in each Community by increasing rental rates and reducing operating expenses while maintaining high occupancy levels. The steps taken to meet these objectives include:

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•   providing real-time information through technology innovations; such as the implementation of the Company’s new web-based property management system that shares information between properties and management;

•   empowering the Company’s property managers to adjust rents in response to local market conditions and to concentrate resident turnover during peak rental demand months;

•   developing new ancillary income programs aimed at offering new services to residents, including telephone, cable, and internet access, on which the Company generates fee and commission income;

•   implementing programs to control expenses through investment in cost-saving initiatives, such as the installation of individual apartment unit water and utility meters in certain Communities;

•   analyzing individual asset productivity performances to identify best practices and improvement areas;

•   proactively maintaining the physical condition of each property;

•   improving the “curb appeal” of the Communities through extensive landscaping and exterior improvements and repositioning Communities from time to time to maintain market leadership positions;

•   compensating employees through performance-based compensation and stock ownership programs;

•   maintaining a hands-on management style and “flat” organizational structure that emphasizes senior management’s continued close contact with the market and employees;

•   selling or exchanging underperforming assets and repurchasing or issuing shares of common and preferred stock when cost of capital and asset values permit;

•   aggressively managing lease expirations to align with peak leasing traffic patterns and to maximize productivity of property staffing; and

•   allocating additional capital, including capital for selective interior improvements, where the investment will generate the highest returns for the Company.

JOINT VENTURE STRATEGY.    One of the Company’s strategies is to co-invest with private capital partners in joint venture opportunities from time to time to the extent the Company believes that a joint venture will enable it to obtain a higher return on its investment through management and other fees, which leverage the Company’s skills in acquiring, repositioning, redeveloping and managing multifamily investments. In addition, the joint venture investment strategy can provide a platform for creating more capital diversification and lower investment risk for the Company. The Company is currently invested in a joint venture with Crow Holdings that was established in early 2004.

DISPOSITION STRATEGY.    The Company from time to time disposes of mature assets, defined as those apartment communities that no longer meet the Company’s investment criteria and long-term strategic objectives. Typically, the Company selects assets for disposition that do not meet its present investment criteria including estimated future return on investment, location, market, potential for growth, and capital needs. The Company may from time to time also dispose of assets for which the Company receives an offer meeting or exceeding its return on investment criteria even though those assets may not meet the disposition criteria disclosed above.

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The following Communities were sold during 2005:

Property	Location	Number of Units		Date Sold
100% Owned Properties:
Eastview	Memphis, TN		432	April 1, 2005
Joint Venture Properties:
Seasons at Green Oaks (1)	Grand Prairie, TX (Dallas metro)		300	May 31, 2005
Preston Hills (1)	Buford, GA (Atlanta metro)		464	June 16, 2005
			1,196

 

(1) Properties were owned by Mid-America/CH Realty LP which ceased to operate in 2005 following the disposition of these properties.

ACQUISITION STRATEGY. One of the Company’s growth strategies is to acquire and redevelop apartment communities that meet its investment criteria and focus as discussed above. The Company has extensive experience and research-based skills in the acquisition and repositioning of multifamily properties. In addition, the Company will acquire newly built and developed properties that can be purchased on a favorable pricing basis. The Company will continue to evaluate opportunities that arise, and will utilize this strategy to increase the number of properties in strong and growing markets in the Southeast.

The following Communities were purchased during 2005:

Property	Location	Number of Units		Date Purchased
100% Owned Properties:
Lake Lanier Club	Gainesville, GA		657	February 18, 2005
Waterford Forest	Cary, NC		384	July 6, 2005
Boulder Ridge	Roanoke, TX		478	July 8, 2005
			1,519

 

DEVELOPMENT STRATEGY.    In late 1997, the Company’s emphasis shifted from acquisitions to development because of its belief that under then-current market conditions, such development would generate higher quality assets and higher long-term investment returns. In 1999, management decided to exit the construction and development business upon completion of the Company’s existing development pipeline after determining that market conditions were changing, making it unlikely that future proposed projects would meet the Company’s profitability targets over the next few years. In 2002, the Company completed the $300 million construction program of high quality apartments.

At December 31, 2005, the Company had no properties in development.

In 2006, the Company plans to begin some expansion development projects at existing communities on adjacent land currently owned by the Company. The Company does not currently intend to return to development in a significant way, preferring to capture accretive new growth through opportunistically acquiring new properties.

COMMON AND PREFERRED STOCK

The Company continuously reviews opportunities for lowering its cost of capital, and increasing value per share. The Company evaluates opportunities to repurchase stock when it believes that its stock price is below the value of its assets and accordingly repurchased common stock, funded by asset sales, between 1999 and 2001. The Company also looks for opportunities where it can acquire or develop communities, selectively funded or partially funded by stock sales, when it will add to shareholder value and the investment return is projected to substantially exceed its cost of capital. The Company will also opportunistically seek to lower its cost of capital through refinancing preferred stock as it did in 2003.

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On May 26, 2005, the Company gave the required one-year notice to redeem all of the issued and outstanding 8 5/8% Series G Cumulative Redeemable Preferred Stock shares on May 26, 2006, at a total redemption price of $10 million.

SHARE REPURCHASE PROGRAM

In 1999, the Company’s Board of Directors approved an increase in the number of shares of the Company’s common stock authorized to be repurchased to 4 million shares. As of December 31, 2005, the Company had repurchased a total of approximately 1.86 million shares (8% of the shares of common stock and Common Units outstanding as of the beginning of the repurchase program). From time to time, the Company intends to sell assets based on its disposition strategy outlined in this Annual Report and use the proceeds to repurchase shares when it believes that shareholder value is enhanced. Factors affecting this determination include the share price, asset dispositions and pricing, financing agreements and rates of return of alternative investments. No shares were repurchased from 2002 through 2005 under this plan.

COMPETITION

All of the Company’s Communities are located in areas that include other apartment communities. Occupancy and rental rates are affected by the number of competitive apartment communities in a particular area. The owners of competing apartment communities may have greater resources than the Company, and the managers of these communities may have more experience than the Company’s management. Moreover, single-family rental housing, manufactured housing, condominiums and the new and existing home markets provide housing alternatives to potential residents of apartment communities.

Apartment communities compete on the basis of monthly rent, discounts, and facilities offered such as apartment size and amenities, and apartment community amenities, including recreational facilities, resident services, and physical property condition. The Company makes capital improvements to both the Communities and individual apartments on a regular basis in order to maintain a competitive position in each individual market.

ENVIRONMENTAL MATTERS

As part of the acquisition process, the Company obtains environmental studies on all of its Communities from various outside environmental engineering firms. The purpose of these studies is to identify potential sources of contamination at the Communities and to assess the status of environmental regulatory compliance. These studies generally include historical reviews of the Communities, reviews of certain public records, preliminary investigations of the sites and surrounding properties, visual inspection for the presence of asbestos, PCBs and underground storage tanks and the preparation and issuance of written reports. Depending on the results of these studies, more invasive procedures, such as soil sampling or ground water analysis, will be performed to investigate potential sources of contamination. These studies must be satisfactorily completed before the Company takes ownership of an acquisition property, however, no assurance can be given that the studies identify all significant environmental problems.

Under various Federal, state and local laws and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on properties. Such laws often impose such liability without regard to whether the owner caused or knew of the presence of hazardous or toxic substances and whether or not the storage of such substances was in violation of a resident’s lease. Furthermore, the cost of remediation and removal of such substances may be substantial, and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner’s ability to sell such real estate or to borrow using such real estate as collateral.

The Company is aware of environmental concerns specifically relating to potential issues resulting from mold in residential properties and has in place an active management and preventive maintenance program that includes procedures specifically related to mold. The Company has established a policy requiring residents to sign a mold addendum to lease. The Company has also purchased a $2 million insurance policy that covers remediation and exposure to mold. The current policy expires in 2007 but is renewable at that time. The Company, therefore, believes that its exposure to this issue is limited and controlled.

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The environmental studies received by the Company have not revealed any material environmental liabilities. The Company is not aware of any existing conditions that would currently be considered an environmental liability. Nevertheless, it is possible that the studies do not reveal all environmental liabilities or that there are material environmental liabilities of which the Company is unaware. Moreover, no assurance can be given concerning future laws, ordinances or regulations, or the potential introduction of hazardous or toxic substances by neighboring properties or residents.

The Company believes that its Communities are in compliance in all material respects with all applicable Federal, state and local ordinances and regulations regarding hazardous or toxic substances and other environmental matters.

RECENT DEVELOPMENTS

DISTRIBUTION.    In January 2006, the Company announced a quarterly distribution to common shareholders of $0.595 per share, which was paid on January 31, 2006.

In February 2006, the Company announced a monthly distribution to its Series F Cumulative Redeemable Preferred Stock shareholders of $0.1927 per share, which is payable on March 15, 2006.

ACQUISITIONS.    On January 19, 2006, the Company acquired the Preserve at Brier Creek apartments in Raleigh, NC with 250 units.

ITEM 1A.  RISK FACTORS

The Company’s ability to generate sufficient cash flow in order to pay common dividends to its shareholders depends on its ability to generate funds from operations in excess of capital expenditure requirements and preferred dividends, and/or to have access to the markets for debt and equity financing. Funds from operations and the value of the Company’s properties may be insufficient because of factors which are beyond the Company’s control. Such events or conditions could include:

•   competition from other apartment communities;

•   overbuilding of new apartment units or oversupply of available apartment units in the Company’s markets, which might adversely affect apartment occupancy or rental rates and/or require rent concessions in order to lease apartment units;

•   increases in operating costs (including real estate taxes and insurance premiums) due to inflation and other factors, which may not be offset by increased rents;

•   the Company’s inability to rent apartments on favorable economic terms;

•   changes in governmental regulations and the related costs of compliance;

•   changes in tax laws and housing laws including the enactment of rent control laws or other laws regulating multifamily housing;

•   changes in interest rate levels and the availability of financing, which could lead renters to purchase homes (if interest rates decrease and home loans are more readily available) or increase the Company’s acquisition and operating costs (if interest rates increase and financing is less readily available);

•   weakness in the overall economy which lowers job growth and the associated demand for apartment housing; and

•   the relative illiquidity of real estate investments.

At times, the Company relies on external funding sources to fully fund the payment of distributions to shareholders and its capital investment program (including its existing property expansion developments). While the Company has sufficient liquidity to permit distributions at current rates through additional borrowings if necessary, any significant and sustained deterioration in operations could result in the Company’s financial resources being insufficient to pay distributions to shareholders at the current rate, in which event the Company would be required to reduce the distribution rate. Any decline in the Company’s

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funds from operations could adversely affect the Company’s ability to make distributions to its shareholders or to meet its loan covenants and could have a material adverse effect on the Company’s stock price.

Debt Level, Refinancing and Loan Covenant Risk May Adversely Affect Financial Condition and Operating Results

At December 31, 2005, the Company had total debt outstanding of $1.14 billion. Payments of principal and interest on borrowings may leave the Company with insufficient cash resources to operate the Communities or pay distributions that are required to be paid in order for the Company to maintain its qualification as a REIT. The Company currently intends to limit its total debt to approximately 60% of the undepreciated book value of its assets, although the Company’s charter and bylaws do not limit its debt levels. Circumstances may cause the Company to exceed that target from time to time. As of December 31, 2005, the Company’s ratio of debt to undepreciated book value was approximately 56%. The Company’s Board of Directors can modify this policy at any time which could allow the Company to become more highly leveraged and decrease its ability to make distributions to its shareholders. In addition, the Company must repay its debt upon maturity, and the inability to access debt or equity capital at attractive rates could adversely affect the Company’s financial condition and/or its funds from operations. The Company relies on Fannie Mae and Freddie Mac (the “Agencies”) for the majority of its debt financing and has agreements with the Agencies and with other lenders that require it to comply with certain covenants. The breach of any one of these covenants would place the Company in default with its lenders and may have serious consequences on the operations of the Company.

Variable Interest Rates May Adversely Affect Funds from Operations

At December 31, 2005, effectively $173 million of the Company’s debt bore interest at a variable rate and was not hedged by interest rate swaps or caps. An additional $25 million also bore interest at a variable rate at December 31, 2005, but was hedged by an interest rate swap that became operative in February 2006. The Company may incur additional debt in the future that also bears interest at variable rates. Variable rate debt creates higher debt service requirements if market interest rates increase, which would adversely affect the Company’s funds from operations and the amounts available to pay distributions to shareholders. The Company’s $950 million secured credit facilities with Prudential Mortgage Capital, credit enhanced by Fannie Mae, are predominately floating rate facilities. The Company also has a $100 million credit facility with Freddie Mac which is a variable rate facility. At December 31, 2005, a total of $907.8 million was outstanding under these facilities. These facilities represent the majority of the variable interest rates the Company was exposed to at December 31, 2005. Large portions of the interest rates on these facilities have been hedged by means of a number of interest rate swaps and caps. Upon the termination of these swaps and caps, the Company will be exposed to the risks of varying interest rates.

Issuances of Additional Debt or Equity May Adversely Impact Our Financial Condition

Our capital requirements depend on numerous factors, including the occupancy rates of our apartment properties, dividend payment rates to our shareholders, development and capital expenditures, costs of operations and potential acquisitions. The Company cannot accurately predict the timing and amount of our capital requirements. If our capital requirements vary materially from our plans, the Company may require additional financing sooner than anticipated. Accordingly, the Company could become more leveraged, resulting in increased risk of default on our obligations and in an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future.

Increasing Real Estate Taxes and Insurance Costs May Negatively Impact Financial Condition

Because the Company has substantial real estate holdings, the cost of real estate taxes and insuring its Communities is a significant component of expense. Real estate taxes and insurance premiums are subject to significant increases and fluctuations which can be widely outside of the control of the Company. If the costs associated with real estate taxes and insurance should rise, the Company’s financial condition could be negatively impacted and the Company’s ability to pay its dividend could be affected.

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Losses from Catastrophes May Exceed Our Insurance Coverage

The Company carries comprehensive liability and property insurance on our properties, which the Company believes is of the type and amount customarily obtained on real property assets. The Company intends to obtain similar coverage for properties the Company acquires in the future. However, some losses, generally of a catastrophic nature, such as losses from floods, hurricanes or earthquakes, may be subject to limitations. The Company exercises its discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our investments at a reasonable cost and on suitable terms. If the Company suffers a substantial loss, its insurance coverage may not be sufficient to pay the full current market value or current replacement value of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed.

New Acquisitions May Fail to Perform as Expected and Failure to Integrate Acquired Communities and New Personnel Could Create Inefficiencies

The Company intends to actively acquire and improve multifamily properties for rental operations. The Company may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position. Additionally, to grow successfully, the Company must be able to apply our experience in managing our existing portfolio of apartment communities to a larger number of properties. The Company must also be able to integrate new management and operations personnel as our organization grows in size and complexity. Failures in either area will result in inefficiencies that could adversely affect our overall profitability.

The Company May Not Be Able To Sell Properties When Appropriate

Real estate investments are relatively illiquid and generally cannot be sold quickly. The Company may not be able to change our portfolio promptly in response to economic or other conditions. This inability to respond promptly to changes in the performance of our investments could adversely affect our financial condition and ability to make distributions to our security holders.

Failure to Qualify as a REIT Would Cause The Company to be Taxed as a Corporation

If the Company fails to qualify as a REIT for federal income tax purposes, the Company will be taxed as a corporation. The Internal Revenue Service may challenge our qualification as a REIT for prior years, and new legislation, regulations, administrative interpretations or court decisions may change the tax laws with respect to qualification as a REIT or the federal tax consequences of such qualification. For any taxable year that the Company fails to qualify as a REIT, the Company would be subject to federal income tax on our taxable income at corporate rates, plus any applicable alternative minimum tax. In addition, unless entitled to relief under applicable statutory provisions, the Company would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. This treatment would reduce our net earnings available for investment or distribution to shareholders because of the additional tax liability for the year or years involved. In addition, distributions would no longer qualify for the dividends paid deduction nor be required to be made in order to preserve REIT status. The Company might be required to borrow funds or to liquidate some of our investments to pay any applicable tax resulting from our failure to qualify as a REIT.

Environmental Problems are Possible and can be Costly

Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at such property. The owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination. These laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the

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owner or operator of a site for damages and costs resulting from environmental contamination emanating from that site. All of our properties have been the subject of environmental assessments completed by qualified independent environmental consultant companies. These environmental assessments have not revealed, nor is the Company aware of, any environmental liability that our management believes would have a material adverse effect on our business, results of operations, financial condition or liquidity. Over the past four years, there have been an increasing number of lawsuits against owners and managers of multifamily properties alleging personal injury and property damage caused by the presence of mold in residential real estate. Some of these lawsuits have resulted in substantial monetary judgments or settlements. The Company cannot be assured that existing environmental assessments of our properties reveal all environmental liabilities, that any prior owner of any of our properties did not create a material environmental condition not known to the Company, or that a material environmental condition does not otherwise exist.

Compliance or Failure to Comply with Laws Requiring Access to Our Properties by Disabled Persons Could Result in Substantial Cost

The Americans with Disabilities Act, the Fair Housing Act of 1988 and other federal, state and local laws generally require that public accommodations be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the government or the award of damages to private litigants. These laws may require the Company to modify our existing properties. These laws may also restrict renovations by requiring improved access to such buildings by disabled persons or may require the Company to add other structural features that increase our construction costs. Legislation or regulations adopted in the future may impose further burdens or restrictions on the Company with respect to improved access by disabled persons. The Company cannot ascertain the costs of compliance with these laws, which may be substantial.

Our Investments in Joint Ventures May Involve Risks

Investments in joint ventures may involve risks which may not otherwise be present in our direct investments such as:

•   the potential inability of our joint venture partner to perform;

•   the joint venture partner may have economic or business interests or goals which are inconsistent with or adverse to ours;

•   the joint venture partner may take actions contrary to our requests or instructions or contrary to our objectives or policies; and

•   the joint venturers may not be able to agree on matters relating to the property they jointly own.

Although each joint owner will have a right of first refusal to purchase the other owner’s interest, in the event a sale is desired, the joint owner may not have sufficient resources to exercise such right of first refusal.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.  PROPERTIES

The Company seeks to acquire apartment communities located in the southeastern United States and Texas that are primarily appealing to middle income residents with the potential for above average growth and return on investment. Approximately 75% of the Company’s apartment units are located in Georgia, Florida, Tennessee and Texas markets. The Company’s strategic focus is to provide its residents high quality apartment units in attractive community settings, characterized by extensive landscaping and attention to aesthetic detail. The Company utilizes its experience and expertise in maintenance, landscaping, marketing and management to effectively reposition many of the apartment communities it acquires to raise occupancy levels and per unit average rents.

The following table sets forth certain historical information for the Communities the Company owned or maintained an ownership interest in, including the property containing 522 apartment units owned by the Crow JV, at December 31, 2005:

10

																	Encumbrances at December 31, 2005
Property	Location	Year Completed		Year Management Commenced		Number of Units		Approximate Rentable Area (Square Footage)		Average Unit Size (Square Footage)		Monthly Rent per Unit at December 31, 2005		Average Occupancy Percent at December 31, 2005			Mortgage Principal (000’s)			Interest Rate			Maturity Date
100% Owned
Eagle Ridge	Birmingham, AL		1986		1998		200		181,400		907	$	680.96		98.00	%	$	—(1	)		(1	)		(1	)
Abbington Place	Huntsville, AL		1987		1998		152		162,792		1,071	$	544.02		94.08	%	$	—(1	)		(1	)		(1	)
Paddock Club Huntsville	Huntsville, AL		1989/98		1997		392		414,736		1,058	$	652.48		92.86	%	$	—(1	)		(1	)		(1	)
Paddock Club Montgomery	Montgomery, AL		1999		1998		208		230,880		1,110	$	727.06		96.63	%	$	—(1	)		(1	)		(1	)
							952		989,808		1,040	$	657.44		94.96	%	$	—
Calais Forest	Little Rock, AR		1987		1994		260		195,000		750	$	620.32		95.77	%	$	—(1	)		(1	)		(1	)
Napa Valley	Little Rock, AR		1984		1996		240		183,120		763	$	614.65		93.33	%	$	—(1	)		(1	)		(1	)
Westside Creek I	Little Rock, AR		1984		1997		142		147,964		1,042	$	697.20		97.18	%	$	—(1	)		(1	)		(1	)
Westside Creek II	Little Rock, AR		1986		1997		166		172,972		1,042	$	656.78		93.37	%	$	4,518			8.760	%		10/1/2006
							808		699,056		865	$	639.64		94.80	%	$	4,518
Tiffany Oaks	Altamonte Springs, FL		1985		1996		288		234,144		813	$	689.29		99.31	%	$	—(1	)		(1	)		(1	)
Marsh Oaks	Atlantic Beach, FL		1986		1995		120		93,240		777	$	670.99		90.00	%	$	—(1	)		(1	)		(1	)
Indigo Point	Brandon, FL		1989		2000		240		194,640		811	$	745.85		99.17	%	$	—(4	)		(4	)		(4	)
Paddock Club Brandon	Brandon, FL		1997/99		1997		440		516,120		1,173	$	902.12		93.86	%	$	—(2	)		(2	)		(2	)
Preserve at Coral Square	Coral Springs, FL		1996		2004		480		528,480		1,101	$	1,077.05		99.58	%	$	32,203			4.170	%		9/28/2008
Anatole	Daytona Beach, FL		1986		1995		208		149,136		717	$	683.30		100.00	%	$	7,000	(10)		3.901%(10	)		10/15/2032	(10)
Paddock Club Gainesville	Gainesville, FL		1999		1998		264		293,040		1,110	$	851.40		97.73	%	$	—(2	)		(2	)		(2	)
Cooper’s Hawk	Jacksonville, FL		1987		1995		208		218,400		1,050	$	792.96		98.08	%	$	—(6	)		(6	)		(6	)
Hunter’s Ridge at Deerwood	Jacksonville, FL		1987		1997		336		295,008		878	$	739.86		97.62	%	$	—(7	)		(7	)		(7	)
Lakeside	Jacksonville, FL		1985		1996		416		344,032		827	$	731.94		95.19	%	$	—(1	)		(1	)		(1	)
Lighthouse Court	Jacksonville, FL		2003		2003		501		556,110		1,110	$	937.75		91.42	%	$	—(1	)		(1	)		(1	)
Paddock Club Jacksonville	Jacksonville, FL		1989/96		1997		440		475,200		1,080	$	817.07		98.18	%	$	—(1	)		(1	)		(1	)
Paddock Club Mandarin	Jacksonville, FL		1998		1998		288		330,336		1,147	$	860.65		96.88	%	$	—(2	)		(2	)		(2	)
St. Augustine	Jacksonville, FL		1987		1995		400		304,400		761	$	649.29		98.00	%	$	—(6	)		(6	)		(6	)
Woodbridge at the Lake	Jacksonville, FL		1985		1994		188		166,004		883	$	709.99		94.68	%	$	—(2	)		(2	)		(2	)
Woodhollow	Jacksonville, FL		1986		1997		450		342,000		760	$	722.42		97.56	%	$	—(1	)		(1	)		(1	)
Paddock Club Lakeland	Lakeland, FL		1988/90		1997		464		505,296		1,089	$	740.28		96.34	%	$	—(1	)		(1	)		(1	)
Savannahs at James Landing	Melbourne, FL		1990		1995		256		238,592		932	$	712.99		99.61	%	$	—(6	)		(6	)		(6	)
Paddock Park Ocala	Ocala, FL		1986/88		1997		480		485,280		1,011	$	750.25		94.58	%	$	6,805	(2)(3)		3.771%(2)(3	)		10/15/2032	(2)(3)
Paddock Club Panama City	Panama City, FL		2000		1998		254		283,972		1,118	$	894.52		98.43	%	$	—(2	)		(2	)		(2	)
Paddock Club Tallahassee	Tallahassee, FL		1990/95		1997		304		329,232		1,083	$	791.39		92.76	%	$	—(2	)		(2	)		(2	)
Belmere	Tampa, FL		1984		1994		210		202,440		964	$	740.17		98.57	%	$	—(1	)		(1	)		(1	)
Links at Carrollwood	Tampa, FL		1980		1998		230		214,820		934	$	770.88		99.57	%	$	—(1	)		(1	)		(1	)
							7,465		7,299,922		978	$	795.58		96.70	%	$	46,008
High Ridge	Athens, GA		1987		1997		160		186,560		1,166	$	696.93		96.88	%	$	—(1	)		(1	)		(1	)
Bradford Pointe	Augusta, GA		1986		1997		192		156,288		814	$	627.08		90.63	%	$	4,760			4.192	%		6/1/2028
Shenandoah Ridge	Augusta, GA		1982		1994		272		222,768		819	$	574.98		95.59	%	$	—(1	)		(1	)		(1	)
Westbury Creek	Augusta, GA		1984		1997		120		107,040		892	$	640.87		95.83	%	$	3,480	(15)		4.612%(15	)		5/15/2033	(15)
Fountain Lake	Brunswick, GA		1983		1997		110		129,800		1,180	$	740.11		95.45	%	$	—(5	)		(5	)		(5	)
Park Walk	College Park, GA		1985		1997		124		112,716		909	$	623.50		94.35	%	$	—(1	)		(1	)		(1	)
Whisperwood	Columbus, GA		1980/82/84/86/98		1997		1,008		1,220,688		1,211	$	737.04		91.96	%	$	—(1	)		(1	)		(1	)
Willow Creek	Columbus, GA		1971/77		1997		285		246,810		866	$	555.93		91.23	%	$	—(1	)		(1	)		(1	)
Terraces at Fieldstone	Conyers, GA		1999		1998		316		351,076		1,111	$	768.83		96.20	%	$	—(1	)		(1	)		(1	)
Prescott	Duluth, GA		2001		2004		384		370,176		964	$	775.65		97.66	%	$	—(8	)		(8	)		(8	)

11

																	Encumbrances at December 31, 2005
Property	Location	Year Completed		Year Management Commenced		Number of Units		Approximate Rentable Area (Square Footage)		Average Unit Size (Square Footage)		Monthly Rent per Unit at December 31, 2005		Average Occupancy Percent at December 31, 2005			Mortgage Principal (000’s)			Interest Rate			Maturity Date
Lanier	Gainesville, GA		1998		2005		344		395,944		1,151	$	790.92		95.64	%	$	20,686			5.250	%		3/1/2014
Lake Club	Gainesville, GA		2001		2005		313		359,950		1,150	$	731.77		91.69	%	$	—(8	)
Whispering Pines	LaGrange, GA		1982/84		1997		216		223,128		1,033	$	558.58		92.59	%	$	—(5	)		(5	)		(5	)
Westbury Springs	Lilburn, GA		1983		1997		150		137,700		918	$	662.29		98.67	%	$	—(1	)		(1	)		(1	)
Austin Chase	Macon, GA		1996		1997		256		292,864		1,144	$	704.75		92.58	%	$	—(7	)		(7	)		(7	)
The Vistas	Macon, GA		1985		1997		144		153,792		1,068	$	614.20		95.14	%	$	—(1	)		(1	)		(1	)
Walden Run	McDonough, GA		1997		1998		240		271,200		1,130	$	703.08		91.25	%	$	—(1	)		(1	)		(1	)
Georgetown Grove	Savannah, GA		1997		1998		220		239,800		1,090	$	805.60		97.27	%	$	10,102			7.750	%		7/1/2037
Wildwood	Thomasville, GA		1980/84		1997		216		223,128		1,033	$	577.98		98.15	%	$	—(1	)		(1	)		(1	)
Hidden Lake	Union City, GA		1985/87		1997		320		342,400		1,070	$	672.63		95.00	%	$	—(1	)		(1	)		(1	)
Three Oaks	Valdosta, GA		1983/84		1997		240		247,920		1,033	$	611.81		92.92	%	$	—(1	)		(1	)		(1	)
Huntington Chase	Warner Robins, GA		1997		2000		200		218,400		1,092	$	681.04		94.00	%	$	8,891			6.850	%		11/1/2008
Southland Station	Warner Robins, GA		1987/90		1997		304		354,768		1,167	$	668.80		96.38	%	$	—(1	)		(1	)		(1	)
Terraces at Townelake	Woodstock, GA		1999		1998		502		575,794		1,147	$	714.29		91.04	%	$	—(1	)		(1	)		(1	)
							6,636		7,140,710		1,076	$	691.24		94.03	%	$	47,919
Fairways at Hartland	Bowling Green, KY		1996		1997		240		251,280		1,047	$	648.96		94.58	%	$	—(1	)		(1	)		(1	)
Paddock Club Florence	Florence, KY		1994		1997		200		207,000		1,035	$	719.04		92.50	%	$	9,600			5.875	%		1/1/2044
Grand Reserve Lexington	Lexington, KY		2000		1999		370		432,530		1,169	$	843.35		89.19	%	$	—(1	)		(1	)		(1	)
Lakepointe	Lexington, KY		1986		1994		118		90,624		768	$	620.02		92.37	%	$	—(1	)		(1	)		(1	)
Mansion, The	Lexington, KY		1989		1994		184		138,736		754	$	620.32		91.85	%	$	—(1	)		(1	)		(1	)
Village, The	Lexington, KY		1989		1994		252		182,700		725	$	601.86		94.05	%	$	—(1	)		(1	)		(1	)
Stonemill Village	Louisville, KY		1985		1994		384		324,096		844	$	596.24		88.28	%	$	—(1	)		(1	)		(1	)
							1,748		1,626,966		931	$	674.78		91.30	%	$	9,600
Riverhills	Grenada, MS		1972		1985		96		81,984		854	$	409.44		98.96	%	$	—(1	)		(1	)		(1	)
Crosswinds	Jackson, MS		1988/90		1996		360		443,160		1,231	$	686.38		99.17	%	$	—(1	)		(1	)		(1	)
Pear Orchard	Jackson, MS		1985		1994		389		338,430		870	$	639.64		97.17	%	$	—(1	)		(1	)		(1	)
Reflection Pointe	Jackson, MS		1986		1988		296		254,856		861	$	656.04		95.95	%	$	5,880	(11)		3.821%(11	)		5/15/2031	(11)
Somerset	Jackson, MS		1981		1995		144		126,864		881	$	594.37		88.19	%	$	—(1	)		(1	)		(1	)
Woodridge	Jackson, MS		1987		1988		192		175,104		912	$	580.87		96.88	%	$	—(1	)		(1	)		(1	)
Lakeshore Landing	Ridgeland, MS		1974		1994		196		171,108		873	$	602.82		95.92	%	$	—(1	)		(1	)		(1	)
Savannah Creek	Southaven, MS		1989		1996		204		237,048		1,162	$	682.32		97.06	%	$	—(1	)		(1	)		(1	)
Sutton Place	Southaven, MS		1991		1996		253		268,686		1,062	$	667.91		86.96	%	$	—(1	)		(1	)		(1	)
							2,130		2,097,240		985	$	635.14		95.45	%	$	5,880
Hermitage at Beechtree	Cary, NC		1988		1997		194		169,750		875	$	614.03		96.39	%	$	—(1	)		(1	)		(1	)
Waterford Forest	Cary, NC		1996		2005		384		344,448		897	$	609.20		94.01	%	$	—(8	)		(8	)		(8	)
Woodstream	Greensboro, NC		1983		1994		304		217,056		714	$	544.73		90.79	%	$	—(1	)		(1	)		(1	)
Corners, The	Winston-Salem, NC		1982		1993		240		173,520		723	$	558.59		95.00	%	$	—(2	)		(2	)		(2	)
							1,122		904,774		806	$	581.74		93.76	%	$	—
Fairways at Royal Oak	Cincinnati, OH		1988		1994		214		214,428		1,002	$	665.52		92.99	%	$	—(1	)		(1	)		(1	)
Colony at South Park	Aiken, SC		1989/91		1997		184		174,800		950	$	688.20		91.30	%	$	—(1	)		(1	)		(1	)
Woodwinds	Aiken, SC		1988		1997		144		165,168		1,147	$	667.14		95.14	%	$	—(1	)		(1	)		(1	)
Tanglewood	Anderson, SC		1980		1994		168		146,664		873	$	574.74		91.07	%	$	—(1	)		(1	)		(1	)
Fairways, The	Columbia, SC		1992		1994		240		213,840		891	$	609.97		97.50	%	$	7,735	(12)		3.864%(12	)		5/15/2031	(12)
Paddock Club Columbia	Columbia, SC		1989/95		1997		336		367,584		1,094	$	725.11		91.67	%	$	—(1	)		(1	)		(1	)

12

																	Encumbrances at December 31, 2005
Property	Location	Year Completed		Year Management Commenced		Number of Units		Approximate Rentable Area (Square Footage)		Average Unit Size (Square Footage)		Monthly Rent per Unit at December 31, 2005		Average Occupancy Percent at December 31, 2005			Mortgage Principal (000’s)			Interest Rate			Maturity Date
Highland Ridge	Greenville, SC		1984		1995		168		143,976		857	$	506.43		98.21	%	$	—(1	)		(1	)		(1	)
Howell Commons	Greenville, SC		1986/88		1997		348		292,668		841	$	511.28		99.14	%	$	—(1	)		(1	)		(1	)
Paddock Club Greenville	Greenville, SC		1996		1997		208		212,160		1,020	$	673.54		94.71	%	$	—(1	)		(1	)		(1	)
Park Haywood	Greenville, SC		1983		1993		208		156,832		754	$	507.36		98.08	%	$	—(1	)		(1	)		(1	)
Spring Creek	Greenville, SC		1985		1995		208		182,000		875	$	513.46		98.08	%	$	—(1	)		(1	)		(1	)
Runaway Bay	Mt. Pleasant, SC		1988		1995		208		177,840		855	$	796.76		98.56	%	$	8,365	(9)		3.950%(9	)		11/15/2035	(9)
Park Place	Spartanburg, SC		1987		1997		184		195,224		1,061	$	613.52		94.02	%	$	—(1	)		(1	)		(1	)
							2,604		2,428,756		933	$	615.72		95.74	%	$	16,100
Hamilton Pointe	Chattanooga, TN		1989		1992		361		256,671		711	$	532.97		93.35	%	$	—(1	)		(1	)		(1	)
Hidden Creek	Chattanooga, TN		1987		1988		300		259,200		864	$	544.42		97.33	%	$	—(1	)		(1	)		(1	)
Steeplechase	Chattanooga, TN		1986		1991		108		98,604		913	$	618.89		99.07	%	$	—(1	)		(1	)		(1	)
Windridge	Chattanooga, TN		1984		1997		174		238,728		1,372	$	715.63		97.70	%	$	5,465	(16)		4.328%(16	)		5/15/2033	(16)
Oaks, The	Jackson, TN		1978		1993		100		87,500		875	$	572.95		97.00	%	$	—(1	)		(1	)		(1	)
Post House Jackson	Jackson, TN		1987		1989		150		163,650		1,091	$	631.23		95.33	%	$	5,095			3.771	%		10/15/2032
Post House North	Jackson, TN		1987		1989		144		144,720		1,005	$	619.43		97.22	%	$	3,375	(13)		3.821%(13	)		5/15/2031(13	)
Bradford Chase	Jackson, TN		1987		1994		148		121,360		820	$	563.57		100.00	%	$	—(1	)		(1	)		(1	)
Woods at Post House	Jackson, TN		1997		1995		122		118,950		975	$	649.35		99.18	%	$	4,998			6.070	%		9/1/2035
Cedar Mill	Memphis, TN		1973/86		1982/94		276		297,804		1,079	$	634.65		81.52	%	$	—(1	)		(1	)		(1	)
Gleneagles	Memphis, TN		1975		1990		184		189,520		1,030	$	612.92		92.39	%	$	—(1	)		(1	)		(1	)
Greenbrook	Memphis, TN		1974/78/83/86		1988		1,037		939,522		906	$	603.38		90.36	%	$	—(4	)		(4	)		(4	)
Hickory Farm	Memphis, TN		1985		1994		200		150,200		751	$	560.98		90.50	%	$	—(1	)		(1	)		(1	)
Kirby Station	Memphis, TN		1978		1994		371		310,156		836	$	632.16		95.42	%	$	—(1	)		(1	)		(1	)
Lincoln on the Green	Memphis, TN		1988/98		1994		618		535,188		866	$	673.06		94.66	%	$	—(1	)		(1	)		(1	)
Park Estate	Memphis, TN		1974		1977		82		96,924		1,182	$	867.03		96.34	%	$	—(4	)		(4	)		(4	)
Reserve at Dexter Lake	Memphis, TN		1999/01		1998		740		792,540		1,071	$	764.99		95.00	%	$	—(5	)		(5	)		(5	)
River Trace	Memphis, TN		1981/85		1997		440		370,920		843	$	595.33		86.14	%	$	—(1	)		(1	)		(1	)
Paddock Club Murfreesboro	Murfreesboro, TN		1999		1998		240		268,800		1,120	$	808.24		90.83	%	$	—(1	)		(1	)		(1	)
Brentwood Downs	Nashville, TN		1986		1994		286		220,220		770	$	690.00		96.50	%	$	—(1	)		(1	)		(1	)
Grand View Nashville	Nashville, TN		2001		1999		433		479,331		1,107	$	826.84		96.54	%	$	—(1	)		(1	)		(1	)
Monthaven Park	Nashville, TN		1999/01		2004		456		427,728		938	$	716.71		98.46	%	$	22,725			3.590	%		1/11/2008
Park at Hermitage	Nashville, TN		1987		1995		440		392,480		892	$	597.09		91.59	%	$	6,645	(17)		3.921%(17	)		2/15/2034	(17)
							7,410		6,960,716		939	$	656.58		93.55	%	$	48,303
Northwood	Arlington, TX		1980		1998		270		224,100		830	$	563.06		88.15	%	$	—(2	)		(2	)		(2	)
Balcones Woods	Austin, TX		1983		1997		384		313,728		817	$	641.85		96.09	%	$	—(2	)		(2	)		(2	)
Grand Reserve at Sunset Valley	Austin, TX		1996		2004		210		198,240		944	$	991.69		95.24	%	$	11,193			4.170	%		9/28/2008
Stassney Woods	Austin, TX		1985		1995		288		248,832		864	$	613.71		94.79	%	$	4,050	(18)		3.921%(18	)		10/15/2032	(18)
Travis Station	Austin, TX		1987		1995		304		249,888		822	$	561.69		97.04	%	$	3,585	(19)		3.921%(19	)		2/15/2034	(19)
Woods, The	Austin, TX		1977		1997		278		214,060		770	$	787.51		94.60	%	$	—(2	)		(2	)		(2	)
Celery Stalk	Dallas, TX		1978		1994		410		374,740		914	$	690.05		94.88	%	$	—(8	)		(8	)		(8	)
Courtyards at Campbell	Dallas, TX		1986		1998		232		168,200		725	$	662.66		99.14	%	$	—(2	)		(2	)		(2	)
Deer Run	Dallas, TX		1985		1998		304		206,720		680	$	628.68		89.47	%	$	—(2	)		(2	)		(2	)
Lodge at Timberglen	Dallas, TX		1983		1994		260		226,200		870	$	649.63		91.15	%	$	—(8	)		(8	)		(8	)
Watermark	Dallas, TX		2002		2004		240		205,200		855	$	753.05		97.50	%	$	—(8	)		(8	)		(8	)
Legacy Pines	Houston, TX		1999		2003		308		283,360		920	$	919.02		95.78	%	$	—(2	)		(2	)		(2	)

13

																	Encumbrances at December 31, 2005
Property	Location	Year Completed		Year Management Commenced		Number of Units		Approximate Rentable Area (Square Footage)		Average Unit Size (Square Footage)		Monthly Rent per Unit at December 31, 2005		Average Occupancy Percent at December 31, 2005			Mortgage Principal (000’s)			Interest Rate			Maturity Date
Westborough Crossing	Katy, TX		1984		1994		274		197,280		720	$	611.69		96.35	%	$	—(8	)		(8	)		(8	)
Kenwood Club	Katy, TX		2000		1999		320		318,080		994	$	801.15		93.13	%	$	—(2	)		(2	)		(2	)
Lane at Towne Crossing	Mesquite, TX		1983		1994		384		277,632		723	$	649.88		94.79	%	$	—(2	)		(2	)		(2	)
Highwood	Plano, TX		1983		1998		196		156,800		800	$	684.48		94.39	%	$	—(4	)		(4	)		(4	)
Los Rios Park	Plano, TX		2000		2003		498		470,112		944	$	749.72		96.59	%	$	—(2	)		(2	)		(2	)
Boulder Ridge	Roanoke, TX		1999		2005		478		429,244		898	$	759.70		91.00	%	$	—(2	)
Cypresswood Court	Spring, TX		1984		1994		208		160,576		772	$	618.27		95.19	%	$	—(8	)		(8	)		(8	)
Villages at Kirkwood	Stafford, TX		1996		2004		274		244,682		893	$	881.02		93.80	%	$	14,439			4.170	%		9/28/2008
Green Tree Place	Woodlands, TX		1984		1994		200		152,200		761	$	671.65		95.50	%	$	—(8	)		(8	)		(8	)
							6,320		5,319,874		842	$	709.20		94.43	%	$	33,267
Township	Hampton, VA		1987		1995		296		248,048		838	$	818.75		95.95	%	$	10,800	(14)		3.901%(14	)		10/15/2032	(14)
Subtotal 100% Owned							37,705		35,930,298		953	$	694.59		94.65	%
Joint Venture Properties
Verandas at Timberglen	Dallas, TX		1999		2004		522		500,076		958	$	1,031.25		92.72	%		N/A
Subtotal Joint Venture Properties							522		500,076		958	$	1,031.25		92.72	%
Total 100% Owned and Joint Venture Properties							38,227		36,430,374		953	$	699.18		94.62	%

 

(1) Encumbered by a $600 million FNMA facility, with $587.3 million available and $562.8 million outstanding with a variable interest rate of 4.93% on which there exists thirteen interest rate swap agreements totaling $490 million at an average rate of 5.61% at December 31, 2005.

(2) Encumbered by a $250 million FNMA facility, with $204.0 available and $158.6 million outstanding, $48.6 million of which had a variable interest rate of 4.58% and $110 million with a fixed rate of 7.18% at December 31, 2005.

(3) Phase I of Paddock Park—Ocala is encumbered by $6.8 million in bonds on which there exists a $6.8 million interest rate cap of 6.000% which terminates on October 24, 2007.

(4) Encumbered, along with one corporate property, by a mortgage with a principal balance of $40 million at December 31, 2005, with a maturity of April 1, 2009 and an interest rate of 5.41% on which there is a $25 million interest rate swap agreement with a rate of 4.98%, maturing on March 1, 2009.

(5) Encumbered by a credit line with AmSouth Bank, with an outstanding balance of $12.5 million at December 31, 2005.

(6) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with principal balance of $13.2 million at December 31, 2005, and an average interest rate of 5.87%.

(7) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $12.5 million at December 31, 2005, and an average interest rate of 5.21%.

(8) Encumbered by a $100 million Freddie Mac facility, with $96.4 million available and an outstanding balance of $96.4 million and a variable interest rate of 4.96% on which there exists five interest rate swap agreements totaling $83 million at an average rate of 5.41% at December 31, 2005.

(9) Encumbered by $8.4 million in bonds on which there exists a $8.4 million interest rate swap agreement fixed at 4.73% and maturing on September 15, 2010.

(10) Encumbered by $7.0 million in bonds on which there exists a $7.0 million interest rate swap agreement fixed at 3.95% and maturing on October 24, 2007.

(11) Encumbered by $5.9 million in bonds on which there exists a $5.9 million interest rate swap agreement fixed at 5.13% and maturing on June 15, 2008.

(12)Encumbered by $7.7 million in bonds on which there exists a $7.7 million interest rate swap agreement fixed at 5.13% and maturing on June 15, 2008.

(13) Encumbered by $3.4 million in bonds on which there exists a $3.4 million interest rate swap agreement fixed at 5.13% and maturing on June 15, 2008.

(14) Encumbered by $10.8 million in bonds on which there exists a $10.8 million interest rate swap agreement fixed at 3.95% and maturing on October 24, 2007.

(15) Encumbered by $3.5 million in bonds on which there exist a $3.0 million interest rate swap agreement fixed at 3.23% and maturing on May 30, 2008.

14

(16) Encumbered by $5.5 million in bonds on which there exists a $5.0 million interest rate swap agreement fixed at 3.23% and maturing on May 30, 2008.

(17) Encumbered by $6.6 million in bonds on which there exists a $6.6 million interest rate swap agreement fixed at 3.63% and maturing on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 4.99% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

(18) Encumbered by $4.0 million in bonds on which there exists a $4.0 million interest rate cap of 6.0% which terminates on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 4.99% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

(19) Encumbered by $3.6 million in bonds on which there exists a $3.6 million interest rate swap agreement fixed at 3.63% and maturing on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 4.99% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

15

ITEM 3.  LEGAL PROCEEDINGS

The Company is not presently subject to any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company. The Company is presently subject to routine litigation arising in the ordinary course of business, some of which is expected to be covered by liability insurance and none of which is expected to have a material adverse effect on the business, financial condition, liquidity or results of operations of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock has been listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “MAA” since its initial public offering in February 1994. On February 10, 2006, the reported last sale price of the Company’s common stock on the NYSE was $52.41 per share, and there were approximately 1,400 holders of record of the common stock. The Company estimates there are approximately 14,000 beneficial owners of its common stock. On February 10, 2006, there was one holder of record of the 9-1/4% Series F Cumulative Redeemable Preferred Stock (“Series F”), three holders of record of the 8 5/8% Series G Cumulative Redeemable Preferred Stock (“Series G”) and approximately 15 holders of record of the 8.30% Series H Cumulative Redeemable Preferred Stock (“Series H”). The following table sets forth the quarterly high and low sales prices of the Company’s common stock as reported on the NYSE and the dividends declared by the Company with respect to the periods indicated.

	Sales Prices
	High		Low		Dividends Declared
2005:
First Quarter	$	41.350	$	35.840	$	0.585
Second Quarter	$	46.520	$	35.620	$	0.585
Third Quarter	$	48.760	$	42.530	$	0.585
Fourth Quarter	$	50.190	$	43.050	$	0.595
2004:
First Quarter	$	37.400	$	33.420	$	0.585
Second Quarter	$	38.640	$	30.750	$	0.585
Third Quarter	$	40.900	$	35.130	$	0.585
Fourth Quarter	$	41.740	$	37.920	$	0.585

 

The Company’s quarterly dividend rate is currently $0.595 per common share. The Board of Directors reviews and declares the dividend rate quarterly. Actual dividends made by the Company will be affected by a number of factors, including the gross revenues received from the Communities, the operating expenses of the Company, the interest expense incurred on borrowings and unanticipated capital expenditures.

The Company currently pays a preferential regular distribution on the Series F stock, Series G stock and Series H stock at annual rates of $2.3125, $2.15625 and $2.075 per share, respectively. No distribution may be made on the Company’s common stock unless all accrued distributions have been made with respect to each series of the Company’s preferred stock. No assurance can be given that the Company will be able to maintain its distribution rate on its common stock or make required distributions with respect to the Series F, Series G and Series H preferred stock.

The Company expects to make future quarterly distributions to shareholders; however, future distributions by the Company will be at the discretion of the Board of Directors and will depend on the actual funds from operations of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as the Board of Directors deems relevant.

16

The Company has established the Direct Stock Purchase and Distribution Reinvestment Plan (the “DRSPP”) under which holders of common stock, preferred stock and limited partnership interests in Mid-America Apartments, L.P. can elect automatically to reinvest their distributions in additional shares of common stock. The plan also allows for the optional purchase of common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. The Company, in its absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill its obligations under the DRSPP, the Company may either issue additional shares of common stock or repurchase common stock in the open market. The Company may elect to sell shares under the DRSPP at up to a 5% discount.

In 2004, the Company issued a total of 413,598 shares through its DRSPP and offered a 2% discount for optional cash purchases in the months of August through December. Throughout 2005, the Company issued a total of 803,251 shares through its DRSPP and offered an average 1.5% discount for optional cash purchases.

The following table provides information with respect to compensation plans under which our equity securities are authorized for issuance as of December 31, 2005.

	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a))
	(a)(1)		(b)(1)		(c)(2)
Equity compensation plans approved by security holders		398,052	$	24.83		584,355
Equity compensation plans not approved by security holders		N/A		N/A		N/A
Total		398,052	$	24.83		584,355

 

(1) Columns (a) and (b) above do not include 104,698 shares of restricted stock that are subject to vesting requirements which were issued through the Company’s Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan, 17,448 shares of restricted stock that are subject to vesting requirements which were issued through the Company’s 2004 Stock Plan, 48,197 shares of common stock which have been purchased by employees through the Employee Stock Purchase Plan or 74,895 shares of restricted stock authorized to be issued through the Long-Term Performance Based Incentive Plan for Executive Officers as of December 31, 2005, which is pending issuance by the Compensation Committee of the Board of Directors in 2006. See Note 11 of the consolidated financial statements for more information on these plans.

(2) Column (c) above includes 482,552 shares available to be issued under the Company’s 2004 Stock Plan and 101,803 shares available to be issued under the Company’s Employee Stock Purchase Plan. See Note 11 of the consolidated financial statements for more information on these plans.

The Company has not issued any stock option grants since 2002.

17

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth selected financial data on an historical basis for the Company. This data should be read in conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.

MID-AMERICA APARTMENT COMMUNITIES, INC.
SELECTED FINANCIAL DATA
(Dollars in thousands except per share data)

	Year Ended December 31,
	2005			2004			2003			2002			2001
Operating Data:
Total revenues	$	297,455		$	267,784		$	236,762		$	228,851		$	228,015
Expenses:
Property operating expenses		123,716			112,748			98,692			90,869			87,658
Depreciation		75,050			68,653			58,074			54,285			51,091
Property management and general and administrative expenses		22,225			19,597			15,670			15,298			16,083
Income from continuing operations before non-operating items		76,464			66,786			64,326			68,399			73,183
Interest and other non-property income		498			593			835			729			1,301
Interest expense		(58,751	)		(50,858	)		(44,991	)		(48,381	)		(51,487	)
(Loss) gain on debt extinguishment		(409	)		1,095			111			(1,441	)		(1,189	)
Amortization of deferred financing costs		(2,011	)		(1,753	)		(2,050	)		(2,700	)		(2,339	)
Minority interest in operating partnership income		(1,571	)		(2,264	)		(1,360	)		(388	)		(2,417	)
Income (loss) from investments in unconsolidated entities		65			(287	)		(949	)		(532	)		(296	)
Incentive fee from unconsolidated entity		1,723			—			—			—			—
Net gain on insurance and other settlement proceeds		749			2,683			2,860			397			11,933
Gain on sale of non-depreciable assets		334			—			—			—			—
Gain on disposition within unconsolidated entities		3,034			3,249			—			—			—
Income from continuing operations		20,125			19,244			18,782			16,083			28,689
Discontinued operations:
(Loss) income from discontinued operations before asset impairment, settlement proceeds and gain on sale		(113	)		(197	)		(577	)		58			9
Asset impairment of discontinued operations		(243	)		(200	)		—			—			—
Net (loss) gain on insurance and other settlement proceeds of discontinued operations		(25	)		526			82			—			—
Gain on sale of discontinued operations		—			5,825			1,919			—			—
Net income		19,744			25,198			20,206			16,141			28,698
Preferred dividend distribution		14,329			14,825			15,419			16,029			16,113
Premiums and original issuance costs associated with the redemption of preferred stock		—			—			5,987			2,041			—
Net income (loss) available for common shareholders	$	5,415		$	10,373		$	(1,200	)	$	(1,929	)	$	12,585

18

	Year Ended December 31,
	2005			2004			2003			2002			2001
Per Share Data:
Weighted average shares outstanding (in thousands):
Basic		21,405			20,317			18,374			17,561			17,427
Effect of dilutive stock options		202			335			—			—			105
Diluted		21,607			20,652			18,374			17,561			17,532
Net income (loss) available for common shareholders	$	5,415		$	10,373		$	(1,200	)	$	(1,929	)	$	12,585
Discontinued property operations		381			(5,954	)		(1,424	)		(58	)		(9	)
Income (loss) from continuing operations available for common shareholders	$	5,796		$	4,419		$	(2,624	)	$	(1,987	)	$	12,576
Earnings per share—basic:
Income (loss) from continuing operations available for common shareholders	$	0.27		$	0.22		$	(0.14	)	$	(0.11	)	$	0.72
Discontinued property operations		(0.02	)		0.29			0.07			—			—
Net income (loss) available for common shareholders	$	0.25		$	0.51		$	(0.07	)	$	(0.11	)	$	0.72
Earnings per share—diluted:
Income (loss) from continuing operations available for common shareholders	$	0.27		$	0.21		$	(0.14	)	$	(0.11	)	$	0.72
Discontinued property operations		(0.02	)		0.29			0.07			—			—
Net income (loss) available for common shareholders	$	0.25		$	0.50		$	(0.07	)	$	(0.11	)	$	0.72
Balance Sheet Data:
Real estate owned, at cost	$	1,987,853		$	1,862,850		$	1,695,111		$	1,478,793		$	1,449,720
Real estate assets, net	$	1,510,289		$	1,459,952		$	1,351,849		$	1,192,539		$	1,216,933
Total assets	$	1,570,457		$	1,522,307		$	1,406,533		$	1,239,467		$	1,263,488
Total debt	$	1,140,046		$	1,083,473		$	951,941		$	803,703		$	779,664
Minority interest	$	29,798		$	31,376		$	32,019		$	33,405		$	43,902
Shareholders’ equity	$	362,526		$	347,325		$	351,294		$	328,171		$	398,358
Other Data (at end of period):
Market capitalization (shares and units)(1)	$	1,358,725		$	1,145,183		$	939,581		$	673,431		$	709,224
Ratio of total debt to total capitalization(2)		45.6	%		48.6	%		50.3	%		54.4	%		52.4	%
Number of properties, including joint venture ownership interest(3)		132			132			127			123			122
Number of apartment units, including joint venture ownership interest(3)		38,227			37,904			35,734			33,923			33,411

 

(1) Market capitalization includes all series of preferred shares (value based on $25 per share liquidation preference) regardless of classification on balance sheet, common shares and partnership units (value based on common stock equivalency).

(2) Total capitalization is market capitalization plus total debt and market capitalization of preferred shares (value based on $25 per share liquidation preference).

(3) Property and apartment unit totals have not been adjusted to exclude properties held for sale.

19

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS

This and other sections of this Annual Report contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These statements include, but are not limited to, statements about anticipated market conditions, expected growth rates of revenues and expenses, planned asset dispositions, disposition pricing, planned acquisitions and developments, property financings, expected interest rates and planned capital expenditures. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report on Form 10-K will 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 the Company or any other person that the objectives and plans of the Company will be achieved.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The following discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, and the notes thereto, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires the Company to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis, the Company evaluates its estimates and assumptions based upon historical experience and various other factors and circumstances. The Company believes that its estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates and assumptions.

The Company believes that the estimates and assumptions that are most important to the portrayal of its financial condition and results of operations, in that they require the most subjective judgments, form the basis of accounting policies deemed to be most critical. These critical accounting policies include revenue recognition, capitalization of expenditures and depreciation of assets, impairment of long-lived assets, including goodwill, and fair value of derivative financial instruments.

Revenue Recognition

The Company leases multifamily residential apartments under operating leases primarily with terms of one year or less. Rental revenues are recognized using a method that represents a straight-line basis over the term of the lease and other revenues are recorded when earned.

The Company records all gains and losses on real estate in accordance with Statement No. 66 “Accounting for Sales of Real Estate”.

Capitalization of expenditures and depreciation of assets

The Company carries its real estate assets at their depreciated cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, which range from 8 to 40 years for land improvements and buildings, 5 years for furniture, fixtures, and equipment, and 3 to 5 years for computers and software, all of which are subjective determinations. Repairs and maintenance costs are expensed as incurred while significant improvements, renovations, and replacements are capitalized. The cost to complete any deferred repairs and maintenance at properties acquired by the Company in order to elevate the condition of the property to the Company’s standards are capitalized as incurred.

Impairment of long-lived assets, including goodwill

The Company accounts for long-lived assets in accordance with the provisions of Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“Statement 144”) and evaluates its goodwill

20

for impairment under Statement No. 142, Goodwill and Other Intangible Assets (“Statement 142”). The Company evaluates its goodwill for impairment on an annual basis in the Company’s fiscal fourth quarter, or sooner if a goodwill impairment indicator is identified. The Company periodically evaluates its long-lived assets, including its investments in real estate and goodwill, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions, and legal factors.

In accordance with Statement 144, long-lived assets, such as real estate assets, equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

Goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination is made at the reporting unit level and consists of two steps. First, the Company determines the fair value of a reporting unit and compares it to its carrying amount. In the apartment industry, the primary method used for determining fair value is to divide annual operating cash flows by an appropriate capitalization rate. The Company determines the appropriate capitalization rate by reviewing the prevailing rates in a property’s market or submarket. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with Statement No. 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

Fair value of derivative financial instruments

The Company utilizes certain derivative financial instruments, primarily interest rate swaps and caps, during the normal course of business to manage, or hedge, the interest rate risk associated with the Company’s variable rate debt or as hedges in anticipation of future debt transactions to manage well-defined interest rate risk associated with the transaction. The valuation of the derivative financial instruments under Statement No. 133 as amended requires the Company to make estimates and judgments that affect the fair value of the instruments.

In order for a derivative contract to be designated as a hedging instrument, the relationship between the hedging instrument and the hedged item must be highly effective. While the Company’s calculation of hedge effectiveness contains some subjective determinations, the historical correlation of the cash flows of the hedging instruments and the underlying hedged item are measured by the Company before entering into the hedging relationship and have been found to be highly correlated.

The Company performs ineffectiveness tests using the change in the variable cash flows method at the inception of the hedge and for each reporting period thereafter, through the term of the hedging instruments. Any amounts determined to be ineffective are recorded in earnings. The change in fair value of the interest rate swaps and caps designated as cash flow hedges are recorded to accumulated other comprehensive income in the statement of shareholders’ equity.

OVERVIEW OF THE YEAR ENDED DECEMBER 31, 2005

The Company’s results for 2005 were positively influenced by both the improvement in operational results of communities held throughout both the current and prior period (“same store”) and the positive impact from acquisitions in 2004 and 2005.

21

The Company’s 2005 same store operating results were helped by signs of economic recovery in the Company’s geographic areas of operation. Same store occupancy and average rental rates were both improved from the prior year.

The Company grew externally during 2004 by following its acquisition strategy to invest in large and mid-sized growing markets in the southeastern United States. The Company acquired six properties in 2004 for which it benefited from a full year of revenues in 2005. The Company acquired an additional three properties in 2005.

The Company sold one property in 2005. A joint venture the Company was invested in with Crow Holdings sold two properties in 2005 resulting in the winding up of the joint venture and generating approximately $3 million in gains and $1.7 million related to a one-time incentive fee for the Company.

The Company did experience an increase in interest expense in 2005 as its total debt outstanding and average borrowing costs both increased from prior year levels.

The following is a discussion of the consolidated financial condition and results of operations of the Company for the years ended December 31, 2005, 2004, and 2003. This discussion should be read in conjunction with all of the consolidated financial statements included in this Annual Report on Form 10-K.

As of December 31, 2005, the total number of apartment units the Company owned or had an ownership interest in, including the properties owned by the Crow JV was 38,227 in 132 Communities compared to the 37,904 apartment units in 132 Communities owned at December 31, 2004, and the 35,734 apartment units in 127 Communities owned at December 31, 2003. For properties owned 100% by the Company, the average monthly rental per apartment unit, excluding units in lease-up, increased to $695 at December 31, 2005, from $680 at December 31, 2004, and $667 at December 31, 2003. For these same units, overall occupancy at December 31, 2005, 2004, and 2003 was 94.6%, 93.6%, and 92.7%, respectively.

RESULTS OF OPERATIONS

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2005, TO THE YEAR ENDED DECEMBER 31, 2004

Property revenues for the year ended December 31, 2005, increased by approximately $29,928,000 from the year ended December 31, 2004, due to (i) a $12,816,000 increase in property revenues from the six properties acquired in 2004 (the “2004 Acquisitions”), (ii) a $8,934,000 increase in property revenues from the properties held throughout both periods, and (iii) a $8,178,000 increase in property revenues from the three properties acquired in 2005 (the “2005 Acquisitions”).

Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other property related costs. Property operating expenses for the year ended December 31, 2005, increased by approximately $10,968,000 from the year ended December 31, 2004, due primarily to increases of property operating expenses of (i) $5,356,000 from the 2004 Acquisitions, (ii) $3,336,000 from the 2005 Acquisitions, and (iii) $2,276,000 from the properties held throughout both periods.

Depreciation expense increased by approximately $6,397,000 primarily due to the increases of depreciation expense of (i) $4,217,000 from the 2004 Acquisitions, (ii) $3,954,000 from the 2005 Acquisitions, and (iii) $1,424,000 from the communities held throughout both periods. These increases were partially offset by a decrease in depreciation expense of $3,198,000 from the expiration of the amortization of fair market value of leases of 13 communities acquired by the Company in 2003.

Property management expenses increased by approximately $1,514,000 from the year ended December 31, 2004, to the year ended December 31, 2005, partially due to increased personnel expenses and incentive compensation both related to property acquisitions. General and administrative expenses increased by approximately $1,114,000 over this same period. Property management expenses and general and administrative expenses for 2005 were both impacted by a cumulative charge to amortize four years of a ten year senior management incentive plan which the Company previously expected would expense from 2007 through 2011.

Interest expense increased approximately $7,893,000 in 2005 from 2004 due primarily to the increase in the amount of debt outstanding from 2004 and the increase in the Company’s average borrowing cost from 5.0% over the twelve months ended December 31, 2004, to 5.3% over the twelve months ended December 31, 2005.

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For the year ended December 31, 2005, the Company recorded total gains of approximately $3,034,000 from the sale of two properties owned by a joint venture of the Company. The sales of these properties resulted in an additional incentive fee being paid to the Company of approximately $1,723,000 in 2005. For the year ended December 31, 2004, the Company recorded a total of approximately $9,074,000 in gains from two property sales, of which approximately $3,249,000 represented the Company’s share of the gain from the sale of a property which was owned by a joint venture of the Company.

In 2005 and 2004, the Company refinanced the debt on several of its communities primarily to take advantage of the lower interest rate environment. In 2005, this resulted in a loss on debt extinguishment of approximately $409,000 due to the write-off of deferred financing costs and prepayment penalties. In 2004, the Company recorded a gain of approximately $1,095,000 related to the early extinguishment of debt.

For the years ended December 31, 2005, and 2004, the Company recorded net gains on insurance and other settlement proceeds totaling approximately $749,000 mainly related to insurance settlements from hurricane damage experienced at some of the Company’s Communities and $2,683,000 mainly related to insurance settlements from fires at some of the Company’s Communities, respectively.

Primarily as a result of the foregoing, net income decreased by approximately $5,454,000 in 2005 over 2004.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2004, TO THE YEAR ENDED DECEMBER 31, 2003

Comparisons of income from property operations for the years ended December 31, 2004, and 2003, were impacted by various factors. As a result of the buyout in August of 2003 of the partnership interest in Bre/Maac Associates, LLC, (the “BreMaac Buyout”), the Company’s joint venture with Blackstone Real Estate Advisors (“Blackstone”), the Company’s consolidated financial statements for 2003 include the impact of approximately only four months of operations of the 10 properties which were previously owned by the joint venture and accounted for using the equity method. The Company’s consolidated financial statements for 2004 include a full twelve months of operations for these 10 properties. The Company’s consolidated financial statements for 2003 also included only partial year results for the four properties acquired during 2003 (one of which was subsequently transferred to Mid-America CH/Realty, LP, the Company’s joint venture with Crow Holdings (the “Green Oaks Transfer”)). The Company also acquired an additional six properties during the course of 2004. During 2003, the Company had two development communities which completed lease-up. Finally, the Company’s performance during 2004 and 2003 was impacted by changes in performance of the communities that were held throughout both periods.

Property revenues for the year ended December 31, 2004, increased by approximately $31,262,000 from the year ended December 31, 2003, due to (i) a $12,481,000 increase in property revenues from the BreMaac Buyout, (ii) a $7,759,000 increase in property revenues from 2004 Acquisitions, (iii) a $7,372,000 increase in property revenues from the acquisitions of the Los Rios Park, Lighthouse Court and Legacy Pines communities in 2003 (the “2003 Acquisitions”), (iv) a $4,062,000 increase in property revenues from the communities held throughout both periods, and (v) a $189,000 increase in property revenues from the communities in lease-up in 2003 (the “Communities in Lease-up”). These increases were partially offset by a decrease in property revenues of $601,000 due to the Green Oaks Transfer.

Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other property related costs. Property operating expenses for the year ended December 31, 2004, increased by approximately $14,056,000 from the year ended December 31, 2003, due primarily to increases of property operating expenses of (i) $6,008,000 from the BreMaac Buyout, (ii) $3,966,000 from the 2003 Acquisitions, (iii) $3,307,000 from the 2004 Acquisitions, (iv) $593,000 from the communities held throughout both periods, (v) $514,000 from expenses related to the extraordinary hurricane season in 2004, and (vi) $27,000 from the Communities in Lease-up. These increases were partially offset by a decrease in property operating expenses of $359,000 from the Green Oaks Transfer.

Depreciation expense increased by approximately $10,579,000 primarily due to the increases of depreciation expense of (i) $3,659,000 from the 2003 Acquisitions, (ii) $3,362,000 from the 2004 Acquisitions, (iii) $2,781,000 from the BreMaac Buyout, and (iv) $802,000 from the communities held

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throughout both periods. These increases were partially offset by a decrease in depreciation expense of $25,000 from the Communities in Lease-up.

Property management expenses increased by approximately $1,922,000 from the year ended December 31, 2003, to the year ended December 31, 2004, partially due to increased personnel expenses and incentive compensation related to property acquisitions. General and administrative expenses increased by approximately $2,005,000 over this same period partially related to expenses associated with the implementation of new property management software and expenses resulting from new regulatory requirements.

Interest expense increased approximately $5,867,000 from 2003 due primarily to the increase in the amount of debt outstanding from 2003. The Company’s average borrowing cost at December 31, 2004, and 2003, was 5.4%.

For the year ended December 31, 2004, the Company recorded a total of approximately $9,074,000 in gains from two property sales, of which approximately $3,249,000 represented the Company’s share of the gain from the sale of a property which was owned by one of the Company’s joint ventures. In 2003, the Company sold one property and recorded a gain of approximately $1,919,000.

In 2004, and 2003, the Company refinanced the debt on several of its communities primarily to take advantage of the lower interest rate environment. This resulted in gains of approximately $1,095,000 and $111,000 related to the early extinguishment of debt in 2004 and 2003, respectively.

For the years ended December 31, 2004, and 2003, the Company recorded net gains on insurance and other settlement proceeds totaling approximately $2,683,000, mainly related to insurance settlements from fires at some of the Company’s Communities, and approximately $2,860,000, mainly related to insurance settlements from the fire at the Company’s headquarters in March 2002, respectively.

Primarily as a result of the foregoing, net income increased by $4,992,000 in 2004 over 2003.

FUNDS FROM OPERATIONS

Funds from operations (“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, gain 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 (“NAREIT”) definition. Disposition of real estate assets includes sales of discontinued operations as well as proceeds received from insurance and other settlements from property damage.

In response to the Securities and Exchange Commission’s Staff Policy Statement relating to EITF Topic D-42 concerning the calculation of earnings per share for the redemption of preferred stock, the Company has included the amount charged to retire preferred stock in excess of carrying values in its FFO calculation.

The Company’s policy is to expense the cost of interior painting, vinyl flooring, and blinds as incurred for stabilized properties. During the stabilization period for acquisition properties, these items are capitalized as part of the total repositioning program of newly acquired properties, and, thus are not deducted in calculating FFO.

FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, as an indicator of operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of liquidity. The Company believes that FFO is helpful to investors in understanding the Company’s operating performance in that such calculation excludes depreciation expense on real estate assets. The Company 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. The Company’s 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.

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The following table is a reconciliation of FFO to net income for the years ended December 31, 2005, 2004, and 2003 (dollars and shares in thousands):

	Years ended December 31,
	2005			2004			2003
Net income	$	19,744		$	25,198		$	20,206
Depreciation real estate assets		73,704			67,302			56,701
Net gain on insurance and other settlement proceeds		(749	)		(2,683	)		(2,860	)
Gain on disposition within unconsolidated entities		(3,034	)		(3,249	)		—
Net loss (gain) on insurance and other settlement proceeds of discontinued operations		25			(526	)		(82	)
Depreciation real estate assets of discontinued operations		—			681			1,022
Gain on sale of discontinued operations		—			(5,825	)		(1,919	)
Depreciation real estate assets of unconsolidated entities		482			1,688			2,345
Preferred dividend distribution		(14,329	)		(14,825	)		(15,419	)
Minority interest in operating partnership income		1,571			2,264			1,360
Premiums and original issuance costs associated with the redemption of preferred stock		—			—			(5,987	)
Funds from operations	$	77,414		$	70,025		$	55,367
Weighted average shares and units:
Basic		24,025			22,981			21,093
Diluted		24,227			23,316			21,354

 

FFO increased during 2005 by approximately $7,389,000 to $77,414,000 versus $70,025,000 in 2004 principally because of improved operation results both from the Company’s same store portfolio and the addition of properties from the 2004 Acquisitions and 2005 Acquisitions as previously reviewed in the net income discussion above. FFO increased during 2004 by approximately $14,658,000 to $70,025,000 versus $55,367,000 in 2003 principally because of the addition of properties through the BreMaac Buyout and 2003 Acquisitions and 2004 Acquisitions as previously reviewed in the net income discussion above. FFO for 2003 included a charge of $5,987,000 for premiums and original issuance costs associated with the redemption of preferred stock.

TRENDS

Property performance over the past four years has been pressured by an imbalance between supply and demand for apartment units in many of the Company’s markets, but has begun to show signs of improvement.

The Company believes that demand by apartment renters is most impacted by household formation, which is driven by job formation. Job formation has been quite weak in many of the Company’s markets, and most noticeably in the larger metro areas, such as Atlanta, Houston and Dallas. Some of the smaller and mid-size markets in which the Company operates, such as Jackson, Mississippi, Jacksonville, Florida, and Columbus, Georgia have been less impacted.

On the supply side, low interest rates encouraged over-building of apartments, especially in the larger metropolitan areas. Delivery of new apartment units during this period of weakened apartment demand increased competition, reducing apartment occupancy levels, especially in the larger markets. In addition, single-family homes, which are direct competition for apartments, became even more affordable, and home ownership continued to climb in the Company’s markets.

In 2005, the Company began to see a turn in many of its markets, particularly in Florida and Georgia, where there are some signs of improving demand coupled with a slight slow down in supply. The Company’s large-tier markets, which have been under the most pressure during the economic downturn, are beginning to show signs of absorbing the oversupply of new apartments and returning to historical occupancy and pricing levels, while the Company’s smaller tier and mid-sized markets are benefiting from improving market fundamentals which support continued stable growth. The policies of the Federal Reserve, which has raised short-term interest rates by 300 basis points in a short span of time, also seem to be having some early impact

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on the supply of new apartments. Development costs of apartments and of single-family homes also appear to be rising, as are mortgage interest rates, with the likelihood that this may slightly alleviate this competition.

The Company believes that the impact of higher demand from apartment renters, a reduced rate of increase in supply, and reduced competition from single-family homes will contribute to better operating results in 2006. While rising interest rates will also increase the Company’s cost of borrowing, the Company has mitigated part of the impact of this by putting in place $25 million of forward swap, such that the interest rate on approximately 87% of its debt has been fixed, swapped, forward swapped, or capped, compared to 81% at the end of 2004.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow provided by operating activities increased by approximately $11,458,000 to $99,687,000 for 2005 compared to $88,229,000 for 2004 mainly related to the growth of the Company through acquisitions and improved operating results in 2005. Net cash flow provided by operating activities increased by approximately $11,709,000 to $88,229,000 for 2004 compared to $76,520,000 for 2003 mainly related to the growth of the Company through the BreMaac Buyout and the 2003 Acquisitions and 2004 Acquisitions.

Net cash used in investing activities decreased by approximately $60,031,000 from $168,383,000 in 2004 to $108,352,000 in 2005. Net cash used in investing activities in 2003 was approximately $139,555,000. A total of approximately $105,643,000 was invested in 2005 to acquire properties, this compares to approximately $155,088,000 in 2004, and $138,688,000 in 2003. Capital improvements to existing real estate assets during 2005, 2004 and 2003 totaled approximately $27,301,000, $30,413,000 and $22,832,000, respectively.

Net cash provided by financing activities decreased approximately $66,896,000 to $13,596,000 in 2005 from $80,492,000 in 2004 and $61,680,000 in 2003. Cash provided from credit lines and notes payable decreased approximately $223,851,000 from approximately $280,930,000 in 2004 to $57,079,000 in 2005. Cash provided from credit lines and notes payable was approximately $245,897,000 in 2003. Principal payments on notes payable dropped to approximately $10,921,000 in 2005 from $152,046,000 in 2004 and $175,852,000 in 2003 as the Company had fewer refinancings in 2005. Proceeds from issuances of common shares and units increased in 2005 to approximately $39,459,000 mainly related to the Company’s use of its DRSPP. Proceeds from issuances of common shares and units decreased approximately $34,628,000 from 2003 to 2004 as the Company sold 1,765,000 shares of common stock to certain advisory clients of Cohen & Steers Capital Management, Inc. and to Scudder RREEF Real Estate Fund II, Inc. in 2003 to partially fund the BreMaac Buyout and 2003 Acquisitions.

The weighted average interest rate at December 31, 2005, for the $1.14 billion of debt outstanding was 5.4% compared to 5.4% on $1.08 billion of debt outstanding at December 31, 2004. The Company utilizes both conventional and tax exempt debt to help finance its activities. Borrowings are made through individual property mortgages and secured credit facilities. The Company utilizes fixed rate borrowings, interest rate swaps and interest rate caps to manage its current and future interest rate risk. More details on the Company’s borrowings can be found in the schedule on page 28.

At December 31, 2005, the Company had secured credit facilities relationships with Prudential Mortgage Capital which are credit enhanced by the Federal National Mortgage Association (“FNMA”), FNMA, Federal Home Loan Mortgage Corporation (“Freddie MAC”), and a group of banks led by AmSouth Bank. Together, these credit facilities provided a total borrowing capacity of $1.1 billion at December 31, 2005, with an availability to borrow of $1.0 billion. At December 31, 2005, the Company had total borrowings outstanding under these credit facilities of $920 million.

Approximately 71% of the Company’s outstanding obligations at December 31, 2005, were borrowed through facilities with/or credit enhanced by FNMA (the “FNMA Facilities”). The FNMA Facilities have a combined line limit of $950 million, $881 million of which was available to borrow at December 31, 2005. Various traunches of the facilities mature from 2010 through 2014. The FNMA Facilities provide for both fixed and variable rate borrowings. The interest rate on the majority of the variable portion renews every 90 days and is based on the FNMA Discount Mortgage Backed Security (“DMBS”) rate on the date of renewal,

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which has typically approximated three-month LIBOR less an average spread of 0.04% over the life of the FNMA Facilities, plus a credit enhancement fee of 0.62% to 0.795%.

Each of the Company’s secured credit facilities is subject to various covenants and conditions on usage, and are subject to periodic re-evaluation of collateral. If the Company were to fail to satisfy a condition to borrowing, the available credit under one or more of the facilities could not be drawn, which could adversely affect the Company’s liquidity. In the event of a reduction in real estate values the amount of available credit could be reduced. Moreover, if the Company were to fail to make a payment or violate a covenant under a credit facility, after applicable cure periods one or more of its lenders could declare a default, accelerate the due date for repayment of all amounts outstanding and/or foreclose on properties securing such facilities. Any such event could have a material adverse effect on the Company.

On May 26, 2005, the Company gave the required one year notice to redeem all of the issued and outstanding shares of its 8-5/8% Series G Cumulative Redeemable Preferred Stock (“Series G”) on May 26, 2006, for the total redemption price of $10 million. As a result, in accordance with Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, the Company classified the Series G as a liability within notes payable as of May 26, 2005, on the accompanying consolidated financial statements.

As of December 31, 2005, the Company had interest rate swaps in effect totaling a notional amount of approximately $659 million. To date, these swaps have proven to be highly effective hedges. The Company also had entered into a future interest rate swap totaling a notional amount of $25 million. This swap goes into effect in February 2006. The Company also had interest rate cap agreements totaling a notional amount of approximately $23 million in effect as of December 31, 2005.

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Summary details of the debt outstanding at December 31, 2005, follows in the table below:

	Line Limit		Line Availability		Outstanding Balance/ Notional Amount		Average Interest Rate			Average Rate Maturity		Average Contract Maturity
COMBINED DEBT
Fixed Rate or Swapped
Conventional					$	847,354,719		5.7	%		4/20/2011		4/20/2011
Tax Exempt						87,015,000		4.5	%		6/25/2013		6/25/2013
Preferred Series G						10,000,000		8.6	%		5/26/2006		5/26/2006
Subtotal Fixed Rate or Swapped						944,369,719		5.6	%		6/13/2011		6/13/2011
Variable Rate
Conventional						162,245,891		4.8	%		2/24/2006		6/14/2012
Tax Exempt						10,855,004		4.0	%		1/15/2006		5/30/2020
Conventional—Capped						11,720,000		4.9	%		3/1/2009		3/1/2009
Tax Exempt—Capped						10,855,000		3.9	%		4/25/2008		4/25/2008
Subtotal Variable Rate						195,675,895		4.7	%		2/19/2006		1/16/2013
Total Combined Debt Outstanding					$	1,140,045,614		5.4	%		7/15/2010		9/21/2011
UNDERLYING DEBT
Individual Property Mortgages/Bonds
Conventional Fixed Rate					$	139,354,719		5.0	%		11/7/2014		11/7/2014
Tax Exempt Fixed Rate						25,685,000		5.5	%		12/2/2024		12/2/2024
Tax Exempt Variable Rate						4,760,004		4.2	%		1/15/2006		6/1/2028
Preferred Series G						10,000,000		8.6	%		5/26/2006		5/26/2006
FNMA Credit Facilities
Tax Free Borrowings	$	88,280,000	$	78,280,000		78,280,000		3.9	%		1/15/2006		3/1/2014
Conventional Borrowings
Fixed Rate Borrowings		110,000,000		110,000,000		110,000,000		7.2	%		1/10/2009		1/10/2009
Variable Rate Borrowings		751,720,000		692,955,000		623,102,000		4.9	%		2/28/2006		5/20/2013
Subtotal FNMA Facilities		950,000,000		881,235,000		811,382,000		5.1	%		7/15/2006		11/12/2012
Freddie Mac Credit Facility		100,000,000		96,404,000		96,404,000		5.0	%		3/9/2006		7/1/2011
AmSouth Credit Facility		40,000,000		30,203,438		12,459,891		6.0	%		1/31/2006		5/24/2007
Union Planters Bank						40,000,000		5.4	%		1/31/2006		4/1/2009
Total Underlying Debt Outstanding					$	1,140,045,614		5.1	%		11/30/2007		1/31/2013
HEDGING INSTRUMENTS
Interest Rate Swaps
LIBOR indexed					$	598,000,000		5.5	%		9/24/2010
LIBOR indexed—Forward Interest Rate Swap						25,000,000		5.3	%		2/1/2013
BMA indexed						61,330,000		4.1	%		9/10/2008
Total Interest Rate Swaps					$	684,330,000		5.4	%		8/19/2010
Interest Rate Caps
LIBOR indexed					$	11,720,000		6.0	%		3/1/2009
BMA indexed						10,855,000		6.0	%		4/25/2008
Total Interest Rate Caps					$	22,575,000		6.0	%		10/2/2008

 

During 2005, the Company offered an average 1.5% discount through its DRSPP and issued approximately 784,000 shares of common stock through the direct stock purchase feature of this plan, generating approximately $32.3 million in proceeds. During 2004, the Company offered an average discount of 2.0% from August through December through its DRSPP. For the twelve months ended December 31, 2004, the Company issued approximately 392,000 shares of common stock through the direct stock purchase feature of this plan, generating approximately $15.1 million in proceeds.

On July 10, 2003, in an underwritten public offering, the Company sold 5,600,000 shares of its 8.30% Series H Cumulative Redeemable Preferred Stock (“Series H”) at $25 per share less an underwriting discount of $0.7875 per share. The net proceeds of the sale were applied to the redemption of all the issued and

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outstanding shares of the Company’s 9.5% Series A Cumulative Preferred Stock and 9-3/8% Series C Cumulative Redeemable Preferred Stock as well as 1,600,000 shares of the 1,938,830 issued and outstanding shares of the Company’s 8-7/8% Series B Cumulative Preferred Stock (“Series B”) on August 12, 2003.

On July 16, 2003, the underwriters of the Company’s Series H offering exercised an option to purchase an additional 525,000 shares of the Series H preferred stock for $25 per share less the underwriting discount, and on August 4, 2003, the underwriters exercised an option to purchase the remaining additional 75,000 shares of the Series H preferred stock for $25 per share less the underwriting discount. The net proceeds were used to redeem the remaining issued and outstanding shares of the Series B preferred stock on August 18, 2003.

On August 22, 2003, the Company sold 700,000 shares of its common stock to certain advisory clients of Cohen & Steers Capital Management, Inc. The stock was sold at a price of $28.40 per share. The $19,870,000 in net proceeds from the sale were used to partially fund the BreMaac Buyout.

On September 19, 2003, the Company sold 665,000 shares of its common stock to certain advisory clients of Cohen & Steers Capital Management, Inc. and to Scudder RREEF Real Estate Fund II, Inc. The stock was sold at a price of $29.36 per share. The $19,500,000 in net proceeds from the sale were used to partially fund the purchase of the Los Rios Park apartments.

On December 2, 2003, the Company sold 400,000 shares of its common stock to RREEF America, L.L.C. on behalf of itself and Scudder RREEF Real Estate Fund II, Inc. The stock was sold at a price of $30.00 per share. The $11,996,000 in net proceeds from the sale were used to partially fund the acquisition of the Lighthouse Court apartments.

The Company believes that it has adequate resources to fund its current operations, annual refurbishment of its properties, and incremental investment in new apartment properties. The Company is relying on the efficient operation of the financial markets to finance debt maturities, and also is heavily reliant on the creditworthiness of FNMA, which provides credit enhancement for approximately $811 million of the Company’s debt. The interest rate market for FNMA DMBS, which in the Company’s experience is highly correlated with three-month LIBOR interest rates, is also an important component of the Company’s liquidity and interest rate swap effectiveness. In the event that the FNMA DMBS market becomes less efficient, or the credit of FNMA becomes impaired, the Company would seek alternative sources of debt financing.

For the year ended December 31, 2005, the Company’s net cash provided by operating activities exceeded improvements to existing real estate assets, distributions to unitholders, and dividends paid on common and preferred shares by approximately $1.6 million. This compares to shortfalls for the years ended December 31, 2004, and 2003, of approximately $10.9 million and $11.0 million, respectively. While the Company has sufficient liquidity to permit distributions at current rates, from time to time the Company may utilize additional borrowings to cover shortfalls if necessary. Any significant deterioration in operations could result in the Company’s financial resources to be insufficient to pay distributions to shareholders at the current rate, in which event the Company would be required to reduce the distribution rate.

The following table reflects the Company’s total contractual cash obligations which consists of its long-term debt and operating leases as of December 31, 2005, (dollars in 000’s):

	Payments Due by Period
Contractual Obligations	2006		2007		2008		2009		2010		Thereafter		Total
Long-Term Debt (1)	$	38,889	$	17,017	$	110,510	$	106,846	$	121,948	$	744,836	$	1,140,046
Operating Lease		4		4		4		—		—		—		12
Total	$	38,893	$	17,021	$	110,514	$	106,846	$	121,948	$	744,836	$	1,140,058

 

(1) Represents principal payments.

OFF-BALANCE SHEET ARRANGEMENTS

At December 31, 2005, and 2004, the Company did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as “structured finance” or “special purpose entities,” established for the purpose of facilitating off-balance sheet arrangements or other contractually

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narrow or limited purposes. The Company’s joint venture with Blackstone (terminated in 2003) was established in order to raise capital through asset sales to fund development (while acquiring management fees to help offset the reduction in FFO from the sale), share repurchases, and other capital requirements. The Company’s joint ventures with Crow Holdings were established to acquire approximately $200 million of multifamily properties. In addition, the Company does not engage in trading activities involving non-exchange traded contracts. As such, the Company is not materially exposed to any financing, liquidity, market, or credit risk that could arise if it had engaged in such relationships. The Company does not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with the Company or its related parties other than what is disclosed in Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements, Note 13.

The Company’s investments in its real estate joint ventures are unconsolidated and are recorded on the equity method as the Company does not have a controlling interest.

INSURANCE

In the opinion of management, property and casualty insurance is in place that provides adequate coverage to provide financial protection against normal insurable risks such that it believes that any loss experienced would not have a significant impact on the Company’s liquidity, financial position, or results of operations.

INFLATION

Substantially all of the resident leases at the Communities allow, at the time of renewal, for adjustments in the rent payable there under, and thus may enable the Company to seek rent increases. Almost all leases are for one year or less. The short-term nature of these leases generally serves to reduce the risk to the Company of the adverse effects of inflation.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (“Statement 153”). Statement 153 was a result of a joint effort by the FASB and the IASB to improve financial reporting by eliminating certain narrow differences between their existing accounting standards. Statement 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Statement 153 is applied prospectively for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of Statement 153 did not have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In December 2004, the FASB issued Statement No. 123 (revised December 2004), Share-Based Payment (“Statement 123(R)”). Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. Statement 123(R) will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant date fair value of the equity or the liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. Statement 123(R) is effective as of the beginning of the first annual reporting period that begins after June 15, 2005. The Company will adopt Statement 123(R) effective January 1, 2006, and does not believe it will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In March 2005, the SEC issued SAB 107 to provide public companies additional guidance in applying the provisions of Statement 123(R). Among other things, SAB 107 describes the SEC staff’s expectations in determining the assumptions that underlie the fair value estimates and discusses the interaction of Statement 123(R) with certain existing SEC guidance. The guidance is also beneficial to users of financial statements in

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analyzing the information provided under statement 123(R). SAB 107 will be applied upon the adoption of Statement 123(R).

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations-an interpretation of FASB Statement No. 143 (“Interpretation 47”). Interpretation 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations, (“Statement 143”) refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Interpretation 47 is effective no later than the end of fiscal years ending after December 15, 2005, (December 31, 2005, for calendar-year enterprises). Retrospective application for interim financial information is permitted but is not required. The adoption of Interpretation 47 did not have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In June 2005, the FASB ratified EITF 04-5: Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“EITF 04-5”). EITF 04-5 provides a framework for determining whether a general partner is required to consolidate limited partners. The new framework is significantly different than the guidance in SOP 78-9 and would make it more difficult for a general partner to overcome the presumption that it controls the limited partnership, requiring the limited partner to have substantive “kick-out” or “participating” rights. Kick-out rights are the right to dissolve or liquidate the partnership or to otherwise remove the general partner without cause and participating rights are the right to effectively participate in significant decisions made in the ordinary course of the partnership’s business. EITF 04-5 became effective immediately for all newly formed limited partnerships and existing limited partnerships which are modified. The guidance will become effective for existing limited partnerships which are not modified the beginning of the first reporting period in fiscal years beginning after December 15, 2005. The Company does not believe the adoption of EITF 04-5 will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s primary market risk exposure is to changes in interest rates obtainable on its secured and unsecured borrowings. At December 31, 2005, 45.6% of the Company’s total capitalization consisted of borrowings. The Company’s interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower its overall borrowing costs. To achieve this objective, the Company manages its exposure to fluctuations in market interest rates for its borrowings through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable with such arrangements, and may enter into derivative financial instruments such as interest rate swaps and caps to mitigate its interest rate risk on a related financial instrument or to effectively fix the interest rate on a portion of its variable debt or on future refinancings. The Company does not enter into derivative instruments for trading purposes. Approximately 85% of the Company’s outstanding debt was subject to fixed rates after considering related derivative instruments with a weighted average of 5.6% at December 31, 2005. After considering the $25 million forward interest rate swap which becomes operative in February 2006, approximately 87% of the Company’s debt was fixed or hedged by interest rate swaps or caps at December 31, 2005. The Company regularly reviews interest rate exposure on its outstanding borrowings in an effort to minimize the risk of interest rate fluctuations.

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The table below provides information about the Company’s financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For the Company’s interest rate swaps and caps, the table presents the notional amount of the swaps and caps and the years in which they expire. Weighted average variable rates are based on rates in effect at the reporting date (dollars in 000’s).

	2006			2007			2008			2009			2010			Total Thereafter			Total			Fair Value
Long-term Debt
Fixed Rate (1)	$	34,518			—		$	114,451		$	65,000			—		$	71,071		$	285,040		$	258,662
Average interest rate		6.99	%		—			4.86	%		7.71	%		—			5.86	%		6.02	%
Variable Rate (1)		—		$	12,460			—		$	40,000		$	120,000		$	682,546		$	855,006		$	855,006
Average interest rate		—			6.00	%		—			5.40	%		4.93	%		4.79	%		4.86	%
Interest Rate Swaps (2)
Variable to Fixed	$	25,000		$	92,800		$	74,935		$	35,230		$	98,365		$	358,000		$	684,330		$	7,303
Average Pay Rate		7.50	%		5.89	%		5.42	%		4.59	%		5.44	%		5.25	%		5.43	%
Interest Rate Cap
Variable to Fixed		—		$	6,805			—		$	15,770			—			—		$	22,575		$	30
Average Pay Rate		—			6.00	%		—			6.00	%		—			—			6.00	%

 

(1) Excluding the effect of interest rate swap and cap agreements.

(2) Includes the Company’s forward interest rate swap agreement.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Reports of Independent Registered Public Accounting Firm, Consolidated Financial Statements and Selected Quarterly Financial Information are set forth on pages F-1 to F-29 of this Annual Report on Form 10-K.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On September 19, 2005, and effective October 31, 2005, upon the filing of its Form 10-Q for the third quarter of 2005, the Audit Committee of the Board of Directors of the Company dismissed KPMG LLP as the Company’s independent registered public accounting firm and engaged Ernst & Young LLP as its new independent registered public accounting firm to conduct the audit of the Company’s financial statements as of and for the year ended December 31, 2005.

The reports of KPMG LLP on the financial statements for the years ended December 31, 2004, and 2003, did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principle.

There have been no disagreements with the Company’s independent accountants on any matter of accounting principles or practices or financial statement disclosure.

ITEM 9A.  CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s filings under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures which, by their nature, can provide only reasonable assurance regarding management’s control objectives. The Company also has an investment in an unconsolidated entity

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which is not under its control. Consequently, the Company’s disclosure controls and procedures with respect to this entity are necessarily more limited than those it maintains with respect to its consolidated subsidiaries.

Our management, with the participation of our principal executive officer and financial officers has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Exchange Act. Based on their evaluation as of December 31, 2005, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) that is required to be included in the Company’s Exchange Act filings.

Management’s Report on Internal Control Over Financial Reporting

Management’s report on our internal control over financial reporting is presented on page F-1 of this Annual Report on Form 10-K. The reports of Ernst & Young LLP relating to the consolidated financial statements, financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting are presented on pages F-2 and F-4 of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

During the Company’s evaluation of internal controls over financial reporting, management identified items which would have been classified as deficiencies or significant deficiencies within the framework utilized by management to assess the effectiveness of internal control over financial reporting. Management communicated these items to the Audit Committee of the Board of Directors of the Company and all of the significant deficiencies were either remediated or the Company had a remediation plan in place as of the end of the period covered by this report. No material weaknesses were identified by management during its assessment.

During the three months ended December 31, 2005, there were no significant changes in the Company’s internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION

None.

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PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information contained in the Company’s 2006 Proxy Statement in the sections entitled “Proposal 1—Election of Directors”, “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance,” is incorporated herein by reference in response to this item.

Our Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors and employees, which can be found on the Company’s website at www.maac.net, on the Investor’s page under Company Info and Governance. The Company will provide a copy of this document to any person, without charge, upon request, by writing to the Investor Relations Department at Mid-America Apartment Communities, Inc., 6584 Poplar Avenue, Suite 300, Memphis, TN 38138. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics by posting such information on our website at the address and the locations specified above.

ITEM 11.  EXECUTIVE COMPENSATION

The information contained in the Company’s 2006 Proxy Statement in the section entitled “Executive Compensation,” is incorporated herein by reference in response to this item.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information contained in the Company’s 2006 Proxy Statement in the sections entitled “Security Ownership of Management” and “Security Ownership of Certain Beneficial Owners,” is incorporated herein by reference in response to this item.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information contained in the Company’s 2006 Proxy Statement in the sections entitled “Certain Relationships and Related Transactions” is incorporated herein by reference in response to this item.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information contained in the Company’s 2006 Proxy Statement in the section entitled “Proposal 2—Ratification of Independent Registered Public Accounting Firm,” is incorporated herein by reference in response to this item.

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PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1.	Management’s Report on Internal Controls Over Financial Reporting	F-1
	Reports of Independent Registered Public Accounting Firm	F-2
	Consolidated Balance Sheets as of December 31, 2005, and 2004	F-5
	Consolidated Statements of Operations for the years ended December 31, 2005, 2004, and 2003	F-6
	Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2005, 2004, and 2003	F-7
	Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004, and 2003	F-8
	Notes to Consolidated Financial Statements for the years ended December 31, 2005, 2004, and 2003	F-10
2.	Financial Statement Schedule required to be filed by Item 8 and Paragraph (b) of this Item 15:
	Schedule III—Real Estate Investments and Accumulated Depreciation as of December 31, 2005	F-30
3.	The exhibits required by Item 601 of Regulation S-K, except as otherwise noted, have been filed with previous reports by the registrant and are herein incorporated by reference.

 

Exhibit Number	Exhibit Description
3.1	Amended and Restated Charter of Mid-America Apartment Communities, Inc. dated as of January 10, 1994, as filed with the Tennessee Secretary of State on January 25, 1994 (Filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
3.2	Articles of Amendment to the Charter of Mid-America Apartment Communities, Inc. dated as of January 28, 1994, as filed with the Tennessee Secretary of State on January 28, 1994 (Filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference).
3.3	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Preferred Stock dated as of October 9, 1996, as filed with the Tennessee Secretary of State on October 10, 1996 (Filed as Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996 and incorporated herein by reference).
3.4	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter dated November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997 (Filed as Exhibit 3.6 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
3.5	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997 (Filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997 and incorporated herein by reference).

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3.6	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of June 25, 1998, as filed with the Tennessee Secretary of State on June 30, 1998 (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on June 26, 1998 and incorporated herein by reference).
3.7	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of A Series of Shares of Preferred Stock dated as of December 24, 1998, as filed with the Tennessee Secretary of State on December 30, 1998 (Filed as Exhibit 3.7 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
3.8	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of October 11, 2002, as filed with the Tennessee Secretary of State on October 14, 2002 (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002 and incorporated herein by reference).
3.9	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of October 28, 2002, as filed with the Tennessee Secretary of State on October 28, 2002 (Filed as Exhibit 3.9 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
3.10	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of August 7, 2003, as filed with the Tennessee Secretary of State on August 7, 2003 (Filed as Exhibit 3.10 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
3.11	Bylaws of Mid-America Apartment Communities, Inc. (Filed as an Exhibit to the Registrant’s Registration Statement on Form S-11 (File Number 33-69434) and incorporated herein by reference).
4.1	Form of Common Share Certificate (Filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
4.2	Form of 9.5% Series A Cumulative Preferred Stock Certificate (Filed as Exhibit 2 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996 and incorporated herein by reference).
4.3	Form of 8 7/8% Series B Cumulative Preferred Stock Certificate (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997 and incorporated herein by reference).
4.4	Form of 9 3/8% Series C Cumulative Preferred Stock Certificate (Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on June 26, 1998 and incorporated herein by reference).
4.5	Form of 9.5% Series E Cumulative Preferred Stock Certificate (Filed as Exhibit 4.5 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
4.6	Form of 9 ¼% Series F Cumulative Preferred Stock Certificate (Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002 and incorporated herein by reference).
4.7	Form of 8.30% Series G Cumulative Preferred Stock Certificate (Filed as Exhibit 4.7 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).

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4.8	Form of 8.30% Series H Cumulative Preferred Stock Certificate (Filed as Exhibit 4.8 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.1	Second Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P., a Tennessee limited partnership (Filed as Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by reference).
10.2 †	Employment Agreement between the Registrant and H. Eric Bolton, Jr. (Filed as Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated herein by reference).
10.3 †	Employment Agreement between the Registrant and Simon R.C. Wadsworth (Filed as Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated herein by reference).
10.4 †	Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan (Filed as Exhibit A to the Registrant’s Proxy Statement filed on April 24, 2002 and incorporated herein by reference).
10.5	AmSouth Revolving Credit Agreement (Amended and Restated) dated July 17, 2003 (Filed as Exhibit 10.10 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.6	First Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated May 19, 2004 (Filed as Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.7	Second Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated May 23, 2005.
10.8	Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 30, 2004.
10.9	First Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 31, 2004 (Filed as Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.10	Second Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated April 30, 2004 (Filed as Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.11	Third Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated August 3, 2004 (Filed as Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.12	Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated August 31, 2004 (Filed as Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).

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10.13	Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated October 1, 2004 (Filed as Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.14	Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 1, 2004 (Filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.15	Seventh Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 15, 2004 (Filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.16	Eighth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 31, 2005.
10.17	Ninth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated September 23, 2005.
10.18	Tenth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 16, 2005.
10.19	Eleventh Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated February 22, 2006.
10.20	Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P., dated March 30, 2004.
10.21	First Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated March 31, 2004.
10.22	Second Amendment to the Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated as of August 3, 2004 (Filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.23	Third Amendment to the Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated as of December 1, 2004 (Filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.24	Fourth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated March 31, 2005.

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10.25	Fifth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated September 23, 2005.
10.26	Sixth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated February 22, 2006.
10.27	Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways- Columbia, L.P. dated June 1, 2001 (Filed as Exhibit 10.17 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.28	Amendment No. 1 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated December 24, 2002 (Filed as Exhibit 10.18 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.29	Amendment No. 2 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated May 30, 2003 (Filed as Exhibit 10.19 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.30	Amendment No. 3 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated March 2, 2004.
10.31	Amendment No. 4 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated November 17, 2005.
10.32	Amendment No. 5 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated February 23, 2006.
10.33	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004, (Sunset Valley Apartments, Texas) (Filed as Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.34	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004 (Village Apartments, Texas) (Filed as Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.35	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004, (Coral Springs Apartments, Florida) (Filed as Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.36	Credit Agreement dated September 28, 1998 by and among Jefferson Village, L.P., Jefferson at Sunset Valley, L.P. and JPI Coral Springs, L.P. (Filed as Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.37	Credit Agreement by and among Mid-America Apartment Communities, Inc., Mid-America Apartments L.P. and Mid- America Apartments of Texas, L.P. and Financial Federal Savings Bank dated June 29, 2004 (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and incorporated herein by reference).

39

10.38	Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated March 2, 2004.
10.39	Amendment No. 1 to Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated November 17, 2005.
10.40	Amendment No. 2 to Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated February 23, 2006.
10.41†	Mid-America Apartment Communities, Inc. Non-Qualified Deferred Compensation Plan for Outside Company Directors as Amended Effective January, 1 2005 (Filed as Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.42†	Mid-America Apartment Communities Non-Qualified Deferred Compensation Retirement Plan as Amended Effective January 1, 2005 (Filed as Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.43 †	Mid-America Apartment Communities 2005 Key Management Restricted Stock Plan (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 20, 2005 and incorporated herein by reference).
10.44 †	2005 Executive Annual Bonus Program (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 25, 2005 and incorporated herein by reference).
10.45†	Form of Restricted Stock Agreement (Filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 11, 2005 and incorporated herein by reference).
11	Statement re: computation of per share earnings (included within the Form 10-K).
14	Code of Ethics (Filed as Exhibit 14.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference).
21	List of Subsidiaries
23.1	Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP
23.2	Consent of Independent Registered Public Accounting Firm, KPMG LLP
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
____________________ † Management contract or compensatory plan or arrangement.

(b) Exhibits:

See Item 15(a)(3) above.

(c) Financial Statement Schedule:

See Item 15(a)(2) above.

40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MID-AMERICA APARTMENT COMMUNITIES, INC.
Date: February 28, 2006	/s/ H. ERIC BOLTON, JR. H. Eric Bolton, Jr. Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Date: February 28, 2006	/s/ H. ERIC BOLTON, JR.H. Eric Bolton, Jr. Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)
Date: February 28, 2006	/s/ SIMON R.C. WADSWORTHSimon R.C. Wadsworth Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
Date: February 28, 2006	/s/ GEORGE E. CATESGeorge E. Cates Director
Date: February 28, 2006	/s/ JOHN F. FLOURNOYJohn F. Flournoy Director
Date: February 28, 2006	/s/ ROBERT F. FOGELMANRobert F. Fogelman Director
Date: February 28, 2006	/s/ ALAN B. GRAF, JR.Alan B. Graf, Jr. Director
Date: February 28, 2006	/s/ JOHN S. GRINALDSJohn S. Grinalds Director
Date: February 28, 2006	/s/ RALPH HORNRalph Horn Director

 

41

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with appropriate authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an assessment of the Company’s internal control over financial reporting as of December 31, 2005 using the framework specified in Internal Control—Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2005.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is presented in this Annual Report.

F-1

Report of Independent Registered Accounting Firm

The Board of Directors and Shareholders
of Mid-America Apartment Communities, Inc.

We have audited the consolidated balance sheet of Mid-America Apartment Communities, Inc. and subsidiaries as of December 31, 2005, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended. Our audit also included the information as of and for the year ended December 31, 2005 contained in the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements as of and for the year ended December 31, 2005 referred to above present fairly, in all material respects, the consolidated financial position of Mid-America Apartment Communities, Inc. and subsidiaries at December 31, 2005 and the consolidated results of their operations and their cash flows for the year ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information as of and for the year ended December 31, 2005 set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2006 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Memphis, Tennessee
February 27, 2006

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Mid-America Apartment Communities, Inc.

We have audited the accompanying consolidated balance sheet of Mid-America Apartment Communities, Inc. and subsidiaries (the Company) as of December 31, 2004, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2004. In connection with our audits of the consolidated financial statements, we also have audited the 2004 and 2003 information included in the accompanying financial statement Schedule III: Real Estate and Accumulated Depreciation. These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule 2004 and 2003 information based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mid-America Apartment Communities, Inc. and subsidiaries as of December 31, 2004, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the 2004 and 2003 information included in the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Memphis, Tennessee
March 8, 2005

F-3

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
of Mid-America Apartment Communities, Inc.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Mid-America Apartment Communities, Inc. maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Mid-America Apartment Communities, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Mid-America Apartment Communities, Inc. maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Mid-America Apartment Communities, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Mid-America Apartment Communities, Inc. and subsidiaries as of December 31, 2005, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended and our report dated February 27, 2006 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Memphis, Tennessee
February 27, 2006

F-4

MID-AMERICA APARTMENT COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2005 and 2004
(Dollars in thousands, except per share data)

	December 31, 2005			December 31, 2004
ASSETS:
Real estate assets:
Land	$	179,523		$	163,381
Buildings and improvements		1,740,818			1,625,194
Furniture, fixtures and equipment		46,301			41,682
Capital improvements in progress		4,175			6,519
		1,970,817			1,836,776
Less accumulated depreciation		(473,421	)		(399,762	)
		1,497,396			1,437,014
Land held for future development		1,366			1,366
Commercial properties, net		7,345			7,429
Investments in and advances to real estate joint ventures		4,182			14,143
Real estate assets, net		1,510,289			1,459,952
Cash and cash equivalents		14,064			9,133
Restricted cash		5,534			6,041
Deferred financing costs, net		15,338			16,365
Other assets		20,181			16,837
Goodwill		5,051			5,400
Assets held for sale		—			8,579
Total assets	$	1,570,457		$	1,522,307
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Liabilities:
Notes payable	$	1,140,046		$	1,083,473
Accounts payable		3,278			767
Accrued expenses and other liabilities		28,380			43,381
Security deposits		6,429			5,821
Liabilities associated with assets held for sale		—			164
Total liabilities		1,178,133			1,133,606
Minority interest		29,798			31,376
8.625% Series G Cumulative Redeemable Preferred Stock, 400,000 shares authorized, 400,000 shares issued and outstanding		—			10,000
Shareholders’ equity:
Preferred stock, $.01 par value, 20,000,000 shares authorized, $166,863 or $25 per share liquidation preference:
9.25% Series F Cumulative Redeemable Preferred Stock, 3,000,000 shares authorized, 474,500 shares issued and outstanding		5			5
8.30% Series H Cumulative Redeemable Preferred Stock, 6,200,000 shares authorized, 6,200,000 shares issued and outstanding		62			62
Common stock, $.01 par value per share, 50,000,000 shares authorized; 22,048,372 and 20,856,791 shares issued and outstanding at December 31, 2005 and December 31, 2004, respectively		220			209
Additional paid-in capital		671,885			634,520
Other		(2,422	)		(3,252	)
Accumulated distributions in excess of net income		(314,352	)		(269,482	)
Accumulated other comprehensive income (loss)		7,128			(14,737	)
Total shareholders’ equity		362,526			347,325
Total liabilities and shareholders’ equity	$	1,570,457		$	1,522,307

 

See accompanying notes to consolidated financial statements.

F-5

MID-AMERICA APARTMENT COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2005, 2004, and 2003
(Dollars in thousands, except per share data)

	2005			2004			2003
Operating revenues:
Rental revenues	$	285,965		$	257,265		$	227,541
Other property revenues		11,165			9,937			8,399
Total property revenues		297,130			267,202			235,940
Management fee income		325			582			822
Total operating revenues		297,455			267,784			236,762
Property operating expenses:
Personnel		35,771			32,154			27,485
Building repairs and maintenance		11,097			9,994			9,119
Real estate taxes and insurance		37,677			35,135			31,331
Utilities		16,749			14,734			12,117
Landscaping		7,978			7,251			6,462
Other operating		14,444			13,480			12,178
Depreciation		75,050			68,653			58,074
Total property operating expenses		198,766			181,401			156,766
Property management expenses		11,871			10,357			8,435
General and administrative expenses		10,354			9,240			7,235
Income from continuing operations before non-operating items		76,464			66,786			64,326
Interest and other non-property income		498			593			835
Interest expense		(58,751	)		(50,858	)		(44,991	)
(Loss) gain on debt extinguishment		(409	)		1,095			111
Amortization of deferred financing costs		(2,011	)		(1,753	)		(2,050	)
Minority interest in operating partnership income		(1,571	)		(2,264	)		(1,360	)
Income (loss) from investments in unconsolidated entities		65			(287	)		(949	)
Incentive fee from unconsolidated entity		1,723			—			—
Net gain on insurance and other settlement proceeds		749			2,683			2,860
Gain on sale of non-depreciable assets		334			—			—
Gain on disposition within unconsolidated entities		3,034			3,249			—
Income from continuing operations		20,125			19,244			18,782
Discontinued operations:
Loss from discontinued operations before asset impairment, settlement proceeds and gain on sale		(113	)		(197	)		(577	)
Asset impairment on discontinued operations		(243	)		(200	)		—
Net (loss) gain on insurance and other settlement proceeds on discontinued operations		(25	)		526			82
Gain on sale of discontinued operations		—			5,825			1,919
Net income		19,744			25,198			20,206
Preferred dividend distribution		14,329			14,825			15,419
Premiums and original issuance costs associated with the redemption of preferred stock		—			—			5,987
Net income (loss) available for common shareholders	$	5,415		$	10,373		$	(1,200	)
Weighted average shares outstanding (in thousands):
Basic		21,405			20,317			18,374
Effect of dilutive stock options		202			335			—
Diluted		21,607			20,652			18,374
Net income (loss) available for common shareholders	$	5,415		$	10,373		$	(1,200	)
Discontinued property operations		381			(5,954	)		(1,424	)
Income (loss) from continuing operations available for common shareholders	$	5,796		$	4,419		$	(2,624	)
Earnings per share—basic:
Income (loss) from continuing operations available for common shareholders	$	0.27		$	0.22		$	(0.14	)
Discontinued property operations		(0.02	)		0.29			0.07
Net income (loss) available for common shareholders	$	0.25		$	0.51		$	(0.07	)
Earnings per share—diluted:
Income (loss) from continuing operations available for common shareholders	$	0.27		$	0.21		$	(0.14	)
Discontinued property operations		(0.02	)		0.29			0.07
Net income (loss) available for common shareholders	$	0.25		$	0.50		$	(0.07	)

 

See accompanying notes to consolidated financial statements.

F-6

MID-AMERICA APARTMENT COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Years Ended December 31, 2005, 2004 and 2003
(Dollars and Shares in Thousands)

	Preferred Stock						Common Stock
	Shares			Amount			Shares			Amount		Additional Paid-In Capital			Other			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Total
BALANCE DECEMBER 31, 2002		6,413		$	64			17,840		$	178	$	548,483		$	(4,299	)	$	(188,155	)	$	(28,100	)	$	328,171
Comprehensive income:
Net income		—			—			—			—		—			—			20,206			—			20,206
Other comprehensive income—derivative instruments (cash flow hedges)		—			—			—			—		—			—			—			2,652			2,652
Comprehensive income																									22,858
Issuance and registration of common shares		—			—			1,821			18		52,837			—			—			—			52,855
Exercise of stock options		—			—			308			3		7,178			—			—			—			7,181
Repurchase of common shares		—			—			—			—		(47	)		—			—			—			(47	)
Restricted shares issued to officers and directors (Note 11)		—			—			8			—		213			(213	)		—			—			—
Amortization of LESOP provision employee advances (Note 11)		—			—			—			—		—			385			—			—			385
Shares issued in exchange for units		—			—			55			1		627			—			—			—			628
Adjustment for Minority Interest Ownership in Operating Partnership		—			—			—			—		(4,258	)		—			—			—			(4,258	)
Amortization of unearned compensation		—			—			—			—		—			416			—			—			416
Cash dividends on common stock ($2.34 per share)		—			—			—			—		—			—			(42,869	)		—			(42,869	)
Redemption of preferred stock		(5,938	)		(59	)		—			—		(142,447	)		—			(5,987	)		—			(148,493	)
Issuance of preferred stock		6,200			62			—			—		149,824			—			—			—			149,886
Dividends on preferred stock		—			—			—			—		—			—			(15,419	)		—			(15,419	)
BALANCE DECEMBER 31, 2003		6,675			67			20,032			200		612,410			(3,711	)		(232,224	)		(25,448	)		351,294
Comprehensive income:
Net income		—			—			—			—		—			—			25,198			—			25,198
Other comprehensive income—derivative instruments (cash flow hedges)		—			—			—			—		—			—			—			10,711			10,711
Comprehensive income																									35,909
Issuance and registration of common shares		—			—			435			5		16,512			—			—			—			16,517
Exercise of stock options		—			—			343			3		8,888			—			—			—			8,891
Repurchase of common shares		—			—			(2	)		—		(54	)		—			—			—			(54	)
Restricted shares issued to officers and directors (Note 11)		—			—			2			—		104			(104	)		—			—			—
Amortization of LESOP provision employee advances (Note 11)		—			—			—			—		—			293			—			—			293
Shares issued in exchange for units		—			—			47			1		511			—			—			—			512
Adjustment for Minority Interest Ownership in Operating Partnership		—			—			—			—		(3,851	)		—			—			—			(3,851	)
Amortization of unearned compensation		—			—			—			—		—			270			—			—			270
Cash dividends on common stock ($2.34 per share)		—			—			—			—		—			—			(47,631	)		—			(47,631	)
Dividends on preferred stock		—			—			—			—		—			—			(14,825	)		—			(14,825	)
BALANCE DECEMBER 31, 2004		6,675			67			20,857			209		634,520			(3,252	)		(269,482	)		(14,737	)		347,325
Comprehensive income:
Net income		—			—			—			—		—			—			19,744			—			19,744
Other comprehensive income—derivative instruments (cash flow hedges)		—			—			—			—		—			—			—			21,865			21,865
Comprehensive income																									41,609
Issuance and registration of common shares		—			—			816			8		33,836			—			—			—			33,844
Exercise of stock options		—			—			240			2		5,613			—			—			—			5,615
Restricted shares issued to officers and directors (Note 11)		—			—			23			—		939			(939	)		—			—			—
Amortization of LESOP provision employee advances (Note 11)		—			—			—			—		—			360			—			—			360
Shares issued in exchange for units		—			—			112			1		1,254			—			—			—			1,255
Adjustment for Minority Interest Ownership in Operating Partnership		—			—			—			—		(4,277	)		—			—			—			(4,277	)
Amortization of unearned compensation		—			—			—			—		—			1,409			—			—			1,409
Cash dividends on common stock ($2.35 per share)		—			—			—			—		—			—			(50,285	)		—			(50,285	)
Dividends on preferred stock		—			—			—			—		—			—			(14,329	)		—			(14,329	)
BALANCE DECEMBER 31, 2005		6,675		$	67			22,048		$	220	$	671,885		$	(2,422	)	$	(314,352	)	$	7,128		$	362,526

 

F-7

See accompanying notes to consolidated financial statements.

MID-AMERICA APARTMENT COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2005, 2004, and 2003
(Dollars in thousands)

	2005			2004			2003
Cash flows from operating activities:
Net income	$	19,744		$	25,198		$	20,206
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations before asset impairment, settlement proceeds and gain on sale		113			197			577
Depreciation and amortization of deferred financing costs		77,061			70,406			60,124
Amortization of unearned stock compensation		1,769			563			801
Amortization of debt premium		(1,862	)		(1,575	)		(1,429	)
(Gain) loss from investments in unconsolidated entities		(65	)		287			949
Minority interest in operating partnership income		1,571			2,264			1,360
Loss (gain) on debt extinguishment		409			(1,095	)		(111	)
Gain on sale of non-depreciable assets		(334	)		—			—
Gain on sale of discontinued operations		—			(5,825	)		(1,919	)
Gain on disposition within unconsolidated entities		(3,034	)		(3,249	)		—
Incentive fee from unconsolidated entity		(1,723	)		—			—
Net loss (gain) on insurance and other settlement proceeds on discontinued operations		25			(526	)		(82	)
Asset impairment on discontinued operations		243			200			—
Net gain on insurance and other settlement proceeds		(749	)		(2,683	)		(2,860	)
Changes in assets and liabilities:
Restricted cash		343			4,687			(3,265	)
Other assets		(3,843	)		(778	)		(2,517	)
Accounts payable		2,511			(926	)		1,232
Accrued expenses and other		6,900			264			2,824
Security deposits		608			820			630
Net cash provided by operating activities		99,687			88,229			76,520
Cash flows from investing activities:
Purchases of real estate and other assets		(105,643	)		(155,088	)		(116,835	)
Improvements to existing real estate assets		(27,301	)		(30,413	)		(22,832	)
Distributions from real estate joint venture		14,903			6,427			445
Contributions to real estate joint ventures		—			(5,222	)		(4,727	)
Payments received from real estate joint ventures		—			234			—
Proceeds from disposition of real estate assets		9,689			15,679			26,247
Purchase of Blackstone Joint Venture		—			—			(21,853	)
Net cash used in investing activities		(108,352	)		(168,383	)		(139,555	)
Cash flows from financing activities:
Net change in credit lines		29,228			189,496			218,399
Proceeds from notes payable		27,851			91,434			27,498
Principal payments on notes payable		(10,921	)		(152,046	)		(175,852	)
Payment of deferred financing costs		(1,236	)		(5,044	)		(5,083	)
Repurchase of common stock		—			(54	)		(47	)
Proceeds from issuances of common shares and units		39,459			25,408			60,036
Distributions to unitholders		(6,171	)		(6,246	)		(6,376	)
Dividends paid on common shares		(50,285	)		(47,631	)		(42,869	)
Dividends paid on preferred shares		(14,329	)		(14,825	)		(15,419	)
Proceeds from issuance of preferred stock		—			—			149,886
Redemption of preferred stock		—			—			(148,493	)
Net cash provided by financing activities		13,596			80,492			61,680
Net decrease in cash and cash equivalents		4,931			338			(1,355	)
Cash and cash equivalents, beginning of period		9,133			8,795			10,150
Cash and cash equivalents, end of period	$	14,064		$	9,133		$	8,795

F-8

	2005		2004		2003
Supplemental disclosure of cash flow information:
Interest paid	$	61,305	$	53,295	$	45,277
Supplemental disclosure of noncash investing and financing activities:
Conversion of units to common shares	$	1,254	$	512	$	628
Issuance of restricted common shares	$	939	$	104	$	213
Marked-to-market adjustment on derivative instruments	$	21,865	$	10,711	$	2,652
Fair value adjustment on debt assumed	$	2,277	$	5,757	$	—
In August 2003, the Company purchased the limited partnership interest held by Blackstone Real Estate Advisors in BRE/MAAC Associates, LLC. In conjunction with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired	$	—	$	—	$	75,091
Cash paid	$	—	$	—	$	(21,853	)
Debt assumed	$	—	$	—	$	53,238

 

See accompanying notes to consolidated financial statements.

F-9

Mid-America Apartment Communities, Inc.
Notes to Consolidated Financial Statements
Years ended December 31, 2005, 2004 and 2003

1. Organization and Summary of Significant Accounting Policies

Organization and Formation of the Company

Mid-America Apartment Communities, Inc. (“Mid-America”) is a self-administrated and self-managed real estate investment trust which owns, acquires and operates multifamily apartment communities mainly in the southeastern United States. Mid-America owns and operates 131 apartment communities principally through its majority owned subsidiary, Mid-America Apartments, L.P. (the “Operating Partnership”). Mid-America also owns a 33.33% interest in a real estate joint venture which owned one apartment community at December 31, 2005, for which the Company provides management services.

Basis of Presentation

The consolidated financial statements presented herein include the accounts of Mid-America, the Operating Partnership, and all other subsidiaries (“the Company”). The Company owns 51% to 100% of all consolidated subsidiaries. The Company uses the equity method of accounting for its investments in 20 to 50 percent owned entities for which the Company does not have the ability to exercise control. All significant intercompany accounts and transactions have been eliminated in consolidation.

Minority Interest

Minority interest in the accompanying consolidated financial statements relates to the ownership interest in the Operating Partnership by the holders of Class A Common Units of the Operating Partnership (“Operating Partnership Units”). Mid-America is the sole general partner of the Operating Partnership. Net income is allocated to the minority interest based on their respective ownership percentage of the Operating Partnership. Issuance of additional common shares or Operating Partnership Units changes the ownership of both the minority interest and Mid-America. Such transactions and the proceeds there from are treated as capital transactions and result in an allocation between shareholders’ equity and minority interest to account for the change in the respective percentage ownership of the underlying equity of the Operating Partnership.

The Company’s Board of Directors established economic rights in respect to each Operating Partnership Unit that were equivalent to the economic rights in respect to each share of common stock. The holder of each unit may redeem their units in exchange for one share of common stock or cash, at the option of the Company. The Operating Partnership has followed the policy of paying the same per unit distribution in respect to the units as the per share distribution in respect to the common stock. Operating Partnership net income for 2005, 2004 and 2003 was allocated approximately 11.4%, 12.1%, and 14.6%, respectively, to holders of Operating Partnership Units and 88.6%, 87.9%, and 85.4%, respectively, to Mid-America.

Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses to prepare these financial statements and notes in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates.

Revenue Recognition

The Company leases multifamily residential apartments under operating leases primarily with terms of one year or less. Rental revenues are recognized using a method that represents a straight-line basis over the term of the lease and other revenues are recorded when earned.

The Company records all gains and losses on real estate in accordance with Statement No. 66 “Accounting for Sales of Real Estate”.

F-10

Rental Costs

Costs associated with rental activities are expensed as incurred. Certain costs associated with the lease-up of development projects, including cost of model units, their furnishings, signs, and “grand openings” are capitalized and amortized over their respective estimated useful lives. All other costs relating to renting development projects are expensed as incurred.

Earnings Per Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding. The computation of diluted earnings per share is based on the weighted average number of common shares outstanding plus the shares resulting from the assumed exercise of all dilutive outstanding options using the treasury stock method. For periods where the Company reports a net loss available for common shareholders, the effect of dilutive shares is excluded from earnings per share calculations because including such shares would be anti-dilutive.

A reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the years ended December 31, 2005, 2004, and 2003 is presented on the Consolidated Statements of Operations.

Cash and Cash Equivalents

The Company considers cash, investments in money market accounts and certificates of deposit with original maturities of three months or less to be cash equivalents.

Restricted Cash

Restricted cash consists of escrow deposits held by lenders for property taxes, insurance, debt service and replacement reserves.

Real Estate Assets and Depreciation

Real estate assets are carried at depreciated cost. Repairs and maintenance costs are expensed as incurred while significant improvements, renovations, and recurring capital replacements are capitalized. Recurring capital replacements typically include whole unit carpet replacement, new roofs, HVAC units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. These expenditures extend the useful life of the property and increase the property’s fair market value. The cost of interior painting, vinyl flooring and blinds are expensed as incurred.

In conjunction with acquisitions of properties, the Company’s policy is to provide in its acquisition budgets adequate funds to complete any deferred maintenance items to bring the properties to the required standard, including the cost of replacement appliances, carpet, interior painting, vinyl flooring and blinds. These costs are capitalized.

Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which range from 8 to 40 years for land improvements and buildings and 5 years for furniture, fixtures and equipment and 3 to 5 years for computers and software.

For real estate acquisitions subsequent to June 30, 2001, the effective date of Statement 141, Business Combinations, the fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, building, furniture, fixtures and equipment, and identified intangible assets and liabilities, consisting of above and below market leases, resident relationship values and the value of in-place leases.

The fair value of the tangible assets of an acquired property (land, building, furniture, fixtures and equipment) is determined by valuing the property as if it were vacant. The “as-if-vacant” value is then allocated to land, building, furniture, fixtures and equipment based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the period of time that would be required in the

F-11

current market conditions to lease-up the property. Management includes real estate taxes, insurance, operating expenses and lost rentals as well as the costs required to execute similar leases in the estimated carrying costs.

In allocating the fair value of identified intangible assets and liabilities of an acquired property, the in-place leases are compared to current market conditions. Based on these evaluations, management believes that the leases acquired on each of its property acquisitions were at market rates since the lease terms generally do not extend beyond one year.

The fair value of the in-place leases and resident relationships is measured by the excess of the purchase price over the as-if-vacant value of the property as described above. The fair value of the in-place leases and resident relationships is then amortized over the remaining term of the resident leases. The amount of these resident lease intangibles included in real estate assets totaled $12.3 million, $9.1 million and $4.9 million as of December 31, 2005, 2004, and 2003, respectively, and the amortization recorded as depreciation expense was $4.9 million, $4.9 million and $1.4 million for the years ending December 31, 2005, 2004, and 2003, respectively.

Goodwill and Intangible Assets

The Company accounts for long-lived assets in accordance with the provisions of Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“Statement 144”) and evaluates its goodwill for impairment under Statement No. 142, Goodwill and Other Intangible Assets (“Statement 142”). The Company evaluates its goodwill for impairment on an annual basis in the Company’s fiscal fourth quarter, or sooner if a goodwill impairment indicator is identified. The Company periodically evaluates its long-lived assets, including its investments in real estate and goodwill, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions, and legal factors.

In accordance with Statement 144, long-lived assets, such as real estate assets, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

Goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination is made at the reporting unit level and consists of two steps. First, the Company determines the fair value of a reporting unit and compares it to its carrying amount. In the apartment industry, the primary method used for determining fair value is to divide annual operating cash flows by an appropriate capitalization rate. The Company determines the appropriate capitalization rate by reviewing the prevailing rates in a property’s market or submarket. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with Statement No. 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

In 2005, the Company sold the Eastview apartments and recorded an asset impairment charge to discontinued operations of $243,000. In 2004, the Eastview apartments were classified as held for sale and the annual evaluation indicated an impairment of goodwill related to the property resulting in an asset impairment charge to discontinued operations of $200,000.

F-12

Land Held for Future Development

Real estate held for future development are sites intended for future multifamily developments and are carried at the lower of cost or fair value.

Investment In and Advances to Real Estate Joint Ventures

The Company’s investment in its unconsolidated real estate joint venture is recorded on the equity method as the Company is able to exert significant influence, but does not have a controlling interest in the joint venture.

Deferred Financing Costs

Deferred financing costs are amortized over the terms of the related debt using a method which approximates the interest method.

Other Assets

Other assets consist of deferred rental concessions which are recognized on a straight line basis over the life of the leases, receivables and deposits from residents, and other prepaid expenses including prepaid insurance and prepaid interest.

Accrued Expenses and Other Liabilities

Accrued expenses consist of accrued real estate taxes, accrued interest payable, other accrued expenses payable, unearned income and the adjustment for the fair market value of the Company’s derivative financial instruments.

Derivative Financial Instruments

In the normal course of business, the Company uses certain derivative financial instruments to manage, or hedge, the interest rate risk associated with the Company’s variable rate debt or as hedges in anticipation of future debt transactions to manage well-defined interest rate risk associated with the transaction.

The Company does not use derivative financial instruments for speculative or trading purposes. Further, the Company has a policy of entering into contracts with major financial institutions based upon their credit rating and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designated to hedge, the Company has not sustained any material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.

The Company requires that derivative financial instruments designated as cash flow hedges be effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Instruments that meet the hedging criteria are formally designated as hedging instruments at the inception of the derivative contract. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking the hedge transaction. This process includes linking all derivatives that are designated as fair-value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives used are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

All of the Company’s derivative financial instruments are recorded at fair value and reported on the balance sheet, and are characterized as cash flow hedges. These transactions hedge the future cash flows of debt transactions through interest rate swaps that convert variable payments to fixed payments and interest rate caps that limit the exposure to rising interest rates. The unrealized gains/losses in the fair value of these hedging instruments are reported on the balance sheet with a corresponding adjustment to accumulated other comprehensive income, with any ineffective portion of the hedging transactions reclassified to earnings.

F-13

During the years ended December 31, 2005, 2004, and 2003, the ineffective portion of the hedging transactions was not significant.

Stock-Based Compensation

Upon shareholder approval at the May 24, 2004, Annual Meeting of Shareholders, the Company adopted the 2004 Stock Plan to provide incentives to attract and retain independent directors, executive officers and key employees. This plan replaced the 1994 Restricted Stock and Stock Option Plan under which no further awards may be granted as of January 31, 2004. See Note 11 for further details.

The Company has adopted the disclosure provisions of Statement No. 123, Accounting for Stock-Based Compensation, as amended by Statement No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123 which requires the impact of the fair value of employee stock based compensation plans on net income and earnings per share be disclosed on a pro forma basis in a footnote to the financial statements for awards granted after December 15, 1994, if the accounting for such awards continues to be in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, (“APB 25”). The Company will continue such accounting under the provisions of APB 25.

The following table reflects the effect on net income (loss) if the fair value method of accounting allowed under Statement No. 123 had been used by the Company along with the applicable assumptions utilized in the Black-Scholes option pricing model calculation (dollars and shares in thousands, except per share data):

	Years Ended December 31,
	2005			2004			2003
Net income (loss) available for common shareholders	$	5,415		$	10,373		$	(1,200	)
Add: Stock-based employee compensation expense included in reported net income		887			—			—
Less: Stock-based employee compensation expense from employee stock purchase plan discount		(32	)		(27	)		(22	)
Less: Stock-based employee compensation expense determined under fair value method of accounting		(1,175	)		(185	)		(266	)
Pro forma net income (loss) available for common shareholders	$	5,095		$	10,161		$	(1,488	)
Average common shares outstanding—basic		21,405			20,317			18,374
Average common shares outstanding—diluted		21,607			20,652			18,374
Net income (loss) available per common share:
Basic as reported	$	0.25		$	0.51		$	(0.07	)
Basic pro forma	$	0.24		$	0.50		$	(0.08	)
Diluted as reported	$	0.25		$	0.50		$	(0.07	)
Diluted pro forma	$	0.24		$	0.49		$	(0.08	)
Assumptions:
Risk free interest rate		N/A			N/A			N/A
Expected life—years		N/A			N/A			N/A
Expected volatility		N/A			N/A			N/A

 

No options were granted in 2005, 2004 or 2003.

Recent Accounting Pronouncements

In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (“Statement 153”). Statement 153 was a result of a joint effort by the FASB and the IASB to improve financial reporting by eliminating certain narrow differences between their existing accounting standards. Statement 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Statement 153 is applied prospectively for nonmonetary asset exchanges occurring in fiscal periods

F-14

beginning after June 15, 2005. The adoption of Statement 153 did not have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In December 2004, the FASB issued Statement No. 123 (revised December 2004), Share-Based Payment (“Statement 123(R)”). Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. Statement 123(R) will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or the liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. Statement 123(R) is effective as of the beginning of the first annual reporting period that begins after June 15, 2005. The Company will adopt Statement 123(R) effective January 1, 2006, and does not believe it will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In March 2005, the SEC issued SAB 107 to provide public companies additional guidance in applying the provisions of Statement 123(R). Among other things, SAB 107 describes the SEC staff’s expectations in determining the assumptions that underlie the fair value estimates and discusses the interaction of Statement 123(R) with certain existing SEC guidance. The guidance is also beneficial to users of financial statements in analyzing the information provided under statement 123(R). SAB 107 will be applied upon the adoption of Statement 123(R).

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations-an interpretation of FASB Statement No. 143 (“Interpretation 47”). Interpretation 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations, (“Statement 143”) refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Interpretation 47 is effective no later than the end of fiscal years ending after December 15, 2005, (December 31, 2005, for calendar-year enterprises). Retrospective application for interim financial information is permitted but is not required. The adoption of Interpretation 47 did not have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In June 2005, the FASB ratified EITF 04-5: Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“EITF 04-5”). EITF 04-5 provides a framework for determining whether a general partner is required to consolidate limited partners. The new framework is significantly different than the guidance in SOP 78-9 and would make it more difficult for a general partner to overcome the presumption that it controls the limited partnership, requiring the limited partner to have substantive “kick-out” or “participating” rights. Kick-out rights are the right to dissolve or liquidate the partnership or to otherwise remove the general partner without cause and participating rights are the right to effectively participate in significant decisions made in the ordinary course of the partnership’s business. EITF 04-5 became effective immediately for all newly formed limited partnerships and existing limited partnerships which are modified. The guidance will become effective for existing limited partnerships which are not modified the beginning of the first reporting period in fiscal years beginning after December 15, 2005. The Company does not believe the adoption of EITF 04-5 will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

Reclassifications

Certain prior year amounts have been reclassified to conform to 2005 presentation. The reclassifications had no effect on net income available for common shareholders.

F-15

2. Comprehensive Income

Total comprehensive income and its components for the years ended December 31, 2005, 2004, and 2003 were as follows (dollars in thousands):

	Twelve months ended December 31,
	2005		2004		2003
Net income	$	19,744	$	25,198	$	20,206
Marked-to-market adjustment on derivative instruments		21,865		10,711		2,652
Total comprehensive income	$	41,609	$	35,909	$	22,858

 

3. Real Estate Joint Ventures

At the beginning of 2005, the Company owned a 33.33% interest in a joint venture (“CH/Realty”) with Crow Holdings which was formed in 2002. In 2004, CH/Realty sold the Preserve at Arbor Lakes apartments, a 284-unit community in Jacksonville, FL. In 2005, CH/Realty sold Seasons at Green Oaks, a 300-unit community in Grand Prairie, TX and Preston Hills, a 464-unit community in Buford, GA, the two remaining properties owned by the joint venture. Following the sale of the final properties from the joint venture, the Company’s relationship with Crow Holdings in CH/Realty ceased to exist.

The Company entered into a second joint venture (“CH/Realty II”) with Crow Holdings in 2004 with the purchase of the Verandas at Timberglen apartments. The Company also owns a 33.33% interest in CH/Realty II, and contributed 33.33% of the capital necessary to establish the joint venture. While the joint venture agreement does provide for methods of establishing subsequent capital contributions, CH/Realty II has generated sufficient cash flow to meet the debt service requirements of its non-recourse debt and provide monthly distributions to the owners. At December 31, 2005, CH Realty II owned one apartment community with 522 apartment units.

Through August 25, 2003, the Company owned a 33.33% interest in a joint venture (“Bre/MAAC”) with Blackstone Real Estate Acquisitions, LLC (“Blackstone”) which was formed in 1999 when the Company sold 10 apartment communities containing 2,793 apartment units to Bre/MAAC for $97.9 million. On August 25, 2003, the Company paid $21.9 million in cash and assumed $53.2 million in debt to purchase Blackstone’s 66.67% interest in the joint venture. This acquisition was accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations. The purchase accounting adjustments include an adjustment to the carrying value of the real estate asset resulting from the previously unrecognized deferred gain on the Company’s retained interest from the original sale of the properties to Bre/MAAC in 1999 and the recording of certain intangible assets. The operating results of Bre/MAAC are included in the accompanying statement of operations commencing August 25, 2003.

F-16

The income, contributions, distributions and ending investment balances related to the Company’s joint ventures consisted of the following for the years ended December 31, 2005, 2004, and 2003 (dollars in thousands):

	2005
	CH/Realty		CH/Realty II			Bre/MAAC		Total
Joint venture income (loss)	$	79	$	(14	)	$	—	$	65
Gain on joint venture asset dispositions		3,034		—			—		3,034
Management fee income		121		204			—		325
Incentive fee income		1,723		—			—		1,723
Contributions to joint venture		—		—			—		—
Distributions from joint venture		14,644		259			—		14,903
Investment in at December 31		—		4,182			—		4,182
Advances to at December 31		—		—			—		—

 

	2004
	CH/Realty		CH/Realty II			Bre/MAAC		Total
Joint venture income (loss)	$	301	$	(588	)	$	—	$	(287	)
Gain on joint venture asset dispositions		3,249		—			—		3,249
Management fee income		382		200			—		582
Contributions to joint venture		—		(5,222	)		—		(5,222	)
Distributions from joint venture		6,209		218			—		6,427
Investment in at December 31		5,252		4,416			—		9,668
Advances to at December 31		4,475		—			—		4,475

 

	2003
	CH/Realty			CH/Realty II		Bre/MAAC			Total
Joint venture loss	$	(444	)	$	—	$	(505	)	$	(949	)
Gain on joint venture asset dispositions		—			—		—			—
Management fee income		292			—		530			822
Contributions to joint venture		(4,727	)		—		—			(4,727	)
Distributions from joint venture		445			—		—			445
Investment in at December 31		7,912			—		—			7,912
Advances to at December 31		4,708			—		—			4,708

 

4. Borrowings

The Company maintains a total of $950 million of secured credit facilities with Prudential Mortgage Capital, credit enhanced by FNMA (the “FNMA Facilities”). The FNMA Facilities provide for both fixed and variable rate borrowings and have traunches with maturities from 2010 through 2014. The interest rate on the majority of the variable portion renews every 90 days and is based on the FNMA discount mortgage backed security rate on the date of renewal, which, for the Company, has historically approximated three-month LIBOR less an average of 0.04% over the life of the FNMA Facilities, plus a fee of 0.62% to 0.795%. Borrowings under the FNMA Facilities totaled $811 million at December 31, 2005, consisting of $110 million under a fixed portion at a rate of 7.2%, and the remaining $701 million under the variable rate portion of the facility at an average rate of 4.8%. The available borrowing base capacity at December 31, 2005, was $881 million. The Company has 21 interest rate swap agreements, totaling a notional amount of $551 million designed to fix the interest rate on a portion of the variable rate borrowings outstanding under the FNMA Facilities at approximately 5.5%. The interest rate swaps have maturities between 2006 and 2013. The Company also has a forward interest rate swap for an additional notional amount of $25 million at an interest rate of 5.3% which goes into effect in February 2006 and matures in 2013. The swaps are highly effective and

F-17

are designed as cash flow hedges. The Company has also entered into three interest rate caps totaling a notional amount of $23 million which are designated against the FNMA Facilities. These interest rate caps mature in 2007 and 2009 and are set at 6.0%. The FNMA Facilities are subject to certain borrowing base calculations that effectively reduce the amount that may be borrowed.

The Company has a $100 million credit facility with Freddie MAC (the “Freddie Mac Facility”). At December 31, 2005, the Company had $96 million borrowed against the Freddie Mac Facility at an interest rate of 5.0%. The Company has five interest rate swap agreements, totaling a notional amount of $83 million designed to fix the interest rate on a portion of the variable rate borrowings outstanding under the Freddie Mac Facility at approximately 5.4%. The interest rate swaps expire in 2011.

The Company also maintains a $40 million secured credit facility with two banks led by AmSouth Bank (the “AmSouth Credit Line”). The AmSouth Credit Line bears an interest rate of LIBOR plus a spread ranging from 1.35% to 1.75% based on certain quarterly coverage calculations established by the agreement. This credit line expires in May 2007 and is subject to certain borrowing base calculations that effectively reduce the amount that may be borrowed. At December 31, 2005, the Company had $30 million available to be borrowed under the AmSouth Credit Line agreement with $12 million borrowed under this facility at an interest rate of 6.0%. Approximately $7 million of the facility is used for letters of credit.

Each of the Company’s credit facilities is subject to various covenants and conditions on usage. If the Company were to fail to satisfy a condition to borrowing, the available credit under one or more of the facilities could not be drawn, which could adversely affect the Company’s liquidity. Moreover, if the Company were to fail to make a payment or violate a covenant under a credit facility, after applicable cure periods one or more of its lenders could declare a default, accelerate the due date for repayment of all amounts outstanding and/or foreclose on properties securing such facilities. Any such event could have a material adverse effect on the Company. The Company believes it was in compliance with these covenants and conditions on usage at December 31, 2005.

The Company had outstanding at December 31, 2005, a $40 million promissory note with Union Planters Bank at a variable interest rate based on three month LIBOR of 5.4% which matures in April 2009. The Company has entered into an interest rate swap agreement with a notional amount of $25 million and an interest rate of 5.0% which expires in 2009 and is designated against the Union Planters Bank promissory note.

At December 31, 2005, the Company had $139 million of fixed rate conventional individual property mortgages with an average interest rate of 5.0% and an average maturity of 2014, $26 million of fixed rate tax exempt individual property mortgages with an average interest rate of 5.5% and an average maturity of 2024, and a $5 million variable rate tax exempt individual property mortgage at an interest rate of 4.2% with a maturity in 2028.

At December 31, 2005, the Company had $162 million (after considering the impact of interest rate swap agreements in effect) conventional variable rate debt outstanding at an average interest rate of 4.8%, $11 million (after considering the impact of interest rate swap agreements) of tax-free variable rate debt outstanding at an average rate of 4.0%, and an additional $23 million of capped tax-free variable rate debt at an average rate of 4.4%. As of December 31, 2005, the Company had also entered into a forward interest rate swap agreement which goes into effect in February 2006 and hedges an additional $25 million of conventional variable rate debt outstanding at an average interest rate of 5.3%. The interest rate on all other debt, totaling $944 million, was hedged or fixed at an average interest rate of 5.6%.

As of December 31, 2005, the Company estimated that the weighted average interest rate on the Company’s debt was 5.4%.

F-18

The following table summarizes the Company’s indebtedness at December 31, 2005, and 2004, (dollars in millions):

	At December 31, 2005
	Actual Interest Rates		Average Interest Rate			Maturity		Balance		Balance at December 31, 2004
Fixed Rate:
Taxable		3.59–8.76%		5.96	%		2006–2044	$	249.4	$	255.3
Tax-exempt		5.21–5.87%		5.55	%		2021–2028		25.7		35.0
Interest rate swaps		3.23–7.50%		5.44	%		2006–2013		659.3		519.0
Preferred Series G	8.63%			8.63	%	2006			10.0		—
									944.4		809.3
Variable Rate:(1)
Taxable		3.93–6.00%		4.82	%		2007–2014		162.2		240.8
Tax-exempt		3.93–4.19%		4.04	%		2014–2028		10.9		10.8
Interest rate caps		3.93–4.90%		4.44	%		2007–2009		22.6		22.6
									195.7		274.2
								$	1,140.1	$	1,083.5

 

(1)   Amounts are adjusted to reflect interest rate swap and cap agreements in effect at December 31, 2005, and 2004, respectively which results in the Company paying fixed interest payments over the terms of the interest rate swaps and on changes in interest rates above the strike rate of the cap.

The following table includes scheduled principal repayments on the borrowings at December 31, 2005, as well as the amortization of the fair market value of debt assumed (dollars in thousands):

Year	Amortization		Maturities		Total
2006	$	4,430	$	34,459	$	38,889
2007		4,557		12,460		17,017
2008		3,795		106,715		110,510
2009		1,846		105,000		106,846
2010		1,948		120,000		121,948
Thereafter		64,165		680,671		744,836
	$	80,741	$	1,059,305	$	1,140,046

 

F-19

5. Derivative Financial Instruments

Following are the details of the interest rate swaps that were entered into as of December 31, 2005 (dollars in thousands):

			Interest Rate
	Notional Balance		Variable Leg Base		Fixed Leg			Expiration
Interest rate swaps designated against the FNMA Facilities
	$	25,000		3-month LIBOR		7.50	%		2006
		25,000		3-month LIBOR		6.43	%		2007
		25,000		3-month LIBOR		5.70	%		2007
		50,000		3-month LIBOR		5.87	%		2008
		50,000		3-month LIBOR		5.48	%		2010
		25,000		3-month LIBOR		6.93	%		2007
		40,000		3-month LIBOR		5.54	%		2010
		50,000		3-month LIBOR		5.36	%		2011
		25,000		3-month LIBOR		5.15	%		2012
		50,000		3-month LIBOR		5.29	%		2012
		50,000		3-month LIBOR		5.00	%		2012
		50,000		3-month LIBOR		5.06	%		2013
		25,000		3-month LIBOR		5.34	%		2013
		490,000				5.61	%
Interest rate swaps designated against the FNMA Tax-Free Bond Facility
		16,990		BMA Municipal Swap Index		5.13	%		2008
		10,800		BMA Municipal Swap Index		3.95	%		2007
		7,000		BMA Municipal Swap Index		3.95	%		2007
		4,965		BMA Municipal Swap Index		3.23	%		2008
		2,980		BMA Municipal Swap Index		3.23	%		2008
		3,585		BMA Municipal Swap Index		3.63	%		2009
		6,645		BMA Municipal Swap Index		3.63	%		2009
		8,365		BMA Municipal Swap Index		4.73	%		2010
		61,330				4.23	%
Interest rate swaps designated against the Freddie Mac Facility
		26,000		3-month LIBOR		5.40	%		2011
		10,000		3-month LIBOR		5.11	%		2011
		15,000		3-month LIBOR		5.19	%		2011
		15,000		3-month LIBOR		5.72	%		2011
		17,000		3-month LIBOR		5.53	%		2011
		83,000				5.41	%
Interest rate swaps designated against Union Planters Bank borrowings
		25,000				4.98	%		2009
Total interest rate swaps in									2011
effect at December 31, 2005		659,330				5.44	%
Forward interest rate swap designated against FNMA Facilities
		25,000		3-month LIBOR		5.34	%		2013
Total interest rate swaps entered into									2011
as of December 31, 2005	$	684,330				5.43	%

 

F-20

At December 31, 2005, all of the Company’s interest rate swaps and interest rate caps were designated as cash flow hedges in accordance with Statement No. 133 as amended and have a net liability fair value of $7.3 million recorded in accrued expenses and other liabilities in the consolidated balance sheet and an asset fair value of $30,000 recorded in other assets in the consolidated balance sheet, respectively.

6. Fair Value Disclosure of Financial Instruments

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses and other liabilities and security deposits are carried at amounts which reasonably approximate their fair value due to their short term nature.

Fixed rate notes payable at December 31, 2005, and 2004, total $285.0 million and $290.3 million, respectively, and have an estimated fair value of $258.7 million and $240.5 million (excluding prepayment penalties), respectively, based upon interest rates available for the issuance of debt with similar terms and remaining maturities as of December 31, 2005, and 2004. The carrying value of variable rate notes payable (excluding the effect of interest rate swap agreements) at December 31, 2005, and 2004, total $855.0 million and $793.2 million, respectively, which reasonably approximates their fair value because the related variable interest rates available for the issuance of debt with similar terms and remaining maturities reasonably approximate market rates. The notional amount of interest rate and forward interest rate swap agreements at December 31, 2005, and 2004, total $684.3 million and $569.0 million, respectively, and have an estimated fair value of $7.3 million and ($14.6) million, respectively, based upon interest rates available for interest rate swaps with similar terms and remaining maturities as of December 31, 2005, and 2004. The notional amount of interest rate cap agreements at December 31, 2005, and 2004, total $22.6 million and $22.6 million, respectively, and have an estimated fair value of $30 thousand and $66 thousand, respectively, based upon interest rates available for interest rate caps with similar terms and remaining maturities as of December 31, 2005, and 2004.

The fair value estimates presented herein are based on information available to management as of December 31, 2005, and 2004. These estimates are not necessarily indicative of the amounts the Company could ultimately realize.

7. Commitments and Contingencies

The Company is not presently subject to any material litigation nor, to the Company’s knowledge, with advice of legal counsel, is any material litigation threatened against the Company. The Company is subject to routine litigation arising in the ordinary course of business, some of which is expected to be covered by liability insurance and none of which is expected to have a material adverse effect on the consolidated financial statements of the Company.

The Company had operating lease expense of approximately $4,000 for the years ended December 31, 2005, and 2004, and none for the year ended December 31, 2003. The Company has commitments of approximately $4,000 annually through 2008 under operating lease agreements outstanding at December 31, 2005.

8. Income Taxes

No provision for Federal income taxes has been made in the accompanying consolidated financial statements. The Company has made an election to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code. As a REIT, the Company is generally not subject to Federal income tax on that portion of its income that qualifies as REIT taxable income to the extent that it distributes at least 90% of its taxable income to the Company’s shareholders and complies with certain requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to the Federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Even though the Company qualifies for taxation as a REIT, the Company may be subject to certain Federal, state and local taxes on its income and property and to Federal income and excise tax on its undistributed income.

F-21

Earnings and profits, which determine the taxability of dividends to shareholders, differ from net income reported for financial reporting purposes primarily because of differences in depreciable lives, bases of certain assets and liabilities and in the timing of recognition of earnings upon disposition of properties. For Federal income tax purposes, the following summarizes the taxability of cash distributions paid on the common shares in 2004 and 2003 and the estimated taxability for 2005:

	2005		2004		2003
Per common share
Ordinary income	$	0.86	$	1.05	$	1.13
Capital gains		0.26		0.26		0.14
Return of capital		1.23		1.03		1.07
Total	$	2.35	$	2.34	$	2.34

 

9. Shareholders’ Equity

Series A Preferred Stock

Series A Cumulative Preferred Stock (“Series A Preferred Stock”) had a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.375 per share, payable monthly. In August 2003, the Company used part of the proceeds from the issuance of the Series H Cumulative Redeemable Preferred Stock (“Series H Preferred Stock”) to redeem all of the 2,000,000 outstanding shares of its Series A Preferred Stock for $50 million.

Series B Preferred Stock

Series B Cumulative Preferred Stock (“Series B Preferred Stock”) had a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.21875 per share, payable monthly. In August 2003, the Company used part of the proceeds from the issuance of the Series H Preferred Stock to redeem all 1,938,830 outstanding shares of its Series B Preferred Stock for $48.5 million.

Series C Preferred Stock

Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”) had a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.34375 per share, payable quarterly. In August 2003, the Company used part of the proceeds from the issuance of the Series H Preferred Stock to redeem all 2,000,000 outstanding shares of its Series C Preferred Stock for $50 million.

Series D Preferred Stock—Shareholders Rights Plan

The Board of Directors authorized a Shareholders Rights Plan (the “Rights Plan”). In implementing the Rights Plan, the Board declared a distribution of one right for each of the Company’s outstanding common shares which would become exercisable only if a person or group (the “Acquiring Person”) became the beneficial owner of 10% or more of the common shares or announced a tender or exchange offer that would result in ownership of 10% of the Company’s common shares. The rights would trade with the Company’s common stock until exercisable. Each holder of a right, other than the Acquiring Person, would in that event be entitled to purchase one common share of the Company for each right at one half of the then current price.

In November 2005, as a governance initiative, the Board voted to terminate the Rights Plan.

Series F Preferred Stock

In 2002, the Company issued Series F Cumulative Redeemable Preferred Stock (“Series F Preferred Stock”) with a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.3125 per share, payable monthly. The Company has outstanding 474,500 Series F Preferred shares for which it received aggregate proceeds of $11.9 million. On and after October 16, 2007, the Series F Preferred shares will be redeemable for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation preference plus dividends accrued and unpaid to the redemption date.

F-22

Series H Preferred Stock

In 2003, the Company issued the Series H Preferred Stock with a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.075 per share, payable quarterly. The Company has outstanding 6,200,000 Series H Preferred Stock shares for which it received net proceeds of $150.1 million. On and after August 11, 2008, the Series H Preferred Stock shares will be redeemable for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation preference plus dividends owed and unpaid to the redemption date.

Direct Stock Purchase and Distribution Reinvestment Plan

The Company has a Direct Stock Purchase and Distribution Reinvestment Plan (“DRSPP”) pursuant to which the Company’s shareholders have the ability to reinvest all or part of their distributions from the Company’s common stock, preferred stock or limited partnership interests in Mid-America Apartments, L.P. into the Company’s common stock. The plan also provides the opportunity to make optional cash investments in common shares of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. The Company, in its absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill its obligations under the DRSPP, the Company may either issue additional shares of common stock or repurchase common stock in the open market. The Company has registered with the Securities and Exchange Commission the offer and sale of up to 4,600,000 shares of common stock pursuant to the DRSPP. Additional shares will be purchased at the market price on the “Investment Date” each month, which shall in no case be later than ten business days following the distribution payment date. The Company may elect to sell shares under the DRSPP at up to a 5% discount.

Common stock shares totaling 803,251 in 2005, 413,598, in 2004, and 31,697 in 2003, were acquired by shareholders under the DRSPP. The Company offered an average of a 1.5% discount for optional cash purchases in 2005 and a 2% discount in the months of August through December in 2004. No discounts were offered in 2003.

Stock Repurchase Plan

In 1999, the Company’s Board of Directors approved a stock repurchase plan to acquire up to a total of 4.0 million shares of the Company’s common stock. Through December 31, 2005, the Company has repurchased and retired approximately 1.9 million shares of common stock for a cost of approximately $42 million at an average price per common share of $22.54. No shares were repurchased in 2002, 2003, 2004 or 2005 under the plan.

10. 8-5/8% Series G Cumulative Redeemable Preferred Stock

In 2002, the Company issued 8-5/8% Series G Cumulative Redeemable Preferred Stock (“Series G”) with a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.15625 per share, payable monthly. The Company has outstanding 400,000 Series G shares issued in a direct placement with private investors (“Investors”) for which it received aggregate proceeds of $10 million. On or after November 15, 2004, the Company or the Investors may give the required one-year notice to redeem or put, respectively, all or part of the Series G shares beginning on or after November 15, 2005, in increments of $1 million. In the event the Investors elect to put all or a part of the Series G to the Company, the Company has the option to redeem all or a portion of the shares of the Series G in shares of common stock of the Company in lieu of cash.

In accordance with EITF D-98: Classification and Measurement of Redeemable Securities, as of March 31, 2005, the Company classified the Series G outside of permanent equity as the Company determined that in the event of a put by the Investors, there were two possible circumstances which were not wholly in control of the Company that could require the Series G to be redeemed by the Company for cash as opposed to common stock, and thus the Series G should be presented outside of permanent equity. These circumstances were the delisting of the Company’s common stock from the New York Stock Exchange and the failure to complete a registration of the Company’s common stock exchanged for the Series G. The December 31, 2004, consolidated balance sheet was adjusted to conform to such presentation as were the December 31, 2004 and 2003, Statements of Shareholders’ Equity.

F-23

On May 26, 2005, the Company gave the required one-year notice to redeem all of the issued and outstanding Series G shares on May 26, 2006. As a result, in accordance with Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“Statement 150”), the Company classified the Series G as a liability within notes payable as of May 26, 2005, on the accompanying consolidated financial statements. Statement 150 also requires that all subsequent dividend payments be classified as interest expense on the consolidated financial statements.

11. Employee Benefit Plans

401 (k) Savings Plan

The Mid-America Apartment Communities, Inc. 401(k) Savings Plan is a defined contribution plan that satisfies the requirements of Section 401(a) and 401(k) of the Code. The Company may, but is not obligated to, make a matching contribution of $0.50 for each $1.00 contributed, up to 6% of the participant’s compensation. The Company’s contribution to this plan was approximately $389,000, $330,000, and $251,000 in 2005, 2004, and 2003, respectively.

Non-Qualified Deferred Compensation Retirement Plan

The Company has adopted a non-qualified deferred compensation retirement plan for key employees who are not qualified for participation in the Company’s 401(k) Savings Plan. Under the terms of the plan, employees may elect to defer a percentage of their compensation and the Company matches a portion of their salary deferral. The plan is designed so that the employees’ investment earnings under the non-qualified plan should be the same as the earning assets in the Company’s 401(k) Savings Plan. The Company’s match to this plan in 2005, 2004, and 2003 was approximately $31,800, $30,400, and $23,700, respectively.

Non-Qualified Deferred Compensation Plan for Outside Company Directors

The Company has adopted a non-qualified deferred compensation plan for the non-employee directors who serve on the Board of Directors of the Company (the “Directors Deferred Compensation Plan”). The Directors Deferred Compensation Plan allows directors to receive shares of phantom stock in place of cash fees in increments of 25%. The phantom stock is then issued either in shares of common stock of the Company or in a comparable cash value in two annual installments following the director’s retirement from the Board of Directors. In 2005, 2004, and 2003, the Company issued 5,742, 5,931, and 7,879, shares of phantom stock, with weighted-average grant date fair values of $43.35, $36.59 and $27.67, respectively, to outside directors.

Director Restricted Stock Plan

Beginning with the 2005 Annual Meeting of Shareholders, non-employee directors elected to the Board of Directors receive a grant of $75,000 worth of restricted shares of common stock. The shares vest in three equal installments over the director’s three-year term. To begin the program, non-employee directors not sitting for re-election at the 2005 Annual Meeting of Shareholders received a pro-rata grant representing the number of years left in their term. In 2005, 8,596 shares of restricted stock were granted to non-employee directors with a grant date fair value of $40.71.

Employee Stock Purchase Plan

The Mid-America Apartment Communities, Inc. Employee Stock Purchase Plan (the “ESPP”) provides a means for employees to purchase common stock of the Company. The Board of Directors has authorized the issuance of 150,000 shares for the plan. The ESPP is administered by the Compensation Committee of the Board of Directors who may annually grant options to employees to purchase annually up to an aggregate of 15,000 shares of common stock at a price equal to 85% of the market price of the common stock. For 2005, 2004, and 2003, the ESPP purchased 4,796, 4,801, and 5,162 shares of common stock, with weighted-average grant date fair values of $37.41, $31.63 and $23.84, respectively.

F-24

Employee Stock Ownership Plan

The Mid-America Apartment Communities, Inc. Employee Stock Ownership Plan (the “ESOP”) is a non-contributory stock bonus plan that satisfies the requirements of Section 401(a) of the Internal Revenue Code. Each employee of the Company is eligible to participate in the ESOP after attaining the age of 21 years and completing one year of service with the Company. Participants’ ESOP accounts will be 100% vested after five years of continuous service, with no vesting prior to that time. The Company contributed 22,500 shares of common stock to the ESOP upon conclusion of the initial offering. During 2005, 2004, and 2003, the Company contributed approximately $700,000, $554,000, and $568,000, respectively, to the ESOP which purchased an additional 16,447, 15,104, and 20,489, shares of common stock, with weighted-average grant date fair values of $42.58, $36.66, and $27.74, respectively.

Restricted Stock and Stock Option Plan

The Company adopted the 1994 Restricted Stock and Stock Option Plan (the “1994 Plan”) to provide incentives to attract and retain independent directors, executive officers and key employees. As of January 31, 2004, no further awards may be granted under this plan. The 1994 Restricted Stock and Stock Option Plan was replaced by the 2004 Stock Plan (collectively the “Plans”) by shareholder approval at the May 24, 2004, Annual Meeting of Shareholders. The Plans provide(d) for the granting of options to purchase a specified number of shares of common stock (“Options”) or grants of restricted shares of common stock (“Restricted Stock”). The Plan also allow(ed) the Company to grant options to purchase Operating Partnership Units at the price of the common stock on the New York Stock Exchange on the day prior to issuance of the units (the “LESOP Provision”). The 1994 Plan authorized the issuance of 2,400,000 common shares or options to acquire shares. The 2004 Stock Plan authorizes the issuance of 500,000 common shares or options to acquire shares. Under the terms of the 1994 Plan, the Company could advance directors, executive officers, and key employees a portion of the cost of the common stock or units. The employee advances mature five years from the date of issuance and accrue interest, payable in arrears, at a rate established at the date of issuance. The Company has also entered into supplemental bonus agreements with the employees which are intended to fund the payment of a portion of the advances over a five year period. Under the terms of the supplemental bonus agreements, the Company will pay bonuses to these employees equal to 3% of the original note balance on each anniversary date of the advance, limited to 15% of the aggregate purchase price of the shares and units. In March of 2002, the Company entered into duplicate supplemental bonus agreements on the then existing options to executive officers, effectively doubling their advances. The advances become due and payable and the bonus agreement will terminate if the employees voluntarily terminate their employment with the Company. The Company also agreed to pay a bonus to certain executive officers in an amount equal to the debt service on the advances for as long as they remain employed by the Company.

As of December 31, 2005, the Company had advances outstanding relating to the Plan totaling approximately $840,000, which is presented as a reduction to shareholders’ equity in the accompanying consolidated balance sheets. All of the $840,000 advances at December 31, 2005, were to current and one former executive officers and were at interest rates ranging from 5.59%-6.49% and maturing at various dates from 2007 to 2010.

In 2005, the Company issued 8,852 restricted shares of common stock to executive management under the 2004 Stock Plan with a grant date fair value of $38.50. These shares will vest in two equal amounts in 2006 and 2007. Recipients will receive dividend payments on the shares of restricted stock prior to vesting.

In 2003, the Company issued 7,471 restricted shares of common stock to executive management with a grant date fair value of $23.42. These shares vested in 2004. Recipients received dividend payments on the shares of restricted stock prior to vesting.

In 2005, the Board of Directors adopted the 2005 Key Management Restricted Stock Plan (the “2005 Plan”), a long-term incentive program for key managers and executive officers. The 2005 Plan grants shares of restricted stock based on a sliding scale of total shareholder return over three 12-month periods. Any restricted stock earned will vest 100% at the end of a three-year restriction period. Recipients will receive dividend payments on the shares of restricted stock during the restriction period. There is no automatic vesting of the shares.

F-25

In 2002, the Company issued 97,881 restricted shares of common stock to key managers with a grant date fair value of $25.65. As a result of two managers leaving the employment of the Company, as of December 31, 2005, only 86,477 shares remain issued. These shares will vest 20% a year for five consecutive years beginning in 2007. Recipients receive dividend payments on the shares of restricted stock prior to vesting. In the fourth quarter of 2005, the Company expensed approximately $887,000 representing a cumulative charge to amortize the first four years of this plan which the Company previously expected would expense over the vesting period from 2007 through 2011.

In 2000, the Company issued 10,750 restricted shares of common stock to executive officers with a grant date fair value of $22.1875. These shares vest 10% each over ten years through 2010. The executive officers have the option to accelerate the vesting in lieu of bonuses. As of December 31, 2005, no shares have been vested early. Recipients receive dividend payments on the shares of restricted stock prior to vesting.

Options granted to employees through the 1994 Plan vest(ed) annually over five years in the following consecutive amounts: 10%, 10%, 20%, 30%, and 30%. No options have been granted through the 2004 Stock Plan. A summary of changes in options to acquire shares of the Company’s common stock and Operating Partnership Units, including grants and exercises pursuant to the LESOP provision, for the three years ended December 31, 2005, is as follows:

	Options			Weighted Average Exercise Price
Outstanding at December 31, 2002		1,424,024		$	24.37
Granted		—
Exercised		(308,467	)	$	23.12
Forfeited		(77,587	)	$	23.85
Outstanding at December 31, 2003		1,037,970		$	24.78
Granted		—
Exercised		(343,429	)	$	25.76
Forfeited		(20,475	)	$	24.14
Outstanding at December 31, 2004		674,066		$	24.30
Granted		—
Exercised		(239,514	)	$	23.45
Forfeited		(36,500	)	$	24.10
Outstanding at December 31, 2005		398,052		$	24.83
Options exercisable:
December 31, 2003		403,070		$	26.75
December 31, 2004		247,216		$	25.06
December 31, 2005		190,707		$	25.09

 

Exercise prices for options outstanding as of December 31, 2005, ranged from $22.14 to $29.50. The weighted average remaining contractual life of those options is 4.4 years.

Long-Term Performance Based Incentive Plan for Executive Officers

The Compensation Committee by authorization of the Board of Directors of the Company submitted the Long-Term Performance Based Incentive Plan for Executive Officers (the “Long-Term Plan”) which was approved by shareholders on June 2, 2003. The Long-Term Plan allows executive management to earn performance units that convert into shares of restricted stock based on achieving defined total shareholder investment performance levels. The potential award of performance units which convert into shares of restricted stock is based on the Company’s performance from January 1, 2003, through December 31, 2005. Any performance units earned will be granted based on the closing market price on December 31, 2005, and are immediately convertible into shares of restricted stock. While these shares of restricted stock will be entitled to dividend payments, they will not be transferable or have voting privileges until they vest. Dependent upon the executive officer’s continued employment with the Company, any shares of restricted stock awarded will vest 20% annually from 2006 through 2010.

F-26

12. Earnings from Discontinued Operations

In accordance with Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company sold the Eastview apartments in 2005, the Island Retreat apartments in 2004 and the Crossings apartments in 2003, and has classified them as discontinued operations in the Consolidated Statements of Operations. The following is a summary of earnings from discontinued operations for the three years ended December 31, 2005, (dollars in thousands):

	2005			2004			2003
Revenues:
Rental revenues	$	579		$	2,857		$	3,355
Other revenues		(8	)		64			89
Total revenues		571			2,921			3,444
Expenses:
Property operating expenses		684			1,798			1,945
Depreciation and amortization		—			681			1,023
Interest expense		—			575			1,041
Loss on debt extinguishment		—			60			—
Amortization of deferred financing costs		—			4			12
Asset impairment		243			200			—
Total expenses		927			3,318			4,021
Earnings from discontinued operations before gain on sale and settlement proceeds		(356	)		(397	)		(577	)
Net gain (loss) on insurance and other settlement proceeds		(25	)		526			82
Gain on sale		—			5,825			1,919
Earnings (loss) from discontinued operations	$	(381	)	$	5,954		$	1,424

 

13. Related Party Transactions

Pursuant to management contracts with the Company’s joint venture(s), the Company manages the operations of the joint venture(s) apartment communities for a fee of 4% of the revenues of the joint venture(s). The Company received approximately $325,000, $582,000, and $822,000 as management fees from the joint venture(s) in 2005, 2004, and 2003, respectively.

The Company earned interest on a $4.5 million loan to CH/Realty at an average interest rate of 9% until its closure following the sale of its remaining two properties in 2005.

The Company has certain advances to current and one former executive officer through the 1994 Plan as discussed in Note 11.

14. Segment Information

At December 31, 2005, the Company owned or had an ownership interest in 132 multifamily apartment communities, including the apartment community owned by the Company’s joint venture, in 12 different states from which it derives all significant sources of earnings and operating cash flows. The Company’s operational structure is organized on a decentralized basis, with individual property managers having overall responsibility and authority regarding the operations of their respective properties. Each property manager individually monitors local and area trends in rental rates, occupancy percentages, and operating costs. Property managers are given the on-site responsibility and discretion to react to such trends in the best interest of the Company. The Company’s chief operating decision maker evaluates the performance of each individual property based on its contribution to net operating income in order to ensure that the individual property continues to meet the Company’s return criteria and long term investment goals. The Company defines each of its multifamily communities as an individual operating segment. It has also determined that all of its communities have similar economic characteristics and meet the other criteria which permit the communities to be aggregated into one reportable segment, which is acquisition and operation of the multifamily communities owned.

F-27

15. Subsequent Events

DISTRIBUTION.    In January 2006, the Company announced a quarterly distribution to common shareholders of $0.595 per share, which was paid on January 31, 2006.

In February 2006, the Company announced a monthly distribution to its Series F Cumulative Redeemable Preferred Stock shareholders of $0.1927 per share, which is payable on March 15, 2006.

ACQUISITIONS.    On January 19, 2006, the Company acquired the Preserve at Brier Creek apartments in Raleigh, NC. The property had a total of 250 apartment units when purchased. The Company announced plans to develop an additional 200 apartment units on land it purchased adjacent to the existing property.

16. Selected Quarterly Financial Information (Unaudited)

Mid-America Apartment Communities, Inc.
Quarterly Financial Data (Unaudited)
(Dollars in thousands except per share data)

	Year Ended December 31, 2005
	First			Second			Third			Fourth
Total revenues	$	71,441		$	72,862		$	75,155		$	77,997
Income from continuing operations before non-operating items	$	18,554		$	19,138		$	18,596		$	20,176
Interest expense	$	(13,732	)	$	(14,473	)	$	(15,332	)	$	(15,214	)
(Loss) gain on debt extinguishment	$	(4	)	$	(90	)	$	12		$	(327	)
Minority interest in operating partnership income	$	(260	)	$	(778	)	$	(91	)	$	(442	)
Income (loss) from investments in unconsolidated entities	$	318		$	(193	)	$	(52	)	$	(8	)
Net gain (loss) on insurance and other settlement proceeds	$	7		$	(16	)	$	874		$	(116	)
Gain on disposition within unconsolidated entities	$	—		$	3,034		$	—		$	—
Discontinued operations:
(Loss) gain from discontinued operations before asset impairment, settlement proceeds and gain on sale	$	(135	)	$	22		$	—		$	—
Asset impairment on discontinued operations	$	(94	)	$	(149	)	$	—		$	—
Net loss on insurance and other settlement proceeds on discontinued operations	$	(25	)	$	—		$	—		$	—
Gain on sale of discontinued operations	$	—		$	—		$	—		$	—
Net income	$	4,326		$	8,193		$	3,615		$	3,610
Net income available for common shareholders	$	613		$	4,558		$	125		$	119
Per share:
Net income available per common share—basic	$	0.03		$	0.21		$	0.01		$	0.01
Net income available per common share—diluted	$	0.03		$	0.21		$	0.01		$	0.01
Dividend declared	$	0.585		$	0.585		$	0.585		$	0.595

 

F-28

	Year Ended December 31, 2004
	First			Second			Third			Fourth
Total revenues	$	65,501		$	66,066		$	67,527		$	68,690
Income from continuing operations before non-operating items	$	16,540		$	16,456		$	16,573		$	17,217
Interest expense	$	(12,341	)	$	(12,030	)	$	(12,868	)	$	(13,619	)
Gain (loss) on debt extinguishment	$	82		$	(299	)	$	38		$	1,274
Minority interest in operating partnership income	$	(420	)	$	(534	)	$	(464	)	$	(846	)
Loss from investments in unconsolidated entities	$	(41	)	$	(33	)	$	(61	)	$	(152	)
Net gain (loss) on insurance and other settlement proceeds	$	1,628		$	1,228		$	248		$	(421	)
Gain on disposition within unconsolidated entities	$	—		$	—		$	—		$	3,249
Discontinued operations:
Loss from discontinued operations before asset impairment, settlement proceeds and gain on sale	$	(76	)	$	(53	)	$	(54	)	$	(14	)
Asset impairment on discontinued operations	$	—		$	—		$	—		$	(200	)
Net gain on insurance and other settlement proceeds on discontinued operations	$	—		$	526		$	—		$	—
Gain on sale of discontinued operations	$	—		$	—		$	—		$	5,825
Net income	$	5,055		$	4,992		$	3,131		$	12,020
Net income (loss) available for common shareholders	$	1,349		$	1,286		$	(576	)	$	8,314
Per share:
Net income (loss) available per common share—basic	$	0.07		$	0.06		$	(0.03	)	$	0.40
Net income (loss) available per common share—diluted	$	0.07		$	0.06		$	(0.03	)	$	0.40
Dividend declared	$	0.585		$	0.585		$	0.585		$	0.585

 

F-29

MID-AMERICA APARTMENT COMMUNITIES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2005
(Dollars in thousands)

					Initial Cost				Cost Capitalized subsequent to Acquisition					Gross Amount carried at December 31, 2005 (20)
Property	Location	Encumbrances			Land		Buildings and Fixtures		Land			Buildings and Fixtures		Land		Buildings and Fixtures		Total		Accumulated Depreciation			Net		Date of Construction		Life used to compute depreciation in latest income statement (21)
Eagle Ridge	Birmingham, AL		—(1	)	$	851	$	7,667	$	—		$	1,360	$	851	$	9,027	$	9,878	$	(2,548	)	$	7,330		1986		1–40
Abbington Place	Huntsville, AL		—(1	)		524		4,724		—			1,249		524		5,973		6,497		(1,890	)		4,607		1987		1–40
Paddock Club Huntsville	Huntsville, AL		—(1	)		909		10,152		830			8,961		1,739		19,113		20,852		(4,756	)		16,096		1989/98		1–40
Paddock Club Montgomery	Montgomery, AL		—(1	)		965		13,190		—			623		965		13,813		14,778		(3,002	)		11,776		1999		1–40
Calais Forest	Little Rock, AR		—(1	)		1,026		9,244		—			2,462		1,026		11,706		12,732		(4,857	)		7,875		1987		1–40
Napa Valley	Little Rock, AR		—(1	)		960		8,642		—			1,565		960		10,207		11,167		(3,586	)		7,581		1984		1–40
Westside Creek I	Little Rock, AR		—(1	)		616		5,559		—			1,411		616		6,970		7,586		(2,220	)		5,366		1984		1–40
Westside Creek II	Little Rock, AR		4,518			654		5,904		—			509		654		6,413		7,067		(1,976	)		5,091		1986		1–40
Tiffany Oaks	Altamonte Springs, FL		—(1	)		1,024		9,219		—			2,526		1,024		11,745		12,769		(4,021	)		8,748		1985		1–40
Marsh Oaks	Atlantic Beach, FL		—(1	)		244		2,829		—			1,029		244		3,858		4,102		(1,648	)		2,454		1986		1–40
Indigo Point	Brandon, FL		—(4	)		1,167		10,500		—			1,531		1,167		12,031		13,198		(2,668	)		10,530		1989		1–40
Paddock Club Brandon	Brandon, FL		—(2	)		2,896		26,111		—			960		2,896		27,071		29,967		(7,233	)		22,734		1997/99		1–40
Preserve at Coral Square	Coral Springs, FL		32,203			9,600		41,206		—			821		9,600		42,027		51,627		(2,884	)		48,743		1996		1–40
Anatole	Daytona Beach, FL		7,000(10	)		1,227		5,879		—			1,296		1,227		7,175		8,402		(2,822	)		5,580		1986		1–40
Paddock Club Gainesville	Gainesville, FL		—(2	)		1,800		15,879		—			339		1,800		16,218		18,018		(3,277	)		14,741		1999		1–40
Cooper’s Hawk	Jacksonville, FL		—(6	)		854		7,500		—			1,595		854		9,095		9,949		(3,624	)		6,325		1987		1–40
Hunter’s Ridge at Deerwood	Jacksonville, FL		—(7	)		1,533		13,835		—			1,571		1,533		15,406		16,939		(4,572	)		12,367		1987		1–40
Lakeside	Jacksonville, FL		—(1	)		1,431		12,883		(1	)		4,621		1,430		17,504		18,934		(7,267	)		11,667		1985		1–40
Lighthouse Court	Jacksonville, FL		—(1	)		4,047		36,431		—			285		4,047		36,716		40,763		(3,987	)		36,776		2003		1–40
Paddock Club Jacksonville	Jacksonville, FL		—(1	)		2,294		20,750		(2	)		1,147		2,292		21,897		24,189		(6,102	)		18,087		1989/96		1–40
Paddock Club Mandarin	Jacksonville, FL		—(2	)		1,410		14,967		—			617		1,410		15,584		16,994		(3,212	)		13,782		1998		1–40
St. Augustine	Jacksonville, FL		—(6	)		2,858		6,475		(1	)		3,205		2,857		9,680		12,537		(4,446	)		8,091		1987		1–40
Woodbridge at the Lake	Jacksonville, FL		—(2	)		645		5,804		—			2,029		645		7,833		8,478		(3,399	)		5,079		1985		1–40
Woodhollow	Jacksonville, FL		—(1	)		1,686		15,179		—			4,237		1,686		19,416		21,102		(6,567	)		14,535		1986		1–40
Paddock Club Lakeland	Lakeland, FL		—(1	)		2,254		20,452		(1,033	)		2,944		1,221		23,396		24,617		(6,998	)		17,619		1988/90		1–40
Savannahs at James Landing	Melbourne, FL		—(6	)		582		7,868		—			2,973		582		10,841		11,423		(4,074	)		7,349		1990		1–40
Paddock Park Ocala	Ocala, FL		6,805(2)(3	)		2,284		21,970		—			1,301		2,284		23,271		25,555		(7,143	)		18,412		1986/88		1–40
Paddock Club Panama City	Panama City, FL		—(2	)		898		14,276		—			495		898		14,771		15,669		(3,739	)		11,930		2000		1–40
Paddock Club Tallahassee	Tallahassee, FL		—(2	)		530		4,805		950			9,874		1,480		14,679		16,159		(4,248	)		11,911		1990/95		1–40
Belmere	Tampa, FL		—(1	)		851		7,667		1			2,933		852		10,600		11,452		(4,432	)		7,020		1984		1–40
Links at Carrollwood	Tampa, FL		—(1	)		817		7,355		110			2,908		927		10,263		11,190		(2,994	)		8,196		1980		1–40
High Ridge	Athens, GA		—(1	)		884		7,958		—			836		884		8,794		9,678		(2,547	)		7,131		1987		1–40
Bradford Pointe	Augusta, GA		4,760			772		6,949		—			1,158		772		8,107		8,879		(2,448	)		6,431		1986		1–40
Shenandoah Ridge	Augusta, GA		—(1	)		650		5,850		8			3,091		658		8,941		9,599		(3,830	)		5,769		1982		1–40
Westbury Creek	Augusta, GA		3,480(15	)		400		3,626		—			811		400		4,437		4,837		(1,400	)		3,437		1984		1–40
Fountain Lake	Brunswick, GA		—(5	)		502		4,551		—			1,272		502		5,823		6,325		(1,913	)		4,412		1983		1–40
Park Walk	College Park, GA		—(1	)		536		4,859		—			685		536		5,544		6,080		(1,667	)		4,413		1985		1–40
Whisperwood	Columbus, GA		—(1	)		4,290		42,722		(2	)		7,127		4,288		49,849		54,137		(14,017	)		40,120		1980/82/84/86/98		1–40
Willow Creek	Columbus, GA		—(1	)		614		5,523		—			2,265		614		7,788		8,402		(2,451	)		5,951		1971/77		1–40
Terraces at Fieldstone	Conyers, GA		—(1	)		1,284		15,819		—			488		1,284		16,307		17,591		(3,174	)		14,417		1999		1–40
Prescott	Duluth, GA		—(8	)		3,840		24,876		—			407		3,840		25,283		29,123		(2,048	)		27,075		2001		1–40
Lanier	Gainesville, GA		20,686			3,560		23,248		—			475		3,560		23,723		27,283		(1,203	)		26,080		1998		1–40
Lake Club	Gainesville, GA		—(8	)		3,150		18,997		—			90		3,150		19,087		22,237		(1,057	)		21,180		2001		1–40
Whispering Pines	LaGrange, GA		—(5	)		823		7,470		—			1,463		823		8,933		9,756		(2,785	)		6,971		1982/84		1–40
Westbury Springs	Lilburn, GA		—(1	)		665		6,038		—			1,085		665		7,123		7,788		(2,153	)		5,635		1983		1–40
Austin Chase	Macon, GA		—(7	)		1,409		12,687		—			152		1,409		12,839		14,248		(3,355	)		10,893		1996		1–40
The Vistas	Macon, GA		—(1	)		595		5,403		—			992		595		6,395		6,990		(1,965	)		5,025		1985		1–40
Walden Run	McDonough, GA		—(1	)		1,281		11,935		—			14		1,281		11,949		13,230		(1,379	)		11,851		1997		1–40
Georgetown Grove	Savannah, GA		10,102			1,288		11,579		—			712		1,288		12,291		13,579		(3,369	)		10,210		1997		1–40

F-30

					Initial Cost				Cost Capitalized subsequent to Acquisition					Gross Amount carried at December 31, 2005 (20)
Property	Location	Encumbrances			Land		Buildings and Fixtures		Land			Buildings and Fixtures		Land		Buildings and Fixtures		Total		Accumulated Depreciation			Net		Date of Construction		Life used to compute depreciation in latest income statement (21)
Wildwood	Thomasville, GA		—(1	)		438		3,971		371			4,471		809		8,442		9,251		(2,626	)		6,625		1980/84		1–40
Hidden Lake	Union City, GA		—(1	)		1,296		11,715		—			1,717		1,296		13,432		14,728		(4,097	)		10,631		1985/87		1–40
Three Oaks	Valdosta, GA		—(1	)		462		4,188		459			5,606		921		9,794		10,715		(3,052	)		7,663		1983/84		1–40
Huntington Chase	Warner Robins, GA		8,891			1,160		10,437		—			636		1,160		11,073		12,233		(2,352	)		9,881		1997		1–40
Southland Station	Warner Robins, GA		—(1	)		1,470		13,284		—			1,699		1,470		14,983		16,453		(4,669	)		11,784		1987/90		1–40
Terraces at Townelake	Woodstock, GA		—(1	)		1,331		11,918		1,688			16,396		3,019		28,314		31,333		(7,180	)		24,153		1999		1–40
Fairways at Hartland	Bowling Green, KY		—(1	)		1,038		9,342		—			1,347		1,038		10,689		11,727		(3,411	)		8,316		1996		1–40
Paddock Club Florence	Florence, KY		9,600			1,209		10,969		—			1,241		1,209		12,210		13,419		(3,537	)		9,882		1994		1–40
Grand Reserve Lexington	Lexington, KY		—(1	)		2,024		31,234		—			—		2,024		31,234		33,258		(5,457	)		27,801		2000		1–40
Lakepointe	Lexington, KY		—(1	)		411		3,699		—			1,119		411		4,818		5,229		(2,013	)		3,216		1986		1–40
Mansion, The	Lexington, KY		—(1	)		694		6,242		—			1,618		694		7,860		8,554		(3,195	)		5,359		1989		1–40
Village, The	Lexington, KY		—(1	)		900		8,097		—			2,358		900		10,455		11,355		(4,350	)		7,005		1989		1–40
Stonemill Village	Louisville, KY		—(1	)		1,169		10,518		—			3,653		1,169		14,171		15,340		(5,787	)		9,553		1985		1–40
Riverhills	Grenada, MS		—(1	)		153		2,092		—			735		153		2,827		2,980		(1,587	)		1,393		1972		1–40
Crosswinds	Jackson, MS		—(1	)		1,535		13,826		—			2,351		1,535		16,177		17,712		(5,726	)		11,986		1988/89		1–40
Pear Orchard	Jackson, MS		—(1	)		1,352		12,168		(1	)		3,313		1,351		15,481		16,832		(6,233	)		10,599		1985		1–40
Reflection Pointe	Jackson, MS		5,880(11	)		710		8,770		140			3,693		850		12,463		13,313		(4,871	)		8,442		1986		1–40
Somerset	Jackson, MS		—(1	)		477		4,294		—			1,303		477		5,597		6,074		(2,287	)		3,787		1981		1–40
Woodridge	Jackson, MS		—(1	)		471		5,522		—			1,191		471		6,713		7,184		(2,549	)		4,635		1987		1–40
Lakeshore Landing	Ridgeland, MS		—(1	)		676		6,470		—			71		676		6,541		7,217		(759	)		6,458		1974		1–40
Savannah Creek	Southaven, MS		—(1	)		778		7,013		—			1,521		778		8,534		9,312		(3,139	)		6,173		1989		1–40
Sutton Place	Southaven, MS		—(1	)		894		8,053		—			1,711		894		9,764		10,658		(3,622	)		7,036		1991		1–40
Hermitage at Beechtree	Cary, NC		—(1	)		900		8,099		—			1,557		900		9,656		10,556		(3,164	)		7,392		1988		1–40
Waterford Forest	Cary, NC		—(8	)		4,000		20,957		—			227		4,000		21,184		25,184		(715	)		24,469		1996		1–40
Woodstream	Greensboro, NC		—(1	)		1,048		9,855		—			335		1,048		10,190		11,238		(1,204	)		10,034		1983		1–40
Corners, The	Winston-Salem, NC		—(2	)		685		6,165		—			1,529		685		7,694		8,379		(3,315	)		5,064		1982		1–40
Fairways at Royal Oak	Cincinnati, OH		—(1	)		814		7,335		(12	)		1,478		802		8,813		9,615		(3,635	)		5,980		1988		1–40
Colony at South Park	Aiken, SC		—(1	)		862		8,005		—			119		862		8,124		8,986		(837	)		8,149		1989/91		1–40
Woodwinds	Aiken, SC		—(1	)		503		4,540		—			945		503		5,485		5,988		(1,733	)		4,255		1988		1–40
Tanglewood	Anderson, SC		—(1	)		427		3,853		—			1,442		427		5,295		5,722		(2,276	)		3,446		1980		1–40
Fairways, The	Columbia, SC		7,735(12	)		910		8,207		—			829		910		9,036		9,946		(3,680	)		6,266		1992		1–40
Paddock Club Columbia	Columbia, SC		—(1	)		1,840		16,560		—			1,646		1,840		18,206		20,046		(5,356	)		14,690		1989/95		1–40
Highland Ridge	Greenville, SC		—(1	)		482		4,337		—			1,302		482		5,639		6,121		(1,869	)		4,252		1984		1–40
Howell Commons	Greenville, SC		—(1	)		1,304		11,740		—			1,606		1,304		13,346		14,650		(4,378	)		10,272		1986/88		1–40
Paddock Club Greenville	Greenville, SC		—(1	)		1,200		10,800		—			765		1,200		11,565		12,765		(3,387	)		9,378		1996		1–40
Park Haywood	Greenville, SC		—(1	)		325		2,925		35			3,395		360		6,320		6,680		(2,624	)		4,056		1983		1–40
Spring Creek	Greenville, SC		—(1	)		597		5,374		(14	)		1,322		583		6,696		7,279		(2,572	)		4,707		1985		1–40
Runaway Bay	Mt. Pleasant, SC		8,365(9	)		1,085		7,269		—			1,783		1,085		9,052		10,137		(3,593	)		6,544		1988		1–40
Park Place	Spartanburg, SC		—(1	)		723		6,504		—			1,402		723		7,906		8,629		(2,526	)		6,103		1987		1–40
Hamilton Pointe	Chattanooga, TN		—(1	)		1,131		10,861		—			226		1,131		11,087		12,218		(1,239	)		10,979		1989		1–40
Hidden Creek	Chattanooga, TN		—(1	)		972		9,201		—			183		972		9,384		10,356		(1,073	)		9,283		1987		1–40
Steeplechase	Chattanooga, TN		—(1	)		217		1,957		—			2,121		217		4,078		4,295		(1,734	)		2,561		1986		1–40
Windridge	Chattanooga, TN		5,465(16	)		817		7,416		—			1,539		817		8,955		9,772		(2,546	)		7,226		1984		1–40
Oaks, The	Jackson, TN		—(1	)		177		1,594		—			1,346		177		2,940		3,117		(1,257	)		1,860		1978		1–40
Post House Jackson	Jackson, TN		5,095			443		5,078		—			2,964		443		8,042		8,485		(2,539	)		5,946		1987		1–40
Post House North	Jackson, TN		3,375(13	)		381		4,299		(57	)		1,600		324		5,899		6,223		(2,362	)		3,861		1987		1–40
Bradford Chase	Jackson, TN		—(1	)		523		4,711		—			1,107		523		5,818		6,341		(2,349	)		3,992		1987		1–40
Woods at Post House	Jackson, TN		4,998			240		6,839		—			1,264		240		8,103		8,343		(3,605	)		4,738		1997		1–40
Cedar Mill	Memphis, TN		—(1	)		824		8,023		—			573		824		8,596		9,420		(1,223	)		8,197		1973/86		1–40
Gleneagles	Memphis, TN		—(1	)		443		3,983		—			2,610		443		6,593		7,036		(4,079	)		2,957		1975		1–40
Greenbrook	Memphis, TN		—(4	)		2,100		24,468		25			18,207		2,125		42,675		44,800		(18,575	)		26,225		1974/78/83/86		1–40
Hickory Farm	Memphis, TN		—(1	)		580		5,220		(19	)		1,521		561		6,741		7,302		(2,942	)		4,360		1985		1–40
Kirby Station	Memphis, TN		—(1	)		1,148		10,337		—			3,799		1,148		14,136		15,284		(5,751	)		9,533		1978		1–40
Lincoln on the Green	Memphis, TN		—(1	)		1,498		20,483		—			9,800		1,498		30,283		31,781		(10,938	)		20,843		1988/98		1–40
Park Estate	Memphis, TN		—(4	)		178		1,141		—			3,115		178		4,256		4,434		(2,368	)		2,066		1974		1–40
Reserve at Dexter Lake	Memphis, TN		—(5	)		1,260		16,043		2,147			32,402		3,407		48,445		51,852		(7,742	)		44,110		1999/01		1–40
River Trace	Memphis, TN		—(1	)		1,622		14,723		1			2,443		1,623		17,166		18,789		(5,419	)		13,370		1981/85		1–40

F-31

					Initial Cost				Cost Capitalized subsequent to Acquisition					Gross Amount carried at December 31, 2005 (20)
Property	Location	Encumbrances			Land		Buildings and Fixtures		Land			Buildings and Fixtures		Land		Buildings and Fixtures		Total		Accumulated Depreciation			Net		Date of Construction		Life used to compute depreciation in latest income statement (21)
Paddock Club Murfreesboro	Murfreesboro, TN		—(1	)		915		14,774		—			293		915		15,067		15,982		(3,164	)		12,818		1999		1–40
Brentwood Downs	Nashville, TN		—(1	)		1,193		10,739		(2	)		1,753		1,191		12,492		13,683		(5,137	)		8,546		1986		1–40
Grand View Nashville	Nashville, TN		—(1	)		2,963		33,673		—			1,052		2,963		34,725		37,688		(5,397	)		32,291		2001		1–40
Monthaven Park	Nashville, TN		22,725			2,736		29,556		—			751		2,736		30,307		33,043		(2,678	)		30,365		1999/01		1–40
Park at Hermitage	Nashville, TN		6,645(17	)		1,524		14,800		—			3,410		1,524		18,210		19,734		(7,136	)		12,598		1987		1–40
Northwood	Arlington, TX		—(2	)		886		8,278		—			193		886		8,471		9,357		(979	)		8,378		1980		1–40
Balcones Woods	Austin, TX		—(2	)		1,598		14,398		—			3,389		1,598		17,787		19,385		(6,020	)		13,365		1983		1–40
Grand Reserve at Sunset Valley	Austin, TX		11,193			3,150		11,868		—			319		3,150		12,187		15,337		(957	)		14,380		1996		1–40
Stassney Woods	Austin, TX		4,050(18	)		1,621		7,501		—			3,118		1,621		10,619		12,240		(4,247	)		7,993		1985		1–40
Travis Station	Austin, TX		3,585(19	)		2,282		6,169		(1	)		2,251		2,281		8,420		10,701		(3,331	)		7,370		1987		1–40
Woods, The	Austin, TX		—(2	)		1,405		13,083		—			157		1,405		13,240		14,645		(1,445	)		13,200		1977		1–40
Celery Stalk	Dallas, TX		—(8	)		1,463		13,165		(1	)		4,214		1,462		17,379		18,841		(7,244	)		11,597		1978		1–40
Courtyards at Campbell	Dallas, TX		—(2	)		988		8,893		—			1,479		988		10,372		11,360		(2,921	)		8,439		1986		1–40
Deer Run	Dallas, TX		—(2	)		1,252		11,271		—			1,934		1,252		13,205		14,457		(3,733	)		10,724		1985		1–40
Lodge at Timberglen	Dallas, TX		—(8	)		825		7,422		(1	)		2,951		824		10,373		11,197		(4,466	)		6,731		1983		1–40
Watermark	Dallas, TX		—(8	)		960		14,839		—			121		960		14,960		15,920		(1,195	)		14,725		2002		1–40
Legacy Pines	Houston, TX		—(2	)		2,157		19,491		—			305		2,157		19,796		21,953		(2,266	)		19,687		1999		1–40
Westborough Crossing	Katy, TX		—(8	)		677		6,091		(1	)		1,818		676		7,909		8,585		(3,279	)		5,306		1984		1–40
Kenwood Club	Katy, TX		—(2	)		1,002		17,288		—			394		1,002		17,682		18,684		(3,452	)		15,232		2000		1–40
Lane at Towne Crossing	Mesquite, TX		—(2	)		1,311		12,254		—			196		1,311		12,450		13,761		(1,465	)		12,296		1983		1–40
Highwood	Plano, TX		—(4	)		864		7,783		—			1,416		864		9,199		10,063		(2,689	)		7,374		1983		1–40
Los Rios Park	Plano, TX		—(2	)		3,273		29,483		—			718		3,273		30,201		33,474		(3,053	)		30,421		2000		1–40
Boulder Ridge	Roanoke, TX		—(2	)		5,432		27,930		—			419		5,432		28,349		33,781		(980	)		32,801		1999		1–40
Cypresswood Court	Spring, TX		—(8	)		577		5,190		(1	)		1,529		576		6,719		7,295		(2,876	)		4,419		1984		1–40
Villages at Kirkwood	Stafford, TX		14,439			1,918		16,358		—			432		1,918		16,790		18,708		(1,178	)		17,530		1996		1–40
Green Tree Place	Woodlands, TX		—(8	)		539		4,850		—			1,439		539		6,289		6,828		(2,618	)		4,210		1984		1–40
Township	Hampton, VA		10,800(14	)		1,509		8,189		—			3,419		1,509		11,608		13,117		(3,458	)		9,659		1987		1–40
Total Properties					$	173,907	$	1,493,072	$	5,616		$	298,222	$	179,523	$	1,791,294	$	1,970,817	$	(473,421	)	$	1,497,396
Land Held for Future Developments	Various				$	1,366	$	—	$	—		$	—	$	1,366	$	—	$	1,366	$	—		$	1,366		N/A		N/A
Commercial Properties	Various					—		2,769		—			8,719		—		11,488		11,488		(4,143	)		7,345		Various		1–40
Total Other					$	1,366	$	2,769	$	—		$	8,719	$	1,366	$	11,488	$	12,854	$	(4,143	)	$	8,711
Total Real Estate Assets					$	175,273	$	1,495,841	$	5,616		$	306,941	$	180,889	$	1,802,782	$	1,983,671	$	(477,564	)	$	1,506,107

 

 (1) Encumbered by a $600 million FNMA facility, with $587.3 million available and $562.8 million outstanding with a variable interest rate of 4.93% on which there exists thirteen interest rate swap agreements totaling $490 million at an average rate of 5.61% at December 31, 2005.

 (2) Encumbered by a $250 million FNMA facility, with $204.0 available and $158.6 million outstanding, $48.6 million of which had a variable interest rate of 4.58% and $110 million with a fixed rate of 7.18% at December 31, 2005.

 (3) Phase I of Paddock Park—Ocala is encumbered by $6.8 million in bonds on which there exists a $6.8 million interest rate cap of 6.000% which terminates on October 24, 2007.

 (4) Encumbered, along with one corporate property, by a mortgage with a principal balance of $40 million at December 31, 2005, with a maturity of April 1, 2009 and an interest rate of 5.41% on which there is a $25 million interest rate swap agreement with a rate of 4.98%, maturing on March 1, 2009.

 (5) Encumbered by a credit line with AmSouth Bank, with an outstanding balance of $12.5 million at December 31, 2005.

 (6) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with principal balance of $13.2 million at December 31, 2005, and an average interest rate of 5.87%.

 (7) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $12.5 million at December 31, 2005, and an average interest rate of 5.21%.

 (8) Encumbered by a $100 million Freddie Mac facility, with $96.4 million available and an outstanding balance of $96.4 million and a variable interest rate of 4.96% on which there exists five interest rate swap agreements totaling $83 million at an average rate of 5.41% at December 31, 2005.

 (9) Encumbered by $8.4 million in bonds on which there exists a $8.4 million interest rate swap agreement fixed at 4.73% and maturing on September 15, 2010.

 (10) Encumbered by $7.0 million in bonds on which there exists a $7.0 million interest rate swap agreement fixed at 3.95% and maturing on October 24, 2007.

F-32

 (11) Encumbered by $5.9 million in bonds on which there exists a $5.9 million interest rate swap agreement fixed at 5.13% and maturing on June 15, 2008.

 (12) Encumbered by $7.7 million in bonds on which there exists a $7.7 million interest rate swap agreement fixed at 5.13% and maturing on June 15, 2008.

 (13) Encumbered by $3.4 million in bonds on which there exists a $3.4 million interest rate swap agreement fixed at 5.13% and maturing on June 15, 2008.

 (14) Encumbered by $10.8 million in bonds on which there exists a $10.8 million interest rate swap agreement fixed at 3.95% and maturing on October 24, 2007.

 (15) Encumbered by $3.5 million in bonds on which there exist a $3.0 million interest rate swap agreement fixed at 3.23% and maturing on May 30, 2008.

 (16) Encumbered by $5.5 million in bonds on which there exists a $5.0 million interest rate swap agreement fixed at 3.23% and maturing on May 30, 2008.

 (17) Encumbered by $6.6 million in bonds on which there exists a $6.6 million interest rate swap agreement fixed at 3.63% and maturing on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 4.99% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

 (18) Encumbered by $4.0 million in bonds on which there exists a $4.0 million interest rate cap of 6.0% which terminates on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 4.99% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

 (19) Encumbered by $3.6 million in bonds on which there exists a $3.6 million interest rate swap agreement fixed at 3.63% and maturing on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 4.99% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

 (20) The aggregate cost for Federal income tax purposes was approximately $1,872 million at December 31, 2005. The aggregate cost for book purposes exceeds the total gross amount of real estate assets for Federal income tax purposes, principally due to purchase accounting adjustments recorded under accounting principles generally accepted in the United States of America.

 (21) Depreciation is on a straight line basis over the estimated useful asset life which ranges from 8 to 40 years for land improvements and buildings, 5 years for furniture, fixtures and equipment, and 1 year for fair market value of leases.

F-33

MID-AMERICA APARTMENT COMMUNITIES, INC.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

A summary of activity for real estate investments and accumulated depreciation is as follows:

	Year Ended December 31,
	2005			2004			2003
	Dollars in thousands
Real estate investments:
Balance at beginning of year	$	1,848,707		$	1,682,491		$	1,463,793
Acquisitions		107,920			160,517			200,104
Improvement and development		27,301			30,875			22,374
Assets held for sale		—			(14,171	)		—
Disposition of real estate assets		(257	)		(11,005	)		(3,780	)
Balance at end of year	$	1,983,671		$	1,848,707		$	1,682,491
Accumulated depreciation:
Balance at beginning of year	$	399,762		$	339,704		$	283,277
Depreciation		73,700			67,977			56,506
Assets held for sale		—			(5,622	)		—
Disposition of real estate assets		(41	)		(2,297	)		(79	)
Balance at end of year	$	473,421		$	399,762		$	339,704

 

The Company’s consolidated balance sheet at December 31, 2005, 2004, and 2003 includes accumulated depreciation of $ 4,143, $3,136 and $3,558 respectively, in the caption “Commercial properties, net”.

See accompanying report of independent registered public accounting firm.

F-34

Exhibit Number	Exhibit Description
3.1	Amended and Restated Charter of Mid-America Apartment Communities, Inc. dated as of January 10, 1994, as filed with the Tennessee Secretary of State on January 25, 1994 (Filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
3.2	Articles of Amendment to the Charter of Mid-America Apartment Communities, Inc. dated as of January 28, 1994, as filed with the Tennessee Secretary of State on January 28, 1994 (Filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference).
3.3	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Preferred Stock dated as of October 9, 1996, as filed with the Tennessee Secretary of State on October 10, 1996 (Filed as Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996 and incorporated herein by reference).
3.4	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter dated November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997 (Filed as Exhibit 3.6 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
3.5	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997 (Filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997 and incorporated herein by reference).
3.6	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of June 25, 1998, as filed with the Tennessee Secretary of State on June 30, 1998 (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on June 26, 1998 and incorporated herein by reference).
3.7	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of A Series of Shares of Preferred Stock dated as of December 24, 1998, as filed with the Tennessee Secretary of State on December 30, 1998 (Filed as Exhibit 3.7 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
3.8	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of October 11, 2002, as filed with the Tennessee Secretary of State on October 14, 2002 (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002 and incorporated herein by reference).

3.9	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of October 28, 2002, as filed with the Tennessee Secretary of State on October 28, 2002 (Filed as Exhibit 3.9 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
3.10	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of August 7, 2003, as filed with the Tennessee Secretary of State on August 7, 2003 (Filed as Exhibit 3.10 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
3.11	Bylaws of Mid-America Apartment Communities, Inc. (Filed as an Exhibit to the Registrant’s Registration Statement on Form S-11 (File Number 33-69434) and incorporated herein by reference).
4.1	Form of Common Share Certificate (Filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
4.2	Form of 9.5% Series A Cumulative Preferred Stock Certificate (Filed as Exhibit 2 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996 and incorporated herein by reference).
4.3	Form of 8 7/8% Series B Cumulative Preferred Stock Certificate (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997 and incorporated herein by reference).
4.4	Form of 9 3/8% Series C Cumulative Preferred Stock Certificate (Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on June 26, 1998 and incorporated herein by reference).
4.5	Form of 9.5% Series E Cumulative Preferred Stock Certificate (Filed as Exhibit 4.5 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
4.6	Form of 9 ¼% Series F Cumulative Preferred Stock Certificate (Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002 and incorporated herein by reference).
4.7	Form of 8.30% Series G Cumulative Preferred Stock Certificate (Filed as Exhibit 4.7 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
4.8	Form of 8.30% Series H Cumulative Preferred Stock Certificate (Filed as Exhibit 4.8 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.1	Second Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P., a Tennessee limited partnership (Filed as Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by reference).

10.2 †	Employment Agreement between the Registrant and H. Eric Bolton, Jr. (Filed as Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated herein by reference).
10.3 †	Employment Agreement between the Registrant and Simon R.C. Wadsworth (Filed as Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated herein by reference).
10.4 †	Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan (Filed as Exhibit A to the Registrant’s Proxy Statement filed on April 24, 2002 and incorporated herein by reference).
10.5	AmSouth Revolving Credit Agreement (Amended and Restated) dated July 17, 2003 (Filed as Exhibit 10.10 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.6	First Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated May 19, 2004 (Filed as Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.7	Second Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated May 23, 2005.
10.8	Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 30, 2004.
10.9	First Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 31, 2004 (Filed as Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.10	Second Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated April 30, 2004 (Filed as Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.11	Third Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated August 3, 2004 (Filed as Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.12	Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated August 31, 2004 (Filed as Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).

10.13	Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated October 1, 2004 (Filed as Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.14	Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 1, 2004 (Filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.15	Seventh Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 15, 2004 (Filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.16	Eighth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 31, 2005.
10.17	Ninth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated September 23, 2005.
10.18	Tenth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 16, 2005.
10.19	Eleventh Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated February 22, 2006.
10.20	Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P., dated March 30, 2004.
10.21	First Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated March 31, 2004.
10.22	Second Amendment to the Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated as of August 3, 2004 (Filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).

10.23	Third Amendment to the Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated as of December 1, 2004 (Filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.24	Fourth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated March 31, 2005.
10.25	Fifth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated September 23, 2005.
10.26	Sixth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated February 22, 2006.
10.27	Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways- Columbia, L.P. dated June 1, 2001 (Filed as Exhibit 10.17 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.28	Amendment No. 1 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated December 24, 2002 (Filed as Exhibit 10.18 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.29	Amendment No. 2 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated May 30, 2003 (Filed as Exhibit 10.19 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.30	Amendment No. 3 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated March 2, 2004.
10.31	Amendment No. 4 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated November 17, 2005.
10.32	Amendment No. 5 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated February 23, 2006.
10.33	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004, (Sunset Valley Apartments, Texas) (Filed as Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).

10.34	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004 (Village Apartments, Texas) (Filed as Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.35	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004, (Coral Springs Apartments, Florida) (Filed as Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.36	Credit Agreement dated September 28, 1998 by and among Jefferson Village, L.P., Jefferson at Sunset Valley, L.P. and JPI Coral Springs, L.P. (Filed as Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.37	Credit Agreement by and among Mid-America Apartment Communities, Inc., Mid-America Apartments L.P. and Mid- America Apartments of Texas, L.P. and Financial Federal Savings Bank dated June 29, 2004 (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and incorporated herein by reference).
10.38	Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated March 2, 2004.
10.39	Amendment No. 1 to Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated November 17, 2005.
10.40	Amendment No. 2 to Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated February 23, 2006.
10.41†	Mid-America Apartment Communities, Inc. Non-Qualified Deferred Compensation Plan for Outside Company Directors as Amended Effective January, 1 2005 (Filed as Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.42†	Mid-America Apartment Communities Non-Qualified Deferred Compensation Retirement Plan as Amended Effective January 1, 2005 (Filed as Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.43 †	Mid-America Apartment Communities 2005 Key Management Restricted Stock Plan (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 20, 2005 and incorporated herein by reference).
10.44 †	2005 Executive Annual Bonus Program (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 25, 2005 and incorporated herein by reference).
10.45†	Form of Restricted Stock Agreement (Filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 11, 2005 and incorporated herein by reference).
11	Statement re: computation of per share earnings (included within the Form 10-K).

14	Code of Ethics (Filed as Exhibit 14.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference).
21	List of Subsidiaries
23.1	Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP
23.2	Consent of Independent Registered Public Accounting Firm, KPMG LLP
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
† Management contract or compensatory plan or arrangement.

EX-10.7

EXHIBIT 10.7

SECOND AMENDMENT TO AMENDED AND

RESTATED REVOLVING CREDIT AGREEMENT

This Second Amendment to Amended and Restated Revolving Credit Agreement (this "Amendment") is executed as of May 23, 2005, among Mid-America Apartment Communities, Inc. ("MAAC"), Mid-America Apartments, L.P. ("Mid-America"), the financial institutions listed on Schedule 1, as amended or supplemented from time to time (the "Lenders"), and AmSouth Bank, an Alabama banking corporation, as Administrative Agent for the Lenders, its successors and assigns (in such capacity, the "Administrative Agent").

Recitals

A.MAAC, Mid-America, certain Lenders and the Administrative Agent entered into that certain Amended and Restated Revolving Credit Agreement dated as of July 17, 2003, as amended by that certain First Amendment to Amended and Restated Revolving Credit Agreement dated as of May 19, 2004 (as it may be amended further from time to time, the "Agreement"). Unless otherwise defined in this Amendment, capitalized terms shall have the meaning assigned to them in the Agreement.

B.The Borrowers have requested that the Agreement be amended to extend the Maturity Date defined in the Agreement and to amend certain other terms.

C.The parties to the Agreement desire to execute this Amendment to evidence the extension of the Maturity Date and the modification of certain other provisions set forth in the Agreement.

Agreement

NOW, THEREFORE, in consideration of the above Recitals, the parties hereby agree as follows:

1. Section 1.13(b) of the Agreement is hereby deleted in its entirety and replaced with the following:

(b) Each Base Rate Loan and each Loan evidenced by the Swing Line Facility Note shall bear interest at the Base Rate minus 100 basis points on its unpaid principal amount from the date such Loan is made until repaid. Accrued interest shall be payable on Base Rate Loans and Loans evidenced by the Swing Line Facility Note on the first day of each month.

2.The definition of "Fair Market Value" set forth in Section 11.1 of the Agreement is hereby deleted in its entirety and replaced with the following:

Fair Market Value shall be determined quarterly, on a "Net Operating Income" basis, not later than the twenty-second (22^nd) day of each calendar quarter, but as of the last day of the immediately preceding calendar quarter, from the Effective Date until the Termination Date of the Loans, by dividing the prior calendar quarter's annualized Adjusted NOI of each Stabilized Property subject to a Mortgage by 8.75% (with the exception of the Stabilized Properties known as

1

Reserve at Dexter Phase I, Phase II and Phase III, for which the cap rate/denominator shall be 8.50%).

3.The definition of “Margin” set forth in Section 11.1 of the Agreement is hereby deleted in its entirety and replaced with the following:

Margin shall mean 135 basis points.

4.The definition of "Maturity Date" set forth in Section 11.1 of the Agreement is hereby amended by replacing the date "May 24, 2006" with the date "May 24, 2007."

5.Schedule 2 of the Agreement is hereby deleted in its entirety and replaced with the Schedule 2 attached hereto.

6. Exhibit F of the Agreement is hereby deleted in its entirety and replaced with the Exhibit F attached hereto.

7.In consideration of this Amendment, the Borrowers shall pay to the Lenders on the date hereof an extension fee equal to 17.5 basis points of the Aggregate Commitment ($70,000.00). An additional extension fee shall be payable by the Borrowers to the Administrative Agent on the date hereof pursuant to a separate agreement between the Administrative Agent and the Borrowers.

8. This Amendment shall not be effective until the following conditions have been fulfilled:

a. The Administrative Agent has received a fully executed original of this Amendment;

b. The fees required herein have been received by the Administrative Agent;

c The Administrative Agent has received appropriate resolutions of the Borrowers authorizing the transactions contemplated herein;

d. The Administrative Agent has received an opinion of counsel to each of the Borrowers, which opinion shall be satisfactory to the Administrative Agent in all respects; and

e. The Administrative Agent has received evidence of the payment of 2004 ad valorem taxes for each Mortgaged Property.

Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with its terms.

Each Borrower represents and warrants that no Event of Default has occurred and is continuing under the Agreement, nor does any event that upon notice or lapse of time or both would constitute such an Event of Default exist.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above.

2

Signature page to

Second Amendment to Amended and Restated Revolving Credit Agreement

MID-AMERICA APARTMENT

COMMUNITIES, INC.

By:__________________________________

Name: Al Campbell

Title: Senior Vice President and Treasurer

3

Signature page to

Second Amendment to Amended and Restated Revolving Credit Agreement

MID-AMERICA APARTMENTS, L.P.

By Mid-America Apartment Communities, Inc.

Its Sole General Partner

By:__________________________________

Name: Al Campbell

Title: Senior Vice President and Treasurer

4

Signature page to

Second Amendment to Amended and Restated Revolving Credit Agreement

AMSOUTH BANK,

in its individual capacity as Lender

and as Administrative Agent

By:__________________________________

Name: Lawrence Clark

Title: Vice President

5

Signature page to

Second Amendment to Amended and Restated Revolving Credit Agreement

FIRST TENNESSEE BANK, N.A.

By:_______________________________

Name:_____________________________

Title:______________________________

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SCHEDULE 2

[Current List of Properties]

		Availability
Property	Advance Rate	as of the date hereof

I.	Stabilized Properties:
1.	Sterling Ridge (GA)	65%	$ 4,977,373
2.	Reserve at Dexter Phases I, II, & III (TN)	65%	$23,788,065
3.	Fountain Lake Apartments (GA)	65%	$ 3,351,482
5.	Whispering Pines Phases I & II (GA)	65%	$ 5,515,633

II.	Development Projects:
	None

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BORROWING BASE CERTIFICATE

EXHIBIT F

FOR THE ________________ Quarter 200__

Part I Borrowing Base Calculation

A. Stabilized Properties

PROPERTY UNITS REVENUE/ NOI MANAGEMENT CAP. EX. ADJUSTED CAPPED AVAILABLE

1,000 FEE (5%) ($200/unit)NOI AT 8.75% *65%                      

B. Development Projects

PROPERTY	PROJECT	COSTS TO		AVAILABILITY TO
	BUDGET		DATE	DATE (AT 40%)

	BORROWING BASE		_____________________
			$____________________
PART II		Representations and Warranties; Events of Default

1) The representations and warranties set forth in the Agreement are true and correct as of the date of this Certificate.

2) No Event of Default, or event which would constitute an event of Default with the passage of time or giving of notice or both, has occurred under this Agreement, except as follows: __________________________________________________________________________________________

______________________________________________________________________________________________________________________

______________________________________________________________________________________________________________________.

Dated this ___________ day of ________________, 200___.

MID-AMERICA APARTMENT COMMUNITIES, INC.

BY____________________________________

ITS____________________________________

MID-AMERICA APARTMENTS, L.P.

BY MID-AMERICA APARTMENT COMMUNITIES, INC.
	ITS SOLE GENERAL PARTNER
		BY_____________________________
	ITS_____________________________

* Cap rate for Reserve at Dexter Phases I, II and III shall be 8.50%.

EX-10.8

EXHIBIT 10.8

SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT
(MAA II)

          THIS SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT is made as of the 30^th day of March, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”) and (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”; the REIT and OP being collectively referred to as the “Borrower”), and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          Borrower and Lender entered into that certain Master Credit Facility Agreement dated as of August 22, 2002 (the “Original Agreement”), pursuant to which Lender agreed to make credit available to Borrower under the terms and conditions set forth in the Original Agreement.

          B.          Pursuant to various amendments to the Original Agreement, among other things various Mortgaged Properties (each capitalized term used but not defined has the meaning ascribed to such term in Article I of this Agreement) were added to the Collateral Pool.

          C.          The Borrower amended and restated the Original Agreement in its entirety as set forth in that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003 (the “First Amended and Restated Agreement”).

          D.          The Borrower has requested that various terms and conditions of the Original Agreement be modified. The Borrower and the Lender now wish to amend and restate the Original Agreement in its entirety.

          E.          The REIT owns, directly and indirectly, 85% of the voting interests in OP.

          F.          The Borrower owns Multifamily Residential Properties as more particularly described in Exhibit A to this Agreement.

          G.          Pursuant to the Original Agreement, the Lender established a $198,192,000 credit facility, comprised of a $0 Fixed Facility Commitment and a $198,192,000 Variable Facility Commitment.

          H.          Pursuant to various amendments to the Original Agreement, the Lender has increased the Credit Facility to $419,020,000.

          I.           Pursuant to that certain First Amendment to Amended and Restated Master Credit Facility Agreement dated as of December 11, 2003 the Lender increased the Credit Facility to $436,608,000.

          J.           Pursuant to the First Amended and Restated Agreement, the Lender agreed that the Credit Facility may be increased to an amount not to exceed $511,000,000. The Borrower and Lender wish to further increase the amount to which the Credit Facility may be expanded subject to the rights of Borrower to elect to increase the Fixed Facility Commitment and Variable Facility Commitment in accordance with Article VIII hereof.

          K.          To secure the obligations of the Borrower under this Agreement and the other Loan Documents issued in connection with the Credit Facility, the Borrower has created a Collateral Pool in favor of the Lender. The Collateral Pool also secures the Borrower’s obligations under that certain Third Amended and Restated Master Credit Facility Agreement between Lender, Borrower and Mid-America Apartments of Texas, L.P. dated of even date herewith (the “Other Credit Agreement”). The Collateral Pool is comprised of (i) Security Instruments on certain Multifamily Residential Properties owned by the Borrower and (ii) any other Security Documents executed by the Borrower pursuant to this Agreement or any other Loan Documents.

          L.          Each of the Security Documents shall be cross-defaulted (i.e., a default under any Security Document, under this Agreement or under the Other Credit Agreement, shall constitute a default under each Security Document, and this Agreement) and cross-collateralized (i.e., each Security Instrument shall secure all of the Borrower’s obligations under this Agreement, the other Loan Documents issued in connection with the Credit Facility and the Other Credit Agreement) and it is the intent of the parties to this Agreement that the Lender may accelerate any Note without the necessity to accelerate any other Note and that in the exercise of its rights and remedies under the Loan Documents, Lender may, except as provided in this Agreement, exercise and perfect any and all of its rights in and under the Loan Documents with regard to any Mortgaged Property without the necessity to exercise and perfect its rights and remedies with respect to any other Mortgaged Property and that any such exercise shall be without regard to the Allocable Facility Amount assigned to such Mortgaged Property and that Lender may recover an amount equal to the full amount outstanding in respect of any of the Notes in connection with such exercise and any such amount shall be applied as determined by Lender in its sole and absolute discretion.

          M.          Subject to the terms, conditions and limitations of this Agreement, the Lender has agreed to establish the Credit Facility.

          NOW, THEREFORE, the Borrower and the Lender, in consideration of the mutual promises and agreements contained in this Agreement, hereby agree to amend and restate, in its entirety, the Original Agreement as follows:

ARTICLE I
DEFINITIONS

For all purposes of this Agreement, the following terms shall have the respective meanings set forth below:

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          “Acquiring Person” means a “person” or “group of persons” within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.

          “Additional Collateral Due Diligence Fees” shall have the meaning set forth in Section 16.03(b).

          “Additional Mortgaged Property” means each Multifamily Residential Property owned by the Borrower (either in fee simple or as tenant under a ground lease meeting all of the requirements of the DUS Guide) and added to the Collateral Pool after the Initial Closing Date pursuant to Article VI.

          “Advance” means a Variable Advance or a Fixed Facility Advance.

          “Advance Confirmation Instrument” shall have the meaning set forth in Section 4.02.

          “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management (other than property management) and policies of that Person, whether through the ownership of voting securities, partnership interests or by contract or otherwise.

          “Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period” means, for any specified date, the ratio (expressed as a percentage) of--

	(a)          the aggregate of the Net Operating Income for the Trailing 12 Month Period for the Mortgaged Properties
to
	(b)          the Facility Debt Service on the specified date.
	“Aggregate Loan to Value Ratio” means, for any specified date, the ratio (expressed as a percentage) of--
	(a)          the Advances Outstanding on the specified date,
to
	(b)	the aggregate of the Valuations most recently obtained prior to the specified date for all of the Mortgaged Properties.

          “Agreement” means this Master Credit Facility Agreement, as it may be amended, supplemented or otherwise modified from time to time, including all Recitals

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and Exhibits to this Agreement, each of which is hereby incorporated into this Agreement by this reference.

          “Allocable Facility Amount” means the portion of the Credit Facility allocated to a particular Mortgaged Property by Lender in accordance with this Agreement.

          “Amended and Restated Commitment” means the portion of the Commitment in excess of $413,374,000. Any portion of the Commitment above $413,374,000 shall be deemed to be part of the Amended and Restated Commitment.

          “Amended and Restated Variable Facility Commitment” means the portion of the Variable Facility Commitment in excess of $413,374,000.

          “Amortization Period” means, with respect to each Fixed Facility Advance, the period of not less than 25 years and not more than 30 years.

          “Applicable Law” means (a) all applicable provisions of all constitutions, statutes, rules, regulations and orders of all governmental bodies, all Governmental Approvals and all orders, judgments and decrees of all courts and arbitrators, (b) all zoning, building, environmental and other laws, ordinances, rules, regulations and restrictions of any Governmental Authority affecting the ownership, management, use, operation, maintenance or repair of any Mortgaged Property, including the Americans with Disabilities Act (if applicable), the Fair Housing Amendment Act of 1988 and Hazardous Materials Laws, (c) any building permits or any conditions, easements, rights-of-way, covenants, restrictions of record or any recorded or unrecorded agreement affecting or concerning any Mortgaged Property including planned development permits, condominium declarations, and reciprocal easement and regulatory agreements with any Governmental Authority, (d) all laws, ordinances, rules and regulations, whether in the form of rent control, rent stabilization or otherwise, that limit or impose conditions on the amount of rent that may be collected from the units of any Mortgaged Property, and (e) requirements of insurance companies or similar organizations, affecting the operation or use of any Mortgaged Property or the consummation of the transactions to be effected by this Agreement or any of the other Loan Documents.

          “Appraisal” means an appraisal of a Multifamily Residential Property or Multifamily Residential Properties conforming to the requirements of Chapter 5 of Part III of the DUS Guide, and accepted by the Lender.

          “Appraised Value” means the value set forth in an Appraisal.

          “Borrower” means, individually and collectively, the REIT and OP.

          “Business Day” means a day on which Fannie Mae is open for business.

          “Calendar Quarter” means, with respect to any year, any of the following three month periods: (a) January-February-March; (b) April-May-June; (c) July-August-September; and (d) October-November-December.

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          “Cap” means an interest rate cap provided pursuant to, and satisfying the requirements of, Article XXI.

          “Cap Rate” means, for each Mortgaged Property, a capitalization rate reasonably selected by the Lender for use in determining the Valuations, as disclosed to the Borrower from time to time.

          “Change of Control” means the earliest to occur of: (a) the date on which the REIT ceases for any reason whatsoever to be the sole general partner or managing member of the OP or ceases to own, directly or indirectly, 100% of the sole general partner or managing member of the OP, or (b) the date on which an Acquiring Person becomes (by acquisition, consolidation, merger or otherwise), directly or indirectly, the beneficial owner of more than 25% of the total Voting Equity Capital (or of any other Securities or ownership interest) of any Borrower then outstanding, or (c) the replacement (other than solely by reason of retirement at age sixty-five or older, death or disability) of more than 50% (or such lesser percentage as is required for decision-making by the board of directors or an equivalent governing body) of the members of the board of directors or an equivalent governing body) of the REIT or OP over a one-year period from the directors who constituted such board of directors at the beginning of such period and such replacement shall not have been approved by a vote of at least a majority of the board of directors of the REIT or OP then still in office who either were members of such board of directors at the beginning of such one-year period or whose election as members of the board of directors was previously so approved (it being understood and agreed that in the case of any entity governed by a trustee, board of managers, or other similar governing body, the foregoing clause (d) shall apply thereto by substituting such governing body and the members thereof for the board of directors and members thereof, respectively).

          “Closing Date” means the Initial Closing Date and each date after the Initial Closing Date on which the funding or other transaction requested in a Request is required to take place.

          “Collateral” means, the Mortgaged Properties and other collateral from time to time or at any time encumbered by the Security Instruments, or any other property securing the Borrower’s obligations under the Loan Documents.

          “Collateral Addition Fee” means, with respect to each Additional Mortgaged Property added to the Collateral Pool in accordance with Article VI--

	(i)	65 basis points, multiplied by
	(ii)	Allocable Facility Amount of the Additional Mortgaged Property, as determined by the Lender;
Provided however, if a Collateral Addition Property is added to the Collateral Pool in conjunction with such Mortgaged Property being released from the collateral pool under the Other Credit Agreement, the Collateral Addition Fee shall be waived for the aggregate of the first six (6) transactions which are either

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Mortgaged Properties transferred from the Collateral Pool under this Agreement to the collateral pool under the Other Credit Agreement, or Mortgaged Properties transferred from the collateral pool under the Other Credit Agreement to the Collateral Pool under this Agreement.

          “Collateral Addition Loan Documents” means the Security Instrument covering an Additional Mortgaged Property and any other documents, instruments or certificates required by the Lender in connection with the addition of the Additional Mortgaged Property to the Collateral Pool pursuant to Article VI.

          “Collateral Addition Request” shall have the meaning set forth in Section 6.02(a).

          “Collateral Pool” means the aggregate total of the Collateral.

          “Collateral Release Property” shall have the meaning set forth in Section 7.02(a).

          “Collateral Release Request” shall have the meaning set forth in Section 7.02(a).

          “Collateral Substitution Fee” means, with respect to any substitution effected in accordance with Section 7.04, a fee equal to 65 basis points multiplied by the Allocable Facility Amount of the Substituted Mortgage Property added to the Collateral Pool; provided however, if a Substituted Mortgaged Property is added to the Collateral Pool in conjunction with such Mortgaged Property being released from the collateral pool under the Other Credit Agreement, the Collateral Substitution Fee shall be waived for the aggregate of the first six (6) transactions which are either Mortgaged Properties transferred from the Collateral Pool under this Agreement to the collateral pool under the Other Credit Agreement, or Mortgaged Properties transferred from the collateral pool under the Other Credit Agreement to the Collateral Pool under this Agreement..

          “Commitment” means, at any time, the sum of the Fixed Facility Commitment and the Variable Facility Commitment.

          “Complete Fixed Facility Termination” shall have the meaning set forth in Section 9.02(a).

          “Complete Variable Facility Termination” shall have the meaning set forth in Section 9.02(a).

          “Compliance Certificate” means a certificate of the Borrower in the form attached as Exhibit D to this Agreement.

          “Conversion Documents” has the meaning specified in Section 3.07(b).

          “Conversion Request” has the meaning specified in Section 3.07(a).

          “Coupon Rate” means, with respect to a Variable Advance, the imputed interest rate determined by the Lender pursuant to Section 2.05 for the Variable Advance and,

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with respect to a Fixed Facility Advance, the interest rate determined by the Lender pursuant to Section 3.05 for the Fixed Facility Advance.

          “Coverage and LTV Tests” mean, for any specified date, each of the following financial tests:

(a)          The Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period is not less than 140%.
	(b)          The Aggregate Loan to Value Ratio does not exceed 65%.

          “Credit Facility” means the Fixed Facility and the Variable Facility.

          “Credit Facility Expansion” means an increase in the Commitment made in accordance with Article VIII.

           “Credit Facility Expansion Loan Documents” means amendments to the Variable Facility Note or the Fixed Facility Note, as the case may be, increasing the amount of such Note to the amount of the Commitment, as expanded in accordance with Article VIII and amendments to the Security Instruments, increasing the amount secured by such Security Instruments to the amount of the Commitment.

          “Credit Facility Expansion Request” shall have the meaning set forth in Section 8.02(a).

          “Credit Facility Termination Date” means December 1, 2014.

          “Credit Facility Termination Request” shall have the meaning set forth in Section 10.02(a).

          “Debt Service Coverage Ratio” means, for any Mortgaged Property, for any specified date, the ratio (expressed as a percentage) of --

	(a)           the aggregate of the Net Operating Income for the preceding 12 month period for the subject Mortgaged Property
to
	(b)          the Facility Debt Service on the specified date, assuming, for the purpose of calculating the Facility Debt Service for this definition, that Advances Outstanding shall be the Allocable Facility Amount for the subject Mortgaged Property.
	“Discount” means, with respect to any Variable Advance, an amount equal to the excess of --
	(i)           the face amount of the MBS backed by the Variable Advance, over

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(ii)          the Price of the MBS backed by the Variable Advance.

          “DUS Guide” means the Fannie Mae Multifamily Delegated Underwriting and Servicing (DUS) Guide, as such Guide may be amended from time to time, including exhibits to the DUS Guide and amendments in the form of Lender Memos, Guide Updates and Guide Announcements (and, if such Guide is no longer used by Fannie Mae, the term “DUS Guide” as used in this Agreement means the Fannie Mae Multifamily Negotiated Transactions Guide, as such Guide may be amended from time to time, including amendments in the form of Lender Memos, Guide Updates and Guide Announcements). All references to specific articles and sections of, and exhibits to, the DUS Guide shall be deemed references to such articles, sections and exhibits as they may be amended, modified, updated, superseded, supplemented or replaced from time to time.

          “DUS Underwriting Requirements” means the overall underwriting requirements for Multifamily Residential Properties as set forth in the DUS Guide.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

          “Event of Default” means any event defined to be an “Event of Default” under Article XVII.

           “Facility Debt Service” means, as of any specified date, the sum of:

(a)	the amount of interest and principal amortization, during the 12 month period immediately succeeding the specified date, with respect to the Advances Outstanding on the specified date, except that, for these purposes:
	(i)	(A) with respect to Variable Advances (or portions thereof) that are not part of the Hedge Requirement Amount, each Variable Advance (or portion thereof) shall be deemed to require level monthly payments of principal and interest (at the Coupon Rate for the Variable Advance (or portion thereof)) in an amount necessary to fully amortize the original principal amount of the Variable Advance (or portion thereof) over a 30-year period, with such amortization deemed to commence on the first day of the 12 month period; and
		(B) with respect to Variable Advances (or portions thereof) that are part of the Hedge Requirement Amount (x) for which Borrower has obtained a Swap, each such Variable Advance (or portion thereof) shall be deemed to require level monthly payments of principal and interest at the Swap Rate in an amount necessary to fully amortize the original principal amount of the Variable Advance (or portion thereof) over a 30-year period, with such amortization deemed to commence on the first day of the 12

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		month period; or (y) for which Borrower has obtained a Cap, each such Variable Advance (or portion thereof) shall be deemed to require level monthly payments of principal and interest (at the lesser of the Coupon Rate and the stated price of the relevant Cap) in an amount necessary to fully amortize the original principal amount of the Variable Advance (or portion thereof) over a 30-year period, with such amortization deemed to commence on the first day of the 12 month period; and
	(ii)	each Fixed Facility Advance shall require level monthly payments of principal and interest (at the Coupon Rate for the Fixed Facility Advance) in an amount necessary to fully amortize the original principal amount of the Fixed Facility Advance over a 30-year period, with such amortization to commence on the first day of the 12 month period; and
(b)	the amount of the Standby Fee and Rate Preservation Fee payable to the Lender pursuant to Section 16.01 during such 12 month period (assuming, for these purposes, that the Advances Outstanding throughout the 12 month period are always equal to the amount of Advances Outstanding on the specified date).

Exhibit E to this Agreement contains an example of the determination of the Facility Debt Service.

          “Facility Termination Fee” means, with respect to a reduction in either the Variable Facility Commitment or the Fixed Facility Commitment pursuant to Articles IX or X, an amount equal to the product obtained by multiplying--

(1)	the reduction in the Variable Facility Commitment and any undrawn portion of the Fixed Facility Commitment, by
(2)	18 basis points, by
(3)	the present value factor calculated using the following formula:

1 - (1 + r)^-n

r

[r = Yield Rate
n =	the number of years (counting any partial year as a full year) remaining between the Closing Date for the reduction in the Commitment and the Variable Facility Termination Date shown on the Summary of Credit Facility Structure.

The “Yield Rate” means the rate, determined as of the Initial Closing Date, on the U.S. Treasury security having a maturity closest to the applicable Variable Facility Termination Date].

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          “Fannie Mae” means the federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716 et seq.

          “Financial Covenants” means the covenants set forth in Article XV.

          “Fixed Facility” means the agreement of the Lender to make Fixed Facility Advances to the Borrower pursuant to Section 3.01.

          “Fixed Facility Advance” means a loan made by the Lender to the Borrower under the Fixed Facility Commitment.

          “Fixed Facility Availability Period” means the applicable fixed facility availability period shown on the Summary of Credit Facility Structure attached hereto.

          “Fixed Facility Commitment” means $0, plus such amount as the Borrower may elect to add to the Fixed Facility Commitment in accordance with Articles III or VIII.

          “Fixed Facility Fee” means the applicable fixed facility fee shown on the Summary of Credit Facility Structure as adjusted, if applicable, as set forth in Section 15.03 of this Agreement.

          “Fixed Facility Note” means a promissory note, in the form attached as Exhibit B to this Agreement, which will be issued by the Borrower to the Lender, concurrently with the funding of each Fixed Facility Advance, to evidence the Borrower’s obligation to repay the Fixed Facility Advance.

          “Future Advance” means an Advance made after the Initial Closing Date.

          “Future Advance Request” shall have the meaning set forth in Section 5.02.

          “GAAP” means generally accepted accounting principles in the United States in effect from time to time, consistently applied.

          “General Conditions” shall have the meaning set forth in Article XI.

          “Geographical Diversification Requirements” means (a) at all times that aggregate Advances Outstanding are $100,000,000 or less, a requirement that the Collateral Pool consist of at least five (5) Mortgaged Properties located in at least four (4) states, (b) at all times that aggregate Advances Outstanding are more than $100,000,000 and equal to or less than $200,000,000, a requirement that the Collateral Pool consist of at least ten (10) Mortgaged Properties located in at least six (6) states, (c) at all times that aggregate Advances Outstanding are more than $200,000,000 and equal to or less than $300,000,000, a requirement that the Collateral Pool consist of at least twenty (20) Mortgaged Properties located in at least seven (7) states, and (c) at all times that aggregate Advances Outstanding are more than $300,000,000, a requirement that the Collateral Pool consist of at least twenty-five (25) Mortgaged Properties located in at least seven (7) states.

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          “Governmental Approval” means an authorization, permit, consent, approval, license, registration or exemption from registration or filing with, or report to, any Governmental Authority.

          “Governmental Authority” means any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

          “Gross Revenues” means, for any specified period, with respect to any Multifamily Residential Property, all income in respect of such Multifamily Residential Property as reflected on the certified operating statement for such specified period as adjusted to exclude unusual income (e.g. temporary or nonrecurring income), income not allowed under DUS guidelines as shown in Section 403.02 of Part III of the DUS Guide (e.g. interest income, furniture income, etc.), and the value of any unreflected concessions.

          “Hazardous Materials”, with respect to any Mortgaged Property, shall have the meaning given that term in the Security Instrument encumbering the Mortgaged Property.

          “Hazardous Materials Law”, with respect to any Mortgaged Property, shall have the meaning given that term in the Security Instrument encumbering the Mortgaged Property.

          “Hazardous Substance Activity” means any storage, holding, existence, release, spill, leaking, pumping, pouring, injection, escaping, deposit, disposal, dispersal, leaching, migration, use, treatment, emission, discharge, generation, processing, abatement, removal, disposition, handling or transportation of any Hazardous Materials from, under, into or on any Mortgaged Property in violation of Hazardous Materials Laws, including the discharge of any Hazardous Materials emanating from any Mortgaged Property in violation of Hazardous Materials Laws through the air, soil, surface water, groundwater or property and also including the abandonment or disposal of any barrels, containers and other receptacles containing any Hazardous Materials from or on any Mortgaged Property in violation of Hazardous Materials Laws, in each case whether sudden or nonsudden, accidental or nonaccidental.

          “Hedge” means a Swap, a Cap or a combination of a Swap and a Cap, or another interest rate protection instrument satisfying the requirements of Article XXI.

          “Hedge Documents” has the meaning set forth in Section 21.02.

          “Hedge Requirement Amount” means the amount by which the Variable Facility Commitment exceeds, when added to the “Variable Facility Commitment” under the Other Credit Facility, $441,756,000.

          “Hedge Security Agreement” means, with respect to a Hedge, the Interest Rate Hedge Security, Pledge and Assignment Agreement between Borrower and Lender, for

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the benefit of Lender, in the form attached as Exhibit GG to this Agreement as such agreement may be amended, modified, supplemented or restated from time to time.

           “Impositions” means, with respect to any Mortgaged Property, all (1) water and sewer charges which, if not paid, may result in a lien on all or any part of the Mortgaged Property, (2) premiums for fire and other hazard insurance, rent loss insurance and such other insurance as Lender may require under any Security Instrument, (3) Taxes, and (4) amounts for other charges and expenses which Lender at any time reasonably deems necessary to protect the Mortgaged Property, to prevent the imposition of liens on the Mortgaged Property, or otherwise to protect Lender’s interests.

          “Indebtedness” means, with respect to any Person, as of any specified date, without duplication, all:

               (a) indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than (i) current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices, and (ii) for construction of improvements to property, if such person has a non-contingent contract to purchase such property);

               (b) other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument;

               (c) obligations of such Person under any lease of property, real or personal, the obligations of the lessee in respect of which are required by GAAP to be capitalized on a balance sheet of the lessee or to be otherwise disclosed as such in a note to such balance sheet;

               (d) obligations of such Person in respect of acceptances (as defined in Article 3 of the Uniform Commercial Code of the District of Columbia) issued or created for the account of such Person;

               (e) liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment of such liabilities; and

               (f) as to any Person (“guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of a primary obligation (as defined below) with respect to which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing, or in effect guaranteeing, any indebtedness, lease, dividend or other obligation (“primary obligations”) of any third person (“primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, to (1) purchase any such primary obligation or any property constituting direct or indirect security therefor, (2) advance or supply funds for the purchase or payment of any such primary obligation or to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (3) purchase property, securities or services

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primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (4) otherwise assure or hold harmless the owner of any such primary obligation against loss in respect of the primary obligation, provided, however, that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation of any guaranteeing person shall be deemed to be the lesser of (i) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made and (ii) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Contingent Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Contingent Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by Owner in good faith.

          “Initial Advance” means the Variable Advance Outstanding on the date hereof in the principal amount of $436,608,000.

          “Initial Closing Date” means August 22, 2002.

          “Initial Commitment” means the portion of the Commitment equal to or less than $183,372,000. Any portion of the Commitment equal to or less than $183,372,000 shall be deemed to be part of the Initial Commitment.

          “Initial Mortgaged Properties” means the Multifamily Residential Properties described on Exhibit A to this Agreement and which represent the Multifamily Residential Properties which comprise the Collateral Pool on the date hereof.

          “Initial Security Instruments” means the Security Instruments covering the Initial Mortgaged Properties.

          “Initial Valuation” means, when used with reference to specified Collateral, the Valuation initially performed for the Collateral as of the date on which the Collateral was added to the Collateral Pool, as set forth in Exhibit A to this Agreement.

          “Insurance Policy” means, with respect to a Mortgaged Property, the insurance coverage and insurance certificates evidencing such insurance required to be maintained pursuant to the Security Instrument encumbering the Mortgaged Property.

          “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended. Each reference to the Internal Revenue Code shall be deemed to include (a) any successor internal revenue law and (b) the applicable regulations whether final, temporary or proposed.

          “Lease” means any lease, any sublease or subsublease, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in any Mortgaged Property, and every

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modification, amendment or other agreement relating to such lease, sublease, subsublease or other agreement entered into in connection with such lease, sublease, subsublease or other agreement, and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

          “Lender” shall have the meaning set forth in the first paragraph of this Agreement, but shall refer to any replacement Lender if the initial Lender is replaced pursuant to the terms of Section 19.04.

          “Lien” means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance (including both consensual and non-consensual liens and encumbrances).

          “Loan Documents” means this Agreement, the Notes, the Advance Confirmation Instruments for the Variable Advances, the Security Documents, all documents executed by the Borrower pursuant to the General Conditions set forth in Article XI of this Agreement and any other documents executed by the Borrower from time to time in connection with this Agreement or the transactions contemplated by this Agreement.

          “Loan to Value Ratio ” means, for a Mortgaged Property, for any specified date, the ratio (expressed as a percentage) of --

(a)          the Allocable Facility Amount of the subject Mortgaged Property on the specified date,

to

(b)          the Valuation most recently obtained prior to the specified date for the subject Mortgaged Property.

          “Loan Year” means the 12-month period from the first day of the first calendar month after the Initial Closing Date to and including the last day before the first anniversary of the Initial Closing Date, and each 12-month period thereafter.

          “Material Adverse Effect” means, with respect to any circumstance, act, condition or event of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, or circumstance or circumstances, whether or not related, a material adverse change in or a materially adverse effect upon any of (a) the business, operations, property or condition (financial or otherwise) of the Borrower, (b) the present or future ability of the Borrower to perform the Obligations for which it is liable, (c) the validity, priority, perfection or enforceability of this Agreement or any other Loan Document or the rights or remedies of the Lender under any Loan Document, or (d) the value of, or the Lender’s ability to have recourse against, any Mortgaged Property.

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          “MBS” means a mortgage-backed security which is “backed” by an interest in the Notes and the Collateral Pool securing the Notes, which interest permits the holder of the MBS to participate in the Notes and the Collateral Pool to the extent of such Advance.

          “MBS Imputed Interest Rate” shall have the meaning set forth in Section 2.05(a).

          “MBS Issue Date” means the date on which a Fannie Mae MBS is issued by Fannie Mae.

          “MBS Delivery Date” means the date on which a Fannie Mae MBS is delivered by Fannie Mae.

          “MBS Pass-Through Rate” for a Fixed Facility Advance means the interest rate as determined by the Lender (rounded to three places) payable in respect of the Fannie Mae MBS issued pursuant to the MBS Commitment backed by the Fixed Facility Advance as determined in accordance with Section 4.01.

          “Mortgaged Properties” means, collectively, the Additional Mortgaged Properties, the Substituted Mortgaged Properties and the Initial Mortgaged Properties, but excluding each Collateral Release Property from and after the date of the release of the Collateral Release Property from the Collateral Pool.

          “Multifamily Residential Property” means a residential property, located in the United States, containing five or more dwelling units in which not more than twenty percent (20%) of the net rentable area is or will be rented to non-residential tenants, and conforming to the requirements of Chapter 2 of Part III of the DUS Guide (Property Requirements).

          “Net Operating Income” means, for any specified period, with respect to any Multifamily Residential Property, the aggregate net income during such period equal to Gross Revenues during such period less the aggregate Operating Expenses during such period. If a Mortgaged Property is not owned by the Borrower or an Affiliate of the Borrower for the entire specified period, the Net Operating Income for the Mortgaged Property for the time within the specified period during which the Mortgaged Property was owned by the Borrower or an Affiliate of the Borrower shall be the Mortgaged Property’s pro forma net operating income determined by the Lender in accordance with the underwriting procedures set forth in Chapter 4 of Part III of the DUS Guide (Determination of Loan Amount).

          “Note” means any Fixed Facility Note or the Variable Facility Note.

          “Obligations” means the aggregate of the obligations of the Borrower under this Agreement and the other Loan Documents.

          “Operating Expenses” means, for any period, with respect to any Multifamily Residential Property, all expenses in respect of the Multifamily Residential Property, as determined by the Lender based on the certified operating statement for such specified

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period as adjusted to provide for the following: (i) all appropriate types of expenses, including a management fee and deposits to the Replacement Reserves (whether funded or not), are included in the total operating expense figure; (ii) upward adjustments to individual line item expenses to reflect market norms or actual costs and correct any unusually low expense items, which could not be replicated by a different owner or manager (e.g., a market rate management fee will be included regardless of whether or not a management fee is charged, market rate payroll will be included regardless of whether shared payroll provides for economies, etc.); and (iii) downward adjustments to individual line item expenses to reflect unique or aberrant costs (e.g., non-recurring capital costs, non-operating borrower expenses, etc.).

          “Organizational Certificate” means a certificate of the Borrower in the form attached as Exhibit F to this Agreement.

          “Organizational Documents” means all certificates, instruments and other documents pursuant to which an organization is organized or operates, including but not limited to, (i) with respect to a corporation, its articles of incorporation and bylaws, (ii) with respect to a limited partnership, its limited partnership certificate and partnership agreement, (iii) with respect to a general partnership or joint venture, its partnership or joint venture agreement and (iv) with respect to a limited liability company, its articles of organization and operating agreement.

          “Original Expansion Commitment” means the portion of the Commitment in excess of $183,372,000 but less than $413,374,000. Any portion of the Commitment in excess of $183,372,000 but less than $413,374,000 shall be deemed to be part of the Original Expansion Commitment.

          “Outstanding” means, when used in connection with promissory notes, other debt instruments or Advances, for a specified date, promissory notes or other debt instruments which have been issued, or Advances which have been made, but have not been repaid in full as of the specified date.

          “Ownership Interests” means, with respect to any entity, any ownership interests in the entity and any economic rights (such as a right to distributions, net cash flow or net income) to which the owner of such ownership interests is entitled.

          “PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

          “Permits” means all permits, or similar licenses or approvals issued and/or required by an applicable Governmental Authority or any Applicable Law in connection with the ownership, use, occupancy, leasing, management, operation, repair, maintenance or rehabilitation of any Mortgaged Property or the Borrower’s business.

          “Permitted Liens” means, with respect to a Mortgaged Property, (i) the exceptions to title to the Mortgaged Property set forth in the Title Insurance Policy for the Mortgaged Property which are approved by the Lender, (ii) the Security Instrument

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encumbering the Mortgaged Property, (iii) any other Liens approved by the Lender, and (iv) Leases.

          “Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private).

          “Potential Event of Default” means any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

          “Price” means, with respect to an Advance, the proceeds of the sale of the MBS backed by the Advance.

          “Property” means any estate or interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

          “Rate Confirmation Form” shall have the meaning set forth in Section 4.01(c).

          “Rate Preservation Fee” means, for any month following December 31, 2005, an amount equal to the product obtained by multiplying: (i) 1/12, by (ii) 15 basis points, by (iii) the Reserved Amount. The Rate Preservation Fee shall be paid monthly in arrears.

          “Rate Setting Date” shall have the meaning set forth in Section 4.01(b).

          “Rate Setting Form” shall have the meaning set forth in Section 4.01(b).

          “REIT” means Mid-America Apartment Communities, Inc., a Tennessee corporation.

          “Release Fee” means, with respect to each Mortgaged Property released from the Collateral Pool pursuant to Article VII, a fee equal to $15,000. Provided however, if a Collateral Release Property is released from the Collateral Pool in conjunction with such Mortgaged Property being added to the collateral pool under the Other Credit Agreement, the Release Fee shall be waived for the aggregate of the first three (3) transactions which are either Mortgaged Properties transferred from the Collateral Pool under this Agreement to the collateral pool under the Other Credit Agreement, or Mortgaged Properties transferred from the collateral pool under the Other Credit Agreement to the Collateral Pool under this Agreement.

          “Release Price” shall have the meaning set forth in Section 7.02(c).

          “Rent Roll” means, with respect to any Multifamily Residential Property, a rent roll prepared and certified by the owner of the Multifamily Residential Property, on Fannie Mae Form 4243, as set forth in Exhibit III-3 of the DUS Guide, or on another form approved by the Lender and containing substantially the same information as Form 4243 requires.

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          “Replacement Reserve Agreement” means a Replacement Reserve and Security Agreement, reasonably required by the Lender, and completed in accordance with the requirements of the DUS Guide.

          “Request” means a Collateral Addition Request, a Collateral Substitution Request, a Collateral Release Request, a Conversion Request, a Credit Facility Expansion Request, a Credit Facility Termination Request, a Future Advance Request, a Reborrowing Request or a Variable Facility Termination Request.

          “Reserved Amount” means $163,392,000 unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $163,392,000. The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

          “Revolving Credit Endorsement” means an endorsement to a Title Insurance Policy which contains substantially the same coverages, and is subject to substantially the same or fewer exceptions (or such other exceptions as the Lender may approve), as the form attached as Exhibit H to this Agreement.

          “Security” means a “security” as set forth in Section 2(1) of the Securities Act of 1933, as amended.

          “Security Documents” means the Security Instruments, the Hedge Secuirty Agreement, the Replacement Reserve Agreements and any other documents executed by the Borrower from time to time to secure the Borrower’s obligations under the Loan Documents.

          “Security Instrument” means, for each Mortgaged Property, a separate Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement given by the Borrower to or for the benefit of the Lender to secure the obligations of the Borrower under the Loan Documents. With respect to each Mortgaged Property owned by the Borrower, the Security Instrument shall be substantially in the form published by Fannie Mae for use in the state in which the Mortgaged Property is located. The amount secured by the Security Instrument shall be equal to the Commitment in effect from time to time.

          “Senior Management” means (i) the Chief Executive Officer, Chairman of the Board, President, Chief Financial Officer and Chief Operating Officer of the REIT or OP and (ii) any other individuals with responsibility for any of the functions typically performed in a corporation by the officers described in clause (i).

          “Single-Purpose” means, with respect to a Person which is any form of partnership or corporation or limited liability company, that such Person at all times since its formation:

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(i)	has been a duly formed and existing partnership, corporation or limited liability company, as the case may be;
(ii)	has been duly qualified in each jurisdiction in which such qualification was at such time necessary for the conduct of its business;
(iii)	has complied with the provisions of its organizational documents and the laws of its jurisdiction of formation in all respects;
(iv)	has observed all customary formalities regarding its partnership or corporate existence, as the case may be;
(v)	has accurately maintained its financial statements, accounting records and other partnership or corporate documents separate from those of any other Person;
(vi)	has not commingled its assets or funds with those of any other Person;
(vii)	has accurately maintained its own bank accounts and books and accounts separate from those of any other Person;
(viii)	has paid its own liabilities from its own separate assets;
(ix)	has identified itself in all dealings with creditors (other than trade creditors in the ordinary course of business and creditors for the construction of improvements to property on which such Person has a non-contingent contract to purchase such property) under its own name and as a separate and distinct entity;
(x)	has not identified itself as being a division or a part of any other Person;
(xi)	has not identified any other Person as being a division or a part of such Person;
(xii)	has been adequately capitalized in light of its contemplated business operations;
(xiii)	has not assumed, guaranteed or become obligated for the liabilities of any other Person (except in connection with the Credit Facility or the endorsement of negotiable instruments in the ordinary course of business) or held out its credit as being available to satisfy the obligations of any other Person;
(xiv)	has not acquired obligations or securities of any other Person;
(xv)	in relation to the Borrower, except for loans made in the ordinary course of business to Affiliates, has not made loans or advances to any other Person;

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(xvi)	has not entered into and was not a party to any transaction with any Affiliate of such Person, except in the ordinary course of business and on terms which are no less favorable to such Person than would be obtained in a comparable arm’s-length transaction with an unrelated third party;
(xvii)	has conducted its own business in its own name;
(xviii)	has paid the salaries of its own employees, if any, and maintained a sufficient number of employees in light of its contemplated business operations;
(xix)	has allocated fairly and reasonably any overhead for shared office space;
(xx)	has not pledged its assets for the benefit of any other entity or made any loans or advances to any person or entity;
(xxi)	has not engaged in a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Internal Revenue Code;
(xxii)	has not acquired obligations or securities of its partners or Affiliates; and
(xxiii)	has corrected any known misunderstanding regarding its separate identity.

          “SMSA” means a “standard metropolitan statistical area,” as defined from time to time by the United States Office of Management and Budget.

          “Standby Fee” means, for any month, an amount equal to the sum obtained by adding the product of (i) 1/12, by (ii) the amount shown as the Standby Fee on the Summary of Credit Facility Structure, by (iii) the Unused Capacity.

          “Subsequent Hedge” has the meaning set forth in Section 21.01.

          “Subsidiary” means, when used with reference to a specified Person, (i) any Person that, directly or indirectly, through one or more intermediaries, is controlled by the specified Person, (ii) any Person of which the specified Person is, directly or indirectly, the owner of more than 50% of any voting class of Ownership Interests or (iii) any Person (A) which is a partnership and (B) of which the specified Person is a general partner and owns more than 50% of the partnership interests.

          “Substituted Mortgaged Property” means each Multifamily Residential Property owned by the Borrower (either in fee simple or as tenant under a ground lease meeting all of the requirements of the DUS Guide) and added to the Collateral Pool after the Initial Closing Date in connection with substitution of Collateral as permitted by Section 7.04 of this Agreement.

          “Summary of Credit Facility Structure” means the summary of credit facility structure attached to this Agreement as Schedule I.

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           “Surveys” means the as-built surveys of the Mortgaged Properties prepared in accordance with the requirements of Section 113 of the DUS Guide, or otherwise approved by the Lender.

          “Swap” means an interest rate swap provided pursuant to and satisfying the requirements of Article XXI of this Agreement.

          “Swap Rate” has the meaning set forth in Section 21.02.

          “Taxes” means all taxes, assessments, vault rentals and other charges, if any, general, special or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a lien, on the Mortgaged Properties.

          “Term of this Agreement” shall be determined as provided in Section 23.10 to this Agreement.

          “Termination Date” means, at any time during which Fixed Facility Advances are Outstanding, the latest maturity date for any Fixed Facility Advance Outstanding, and, at any time during which Fixed Facility Advances are not Outstanding, the Variable Facility Termination Date.

          “Three Month LIBOR Rate” means the London interbank offered rate for three-month U.S. dollar deposits, as such rate is reported in The Wall Street Journal. In the event that a rate is not published for Three-Month LIBOR, then the nearest equivalent duration London interbank offered rate for U.S. Dollar deposits shall be selected at Lender’s reasonable discretion. If the publication of Three-Month LIBOR is discontinued, Lender shall determine such rate from another equivalent source selected by Lender in its reasonable discretion.

          “Tie-In Endorsement” means an endorsement to a Title Insurance Policy which contains substantially the same coverages, and is subject to substantially the same or fewer exceptions (or such other exceptions as the Lender may approve), as the form attached as Exhibit J to this Agreement.

          “Title Company” means Fidelity National Title Insurance Company of New York.

          “Title Insurance Policies” means the mortgagee’s policies of title insurance issued by the Title Company from time to time relating to each of the Security Instruments, conforming to the requirements of Section 111 of the DUS Guide, together with such endorsements, coinsurance, reinsurance and direct access agreements with respect to such policies as the Lender may, from time to time, consider necessary or appropriate, whether or not required by the DUS Guide, including Revolving Credit Endorsements, if available, and Tie-In Endorsements, if available, and with a limit of liability under the policy (subject to the limitations contained in Sections 6(a)(i) and 6(a)(iii) of the Stipulations and Conditions of the policy) equal to the Commitment.

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          “Trailing 12 Month Period” means, for any specified date, the 12 month period ending with the last day of the most recent Calendar Quarter for which financial statements have been delivered by the Borrower to the Lender pursuant to Sections 13.04(c) and (d).

          “Transfer” means (i) a sale, assignment, lease, pledge, transfer or other disposition (whether voluntary or by operation of law) of, or the granting or creating of a lien, encumbrance or security interest in, any estate, rights, title or interest in a Mortgaged Property, or any portion thereof, or (ii) a sale, assignment, pledge, transfer or other disposition of any interest in the Borrower, or (iii) the issuance or other creation of new ownership interests in the Borrower other than (a) sales of the stock of the REIT on the New York Stock Exchange or (b) private placements of ownership interests in the Borrower that do not result in a Change of Control or any other partnership, corporation, real estate investment trust or other entity that has a direct or indirect ownership interest in the Borrower, or (iv) a merger or consolidation of the Borrower into another entity or of another entity into the Borrower, or (v) the reconstitution of the Borrower from one type of entity to another type of entity, or (vi) the amendment, modification or any other change in the governing instrument or instruments of such Person which has the effect of changing the relative powers, rights, privileges, voting rights or economic interests of the ownership interests in such Person. “Transfer” does not include (i) a conveyance of the Mortgaged Property at a judicial or non-judicial foreclosure sale under any Security Instrument or (ii) the Mortgaged Property becoming part of a bankruptcy estate by operation of law under the United States Bankruptcy Code.

          “Unused Capacity” means, for any month, the sum of the daily average during such month of (i) the undrawn amount of the Variable Facility Commitment available under Article II of this Agreement for the making of Variable Advances plus (ii) the undrawn amount of the Fixed Facility Commitment available under Article III of this Agreement for the making of Fixed Facility Advances, without regard to any unclosed Requests or to the fact that a Request must satisfy conditions precedent.

          “Valuation” means, for any specified date, with respect to a Multifamily Residential Property, (a) if an Appraisal of the Multifamily Residential Property was more recently obtained than a Cap Rate for the Multifamily Residential Property, the Appraised Value of such Multifamily Residential Property, or (b) if a Cap Rate for the Multifamily Residential Property was more recently obtained than an Appraisal of the Multifamily Residential Property, the value derived by dividing--

(i)	the Net Operating Income of such Multifamily Residential Property for the Trailing 12 Month Period, by
(ii)	the most recent Cap Rate determined by the Lender.

Notwithstanding the foregoing, any Valuation for a Multifamily Residential Property calculated for a date occurring before the first anniversary of the date on which the Multifamily Residential Property becomes a part of the Collateral Pool shall equal the Appraised Value of such Multifamily Residential Property, unless the Lender determines

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that changed market or property conditions warrant that the value be determined as set forth in the preceding sentence.

          “Variable Advance” means a loan made by the Lender to the Borrower under the Variable Facility Commitment.

          “Variable Facility” means the agreement of the Lender to make Advances to the Borrower pursuant to Section 2.01.

          “Variable Facility Availability Period” means the period beginning on the Initial Closing Date and ending on the 90th day before the Variable Facility Termination Date.

          “Variable Facility Commitment” means an aggregate amount of $436,608,000, which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, and less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          “Variable Facility Fee” means the applicable variable facility fee shown on the Summary of Credit Facility Structure as adjusted, if applicable, as set forth in Section 15.03 of this Agreement.

          “Variable Facility Note” means, the promissory note, in the form attached as Exhibit I to this Agreement, which has been issued by the Borrower to the Lender to evidence the Borrower’s obligation to repay Variable Advances.

          “Variable Facility Termination Date” means the variable facility termination date shown on the Summary of Credit Facility Structure attached hereto.

          “Voting Equity Capital” means Securities or partnership interests of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the board of directors (or Persons performing similar functions).

ARTICLE II
THE VARIABLE FACILITY COMMITMENT

SECTION 2.01 Variable Facility Commitment. Subject to the terms, conditions and limitations of this Agreement, the Lender agrees to make Variable Advances to the Borrower from time to time during the applicable Variable Facility Availability Period. The aggregate unpaid principal balance of the Variable Advances Outstanding at any time shall not exceed the Variable Facility Commitment. Subject to the terms, conditions and limitations of this Agreement, the Borrower may re-borrow any amounts under the Variable Facility which it has previously borrowed and repaid under the Variable Facility.

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SECTION 2.02 Requests for Variable Advances. The Borrower shall request a Variable Advance by giving the Lender a Future Advance Request in accordance with Section 5.02.

SECTION 2.03 Maturity Date of Variable Advances. Regardless of the date on which a Variable Advance is made, the maturity date of each Variable Advance shall be a date selected by the Borrower in its Request for the Variable Advance, which date shall be the last day of a calendar month occurring:

          (a)          no earlier than the date which completes three full months after the Closing Date for the Variable Advance; and

          (b)          no later than the date which completes nine full months after the Closing Date for the Variable Advance.

For these purposes, a year shall be deemed to consist of 12 30-day months. For example, the date which completes three full months after September 15 shall be December 15; and the date which completes three full months after November 30 shall be February 28.

SECTION 2.04 Interest on Variable Facility Advances.

               (a)          Discount. Each Variable Advance shall be a discount loan. The original stated principal amount of a Variable Advance shall be the sum of the Price of the Variable Advance and the Discount of the Variable Advance. The Price and Discount of each Variable Advance shall be determined in accordance with the procedures set out in Section 4.01. The proceeds of the Variable Advance made available by the Lender to the Borrower will equal the Price of the Variable Advance. The Borrower shall pay to the Lender, in advance of the Lender making a Variable Advance requested by the Borrower, the entire Discount for the Variable Advance.

               (b)          Partial Month Interest. Notwithstanding anything to the contrary in this Section, if a Variable Advance is not made on the first day of a calendar month, and the MBS Issue Date for the MBS backed by the Variable Advance is the first day of the month following the month in which the Variable Advance is made, the Borrower shall pay interest on the original stated principal amount of the Variable Advance for the partial month period commencing on the Closing Date for the Variable Advance and ending on the last day of the calendar month in which the Closing Date occurs, at a rate per annum equal to the greater of (i) the Coupon Rate for the Variable Advance as determined in accordance with Section 2.05(b) and (ii) a rate determined by the Lender, based on the Lender’s cost of funds and approved in advance, in writing, by the Borrower, pursuant to the procedures mutually agreed upon by the Borrower and the Lender.

               (c)          Variable Facility Fee. In addition to paying the Discount and the partial month interest, if any, the Borrower shall pay monthly installments of the Variable Facility Fee to the Lender on account of each Variable Advance over the whole number of calendar months the MBS backed by the Variable Advance is to run from the MBS Issue Date to the maturity date of the MBS. The Variable Facility Fee shall be payable in advance, in accordance with the terms of the Variable Facility Note. The first installment shall be payable on or prior to the Closing Date for the Variable Advance and shall apply to the first full calendar month of the

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MBS backed by the Variable Advance. Subsequent installments shall be payable on the first day of each calendar month, commencing on the first day of the second full calendar month of such MBS, until the maturity of such MBS. Each installment of the Variable Facility Fee shall be in an amount equal to the product of multiplying (i) the Variable Facility Fee, by (ii) the amount of the Variable Advance, by (iii) 1/12.

SECTION 2.05 Coupon Rates for Variable Advances. The Coupon Rate for a Variable Advance shall be a rate, per annum, as follows:

               (a)          The Coupon Rate for a Variable Advance shall equal the sum of (i) an interest rate as determined by the Lender pursuant to Section 4.01 of this Agreement (rounded to three places) payable for the Fannie Mae MBS pursuant to the MBS Commitment backed by the Variable Advance (“MBS Imputed Interest Rate”) and (ii) the Variable Facility Fee.

               (b)          Notwithstanding anything to the contrary in this Section, if a Variable Advance is not made on the first day of a calendar month, and the MBS Issue Date for the MBS backed by the Variable Advance is the first day of the month following the month in which the Variable Advance is made, the Coupon Rate for such Variable Advance for such period shall be the greater of (i) the rate for the Variable Advance determined in accordance with subsection (a) of this Section and (ii) a rate determined by the Lender, based on the Lender’s cost of funds, and approved in advance, in writing, by the Borrower, pursuant to procedures mutually agreed upon by the Borrower and the Lender.

SECTION 2.06 Variable Facility Note. The obligation of the Borrower to repay the Variable Advances will be evidenced by the Variable Facility Note. The Variable Facility Note shall be payable to the order of the Lender and shall be made in the amount of the Variable Facility Commitment.

SECTION 2.07 [Intentionally Deleted.]

SECTION 2.08 Reinstatement of Variable Commitment Upon Maturity of Fixed Facility Advances. If any Fixed Facility Advance matures prior to the end of the Variable Facility Availability Period, Borrower may elect to reborrow any or all of such maturing Fixed Facility Advance and to increase the Variable Commitment by an amount equal to the amount desired to be reborrowed by the Borrower on the following terms and conditions:

(a)

Request. In order to reborrow all or a portion of a maturing Fixed Facility Advance, the Borrower shall deliver a written request for such reborrowing (the “Reborrowing Request”) to the Lender, in the form attached as Exhibit CC hereto.

(b)

Closing. If none of the limitations contained in Section 2.09 are violated, and all conditions contained in Section 2.10 are satisfied, the Lender shall permit the requested reborrowing, at a Closing to be held at offices designated by the Lender on the maturity date of the Fixed Facility Advance to be reborrowed (or on such other date to which the Borrower and the Lender may agree), by executing and delivering, at the sole cost and expense of the Borrower, an amendment to this Agreement, in the form attached as Exhibit R hereto, together

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with an amendment to each Security Document (if required by the Lender) and other applicable Loan Documents, in form and substance satisfactory to the Lender, reflecting the reborrowing. The documents and instruments referred to in the preceding sentence are referred to in this Article as the “Reborrowing Documents.”

Section 2.09 Limitations on Right to Reborrow. The right of the Borrower to reborrow all or a portion of a maturing Fixed Facility Advance is subject to the following limitations:

(a)	Closing Date. The Closing Date shall occur during the Variable Facility Availability Period.
(b)	Minimum Request. Each Request for a reborrowing shall be in the minimum amount of $5,000,000.
(c)	Limitation on Reborrowing. In no event will a reborrowing of a Fixed Facility Advance be permitted if the Fixed Facility Advance is prepaid prior to its Maturity Date

SECTION 2.10 Conditions Precedent to Reborrowing. The reborrowing of all or a portion of a maturing Fixed Facility Advance is subject to the satisfaction of the following conditions precedent:

(a)	After giving effect to the requested reborrowing, the Coverage and LTV Tests will be satisfied;
(b)	Payment by the Borrower in full of the maturing Fixed Facility Advance which the Borrower has designated for reborrowing, together with any other amounts due with respect to the repayment of such Fixed Facility Advance;
(c)	The receipt by the Lender of an endorsement to each Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date and other exceptions approved by the Lender;
(d)	Receipt by the Lender of one or more counterparts of each Reborrowing Document, dated as of the Closing Date, signed by each of the parties (other than the Lender) who is a party to such Reborrowing Document;
(e)	In the event that Fannie Mae is no longer in the business of purchasing loans of the type and size of the loans evidenced by this Agreement without requiring interest rate protection, the Borrower shall make arrangements for such interest rate protection. Such protection shall be a Hedge satisfying the requirements of Article XXI with respect to any amounts reborrowed pursuant to Sections 2.08, 2.09 and 2.10 of this Agreement; and
(f)	The satisfaction of all applicable General Conditions set forth in Article XI.

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ARTICLE III
THE FIXED FACILITY COMMITMENT

SECTION 3.01 Fixed Facility Commitment. Subject to the terms, conditions and limitations set forth in this Article, the Lender agrees to make Fixed Facility Advances to the Borrower from time to time during the Fixed Facility Availability Period. The aggregate original principal of the Fixed Facility Advances shall not exceed the Fixed Facility Commitment. The borrowing of a Fixed Facility Advance shall permanently reduce the Fixed Facility Commitment by the original principal amount of the Fixed Facility Advance. The Borrower may not re-borrow any part of the Fixed Facility Advance which it has previously borrowed and repaid, provided, however, that a Fixed Facility Advance that matures prior to the end of the Variable Facility Availability Period may be reborrowed as a Variable Advance pursuant to the terms of Section 2.08 of this Agreement.

SECTION 3.02 Requests for Fixed Facility Advances. The Borrower shall request a Fixed Facility Advance by giving the Lender a Future Advance Request in accordance with Section 5.02, as applicable.

SECTION 3.03 Maturity Date of Fixed Facility Advances; Amortization. The maturity date of each Fixed Facility Advance shall be the maturity date selected by the Borrower, provided that (A) in the case of a Fixed Facility Advance drawn from the Initial Commitment, such Maturity Date shall not be earlier than the date five (5) years after the date of such Advance and shall not be later than November 10, 2014, and (B) in the case of a Fixed Facility Advance drawn from the Original Expansion Commitment, such Maturity Date shall not be earlier than the date five (5) years after the date of such Advance and shall not be later than December 1, 2014. The principal of each Fixed Facility Advance shall, at the election of the Borrower, which election shall be made at the time of the first Conversion Request or Credit Facility Expansion Request relating to a Fixed Facility Commitment (which election shall apply to all Fixed Facility Advances) be amortized on a 30-year schedule or shall require payments of interest only.

SECTION 3.04 Interest on Fixed Facility Advances.

               (a)          Advances. Each Fixed Facility Advance shall bear interest at a rate, per annum, equal to the sum of (i) the MBS Pass-Through Rate determined for such Fixed Facility Advance and (ii) the Fixed Facility Fee.

               (b)          Partial Month Interest. Notwithstanding anything to the contrary in this Section, if a Fixed Facility Advance is not made on the first day of a calendar month, and the MBS Issue Date for the MBS backed by the Fixed Facility Advance is the first day of the month following the month in which the Fixed Facility Advance is made, the Borrower shall pay interest on the original stated principal amount of the Fixed Facility Advance for the partial month period commencing on the Closing Date for the Fixed Facility Advance and ending on the last day of the calendar month in which the Closing Date occurs at a rate, per annum, equal to the greater of (i) the interest rate for the Fixed Facility Advance described in the first sentence of this Section and (ii) a rate determined by the Lender, based on the Lender’s cost of funds, and

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approved in advance, in writing, by the Borrower, pursuant to procedures mutually agreed upon by the Borrower and the Lender.

SECTION 3.05 Coupon Rates for Fixed Facility Advances. The Coupon Rate for a Fixed Facility Advance shall be the rate of interest applicable to such Fixed Facility Advance pursuant to Section 3.04.

SECTION 3.06 Fixed Facility Note. The obligation of the Borrower to repay a Fixed Facility Advance will be evidenced by a Fixed Facility Note. The Fixed Facility Notes shall be payable to the order of the Lender and shall be made in the original principal amount of each Fixed Facility Advance.

SECTION 3.07 Conversion of Commitment from Variable Facility Commitment to Fixed Facility Commitment. The Borrower shall have the right, from time to time during the Fixed Facility Availability Period, to convert all or a portion of a Variable Facility Commitment to the Fixed Facility Commitment, in which event the Variable Facility Commitment shall be reduced by, and the Fixed Facility Commitment shall be increased by, the amount of the conversion.

          (a)          Request. In order to convert all or a portion of the Variable Facility Commitment to the Fixed Facility Commitment, the Borrower shall deliver a written request for a conversion (“Conversion Request”) to the Lender, in the form attached as Exhibit K to this Agreement. Each Conversion Request shall be accompanied by a designation of the amount of the conversion and a designation of any Variable Advances Outstanding which will be prepaid on or before the Closing Date for the conversion as required by Section 3.08(c).

          (b)          Closing. If none of the limitations contained in Section 3.08 is violated, and all conditions contained in Section 3.09 are satisfied, the Lender shall permit the requested conversion, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within 30 Business Days after the Lender’s receipt of the Conversion Request (or on such other date to which the Borrower and the Lender may agree), by executing and delivering, all at the sole cost and expense of the Borrower, an amendment to this Agreement, in the form attached as Exhibit L to this Agreement, together with an amendment to each Security Document and other applicable Loan Documents, in form and substance satisfactory to the Lender, reflecting the change in the Fixed Facility Commitment and the Variable Facility Commitment. The documents and instruments referred to in the preceding sentence are referred to in this Article as the “Conversion Documents.”

SECTION 3.08 Limitations on Right to Convert. The right of the Borrower to convert all or a portion of the Variable Facility Commitment to the Fixed Facility Commitment is subject to the following limitations:

          (a)          Closing Date. The Closing Date shall occur during the Fixed Facility Availability Period.

          (b)          Minimum Request. Each Request for a conversion shall be in the minimum amount of $5,000,000.

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          (c)          Obligation to Prepay Variable Advances. If, after the conversion, the aggregate unpaid principal balance of all Variable Advances Outstanding will exceed the Variable Facility Commitment, the Borrower shall be obligated to prepay, as a condition precedent to the conversion, an amount of Variable Advances Outstanding which is at least equal to the amount of the excess.

SECTION 3.09 Conditions Precedent to Conversion. The conversion of all or a portion of the Variable Facility Commitment to the Fixed Facility Commitment is subject to the satisfaction of the following conditions precedent on or before the Closing Date:

               (a)          After giving effect to the requested conversion, the Coverage and LTV Tests will be satisfied;

               (b)               Prepayment by the Borrower in full of any Variable Advances Outstanding which the Borrower has designated for payment, together with any associated prepayment premiums and other amounts due with respect to the prepayment of such Variable Advances;

               (c)               The receipt by the Lender of an endorsement to each Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date and other exceptions approved by the Lender;

               (d)          Receipt by the Lender of one or more counterparts of each Conversion Document, dated as of the Closing Date, signed by each of the parties (other than the Lender) who is a party to such Conversion Document; and

               (e)          The satisfaction of all applicable General Conditions set forth in Article XI.

SECTION 3.10 Defeasance. At such time as the Borrower elects to convert all or a portion of the Variable Facility Commitment to a Fixed Facility Commitment pursuant to Section 3.07 of this Agreement, or elects that any expansion of the Commitment shall be a Fixed Facility Commitment, the Borrower shall select defeasance or yield maintenance with respect to prepayments of Fixed Facility Advances on the Conversion Request or Credit Facility Expansion Request for the first Fixed Facility Commitment. If defeasance is selected, this Section 3.10 shall apply. The election of the Borrower as to defeasance or yield maintenance in the first Conversion Request or Credit Facility Expansion Request relating to a Fixed Facility Commitment shall apply to all Fixed Facility Advances during the term of this Agreement. Fixed Facility Advances are not prepayable at any time, provided that, notwithstanding the foregoing, the Borrower may prepay any Fixed Facility Advance during the last ninety (90) days of the term of such Fixed Facility Advance and provided that Fixed Facility Advances may be defeased pursuant to the terms and conditions of this Section.

               (a)          Conditions. Subject to Section 3.10(d), the Borrower shall have the right to obtain the release of Mortgaged Properties from the lien of the related Security Instruments (and all collateral derived from such Mortgage Properties, including assignment of leases, fixture filings and other documents and instruments evidencing a

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lien or security interest in the Borrower’s assets [except the Substitute Collateral] shall be released) upon the satisfaction of all of the following conditions:

          (1)          Defeasance Notice. The Borrower shall give Lender a notice (the “Defeasance Notice”), in the manner specified in Section 3.10(g)(4), on a form provided by Lender, specifying a Business Day (the “Defeasance Closing Date”) which the Borrower desires to consummate the Defeasance. The Defeasance Closing Date specified by the Borrower may not be more than 45 calendar days, nor less than 30 calendar days, after the date on which the Defeasance Notice is received by Lender. The Borrower shall also specify in the Defeasance Notice the name, address and telephone number of the Borrower for notices pursuant to Section 3.10(g)(4). The form Defeasance Notice provided by Lender specifies: (i) which Mortgaged Properties the Borrower proposes to be released, provided that any Mortgaged Property securing only Fixed Facility Advances must be among the Mortgaged Properties proposed to be released; (ii) the name, address and telephone number of Lender for notices pursuant to Section 3.10(g)(4); (iii) the account(s) to which payments to Lender are to be made; (iv) whether a Fannie Mae Investment Security will be offered for use as the Substitute Collateral and, if not, that U.S. Treasury Securities will be the Substitute Collateral; (v) whether the Successor Borrower will be designated by Lender or the Borrower; and (vi) if a Fannie Mae Investment Security is offered for use as the Substitute Collateral, the Defeasance Notice shall also include the amount of the Defeasance Commitment Fee.

Any applicable Defeasance Commitment fee must be paid by the Borrower and received by Lender no later than the date and time when Lender receives the Defeasance Notice from the Borrower.

          (2)          Confirmation. After Lender has confirmed that the Defeasance is then permitted as provided in Section 3.10(d), and has confirmed that the terms of the Defeasance Notice are reasonably acceptable to Lender, Lender shall, with reasonable promptness, notify the Borrower of such confirmation by signing the Defeasance Notice, attaching the Annual Yields for the Mortgage Payments beginning on the first day of the second calendar month after the Defeasance Closing Date and ending on the Stated Maturity Date (if a Fannie Mae Investment Security is offered as Substitute Collateral) and transmitting the signed Defeasance Notice to the Borrower pursuant to Section 3.10(g)(4). If, after Lender has notified the Borrower of its confirmation in accordance with the foregoing, Lender does not receive the Defeasance Commitment Fee within five (5) Business Days after the Defeasance Notice Effective Date, then the Borrower’s right to obtain Defeasance pursuant to that Defeasance Notice shall terminate.

          (3)          Substitute Collateral. On or before the Defeasance Closing Date, the Borrower shall deliver to Lender a pledge and security agreement, in form and substance satisfactory to Lender in its sole discretion (the “Pledge Agreement”), creating a first priority perfected security interest in favor of

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Lender in substitute collateral constituting an Investment Security (the “Substitute Collateral”). The Pledge Agreement shall provide the Borrower’s authorization and direction that all interest on, principal of and other amounts payable with respect to the Substitute Collateral shall be paid directly to Lender to be applied to Mortgage Payments due under the Fixed Facility Note subject to Defeasance. If the Substitute Collateral is issued in a certificated form and the Borrower has possession of the certificate, the certificate shall be endorsed (either on the certificate or on a separate writing attached thereto) by the Borrower as directed by Lender and delivered to Lender. If the Substitute Collateral is issued in an uncertificated form, or in a certificated form but the Borrower does not have possession of the certificate, the Borrower shall execute and deliver to Lender all documents and instruments required by Lender to create in Lender’s favor a first priority perfected security interest in such Substitute Collateral, including a securities account control agreement or any other instrument or document required to perfect a security interest in each Substitute Collateral.

          (4)          Closing Documents. The Borrower shall deliver to Lender on or before the Defeasance Closing Date the documents described in Section 3.10(b).

          (5)          Amounts Payable by the Borrower. On or before the Defeasance Closing Date, the Borrower shall pay to Lender an amount equal to the sum of:

(A)	the Next Scheduled P&I Payment;
(B)	all other sums then due and payable under the Fixed Facility Note subject to Defeasance, the Security Instruments related to the Mortgaged Properties to be released; and
(C)	all reasonable costs and expenses incurred by Lender or Servicer in connection with the Defeasance, including the fees and disbursements of Lender’s or Servicer’s legal counsel.

          (6)          Defeasance Deposit. If a Fannie Mae Investment Security will be the Substitute Collateral, then, on or before 3:00 p.m., Eastern Standard Time, on the Defeasance Closing Date, the Borrower shall pay the Defeasance Deposit (reduced by the Defeasance Commitment Fee) to Lender to be used by Lender to purchase the Fannie Mae Investment Security as the Borrower’s agent.

           (7)          Covenants, Representations and Warranties. On the Defeasance Closing Date, all of the covenants of the Borrower set forth in Articles XIII, XIV and XV of this Agreement and all of the representations and warranties of the Borrower set forth in Article XII of this Agreement are true and correct in all material respects.

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	(8)          Geographical Diversification. If, as a result of the Defeasance, Lender determines that the geographical diversification of the Collateral Pool is compromised (whether or not the Geographical Diversification Requirement is met), Lender may require that the Borrower add or substitute Multifamily Residential Properties to the Collateral Pool in a number and having a valuation required to restore the Geographical Diversification of the Collateral Pool to a level at least as diverse as before the Defeasance.
(b)          Closing Documents. The documents required to be delivered to Lender on or before the Defeasance Closing Date pursuant to Section 3.10(a)(4) are:
	(1)          an opinion of counsel for the Borrower, in form and substance satisfactory to Lender, to the effect that Lender has a valid and perfected lien and security interest of first priority in the Substitute Collateral and the principal and interest payable thereunder;
	(2)          an opinion of counsel for the Borrower, in form and substance satisfactory to Lender, that the Defeasance, including both Borrowers granting to Lender of a lien and security interest in the Substitute Collateral and the assignment and assumption by Successor Borrower, and each of them, when considered in combination and separately, are not subject to avoidance under any applicable federal or state laws, including Sections 547 and 548 of the U.S. Bankruptcy Code;
	(3)          if a Fannie Mae Investment Security is not used as Substitute Collateral, and unless waived by Lender, a certificate in form and substance satisfactory to Lender, issued by an independent certified public accountant, or financial institution, approved by Lender, to the effect that the Substitute Collateral will generate the Scheduled Defeasance Payments;
	(4)          unless waived by Lender, an opinion of counsel for the Borrower in form and substance satisfactory to Lender, that the Defeasance will not result in a “sale or exchange” of any Fixed Facility Note within the meaning of Section 1001(c) of the Internal Revenue Code and the temporary and final regulations promulgated thereunder;
	(5)          such other opinions, certificates, documents or instruments as Lender may reasonably request; and
	(6)          three counterparts of the executed Assignment and Assumption Agreement described in Section 3.10(e).
(c)          Release. Upon the Borrower’s compliance with the requirements of Sections 3.10(a)(1) through (6), the Mortgaged Properties shall be released from the lien of the Security Instruments (and all collateral derived from such Mortgaged Properties, including assignments of leases, fixture filings and other documents and instruments evidencing a lien or security interest in the Borrower’s assets [except the Substitute Collateral] shall be released). Lender shall, with reasonable promptness, execute and

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deliver to the Borrower, at the Borrower’s cost and expense, any additional documents reasonably requested by the Borrower in order to evidence or confirm the release of Lender’s liens and security interests described in the immediately preceding sentence.
(d)          Defeasance Not Allowed. The Borrower shall not have the right to obtain Defeasance at any of the following times:
	(1)          before the third anniversary of the date of the relevant Fixed Facility Note;
	(2)          after the expiration of the Defeasance Period; or
	(3)          after Lender has accelerated the maturity of the unpaid principal balance of, accrued interest on, and other amounts payable under, any Note pursuant to Paragraph 6 of such Note.
(e)          Assignment and Assumption. Upon the Borrower’s compliance with the requirements of Section 3.10(a), the Borrower shall assign all its obligations and rights under the relevant Fixed Facility Note, together with the Substitute Collateral, to a successor entity (the “Successor Borrower”) designated by Lender or, if not so designated by Lender, designated by the Borrower and acceptable to Lender in its sole discretion. The Borrower and Successor Borrower shall execute and deliver to Lender an assignment and assumption agreement on a form provided by Lender (the “Assignment and Assumption Agreement”). The Assignment and Assumption Agreement shall provide for (i) the transfer and assignment by the Borrower to Successor Borrower of the Substitute Collateral, subject to the lien and security interest in favor of Lender, (ii) the assumption by Successor Borrower of all liabilities and obligations of the Borrower under the relevant Fixed Facility Note, and (iii) the release by Lender of the Borrower from all liabilities and obligations under the relevant Fixed Facility Note and all Obligations related thereto. Lender shall, at the Borrower’s request and expense, execute and deliver releases, reconveyances and security interest terminations with respect to the released Mortgage Properties and all other collateral held by Lender (except the Defeasance Deposit). The Assignment and Assumption Agreement shall be executed by Lender with a counterpart to be returned by Lender to the Borrower and Successor Borrower thereafter; provided, however, in all events that it shall not be a condition of Defeasance that the Assignment and Assumption Agreement be executed by Lender, or any Successor Borrower that is designated by Lender.
(f)          Agent. If the Defeasance Notice provides that Lender will make available a Fannie Mae Investment Security for purchase by the Borrower for use as the Substitute Collateral, the Borrower hereby authorizes Lender to use, and appoints Lender as its agent and attorney-in-fact for the purpose of using, the Defeasance Deposit (including any portion thereof that constitutes the Defeasance Commitment Fee) to purchase a Fannie Mae Investment Security.
(g)          Administrative Provisions.

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          (1)          Fannie Mae Security Liquidated Damages. If the Borrower timely pays the Defeasance Commitment Fee, and Lender and the Borrower timely transmits a signed facsimile copy of the Defeasance Notice pursuant to Section 3.10(a)(2), but the Borrower fails to perform its other obligations under Sections 3.10(a) and Section 3.10(e), Lender shall have the right to retain the Defeasance Commitment Fee as liquidated damages for the Borrower’s default, as Lender’s sole and exclusive remedy, and, except as provided in Section 3.10(g)(2), the Borrower shall be released from all further obligations under this Section 3.10. The Borrower acknowledges that, from and after the date on which Lender has executed the Defeasance Notice under Section 3.10(a)(2) and the Borrower has delivered the Defeasance Commitment Fee, Lender will incur financing costs in arranging and preparing for the purchase of the Substitute Collateral and in arranging and preparing for the release of the Mortgaged Properties from the lien of the Security Instruments in reliance on the executed Defeasance Notice. The Borrower agrees that the Defeasance Commitment Fee represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Agreement, of the damages Lender will incur by reason of the Borrower’s default.

          (2)          Third Party Costs. In the event that the Defeasance is not consummated on the Defeasance Closing Date for any reason, the Borrower agrees to reimburse Lender and Servicer for all reasonable third party costs and expenses (other than financing costs covered by Section 4.0l(g)(1) above), including attorneys’ fees and expenses, incurred by Lender in reliance on the executed Defeasance Notice, within 10 Business Days after the Borrower receives a written demand for payment, accompanied by a statement, in reasonable detail, of Lender’s and Servicer’s third party costs and expenses.

          (3)          Payments. All payments required to be made by the Borrower to Lender or Servicer pursuant to this Section 3.10 shall be made by wire transfer of immediately available finds to the account(s) designated by Lender or Servicer, as the case may be, in the Defeasance Notice.

          (4)          Notice. The Defeasance Notice delivered pursuant to this Section 4.0l(g)(4) shall be in writing and shall be sent by telecopier or facsimile machine which automatically generates a transmission report that states the date and time of the transmission, the length of the document transmitted and the telephone number of the recipient’s telecopier or facsimile machine (or shall be sent by any distribution media, whether currently existing or hereafter developed, including electronic mail and internet distribution, as approved by Lender). Any notice so sent addressed to the parties at their respective addresses designated in the Defeasance Notice pursuant to Section 3.10(a), shall be deemed to have been received on the date and time indicated on the transmission report of recipient. To be effective, the Borrower must send the Defeasance Notice (as described above) so that Lender receives the Defeasance Notice no earlier than 11:00 a.m. and no later than 3:00 p.m. Eastern Standard Time on a Business Day.

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(h)          Definitions. For purposes of this Section 3.10, the following terms shall have the following meanings:
	(1)          The term “Annual Yield” means the yield for the theoretical zero coupon U.S. Treasury Security as calculated from the current “on-the-run” U.S. Treasury yield curve with a term to maturity that most closely matches the Applicable Defeasance Term for the Mortgage Payment, as published by Fannie Mae on MORNET® (or in an alternative electronic format) at 2:00 p.m. Eastern Standard Time on the Business Day that Lender receives the Defeasance Notice in accordance with Section 3.10(g)(4). If the publication of yields on MORNET® is unavailable, Lender shall determine yields from another source reasonably determined by Lender.
	(2)          The term “Applicable Defeasance Term” means, in the case of each Mortgage Payment, the number of calendar months, based on a year containing 12 calendar months with 30 days each, in the period beginning on the first day of the first calendar month after the Defeasance Closing Date to the date on which such Mortgage Payment is due and payable.
	(3)          The term “Defeasance” means the transaction in which all (but not less than all) of the Mortgaged Properties are released from the lien of the Security Instruments and Lender receives, as substitute collateral, a valid and perfected lien and security interest of first priority in the Substitute Collateral and the principal and interest payable thereunder.
	(4)          The term “Defeasance Commitment Fee” means the amount specified in the Defeasance Notice as the Borrower’s good faith deposit to ensure performance of its obligations under this Section, which shall equal two percent (2%) of the aggregate unpaid principal balance of the Fixed Facility Note subject to Defeasance as of the Defeasance Notice Effective Date, if the Successor Borrower is designated by the Borrower under Section 3.10(e), or one percent (1%) of the aggregate unpaid principal balance of the Fixed Facility Note subject to Defeasance as of the Defeasance Notice Effective Date if the Successor Borrower is designated by Lender under Section 3.10(e). No Defeasance Commitment Fee will be applicable if U.S. Treasury Securities are specified in the Defeasance Notice as the applicable Investment Security.
	(5)          The term “Defeasance Deposit” means an amount equal to the sum of the present value of each Mortgage Payment that becomes due and payable during the period beginning on the first day of the second calendar month after the Defeasance Closing Date and ending on the Stated Maturity Date, where the present value of each Mortgage Payment is determined using the following formula:

the amount of the Mortgage Payment
(1 + (the Annual Yield/12))ⁿ

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For this purpose, the last Mortgage Payment due and payable on the Stated Maturity Date shall include the amounts that would constitute the unpaid principal balance of the Fixed Facility Note subject to Defeasance on the Stated Maturity Date if all prior Mortgage Payments were paid on their due dates and “n” shall equal the Applicable Defeasance Term.

          (6)          The term “Defeasance Period” means the period beginning on the earliest permitted date determined under Section 3.10(d)(l) and ending on the 90th day before the Stated Maturity Date.

          (7)          The term “Defeasance Notice Effective Date” means the date on which Lender provides confirmation of the Defeasance Notice pursuant to Section 3.10(a)(2).

          (8)          The term “Fannie Mae Investment Security” means any bond, debenture, note, participation certificate or other similar obligation issued by Fannie Mae in connection with the Defeasance which provides for Scheduled Defeasance Payments beginning in the second calendar month after the Defeasance Closing Date.

          (9)          The term “Investment Security” means:

                              (A)          If offered by Lender pursuant to the Defeasance Notice, a Fannie Mae Investment Security purchased in the manner described in Sections 3.10(a)(6) and 3.10(f), and

                              (B)          If no Fannie Mae Investment Security is offered by Lender pursuant to the Defeasance Notice, U.S. Treasury Securities.

          (10)          The term “Mortgage Payment” means the amount of each regularly scheduled monthly payment of principal and interest due and payable under the Fixed Facility Note subject to Defeasance during the period beginning on the first day of the second calendar month after the Defeasance Closing Date and ending on the Stated Maturity Date, and the amount that would constitute the aggregate unpaid principal balance of the Fixed Facility Note subject to Defeasance on the Stated Maturity Date if all prior Mortgage Payments were paid on their due dates.

          (11)          The term “Next Scheduled P&I Payment” means an amount equal to the monthly installment of principal and interest due under the Fixed Facility Note subject to Defeasance on the first day of the first calendar month after the Defeasance Closing Date.

          (12)          The term “Scheduled Defeasance Payments” means payments prior and as close as possible to (but in no event later than) the successive scheduled dates on which Mortgage Payments are required to be paid under the Fixed Facility Note subject to Defeasance and in amounts equal to or greater than

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the scheduled Mortgage Payments due and payable on such dates under the Fixed Facility Note subject to Defeasance.

          (13)          The term “Stated Maturity Date” means the Maturity Date specified in the Fixed Facility Note subject to Defeasance determined without regard to Lender’s exercise of any right of acceleration of the Fixed Facility Note subject to Defeasance.

          (14)          The term “U.S. Treasury Securities” means direct, non-callable and non-redeemable obligations of the United States of America which provided for Scheduled Defeasance Payments beginning in the second calendar month after the Defeasance Closing Date.

ARTICLE IV
RATE SETTING FOR THE ADVANCES

SECTION 4.01 Rate Setting for an Advance. Rates for an Advance shall be set in accordance with the following procedures:

               (a)          Preliminary, Nonbinding Quote. At the Borrower’s request the Lender shall quote to the Borrower an estimate of the MBS Pass-Through Rate (for a proposed Fixed Facility Advance) or MBS Imputed Interest Rate (for a proposed Variable Advance) for a Fannie Mae MBS backed by a proposed Advance. The Lender’s quote shall be based on (i) a solicitation of bids from institutional investors selected by the Lender and (ii) the proposed terms and amount of the Advance selected by the Borrower. The quote shall not be binding upon the Lender.

               (b)          Rate Setting. If the Borrower satisfies all of the conditions to the Lender’s obligation to make the Advance in accordance with Article V, then the Borrower may propose a MBS Pass-Through Rate (for a Fixed Facility Advance) or MBS Imputed Interest Rate (for a Variable Advance) by submitting to the Lender by facsimile transmission a completed and executed document, in the form attached as Exhibit M to this Agreement (“Rate Setting Form”), before 1:00 p.m. Eastern Standard Time on any Business Day (“Rate Setting Date”). The Rate Setting Form contains various factual certifications required by the Lender and specifies:

          (i) for a Variable Advance, the amount, term, MBS Issue Date, Variable Facility Fee, the proposed maximum Coupon Rate (“Maximum Annual Coupon Rate”) and Closing Date for the Advance; and

          (ii) for a Fixed Facility Advance, the amount, term, MBS Issue Date, Fixed Facility Fee, Maximum Annual Coupon Rate, Price (which will be in a range between 99-1/2 and 100-1/2), Yield Maintenance Period, Amortization Period, if applicable, interest only and Closing Date for the Advance.

               (c)          Rate Confirmation. Within one Business Day after receipt of the completed and executed Rate Setting Form, the Lender shall solicit bids from institutional

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investors selected by the Lender based on the information in the Rate Setting Form and, provided the actual Coupon Rate (if the low bid were accepted) would be at or below the Maximum Annual Coupon Rate, shall obtain a commitment (“MBS Commitment”) for the purchase of a Fannie Mae MBS having the bid terms described in the related Rate Setting Form, and shall immediately deliver to the Borrower by facsimile transmission a completed document, in the form attached as Exhibit N to this Agreement (“Rate Confirmation Form”). The Rate Confirmation Form will confirm:

          (i) for a Variable Advance, the amount, term, MBS Issue Date, MBS Delivery Date, MBS Imputed Interest Rate, Variable Facility Fee, Coupon Rate, Discount, Price, and Closing Date for the Advance; and

          (ii) for a Fixed Facility Advance, the amount, term, MBS Issue Date, MBS Delivery Date, MBS Pass-Through Rate, Fixed Facility Fee, Coupon Rate, Price, Yield Maintenance Period, Specified U.S. Treasury Security, Amortization Period and Closing Date for the Advance.

SECTION 4.02 Advance Confirmation Instrument for Variable Advances. On or before the Closing Date for a Variable Advance, the Borrower executes and delivers to the Lender an instrument (“Advance Confirmation Instrument”), in the form attached as Exhibit O to this Agreement, confirming the amount, term, MBS Issue Date, MBS Delivery Date, MBS Imputed Interest Rate, Variable Facility Fee, Coupon Rate, Discount, Price and Closing Date for the Advance, and the Borrower’s obligation to repay the Advance in accordance with the terms of the Notes and this Agreement. Upon the funding of the Variable Advance, the Lender shall note the date of funding in the appropriate space at the foot of the Advance Confirmation Instrument and deliver a copy of the completed Advance Confirmation Instrument to the Borrower. The Lender’s failure to do so shall not invalidate the Advance Confirmation Instrument or otherwise affect in any way any obligation of the Borrower to repay Variable Advances in accordance with the Advance Confirmation Instrument, the Variable Facility Note or the other Loan Documents, but is merely meant to facilitate evidencing the date of funding and to confirm that the Advance Confirmation Instrument is not effective until the date of funding.

SECTION 4.03 Breakage and other Costs. In the event that the Lender obtains an MBS Commitment and the Lender fails to fulfill the MBS Commitment because the Advance is not made (for a reason other than the default of the Lender to make the Advance), the Borrower shall pay all reasonable out-of-pocket costs payable to the potential investor and other reasonable costs, fees and damages incurred by the Lender in connection with its failure to fulfill the MBS Commitment. The Lender reserves the right to require that the Borrower post a deposit at the time the MBS Commitment is obtained. The deposit referred to in the preceding sentence shall be refundable to the Borrower upon the delivery of the related MBS.

ARTICLE V
MAKING THE ADVANCES

SECTION 5.01 Initial Advance. The Lender has made the Initial Advance.

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SECTION 5.02 Future Advances. In order to obtain a Future Advance, the Borrower may from time to time deliver a written request for a Future Advance (“Future Advance Request”) to the Lender, in the form attached as Exhibit P to this Agreement. Each Future Advance Request shall be accompanied by (a) a designation of the amount of the Future Advance requested, and (b) a designation of the maturity date of the Advance. Each Future Advance Request shall be in the minimum amount of $3,000,000. If all conditions contained in Section 5.03 are satisfied, the Lender shall make the requested Future Advance, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring on a date selected by the Borrower, which date shall be not more than three (3) Business Days, after the Borrower’s receipt of the Rate Confirmation Form (or on such other date to which the Borrower and the Lender may agree). The Lender reserves the right to require that the Borrower post a deposit at the time the MBS Commitment is obtained as an additional condition to the Lender’s obligation to make the Future Advance. The deposit referred to in the preceding sentence shall be refundable to the Borrower upon the delivery of the related MBS.

SECTION 5.03 Conditions Precedent to Future Advances. The obligation of the Lender to make a requested Future Advance is subject to the following conditions precedent:

               (a)          The receipt by the Lender of a Future Advance Request;

               (b)          The Lender has delivered the Rate Setting Form for the Future Advance to the Borrower;

               (c)          After giving effect to the requested Future Advance, the Coverage and LTV Tests will be satisfied;

               (d)          If the Advance is a Fixed Facility Advance, delivery of a Fixed Facility Note, duly executed by the Borrower, in the amount of the Advance, reflecting all of the terms of the Fixed Facility Advance;

               (e)          If the Advance is a Variable Advance, delivery of the Advance Confirmation Instrument, duly executed by the Borrower;

               (f)          For any Title Insurance Policy not containing a Revolving Credit Endorsement, the receipt by the Lender of an endorsement to the Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date, Permitted Liens, and other exceptions approved by the Lender;

               (g)          If the Advance is a Variable Advance, the receipt by the Lender of the first installment of Variable Facility Fee for the Variable Advance and the entire Discount for the Variable Advance payable by the Borrower pursuant to Section 2.04;

               (h)          The receipt by the Lender of all legal fees and expenses payable by the Borrower in connection with the Future Advance pursuant to Section 16.04(b); and

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               (i)          If the Advance is a Variable Advance requiring a Hedge pursuant to the terms of Article XXI, receipt by Lender at least five (5) days prior to the Closing Date for such Advance, of the confirmation of a Hedge commitment with respect to such Advance;

               (j)          If applicable, receipt by Lender of Hedge Documents effective as of the Closing Date;

               (k)          The satisfaction of all applicable General Conditions set forth in Article XI.

SECTION 5.04 Determination of Allocable Facility Amount and Valuations. The Lender shall determine the Allocable Facility Amount and Valuation for each Initial Mortgaged Property on the Initial Closing Date. Once each Calendar Quarter, within 20 Business Days after the Borrower has delivered to the Lender the reports required in Section 13.04, the Lender shall determine the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month period and the Aggregate Loan to Value Ratio. If the Lender reasonably decides that changed market or property conditions warrant, the Lender may (i) request an Appraisal of the relevant Mortgaged Properties and/or (ii) determine new Allocable Facility Amounts and Valuations at any other times. The Lender shall also redetermine Allocable Facility Amounts as necessary to take account of any addition, release or substitution of Collateral or other event which invalidates the outstanding determinations. The Lender shall determine Cap Rates when determining Valuations on the basis of its internal survey and analysis of cap rates for comparable sales in the vicinity of the Mortgaged Property, with such adjustments as the Lender deems appropriate and shall not be obligated to use any information provided by the Borrower. The Lender shall promptly disclose its determinations to the Borrower. Until redetermined, the Allocable Facility Amounts and Valuations determined by the Lender shall remain in effect. In performing a Valuation of a Multifamily Residential Property to be added to the Collateral Pool, the Lender shall be entitled to obtain an Appraisal. The Lender shall also have the right to obtain an Appraisal in connection with the redetermination of a Valuation of a Mortgaged Property, but only if the Lender is unable to determine a Cap Rate for such Mortgaged Property and then only if the Lender has not obtained an Appraisal for such Mortgaged Property within the prior year.

ARTICLE VI
ADDITIONS OF COLLATERAL

SECTION 6.01 Right to Add Collateral. Subject to the terms and conditions of this Article, the Borrower shall have the right, from time to time during the Term of this Agreement, to add Multifamily Residential Properties to the Collateral Pool in accordance with the provisions of this Article.

SECTION 6.02 Procedure for Adding Collateral. The procedure for adding Collateral set forth in this Section 6.02 shall apply to all additions of Collateral in connection with this Agreement, including but not limited to additions of Collateral in connection with substitutions of Collateral and expansion of the Credit Facility.

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               (a)          Request. The Borrower may, not more than eight (8) times per Calendar Year, deliver a written request (“Collateral Addition Request”) to the Lender, in the form attached as Exhibit Q to this Agreement, to add one or more Additional Mortgaged Properties to the Collateral Pool. Each Collateral Addition Request shall be accompanied by the following:

          (i) The information relating to the proposed Additional Mortgaged Property required by the form attached as Exhibit R to this Agreement (“Collateral Addition Description Package”), as amended from time to time to include information required under the DUS Guide; and

          (ii) The payment of all Additional Collateral Due Diligence Fees pursuant to Section 16.03(b).

               (b)          Additional Information. The Borrower shall promptly deliver to the Lender any additional information concerning the proposed Additional Mortgaged Property that the Lender may from time to time reasonably request.

               (c)          Underwriting. The Lender shall evaluate the proposed Additional Mortgaged Property, and shall make underwriting determinations as to the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period and the Aggregate Loan to Value Ratio applicable to the Collateral Pool, on the basis of the lesser of (i) if purchased by the Borrower within 12 months of the related Collateral Addition Request, the acquisition price of the proposed Additional Mortgaged Property or (ii) a Valuation made with respect to the proposed Additional Mortgaged Property, and otherwise in accordance with Fannie Mae’s DUS Underwriting Requirements, including applicable underwriting floors. Within 30 days after receipt of (i) the Collateral Addition Request for the proposed Additional Mortgaged Property and (ii) all reports, certificates and documents set forth on Exhibit S to this Agreement, including a zoning analysis undertaken in accordance with Section 206 of the DUS Guide, the Lender shall notify the Borrower whether or not it shall consent to the addition of the proposed Additional Mortgaged Property to the Collateral Pool and, if it shall so consent, shall set forth the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period and the Aggregate Loan to Value Ratio which it estimates shall result from the addition of the proposed Additional Mortgaged Property to the Collateral Pool. If the Lender declines to consent to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, the Lender shall include, in its notice, a brief statement of the reasons for doing so. Within five Business Days after receipt of the Lender’s notice that it shall consent to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, the Borrower shall notify the Lender whether or not it elects to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool. If the Borrower fails to respond within the period of five Business Days, it shall be conclusively deemed to have elected not to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool.

               (d)          Closing. If, pursuant to subsection (c), the Lender consents to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, the Borrower timely elects to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool and all conditions contained in Section 6.03 are satisfied, the Lender shall permit the proposed Additional Mortgaged Property to be added to the Collateral Pool, at a closing to be

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held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within 30 Business Days after the Lender’s receipt of the Borrower’s election (or on such other date to which the Borrower and the Lender may agree).

SECTION 6.03 Conditions Precedent to Addition of an Additional Mortgaged Property to the Collateral Pool. The addition of an Additional Mortgaged Property to the Collateral Pool on the Closing Date applicable to the Additional Mortgaged Property is subject to the satisfaction of the following conditions precedent:

               (a)          The proposed Additional Mortgaged Property has a Debt Service Coverage Ratio for the Trailing 12 Month Period of not less than 140% and a Loan to Value Ratio of not more than 65% and immediately after giving effect to the requested addition, the Coverage and LTV Tests will be satisfied, and in the case of any substitution effected pursuant to Section 7.04 of this Agreement, the Coverage and LTV Tests are not adversely affected after giving effect to the proposed substitution;

               (b)          The receipt by the Lender of the Collateral Addition Fee, except as provided in Section 16.02(b), and all legal fees and expenses payable by the Borrower in connection with the Collateral Addition pursuant to Section 16.04(b);

               (c)          The delivery to the Title Company, with fully executed instructions directing the Title Company to file and/or record in all applicable jurisdictions, all applicable Collateral Addition Loan Documents required by the Lender, including duly executed and delivered original copies of any Security Instruments and UCC-1 Financing Statements covering the portion of the Additional Mortgaged Property comprised of personal property, and other appropriate documents, in form and substance satisfactory to the Lender and in form proper for recordation, as may be necessary in the opinion of the Lender to perfect the Lien created by the applicable additional Security Instrument, and any other Collateral Addition Loan Document creating a Lien in favor of the Lender, and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing;

               (d)          If required by the Lender, amendments to the Notes and the Security Instruments, reflecting the addition of the Additional Mortgaged Property to the Collateral Pool and, as to any Security Instrument so amended, the receipt by the Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date, Permitted Liens and other exceptions approved by the Lender;

               (e)          If the Title Insurance Policy for the Additional Mortgaged Property contains a Tie-In Endorsement, an endorsement to each other Title Insurance Policy containing a Tie-In Endorsement, adding a reference to the Additional Mortgaged Property; and

               (f)          The satisfaction of all applicable General Conditions set forth in Article XI.

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ARTICLE VII
RELEASES OF COLLATERAL

SECTION 7.01 Right to Obtain Releases of Collateral. Subject to the terms and conditions of this Article, the Borrower shall have the right to obtain a release of Collateral from the Collateral Pool in accordance with the provisions of this Article.

SECTION 7.02 Procedure for Obtaining Releases of Collateral.

               (a)          Request. In order to obtain a release of Collateral from the Collateral Pool, the Borrower may, not more than once each calendar month, deliver a written request for the release of Collateral from the Collateral Pool (“Collateral Release Request”) to the Lender, in the form attached as Exhibit T to this Agreement. The Collateral Release Request shall not result in a termination of all or any part of the Credit Facility. The Borrower may only terminate all or any part of the Credit Facility by delivering a Variable Facility Termination Request or Credit Facility Termination Request pursuant to Articles IX or X. The Collateral Release Request shall be accompanied by (and shall not be effective unless it is accompanied by) the name, address and location of the Mortgaged Property to be released from the Collateral Pool (“Collateral Release Property”).

               (b)          Closing. If all conditions contained in Section 7.03 are satisfied, the Lender shall cause the Collateral Release Property to be released from the Collateral Pool, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within 30 days after the Lender’s receipt of the Collateral Release Request (or on such other date to which the Borrower and the Lender may agree, by executing and delivering, and causing all applicable parties to execute and deliver, all at the sole cost and expense of the Borrower, instruments, in the form customarily used by the Lender for releases in the jurisdiction governing the perfection of the security interest being released, releasing the applicable Security Instrument as a Lien on the Collateral Release Property, and UCC-3 Termination Statements terminating the UCC-1 Financing Statements perfecting a Lien on the portion of the Collateral Release Property comprised of personal property and such other documents and instruments as the Borrower may reasonably request evidencing the release of the applicable Collateral from any lien securing the Obligations (including a termination of any restriction on the use of any accounts relating to the Collateral Release Property) and the release and return to the Borrower of any and all escrowed amounts relating thereto. The instruments referred to in the preceding sentence are referred to in this Article as the “Collateral Release Documents.” The Borrower shall prepare the Collateral Release Documents and submit them to Lender for its review.

               (c)          Release Price. The “Release Price” for each Mortgaged Property means (1) during the period Section 22.01(a) of this Agreement is in effect the greater of (i) the Allocable Facility Amount for the Mortgaged Property to be released and (ii) the amount, if any, of Advances Outstanding which are required to be repaid by the Borrower to the Lender in connection with the proposed release of the Mortgaged Property from the Collateral Pool, so that, immediately after the release, the Coverage and LTV Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value Ratio for the Trailing 12 Month Period will be increased as a result of such release and (2) at all times after Section 22.01(a) of this Agreement is no longer in effect the greater of (i) 125% of the Allocable Facility Amount for the Mortgaged Property to be released and (ii) the amount, if any, of Advances Outstanding which are required to be repaid by

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the Borrower to the Lender in connection with the proposed release of the Mortgaged Property from the Collateral Pool, so that, immediately after the release, the Coverage and LTV Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value Ratio for the Trailing 12 Month Period will be increased as a result of such release. In addition to the Release Price, the Borrower shall pay to the Lender all associated prepayment premiums and other amounts due under the Notes and any Advance Confirmation Instruments evidencing the Advances being repaid.

               (d)          Application of Release Price. The Release Price shall be applied against the Variable Advances Outstanding until there are no further Variable Advances Outstanding, and thereafter shall be held by the Lender (or its appointed collateral agent) as substituted Collateral (“Substituted Cash Collateral”), in accordance with a security agreement and other documents in form and substance acceptable to the Lender (or, at the Borrower’s option, may be applied against the prepayment of Fixed Facility Advances, so long as the prepayment is permitted under the Fixed Facility Note for the Fixed Facility Advance). Any portion of the Release Price held as Substituted Cash Collateral may be released if, immediately after giving effect to the release, each of the conditions set forth in Section 7.03(a) below shall have been satisfied. If, on the date on which the Borrower pays the Release Price, Variable Advances are Outstanding but are not then due and payable, the Lender shall hold the payments as additional Collateral for the Credit Facility, until the next date on which Variable Advances are due and payable, at which time the Lender shall apply the amounts held by it to the amounts of the Variable Advances due and payable.

SECTION 7.03 Conditions Precedent to Release of Collateral Release Property from the Collateral. The obligation of the Lender to release a Collateral Release Property from the Collateral Pool by executing and delivering the Collateral Release Documents on the Closing Date, are subject to the satisfaction of the following conditions precedent on or before the Closing Date:

               (a)          Immediately after giving effect to the requested release the Coverage and LTV Tests will be satisfied, and in the case of any substitution effected pursuant to Section 7.04 of this Agreement, the Coverage and LTV Tests are not adversely affected after giving effect to the proposed substitution;

               (b)          Receipt by the Lender of the Release Price;

               (c)          Receipt by the Lender of the Release Fee for the Collateral Release Property and all legal fees and expenses payable by the Borrower in connection with the release pursuant to Section 16.04(b);

               (d)          Receipt by the Lender on the Closing Date of one or more counterparts of each Collateral Release Document, dated as of the Closing Date, signed by each of the parties (other than the Lender) who is a party to such Collateral Release Document;

               (e)          If required by the Lender, amendments to the Notes and the Security Instruments, reflecting the release of the Collateral Release Property from the Collateral Pool

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and, as to any Security Instrument so amended, the receipt by the Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date, Permitted Liens, and other exceptions approved by the Lender;

               (f)          If the Lender determines the Collateral Release Property to be one phase of a project, and one or more other phases of the project are Mortgaged Properties which will remain in the Collateral Pool (“Remaining Mortgaged Properties”), the Lender must determine that the Remaining Mortgaged Properties can be operated separately from the Collateral Release Property and any other phases of the project which are not Mortgaged Properties. In making this determination, the Lender shall evaluate whether the Remaining Mortgaged Properties comply with the terms of Sections 203 and 208 of the DUS Guide, which, as of the date of this Agreement, require, among other things, that a phase which constitutes collateral for a loan made in accordance with the terms of the DUS Guide (i) have adequate ingress and egress to existing public roadways, either by location of the phase on a dedicated, all-weather road or by access to such a road by means of a satisfactory easement, (ii) have access which is sufficiently attractive and direct from major thoroughfares to be conducive to continued good marketing, (iii) have a location which is not (A) inferior to other phases, (B) such that inadequate maintenance of other phases would have a significant negative impact on the phase, and (C) such that the phase is visible only after passing through the other phases of the project and (iv) comply with such other issues as are dictated by prudent practice;

               (g)          Receipt by the Lender of endorsements to the Tie-In Endorsements of the Title Insurance Policies, if deemed necessary by the Lender, to reflect the release;

               (h)          Receipt by the Lender on the Closing Date of a writing, dated as of the Closing Date, signed by the Borrower, in the form attached as Exhibit U to this Agreement, pursuant to which the Borrower confirms that its obligations under the Loan Documents are not adversely affected by the release of the Collateral Release Property from the Collateral;

               (i)          The remaining Mortgaged Properties in the Collateral Pool shall satisfy the then-existing Geographical Diversification Requirements;

               (j)          The satisfaction of all applicable General Conditions set forth in Article XI; and

               (k)          Notwithstanding the other provisions of this Section 7.03, no release of any of the Mortgaged Properties shall be made unless the Borrower has provided title insurance, taking into account Tie-In Endorsements, to Lender in respect of each of the remaining Mortgaged Properties in the Collateral Pool in an amount equal to 125% of the Initial Valuation of each of such remaining Mortgaged Properties.

SECTION 7.04 Substitutions.

               (a)          Right to Substitute Collateral. Subject to the terms, conditions and limitations of this Section 7.04 and Article VII, the Borrower shall have the right, from time to time during the Term of this Agreement, to add one or more Multifamily Residential Properties to the Collateral Pool in substitution of one or more Mortgaged Properties then in the Collateral

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Pool in accordance with the provisions of this Section 7.04 (“Substituted Mortgaged Property”).

               (b)          Procedure for Substituting Collateral.

          (i)          Request. The Borrower may deliver a written request (“Collateral Substitution Request”) to the Lender, in the form attached as Exhibit Z to this Agreement, to add one or more Multifamily Residential Properties to the Collateral Pool in substitution of one or more Mortgaged Properties then in the Collateral Pool. Each Collateral Substitution Request shall be accompanied by the following:

          (A)          The information relating to the proposed Substituted Mortgaged Property required by the form attached as Exhibit DD to this Agreement (“Collateral Substitution Description Package”), as amended from time to time to include information required under the DUS guide;

          (B)          The payment of all Additional Collateral Due Diligence Fees pursuant to Section 16.03(b).

          (C)          A statement whether the addition of the proposed Substituted Mortgaged Property will occur simultaneously with the release of the proposed Collateral Release Property and, if not, the Borrower shall specify the proposed date on which the proposed Substituted Mortgaged Property will be added to the Collateral Pool which, in no event, shall be a date which is more than 90 days after the proposed date of the release of the proposed Collateral Release Property.

          (ii)          Additional Information. The Borrower shall promptly deliver to the Lender any additional information concerning the proposed Substituted Mortgaged Property and the proposed Collateral Release Property that the Lender may from time to time reasonably request.

          (iii)          Underwriting. The Lender shall evaluate the proposed Substituted Mortgaged Property, and shall make underwriting determinations as to (a) the Aggregate Debt Service Coverage Ratios and the Aggregate Loan to Value Ratio immediately prior to and immediately after giving effect to the proposed substitution, and (b) the Valuation and the Net Operating Income for the Trailing 12 Month Period for both the proposed Substituted Mortgaged Property and the proposed Collateral Release Property. Notwithstanding anything to the contrary contained herein, for purposes of making such underwriting determines with respect to the proposed Substituted Mortgaged Property, such determinations shall be made on the basis of a Valuation made with respect to the proposed Substituted Mortgaged Property, and otherwise in accordance with Fannie Mae’s DUS Underwriting Requirements, including applicable underwriting floors. Within 30 days after receipt of (a) the Collateral Substitution Request for the proposed Substituted Mortgaged Property and the proposed Collateral Release Property and (b) all reports, certificates and documents set forth on Exhibit EE to this Agreement, including a zoning analysis undertaken in accordance with Section 206 of the DUS Guide, the Lender shall notify the Borrower whether or not the proposed Substituted Mortgaged

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Property meets the Coverage and LTV Tests and DUS Underwriting Requirements required by this Section 7.04(b)(iii), and therefore whether or not it shall consent to the addition of the proposed Substituted Mortgaged Property to the Collateral Pool in substitution of the proposed Collateral Release Property and, if it shall so consent, shall set forth the Aggregate Debt Service Coverage Ratios and the Aggregate Loan to Value Ratio which it estimates shall result from the substitution of the proposed Substituted Mortgaged Property into the Collateral Pool in replacement of the proposed Collateral Release Property. If the proposed Substituted Mortgaged Property does not meet the Coverage and LTV Tests and DUS Underwriting Requirements required by this Section 7.04(b)(iii), and therefore the Lender does not consent to the substitution of the proposed Substituted Mortgaged Property into the Collateral Pool in replacement of the proposed Collateral Release Property, the Lender shall include, in its notice, a brief statement of the reasons for doing so. Within five Business Days after receipt of the Lender’s notice that it shall consent to the substitution of the proposed Substituted Mortgaged Property into the Collateral Pool in replacement of the proposed Collateral Release Property, the Borrower shall notify the Lender whether or not they elect to cause such substitution to occur. If the Borrower fails to respond within the period of five Business Days, they shall be conclusively deemed to have elected not to cause the proposed substitution to occur.

          (iv)          Closing. If, pursuant to this Section 7.04, the Lender consents to the substitution of the proposed Substituted Mortgaged Property into the Collateral Pool in replacement of the proposed Collateral Release Property, the Borrower timely elects to cause such substitution to occur and all conditions contained in Section 7.04(c) are satisfied, the Lender shall permit the proposed Substituted Mortgaged Property to be substituted into the Collateral Pool in replacement of the proposed Collateral Release Property, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring --

(x)         if the substitution of the proposed Substituted Collateral Property is to occur simultaneously with the release of the proposed Collateral Released Property, within 30 days after the Lender’s receipt of the Borrower’s election (or on such other date to which the Borrower and the Lender may agree); or

(y)         if the substitution of the proposed Substituted Collateral Property is to occur subsequent to the release of the Collateral Release Property, within 90 days after the release of the Collateral Release Property in accordance with Section 7.02(c).

If, in the case of clause (y), the addition of the proposed Substituted Collateral Property to the Collateral Pool does not occur within 90 days or such longer period as approved by Lender, in its sole discretion, after the release of the Collateral Release Property in accordance with such clause (y), then the Borrower shall have waived its right to substitute such Collateral Release Property with the proposed Substituted Mortgaged Property, the Release Price shall be determined pursuant to Section 7.02(c) and the Borrower shall comply with the requirement set forth in Section 7.03. Such Release Price, or the applicable portion thereof, shall be credited under this Agreement and/or be

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immediately due and payable by the Borrower to the Lender to reduce the Advances Outstanding as required by, and in the manner set forth in, Section 7.02(d).

               (c)          Conditions Precedent to Substitution of a Substituted Mortgaged Property into the Collateral Pool. The substitution of a Substituted Mortgaged Property into the Collateral Pool in replacement of a Collateral Release Property on the Closing Date is subject to the satisfaction of the following conditions precedent:

          (i)          The proposed Substituted Mortgaged Property has a Debt Service Coverage Ratio for the Trailing 12 Month Period of not less than 140% and a Loan to Value Ratio of not more than 65% and immediately after giving effect to the requested addition, the Coverage and LTV Tests will be satisfied;

          (ii)          The Lender shall have made the determination, as a part of the underwriting evaluations made in accordance with Section 7.04(b)(iii), that (a) the Aggregate Debt Service Coverage Ratio immediately after giving effect to the proposed substitution will be equal to or higher than the Aggregate Debt Service Coverage Ratio immediately prior to the proposed substitution, and (ii) the Aggregate Loan to Value Ratio immediately after giving effect to the proposed substitution will be equal to or less than the Aggregate Loan to Ratio immediately prior to giving effect to the proposed substitution;

          (iii)          With respect to the release of the proposed Collateral Release Property, the Borrower shall have complied with Section 7.03 (other than clause (b) with respect to the requirement pertaining to Release Price);

          (iv)          The receipt by the Lender of the Collateral Substitution Fee and all legal fees and expenses payable by the Borrower in connection with the substitution pursuant to Section 16.04(b).

          (v)          The delivery to the Title Company, with fully executed instructions directing the Title Company to file and/or record in all applicable jurisdictions, all applicable Collateral Substitution Loan Documents required by Lender, including duly executed and delivered original copies of any Security Instruments and UCC-1 Financing Statements covering the portion of the Substituted Mortgaged Property comprised of personal property, and other appropriate documents, in form and substance satisfactory to the Lender and in form proper for recordation, as may be necessary in the opinion of the Lender to perfect the Lien created by the applicable additional Security Instrument, and any other Collateral Substitution Loan Document creating a Lien in favor of the Lender, and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing;

          (vi)          If required by the Lender, amendments to the Notes and the Security Instruments, reflecting the addition of the Substituted Mortgaged Property to the Collateral Pool and, as to any Security Instrument so amended, the receipt by the Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument,

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amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than Permitted Liens;

          (vii)          If the Title Insurance Policy for the Substituted Mortgaged Property contains a Tie-In Endorsement, and endorsement to each other Title Insurance Policy containing a Tie-In Endorsement, adding a reference to the Substituted Mortgaged Property;

          (viii)          The delivery to the Lender of additional collateral or the repayment of Advances Outstanding to the extent required pursuant to Section 7.04(d); and

          (ix)          The satisfaction of all General Conditions set forth in Article XI.

               (d)          Restriction on Borrowings. In the case that the substitution of the proposed Substituted Mortgaged Property is not to occur simultaneously with the release of the proposed Collateral Release Property, from and after the release of the proposed Collateral Release Property until the addition of the proposed Substituted Mortgaged Property into the Collateral Pool in accordance with this Section 7.04, the Borrower shall not be permitted to have the aggregate unpaid principal balance of Loans Outstanding to be in excess of an amount equal to the then-existing Commitment minus the Allocable Credit Facility Amount attributable to the Collateral Release Property that was released, unless the Borrower shall have delivered to the Lender additional collateral reasonably acceptable to the Lender in an amount at least equal to such Allocable Credit Facility Amount. In the event that the aggregate unpaid principal balance of Advances Outstanding exceeds such amount (and additional collateral in an amount at least equal to the applicable Allocable Credit Facility Amount has not been delivered by the Borrower to the Lender), as a condition precedent to the substitution of a Substituted Mortgaged Property into the Collateral Pool, the Borrower shall pay such excess. Notwithstanding the foregoing, in no event shall the value of the additional collateral exceed 15% of the principal balance of the Loans Outstanding. Any payment received by the Lender under this Section 7.04(d) shall be applied against Loans Outstanding in the manner prescribed for Release Prices pursuant to Section 7.02. The additional collateral shall be released to the Borrower upon the addition of the applicable Substituted Mortgaged Property to the Collateral Pool in accordance with this Section 7.05.

ARTICLE VIII
EXPANSION OF CREDIT FACILITY

SECTION 8.01 Right to Increase Commitment. Subject to the terms, conditions and limitations of this Article, the Borrower shall have the right, at any time or from time to time during the Fixed Facility Availability Period, to increase the Fixed Facility Commitment, the Variable Facility Commitment, or both. Either Commitment may be increased by the addition of Collateral to the Collateral Pool and/or increases in the value of the Mortgaged Properties. The Borrower’s right to increase the Commitment is subject to the following limitations:

               (a)          Maximum Amount of Increase in Commitment. Notwithstanding the terms of this Agreement and Section 8.01 of the Other Credit Agreement, Borrower shall have the right, upon repayment in full of the loans secured by those certain Multifamily Residential

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Properties identified on Exhibit HH (the “DUS Properties”), to increase the Commitment by an additional $163,392,000 (to a maximum Commitment of $600,000,000). Borrower acknowledges that the DUS Properties are currently subject to liens under the Fannie Mae Delegated Underwriting and Servicing program and are serviced by Lender. Borrower hereby agrees that the total commitment, when added to the commitment of the Lender to the Borrower under the Other Credit Agreement, shall not exceed $850,000,000.

               (b)          Minimum Request. Each Request for an increase in the Commitment shall be in the minimum amount of $3,000,000.

                (c)          Terms and Conditions. The terms and conditions of this Agreement shall apply to any increase in the Commitment closed not later than December 31, 2005. The terms and conditions (including pricing, other than in respect of an increase in the Commitment in an amount equal to or less than the Reserved Amount on which the Rate Preservation Fee has been paid, in which case the terms and conditions, including pricing, shall be as set forth in this Agreement) applicable to any increase in the Commitment after December 31, 2005 shall be acceptable to Lender in its discretion.

SECTION 8.02 Procedure for Obtaining Increases in Commitment.

               (a)          Request. In order to obtain an increase in the Commitment, the Borrower shall deliver a written request for an increase (a “Credit Facility Expansion Request”) to the Lender, in the form attached as Exhibit V to this Agreement. Each Credit Facility Expansion Request shall be accompanied by the following:

          (i)          A designation of the amount of the proposed increase;

          (ii)          A designation of the increase in the Fixed Facility Credit Commitment and the Variable Facility Credit Commitment;

          (iii)          If any Multifamily Residential Properties are proposed to be added to the Collateral Pool, a list of such Multifamily Residential Properties and evidence of compliance with the requirements of Article VI in connection with such addition;

          (iv)          [Intentionally Deleted];

          (v)          A request that the Lender inform the Borrower of the Fixed Facility Fee and the Variable Facility Fee to apply to Advances drawn from such increase in the Commitment.

               (b)          Closing. If all conditions contained in Section 8.03 are satisfied, the Lender shall permit the requested increase in the Commitment, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within fifteen (15) Business Days after the Lender’s receipt of the Credit Facility Expansion Request (or on such other date to which the Borrower and the Lender may agree).

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SECTION 8.03 Conditions Precedent to Increase in Commitment. The right of the Borrower to increase the Commitment is subject to the satisfaction of the following conditions precedent on or before the Closing Date:

                    (a)          After giving effect to the requested increase the Coverage and LTV Tests will be satisfied;

                    (b)          Payment by the Borrower of the Expansion Origination Fee in accordance with Section 16.02(b) and all legal fees and expenses payable by the Borrower in connection with the expansion of the Commitment pursuant to Section 16.04(b);

                    (c)          The receipt by the Lender of an endorsement to each Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date, increasing the limits of liability to the Commitment, as increased under this Article, showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date (or, if applicable, the last Closing Date with respect to which the Title Insurance Policy was endorsed), the Permitted Liens, and other exceptions approved by the Lender, together with any reinsurance agreements required by the Lender;

                    (d)          The receipt by the Lender of fully executed original copies of all Credit Facility Expansion Loan Documents, each of which shall be in full force and effect, and in form and substance satisfactory to the Lender in all respects;

                    (e)          if determined necessary by the Lender, the Borrower’s agreement to such geographical diversification requirements as the Lender may determine; and

                    (f)          The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE IX
PARTIAL TERMINATION OF FACILITIES

SECTION 9.01 Right to Complete or Partial Termination of Facilities. Subject to the terms and conditions of this Article, the Borrower shall have the right to permanently reduce the Variable Facility Commitment and the Fixed Facility Commitment in accordance with the provisions of this Article.

SECTION 9.02 Procedure for Complete or Partial Termination of Facilities.

                    (a)          Request. In order to permanently reduce the Variable Facility Commitment or the Fixed Facility Commitment, the Borrower may deliver a written request for the reduction (“Facility Termination Request”) to the Lender, in the form attached as Exhibit W to this Agreement. A permanent reduction of the Variable Facility Commitment to $0 shall be referred to as a “Complete Variable Facility Termination.” A permanent reduction of the Fixed Facility Commitment to $0 shall be referred to as a “Complete Fixed Facility Termination.” The Facility Termination Request shall be accompanied by the following:

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                    (i)          A designation of the proposed amount of the reduction in the Variable Facility Commitment or Fixed Facility Commitment, as the case may be; and

                    (ii)          Unless there is a Complete Variable Facility Termination, or a Complete Fixed Facility Termination, a designation by the Borrower of any Variable Advances which will be prepaid or Fixed Advances which will be prepaid or defeased, as the case may be.

Any release of Collateral, whether or not made in connection with a Facility Termination Request, must comply with all conditions to a release which are set forth in Article VII.

                    (b)          Closing. If all conditions contained in Section 9.03 are satisfied, the Lender shall permit the Variable Facility Commitment or Fixed Facility Commitment as the case may be, to be reduced to the amount designated by the Borrower, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, within fifteen (15) Business Days after the Lender’s receipt of the Facility Termination Request (or on such other date to which the Borrower and the Lender may agree), by executing and delivering a counterpart of an amendment to this Agreement, in the form attached as Exhibit X to this Agreement, evidencing the reduction in the Facility Commitment. The document referred to in the preceding sentence is referred to in this Article as the “Facility Termination Document.”

SECTION 9.03 Conditions Precedent to Complete or Partial Termination of Facilities. The right of the Borrower to reduce the Facility Commitment and the obligation of the Lender to execute the Facility Termination Document, are subject to the satisfaction of the following conditions precedent on or before the Closing Date:

                    (a)          Payment by the Borrower in full of all of the Variable Advances Outstanding and Fixed Facility Advances Outstanding, as the case may be, required to be paid in order that the aggregate unpaid principal balance of all Variable Advances Outstanding and Fixed Facility Advances Outstanding, as the case may be, is not greater than the Variable Facility Commitment and Fixed Facility Commitment, as the case may be, including any associated prepayment premiums or other amounts due under the Notes (but if the Borrower is not required to prepay all of the Variable Advances or Fixed Facility Advances Outstanding, as the case may be, the Borrower shall have the right to select which of the Variable Advances or Fixed Facility Advances, as the case may be, shall be repaid);

                    (b)          Payment by the Borrower of the Facility Termination Fee;

                    (c)          Receipt by the Lender on the Closing Date of one or more counterparts of the Facility Termination Document, dated as of the Closing Date, signed by each of the parties (other than the Lender) who is a party to such Facility Termination Document; and

                    (d)          The satisfaction of all applicable General Conditions set forth in Article XI.

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ARTICLE X
TERMINATION OF CREDIT FACILITY

SECTION 10.01 Right to Terminate Credit Facility. Subject to the terms and conditions of this Article, the Borrower shall have the right to terminate this Agreement and the Credit Facility and receive a release of all of the Collateral from the Collateral Pool in accordance with the provisions of this Article.

SECTION 10.02 Procedure for Terminating Credit Facility.

                    (a)          Request. In order to terminate this Agreement and the Credit Facility, the Borrower shall deliver a written request for the termination (“Credit Facility Termination Request”) to the Lender, in the form attached as Exhibit Y to this Agreement.

                    (b)          Closing. If all conditions contained in Section 10.03 are satisfied, this Agreement shall terminate, and the Lender shall cause all of the Collateral to be released from the Collateral Pool, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, within 30 Business Days after the Lender’s receipt of the Credit Facility Termination Request (or on such other date to which the Borrower and the Lender may agree), by executing and delivering, and causing all applicable parties to execute and deliver, all at the sole cost and expense of the Borrower, (i) instruments, in the form customarily used by the Lender for releases in the jurisdictions in which the Mortgaged Properties are located, releasing all of the Security Instruments as a Lien on the Mortgaged Properties, (ii) UCC-3 Termination Statements terminating all of the UCC-1 Financing Statements perfecting a Lien on the personal property located on the Mortgaged Properties, in form customarily used in the jurisdiction governing the perfection of the security interest being released, (iii) such other documents and instruments as the Borrower may reasonably request evidencing the release of the Collateral from any lien securing the Obligations (including a termination of any restriction on the use of any accounts relating to the Collateral) and the release and return to the Borrower of any and all escrowed amounts relating thereto, (iv) instruments releasing the Borrower from its obligations under this Agreement and any and all other Loan Documents, and (v) the Notes, each marked paid and canceled. The instruments referred to in the preceding sentence are referred to in this Article as the “Facility Termination Documents.”

SECTION 10.03 Conditions Precedent to Termination of Credit Facility. The right of the Borrower to terminate this Agreement and the Credit Facility and to receive a release of all of the Collateral from the Collateral Pool and the Lender’s obligation to execute and deliver the Facility Termination Documents on the Closing Date are subject to the following conditions precedent:

                    (a)          Payment by the Borrower in full of all of the Notes Outstanding on the Closing Date, including any associated prepayment premiums or other amounts due under the Notes and all other amounts owing by the Borrower to the Lender under this Agreement;

                    (b)          If applicable, Defeasance by the Borrower, in accordance with the provisions of Section 3.10 of this Agreement, with respect to all Fixed Facility Notes Outstanding on the Closing Date;

                    (c)          Payment of the Facility Termination Fee; and

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                    (d)          The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE XI
GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS

          The obligation of the Lender to close the transaction requested in a Request shall be subject to the following conditions precedent (“General Conditions”) in addition to any other conditions precedent set forth in this Agreement:

SECTION 11.01 Conditions Applicable to All Requests. Each of the following conditions precedent shall apply to all Requests:

                    (a)          Payment of Expenses. The payment by the Borrower of the Lender’s reasonable fees and expenses payable in accordance with this Agreement.

                    (b)          No Material Adverse Change. Except in connection with a Credit Facility Termination Request, there has been no material adverse change in the financial condition, business or prospects of the Borrower or in the physical condition, operating performance or value of any of the Mortgaged Properties since the Initial Closing Date.

                    (c)          No Default. Except in connection with a Credit Facility Termination Request, there shall exist no Event of Default or Potential Event of Default on the Closing Date for the Request and, after giving effect to the transaction requested in the Request, no Event of Default or Potential Event of Default shall have occurred.

                    (d)          No Insolvency. Except in connection with a Credit Facility Termination Request, receipt by the Lender on the Closing Date for the Request of evidence satisfactory to the Lender that the Borrower is not insolvent (within the meaning of any applicable federal or state laws relating to bankruptcy or fraudulent transfers) or will be rendered insolvent by the transactions contemplated by the Loan Documents, including the making of a Future Advance, or, after giving effect to such transactions, will be left with an unreasonably small capital with which to engage in its business or undertakings, or will have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature or will have intended to hinder, delay or defraud any existing or future creditor.

                    (e)          No Untrue Statements. The Loan Documents shall not contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary in order to make the information contained therein not misleading.

                    (f)          Representations and Warranties. Except in connection with a Credit Facility Termination Request, all representations and warranties made by the Borrower in the Loan Documents shall be true and correct in all material respects on the Closing Date for the Request with the same force and effect as if such representations and warranties had been made on and as of the Closing Date for the Request.

                    (g)          No Condemnation or Casualty. Except in connection with a Credit Facility Termination Request, there shall not be pending or threatened any condemnation or

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other taking, whether direct or indirect, against any Mortgaged Property and there shall not have occurred any casualty to any improvements located on any Mortgaged Property, which casualty would have a material adverse effect on the continued operations of such Mortgaged Property.

                    (h)          [Intentionally Deleted]

                    (i)          Delivery of Closing Documents. The receipt by the Lender of the following, each dated as of the Closing Date for the Request, in form and substance satisfactory to the Lender in all respects:

                    (i)          A Compliance Certificate;

                    (ii)         An Organizational Certificate; and

                    (iii)        Such other documents, instruments, approvals (and, if requested by the Lender, certified duplicates of executed copies thereof) and opinions as the Lender may reasonably request.

                    (j)          Covenants. Except in connection with a Credit Facility Termination Request, the Borrower is in full compliance with each of the covenants set forth in Articles XIII, XIV and XV of this Agreement, without giving effect to any notice and cure rights of the Borrower.

SECTION 11.02 Delivery of Closing Documents Relating to Collateral Addition Request, Collateral Substitution Request, Credit Facility Expansion Request or Future Advance Request. With respect to the closing of a Collateral Addition Request, a Collateral Substitution Request, or a Credit Facility Expansion Request, it shall be a condition precedent that the Lender receives each of the following, each dated as of the Closing Date for the Request, in form and substance satisfactory to the Lender in all respects:

                    (a)          Loan Documents. Fully executed original copies of each Loan Document required to be executed in connection with the Request, duly executed and delivered by the parties thereto (other than the Lender), each of which shall be in full force and effect.

                    (b)          Opinion. Favorable opinions of counsel to the Borrower, as to the due organization and qualification of the Borrower, the due authorization, execution, delivery and enforceability of each Loan Document executed in connection with the Request and such other matters as the Lender may reasonably require.

SECTION 11.03 Delivery of Property-Related Documents. With respect to each of the Mortgaged Properties to be made part of the Collateral Pool on the Closing Date of a Collateral Addition Request or a Collateral Substitution Request, it shall be a condition precedent that the Lender receive each of the following, each dated as of the Closing Date of a Collateral Addition Request or a Collateral Substitution Request, as the case may be, in form and substance satisfactory to the Lender in all respects:

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                    (a)          A favorable opinion of local counsel to the Borrower or the Lender as to the enforceability of the Security Instrument, and any other Loan Documents, executed in connection with the Request.

                    (b)          A commitment for the Title Insurance Policy applicable to the Mortgaged Property and a pro forma Title Insurance Policy based on the Commitment.

                    (c)          The Insurance Policy (or a certified copy of the Insurance Policy) applicable to the Mortgaged Property.

                    (d)          The Survey applicable to the Mortgaged Property.

                    (e)          Evidence satisfactory to the Lender of compliance of the Mortgaged Property with property laws as required by Sections 205 and 206 of Part III of the DUS Guide.

                    (f)          An Appraisal of the Mortgaged Property.

                    (g)          A Replacement Reserve Agreement, providing for the establishment of a replacement reserve account, to be pledged to the Lender, in which the owner shall (unless waived by the Lender) periodically deposit amounts for replacements for improvements at the Mortgaged Property and as additional security for the Borrower’s obligations under the Loan Documents.

                    (h)          A Completion/Repair and Security Agreement, together with required escrows, on the standard form required by the DUS Guide.

                    (i)          An Assignment of Management Agreement, on the standard form required by the DUS Guide.

                    (j)          An Assignment of Leases and Rents, if the Lender determines one to be necessary or desirable, provided that the provisions of any such assignment shall be substantively identical to those in the Security Instrument covering the Collateral, with such modifications as may be necessitated by applicable state or local law.

ARTICLE XII
REPRESENTATIONS AND WARRANTIES

SECTION 12.01 Representations and Warranties of the Borrower. The Borrower hereby represents and warrants to the Lender as follows:

          (a)          Due Organization; Qualification.

                    (1)          The REIT is qualified to transact business and is in good standing in the State of Tennessee. The Borrower is qualified to transact business and is in good standing in the State in which it is organized and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity of, the enforceability of, or the ability of the Borrower to perform the Obligations under this Agreement and the

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other Loan Documents. The Borrower is qualified to transact business and is in good standing in each State in which it owns a Mortgaged Property.

                    (2)          The Borrower’s principal place of business, principal office and office where it keeps its books and records as to the Collateral is located at the address set out in Section 23.08.

                    (b)          Power and Authority. The Borrower has the requisite power and authority (i) to own its properties and to carry on its business as now conducted and as contemplated to be conducted in connection with the performance of the Obligations hereunder and under the other Loan Documents and (ii) to execute and deliver this Agreement and the other Loan Documents and to carry out the transactions contemplated by this Agreement and the other Loan Documents.

                    (c)          Due Authorization. The execution, delivery and performance of this Agreement and the other Loan Documents have been duly authorized by all necessary action and proceedings by or on behalf of the Borrower, and no further approvals or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of the Borrower as a condition to the valid execution, delivery and performance by the Borrower of this Agreement or any of the other Loan Documents.

                    (d)          Valid and Binding Obligations. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by the Borrower and constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors’ rights generally or by equitable principles or by the exercise of discretion by any court.

                    (e)          Non-contravention; No Liens. Neither the execution and delivery of this Agreement and the other Loan Documents, nor the fulfillment of or compliance with the terms and conditions of this Agreement and the other Loan Documents nor the performance of the Obligations:

                    (1)          does or will conflict with or result in any breach or violation of any Applicable Law enacted or issued by any Governmental Authority or other agency having jurisdiction over the Borrower, any of the Mortgaged Properties or any other portion of the Collateral or other assets of the Borrower, or any judgment or order applicable to the Borrower or to which the Borrower, any of the Mortgaged Properties or other assets of the Borrower is subject;

                    (2)          does or will conflict with or result in any material breach or violation of, or constitute a default under, any of the terms, conditions or provisions of the Borrower’s Organizational Documents, any indenture, existing agreement or other instrument to which the Borrower is a party or to which the Borrower, any of the Mortgaged Properties or any other portion of the Collateral or other assets of the Borrower is subject;

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                    (3)          does or will result in or require the creation of any Lien on all or any portion of the Collateral or any of the Mortgaged Properties, except for the Permitted Liens; or

                    (4)          does or will require the consent or approval of any creditor of the Borrower, any Governmental Authority or any other Person except such consents or approvals which have already been obtained.

                    (f)          Pending Litigation or other Proceedings. There is no pending or, to the best knowledge of the Borrower, threatened action, suit, proceeding or investigation, at law or in equity, before any court, board, body or official of any Governmental Authority or arbitrator against or affecting any Mortgaged Property or any other portion of the Collateral or other assets of the Borrower, which, if decided adversely to the Borrower, would have, or may reasonably be expected to have, a Material Adverse Effect. The Borrower is not in default with respect to any order of any Governmental Authority.

                    (g)          Solvency. The Borrower is not insolvent and will not be rendered insolvent by the transactions contemplated by this Agreement or the other Loan Documents and after giving effect to such transactions, the Borrower will not be left with an unreasonably small amount of capital with which to engage in its business or undertakings, nor will the Borrower has incurred, have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. The Borrower did not receive less than a reasonably equivalent value in exchange for incurrence of the Obligations. There (i) is no contemplated, pending or, to the best of the Borrower’s knowledge, threatened bankruptcy, reorganization, receivership, insolvency or like proceeding, whether voluntary or involuntary, affecting the Borrower or any of the Mortgaged Properties and (ii) has been no assertion or exercise of jurisdiction over the Borrower or any of the Mortgaged Properties by any court empowered to exercise bankruptcy powers.

                    (h)          No Contractual Defaults. There are no defaults by the Borrower or, to the knowledge of the Borrower, by any other Person under any contract to which the Borrower is a party relating to any Mortgaged Property, including any management, rental, service, supply, security, maintenance or similar contract, other than defaults which do not have, and are not reasonably expected to have, a Material Adverse Effect. Neither the Borrower nor, to the knowledge of the Borrower, any other Person, has received notice or has any knowledge of any existing circumstances in respect of which it could receive any notice of default or breach in respect of any contracts affecting or concerning any Mortgaged Property.

                    (i)          Compliance with the Loan Documents. The Borrower is in compliance with all provisions of the Loan Documents to which it is a party or by which it is bound. The representations and warranties made by the Borrower in the Loan Documents are true, complete and correct as of the Closing Date and do not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

                    (j)          ERISA.

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          1.          The Borrower is not an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the assets of Borrower do not constitute “plan assets” of one or more such plans within the meaning of 29 Code of Federal Regulations (“C.F.R.”) Section 2510.3-101 or the Advances from Lender to Borrower described hereunder are exempt from the restrictions of Section 406(a)(1)(A) through (D) of ERISA as well as from the taxes imposed by Section 4975(a) and (b) of the Internal Revenue Code of 1986, as amended (“Code”), by reason of Department of Labor Prohibited Transaction Exemption 96-23 (“INHAM Exemption”).

          2.          The Borrower is not a “governmental plan” within the meaning of Section 3(32) of ERISA.

          3.          The Borrower and transactions with the Borrower are not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans.

          4.          One or more of the following circumstances is/are true:

                    (i)          Equity interests in the Borrower are publicly offered securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2).

                    (ii)         Less than twenty-five percent (25%) of all equity interests in the Borrower are held by “benefit plan investors” within the meaning of 29 C.F.R. Section 2510.3-101(f)(2).

                    (iii)        The Borrower qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. Section 2510.3-101(c) or (e).

                    (iv)         The Advances are exempt from the restrictions of Section 406(a)(1)(A) through (D) of ERISA as well as from the taxes imposed by Section 4975(a) and (b) of the Code.

                    (k)          Financial Information. The financial projections relating to the Borrower and delivered to the Lender on or prior to the date hereof, if any, were prepared on the basis of assumptions believed by the Borrower, in good faith at the time of preparation, to be reasonable and the Borrower is not aware of any fact or information that would lead it to believe that such assumptions are incorrect or misleading in any material respect; provided, however, that no representation or warranty is made that any result set forth in such financial projections shall be achieved. The financial statements of the Borrower which have been furnished to the Lender are complete and accurate in all material respects and present fairly the financial condition of the Borrower, as of its date in accordance with GAAP, applied on a consistent basis, and since the date of the most recent of such financial statements no event has occurred which would have, or may reasonably be expected to have a Material Adverse Effect, and there has not been any material transaction entered into by the Borrower other than transactions in the ordinary course of business. The Borrower has no material contingent obligations which are not otherwise disclosed in its most recent financial statements.

                    (l)          Accuracy of Information. No information, statement or report furnished in writing to the Lender by the Borrower in connection with this Agreement or any other Loan

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Document or in connection with the consummation of the transactions contemplated hereby and thereby contains any material misstatement of fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; and the representations and warranties of the Borrower and the statements, information and descriptions contained in the Borrower’s closing certificates, as of the Closing Date, are true, correct and complete in all material respects, do not contain any untrue statement or misleading statement of a material fact, and do not omit to state a material fact required to be stated therein or necessary to make the certifications, representations, warranties, statements, information and descriptions contained therein, in light of the circumstances under which they were made, not misleading; and the estimates and the assumptions contained herein and in any certificate of the Borrower delivered as of the Closing Date are reasonable and based on the best information available to the Borrower.

                    (m)          No Conflicts of Interest. To the best knowledge of the Borrower, no member, officer, agent or employee of the Lender has been or is in any manner interested, directly or indirectly, in that Person’s own name, or in the name of any other Person, in the Loan Documents, the Borrower or any Mortgaged Property, in any contract for property or materials to be furnished or used in connection with such Mortgaged Property or in any aspect of the transactions contemplated by the Loan Documents.

                    (n)          Governmental Approvals. No Governmental Approval not already obtained or made is required for the execution and delivery of this Agreement or any other Loan Document or the performance of the terms and provisions hereof or thereof by the Borrower.

                    (o)          Governmental Orders. The Borrower is not presently under any cease or desist order or other orders of a similar nature, temporary or permanent, of any Governmental Authority which would have the effect of preventing or hindering performance of its duties hereunder, nor are there any proceedings presently in progress or to its knowledge contemplated which would, if successful, lead to the issuance of any such order.

                    (p)          No Reliance. The Borrower acknowledges, represents and warrants that it understands the nature and structure of the transactions contemplated by this Agreement and the other Loan Documents, that it is familiar with the provisions of all of the documents and instruments relating to such transactions; that it understands the risks inherent in such transactions, including the risk of loss of all or any of the Mortgaged Properties; and that it has not relied on the Lender or Fannie Mae for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Agreement or any other Loan Document or otherwise relied on the Lender or Fannie Mae in any manner in connection with interpreting, entering into or otherwise in connection with this Agreement, any other Loan Document or any of the matters contemplated hereby or thereby.

                    (q)          Compliance with Applicable Law. The Borrower is in compliance with Applicable Law, including all Governmental Approvals, if any, except for such items of noncompliance that, singly or in the aggregate, have not had and are not reasonably expected to cause, a Material Adverse Effect.

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                    (r)          Contracts with Affiliates. Except as otherwise approved in writing by the Lender, the Borrower has not entered into and is not a party to any contract, lease or other agreement with any Affiliate of the Borrower for the provision of any service, materials or supplies to any Mortgaged Property (including any contract, lease or agreement for the provision of property management services, cable television services or equipment, gas, electric or other utilities, security services or equipment, laundry services or equipment or telephone services or equipment). The Lender hereby approves the property management agreements set forth on Exhibit AA to this Agreement.

                    (s)          Lines of Business. The Borrower is not engaged in any businesses other than the acquisition, ownership, development, construction, leasing, financing or management of Multifamily Residential Properties, and the conduct of these businesses does not violate the Organizational Documents pursuant to which it is formed.

                    (t)          Status as a Real Estate Investment Trust. The REIT is qualified, and is taxed as, a real estate investment trust under Subchapter M of the Internal Revenue Code, and is not engaged in any activities which would jeopardize such qualification and tax treatment.

SECTION 12.02 Representations and Warranties of the Borrower. The Borrower hereby represents and warrants to the Lender as follows with respect to each of the Mortgaged Properties:

                    (a)          Title. The Borrower has good, valid, marketable and indefeasible title to each Mortgaged Property (either in fee simple or as tenant under a ground lease meeting all of the requirements of the DUS Guide), free and clear of all Liens whatsoever except the Permitted Liens. Each Security Instrument, if and when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create a valid, perfected first lien on the Mortgaged Property intended to be encumbered thereby (including the Leases related to such Mortgaged Property and the rents and all rights to collect rents under such Leases), subject only to Permitted Liens. Except for any Permitted Liens, there are no Liens or claims for work, labor or materials affecting any Mortgaged Property which are or may be prior to, subordinate to, or of equal priority with, the Liens created by the Loan Documents. The Permitted Liens do not have, and may not reasonably be expected to have, a Material Adverse Effect.

                    (b)          Impositions. The Borrower has filed all property and similar tax returns required to have been filed by it with respect to each Mortgaged Property and has paid and discharged, or caused to be paid and discharged, all installments for the payment of all Taxes due to date, and all other material Impositions imposed against, affecting or relating to each Mortgaged Property other than those which have not become due, together with any fine, penalty, interest or cost for nonpayment pursuant to such returns or pursuant to any assessment received by it, provided, however, that if the Borrower contests in good faith and by appropriate proceeding the validity or applicability of any Imposition, provides to the Lender security in such amount and in such form as the Lender may reasonably require, then compliance with the Imposition in question shall be suspended during the pendency of such contest. The Borrower has no knowledge of any new proposed Tax, levy or other governmental or private assessment

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or charge in respect of any Mortgaged Property which has not been disclosed in writing to the Lender.

                    (c)          Zoning. Each Mortgaged Property complies in all material respects with all Applicable Laws affecting such Mortgaged Property. Without limiting the foregoing, all material Permits, including certificates of occupancy, to the extent issued by the relevant jurisdiction, have been issued and are in full force and effect. Neither the Borrower nor, to the knowledge of the Borrower, any former owner of any Mortgaged Property, has received any written notification or threat of any actions or proceedings regarding the noncompliance or nonconformity of any Mortgaged Property with any Applicable Laws or Permits, nor is the Borrower otherwise aware of any such pending actions or proceedings.

                    (d)          Leases. The Borrower has delivered to the Lender a true and correct copy of their form apartment lease for each Mortgaged Property (and, with respect to leases executed prior to the date on which the Borrower first owned the Mortgaged Property, the form apartment lease used for such leases), and each Lease with respect to such Mortgaged Property is in the form thereof, with no material modifications thereto, except as previously disclosed in writing to the Lender. Except as set forth in a Rent Roll, no Lease for any unit in any Mortgaged Property (i) is for a term in excess of one year, including any renewal or extension period unless such renewal or extension period is subject to termination by the Borrower upon not more than 30 days’ written notice, (ii) provides for prepayment of more than one month’s rent, or (iii) was entered into in other than the ordinary course of business.

                    (e)          Rent Roll. The Borrower has executed and delivered to the Lender a Rent Roll for each Mortgaged Property, each dated as of and delivered within 30 days prior to the Closing Date. Each Rent Roll sets forth each and every unit subject to a Lease which is in full force and effect as of the date of such Rent Roll. The information set forth on each Rent Roll is true, correct and complete in all material respects as of its date and there has occurred no material adverse change in the information shown on any Rent Roll from the date of each such Rent Roll to the Closing Date. Except as disclosed in the Rent Roll with respect to each Mortgaged Property or otherwise previously disclosed in writing to the Lender, no Lease is in effect as of the date of the Rent Roll with respect to such Mortgaged Property.

                    (f)          Status of Landlord under Leases. Except for any assignment of leases and rents which is a Permitted Lien or which is to be released in connection with the consummation of the transactions contemplated by this Agreement, the Borrower is the owner and holder of the landlord’s interest under each of the Leases of units in each Mortgaged Property and there are no prior outstanding assignments of any such Lease, or any portion of the rents, additional rents, charges, issues or profits due and payable or to become due and payable thereunder.

                    (g)          Enforceability of Leases. Each Lease constitutes the legal, valid and binding obligation of the Borrower and, to the knowledge of the Borrower, of each of the other parties thereto, enforceable in accordance with its terms, subject only to bankruptcy, insolvency, reorganization or other similar laws relating to creditors’ rights generally, and equitable principles, and except as disclosed in writing to the Lender, no notice of any default by the Borrower which remains uncured has been sent by any tenant under any such Lease, other than

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defaults which do not have, and are not reasonably expected to have, a Material Adverse Effect on the Mortgaged Property subject to the Lease.

                    (h)          No Lease Options. All premises demised to tenants under Leases are occupied by such tenants as tenants only. No Lease contains any option or right to purchase, right of first refusal or any other similar provisions. No option or right to purchase, right of first refusal, purchase contract or similar right exists with respect to any Mortgaged Property.

                    (i)          Insurance. The Borrower has delivered to the Lender true and correct certified copies of all Insurance Policies currently in effect as of the date of this Agreement with respect to the Mortgaged Property which it owns. Each such Insurance Policy complies in all material respects with the requirements set forth in the Loan Documents.

                    (j)          Tax Parcels. Each Mortgaged Property is on one or more separate tax parcels, and each such parcel (or parcels) is (or are) separate and apart from any other property.

                    (k)          Encroachments. Except as disclosed on the Survey with respect to each Mortgaged Property, none of the improvements located on any Mortgaged Property encroaches upon the property of any other Person or upon any easement encumbering the Mortgaged Property, nor lies outside of the boundaries and building restriction lines of such Mortgaged Property and no improvement located on property adjoining such Mortgaged Property lies within the boundaries of or in any way encroaches upon such Mortgaged Property.

                    (l)          Independent Unit. Except for Permitted Liens and as disclosed on Exhibit BB to this Agreement, or as disclosed in a Title Insurance Policy or Survey for the Mortgaged Property, each Mortgaged Property is an independent unit which does not rely on any drainage, sewer, access, parking, structural or other facilities located on any Property not included either in such Mortgaged Property or on public or utility easements for the (i) fulfillment of any zoning, building code or other requirement of any Governmental Authority that has jurisdiction over such Mortgaged Property, (ii) structural support, or (iii) the fulfillment of the requirements of any Lease or other agreement affecting such Mortgaged Property. The Borrower, directly or indirectly, has the right to use all amenities, easements, public or private utilities, parking, access routes or other items necessary or currently used for the operation of each Mortgaged Property. All public utilities are installed and operating at each Mortgaged Property and all billed installation and connection charges have been paid in full. Each Mortgaged Property is either (x) contiguous to or (y) benefits from an irrevocable unsubordinated easement permitting access from such Mortgaged Property to a physically open, dedicated public street, and has all necessary permits for ingress and egress and is adequately serviced by public water, sewer systems and utilities. No building or other improvement not located on a Mortgaged Property relies on any part of the Mortgaged Property to fulfill any zoning requirements, building code or other requirement of any Governmental Authority that has jurisdiction over the Mortgaged Property, for structural support or to furnish to such building or improvement any essential building systems or utilities.

                    (m)          Condition of the Mortgaged Properties. Except as disclosed in any third party report delivered to the Lender prior to the date on which the Borrower’s Mortgaged Property is added to the Collateral Pool, or otherwise disclosed in writing by the Borrower to the

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Lender prior to such date, each Mortgaged Property is in good condition, order and repair, there exist no structural or other material defects in such Mortgaged Property (whether patent or, to the best knowledge of the Borrower, latent or otherwise) and the Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in such Mortgaged Property, or any part of it, which would adversely affect the insurability of such Mortgaged Property or cause the imposition of extraordinary premiums or charges for insurance or of any termination or threatened termination of any policy of insurance or bond. No claims have been made against any contractor, architect or other party with respect to the condition of any Mortgaged Property or the existence of any structural or other material defect therein. No Mortgaged Property has been materially damaged by casualty which has not been fully repaired or for which insurance proceeds have not been received or are not expected to be received except as previously disclosed in writing to the Lender. There are no proceedings pending for partial or total condemnation of any Mortgaged Property except as disclosed in writing to the Lender.

SECTION 12.03 Representations and Warranties of the Lender. The Lender hereby represents and warrants to the Borrower as follows:

                    (a)          Due Organization. The Lender is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

                    (b)          Power and Authority. The Lender has the requisite power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement.

                    (c)          Due Authorization. The execution and delivery by the Lender of this Agreement, and the consummation by it of the transactions contemplated thereby, and the performance by it of its obligations thereunder, have been duly and validly authorized by all necessary action and proceedings by it or on its behalf.

ARTICLE XIII
AFFIRMATIVE COVENANTS OF THE BORROWER

The Borrower agrees and covenants with the Lender that, at all times during the Term of this Agreement:

SECTION 13.01 Compliance with Agreements. The Borrower shall comply with all the terms and conditions of each Loan Document to which it is a party or by which it is bound; provided, however, that the Borrower’s failure to comply with such terms and conditions shall not be an Event of Default until the expiration of the applicable notice and cure periods, if any, specified in the applicable Loan Document.

SECTION 13.02 Maintenance of Existence. The Borrower shall maintain its existence and continue to be a limited partnership or corporation, as the case may be, organized under the laws of the state of its organization. The Borrower shall continue to be duly qualified to do business in each jurisdiction in which such qualification is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity of, the enforceability of, or the ability to perform, its obligations under this Agreement or any other Loan Document.

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SECTION 13.03 Maintenance of REIT Status. During the Term of this Agreement, the REIT shall qualify, and be taxed as, a real estate investment trust under Subchapter M of the Internal Revenue Code, and will not be engaged in any activities which would jeopardize such qualification and tax treatment.

SECTION 13.04 Financial Statements; Accountants’ Reports; Other Information. The Borrower shall keep and maintain at all times complete and accurate books of accounts and records in sufficient detail to correctly reflect (x) all of the Borrower’s financial transactions and assets and (y) the results of the operation of each Mortgaged Property and copies of all written contracts, Leases and other instruments which affect each Mortgaged Property (including all bills, invoices and contracts for electrical service, gas service, water and sewer service, waste management service, telephone service and management services). In addition, the Borrower shall furnish, or cause to be furnished, to the Lender:

                    (a)          Annual Financial Statements. As soon as available, and in any event within 90 days after the close of its fiscal year during the Term of this Agreement, the audited balance sheet of the REIT and its Subsidiaries as of the end of such fiscal year, the audited statement of income, equity and retained earnings of the REIT and its Subsidiaries for such fiscal year and the audited statement of cash flows of the REIT and its Subsidiaries for such fiscal year, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the prior fiscal year, prepared in accordance with GAAP, consistently applied, and accompanied by a certificate of the REIT’s independent certified public accountants to the effect that such financial statements have been prepared in accordance with GAAP, consistently applied, and that such financial statements fairly present the results of its operations and financial condition for the periods and dates indicated, with such certification to be free of exceptions and qualifications as to the scope of the audit or as to the going concern nature of the business.

                    (b)          Quarterly Financial Statements. As soon as available, and in any event within 45 days after each of the first three fiscal quarters of each fiscal year during the Term of this Agreement, the unaudited balance sheet of the REIT and its Subsidiaries as of the end of such fiscal quarter, the unaudited statement of income and retained earnings of the REIT and its Subsidiaries and the unaudited statement of cash flows of the REIT and its Subsidiaries for the portion of the fiscal year ended with the last day of such quarter, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the previous fiscal year, accompanied by a certificate of the Chief Financial Officer of the REIT to the effect that such financial statements have been prepared in accordance with GAAP, consistently applied, and that such financial statements fairly present the results of its operations and financial condition for the periods and dates indicated subject to year end adjustments in accordance with GAAP.

                    (c)          Quarterly Property Statements. As soon as available, and in any event within 45 days after each Calendar Quarter, a statement of income and expenses of each Mortgaged Property accompanied by a certificate of the Chief Financial Officer of the REIT to the effect that each such statement of income and expenses fairly, accurately and completely presents the operations of each such Mortgaged Property for the period indicated.

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                    (d)          Annual Property Statements. On an annual basis within forty-five (45) days of the end of its fiscal year, an annual statement of income and expenses of each Mortgaged Property accompanied by a certificate of the Chief Financial Officer of the REIT to the effect that each such statement of income and expenses fairly, accurately and completely presents the operations of each such Mortgaged Property for the period indicated.

                    (e)          Updated Rent Rolls. Upon the Lender’s request (but not more frequently than quarterly), a current Rent Roll for each Mortgaged Property, showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date, the rent payable, the rent paid and any other information requested by the Lender and accompanied by a certificate of the Chief Financial Officer of the REIT to the effect that each such Rent Roll fairly, accurately and completely presents the information required therein.

                    (f)          Security Deposit Information. Upon the Lender’s request, an accounting of all security deposits held in connection with any Lease of any part of any Mortgaged Property, including the name and identification number of the accounts in which such security deposits are held, the name and address of the financial institutions in which such security deposits are held and the name and telephone number of the person to contact at such financial institution, along with any authority or release necessary for the Lender to access information regarding such accounts.

                    (g)          Security Law Reporting Information. So long as the REIT is a reporting company under the Securities and Exchange Act of 1934, promptly upon becoming available, (a) copies of all financial statements, reports and proxy statements sent or made available generally by the Borrower, or any of its Affiliates, to their respective security holders, (b) all regular and periodic reports and all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or a similar form) and prospectuses, if any, filed by the Borrower, or any of its Affiliates, with the Securities and Exchange Commission or other Governmental Authorities, and (c) all statements made available generally by the Borrower, or any of their Affiliates, to the public concerning material developments in the business of the REIT or other party.

                    (h)          Accountants’ Reports. Promptly upon receipt thereof, copies of any reports or management letters submitted to the Borrower by its independent certified public accountants in connection with the examination of its financial statements made by such accountants (except for reports otherwise provided pursuant to subsection (a) above); provided, however, that the Borrower shall only be required to deliver such reports and management letters to the extent that they relate to the Borrower or any Mortgaged Property.

                    (i)          Annual Budgets. Promptly, and in any event within 60 days after the start of its fiscal year, an annual budget for each Mortgaged Property for such fiscal year, setting forth an estimate of all of the costs and expenses, including capital expenses, of maintaining and operating each Mortgaged Property.

                    (j)          REIT Plans and Projections. If prepared by the REIT, within 90 days after the beginning of each fiscal year, copies of (1) the REIT’s business plan for the current and the succeeding two fiscal years, (2) the REIT’s annual budget (including capital expenditure

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budgets) and projections for each Mortgaged Property; and (3) the REIT’s financial projections for the current and the succeeding two fiscal years, as prepared by the REIT’s Chief Financial Officer and in a format and with such detail as the Lender may require.

                    (k)          Strategic Plan. Within 90 days after the end of each fiscal year of the REIT, the REIT shall deliver to the Lender a written narrative discussing the REIT’s publicly disclosed short and long range plans, including its plans for operations, mergers, acquisitions and management, and accompanied by supporting financial projections and schedules, certified by a member of Senior Management as true, correct and complete (“Strategic Plan”) If the REIT’s or the Borrower’s Strategic Plan materially changes, then such person shall deliver to the Lender the Strategic Plan as so changed.

                    (l)          Annual Rental and Sales Comparable Analysis. Within 30 days after the Lender’s request, a rental and sales comparable analysis of the local real estate market in which each Mortgaged Property is located, in a form approved by the Lender.

                    (m)          Federal Tax Returns. Upon request of Lender, the Federal Tax Returns of the REIT.

                    (n)          Other Reports. Promptly upon receipt thereof, all schedules, financial statements or other similar reports delivered by the Borrower pursuant to the Loan Documents or requested by the Lender with respect to the Borrower’s business affairs or condition (financial or otherwise) or any of the Mortgaged Properties.

                    (o)          Certification. All certifications required to be delivered pursuant to this Section 13.04 shall run directly to and be for the benefit of Lender and Fannie Mae.

SECTION 13.05 Certificate of Compliance. The Borrower shall deliver to the Lender concurrently with the delivery of the financial statements and/or reports required to be delivered pursuant to Section 13.04 (a) and (b) above a certificate signed by the Chief Financial Officer of the REIT stating that, to the best knowledge of such individual following reasonable inquiry, (i) setting forth in reasonable detail the calculations required to establish whether the Borrower was in compliance with the requirements of Sections 15.02 through 15.08 on the date of such financial statements, and (ii) stating that, to the best knowledge of such individual following reasonable inquiry, no Event of Default or Potential Event of Default has occurred, or if an Event of Default or Potential Event of Default has occurred, specifying the nature thereof in reasonable detail and the action which the Borrower is taking or proposes to take with respect thereto. Any certificate required by this Section 13.05 shall run directly to and be for the benefit of Lender and Fannie Mae.

SECTION 13.06 Maintain Licenses. The Borrower shall procure and maintain in full force and effect all licenses, Permits, charters and registrations which are material to the conduct of its business and shall abide by and satisfy all terms and conditions of all such licenses, Permits, charters and registrations.

SECTION 13.07 Access to Records; Discussions With Officers and Accountants. To the extent permitted by law and in addition to the applicable requirements of the Security Instruments, the Borrower shall permit the Lender:

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                    (a)          to inspect, make copies and abstracts of, and have reviewed or audited, such of the Borrower’s books and records as may relate to the Obligations or any Mortgaged Property;

                    (b)          to discuss the Borrower’s affairs, finances and accounts with the Borrower’s officers, partners and employees;

                    (c)          to discuss the Mortgage Properties’ conditions, operations or maintenance with the managers of such Mortgaged Properties and the officers and employees of the Borrower;

                    (d)          to discuss the Borrower’s affairs, finances and accounts with its independent public accountants; and

                    (e)          to receive any other information that the Lender deems reasonably necessary or relevant in connection with any Advance, any Loan Document or the Obligations.

Notwithstanding the foregoing, prior to an Event of Default or Potential Event of Default and in the absence of an emergency, all inspections shall be conducted at reasonable times during normal business hours upon reasonable notice to the Borrower.

SECTION 13.08 Inform the Lender of Material Events. The Borrower shall promptly inform the Lender in writing of any of the following (and shall deliver to the Lender copies of any related written communications, complaints, orders, judgments and other documents relating to the following) of which the Borrower has actual knowledge:

                    (a)          Defaults. The occurrence of any Event of Default or any Potential Event of Default under this Agreement or any other Loan Document;

                    (b)          Regulatory Proceedings. The commencement of any rulemaking or disciplinary proceeding or the promulgation of any proposed or final rule which would have, or may reasonably be expected to have, a Material Adverse Effect;

                    (c)          Legal Proceedings. The commencement or threat of, or amendment to, any proceedings by or against the Borrower in any Federal, state or local court or before any Governmental Authority, or before any arbitrator, which, if adversely determined, would have, or at the time of determination may reasonably be expected to have, a Material Adverse Effect;

                    (d)          Bankruptcy Proceedings. The commencement of any proceedings by or against the Borrower under any applicable bankruptcy, reorganization, liquidation, insolvency or other similar law now or hereafter in effect or of any proceeding in which a receiver, liquidator, trustee or other similar official is sought to be appointed for it;

                    (e)          Regulatory Supervision or Penalty. The receipt of notice from any Governmental Authority having jurisdiction over the Borrower that (A) the Borrower is being placed under regulatory supervision, (B) any license, Permit, charter, membership or registration material to the conduct of the Borrower’s business or the Mortgaged Properties is to be suspended or revoked or (C) the Borrower is to cease and desist any practice, procedure or

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policy employed by the Borrower, as the case may be, in the conduct of its business, and such cessation would have, or may reasonably be expected to have, a Material Adverse Effect;

                    (f)          Environmental Claim. The receipt from any Governmental Authority or other Person of any notice of violation, claim, demand, abatement, order or other order or direction (conditional or otherwise) for any damage, including personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, pollution, contamination or other adverse effects on the environment, removal, cleanup or remedial action or for fines, penalties or restrictions, resulting from or based upon (a) the existence or occurrence, or the alleged existence or occurrence, of a Hazardous Substance Activity or (b) the violation, or alleged violation, of any Hazardous Materials Laws in connection with any Mortgaged Property or any of the other assets of the Borrower;

                    (g)          Material Adverse Effects. The occurrence of any act, omission, change or event which has a Material Adverse Effect, subsequent to the date of the most recent audited financial statements of the Borrower delivered to the Lender pursuant to Section 13.04;

                    (h)          Accounting Changes. Any material change in the Borrower’s accounting policies or financial reporting practices;

                    (i)          Legal and Regulatory Status. The occurrence of any act, omission, change or event, including any Governmental Approval, the result of which is to change or alter in any way the legal or regulatory status of the Borrower; and

                    (j)          Default on Indebtedness. The occurrence of any event that results in or could result in (i) any imminent default, default or waiver of default in respect of any Indebtedness having an unpaid principal balance of $1,000,000 or more, (ii) the failure of the Borrower to pay when due or within any applicable grace period any Indebtedness of the Borrower, or (iii) any Indebtedness of the Borrower becoming due and payable before its normal maturity by reason of a default or event of default, however described, or any other event of default shall occur and continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness.

SECTION 13.09 Intentionally Omitted.

SECTION 13.10 Inspection. The Borrower shall permit any Person designated by the Lender: (i) to make entries upon and inspections of the Mortgaged Properties; and (ii) to otherwise verify, examine and inspect the amount, quantity, quality, value and/or condition of, or any other matter relating to, any Mortgaged Property; provided, however, that prior to an Event of Default or Potential Event of Default and in the absence of an emergency, all such entries, examinations and inspections shall be conducted at reasonable times during normal business hours upon reasonable notice to the Borrower.

SECTION 13.11 Compliance with Applicable Laws. The Borrower shall comply in all material respects with all Applicable Laws now or hereafter affecting any Mortgaged Property or any part of any Mortgaged Property or requiring any alterations, repairs or improvements to

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any Mortgaged Property. The Borrower shall procure and continuously maintain in full force and effect, and shall abide by and satisfy all material terms and conditions of all Permits.

SECTION 13.12 Warranty of Title. The Borrower shall warrant and defend (a) the title to each Mortgaged Property and every part of each Mortgaged Property, subject only to Permitted Liens, and (b) the validity and priority of the lien of the applicable Loan Documents, subject only to Permitted Liens, in each case against the claims of all Persons whatsoever. The Borrower shall reimburse the Lender for any losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by the Lender if an interest in any Mortgaged Property, other than with respect to a Permitted Lien, is claimed by others.

SECTION 13.13 Defense of Actions. The Borrower shall appear in and defend any action or proceeding purporting to affect the security for this Agreement or the rights or power of the Lender hereunder, and shall pay all costs and expenses, including the cost of evidence of title and reasonable attorneys’ fees, in any such action or proceeding in which the Lender may appear. If the Borrower fails to perform any of the covenants or agreements contained in this Agreement, or if any action or proceeding is commenced that is not diligently defended by the Borrower which affects in any material respect the Lender’s interest in any Mortgaged Property or any part thereof, including eminent domain, code enforcement or proceedings of any nature whatsoever under any Applicable Law, whether now existing or hereafter enacted or amended, then the Lender may, but without obligation to do so and without notice to or demand upon the Borrower and without releasing the Borrower from any Obligation, make such appearances, disburse such sums and take such action as the Lender deems necessary or appropriate to protect the Lender’s interest, including disbursement of attorney’s fees, entry upon such Mortgaged Property to make repairs or take other action to protect the security of said Mortgaged Property, and payment, purchase, contest or compromise of any encumbrance, charge or lien which in the judgment of the Lender appears to be prior or superior to the Loan Documents. In the event (i) that any Security Instrument is foreclosed in whole or in part or that any Loan Document is put into the hands of an attorney for collection, suit, action or foreclosure, or (ii) of the foreclosure of any mortgage, deed to secure debt, deed of trust or other security instrument prior to or subsequent to any Security Instrument or any Loan Document in which proceeding the Lender is made a party or (iii) of the bankruptcy of the Borrower or an assignment by the Borrower for the benefit of their respective creditors, the Borrower shall be chargeable with and agrees to pay all reasonable costs of collection and defense, including actual attorneys’ fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes.

SECTION 13.14 Alterations to the Mortgaged Properties. Except as otherwise provided in the Loan Documents, the Borrower shall have the right to undertake any alteration, improvement, demolition, removal or construction (collectively, “Alterations”) to the Mortgaged Property which it owns without the prior consent of the Lender; provided, however, that in any case, no such Alteration shall be made to any Mortgaged Property without the prior written consent of the Lender if (i) such Alteration could reasonably be expected to adversely affect the value of such Mortgaged Property or its operation as a multifamily housing facility in substantially the same manner in which it is being operated on the date such property became Collateral, (ii) the construction of such Alteration could reasonably be expected to result in interference to the occupancy of tenants of such Mortgaged Property such that tenants in occupancy with respect to

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five percent (5%)or more of the Leases would be permitted to terminate their Leases or to abate the payment of all or any portion of their rent, or (iii) such Alteration will be completed in more than 12 months from the date of commencement or in the last year of the Term of this Agreement. Notwithstanding the foregoing, the Borrower must obtain the Lender’s prior written consent to construct Alterations with respect to the Mortgaged Property costing in excess of, with respect to any Mortgaged Property, the number of units in such Mortgaged Property multiplied by $2,000, but in any event, costs in excess of $350,000 and the Borrower must give prior written notice to the Lender of its intent to construct Alterations with respect to such Mortgaged Property costing in excess of $150,000; provided, however, that the preceding requirements shall not be applicable to Alterations made, conducted or undertaken by the Borrower as part of the Borrower’s routine maintenance and repair of the Mortgaged Properties as required by the Loan Documents.

SECTION 13.15 ERISA. The Borrower Party shall at all times remain in compliance in all material respects with all applicable provisions of ERISA, similar requirements of the PBGC, and the provisions set forth in Section 12.01(j) of this Agreement.

SECTION 13.16 Loan Document Taxes. If any tax, assessment or Imposition (other than a franchise tax or excise tax imposed on or measured by, the net income or capital (including branch profits tax) of the Lender (or any transferee or assignee thereof, including a participation holder)) (“Loan Document Taxes”) is levied, assessed or charged by the United States, or any State in the United States, or any political subdivision or taxing authority thereof or therein upon any of the Loan Documents or the obligations secured thereby, the interest of the Lender in the Mortgaged Properties, or the Lender by reason of or as holder of the Loan Documents, the Borrower shall pay all such Loan Document Taxes to, for, or on account of the Lender (or provide funds to the Lender for such payment, as the case may be) as they become due and payable and shall promptly furnish proof of such payment to the Lender, as applicable. In the event of passage of any law or regulation permitting, authorizing or requiring such Loan Document Taxes to be levied, assessed or charged, which law or regulation in the opinion of counsel to the Lender may prohibit the Borrower from paying the Loan Document Taxes to or for the Lender, the Borrower shall enter into such further instruments as may be permitted by law to obligate the Borrower to pay such Loan Document Taxes.

SECTION 13.17 Further Assurances. The Borrower, at the request of the Lender, shall execute and deliver and, if necessary, file or record such statements, documents, agreements, UCC financing and continuation statements and such other instruments and take such further action as the Lender from time to time may request as reasonably necessary, desirable or proper to carry out more effectively the purposes of this Agreement or any of the other Loan Documents or to subject the Collateral to the lien and security interests of the Loan Documents or to evidence, perfect or otherwise implement, to assure the lien and security interests intended by the terms of the Loan Documents or in order to exercise or enforce its rights under the Loan Documents.

SECTION 13.18 Monitoring Compliance. Upon the request of the Lender, from time to time, the Borrower shall promptly provide to the Lender such documents, certificates and other information as may reasonably be deemed necessary to enable the Lender to perform its functions under the Servicing Agreement.

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SECTION 13.19 Leases. Each unit in each Mortgaged Property will be leased pursuant to the form lease delivered to, and acceptable to, the Lender, with no material modifications to such approved form lease, except as disclosed in writing to the Lender.

SECTION 13.20 Intentionally Omitted.

SECTION 13.21 Transfer of Ownership Interests of the Borrower.

                    (a)          Prohibition on Transfers. Subject to paragraph (b) of this Section 13.21, the Borrower shall not cause or permit a Transfer or a Change of Control.

                    (b)          Permitted Transfers. Notwithstanding the provisions (a) of this Section 13.21, the following Transfers by the Borrower are permitted without the consent of the Lender:

                    (i)          A Transfer that occurs by inheritance, devise, or bequest or by operation of law upon the death of a natural person who is an owner of a Mortgaged Property or the owner of a direct or indirect ownership interest in the Borrower.

                    (ii)         The grant of a leasehold interest in individual dwelling units or commercial spaces in accordance with the Security Instrument.

                    (iii)        A sale or other disposition of obsolete or worn out personal property which is contemporaneously replaced by comparable personal property of equal or greater value which is free and clear of liens, encumbrances and security interests other than those created by the Loan Documents.

                    (iv)          The creation of a mechanic’s or materialmen’s lien or judgment lien against a Mortgaged Property which is released of record or otherwise remedied to Lender’s satisfaction within 30 days of the date of creation.

                    (v)          The grant of an easement, if prior to the granting of the easement the Borrower causes to be submitted to Lender all information required by Lender to evaluate the easement, and if Lender consents to such easement based upon Lender’s determination that the easement will not materially affect the operation of the Mortgaged Property or Lender’s interest in the Mortgaged Property and Borrower pays to Lender, on demand, all reasonable costs and expenses incurred by Lender in connection with reviewing Borrower’s request. Lender shall not unreasonably withhold its consent to or withhold its agreement to subordinate the lien of a Security Instrument to (A) the grant of a utility easement serving a Mortgaged Property to a publicly operated utility, or (B) the grant of an easement related to expansion or widening of roadways, provided that any such easement is in form and substance reasonably acceptable to Lender and does not materially and adversely affect the access, use or marketability of a Mortgaged Property.

                    (vi)          The Transfer of shares of common stock, limited partnership interests or other beneficial or ownership interest or other forms of securities in the REIT or the OP, and the issuance of all varieties of convertible debt, equity and other similar securities of the REIT or the OP, and the subsequent Transfer of such securities;

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	provided, however, that no Change in Control occurs as a result of such Transfer, either upon such Transfer or upon the subsequent conversion to equity or such convertible debt or other securities.
	(vii)         The Transfer of limited partnership interests by the limited partners of Borrower, including, without limitation, the conversion or exchange of limited partnership interests in Borrower to shares of common stock or other beneficial or ownership interests or other forms of securities in the REIT; provided, however, that no Change in Control occurs as the result of such Transfer.
	(viii)        The issuance by Borrower of additional limited partnership units or convertible debt, equity and other similar securities, and the subsequent Transfer of such units or other securities; provided, however, that no Change in Control occurs as the result of such Transfer, either upon such Transfer or upon the subsequent conversion to equity of such convertible debt or other securities.
	(ix)          A merger with or acquisition of another entity by Borrower, provided that (A) Borrower is the surviving entity after such merger or acquisition, (B) no Change in Control occurs, and (C) such merger or acquisition does not result in an Event of Default, as such terms are defined in this Agreement.
	(x)          A Transfer in connection with any substitution or release pursuant to the terms and conditions of Article VII of this Agreement.
(c)       Consent to Prohibited Transfers. Lender may, in its sole and absolute discretion, consent to a Transfer that would otherwise violate this Section 13.21 if, prior to the Transfer, Borrower has satisfied each of the following requirements:
	(i)          the submission to Lender of all information required by Lender to make the determination required by this Section 13.21(c);
	(ii)         the absence of any Event of Default;
	(iii)        the transferee meets all of the eligibility, credit, management and other standards (including any standards with respect to previous relationships between Lender and the transferee and the organization of the transferee) customarily applied by Lender at the time of the proposed Transfer to the approval of Borrower in connection with the origination or purchase of similar mortgages, deeds of trust or deeds to secure debt on multifamily properties;
	(iv)          in the case of a Transfer of direct or indirect ownership interests in Borrower, if transferor or any other person has obligations under any Loan Documents, the execution by the transferee of one or more individuals or entities acceptable to Lender of an assumption agreement that is acceptable to Lender and that, among other things, requires the transferee to perform all obligations of transferor or such person set forth in such Loan Document, and may require that the transferee comply with any provisions of this Instrument or any other Loan Document which previously may have been waived by Lender;

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          (v)          Lender’s receipt of all of the following:

                         (A)          a transfer fee equal to 1 percent of the Commitment immediately prior to the transfer.

                         (B)          In addition, Borrower shall be required to reimburse Lender for all of Lender’s reasonable out-of-pocket costs (including reasonable attorneys’ fees) incurred in reviewing the Transfer request.

SECTION 13.22 Change in Senior Management.

                    (a)          The Borrower shall give the Lender notice of any change in the identity of Senior Management.

                    (b)          Within 30 Business Days after receipt of the Borrower’s notice, the Lender shall have the right to terminate this Agreement and the Credit Facility by giving a notice of such termination to the Borrower. In such event, this Agreement and the Credit Facility shall terminate with the same effect as if the Lender had approved a Credit Facility Termination Request (including the Borrower’s obligation, pursuant to Section 10.03(a), to pay in full all of the Notes Outstanding on the Closing Date, including any other charges under the Notes), except that, for these purposes, the Closing Date shall be the 180th day after the date on which the Borrower first receives the Lender’s termination notice.

                    (c)          If the Lender exercises its termination right pursuant to subsection (b), the Borrower shall have a period of 120 days, commencing with the date on which the Borrower receives the Lender’s termination notice, to request that the Lender rescind its termination notice. The Borrower may include in its request any undertakings which it is willing to make in order to obtain such a rescission. The Lender shall give the Borrower notice of its acceptance or rejection of the Borrower’s request within 30 Business Days after the Borrower makes the request. If the Lender accepts the request, the Lender shall give the Borrower a notice that the termination notice shall be deemed rescinded and of no further force or effect, and this Agreement and the Credit Facility shall continue in accordance with, and subject to the terms, conditions and limitations contained in, this Agreement.

SECTION 13.23 Date-Down Endorsements. At any time and from time to time, a Lender may obtain an endorsement to each Title Insurance Policy containing a Revolving Credit Endorsement, amending the effective date of the Title Insurance Policy to the date of the title search performed in connection with the endorsement. The Borrower shall pay for the cost and expenses incurred by the Lender to the Title Company in obtaining such endorsement, provided that, for each Title Insurance Policy, it shall not be liable to pay for more than one such endorsement in any consecutive 12 month period.

SECTION 13.24 Geographical Diversification. The Borrower shall maintain Mortgaged Properties in the Collateral Pool so that the Collateral Pool satisfies the Geographical Diversification Requirement..

SECTION 13.25 Ownership of Mortgaged Properties. The Borrower shall be the sole owner of each of the Mortgaged Properties free and clear of any Liens other than Permitted Liens.

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ARTICLE XIV
NEGATIVE COVENANTS OF THE BORROWER

The Borrower, with respect to itself, agrees and covenants with the Lender that, at all times during the Term of this Agreement:

SECTION 14.01 Other Activities. The Borrower shall not:

                    (a)       engage in any business or activity other than in connection with (i) the Ownership, development, construction, management and operation of Multifamily Residential Properties or other types of real property in which it has expertise and (ii) activities related to the activities permitted in (i) above;

                    (b)       amend its Organizational Documents in any material respect without the prior written consent of the Lender;

                    (c)       dissolve or liquidate in whole or in part;

                    (d)       except as otherwise provided in this Agreement, without the prior written consent of Lender, merge or consolidate with any Person; or

                    (e)       use, or permit to be used, any Mortgaged Property for any uses or purposes other than as a Multifamily Residential Property.

SECTION 14.02 Value of Security. The Borrower shall not take any action which could reasonably be expected to have any Material Adverse Effect.

SECTION 14.03 Zoning. The Borrower shall not initiate or consent to any zoning reclassification of any Mortgaged Property or seek any variance under any zoning ordinance or use or permit the use of any Mortgaged Property in any manner that could result in the use becoming a nonconforming use under any zoning ordinance or any other applicable land use law, rule or regulation.

SECTION 14.04 Liens. The Borrower shall not create, incur, assume or suffer to exist any Lien on any Mortgaged Property or any part of any Mortgaged Property, except the Permitted Liens.

SECTION 14.05 Sale. Except in connection with a release of Collateral in accordance with Article VII, the Borrower shall not Transfer any Mortgaged Property or any part of any Mortgaged Property without the prior written consent of the Lender (which consent may be granted or withheld in the Lender’s discretion), or any interest in any Mortgaged Property, other than to enter into Leases for units in a Mortgaged Property to any tenant in the ordinary course of business. For so long as the Mortgaged Property commonly known as Southland Station, Phase II and located in Houston County, Georgia is part of the Collateral Pool, the Borrower shall not sell or otherwise transfer any Ownership Interest in the entity owning all or any part of the property commonly known as Southland Station, Phase I and located in Houston County, Georgia (except for any Transfer permitted under this Agreement) and any uncured default on any indebtedness secured by such Multifamily Residential Property shall be a default under this

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Agreement. For so long as either of the Mortgaged Properties commonly known as Three Oaks I or Three Oaks II each located in Valdosta, Georgia, is part of the Collateral Pool, the Borrower Party shall not sell or otherwise transfer all or any part of either such Mortgaged Property (except for any Transfer permitted under this Agreement). For so long as either of the Mortgaged Properties commonly known as Wildwood I or Wildwood II each located in Thomasville, Georgia, is part of the Collateral Pool, the Borrower Party shall not sell or otherwise transfer all or any part of either such Mortgaged Property (except for any Transfer permitted under this Agreement).

SECTION 14.06 Indebtedness. The Borrower shall not incur or be obligated at any time with respect to any Indebtedness (other than Advances) in connection with any of the Mortgaged Properties.

SECTION 14.07 Principal Place of Business. The Borrower shall not change its principal place of business or the location of its books and records, each as set forth in Section 12.01(a), without first giving 30 days’ prior written notice to the Lender.

SECTION 14.08 Frequency of Requests. The Borrower shall have the right, subject to the terms, conditions and limitations of this Agreement, to make a Future Advance Request for a Variable Facility Advance on any day until the expiration of the Variable Facility Availability Period and to make a Future Advance Request for a Fixed Facility Advance on any day until the expiration of the Fixed Facility Availability Period.

SECTION 14.09 Change in Property Management. The Borrower shall not change the management agent for any Mortgaged Property except to a management agent which the Lender determines is qualified in accordance with the criteria set forth in Section 701 of the DUS Guide.

SECTION 14.10 Condominiums. The Borrower shall not submit any Mortgaged Property to a condominium regime during the Term of this Agreement.

SECTION 14.11 Restrictions on Partnership Distributions. The Borrower shall not make any distributions of any nature or kind whatsoever to the owners of its Ownership Interests as such if, at the time of such distribution, a Potential Event of Default or an Event of Default has occurred and remains uncured.

SECTION 14.12 Lines of Business. The Borrower shall not be substantially involved in any businesses other than the acquisition, ownership, development, construction, leasing, financing or management, directly or through Affiliates, of Multifamily Residential Properties, and the conduct of these businesses shall not violate the Organizational Documents pursuant to which it is formed.

SECTION 14.13 Limitation on Unimproved Real Property and New Construction. The Borrower shall not permit:

                    (a)          the value of its real property which is not improved (except real property on which phases of a Mortgaged Property are contemplated to be constructed) by one or more buildings leased, or held out for lease, to third parties (“Unimproved Real Property”) to

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exceed 10% of the value of all of its “Real Estate Assets” (as that term is defined in Section 856(c)(6)(B) of the Internal Revenue Code and the regulations thereunder); and

                    (b)          the sum of (i) the value of its Unimproved Real Property and (ii) the value of its Real Estate Assets which are under construction or subject to substantial rehabilitation to exceed 20% of the value of all of its Real Estate Assets.

All of the foregoing values shall be reasonably determined by the Lender.

SECTION 14.14 Dividend Payout. The Borrower Party shall not make a dividend payment (including both common stock dividends, unitholder distributions, and preferred stock dividends) which is greater than ninety percent (90%) of Funds from Operations or that would otherwise violate the United States federal tax laws governing the qualifications of real estate investment trusts. As used herein, “Funds from Operations” shall mean consolidated net income of the REIT, including minority interest (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring, sales of property, impairment charges, or charges related to the adjustment to the value of assumed debt, plus real property depreciation and goodwill amortization, before extraordinary or unusual items, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect Funds from Operations on the same basis. Upon written pre-approval of the Lender, exceptions may be made where the Board of Directors of the REIT determines, in good faith, that a special dividend must be paid to avoid taxes due to excess gains from the sale of Multifamily Residential Properties. In determining compliance with the dividend payout ratio set forth herein, the amount of dividends paid and Funds from Operations shall be calculated on a trailing 12-month period.

ARTICLE XV
FINANCIAL COVENANTS OF THE BORROWER

The Borrower agrees and covenants with the Lender that, at all times during the Term of this Agreement:

SECTION 15.01 Financial Definitions. For all purposes of this Agreement, the following terms shall have the respective meanings set forth below:

          “Consolidated EBITDA” means, for any period, and without double counting any item, the EBITDA for the Borrower and its Subsidiaries for such period on a consolidated basis.

          “Consolidated EBITDA to Fixed Charges Ratio” means, for any period of determination, the ratio (expressed as a percentage) of--

          (a)          the excess of--

                    (i)          the Consolidated EBITDA for the period, less

                    (ii)          the Imputed Capital Expenditures for the period;

              to

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	(b)          the Consolidated Fixed Charges for the period.
“Consolidated EBITDA to Interest Ratio” means, for any period of determination, the ratio (expressed as a percentage) of--
	(a)          the excess of--
	(i)          the Consolidated EBITDA for the period, less
	(ii)         the Imputed Capital Expenditures for the period;
	to
	(b)           the Consolidated Interest Expense for the period.
	“Consolidated Fixed Charges” means, for any period of determination, the sum of--
	(a)          the Consolidated Interest Expense for the period;
	(b)          the Consolidated Scheduled Amortization for the period; and
	(c)          Preferred Distributions for the period.

                    “Consolidated Interest Expense” means, for any period of determination, and without double counting any item, the sum of the Interest Expense for the Borrower and its Subsidiaries for such period on a consolidated basis.

                    “Consolidated Scheduled Amortization” means, for any period of determination, and without double counting any item, the sum of the Scheduled Amortization (but excluding balloon payments) for the Borrower and its Subsidiaries for such period on a consolidated basis.

                    “Consolidated Total Assets” means, for any Person, all assets of such Person and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that all assets composed of real property shall be valued on an undepreciated cost basis and the portion of any joint venture assets owned by such Person shall be included in Consolidated Total Assets. The assets of a Person and its Subsidiaries shall be adjusted to reflect such Person’s allocable share of such assets, for the relevant period or as of the date of determination, taking into account (a) the relative proportion of each such item derived from assets directly owned by such Person and from assets owned by its Subsidiaries, and (b) such Person’s respective ownership interest in its Subsidiaries.

                    “Consolidated Total Indebtedness” means, as of any date, and without double counting any item, the Total Indebtedness for the Borrower and its Subsidiaries as of such date (including the Total Indebtedness of the Borrower as of such date and the portion of any indebtedness of any joint venture in which the Borrower or any Subsidiary thereof is a venturer attributable to the Borrower or its Subsidiary).

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                    “EBITDA” means, for any period, the sum determined in accordance with GAAP, of the following, for any Person on a consolidated basis--

                    (a)          the net income (or net loss) of such Person during such Period, but excluding gains and losses on the sale of fixed assets;

                    (b)          all amounts treated as expenses for depreciation, Interest Expense and the amortization of intangibles of any kind to the extent included in the determination of such net income (or loss); and

                    (c)          all accrued taxes on or measured by income to the extent included in the determination of such net income (or loss);

                    provided, however, that net income (or loss) shall be computed for these purposes without giving effect to extraordinary losses or extraordinary gains.

                    “Imputed Capital Expenditures” means, for any four (4) consecutive quarters, an amount equal to the average number of apartment units owned by the Borrower or its Subsidiaries during such period multiplied by Three Hundred Dollars ($300.00) per apartment unit, and for any period of less than four (4) consecutive quarters, an appropriate proration of such figure.

                    “Interest Expense” means, for any period, the sum of--

                    (a)          gross interest expense for the period (including all commissions, discounts, fees and other charges in connection with standby letters of credit and similar instruments) for the Borrower and its Subsidiaries; and

                    (b)          the portion of the up-front costs and expenses for Rate Contracts entered into by the Borrower and its Subsidiaries (to the extent not included in gross interest expense) fairly allocated to such Rate Contracts as expenses for such period, as determined in accordance with GAAP;

                    (c)          provided, that, all interest expense accrued by the Borrower and its Subsidiaries during such period, even if not payable on or before the Credit Facility Termination Date, shall be included within “Interest Expense.” Notwithstanding the foregoing, interest accrued under any Intra-Company Debt shall not be included within “Interest Expense” for any purposes hereof.

                    “Intra-Company Debt” means Indebtedness (whether book-entry or evidenced by a term, demand or other note or other instrument) owed by the Borrower or its Subsidiaries to any Subsidiary, and incurred or assumed for the purpose of capitalizing a Subsidiary of the Borrower.

                    “Management Entity” means the REIT.

                    “Net Worth” means, as of any specified date, for any Person, the excess of the Person’s assets over the Person’s liabilities, determined in accordance with GAAP but excluding

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any adjustment for the fair value of swaps or caps, on a consolidated basis, provided that all real property shall be valued on an undepreciated basis.

                    “Pledged Cash” shall mean the amount held on deposit in the Pledgee Account.

                    “Preferred Distributions” means, for any period, the amount of any and all distributions due and payable to the holders of any form of preferred stock (whether perpetual, convertible or otherwise) or other ownership or beneficial interest in the REIT or any of its Subsidiaries that entitles the holders thereof to preferential payment or distribution priority with respect to dividends, assets or other payments over the holders of any other stock or other ownership or beneficial interest in such Person.

                    “Rate Contracts” means interest rate and currency swap agreements, cap, floor and collar agreements, interest rate insurance, currency spot and forward contracts and other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates.

                    “Restricted Cash” means the sum of Pledged Cash plus any cash pledged by the Borrower or its Subsidiaries to other lenders, as indicated in the line item for “restricted cash” in the Borrower’s balance sheet from time to time.

                    “Scheduled Amortization” means, with respect to any Person, the sum, as of any date of determination, of the current portion (i.e., such portion as is scheduled to be paid by the obligor thereof within 12 months from the date of determination) of all regularly scheduled amortization payments due on such Person’s long-term fully amortizing mortgage Indebtedness (exclusive of balloon payments).

                    “Stock” means all shares, options, warrants, interests, participations or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or nonvoting, including common stock, preferred stock, perpetual preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities and Exchange Act of 1934, and regulations promulgated thereunder).

                    “Total Indebtedness” means, as of any date of determination, and in respect of any Person, all outstanding Indebtedness, and shall include, without limitation: (i) such Person’s share of the Indebtedness of any partnership or joint venture in which such Person directly or indirectly holds any interest; and (ii) any recourse or contingent obligations, directly or indirectly, of such Person with respect to any Indebtedness of such partnership or joint venture in excess of its proportionate share. Notwithstanding the foregoing, (x) Intra-Company Debt, and (y) accounts payable to trade creditors for goods and services and current operating liabilities (not the result of the borrowing of money) incurred in the ordinary course of business in accordance with customary terms and paid within the specified time, shall be excluded from the calculation of “Total Indebtedness” but shall not otherwise be excluded as Indebtedness for any other purpose hereof.

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                    “Unconsolidated Partnership” means any partnership or joint venture (a) in which the Borrower or any Subsidiary of the Borrower holds an interest which is not consolidated in the financial statements of the REIT or (b) which is not a Subsidiary.

                    “Wholly-Owned Subsidiary” means a Subsidiary of the Borrower one hundred percent (100%) of the Stock or other equity or other beneficial interests (in the case of Persons other than corporations) is owned directly or indirectly by the Borrower; provided, however, that where such term is qualified with respect to a specific Person (e.g., “Wholly-Owned Subsidiary of the REIT”) such terms means a Subsidiary one hundred percent (100%) of the Stock or other equity or other beneficial interests (in the case of Persons other than corporations) is owned directly or indirectly by the specified Person.

SECTION 15.02 Compliance with Debt Service Coverage Ratios. The Borrower shall at all times maintain the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period so that it is not less than 1.40:1.0.

SECTION 15.03 Compliance with Loan to Value Ratios. The Borrower shall at all times maintain the Aggregate Loan to Value Ratio so that it is not greater than 65%. Notwithstanding the foregoing, the parties hereby agree that if, as a result of any annual Valuation performed pursuant to Section 5.04, the Aggregate Loan to Value Ratio exceeds 65% but is not greater than 70%, such Aggregate Loan to Value Ratio shall not be an Event of Default until the next annual Valuation and determination of Aggregate Loan to Value Ratio is performed, provided that Borrower shall pay an additional Variable Facility Fee and Fixed Facility Fee of (x) if such non-compliance occurs during 2004, 9 basis points per annum for the period beginning on the date of the determination and ending on December 31, 2004, and (y) if such non-compliance occurs subsequent to December 31, 2004, the number of basis points to be determined by Lender.

SECTION 15.04 Compliance with Concentration Test.

                    (a)          The Borrower shall at all times maintain the Collateral so that the aggregate Valuations of any group of Mortgaged Properties located within a one mile radius shall not exceed 25% of the aggregate Valuations of all Mortgaged Properties.

                    (b)          The Borrower shall at all times maintain the Collateral so that the Valuation of any one Mortgaged Property shall not exceed 20% of the aggregate Valuations of all Mortgaged Properties.

SECTION 15.05 Compliance with REIT’s Net Worth Test. The REIT shall at all times maintain its Net Worth so that it is not less than the highest Net Worth covenant required by any other financial institution where the REIT maintains a bank line (whether secured or unsecured), but in no event less than $550,000,000 plus 65% of proceeds (less all reasonable and customary expenses and costs) of equity offerings, net of redemptions, consummated by the REIT after August 22, 2002.

SECTION 15.06 Compliance with REIT’s Total Indebtedness to Consolidated Total Assets Ratio. The REIT shall not permit the ratio of Consolidated Total Indebtedness to Consolidated Total Assets to exceed 60% at any time.

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SECTION 15.07 Compliance with REIT’s Consolidated EBITDA to Interest Ratio. The REIT shall not permit the Consolidated EBITDA to Interest Ratio computed for any fiscal quarter to be less than 200% for any period of four consecutive fiscal quarters (treated as a single accounting period).

SECTION 15.08 Compliance with REIT’s Consolidated EBITDA to Fixed Charge Ratio. The REIT shall not permit the Consolidated EBITDA to Fixed Charges Ratio computed for any fiscal quarter or year to be less than 150% for any period of four consecutive fiscal quarters (treated as a single accounting period).

ARTICLE XVI
FEES

SECTION 16.01 Standby Fee and Rate Preservation Fee. The Borrower shall pay the Standby Fee to the Lender for the period from the date of this Agreement to the end of the Term of this Agreement. Unless Borrower notifies Lender in writing by December 1, 2005 that it does not elect to pay the Rate Preservation Fee, Borrower shall pay the Rate Preservation Fee to Lender commencing on January 1, 2006. If Borrower elects not to pay the Rate Preservation Fee, such election shall be final. Borrower may elect to no longer pay the Rate Preservation Fee, which election shall be irrevocably terminated by at least 30 days’ written notice of such termination by Borrower to Lender. Each of the Standby Fee and the Rate Preservation Fee shall be payable monthly, in arrears, on the first Business Day following the end of the month, except that the Standby Fee and Rate Preservation Fee for the last month during the Term of this Agreement shall be paid on the last day of the Term of this Agreement.

SECTION 16.02 Origination Fees.

                         (a)     Initial Origination Fee. The Borrower has paid to the Lender an origination fee (“Initial Origination Fee”) equal to the product obtained by multiplying (i) the Commitment by (ii) .65%.

                         (b)     Expansion Origination Fee. Upon the closing of a Credit Facility Expansion Request under Article VIII, the Borrower shall pay to the Lender an origination fee (“Expansion Origination Fee”) equal to the product obtained by multiplying (i) the increase in the Commitment made on the Closing Date for the Credit Facility Expansion Request, by (ii) .65%. Any Expansion Origination Fee shall be reduced by the amount of any Collateral Addition Fee paid by the Borrower in respect of any Additional Mortgaged Properties added to the Collateral Pool in conjunction with such expansion. The Borrower shall pay the Expansion Origination Fee on or before the Closing Date for the Credit Facility Expansion Request.

SECTION 16.03 Due Diligence Fees.

                    (a)          Initial Due Diligence Fees. The Borrower has paid to the Lender due diligence fees (“Initial Due Diligence Fees”) with respect to the Initial Mortgaged Properties.

                    (b)          Additional Due Diligence Fees for Additional and Substituted Collateral. The Borrower shall pay to the Lender additional reasonable due diligence fees (the “Additional Collateral Due Diligence Fees”) with respect to each Additional and Substituted Mortgaged

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Property in an amount not to exceed the sum of $16,000. The Borrower shall pay Additional Collateral Due Diligence Fees for the Additional or Substituted Mortgaged Property to the Lender on the date on which it submits the Collateral Addition or Substitution Request for the addition of the Additional or Substituted Mortgaged Property to the Collateral Pool.

SECTION 16.04 Legal Fees and Expenses.

                    (a)          Initial Legal Fees. The Borrower shall pay, or reimburse the Lender for, all out-of-pocket legal fees and expenses incurred by the Lender and by Fannie Mae in connection with the preparation, review and negotiation of this Agreement and any other Loan Documents executed on the date hereof. The Borrower has paid Lender’s and Fannie Mae’s legal fees in connection with the Initial Mortgaged Properties. On the date of this Agreement, the Borrower shall pay all such legal fees and expenses not previously paid or for which funds have not been previously provided.

                    (b)          Fees and Expenses Associated with Requests. The Borrower shall pay, or reimburse the Lender for, all reasonable costs and expenses incurred by the Lender, including the out-of-pocket legal fees and expenses incurred by the Lender in connection with the preparation, review and negotiation of all documents, instruments and certificates to be executed and delivered in connection with each Request, the performance by the Lender of any of its obligations with respect to the Request, the satisfaction of all conditions precedent to the Borrower’s rights or the Lender’s obligations with respect to the Request, and all transactions related to any of the foregoing, including the cost of title insurance premiums and applicable recordation and transfer taxes and charges and all other reasonable costs and expenses in connection with a Request. The obligations of the Borrower under this subsection shall be absolute and unconditional, regardless of whether the transaction requested in the Request actually occurs. The Borrower shall pay such costs and expenses to the Lender on the Closing Date for the Request, or, as the case may be, after demand by the Lender when the Lender determines that such Request will not close.

SECTION 16.05 MBS-Related Costs. The Borrower shall pay to the Lender, within 30 days after demand, all reasonable fees and expenses incurred by the Lender or Fannie Mae in connection with the issuance of any MBS backed by an Advance, including the fees charged by Depository Trust Company and State Street Bank or any successor fiscal agent or custodian.

SECTION 16.06 Failure to Close any Request. If the Borrower makes a Request and fails to close on the Request for any reason other than the default by the Lender, then the Borrower shall pay to the Lender and Fannie Mae all damages incurred by the Lender and Fannie Mae in connection with the failure to close.

SECTION 16.07 Other Fees. The Borrower shall pay the following additional fees and payments, if and when required pursuant to the terms of this Agreement:

                    (a)      The Collateral Addition Fee, pursuant to Section 6.03(b), in connection with the addition of an Additional Mortgaged Property to the Collateral Pool pursuant to Article VI;

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                    (b)      The Collateral Substitution Fee, pursuant to Section 7.04, in connection with the addition of a Substituted Mortgaged Property to the Collateral Pool pursuant to Article VII;

                    (c)      The Release Price, pursuant to Section 7.02(c), in connection with the release of a Mortgaged Property from the Collateral Pool pursuant to Article VII;

                    (d)      The Release Fee, pursuant to Section 7.03(c), in connection with the release of a Mortgaged Property from the Collateral Pool pursuant to Article VII;

                    (e)      The Variable Facility Termination Fee, pursuant to Section 9.03(b) in connection with a complete or partial termination of the Variable Facility pursuant to Article IX; and

                    (f)      The Variable Facility Termination Fee, pursuant to Section 10.03(b), in connection with the termination of the Credit Facility pursuant to Article X.

ARTICLE XVII
EVENTS OF DEFAULT

SECTION 17.01 Events of Default. Each of the following events shall constitute an “Event of Default” under this Agreement, whatever the reason for such event and whether it shall be voluntary or involuntary, or within or without the control of the Borrower, or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority:

                    (a)      the occurrence of a default under any Loan Document beyond the cure period, if any, set forth therein; or

                    (b)      the failure by the Borrower to pay when due any amount payable by the Borrower under any Note, any Mortgage, this Agreement or any other Loan Document, including any fees, costs or expenses; or

                    (c)      the failure by the Borrower to perform or observe any covenant set forth in Article XIII or Article XIV within thirty (30) days after prior written notice of such failure from Lender, provided that such period shall be extended for up to 30 additional days if the Borrower, in the discretion of the Lender, is diligently pursuing a cure of such default within 30 days after receipt of notice from the Lender; or

                    (d)      any warranty, representation or other written statement made by or on behalf of the Borrower contained in this Agreement, any other Loan Document or in any instrument furnished in compliance with or in reference to any of the foregoing, is false or misleading in any material respect on any date when made or deemed made; or

                    (e)      any other Indebtedness, including but not limited to Indebtedness related to the Other Credit Agreement, in an aggregate amount of $1,000,000 of either Borrower or

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assumed by either Borrower (i) is not paid when due nor within any applicable grace period in any agreement or instrument relating to such Indebtedness or (ii) becomes due and payable before its normal maturity by reason of a default or event of default, however described, or any other event of default shall occur and continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or

                    (f)      (i) The Borrower shall (A) commence a voluntary case under the Federal bankruptcy laws (as now or hereafter in effect), (B) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, debt adjustment, winding up or composition or adjustment of debts, (C) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (D) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of a substantial part of its property, domestic or foreign, (E) admit in writing its inability to pay, or generally not be paying, its debts as they become due, (F) make a general assignment for the benefit of creditors, (G) assert that the Borrower has no liability or obligations under this Agreement or any other Loan Document to which it is a party; or (H) take any action for the purpose of effecting any of the foregoing; or (ii) a case or other proceeding shall be commenced against the Borrower in any court of competent jurisdiction seeking (A) relief under the Federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding upon or composition or adjustment of debts, or (B) the appointment of a trustee, receiver, custodian, liquidator or the like of the Borrower, or of all or a substantial part of the property, domestic or foreign, of the Borrower and any such case or proceeding shall continue undismissed or unstayed for a period of 60 consecutive calendar days, or any order granting the relief requested in any such case or proceeding against the Borrower (including an order for relief under such Federal bankruptcy laws) shall be entered; or

                    (g)     if any provision of this Agreement or any other Loan Document or the lien and security interest purported to be created hereunder or under any Loan Document shall at any time for any reason cease to be valid and binding in accordance with its terms on the Borrower, or shall be declared to be null and void, or the validity or enforceability hereof or thereof or the validity or priority of the lien and security interest created hereunder or under any other Loan Document shall be contested by the Borrower seeking to establish the invalidity or unenforceability hereof or thereof, or the Borrower shall deny that it has any further liability or obligation hereunder or thereunder; or

                    (h)     (i) the execution by the Borrower of a chattel mortgage or other security agreement on any materials, fixtures or articles used in the construction or operation of the improvements located on any Mortgaged Property or on articles of personal property located therein, or (ii) if any such materials, fixtures or articles are purchased pursuant to any conditional sales contract or other security agreement or otherwise so that the Ownership thereof will not vest unconditionally in the Borrower free from encumbrances, or (iii) if the Borrower does not furnish to the Lender upon request the contracts, bills of sale, statements, receipted vouchers and agreements, or any of them, under which the Borrower claims title to such materials, fixtures, or articles; or

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                    (i)     the failure by the Borrower to comply with any requirement of any Governmental Authority within 30 days after written notice of such requirement shall have been given to the Borrower by such Governmental Authority; provided that, if action is commenced and diligently pursued by the Borrower within such 30 days, then the Borrower shall have an additional 30 days to comply with such requirement; or

                    (j)     a dissolution or liquidation for any reason (whether voluntary or involuntary) of the Borrower; or

                    (k)     any judgment against either Borrower, any attachment or other levy against any portion of either Borrower’s assets with respect to a claim or claims in an amount in excess of$500,000in the aggregate remains unpaid, unstayed on appeal undischarged, unbonded, not fully insured or undismissed for a period of 60 days; or

                    (l)     the failure of the Borrower to perform or observe any of the Financial Covenants, which failure shall continue for a period of 30 days after the date on which the Borrower receives a notice from the Lender specifying the failure; or

                    (m)     the failure of Borrower to maintain the Hedges required by Article XXI of this Agreement; or

                    (n)     the failure by the Borrower to perform or observe any term, covenant, condition or agreement hereunder, other than as set forth in subsections (a) through (l) above, or in any other Loan Document, within 30 days after receipt of notice from the Lender identifying such failure.

ARTICLE XVIII
REMEDIES

SECTION 18.01 Remedies; Waivers. Upon the occurrence of an Event of Default, the Lender may do any one or more of the following (without presentment, protest or notice of protest, all of which are expressly waived by the Borrower):

                    (a)          by written notice to the Borrower, to be effective upon dispatch, terminate the Commitment and declare the principal of, and interest on, the Advances and all other sums owing by the Borrower to the Lender under any of the Loan Documents forthwith due and payable, whereupon the Commitment will terminate and the principal of, and interest on, the Advances and all other sums owing by the Borrower to the Lender under any of the Loan Documents will become forthwith due and payable.

                    (b)          The Lender shall have the right to pursue any other remedies available to it under any of the Loan Documents.

                    (c)          The Lender shall have the right to pursue all remedies available to it at law or in equity, including obtaining specific performance and injunctive relief.

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SECTION 18.02 Waivers; Rescission of Declaration. The Lender shall have the right, to be exercised in its complete discretion, to waive any breach hereunder (including the occurrence of an Event of Default), by a writing setting forth the terms, conditions, and extent of such waiver signed by the Lender and delivered to the Borrower. Unless such writing expressly provides to the contrary, any waiver so granted shall extend only to the specific event or occurrence which gave rise to the waiver and not to any other similar event or occurrence which occurs subsequent to the date of such waiver.

SECTION 18.03 The Lender’s Right to Protect Collateral and Perform Covenants and Other Obligations. If the Borrower fails to perform the covenants and agreements contained in this Agreement or any of the other Loan Documents, then the Lender at the Lender’s option may make such appearances, disburse such sums and take such action as the Lender deems necessary, in its sole discretion, to protect the Lender’s interest, including (i) disbursement of reasonable attorneys’ fees, (ii) entry upon the Mortgaged Property to make repairs and Replacements, (iii) procurement of satisfactory insurance as provided in paragraph 5 of the Security Instrument encumbering the Mortgaged Property, and (iv) if the Security Instrument is on a leasehold, exercise of any option to renew or extend the ground lease on behalf of the Borrower and the curing of any default of the Borrower in the terms and conditions of the ground lease. Any amounts disbursed by the Lender pursuant to this Section, with interest thereon, shall become additional indebtedness of the Borrower secured by the Loan Documents. Unless the Borrower and the Lender agree to other terms of payment, such amounts shall be immediately due and payable and shall bear interest from the date of disbursement at the weighted average, as determined by Lender, of the interest rates in effect from time to time for each Advance unless collection from the Borrower of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from the Borrower under applicable law. Nothing contained in this Section shall require the Lender to incur any expense or take any action hereunder.

SECTION 18.04 No Remedy Exclusive. Unless otherwise expressly provided, no remedy herein conferred upon or reserved is intended to be exclusive of any other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under the Loan Documents or existing at law or in equity.

SECTION 18.05 No Waiver. No delay or omission to exercise any right or power accruing under any Loan Document upon the happening of any Event of Default or Potential Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.

SECTION 18.06 No Notice. In order to entitle the Lender to exercise any remedy reserved to the Lender in this Article, it shall not be necessary to give any notice, other than such notice as may be required under the applicable provisions of this Agreement or any of the other Loan Documents.

SECTION 18.07 Application of Payments. Except as otherwise expressly provided in the Loan Documents, and unless applicable law provides otherwise, (i) all payments received by the Lender from the Borrower under the Loan Documents shall be applied by the Lender against

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any amounts then due and payable under the Loan Documents by the Borrower, in any order of priority that the Lender may determine and (ii) the Borrower shall have no right to determine the order of priority or the allocation of any payment it makes to the Lender.

ARTICLE XIX
RIGHTS OF FANNIE MAE

SECTION 19.01 Special Pool Purchase Contract. The Borrower acknowledges that Fannie Mae is entering into an agreement with the Lender (“Special Pool Purchase Contract”), pursuant to which, inter alia, (i) the Lender shall agree to assign all of its rights under this Agreement to Fannie Mae, (ii) Fannie Mae shall accept the assignment of the rights, (iii) subject to the terms, limitations and conditions set forth in the Special Pool Purchase Contract, Fannie Mae shall agree to purchase a 100% participation interest in each Advance issued under this Agreement by issuing to the Lender a Fannie Mae MBS, in the amount and for a term equal to the Advance purchased and backed by an interest in the Fixed Facility Note or the Variable Facility Note, as the case may be, and the Collateral Pool securing the Notes, (iv) the Lender shall agree to assign to Fannie Mae all of the Lender’s interest in the Notes and Collateral Pool securing the Notes, and (v) the Lender shall agree to service the loans evidenced by the Notes.

SECTION 19.02 Assignment of Rights. The Borrower acknowledges and consents to the assignment to Fannie Mae of all of the rights of the Lender under this Agreement and all other Loan Documents, including the right and power to make all decisions on the part of the Lender to be made under this Agreement and the other Loan Documents, but Fannie Mae, by virtue of this assignment, shall not be obligated to perform the obligations of the Lender under this Agreement or the other Loan Documents.

SECTION 19.03 Release of Collateral. The Borrower hereby acknowledges that, after the assignment of Loan Documents contemplated in Section 19.02, the Lender shall not have the right or power to effect a release of any Collateral pursuant to Articles VII or X. The Borrower acknowledges that the Security Instruments provide for the release of the Collateral under Articles VII and X. Accordingly, the Borrower shall not look to the Lender for performance of any obligations set forth in Articles VII and X, but shall look solely to the party secured by the Collateral to be released for such performance. The Lender represents and warrants to the Borrower that the party secured by the Collateral shall be subject to the release provisions contained in Articles VII and X by virtue of the release provisions in each Security Instrument.

SECTION 19.04 Replacement of Lender. At the request of Fannie Mae, the Borrower and the Lender shall agree to the assumption by another lender designated by Fannie Mae (which lender shall meet Fannie Mae’s then current standards for lenders for credit facilities of the type and size of the credit facility evidenced by this Agreement), of all of the obligations of the Lender under this Agreement and the other Loan Documents, and/or any related servicing obligations, and, at Fannie Mae’s option, the concurrent release of the Lender from its obligations under this Agreement and the other Loan Documents, and/or any related servicing obligations, and shall execute all releases, modifications and other documents which Fannie Mae determines are necessary or desirable to effect such assumption.

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SECTION 19.05 Fannie Mae and Lender Fees and Expenses. The Borrower agrees that any provision providing for the payment of fees, costs or expenses incurred or charged by the Lender pursuant to this Agreement shall be deemed to provide for the Borrower’s payment of all reasonable fees, costs and expenses incurred or charged by the Lender or Fannie Mae in connection with the matter for which fees, costs or expenses are payable.

SECTION 19.06 Third-Party Beneficiary. The Borrower hereby acknowledges and agrees that Fannie Mae is a third party beneficiary of all of the representations, warranties and covenants made by any Borrower to, and all rights under this Agreement conferred upon, the Lender, and, by virtue of its status as third-party beneficiary and/or assignee of the Lender’s rights under this Agreement, Fannie Mae shall have the right to enforce all of the provisions of this Agreement against the Borrower.

ARTICLE XX
INSURANCE, REAL ESTATE TAXES
AND REPLACEMENT RESERVES

SECTION 20.01 Insurance and Real Estate Taxes. The Borrower shall (unless waived by Lender) establish funds for taxes, insurance premiums and certain other charges for each Mortgaged Property in accordance with Section 7(a) of the Security Instrument for each Mortgaged Property. The requirement for any fund established pursuant to the preceding sentence may be met, at the Lender’s reasonable discretion, by the posting of a letter of credit in form and substance reasonably satisfactory to the Lender and meeting the requirements of Fannie Mae.

SECTION 20.02 Replacement Reserves. The Borrower shall execute a Replacement Reserve Agreement for the Mortgaged Property which they own and shall (unless waived by the Lender) make all deposits for replacement reserves in accordance with the terms of the Replacement Reserve Agreement.

ARTICLE XXI
INTEREST RATE PROTECTION

SECTION 21.01 Interest Rate Protection.

          (a)          Hedge Requirement. To protect against fluctuations in interest rates, the Borrower shall make arrangements for a Hedge to be in place and maintained at all times with respect to the Hedge Requirement Amount. The Hedge for the Hedge Requirement Amount shall be in place for a period beginning on the date of the first Variable Advance from the Hedge Requirement Amount and ending not earlier than the date which is the fifth anniversary of the Initial Closing Date (the “Initial Hedge Period”).

          (b)          Subsequent Hedges. Subject to the terms of Article XXI, additional Hedges (each a “Subsequent Hedge”) shall be required (i) upon the expiration of the Hedge in place for the Initial Hedge Period and (ii) if and at such times as a new Variable Advance is funded that is part of the Hedge Requirement Amount, such Subsequent Hedge to be in effect for a period beginning on the day of the expiration of the Hedge in place for the Initial Hedge Period or on the Closing Date of the Future Advance Request, as the case may be, and ending not earlier than

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the then effective Variable Facility Termination Date with respect to such Variable Advance. It is the intention of the parties that the Borrower shall obtain, and shall maintain at all times during the term of this Agreement so long as any Variable Facility Advance is Outstanding with respect to the Hedge Requirement Amount, a Hedge or Hedges in an aggregate notional principal amount equal to the Variable Advances Outstanding that are part of the Hedge Requirement Amount and covering the entire term of the Amended and Restated Variable Facility Commitment as set forth on the Summary of Credit Facility Structure and meeting the conditions set forth in Section 21.02.

SECTION 21.02. Hedge Terms. Each Hedge shall:

                    (a)          provide for a notional principal amount equal at all times to Variable Advances Outstanding that are part of the Hedge Requirement Amount;

                    (b)          [intentionally deleted];

                    (c)          in the case of Swaps, provide for a notional interest rate required to achieve a 1.40 Aggregate Debt Service Coverage Ratio for the Trailing 12 Months based upon a 30-year amortization period equal to the Three Month Libor Rate in effect from time to time (the “Swap Rate”);

                    (d)          in the case of Caps, provide for a notional interest rate not greater than the lowest interest rate that would result in an Aggregate Debt Service Coverage Ratio for the Variable Advances subject to the Cap of not less than 1.10 to 1 (the “Cap Interest Rate”), provided that the Aggregate Debt Service Coverage Ratio shall be calculated based on an interest rate equal to (i) the then current Three Month LIBOR Rate, plus (ii) the Variable Facility Fee, plus (iii) 300 basis points, and including any amortization payments in respect of such Loan;

                    (e)          in the case of Swaps, require the counterparty to make interest payments on the notional principal amount at a rate equal to the amount by which Coupon Rate exceeds the Swap Rate;

                    (f)          in the case of Caps, require the counterparty to make interest payments on the notional principal amount at a rate equal to the amount by which the then applicable Coupon Rate exceeds the Cap Interest Rate;

                    (g)          [intentionally deleted]; and

                    (h)          be evidenced, governed and secured on terms and conditions, and pursuant to documentation (the “Hedge Documents”), in form and content reasonably acceptable to Fannie Mae, and with a counterparty (a “Counterparty”) approved by Fannie Mae.

SECTION 21.03 Hedge Security Agreement; Delivery of Hedge Payments. Pursuant to a Hedge Security Agreement, the Lender shall be granted an enforceable, perfected, first priority lien on and security interest in each Hedge and payments due under the Hedge (including scheduled and termination payments) in order to secure the Borrower’s obligations to the

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Lender under this Agreement. With respect to each Hedge, the Hedge Security Agreement must be delivered by the Borrower to the Lender no later than the effective date of the Hedge.

SECTION 21.04 Termination. The Borrower shall not terminate, transfer or consent to any transfer of any existing Hedge without the Lender’s prior written consent as long as the Borrower is required to maintain a Hedge pursuant to this Agreement; provided, however, that if, and at such time as, there are no Variable Advances Outstanding that are part of the Hedge Requirement Amount, the Borrower shall have the right to terminate the existing Hedge and the proceeds of any such termination shall be paid to the Borrower.

SECTION 21.05 Performance Under Hedge Documents. The Borrower agrees to comply fully with, and to otherwise perform when due, its obligations under, all applicable Hedge Documents and all other agreements evidencing, governing and/or securing any Hedge arrangement contemplated under this Article XXI. The Borrower shall not exercise, without the Lender’s prior written consent, which consent shall not be unreasonably withheld, and shall exercise, at the Lender’s direction, any rights or remedies under any Hedge Document, including without limitation the right of termination.

SECTION 21.06 Approved Swaps. Notwithstanding any provisions herein to the contrary, the parties hereby acknowledge that the Hedge Documents evidencing the LIBOR Swaps with AmSouth and First Tennessee set forth on Exhibit II attached hereto have been approved by Fannie Mae as acceptable Swaps under this Agreement (the “Approved Swaps”). Borrower Parties agree to assign to Lender all right, title and interest in all payments received (but not the obligation for any payments due) under the Approved Swaps in a form acceptable to Lender.

ARTICLE XXII
LIMITS ON PERSONAL LIABILITY

SECTION 22.01 Personal Liability to the Borrower.

                    (a)          Full Recourse. Except as provided in Section 22.01(b), each Borrower is and shall remain jointly and severally personally liable to the Lender for the payment and performance of all Obligations throughout the term of this Agreement.

                    (b)          Termination of Personal Liability. The provisions of Section 22.01(a) shall be null and void upon the written notice of Borrower to Lender of its election to render such provisions null and void if (i) the Aggregate Loan to Value Ratio is 60% or less, (ii) the Aggregate Debt Service Ratio for the Trailing 12 Month Period is 145% or more, (iii) there has been a complete termination of the Variable Facility, and (iv) the Mortgaged Properties are owned in fee simple by the Borrower that is a Single Purpose Entity. Upon the termination of the effectiveness of Section 22.01(a) the following additional provisions of this Agreement shall be null and void and no longer applicable:

          (1)          The second, third and fourth sentences of Section 8.01; and

          (2)          Sections 15.02 and 15.03 to the extent that a Default would result from the failure of the Borrower to be in compliance with such Sections;

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                    (c)          Exceptions to Limits on Personal Liability. Upon termination of personal liability of the Borrower pursuant to paragraph (b) of this Section 22.01, the Borrower shall remain personally liable to the Lender on a joint and several basis for the repayment of a portion of the Advances and other amounts due under the Loan Documents equal to any loss or damage suffered by the Lender as a result of (1) failure of the Borrower to pay to the Lender upon written demand after an Event of Default all Rents to which the Lender is entitled under Section 3(a) of the Security Instrument encumbering the Mortgaged Property and the amount of all security deposits collected by the Borrower from tenants then in residence; (2) failure of the Borrower to apply all insurance proceeds and condemnation proceeds as required by the Security Instrument encumbering the Mortgaged Property; (3) failure of the Borrower to comply in all material respects with Section 13.04 relating to the delivery of books and records, statements, schedules and reports; (4) fraud or written material misrepresentation by the Borrower or any officer, director, partner, member or employee of the Borrower in connection with the application for or creation of the Obligations or any request for any action or consent by the Lender; (5) failure to apply Rents, first, to the payment of reasonable operating expenses and then to amounts (“Debt Service Amounts”) payable under the Loan Documents (except that the Borrower will not be personally liable (i) to the extent that the Borrower lacks the legal right to direct the disbursement of such sums because of a bankruptcy, receivership or similar judicial proceeding or otherwise under the Loan Documents, or (ii) with respect to Rents of a Mortgaged Property that are distributed in any Calendar Quarter if the Borrower has paid all operating expenses and Debt Service Amounts for that Calendar Quarter); or (6) failure of the Borrower to pay any and all documentary stamp taxes, intangible taxes and other taxes, impositions, fees and charges due on or with respect to the Note, the Indebtedness, this Instrument and/or any of the other Loan Documents.

                    (d)          Full Recourse After Termination of Personal Liability. Upon termination of personal liability of the Borrower pursuant to paragraph (b) of this Section 22.01, the Borrower shall become personally liable to the Lender for the payment and performance of all Obligations upon the occurrence of any of the following Events of Default: (1) the Borrower’s acquisition of any property or operation of any business not permitted by Section 33 of the Security Instrument; or (2) a Transfer that is an Event of Default under Section 21 of the Security Instrument.

                    (e)          Permitted Transfer Not Release. No Transfer by the REIT of its Ownership Interests in the Borrower shall release the Borrower from liability under this Article, this Agreement or any other Loan Document, unless the Lender shall have approved the Transfer and shall have expressly released the Borrower in connection with the Transfer.

                    (f)          Miscellaneous. To the extent that the Borrower has personal liability under this Section, the Lender may exercise its rights against the Borrower personally without regard to whether the Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to the Lender under the Loan Documents or applicable law. For purposes of this Article, the term “Mortgaged Property” shall not include any funds that (1) have been applied by the Borrower as required or permitted by the Loan Documents prior to the occurrence of an Event of Default, or (2) are owned by the Borrower and which the Borrower was unable to apply as

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required or permitted by the Loan Documents because of a bankruptcy, receivership, or similar judicial proceeding.

ARTICLE XXIII
MISCELLANEOUS PROVISIONS

SECTION 23.01 Counterparts. To facilitate execution, this Agreement may be executed in any number of counterparts. It shall not be necessary that the signatures of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart, but it shall be sufficient that the signature of, or on behalf of, each party, appear on one or more counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.

SECTION 23.02 Amendments, Changes and Modifications. This Agreement may be amended, changed, modified, altered or terminated only by written instrument or written instruments signed by all of the parties hereto.

SECTION 23.03 Payment of Costs, Fees and Expenses. The Borrower shall pay, on demand, all reasonable fees, costs, charges or expenses (including the fees and expenses of attorneys, accountants and other experts) incurred by the Lender in connection with:

                    (a)     Any amendment, consent or waiver to this Agreement or any of the Loan Documents (whether or not any such amendments, consents or waivers are entered into).

                    (b)     Defending or participating in any litigation arising from actions by third parties and brought against or involving the Lender with respect to (i) any Mortgaged Property, (ii) any event, act, condition or circumstance in connection with any Mortgaged Property or (iii) the relationship between the Lender and the Borrower in connection with this Agreement or any of the transactions contemplated by this Agreement.

                    (c)     The administration or enforcement of, or preservation of rights or remedies under, this Agreement or any other Loan Documents or in connection with the foreclosure upon, sale of or other disposition of any Collateral granted pursuant to the Loan Documents.

                    (d)     The REIT’s Registration Statement, or similar disclosure documents, including fees payable to any rating agencies, including the reasonable fees and expenses of the Lender’s attorneys and accountants.

The Borrower shall also pay, on demand, any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution, delivery, filing, recordation, performance or enforcement of any of the Loan Documents or the Advances. However, the Borrower will not be obligated to pay any franchise, excise, estate, inheritance, income, excess profits or similar tax on the Lender. Any attorneys’ fees and expenses payable by the Borrower pursuant to this Section shall be recoverable separately from and in addition to any other amount included in such judgment, and such obligation is intended to be severable

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from the other provisions of this Agreement and to survive and not be merged into any such judgment. Any amounts payable by the Borrower pursuant to this Section, with interest thereon if not paid when due, shall become additional indebtedness of the Borrower secured by the Loan Documents. Such amounts shall bear interest from the date such amounts are due until paid in full at the weighted average, as determined by Lender, of the interest rates in effect from time to time for each Advance unless collection from the Borrower of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from the Borrower under applicable law. The provisions of this Section are cumulative with, and do not exclude the application and benefit to the Lender of, any provision of any other Loan Document relating to any of the matters covered by this Section.

SECTION 23.04 Payment Procedure. All payments to be made to the Lender pursuant to this Agreement or any of the Loan Documents shall be made in lawful currency of the United States of America and in immediately available funds by wire transfer to an account designated by the Lender before 1:00 p.m. (Eastern Standard Time) on the date when due.

SECTION 23.05 Payments on Business Days. In any case in which the date of payment to the Lender or the expiration of any time period hereunder occurs on a day which is not a Business Day, then such payment or expiration of such time period need not occur on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the day of maturity or expiration of such period, except that interest shall continue to accrue for the period after such date to the next Business Day.

SECTION 23.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial. NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND RIGHTS AND OBLIGATIONS OF THE BORROWER UNDER THE NOTES, AND THE BORROWER UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED, (2) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER THAN DEPOSIT ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE DISTRICT OF COLUMBIA UNIFORM COMMERCIAL CODE AND (3) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS LOCATED. THE BORROWER AGREES THAT ANY CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL

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BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN THE DISTRICT OF COLUMBIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN THE DISTRICT OF COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. THE BORROWER IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST THE BORROWER, AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF DISTRICT OF COLUMBIA SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY THE BORROWER TO PERSONAL JURISDICTION WITHIN THE DISTRICT OF COLUMBIA. THE BORROWER (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED TO, LENDER’S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY THE BORROWER UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY THE BORROWER’S FREE WILL.

SECTION 23.07 Severability. In the event any provision of this Agreement or in any other Loan Document shall be held invalid, illegal or unenforceable in any jurisdiction, such provision will be severable from the remainder hereof as to such jurisdiction and the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired in any jurisdiction.

SECTION 23.08 Notices.

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                (a)          Manner of Giving Notice. Each notice, direction, certificate or other communication hereunder (in this Section referred to collectively as “notices” and singly as a “notice”) which any party is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if:

	(1)          personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have been received at the time so delivered);
	(2)          sent by Federal Express (or other similar overnight courier) designating morning delivery (any notice so delivered shall be deemed to have been received on the Business Day it is delivered by the courier);
	(3)          sent by telecopier or facsimile machine which automatically generates a transmission report that states the date and time of the transmission, the length of the document transmitted, and the telephone number of the recipient’s telecopier or facsimile machine (to be confirmed with a copy thereof sent in accordance with paragraphs (1) or (2) above within two Business Days) (any notice so delivered shall be deemed to have been received (i) on the date of transmission, if so transmitted before 5:00 p.m. (local time of the recipient) on a Business Day, or (ii) on the next Business Day, if so transmitted on or after 5:00 p.m. (local time of the recipient) on a Business Day or if transmitted on a day other than a Business Day);
addressed to the parties as follows:
	As to the Borrower:
		c/o Mid-America Apartment Communities, Inc.
		6584 Polar Avenue
		Suite 300
		Memphis, Tennessee 38138
		Attention:	Simon R.C. Wadsworth
			Chief Financial Officer
		Telecopy No.: (901) 682-6667
	with a copy to:
		Bass, Berry & Sims PLC
		The Tower at Peabody Place
		100 Peabody Place
		Suite 900
		Memphis, Tennessee 38103-3672
		Attention:	John A. Stemmler, Esq.
		Telecopy No.: (901) 543-5999
	As to the Lender:
		Prudential Multifamily Mortgage, Inc.
		c/o Prudential Asset Resources

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	2200 Ross Avenue
	Suite 4900 E
	Dallas, Texas 75201
	Attention:	Asset Management Department
	Telecopy No.:	(214) 777-4556
with a copy to:
	Prudential Multifamily Mortgage, Inc.
	8401 Greensboro Drive
	Suite 200
	McLean, Virginia 22102
	Attention: Laura Eckhardt
	Telecopy No.: (703) 610-1422
	and
	Prudential Multifamily Mortgage, Inc.
	Four Embarcadero Center
	Suite 2700
	San Francisco, California 94111
	Attention: Harry N. Mixon, Esq.
	Telecopy No.: (415) 956-2197
As to Fannie Mae:
	Fannie Mae
	3939 Wisconsin Avenue, N.W.
	Washington, D.C. 20016-2899
	Attention:	Vice President for
		Multifamily Asset Management
	Telecopy No.: (202) 752-5016
with a copy to:
	Venable LLP
	575 7th Street, N.W.
	Washington, D.C. 20004
	Attention:	Lawrence H. Gesner, Esq.
	Telecopy No.: (202) 344-8300

                       (b)     Change of Notice Address. Any party may, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses, for its notices, but notice of a change of address shall only be effective upon receipt. Each party agrees that it shall not refuse or reject delivery of any notice given hereunder, that it shall acknowledge, in writing, receipt of the same upon request by the other party and that any notice rejected or refused by it shall be deemed for all purposes of this Agreement to have been received by the rejecting party on the

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date so refused or rejected, as conclusively established by the records of the U.S. Postal Service, the courier service or facsimile.

SECTION 23.09 Further Assurances and Corrective Instruments.

                    (a)     Further Assurances. To the extent permitted by law, the parties hereto agree that they shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as the Lender or the Borrower may request and as may be required in the opinion of the Lender or its counsel to effectuate the intention of or facilitate the performance of this Agreement or any Loan Document.

                    (b)     Further Documentation. Without limiting the generality of subsection (a), in the event any further documentation or information is required by the Lender to correct patent mistakes in the Loan Documents, materials relating to the Title Insurance Policies or the funding of the Advances, the Borrower shall provide, or cause to be provided to the Lender, at their cost and expense, such documentation or information. The Borrower shall execute and deliver to the Lender such documentation, including any amendments, corrections, deletions or additions to the Notes, the Security Instruments or the other Loan Documents as is reasonably required by the Lender.

                    (c)     Compliance with Investor Requirements. Without limiting the generality of subsection (a), the Borrower shall do anything necessary to comply with the reasonable requirements of the Lender in order to enable the Lender to sell the MBS backed by an Advance.

SECTION 23.10 Term of this Agreement. This Agreement shall continue in effect until the Credit Facility Termination Date.

SECTION 23.11 Assignments; Third-Party Rights. The Borrower shall not assign this Agreement, or delegate any of its obligations hereunder, without the prior written consent of the Lender. The Lender may assign its rights and obligations under this Agreement separately or together, without the Borrower’s consent, only to Fannie Mae, but may not delegate its obligations under this Agreement unless required to do so pursuant to Section 19.04.

SECTION 23.12 Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 23.13 General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in Article I, Section 15.01, Section 16.01 and elsewhere in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other genders; (ii) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (iii) references herein to “Articles,” “Sections,” “subsections,” “paragraphs” and other subdivisions without reference to a document are to designated Articles, Sections, subsections, paragraphs and other subdivisions of this Agreement; (iv) a reference to a subsection without further

-98-

reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (v) a reference to an Exhibit or a Schedule without a further reference to the document to which the Exhibit or Schedule is attached is a reference to an Exhibit or Schedule to this Agreement; (vi) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and (vii) the word “including” means “including, but not limited to.”

SECTION 23.14 Interpretation. The parties hereto acknowledge that each party and their respective counsel have participated in the drafting and revision of this Agreement and the Loan Documents. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Agreement and the Loan Documents or any amendment or supplement or exhibit hereto or thereto.

SECTION 23.15 Standards for Decisions, Etc. Unless otherwise provided herein, if the Lender’s approval is required for any matter hereunder, such approval may be granted or withheld in the Lender’s sole and absolute discretion. Unless otherwise provided herein, if the Lender’s designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such designation, determination, selection, estimate, action or decision shall be made in the Lender’s sole and absolute discretion.

SECTION 23.16 Decisions in Writing. Any approval, designation, determination, selection, action or decision of the Lender or the Borrower must be in writing to be effective.

SECTION 23.17 Joint and Several Liability. Each Borrower shall be jointly and severally liable for the payment and performance of each obligation of the Borrower arising under any of the Loan Documents.

[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

Borrower
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

-100-

Lender
PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation
By:
Name:	Sharon D. Singleton
Title:	Vice President

-101-

SCHEDULE I

SUMMARY OF CREDIT FACILITY STRUCTURE

SUMMARY OF CREDIT FACILITY STRUCTURE – PRIOR TO NOVEMBER 1, 2004

		Facility Fees	Standby Fee	Facility Termination Fee
Initial Commitment
Fixed		57 bps (1)
Variable	$ 183,372,000	67 bps	15 bps	18 bps
Total	$ 183,372,000			through Variable Facility Termination Date as calculated in Agreement
Original Expanded Commitment	Amounts above
Fixed
Variable	$ 183,372,000
Total	$ 183,372,000
	Up to
Fixed
Variable	$ 413,374,000
Total	$ 413,374,000
	Net Amount Equal to
Fixed		65 bps (1) (2)
Variable	$ 230,002,000	72 bps	15 bps	18 bps
Total	$ 230,002,000			through Variable Facility Termination Date as calculated in Agreement
Amended and Restated Commitment (4)	Amounts above
Fixed
Variable	$413,374,000
Total	$413,374,000
	Up to
Fixed
Variable	$451,000,000
Total	$451,000,000
	Net Amount Equal to
Fixed		50 bps (1) (3)
Variable	$37,626,000	60 bps	15 bps	18 bps
Total	$37,626,000			through Variable Facility Termination Date as calculated in Agreement

NOTES:

(1) All Fixed Facility Fees reflect interest only option.

(2) The Fixed Facility Fee for this tranche with amortizing option is 57 bps.

(3) The Fixed Facility Fee for this tranche with the amortizing option is 43.5 bps.

(4) Although not shown here, the Amended and Restated Commitment includes those amounts by which the Commitment is expanded beyond the amounts shown here to reflect additional capacity as result of the payoff of the Blackstone JV properties up to a total maximum commitment of $600 million.

I-1

SUMMARY OF CREDIT FACILITY STRUCTURE – ON AND AFTER NOVEMBER 1, 2004

		Facility Fees	Standby Fee	Facility Termination Fee
FIXED				18 bps - through Variable Facility Termination Date as calculated in Agreement
Existing Fixed Advances	N/A
Future Fixed Advances (i) drawn after 10/31/2004 and prior to 1/1/2006 or (ii) drawn from the Reserved Amount at any time (3)		52 bps (1) (2)	15 bps
Future Fixed Advances drawn after 1/1/2006 and not from the Reserved Amount		(3) The number of basis points determined at the time of such increase or conversion by Lender as the Fixed Facility Fee for such Fixed Advances	(3) The number of basis points determined by Lender as the Standby Fee at the time of the increase of the Commitment
VARIABLE				18 bps - through Variable Facility Termination Date as calculated in Agreement
Variable Advances (i) Rolling or drawn after 10/31/2004 and prior to 1/1/2006 (ii) drawn from the Reserved Amount at any time (3)		62 bps	15 bps
Variable Advances Rolling after 1/1/2006		62 bps
Variable Advances drawn after 1/1/2006 and not from the Reserved Amount		(3) The number of basis points determined at the time of such increase or conversion by Lender as the Variable Facility Fee for such Variable Advances	(3) The number of basis points determined by Lender as the Standby Fee at the time of the increase of the Commitment

NOTES:

(1) All Fixed Facility Fees reflect interest only option.

(2) The Fixed Facility Fee after 10/31/2004 with the amortizing option is 45.5 bps.

(3)All Fees for the Commitment are subject to change after January 1, 2006 unless the Borrower pays the Rate Preservation Fee in which case the pricing shall not change for so long as the Rate Preservation Fee is paid, provided that in no event shall the Fixed Facility Fee exceed 72 basis points.

I-1

MID-AMERICA APARTMENT COMMUNITIES LP
SUMMARY OF CREDIT FACILITY STRUCTURE

MAA I Maturity Dates and Availability Period

	Variable Facility Termination Date (Variable Advance Maturity Date)	Fixed Facility Availability Period
Aggregate Commitment equal to or less than $80,000,000 (1)	December 1, 2011	December 1, 2006
Aggregate Commitment greater than $80,000,000 but less than $160,000,000 (1)	December 1, 2012	December 1, 2007
Aggregate Commitment greater than $160,000,000 (1)	December 1, 2013	December 1, 2008

(1) If the Borrower has both Fixed and Variable Commitments, the Variable Commitment shall be designated as the first advance for the purposes of determining maturity.

MAA I Existing Fixed Note Maturity Dates

Note Amount	Date of Note	Maturity Date
$65,000,000	August 23, 2000	November 1, 2009
$25,000,000	May 23, 2001	July 1, 2008
$20,000,000	November 28, 2001	December 1, 2006

MAA II Maturity Dates and Availability Period

	Variable Facility Termination Date (on Variable Advance Maturity Date)	Fixed Facility Availability Period
Aggregate Commitment equal to or less than $120,000,000 (1)	December 1, 2010	December 1, 2005
Aggregate Commitment greater than $120,000,000 but less than $160,000,000 (1)	December 1, 2011	December 1, 2006
Aggregate Commitment greater than $160,000,000 but less than $200,000,000 (1)	December 1, 2012	December 1, 2007
Aggregate Commitment greater than $200,000,000 but less than $320,000,000 (1)	December 1, 2013	December 1, 2008
Aggregate Commitment greater than $320,000,000 (1)	December 1, 2014	December 1, 2009

(1) If the Borrower has both Fixed and Variable Commitments, the Variable Commitment shall be designated as the first advance for the purposes of determining maturity.

I-3

	MAA #1	MAA #2	Total
Initial Commitment	$   119,367,000	$   183,372,000	$   302,739,000
Original Expanded Commitment	Amounts above $   119,367,000 Up to $   138,382,000 Net Amount Equal to $   19,015,000	Amounts above $  183,372,000 Up to $  413,374,000 Net Amount Equal to $  230,002,000	Amounts above $   302,739,000 Up to $   551,756,000 Net Amount Equal to $   249,017,000
Amended and Restated Commitment Count	Amounts above $   138,382,000 Up to $   250,000,000 Net Amount Equal to $   21,618,000	Amounts above $   413,374,000 Up to $   600,000,000 Net Amount Equal to $   37,626,000	Amounts above $   551,756,000 Up to $   850,000,000 Net Amount Equal to $   159,244,000
At 4-01-04:
Available	$   183,769,000	$   457,526,000	$   641,295,000
Collateralized incl new additions	$   183,769,000	$   457,526,000	$   641,295,000
Net available but uncollateralized	$                     0	$                     0	$                     0
Expansion capacity	$   250,000,000	$   600,000,000	$   850,000,000
Expansion less collateralized $	$     66,231,000	$   142,474,000
Increase in availability	$     66,231,000	$   142,474,000
4/1/04 Additions	$     24,262,000	$     20,918,000

I-4

SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT
(MAA II)

among

(i) MID-AMERICA APARTMENT COMMUNITIES, INC.,
a Tennessee corporation, and

(ii) MID- AMERICA APARTMENTS, LP,
a Tennessee limited partnership

and

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
a Delaware corporation,

dated as of

March 30, 2004

(MAA II)

TABLE OF CONTENTS

			Page
RECITALS		1
ARTICLE I		2
ARTICLE II		23
	SECTION 2.01 Variable Facility Commitment		23
	SECTION 2.02 Requests for Variable Advances		24
	SECTION 2.03 Maturity Date of Variable Advances		24
	SECTION 2.04 Interest on Variable Facility Advances		24
	SECTION 2.05 Coupon Rates for Variable Advances		25
	SECTION 2.06 Variable Facility Note		25
	SECTION 2.08 Reinstatement of Variable Commitment Upon Maturity of Fixed Facility Advances		25
	SECTION 2.09 Limitations on Right to Reborrow		26
	SECTION 2.10 Conditions Precedent to Reborrowing		26
ARTICLE III		27
	SECTION 3.01 Fixed Facility Commitment		27
	SECTION 3.02 Requests for Fixed Facility Advances		27
	SECTION 3.03 Maturity Date of Fixed Facility Advances; Amortization		27
	SECTION 3.04 Interest on Fixed Facility Advances		27
	SECTION 3.05 Coupon Rates for Fixed Facility Advances		28
	SECTION 3.06 Fixed Facility Note		28
	SECTION 3.07 Conversion of Commitment from Variable Facility Commitment to Fixed Facility Commitment		28
	SECTION 3.08 Limitations on Right to Convert		28
	SECTION 3.09 Conditions Precedent to Conversion		29
	SECTION 3.10 Defeasance		29
ARTICLE IV		37
	SECTION 4.01 Rate Setting for an Advance		37
	SECTION 4.02 Advance Confirmation Instrument for Variable Advances		38
	SECTION 4.03 Breakage and other Costs		38
ARTICLE V		38
	SECTION 5.01 Initial Advance		38
	SECTION 5.02 Future Advances		39
	SECTION 5.03 Conditions Precedent to Future Advances		39
	SECTION 5.04 Determination of Allocable Facility Amount and Valuations		40
ARTICLE VI		40
	SECTION 6.01 Right to Add Collateral		40
	SECTION 6.02 Procedure for Adding Collateral		40
	SECTION 6.03 Conditions Precedent to Addition of an Additional Mortgaged Property to the Collateral Pool		42
ARTICLE VII		42
	SECTION 7.01 Right to Obtain Releases of Collateral		43

A-1

	SECTION 7.02 Procedure for Obtaining Releases of Collateral		43
	SECTION 7.03 Conditions Precedent to Release of Collateral Release Property from the Collateral		44
	SECTION 7.04 Substitutions		45
ARTICLE VIII		49
	SECTION 8.01 Right to Increase Commitment		49
	SECTION 8.02 Procedure for Obtaining Increases in Commitment		50
	SECTION 8.03 Conditions Precedent to Increase in Commitment		51
ARTICLE IX		51
	SECTION 9.01 Right to Complete or Partial Termination of Facilities		51
	SECTION 9.02 Procedure for Complete or Partial Termination of Facilities.		51
	SECTION 9.03 Conditions Precedent to Complete or Partial Termination of Facilities		52
ARTICLE X		52
	SECTION 10.01 Right to Terminate Credit Facility		53
	SECTION 10.02 Procedure for Terminating Credit Facility		53
	SECTION 10.03 Conditions Precedent to Termination of Credit Facility		53
ARTICLE XI		54
	SECTION 11.01 Conditions Applicable to All Requests		54
	SECTION 11.02 Delivery of Closing Documents Relating to Initial Advance Request, Collateral Addition Request, Collateral Substitution Request, Credit Facility Expansion Request or Future Advance Request		55
	SECTION 11.03 Delivery of Property-Related Documents		55
ARTICLE XII		56
	SECTION 12.01 Representations and Warranties of the Borrower		56
	SECTION 12.02 Representations and Warranties of the Borrower		61
	SECTION 12.03 Representations and Warranties of the Lender		64
ARTICLE XIII		64
	SECTION 13.01 Compliance with Agreements		64
	SECTION 13.02 Maintenance of Existence		64
	SECTION 13.03 Maintenance of REIT Status		65
	SECTION 13.04 Financial Statements; Accountants’ Reports; Other Information		65
	SECTION 13.05 Certificate of Compliance		67
	SECTION 13.06 Maintain Licenses		67
	SECTION 13.07 Access to Records; Discussions With Officers and Accountants		67
	SECTION 13.08 Inform the Lender of Material Events		68
	SECTION 13.09 Intentionally Omitted		69
	SECTION 13.10 Inspection		69
	SECTION 13.11 Compliance with Applicable Laws		69
	SECTION 13.12 Warranty of Title		70
	SECTION 13.13 Defense of Actions		70
	SECTION 13.14 Alterations to the Mortgaged Properties		70
	SECTION 13.15 ERISA		71
	SECTION 13.16 Loan Document Taxes		71
	SECTION 13.17 Further Assurances		71
	SECTION 13.18 Monitoring Compliance		71

A-2

	SECTION 13.19 Leases		72
	SECTION 13.20 Intentionally Omitted		72
	SECTION 13.21 Transfer of Ownership Interests of the Borrower		72
	SECTION 13.22 Change in Senior Management		74
	SECTION 13.23 Date-Down Endorsements		74
	SECTION 13.24 Geographical Diversification		74
	SECTION 13.25 Ownership of Mortgaged Properties		74
ARTICLE XIV		75
	SECTION 14.01 Other Activities		75
	SECTION 14.02 Value of Security		75
	SECTION 14.03 Zoning		75
	SECTION 14.04 Liens		75
	SECTION 14.05 Sale		75
	SECTION 14.06 Indebtedness		76
	SECTION 14.07 Principal Place of Business		76
	SECTION 14.08 Frequency of Requests		76
	SECTION 14.09 Change in Property Management		76
	SECTION 14.10 Condominiums		76
	SECTION 14.11 Restrictions on Partnership Distributions		76
	SECTION 14.12 Lines of Business		76
	SECTION 14.13 Limitation on Unimproved Real Property and New Construction		76
	SECTION 14.14 Dividend Payout		77
ARTICLE XV		77
	SECTION 15.01 Financial Definitions		77
	SECTION 15.02 Compliance with Debt Service Coverage Ratios		81
	SECTION 15.03 Compliance with Loan to Value Ratios		81
	SECTION 15.04 Compliance with Concentration Test		81
	SECTION 15.05 Compliance with REIT’s Net Worth Test		81
	SECTION 15.06 Compliance with REIT’s Total Indebtedness to Consolidated Total Assets Ratio		81
	SECTION 15.07 Compliance with REIT’s Consolidated EBITDA to Interest Ratio		82
	SECTION 15.08 Compliance with REIT’s Consolidated EBITDA to Fixed Charge Ratio		82
ARTICLE XVI		82
	SECTION 16.01 Standby Fee and Rate Preservation Fee		82
	SECTION 16.02 Origination Fees		82
	SECTION 16.03 Due Diligence Fees		82
	SECTION 16.04 Legal Fees and Expenses		83
	SECTION 16.05 MBS-Related Costs		83
	SECTION 16.06 Failure to Close any Request		83
	SECTION 16.07 Other Fees		83
ARTICLE XVII		84
	SECTION 17.01 Events of Default		84
ARTICLE XVIII		86
	SECTION 18.01 Remedies; Waivers		86
	SECTION 18.02 Waivers; Rescission of Declaration		87

A-3

	SECTION 18.03 The Lender’s Right to Protect Collateral and Perform Covenants and Other Obligations		87
	SECTION 18.04 No Remedy Exclusive		87
	SECTION 18.05 No Waiver		87
	SECTION 18.06 No Notice		87
	SECTION 18.07 Application of Payments		87
ARTICLE XIX		88
	SECTION 19.01 Special Pool Purchase Contract		88
	SECTION 19.02 Assignment of Rights		88
	SECTION 19.03 Release of Collateral		88
	SECTION 19.04 Replacement of Lender		88
	SECTION 19.05 Fannie Mae and Lender Fees and Expenses		89
	SECTION 19.06 Third-Party Beneficiary		89
ARTICLE XX		89
	SECTION 20.01 Insurance and Real Estate Taxes		89
	SECTION 20.02 Replacement Reserves		89
ARTICLE XXI		89
	SECTION 21.01 Swap		89
	SECTION 21.02 Swap Terms		90
	SECTION 21.03 Swap Security Agreement; Delivery of Swap Payments		90
	SECTION 21.04 Termination		91
	SECTION 21.05 Performance Under Swap Documents		91
ARTICLE XXII		91
	SECTION 22.01 Personal Liability to the Borrower		91
ARTICLE XXIII		93
	SECTION 23.01 Counterparts		93
	SECTION 23.02 Amendments, Changes and Modifications		93
	SECTION 23.03 Payment of Costs, Fees and Expenses		93
	SECTION 23.04 Payment Procedure		94
	SECTION 23.05 Payments on Business Days		94
	SECTION 23.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial		94
	SECTION 23.07 Severability		95
	SECTION 23.08 Notices		95
	SECTION 23.09 Further Assurances and Corrective Instruments		98
	SECTION 23.10 Term of this Agreement		98
	SECTION 23.11 Assignments; Third-Party Rights		98
	SECTION 23.12 Headings		98
	SECTION 23.13 General Interpretive Principles		98
	SECTION 23.14 Interpretation		99
	SECTION 23.15 Standards for Decisions, Etc		99
	SECTION 23.16 Decisions in Writing		99
	SECTION 23.17 Joint and Several Liability		99

A-4

SCHEDULE I	-	Summary of Credit Facility Structure
EXHIBIT A	-	Schedule of Initial Mortgaged Properties and Initial Valuations
EXHIBIT B	-	Fixed Facility Note
EXHIBIT C	-	Intentionally Omitted
EXHIBIT D	-	Compliance Certificate
EXHIBIT E	-	Sample Facility Debt Service
EXHIBIT F	-	Organizational Certificate
EXHIBIT G	-	Intentionally Omitted
EXHIBIT H	-	Revolving Credit Endorsement
EXHIBIT I	-	Variable Facility Note
EXHIBIT J	-	Tie-In Endorsement
EXHIBIT K	-	Conversion Request
EXHIBIT L	-	Conversion Amendment
EXHIBIT M	-	Rate Setting Form
EXHIBIT N	-	Rate Confirmation Form
EXHIBIT O	-	Advance Confirmation Instrument
EXHIBIT P	-	Future Advance Request
EXHIBIT Q	-	Collateral Addition Request
EXHIBIT R	-	Collateral Addition Description Package
EXHIBIT S	-	Collateral Addition Supporting Documents
EXHIBIT T	-	Collateral Release Request
EXHIBIT U	-	Confirmation of Obligations
EXHIBIT V	-	Credit Facility Expansion Request
EXHIBIT W	-	Variable Facility Termination Request
EXHIBIT X	-	Variable Facility Termination Document
EXHIBIT Y	-	Credit Facility Termination Request
EXHIBIT Z	-	Collateral Substitution Request
EXHIBIT AA	-	Schedule of Approved Property Management Agreements
EXHIBIT BB	-	Independent Unit Encumbrances
EXHIBIT CC	-	Reborrowing Request
EXHIBIT DD	-	Collateral Substitution Description Package
EXHIBIT EE	-	Collateral Substitution Supporting Documents
EXHIBIT FF	-	Reborrowing Amendment
EXHIBIT GG	-	Swap Security Agreement
EXHIBIT HH	-	DUS Properties
EXHIBIT II	-	Approved Swap

A-5

EXHIBIT A TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL	$  4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL	$10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA	$14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA	$20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC	$13,420,000
The Mansion	Fayette	Lexington, KY	$  7,630,000
Brentwood Downs	Davidson	Nashville, TN	$14,600,000
Calais Forest	Pulaski	Little Rock, AR	$  9,900,000
Southland Station II	Houston	Warner Robins, GA	$  8,050,000
Fairways at Hartland	Warren	Bowling Green, KY	$10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN	$14,160,000
Whisperwood	Muscogee	Columbus, GA	$49,900,000
River Trace I	Shelby	Memphis, TN	$  8,975,000
Wildwood I	Thomas	Thomasville, GA	$  3,825,000
Three Oaks I	Lowndes	Valdosta, GA	$  3,950,000
Westbury Springs	Gwinnett	Lilburn, GA	$  6,775,000
Hickory Farms	Shelby	Memphis, TN	$  6,475,000
Gleneagles	Shelby	Memphis, TN	$  6,850,000
The Oaks	Madison	Jackson, TN	$  2,825,000
TPC Greenville	Greenville	Greenville, SC	$  8,930,000
TPC Huntsville	Madison	Huntsville, AL	$17,800,000
Eagle Ridge	Birmingham	Birmingham, AL	$  8,400,000
River Hills	Grenada	Grenada, MS	$  1,600,000
Stonemill Village	Jefferson	Louisville, KY	$19,825,000
Woodwinds	Aiken	Aiken, SC	$  7,000,000
Tanglewood	Anderson	Anderson, SC	$  5,110,000
Wood Hollow	Duval	Jacksonville, FL	$22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA	$16,450,000
Grand Reserve	Fayette	Lexington, KY	$23,200,000
Island Retreat	Glynn	St. Simons Island, GA	$  5,400,000
Belmere	Hillsborough	Tampa, FL	$11,150,000
Bradford Chase (WV)	Madison	Jackson, TN	$  4,960,000
Crosswinds	Rankin	Jackson, MS	$13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH	$  9,800,000
Hermitage at Beechtree	Wake	Cary, NC	$  8,720,000
Hidden Lake II	Fulton	Union City, GA	$  7,050,000
High Ridge	Clarke	Athens, GA	$  6,600,000
Howell Commons	Greenville	Greenville, SC	$12,380,000
Kirby Station	Shelby	Memphis, TN	$15,800,000
Lakepointe	Fayette	Lexington, KY	$  4,425,000

A-6

Property Name	County	Property Location	Initial Valuation
Lakeside	Duval	Jacksonville, FL	$21,100,000
Lighthouse Court	Clay	Orange Park, FL	$40,092,000
Marsh Oaks	Duval	Atlantic Beach, FL	$  5,500,000
Napa Valley	Pulaski	Little Rock, AR	$10,500,000
Park Haywood	Greenville	Greenville, SC	$  5,600,000
Park Place	Spartanburg	Spartanburg, SC	$  6,470,000
Pear Orchard	Madison	Jackson, MS	$15,700,000
Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)	$  9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA	$  9,567,000
Somerset	Hinds	Jackson, MS	$  3,160,000
Southland Station I	Houston	Warner Robins, GA	$  7,300,000
Steeplechase	Hamilton	Chattanooga, TN	$  4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)	$10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL	$14,750,000
Village	Fayette	Lexington, KY	$10,340,000
Westside Creek I	Pulaski	Little Rock, AR	$  7,010,000
Willow Creek	Muscogee	Columbus, GA	$10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL	$13,050,000
Grand View	Nashville	Nashville, TN	$26,805,000
Three Oaks II	Lowndes	Valdosta, GA	$  4,737,000
Wildwood II	Thomas	Thomasville, GA	$  3,950,000
Lighthouse Court	Clay	Orange Park, FL	$40,092,000

A-7

EXHIBIT B TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FIXED FACILITY NOTE

US $____________ ____________

          FOR VALUE RECEIVED, the undersigned (collectively, the “Borrower ”) promise to pay to the order of PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender ”) the principal sum of _______________________________ AND NO/100 DOLLARS (US $____________), with interest accruing on the unpaid principal balance from the date of disbursement until fully paid at the annual rate of ____________ percent (%).

          This Note is executed and delivered by Borrower pursuant to that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 by and among Borrower and Lender (as amended from time to time, the “Master Agreement ”), to evidence the obligation of Borrower to repay a Fixed Facility Advance made by Lender to Borrower in accordance with the terms of the Master Agreement. This Note is entitled to the benefit and security of the Loan Documents provided for in the Master Agreement, to which reference is hereby made for a statement of all of the terms and conditions under which the Fixed Facility Advance evidenced hereby is made.

          1.          Defined Terms. As used in this Note, (i) the term “Lender ” means the holder of this Note, (ii) the term “Indebtedness ” means the principal of, interest on, or any other amounts due at any time under, this Note, the Security Instruments or any other Loan Document, including prepayment premiums, late charges, default interest, and advances to protect the security of the Security Instruments under Section 12 of the Security Instruments and (iii) a “Business Day ” means any day other than a Saturday, Sunday or any day on which Lender is not open for business. Event of Default and other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Master Agreement (or, if not defined in the Master Agreement, as defined in the Security Instruments (as defined in Paragraph 5).

          2.          Address for Payment. All payments due under this Note shall be payable at 2200 Ross Avenue, Suite 4900E, Dallas, Texas 75201, or such other place as may be designated by written notice to Borrower from or on behalf of Lender.

          3.          Payment of Principal and Interest. Principal and interest shall be paid as follows:

          (a)         Unless disbursement of principal is made by Lender to Borrower on the first day of the month, interest for the period beginning on the date of disbursement and ending on and

B-1

including the last day of the month in which such disbursement is made shall be payable simultaneously with the execution of this Note. Interest under this Note shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

          (b)         Consecutive monthly installments of interest, each in the amount of _________________ Dollars (US $ _________________), shall be payable on the first day of each month beginning on _________________, until the entire unpaid principal balance evidenced by this Note is fully paid. Any accrued interest remaining past due for 30 days or more shall be added to and become part of the unpaid principal balance and shall bear interest at the rate or rates specified in this Note, and any reference below to “accrued interest” shall refer to accrued interest which has not become part of the unpaid principal balance. Any remaining principal and interest shall be due and payable on _______________, 20__ or on any earlier date on which the unpaid principal balance of this Note becomes due and payable, by acceleration or otherwise (the “Maturity Date”). The unpaid principal balance shall continue to bear interest after the Maturity Date at the Default Rate set forth in this Note until and including the date on which it is paid in full.

          (c)         Any regularly scheduled monthly installment of interest that is received by Lender before the date it is due shall be deemed to have been received on the due date solely for the purpose of calculating interest due.

          4.          Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness that is less than all amounts due and payable at such time, Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Borrower agrees that neither Lender’s acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender’s application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.

          5.          Security. The Indebtedness is secured, among other things, by multifamily mortgages, deeds to secure debt or deeds of trust dated as of the date of this Note (the “Security Instruments”), and reference is made to the Security Instruments for other rights of Lender concerning the collateral for the Indebtedness.

          6.          Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, the prepayment premium payable under Paragraph 10, if any, and all other amounts payable under this Note and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower. Lender may exercise this option to accelerate regardless of any prior forbearance.

B-2

          7.          Late Charge. If any monthly installment due hereunder is not received by Lender on or before the 10^th day of each month or if any other amount payable under this Note or under the Security Instruments or any other Loan Document is not received by Lender within 10 days after the date such amount is due, counting from and including the date such amount is due, Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to 5 percent of such monthly installment or other amount due. Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the loan evidenced by this Note (the “Loan”), and that it is extremely difficult and impractical to determine those additional expenses. Borrower agrees that the late charge payable pursuant to this Paragraph represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Paragraph 8.

          8.          Default Rate. So long as any monthly installment or any other payment due under this Note remains past due for 30 days or more, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or other payment due, as applicable, at a rate (the “Default Rate”) equal to the lesser of 4 percentage points above the rate stated in the first paragraph of this Note or the maximum interest rate which may be collected from Borrower under applicable law. If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate. Borrower also acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, that, during the time that any monthly installment or payment under this Note is delinquent for more than 30 days, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender’s ability to meet its other obligations and to take advantage of other investment opportunities, and that it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any monthly installment or other payment due under this Note is delinquent for more than 30 days, Lender’s risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk. Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

          9.          Limits on Personal Liability.

B-3

          The provisions of Article 22.01 of the Master Agreement (entitled “Limits on Personal Liability”) are hereby incorporated into this Note by this reference to the fullest extent as if the text of such Article were set forth in its entirety herein.

          10.        Voluntary and Involuntary Prepayments.

          (a)         A prepayment premium shall be payable in connection with any prepayment made under this Note as provided below:

(1)        Borrower may voluntarily prepay all (but not less than all) of the unpaid principal balance of this Note only on the last calendar day of a calendar month and only if Borrower has complied with all of the following:
	(i)	Borrower must give Lender at least 30 days, but not more than 60 days, prior written notice of its intention to make such prepayment (the “Prepayment Notice”).
	(ii)	The Prepayment Notice shall be addressed to Lender and shall include, at a minimum, the date upon which Borrower intends to make the prepayment (the “Intended Prepayment Date”). Borrower acknowledges that the Lender is not required to accept any voluntary prepayment of this Note on any day other than the last calendar day of a calendar month. If the last calendar day of a calendar month is not a Business Day, then the Borrower must make the payment on the Business Day immediately preceding the last calendar day of a calendar month. For all purposes, including the accrual of interest and the calculation of the prepayment premium, any prepayment received by Lender on any day other than the last calendar day of a calendar month shall be deemed to have been received on the last calendar day of the month in which such prepayment occurs.
	(iii)	Any prepayment shall be made by paying (A) the amount of principal being prepaid, (B) all accrued interest, (C) all other sums due Lender at the time of such prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
	(iv)	If, for any reason, Borrower fails to prepay this Note (i) within five (5) Business Days after the Intended Prepayment Date or (ii) if the prepayment occurs in a month other than the month stated in the original Prepayment Notice, then Lender shall have the right, but not the obligation, to recalculate the prepayment premium based

B-4

	upon the date that Borrower actually prepays this Note and to make such calculation as described in Schedule A attached hereto. For purposes of such recalculation, such new prepayment date shall be deemed the “Intended Prepayment Date.”
(2)        Upon Lender’s exercise of any right of acceleration under this Note, Borrower shall pay to Lender, in addition to the entire unpaid principal balance of this Note outstanding at the time of the acceleration, (A) all accrued interest and all other sums due Lender under this Note and the other Loan Documents, and (B) the prepayment premium calculated pursuant to Schedule A.
(3)        Any application by Lender of any collateral or other security to the repayment of any portion of the unpaid principal balance of this Note prior to the Maturity Date and in the absence of acceleration shall be deemed to be a partial prepayment by Borrower, requiring the payment to Lender by Borrower of a prepayment premium.

          (b)         Notwithstanding the provisions of Paragraph 10(a), no prepayment premium shall be payable with respect to any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under any Security Instrument or as provided in subparagraph (c) of Schedule A.

          (c)         Schedules A and B are hereby incorporated by reference into this Note.

          (d)         Any required prepayment of less than the unpaid principal balance of this Note shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless Lender agrees otherwise in writing.

          (e)         Borrower recognizes that any prepayment of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from a default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender’s ability to meet its commitments to third parties. Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages. Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth on Schedule A represents a reasonable estimate of the damages Lender will incur because of a prepayment.

          (f)          Borrower further acknowledges that the prepayment premium provisions of this Note are a material part of the consideration for the loan evidenced by this Note, and acknowledges that the terms of this Note are in other respects more favorable to Borrower as a result of Borrower’s voluntary agreement to the prepayment premium provisions.

B-5

          11.         Costs and Expenses. Borrower shall pay on demand all expenses and costs, including fees and out-of-pocket expenses of attorneys and expert witnesses and costs of investigation, incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.

          12.         Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instruments, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower’s obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender.

          13.         Waivers. Except as expressly provided in the Master Agreement, presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness are waived by Borrower and all endorsers and guarantors of this Note and all other third party obligors.

          14.         Loan Charges. Borrower agrees to pay an effective rate of interest equal to the sum of the interest rate provided for in this Note and any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the loan evidenced by this Note and any other fees or amounts to be paid by Borrower pursuant to any of the other Loan Documents. Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the maximum interest rate permitted to be charged under applicable law. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the

B-6

stated term of the Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note.

          15.         Commercial Purpose. Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes.

          16.         Counting of Days. Except where otherwise specifically provided, any reference in this Note to a period of “days” means calendar days, not Business Days.

          17.         Governing Law; Consent to Jurisdiction and Venue; WAIVER OF TRIAL BY JURY. The provisions of Section 23.06 of the Master Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated into this Note by this reference to the fullest extent as if the text of such Section were set forth in its entirety herein.

          18.         Captions. The captions of the paragraphs of this Note are for convenience only and shall be disregarded in construing this Note.

          19.         Notices. All notices, demands and other communications required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 23.08 of the Master Agreement.

          20.         Security for this Note. The indebtedness evidenced by this Note is secured by other Security Documents executed by Borrower or its Affiliates. Reference is made hereby to the Master Agreement and the Security Documents for additional rights and remedies of Lender relating to the indebtedness evidenced by this Note. Each Security Document shall be released in accordance with the provisions of the Master Agreement and the Security Documents.

          21.         Fixed Facility. This Note is issued as part of the Fixed Facility established in accordance with the terms of the Master Agreement. Borrower may not re-borrow any amounts under this Note which it has previously borrowed and repaid under this Note.

          22.         Cross-Default with Master Agreement. The occurrence of an Event of Default under the Master Agreement shall constitute an “Event of Default” under this Note, and, accordingly, upon the occurrence of an Event of Default under the Master Agreement, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof.

[Remainder of page intentionally left blank.]

B-7

IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal or has caused this Note to be signed and delivered under seal by its duly authorized representative.

Borrower intends that this Note shall be deemed to be signed and delivered as a sealed instrument.

	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
SEAL		By:
		Name:
		Title:
	MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
SEAL		By:
		Name:
		Title:

B-8

Pay to the order of _________________, without recourse.

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

By:

Name:

Title:

B-9

ATTACHED SCHEDULES. The following Schedules are attached to this Note:

x          Schedule A Prepayment Premium (required)

x          Schedule B Modifications to Multifamily Note

B-10

USE IF DEFEASANCE IS SELECTED

SCHEDULE A

PREPAYMENT PREMIUM

No prepayment premium shall be payable in connection with a prepayment of this Note after the end of the Lockout Period (as defined in Schedule B to this Note).

B-11

USE IF YIELD MAINTENANCE IS SELECTED

SCHEDULE A

PREPAYMENT PREMIUM

Any prepayment premium payable under Paragraph 10 of this Note shall be computed as follows:

(a)	If the prepayment is made at any time after the date of this Note and before the last calendar day of ____________, ____ (“Yield Maintenance Period End Date”) [insert the appropriate month and year, six months prior to the Maturity Date], the prepayment premium shall be the greater of:
		(i)	1% of the amount of principal being prepaid; or
		(ii)	The product obtained by multiplying:
			(A)	the amount of principal being prepaid,
			by
			(B)	the difference obtained by subtracting from the interest rate on this Note the yield rate (the “Yield Rate ”) on the __________% U.S. Treasury Security due _________________________ (the “Specified U.S. Treasury Security”), as the Yield Rate is reported in The Wall Street Journal on the twenty-fifth Business Day preceding (x) the Intended Prepayment Date, or (y) the date Lender accelerates the Loan or otherwise accepts a prepayment pursuant to Paragraph 10(a)(3) of this Note,
					by
			(C)	the present value factor calculated using the following formula:
				1 - (1 + r)-n/12        r

B-12

			[r =	Yield Rate
			n =	the number of months remaining between (1) either of the following: (x) in the case of a voluntary prepayment, the last calendar day of the calendar month during which the prepayment is made, or (y) in any other case, the date on which Lender accelerates the unpaid principal balance of this Note and (2) the Yield Maintenance Period End Date]
		In the event that no Yield Rate is published for the Specified U.S. Treasury Security, then the nearest equivalent U.S. Treasury Security shall be selected at Lender’s discretion. If the publication of such Yield Rates in The Wall Street Journal is discontinued, Lender shall determine such Yield Rates from another source selected by Lender.
(b)	If the prepayment is made on or after the Yield Maintenance Period End Date but before the last calendar day of the 4th month prior to the month in which the Maturity Date occurs, the prepayment premium shall be 1% of the amount of principal being prepaid.
(c)	Notwithstanding the provisions of Paragraph 10(a) of this Note, no prepayment premium shall be payable with respect to any prepayment made on or after the last calendar day of the 4th month prior to the month in which the Maturity Date occurs.

INITIAL(S)

INITIAL(S)

B-13

USE IF DEFEASANCE IS SELECTED

SCHEDULE B

MODIFICATIONS TO FIXED FACILITY NOTE

          The Fixed Facility Note dated ___________, ____ in the original principal amount of $____________ (the “Note”) issued by MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership, and MID-AMERICA APARTMENT COMMUNITIES, IN.C, a Tennessee corporation (collectively, the “Borrower”), and payable to the order of PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”) is hereby amended as follows:

          1.          Notwithstanding Paragraph 10 of this Note, Borrower shall not have the right voluntarily to prepay any of the principal of this Note during the period beginning on the date of this Note and ending on the 90th day before the Maturity Date (determined without regard to Lender’s exercise of any right of acceleration of this Note) (the “Lockout Period”). The preceding sentence shall not apply to a prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument. If Borrower obtains a release of the Mortgaged Property from the lien of the Security Instrument pursuant to Section 3.10 of the Master Agreement, Borrower shall not have the right voluntarily to prepay any of the principal of this Note at any time.

          2.          Upon Lender’s exercise, at any time during the Lockout Period, of any right of acceleration of this Note, Borrower shall pay the following amounts to Lender:

(A)	all sums due Lender under this Note and the other Loan Documents (other than the unpaid principal balance of the Note which is included as a part of 2(B) below; and
(B)	an amount equal to the greater of:
	(i)          the Defeasance Deposit that would be payable by Borrower to Lender if the Defeasance Deposit were calculated on the Business Day before the date on which Lender accelerates this Note (and assuming that the “Defeasance Closing Date” defined in the Master Agreement is the date Lender accelerates the Note), plus the next scheduled payment of principal and interest due in the month following the month Lender accelerates this Note, or
	(ii)         all accrued interest and the unpaid principal balance of this Note as of the Business Day before the date on which Lender accelerates this Note.

B-14

          3.          Paragraph 5 of this Note is amended by adding a paragraph at the end thereof to read as follows:

           “If Borrower obtains a release of the Mortgaged Property from the lien of the Security Instrument pursuant to Section 3.10 of the Master Agreement, the Indebtedness shall be secured by the Pledge Agreement, and reference shall be made to the Pledge Agreement for other rights of Lender concerning the collateral for the Indebtedness.”

          4.          Paragraph 9 of this Note is amended by adding a paragraph at the end thereof to read as follows:

          “If Borrower obtains a release of the Mortgaged Property from the lien of the Security Instrument pursuant to Section 3.10 of the Master Agreement, Borrower shall have no personal liability under this Note or the Pledge Agreement for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under this Note or the Pledge Agreement (other than any liability under Section 18 of the Security Instrument for events that occur prior to the Defeasance Closing Date, whether discovered before or after the Defeasance Closing Date), and Lender’s only recourse for the satisfaction of the Indebtedness and the performance of such obligations shall be Lender’s exercise of its rights and remedies with respect to the collateral held by Lender under the Pledge Agreement as security for the Indebtedness.”

INITIALS

B-15

EXHIBIT C TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTENTIONALLY OMITTED

EXHIBIT D TO
SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT

COMPLIANCE CERTIFICATE

     The undersigned (individually and collectively, “Borrower”) hereby certify to Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) and Fannie Mae as follows:

          Section 1.          Master Agreement. Borrower entered into that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 by and among Borrower and the Lender (as amended from time to time, the “Master Agreement”). The rights of the Lender under the Master Agreement have been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of the Master Agreement.

          Section 2.          Satisfaction of Conditions. Each Borrower hereby represents, warrants and covenants to the Lender that all conditions to the Request with respect to which this Certificate is issued have been satisfied.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Certificate shall have the meanings ascribed to such terms in the Master Agreement.

Dated: _____________

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R. C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

D-1

EXHIBIT E TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SAMPLE FACILITY DEBT SERVICE

For this example:

	- Total Credit Facility Commitment amount is	$400,000,000
	- Variable Facility Commitment amount is	$300,000,000
	- Fixed Facility Commitment amount is	$100,000,000
	- Total Variable Facility Advances outstanding is	$300,000,000
	- Total Fixed Facility Advances outstanding is	$100,000,000
	- Unused Capacity is	0
	- Variable Facility Coupon Rate is	3.0%
	- Fixed Facility Coupon Rate is	6.0%
	- Fixed Facility Amortization Period is	30 years
	- Standby Fee is	15 bp/yr.
Then:
Facility Debt Service allocable to Variable Facility Advances:
	$300,000,000 @ 3.0%, 30 year amortization =	$TBD
Facility Debt Service allocable to Fixed Facility Advances:
	$    100,000,000 @ 6% 30 year amortization =	$TBD
Standby Fee: $0 X 15 bp =		$0
Facility Debt Service =		$TBD per month

E-1

EXHIBIT F TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ORGANIZATIONAL CERTIFICATE

          I, the undersigned, Simon R.C. Wadsworth, hereby certify as follows:

          Section 1.          Position. I am the Executive Vice President of Mid-America Apartment Communities, Inc., a Tennessee corporation (the “REIT”), and I am authorized to deliver this Certificate on behalf of the REIT for itself and as the sole general partner of Mid-America Apartments, L.P., a Tennessee limited partnership (the “OP”).

          Section 2.          Master Agreement. The REIT and the OP (the “Borrower Parties”) entered into that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the Borrower Parties and Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) (as amended from time to time, the “Master Agreement”). The rights of the Lender under the Master Agreement have been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of the Master Agreement.

          Section 3.          Due Authorization of Request. I hereby certify that no action by the shareholders of the REIT and no action of the partners of the OP is necessary to duly authorize the execution and delivery of, and the consummation of the transaction contemplated by, the Request with respect to which this Certificate is delivered, or, if necessary, that attached as Exhibit A to this Certificate is a true copy of resolutions duly adopted at a meeting of the board of directors, partners or members, as the case may be, that authorize the action. Any such resolutions are in full force and effect and are unmodified as of the date of this Certificate.

          Section 4.          No Changes. Since the date of the most recent Organizational Certificate delivered to the Lender, or, if there are none, since the date of the Master Agreement, there have been no changes in any of the Organizational Documents of the REIT or the OP, except as set forth in Exhibit B to this Certificate, and the REIT and the OP remain in good standing or are duly qualified in the jurisdictions in which it is required to be in good standing or duly qualified under the terms of the Master Agreement.

          Section 5.          Incumbency Certificate. One or more of the persons authorized to execute and deliver any documents required to be delivered in connection with the Request are set forth on the attached Schedule.

          Section 6.          Capitalized Terms. All capitalized terms used but not defined in this Certificate shall have the meanings ascribed to such terms in the Master Agreement.

Dated: _________________, _________

[The rest of this page has been intentionally left blank.]

F-1

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R. C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

F-2

EXHIBIT A

(See Attached Resolutions, if any)

EXHIBIT B

None

EXHIBIT G TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTENTIONALLY OMITTED

EXHIBIT H TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FUTURE ADVANCE AND REVOLVING CREDIT ENDORSEMENT

Attached to and made a part of ___________ Policy No.

Said policy is amended by adding the following:

1.		The Company acknowledges that the insured mortgage identified in Schedule A of this Policy secures future advances of principal or a revolving credit line and provides for changes in the rate of interest calculated pursuant to a formula contained in the insured mortgage. By this endorsement, the Company insures against loss or damage which the insured sustains as a result of:
	a.		The invalidity or unenforceability of the lien of the insured mortgage resulting from the provision in the insured mortgage providing for changes in the rate of interest.
	b.		The loss of priority of the lien of the insured mortgage as security for the unpaid principal balance of the loan, together with interest as changed in accordance with the provisions of the insured mortgage, which loss of priority is caused by changes in the rate of interest as provided in the insured mortgage.
	c.		The invalidity or unenforceability of the lien of the insured mortgage as security for future advances of principal indebtedness.
	d.		The invalidity or unenforceability of the lien of the insured mortgage as a result of fluctuations of the unpaid balance of the principal indebtedness.
	e.		The priority of any lien or encumbrance over the lien of the insured mortgage as security for the principal indebtedness and any future advances of principal indebtedness made after the date of the policy.
2.		This endorsement is made a part of the Policy and the insurance affected by it is subject to: (i) the Exclusions from Coverage except Paragraph 3(d), (ii) the provisions of the Conditions and Stipulations except Paragraph 8(d) and (iii) the Exceptions contained in Schedule B of the Policy. In addition, it does not insure against loss or damage resulting from:
		i.	Future advances of principal indebtedness made after Petition for Relief under the Bankruptcy Code (11 U.S.C.) by or on behalf of the mortgagor.
		ii.	The loss of priority of future advances of principal indebtedness as a result of taxes, assessments, or notice of a federal tax lien filed against the mortgagor.

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iii.	The loss of priority of future advances of principal indebtedness made after the vestee shown in Schedule A is divested as owner of the estate or interest covered by this Policy.
iv.	The loss of priority of future advances of principal indebtedness made during any period in which a declared default exists under the terms of the insured mortgage.
v.	The loss of priority of a future advance of principal indebtedness made after the insured has actual knowledge of the existence of liens, encumbrances or other matters affecting the insured premises described in Schedule A intervening between the date of the Policy and that future advance, as to such intervening lien, encumbrance or other matters.
vi.	The fact that the outstanding balance of the indebtedness secured by the mortgage is reduced to a zero balance at any time, unless the recorded mortgage provides that the reduction of the indebtedness to a zero balance shall not cause the mortgage to become extinguished by operation of law.

The total liability of the Company under said policy, binder or commitment and under this and any prior endorsements thereto shall not exceed, in the aggregate, the amount of liability stated on the face of said policy, binder or commitment, as the same may be specifically amended in dollar amount by this or any prior endorsements, and the costs which the Company is obligated to pay under the Conditions and Stipulations of the policy.

This endorsement is made a part of said policy, binder or commitment and is subject to all the terms and provisions thereof, except as modified by the provisions hereof.

Nothing herein contained shall be construed as extending or changing the effective date of the aforesaid policy, binder or commitment unless otherwise expressly stated.

[The rest of this page has been left blank intentionally.]

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          IN WITNESS WHEREOF, the Company has caused this Endorsement to be signed and sealed as of the ____ day of ____________, ______, to be valid when countersigned by an authorized officer or agent of the Company, all in accordance with its By-Laws.

Issued at __________________________________________________________________________________________

COUNTERSIGNED:		, President
	Attest:
		, Secretary
Authorized Officer or Agent

H-3

EXHIBIT I TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
AMENDED AND RESTATED VARIABLE FACILITY NOTE

US $_______________ _________________

          FOR VALUE RECEIVED, the undersigned (collectively, the “Borrower”) promise to pay to the order of Prudential Multifamily Mortgage, Inc., a Delaware corporation (“Lender”), the principal sum of ______________(US $_________), with interest accruing on each Variable Facility Advance from the date of disbursement until fully disbursed at an annual rate as calculated in Section 3 hereof.

          This Note is executed and delivered by Borrower pursuant to that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among Borrower and Lender (as amended from time to time, the “Master Agreement”), to evidence the obligation of Borrower to repay Variable Advances made by Lender to Borrower in accordance with the terms of the Master Agreement. This Note is entitled to the benefit and security of the Loan Documents provided for in the Master Agreement, to which reference is hereby made for a statement of all of the terms and conditions under which the Variable Advances evidenced hereby is made. The Master Agreement requires certain of the terms of each Variable Advance to be evidenced by an Advance Confirmation Instrument, and reference is hereby made to each such Advance Confirmation Instrument for such terms.

          This Note is issued as part of a Variable Facility established in accordance with the terms of the Master Agreement. Subject to the terms, conditions and limitations of Article II of the Master Agreement, Borrower may re-borrow any amounts under this Note which they have previously borrowed and repaid under this Note.

          1.          Defined Terms. As used in this Note, (i) the term “Lender” means the holder of this Note, (ii) the term “Indebtedness” means the principal of, interest on, or any other amounts due at any time under, this Note, the Security Instruments or any other Loan Document, including prepayment premiums, late charges, default interest, and advances to protect the security of the Security Instruments under Section 12 of the Security Instruments, and (iii) a “Business Day” means any day other than a Saturday, Sunday or any day on which Lender is not open for business. Event of Default and other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Master Agreement (or, if not defined in the Master Agreement, as defined in the Security Instruments (as defined in Paragraph 5).

          2.          Address for Payment. All payments due under this Note shall be payable at 2200 Ross Avenue, Suite 4900E, Dallas, Texas 75201, or such other place as may be designated by written notice to Borrower from or on behalf of Lender.

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          3.          Payment of Principal and Interest. Principal and interest shall be paid as follows:

          (a)           This Note shall evidence Variable Advances made from time to time under the Master Agreement. Each Variable Advance shall bear interest at a rate determined in accordance with Section 4.01 of the Master Agreement.

          (b)          Borrower shall pay imputed interest on each Variable Advance in advance in the form of a Discount in accordance with Section 2.04(a) of the Master Agreement (except that Borrower shall pay actual interest on the Variable Advance for the partial month period, if any, described in Section 2.04(b) of the Master Agreement, in accordance with the terms of such Section). If not sooner paid, the entire principal amount of each Variable Advance shall be due and payable on the maturity date of the applicable Variable Advance (the “Maturity Date”) in accordance with Section 2.03 of the Master Agreement. In addition to payment of principal and the Discount, the Borrower shall pay the Variable Facility Fee due on each Variable Advance in accordance with Section 2.04(c) of the Master Agreement. No Variable Advance may have a Maturity Date later than, and any then outstanding Variable Advance shall be due and payable in full on, the related Variable Facility Termination Date.

          4.          Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness that is less than all amounts due and payable at such time, Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Borrower agrees that neither Lender’s acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender’s application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.

          5.          Security. The Indebtedness is secured, among other things, by the Security Instruments described in the Master Agreement and reference is made to the Security Instruments for other rights of Lender concerning the collateral for the Indebtedness.

          6.          Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, the prepayment premium payable under Paragraph 10, if any, and all other amounts payable under this Note and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower. Lender may exercise this option to accelerate regardless of any prior forbearance.

          7.          Late Charge. If any monthly installment due hereunder is not received by Lender on or before the 10^th day of each month or if any other amount payable under this Note or under the Security Instruments or any other Loan Document is not received by Lender within 10 days after the date such amount is due, counting from and including the date such amount is due, Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to 5 percent of such monthly installment or other amount due. Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the loan evidenced by this Note (the “Loan”), and that it is extremely difficult and

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impractical to determine those additional expenses. Borrower agrees that the late charge payable pursuant to this Paragraph represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Paragraph 8.

          8.          Default Rate. So long as any monthly installment or any other payment due under this Note remains past due for 30 days or more, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or other payment due, as applicable, at a rate (the “Default Rate”) equal to the lesser of 4 percentage points above the rate stated in the first paragraph of this Note or the maximum interest rate which may be collected from Borrower under applicable law. If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate. Borrower also acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, that, during the time that any monthly installment or payment under this Note is delinquent for more than 30 days, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender’s ability to meet its other obligations and to take advantage of other investment opportunities, and that it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any monthly installment or other payment due under this Note is delinquent for more than 30 days, Lender’s risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk. Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of the Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

          9.            Limits on Personal Liability.

          The provisions of Article 22.01 of the Master Agreement (entitled “Limits on Personal Liability”) are hereby incorporated into this Note by this reference to the fullest extent as if the text of such Article were set forth in its entirety herein.

          10.          Voluntary and Involuntary Prepayments.

                         Pursuant to the terms of the Master Agreement, the Borrower shall pay the entire amount of the Discount on any Variable Advance in advance. Accordingly, any Variable Advance may be prepaid in whole or in part and at any time without penalty. Borrower shall give Lender five Business Days’ advance notice of any prepayment.

          11.          Costs and Expenses. Borrower shall pay on demand all expenses and costs, including fees and out-of-pocket expenses of attorneys and expert witnesses and costs of investigation, incurred by Lender as a result of any default under this Note or in connection with

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efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.

          12.          Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower’s obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender.

          13.          Waivers. Except as expressly provided in the Master Agreement, presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness are waived by Borrower and all endorsers and guarantors of this Note and all other third party obligors.

          14.          Loan Charges. Borrower agrees to pay an effective rate of interest equal to the sum of the interest rate provided for in this Note and any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the loan evidenced by this Note and any other fees or amounts to be paid by Borrower pursuant to any of the other Loan Documents. Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the maximum interest rate permitted to be charged under applicable law. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the stated term of the Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note.

          15.          Commercial Purpose. Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes.

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          16.          Counting of Days. Except where otherwise specifically provided, any reference in this Note to a period of “days” means calendar days, not Business Days.

          17.          Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. The provisions of Section 23.06 of the Master Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated into this Note by this reference to the fullest extent as if the text of such Section were set forth in its entirety herein.

          18.          Captions. The captions of the paragraphs of this Note are for convenience only and shall be disregarded in construing this Note.

          19.          Notices. All notices, demands and other communications required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 23.08 of the Master Agreement.

          20.          Cross-Default with Master Agreement. The occurrence of an Event of Default under the Master Agreement shall constitute an “Event of Default” under this Note, and, accordingly, upon the occurrence of an Event of Default under the Master Agreement, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof.

          21.          Advance Confirmation Instruments; Accounting for Variable Advances. The terms of the Master Agreement and this Note govern the repayment, and all other terms relating to each Variable Advance. However, Borrower shall execute an Advance Confirmation Instrument to create a physical instrument evidencing the Variable Advance. The Advance Confirmation Instrument for a Variable Advance executed by Borrower in accordance with Section 4.02 of the Master Agreement shall set forth the amount, term, Discount, Closing Date and certain other terms of the Variable Advance. The Advance Confirmation Instrument shall conclusively establish each of the terms described in the preceding sentence, absent manifest error. The Variable Advance evidenced by the Advance Confirmation Instrument does not represent a separate indebtedness from that evidenced by this Note. In making proof of this Note, no other documents other than this Note shall be required. In making proof of the amount and terms of the outstanding Variable Advances under this Note, this Note, the Advance Confirmation Instruments for the Variable Advances, and Lender’s records concerning payments made by Borrower under this Note, shall be conclusive evidence of the terms and outstanding amounts of each Variable Advance, absent manifest error.

          23.          Priority of Advances. Each Variable Advance under this Note shall be evidenced by an Advance Confirmation Instrument, and the lien of each Security Document executed by Borrower from time to time to secure this Note, shall secure each separate Advance (and the lien of each Security Instrument and other Security Document executed by the Borrower to secure its obligations under the Loan Documents) to the same extent and with the same effect as if the Advance had been made (and any guaranty obligation had been incurred) on the date on which (i) with respect to each other Security Instrument, the Security Instrument is recorded in the land records of the jurisdiction in which the real property covered by the Security Instrument

I-5

is located, or (ii) with respect to each other Security Document, the date on which the Security Document is executed and delivered to Lender.

          ATTACHED SCHEDULES. The following Schedules are attached to this Note:

          o          Schedule A     Prepayment Premium

          o           Schedule B     Modifications to Multifamily Note

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          IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal or has caused this Note to be signed and delivered under seal by its duly authorized representative. Borrower intends that this Note shall be deemed to be signed and delivered as a sealed instrument.

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

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          Pay to the order of ______________ without recourse.

PRUDENTIAL MULTIFAMILY MORTGAGE,
INC., a Delaware corporation

By:

Name:

Title:

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EXHIBIT J TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

TIE-IN ENDORSEMENT

To be annexed to and form a part of Policy No. ________________.

The said policy is hereby amended in the following manner:

The Company acknowledges that the land described in Schedule A of this policy is part of the security for an indebtedness in the amount of $____________________ which indebtedness is also secured by mortgages or deeds of trust which are insured concurrently by the following policies:

Policy No. County State Amount

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Anything to the contrary notwithstanding in Paragraph 6(a)(ii) of the Conditions and Stipulations of the Policy, the insurance coverage afforded in this Policy is aggregated with the insurance coverage in all of the other policies identified in this endorsement so the effective insurance coverage is $___________________. The total liability of the Company under this and all policies identified in this endorsement shall not exceed such amount, but its liability in this Policy for the land described in Schedule A remains limited by the provisions of Paragraph 6(a)(i) and 6(a)(iii) of the Conditions and Stipulations of this Policy. Any payment by the Company on this or any of the Policies listed in this Endorsement shall reduce pro tanto the liability of the Company under all policies, and the amount so paid shall be deemed a payment under all policies.

The total liability of the Company under said Policy and any prior endorsements attached thereto shall not exceed, in the aggregate, the face amount of said Policy, as the same may be specifically amended in dollar amount by this or any prior endorsements, and the costs which the Company is obligated under the provisions of said Policy to pay.

Nothing herein contained shall be construed as extending or changing the effective date of said commitment or policy unless otherwise expressly stated.

This endorsement is made a part of said Policy and is subject to the exclusions, schedules, endorsements, conditions, stipulations and terms thereof, except as modified by the provisions hereof.

Executed this ____ day of ____________, ______

                       _________________________________

COUNTERSIGNED:
President
	Attest:	, Secretary
Authorized Signatory

K-2

EXHIBIT K TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CONVERSION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THERE TO OCCUR AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN 30 BUSINESS DAYS AFTER YOUR RECEIPT OF THE CONVERSION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS NONE OF THE LIMITATIONS CONTAINED IN SECTION 3.08 OF THE MASTER AGREEMENT IS VIOLATED, AND ALL CONDITIONS CONTAINED IN SECTION 3.09 OF THE MASTER AGREEMENT ARE SATISFIED.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: CONVERSION REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and the Lender (as amended from time to time, the “Master Agreement”).

Ladies and Gentlemen:

This constitutes a Conversion Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request.  The Borrower hereby requests that there occur a conversion of all or a portion of the Variable Advance to the Fixed Facility Commitment in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)           Designation of Amount of Conversion. The amount of the conversion shall be $_________________________.

          (b)           Prepayment of Variable Advances. (If necessary) The Variable Advances Outstanding which will be prepaid on the Closing Date for the conversion are as follows:

Closing Date of Variable Advance:  

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Maturity Date of Variable Advance:

Amount of Advance:

(Note: Any Fixed Facility Advances made in conjunction with a conversion of all or a portion of the Variable Advance to the Fixed Facility Commitment must be accompanied by a Future Advance Request and shall be reviewed in accordance with the terms of the Master Agreement.)

          (c)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 3.09 of the Master Agreement, including (i) the Conversion Documents, as well as (ii) a Compliance Certificate and (iii) an Organizational Certificate will be delivered on or before the Closing Date.

          (d)          Defeasance or Yield Maintenance. [For Fixed Facility Advance only] The Borrower requests the following with respect to prepayments of Fixed Facility Advances for the first Fixed Facility Commitment, if applicable:

          [   ] Defeasance or

          [   ] Yield Maintenance.

          Section 2.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner

By:

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   Simon R.C. Wadsworth

   Executive Vice President

K-5

EXHIBIT L TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

          THIS ____ AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is made as of the ____ day of _______________, _____, by and among (i) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (collectively, the REIT and OP are referred to hereafter as the “Borrower”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower and the Lender are parties to that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents dated as of August 22, 2002, and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.          The parties are executing this Amendment pursuant to the Master Agreement to reflect a conversion of all or a portion of a Variable Advance to the Fixed Facility Commitment.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Conversion. The Variable Advance shall be reduced by, and the Fixed Facility Commitment shall be increased by, $____________________, and the definitions of “Variable Facility Commitment” and “Fixed Facility Commitment” are hereby replaced in their entirety by the following new definitions:

L-1

          “Fixed Facility Commitment” means $________________, plus such amount as the Borrower may elect to add to the Fixed Facility Commitment in accordance with Articles III or VIII.

          “Variable Facility Commitment” means an aggregate amount of $_______________, which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 2.     Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 3.     Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 4.     Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[The rest of this page has been intentionally left blank.]

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          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an instrument under seal as of the day and year first above written.

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner

By:
	Simon R.C. Wadsworth
	Executive Vice President

          PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

By:

Name:

Title:

L-3

EXHIBIT M TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

RATE SETTING FORM

          Pursuant to Section 4.01(b) of that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”) by and among Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) and the undersigned (the “Borrower”), the Borrower hereby requests that the Lender issue to it an advance [for the purposes of refinancing the existing Indebtedness under the Note (applies to Variable Advance only)] with the following terms:

Designation of Advance	_____ Fixed Facility Advance
(Check One)	_____ Variable Advance

          FOR VARIABLE ADVANCE ONLY:

Proposed MBS Imputed Interest Rate	________%
Advance Amount	$______________________
Term	_______ months
MBS Issue Date	_______________, _______
Variable Advance Fee	_______________________
Maximum Annual Coupon Rate	________%
Discount	________%
Price	_______________________
Closing Date no later than	_______________, _______

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          FOR FIXED FACILITY ADVANCE ONLY:

Proposed Pass-Through Rate	________%
Advance Amount	$______________________
Term	_______ months
MBS Issue Date	_______________, _______
Fixed Facility Fee	_______________________
Maximum Annual Coupon Rate	________%
Amortization Period	_______________________
Closing Date no later than	_______________, _______
30/360 or Actual/360	_______________________

          The Lender will provide the Borrower with written confirmation when and if it has obtained a commitment for the purchase of a Fannie Mae MBS having the characteristics described above at a price between 99-½ and 100-½ or better. In the event that the lowest available Coupon Rate is greater than that specified above, the Lender will not proceed without the prior written authorization of the Borrower.

          The Borrower certifies that all conditions contained in Article V of the Master Agreement that are required to be satisfied will be satisfied on or before the Closing Date.

          Defined terms used herein shall have the same meaning as set forth in the Master Agreement.

[Signatures on the following page]

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Dated: ____________________, ____

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner

By:
	Simon R.C. Wadsworth
	Executive Vice President

M-3

EXHIBIT N TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

RATE CONFIRMATION FORM

          Pursuant to Section 4.01(c) of that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”) by and among (a) Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”), (b) Mid-America Apartment Communities, Inc., a Tennessee corporation (the “REIT”), and (c) Mid-America Apartments, L.P., a Tennessee limited partnership (“OP”; REIT and OP, collectively, the “Borrower”), and the Rate Setting Form dated _______________, from the Borrower to the Lender, the Lender hereby confirms that it has obtained a commitment [for the purchase of a Fannie Mae MBS]/[for the purposes of refinancing the existing Indebtedness under the Note (applies to Variable Advance only)] with the following terms:

Designation of Advance	_____ Fixed Facility Advance
(Check One)	_____ Variable Advance
FOR VARIABLE ADVANCE ONLY:

Advance Amount	$_______________________
Term	_______ months
MBS Issue Date	_______________, _______
MBS Imputed Interest Rate	________%
Variable Advance Fee	_______________________
Maximum Annual Coupon Rate	________%
Discount	________%
Price	_______________________
Closing Date no later than	_______________, _______

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FOR FIXED FACILITY ADVANCE ONLY:

Advance Amount	$_______________________
Term	_______ months
MBS Issue Date	_______________, _______
MBS Pass-Through Rate	________%
Fixed Facility Fee	_______________________
Maximum Annual Coupon Rate	________%
Price	_______________________
Yield Maintenance Period	_______________________
Yield Rate Security	_______________________
Amortization Period	_______________________
Closing Date no later than	_______________, _______
30/360 or Actual/360	_______________________

Dated: ____________________, ______

PRUDENTIAL MULTIFAMILY MORTGAGE,
INC., a Delaware corporation

By:

Name:

Title:

Rate Setting Date: ____________________, ______, ___:___ AM/PM Eastern Time

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EXHIBIT O TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ADVANCE CONFIRMATION INSTRUMENT

          THIS ADVANCE CONFIRMATION INSTRUMENT (the“Advance Confirmation Instrument”) is made as of the ____ day of _______________, _____, by (a) Mid-America Apartment Communities, Inc., a Tennessee corporation (the “REIT”), (b) Mid-America Apartments, L.P., a Tennessee limited partnership (“OP”; the REIT and OP, collectively, the “Borrower”) for the benefit of Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”).

RECITALS

          A.          The Borrower and the Lender are parties to that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents dated as of August 22, 2002, and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.          In accordance with this Advance Confirmation Instrument and the Master Agreement, the Lender is making a Variable Advance to the Borrower.

          D.          The Borrower is executing this Advance Confirmation Instrument pursuant to the Master Agreement to confirm certain terms of the Master Agreement and that certain Amended and Restated Variable Facility Note dated as of __________________ in the original principal amount of $____________ (as amended from time to time, the “Variable Advance Note”) relating to the Variable Advance, and the Borrower’s obligation to repay the Advance in accordance with the terms of the Variable Advance Note and this Advance Confirmation Instrument.

          NOW, THEREFORE, the Borrower, in consideration of the Lender’s making of the Variable Advance, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

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          Section 1.          Confirmation of Advance and Terms of Advance. The Borrower hereby confirms the following terms of the Variable Advance, and confirms and agrees that it shall repay the Advance to the Lender in accordance with the terms of the Variable Advance Note and the Master Agreement:

Advance Amount	$_______________________
Term	_______ months
MBS Issue Date	_________________, ______
MBS Imputed Interest Rate	_______%
Variable Advance Fee	$_______________________
Coupon Rate	_______%
Discount	_______%
Price	________________________
Closing Date	_______________, ________

          Section 2.          Beneficiaries. This Advance Confirmation Instrument is made for the express benefit of the Lender.

          Section 3.          Purpose. The terms of the Master Agreement and the Variable Advance Note govern the repayment, and all other terms relating to the Variable Advance. However, this Advance Confirmation Instrument has been executed to create a physical instrument evidencing the above-described Advance under the Variable Advance Note. The Variable Advance evidenced by this Advance Confirmation Instrument does not represent a separate indebtedness from that evidenced by the Variable Advance Note.

          Section 4.          Effectiveness of Advance Confirmation Instrument. This Advance Confirmation Instrument will not be effective until the Lender funds the Variable Advance, at which time the Lender shall note the date of such funding by completing the date block at the foot of this Advance Confirmation Instrument, and executing this Advance Confirmation Instrument below such date block, and such completion shall be binding on the Borrower, absent manifest error.

          Section 5.          Capitalized Terms. All capitalized terms used in this Advance Confirmation Instrument which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 6.          Counterparts. This Advance Confirmation Instrument may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

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          IN WITNESS WHEREOF, the Borrower has executed this Advance Confirmation Instrument as an instrument under seal as of the day and year first above written.

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

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Date of Funding: _______________________, _______

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

By:

Name:

Title:

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EXHIBIT P TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FUTURE ADVANCE REQUEST

THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU TO MAKE THE REQUESTED FUTURE ADVANCE, IF ALL CONDITIONS CONTAINED IN SECTION 5.03 OF THE MASTER AGREEMENT ARE SATISFIED, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING ON A DATE SELECTED BY US, WHICH DATE SHALL BE NOT MORE THAN THREE (3) BUSINESS DAYS AFTER YOUR RECEIPT OF THE FUTURE ADVANCE REQUEST AND THE OUR RECEIPT OF THE RATE CONFIRMATION FORM (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE). THE LENDER RESERVES THE RIGHT TO REQUIRE THAT WE POST A DEPOSIT AT THE TIME THE MBS COMMITMENT IS OBTAINED AS AN ADDITIONAL CONDITION TO YOUR OBLIGATION TO MAKE THE FUTURE ADVANCE.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: FUTURE ADVANCE REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and the Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Future Advance Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the Lender make an Advance in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

(a)	Amount. The amount of the Future Advance shall be $_______________.
(b)	Designation of Facility. The Future Advance is a: [Check one]
	_____ Fixed Facility Advance

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	_____ Variable Advance
(c)	Maturity Date. The Maturity Date of the Future Advance is as follows:
	_________________, ______.
(d)	Amortization Period. [For Fixed Facility Advance only] The principal of this Fixed Facility Advance shall be amortized over a period of 30 years.
(e)	Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 5.03 of the Master Agreement, including (i) a Rate Setting Form, (ii) an Advance Confirmation Instrument (for Variable Advances only), (iii) a Fixed Facility Note (for Fixed Facility Advances only) as well as (iv) a Compliance Certificate, and (v) an Organizational Certificate, will be delivered on or before the Closing Date.

          Section 2.          Available Commitment. The information contained in the following table is true, correct and complete, to the undersigned’s knowledge. The undersigned acknowledges and agrees that the final determination of the information shall be made by the Lender, in accordance with the terms of the Master Agreement.

Currently Available Fixed Facility
Credit Commitment

Currently Available Variable
Advance Credit Commitment

Proposed Amount Drawn on Fixed
Facility Credit Commitment

Remaining Fixed Facility Credit
Commitment after Proposed Draw

Proposed Amount Drawn on
Variable Advance Credit Commitment

Remaining Variable Advance
Credit Commitment after the
Proposed Draw

          For these purposes, the terms

(a)

“Available Fixed Facility Credit Commitment” means, at any time, the maximum amount of Fixed Facility Advances which could be issued and outstanding without causing: (i) the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period to be less than 1.40:1.0; (ii) the Aggregate Loan to Value Ratio for the Trailing 12 Month Period to be greater than 65%; or (iii) a breach of any of the Financial Covenants set forth in Article XV of the Master Agreement; and

(b)

“Available Variable Advance Credit Commitment” means, at any time, the maximum amount of Variable Advances which could be issued and outstanding

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without causing: (i) the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period to be less than 1.40:1.0; (ii) the Aggregate Loan to Value Ratio for the Trailing 12 Month Period to be greater than 65% or (iii) a breach of any of the Financial Covenants set forth in Article XV of the Master Agreement.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner
		By:
			Simon R.C. Wadsworth
			Executive Vice President

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EXHIBIT Q TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL ADDITION REQUEST

THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THAT IF (1) YOU CONSENT TO THE ADDITION OF THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO THE COLLATERAL POOL, (2) WE ELECT TO CAUSE THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND (3) ALL CONDITIONS CONTAINED IN SECTION 6.03 OF THE MASTER AGREEMENT ARE SATISFIED, THEN YOU SHALL PERMIT THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN THIRTY (30) BUSINESS DAYS AFTER YOUR RECEIPT OF OUR ELECTION (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE).

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue
Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: COLLATERAL ADDITION REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Addition Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the Multifamily Residential Property described in this Request be added to the Collateral Pool in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

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          (a)          Collateral Addition Description Package. Attached to this Request is the Collateral Addition Description Package and attached thereto are all information and documents relating to the Additional Collateral required by the Collateral Addition Description Package;

          (b)          Due Diligence Fees. Enclosed with this Request is a check in payment of all Additional Collateral Due Diligence Fees required to be submitted with this Request pursuant to Section 16.03(b) of the Master Agreement; and

          (c)          Accompanying Documents. All reports, certificates and documents required to be delivered pursuant to the conditions contained in Section 6.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Collateral Addition Fee. If the Lender consents to the addition of the Additional Collateral to the Collateral Pool, and the Borrower Parties elect to add the Additional Collateral to the Collateral Pool, Mid-America Apartment Communities, Inc., a Tennessee corporation, and Mid-America Apartments, L.P., a Tennessee limited partnership, shall pay the Collateral Addition Fee for the Additional Collateral to the Lender as one of the conditions to the closing of the addition of the Additional Collateral to the Collateral Pool.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

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EXHIBIT R TO
SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT

COLLATERAL ADDITION DESCRIPTION PACKAGE

Property Name:	__________________________________________________
Address:	__________________________________________________
City/County/State:	__________________________________________________
General Description, including number of units and amenities:
__________________________________________________
__________________________________________________
__________________________________________________
Year Built:	__________
Year Acquired:	__________
Fee Owner:	__________________________________________________
Valuation:
__________________________________________________
Existing Third Party Reports:
__________________________________________________
__________________________________________________
Property Contact:	__________________________________________________
Other Pertinent Information:
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________

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EXHIBIT S TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL ADDITION REQUEST SUPPORTING DOCUMENTS

[NOTE: SUBJECT TO LENDER REVIEW
AND POSSIBLE WAIVER]

ADDITIONS TO COLLATERAL

DUS APPLICATION CHECKLIST

PROPERTY DATA

REC’D	OUT
_____	_____	*A.	Current month’s rent roll, dated and certified by Borrower; must include apartment number, unit type, tenant name, monthly rent, market rent, move-in date, lease expiration date, and whether furnished or unfurnished.
_____	_____	*B.	Certification of Current Project Rent Roll (Schedule H).
_____	_____	*C.	Borrower’s Concession Statement (Schedule H-1 and H-2).
_____	_____	*D.	Commercial leases (if applicable).
_____	_____	*E.	Current certified year-to-date operating statement and prior three years’ statements. YTD statement must end with the same month as the certified rent roll.
_____	_____	F.	Monthly operating statements for the last six months.
_____	_____	G.	Vacancy/turnover information for prior 24 months; month-by-month breakdown of collections including vacancy, bad debt and concessions (may be provided in operating statements).
_____	_____	H.	Delinquency information for 30, 60, 90+ days. Lender will take this information in whatever form the Borrower has.
_____	_____	I.	Operating Budget (Schedule I, provides instructions).
_____	_____	J.	Copies of existing major service contracts (landscaping, trash, pool, laundry, pest and elevator).

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_____	_____	K.	Copy of most recent and prior year tax bills and most recent assessment.
_____	_____	L.	Copy of complete insurance policies including all endorsements, declarations, and premiums. Required only if not on blanket policy; Certificate of Insurance required for all additions.
_____	_____	M.	Major improvements during the last two years and projected for the next twelve months.
_____	_____	N.	Existing title report including all easements, restrictions, judgments and liens. (Lender requirements enclosed). Will need to be updated prior to Closing.
_____	_____	*O.	Two copies of the existing as-built survey or site plan (Lender requirements enclosed). Will need to be updated prior to Closing.
_____	_____	*P.	Legal Description.
_____	_____	Q.	Occupancy Certificates. If not available, please provide a letter from the City stating that they are not available, and why.
_____	_____	*R.	Ground Lease; please advise if not applicable.
_____	_____	*S.	Reciprocal Use Agreement; please advise if not applicable.
_____	_____	T.	Operating Licenses.
_____	_____	U.	Termite inspection.
_____	_____	V.	Copy of one bill from each utility for the property.
_____	_____	*W.	Existing reports, if available (e.g., appraisal, market study, engineering, environmental).
_____	_____	X.	Plans, specifications and soil reports (recently completed properties only).
_____	_____	Y.	Copies of any deed or rent restrictions in place; please advise if not applicable.
* STARRED ITEMS ARE REQUIRED AS SOON AS POSSIBLE SO THAT THIRD PARTY REPORTS CAN BE ORDERED.

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		III.	Management Company
REC’D	OUT
_____	_____	A.	Copy of current or proposed Management Agreement, if applicable.
_____	_____	B.	Sample tenant lease.
_____	_____	C.	Management Resume, if other than REIT-related management company.
_____	_____	D.	Accounts payable schedule for 30, 60 and 90+ days; list should include vendor name, invoice date, invoice number, description of item and amount.
_____	_____	E.	Market survey done by resident manager; to be provided to Lender underwriter at site inspection.
_____	_____	F.	Leasing brochure and floor plans.
_____	_____	G.	Property Payroll and Benefits (Schedule L).

Any other information deemed necessary by Lender to complete the underwriting of the addition to collateral.

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EXHIBIT T TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL RELEASE REQUEST

THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES FOR THERE TO OCCUR AT A CLOSING WITHIN 30 BUSINESS DAYS AFTER YOUR RECEIPT OF THIS REQUEST, SUBJECT TO SATISFACTION OF ALL CONDITIONS CONTAINED IN SECTION 7.03 OF THE MASTER AGREEMENT. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Vienna, Virginia 22812

[Note: Subject to change in the event Lender or its address changes]

Re: COLLATERAL RELEASE REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Release Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the Collateral Release Property described in this Request be released from the Collateral Pool in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Description of Collateral Release Property. The name, address and location (county and state) of the Mortgaged Property, or other designation of the Collateral, to be released from the Collateral Pool is as follows:

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Name:	_____________________________________________
Address:	_____________________________________________
	_____________________________________________
Location:	_____________________________________________

          (b)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 7.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Release Price and Release Fee. The Borrower shall pay the Release Price and the Release Fee as two of the conditions to the closing of the release of the Collateral Release Property from the Collateral Pool.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner
		By:
			Simon R.C. Wadsworth
			Executive Vice President

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EXHIBIT U TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CONFIRMATION OF OBLIGATIONS

          THIS CONFIRMATION OF OBLIGATIONS (the “Confirmation of Obligations”) is made as of the ____ day of __________, ____, by and among (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation, (the “REIT”) and (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”; the REIT and OP being collectively referred to as the “Borrower”), for the benefit of Prudential Multifamily Mortgage, Inc., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower and the Lender are parties to that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents dated as of August 22, 2002, and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.          The Borrower has delivered to the Lender a Collateral Release Request pursuant to the Master Agreement to release a Collateral Release Property from the Collateral Pool.

          D.          The Lender has consented to the Collateral Release Request.

          E.          The parties are executing this Confirmation of Obligations pursuant to the Master Agreement to confirm that each remains liable for all of its obligations under the Master Agreement and the other Loan Documents notwithstanding the release of the Collateral Release Property from the Collateral Pool.

          NOW, THEREFORE, the Borrower, in consideration of the Lender’s consent to the release of the Collateral Release Property from the Collateral Pool and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agrees as follows:

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          Section 1.          Confirmation of Obligations. The Borrower confirms that none of their respective obligations under the Master Agreement and the Loan Documents is affected by the release of the Collateral Release Property from the Collateral, and each of their respective obligations under the Master Agreement and the Loan Documents shall remain in full force and effect, and each shall be fully liable for the observance of all such obligations, notwithstanding the release of the Collateral Release Property from the Collateral Pool. The Borrower confirms that, except with respect to the Collateral Release Property, none of their respective obligations under the Master Agreement and the Loan Documents are affected by the release of the Collateral Release Property, and their obligations under the Master Agreement and the Loan Documents shall remain in full force and effect, and they shall be fully liable for the observance of all such obligations, notwithstanding the release of the Collateral Release Property from the Collateral Pool.

          Section 2.          Beneficiaries. This Confirmation of Obligations is made for the express benefit of both the Lender and Fannie Mae.

          Section 3.          Capitalized Terms. All capitalized terms used in this Confirmation of Obligations which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 4.          Counterparts. This Confirmation of Obligations may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

          IN WITNESS WHEREOF, the parties hereto have executed this Confirmation of Obligations as an instrument under seal as of the day and year first above written.

[Signatures on the following pages]

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MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

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PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a
Delaware corporation

By:

Name:

Title:

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EXHIBIT V TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CREDIT FACILITY EXPANSION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU TO PERMIT THE REQUESTED INCREASE IN THE COMMITMENT, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN FIFTEEN (15) BUSINESS DAYS AFTER THE YOUR RECEIPT OF THE CREDIT FACILITY EXPANSION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE), AS LONG AS ALL CONDITIONS CONTAINED IN SECTION 8.03 OF THE MASTER AGREEMENT ARE SATISFIED. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201

[Note: Subject to change in the event Lender or its address changes]

Re: CREDIT FACILITY EXPANSION REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and the Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Credit Facility Expansion Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests an increase in the maximum credit commitment in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Amount of Increase. The amount of the increase in the maximum credit commitment and the amount of the increases in the Fixed Facility Commitment or the Variable Facility Commitment are as follows:

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NAME	INCREASE	RESULTING AMOUNT OF COMMITMENT
MAXIMUM CREDIT COMMITMENT:
FIXED FACILITY COMMITMENT:
VARIABLE FACILITY COMMITMENT:

[Note: Section 8.01 of the Master Agreement limits the maximum credit commitment to $600,000,000 and the increase in the Maximum Credit Commitment must be in the minimum amount of $10,000,000.]

          (b)          Geographical Diversification Requirements. The Borrower hereby requests that the Lender inform the Borrower of any change in the Geographical Diversification Requirements.

          (c)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 8.03 of the Master Agreement will be delivered on or before the Closing Date.

          (d)          Defeasance or Yield Maintenance. [For Fixed Facility Advance only] The Borrower requests the following with respect to prepayments of Fixed Facility Advances for the first Fixed Facility Commitment, if applicable:

          [  ] Defeasance or

          [  ] Yield Maintenance.

          Section 2.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

By:
	Simon R.C. Wadsworth
	Executive Vice President

V-2

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner

By:
	Simon R.C. Wadsworth
	Executive Vice President

V-3

EXHIBIT W TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

VARIABLE FACILITY TERMINATION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU TO PERMIT THE VARIABLE FACILITY COMMITMENT TO BE REDUCED TO THE AMOUNT DESIGNATED BY US, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, WITHIN FIFTEEN (15) BUSINESS DAYS AFTER THE YOUR RECEIPT OF THE VARIABLE FACILITY TERMINATION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), IF ALL CONDITIONS CONTAINED IN SECTION 9.03 ARE SATISFIED. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201

[Note: Subject to change in the event Lender or its address changes]

Re: VARIABLE FACILITY TERMINATION REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and the Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Variable Facility Termination Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests a permanent reduction in the amount of the Variable Facility in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Amount of Reduction. The amount of the permanent reduction in the Variable Facility is as follows:

Amount of Reduction:           $

W-1

Resulting Amount of

Variable Facility:               $

          (b)     Required Prepayments. Following are any Variable Facilities that shall be prepaid in connection with the permanent reduction in the Variable Facility:

Closing Date of Advance:

Maturity Date of Advance:

Amount of Advance:

          (c)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 9.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Prepayments and Termination Fee. The Borrower shall pay the required amount of the prepayment for any Variable Facility Advances required to be prepaid, and the required amount of the Termination Fee, pursuant to the terms of Section 9.03 of the Master Agreement, as two of the conditions to the permanent reduction in the Variable Facility.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation

By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth

W-2

    Executive Vice President

W-3

EXHIBIT X TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

THIS ____ AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is made as of the ____ day of _______________, _____, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), and (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”; the REIT and OP being collectively referred to as the “Borrower”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower and the Lender are parties to that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents dated as of August 22, 2002, and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.          The parties are executing this Amendment pursuant to the Master Agreement to reflect a permanent reduction of all or a portion of the Variable Facility.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Reduction of Variable Facility Commitment. The Variable Facility Commitment shall be reduced by $____________________, and the definition of “Variable Facility Commitment” is hereby replaced in its entirety by the following new definition:

X-1

          ”Variable Facility Commitment” means an aggregate amount of $_______________,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 2.     Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 3.     Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 4.     Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[Signatures on the following pages]

X-2

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an instrument under seal as of the day and year first above written.

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
		Simon R.C. Wadsworth
		Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President
PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

By:

Name:

Title:

X-3

EXHIBIT Y TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CREDIT FACILITY TERMINATION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THAT THIS AGREEMENT SHALL TERMINATE, AND YOU SHALL CAUSE ALL OF THE COLLATERAL TO BE RELEASED FROM THE COLLATERAL POOL, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, WITHIN 30 BUSINESS DAYS AFTER THE YOUR RECEIPT OF THE CREDIT FACILITY TERMINATION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS ALL CONDITIONS CONTAINED IN SECTION 10.03 OF THE MASTER AGREEMENT ARE SATISFIED. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, _____

VIA: ______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201

[Note: Subject to change in the event Lender or its address changes]

Re: CREDIT FACILITY TERMINATION REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and the Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Credit Facility Termination Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests a termination of the Master Agreement and the Credit Facility in accordance with the terms of the Master Agreement. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 10.03 of the Master Agreement will be delivered on or before the Closing Date.

Y-1

          Section 2.          Prepayments, Release Fees and Termination Fee. The Borrower shall pay in full all Notes Outstanding, and the required amount of the Release Fees and the required Credit Facility Termination Fee as a condition to the termination of the Master Agreement and the Credit Facility.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

Y-2

EXHIBIT Z TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL SUBSTITUTION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THAT (1) IF YOU CONSENT TO THE SUBSTITUTION OF THE PROPOSED SUBSTITUTED MORTGAGED PROPERTY FOR THE COLLATERAL RELEASE PROPERTY, (2) WE ELECT TO CAUSE THE PROPOSED SUBSTITUTED MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND THE PROPOSED COLLATERAL RELEASE PROPERTY TO BE RELEASED FROM THE COLLATERAL POOL, AND (3) ALL CONDITIONS CONTAINED IN SECTION 7.04(c) OF THE MASTER AGREEMENT ARE SATISFIED, THEN YOU SHALL PERMIT THE PROPOSED SUBSTITUTED MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND THE PROPOSED COLLATERAL RELEASE PROPERTY TO BE RELEASED FROM THE COLLATERAL POOL AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN 30 BUSINESS DAYS AFTER YOUR RECEIPT OF OUR ELECTION (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE).

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201

[Note: Subject to change in the event Lender or its address changes]

Re: COLLATERAL SUBSTITUTION REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (collectively, the “Borrower”) and Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Substitution Request pursuant to the terms of the above-referenced Master Agreement.

Z-1

          Section 1.          Request. The Borrower hereby requests that the Multifamily Residential Property described in this Request be added to the Collateral Pool in accordance with the terms of the Master Agreement and that the Collateral Release Property described in this Request be released from the Collateral Pool in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Collateral Substitution Description Package. Attached to this Request is the Collateral Substitution Description Package and attached thereto are all information and documents relating to the proposed Substituted Mortgaged Property required by the Collateral Addition Description Package.

          (b)          Description of Proposed Collateral Release Property. The name, owner, address and location (county and state) of the Proposed Collateral Release Property to be released from the Collateral Pool is as follows:

Name:

Record Owner:

Beneficial Owner:

Address:

Location:

          (c)          Accompanying Documents. All reports, certificates and documents required to be delivered pursuant to the conditions contained in Section 6.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Collateral Substitution Fee. If the Lender consents to the addition of the Substitution to the Collateral Pool and the release of the proposed Collateral Release Property from the Collateral Pool, and the Borrower elects to add the Substituted Mortgaged Property to the Collateral Pool and release the proposed Collateral Release Property from the Collateral Pool, the Borrower shall pay the Collateral Substitution Fee and all legal fees and expenses payable by the Borrower pursuant to Section 16.04 as one of the conditions to the closing of the addition of the Substituted Mortgaged Property to the Collateral Pool and the release of the proposed Collateral Release Property from the Collateral Pool.

Z-2

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner
		By:
			Simon R.C. Wadsworth
			Executive Vice President

Z-3

EXHIBIT AA TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

	Property Name	Manager
1.	Abbington Place	Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery	Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II	Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone	Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II	Mid-America Apartment Communities, Inc.
6.	The Mansion	Mid-America Apartment Communities, Inc.
7.	Brentwood Downs	Mid-America Apartment Communities, Inc.
8.	Calais Forest	Mid-America Apartment Communities, Inc.
9.	Southland Station II	Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland	Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro	Mid-America Apartment Communities, Inc.
12.	Whisperwood	Mid-America Apartment Communities, Inc.
13.	River Trace I	Mid-America Apartment Communities, Inc.
14.	Wildwood I	Mid-America Apartment Communities, Inc.
15.	Three Oaks I	Mid-America Apartment Communities, Inc.
16.	Westbury Springs	Mid-America Apartment Communities, Inc.
17.	Hickory Farms	Mid-America Apartment Communities, Inc.
18.	Gleneagles	Mid-America Apartment Communities, Inc.
19.	The Oaks	Mid-America Apartment Communities, Inc.
20.	TPC Greenville	Mid-America Apartment Communities, Inc.
21.	TPC Huntsville	Mid-America Apartment Communities, Inc.
22.	Eagle Ridge	Mid-America Apartment Communities, Inc.
23.	River Hills	Mid-America Apartment Communities, Inc.
24.	Stonemill Village	Mid-America Apartment Communities, Inc.
25.	Woodwinds	Mid-America Apartment Communities, Inc.
26.	Tanglewood	Mid-America Apartment Communities, Inc.
27.	Wood Hollow	Mid-America Apartment Communities, Inc.
28.	Belmere	Mid-America Apartments, L.P.
29.	Bradford Chase (WV)	Mid-America Apartments, L.P.
30.	Crosswinds	Mid-America Apartments, L.P.
31.	Fairways at Royal Oak	Mid-America Apartments, L.P.
32.	Hermitage at Beechtree	Mid-America Apartments, L.P.
33.	Hidden Lake II	Mid-America Apartments, L.P.

AA-1

34.	High Ridge	Mid-America Apartments, L.P.
35.	Howell Commons	Mid-America Apartments, L.P.
36.	Kirby Station	Mid-America Apartments, L.P.
37.	Lakepointe	Mid-America Apartments, L.P.
38.	Lakeside	Mid-America Apartments, L.P.
39.	Marsh Oaks	Mid-America Apartments, L.P.
40.	Napa Valley	Mid-America Apartments, L.P.
41.	Park Haywood	Mid-America Apartments, L.P.
42.	Park Place	Mid-America Apartments, L.P.
43.	Pear Orchard	Mid-America Apartments, L.P.
44.	Savannah Creek	Mid-America Apartments, L.P.
45.	Shenandoah Petersburg	Mid-America Apartments, L.P.
46.	Somerset	Mid-America Apartments, L.P.
47.	Southland Station I	Mid-America Apartments, L.P.
48.	Steeplechase	Mid-America Apartments, L.P.
49.	Sutton Place	Mid-America Apartments, L.P.
50.	Tiffany Oaks	Mid-America Apartments, L.P.
51.	Village	Mid-America Apartments, L.P.
52.	Westside Creek I	Mid-America Apartments, L.P.
53.	Willow Creek	Mid-America Apartments, L.P.
54.	Links at Carrollwood	Mid-America Apartments, L.P.
55.	Grand View	Mid-America Apartments, L.P.
56.	Three Oaks II	Mid-America Apartment Communities, Inc.
57.	Wildwood II	Mid-America Apartment Communities, Inc.
58.	Lighthouse Court	Mid-America Apartments, L.P.

AA-2

EXHIBIT BB TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INDEPENDENT UNIT ENCUMBRANCES

None

BB-1

EXHIBIT CC TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

REBORROWING REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THERE TO OCCUR AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON THE MATURITY DATE OF THE FIXED FACILITY ADVANCE TO WHICH THIS REQUEST RELATES (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS NONE OF THE LIMITATIONS CONTAINED IN SECTION 2.09 OF THE MASTER AGREEMENT IS VIOLATED, AND ALL CONDITIONS CONTAINED IN SECTION 2.10 OF THE MASTER AGREEMENT ARE SATISFIED.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue
Suite 4900 E
Dallas, Texas 75201

[Note: Subject to change in the event Lender or its address changes]

Re: REBORROWING REQUEST issued pursuant to the Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and the Lender (as amended from time to time, the “Master Agreement”).

Ladies and Gentlemen:

This constitutes a Reborrowing Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that there occur a reborrowing of all or a portion of a maturing Fixed Facility Advance as a Variable Advance in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Designation of Amount of Reborrowing. The amount of the reborrowing shall be $_________________________.

          (b)          Repayment of Fixed Facility Advances. The Fixed Facility Advance Outstanding which will be repaid on the Closing Date for the reborrowing is as follows:

CC-1

Closing Date of Fixed Facility Advance:

Maturity Date of Fixed Facility Advance:

Amount of Advance:

(Note: Any Variable Facility Advances made in conjunction with a reborrowing of all or a portion of a maturing Fixed Facility Advance must be accompanied by a Future Advance Request and shall be reviewed in accordance with the terms of the Master Agreement.)

          (c)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 2.10 of the Master Agreement, including (i) the Reborrowing Documents, as well as (ii) a Compliance Certificate and (iii) an Organizational Certificate will be delivered on or before the Closing Date.

          Section 2.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	BORROWER:
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner
		By:
			Simon R.C. Wadsworth
			Executive Vice President

CC-2

CC-3

EXHIBIT DD TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL SUBSTITUTION DESCRIPTION PACKAGE

Property Name:

Owner:

Address:

City/County/State:

General Description, including number of units and amenities:

Year Built:

Year Acquired:

Fee Owner:

Valuation:

Existing Third Party Reports:

Property Contact:

Other Pertinent Information:

DD-1

EXHIBIT EE TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ADDITIONS TO COLLATERAL

DUS APPLICATION CHECKLIST

		I.	PROPERTY DATA
REC’D	OUT
_____	_____	*A.	Current month’s rent roll, dated and certified by Borrower; must include apartment number, unit type, tenant name, monthly rent, market rent, move-in date, lease expiration date, and whether furnished or unfurnished.
_____	_____	*B.	Certification of Current Project Rent Roll (Schedule H).
_____	_____	*C.	Borrower’s Concession Statement (Schedule H-1 and H-2).
_____	_____	*D.	Commercial leases (if applicable).
_____	_____	*E.	Current certified year-to-date operating statement and prior three years’ statements. YTD statement must end with the same month as the certified rent roll.
_____	_____	F.	Monthly operating statements for the last six months.
_____	_____	G.	Vacancy/turnover information for prior 24 months; month-by-month breakdown of collections including vacancy, bad debt and concessions (may be provided in operating statements).
_____	_____	H.	Delinquency information for 30, 60, 90+ days. Lender will take this information in whatever form the Borrower has.
_____	_____	I.	Operating Budget (Schedule I, provides instructions).
_____	_____	J.	Copies of existing major service contracts (landscaping, trash, pool, laundry, pest and elevator).
_____	_____	K.	Copy of most recent and prior year tax bills and most recent assessment.
_____	_____	L.	Copy of complete insurance policies including all endorsements, declarations, and premiums. Required only if not on blanket policy; Certificate of Insurance required for all additions.

EE-2

_____	_____	M.	Major improvements during the last two years and projected for the next twelve months.
_____	_____	N.	Existing title report including all easements, restrictions, judgments and liens. (Lender requirements enclosed).Will need to be updated prior to Closing.
_____	_____	*O.	Two copies of the existing as-built survey or site plan (Lender requirements enclosed). Will need to be updated prior to Closing.
_____	_____	*P.	Legal Description.
_____	_____	Q.	Occupancy Certificates. If not available, please provide a letter from the City stating that they are not available, and why.
_____	_____	*R.	Ground Lease; please advise if not applicable.
_____	_____	*S.	Reciprocal Use Agreement; please advise if not applicable.
_____	_____	T.	Operating Licenses.
_____	_____	U.	Termite inspection.
_____	_____	V.	Copy of one bill from each utility for the property.
_____	_____	*W.	Existing reports, if available (e.g., appraisal, market study, engineering, environmental).
_____	_____	X.	Plans, specifications and soil reports (recently completed properties only).
_____	_____	Y.	Copies of any deed or rent restrictions in place; please advise if not applicable.

* STARRED ITEMS ARE REQUIRED AS SOON AS POSSIBLE SO THAT THIRD PARTY REPORTS CAN BE ORDERED.

EE-3

		II.	Management Company
REC’D	OUT
_____	_____	A.	Copy of current or proposed Management Agreement, if applicable.
_____	_____	B.	Sample tenant lease.
_____	_____	C.	Management Resume, if other than Borrower-related management company.
_____	_____	D.	Accounts payable schedule for 30, 60 and 90+ days; list should include vendor name, invoice date, invoice number, description of item and amount.
_____	_____	E.	Market survey done by resident manager; to be provided to Lender underwriter at site inspection.
_____	_____	F.	Leasing brochure and floor plans.
_____	_____	G.	Property Payroll and Benefits (Schedule L).
		Any other information deemed necessary by Lender to complete the underwriting of the addition to collateral.

EE-4

EXHIBIT FF TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

          THIS ____ AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is made as of the ____ day of _______________, _____, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”); and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower and Lender are parties to that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2003 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents dated as of August 22, 2002, and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C          The parties are executing this Amendment pursuant to the Master Agreement to reflect a conversion of all or a portion of a Fixed Facility Advance to a Variable Advance.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.          Reborrowing. The Variable Facility Commitment shall be increased by $____________________, and the definition of “Variable Facility Commitment” is hereby replaced in its entirety by the following new definition:

          “Variable Facility Commitment” means an aggregate amount of $_______________,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in

FF-1

accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 2.          Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 3.          Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 4.          Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[The rest of this page has been intentionally left blank.]

FF-2

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an instrument under seal as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

[Signatures follow on next page]

FF-3

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE INC.,

a Delaware corporation

By:

Name:

Title:

FF-4

EXHIBIT GG TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTEREST RATE HEDGE SECURITY,
PLEDGE AND ASSIGNMENT AGREEMENT

          This INTEREST RATE HEDGE SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT (this “Agreement”) is made as of the ____ day of _______________, _____, by and among MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”; the REIT and OP being collectively referred to as the “Grantor”) and PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation formerly known as Washington Mortgage Financial Group, Ltd. (“Lender”). [ADD SWAP PROVIDER]

RECITALS:

          A          Grantor and the Lender are parties to that certain Second Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”), pursuant to which Lender has agreed to provide certain advances in accordance with and subject to the terms of the Master Agreement. As set forth in Section 1.2 of this Agreement, all capitalized terms not otherwise defined herein shall have their respective meanings set forth in the Master Agreement.

         B.          As required by the Master Agreement, the Grantor has made arrangements for the acquisition of a Hedge or Hedges pursuant to certain documents attached as Exhibit A to this Agreement (the “Hedge Documents”).

          C.          As security for the Grantor’s obligations under the Master Agreement and the Note, the Grantor and the Lender are entering into this Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor and the Lender agree as follows:

          1.          Incorporation of Recitals; Definitions; Interpretation; Reference Materials.

                       1.1           Incorporation of Recitals. The recitals set forth in this Agreement are, by this reference, incorporated into and deemed a part of this Agreement.

                       1.2           Definitions. Capitalized terms used in this Agreement shall have the meanings given to those terms in this Agreement. Capitalized terms used in this Agreement and not defined in this Agreement, but defined in the Master Agreement, shall have the meanings given to those terms in the Master Agreement.

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                       1.3          Interpretation. Words importing any gender include all genders. The singular form of any word used in this Agreement shall include the plural, and vice versa, unless the context otherwise requires. Words importing persons include natural persons, firms, associations, partnerships and corporations. The parties hereto acknowledge that each party and their respective counsel have participated in the drafting and revision of this Agreement. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Agreement or any statement or supplement or exhibit hereto.

                       1.4          Reference Materials. Sections mentioned by number only are the respective sections of this Agreement so numbered. Reference to “this section” or “this subsection” shall refer to the particular section or subsection in which such reference appears. Any captions, titles or headings preceding the text of any section and any table of contents or index attached to this Agreement are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.

          2.          Collateral and Obligations; Further Assurances.

                       2.1          Security Interest in Collateral. To secure the Grantor’s obligations under the Master Agreement, the Note and the other Loan Documents (the “Obligations”), the Grantor hereby assigns, pledges and grants a security interest to the Lender in and to all of the Grantor’s right, title and interest in and to the following (collectively, the “Collateral”):

                                       (i)          the Hedge and the Hedge Documents;

                                       (ii)          any and all moneys (collectively, “Payments”) payable to the Grantor, from time to time, pursuant to the Hedge Documents by the counterparty under the Hedge Documents (the “Counterparty”);

                                       (iii)          all rights of the Grantor under any of the foregoing, including all rights of the Grantor to the Payments, contract rights and general intangibles now existing or hereafter arising with respect to any or all of the foregoing;

                                       (iv)          all rights, liens and security interests or guarantees now existing or hereafter granted by the Counterparty or any other person to secure or guaranty payment of the Payments due pursuant to the Hedge Documents;

                                        (v)          all documents, writings, books, files, records and other documents arising from or relating to any of the foregoing, whether now existing or hereafter arising;

                                       (vi)          all extensions, renewals and replacements of the foregoing;

                                       (vii)          all cash and non-cash proceeds and products of any of the foregoing, including, without limitation, interest, dividends, cash, instruments and other

GG-2

property from time to time received, receivable or otherwise distributed or distributable in respect of or in exchange for any or all of the other Collateral; and

                                       (viii)          [ADD SWAP PAYMENTS]

          3.          Delivery of Hedge Documents.

                       3.1          Acquisition of Hedge; Delivery of Hedge Documents. The Grantor has, on or before the date of this Agreement, executed and delivered the Hedge Documents to the Counterparty and has delivered to the Lender fully executed originals of such Hedge Documents. True, complete and correct copies of the Hedge Documents and all amendments thereto, fully executed by all parties, are attached as Exhibit A hereto. The Grantor hereby represents and warrants to the Lender that there is no additional security for or any other arrangements or agreements relating to the Hedge Documents.

                       3.2          Obligations Remain Absolute. Nothing contained herein shall relieve the Grantor of its primary obligation to pay all amounts due in respect of its obligations under the Master Agreement, the Note or the Other Loan Documents.

          4.          Representations and Warranties.

                       4.1          Representations and Warranties of the Grantor. The Grantor represents and warrants to the Lender on the Closing Date that:

                                       (i)          it has all requisite power and authority to enter into this Agreement and to carry out its obligations under this Agreement; the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary action on the part of the Grantor; this Agreement has been duly executed and delivered by it and is the valid and binding obligation of the Grantor, enforceable against it in accordance with its terms; and

                                       (ii)          it is the legal and beneficial owner of, and has good and marketable title to (and full right and authority to assign), the Collateral, free and clear of all Liens.

          5.          Maintenance, Administration of Hedge.

                       5.1          Compliance with Reimbursement Agreement. The Grantor agrees to comply with the provisions of the Master Agreement related to obtaining and maintaining at all applicable times a Hedge which satisfies the requirements of the Master Agreement.

                       5.2          Event of Default. Upon the occurrence and during the continuance of any “Event of Default” under the Master Agreement, the Lender shall have and may exercise the same rights, powers, and remedies with respect to the Collateral that the Grantor may exercise, which rights, powers, and remedies are incorporated herein by this

GG-3

reference for all purposes. In furtherance and not in limitation of the foregoing, the Lender shall have all rights, remedies and recourses with respect to the Collateral granted in the Master Agreement and any other instrument executed in connection therewith, or existing at common law or equity (including specifically those granted by the Uniform Commercial Code as adopted in the District of Columbia, the right of offset, the right to sell the Collateral at public or private sale, and the right to receive distributions to Grantor, and such rights and remedies (i) shall be cumulative and concurrent, (ii) may be pursued separately, successively or concurrently against the Grantor and any other party obligated under the Obligations, or against the Collateral, or any other security for the Obligations, at the sole discretion of the Lender, (iii) may be exercised as often as occasion therefor shall arise, it being agreed by Grantor that the exercise or failure to exercise any of same shall in no event be construed as a waiver or release thereof or of any other right, remedy or recourse, and (iv) are intended to be and shall be, non-exclusive.

          If the proceeds of sale, collection or other realization of or upon the Collateral are insufficient to cover the costs and expenses of such realization and the payment in full of the Obligations, the Grantor shall remain liable for any deficiency (subject to the applicable non-recourse provisions of the Master Agreement).

          Upon the occurrence and continuance of an “Event of Default” under the Master Agreement, in case of any sale by the Lender of any of the Collateral, which may be elected at the option and in the complete discretion of the Lender, the Collateral so sold may be retained by the Lender until the selling price is paid by the purchaser, but the Lender shall not incur any liability in case of failure of the purchaser to take up and pay for the Collateral so sold. In case of any such failure, such Collateral so sold may be again similarly sold. After deducting all costs or expenses of every kind (including, without limitation, the reasonable attorneys’ fees and legal expenses incurred by the Lender), the Lender shall apply the residue of the proceeds of any sale or sales in such manner as the Lender may deem advisable.

          6.          Miscellaneous Provisions.

                       6.1          Termination. This Agreement shall terminate upon the date which is ninety-one (91) days after the date on which all amounts due under the Master Agreement, the Note and the other Loan Documents have been paid in full, provided that during such ninety-one (91) day period no Act of Bankruptcy (as defined below) shall have occurred. “Act of Bankruptcy” means the filing of a petition in bankruptcy or other commencement of a bankruptcy or similar proceeding by or against the Grantor under any applicable bankruptcy, insolvency, reorganization or similar law now in effect or any such proceeding by or against the Grantor under any applicable bankruptcy, insolvency, reorganization or similar law in effect after the date of this Agreement. Upon termination of this Agreement, all Collateral shall be reassigned to the Grantor without recourse, representation or warranty.

                       6.2          Attorney-In-Fact. Without limiting any rights or powers granted by this Agreement to the Lender, upon the occurrence and during the continuance of any

GG-4

“Event of Default” under the Master Agreement, the Lender is hereby appointed the attorney-in-fact of the Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which the Lender may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Lender shall have the right and power to receive, endorse and collect all checks made payable to the order of the Grantor representing any dividend, payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same.

                       6.3          Further Assurances. At any time and from time to time, at the expense of the Grantor, the Grantor shall promptly execute and deliver to Lender all further instruments and documents, and take all further action, that may be necessary or desirable, or that Lender may request, in order to carry out the intent and purposes of this Agreement or to enable Lender to exercise and enforce its rights and remedies under this Agreement all at the sole expense of the Grantor.

                       6.4          Expenses. The Grantor agrees to pay to Lender all reasonable out-of-pocket expenses (including reasonable expenses for legal services of every kind) of, or incident to, the preservation of rights under or enforcement of any of the provisions of this Agreement or performance by Lender of any obligations of the Grantor in respect of the Collateral which Grantor has failed or refused to perform, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in Collateral and defending or asserting rights and claims of Lender in respect thereof, by litigation or otherwise, including expenses of insurance, and all such expenses shall be Obligations hereby secured.

                       6.5          No Deemed Waiver. No failure on the part of Lender or any of its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by Lender or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law.

                       6.6          Entire Agreement. This Agreement and the Master Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties to this Agreement with respect to the subject matter of this Agreement. This Agreement may not be amended, changed, waived or modified except by a writing executed by each party hereto.

                       6.6.          Successors and Assigns. This Agreement shall inure to the benefit of, and be enforceable by, the Grantor and Lender and their respective successors and permitted assigns, and nothing herein expressed or implied shall be construed to give any other person any legal or equitable rights under this Agreement.

GG-5

                       6.7.          Notices. The provisions of Section 17.08 of the Master Agreement (entitled “Notices”) are hereby incorporated into this Agreement by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

                       6.8.          Governing Law. The provisions of Section 17.06 of the Master Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated into this Agreement by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

                       6.9.          Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.

                       6.10.        Multiple Counterparts. This Agreement may be simultaneously executed in multiple counterparts, all of which shall constitute one and the same instrument and each of which shall be, and shall be deemed to be, an original.

                       6.11.        Limits on Personal Liability. The provisions of Article 15 of the Master Agreement (entitled “Limits on Personal Liability”) are hereby incorporated into this Agreement by this reference to the fullest extent as if the text of such Article were set forth in its entirety herein.

          The Grantor and Lender have caused this Agreement to be signed as an instrument under seal, on the date first written above, by their respective officers duly authorized.

GG-6

GRANTOR
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

[Signatures continued on following page]

GG-7

LENDER

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation, formerly known as Washington Mortgage Financial Group, Ltd.

By:

Name:

Title:

[ADD SWAP PROVIDER]

GG-8

EXHIBIT A

Hedge Documents

(See Attached)

GG-9

EXHIBIT HH TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

DUS PROPERTIES

Property Name	Location
Lane at Towne Crossing	Mesquite, Texas
Northwood Place	Arlington, Texas
The Woods	Austin, Texas
Walden Run	McDonough, Georgia
Lakeshore Landing	Jackson, Mississippi
Woodstream	Greensboro, North Carolina
Colony at South Park	Aiken, South Carolina
Hamilton Pointe	Chattanooga, Tennessee
Hidden Creek	Chattanooga, Tennessee
Cedar Mill	Memphis, Tennessee
East View	Memphis, Tennessee

HH-1

EXHIBIT II TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

APPROVED SWAPS

Notional Amount		Maturity	Rate
$	25,000,000.00	9/1/2005	6.813	%	AmSouth	Fannie Accepted
$	25,000,000.00	9/1/2006	6.790	%	AmSouth	Fannie Accepted
$	25,000,000.00	12/1/2005	5.595	%	AmSouth	Fannie Accepted
$	25,000,000.00	6/1/2007	5.730	%	AmSouth	Fannie Accepted
$	25,000,000.00	4/1/2007	5.010	%	AmSouth	Fannie Accepted
$	50,000,000.00	6/1/2008	5.268	%	1st TN	Fannie Accepted
$	50,000,000.00	6/1/2010	4.825	%	Sun Trust	Fannie Enhanced
$	25,000,000.00	9/1/2007	6.220	%	AmSouth	Fannie Accepted
$	25,000,000.00	3/3/2005	5.430	%	1st TN	Fannie Accepted
$	25,000,000.00	3/1/2009	3.910	%	1st TN	Fannie Accepted
$	300,000,000.00		5.474	%
$	40,000,000.00	3/31/2010	4.850	%	AmSouth	Fannie Accepted - Forward Swap for 4/1/04
$	340,000,000.00		5.400	%

(1) Excludes swaps and caps purchased for the MAA Tax-Exempt Bond Facility, which requires acceptable hedges on all debt.

DD-i

EX-10.16

EXHIBIT 10.16

EIGHTH AMENDMENT TO SECOND AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

(MAA II)

THIS EIGHTH AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 31^st day of March, 2005, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

A.         Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004, as further amended by that certain Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, as further amended by that certain Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 31, 2004, as further amended by that certain Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of October 1, 2004, as further amended by that certain Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004, and as further amended by that certain Seventh Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 15, 2004 (as amended from time to time, the “Master Agreement”).

B.         All of the Lender's right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

C.        Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for (i) the release of the Mortgaged Property known as Eastview from the Collateral Pool, and (ii) the amendment of Schedule II to the Master Agreement..

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

Section 1.Collateral Pool. Exhibit A to the Master Agreement is hereby deleted and replaced with the attached Exhibit A to reflect the release of the Mortgaged Property known as Eastview from the Collateral Pool.

Section 2.Property Management Agreements. Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

Section 3.Schedule II. Schedule II is hereby deleted in its entirety and replaced with the Schedule II attached to this Amendment.

Section 4.Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

Section 5.Reaffirmation. The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

Section 6. Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

Section 7.Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:

MID-AMERICA APARTMENT COMMUNITIES,

INC., a Tennessee corporation

By: __________________________________

Name: Al Campbell

Title: Senior Vice President and Treasurer

MID-AMERICA APARTMENTS, L.P.,

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,

a Tennessee corporation, its general partner

By:	_____________________________
Name:	Al Campbell

Title:Senior Vice President and Treasurer

[SIGNATURES FOLLOW ON NEXT PAGE]

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a        Delaware corporation

By:	________________________________________
Name:	Linda Clark
Title:	Assistant Vice President

[SIGNATURES FOLLOW ON NEXT PAGE]

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES

AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL	$4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL	$10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA	$14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA	$20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC	$13,420,000
The Mansion	Fayette	Lexington, KY	$7,630,000
Brentwood Downs	Davidson	Nashville, TN	$14,600,000
Calais Forest	Pulaski	Little Rock, AR	$9,900,000
Southland Station II	Houston	Warner Robins, GA	$8,050,000
Fairways at Hartland	Warren	Bowling Green, KY	$10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN	$14,160,000
Whisperwood	Muscogee	Columbus, GA	$49,900,000
River Trace I	Shelby	Memphis, TN	$8,975,000
Wildwood I	Thomas	Thomasville, GA	$3,825,000
Three Oaks I	Lowndes	Valdosta, GA	$3,950,000
Westbury Springs	Gwinnett	Lilburn, GA	$6,775,000
Hickory Farms	Shelby	Memphis, TN	$6,475,000
Gleneagles	Shelby	Memphis, TN	$6,850,000
The Oaks	Madison	Jackson, TN	$2,825,000
TPC Greenville	Greenville	Greenville, SC	$8,930,000
TPC Huntsville	Madison	Huntsville, AL	$17,800,000
Eagle Ridge	Birmingham	Birmingham, AL	$8,400,000
River Hills	Grenada	Grenada, MS	$1,600,000
Stonemill Village	Jefferson	Louisville, KY	$19,825,000
Woodwinds	Aiken	Aiken, SC	$7,000,000
Tanglewood	Anderson	Anderson, SC	$5,110,000
Wood Hollow	Duval	Jacksonville, FL	$22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA	$16,450,000
Grand Reserve	Fayette	Lexington, KY	$23,200,000
Belmere	Hillsborough	Tampa, FL	$11,150,000
Bradford Chase (WV)	Madison	Jackson, TN	$4,960,000
Crosswinds	Rankin	Jackson, MS	$13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH	$9,800,000
Hermitage at Beechtree	Wake	Cary, NC	$8,720,000
Hidden Lake II	Fulton	Union City, GA	$7,050,000
High Ridge	Clarke	Athens, GA	$6,600,000
Howell Commons	Greenville	Greenville, SC	$12,380,000
Kirby Station	Shelby	Memphis, TN	$15,800,000
Lakepointe	Fayette	Lexington, KY	$4,425,000
Lakeside	Duval	Jacksonville, FL	$21,100,000
Marsh Oaks	Duval	Atlantic Beach, FL	$5,500,000
Napa Valley	Pulaski	Little Rock, AR	$10,500,000
Park Haywood	Greenville	Greenville, SC	$5,600,000
Park Place	Spartanburg	Spartanburg, SC	$6,470,000
Pear Orchard	Madison	Jackson, MS	$15,700,000

Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)	$9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA	$9,567,000
Somerset	Hinds	Jackson, MS	$3,160,000
Southland Station I	Houston	Warner Robins, GA	$7,300,000
Steeplechase	Hamilton	Chattanooga, TN	$4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)	$10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL	$14,750,000
Village	Fayette	Lexington, KY	$10,340,000
Westside Creek I	Pulaski	Little Rock, AR	$7,010,000
Willow Creek	Muscogee	Columbus, GA	$10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL	$13,050,000
Grand View	Nashville	Nashville, TN	$26,805,000
Three Oaks II	Lowndes	Valdosta, GA	$4,737,000
Wildwood II	Thomas	Thomasville, GA	$3,950,000
Lighthouse Court	Clay	Orange Park, FL	$40,092,000
Colony at South Park	Aiken	Aiken, SC	$8,100,000
Woodstream	Guilford	Greensboro, NC	$11,300,000
Walden Creek	Henry	McDonough, GA	$12,783,000
Cedar Mill	Shelby	Memphis, TN	$9,130,000
Hamilton Pointe	Hamilton	Chattanooga, TN	$13,100,000
Hidden Creek	Hamilton	Chattanooga, TN	$11,100,000
Lakeshore Landing	Madison	Jackson, MS	$8,925,000
River Trace II	Shelby	Memphis, TN	$6,675,000
Vistas	Bibb	Macon, GA	$8,000,000
Hidden Lake I	Fulton	Union City, GA	$7,700,000
Park Walk	Clayton	College Park, GA	$5,500,000
Woodridge	Hinds	Jackson, MS	$8,500,000
Lincoln on the Green	Shelby	Memphis, TN	$34,400,000
Paddock Club Lakeland I and II	Polk	Lakeland, FL	$30,000,000
Paddock Club Jacksonville I, II, and III	Duval	Jacksonville, FL	$34,400,000

EXHIBIT AA TO

SECOND AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED

PROPERTY MANAGEMENT AGREEMENTS

		Property Name		Manager
1.	Abbington Place		Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery		Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II		Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone		Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II		Mid-America Apartment Communities, Inc.
6.	The Mansion		Mid-America Apartment Communities, Inc.
7.	Brentwood Downs		Mid-America Apartment Communities, Inc.
8.	Calais Forest		Mid-America Apartment Communities, Inc.
9.	Southland Station II		Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland		Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro		Mid-America Apartment Communities, Inc.
12.	Whisperwood		Mid-America Apartment Communities, Inc.
13.	River Trace I		Mid-America Apartment Communities, Inc.
14.	Wildwood I		Mid-America Apartment Communities, Inc.
15.	Three Oaks I		Mid-America Apartment Communities, Inc.
16.	Westbury Springs		Mid-America Apartment Communities, Inc.
17.	Hickory Farms		Mid-America Apartment Communities, Inc.
18.	Gleneagles		Mid-America Apartment Communities, Inc.
19.	The Oaks		Mid-America Apartment Communities, Inc.
20.	TPC Greenville		Mid-America Apartment Communities, Inc.
21.	TPC Huntsville		Mid-America Apartment Communities, Inc.
22.	Eagle Ridge		Mid-America Apartment Communities, Inc.
23.	River Hills		Mid-America Apartment Communities, Inc.
24.	Stonemill Village		Mid-America Apartment Communities, Inc.
25.	Woodwinds		Mid-America Apartment Communities, Inc.
26.	Tanglewood		Mid-America Apartment Communities, Inc.
27.	Wood Hollow		Mid-America Apartment Communities, Inc.
28.	Belmere		Mid-America Apartments, L.P.
29.	Bradford Chase (WV)		Mid-America Apartments, L.P.
30.	Crosswinds		Mid-America Apartments, L.P.
31.	Fairways at Royal Oak		Mid-America Apartments, L.P.
32.	Grand Reserve		Mid-America Apartments, L.P.
33.	Hermitage at Beechtree		Mid-America Apartments, L.P.
34.	Hidden Lake II		Mid-America Apartments, L.P.
35.	High Ridge		Mid-America Apartments, L.P.
36.	Howell Commons		Mid-America Apartments, L.P.
37.	Kirby Station		Mid-America Apartments, L.P.
38.	Lakepointe		Mid-America Apartments, L.P.

39.	Lakeside	Mid-America Apartments, L.P.
40.	Marsh Oaks	Mid-America Apartments, L.P.
41.	Napa Valley	Mid-America Apartments, L.P.
42.	Park Haywood	Mid-America Apartments, L.P.
43.	Park Place	Mid-America Apartments, L.P.
44.	Pear Orchard	Mid-America Apartments, L.P.
45.	Savannah Creek	Mid-America Apartments, L.P.
46.	Shenandoah Petersburg	Mid-America Apartments, L.P.
47.	Somerset	Mid-America Apartments, L.P.
48.	Southland Station I	Mid-America Apartments, L.P.
49.	Steeplechase	Mid-America Apartments, L.P.
50.	Sutton Place	Mid-America Apartments, L.P.
51.	Terraces at Towne Lake I	Mid-America Apartments, L.P.
52.	Tiffany Oaks	Mid-America Apartments, L.P.
53.	Village	Mid-America Apartments, L.P.
54.	Westside Creek I	Mid-America Apartments, L.P.
55.	Willow Creek	Mid-America Apartments, L.P.
56.	Links at Carrollwood	Mid-America Apartments, L.P.
57.	Grand View	Mid-America Apartments, L.P.
58.	Three Oaks II	Mid-America Apartments, L.P.
59.	Wildwood II	Mid-America Apartments, L.P.
60.	Lighthouse Court	Mid-America Apartments, L.P.
61.	Colony at South Park	Mid-America Apartments, L.P.
62.	Woodstream	Mid-America Apartments, L.P.
63.	Walden Creek	Mid-America Apartments, L.P.
64.	Cedar Mill	Mid-America Apartments, L.P.
65.	Hamilton Pointe	Mid-America Apartments, L.P.
66.	Hidden Creek	Mid-America Apartments, L.P.
67.	Lakeshore Landing	Mid-America Apartments, L.P.
68.	River Trace II	Mid-America Apartments, L.P.
69.	Vistas	Mid-America Apartments, L.P.
70.	Hidden Lake I	Mid-America Apartments, L.P.
71.	Park Walk	Mid-America Apartments, L.P.
72.	Woodridge	Mid-America Apartments, L.P.
73.	Lincoln on the Green	Mid-America Apartments, L.P.
74.	Paddock Club Lakeland I and II	Mid-America Apartments, L.P.
75.	Paddock Club Jacksonville I, II and III	Mid-America Apartments, L.P.

SCHEDULE II

Credit Enhancement Fee Schedule

Counter Party	Swap Effective Date	Maturity	Principal	Credit Enhancement Fee
SunTrust	K 6/1/2003	6/1/2010	50,000,000	18 basis points
DeutscheBank	U 9/1/2004	9/1/2011	50,000,000	17 basis points
Deutsche Bank	U 12/1/2004	12/1/2011	25,000,000	17 basis points
RBC Capital Markets	5/2/2005	5/1/2012	50,000,000	17 basis points

EX-10.17

EXHIBIT 10.17

NINTH AMENDMENT TO SECOND AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

(MAA II)

THIS NINTH AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 23^rd day of September, 2005, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

A.         Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004, as further amended by that certain Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, as further amended by that certain Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 31, 2004, as further amended by that certain Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of October 1, 2004, as further amended by that certain Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004, as further amended by that certain Seventh Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 15, 2004, and as further amended by that certain Eighth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2005 (as amended from time to time, the “Master Agreement”).

B.         All of the Lender's right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Loans

contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

C.        Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for (i) the amendment of Schedule II to the Master Agreement, (ii) an increase in the Variable Facility Commitment as set forth hereinafter, and (iii) a decrease in the maximum amount by which the Commitment may be increased.

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

Section 1.Schedule II. Schedule II is hereby deleted in its entirety and replaced with the Schedule II attached to this Amendment.

Section 2.Expansion. The Variable Facility Commitment is hereby increased by $3,302,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

“Variable Facility Commitment” means an aggregate amount of $577,358,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

Section 3.Reserved Amount. “Reserved Amount” means $22,642,000 unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $22,642,000. The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

Section 4.Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

Section 5.Reaffirmation. The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

Section 6. Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

Section 7.Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:

MID-AMERICA APARTMENT COMMUNITIES,

INC., a Tennessee corporation

By: __________________________________

Name: Al Campbell

Title: Senior Vice President and Treasurer

MID-AMERICA APARTMENTS, L.P.,

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,

a Tennessee corporation, its general partner

By:	_____________________________
Name:	Al Campbell

Title:Senior Vice President and Treasurer

[SIGNATURES FOLLOW ON NEXT PAGE]

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a        Delaware corporation

By:	________________________________________
Name:	Sharon D. Singleton
Title:	Vice President

SCHEDULE II

Credit Enhancement Fee Schedule

Counter Party	Swap Effective Date	Maturity	Principal	Credit Enhancement Fee
SunTrust	K 6/1/2003	6/1/2010	50,000,000	18 basis points
Deutsche Bank	U 9/1/2004	9/1/2011	50,000,000	17 basis points
Deutsche Bank	U 12/1/2004	12/1/2011	25,000,000	17 basis points
RBC Capital Markets	5/2/2005	5/1/2012	50,000,000	17 basis points
Deutsche Bank	12/1/2005	3/1/2012	50,000,000	17 basis points
RBC Capital Markets	12/1/2005	3/1/2013	50,000,000	20 basis points
SunTrust	12/1/2005	TBD	50,000,000	20 basis points
SunTrust	12/1/2005	TBD	50,000,000	20 basis points

EX-10.18

EXHIBIT 10.18

TENTH AMENDMENT TO SECOND AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

(MAA II)

THIS TENTH AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 16^th day of December, 2005, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

A.         Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004, as further amended by that certain Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, as further amended by that certain Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 31, 2004, as further amended by that certain Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of October 1, 2004, as further amended by that certain Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004, as further amended by that certain Seventh Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 15, 2004, as further amended by that certain Eighth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2005, and as further amended by that certain Ninth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of September 23, 2005 (as amended from time to time, the “Master Agreement”).

B.         All of the Lender's right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Loans

contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

C.        Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for (i) the addition of the Mortgaged Properties commonly known as Highland Ridge and Spring Creek to the Collateral Pool, (ii) the amendment of Schedule II to the Master Agreement, (iii) an increase in the Variable Facility Commitment as set forth hereinafter, and (iv) a decrease in the maximum amount by which the Commitment may be increased

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

Section 1.Collateral Pool. Exhibit A to the Master Agreement is hereby deleted in its entirety and replaced with the attached Exhibit A to reflect the addition of Highland Ridge and Spring Creekas Additional Mortgaged Properties in the Collateral Pool.

Section 2.Schedule II. Schedule II to the Master Agreement is hereby deleted in its entirety and replaced with the Schedule II attached to this Amendment.

Section 3.Expansion. The Variable Facility Commitment is hereby increased by $9,893,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

“Variable Facility Commitment” means an aggregate amount of $587,251,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

Section 4.Reserved Amount. “Reserved Amount” means $12,749,000 unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $12,749,000. The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

Section 5.Property Management Agreements. Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

Section 6.Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

Section 7.Reaffirmation. The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

Section 8. Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

Section 9.Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:

MID-AMERICA APARTMENT COMMUNITIES,

INC., a Tennessee corporation

By: __________________________________

Name: Al Campbell

Title: Senior Vice President and Treasurer

MID-AMERICA APARTMENTS, L.P.,

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,

a Tennessee corporation, its general partner

By:	_____________________________
Name:	Al Campbell

Title:Senior Vice President and Treasurer

[SIGNATURES FOLLOW ON NEXT PAGE]

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

By: 

Name:	Sharon D. Singleton
Title:	Vice President

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES

AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL	$4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL	$10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA	$14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA	$20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC	$13,420,000
The Mansion	Fayette	Lexington, KY	$7,630,000
Brentwood Downs	Davidson	Nashville, TN	$14,600,000
Calais Forest	Pulaski	Little Rock, AR	$9,900,000
Southland Station II	Houston	Warner Robins, GA	$8,050,000
Fairways at Hartland	Warren	Bowling Green, KY	$10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN	$14,160,000
Whisperwood	Muscogee	Columbus, GA	$49,900,000
River Trace I	Shelby	Memphis, TN	$8,975,000
Wildwood I	Thomas	Thomasville, GA	$3,825,000
Three Oaks I	Lowndes	Valdosta, GA	$3,950,000
Westbury Springs	Gwinnett	Lilburn, GA	$6,775,000
Hickory Farms	Shelby	Memphis, TN	$6,475,000
Gleneagles	Shelby	Memphis, TN	$6,850,000
The Oaks	Madison	Jackson, TN	$2,825,000
TPC Greenville	Greenville	Greenville, SC	$8,930,000
TPC Huntsville	Madison	Huntsville, AL	$17,800,000
Eagle Ridge	Birmingham	Birmingham, AL	$8,400,000
River Hills	Grenada	Grenada, MS	$1,600,000
Stonemill Village	Jefferson	Louisville, KY	$19,825,000
Woodwinds	Aiken	Aiken, SC	$7,000,000
Tanglewood	Anderson	Anderson, SC	$5,110,000
Wood Hollow	Duval	Jacksonville, FL	$22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA	$16,450,000
Grand Reserve	Fayette	Lexington, KY	$23,200,000
Belmere	Hillsborough	Tampa, FL	$11,150,000
Bradford Chase (WV)	Madison	Jackson, TN	$4,960,000
Crosswinds	Rankin	Jackson, MS	$13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH	$9,800,000
Hermitage at Beechtree	Wake	Cary, NC	$8,720,000
Hidden Lake II	Fulton	Union City, GA	$7,050,000
High Ridge	Clarke	Athens, GA	$6,600,000
Howell Commons	Greenville	Greenville, SC	$12,380,000
Kirby Station	Shelby	Memphis, TN	$15,800,000
Lakepointe	Fayette	Lexington, KY	$4,425,000
Lakeside	Duval	Jacksonville, FL	$21,100,000
Marsh Oaks	Duval	Atlantic Beach, FL	$5,500,000
Napa Valley	Pulaski	Little Rock, AR	$10,500,000
Park Haywood	Greenville	Greenville, SC	$5,600,000
Park Place	Spartanburg	Spartanburg, SC	$6,470,000
Pear Orchard	Madison	Jackson, MS	$15,700,000

Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)	$9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA	$9,567,000
Somerset	Hinds	Jackson, MS	$3,160,000
Southland Station I	Houston	Warner Robins, GA	$7,300,000
Steeplechase	Hamilton	Chattanooga, TN	$4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)	$10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL	$14,750,000
Village	Fayette	Lexington, KY	$10,340,000
Westside Creek I	Pulaski	Little Rock, AR	$7,010,000
Willow Creek	Muscogee	Columbus, GA	$10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL	$13,050,000
Grand View	Nashville	Nashville, TN	$26,805,000
Three Oaks II	Lowndes	Valdosta, GA	$4,737,000
Wildwood II	Thomas	Thomasville, GA	$3,950,000
Lighthouse Court	Clay	Orange Park, FL	$40,092,000
Colony at South Park	Aiken	Aiken, SC	$8,100,000
Woodstream	Guilford	Greensboro, NC	$11,300,000
Walden Creek	Henry	McDonough, GA	$12,783,000
Cedar Mill	Shelby	Memphis, TN	$9,130,000
Hamilton Pointe	Hamilton	Chattanooga, TN	$13,100,000
Hidden Creek	Hamilton	Chattanooga, TN	$11,100,000
Lakeshore Landing	Madison	Jackson, MS	$8,925,000
River Trace II	Shelby	Memphis, TN	$6,675,000
Vistas	Bibb	Macon, GA	$8,000,000
Hidden Lake I	Fulton	Union City, GA	$7,700,000
Park Walk	Clayton	College Park, GA	$5,500,000
Woodridge	Hinds	Jackson, MS	$8,500,000
Lincoln on the Green	Shelby	Memphis, TN	$34,400,000
Paddock Club Lakeland I and II	Polk	Lakeland, FL	$30,000,000
Paddock Club Jacksonville I, II, and III	Duval	Jacksonville, FL	$34,400,000
Highland Ridge	Greenville	Greenville, SC	$4,290,000
Spring Creek	Greenville	Simpsonville, SC	$5,603,000

EXHIBIT AA TO

SECOND AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED

PROPERTY MANAGEMENT AGREEMENTS

		Property Name		Manager
1.	Abbington Place		Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery		Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II		Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone		Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II		Mid-America Apartment Communities, Inc.
6.	The Mansion		Mid-America Apartment Communities, Inc.
7.	Brentwood Downs		Mid-America Apartment Communities, Inc.
8.	Calais Forest		Mid-America Apartment Communities, Inc.
9.	Southland Station II		Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland		Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro		Mid-America Apartment Communities, Inc.
12.	Whisperwood		Mid-America Apartment Communities, Inc.
13.	River Trace I		Mid-America Apartment Communities, Inc.
14.	Wildwood I		Mid-America Apartment Communities, Inc.
15.	Three Oaks I		Mid-America Apartment Communities, Inc.
16.	Westbury Springs		Mid-America Apartment Communities, Inc.
17.	Hickory Farms		Mid-America Apartment Communities, Inc.
18.	Gleneagles		Mid-America Apartment Communities, Inc.
19.	The Oaks		Mid-America Apartment Communities, Inc.
20.	TPC Greenville		Mid-America Apartment Communities, Inc.
21.	TPC Huntsville		Mid-America Apartment Communities, Inc.
22.	Eagle Ridge		Mid-America Apartment Communities, Inc.
23.	River Hills		Mid-America Apartment Communities, Inc.
24.	Stonemill Village		Mid-America Apartment Communities, Inc.
25.	Woodwinds		Mid-America Apartment Communities, Inc.
26.	Tanglewood		Mid-America Apartment Communities, Inc.
27.	Wood Hollow		Mid-America Apartment Communities, Inc.
28.	Belmere		Mid-America Apartments, L.P.
29.	Bradford Chase (WV)		Mid-America Apartments, L.P.
30.	Crosswinds		Mid-America Apartments, L.P.
31.	Fairways at Royal Oak		Mid-America Apartments, L.P.
32.	Grand Reserve		Mid-America Apartments, L.P.
33.	Hermitage at Beechtree		Mid-America Apartments, L.P.
34.	Hidden Lake II		Mid-America Apartments, L.P.
35.	High Ridge		Mid-America Apartments, L.P.
36.	Howell Commons		Mid-America Apartments, L.P.
37.	Kirby Station		Mid-America Apartments, L.P.
38.	Lakepointe		Mid-America Apartments, L.P.

39.	Lakeside	Mid-America Apartments, L.P.
40.	Marsh Oaks	Mid-America Apartments, L.P.
41.	Napa Valley	Mid-America Apartments, L.P.
42.	Park Haywood	Mid-America Apartments, L.P.
43.	Park Place	Mid-America Apartments, L.P.
44.	Pear Orchard	Mid-America Apartments, L.P.
45.	Savannah Creek	Mid-America Apartments, L.P.
46.	Shenandoah Petersburg	Mid-America Apartments, L.P.
47.	Somerset	Mid-America Apartments, L.P.
48.	Southland Station I	Mid-America Apartments, L.P.
49.	Steeplechase	Mid-America Apartments, L.P.
50.	Sutton Place	Mid-America Apartments, L.P.
51.	Terraces at Towne Lake I	Mid-America Apartments, L.P.
52.	Tiffany Oaks	Mid-America Apartments, L.P.
53.	Village	Mid-America Apartments, L.P.
54.	Westside Creek I	Mid-America Apartments, L.P.
55.	Willow Creek	Mid-America Apartments, L.P.
56.	Links at Carrollwood	Mid-America Apartments, L.P.
57.	Grand View	Mid-America Apartments, L.P.
58.	Three Oaks II	Mid-America Apartments, L.P.
59.	Wildwood II	Mid-America Apartments, L.P.
60.	Lighthouse Court	Mid-America Apartments, L.P.
61.	Colony at South Park	Mid-America Apartments, L.P.
62.	Woodstream	Mid-America Apartments, L.P.
63.	Walden Creek	Mid-America Apartments, L.P.
64.	Cedar Mill	Mid-America Apartments, L.P.
65.	Hamilton Pointe	Mid-America Apartments, L.P.
66.	Hidden Creek	Mid-America Apartments, L.P.
67.	Lakeshore Landing	Mid-America Apartments, L.P.
68.	River Trace II	Mid-America Apartments, L.P.
69.	Vistas	Mid-America Apartments, L.P.
70.	Hidden Lake I	Mid-America Apartments, L.P.
71.	Park Walk	Mid-America Apartments, L.P.
72.	Woodridge	Mid-America Apartments, L.P.
73.	Lincoln on the Green	Mid-America Apartments, L.P.
74.	Paddock Club Lakeland I and II	Mid-America Apartments, L.P.
75.	Paddock Club Jacksonville I, II and III	Mid-America Apartments, L.P.
76.	Highland Ridge	Mid-America Apartments, L.P.
77.	Spring Creek	Mid-America Apartments, L.P.

SCHEDULE II

Credit Enhancement Fee Schedule

Counter Party	Swap Effective Date	Maturity	Principal	Credit Enhancement Fee
SunTrust	K 6/1/2003	6/1/2010	50,000,000	18 basis points
Deutsche Bank	U 9/1/2004	9/1/2011	50,000,000	17 basis points
Deutsche Bank	U 12/1/2004	12/1/2011	25,000,000	17 basis points
RBC Capital Markets	5/2/2005	5/1/2012	50,000,000	17 basis points
Deutsche Bank	12/1/2005	3/1/2012	50,000,000	17 basis points
RBC Capital Markets	12/1/2005	3/1/2013	50,000,000	20 basis points
Deutsche Bank	12/1/2005	6/1/2013	25,000,000	20 basis points
Deutsche Bank	2/1/2006	2/1/2013	25,000,000	20 basis points

EX-10.19

EXHIBIT 10.19

ELEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

(MAA II)

THIS ELEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 22^nd day of February, 2006, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

A.         Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004, as further amended by that certain Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, as further amended by that certain Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 31, 2004, as further amended by that certain Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of October 1, 2004, as further amended by that certain Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004, as further amended by that certain Seventh Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 15, 2004, as further amended by that certain Eighth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2005, as further amended by that certain Ninth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of September 23, 2005, and as further amended by that certain Tenth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 16, 2005 (as amended from time to time, the “Master Agreement”).

B.         All of the Lender's right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any

of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

C.        Borrower is a party to that certain Master Reimbursement Agreement by and among Fannie Mae, Borrower and others party thereto dated as of June 1, 2001 (as amended from time to time, the “MAA Bond Reimbursement Agreement”) pursuant to which Fannie Mae agreed to provide credit enhancement for bonds issued pursuant to the provisions thereof.   Pursuant to Section 1.2 of the MAA Bond Reimbursement Agreement, the maximum amount to which the commitment under the MAA Bond Reimbursement Agreement may be increased is  $100,000,000 (the “Bond Commitment”). 

D.        Pursuant to the terms of the MAA Bond Reimbursement Agreement, Borrower and Lender intend to add an additional mortgaged property commonly known as St. Augustine Apartments located in Jacksonville, Florida to the collateral pool under the MAA Bond Reimbursement Agreement.   At such time that St. Augustine Apartments is added to the collateral pool under the MAA Bond Reimbursement Agreement, Borrower and Lender desire to increase the maximum amount by which the Bond Commitment may be increased under the MAA Bond Reimbursement Agreement and decrease the maximum amount by which the Commitment may be increased under the Master Agreement by $9,451,000.

E.        Borrower and Lender are executing this Amendment to provide for a decrease in the maximum amount by which the Commitment may be increased subject to the terms set forth herein.

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

Section 1.         Borrower and Lender hereby agree that at such time that the St. Augustine Apartments is added to the collateral pool under the MAA Bond Reimbursement Agreement, the maximum amount by which Commitment may be increased under the Master Agreement shall be automatically reduced by $9,451,000, and the following revisions to the Master Agreement shall automatically take effect:

(i)Section 8.01(a) shall be automatically deleted in its entirety and restated as follows:

(a)Maximum Amount of Increase in Commitment.  Notwithstanding the terms of this Agreement and Section 8.01 of the Other Credit Agreement, Borrower shall have the right, upon repayment in full of the loans secured by those certain Multifamily Residential Properties identified on Exhibit HH (the “DUS Properties”), to increase the Commitment by an additional $153,941,000 (to a maximum Commitment of $590,549,000).  Borrower acknowledges that the DUS Properties are currently subject to liens under the Fannie Mae Delegated Underwriting and Servicing program and are

serviced by Lender.  Borrower hereby agrees that the total commitment, when added to the commitment of the Lender to the Borrower under the Other Credit Agreement, shall not exceed $840,549,000.

(ii)        The definition of “Reserved Amount” shall be automatically deleted in its entirety and restated as follows:

“Reserved Amount” means $3,298,000 unless Borrower elects in writing a lesser amount not to exceed $590,549,000 minus the amount of the Commitment in effect at any time, but in no event greater than $3,298,000. The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

Section 2.Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

Section 3. Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

Section 4.Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:

MID-AMERICA APARTMENT COMMUNITIES,

INC., a Tennessee corporation

By: __________________________________

Name: Al Campbell

Title: Senior Vice President and Treasurer

MID-AMERICA APARTMENTS, L.P.,

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,

a Tennessee corporation, its general partner

By:	_____________________________
Name:	Al Campbell
Title:	Senior Vice President and Treasurer

[SIGNATURES FOLLOW ON NEXT PAGE]

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

By: 

Name:	Sharon D. Singleton
Title:	Vice President

EX-10.20

EXHIBIT 10.20

THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
(MAA I)

THIS THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT is made as of the 30^th day of March, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”); the REIT and OP being collectively referred to as the “Borrower”), (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas”; MAA of Texas and Borrower being collectively referred to as the “Borrower Parties”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties, Paddock Club Brandon, a Limited Partnership, a Georgia limited partnership, Paddock Club Columbia, a Limited Partnership, a Georgia limited partnership, Paddock Park Ocala II, a Limited Partnership, a Georgia limited partnership, Paddock Club Tallahassee, a Limited Partnership, a Georgia limited partnership, and Lender entered into that certain Master Credit Facility Agreement dated as of November 10, 1999 (the “Original Agreement”), pursuant to which the Lender agreed to make credit available to the Borrower under the terms and conditions set forth in the Original Agreement.

          B.          Pursuant to various amendments to the Original Agreement, among other things (i) MAA of Texas became a Guarantor under the Original Agreement and (ii) various Mortgaged Properties (each capitalized term used but not defined has the meaning ascribed to such term in Article I of this Agreement) were added to the Collateral Pool. Pursuant to Articles of Merger effective December 31, 1999, certain entities that were or had become Borrower Parties under the Original Agreement merged with and into OP, with OP as the surviving entity.

          C.          The Borrower Parties amended and restated the Original Agreement in its entirety as set forth in that certain Amended and Restated Master Credit Facility Agreement dated as of August 22, 2002 (the “First Amended and Restated Agreement”).

          D.          The Borrower Parties amended and restated the First Amended and Restated Agreement in its entirety as set forth in that certain Second Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003 (the “Second Amended and Restated Agreement”).

          E.          The Borrower Parties have requested that various terms and conditions of the Second Amended and Restated Agreement be modified. The Borrower Parties and the Lender now wish to amend and restate the Second Amended and Restated Agreement in its entirety.

          F.          The REIT owns directly and indirectly 85% of the voting interests in OP. The REIT owns, directly or indirectly, 100% of the ownership interest in MAA of Texas.

          G.          The Borrower Parties own one or more Multifamily Residential Properties as more particularly described in Exhibit A to this Agreement.

          H.          Pursuant to the First Amended and Restated Agreement, the Lender established a $119,367,000 credit facility, comprised of a $110,000,000 Fixed Facility Commitment and a $9,367,000 Variable Facility Commitment.

          I.          Pursuant to various amendments to the First Amended and Restated Agreement, the Lender increased the Credit Facility to $159,507,000, consisting of a $110,000,000 Fixed Facility Commitment and a $49,507,000 Variable Facility Commitment.

          J.          Pursuant to the Second Amended and Restated Agreement, the Lender agreed that the Credit Facility may be increased to an amount not to exceed $193,000,000.

          K.          The Borrower Parties and Lender wish to further increase the amount to which the Credit Facility may be expanded subject to the rights of Borrower to elect to increase the Fixed Facility Commitment and Variable Facility Commitment in accordance with Article VIII hereof.

          L.          To secure the obligations of the Borrower Parties under this Agreement and the other Loan Documents issued in connection with the Credit Facility, the Borrower Parties have created a Collateral Pool in favor of the Lender. The Collateral Pool is comprised of (i) Security Instruments on certain Multifamily Residential Properties owned by the Borrower Parties and (ii) any other Security Documents executed by any Borrower Party pursuant to this Agreement or any other Loan Documents.

          M.          Each of the Security Documents shall be cross-defaulted (i.e., a default under any Security Document, or under this Agreement, shall constitute a default under each Security Document, and this Agreement) and cross-collateralized (i.e., each Security Instrument shall secure all of the Borrower Parties’ obligations under this Agreement and the other Loan Documents issued in connection with the Credit Facility) and it is the intent of the parties to this Agreement that the Lender may accelerate any Note without the necessity to accelerate any other Note and that in the exercise of its rights and remedies under the Loan Documents, Lender may, except as provided in this Agreement, exercise and perfect any and all of its rights in and under the Loan Documents with regard to any Mortgaged Property without the necessity to exercise and perfect its rights and remedies with respect to any other Mortgaged Property and that any such exercise shall be without regard to the Allocable Facility Amount assigned to such Mortgaged Property and that Lender may recover an amount equal to the full amount outstanding in respect of any of the Notes in connection with such exercise and any such amount shall be applied as determined by Lender in its sole and absolute discretion.

          N.          Subject to the terms, conditions and limitations of this Agreement, the Lender has agreed to establish the Credit Facility.

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          NOW, THEREFORE, the Borrower Parties and the Lender, in consideration of the mutual promises and agreements contained in this Agreement, hereby agree to amend and restate, in its entirety, the First Amended and Restated Agreement as follows:

ARTICLE I
DEFINITIONS

For all purposes of this Agreement, the following terms shall have the respective meanings set forth below:

          “Acquiring Person” means a “person” or “group of persons” within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.

          “Additional Collateral Due Diligence Fees” shall have the meaning set forth in Section 16.03(b).

          “Additional Mortgaged Properties” means each Multifamily Residential Property owned by any Borrower Party (either in fee simple or as tenant under a ground lease meeting all of the requirements of the DUS Guide) and added to the Collateral Pool after the Initial Closing Date pursuant to Article VI of this Agreement.

          “Advance” means a Variable Advance or a Fixed Facility Advance.

          “Advance Confirmation Instrument” shall have the meaning set forth in Section 4.02.

          “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management (other than property management) and policies of that Person, whether through the ownership of voting securities, partnership interests or by contract or otherwise.

          “Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period” means, for any specified date, the ratio (expressed as a percentage) of--

	(a)          the aggregate of the Net Operating Income for the Trailing 12 Month Period for the Mortgaged Properties
to
	(b)          the Facility Debt Service on the specified date.

          “Aggregate Loan to Value Ratio” means, for any specified date, the ratio (expressed as a percentage) of--

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	(a)	the Advances Outstanding on the specified date,
to
	(b)	the aggregate of the Valuations most recently obtained prior to the specified date for all of the Mortgaged Properties.

          “Agreement” means this Master Credit Facility Agreement, as it may be amended, supplemented or otherwise modified from time to time, including all Recitals and Exhibits to this Agreement, each of which is hereby incorporated into this Agreement by this reference.

          “Allocable Facility Amount” means the portion of the Credit Facility allocated to a particular Mortgaged Property by Lender in accordance with this Agreement.

          “Amended and Restated Commitment” means the portion of the Commitment in excess of $138,382,000. Any portion of the Commitment above $138,382,000 shall be deemed to be part of the Amended and Restated Commitment.

          “Amended and Restated Variable Facility Commitment” means the portion of the Variable Facility Commitment in excess of $28,382,000.

          “Amortization Period” means, with respect to each Fixed Facility Advance, the period of not less than 25 years and not more than 30 years.

          “Applicable Law” means (a) all applicable provisions of all constitutions, statutes, rules, regulations and orders of all governmental bodies, all Governmental Approvals and all orders, judgments and decrees of all courts and arbitrators, (b) all zoning, building, environmental and other laws, ordinances, rules, regulations and restrictions of any Governmental Authority affecting the ownership, management, use, operation, maintenance or repair of any Mortgaged Property, including the Americans with Disabilities Act (if applicable), the Fair Housing Amendment Act of 1988 and Hazardous Materials Laws, (c) any building permits or any conditions, easements, rights-of-way, covenants, restrictions of record or any recorded or unrecorded agreement affecting or concerning any Mortgaged Property including planned development permits, condominium declarations, and reciprocal easement and regulatory agreements with any Governmental Authority, (d) all laws, ordinances, rules and regulations, whether in the form of rent control, rent stabilization or otherwise, that limit or impose conditions on the amount of rent that may be collected from the units of any Mortgaged Property, and (e) requirements of insurance companies or similar organizations, affecting the operation or use of any Mortgaged Property or the consummation of the transactions to be effected by this Agreement or any of the other Loan Documents.

          “Appraisal” means an appraisal of a Multifamily Residential Property or Multifamily Residential Properties conforming to the requirements of Chapter 5 of Part III of the DUS Guide, and accepted by the Lender.

          “Appraised Value” means the value set forth in an Appraisal.

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          “Borrower” means, individually and collectively, the REIT and OP.

          “Borrower Parties” means, individually and collectively, the Borrower and the Guarantor.

          “Business Day” means a day on which Fannie Mae is open for business.

          “Calendar Quarter” means, with respect to any year, any of the following three month periods: (a) January-February-March; (b) April-May-June; (c) July-August-September; and (d) October-November-December.

          “Cap” means an interest rate cap provided pursuant to, and satisfying the requirements of, Article XXI.

          “Cap Rate” means, for each Mortgaged Property, a capitalization rate reasonably selected by the Lender for use in determining the Valuations, as disclosed to the Borrower Parties from time to time.

          “Change of Control” means the earliest to occur of: (a) the date on which the REIT ceases for any reason whatsoever to be the sole general partner or managing member of any other Borrower Party or ceases to own, directly or indirectly, 100% of the sole general partner or managing member of any other Borrower Party, or (b) the date on which the REIT or OP shall cease for any reason to be the holder of at least 75% of the voting interest of the other Borrower Parties or to own at least 40% of the equity, profits or other limited partnership interests in, or Voting Equity Capital (or any other Securities or ownership interests) of the other Borrower Parties, or (c) the date on which an Acquiring Person becomes (by acquisition, consolidation, merger or otherwise), directly or indirectly, the beneficial owner of more than 25% of the total Voting Equity Capital (or of any other Securities or ownership interest) of any Borrower Party then outstanding, or (d) the replacement (other than solely by reason of retirement at age sixty-five or older, death or disability) of more than 50% (or such lesser percentage as is required for decision-making by the board of directors or an equivalent governing body) of the members of the board of directors or an equivalent governing body) of the REIT or OP over a one-year period from the directors who constituted such board of directors at the beginning of such period and such replacement shall not have been approved by a vote of at least a majority of the board of directors of the REIT or OP then still in office who either were members of such board of directors at the beginning of such one-year period or whose election as members of the board of directors was previously so approved (it being understood and agreed that in the case of any entity governed by a trustee, board of managers, or other similar governing body, the foregoing clause (d) shall apply thereto by substituting such governing body and the members thereof for the board of directors and members thereof, respectively).

          “Closing Date” means the Initial Closing Date, and each date thereafter on which the funding or other transaction requested in a Request is required to take place.

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          “Collateral” means, the Mortgaged Properties and other collateral from time to time or at any time encumbered by the Security Instruments, or any other property securing any of the Borrower Parties’ obligations under the Loan Documents.

          “Collateral Addition Fee” means, with respect to each Additional Mortgaged Property added to the Collateral Pool in accordance with Article VI --

                    (i)      65 basis points, multiplied by

                    (ii)    Allocable Facility Amount of the Additional Mortgaged Property, as determined by the Lender; provided however, if a Collateral Addition Property is added to the Collateral Pool in conjunction with such Mortgaged Property being released from the collateral pool under the Other Credit Agreement, the Collateral Addition Fee shall be waived for the aggregate of the first six (6) transactions which are either Mortgaged Properties transferred from the Collateral Pool under this Agreement to the collateral pool under the Other Credit Agreement, or Mortgaged Properties transferred from the collateral pool under the Other Credit Agreement to the Collateral Pool under this Agreement.

          “Collateral Addition Loan Documents” means the Security Instrument covering an Additional Mortgaged Property and any other documents, instruments or certificates required by the Lender in connection with the addition of the Additional Mortgaged Property to the Collateral Pool pursuant to Article VI.

          “Collateral Addition Request” shall have the meaning set forth in Section 6.02(a).

          “Collateral Pool” means the aggregate total of the Collateral.

          “Collateral Release Property” shall have the meaning set forth in Section 7.02(a).

          “Collateral Release Request” shall have the meaning set forth in Section 7.02(a).

          “Collateral Substitution Fee” means, with respect to any substitution effected in accordance with Section 7.04, a fee equal to 65 basis points multiplied by the Allocable Facility Amount of the Substituted Mortgage Property added to the Collateral Pool; provided however, if a Substituted Mortgaged Property is added to the Collateral Pool in conjunction with such Mortgaged Property being released from the collateral pool under the Other Credit Agreement, the Collateral Substitution Fee shall be waived for the aggregate of the first six (6) transactions which are either Mortgaged Properties transferred from the Collateral Pool under this Agreement to the collateral pool under the Other Credit Agreement, or Mortgaged Properties transferred from the collateral pool under the Other Credit Agreement to the Collateral Pool under this Agreement.

          “Commitment” means, at any time, the sum of the Fixed Facility Commitment and the Variable Facility Commitment.

          “Complete Fixed Facility Termination” shall have the meaning set forth in Section 9.02(a).

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          “Complete Variable Facility Termination” shall have the meaning set forth in Section 9.02(a).

          “Compliance Certificate” means a certificate of the Borrower Parties in the form attached as Exhibit D to this Agreement.

          “Conversion Documents” has the meaning specified in Section 3.07(b).

          “Conversion Request” has the meaning specified in Section 3.07(a).

          “Coupon Rate” means, with respect to a Variable Advance, the imputed interest rate determined by the Lender pursuant to Section 2.05 for the Variable Advance and, with respect to a Fixed Facility Advance, the interest rate determined by the Lender pursuant to Section 3.05 for the Fixed Facility Advance.

          “Coverage and LTV Tests” mean, for any specified date, each of the following financial tests:

                    (a)      The Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period is not less than 140%.

                     (b)     The Aggregate Loan to Value Ratio does not exceed 65%.

          “Credit Facility” means the Fixed Facility and the Variable Facility.

          “Credit Facility Expansion” means an increase in the Commitment made in accordance with Article VIII.

          “Credit Facility Expansion Loan Documents” means amendments to the Variable Facility Note or the Fixed Facility Note, as the case may be, increasing the amount of such Note to the amount of the Commitment, as expanded in accordance with Article VIII and amendments to the Security Instruments, increasing the amount secured by such Security Instruments to the amount of the Commitment.

          “Credit Facility Expansion Request” shall have the meaning set forth in Section 8.02(a).

          “Credit Facility Termination Date” means December 1, 2013.

          “Credit Facility Termination Request” shall have the meaning set forth in Section 10.02(a).

          “Debt Service Coverage Ratio” means, for any Mortgaged Property, for any specified date, the ratio (expressed as a percentage) of --

(a)          the aggregate of the Net Operating Income for the preceding 12 month period for the subject Mortgaged Property

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to
	(b)          the Facility Debt Service on the specified date, assuming, for the purpose of calculating the Facility Debt Service for this definition, that Advances Outstanding shall be the Allocable Facility Amount for the subject Mortgaged Property.

          “Discount” means, with respect to any Variable Advance, an amount equal to the excess of --

          (i)          the face amount of the MBS backed by the Variable Advance, over

          (ii)         the Price of the MBS backed by the Variable Advance.

          “DUS Guide” means the Fannie Mae Multifamily Delegated Underwriting and Servicing (DUS) Guide, as such Guide may be amended from time to time, including exhibits to the DUS Guide and amendments in the form of Lender Memos, Guide Updates and Guide Announcements (and, if such Guide is no longer used by Fannie Mae, the term “DUS Guide” as used in this Agreement means the Fannie Mae Multifamily Negotiated Transactions Guide, as such Guide may be amended from time to time, including amendments in the form of Lender Memos, Guide Updates and Guide Announcements). All references to specific articles and sections of, and exhibits to, the DUS Guide shall be deemed references to such articles, sections and exhibits as they may be amended, modified, updated, superseded, supplemented or replaced from time to time.

          “DUS Underwriting Requirements” means the overall underwriting requirements for Multifamily Residential Properties as set forth in the DUS Guide.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

           “Event of Default” means any event defined to be an “Event of Default” under Article XVII.

          “Facility Debt Service” means, as of any specified date, the sum of:

(a) the amount of interest and principal amortization, during the 12 month period immediately succeeding the specified date, with respect to the Advances Outstanding on the specified date, except that, for these purposes:

(i) (A) with respect to Variable Advances (or portions thereof) that are not part of the Hedge Requirement Amount, each Variable Advance (or portion thereof) shall be deemed to require level monthly payments of principal and interest (at the Coupon Rate for the Variable Advance (or portion thereof)) in an amount necessary to fully amortize the original principal amount of the Variable Advance (or portion thereof) over a 30-year period, with such

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	amortization deemed to commence on the first day of the 12 month period; and
	(B) with respect to Variable Advances (or portions thereof) that are part of the Hedge Requirement Amount (x) for which Borrower has obtained a Swap, each such Variable Advance (or portion thereof) shall be deemed to require level monthly payments of principal and interest at the Swap Rate in an amount necessary to fully amortize the original principal amount of the Variable Advance (or portion thereof) over a 30-year period, with such amortization deemed to commence on the first day of the 12 month period; or (y) for which Borrower has obtained a Cap, each such Variable Advance (or portion thereof) shall be deemed to require level monthly payments of principal and interest (at the lesser of the Coupon Rate and the stated price of the relevant Cap) in an amount necessary to fully amortize the original principal amount of the Variable Advance (or portion thereof) over a 30-year period, with such amortization deemed to commence on the first day of the 12 month period; and
(ii)	each Fixed Facility Advance shall require level monthly payments of principal and interest (at the Coupon Rate for the Fixed Facility Advance) in an amount necessary to fully amortize the original principal amount of the Fixed Facility Advance over a 30-year period, with such amortization to commence on the first day of the 12 month period; and

(b) the amount of the Standby Fee and Rate Preservation Fee payable to the Lender pursuant to Section 16.01 during such 12 month period (assuming, for these purposes, that the Advances Outstanding throughout the 12 month period are always equal to the amount of Advances Outstanding on the specified date).

Exhibit E to this Agreement contains an example of the determination of the Facility Debt Service.

          “Facility Termination Fee” means, with respect to a reduction in either the Variable Facility Commitment or the Fixed Facility Commitment pursuant to Articles IX or X, an amount equal to the product obtained by multiplying--

(1)	the reduction in the Variable Facility Commitment and any undrawn portion of the Fixed Facility Commitment, by
(2)	18 basis points, by
(3)	the present value factor calculated using the following formula:

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1 - (1 + r)	-n
	r

[r = Yield Rate

n = the number of years (counting any partial year as a full year) remaining between the Closing Date for the reduction in the Commitment and the Variable Facility Termination Date shown on the Summary of Credit Facility Structure.

The “Yield Rate” means the rate, determined as of the Initial Closing Date, on the U.S. Treasury security having a maturity closest to the Variable Facility Termination Date.]

          “Fannie Mae” means the federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716 et seq.

          “Financial Covenants” means the covenants set forth in Article XV.

          “Fixed Facility” means the agreement of the Lender to make Fixed Facility Advances to the Borrower pursuant to Section 3.01.

          “Fixed Facility Advance” means a loan made by the Lender to the Borrower under the Fixed Facility Commitment.

          “Fixed Facility Availability Period” means the applicable fixed facility availability period shown on the Summary of Credit Facility Structure attached hereto.

          “Fixed Facility Commitment” means $110,000,000, plus such amount as the Borrower may elect to add to the Fixed Facility Commitment in accordance with Articles III or VIII.

          “Fixed Facility Fee” means the applicable fixed facility fee shown on the Summary of Credit Facility Structure as adjusted, if applicable, as set forth in Section 15.03 of this Agreement.

          “Fixed Facility Note” means a promissory note, in the form attached as Exhibit B to this Agreement, which will be issued by the Borrower to the Lender, concurrently with the funding of each Fixed Facility Advance, to evidence the Borrower’s obligation to repay the Fixed Facility Advance.

          “Future Advance” means an Advance made after the date hereof.

          “Future Advance Request” shall have the meaning set forth in Section 5.02.

          “GAAP” means generally accepted accounting principles in the United States in effect from time to time, consistently applied.

          “General Conditions” shall have the meaning set forth in Article XI.

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          “Geographical Diversification Requirements” means a requirement that the Collateral Pool consist of at least seven (7) Mortgaged Properties located in at least two (2) states and five (5) SMSA’s.

           “Governmental Approval” means an authorization, permit, consent, approval, license, registration or exemption from registration or filing with, or report to, any Governmental Authority.

           “Governmental Authority” means any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

          “Gross Revenues” means, for any specified period, with respect to any Multifamily Residential Property, all income in respect of such Multifamily Residential Property as reflected on the certified operating statement for such specified period as adjusted to exclude unusual income (e.g. temporary or nonrecurring income), income not allowed under DUS guidelines as shown in Section 403.02 of Part III of the DUS Guide (e.g. interest income, furniture income, etc.), and the value of any unreflected concessions.

          “Guarantor” means MAA of Texas.

          “Guaranty” means that certain Amended and Restated Guaranty executed by the Guarantor in the form attached as Exhibit FF to this Agreement.

          “Hazardous Materials”, with respect to any Mortgaged Property, shall have the meaning given that term in the Security Instrument encumbering the Mortgaged Property.

          “Hazardous Materials Law”, with respect to any Mortgaged Property, shall have the meaning given that term in the Security Instrument encumbering the Mortgaged Property.

          “Hazardous Substance Activity” means any storage, holding, existence, release, spill, leaking, pumping, pouring, injection, escaping, deposit, disposal, dispersal, leaching, migration, use, treatment, emission, discharge, generation, processing, abatement, removal, disposition, handling or transportation of any Hazardous Materials from, under, into or on any Mortgaged Property in violation of Hazardous Materials Laws, including the discharge of any Hazardous Materials emanating from any Mortgaged Property in violation of Hazardous Materials Laws through the air, soil, surface water, groundwater or property and also including the abandonment or disposal of any barrels, containers and other receptacles containing any Hazardous Materials from or on any Mortgaged Property in violation of Hazardous Materials Laws, in each case whether sudden or nonsudden, accidental or nonaccidental.

          “Hedge” means a Swap, a Cap or a combination of a Swap and a Cap, or another interest rate protection instrument satisfying the requirements of Article XXI.

          “Hedge Documents” has the meaning set forth in Section 21.02.

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          “Hedge Requirement Amount” means the amount by which the Variable Facility Commitment exceeds, when added to the “Variable Facility Commitment” under the Other Credit Facility, $441,756,000.

          “Hedge Security Agreement” means, with respect to a Hedge, the Interest Rate Hedge Security, Pledge and Assignment Agreement between Borrower and Lender, for the benefit of Lender, in the form attached as Exhibit GG to this Agreement as such agreement may be amended, modified, supplemented or restated from time to time.

          “Impositions” means, with respect to any Mortgaged Property, all (1) water and sewer charges which, if not paid, may result in a lien on all or any part of the Mortgaged Property, (2) premiums for fire and other hazard insurance, rent loss insurance and such other insurance as Lender may require under any Security Instrument, (3) Taxes, and (4) amounts for other charges and expenses which Lender at any time reasonably deems necessary to protect the Mortgaged Property, to prevent the imposition of liens on the Mortgaged Property, or otherwise to protect Lender’s interests.

          “Indebtedness” means, with respect to any Person, as of any specified date, without duplication, all:

                    (a) indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than (i) current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices, and (ii) for construction of improvements to property, if such person has a non-contingent contract to purchase such property);

                    (b) other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument;

                     (c) obligations of such Person under any lease of property, real or personal, the obligations of the lessee in respect of which are required by GAAP to be capitalized on a balance sheet of the lessee or to be otherwise disclosed as such in a note to such balance sheet;

                    (d) obligations of such Person in respect of acceptances (as defined in Article 3 of the Uniform Commercial Code of the District of Columbia) issued or created for the account of such Person;

                    (e) liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment of such liabilities; and

                    (f) as to any Person (“guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of a primary obligation (as defined below) with respect to which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing, or in effect guaranteeing, any indebtedness, lease,

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dividend or other obligation (“primary obligations”) of any third person (“primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, to (1) purchase any such primary obligation or any property constituting direct or indirect security therefor, (2) advance or supply funds for the purchase or payment of any such primary obligation or to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (3) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (4) otherwise assure or hold harmless the owner of any such primary obligation against loss in respect of the primary obligation, provided, however, that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation of any guaranteeing person shall be deemed to be the lesser of (i) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made and (ii) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Contingent Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Contingent Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by Owner in good faith.

          “Initial Advance” means, collectively, the Variable Advance Outstanding on the date hereof in the principal amount of $49,507,000, and the Fixed Advances Outstanding on the date hereof in the aggregate principal amount of $110,000,000.

          “Initial Closing Date” means November 10, 1999.

          “Initial Commitment” means the portion of the Commitment equal to or less than $119,367,000. Any portion of the Commitment equal to or less than $119,367,000 shall be deemed to be part of the Initial Commitment.

          “Initial Mortgaged Properties” means the Multifamily Residential Properties described on Exhibit A to this Agreement and which represent the Multifamily Residential Properties which comprise the Collateral Pool on the date hereof.

          “Initial Security Instruments” means the Security Instruments covering the Initial Mortgaged Properties.

          “Initial Valuation” means, when used with reference to specified Collateral, the Valuation initially performed for the Collateral as of the date on which the Collateral was added to the Collateral Pool as set forth in Exhibit A to this Agreement.

          “Insurance Policy” means, with respect to a Mortgaged Property, the insurance coverage and insurance certificates evidencing such insurance required to be maintained pursuant to the Security Instrument encumbering the Mortgaged Property.

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          “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended. Each reference to the Internal Revenue Code shall be deemed to include (a) any successor internal revenue law and (b) the applicable regulations whether final, temporary or proposed.

          “Lease” means any lease, any sublease or subsublease, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in any Mortgaged Property, and every modification, amendment or other agreement relating to such lease, sublease, subsublease or other agreement entered into in connection with such lease, sublease, subsublease or other agreement, and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

          “Lender” shall have the meaning set forth in the first paragraph of this Agreement, but shall refer to any replacement Lender if the initial Lender is replaced pursuant to the terms of Section 19.04.

          “Lien” means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance (including both consensual and non-consensual liens and encumbrances).

          “Loan Documents” means this Agreement, the Notes, the Advance Confirmation Instruments for the Variable Advances, the Guaranty, the Security Documents, all documents executed by the Borrower Parties pursuant to the General Conditions set forth in Article XI of this Agreement and any other documents executed by a Borrower Party from time to time in connection with this Agreement or the transactions contemplated by this Agreement.

          “Loan to Value Ratio “ means, for a Mortgaged Property, for any specified date, the ratio (expressed as a percentage) of --

	(a)     the Allocable Facility Amount of the subject Mortgaged Property on the specified date,
to
	(b)     the Valuation most recently obtained prior to the specified date for the subject Mortgaged Property.

          “Loan Year” means the 12-month period from the first day of the first calendar month after the Initial Closing Date to and including the last day before the first anniversary of the Initial Closing Date, and each 12-month period thereafter.

          “Material Adverse Effect” means, with respect to any circumstance, act, condition or event of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, or

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circumstance or circumstances, whether or not related, a material adverse change in or a materially adverse effect upon any of (a) the business, operations, property or condition (financial or otherwise) of any Borrower Party, (b) the present or future ability of any Borrower Party to perform the Obligations for which it is liable, (c) the validity, priority, perfection or enforceability of this Agreement or any other Loan Document or the rights or remedies of the Lender under any Loan Document, or (d) the value of, or the Lender’s ability to have recourse against, any Mortgaged Property.

          “MBS” means a mortgage-backed security which is “backed” by an interest in the Notes and the Collateral Pool securing the Notes, which interest permits the holder of the MBS to participate in the Notes and the Collateral Pool to the extent of such Advance.

          “MBS Imputed Interest Rate” shall have the meaning set forth in Section 2.05(a).

          “MBS Issue Date” means the date on which a Fannie Mae MBS is issued by Fannie Mae.

          “MBS Delivery Date” means the date on which a Fannie Mae MBS is delivered by Fannie Mae.

          “MBS Pass-Through Rate” for a Fixed Facility Advance means the interest rate as determined by the Lender (rounded to three places) payable in respect of the Fannie Mae MBS issued pursuant to the MBS Commitment backed by the Fixed Facility Advance as determined in accordance with Section 4.01.

          “Mortgaged Properties” means, collectively, the Substituted Mortgaged Properties and the Initial Mortgaged Properties, but excluding each Collateral Release Property from and after the date of the release of the Collateral Release Property from the Collateral Pool.

          “Multifamily Residential Property” means a residential property, located in the United States, containing five or more dwelling units in which not more than twenty percent (20%) of the net rentable area is or will be rented to non-residential tenants, and conforming to the requirements of Chapter 2 of Part III of the DUS Guide (Property Requirements).

          “Net Operating Income” means, for any specified period, with respect to any Multifamily Residential Property, the aggregate net income during such period equal to Gross Revenues during such period less the aggregate Operating Expenses during such period. If a Mortgaged Property is not owned by a Borrower Party or an Affiliate of a Borrower Party for the entire specified period, the Net Operating Income for the Mortgaged Property for the time within the specified period during which the Mortgaged Property was owned by a Borrower Party or an Affiliate of a Borrower Party shall be the Mortgaged Property’s pro forma net operating income determined by the Lender in accordance with the underwriting procedures set forth in Chapter 4 of Part III of the DUS Guide (Determination of Loan Amount).

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          “Note” means any Fixed Facility Note or the Variable Facility Note.

          “Obligations” means the aggregate of the obligations of each of the Borrower Parties under this Agreement and the other Loan Documents.

          “Operating Expenses” means, for any period, with respect to any Multifamily Residential Property, all expenses in respect of the Multifamily Residential Property, as determined by the Lender based on the certified operating statement for such specified period as adjusted to provide for the following: (i) all appropriate types of expenses, including a management fee and deposits to the Replacement Reserves (whether funded or not), are included in the total operating expense figure; (ii) upward adjustments to individual line item expenses to reflect market norms or actual costs and correct any unusually low expense items, which could not be replicated by a different owner or manager (e.g., a market rate management fee will be included regardless of whether or not a management fee is charged, market rate payroll will be included regardless of whether shared payroll provides for economies, etc.); and (iii) downward adjustments to individual line item expenses to reflect unique or aberrant costs (e.g., non-recurring capital costs, non-operating borrower expenses, etc.).

          “Organizational Certificate” means a certificate of each of the Borrower Parties in the form attached as Exhibit F to this Agreement.

          “Organizational Documents” means all certificates, instruments and other documents pursuant to which an organization is organized or operates, including but not limited to, (i) with respect to a corporation, its articles of incorporation and bylaws, (ii) with respect to a limited partnership, its limited partnership certificate and partnership agreement, (iii) with respect to a general partnership or joint venture, its partnership or joint venture agreement and (iv) with respect to a limited liability company, its articles of organization and operating agreement.

          “Original Expansion Commitment” means the portion of the Commitment in excess of $119,367,000 but less than $138,382,000. Any portion of the Commitment in excess of $119,367,000 but less than $138,382,000 shall be deemed to be part of the Original Expansion Commitment.

          “Other Credit Agreement” means, that certain Second Amended and Restated Master Credit Facility Agreement dated as of even date herewith by and between Borrower, Lender and others.

          “Outstanding” means, when used in connection with promissory notes, other debt instruments or Advances, for a specified date, promissory notes or other debt instruments which have been issued, or Advances which have been made, but have not been repaid in full as of the specified date.

          “Ownership Interests” means, with respect to any entity, any ownership interests in the entity and any economic rights (such as a right to distributions, net cash flow or net income) to which the owner of such ownership interests is entitled.

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          “PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

          “Permits” means all permits, or similar licenses or approvals issued and/or required by an applicable Governmental Authority or any Applicable Law in connection with the ownership, use, occupancy, leasing, management, operation, repair, maintenance or rehabilitation of any Mortgaged Property or any Borrower Party’s business.

          “Permitted Liens” means, with respect to a Mortgaged Property, (i) the exceptions to title to the Mortgaged Property set forth in the Title Insurance Policy for the Mortgaged Property which are approved by the Lender, (ii) the Security Instrument encumbering the Mortgaged Property, (iii) any other Liens approved by the Lender, and (iv) Leases.

          “Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private).

          “Potential Event of Default” means any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

          “Price” means, with respect to an Advance, the proceeds of the sale of the MBS backed by the Advance.

          “Property” means any estate or interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

          “Rate Confirmation Form” shall have the meaning set forth in Section 4.01(c).

          “Rate Preservation Fee” means, for any month following December 31, 2005, an amount equal to the product obtained by multiplying: (i) 1/12, by (ii) 15 basis points, by (iii) the Reserved Amount. The Rate Preservation Fee shall be paid monthly in arrears.

          “Rate Setting Date” shall have the meaning set forth in Section 4.01(b).

          “Rate Setting Form” shall have the meaning set forth in Section 4.01(b).

          “REIT” means Mid-America Apartment Communities, Inc., a Tennessee corporation.

          “Release Fee” means, with respect to each Mortgaged Property released from the Collateral Pool pursuant to Article VII, a fee equal to $15,000. Provided however, if a Collateral Release Property is released from the Collateral Pool in conjunction with such Mortgaged Property being added to the collateral pool under the Other Credit Agreement, the Release Fee shall be waived for the aggregate of the first three (3) transactions which are either Mortgaged Properties transferred from the Collateral Pool under this Agreement to the collateral pool under the Other Credit Agreement, or Mortgaged

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Properties transferred from the collateral pool under the Other Credit Agreement to the Collateral Pool under this Agreement.

          “Release Price” shall have the meaning set forth in Section 7.02(c).

          “Rent Roll” means, with respect to any Multifamily Residential Property, a rent roll prepared and certified by the owner of the Multifamily Residential Property, on Fannie Mae Form 4243, as set forth in Exhibit III-3 of the DUS Guide, or on another form approved by the Lender and containing substantially the same information as Form 4243 requires.

          “Replacement Reserve Agreement” means a Replacement Reserve and Security Agreement, reasonably required by the Lender, and completed in accordance with the requirements of the DUS Guide.

          “Request” means a Collateral Addition Request, a Collateral Substitution Request, a Collateral Release Request, a Conversion Request, a Credit Facility Expansion Request, a Credit Facility Termination Request, a Future Advance Request, a Reborrowing Request or a Variable Facility Termination Request.

          “Reserved Amount” means $90,493,000, unless Borrower elects in writing a lesser amount not to exceed $250,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $90,493,000. The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

          “Revolving Credit Endorsement” means an endorsement to a Title Insurance Policy which contains substantially the same coverages, and is subject to substantially the same or fewer exceptions (or such other exceptions as the Lender may approve), as the form attached as Exhibit H to this Agreement.

          “Security” means a “security” as set forth in Section 2(1) of the Securities Act of 1933, as amended.

          “Security Documents” means the Security Instruments, the Hedge Security Agreement, the Replacement Reserve Agreements and any other documents executed by a Borrower Party from time to time to secure any of the Borrower Parties’ obligations under the Loan Documents.

          “Security Instrument” means, for each Mortgaged Property, a separate Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement given by a Borrower Party to or for the benefit of the Lender to secure the obligations of the Borrower Parties under the Loan Documents. With respect to each Mortgaged Property owned by a Borrower Party, the Security Instrument shall be substantially in the form published by Fannie Mae for use in the state

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in which the Mortgaged Property is located. The amount secured by the Security Instrument shall be equal to the Commitment in effect from time to time.

          “Senior Management” means (i) the Chief Executive Officer, Chairman of the Board, President, Chief Financial Officer and Chief Operating Officer of the REIT or OP and (ii) any other individuals with responsibility for any of the functions typically performed in a corporation by the officers described in clause (i).

          “Single-Purpose” means, with respect to a Person which is any form of partnership or corporation or limited liability company, that such Person at all times since its formation:

(i)	has been a duly formed and existing partnership, corporation or limited liability company, as the case may be;
(ii)	has been duly qualified in each jurisdiction in which such qualification was at such time necessary for the conduct of its business;
(iii)	has complied with the provisions of its organizational documents and the laws of its jurisdiction of formation in all respects;
(iv)	has observed all customary formalities regarding its partnership or corporate existence, as the case may be;
(v)	has accurately maintained its financial statements, accounting records and other partnership or corporate documents separate from those of any other Person;
(vi)	has not commingled its assets or funds with those of any other Person;
(vii)	has accurately maintained its own bank accounts and books and accounts separate from those of any other Person;
(viii)	has paid its own liabilities from its own separate assets;
(ix)	has identified itself in all dealings with creditors (other than trade creditors in the ordinary course of business and creditors for the construction of improvements to property on which such Person has a non-contingent contract to purchase such property) under its own name and as a separate and distinct entity;
(x)	has not identified itself as being a division or a part of any other Person;
(xi)	has not identified any other Person as being a division or a part of such Person;
(xii)	has been adequately capitalized in light of its contemplated business operations;

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(xiii)	has not assumed, guaranteed or become obligated for the liabilities of any other Person (except in connection with the Credit Facility or the endorsement of negotiable instruments in the ordinary course of business) or held out its credit as being available to satisfy the obligations of any other Person;
(xiv)	has not acquired obligations or securities of any other Person;
(xv)	in relation to a Borrower Party, except for loans made in the ordinary course of business to Affiliates, has not made loans or advances to any other Person;
(xvi)	has not entered into and was not a party to any transaction with any Affiliate of such Person, except in the ordinary course of business and on terms which are no less favorable to such Person than would be obtained in a comparable arm’s-length transaction with an unrelated third party;
(xvii)	has conducted its own business in its own name;
(xviii)	has paid the salaries of its own employees, if any, and maintained a sufficient number of employees in light of its contemplated business operations;
(xix)	has allocated fairly and reasonably any overhead for shared office space;
(xx)	has not pledged its assets for the benefit of any other entity or made any loans or advances to any person or entity;
(xxi)	has not engaged in a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Internal Revenue Code;
(xxii)	has not acquired obligations or securities of its partners or Affiliates; and
(xxiii)	has corrected any known misunderstanding regarding its separate identity.

          “SMSA” means a “standard metropolitan statistical area,” as defined from time to time by the United States Office of Management and Budget.

          “Standby Fee” means, for any month, an amount equal to the sum obtained by adding the product of (i) 1/12, by (ii) the amount shown as the Standby Fee on the Summary of Credit Facility Structure, by (iii) the Unused Capacity.

          “Subsequent Hedge” has the meaning set forth in Section 21.01.

          “Subsidiary” means, when used with reference to a specified Person, (i) any Person that, directly or indirectly, through one or more intermediaries, is controlled by the specified Person, (ii) any Person of which the specified Person is, directly or indirectly, the owner of more than 50% of any voting class of Ownership Interests or (iii)

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any Person (A) which is a partnership and (B) of which the specified Person is a general partner and owns more than 50% of the partnership interests.

          “Substituted Mortgaged Property” means each Multifamily Residential Property owned by any Borrower Party (either in fee simple or as tenant under a ground lease meeting all of the requirements of the DUS Guide) and added to the Collateral Pool after the date hereof in connection with substitution of Collateral as permitted by Section 7.04 of this Agreement.

          “Summary of Credit Facility Structure” means the summary of credit facility structure attached to this Agreement as Schedule I.

          “Surveys” means the as-built surveys of the Mortgaged Properties prepared in accordance with the requirements of Section 113 of the DUS Guide, or otherwise approved by the Lender.

          “Swap” means an interest rate swap provided pursuant to and satisfying the requirements of Article XXI of this Agreement.

          “Swap Rate” has the meaning set forth in Section 21.02.

          “Taxes” means all taxes, assessments, vault rentals and other charges, if any, general, special or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a lien, on the Mortgaged Properties.

          “Term of this Agreement” shall be determined as provided in Section 23.10 to this Agreement.

          “Termination Date” means, at any time during which Fixed Facility Advances are Outstanding, the latest maturity date for any Fixed Facility Advance Outstanding, and, at any time during which Fixed Facility Advances are not Outstanding, the Variable Facility Termination Date.

          “Three Month LIBOR Rate” means the London interbank offered rate for three-month U.S. dollar deposits, as such rate is reported in The Wall Street Journal. In the event that a rate is not published for Three-Month LIBOR, then the nearest equivalent duration London interbank offered rate for U.S. Dollar deposits shall be selected at Lender’s reasonable discretion. If the publication of Three-Month LIBOR is discontinued, Lender shall determine such rate from another equivalent source selected by Lender in its reasonable discretion.

          “Tie-In Endorsement” means an endorsement to a Title Insurance Policy which contains substantially the same coverages, and is subject to substantially the same or fewer exceptions (or such other exceptions as the Lender may approve), as the form attached as Exhibit J to this Agreement.

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          “Title Company” means Fidelity National Title Insurance Company of New York.

          “Title Insurance Policies” means the mortgagee’s policies of title insurance issued by the Title Company from time to time relating to each of the Security Instruments, conforming to the requirements of Section 111 of the DUS Guide, together with such endorsements, coinsurance, reinsurance and direct access agreements with respect to such policies as the Lender may, from time to time, consider necessary or appropriate, whether or not required by the DUS Guide, including Revolving Credit Endorsements, if available, and Tie-In Endorsements, if available, and with a limit of liability under the policy (subject to the limitations contained in Sections 6(a)(i) and 6(a)(iii) of the Stipulations and Conditions of the policy) equal to the Commitment.

          “Trailing 12 Month Period” means, for any specified date, the 12 month period ending with the last day of the most recent Calendar Quarter for which financial statements have been delivered by the Borrower Party to the Lender pursuant to Sections 13.04(c) and (d).

          “Transfer” means (i) a sale, assignment, lease, pledge, transfer or other disposition (whether voluntary or by operation of law) of, or the granting or creating of a lien, encumbrance or security interest in, any estate, rights, title or interest in a Mortgaged Property, or any portion thereof, or (ii) a sale, assignment, pledge, transfer or other disposition of any interest in a Borrower Party other than to another Borrower Party, or (iii) the issuance or other creation of new ownership interests in a Borrower Party other than (a) sales of the stock of the REIT on the New York Stock Exchange or (b) private placements of ownership interests in a Borrower Party that do not result in a Change of Control or any other partnership, corporation, real estate investment trust or other entity that has a direct or indirect ownership interest in a Borrower Party, or (iv) a merger or consolidation of a Borrower Party into another entity or of another entity into a Borrower Party other than into another Borrower Party, or (v) the reconstitution of a Borrower Party from one type of entity to another type of entity, or (vi) the amendment, modification or any other change in the governing instrument or instruments of such Person which has the effect of changing the relative powers, rights, privileges, voting rights or economic interests of the ownership interests in such Person. “Transfer” does not include (i) a conveyance of the Mortgaged Property at a judicial or non-judicial foreclosure sale under any Security Instrument or (ii) the Mortgaged Property becoming part of a bankruptcy estate by operation of law under the United States Bankruptcy Code.

          “Unused Capacity” means, for any month, the sum of the daily average during such month of (i) the undrawn amount of the Variable Facility Commitment available under Article II of this Agreement for the making of Variable Advances plus (ii) the undrawn amount of the Fixed Facility Commitment available under Article III of this Agreement for the making of Fixed Facility Advances, without regard to any unclosed Requests or to the fact that a Request must satisfy conditions precedent.

          “Valuation” means, for any specified date, with respect to a Multifamily Residential Property, (a) if an Appraisal of the Multifamily Residential Property was more recently obtained than a Cap Rate for the Multifamily Residential Property, the

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Appraised Value of such Multifamily Residential Property, or (b) if a Cap Rate for the Multifamily Residential Property was more recently obtained than an Appraisal of the Multifamily Residential Property, the value derived by dividing--
	(i)         the Net Operating Income of such Multifamily Residential Property for the Trailing 12 Month Period, by
	(ii)        the most recent Cap Rate determined by the Lender.

          Notwithstanding the foregoing, any Valuation for a Multifamily Residential Property calculated for a date occurring before the first anniversary of the date on which the Multifamily Residential Property becomes a part of the Collateral Pool shall equal the Appraised Value of such Multifamily Residential Property, unless the Lender determines that changed market or property conditions warrant that the value be determined as set forth in the preceding sentence.

          “Variable Advance” means a loan made by the Lender to the Borrower Parties under the Variable Facility Commitment.

          “Variable Facility” means the agreement of the Lender to make Advances to the Borrower Parties pursuant to Section 2.01.

          “Variable Facility Availability Period” means the period beginning on the Initial Closing Date and ending on the 90th day before the Variable Facility Termination Date.

          “Variable Facility Commitment” means an aggregate amount of $49,507,000, which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          “Variable Facility Fee” means the applicable variable facility fee shown on the Summary of Credit Facility Structure as adjusted, if applicable, as set forth in Section 15.03 of this Agreement.

          “Variable Facility Note” means, the promissory note, in the form attached as Exhibit I to this Agreement, which has been issued by the Borrower Parties to the Lender to evidence the Borrower Parties’ obligation to repay Variable Advances.

          “Variable Facility Termination Date” means the variable facility termination date shown on the Summary of Credit Facility Structure attached hereto.

           “Voting Equity Capital” means Securities or partnership interests of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the board of directors (or Persons performing similar functions).

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ARTICLE II
THE VARIABLE FACILITY COMMITMENT

SECTION 2.01 Variable Facility Commitment. Subject to the terms, conditions and limitations of this Agreement, the Lender agrees to make Variable Advances to the Borrower from time to time during the applicable Variable Facility Availability Period. The aggregate unpaid principal balance of the Variable Advances Outstanding at any time shall not exceed the Variable Facility Commitment. Subject to the terms, conditions and limitations of this Agreement, the Borrower may re-borrow any amounts under the Variable Facility which it has previously borrowed and repaid under the Variable Facility.

SECTION 2.02 Requests for Variable Advances. The Borrower shall request a Variable Advance by giving the Lender a Future Advance Request in accordance with Section 5.02.

SECTION 2.03 Maturity Date of Variable Advances. Regardless of the date on which a Variable Advance is made, the maturity date of each Variable Advance shall be a date selected by the Borrower in its Request for the Variable Advance, which date shall be the last day of a calendar month occurring:

          (a)          no earlier than the date which completes three full months after the Closing Date for the Variable Advance; and

          (b)          no later than the date which completes nine full months after the Closing Date for the Variable Advance.

For these purposes, a year shall be deemed to consist of 12 30-day months. For example, the date which completes three full months after September 15 shall be December 15; and the date which completes three full months after November 30 shall be February 28.

SECTION 2.04 Interest on Variable Facility Advances.

                    (a)          Discount. Each Variable Advance shall be a discount loan. The original stated principal amount of a Variable Advance shall be the sum of the Price of the Variable Advance and the Discount of the Variable Advance. The Price and Discount of each Variable Advance shall be determined in accordance with the procedures set out in Section 4.01. The proceeds of the Variable Advance made available by the Lender to the Borrower will equal the Price of the Variable Advance. The Borrower shall pay to the Lender, in advance of the Lender making a Variable Advance requested by the Borrower, the entire Discount for the Variable Advance.

                    (b)          Partial Month Interest. Notwithstanding anything to the contrary in this Section, if a Variable Advance is not made on the first day of a calendar month, and the MBS Issue Date for the MBS backed by the Variable Advance is the first day of the month following the month in which the Variable Advance is made, the Borrower shall pay interest on the original stated principal amount of the Variable Advance for the partial month period commencing on the Closing Date for the Variable Advance and ending on the last day of the calendar month in which the Closing Date occurs, at a rate per annum equal to the greater of (i) the Coupon Rate

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for the Variable Advance as determined in accordance with Section 2.05(b) and (ii) a rate determined by the Lender, based on the Lender’s cost of funds and approved in advance, in writing, by the Borrower, pursuant to the procedures mutually agreed upon by the Borrower and the Lender.

                    (c)          Variable Facility Fee. In addition to paying the Discount and the partial month interest, if any, the Borrower shall pay monthly installments of the Variable Facility Fee to the Lender on account of each Variable Advance over the whole number of calendar months the MBS backed by the Variable Advance is to run from the MBS Issue Date to the maturity date of the MBS. The Variable Facility Fee shall be payable in advance, in accordance with the terms of the Variable Facility Note. The first installment shall be payable on or prior to the Closing Date for the Variable Advance and shall apply to the first full calendar month of the MBS backed by the Variable Advance. Subsequent installments shall be payable on the first day of each calendar month, commencing on the first day of the second full calendar month of such MBS, until the maturity of such MBS. Each installment of the Variable Facility Fee shall be in an amount equal to the product of multiplying (i) the Variable Facility Fee, by (ii) the amount of the Variable Advance, by (iii) 1/12.

SECTION 2.05 Coupon Rates for Variable Advances. The Coupon Rate for a Variable Advance shall be a rate, per annum, as follows:

                    (a)          The Coupon Rate for a Variable Advance shall equal the sum of (i) an interest rate as determined by the Lender pursuant to Section 4.01 of this Agreement (rounded to three places) payable for the Fannie Mae MBS pursuant to the MBS Commitment backed by the Variable Advance (“MBS Imputed Interest Rate”) and (ii) the Variable Facility Fee.

                    (b)          Notwithstanding anything to the contrary in this Section, if a Variable Advance is not made on the first day of a calendar month, and the MBS Issue Date for the MBS backed by the Variable Advance is the first day of the month following the month in which the Variable Advance is made, the Coupon Rate for such Variable Advance for such period shall be the greater of (i) the rate for the Variable Advance determined in accordance with subsection (a) of this Section and (ii) a rate determined by the Lender, based on the Lender’s cost of funds, and approved in advance, in writing, by the Borrower, pursuant to procedures mutually agreed upon by the Borrower and the Lender.

SECTION 2.06 Variable Facility Note. The obligation of the Borrower to repay the Variable Advances will be evidenced by the Variable Facility Note. The Variable Facility Note shall be payable to the order of the Lender and shall be made in the amount of the Variable Facility Commitment.

SECTION 2.07 [Intentionally Deleted.]

SECTION 2.08 Reinstatement of Variable Commitment Upon Maturity of Fixed Facility Advances. If any Fixed Facility Advance matures prior to the end of the Variable Facility Availability Period, Borrower may elect to reborrow any or all of such maturing Fixed Facility Advance and to increase the Variable Commitment by an amount equal to the amount desired to be reborrowed by the Borrower on the following terms and conditions:

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(a)

Request. In order to reborrow all or a portion of a maturing Fixed Facility Advance, the Borrower shall deliver a written request for such reborrowing (the “Reborrowing Request”) to the Lender, in the form attached as Exhibit Q hereto.

(b)

Closing. If none of the limitations contained in Section 2.09 are violated, and all conditions contained in Section 2.10 are satisfied, the Lender shall permit the requested reborrowing, at a Closing to be held at offices designated by the Lender on the maturity date of the Fixed Facility Advance to be reborrowed (or on such other date to which the Borrower and the Lender may agree), by executing and delivering, at the sole cost and expense of the Borrower, an amendment to this Agreement, in the form attached as Exhibit R hereto, together with an amendment to each Security Document (if required by the Lender) and other applicable Loan Documents, in form and substance satisfactory to the Lender, reflecting the reborrowing. The documents and instruments referred to in the preceding sentence are referred to in this Article as the “Reborrowing Documents.”

Section 2.09 Limitations on Right to Reborrow. The right of the Borrower to reborrow all or a portion of a maturing Fixed Facility Advance is subject to the following limitations:

(a)	Closing Date. The Closing Date shall occur during the Variable Facility Availability Period.
(b)	Minimum Request. Each Request for a reborrowing shall be in the minimum amount of $5,000,000.
(c)	Limitation on Reborrowing. In no event will a reborrowing of a Fixed Facility Advance be permitted if the Fixed Facility Advance is prepaid prior to its Maturity Date.

SECTION 2.10 Conditions Precedent to Reborrowing. The reborrowing of all or a portion of a maturing Fixed Facility Advance is subject to the satisfaction of the following conditions precedent :

(a)	After giving effect to the requested reborrowing, the Coverage and LTV Tests will be satisfied;
(b)	Payment by the Borrower in full of the maturing Fixed Facility Advance which the Borrower has designated for reborrowing, together with any other amounts due with respect to the repayment of such Fixed Facility Advance;
(c)	The receipt by the Lender of an endorsement to each Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date and other exceptions approved by the Lender;
(d)	Receipt by the Lender of one or more counterparts of each Reborrowing Document, dated as of the Closing Date, signed by each of the parties (other than the Lender) who is a party to such Reborrowing Document;

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(e)

In the event that Fannie Mae is no longer in the business of purchasing loans of the type and size of the loans evidenced by this Agreement without requiring interest rate protection, the Borrower shall make arrangements for such interest rate protection. Such protection shall be a Hedge satisfying the requirements of Article XXI with respect to any amounts reborrowed pursuant to Sections 2.08, 2.09 and 2.10 of this Agreement; and

(f)

The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE III
THE FIXED FACILITY COMMITMENT

SECTION 3.01 Fixed Facility Commitment. Subject to the terms, conditions and limitations set forth in this Article, the Lender agrees to make Fixed Facility Advances to the Borrower from time to time during the Fixed Facility Availability Period. The aggregate original principal of the Fixed Facility Advances shall not exceed the Fixed Facility Commitment. The borrowing of a Fixed Facility Advance shall permanently reduce the Fixed Facility Commitment by the original principal amount of the Fixed Facility Advance. The Borrower may not re-borrow any part of the Fixed Facility Advance which it has previously borrowed and repaid, provided, however, that a Fixed Facility Advance that matures prior to the end of the Variable Facility Availability Period may be reborrowed as a Variable Advance pursuant to the terms of Section 2.08 of this Agreement.

SECTION 3.02 Requests for Fixed Facility Advances. The Borrower shall request a Fixed Facility Advance by giving the Lender a Future Advance Request in accordance with Section 5.02, as applicable.

SECTION 3.03 Maturity Date of Fixed Facility Advances; Amortization. The maturity date of each Fixed Facility Advance shall be the maturity date selected by the Borrower, provided that such Maturity Date shall not be earlier than the date five (5) years after the date of such Advance and shall not be later than December 1, 2013. The principal of each Fixed Facility Advance shall, at the election of the Borrower, which election shall be made at the time of the first Conversion Request or Credit Facility Expansion Request relating to a Fixed Facility Commitment (which election shall apply to all Fixed Facility Advances) be amortized on a 30-year schedule or shall require payments of interest only.

SECTION 3.04 Interest on Fixed Facility Advances.

                    (a)          Advances. Each Fixed Facility Advance shall bear interest at a rate, per annum, equal to the sum of (i) the MBS Pass-Through Rate determined for such Fixed Facility Advance and (ii) the Fixed Facility Fee.

                    (b)          Partial Month Interest. Notwithstanding anything to the contrary in this Section, if a Fixed Facility Advance is not made on the first day of a calendar month, and the MBS Issue Date for the MBS backed by the Fixed Facility Advance is the first day of the month following the month in which the Fixed Facility Advance is made, the Borrower shall pay

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interest on the original stated principal amount of the Fixed Facility Advance for the partial month period commencing on the Closing Date for the Fixed Facility Advance and ending on the last day of the calendar month in which the Closing Date occurs at a rate, per annum, equal to the greater of (i) the interest rate for the Fixed Facility Advance described in the first sentence of this Section and (ii) a rate determined by the Lender, based on the Lender’s cost of funds, and approved in advance, in writing, by the Borrower, pursuant to procedures mutually agreed upon by the Borrower and the Lender.

SECTION 3.05 Coupon Rates for Fixed Facility Advances. The Coupon Rate for a Fixed Facility Advance shall be the rate of interest applicable to such Fixed Facility Advance pursuant to Section 3.04.

SECTION 3.06 Fixed Facility Note. The obligation of the Borrower to repay a Fixed Facility Advance will be evidenced by a Fixed Facility Note. The Fixed Facility Notes shall be payable to the order of the Lender and shall be made in the original principal amount of each Fixed Facility Advance.

SECTION 3.07 Conversion of Commitment from Variable Facility Commitment to Fixed Facility Commitment. The Borrower shall have the right, from time to time during the Fixed Facility Availability Period, to convert all or a portion of a Variable Facility Commitment to the Fixed Facility Commitment, in which event the Variable Facility Commitment shall be reduced by, and the Fixed Facility Commitment shall be increased by, the amount of the conversion.

          (a)          Request. In order to convert all or a portion of the Variable Facility Commitment to the Fixed Facility Commitment, the Borrower shall deliver a written request for a conversion (“Conversion Request”) to the Lender, in the form attached as Exhibit K to this Agreement. Each Conversion Request shall be accompanied by a designation of the amount of the conversion and a designation of any Variable Advances Outstanding which will be prepaid on or before the Closing Date for the conversion as required by Section 3.08(c).

          (b)          Closing. If none of the limitations contained in Section 3.08 is violated, and all conditions contained in Section 3.09 are satisfied, the Lender shall permit the requested conversion, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within 30 Business Days after the Lender’s receipt of the Conversion Request (or on such other date to which the Borrower and the Lender may agree), by executing and delivering, all at the sole cost and expense of the Borrower, an amendment to this Agreement, in the form attached as Exhibit L to this Agreement, together with an amendment to each Security Document and other applicable Loan Documents, in form and substance satisfactory to the Lender, reflecting the change in the Fixed Facility Commitment and the Variable Facility Commitment. The documents and instruments referred to in the preceding sentence are referred to in this Article as the “Conversion Documents.”

SECTION 3.08 Limitations on Right to Convert. The right of the Borrower to convert all or a portion of the Variable Facility Commitment to the Fixed Facility Commitment is subject to the following limitations:

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          (a)          Closing Date. The Closing Date shall occur during the Fixed Facility Availability Period.

          (b)          Minimum Request. Each Request for a conversion shall be in the minimum amount of $5,000,000.

          (c)          Obligation to Prepay Variable Advances. If, after the conversion, the aggregate unpaid principal balance of all Variable Advances Outstanding will exceed the Variable Facility Commitment, the Borrower shall be obligated to prepay, as a condition precedent to the conversion, an amount of Variable Advances Outstanding which is at least equal to the amount of the excess.

SECTION 3.09 Conditions Precedent to Conversion. The conversion of all or a portion of the Variable Facility Commitment to the Fixed Facility Commitment is subject to the satisfaction of the following conditions precedent on or before the Closing Date:

                    (a)          After giving effect to the requested conversion, the Coverage and LTV Tests will be satisfied;

                    (b)          Prepayment by the Borrower in full of any Variable Advances Outstanding which the Borrower has designated for payment, together with any associated prepayment premiums and other amounts due with respect to the prepayment of such Variable Advances;

                    (c)          The receipt by the Lender of an endorsement to each Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date and other exceptions approved by the Lender;

                    (d)          Receipt by the Lender of one or more counterparts of each Conversion Document, dated as of the Closing Date, signed by each of the parties (other than the Lender) who is a party to such Conversion Document; and

                    (e)          The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE IV
RATE SETTING FOR THE ADVANCES

SECTION 4.01 Rate Setting for an Advance. Rates for an Advance shall be set in accordance with the following procedures:

                    (a)          Preliminary, Nonbinding Quote. At the Borrower’s request the Lender shall quote to the Borrower an estimate of the MBS Pass-Through Rate (for a proposed Fixed Facility Advance) or MBS Imputed Interest Rate (for a proposed Variable Advance) for a Fannie Mae MBS backed by a proposed Advance. The Lender’s quote shall be based on (i) a solicitation of bids from institutional investors selected by the Lender and (ii) the proposed terms

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and amount of the Advance selected by the Borrower. The quote shall not be binding upon the Lender.

                    (b)          Rate Setting. If the Borrower satisfies all of the conditions to the Lender’s obligation to make the Advance in accordance with Article V, then the Borrower may propose a MBS Pass-Through Rate (for a Fixed Facility Advance) or MBS Imputed Interest Rate (for a Variable Advance) by submitting to the Lender by facsimile transmission a completed and executed document, in the form attached as Exhibit M to this Agreement (“Rate Setting Form”), before 1:00 p.m. Eastern Standard Time on any Business Day (“Rate Setting Date”). The Rate Setting Form contains various factual certifications required by the Lender and specifies:

                  (i) for a Variable Advance, the amount, term, MBS Issue Date, Variable Facility Fee, the proposed maximum Coupon Rate (“Maximum Annual Coupon Rate”) and Closing Date for the Advance; and

                  (ii) for a Fixed Facility Advance, the amount, term, MBS Issue Date, Fixed Facility Fee, Maximum Annual Coupon Rate, Price (which will be in a range between 99-1/2 and 100-1/2), Yield Maintenance Period, Amortization Period, if applicable, interest only and Closing Date for the Advance.

                    (c)          Rate Confirmation. Within one Business Day after receipt of the completed and executed Rate Setting Form, the Lender shall solicit bids from institutional investors selected by the Lender based on the information in the Rate Setting Form and, provided the actual Coupon Rate (if the low bid were accepted) would be at or below the Maximum Annual Coupon Rate, shall obtain a commitment (“MBS Commitment”) for the purchase of a Fannie Mae MBS having the bid terms described in the related Rate Setting Form, and shall immediately deliver to the Borrower by facsimile transmission a completed document, in the form attached as Exhibit N to this Agreement (“Rate Confirmation Form”). The Rate Confirmation Form will confirm:

                  (i) for a Variable Advance, the amount, term, MBS Issue Date, MBS Delivery Date, MBS Imputed Interest Rate, Variable Facility Fee, Coupon Rate, Discount, Price, and Closing Date for the Advance; and

                  (ii) for a Fixed Facility Advance, the amount, term, MBS Issue Date, MBS Delivery Date, MBS Pass-Through Rate, Fixed Facility Fee, Coupon Rate, Price, Yield Maintenance Period, Specified U.S. Treasury Security, Amortization Period and Closing Date for the Advance.

SECTION 4.02 Advance Confirmation Instrument for Variable Advances. On or before the Closing Date for a Variable Advance, the Borrower Parties execute and deliver to the Lender an instrument (“Advance Confirmation Instrument”), in the form attached as Exhibit O to this Agreement, confirming the amount, term, MBS Issue Date, MBS Delivery Date, MBS Imputed Interest Rate, Variable Facility Fee, Coupon Rate, Discount, Price and Closing Date for the Advance, and the Borrower’s obligation to repay the Advance in accordance with the terms of the Notes and this Agreement. Upon the funding of the Variable Advance, the Lender shall note

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the date of funding in the appropriate space at the foot of the Advance Confirmation Instrument and deliver a copy of the completed Advance Confirmation Instrument to the Borrower. The Lender’s failure to do so shall not invalidate the Advance Confirmation Instrument or otherwise affect in any way any obligation of the Borrower to repay Variable Advances in accordance with the Advance Confirmation Instrument, the Variable Facility Note or the other Loan Documents, but is merely meant to facilitate evidencing the date of funding and to confirm that the Advance Confirmation Instrument is not effective until the date of funding.

SECTION 4.03 Breakage and other Costs. In the event that the Lender obtains an MBS Commitment and the Lender fails to fulfill the MBS Commitment because the Advance is not made (for a reason other than the default of the Lender to make the Advance), the Borrower shall pay all reasonable out-of-pocket costs payable to the potential investor and other reasonable costs, fees and damages incurred by the Lender in connection with its failure to fulfill the MBS Commitment. The Lender reserves the right to require that the Borrower post a deposit at the time the MBS Commitment is obtained. The deposit referred to in the preceding sentence shall be refundable to the Borrower upon the delivery of the related MBS.

ARTICLE V
MAKING THE ADVANCES

SECTION 5.01 Initial Advance . The Lender has made the Initial Advance.

SECTION 5.02 Future Advances. In order to obtain a Future Advance, the Borrower may from time to time deliver a written request for a Future Advance (“Future Advance Request”) to the Lender, in the form attached as Exhibit P to this Agreement. Each Future Advance Request shall be accompanied by (a) a designation of the amount of the Future Advance requested, and (b) a designation of the maturity date of the Advance. Each Future Advance Request shall be in the minimum amount of $3,000,000. If all conditions contained in Section 5.03 are satisfied, the Lender shall make the requested Future Advance, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring on a date selected by the Borrower, which date shall be not more than three (3) Business Days, after the Borrower’s receipt of the Rate Confirmation Form (or on such other date to which the Borrower and the Lender may agree). The Lender reserves the right to require that the Borrower post a deposit at the time the MBS Commitment is obtained as an additional condition to the Lender’s obligation to make the Future Advance. The deposit referred to in the preceding sentence shall be refundable to the Borrower upon the delivery of the related MBS.

SECTION 5.03 Conditions Precedent to Future Advances. The obligation of the Lender to make a requested Future Advance is subject to the following conditions precedent:

                    (a)          The receipt by the Lender of a Future Advance Request;

                    (b)          The Lender has delivered the Rate Setting Form for the Future Advance to the Borrower;

                    (c)          After giving effect to the requested Future Advance, the Coverage and LTV Tests will be satisfied;

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                    (d)          If the Advance is a Fixed Facility Advance, delivery of a Fixed Facility Note, duly executed by the Borrower, in the amount of the Advance, reflecting all of the terms of the Fixed Facility Advance;

                    (e)          If the Advance is a Variable Advance, delivery of the Advance Confirmation Instrument, duly executed by the Borrower;

                    (f)          For any Title Insurance Policy not containing a Revolving Credit Endorsement, the receipt by the Lender of an endorsement to the Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date, Permitted Liens and other exceptions approved by the Lender;

                    (g)          If the Advance is a Variable Advance, the receipt by the Lender of the first installment of Variable Facility Fee for the Variable Advance and the entire Discount for the Variable Advance payable by the Borrower pursuant to Section 2.04;

                    (h)          The receipt by the Lender of all legal fees and expenses payable by the Borrower in connection with the Future Advance pursuant to Section 16.04(b); and

                    (i)          If the Advance is a Variable Advance requiring a Hedge pursuant to the terms of Article XXI, receipt by Lender at least five (5) days prior to the Closing Date for such Advance, of the confirmation of a Hedge commitment with respect to such Advance;

                    (j)          If applicable, receipt by Lender of Hedge Documents effective as of the Closing Date;

                    (k)          The satisfaction of all applicable General Conditions set forth in Article XI.

SECTION 5.04 Determination of Allocable Facility Amount and Valuations. Once each Calendar Quarter, within 20 Business Days after the Borrower has delivered to the Lender the reports required in Section 13.04, the Lender shall determine the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month period and the Aggregate Loan to Value Ratio. If the Lender reasonably decides that changed market or property conditions warrant, the Lender may (i) request an Appraisal of the relevant Mortgaged Properties and/or (ii) determine new Allocable Facility Amounts and Valuations at any other times. The Lender shall also redetermine Allocable Facility Amounts as necessary to take account of any addition, release or substitution of Collateral or other event which invalidates the outstanding determinations. The Lender shall determine Cap Rates when determining Valuations on the basis of its internal survey and analysis of cap rates for comparable sales in the vicinity of the Mortgaged Property, with such adjustments as the Lender deems appropriate and shall not be obligated to use any information provided by the Borrower. The Lender shall promptly disclose its determinations to the Borrower. Until redetermined, the Allocable Facility Amounts and Valuations determined by the Lender shall remain in effect. In performing a Valuation of a Multifamily Residential Property to be added to the Collateral Pool, the Lender shall be entitled to obtain an Appraisal. The Lender shall also have the right to obtain an Appraisal in connection with the redetermination of

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a Valuation of a Mortgaged Property, but only if the Lender is unable to determine a Cap Rate for such Mortgaged Property and then only if the Lender has not obtained an Appraisal for such Mortgaged Property within the prior year.

ARTICLE VI
ADDITIONS OF COLLATERAL

SECTION 6.01 Right to Add Collateral. Subject to the terms and conditions of this Article, the Borrower shall have the right, from time to time during the Term of this Agreement, to add Additional Mortgaged Properties to the Collateral Pool in accordance with the provisions of this Article.

SECTION 6.02 Procedure for Adding Collateral. The procedure for adding Collateral set forth in this Section 6.02 shall apply to all additions of Collateral in connection with this Agreement, including but not limited to additions of Collateral in connection with substitutions of Collateral and expansion of the Credit Facility.

                    (a)          Request. The Borrower may, not more than eight (8) times per Calendar Year, deliver a written request (the “Collateral Addition Request”) to the Lender, in the form attached as Exhibit S to this Agreement, to add one or more Additional Mortgaged Properties to the Collateral Pool. Each Collateral Addition Request shall be accompanied by the following:

                                   (i)          The information relating to the Additional Mortgaged Property required by the form attached as Exhibit CC to this Agreement (the “Collateral Addition Description Package”), as amended from time to time to include information required under the DUS Guide; and

                                   (ii)          The payment of all Additional Collateral Due Diligence Fees pursuant to Section 16.03(b).

                    (b)          Additional Information. The Borrower shall promptly deliver to the Lender any additional information concerning the proposed Additional Mortgaged Property that the Lender may from time to time reasonably request.

                    (c)          Underwriting. The Lender shall evaluate the proposed Additional Mortgaged Property, and shall make underwriting determinations as to the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period and the Aggregate Loan to Value Ratio applicable to the Collateral Pool, on the basis of the lesser of (i) if purchased by the Borrower within 12 months of the related Collateral Addition Request, the acquisition price of the proposed Additional Mortgaged Property or (ii) a Valuation made with respect to the proposed Additional Mortgaged Property, and otherwise in accordance with Fannie Mae’s DUS Underwriting Requirements, including applicable underwriting floors. Within 30 days after receipt of (i) the Collateral Addition Request for the proposed Additional Mortgaged Property and (ii) all reports, certificates and documents set forth on Exhibit S to this Agreement, including a zoning analysis undertaken in accordance with Section 206 of the DUS Guide, the Lender shall notify the Borrower

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whether or not it shall consent to the addition of the proposed Additional Mortgaged Property to the Collateral Pool and, if it shall so consent, shall set forth the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period and the Aggregate Loan to Value Ratio which it estimates shall result from the addition of the proposed Additional Mortgaged Property to the Collateral Pool. If the Lender declines to consent to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, the Lender shall include, in its notice, a brief statement of the reasons for doing so. Within five Business Days after receipt of the Lender’s notice that it shall consent to the addition of the Additional Mortgaged Property to the Collateral Pool, the Borrower shall notify the Lender whether or not it elects to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool. If the Borrower fails to respond within the period of five Business Days, it shall be conclusively deemed to have elected not to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool.

                    (d)          Closing. If, pursuant to subsection (c), the Lender consents to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, the Borrower timely elects to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool and all conditions contained in Section 6.03 are satisfied, the Lender shall permit the proposed Additional Mortgaged Property to be added to the Collateral Pool, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within 30 Business Days after the Lender’s receipt of the Borrower’s election (or on such other date to which the Borrower and the Lender may agree).

SECTION 6.03 Conditions Precedent to Addition of an Additional Mortgaged Property to the Collateral Pool. The addition of an Additional Mortgaged Property to the Collateral Pool on the Closing Date applicable to the Additional Mortgaged Property is subject to the satisfaction of the following conditions precedent:

                    (a)          The proposed Additional Mortgaged Property has a Debt Service Coverage Ratio for the Trailing 12 Month Period of not less than 140% and a Loan to Value Ratio of not more than 65% and immediately after giving effect to the requested addition, the Coverage and LTV Tests will be satisfied, and in the case of any substitution effected pursuant to Section 7.04 of this Agreement, the Coverage and LTV Tests are not adversely affected after giving effect to the proposed substitution;

                    (b)          The receipt by the Lender of the Collateral Addition Fee, except as provided in Section 16.02(b), and all legal fees and expenses payable by the Borrower in connection with the Collateral Addition pursuant to Section 16.04(b);

                    (c)          The delivery to the Title Company, with fully executed instructions directing the Title Company to file and/or record in all applicable jurisdictions, all applicable Collateral Addition Loan Documents required by the Lender, including duly executed and delivered original copies of any Security Instruments and UCC-1 Financing Statements covering the portion of the Additional Mortgaged Property comprised of personal property, and other appropriate documents, in form and substance satisfactory to the Lender and in form proper for recordation, as may be necessary in the opinion of the

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Lender to perfect the Lien created by the applicable additional Security Instrument, and any other Collateral Addition Loan Document creating a Lien in favor of the Lender, and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing;

                   (d)          If required by the Lender, amendments to the Notes and the Security Instruments, reflecting the addition of the Additional Mortgaged Property to the Collateral Pool and, as to any Security Instrument so amended, the receipt by the Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date, Permitted Liens and other exceptions approved by the Lender;

                    (e)          If the Title Insurance Policy for the Additional Mortgaged Property contains a Tie-In Endorsement, an endorsement to each other Title Insurance Policy containing a Tie-In Endorsement, adding a reference to the Additional Mortgaged Property; and

                    (f)          The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE VII
RELEASES OF COLLATERAL

SECTION 7.01 Right to Obtain Releases of Collateral. Subject to the terms and conditions of this Article, the Borrower shall have the right to obtain a release of Collateral from the Collateral Pool in accordance with the provisions of this Article.

SECTION 7.02 Procedure for Obtaining Releases of Collateral.

                    (a)          Request. In order to obtain a release of Collateral from the Collateral Pool, the Borrower may, not more than once each calendar month, deliver a written request for the release of Collateral from the Collateral Pool (“Collateral Release Request”) to the Lender, in the form attached as Exhibit T to this Agreement. The Collateral Release Request shall not result in a termination of all or any part of the Credit Facility. The Borrower may only terminate all or any part of the Credit Facility by delivering a Variable Facility Termination Request or Credit Facility Termination Request pursuant to Articles IX or X. The Collateral Release Request shall be accompanied by (and shall not be effective unless it is accompanied by) the name, address and location of the Mortgaged Property to be released from the Collateral Pool (“Collateral Release Property”).

                    (b)          Closing. If all conditions contained in Section 7.03 are satisfied, the Lender shall cause the Collateral Release Property to be released from the Collateral Pool, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within 30 days after the Lender’s receipt of the Collateral Release Request (or on such other date to which the Borrower and the Lender may agree, by executing and delivering, and causing all applicable parties to execute and deliver, all at the sole cost and expense of the

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Borrower, instruments, in the form customarily used by the Lender for releases in the jurisdiction governing the perfection of the security interest being released, releasing the applicable Security Instrument as a Lien on the Collateral Release Property, and UCC-3 Termination Statements terminating the UCC-1 Financing Statements perfecting a Lien on the portion of the Collateral Release Property comprised of personal property and such other documents and instruments as the Borrower may reasonably request evidencing the release of the applicable Collateral from any lien securing the Obligations (including a termination of any restriction on the use of any accounts relating to the Collateral Release Property) and the release and return to the Borrower of any and all escrowed amounts relating thereto. The instruments referred to in the preceding sentence are referred to in this Article as the “Collateral Release Documents.” The Borrower shall prepare the Collateral Release Documents and submit them to Lender for its review.

                    (c)          Release Price. The “Release Price” for each Mortgaged Property means (1) during the period Section 22.01(a) of this Agreement is in effect the greater of (i) the Allocable Facility Amount for the Mortgaged Property to be released and (ii) the amount, if any, of Advances Outstanding which are required to be repaid by the Borrower to the Lender in connection with the proposed release of the Mortgaged Property from the Collateral Pool, so that, immediately after the release, the Coverage and LTV Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value Ratio for the Trailing 12 Month Period will be increased as a result of such release and (2) at all times after Section 22.01(a) of this Agreement is no longer in effect the greater of (i) 125% of the Allocable Facility Amount for the Mortgaged Property to be released and (ii) the amount, if any, of Advances Outstanding which are required to be repaid by the Borrower to the Lender in connection with the proposed release of the Mortgaged Property from the Collateral Pool, so that, immediately after the release, the Coverage and LTV Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value Ratio for the Trailing 12 Month Period will be increased as a result of such release. In addition to the Release Price, the Borrower shall pay to the Lender all associated prepayment premiums and other amounts due under the Notes and any Advance Confirmation Instruments evidencing the Advances being repaid.

                    (d)          Application of Release Price. The Release Price shall be applied against the Variable Advances Outstanding until there are no further Variable Advances Outstanding, and thereafter shall be held by the Lender (or its appointed collateral agent) as substituted Collateral (“Substituted Cash Collateral”), in accordance with a security agreement and other documents in form and substance acceptable to the Lender (or, at the Borrower’s option, may be applied against the prepayment of Fixed Facility Advances, so long as the prepayment is permitted under the Fixed Facility Note for the Fixed Facility Advance). Any portion of the Release Price held as Substituted Cash Collateral may be released if, immediately after giving effect to the release, each of the conditions set forth in Section 7.03(a) below shall have been satisfied. If, on the date on which the Borrower pays the Release Price, Variable Advances are Outstanding but are not then due and payable, the Lender shall hold the payments as additional Collateral for the Credit Facility, until the next date on which Variable Advances are due and payable, at which time the Lender shall apply the amounts held by it to the amounts of the Variable Advances due and payable.

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SECTION 7.03 Conditions Precedent to Release of Collateral Release Property from the Collateral. The obligation of the Lender to release a Collateral Release Property from the Collateral Pool by executing and delivering the Collateral Release Documents on the Closing Date, are subject to the satisfaction of the following conditions precedent on or before the Closing Date:

                    (a)          Immediately after giving effect to the requested release the Coverage and LTV Tests will be satisfied, and in the case of any substitution effected pursuant to Section 7.04 of this Agreement, the Coverage and LTV Tests are not adversely affected after giving effect to the proposed substitution;

                    (b)          Receipt by the Lender of the Release Price;

                    (c)          Receipt by the Lender of the Release Fee for the Collateral Release Property and all legal fees and expenses payable by the Borrower in connection with the release pursuant to Section 16.04(b);

                    (d)          Receipt by the Lender on the Closing Date of one or more counterparts of each Collateral Release Document, dated as of the Closing Date, signed by each of the parties (other than the Lender) who is a party to such Collateral Release Document;

                    (e)          If required by the Lender, amendments to the Notes and the Security Instruments, reflecting the release of the Collateral Release Property from the Collateral Pool and, as to any Security Instrument so amended, the receipt by the Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date, Permitted Liens and other exceptions approved by the Lender;

                    (f)          If the Lender determines the Collateral Release Property to be one phase of a project, and one or more other phases of the project are Mortgaged Properties which will remain in the Collateral Pool (“Remaining Mortgaged Properties”), the Lender must determine that the Remaining Mortgaged Properties can be operated separately from the Collateral Release Property and any other phases of the project which are not Mortgaged Properties. In making this determination, the Lender shall evaluate whether the Remaining Mortgaged Properties comply with the terms of Sections 203 and 208 of the DUS Guide, which, as of the date of this Agreement, require, among other things, that a phase which constitutes collateral for a loan made in accordance with the terms of the DUS Guide (i) have adequate ingress and egress to existing public roadways, either by location of the phase on a dedicated, all-weather road or by access to such a road by means of a satisfactory easement, (ii) have access which is sufficiently attractive and direct from major thoroughfares to be conducive to continued good marketing, (iii) have a location which is not (A) inferior to other phases, (B) such that inadequate maintenance of other phases would have a significant negative impact on the phase, and (C) such that the phase is visible only after passing through the other phases of the project and (iv) comply with such other issues as are dictated by prudent practice;

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                    (g)          Receipt by the Lender of endorsements to the Tie-In Endorsements of the Title Insurance Policies, if deemed necessary by the Lender, to reflect the release;

                    (h)          Receipt by the Lender on the Closing Date of a writing, dated as of the Closing Date, signed by the Borrower Parties, in the form attached as Exhibit U to this Agreement, pursuant to which the Borrower Parties confirm that their obligations under the Loan Documents are not adversely affected by the release of the Collateral Release Property from the Collateral;

                    (i)          The remaining Mortgaged Properties in the Collateral Pool shall satisfy the then-existing Geographical Diversification Requirements;

                    (j)          The satisfaction of all applicable General Conditions set forth in Article XI;

                    (k)          Notwithstanding the other provisions of this Section 7.03, no release of any of the Mortgaged Properties shall be made unless the Borrower has provided title insurance, taking into account Tie-In Endorsements, to Lender in respect of each of the remaining Mortgaged Properties in the Collateral Pool in an amount equal to 125% of the Initial Valuation of each of such remaining Mortgaged Properties.

SECTION 7.04 Substitutions.

           (a)          Right to Substitute Collateral. Subject to the terms, conditions and limitations of this Section 7.04 and Article VII, the Borrower Parties shall have the right, from time to time during the Term of this Agreement, to add one or more Multifamily Residential Properties to the Collateral Pool in substitution of one or more Mortgaged Properties then in the Collateral Pool in accordance with the provisions of this Section 7.04 (“Substituted Mortgaged Property”).

          (b)          Procedure for Substituting Collateral.

              (i)          Request. The Borrower Parties may deliver a written request (“Collateral Substitution Request”) to the Lender, in the form attached as Exhibit Z to this Agreement, to add one or more Multifamily Residential Properties to the Collateral Pool in substitution of one or more Mortgaged Properties then in the Collateral Pool. Each Collateral Substitution Request shall be accompanied by the following:

              (A)          The information relating to the proposed Substituted Mortgaged Property required by the form attached as Exhibit DD to this Agreement (“Collateral Substitution Description Package”), as amended from time to time to include information required under the DUS guide;

              (B)          The payment of all Additional Collateral Due Diligence Fees pursuant to Section 16.03(b).

              (C)          A statement whether the addition of the proposed Substituted Mortgaged Property will occur simultaneously with the release of the proposed Collateral Release Property and, if not, the Borrower Parties shall specify the proposed date on which the

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proposed Substituted Mortgaged Property will be added to the Collateral Pool which, in no event, shall be a date which is more than 90 days after the proposed date of the release of the proposed Collateral Release Property.

          (ii)          Additional Information. The Borrower Parties shall promptly deliver to the Lender any additional information concerning the proposed Substituted Mortgaged Property and the proposed Collateral Release Property that the Lender may from time to time reasonably request.

          (iii)          Underwriting. The Lender shall evaluate the proposed Substituted Mortgaged Property, and shall make underwriting determinations as to (a) the Aggregate Debt Service Coverage Ratios and the Aggregate Loan to Value Ratio immediately prior to and immediately after giving effect to the proposed substitution, and (b) the Valuation and the Net Operating Income for the Trailing 12 Month Period for both the proposed Substituted Mortgaged Property and the proposed Collateral Release Property. Notwithstanding anything to the contrary contained herein, for purposes of making such underwriting determines with respect to the proposed Substituted Mortgaged Property, such determinations shall be made on the basis of a Valuation made with respect to the proposed Substituted Mortgaged Property, and otherwise in accordance with Fannie Mae’s DUS Underwriting Requirements, including applicable underwriting floors. Within 30 days after receipt of (a) the Collateral Substitution Request for the proposed Substituted Mortgaged Property and the proposed Collateral Release Property and (b) all reports, certificates and documents set forth on Exhibit EE to this Agreement, including a zoning analysis undertaken in accordance with Section 206 of the DUS Guide, the Lender shall notify the Borrower Parties whether or not the proposed Substituted Mortgaged Property meets the Coverage and LTV Tests and DUS Underwriting Requirements required by this Section 7.04(b)(iii), and therefore whether or not it shall consent to the addition of the proposed Substituted Mortgaged Property to the Collateral Pool in substitution of the proposed Collateral Release Property and, if it shall so consent, shall set forth the Aggregate Debt Service Coverage Ratios and the Aggregate Loan to Value Ratio which it estimates shall result from the substitution of the proposed Substituted Mortgaged Property into the Collateral Pool in replacement of the proposed Collateral Release Property. If the proposed Substituted Mortgaged Property does not meet the Coverage and LTV Tests and DUS Underwriting Requirements required by this Section 7.04(b)(iii), and therefore the Lender does not consent to the substitution of the proposed Substituted Mortgaged Property into the Collateral Pool in replacement of the proposed Collateral Release Property, the Lender shall include, in its notice, a brief statement of the reasons for doing so. Within five Business Days after receipt of the Lender’s notice that it shall consent to the substitution of the proposed Substituted Mortgaged Property into the Collateral Pool in replacement of the proposed Collateral Release Property, the Borrower Parties shall notify the Lender whether or not they elect to cause such substitution to occur. If the Borrower Parties fail to respond within the period of five Business Days, they shall be conclusively deemed to have elected not to cause the proposed substitution to occur.

          (iv)          Closing. If, pursuant to this Section 7.04, the Lender consents to the substitution of the proposed Substituted Mortgaged Property into the Collateral Pool in

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replacement of the proposed Collateral Release Property, the Borrower Parties timely elect to cause such substitution to occur and all conditions contained in Section 7.04(c) are satisfied, the Lender shall permit the proposed Substituted Mortgaged Property to be substituted into the Collateral Pool in replacement of the proposed Collateral Release Property, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring --

              (x)          if the substitution of the proposed Substituted Collateral Property is to occur simultaneously with the release of the proposed Collateral Released Property, within 30 days after the Lender’s receipt of the Borrower Parties’ election (or on such other date to which the Borrower Parties and the Lender may agree); or

              (y)          if the substitution of the proposed Substituted Collateral Property is to occur subsequent to the release of the Collateral Release Property, within 90 days after the release of the Collateral Release Property in accordance with Section 7.02(c).

If, in the case of clause (y), the addition of the proposed Substituted Collateral Property to the Collateral Pool does not occur within 90 days or such longer period as approved by Lender, in its sole discretion, after the release of the Collateral Release Property in accordance with such clause (y), then the Borrower Parties shall have waived their right to substitute such Collateral Release Property with the proposed Substituted Mortgaged Property, the Release Price shall be determined pursuant to Section 7.02(c) and the Borrower Parties shall comply with the requirement set forth in Section 7.03. Such Release Price, or the applicable portion thereof, shall be credited under this Agreement and/or be immediately due and payable by the Borrower Parties to the Lender to reduce the Advances Outstanding as required by, and in the manner set forth in, Section 7.02(d).

          (c)          Conditions Precedent to Substitution of a Substituted Mortgaged Property into the Collateral Pool. The substitution of a Substituted Mortgaged Property into the Collateral Pool in replacement of a Collateral Release Property on the Closing Date is subject to the satisfaction of the following conditions precedent:

          (i)          The proposed Substituted Mortgaged Property has a Debt Service Coverage Ratio for the Trailing 12 Month Period of not less than 140% and a Loan to Value Ratio of not more than 65% and immediately after giving effect to the requested addition, the Coverage and LTV Tests will be satisfied;

          (ii)          The Lender shall have made the determination, as a part of the underwriting evaluations made in accordance with Section 7.04(b)(iii), that (a) the Aggregate Debt Service Coverage Ratio immediately after giving effect to the proposed substitution will be equal to or higher than the Aggregate Debt Service Coverage Ratio immediately prior to the proposed substitution, and (ii) the Aggregate Loan to Value Ratio immediately after giving effect to the proposed substitution will be equal to or less than the Aggregate Loan to Ratio immediately prior to giving effect to the proposed substitution;

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              (iii)          With respect to the release of the proposed Collateral Release Property, the Borrower Parties shall have complied with Section 7.03 (other than clause (b) with respect to the requirement pertaining to Release Price);

              (iv)          The receipt by the Lender of the Collateral Substitution Fee and all legal fees and expenses payable by the Borrower Parties in connection with the substitution pursuant to Section 16.04(b).

              (v)          The delivery to the Title Company, with fully executed instructions directing the Title Company to file and/or record in all applicable jurisdictions, all applicable Collateral Substitution Loan Documents required by Lender, including duly executed and delivered original copies of any Security Instruments and UCC-1 Financing Statements covering the portion of the Substituted Mortgaged Property comprised of personal property, and other appropriate documents, in form and substance satisfactory to the Lender and in form proper for recordation, as may be necessary in the opinion of the Lender to perfect the Lien created by the applicable additional Security Instrument, and any other Collateral Substitution Loan Document creating a Lien in favor of the Lender, and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing;

              (vi)          If required by the Lender, amendments to the Notes and the Security Instruments, reflecting the addition of the Substituted Mortgaged Property to the Collateral Pool and, as to any Security Instrument so amended, the receipt by the Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than Permitted Liens;

              (vii)          If the Title Insurance Policy for the Substituted Mortgaged Property contains a Tie-In Endorsement, and endorsement to each other Title Insurance Policy containing a Tie-In Endorsement, adding a reference to the Substituted Mortgaged Property;

              (viii)          The delivery to the Lender of additional collateral or the repayment of Advances Outstanding to the extent required pursuant to Section 7.04(d); and

              (ix)          The satisfaction of all General Conditions set forth in Article XI.

          (d)          Restriction on Borrowings. In the case that the substitution of the proposed Substituted Mortgaged Property is not to occur simultaneously with the release of the proposed Collateral Release Property, from and after the release of the proposed Collateral Release Property until the addition of the proposed Substituted Mortgaged Property into the Collateral Pool in accordance with this Section 7.04, the Borrower shall not be permitted to have the aggregate unpaid principal balance of Loans Outstanding to be in excess of an amount equal to the then-existing Commitment minus the Allocable Credit Facility Amount attributable to the Collateral Release Property that was released, unless the Borrower shall have delivered to the Lender additional collateral reasonably acceptable to the Lender in an amount at least equal to such Allocable Credit Facility Amount. In the event that the aggregate unpaid principal balance

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of Advances Outstanding exceeds such amount (and additional collateral in an amount at least equal to the applicable Allocable Credit Facility Amount has not been delivered by the Borrower to the Lender), as a condition precedent to the substitution of a Substituted Mortgaged Property into the Collateral Pool, the Borrower shall pay such excess. Notwithstanding the foregoing, in no event shall the value of the additional collateral exceed 15% of the principal balance of the Loans Outstanding. Any payment received by the Lender under this Section 7.04(d) shall be applied against Loans Outstanding in the manner prescribed for Release Prices pursuant to Section 7.02. The additional collateral shall be released to the Borrower upon the addition of the applicable Substituted Mortgaged Property to the Collateral Pool in accordance with this Section 7.05.

ARTICLE VIII
EXPANSION OF CREDIT FACILITY

SECTION 8.01 Right to Increase Commitment. Subject to the terms, conditions and limitations of this Article, the Borrower shall have the right, at any time or from time to time during the Fixed Facility Availability Period, to increase the Fixed Facility Commitment, the Variable Facility Commitment, or both. Either Commitment may be increased by increases in the value of the Mortgaged Properties or as a result of additions of Mortgaged Properties to the Collateral Pool. The Borrower’s right to increase the Commitment as a result of increases in the value of the Mortgaged Properties is subject to the following limitations:

                    (a)          Maximum Amount of Increase in Commitment. Notwithstanding the terms of this Agreement and Section 8.01 of the Other Credit Agreement, Borrower shall have the right, upon repayment in full of the loans secured by those certain Multifamily Residential Properties identified on Exhibit HH (the “DUS Properties”), to increase the Commitment by an additional $90,493,000 (to a maximum Commitment of $250,000,000). Borrower Parties acknowledge that the DUS Properties are currently subject to liens under the Fannie Mae Delegated Underwriting and Servicing program and are serviced by Lender. Borrower hereby agrees that the total commitment, when added to the commitment of the Lender to the Borrower under the Other Credit Agreement, shall not exceed $850,000,000.

                    (b)          Minimum Request. Each Request for an increase in the Commitment shall be in the minimum amount of $3,000,000.

                     (c)          Terms and Conditions. The terms and conditions of this Agreement shall apply to any increase in the Commitment closed not later than December 31, 2005. The terms and conditions (including pricing, other than in respect of an increase in the Commitment in an amount equal to or less than the Reserved Amount on which the Rate Preservation Fee has been paid, in which case the terms and conditions, including pricing, shall be as set forth in this Agreement) applicable to any increase in the Commitment after December 31, 2005 shall be acceptable to Lender in its discretion.

SECTION 8.02 Procedure for Obtaining Increases in Commitment.

                    (a)          Request. In order to obtain an increase in the Commitment, the Borrower shall deliver a written request for an increase (a “Credit Facility Expansion Request”) to the

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Lender, in the form attached as Exhibit V to this Agreement. Each Credit Facility Expansion Request shall be accompanied by the following:

                        (i)          A designation of the amount of the proposed increase;

                        (ii)          A designation of the increase in the Fixed Facility Credit Commitment and the Variable Facility Credit Commitment;

                        (iii)          If any Multifamily Residential Properties are proposed to be added to the Collateral Pool, a list of such Multifamily Residential Properties and evidence of compliance with the requirements of Article VI in connection with such addition;

                        (iv)          A request that the Lender inform the Borrower of the Fixed Facility Fee and the Variable Facility Fee to apply to Advances drawn from such increase in the Commitment.

                    (b)          Closing. If all conditions contained in Section 8.03 are satisfied, the Lender shall permit the requested increase in the Commitment, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within fifteen (15) Business Days after the Lender’s receipt of the Credit Facility Expansion Request (or on such other date to which the Borrower and the Lender may agree).

SECTION 8.03 Conditions Precedent to Increase in Commitment. The right of the Borrower to increase the Commitment is subject to the satisfaction of the following conditions precedent on or before the Closing Date:

                    (a)          After giving effect to the requested increase the Coverage and LTV Tests will be satisfied;

                    (b)          Payment by the Borrower of the Expansion Origination Fee in accordance with Section 16.02(b) and all legal fees and expenses payable by the Borrower in connection with the expansion of the Commitment pursuant to Section 16.04(b);

                    (c)          The receipt by the Lender of an endorsement to each Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date, increasing the limits of liability to the Commitment, as increased under this Article, showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date (or, if applicable, the last Closing Date with respect to which the Title Insurance Policy was endorsed), the Permitted Liens and other exceptions approved by the Lender, together with any reinsurance agreements required by the Lender;

                    (d)          The receipt by the Lender of fully executed original copies of all Credit Facility Expansion Loan Documents, each of which shall be in full force and effect, and in form and substance satisfactory to the Lender in all respects;

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               (e)          if determined necessary by the Lender, the Borrower’s agreement to such geographical diversification requirements as the Lender may determine; and

               (f)          The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE IX
PARTIAL TERMINATION OF FACILITIES

SECTION 9.01 Right to Complete or Partial Termination of Facilities. Subject to the terms and conditions of this Article, the Borrower shall have the right to permanently reduce the Variable Facility Commitment and the Fixed Facility Commitment in accordance with the provisions of this Article.

SECTION 9.02 Procedure for Complete or Partial Termination of Facilities.

               (a)          Request. In order to permanently reduce the Variable Facility Commitment or the Fixed Facility Commitment, the Borrower may deliver a written request for the reduction (“Facility Termination Request”) to the Lender, in the form attached as Exhibit W to this Agreement. A permanent reduction of the Variable Facility Commitment to $0 shall be referred to as a “Complete Variable Facility Termination.” A permanent reduction of the Fixed Facility Commitment to $0 shall be referred to as a “Complete Fixed Facility Termination.” The Facility Termination Request shall be accompanied by the following:

                    (i)          A designation of the proposed amount of the reduction in the Variable Facility Commitment or Fixed Facility Commitment, as the case may be; and

                    (ii)          Unless there is a Complete Variable Facility Termination, or a Complete Fixed Facility Termination, a designation by the Borrower of any Variable Advances which will be prepaid or Fixed Advances which will be prepaid or defeased, as the case may be.

Any release of Collateral, whether or not made in connection with a Facility Termination Request, must comply with all conditions to a release which are set forth in Article VII.

               (b)          Closing. If all conditions contained in Section 9.03 are satisfied, the Lender shall permit the Variable Facility Commitment or Fixed Facility Commitment as the case may be, to be reduced to the amount designated by the Borrower, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, within fifteen (15) Business Days after the Lender’s receipt of the Facility Termination Request (or on such other date to which the Borrower and the Lender may agree), by executing and delivering a counterpart of an amendment to this Agreement, in the form attached as Exhibit X to this Agreement, evidencing the reduction in the Facility Commitment. The document referred to in the preceding sentence is referred to in this Article as the “Facility Termination Document.”

SECTION 9.03 Conditions Precedent to Complete or Partial Termination of Facilities. The right of the Borrower to reduce the Facility Commitment and the obligation of the Lender to

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execute the Facility Termination Document, are subject to the satisfaction of the following conditions precedent on or before the Closing Date:

               (a)          Payment by the Borrower in full of all of the Variable Advances Outstanding and Fixed Facility Advances Outstanding, as the case may be, required to be paid in order that the aggregate unpaid principal balance of all Variable Advances Outstanding and Fixed Facility Advances Outstanding, as the case may be, is not greater than the Variable Facility Commitment and Fixed Facility Commitment, as the case may be, including any associated prepayment premiums or other amounts due under the Notes (but if the Borrower is not required to prepay all of the Variable Advances or Fixed Facility Advances Outstanding, as the case may be, the Borrower shall have the right to select which of the Variable Advances or Fixed Facility Advances, as the case may be, shall be repaid);

               (b)          Payment by the Borrower of the Facility Termination Fee;

               (c)          Receipt by the Lender on the Closing Date of one or more counterparts of the Facility Termination Document, dated as of the Closing Date, signed by each of the parties (other than the Lender) who is a party to such Facility Termination Document; and

               (d)          The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE X
TERMINATION OF CREDIT FACILITY

SECTION 10.01 Right to Terminate Credit Facility. Subject to the terms and conditions of this Article, the Borrower shall have the right to terminate this Agreement and the Credit Facility and receive a release of all of the Collateral from the Collateral Pool in accordance with the provisions of this Article.

SECTION 10.02 Procedure for Terminating Credit Facility.

               (a)          Request. In order to terminate this Agreement and the Credit Facility, the Borrower shall deliver a written request for the termination (“Credit Facility Termination Request”) to the Lender, in the form attached as Exhibit Y to this Agreement.

               (b)          Closing. If all conditions contained in Section 10.03 are satisfied, this Agreement shall terminate, and the Lender shall cause all of the Collateral to be released from the Collateral Pool, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, within 30 Business Days after the Lender’s receipt of the Credit Facility Termination Request (or on such other date to which the Borrower and the Lender may agree), by executing and delivering, and causing all applicable parties to execute and deliver, all at the sole cost and expense of the Borrower, (i) instruments, in the form customarily used by the Lender for releases in the jurisdictions in which the Mortgaged Properties are located, releasing all of the Security Instruments as a Lien on the Mortgaged Properties, (ii) UCC-3 Termination Statements terminating all of the UCC-1 Financing Statements perfecting a Lien on the personal property located on the Mortgaged Properties, in form customarily used in the jurisdiction

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governing the perfection of the security interest being released, (iii) such other documents and instruments as the Borrower may reasonably request evidencing the release of the Collateral from any lien securing the Obligations (including a termination of any restriction on the use of any accounts relating to the Collateral) and the release and return to the Borrower of any and all escrowed amounts relating thereto, (iv) instruments releasing the Borrower Parties from their obligations under this Agreement and any and all other Loan Documents, and (v) the Notes, each marked paid and canceled. The instruments referred to in the preceding sentence are referred to in this Article as the “Facility Termination Documents.”

SECTION 10.03 Conditions Precedent to Termination of Credit Facility. The right of the Borrower to terminate this Agreement and the Credit Facility and to receive a release of all of the Collateral from the Collateral Pool and the Lender’s obligation to execute and deliver the Facility Termination Documents on the Closing Date are subject to the following conditions precedent:

               (a)          Payment by the Borrower in full of all of the Notes Outstanding on the Closing Date, including any associated prepayment premiums or other amounts due under the Notes and all other amounts owing by the Borrower to the Lender under this Agreement;

               (b)          Payment of the Facility Termination Fee; and

               (c)          The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE XI
GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS

          The obligation of the Lender to close the transaction requested in a Request shall be subject to the following conditions precedent (“General Conditions”) in addition to any other conditions precedent set forth in this Agreement:

SECTION 11.01 Conditions Applicable to All Requests. Each of the following conditions precedent shall apply to all Requests:

               (a)          Payment of Expenses. The payment by the Borrower of the Lender’s reasonable fees and expenses payable in accordance with this Agreement.

               (b)          No Material Adverse Change. Except in connection with a Credit Facility Termination Request, there has been no material adverse change in the financial condition, business or prospects of the Borrower Parties or in the physical condition, operating performance or value of any of the Mortgaged Properties since the Initial Closing Date.

               (c)          No Default. Except in connection with a Credit Facility Termination Request, there shall exist no Event of Default or Potential Event of Default on the Closing Date for the Request and, after giving effect to the transaction requested in the Request, no Event of Default or Potential Event of Default shall have occurred.

               (d)          No Insolvency. Except in connection with a Credit Facility Termination Request, receipt by the Lender on the Closing Date for the Request of evidence satisfactory to

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the Lender that no Borrower Party is insolvent (within the meaning of any applicable federal or state laws relating to bankruptcy or fraudulent transfers) or will be rendered insolvent by the transactions contemplated by the Loan Documents, including the making of a Future Advance, or, after giving effect to such transactions, will be left with an unreasonably small capital with which to engage in its business or undertakings, or will have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature or will have intended to hinder, delay or defraud any existing or future creditor.

               (e)          No Untrue Statements. The Loan Documents shall not contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary in order to make the information contained therein not misleading.

               (f)          Representations and Warranties. Except in connection with a Credit Facility Termination Request, all representations and warranties made by any Borrower Party in the Loan Documents shall be true and correct in all material respects on the Closing Date for the Request with the same force and effect as if such representations and warranties had been made on and as of the Closing Date for the Request.

               (g)          No Condemnation or Casualty. Except in connection with a Credit Facility Termination Request, there shall not be pending or threatened any condemnation or other taking, whether direct or indirect, against any Mortgaged Property and there shall not have occurred any casualty to any improvements located on any Mortgaged Property, which casualty would have a material adverse effect on the continued operations of such Mortgaged Property.

               (h)          Delivery of Closing Documents. The receipt by the Lender of the following, each dated as of the Closing Date for the Request, in form and substance satisfactory to the Lender in all respects:

                   (i)          A Compliance Certificate;

                   (ii)         An Organizational Certificate; and

                   (iii)        Such other documents, instruments, approvals (and, if requested by the Lender, certified duplicates of executed copies thereof) and opinions as the Lender may reasonably request.

               (i)          Covenants. Except in connection with a Credit Facility Termination Request, the Borrower Parties are in full compliance with each of the covenants set forth in Articles XIII, XIV and XV of this Agreement, without giving effect to any notice and cure rights of the Borrower Parties.

SECTION 11.02 Delivery of Closing Documents Relating to Collateral Addition Request, Collateral Substitution Request, Credit Facility Expansion Request or Future Advance Request. With respect to the closing of a Collateral Addition Request, Collateral Substitution Request, or a Credit Facility Expansion Request, it shall be a condition precedent that the Lender receives each of the following, each dated as of the Closing Date for the Request, in form and substance satisfactory to the Lender in all respects:

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               (a)          Loan Documents. Fully executed original copies of each Loan Document required to be executed in connection with the Request, duly executed and delivered by the parties thereto (other than the Lender), each of which shall be in full force and effect.

               (b)          Opinion. Favorable opinions of counsel to the Borrower Parties, as to the due organization and qualification of the Borrower Parties, the due authorization, execution, delivery and enforceability of each Loan Document executed in connection with the Request and such other matters as the Lender may reasonably require.

SECTION 11.03 Delivery of Property-Related Documents. With respect to each of the Mortgaged Properties to be made part of the Collateral Pool on the Closing Date of a Collateral Addition Request or a Collateral Substitution Request, it shall be a condition precedent that the Lender receive each of the following, each dated as of the Closing Date of a Collateral Addition Request or a Collateral Substitution Request in form and substance satisfactory to the Lender in all respects:

               (a)          A favorable opinion of local counsel to the Borrower Parties or the Lender as to the enforceability of the Security Instrument, and any other Loan Documents, executed in connection with the Request.

               (b)          A commitment for the Title Insurance Policy applicable to the Mortgaged Property and a pro forma Title Insurance Policy based on the Commitment.

               (c)          The Insurance Policy (or a certified copy of the Insurance Policy) applicable to the Mortgaged Property.

               (d)          The Survey applicable to the Mortgaged Property.

               (e)          Evidence satisfactory to the Lender of compliance of the Mortgaged Property with property laws as required by Sections 205 and 206 of Part III of the DUS Guide.

               (f)          An Appraisal of the Mortgaged Property.

               (g)          A Replacement Reserve Agreement, providing for the establishment of a replacement reserve account, to be pledged to the Lender, in which the owner shall (unless waived by the Lender) periodically deposit amounts for replacements for improvements at the Mortgaged Property and as additional security for the Borrower Parties’ obligations under the Loan Documents.

               (h)          A Completion/Repair and Security Agreement, together with required escrows, on the standard form required by the DUS Guide.

               (i)          An Assignment of Management Agreement, on the standard form required by the DUS Guide.

               (j)          An Assignment of Leases and Rents, if the Lender determines one to be necessary or desirable, provided that the provisions of any such assignment shall be substantively

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identical to those in the Security Instrument covering the Collateral, with such modifications as may be necessitated by applicable state or local law.

ARTICLE XII
REPRESENTATIONS AND WARRANTIES

SECTION 12.01 Representations and Warranties of the Borrower Parties. Each Borrower Party hereby represents and warrants to the Lender, with respect to itself, as follows:

               (a)          Due Organization; Qualification.

                   (1)          The REIT is qualified to transact business and is in good standing in the State of Tennessee. The Borrower Parties are qualified to transact business and is in good standing in the State in which they are organized and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity of, the enforceability of, or the ability of the Borrower Parties to perform the Obligations under this Agreement and the other Loan Documents. The Borrower Parties are qualified to transact business and are in good standing in each State in which they own a Mortgaged Property.

                   (2)          The Borrower Parties’ principal place of business, principal office and office where they keep their books and records as to the Collateral is located at the address set out in Section 23.08.

               (b)          Power and Authority. The Borrower Parties have the requisite power and authority (i) to own their properties and to carry on their business as now conducted and as contemplated to be conducted in connection with the performance of the Obligations hereunder and under the other Loan Documents and (ii) to execute and deliver this Agreement and the other Loan Documents and to carry out the transactions contemplated by this Agreement and the other Loan Documents.

               (c)          Due Authorization. The execution, delivery and performance of this Agreement and the other Loan Documents have been duly authorized by all necessary action and proceedings by or on behalf of the Borrower Parties, and no further approvals or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of the Borrower Parties as a condition to the valid execution, delivery and performance by the Borrower Parties of this Agreement or any of the other Loan Documents.

               (d)          Valid and Binding Obligations. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by the Borrower Party and constitute the legal, valid and binding obligations of the Borrower Party, enforceable against the Borrower Party in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors’ rights generally or by equitable principles or by the exercise of discretion by any court.

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               (e)          Non-contravention; No Liens. Neither the execution and delivery of this Agreement and the other Loan Documents, nor the fulfillment of or compliance with the terms and conditions of this Agreement and the other Loan Documents nor the performance of the Obligations:

                   (1)          does or will conflict with or result in any breach or violation of any Applicable Law enacted or issued by any Governmental Authority or other agency having jurisdiction over the Borrower Party, any of the Mortgaged Properties or any other portion of the Collateral or other assets of the Borrower Party, or any judgment or order applicable to the Borrower Party or to which the Borrower Party, any of the Mortgaged Properties or other assets of the Borrower Party are subject;

                   (2)          does or will conflict with or result in any material breach or violation of, or constitute a default under, any of the terms, conditions or provisions of the Borrower Party’s Organizational Documents, any indenture, existing agreement or other instrument to which the Borrower Party is a party or to which the Borrower Party, any of the Mortgaged Properties or any other portion of the Collateral or other assets of the Borrower Party are subject;

                   (3)          does or will result in or require the creation of any Lien on all or any portion of the Collateral or any of the Mortgaged Properties, except for the Permitted Liens; or

                   (4)          does or will require the consent or approval of any creditor of the Borrower Party, any Governmental Authority or any other Person except such consents or approvals which have already been obtained.

               (f)          Pending Litigation or other Proceedings. There is no pending or, to the best knowledge of the Borrower Party, threatened action, suit, proceeding or investigation, at law or in equity, before any court, board, body or official of any Governmental Authority or arbitrator against or affecting any Mortgaged Property or any other portion of the Collateral or other assets of the Borrower Party, which, if decided adversely to the Borrower Party, would have, or may reasonably be expected to have, a Material Adverse Effect. The Borrower Party is not in default with respect to any order of any Governmental Authority.

               (g)          Solvency. The Borrower Party is not insolvent and will not be rendered insolvent by the transactions contemplated by this Agreement or the other Loan Documents and after giving effect to such transactions, the Borrower Party will not be left with an unreasonably small amount of capital with which to engage in its business or undertakings, nor will the Borrower Party have incurred, have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. The Borrower Party did not receive less than a reasonably equivalent value in exchange for incurrence of the Obligations. There (i) is no contemplated, pending or, to the best of the Borrower Party’s knowledge, threatened bankruptcy, reorganization, receivership, insolvency or like proceeding, whether voluntary or involuntary, affecting the Borrower Party or any of the Mortgaged Properties and (ii) has been no assertion or exercise of jurisdiction over the Borrower Party or any of the Mortgaged Properties by any court empowered to exercise bankruptcy powers.

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          (h)          No Contractual Defaults. There are no defaults by the Borrower Party or, to the knowledge of the Borrower Party, by any other Person under any contract to which the Borrower Party is a party relating to any Mortgaged Property, including any management, rental, service, supply, security, maintenance or similar contract, other than defaults which do not have, and are not reasonably expected to have, a Material Adverse Effect. Neither the Borrower Party nor, to the knowledge of the Borrower Party, any other Person, has received notice or has any knowledge of any existing circumstances in respect of which it could receive any notice of default or breach in respect of any contracts affecting or concerning any Mortgaged Property.

          (i)          Compliance with the Loan Documents. The Borrower Party is in compliance with all provisions of the Loan Documents to which it is a party or by which it is bound. The representations and warranties made by the Borrower Party in the Loan Documents are true, complete and correct as of the Closing Date and do not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

          (j)          ERISA.

          1.          No Borrower Party is a “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the assets of any Borrower Party do not constitute “plan assets” of one or more such plans within the meaning of 29 Code of Federal Regulations (“C.F.R.”) Section 2510.3-101 or the Advances from Lender to Borrower described hereunder are exempt from the restrictions of Section 406(a)(1)(A) through (D) of ERISA as well as from the taxes imposed by Section 4975(a) and (b) of the Internal Revenue Code of 1986, as amended (“Code”), by reason of Department of Labor Prohibited Transaction Exemption 96-23 (“INHAM Exemption”).

          2.          No Borrower Party is a “governmental plan” within the meaning of Section 3(32) of ERISA.

          3.          The Borrower Parties and transactions with the Borrower Parties are not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans.

          4.          One or more of the following circumstances is/are true:

                       (i)          Equity interests in the Borrower are publicly offered securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2).

                       (ii)          Less than twenty-five percent (25%) of all equity interests in the Borrower are held by “benefit plan investors” within the meaning of 29 C.F.R. Section 2510.3-101(f)(2).

                       (iii)          The Borrower qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. Section 2510.3-101(c) or (e).

                       (iv)          The Advances are exempt from the restrictions of Section 406(a)(1)(A) through (D) of ERISA as well as from the taxes imposed by Section 4975(a) and (b) of the Code.

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               (k)          Financial Information. The financial projections relating to the Borrower Party and delivered to the Lender on or prior to the date hereof, if any, were prepared on the basis of assumptions believed by the Borrower Party, in good faith at the time of preparation, to be reasonable and the Borrower Party is not aware of any fact or information that would lead it to believe that such assumptions are incorrect or misleading in any material respect; provided, however, that no representation or warranty is made that any result set forth in such financial projections shall be achieved. The financial statements of the Borrower Party which have been furnished to the Lender are complete and accurate in all material respects and present fairly the financial condition of the Borrower Party, as of its date in accordance with GAAP, applied on a consistent basis, and since the date of the most recent of such financial statements no event has occurred which would have, or may reasonably be expected to have a Material Adverse Effect, and there has not been any material transaction entered into by the Borrower Party other than transactions in the ordinary course of business. The Borrower Party has no material contingent obligations which are not otherwise disclosed in its most recent financial statements.

               (l)          Accuracy of Information. No information, statement or report furnished in writing to the Lender by the Borrower Party in connection with this Agreement or any other Loan Document or in connection with the consummation of the transactions contemplated hereby and thereby contains any material misstatement of fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; and the representations and warranties of the Borrower Party and the statements, information and descriptions contained in the Borrower Party’s closing certificates, as of the Closing Date, are true, correct and complete in all material respects, do not contain any untrue statement or misleading statement of a material fact, and do not omit to state a material fact required to be stated therein or necessary to make the certifications, representations, warranties, statements, information and descriptions contained therein, in light of the circumstances under which they were made, not misleading; and the estimates and the assumptions contained herein and in any certificate of the Borrower Party delivered as of the Closing Date are reasonable and based on the best information available to the Borrower Party.

               (m)          No Conflicts of Interest. To the best knowledge of the Borrower Party, no member, officer, agent or employee of the Lender has been or is in any manner interested, directly or indirectly, in that Person’s own name, or in the name of any other Person, in the Loan Documents, the Borrower Party or any Mortgaged Property, in any contract for property or materials to be furnished or used in connection with such Mortgaged Property or in any aspect of the transactions contemplated by the Loan Documents.

               (n)          Governmental Approvals. No Governmental Approval not already obtained or made is required for the execution and delivery of this Agreement or any other Loan Document or the performance of the terms and provisions hereof or thereof by the Borrower Party.

               (o)          Governmental Orders. The Borrower Party is not presently under any cease or desist order or other orders of a similar nature, temporary or permanent, of any Governmental Authority which would have the effect of preventing or hindering performance of its duties hereunder, nor are there any proceedings presently in progress or to its knowledge contemplated which would, if successful, lead to the issuance of any such order.

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               (p)          No Reliance. The Borrower Party acknowledges, represents and warrants that it understands the nature and structure of the transactions contemplated by this Agreement and the other Loan Documents, that it is familiar with the provisions of all of the documents and instruments relating to such transactions; that it understands the risks inherent in such transactions, including the risk of loss of all or any of the Mortgaged Properties; and that it has not relied on the Lender or Fannie Mae for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Agreement or any other Loan Document or otherwise relied on the Lender or Fannie Mae in any manner in connection with interpreting, entering into or otherwise in connection with this Agreement, any other Loan Document or any of the matters contemplated hereby or thereby.

               (q)          Compliance with Applicable Law. The Borrower Party is in compliance with Applicable Law, including all Governmental Approvals, if any, except for such items of noncompliance that, singly or in the aggregate, have not had and are not reasonably expected to cause, a Material Adverse Effect.

               (r)          Contracts with Affiliates. Except as otherwise approved in writing by the Lender, the Borrower Party has not entered into and is not a party to any contract, lease or other agreement with any Affiliate of the Borrower Party for the provision of any service, materials or supplies to any Mortgaged Property (including any contract, lease or agreement for the provision of property management services, cable television services or equipment, gas, electric or other utilities, security services or equipment, laundry services or equipment or telephone services or equipment). The Lender hereby approves the property management agreements set forth on Exhibit AA to this Agreement.

               (s)          Lines of Business. The Borrower Party is not engaged in any businesses other than the acquisition, ownership, development, construction, leasing, financing or management of Multifamily Residential Properties, and the conduct of these businesses does not violate the Organizational Documents pursuant to which it is formed.

               (t)          Status as a Real Estate Investment Trust. The REIT is qualified, and is taxed as, a real estate investment trust under Subchapter M of the Internal Revenue Code, and is not engaged in any activities which would jeopardize such qualification and tax treatment.

SECTION 12.02 Representations and Warranties of the Borrower Parties. The Borrower Parties hereby represent and warrant to the Lender as follows with respect to each of the Mortgaged Properties:

               (a)          Title. The relevant Borrower Party has good, valid, marketable and indefeasible title to each Mortgaged Property (either in fee simple or as tenant under a ground lease meeting all of the requirements of the DUS Guide), free and clear of all Liens whatsoever except the Permitted Liens. Each Security Instrument, if and when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create a valid, perfected first lien on the Mortgaged Property intended to be encumbered thereby (including the Leases related to such Mortgaged Property and the rents and all rights to collect rents under such Leases), subject only to Permitted Liens. Except for any Permitted Liens, there are no Liens or claims for work, labor or materials

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affecting any Mortgaged Property which are or may be prior to, subordinate to, or of equal priority with, the Liens created by the Loan Documents. The Permitted Liens do not have, and may not reasonably be expected to have, a Material Adverse Effect.

               (b)          Impositions. The Borrower Parties have filed all property and similar tax returns required to have been filed by it with respect to each Mortgaged Property and has paid and discharged, or caused to be paid and discharged, all installments for the payment of all Taxes due to date, and all other material Impositions imposed against, affecting or relating to each Mortgaged Property other than those which have not become due, together with any fine, penalty, interest or cost for nonpayment pursuant to such returns or pursuant to any assessment received by it, provided, however, that if the Borrower Parties contest in good faith and by appropriate proceeding the validity or applicability of any Imposition, provides to the Lender security in such amount and in such form as the Lender may reasonably require, then compliance with the Imposition in question shall be suspended during the pendency of such contest. The Borrower Parties have no knowledge of any new proposed Tax, levy or other governmental or private assessment or charge in respect of any Mortgaged Property which has not been disclosed in writing to the Lender.

               (c)          Zoning. Each Mortgaged Property complies in all material respects with all Applicable Laws affecting such Mortgaged Property. Without limiting the foregoing, all material Permits, including certificates of occupancy, to the extent issued by the relevant jurisdiction, have been issued and are in full force and effect. Neither the Borrower Parties nor, to the knowledge of the Borrower Parties, any former owner of any Mortgaged Property, has received any written notification or threat of any actions or proceedings regarding the noncompliance or nonconformity of any Mortgaged Property with any Applicable Laws or Permits, nor are the Borrower Parties otherwise aware of any such pending actions or proceedings.

               (d)          Leases. The Borrower Parties have delivered to the Lender a true and correct copy of their form apartment lease for each Mortgaged Property (and, with respect to leases executed prior to the date on which the Borrower Parties first owned the Mortgaged Property, the form apartment lease used for such leases), and each Lease with respect to such Mortgaged Property is in the form thereof, with no material modifications thereto, except as previously disclosed in writing to the Lender. Except as set forth in a Rent Roll, no Lease for any unit in any Mortgaged Property (i) is for a term in excess of one year, including any renewal or extension period unless such renewal or extension period is subject to termination by the Borrower Parties upon not more than 30 days’ written notice, (ii) provides for prepayment of more than one month’s rent, or (iii) was entered into in other than the ordinary course of business.

               (e)          Rent Roll. The Borrower Parties have executed and delivered to the Lender a Rent Roll for each Mortgaged Property, each dated as of and delivered within 30 days prior to the Closing Date. Each Rent Roll sets forth each and every unit subject to a Lease which is in full force and effect as of the date of such Rent Roll. The information set forth on each Rent Roll is true, correct and complete in all material respects as of its date and there has occurred no material adverse change in the information shown on any Rent Roll from the date of each such Rent Roll to the Closing Date. Except as disclosed in the Rent Roll with respect to each

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Mortgaged Property or otherwise previously disclosed in writing to the Lender, no Lease is in effect as of the date of the Rent Roll with respect to such Mortgaged Property.

               (f)          Status of Landlord under Leases. Except for any assignment of leases and rents which is a Permitted Lien or which is to be released in connection with the consummation of the transactions contemplated by this Agreement, the relevant Borrower Party is the owner and holder of the landlord’s interest under each of the Leases of units in each Mortgaged Property and there are no prior outstanding assignments of any such Lease, or any portion of the rents, additional rents, charges, issues or profits due and payable or to become due and payable thereunder.

               (g)          Enforceability of Leases. Each Lease constitutes the legal, valid and binding obligation of the Borrower Parties and, to the knowledge of the Borrower Parties, of each of the other parties thereto, enforceable in accordance with its terms, subject only to bankruptcy, insolvency, reorganization or other similar laws relating to creditors’ rights generally, and equitable principles, and except as disclosed in writing to the Lender, no notice of any default by the Borrower Parties which remains uncured has been sent by any tenant under any such Lease, other than defaults which do not have, and are not reasonably expected to have, a Material Adverse Effect on the Mortgaged Property subject to the Lease.

               (h)          No Lease Options. All premises demised to tenants under Leases are occupied by such tenants as tenants only. No Lease contains any option or right to purchase, right of first refusal or any other similar provisions. No option or right to purchase, right of first refusal, purchase contract or similar right exists with respect to any Mortgaged Property.

               (i)          Insurance. The Borrower Parties have delivered to the Lender true and correct certified copies of all Insurance Policies currently in effect as of the date of this Agreement with respect to the Mortgaged Property which it owns. Each such Insurance Policy complies in all material respects with the requirements set forth in the Loan Documents.

               (j)          Tax Parcels. Each Mortgaged Property is on one or more separate tax parcels, and each such parcel (or parcels) is (or are) separate and apart from any other property.

               (k)          Encroachments. Except as disclosed on the Survey with respect to each Mortgaged Property, none of the improvements located on any Mortgaged Property encroaches upon the property of any other Person or upon any easement encumbering the Mortgaged Property, nor lies outside of the boundaries and building restriction lines of such Mortgaged Property and no improvement located on property adjoining such Mortgaged Property lies within the boundaries of or in any way encroaches upon such Mortgaged Property.

               (l)          Independent Unit. Except for Permitted Liens and as disclosed on Exhibit BB to this Agreement, or as disclosed in a Title Insurance Policy or Survey for the Mortgaged Property, each Mortgaged Property is an independent unit which does not rely on any drainage, sewer, access, parking, structural or other facilities located on any Property not included either in such Mortgaged Property or on public or utility easements for the (i) fulfillment of any zoning, building code or other requirement of any Governmental Authority that has jurisdiction over such Mortgaged Property, (ii) structural support, or (iii) the fulfillment of the requirements of

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any Lease or other agreement affecting such Mortgaged Property. The relevant Borrower Party, directly or indirectly, has the right to use all amenities, easements, public or private utilities, parking, access routes or other items necessary or currently used for the operation of each Mortgaged Property. All public utilities are installed and operating at each Mortgaged Property and all billed installation and connection charges have been paid in full. Each Mortgaged Property is either (x) contiguous to or (y) benefits from an irrevocable unsubordinated easement permitting access from such Mortgaged Property to a physically open, dedicated public street, and has all necessary permits for ingress and egress and is adequately serviced by public water, sewer systems and utilities. No building or other improvement not located on a Mortgaged Property relies on any part of the Mortgaged Property to fulfill any zoning requirements, building code or other requirement of any Governmental Authority that has jurisdiction over the Mortgaged Property, for structural support or to furnish to such building or improvement any essential building systems or utilities.

               (m)          Condition of the Mortgaged Properties. Except as disclosed in any third party report delivered to the Lender prior to the date on which a Borrower Party’s Mortgaged Property is added to the Collateral Pool, or otherwise disclosed in writing by the relevant Borrower Party to the Lender prior to such date, each Mortgaged Property is in good condition, order and repair, there exist no structural or other material defects in such Mortgaged Property (whether patent or, to the best knowledge of the relevant Borrower Party, latent or otherwise) and the relevant Borrower Party has not received notice from any insurance company or bonding company of any defects or inadequacies in such Mortgaged Property, or any part of it, which would adversely affect the insurability of such Mortgaged Property or cause the imposition of extraordinary premiums or charges for insurance or of any termination or threatened termination of any policy of insurance or bond. No claims have been made against any contractor, architect or other party with respect to the condition of any Mortgaged Property or the existence of any structural or other material defect therein. No Mortgaged Property has been materially damaged by casualty which has not been fully repaired or for which insurance proceeds have not been received or are not expected to be received except as previously disclosed in writing to the Lender. There are no proceedings pending for partial or total condemnation of any Mortgaged Property except as disclosed in writing to the Lender.

SECTION 12.03 Representations and Warranties of the Lender. The Lender hereby represents and warrants to the Borrower Parties as follows:

               (a)          Due Organization. The Lender is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

               (b)          Power and Authority. The Lender has the requisite power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement.

               (c)          Due Authorization. The execution and delivery by the Lender of this Agreement, and the consummation by it of the transactions contemplated thereby, and the performance by it of its obligations thereunder, have been duly and validly authorized by all necessary action and proceedings by it or on its behalf.

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ARTICLE XIII
AFFIRMATIVE COVENANTS OF THE BORROWER PARTIES

Each Borrower Party, with respect to itself, agrees and covenants with the Lender that, at all times during the Term of this Agreement:

SECTION 13.01 Compliance with Agreements. The Borrower Party shall comply with all the terms and conditions of each Loan Document to which it is a party or by which it is bound; provided, however, that the Borrower Party’s failure to comply with such terms and conditions shall not be an Event of Default until the expiration of the applicable notice and cure periods, if any, specified in the applicable Loan Document.

SECTION 13.02 Maintenance of Existence. The Borrower Party shall maintain its existence and continue to be a limited partnership or corporation, as the case may be, organized under the laws of the state of its organization. The Borrower Party shall continue to be duly qualified to do business in each jurisdiction in which such qualification is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity of, the enforceability of, or the ability to perform, its obligations under this Agreement or any other Loan Document.

SECTION 13.03 Maintenance of REIT Status. During the Term of this Agreement, the REIT shall qualify, and be taxed as, a real estate investment trust under Subchapter M of the Internal Revenue Code, and will not be engaged in any activities which would jeopardize such qualification and tax treatment.

SECTION 13.04 Financial Statements; Accountants’ Reports; Other Information. The Borrower Party shall keep and maintain at all times complete and accurate books of accounts and records in sufficient detail to correctly reflect (x) all of the Borrower Party’s financial transactions and assets and (y) the results of the operation of each Mortgaged Property and copies of all written contracts, Leases and other instruments which affect each Mortgaged Property (including all bills, invoices and contracts for electrical service, gas service, water and sewer service, waste management service, telephone service and management services). In addition, the Borrower Parties shall furnish, or cause to be furnished, to the Lender:

               (a)          Annual Financial Statements. As soon as available, and in any event within 90 days after the close of its fiscal year during the Term of this Agreement, the audited balance sheet of the REIT and its Subsidiaries as of the end of such fiscal year, the audited statement of income, equity and retained earnings of the REIT and its Subsidiaries for such fiscal year and the audited statement of cash flows of the REIT and its Subsidiaries for such fiscal year, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the prior fiscal year, prepared in accordance with GAAP, consistently applied, and accompanied by a certificate of the REIT’s independent certified public accountants to the effect that such financial statements have been prepared in accordance with GAAP, consistently applied, and that such financial statements fairly present the results of its operations and financial condition for the periods and dates indicated, with such certification to be free of exceptions and qualifications as to the scope of the audit or as to the going concern nature of the business.

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               (b)          Quarterly Financial Statements. As soon as available, and in any event within 45 days after each of the first three fiscal quarters of each fiscal year during the Term of this Agreement, the unaudited balance sheet of the REIT and its Subsidiaries as of the end of such fiscal quarter, the unaudited statement of income and retained earnings of the REIT and its Subsidiaries and the unaudited statement of cash flows of the REIT and its Subsidiaries for the portion of the fiscal year ended with the last day of such quarter, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the previous fiscal year, accompanied by a certificate of the Chief Financial Officer of the REIT to the effect that such financial statements have been prepared in accordance with GAAP, consistently applied, and that such financial statements fairly present the results of its operations and financial condition for the periods and dates indicated subject to year end adjustments in accordance with GAAP.

               (c)          Quarterly Property Statements. As soon as available, and in any event within 45 days after each Calendar Quarter, a statement of income and expenses of each Mortgaged Property accompanied by a certificate of the Chief Financial Officer of the REIT to the effect that each such statement of income and expenses fairly, accurately and completely presents the operations of each such Mortgaged Property for the period indicated.

               (d)          Annual Property Statements. On an annual basis within forty-five (45) days of the end of its fiscal year, an annual statement of income and expenses of each Mortgaged Property accompanied by a certificate of the Chief Financial Officer of the REIT to the effect that each such statement of income and expenses fairly, accurately and completely presents the operations of each such Mortgaged Property for the period indicated.

               (e)          Updated Rent Rolls. Upon the Lender’s request (but not more frequently than quarterly), a current Rent Roll for each Mortgaged Property, showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date, the rent payable, the rent paid and any other information requested by the Lender and accompanied by a certificate of the Chief Financial Officer of the REIT to the effect that each such Rent Roll fairly, accurately and completely presents the information required therein.

               (f)          Security Deposit Information. Upon the Lender’s request, an accounting of all security deposits held in connection with any Lease of any part of any Mortgaged Property, including the name and identification number of the accounts in which such security deposits are held, the name and address of the financial institutions in which such security deposits are held and the name and telephone number of the person to contact at such financial institution, along with any authority or release necessary for the Lender to access information regarding such accounts.

               (g)          Security Law Reporting Information. So long as the REIT is a reporting company under the Securities and Exchange Act of 1934, promptly upon becoming available, (a) copies of all financial statements, reports and proxy statements sent or made available generally by any Borrower Party, or any of its Affiliates, to their respective security holders, (b) all regular and periodic reports and all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or a similar form) and prospectuses, if any, filed by any Borrower Party, or any of its Affiliates, with the Securities and Exchange Commission or other

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Governmental Authorities, and (c) all statements made available generally by any Borrower Party, or any of their Affiliates, to the public concerning material developments in the business of the REIT or other party.

               (h)          Accountants’ Reports. Promptly upon receipt thereof, copies of any reports or management letters submitted to the Borrower Party by its independent certified public accountants in connection with the examination of its financial statements made by such accountants (except for reports otherwise provided pursuant to subsection (a) above); provided, however, that the Borrower Party shall only be required to deliver such reports and management letters to the extent that they relate to any Borrower Party or any Mortgaged Property.

               (i)          Annual Budgets. Promptly, and in any event within 60 days after the start of its fiscal year, an annual budget for each Mortgaged Property for such fiscal year, setting forth an estimate of all of the costs and expenses, including capital expenses, of maintaining and operating each Mortgaged Property.

               (j)          REIT Plans and Projections. If prepared by the REIT, within 90 days after the beginning of each fiscal year, copies of (1) the REIT’s business plan for the current and the succeeding two fiscal years, (2) the REIT’s annual budget (including capital expenditure budgets) and projections for each Mortgaged Property; and (3) the REIT’s financial projections for the current and the succeeding two fiscal years, as prepared by the REIT’s Chief Financial Officer and in a format and with such detail as the Lender may require.

               (k)          Strategic Plan. Within 90 days after the end of each fiscal year of the REIT, the REIT shall deliver to the Lender a written narrative discussing the REIT’s publicly disclosed short and long range plans, including its plans for operations, mergers, acquisitions and management, and accompanied by supporting financial projections and schedules, certified by a member of Senior Management as true, correct and complete (“Strategic Plan”) If the REIT’s or any other Borrower Party’s Strategic Plan materially changes, then such person shall deliver to the Lender the Strategic Plan as so changed.

               (l)          Annual Rental and Sales Comparable Analysis. Within 30 days after the Lender’s request, a rental and sales comparable analysis of the local real estate market in which each Mortgaged Property is located, in a form approved by the Lender.

               (m)          Federal Tax Returns. Upon request of Lender, the Federal Tax Returns of the REIT.

               (n)          Other Reports. Promptly upon receipt thereof, all schedules, financial statements or other similar reports delivered by the Borrower Party pursuant to the Loan Documents or requested by the Lender with respect to the Borrower Party’s business affairs or condition (financial or otherwise) or any of the Mortgaged Properties.

               (o)          Certification. All certifications required to be delivered pursuant to this Section 13.04 shall run directly to and be for the benefit of Lender and Fannie Mae.

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SECTION 13.05 Certificate of Compliance. The Borrower Party shall deliver to the Lender concurrently with the delivery of the financial statements and/or reports required to be delivered pursuant to Section 13.04 (a) and (b) above a certificate signed by the Chief Financial Officer of the REIT stating that, to the best knowledge of such individual following reasonable inquiry, (i) setting forth in reasonable detail the calculations required to establish whether each Borrower Party was in compliance with the requirements of Sections 15.02 through 15.08 on the date of such financial statements, and (ii) stating that, to the best knowledge of such individual following reasonable inquiry, no Event of Default or Potential Event of Default has occurred, or if an Event of Default or Potential Event of Default has occurred, specifying the nature thereof in reasonable detail and the action which the relevant Borrower Party is taking or proposes to take with respect thereto. Any certificate required by this Section 13.05 shall run directly to and be for the benefit of Lender and Fannie Mae.

SECTION 13.06 Maintain Licenses. The Borrower Party shall procure and maintain in full force and effect all licenses, Permits, charters and registrations which are material to the conduct of its business and shall abide by and satisfy all terms and conditions of all such licenses, Permits, charters and registrations.

SECTION 13.07 Access to Records; Discussions With Officers and Accountants. To the extent permitted by law and in addition to the applicable requirements of the Security Instruments, the Borrower Party shall permit the Lender:

               (a)          to inspect, make copies and abstracts of, and have reviewed or audited, such of the Borrower Party’s books and records as may relate to the Obligations or any Mortgaged Property;

               (b)          to discuss the Borrower Party’s affairs, finances and accounts with any of the Borrower Party’s officers, partners and employees;

               (c)          to discuss the Mortgage Properties’ conditions, operations or maintenance with the managers of such Mortgaged Properties and the officers and employees of the Borrower Party;

               (d)          to discuss the Borrower Party’s affairs, finances and accounts with its independent public accountants; and

               (e)          to receive any other information that the Lender deems reasonably necessary or relevant in connection with any Advance, any Loan Document or the Obligations.

Notwithstanding the foregoing, prior to an Event of Default or Potential Event of Default and in the absence of an emergency, all inspections shall be conducted at reasonable times during normal business hours upon reasonable notice to the Borrower Parties.

SECTION 13.08 Inform the Lender of Material Events. The Borrower Party shall promptly inform the Lender in writing of any of the following (and shall deliver to the Lender copies of any related written communications, complaints, orders, judgments and other documents relating to the following) of which the Borrower Party has actual knowledge:

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               (a)          Defaults. The occurrence of any Event of Default or any Potential Event of Default under this Agreement or any other Loan Document;

               (b)          Regulatory Proceedings. The commencement of any rulemaking or disciplinary proceeding or the promulgation of any proposed or final rule which would have, or may reasonably be expected to have, a Material Adverse Effect;

               (c)          Legal Proceedings. The commencement or threat of, or amendment to, any proceedings by or against the Borrower Party in any Federal, state or local court or before any Governmental Authority, or before any arbitrator, which, if adversely determined, would have, or at the time of determination may reasonably be expected to have, a Material Adverse Effect;

               (d)          Bankruptcy Proceedings. The commencement of any proceedings by or against the Borrower Party under any applicable bankruptcy, reorganization, liquidation, insolvency or other similar law now or hereafter in effect or of any proceeding in which a receiver, liquidator, trustee or other similar official is sought to be appointed for it;

               (e)          Regulatory Supervision or Penalty. The receipt of notice from any Governmental Authority having jurisdiction over the Borrower Party that (A) the Borrower Party is being placed under regulatory supervision, (B) any license, Permit, charter, membership or registration material to the conduct of the Borrower Party’s business or the Mortgaged Properties is to be suspended or revoked or (C) the Borrower Party is to cease and desist any practice, procedure or policy employed by the Borrower Party, as the case may be, in the conduct of its business, and such cessation would have, or may reasonably be expected to have, a Material Adverse Effect;

               (f)          Environmental Claim. The receipt from any Governmental Authority or other Person of any notice of violation, claim, demand, abatement, order or other order or direction (conditional or otherwise) for any damage, including personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, pollution, contamination or other adverse effects on the environment, removal, cleanup or remedial action or for fines, penalties or restrictions, resulting from or based upon (a) the existence or occurrence, or the alleged existence or occurrence, of a Hazardous Substance Activity or (b) the violation, or alleged violation, of any Hazardous Materials Laws in connection with any Mortgaged Property or any of the other assets of a Borrower Party;

               (g)          Material Adverse Effects. The occurrence of any act, omission, change or event which has a Material Adverse Effect, subsequent to the date of the most recent audited financial statements of the Borrower Parties delivered to the Lender pursuant to Section 13.04;

               (h)          Accounting Changes. Any material change in any Borrower Party’s accounting policies or financial reporting practices;

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               (i)          Legal and Regulatory Status. The occurrence of any act, omission, change or event, including any Governmental Approval, the result of which is to change or alter in any way the legal or regulatory status of any Borrower Party; and

               (j)          Default on Indebtedness. The occurrence of any event that results in or could result in (i) any imminent default, default or waiver of default in respect of any Indebtedness having an unpaid principal balance of $1,000,000 or more, (ii) the failure of any Borrower Party to pay when due or within any applicable grace period any Indebtedness of any Borrower Party, or (iii) any Indebtedness of any Borrower Party becoming due and payable before its normal maturity by reason of a default or event of default, however described, or any other event of default shall occur and continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness.

SECTION 13.09 Intentionally Omitted.

SECTION 13.10 Inspection. The Borrower Party shall permit any Person designated by the Lender: (i) to make entries upon and inspections of the Mortgaged Properties; and (ii) to otherwise verify, examine and inspect the amount, quantity, quality, value and/or condition of, or any other matter relating to, any Mortgaged Property; provided, however, that prior to an Event of Default or Potential Event of Default and in the absence of an emergency, all such entries, examinations and inspections shall be conducted at reasonable times during normal business hours upon reasonable notice to the Borrower Party.

SECTION 13.11 Compliance with Applicable Laws. The Borrower Party shall comply in all material respects with all Applicable Laws now or hereafter affecting any Mortgaged Property or any part of any Mortgaged Property or requiring any alterations, repairs or improvements to any Mortgaged Property. The Borrower Party shall procure and continuously maintain in full force and effect, and shall abide by and satisfy all material terms and conditions of all Permits.

SECTION 13.12 Warranty of Title. The relevant Borrower Party shall warrant and defend (a) the title to each Mortgaged Property and every part of each Mortgaged Property, subject only to Permitted Liens, and (b) the validity and priority of the lien of the applicable Loan Documents, subject only to Permitted Liens, in each case against the claims of all Persons whatsoever. The Borrower Parties shall reimburse the Lender for any losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by the Lender if an interest in any Mortgaged Property, other than with respect to a Permitted Lien, is claimed by others.

SECTION 13.13 Defense of Actions. The Borrower Party shall appear in and defend any action or proceeding purporting to affect the security for this Agreement or the rights or power of the Lender hereunder, and shall pay all costs and expenses, including the cost of evidence of title and reasonable attorneys’ fees, in any such action or proceeding in which the Lender may appear. If the Borrower Party fails to perform any of the covenants or agreements contained in this Agreement, or if any action or proceeding is commenced that is not diligently defended by the Borrower Party which affects in any material respect the Lender’s interest in any Mortgaged Property or any part thereof, including eminent domain, code enforcement or proceedings of any nature whatsoever under any Applicable Law, whether now existing or hereafter enacted or amended, then the Lender may, but without obligation to do so and without notice to or demand

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upon the Borrower Party and without releasing the Borrower Party from any Obligation, make such appearances, disburse such sums and take such action as the Lender deems necessary or appropriate to protect the Lender’s interest, including disbursement of attorney’s fees, entry upon such Mortgaged Property to make repairs or take other action to protect the security of said Mortgaged Property, and payment, purchase, contest or compromise of any encumbrance, charge or lien which in the judgment of the Lender appears to be prior or superior to the Loan Documents. In the event (i) that any Security Instrument is foreclosed in whole or in part or that any Loan Document is put into the hands of an attorney for collection, suit, action or foreclosure, or (ii) of the foreclosure of any mortgage, deed to secure debt, deed of trust or other security instrument prior to or subsequent to any Security Instrument or any Loan Document in which proceeding the Lender is made a party or (iii) of the bankruptcy of the Borrower Party or an assignment by the Borrower Party for the benefit of their respective creditors, the Borrower Party shall be chargeable with and agrees to pay all reasonable costs of collection and defense, including actual attorneys’ fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes.

SECTION 13.14 Alterations to the Mortgaged Properties. Except as otherwise provided in the Loan Documents, the Borrower Party shall have the right to undertake any alteration, improvement, demolition, removal or construction (collectively, “Alterations”) to the Mortgaged Property which it owns without the prior consent of the Lender; provided, however,that in any case, no such Alteration shall be made to any Mortgaged Property without the prior written consent of the Lender if (i) such Alteration could reasonably be expected to adversely affect the value of such Mortgaged Property or its operation as a multifamily housing facility in substantially the same manner in which it is being operated on the date such property became Collateral, (ii) the construction of such Alteration could reasonably be expected to result in interference to the occupancy of tenants of such Mortgaged Property such that tenants in occupancy with respect to five percent (5%)or more of the Leases would be permitted to terminate their Leases or to abate the payment of all or any portion of their rent, or (iii) such Alteration will be completed in more than 12 months from the date of commencement or in the last year of the Term of this Agreement. Notwithstanding the foregoing, the Borrower Party must obtain the Lender’s prior written consent to construct Alterations with respect to the Mortgaged Property costing in excess of, with respect to any Mortgaged Property, the number of units in such Mortgaged Property multiplied by $2,000, but in any event, costs in excess of $350,000 and the Borrower Party must give prior written notice to the Lender of its intent to construct Alterations with respect to such Mortgaged Property costing in excess of $150,000; provided, however, that the preceding requirements shall not be applicable to Alterations made, conducted or undertaken by the Borrower Party as part of the Borrower Party’s routine maintenance and repair of the Mortgaged Properties as required by the Loan Documents.

SECTION 13.15 ERISA. The Borrower Party shall at all times remain in compliance in all material respects with all applicable provisions of ERISA, similar requirements of the PBGC, and the provisions set forth in Section 12.01(j) of this Agreement.

SECTION 13.16 Loan Document Taxes. If any tax, assessment or Imposition (other than a franchise tax or excise tax imposed on or measured by, the net income or capital (including branch profits tax) of the Lender (or any transferee or assignee thereof, including a participation

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holder)) (“Loan Document Taxes”) is levied, assessed or charged by the United States, or any State in the United States, or any political subdivision or taxing authority thereof or therein upon any of the Loan Documents or the obligations secured thereby, the interest of the Lender in the Mortgaged Properties, or the Lender by reason of or as holder of the Loan Documents, the Borrower Party shall pay all such Loan Document Taxes to, for, or on account of the Lender (or provide funds to the Lender for such payment, as the case may be) as they become due and payable and shall promptly furnish proof of such payment to the Lender, as applicable. In the event of passage of any law or regulation permitting, authorizing or requiring such Loan Document Taxes to be levied, assessed or charged, which law or regulation in the opinion of counsel to the Lender may prohibit the Borrower Party from paying the Loan Document Taxes to or for the Lender, the Borrower Party shall enter into such further instruments as may be permitted by law to obligate the Borrower Party to pay such Loan Document Taxes.

SECTION 13.17 Further Assurances. The Borrower Party, at the request of the Lender, shall execute and deliver and, if necessary, file or record such statements, documents, agreements, UCC financing and continuation statements and such other instruments and take such further action as the Lender from time to time may request as reasonably necessary, desirable or proper to carry out more effectively the purposes of this Agreement or any of the other Loan Documents or to subject the Collateral to the lien and security interests of the Loan Documents or to evidence, perfect or otherwise implement, to assure the lien and security interests intended by the terms of the Loan Documents or in order to exercise or enforce its rights under the Loan Documents.

SECTION 13.18 Monitoring Compliance. Upon the request of the Lender, from time to time, the Borrower Party shall promptly provide to the Lender such documents, certificates and other information as may reasonably be deemed necessary to enable the Lender to perform its functions under the Servicing Agreement.

SECTION 13.19 Leases. Each unit in each Mortgaged Property will be leased pursuant to the form lease delivered to, and acceptable to, the Lender, with no material modifications to such approved form lease, except as disclosed in writing to the Lender.

SECTION 13.20 Intentionally Omitted.

SECTION 13.21 Transfer of Ownership Interests of the Borrower Parties.

               (a)          Prohibition on Transfers. Subject to paragraph (b) of this Section 13.21, the Borrower Parties shall not cause or permit a Transfer or a Change of Control.

               (b)          Permitted Transfers. Notwithstanding the provisions (a) of this Section 13.21, the following Transfers by the Borrower Parties are permitted without the consent of the Lender:

                   (i)          A Transfer that occurs by inheritance, devise, or bequest or by operation of law upon the death of a natural person who is an owner of a Mortgaged Property or the owner of a direct or indirect ownership interest in the Borrower Parties.

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                   (ii)         The grant of a leasehold interest in individual dwelling units or commercial spaces in accordance with the Security Instrument.

                   (iii)        A sale or other disposition of obsolete or worn out personal property which is contemporaneously replaced by comparable personal property of equal or greater value which is free and clear of liens, encumbrances and security interests other than those created by the Loan Documents.

                   (iv)        The creation of a mechanic’s or materialmen’s lien or judgment lien against a Mortgaged Property which is released of record or otherwise remedied to Lender’s satisfaction within 30 days of the date of creation.

                   (v)          The grant of an easement, if prior to the granting of the easement the Borrower Parties cause to be submitted to Lender all information required by Lender to evaluate the easement, and if Lender consents to such easement based upon Lender’s determination that the easement will not materially affect the operation of the Mortgaged Property or Lender’s interest in the Mortgaged Property and Borrower Parties pay to Lender, on demand, all reasonable costs and expenses incurred by Lender in connection with reviewing Borrower Parties’ request. Lender shall not unreasonably withhold its consent to or withhold its agreement to subordinate the lien of a Security Instrument to (A) the grant of a utility easement serving a Mortgaged Property to a publicly operated utility, or (B) the grant of an easement related to expansion or widening of roadways, provided that any such easement is in form and substance reasonably acceptable to Lender and does not materially and adversely affect the access, use or marketability of a Mortgaged Property.

                   (vi)        The Transfer of shares of common stock, limited partnership interests or other beneficial or ownership interest or other forms of securities in the REIT or the OP, and the issuance of all varieties of convertible debt, equity and other similar securities of the REIT or the OP, and the subsequent Transfer of such securities; provided, however, that no Change in Control occurs as a result of such Transfer, either upon such Transfer or upon the subsequent conversion to equity or such convertible debt or other securities.

                   (vii)        The Transfer of limited partnership interests by the limited partners of Borrower Parties, including, without limitation, the conversion or exchange of limited partnership interests in Borrower Parties to shares of common stock or other beneficial or ownership interests or other forms of securities in the REIT; provided, however, that no Change in Control occurs as the result of such Transfer.

                   (viii)        The issuance by Borrower Parties of additional limited partnership units or convertible debt, equity and other similar securities, and the subsequent Transfer of such units or other securities; provided, however, that no Change in Control occurs as the result of such Transfer, either upon such Transfer or upon the subsequent conversion to equity of such convertible debt or other securities.

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                   (ix)          A merger with or acquisition of another entity by Borrower Parties, provided that (A) Borrower Parties are the surviving entity after such merger or acquisition, (B) no Change in Control occurs, and (C) such merger or acquisition does not result in an Event of Default, as such terms are defined in this Agreement.

                   (x)          A Transfer in connection with any substitution or release pursuant to the terms and conditions of Article VII of this Agreement.

               (c)          Consent to Prohibited Transfers. Lender may, in its sole and absolute discretion, consent to a Transfer that would otherwise violate this Section 13.21 if, prior to the Transfer, Borrower Parties have satisfied each of the following requirements:

                    (i)          the submission to Lender of all information required by Lender to make the determination required by this Section 13.21(c);

                    (ii)         the absence of any Event of Default;

                    (iii)        the transferee meets all of the eligibility, credit, management and other standards (including any standards with respect to previous relationships between Lender and the transferee and the organization of the transferee) customarily applied by Lender at the time of the proposed Transfer to the approval of Borrower Parties in connection with the origination or purchase of similar mortgages, deeds of trust or deeds to secure debt on multifamily properties;

                    (iv)          in the case of a Transfer of direct or indirect ownership interests in Borrower Parties, if transferor or any other person has obligations under any Loan Documents, the execution by the transferee of one or more individuals or entities acceptable to Lender of an assumption agreement that is acceptable to Lender and that, among other things, requires the transferee to perform all obligations of transferor or such person set forth in such Loan Document, and may require that the transferee comply with any provisions of this Instrument or any other Loan Document which previously may have been waived by Lender;

                    (v)          Lender’s receipt of all of the following:

                            (A)          a transfer fee equal to 1 percent of the Commitment immediately prior to the transfer.

                            (B)          In addition, Borrower Parties shall be required to reimburse Lender for all of Lender’s reasonable out-of-pocket costs (including reasonable attorneys’ fees) incurred in reviewing the Transfer request.

SECTION 13.22 Change in Senior Management.

               (a)          The Borrower Parties shall give the Lender notice of any change in the identity of Senior Management.

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               (b)          Within 30 Business Days after receipt of the Borrower Parties’ notice, the Lender shall have the right to terminate this Agreement and the Credit Facility by giving a notice of such termination to the Borrower Parties. In such event, this Agreement and the Credit Facility shall terminate with the same effect as if the Lender had approved a Credit Facility Termination Request (including the Borrower Parties’ obligation, pursuant to Section 10.03(a), to pay in full all of the Notes Outstanding on the Closing Date, including any other charges under the Notes), except that, for these purposes, the Closing Date shall be the 180th day after the date on which the Borrower Parties first receive the Lender’s termination notice.

               (c)          If the Lender exercises its termination right pursuant to subsection (b), the Borrower Parties shall have a period of 120 days, commencing with the date on which the Borrower Parties receives the Lender’s termination notice, to request that the Lender rescind its termination notice. The Borrower Parties may include in their request any undertakings which they are willing to make in order to obtain such a rescission. The Lender shall give the Borrower Parties notice of its acceptance or rejection of the Borrower Parties’ request within 30 Business Days after the Borrower Parties make the request. If the Lender accepts the request, the Lender shall give the Borrower Parties a notice that the termination notice shall be deemed rescinded and of no further force or effect, and this Agreement and the Credit Facility shall continue in accordance with, and subject to the terms, conditions and limitations contained in, this Agreement.

SECTION 13.23 Date-Down Endorsements. At any time and from time to time, a Lender may obtain an endorsement to each Title Insurance Policy containing a Revolving Credit Endorsement, amending the effective date of the Title Insurance Policy to the date of the title search performed in connection with the endorsement. The Borrower Parties shall pay for the cost and expenses incurred by the Lender to the Title Company in obtaining such endorsement, provided that, for each Title Insurance Policy, it shall not be liable to pay for more than one such endorsement in any consecutive 12 month period.

SECTION 13.24 Geographical Diversification. The Borrower shall maintain Mortgaged Properties in the Collateral Pool so that the Collateral Pool consists of at least seven (7) Mortgaged Properties located in at least two (2) states and five (5) SMSA’s, and provided, however, that, upon the occurrence of any increase in the Commitment pursuant to Article VIII, the Borrower shall at all times thereafter cause the Collateral Pool to satisfy such other Geographical Diversification Requirements as the Lender may determine and notify Borrower of at the time of the increase.

SECTION 13.25 Ownership of Mortgaged Properties. A Borrower Party shall be the sole owner of each of the Mortgaged Properties free and clear of any Liens other than Permitted Liens.

ARTICLE XIV
NEGATIVE COVENANTS OF THE BORROWER PARTIES

Each Borrower Party, with respect to itself, agrees and covenants with the Lender that, at all times during the Term of this Agreement:

SECTION 14.01 Other Activities. No Borrower Party shall:

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               (a)          engage in any business or activity other than in connection with (i) the Ownership, development, construction, management and operation of Multifamily Residential Properties or other types of real property in which it has expertise and (ii) activities related to the activities permitted in (i) above;

               (b)          amend its Organizational Documents in any material respect without the prior written consent of the Lender;

               (c)          dissolve or liquidate in whole or in part;

               (d)          except as otherwise provided in this Agreement, without the prior written consent of Lender, merge or consolidate with any Person; or

               (e)          use, or permit to be used, any Mortgaged Property for any uses or purposes other than as a Multifamily Residential Property.

SECTION 14.02 Value of Security. The Borrower Party shall not take any action which could reasonably be expected to have any Material Adverse Effect.

SECTION 14.03 Zoning. The Borrower Party shall not initiate or consent to any zoning reclassification of any Mortgaged Property or seek any variance under any zoning ordinance or use or permit the use of any Mortgaged Property in any manner that could result in the use becoming a nonconforming use under any zoning ordinance or any other applicable land use law, rule or regulation.

SECTION 14.04 Liens. The Borrower Party shall not create, incur, assume or suffer to exist any Lien on any Mortgaged Property or any part of any Mortgaged Property, except the Permitted Liens.

SECTION 14.05 Sale. Except in connection with a release of Collateral in accordance with Article VII, the Borrower Party shall not Transfer any Mortgaged Property or any part of any Mortgaged Property without the prior written consent of the Lender (which consent may be granted or withheld in the Lender’s discretion), or any interest in any Mortgaged Property, other than to enter into Leases for units in a Mortgaged Property to any tenant in the ordinary course of business. For so long as the Mortgaged Property commonly known as Paddock Park Ocala II and located in Ocala, Florida is part of the Collateral Pool, the Borrower Party shall not sell or otherwise transfer any Ownership Interest in the entity owning all or any part of the property commonly known as Paddock Park Ocala I and located in Ocala, Florida (except for any Transfer permitted under this Agreement) and any uncured default on any indebtedness secured by such Multifamily Residential Property shall be a default under this Agreement. For so long as either of the Mortgaged Properties commonly known as Paddock Club Tallahassee I or Paddock Club Tallahassee II and each located in Tallahassee, Florida, is part of the Collateral Pool, the Borrower Party shall not sell or otherwise transfer all or any part of either such Mortgaged Property (except for any Transfer permitted under this Agreement).

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SECTION 14.06 Indebtedness. The Borrower Party shall not incur or be obligated at any time with respect to any Indebtedness (other than Advances) in connection with any of the Mortgaged Properties.

SECTION 14.07 Principal Place of Business. The Borrower Party shall not change its principal place of business or the location of its books and records, each as set forth in Section 12.01(a), without first giving 30 days’ prior written notice to the Lender.

SECTION 14.08 Frequency of Requests. The Borrower shall have the right, subject to the terms, conditions and limitations of this Agreement, to make a Future Advance Request for a Variable Facility Advance on any day until the expiration of the Variable Facility Availability Period and to make a Future Advance Request for a Fixed Facility Advance on any day until the expiration of the Fixed Facility Availability Period.

SECTION 14.09 Change in Property Management. The Borrower Parties shall not change the management agent for any Mortgaged Property except to a management agent which the Lender determines is qualified in accordance with the criteria set forth in Section 701 of the DUS Guide.

SECTION 14.10 Condominiums. The Borrower Parties shall not submit any Mortgaged Property to a condominium regime during the Term of this Agreement.

SECTION 14.11 Restrictions on Partnership Distributions. The Borrower Party shall not make any distributions of any nature or kind whatsoever to the owners of its Ownership Interests as such if, at the time of such distribution, a Potential Event of Default or an Event of Default has occurred and remains uncured.

SECTION 14.12 Lines of Business. The Borrower Party shall not be substantially involved in any businesses other than the acquisition, ownership, development, construction, leasing, financing or management, directly or through Affiliates, of Multifamily Residential Properties, and the conduct of these businesses shall not violate the Organizational Documents pursuant to which it is formed.

SECTION 14.13 Limitation on Unimproved Real Property and New Construction. The Borrower Party shall not permit:

               (a)          the value of its real property which is not improved (except real property on which phases of a Mortgaged Property are contemplated to be constructed) by one or more buildings leased, or held out for lease, to third parties (“Unimproved Real Property”) to exceed 10% of the value of all of its “Real Estate Assets” (as that term is defined in Section 856(c)(6)(B) of the Internal Revenue Code and the regulations thereunder); and

               (b)          the sum of (i) the value of its Unimproved Real Property and (ii) the value of its Real Estate Assets which are under construction or subject to substantial rehabilitation to exceed 20% of the value of all of its Real Estate Assets.

All of the foregoing values shall be reasonably determined by the Lender.

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SECTION 14.14 Dividend Payout. The Borrower Party shall not make a dividend payment (including both common stock dividends, unitholder distributions, and preferred stock dividends) which is greater than ninety percent (90%) of Funds from Operations or that would otherwise violate the United States federal tax laws governing the qualifications of real estate investment trusts. As used herein, “Funds from Operations” shall mean consolidated net income of the REIT, including minority interest (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring, sales of property, impairment charges,or charges related to the adjustment to the value of assumed debt, plus real property depreciation and goodwill amortization, before extraordinary or unusual items, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect Funds from Operations on the same basis. Upon written pre-approval of the Lender, exceptions may be made where the Board of Directors of the REIT determines, in good faith, that a special dividend must be paid to avoid taxes due to excess gains from the sale of Multifamily Residential Properties. In determining compliance with the dividend payout ratio set forth herein, the amount of dividends paid and Funds from Operations shall be calculated on a trailing 12-month period.

ARTICLE XV
FINANCIAL COVENANTS OF THE BORROWER PARTIES

Each Borrower Party agrees and covenants with the Lender that, at all times during the Term of this Agreement:

SECTION 15.01 Financial Definitions. For all purposes of this Agreement, the following terms shall have the respective meanings set forth below:

          “Consolidated EBITDA” means, for any period, and without double counting any item, the EBITDA for the Borrower Parties and their respective Subsidiaries for such period on a consolidated basis.

          “Consolidated EBITDA to Fixed Charges Ratio” means, for any period of determination, the ratio (expressed as a percentage) of--

          (a)          the excess of--

              (i)          the Consolidated EBITDA for the period, less

              (ii)         the Imputed Capital Expenditures for the period;

              to

          (b)          the Consolidated Fixed Charges for the period.

          “Consolidated EBITDA to Interest Ratio” means, for any period of determination, the ratio (expressed as a percentage) of--

                        (a)          the excess of--

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(i)          the Consolidated EBITDA for the period, less

(ii)         the Imputed Capital Expenditures for the period;

          to

          (b)         the Consolidated Interest Expense for the period.

          “Consolidated Fixed Charges” means, for any period of determination, the sum of--

(a)          the Consolidated Interest Expense for the period;

(b)          the Consolidated Scheduled Amortization for the period; and

(c)          Preferred Distributions for the period.

               “Consolidated Interest Expense” means, for any period of determination, and without double counting any item, the sum of the Interest Expense for the Borrower Parties and their respective Subsidiaries for such period on a consolidated basis.

               “Consolidated Scheduled Amortization” means, for any period of determination, and without double counting any item, the sum of the Scheduled Amortization (but excluding balloon payments) for the Borrower Parties and their respective Subsidiaries for such period on a consolidated basis.

               “Consolidated Total Assets” means, for any Person, all assets of such Person and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that all assets composed of real property shall be valued on an undepreciated cost basis and the portion of any joint venture assets owned by such Person shall be included in Consolidated Total Assets. The assets of a Person and its Subsidiaries shall be adjusted to reflect such Person’s allocable share of such assets, for the relevant period or as of the date of determination, taking into account (a) the relative proportion of each such item derived from assets directly owned by such Person and from assets owned by its Subsidiaries, and (b) such Person’s respective ownership interest in its Subsidiaries.

               “Consolidated Total Indebtedness” means, as of any date, and without double counting any item, the Total Indebtedness for each Borrower Party and their respective Subsidiaries as of such date (including the Total Indebtedness of the Borrower Parties as of such date and the portion of any indebtedness of any joint venture in which any Borrower Party or any Subsidiary thereof is a venturer attributable to such Borrower Party or its Subsidiary).

               “EBITDA” means, for any period, the sum determined in accordance with GAAP, of the following, for any Person on a consolidated basis--

               (a)     the net income (or net loss) of such Person during such Period, but excluding gains and losses on the sale of fixed assets;

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                    (b)     all amounts treated as expenses for depreciation, Interest Expense and the amortization of intangibles of any kind to the extent included in the determination of such net income (or loss); and

                    (c)     all accrued taxes on or measured by income to the extent included in the determination of such net income (or loss);

                    provided, however, that net income (or loss) shall be computed for these purposes without giving effect to extraordinary losses or extraordinary gains.

                    “Imputed Capital Expenditures” means, for any four (4) consecutive quarters, an amount equal to the average number of apartment units owned by the Borrower Parties or their Subsidiaries during such period multiplied by Three Hundred Dollars ($300.00) per apartment unit, and for any period of less than four (4) consecutive quarters, an appropriate proration of such figure.

                    “Interest Expense” means, for any period, the sum of--

                    (a)     gross interest expense for the period (including all commissions, discounts, fees and other charges in connection with standby letters of credit and similar instruments) for the Borrower Parties and their respective Subsidiaries; and

                    (b)     the portion of the up-front costs and expenses for Rate Contracts entered into by the Borrower Parties and their respective Subsidiaries (to the extent not included in gross interest expense) fairly allocated to such Rate Contracts as expenses for such period, as determined in accordance with GAAP;

                    (c)     provided, that, all interest expense accrued by the Borrower Parties and their respective Subsidiaries during such period, even if not payable on or before the Credit Facility Termination Date, shall be included within “Interest Expense.” Notwithstanding the foregoing, interest accrued under any Intra-Company Debt shall not be included within “Interest Expense” for any purposes hereof.

                    “Intra-Company Debt” means Indebtedness (whether book-entry or evidenced by a term, demand or other note or other instrument) owed by the Borrower Parties or any of their respective Subsidiaries to any Subsidiary, and incurred or assumed for the purpose of capitalizing a Subsidiary of the Borrower Parties.

                    “Management Entity” means the REIT.

                    “Net Worth” means, as of any specified date, for any Person, the excess of the Person’s assets over the Person’s liabilities, determined in accordance with GAAP but excluding any adjustment for the fair value of swaps or caps, on a consolidated basis, provided that all real property shall be valued on an undepreciated basis.

                     “Pledged Cash” shall mean the amount held on deposit in the Pledgee Account.

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                    “Preferred Distributions” means, for any period, the amount of any and all distributions due and payable to the holders of any form of preferred stock (whether perpetual, convertible or otherwise) or other ownership or beneficial interest in the REIT or any of its Subsidiaries that entitles the holders thereof to preferential payment or distribution priority with respect to dividends, assets or other payments over the holders of any other stock or other ownership or beneficial interest in such Person.

                    “Rate Contracts” means interest rate and currency swap agreements, cap, floor and collar agreements, interest rate insurance, currency spot and forward contracts and other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates.

                    “Restricted Cash” means the sum of Pledged Cash plus any cash pledged by the Borrower Parties or any of their Subsidiaries to other lenders, as indicated in the line item for “restricted cash” in the Borrower Parties’ balance sheet from time to time.

                     “Scheduled Amortization” means, with respect to any Person, the sum, as of any date of determination, of the current portion (i.e., such portion as is scheduled to be paid by the obligor thereof within 12 months from the date of determination) of all regularly scheduled amortization payments due on such Person’s long-term fully amortizing mortgage Indebtedness (exclusive of balloon payments).

                     “Stock” means all shares, options, warrants, interests, participations or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or nonvoting, including common stock, preferred stock, perpetual preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities and Exchange Act of 1934, and regulations promulgated thereunder).

                     “Total Indebtedness” means, as of any date of determination, and in respect of any Person, all outstanding Indebtedness, and shall include, without limitation: (i) such Person’s share of the Indebtedness of any partnership or joint venture in which such Person directly or indirectly holds any interest; and (ii) any recourse or contingent obligations, directly or indirectly, of such Person with respect to any Indebtedness of such partnership or joint venture in excess of its proportionate share. Notwithstanding the foregoing, (x) Intra-Company Debt, and (y) accounts payable to trade creditors for goods and services and current operating liabilities (not the result of the borrowing of money) incurred in the ordinary course of business in accordance with customary terms and paid within the specified time, shall be excluded from the calculation of “Total Indebtedness” but shall not otherwise be excluded as Indebtedness for any other purpose hereof.

                     “Unconsolidated Partnership” means any partnership or joint venture (a) in which any Borrower Party or any Subsidiary of any Borrower Party holds an interest which is not consolidated in the financial statements of the REIT or (b) which is not a Subsidiary.

                     “Wholly-Owned Subsidiary” means a Subsidiary of the Borrower Parties one hundred percent (100%) of the Stock or other equity or other beneficial interests (in the case of

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Persons other than corporations) is owned directly or indirectly by the Borrower Parties; provided, however, that where such term is qualified with respect to a specific Person (e.g., “Wholly-Owned Subsidiary of the REIT”) such terms means a Subsidiary one hundred percent (100%) of the Stock or other equity or other beneficial interests (in the case of Persons other than corporations) is owned directly or indirectly by the specified Person.

SECTION 15.02 Compliance with Debt Service Coverage Ratios. The Borrower Parties shall at all times maintain the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period so that it is not less than 1.40:1.0.

SECTION 15.03 Compliance with Loan to Value Ratios. The Borrower Parties shall at all times maintain the Aggregate Loan to Value Ratio so that it is not greater than 65%. Notwithstanding the foregoing, the parties hereby agree that if, as a result of any annual Valuation performed pursuant to Section 5.04, the Aggregate Loan to Value Ratio exceeds 65% but is not greater than 70%, such Aggregate Loan to Value Ratio shall not be an Event of Default until the next annual Valuation and determination of Aggregate Loan to Value Ratio is performed, provided that Borrower shall pay an additional Variable Facility Fee and Fixed Facility Fee of (x) if such non-compliance occurs during 2004, 9 basis points per annum for the period beginning on the date of the determination and ending on December 31, 2004, and (y) if such non-compliance occurs subsequent to December 31, 2004, the number of basis points to be determined by Lender.

SECTION 15.04 Compliance with Concentration Test.

                     (a)     The Borrower Parties shall at all times maintain the Collateral so that the aggregate Valuations of any group of Mortgaged Properties located within a one mile radius shall not exceed 25% of the aggregate Valuations of all Mortgaged Properties.

                     (b)     The Borrower Parties shall at all times maintain the Collateral so that the Valuation of any one Mortgaged Property shall not exceed 20% of the aggregate Valuations of all Mortgaged Properties.

SECTION 15.05 Compliance with REIT’s Net Worth Test. The REIT shall at all times maintain its Net Worth so that it is not less than the highest Net Worth covenant required by any other financial institution where the REIT maintains a bank line (whether secured or unsecured), but in no event less than $550,000,000 plus 65% of proceeds (less all reasonable and customary expenses and costs) of equity offerings, net of redemptions, consummated by the REIT after August 22, 2002.

SECTION 15.06 Compliance with REIT’s Total Indebtedness to Consolidated Total Assets Ratio. The REIT shall not permit the ratio of Consolidated Total Indebtedness to Consolidated Total Assets to exceed 60% at any time.

SECTION 15.07 Compliance with REIT’s Consolidated EBITDA to Interest Ratio. The REIT shall not permit the Consolidated EBITDA to Interest Ratio computed for any fiscal quarter to be less than 200% for any period of four consecutive fiscal quarters (treated as a single accounting period).

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SECTION 15.08 Compliance with REIT’s Consolidated EBITDA to Fixed Charge Ratio. The REIT shall not permit the Consolidated EBITDA to Fixed Charges Ratio computed for any fiscal quarter or year to be less than 150% for any period of four consecutive fiscal quarters (treated as a single accounting period).

ARTICLE XVI
FEES

SECTION 16.01 Standby Fee and Rate Preservation Fee. The Borrower shall pay the Standby Fee to the Lender for the period from the date of this Agreement to the end of the Term of this Agreement. Unless Borrower notifies Lender in writing by December 1, 2005 that it does not elect to pay the Rate Preservation Fee, Borrower shall pay the Rate Preservation Fee to Lender commencing on January 1, 2006.  If Borrower elects not to pay the Rate Preservation Fee, such election shall be final.  Borrower may elect, by at least 30 days’ written notice of such election by Borrower to Lender, to no longer pay the Rate Preservation Fee, which election shall be irrevocable.  Each of the Standby Fee and the Rate Preservation Fee shall be payable monthly, in arrears, on the first Business Day following the end of the month, except that the Standby Fee and Rate Preservation Fee for the last month during the Term of this Agreement shall be paid on the last day of the Term of this Agreement.

SECTION 16.02 Origination Fees.

                     (a)     Initial Origination Fee. The Borrower has paid to the Lender an origination fee (“Initial Origination Fee”) equal to the product obtained by multiplying (i) the Commitment by (ii) .65%.

                     (b)      Expansion Origination Fee. Upon the closing of a Credit Facility Expansion Request under Article VIII, the Borrower shall pay to the Lender an origination fee (“Expansion Origination Fee”) equal to the product obtained by multiplying (i) the increase in the Commitment made on the Closing Date for the Credit Facility Expansion Request, by (ii) .65%. The Borrower shall pay the Expansion Origination Fee on or before the Closing Date for the Credit Facility Expansion Request. Any Expansion Origination Fee shall be reduced by the amount of any Collateral Addition Fee paid by the Borrower in respect of any Additional Mortgaged Properties added to the Collateral Pool in conjunction with such expansion.

SECTION 16.03 Due Diligence Fees.

                     (a)     Initial Due Diligence Fees. The Borrower has paid to the Lender due diligence fees (“Initial Due Diligence Fees”) with respect to the Initial Mortgaged Properties.

                     (b)     Additional Due Diligence Fees for Additional and Substituted Collateral. The Borrower shall pay to the Lender additional reasonable due diligence fees (the “Additional Collateral Due Diligence Fees”) with respect to each Additional and Substituted Mortgaged Property in an amount not to exceed the sum of $16,000. The Borrower shall pay Additional Collateral Due Diligence Fees for the Additional or Substituted Mortgaged Property to the Lender on the date on which it submits the Collateral Addition or Substitution Request for the addition of the Additional or Substituted Mortgaged Property to the Collateral Pool.

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SECTION 16.04 Legal Fees and Expenses.

                     (a)     Initial Legal Fees. The Borrower shall pay, or reimburse the Lender for, all out-of-pocket legal fees and expenses incurred by the Lender and by Fannie Mae in connection with the preparation, review and negotiation of this Agreement and any other Loan Documents executed on the date hereof. The Borrower has paid Lender’s and Fannie Mae’s legal fees in connection with the Initial Mortgaged Properties. On the date of this Agreement, the Borrower shall pay all such legal fees and expenses not previously paid or for which funds have not been previously provided.

                     (b)     Fees and Expenses Associated with Requests. The Borrower shall pay, or reimburse the Lender for, all reasonable costs and expenses incurred by the Lender, including the out-of-pocket legal fees and expenses incurred by the Lender in connection with the preparation, review and negotiation of all documents, instruments and certificates to be executed and delivered in connection with each Request, the performance by the Lender of any of its obligations with respect to the Request, the satisfaction of all conditions precedent to the Borrower’s rights or the Lender’s obligations with respect to the Request, and all transactions related to any of the foregoing, including the cost of title insurance premiums and applicable recordation and transfer taxes and charges and all other reasonable costs and expenses in connection with a Request. The obligations of the Borrower under this subsection shall be absolute and unconditional, regardless of whether the transaction requested in the Request actually occurs. The Borrower shall pay such costs and expenses to the Lender on the Closing Date for the Request, or, as the case may be, after demand by the Lender when the Lender determines that such Request will not close.

SECTION 16.05 MBS-Related Costs. The Borrower shall pay to the Lender, within 30 days after demand, all reasonable fees and expenses incurred by the Lender or Fannie Mae in connection with the issuance of any MBS backed by an Advance, including the fees charged by Depository Trust Company and State Street Bank or any successor fiscal agent or custodian.

SECTION 16.06 Failure to Close any Request. If the Borrower makes a Request and fails to close on the Request for any reason other than the default by the Lender, then the Borrower shall pay to the Lender and Fannie Mae all damages incurred by the Lender and Fannie Mae in connection with the failure to close.

SECTION 16.07 Other Fees. The Borrower shall pay the following additional fees and payments, if and when required pursuant to the terms of this Agreement:

                     (a)     The Collateral Substitution Fee, pursuant to Section 7.04, in connection with the addition of a Substituted Mortgaged Property to the Collateral Pool pursuant to Article VII;

                     (b)     The Release Price, pursuant to Section 7.02(c), in connection with the release of a Mortgaged Property from the Collateral Pool pursuant to Article VII;

                     (c)     The Release Fee, pursuant to Section 7.03(c), in connection with the release of a Mortgaged Property from the Collateral Pool pursuant to Article VII;

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                     (d)     The Variable Facility Termination Fee, pursuant to Section 9.03(b) in connection with a complete or partial termination of the Variable Facility pursuant to Article IX; and

                     (e)     The Variable Facility Termination Fee, pursuant to Section 10.03(b), in connection with the termination of the Credit Facility pursuant to Article X.

                     (f)     The Collateral Addition Fee, pursuant to Section 6.03(b), in connection with the addition of the Additional Mortgaged Properties to the Collateral Pool pursuant to Article VI.

ARTICLE XVII
EVENTS OF DEFAULT

SECTION 17.01 Events of Default. Each of the following events shall constitute an “Event of Default” under this Agreement, whatever the reason for such event and whether it shall be voluntary or involuntary, or within or without the control of a Borrower Party, or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority:

                     (a)     the occurrence of a default under any Loan Document beyond the cure period, if any, set forth therein; or

                     (b)     the failure by the Borrower Parties to pay when due any amount payable by the Borrower Parties under any Note, any Mortgage, this Agreement or any other Loan Document, including any fees, costs or expenses; or

                     (c)     the failure by any Borrower Party to perform or observe any covenant set forth in Article XIII or Article XIV within thirty (30) days after prior written notice of such failure from Lender, provided that such period shall be extended for up to 30 additional days if the Borrower Party, in the discretion of the Lender, is diligently pursuing a cure of such default within 30 days after receipt of notice from the Lender; or

                     (d)     any warranty, representation or other written statement made by or on behalf of a Borrower Party contained in this Agreement, any other Loan Document or in any instrument furnished in compliance with or in reference to any of the foregoing, is false or misleading in any material respect on any date when made or deemed made; or

                     (e)     any other Indebtedness in an aggregate amount of $1,000,000 of any Borrower Party or assumed by any Borrower Party (i) is not paid when due nor within any applicable grace period in any agreement or instrument relating to such Indebtedness or (ii) becomes due and payable before its normal maturity by reason of a default or event of default, however described, or any other event of default shall occur and continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or

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                     (f)     (i) A Borrower Party shall (A) commence a voluntary case under the Federal bankruptcy laws (as now or hereafter in effect), (B) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, debt adjustment, winding up or composition or adjustment of debts, (C) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (D) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of a substantial part of its property, domestic or foreign, (E) admit in writing its inability to pay, or generally not be paying, its debts as they become due, (F) make a general assignment for the benefit of creditors, (G) assert that any Borrower Party has no liability or obligations under this Agreement or any other Loan Document to which it is a party; or (H) take any action for the purpose of effecting any of the foregoing; or (ii) a case or other proceeding shall be commenced against a Borrower Party in any court of competent jurisdiction seeking (A) relief under the Federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding upon or composition or adjustment of debts, or (B) the appointment of a trustee, receiver, custodian, liquidator or the like of the Borrower Party, or of all or a substantial part of the property, domestic or foreign, of the Borrower Party and any such case or proceeding shall continue undismissed or unstayed for a period of 60 consecutive calendar days, or any order granting the relief requested in any such case or proceeding against the Borrower Party (including an order for relief under such Federal bankruptcy laws) shall be entered; or

                     (g)     if any provision of this Agreement or any other Loan Document or the lien and security interest purported to be created hereunder or under any Loan Document shall at any time for any reason cease to be valid and binding in accordance with its terms on any Borrower Party, or shall be declared to be null and void, or the validity or enforceability hereof or thereof or the validity or priority of the lien and security interest created hereunder or under any other Loan Document shall be contested by any Borrower Party seeking to establish the invalidity or unenforceability hereof or thereof, or any Borrower Party shall deny that it has any further liability or obligation hereunder or thereunder; or

                     (h)     (i) the execution by the Borrower Parties of a chattel mortgage or other security agreement on any materials, fixtures or articles used in the construction or operation of the improvements located on any Mortgaged Property or on articles of personal property located therein, or (ii) if any such materials, fixtures or articles are purchased pursuant to any conditional sales contract or other security agreement or otherwise so that the Ownership thereof will not vest unconditionally in the Borrower Parties free from encumbrances, or (iii) if the Borrower Parties do not furnish to the Lender upon request the contracts, bills of sale, statements, receipted vouchers and agreements, or any of them, under which the Borrower Parties claim title to such materials, fixtures, or articles; or

                     (i)     the failure by any Borrower Party to comply with any requirement of any Governmental Authority within 30 days after written notice of such requirement shall have been given to the Borrower Party by such Governmental Authority; provided that, if action is commenced and diligently pursued by the Borrower Party within such 30 days, then the Borrower Party shall have an additional 30 days to comply with such requirement; or

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                     (j)     a dissolution or liquidation for any reason (whether voluntary or involuntary) of any Borrower Party; or

                     (k)     any judgment against any Borrower Party, any attachment or other levy against any portion of any Borrower Party’s assets with respect to a claim or claims in an amount in excess of$500,000in the aggregate remains unpaid, unstayed on appeal undischarged, unbonded, not fully insured or undismissed for a period of 60 days; or

                     (l)     the failure of the Borrower Parties to perform or observe any of the Financial Covenants, which failure shall continue for a period of 30 days after the date on which the Borrower Party receives a notice from the Lender specifying the failure; or

                     (m)      the failure of Borrower to maintain the Hedges required by Article XXI of this Agreement; or

                     (n)     the failure by any Borrower Party to perform or observe any term, covenant, condition or agreement hereunder, other than as set forth in subsections (a) through (l) above, or in any other Loan Document, within 30 days after receipt of notice from the Lender identifying such failure.

ARTICLE XVIII
REMEDIES

SECTION 18.01 Remedies; Waivers. Upon the occurrence of an Event of Default, the Lender may do any one or more of the following (without presentment, protest or notice of protest, all of which are expressly waived by the Borrower Parties):

                     (a)     by written notice to the Borrower Parties, to be effective upon dispatch, terminate the Commitment and declare the principal of, and interest on, the Advances and all other sums owing by the Borrower Parties to the Lender under any of the Loan Documents forthwith due and payable, whereupon the Commitment will terminate and the principal of, and interest on, the Advances and all other sums owing by the Borrower Parties to the Lender under any of the Loan Documents will become forthwith due and payable.

                     (b)     The Lender shall have the right to pursue any other remedies available to it under any of the Loan Documents.

                     (c)     The Lender shall have the right to pursue all remedies available to it at law or in equity, including obtaining specific performance and injunctive relief.

SECTION 18.02 Waivers; Rescission of Declaration. The Lender shall have the right, to be exercised in its complete discretion, to waive any breach hereunder (including the occurrence of an Event of Default), by a writing setting forth the terms, conditions, and extent of such waiver signed by the Lender and delivered to the Borrower Parties. Unless such writing expressly provides to the contrary, any waiver so granted shall extend only to the specific event or occurrence which gave rise to the waiver and not to any other similar event or occurrence which occurs subsequent to the date of such waiver.

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SECTION 18.03 The Lender’s Right to Protect Collateral and Perform Covenants and Other Obligations. If any Borrower Party fails to perform the covenants and agreements contained in this Agreement or any of the other Loan Documents, then the Lender at the Lender’s option may make such appearances, disburse such sums and take such action as the Lender deems necessary, in its sole discretion, to protect the Lender’s interest, including (i) disbursement of reasonable attorneys’ fees, (ii) entry upon the Mortgaged Property to make repairs and Replacements, (iii) procurement of satisfactory insurance as provided in paragraph 5 of the Security Instrument encumbering the Mortgaged Property, and (iv) if the Security Instrument is on a leasehold, exercise of any option to renew or extend the ground lease on behalf of the Borrower Parties and the curing of any default of the Borrower Parties in the terms and conditions of the ground lease. Any amounts disbursed by the Lender pursuant to this Section, with interest thereon, shall become additional indebtedness of the Borrower Parties secured by the Loan Documents. Unless the Borrower and the Lender agree to other terms of payment, such amounts shall be immediately due and payable and shall bear interest from the date of disbursement at the weighted average, as determined by Lender, of the interest rates in effect from time to time for each Advance unless collection from the Borrower of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from the Borrower under applicable law. Nothing contained in this Section shall require the Lender to incur any expense or take any action hereunder.

SECTION 18.04 No Remedy Exclusive. Unless otherwise expressly provided, no remedy herein conferred upon or reserved is intended to be exclusive of any other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under the Loan Documents or existing at law or in equity.

SECTION 18.05 No Waiver. No delay or omission to exercise any right or power accruing under any Loan Document upon the happening of any Event of Default or Potential Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.

SECTION 18.06 No Notice. In order to entitle the Lender to exercise any remedy reserved to the Lender in this Article, it shall not be necessary to give any notice, other than such notice as may be required under the applicable provisions of this Agreement or any of the other Loan Documents.

SECTION 18.07 Application of Payments. Except as otherwise expressly provided in the Loan Documents, and unless applicable law provides otherwise, (i) all payments received by the Lender from any of the Borrower Parties under the Loan Documents shall be applied by the Lender against any amounts then due and payable under the Loan Documents by any of the Borrower Parties, in any order of priority that the Lender may determine and (ii) the Borrower Parties shall have no right to determine the order of priority or the allocation of any payment it makes to the Lender.

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ARTICLE XIX
RIGHTS OF FANNIE MAE

SECTION 19.01 Special Pool Purchase Contract. The Borrower Parties acknowledge that Fannie Mae is entering into an agreement with the Lender (“Special Pool Purchase Contract”), pursuant to which, inter alia, (i) the Lender shall agree to assign all of its rights under this Agreement to Fannie Mae, (ii) Fannie Mae shall accept the assignment of the rights, (iii) subject to the terms, limitations and conditions set forth in the Special Pool Purchase Contract, Fannie Mae shall agree to purchase a 100% participation interest in each Advance issued under this Agreement by issuing to the Lender a Fannie Mae MBS, in the amount and for a term equal to the Advance purchased and backed by an interest in the Fixed Facility Note or the Variable Facility Note, as the case may be, and the Collateral Pool securing the Notes, (iv) the Lender shall agree to assign to Fannie Mae all of the Lender’s interest in the Notes and Collateral Pool securing the Notes, and (v) the Lender shall agree to service the loans evidenced by the Notes.

SECTION 19.02 Assignment of Rights. The Borrower Parties acknowledge and consent to the assignment to Fannie Mae of all of the rights of the Lender under this Agreement and all other Loan Documents, including the right and power to make all decisions on the part of the Lender to be made under this Agreement and the other Loan Documents, but Fannie Mae, by virtue of this assignment, shall not be obligated to perform the obligations of the Lender under this Agreement or the other Loan Documents.

SECTION 19.03 Release of Collateral. The Borrower Parties hereby acknowledge that, after the assignment of Loan Documents contemplated in Section 19.02, the Lender shall not have the right or power to effect a release of any Collateral pursuant to Articles VII or X. The Borrower Parties acknowledge that the Security Instruments provide for the release of the Collateral under Articles VII and X. Accordingly, the Borrower Parties shall not look to the Lender for performance of any obligations set forth in Articles VII and X, but shall look solely to the party secured by the Collateral to be released for such performance. The Lender represents and warrants to the Borrower Parties that the party secured by the Collateral shall be subject to the release provisions contained in Articles VII and X by virtue of the release provisions in each Security Instrument.

SECTION 19.04 Replacement of Lender. At the request of Fannie Mae, the Borrower Parties and the Lender shall agree to the assumption by another lender designated by Fannie Mae (which lender shall meet Fannie Mae’s then current standards for lenders for credit facilities of the type and size of the credit facility evidenced by this Agreement), of all of the obligations of the Lender under this Agreement and the other Loan Documents, and/or any related servicing obligations, and, at Fannie Mae’s option, the concurrent release of the Lender from its obligations under this Agreement and the other Loan Documents, and/or any related servicing obligations, and shall execute all releases, modifications and other documents which Fannie Mae determines are necessary or desirable to effect such assumption.

SECTION 19.05 Fannie Mae and Lender Fees and Expenses. The Borrower Parties agree that any provision providing for the payment of fees, costs or expenses incurred or charged by the Lender pursuant to this Agreement shall be deemed to provide for the Borrower’s payment of all reasonable fees, costs and expenses incurred or charged by the Lender or Fannie Mae in connection with the matter for which fees, costs or expenses are payable.

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SECTION 19.06 Third-Party Beneficiary. The Borrower Parties hereby acknowledge and agree that Fannie Mae is a third party beneficiary of all of the representations, warranties and covenants made by any Borrower Parties to, and all rights under this Agreement conferred upon, the Lender, and, by virtue of its status as third-party beneficiary and/or assignee of the Lender’s rights under this Agreement, Fannie Mae shall have the right to enforce all of the provisions of this Agreement against the Borrower Parties.

ARTICLE XX
INSURANCE, REAL ESTATE TAXES
AND REPLACEMENT RESERVES

SECTION 20.01 Insurance and Real Estate Taxes. The Borrower Parties shall (unless waived by Lender) establish funds for taxes, insurance premiums and certain other charges for each Mortgaged Property in accordance with Section 7(a) of the Security Instrument for each Mortgaged Property. The requirement for any fund established pursuant to the preceding sentence may be met, at the Lender’s reasonable discretion, by the posting of a letter of credit in form and substance reasonably satisfactory to the Lender and meeting the requirements of Fannie Mae.

SECTION 20.02 Replacement Reserves. The Borrower Parties shall execute a Replacement Reserve Agreement for the Mortgaged Property which they own and shall (unless waived by the Lender) make all deposits for replacement reserves in accordance with the terms of the Replacement Reserve Agreement.

ARTICLE XXI
INTEREST RATE PROTECTION

SECTION 21.01  Interest Rate Protection. 

                     (a)     Hedge Requirement. To protect against fluctuations in interest rates, the Borrower shall make arrangements for a Hedge to be in place and maintained at all times with respect to the Hedge Requirement Amount.  The Hedge for the Hedge Requirement Amount shall be in place for a period beginning on the date of the first Variable Advance from the Hedge Requirement Amount and ending not earlier than the date which is the fifth anniversary of the Initial Closing Date (the “Initial Hedge Period”).

                     (b)     Subsequent Hedges. Subject to the terms of Article XXI, additional Hedges (each a “Subsequent Hedge”) shall be required (i) upon the expiration of the Hedge in place for the Initial Hedge Period and (ii) if and at such times as a new Variable Advance is funded that is part of the Hedge Requirement Amount, such Subsequent Hedge to be in effect for a period beginning on the day of the expiration of the Hedge in place for the Initial Hedge Period or on the Closing Date of the Future Advance Request, as the case may be, and ending not earlier than the then effective Variable Facility Termination Date with respect to such Variable Advance.  It is the intention of the parties that the Borrower shall obtain, and shall maintain at all times during the term of this Agreement so long as any Variable Facility Advance is Outstanding with respect to the Hedge Requirement Amount, a Hedge or Hedges in an aggregate notional principal amount equal to the Variable Advances Outstanding that are part of the Hedge Requirement

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Amount and covering the entire term of the Amended and Restated Variable Facility Commitment as set forth on the Summary of Credit Facility Structure and meeting the conditions set forth in Section 21.02.

SECTION 21.02.  Hedge Terms.  Each Hedge shall:

                     (a)        provide for a notional principal amount equal at all times to Variable Advances Outstanding that are part of the Hedge Requirement Amount;

                     (b)        intentionally deleted;

                     (c)        in the case of Swaps, provide for a notional interest rate required to achieve a 1.40 Aggregate Debt Service Coverage Ratio for the Trailing 12 Months based upon a 30-year amortization period equal to the Three Month Libor Rate in effect from time to time (the “Swap Rate”);

                     (d)        in the case of Caps, provide for a notional interest rate not greater than the lowest interest rate that would result in an Aggregate Debt Service Coverage Ratio for the Variable Advances subject to the Cap of not less than 1.10 to 1 (the “Cap Interest Rate”), provided that the Aggregate Debt Service Coverage Ratio shall be calculated based on an interest rate equal to (i) the then current Three Month LIBOR Rate, plus (ii) the Variable Facility Fee, plus (iii) 300 basis points, and including any amortization payments in respect of such Loan;

                     (e)        in the case of Swaps, require the counterparty to make interest payments on the notional principal amount at a rate equal to the amount by which Coupon Rate exceeds the Swap Rate;

                     (f)        in the case of Caps, require the counterparty to make interest payments on the notional principal amount at a rate equal to the amount by which the then applicable Coupon Rate exceeds the Cap Interest Rate;

                     (g)        intentionally deleted; and

                     (h)        be evidenced, governed  and secured on terms and conditions, and pursuant to documentation (the “Hedge Documents”), in form and content reasonably acceptable to Fannie Mae, and with a counterparty (a “Counterparty”) approved by Fannie Mae.

SECTION 21.03  Hedge Security Agreement; Delivery of Hedge Payments.  Pursuant to a Hedge Security Agreement, the Lender shall be granted an enforceable, perfected, first priority lien on and security interest in each Hedge and payments due under the Hedge (including scheduled and termination payments) in order to secure the Borrower’s obligations to the Lender under this Agreement.  With respect to each Hedge, the Hedge Security Agreement must be delivered by the Borrower to the Lender no later than the effective date of the Hedge.

SECTION 21.04  Termination.  The Borrower shall not terminate, transfer or consent to any transfer of any existing Hedge without the Lender’s prior written consent as long as the Borrower is required to maintain a Hedge pursuant to this Agreement; provided, however, that if,

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and at such time as, there are no Variable Advances Outstanding that are part of the Hedge Requirement Amount, the Borrower shall have the right to terminate the existing Hedge and the proceeds of any such termination shall be paid to the Borrower.

SECTION 21.05  Performance Under Hedge Documents.  The Borrower agrees to comply fully with, and to otherwise perform when due, its obligations under, all applicable Hedge Documents and all other agreements evidencing, governing and/or securing any Hedge arrangement contemplated under this Article XXI.  The Borrower shall not exercise, without the Lender’s prior written consent, which consent shall not be unreasonably withheld, and shall exercise, at the Lender’s direction, any rights or remedies under any Hedge Document, including without limitation the right of termination.

SECTION 21.06 Approved Swaps. Notwithstanding any provisions herein to the contrary, the parties hereby acknowledge that the Hedge Documents evidencing the LIBOR Swaps with AmSouth and First Tennessee set forth on Exhibit II attached hereto have been approved by Fannie Mae as acceptable Swaps under this Agreement (the “Approved Swaps”). Borrower Parties agree to assign to Lender all right, title and interest in all payments received (but not the obligation for any payments due) under the Approved Swaps in a form acceptable to Lender.

ARTICLE XXII
LIMITS ON PERSONAL LIABILITY

SECTION 22.01 Personal Liability to the Borrower Parties.

                     (a)     Full Recourse. Except as provided in Section 22.01(b), the Borrower Parties are and shall remain jointly and severally personally liable to the Lender for the payment and performance of all Obligations throughout the term of this Agreement.

                     (b)     Termination of Personal Liability. The provisions of Section 22.01(a) shall be null and void upon the written notice of Borrower to Lender of its election to render such provisions null and void if (i) the Aggregate Loan to Value Ratio is 60% or less, (ii) the Aggregate Debt Service Ratio for the Trailing 12 Month Period is 145% or more, (iii) there has been a complete termination of the Variable Facility, and (iv) the Mortgaged Properties are owned in fee simple by a Borrower Party that is a Single Purpose Entity. Upon the termination of the effectiveness of Section 22.01(a) the following additional provisions of this Agreement shall be null and void and no longer applicable:

          (1)     The second, third and fourth sentences of Section 8.01; and

          (2)     Sections 15.02 and 15.03 to the extent that a Default would result from the failure of the Borrower to be in compliance with such Sections;

                     (c)     Exceptions to Limits on Personal Liability. Upon termination of personal liability of the Borrower Parties pursuant to paragraph (b) of this Section 22.01, the Borrower Parties shall remain personally liable to the Lender on a joint and several basis for the repayment of a portion of the Advances and other amounts due under the Loan Documents equal to any loss or damage suffered by the Lender as a result of (1) failure of the Borrower Parties to pay to the

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Lender upon written demand after an Event of Default all Rents to which the Lender is entitled under Section 3(a) of the Security Instrument encumbering the Mortgaged Property and the amount of all security deposits collected by the Borrower Parties from tenants then in residence; (2) failure of the Borrower Parties to apply all insurance proceeds and condemnation proceeds as required by the Security Instrument encumbering the Mortgaged Property; (3) failure of the Borrower Parties to comply in all material respects with Section 13.04 relating to the delivery of books and records, statements, schedules and reports; (4) fraud or written material misrepresentation by any Borrower Party or any officer, director, partner, member or employee of any Borrower Party in connection with the application for or creation of the Obligations or any request for any action or consent by the Lender; (5) failure to apply Rents, first, to the payment of reasonable operating expenses and then to amounts (“Debt Service Amounts”) payable under the Loan Documents (except that the Borrower Party will not be personally liable (i) to the extent that the Borrower Party lacks the legal right to direct the disbursement of such sums because of a bankruptcy, receivership or similar judicial proceeding or otherwise under the Loan Documents, or (ii) with respect to Rents of a Mortgaged Property that are distributed in any Calendar Quarter if the Borrower Party has paid all operating expenses and Debt Service Amounts for that Calendar Quarter); or (6) failure of the Borrower to pay any and all documentary stamp taxes, intangible taxes and other taxes, impositions, fees and charges due on or with respect to the Note, the Indebtedness, this Instrument and/or any of the other Loan Documents.

                     (d)     Full Recourse After Termination of Personal Liability. Upon termination of personal liability of the Borrower Parties pursuant to paragraph (b) of this Section 22.01, the Borrower Parties shall become personally liable to the Lender for the payment and performance of all Obligations upon the occurrence of any of the following Events of Default: (1) the Borrower Parties’ acquisition of any property or operation of any business not permitted by Section 33 of the Security Instrument; or (2) a Transfer that is an Event of Default under Section 21 of the Security Instrument.

                     (e)     Permitted Transfer Not Release. No Transfer by the REIT of its Ownership Interests in the Borrower Parties shall release the Borrower Parties from liability under this Article, this Agreement or any other Loan Document, unless the Lender shall have approved the Transfer and shall have expressly released the Borrower Parties in connection with the Transfer.

                     (f)     Miscellaneous. To the extent that a Borrower Party has personal liability under this Section, the Lender may exercise its rights against the Borrower Party personally without regard to whether the Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to the Lender under the Loan Documents or applicable law. For purposes of this Article, the term “Mortgaged Property” shall not include any funds that (1) have been applied by any Borrower Party as required or permitted by the Loan Documents prior to the occurrence of an Event of Default, or (2) are owned by a Borrower Party and which the Borrower Party was unable to apply as required or permitted by the Loan Documents because of a bankruptcy, receivership, or similar judicial proceeding.

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ARTICLE XXIII

MISCELLANEOUS PROVISIONS

SECTION 23.01 Counterparts. To facilitate execution, this Agreement may be executed in any number of counterparts. It shall not be necessary that the signatures of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart, but it shall be sufficient that the signature of, or on behalf of, each party, appear on one or more counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.

SECTION 23.02 Amendments, Changes and Modifications. This Agreement may be amended, changed, modified, altered or terminated only by written instrument or written instruments signed by all of the parties hereto.

SECTION 23.03 Payment of Costs, Fees and Expenses. The Borrower shall pay, on demand, all reasonable fees, costs, charges or expenses (including the fees and expenses of attorneys, accountants and other experts) incurred by the Lender in connection with:

                     (a)     Any amendment, consent or waiver to this Agreement or any of the Loan Documents (whether or not any such amendments, consents or waivers are entered into).

                     (b)     Defending or participating in any litigation arising from actions by third parties and brought against or involving the Lender with respect to (i) any Mortgaged Property, (ii) any event, act, condition or circumstance in connection with any Mortgaged Property or (iii) the relationship between the Lender and the Borrower Parties in connection with this Agreement or any of the transactions contemplated by this Agreement.

                     (c)     The administration or enforcement of, or preservation of rights or remedies under, this Agreement or any other Loan Documents or in connection with the foreclosure upon, sale of or other disposition of any Collateral granted pursuant to the Loan Documents.

                     (d)     The REIT’s Registration Statement, or similar disclosure documents, including fees payable to any rating agencies, including the reasonable fees and expenses of the Lender’s attorneys and accountants.

The Borrower shall also pay, on demand, any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution, delivery, filing, recordation, performance or enforcement of any of the Loan Documents or the Advances. However, the Borrower will not be obligated to pay any franchise, excise, estate, inheritance, income, excess profits or similar tax on the Lender. Any attorneys’ fees and expenses payable by the Borrower pursuant to this Section shall be recoverable separately from and in addition to any other amount included in such judgment, and such obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment. Any amounts payable by the Borrower pursuant to this Section, with interest thereon if not paid when due, shall become additional indebtedness of the Borrower secured by the Loan Documents. Such amounts shall bear interest from the date such amounts are due until paid in

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full at the weighted average, as determined by Lender, of the interest rates in effect from time to time for each Advance unless collection from the Borrower of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from the Borrower under applicable law. The provisions of this Section are cumulative with, and do not exclude the application and benefit to the Lender of, any provision of any other Loan Document relating to any of the matters covered by this Section.

SECTION 23.04 Payment Procedure. All payments to be made to the Lender pursuant to this Agreement or any of the Loan Documents shall be made in lawful currency of the United States of America and in immediately available funds by wire transfer to an account designated by the Lender before 1:00 p.m. (Eastern Standard Time) on the date when due.

SECTION 23.05 Payments on Business Days. In any case in which the date of payment to the Lender or the expiration of any time period hereunder occurs on a day which is not a Business Day, then such payment or expiration of such time period need not occur on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the day of maturity or expiration of such period, except that interest shall continue to accrue for the period after such date to the next Business Day.

SECTION 23.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial. NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND RIGHTS AND OBLIGATIONS OF EACH BORROWER PARTY UNDER THE NOTES, AND EACH BORROWER PARTY UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED, (2) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER THAN DEPOSIT ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE DISTRICT OF COLUMBIA UNIFORM COMMERCIAL CODE AND (3) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS LOCATED. THE BORROWER PARTIES AGREE THAT ANY CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN DISTRICT OF COLUMBIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN DISTRICT OF COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH

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MAY ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. EACH BORROWER PARTY IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST THE BORROWER PARTIES, AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF DISTRICT OF COLUMBIA SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF THE BORROWER PARTIES AND THE LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY THE BORROWER PARTIES TO PERSONAL JURISDICTION WITHIN DISTRICT OF COLUMBIA EACH BORROWER PARTY (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, EACH BORROWER PARTY HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED TO, LENDER’S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO EACH BORROWER PARTY THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY THE BORROWER PARTIES UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY THE BORROWER PARTIES’ FREE WILL.

SECTION 23.07 Severability. In the event any provision of this Agreement or in any other Loan Document shall be held invalid, illegal or unenforceable in any jurisdiction, such provision will be severable from the remainder hereof as to such jurisdiction and the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired in any jurisdiction.

SECTION 23.08 Notices.

                     (a)     Manner of Giving Notice. Each notice, direction, certificate or other communication hereunder (in this Section referred to collectively as “notices” and singly as a “notice”) which any party is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if:

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                    (1)     personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have been received at the time so delivered);

                    (2)     sent by Federal Express (or other similar overnight courier) designating morning delivery (any notice so delivered shall be deemed to have been received on the Business Day it is delivered by the courier);

                    (3)     sent by telecopier or facsimile machine which automatically generates a transmission report that states the date and time of the transmission, the length of the document transmitted, and the telephone number of the recipient’s telecopier or facsimile machine (to be confirmed with a copy thereof sent in accordance with paragraphs (1) or (2) above within two Business Days) (any notice so delivered shall be deemed to have been received (i) on the date of transmission, if so transmitted before 5:00 p.m. (local time of the recipient) on a Business Day, or (ii) on the next Business Day, if so transmitted on or after 5:00 p.m. (local time of the recipient) on a Business Day or if transmitted on a day other than a Business Day);

addressed to the parties as follows:

          As to any Borrower Party:

c/o Mid-America Apartment Communities, Inc.
6584 Polar Avenue
Suite 300
Memphis, Tennessee 38138
Attention:	Simon R.C. Wadsworth
	Chief Financial Officer
Telecopy No.:	(901) 682-6667

          with a copy to:

Bass, Berry & Sims PLC
The Tower at Peabody Place
100 Peabody Place
Suite 900
Memphis, Tennessee 38103-3672
Attention:	John A. Stemmler, Esq.
Telecopy No.:	(901) 543-5999

          As to the Lender:

Prudential Multifamily Mortgage, Inc.

c/o Prudential Asset Resources

2200 Ross Avenue

Suite 4900 E

Dallas, Texas 75201

Attention:    Asset Management Department

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Telecopy No.:    (214) 777-4556

with a copy to:

Prudential Multifamily Mortgage, Inc.

8401 Greensboro Drive

Suite 200

McLean, Virginia 22102

Attention: Laura Eckhardt

Telecopy No.: (703) 610-1422

and

Prudential Multifamily Mortgage, Inc.

Four Embarcadero Center

Suite 2700

San Francisco, California 94111

Attention: Harry N. Mixon, Esq.

Telecopy No.: (415) 956-2197

As to Fannie Mae:

Fannie Mae

3939 Wisconsin Avenue, N.W.

Washington, D.C. 20016-2899

Attention:        Vice President for

                         Multifamily Asset Management

Telecopy No.: (202) 752-5016

with a copy to:

Venable LLP

575 7^th Street, N.W.

Washington, D.C. 20004

Attention:        Lawrence H. Gesner, Esq.

Telecopy No.: (202) 344-8300

                    (b) Change of Notice Address. Any party may, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses, for its notices, but notice of a change of address shall only be effective upon receipt. Each party agrees that it shall not refuse or reject delivery of any notice given hereunder, that it shall acknowledge, in writing, receipt of the same upon request by the other party and that any notice rejected or refused by it shall be deemed for all purposes of this Agreement to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service, the courier service or facsimile.

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SECTION 23.09 Further Assurances and Corrective Instruments.

                     (a)     Further Assurances. To the extent permitted by law, the parties hereto agree that they shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as the Lender or the Borrower Parties may request and as may be required in the opinion of the Lender or its counsel to effectuate the intention of or facilitate the performance of this Agreement or any Loan Document.

                     (b)     Further Documentation. Without limiting the generality of subsection (a), in the event any further documentation or information is required by the Lender to correct patent mistakes in the Loan Documents, materials relating to the Title Insurance Policies or the funding of the Advances, the Borrower Parties shall provide, or cause to be provided to the Lender, at their cost and expense, such documentation or information. The Borrower Parties shall execute and deliver to the Lender such documentation, including any amendments, corrections, deletions or additions to the Notes, the Security Instruments or the other Loan Documents as is reasonably required by the Lender.

                     (c)     Compliance with Investor Requirements. Without limiting the generality of subsection (a), the Borrower Parties shall do anything necessary to comply with the reasonable requirements of the Lender in order to enable the Lender to sell the MBS backed by an Advance.

SECTION 23.10 Term of this Agreement. This Agreement shall continue in effect until the Credit Facility Termination Date.

SECTION 23.11 Assignments; Third-Party Rights. No Borrower Party shall assign this Agreement, or delegate any of its obligations hereunder, without the prior written consent of the Lender. The Lender may assign its rights and obligations under this Agreement separately or together, without the Borrower Parties’ consent, only to Fannie Mae, but may not delegate its obligations under this Agreement unless required to do so pursuant to Section 19.04.

SECTION 23.12 Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 23.13 General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in Article I, Section 15.01, Section 16.01 and elsewhere in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other genders; (ii) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (iii) references herein to “Articles,” “Sections,” “subsections,” “paragraphs” and other subdivisions without reference to a document are to designated Articles, Sections, subsections, paragraphs and other subdivisions of this Agreement; (iv) a reference to a subsection without further reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (v) a

- 91 -

reference to an Exhibit or a Schedule without a further reference to the document to which the Exhibit or Schedule is attached is a reference to an Exhibit or Schedule to this Agreement; (vi) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and (vii) the word “including” means “including, but not limited to.”

SECTION 23.14 Interpretation. The parties hereto acknowledge that each party and their respective counsel have participated in the drafting and revision of this Agreement and the Loan Documents. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Agreement and the Loan Documents or any amendment or supplement or exhibit hereto or thereto.

SECTION 23.15 Standards for Decisions, Etc. Unless otherwise provided herein, if the Lender’s approval is required for any matter hereunder, such approval may be granted or withheld in the Lender’s sole and absolute discretion. Unless otherwise provided herein, if the Lender’s designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such designation, determination, selection, estimate, action or decision shall be made in the Lender’s sole and absolute discretion.

SECTION 23.16 Decisions in Writing. Any approval, designation, determination, selection, action or decision of the Lender or the Borrower Parties must be in writing to be effective.

SECTION 23.17 Joint and Several Liability. Each Borrower Party shall be jointly and severally liable for the payment and performance of each obligation of any Borrower Party arising under any of the Loan Documents.

[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

- 92 -

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

Borrower Parties
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

- 93 -

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
	By:
	Name:	John A. Good
	Its:	Assistant Secretary

- 94 -

Lender
PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation
By:
Name:	Sharon D. Singleton
Title:	Vice President

- 95 -

THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
(MAA I)

among

(i) MID-AMERICA APARTMENT COMMUNITIES, INC.,
a Tennessee corporation,

(ii) MID- AMERICA APARTMENTS, LP,
a Tennessee limited partnership, and

(iii) MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership,

and

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
a Delaware corporation

dated as of

March 30, 2004

TABLE OF CONTENTS

		Page
RECITALS		1
ARTICLE I		3
ARTICLE II		24
SECTION 2.01	VARIABLE FACILITY COMMITMENT	24
SECTION 2.02	REQUESTS FOR VARIABLE ADVANCES	24
SECTION 2.03	MATURITY DATE OF VARIABLE ADVANCES	24
SECTION 2.04	INTEREST ON VARIABLE FACILITY ADVANCES	24
SECTION 2.05	COUPON RATES FOR VARIABLE ADVANCES	25
SECTION 2.06	VARIABLE FACILITY NOTE	25
SECTION 2.07	[INTENTIONALLY DELETED.]	25
SECTION 2.08	REINSTATEMENT OF VARIABLE COMMITMENT UPON MATURITY OF FIXED FACILITY ADVANCES	25
SECTION 2.09	LIMITATIONS ON RIGHT TO REBORROW	26
SECTION 2.10	CONDITIONS PRECEDENT TO REBORROWING	26
ARTICLE III		27
SECTION 3.01	FIXED FACILITY COMMITMENT	27
SECTION 3.02	REQUESTS FOR FIXED FACILITY ADVANCES	27
SECTION 3.03	MATURITY DATE OF FIXED FACILITY ADVANCES; AMORTIZATION	27
SECTION 3.04	INTEREST ON FIXED FACILITY ADVANCES	27
SECTION 3.05	COUPON RATES FOR FIXED FACILITY ADVANCES	28
SECTION 3.06	FIXED FACILITY NOTE	28
SECTION 3.07	CONVERSION OF COMMITMENT FROM VARIABLE FACILITY COMMITMENT TO FIXED FACILITY COMMITMENT	28
SECTION 3.08	LIMITATIONS ON RIGHT TO CONVERT	28
SECTION 3.09	CONDITIONS PRECEDENT TO CONVERSION	29
ARTICLE IV		29
SECTION 4.01	RATE SETTING FOR AN ADVANCE	29
SECTION 4.02	ADVANCE CONFIRMATION INSTRUMENT FOR VARIABLE ADVANCES	30
SECTION 4.03	BREAKAGE AND OTHER COSTS	31
ARTICLE V		31
SECTION 5.01	INITIAL ADVANCE	31
SECTION 5.02	FUTURE ADVANCES	31
SECTION 5.03	CONDITIONS PRECEDENT TO FUTURE ADVANCES	31
SECTION 5.04	DETERMINATION OF ALLOCABLE FACILITY AMOUNT AND VALUATIONS	32
ARTICLE VI		33
SECTION 6.01	RIGHT TO ADD COLLATERAL	33
SECTION 6.02	PROCEDURE FOR ADDING COLLATERAL	33
SECTION 6.03	CONDITIONS PRECEDENT TO ADDITION OF THE ADDITIONAL MORTGAGED PROPERTIES TO THE COLLATERAL POOL	34
ARTICLE VII		35
SECTION 7.01	RIGHT TO OBTAIN RELEASES OF COLLATERAL	35
SECTION 7.02	PROCEDURE FOR OBTAINING RELEASES OF COLLATERAL	35

i

SECTION 7.03	CONDITIONS PRECEDENT TO RELEASE OF COLLATERAL RELEASE PROPERTY FROM THE COLLATERAL	37
SECTION 7.04	SUBSTITUTIONS	38
ARTICLE VIII		42
SECTION 8.01	RIGHT TO INCREASE COMMITMENT	42
SECTION 8.02	PROCEDURE FOR OBTAINING INCREASES IN COMMITMENT	42
SECTION 8.03	CONDITIONS PRECEDENT TO INCREASE IN COMMITMENT	43
ARTICLE IX		44
SECTION 9.01	RIGHT TO COMPLETE OR PARTIAL TERMINATION OF FACILITIES	44
SECTION 9.02	PROCEDURE FOR COMPLETE OR PARTIAL TERMINATION OF FACILITIES	44
SECTION 9.03	CONDITIONS PRECEDENT TO COMPLETE OR PARTIAL TERMINATION OF FACILITIES	44
ARTICLE X		45
SECTION 10.01	RIGHT TO TERMINATE CREDIT FACILITY	45
SECTION 10.02	PROCEDURE FOR TERMINATING CREDIT FACILITY	45
SECTION 10.03	CONDITIONS PRECEDENT TO TERMINATION OF CREDIT FACILITY	46
ARTICLE XI		46
SECTION 11.01	CONDITIONS APPLICABLE TO ALL REQUESTS	46
SECTION 11.02	DELIVERY OF CLOSING DOCUMENTS RELATING TO COLLATERAL SUBSTITUTION REQUEST, CREDIT FACILITY EXPANSION REQUEST OR FUTURE ADVANCE REQUEST	47
SECTION 11.03	DELIVERY OF PROPERTY-RELATED DOCUMENTS	48
ARTICLE XII		49
SECTION 12.01	REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES	49
SECTION 12.02	REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES	53
SECTION 12.03	REPRESENTATIONS AND WARRANTIES OF THE LENDER	56
ARTICLE XIII		56
SECTION 13.01	COMPLIANCE WITH AGREEMENTS	57
SECTION 13.02	MAINTENANCE OF EXISTENCE	57
SECTION 13.03	MAINTENANCE OF REIT STATUS	57
SECTION 13.04	FINANCIAL STATEMENTS; ACCOUNTANTS’ REPORTS; OTHER INFORMATION	57
SECTION 13.05	CERTIFICATE OF COMPLIANCE	60
SECTION 13.06	MAINTAIN LICENSES	60
SECTION 13.07	ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS	60
SECTION 13.08	INFORM THE LENDER OF MATERIAL EVENTS	60
SECTION 13.09	INTENTIONALLY OMITTED	62
SECTION 13.10	INSPECTION	62
SECTION 13.11	COMPLIANCE WITH APPLICABLE LAWS	62
SECTION 13.12	WARRANTY OF TITLE	62
SECTION 13.13	DEFENSE OF ACTIONS	62
SECTION 13.14	ALTERATIONS TO THE MORTGAGED PROPERTIES	63
SECTION 13.15	ERISA	63
SECTION 13.16	LOAN DOCUMENT TAXES	63
SECTION 13.17	FURTHER ASSURANCES	64
SECTION 13.18	MONITORING COMPLIANCE	64
SECTION 13.19	LEASES	64
SECTION 13.20	INTENTIONALLY OMITTED	64
SECTION 13.21	TRANSFER OF OWNERSHIP INTERESTS OF THE BORROWER PARTIES	64
SECTION 13.22	CHANGE IN SENIOR MANAGEMENT	66
SECTION 13.23	DATE-DOWN ENDORSEMENTS	67
SECTION 13.24	GEOGRAPHICAL DIVERSIFICATION	67
SECTION 13.25	OWNERSHIP OF MORTGAGED PROPERTIES	67

ii

ARTICLE XIV		67
SECTION 14.01	OTHER ACTIVITIES	67
SECTION 14.02	VALUE OF SECURITY	68
SECTION 14.03	ZONING	68
SECTION 14.04	LIENS	68
SECTION 14.05	SALE	68
SECTION 14.06	INDEBTEDNESS	69
SECTION 14.07	PRINCIPAL PLACE OF BUSINESS	69
SECTION 14.08	FREQUENCY OF REQUESTS	69
SECTION 14.09	CHANGE IN PROPERTY MANAGEMENT	69
SECTION 14.10	CONDOMINIUMS	69
SECTION 14.11	RESTRICTIONS ON PARTNERSHIP DISTRIBUTIONS	69
SECTION 14.12	LINES OF BUSINESS	69
SECTION 14.13	LIMITATION ON UNIMPROVED REAL PROPERTY AND NEW CONSTRUCTION	69
SECTION 14.14	DIVIDEND PAYOUT	70
ARTICLE XV		70
SECTION 15.01	FINANCIAL DEFINITIONS	70
SECTION 15.02	COMPLIANCE WITH DEBT SERVICE COVERAGE RATIOS	74
SECTION 15.03	COMPLIANCE WITH LOAN TO VALUE RATIOS	74
SECTION 15.04	COMPLIANCE WITH CONCENTRATION TEST	74
SECTION 15.05	COMPLIANCE WITH REIT’S NET WORTH TEST	74
SECTION 15.06	COMPLIANCE WITH REIT’S TOTAL INDEBTEDNESS TO CONSOLIDATED TOTAL ASSETS RATIO	74
SECTION 15.07	COMPLIANCE WITH REIT’S CONSOLIDATED EBITDA TO INTEREST RATIO	74
SECTION 15.08	COMPLIANCE WITH REIT’S CONSOLIDATED EBITDA TO FIXED CHARGE RATIO	75
ARTICLE XVI		75
SECTION 16.01	STANDBY FEE AND RATE PRESERVATION FEE	75
SECTION 16.02	ORIGINATION FEES	75
SECTION 16.03	DUE DILIGENCE FEES	75
SECTION 16.04	LEGAL FEES AND EXPENSES	76
SECTION 16.05	MBS-RELATED COSTS	76
SECTION 16.06	FAILURE TO CLOSE ANY REQUEST	76
SECTION 16.07	OTHER FEES	76
ARTICLE XVII		77
SECTION 17.01	EVENTS OF DEFAULT	77
ARTICLE XVIII		79
SECTION 18.01	REMEDIES; WAIVERS	79
SECTION 18.02	WAIVERS; RESCISSION OF DECLARATION	79
SECTION 18.03	THE LENDER’S RIGHT TO PROTECT COLLATERAL AND PERFORM COVENANTS AND OTHER OBLIGATIONS	80
SECTION 18.04	NO REMEDY EXCLUSIVE	80
SECTION 18.05	NO WAIVER	80
SECTION 18.06	NO NOTICE	80
SECTION 18.07	APPLICATION OF PAYMENTS	80
ARTICLE XIX		80
SECTION 19.01	SPECIAL POOL PURCHASE CONTRACT	81
SECTION 19.02	ASSIGNMENT OF RIGHTS	81
SECTION 19.03	RELEASE OF COLLATERAL	81
SECTION 19.04	REPLACEMENT OF LENDER	81
SECTION 19.05	FANNIE MAE AND LENDER FEES AND EXPENSES	81
SECTION 19.06	THIRD-PARTY BENEFICIARY	82

iii

ARTICLE XX		82
SECTION 20.01	INSURANCE AND REAL ESTATE TAXES	82
SECTION 20.02	REPLACEMENT RESERVES	82
ARTICLE XXI		82
SECTION 21.01	SWAP	82
SECTION 21.02	SWAP TERMS	83
SECTION 21.03	SWAP SECURITY AGREEMENT; DELIVERY OF SWAP PAYMENTS	83
SECTION 21.04	TERMINATION	83
SECTION 21.05	PERFORMANCE UNDER SWAP DOCUMENTS	84
SECTION 21.06	APPROVED SWAPS	84
ARTICLE XXII		84
SECTION 22.01	PERSONAL LIABILITY TO THE BORROWER PARTIES	84
ARTICLE XXIII		85
SECTION 23.01	COUNTERPARTS	86
SECTION 23.02	AMENDMENTS, CHANGES AND MODIFICATIONS	86
SECTION 23.03	PAYMENT OF COSTS, FEES AND EXPENSES	86
SECTION 23.04	PAYMENT PROCEDURE	87
SECTION 23.05	PAYMENTS ON BUSINESS DAYS	87
SECTION 23.06	CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL	87
SECTION 23.07	SEVERABILITY	88
SECTION 23.08	NOTICES	88
SECTION 23.09	FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS	91
SECTION 23.10	TERM OF THIS AGREEMENT	91
SECTION 23.11	ASSIGNMENTS; THIRD-PARTY RIGHTS	91
SECTION 23.12	HEADINGS	91
SECTION 23.13	GENERAL INTERPRETIVE PRINCIPLES	91
SECTION 23.14	INTERPRETATION	92
SECTION 23.15	STANDARDS FOR DECISIONS, ETC	92
SECTION 23.16	DECISIONS IN WRITING	92
SECTION 23.17	JOINT AND SEVERAL LIABILITY	92

iv

SCHEDULE I	-	Summary of Credit Facility Structure
EXHIBIT A	-	Schedule of Initial Mortgaged Properties and Initial Valuations
EXHIBIT B	-	Fixed Facility Note
EXHIBIT C	-	Intentionally Omitted
EXHIBIT D	-	Compliance Certificate
EXHIBIT E	-	Sample Facility Debt Service
EXHIBIT F	-	Organizational Certificate
EXHIBIT G	-	Intentionally Omitted
EXHIBIT H	-	Revolving Credit Endorsement
EXHIBIT I	-	Variable Facility Note
EXHIBIT J	-	Tie-In Endorsement
EXHIBIT K	-	Conversion Request
EXHIBIT L	-	Conversion Amendment
EXHIBIT M	-	Rate Setting Form
EXHIBIT N	-	Rate Confirmation Form
EXHIBIT O	-	Advance Confirmation Instrument
EXHIBIT P	-	Future Advance Request
EXHIBIT Q	-	Reborrowing Request
EXHIBIT R	-	Reborrowing Amendment
EXHIBIT S	-	Collateral Addition Request
EXHIBIT T	-	Collateral Release Request
EXHIBIT U	-	Confirmation of Obligations
EXHIBIT V	-	Credit Facility Expansion Request
EXHIBIT W	-	Variable Facility Termination Request
EXHIBIT X	-	Variable Facility Termination Document
EXHIBIT Y	-	Credit Facility Termination Request
EXHIBIT Z	-	Collateral Substitution Request
EXHIBIT AA	-	Schedule of Approved Property Management Agreements
EXHIBIT BB	-	Independent Unit Encumbrances
EXHIBIT CC	-	Collateral Addition Description Package
EXHIBIT DD	-	Collateral Substitution Description Package
EXHIBIT EE	-	Collateral Substitution Supporting Documents
EXHIBIT FF	-	Amended and Restated Guaranty
EXHIBIT GG	-	Swap Security Agreement
EXHIBIT HH	-	DUS Properties
EXHIBIT II	-	Approved Swaps

v

SCHEDULE I
(MAA I)

          SUMMARY OF CREDIT FACILITY STRUCTURE – PRIOR TO NOVEMBER 1, 2004

		Facility Fees	Standby Fee	Facility Termination Fee
Initial Commitment
Fixed	$        110,000,000	57 bps (1)
Variable	$            9,367,000	67 bps	15 bps	18 bps
Total	$        119,367,000			through Variable Facility Termination Date as calculated in Agreement
Original Expanded Commitment	Amounts above
Fixed	$        110,000,000
Variable	$            9,367,000
Total	$        119,367,000
	Up to
Fixed	$        110,000,000
Variable	$          28,382,000
Total	$        138,382,000
	Net Amount Equal to
Fixed	-	65 bps (1) (2)
Variable	$          19,015,000	72 bps	15 bps	18 bps
Total	$          19,015,000			through Variable Facility Termination Date as calculated in Agreement
Amended and Restated
Commitment (4)	Amounts above
Fixed	$        110,000,000
Variable	$          28,382,000
Total	$        138,382,000
	Up to
Fixed	$        110,000,000
Variable	$          50,000,000
Total	$        160,000,000
	Net Amount Equal to
Fixed	-	50 bps (1) (3)
Variable	$          21,618,000	60 bps	15 bps	18 bps
Total	$          21,618,000			through Variable Facility Termination Date as calculated in Agreement

NOTES:

(1) All Fixed Facility Fees reflect interest only option.

(2) The Fixed Facility Fee for this tranche with the amortizing option is 57 bps.

(3) The Fixed Facility Fee for this tranche with the amortizing option is 43.5 bps.

(4) Although not shown here, the Amended and Restated Commitment includes those amounts by which the Commitment is expanded beyond the amounts shown here to reflect additional capacity as result of the payoff of the Blackstone JV properties up to a total maximum commitment of $250 million.

I-1

          SUMMARY OF CREDIT FACILITY STRUCTURE – ON AND AFTER NOVEMBER 1, 2004

		Facility Fees	Standby Fee	Facility Termination Fee
FIXED				18 bps - through Variable Facility Termination Date as calculated in Agreement
Existing Fixed Advances	$110,000,000	57 bps (1)
Future Fixed Advances drawn (i) after 10/31/2004 and prior to 1/1/2006 or (ii) from the Reserved Amount at any time (3)		52 bps (1) (2)	15 bps
Future Fixed Advances drawn after 1/1/2006 and not from the Reserved Amount		(3) The number of basis points determined at the time of such increase or conversion by Lender as the Fixed Facility Fee for such Fixed Advances	(3) The number of basis points determined by Lender as the Standby Fee at the time of the increase of the Commitment
VARIABLE				18 bps - through Variable Facility Termination Date as calculated in Agreement
Variable Advances (i) Rolling or drawn after 10/31/2004 and prior to 1/1/2006 (ii) drawn from the Reserved Amount Reserved Amount at any time (3)		62 bps	15 bps
Variable Advances Rolling after 1/1/2006		62 bps
Variable Advances drawn after 1/1/2006 and not from the Reserved Amount		(3) The number of basis points determined at the time of such increase or conversion by Lender as the Variable Facility Fee for such Variable Advances	(3) The number of basis points determined by Lender as the Standby Fee at the time of the increase of the Commitment

NOTES:

(1) All Fixed Facility Fees reflect interest only option.

(2) The Fixed Facility Fee after 10/31/2004 with the amortizing option is 45.5 bps.

(3)All Fees for the Commitment are subject to change after January 1, 2006 unless the Borrower pays the Rate Preservation Fee in which case the pricing shall not change for so long as the Rate Preservation Fee is paid, provided that in no event shall the Fixed Facility Fee exceed 72 basis points.

I-2

(MAA I)

MID-AMERICA APARTMENT COMMUNITIES LP
SUMMARY OF CREDIT FACILITY STRUCTURE

MAA I Maturity Dates and Availability Period

	Variable Facility Termination Date (Variable Advance Maturity Date)	Fixed Facility Availability Period
Aggregate Commitment equal to or less than $80,000,000 (1)	December 1, 2011	December 1, 2006
Aggregate Commitment greater than $80,000,000 but less than $160,000,000 (1)	December 1, 2012	December 1, 2007
Aggregate Commitment greater than $160,000,000 (1)	December 1, 2013	December 1, 2008

(1) If the Borrower has both Fixed and Variable Commitments, the Variable Commitment shall be designated as the first advance for the purposes of determining maturity.

MAA I Existing Fixed Note Maturity Dates

Note Amount	Date of Note	Maturity Date
$65,000,000	August 23, 2000	November 1, 2009
$25,000,000	May 23, 2001	July 1, 2008
$20,000,000	November 28, 2001	December 1, 2006

(MAA I)

MAA II Maturity Dates and Availability Period

	Variable Facility Termination Date (on Variable Advance Maturity Date)	Fixed Facility Availability Period
Aggregate Commitment equal to or less than $120,000,000 (1)	December 1, 2010	December 1, 2005
Aggregate Commitment greater than $120,000,000 but less than $160,000,000 (1)	December 1, 2011	December 1, 2006
Aggregate Commitment greater than $160,000,000 but less than $200,000,000 (1)	December 1, 2012	December 1, 2007
Aggregate Commitment greater than $200,000,000 but less than $320,000,000 (1)	December 1, 2013	December 1, 2008
Aggregate Commitment greater than $320,000,000 (1)	December 1, 2014	December 1, 2009

(1) If the Borrower has both Fixed and Variable Commitments, the Variable Commitment shall be designated as the first advance for the purposes of determining maturity.

A-2

(MAA I)

	MAA #1	MAA #2	Total
Initial Commitment	$ 119,367,000	$ 183,372,000	$ 302,739,000
Original Expanded Commitment	Amounts above $ 119,367,000 Up to $ 138,382,000 Net Amount Equal to $ 19,015,000	Amounts above $ 183,372,000 Up to $ 413,374,000 Net Amount Equal to $ 230,002,000	Amounts above $ 302,739,000 Up to $ 551,756,000 Net Amount Equal to $ 249,017,000
Amended and Restated Commitment Count	Amounts above $ 138,382,000 Up to $ 250,000,000 Net Amount Equal to $ 21,618,000	Amounts above $ 413,374,000 Up to $ 600,000,000 Net Amount Equal to $ 37,626,000	Amounts above $ 551,756,000 Up to $ 850,000,000 Net Amount Equal to $ 159,244,000
At 4-01-04:
Available	$ 183,769,000	$ 457,526,000	$ 641,295,000
Collateralized incl new additions	$ 183,769,000	$ 457,526,000	$ 641,295,000
Net available but uncollateralized	$ 0	$ 0	$ 0
Expansion capacity	$ 250,000,000	$ 600,000,000	$ 850,000,000
Expansion less collateralized $	$ 66,231,000	$ 142,474,000
Increase in availability	$ 66,231,000	$ 142,474,000
4/1/04 Additions	$ 24,262,000	$ 20,918,000

A-3

(MAA I)

EXHIBIT A TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

Property Name	County	Property Address	Initial Valuation
Paddock Club Brandon I & II	Hillsborough	Brandon, FL	$29,120,000
Paddock Club Mandarin	Duval	Jacksonville, FL	$17,830,000
Woodbridge at the Lake	Duval	Jacksonville, FL	$7,620,000
Paddock Park Ocala II	Marion	Ocala, FL	$15,530,000
Paddock Club Tallahassee I	Leon	Tallahassee, FL	$11,840,000
Courtyards at Campbell Apartments	Dallas	Dallas, TX	$10,910,000
Deer Run Apartments	Dallas	Dallas, TX	$12,930,000
Paddock Club Gainesville	Alachua	Gainesville, FL	$17,100,000
Kenwood Club	Harris	Katy, TX	$18,000,000
Balcones Woods	Travis	Austin, TX	$22,000,000
Paddock Club Panama City Apartments	Bay	Panama City, FL	$13,000,000
Paddock Club Tallahassee II Apartments	Leon	Tallahassee, FL	$6,675,000
The Corners	Forsyth	Winston-Salem, NC	$8,170,000
Jefferson Pines	Harris	Houston, TX	$21,100,000
Los Rios	Collin	Plano, TX	$32,500,000

A-4

EXHIBIT B TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FIXED FACILITY NOTE

US $____________ ________________________

          FOR VALUE RECEIVED, the undersigned (collectively, the “Borrower”) promise to pay to the order of PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”) the principal sum of ___________________________ AND NO/100 DOLLARS (US $____________), with interest accruing on the unpaid principal balance from the date of disbursement until fully paid at the annual rate of percent (____%).

          This Note is executed and delivered by Borrower pursuant to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 by and among Borrower, Mid-America Apartments of Texas, L.P., a Texas limited partnership, and Lender (as amended from time to time, the “Master Agreement”), to evidence the obligation of Borrower to repay a Fixed Facility Advance made by Lender to Borrower in accordance with the terms of the Master Agreement. This Note is entitled to the benefit and security of the Loan Documents provided for in the Master Agreement, to which reference is hereby made for a statement of all of the terms and conditions under which the Fixed Facility Advance evidenced hereby is made.

          1.          Defined Terms. As used in this Note, (i) the term “Lender” means the holder of this Note, (ii) the term “Indebtedness” means the principal of, interest on, or any other amounts due at any time under, this Note, the Security Instruments or any other Loan Document, including prepayment premiums, late charges, default interest, and advances to protect the security of the Security Instruments under Section 12 of the Security Instruments and (iii) a “Business Day” means any day other than a Saturday, Sunday or any day on which Lender is not open for business. Event of Default and other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Master Agreement (or, if not defined in the Master Agreement, as defined in the Security Instruments (as defined in Paragraph 5).

          2.          Address for Payment. All payments due under this Note shall be payable at 2200 Ross Avenue, Suite 4900E, Dallas, Texas 75201, or such other place as may be designated by written notice to Borrower from or on behalf of Lender.

          3.          Payment of Principal and Interest. Principal and interest shall be paid as follows:

          (a)          Unless disbursement of principal is made by Lender to Borrower on the first day of the month, interest for the period beginning on the date of disbursement and ending on

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and including the last day of the month in which such disbursement is made shall be payable simultaneously with the execution of this Note. Interest under this Note shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

          (b)           Consecutive monthly installments of interest, each in the amount of Dollars (US $______), shall be payable on the first day of each month beginning on _________________, until the entire unpaid principal balance evidenced by this Note is fully paid. Any accrued interest remaining past due for 30 days or more shall be added to and become part of the unpaid principal balance and shall bear interest at the rate or rates specified in this Note, and any reference below to “accrued interest” shall refer to accrued interest which has not become part of the unpaid principal balance. Any remaining principal and interest shall be due and payable on _______________, 200_or on any earlier date on which the unpaid principal balance of this Note becomes due and payable, by acceleration or otherwise (the “Maturity Date”). The unpaid principal balance shall continue to bear interest after the Maturity Date at the Default Rate set forth in this Note until and including the date on which it is paid in full.

          (c)          Any regularly scheduled monthly installment of interest that is received by Lender before the date it is due shall be deemed to have been received on the due date solely for the purpose of calculating interest due.

          4.          Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness that is less than all amounts due and payable at such time, Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Borrower agrees that neither Lender’s acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender’s application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.

          5.          Security. The Indebtedness is secured, among other things, by multifamily mortgages, deeds to secure debt or deeds of trust dated as of the date of this Note (the “Security Instruments”), and reference is made to the Security Instruments for other rights of Lender concerning the collateral for the Indebtedness.

          6.          Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, the prepayment premium payable under Paragraph 10, if any, and all other amounts payable under this Note and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower. Lender may exercise this option to accelerate regardless of any prior forbearance.

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          7.          Late Charge. If any monthly installment due hereunder is not received by Lender on or before the 10^th day of each month or if any other amount payable under this Note or under the Security Instruments or any other Loan Document is not received by Lender within 10 days after the date such amount is due, counting from and including the date such amount is due, Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to 5 percent of such monthly installment or other amount due. Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the loan evidenced by this Note (the “Loan”), and that it is extremely difficult and impractical to determine those additional expenses. Borrower agrees that the late charge payable pursuant to this Paragraph represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Paragraph 8.

          8.          Default Rate. So long as any monthly installment or any other payment due under this Note remains past due for 30 days or more, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or other payment due, as applicable, at a rate (the “Default Rate”) equal to the lesser of 4 percentage points above the rate stated in the first paragraph of this Note or the maximum interest rate which may be collected from Borrower under applicable law. If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate. Borrower also acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, that, during the time that any monthly installment or payment under this Note is delinquent for more than 30 days, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender’s ability to meet its other obligations and to take advantage of other investment opportunities, and that it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any monthly installment or other payment due under this Note is delinquent for more than 30 days, Lender’s risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk. Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

          9.          Limits on Personal Liability.

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          The provisions of Article 22.01 of the Master Agreement (entitled “Limits on Personal Liability”) are hereby incorporated into this Note by this reference to the fullest extent as if the text of such Article were set forth in its entirety herein.

          10.          Voluntary and Involuntary Prepayments.

          (a)          A prepayment premium shall be payable in connection with any prepayment made under this Note as provided below:

(1)          Borrower may voluntarily prepay all (but not less than all) of the unpaid principal balance of this Note only on the last calendar day of a calendar month and only if Borrower has complied with all of the following:
	(i)	Borrower must give Lender at least 30 days, but not more than 60 days, prior written notice of its intention to make such prepayment (the “Prepayment Notice”).
	(ii)	The Prepayment Notice shall be addressed to Lender and shall include, at a minimum, the date upon which Borrower intends to make the prepayment (the “Intended Prepayment Date”). Borrower acknowledges that the Lender is not required to accept any voluntary prepayment of this Note on any day other than the last calendar day of a calendar month. If the last calendar day of a calendar month is not a Business Day, then the Borrower must make the payment on the Business Day immediately preceding the last calendar day of a calendar month. For all purposes, including the accrual of interest and the calculation of the prepayment premium, any prepayment received by Lender on any day other than the last calendar day of a calendar month shall be deemed to have been received on the last calendar day of the month in which such prepayment occurs.
	(iii)	Any prepayment shall be made by paying (A) the amount of principal being prepaid, (B) all accrued interest, (C) all other sums due Lender at the time of such prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
	(iv)	If, for any reason, Borrower fails to prepay this Note (i) within five (5) Business Days after the Intended Prepayment Date or (ii) if the prepayment occurs in a month other than the month stated in the original Prepayment Notice, then Lender shall have the right, but

B-4

	not the obligation, to recalculate the prepayment premium based upon the date that Borrower actually prepays this Note and to make such calculation as described in Schedule A attached hereto. For purposes of such recalculation, such new prepayment date shall be deemed the “Intended Prepayment Date.”
(2)           Upon Lender’s exercise of any right of acceleration under this Note, Borrower shall pay to Lender, in addition to the entire unpaid principal balance of this Note outstanding at the time of the acceleration, (A) all accrued interest and all other sums due Lender under this Note and the other Loan Documents, and (B) the prepayment premium calculated pursuant to Schedule A.
(3)           Any application by Lender of any collateral or other security to the repayment of any portion of the unpaid principal balance of this Note prior to the Maturity Date and in the absence of acceleration shall be deemed to be a partial prepayment by Borrower, requiring the payment to Lender by Borrower of a prepayment premium.

          (b)          Notwithstanding the provisions of Paragraph 10(a), no prepayment premium shall be payable with respect to any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under any Security Instrument or as provided in subparagraph (c) of Schedule A.

          (c)          Schedule A is hereby incorporated by reference into this Note.

          (d)          Any required prepayment of less than the entire unpaid principal balance of this Note shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless Lender agrees otherwise in writing.

          (e)          Borrower recognizes that any prepayment of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from a default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender’s ability to meet its commitments to third parties. Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages. Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth on Schedule A represents a reasonable estimate of the damages Lender will incur because of a prepayment.

          (f)          Borrower further acknowledges that the prepayment premium provisions of this Note are a material part of the consideration for the loan evidenced by this Note, and

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acknowledges that the terms of this Note are in other respects more favorable to Borrower as a result of Borrower’s voluntary agreement to the prepayment premium provisions.

          11.     Costs and Expenses. Borrower shall pay on demand all expenses and costs, including fees and out-of-pocket expenses of attorneys and expert witnesses and costs of investigation, incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.

          12.      Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instruments, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower’s obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender.

          13.     Waivers. Except as expressly provided in the Master Agreement, presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness are waived by Borrower and all endorsers and guarantors of this Note and all other third party obligors.

          14.     Loan Charges. Borrower agrees to pay an effective rate of interest equal to the sum of the interest rate provided for in this Note and any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the loan evidenced by this Note and any other fees or amounts to be paid by Borrower pursuant to any of the other Loan Documents. Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the maximum interest rate permitted to be charged under applicable law. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the

B-6

amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the stated term of the Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note.

          15.     Commercial Purpose. Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes.

          16.     Counting of Days. Except where otherwise specifically provided, any reference in this Note to a period of “days” means calendar days, not Business Days.

          17.     Governing Law; Consent to Jurisdiction and Venue; WAIVER OF TRIAL BY JURY. The provisions of Section 23.06 of the Master Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated into this Note by this reference to the fullest extent as if the text of such Section were set forth in its entirety herein.

          18.     Captions. The captions of the paragraphs of this Note are for convenience only and shall be disregarded in construing this Note.

          19.     Notices. All notices, demands and other communications required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 23.08 of the Master Agreement.

          20.     Security for this Note. The indebtedness evidenced by this Note is secured by other Security Documents executed by Borrower or its Affiliates. Reference is made hereby to the Master Agreement and the Security Documents for additional rights and remedies of Lender relating to the indebtedness evidenced by this Note. Each Security Document shall be released in accordance with the provisions of the Master Agreement and the Security Documents.

          21.     Fixed Facility. This Note is issued as part of the Fixed Facility established in accordance with the terms of the Master Agreement. Borrower may not re-borrow any amounts under this Note which it has previously borrowed and repaid under this Note.

          22.     Cross-Default with Master Agreement. The occurrence of an Event of Default under the Master Agreement shall constitute an “Event of Default” under this Note, and, accordingly, upon the occurrence of an Event of Default under the Master Agreement, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof.

B-7

          IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal or has caused this Note to be signed and delivered under seal by its duly authorized representative. Borrower intends that this Note shall be deemed to be signed and delivered as a sealed instrument.

	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
SEAL		By:
		Name:
		Title:
	MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
SEAL	By:
	Name:
	Title:

B-8

          Pay to the order of _________________, without recourse.

PRUDENTIAL MULTIFAMILY MORTGAGE,
INC., a Delaware corporation

By:

Name:

Title:

B-9

ATTACHED SCHEDULES. The following Schedules are attached to this Note:

x Schedule A Prepayment Premium (required)

o Schedule B Modifications to Multifamily Note

B-10

SCHEDULE A

PREPAYMENT PREMIUM

Any prepayment premium payable under Paragraph 10 of this Note shall be computed as follows:

(a) If the prepayment is made at any time after the date of this Note and before the last calendar day of ____________, ____ (“Yield Maintenance Period End Date”) [insert the appropriate month and year, six months prior to the Maturity Date], the prepayment premium shall be the greater of:

(i)	1% of the amount of principal being prepaid; or
(ii)	The product obtained by multiplying:
	(A)	the amount of principal being prepaid,
	by
	(B)	the difference obtained by subtracting from the interest rate on this Note the yield rate (the “Yield Rate”) on the __________% U.S. Treasury Security due _____________________ (the “Specified U.S. Treasury Security”), as the Yield Rate is reported in The Wall Street Journal on the twenty-fifth Business Day preceding (x) the Intended Prepayment Date, or (y) the date Lender accelerates the Loan or otherwise accepts a prepayment pursuant to Paragraph 10(a)(3) of this Note,
		by
	(C)	the present value factor calculated using the following formula:

1 - (1 + r)^-n/12

r

[r = Yield Rate

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n = the number of months remaining between (1) either of the following: (x) in the case of a voluntary prepayment, the last calendar day of the calendar month during which the prepayment is made, or (y) in any other case, the date on which Lender accelerates the unpaid principal balance of this Note and (2) the Yield Maintenance Period End Date]

In the event that no Yield Rate is published for the Specified U.S. Treasury Security, then the nearest equivalent U.S. Treasury Security shall be selected at Lender’s discretion. If the publication of such Yield Rates in The Wall Street Journal is discontinued, Lender shall determine such Yield Rates from another source selected by Lender.

(b)	If the prepayment is made on or after the Yield Maintenance Period End Date but before the last calendar day of the 4th month prior to the month in which the Maturity Date occurs, the prepayment premium shall be 1% of the amount of principal being prepaid.
(c)	Notwithstanding the provisions of Paragraph 10(a) of this Note, no prepayment premium shall be payable with respect to any prepayment made on or after the last calendar day of the 4th month prior to the month in which the Maturity Date occurs.

INITIAL(S)

INITIAL(S)

B-12

EXHIBIT C TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTENTIONALLY OMITTED

EXHIBIT D TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COMPLIANCE CERTIFICATE

     The undersigned (individually and collectively, the “Borrower Parties”) hereby certify to Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) and Fannie Mae as follows:

          Section 1.     Master Agreement. The Borrower Parties are parties to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 by and among the Borrower Parties and the Lender (as amended from time to time, the “Master Agreement”). The rights of the Lender under the Master Agreement have been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of the Master Agreement.

          Section 2.     Satisfaction of Conditions. The Borrower Parties each hereby represents, warrants and covenants to the Lender that all conditions to the Request with respect to which this Certificate is issued have been satisfied.

          Section 3.     Capitalized Terms. All capitalized terms used but not defined in this Certificate shall have the meanings ascribed to such terms in the Master Agreement.

Dated: ________________________

THE BORROWER PARTIES:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner

D-1

	By:
		Simon R.C. Wadsworth
		Executive Vice President
MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
	By:
	Name:
	Its:

D-2

EXHIBIT E TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SAMPLE FACILITY DEBT SERVICE

For this example:
- Total Credit Facility Commitment amount is	$	120,000,000
- Variable Facility Commitment amount is	$	10,000,000
- Fixed Facility Commitment amount is	$	110,000,000
- Total Variable Facility Advances outstanding is	$	10,000,000
- Total Fixed Facility Advances outstanding is	$	110,000,000
- Unused Capacity is		0
- Variable Facility Coupon Rate is		3.0	%
- Fixed Facility Coupon Rate is		6.0	%
- Fixed Facility Amortization Period is		30 years
- Standby Fee is		15 bp/yr.
Then:
Facility Debt Service allocable to Variable Facility Advances:
$110,000,000 @ 3.0%, 30 year amortization =	$	TBD
Facility Debt Service allocable to Fixed Facility Advances:
$10,000,000 @ 6% 30 year amortization =	$	TBD
Standby Fee: $0 X 15 bp =	$	0
Facility Debt Service =	$	TBD per month

E-1

EXHIBIT F-1 TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ORGANIZATIONAL CERTIFICATE
(REIT AND OP)

          I, the undersigned, Simon R.C. Wadsworth, hereby certify as follows:

          Section 1.     Position. I am the Executive Vice President of Mid-America Apartment Communities, Inc., a Tennessee corporation (the “REIT”), and I am authorized to deliver this Certificate on behalf of the REIT for itself and as the sole general partner of Mid-America Apartments, L.P., a Tennessee limited partnership (the “OP”).

          Section 2.     Master Agreement. The REIT, OP and others (the “Borrower Parties”) entered into that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the Borrower Parties and Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) (as amended from time to time, the “Master Agreement”). The rights of the Lender under the Master Agreement have been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of the Master Agreement.

          Section 3.     Due Authorization of Request. I hereby certify that no action by the shareholders of the REIT and no action of the partners of the OP is necessary to duly authorize the execution and delivery of, and the consummation of the transaction contemplated by, the Request with respect to which this Certificate is delivered, or, if necessary, that attached as Exhibit A to this Certificate is a true copy of resolutions duly adopted at a meeting of the board of directors, partners or members, as the case may be, that authorize the action. Any such resolutions are in full force and effect and are unmodified as of the date of this Certificate.

          Section 4.     No Changes. Since the date of the most recent Organizational Certificate delivered to the Lender, or, if there are none, since the date of the Master Agreement, there have been no changes in any of the Organizational Documents of the REIT or the OP, except as set forth in Exhibit B to this Certificate, and the REIT and the OP remain in good standing or are duly qualified in the jurisdictions in which it is required to be in good standing or duly qualified under the terms of the Master Agreement.

          Section 5.     Incumbency Certificate. One or more of the persons authorized to execute and deliver any documents required to be delivered in connection with the Request are set forth on the attached Schedule.

          Section 6.     Capitalized Terms. All capitalized terms used but not defined in this Certificate shall have the meanings ascribed to such terms in the Master Agreement.

Dated: __________________, ______

[The rest of this page has been intentionally left blank.]

F-1-1

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

F-1-2

EXHIBIT A

(See Attached Resolutions, if any)

EXHIBIT B

None

EXHIBIT F-2 TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ORGANIZATIONAL CERTIFICATE
(GUARANTOR)

          I, the undersigned, _____________________, hereby certify as follows:

          Section 1.      Position. I am the ____________________ of MAC of Delaware, Inc., a Delaware corporation (the “Corporation”) the sole general partner of MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (the “Partnership”, together with the Corporation, the “Borrower Party”), and I am authorized to deliver this Certificate on behalf of the Borrower Party.

          Section 2.      Master Agreement. The Partnership is a guarantor under that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among Mid-America Apartment Communities, Inc., a Tennessee corporation, and Mid-America Apartments, L.P., a Tennessee limited partnership (together, the “Borrower”) and Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) (as amended from time to time, the “Master Agreement”). The rights of the Lender under the Master Agreement have been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of the Master Agreement.

          Section 3.      Due Authorization of Request. I hereby certify that no action by the shareholders of the Corporation and no action of the partners of the Partnership is necessary to duly authorize the execution and delivery of, and the consummation of the transaction contemplated by, the Expansion Request dated as of even date herewith, and the Collateral Addition Request dated as of even date herewith with respect to which this Certificate is delivered, or, if necessary, that attached as Exhibit A to this Certificate is a true copy of resolutions duly adopted at a meeting of the board of directors, partners or members, as the case may be, that authorize the action. Any such resolutions are in full force and effect and are unmodified as of the date of this Certificate.

          Section 4.      No Changes. Since the date of the most recent Organizational Certificate delivered to the Lender, or, if there are none, since the date of the Master Agreement, there have been no changes in any of the Organizational Documents of the Borrower Party, except as set forth in Exhibit B to this Certificate, and the Borrower Party remains in good standing or is duly qualified in the jurisdictions in which it is required to be in good standing or duly qualified under the terms of the Master Agreement.

          Section 5.      Incumbency Certificate. One or more of the persons authorized to execute and deliver any documents required to be delivered in connection with the Requests are set forth in the resolutions attached hereto.

          Section 6.      Capitalized Terms. All capitalized terms used but not defined in this Certificate shall have the meanings ascribed to such terms in the Master Agreement.

F-2-1

Dated as of ____________________, ________

F-2-2

[SIGNATURE PAGE TO ORGANIZATIONAL CERTIFICATE (GUARANTOR)]

MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership
By:	MAC of Delaware, Inc.,
	a Delaware corporation, its general partner

By:

Name:

Its:

F-2-3

EXHIBIT A

(See Attached Resolutions, if any)

EXHIBIT B

None

EXHIBIT G TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTENTIONALLY OMITTED

EXHIBIT H TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FUTURE ADVANCE AND REVOLVING CREDIT ENDORSEMENT

Attached to and made a part of ____________________ Policy No.

Said policy is amended by adding the following:

1.	The Company acknowledges that the insured mortgage identified in Schedule A of this Policy secures future advances of principal or a revolving credit line and provides for changes in the rate of interest calculated pursuant to a formula contained in the insured mortgage. By this endorsement, the Company insures against loss or damage which the insured sustains as a result of:
a.		The invalidity or unenforceability of the lien of the insured mortgage resulting from the provision in the insured mortgage providing for changes in the rate of interest.
b.		The loss of priority of the lien of the insured mortgage as security for the unpaid principal balance of the loan, together with interest as changed in accordance with the provisions of the insured mortgage, which loss of priority is caused by changes in the rate of interest as provided in the insured mortgage.
c.		The invalidity or unenforceability of the lien of the insured mortgage as security for future advances of principal indebtedness.
d.		The invalidity or unenforceability of the lien of the insured mortgage as a result of fluctuations of the unpaid balance of the principal indebtedness.
e.		The priority of any lien or encumbrance over the lien of the insured mortgage as security for the principal indebtedness and any future advances of principal indebtedness made after the date of the policy.
2.	This endorsement is made a part of the Policy and the insurance affected by it is subject to: (i) the Exclusions from Coverage except Paragraph 3(d), (ii) the provisions of the Conditions and Stipulations except Paragraph 8(d) and (iii) the Exceptions contained in Schedule B of the Policy. In addition, it does not insure against loss or damage resulting from:
	i.	Future advances of principal indebtedness made after Petition for Relief under the Bankruptcy Code (11 U.S.C.) by or on behalf of the mortgagor.
	ii.	The loss of priority of future advances of principal indebtedness as a result of taxes, assessments, or notice of a federal tax lien filed against the mortgagor.

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iii.	The loss of priority of future advances of principal indebtedness made after the vestee shown in Schedule A is divested as owner of the estate or interest covered by this Policy.
iv.	The loss of priority of future advances of principal indebtedness made during any period in which a declared default exists under the terms of the insured mortgage.
v.	The loss of priority of a future advance of principal indebtedness made after the insured has actual knowledge of the existence of liens, encumbrances or other matters affecting the insured premises described in Schedule A intervening between the date of the Policy and that future advance, as to such intervening lien, encumbrance or other matters.
vi.	The fact that the outstanding balance of the indebtedness secured by the mortgage is reduced to a zero balance at any time, unless the recorded mortgage provides that the reduction of the indebtedness to a zero balance shall not cause the mortgage to become extinguished by operation of law.

The total liability of the Company under said policy, binder or commitment and under this and any prior endorsements thereto shall not exceed, in the aggregate, the amount of liability stated on the face of said policy, binder or commitment, as the same may be specifically amended in dollar amount by this or any prior endorsements, and the costs which the Company is obligated to pay under the Conditions and Stipulations of the policy.

This endorsement is made a part of said policy, binder or commitment and is subject to all the terms and provisions thereof, except as modified by the provisions hereof.

Nothing herein contained shall be construed as extending or changing the effective date of the aforesaid policy, binder or commitment unless otherwise expressly stated.

[The rest of this page has been left blank intentionally.]

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          IN WITNESS WHEREOF, the Company has caused this Endorsement to be signed and sealed as of the ____ day of ____________, ______, to be valid when countersigned by an authorized officer or agent of the Company, all in accordance with its By-Laws.

Issued at  

COUNTERSIGNED:		, President
	Attest:
		, Secretary
Authorized Officer or Agent

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EXHIBIT I TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

VARIABLE FACILITY NOTE

US $

          FOR VALUE RECEIVED, the undersigned (collectively, the “Borrower”) promise to pay to the order of Prudential Multifamily Mortgage, Inc., a Delaware corporation (“Lender”), the principal sum of ______________(US $_________), with interest accruing on each Variable Facility Advance from the date of disbursement until fully disbursed at an annual rate as calculated in Section 3 hereof.

          This Note is executed and delivered by Borrower pursuant to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among Borrower, Lender and Mid-America Apartments of Texas, L.P., a Texas limited partnership (as amended from time to time, the “Master Agreement”), to evidence the obligation of Borrower to repay Variable Advances made by Lender to Borrower in accordance with the terms of the Master Agreement. This Note is entitled to the benefit and security of the Loan Documents provided for in the Master Agreement, to which reference is hereby made for a statement of all of the terms and conditions under which the Variable Advances evidenced hereby is made. The Master Agreement requires certain of the terms of each Variable Advance to be evidenced by an Advance Confirmation Instrument, and reference is hereby made to each such Advance Confirmation Instrument for such terms.

          This Note is issued as part of a Variable Facility established in accordance with the terms of the Master Agreement. Subject to the terms, conditions and limitations of Article II of the Master Agreement, Borrower may re-borrow any amounts under this Note which they have previously borrowed and repaid under this Note.

          1.      Defined Terms. As used in this Note, (i) the term “Lender” means the holder of this Note, (ii) the term “Indebtedness” means the principal of, interest on, or any other amounts due at any time under, this Note, the Security Instruments or any other Loan Document, including prepayment premiums, late charges, default interest, and advances to protect the security of the Security Instruments under Section 12 of the Security Instruments, and (iii) a “Business Day” means any day other than a Saturday, Sunday or any day on which Lender is not open for business. Event of Default and other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Master Agreement (or, if not defined in the Master Agreement, as defined in the Security Instruments (as defined in Paragraph 5).

          2.      Address for Payment. All payments due under this Note shall be payable at 2200 Ross Avenue, Suite 4900E, Dallas, Texas 75201, or such other place as may be designated by written notice to Borrower from or on behalf of Lender.

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          3.      Payment of Principal and Interest. Principal and interest shall be paid as follows:

          (a)     This Note shall evidence Variable Advances made from time to time under the Master Agreement. Each Variable Advance shall bear interest at a rate determined in accordance with Section 4.01 of the Master Agreement.

          (b)     Borrower shall pay imputed interest on each Variable Advance in advance in the form of a Discount in accordance with Section 2.04(a) of the Master Agreement (except that Borrower shall pay actual interest on the Variable Advance for the partial month period, if any, described in Section 2.04(b) of the Master Agreement, in accordance with the terms of such Section). If not sooner paid, the entire principal amount of each Variable Advance shall be due and payable on the maturity date of the applicable Variable Advance (the “Maturity Date”) in accordance with Section 2.03 of the Master Agreement. In addition to payment of principal and the Discount, the Borrower shall pay the Variable Facility Fee due on each Variable Advance in accordance with Section 2.04(c) of the Master Agreement. No Variable Advance may have a Maturity Date later than, and any then outstanding Variable Advance shall be due and payable in full on, the related Variable Facility Termination Date.

          4.     Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness that is less than all amounts due and payable at such time, Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Borrower agrees that neither Lender’s acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender’s application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.

          5.      Security. The Indebtedness is secured, among other things, by the Security Instruments described in the Master Agreement and reference is made to the Security Instruments for other rights of Lender concerning the collateral for the Indebtedness.

          6.      Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, the prepayment premium payable under Paragraph 10, if any, and all other amounts payable under this Note and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower. Lender may exercise this option to accelerate regardless of any prior forbearance.

          7.      Late Charge. If any monthly installment due hereunder is not received by Lender on or before the 10^th day of each month or if any other amount payable under this Note or under the Security Instruments or any other Loan Document is not received by Lender within 10 days after the date such amount is due, counting from and including the date such amount is due, Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to 5 percent of such monthly installment or other amount due. Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the loan evidenced by this Note (the “Loan”), and that it is extremely difficult and

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impractical to determine those additional expenses. Borrower agrees that the late charge payable pursuant to this Paragraph represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Paragraph 8.

          8.      Default Rate. So long as any monthly installment or any other payment due under this Note remains past due for 30 days or more, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or other payment due, as applicable, at a rate (the “Default Rate”) equal to the lesser of 4 percentage points above the rate stated in the first paragraph of this Note or the maximum interest rate which may be collected from Borrower under applicable law. If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate. Borrower also acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, that, during the time that any monthly installment or payment under this Note is delinquent for more than 30 days, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender’s ability to meet its other obligations and to take advantage of other investment opportunities, and that it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any monthly installment or other payment due under this Note is delinquent for more than 30 days, Lender’s risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk. Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of the Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

          9.      Limits on Personal Liability.

          The provisions of Article 22.01 of the Master Agreement (entitled “Limits on Personal Liability”) are hereby incorporated into this Note by this reference to the fullest extent as if the text of such Article were set forth in its entirety herein.

          10.     Voluntary and Involuntary Prepayments.

                   Pursuant to the terms of the Master Agreement, the Borrower shall pay the entire amount of the Discount on any Variable Advance in advance. Accordingly, any Variable Advance may be prepaid in whole or in part and at any time without penalty. Borrower shall give Lender five Business Days’ advance notice of any prepayment.

          11.     Costs and Expenses. Borrower shall pay on demand all expenses and costs, including fees and out-of-pocket expenses of attorneys and expert witnesses and costs of investigation, incurred by Lender as a result of any default under this Note or in connection with

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efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.

          12.     Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower’s obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender.

          13.     Waivers. Except as expressly provided in the Master Agreement, presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness are waived by Borrower and all endorsers and guarantors of this Note and all other third party obligors.

          14.     Loan Charges. Borrower agrees to pay an effective rate of interest equal to the sum of the interest rate provided for in this Note and any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the loan evidenced by this Note and any other fees or amounts to be paid by Borrower pursuant to any of the other Loan Documents. Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the maximum interest rate permitted to be charged under applicable law. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the stated term of the Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note.

          15.     Commercial Purpose. Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes.

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          16.     Counting of Days. Except where otherwise specifically provided, any reference in this Note to a period of “days” means calendar days, not Business Days.

          17.     Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. The provisions of Section 23.06 of the Master Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated into this Note by this reference to the fullest extent as if the text of such Section were set forth in its entirety herein.

          18.     Captions. The captions of the paragraphs of this Note are for convenience only and shall be disregarded in construing this Note.

          19.     Notices. All notices, demands and other communications required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 23.08 of the Master Agreement.

          20.     Cross-Default with Master Agreement. The occurrence of an Event of Default under the Master Agreement shall constitute an “Event of Default” under this Note, and, accordingly, upon the occurrence of an Event of Default under the Master Agreement, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof.

          21.     Advance Confirmation Instruments; Accounting for Variable Advances. The terms of the Master Agreement and this Note govern the repayment, and all other terms relating to each Variable Advance. However, Borrower shall execute an Advance Confirmation Instrument to create a physical instrument evidencing the Variable Advance. The Advance Confirmation Instrument for a Variable Advance executed by Borrower in accordance with Section 4.02 of the Master Agreement shall set forth the amount, term, Discount, Closing Date and certain other terms of the Variable Advance. The Advance Confirmation Instrument shall conclusively establish each of the terms described in the preceding sentence, absent manifest error. The Variable Advance evidenced by the Advance Confirmation Instrument does not represent a separate indebtedness from that evidenced by this Note. In making proof of this Note, no other documents other than this Note shall be required. In making proof of the amount and terms of the outstanding Variable Advances under this Note, this Note, the Advance Confirmation Instruments for the Variable Advances, and Lender’s records concerning payments made by Borrower under this Note, shall be conclusive evidence of the terms and outstanding amounts of each Variable Advance, absent manifest error.

          23.     Priority of Advances. Each Variable Advance under this Note shall be evidenced by an Advance Confirmation Instrument, and the lien of each Security Document executed by Borrower from time to time to secure this Note, shall secure each separate Advance (and the lien of each Security Instrument and other Security Document executed by the Borrower to secure its obligations under the Loan Documents) to the same extent and with the same effect as if the Advance had been made (and any guaranty obligation had been incurred) on the date on which (i) with respect to each other Security Instrument, the Security Instrument is recorded in the land records of the jurisdiction in which the real property covered by the Security Instrument

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is located, or (ii) with respect to each other Security Document, the date on which the Security Document is executed and delivered to Lender.

          ATTACHED SCHEDULES. The following Schedules are attached to this Note:

           o      Schedule A Prepayment Premium

           o      Schedule B Modifications to Multifamily Note

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          IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal or has caused this Note to be signed and delivered under seal by its duly authorized representative. Borrower intends that this Note shall be deemed to be signed and delivered as a sealed instrument.

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

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          Pay to the order of _________________ without recourse.

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
a Delaware corporation

By:

Name:

Title:

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EXHIBIT J TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

TIE-IN ENDORSEMENT

To be annexed to and form a part of Policy No. ________________.

The said policy is hereby amended in the following manner:

The Company acknowledges that the land described in Schedule A of this policy is part of the security for an indebtedness in the amount of $____________________ which indebtedness is also secured by mortgages or deeds of trust which are insured concurrently by the following policies:

Policy No. County State Amount

K-1

Anything to the contrary notwithstanding in Paragraph 6(a)(ii) of the Conditions and Stipulations of the Policy, the insurance coverage afforded in this Policy is aggregated with the insurance coverage in all of the other policies identified in this endorsement so the effective insurance coverage is $___________________. The total liability of the Company under this and all policies identified in this endorsement shall not exceed such amount, but its liability in this Policy for the land described in Schedule A remains limited by the provisions of Paragraph 6(a)(i) and 6(a)(iii) of the Conditions and Stipulations of this Policy. Any payment by the Company on this or any of the Policies listed in this Endorsement shall reduce pro tanto the liability of the Company under all policies, and the amount so paid shall be deemed a payment under all policies.

The total liability of the Company under said Policy and any prior endorsements attached thereto shall not exceed, in the aggregate, the face amount of said Policy, as the same may be specifically amended in dollar amount by this or any prior endorsements, and the costs which the Company is obligated under the provisions of said Policy to pay.

Nothing herein contained shall be construed as extending or changing the effective date of said commitment or policy unless otherwise expressly stated.

This endorsement is made a part of said Policy and is subject to the exclusions, schedules, endorsements, conditions, stipulations and terms thereof, except as modified by the provisions hereof.

Executed this ____ day of ____________, ______

                        _________________________________

COUNTERSIGNED:	________________________,
President
___________________
______________________________	Attest:___________________, Secretary
Authorized Signatory

K-2

EXHIBIT K TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CONVERSION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THERE TO OCCUR AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN 30 BUSINESS DAYS AFTER YOUR RECEIPT OF THE CONVERSION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS NONE OF THE LIMITATIONS CONTAINED IN SECTION 3.08 OF THE MASTER AGREEMENT IS VIOLATED, AND ALL CONDITIONS CONTAINED IN SECTION 3.09 OF THE MASTER AGREEMENT ARE SATISFIED.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: CONVERSION REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”), Mid-America Apartments of Texas, L.P., a Texas limited partnership, and the Lender (as amended from time to time, the “Master Agreement”).

Ladies and Gentlemen:

This constitutes a Conversion Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that there occur a conversion of all or a portion of the Variable Advance to the Fixed Facility Commitment in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Designation of Amount of Conversion. The amount of the conversion shall be $_________________________.

          (b)          Prepayment of Variable Advances. (If necessary) The Variable Advances Outstanding which will be prepaid on the Closing Date for the conversion are as follows:

Closing Date of Variable Advance:	___________________________________________
Maturity Date of Variable Advance:	___________________________________________

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Amount of Advance: ________________________________

(Note: Any Fixed Facility Advances made in conjunction with a conversion of all or a portion of the Variable Advance to the Fixed Facility Commitment must be accompanied by a Future Advance Request and shall be reviewed in accordance with the terms of the Master Agreement.)

          (c)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 3.09 of the Master Agreement, including (i) the Conversion Documents, as well as (ii) a Compliance Certificate and (iii) an Organizational Certificate will be delivered on or before the Closing Date.

          Section 2.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
MID-AMERICA APARTMENT COMMUNITIES,   INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

K-4

EXHIBIT L TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

          THIS ____ AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is made as of the ____ day of _______________, _____, by and among (i) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (collectively, the REIT and OP are referred to hereafter as the “Borrower”), MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAC of Texas” or the “Guarantor”; the Borrower and the Guarantor being collectively referred to herein as the “Borrower Parties”); and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties and the Lender are parties to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002, that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003, and that Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.          The parties are executing this Amendment pursuant to the Master Agreement to reflect a conversion of all or a portion of a Variable Advance to the Fixed Facility Commitment.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.          Conversion. The Variable Advance shall be reduced by, and the Fixed Facility Commitment shall be increased by, $____________________, and the definitions of “Variable Facility Commitment” and “Fixed Facility Commitment” are hereby replaced in their entirety by the following new definitions:

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          “Fixed Facility Commitment” means $________________, plus such amount as the Borrower may elect to add to the Fixed Facility Commitment in accordance with Articles III or VIII.

          “Variable Facility Commitment” means an aggregate amount of $_______________, which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 2.          Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 3.          Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 4.          Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[The rest of this page has been intentionally left blank.]

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          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an instrument under seal as of the day and year first above written.

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President
MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation,
	its general partner
	By:
	Name:
	Its:

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PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

By:

Name:

Title:

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EXHIBIT M TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

RATE SETTING FORM

          Pursuant to Section 4.01(b) of that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”) by and among Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”), the undersigned (the “Borrower”), and Mid-America Apartments of Texas, L.P., a Texas limited partnership, the Borrower hereby requests that the Lender issue to it an advance [for the purposes of refinancing the existing Indebtedness under the Note (applies to Variable Advance only)] with the following terms:

Designation of Advance	_____ Fixed Facility Advance
(Check One)	_____ Variable Advance

          FOR VARIABLE ADVANCE ONLY:

Proposed MBS Imputed Interest Rate	________%
Advance Amount	$______________________
Term	_______ months
MBS Issue Date	_______________, _______
Variable Advance Fee	_______________________
Maximum Annual Coupon Rate	________%
Discount	________%
Price	_______________________
Closing Date no later than	_______________, _______

M-1

          FOR FIXED FACILITY ADVANCE ONLY:

Proposed Pass-Through Rate	________%
Advance Amount	$______________________
Term	_______ months
MBS Issue Date	_______________, _______
Fixed Facility Fee	_______________________
Maximum Annual Coupon Rate	________%
Amortization Period	_______________________
Closing Date no later than	_______________, _______
30/360 or Actual/360	_______________________

          The Lender will provide the Borrower with written confirmation when and if it has obtained a commitment for the purchase of a Fannie Mae MBS having the characteristics described above at a price between 99-½ and 100-½ or better. In the event that the lowest available Coupon Rate is greater than that specified above, the Lender will not proceed without the prior written authorization of the Borrower.

          The Borrower certifies that all conditions contained in Article V of the Master Agreement that are required to be satisfied will be satisfied on or before the Closing Date.

          Defined terms used herein shall have the same meaning as set forth in the Master Agreement.

[Signatures on the following page]

M-2

Dated: ____________________, ____

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President

M-3

EXHIBIT N TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

RATE CONFIRMATION FORM

          Pursuant to Section 4.01(c) of that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”) by and among (a) Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”), (b) Mid-America Apartment Communities, Inc., a Tennessee corporation (the “REIT”), (c) Mid-America Apartments, L.P., a Tennessee limited partnership (“OP”; REIT and OP, collectively, the “Borrower”), and (d) Mid-America Apartments of Texas, L.P., a Texas limited partnership; and the Rate Setting Form dated                                , from the Borrower to the Lender, the Lender hereby confirms that it has obtained a commitment [for the purchase of a Fannie Mae MBS] / [for the purposes of refinancing the existing Indebtedness under the Note (applies to Variable Advance only)] with the following terms:

Designation of Advance	_____ Fixed Facility Advance
(Check One)	_____ Variable Advance

          FOR VARIABLE ADVANCE ONLY:

Advance Amount	$______________________
Term	_______ months
MBS Issue Date	_______________, _______
MBS Imputed Interest Rate	________%
Variable Advance Fee	_______________________
Maximum Annual Coupon Rate	________%
Discount	________%
Price	_______________________
Closing Date no later than	_______________, _______

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          FOR FIXED FACILITY ADVANCE ONLY:

Advance Amount	$______________________
Term	_______ months
MBS Issue Date	_______________, _______
MBS Pass-Through Rate	________%
Fixed Facility Fee	_______________________
Maximum Annual Coupon Rate	________%
Price	_______________________
Yield Maintenance Period	_______________________
Yield Rate Security	_______________________
Amortization Period	_______________________
Closing Date no later than	_______________, _______
30/360 or Actual/360	_______________________

Dated: ____________________, ______

PRUDENTIAL MULTIFAMILY MORTGAGE,
INC., a Delaware corporation

By:

Name: 

Title:

Rate Setting Date:       ____________________, ______,        ___:___ AM/PM Eastern Time

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EXHIBIT O TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ADVANCE CONFIRMATION INSTRUMENT

THIS ADVANCE CONFIRMATION INSTRUMENT (the “Advance Confirmation Instrument”) is made as of the ____ day of _______________, _____, by (a) Mid-America Apartment Communities, Inc., a Tennessee corporation (the “REIT”), (b) Mid-America Apartments, L.P., a Tennessee limited partnership (“OP”; the REIT and OP, collectively, the “Borrower”)for the benefit of Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”).

RECITALS

          A.           The Borrower, Mid-America Apartments of Texas, L.P., a Texas limited partnership, and the Lender are parties to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.            All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002, that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003, and that Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.           In accordance with this Advance Confirmation Instrument and the Master Agreement, the Lender is making a Variable Advance to the Borrower.

          D.           The Borrower is executing this Advance Confirmation Instrument pursuant to the Master Agreement to confirm certain terms of the Master Agreement and that certain _____________ Amended and Restated Renewal Variable Facility Note dated as of __________________ in the original principal amount of $____________ (as amended from time to time, the “Variable Advance Note”) relating to the Variable Advance, and the Borrower’s obligation to repay the Advance in accordance with the terms of the Variable Advance Note and this Advance Confirmation Instrument.

          NOW, THEREFORE, the Borrower, in consideration of the Lender’s making of the Variable Advance, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.          Confirmation of Advance and Terms of Advance. The Borrower hereby confirms the following terms of the Variable Advance, and confirms and agrees that it

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shall repay the Advance to the Lender in accordance with the terms of the Variable Advance Note and the Master Agreement:

Advance Amount	$_______________________
Term	_______ months
MBS Issue Date	_________________, ______
MBS Imputed Interest Rate	_______%
Variable Advance Fee	$_______________________
Coupon Rate	_______%
Discount	_______%
Price	________________________
Closing Date	_______________, ________

          Section 2.          Beneficiaries. This Advance Confirmation Instrument is made for the express benefit of the Lender.

          Section 3.          Purpose. The terms of the Master Agreement and the Variable Advance Note govern the repayment, and all other terms relating to the Variable Advance. However, this Advance Confirmation Instrument has been executed to create a physical instrument evidencing the above-described Advance under the Variable Advance Note. The Variable Advance evidenced by this Advance Confirmation Instrument does not represent a separate indebtedness from that evidenced by the Variable Advance Note.

          Section 4.          Effectiveness of Advance Confirmation Instrument. This Advance Confirmation Instrument will not be effective until the Lender funds the Variable Advance, at which time the Lender shall note the date of such funding by completing the date block at the foot of this Advance Confirmation Instrument, and executing this Advance Confirmation Instrument below such date block, and such completion shall be binding on the Borrower, absent manifest error.

          Section 5.          Capitalized Terms. All capitalized terms used in this Advance Confirmation Instrument which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 6.          Counterparts. This Advance Confirmation Instrument may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

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          IN WITNESS WHEREOF, the Borrower has executed this Advance Confirmation Instrument as an instrument under seal as of the day and year first above written.

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:	_____________________________________
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:	_________________________________
		Simon R.C. Wadsworth
		Executive Vice President

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  Date of Funding: ____________________,_____________

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a

Delaware corporation

By:________________________________________________

Name:_____________________________________________________

Title:_______________________________________________

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EXHIBIT P TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FUTURE ADVANCE REQUEST

THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU TO MAKE THE REQUESTED FUTURE ADVANCE, IF ALL CONDITIONS CONTAINED IN SECTION 5.03 OF THE MASTER AGREEMENT ARE SATISFIED, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING ON A DATE SELECTED BY US, WHICH DATE SHALL BE NOT MORE THAN THREE (3) BUSINESS DAYS AFTER YOUR RECEIPT OF THE FUTURE ADVANCE REQUEST AND THE OUR RECEIPT OF THE RATE CONFIRMATION FORM (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE). THE LENDER RESERVES THE RIGHT TO REQUIRE THAT WE POST A DEPOSIT AT THE TIME THE MBS COMMITMENT IS OBTAINED AS AN ADDITIONAL CONDITION TO YOUR OBLIGATION TO MAKE THE FUTURE ADVANCE.

____________________, ________

VIA:

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: FUTURE ADVANCE REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”), Mid-America Apartments of Texas, L.P., a Texas limited partnership, and the Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Future Advance Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the Lender make an Advance in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

(a)	Amount. The amount of the Future Advance shall be $_______________.
(b)	Designation of Facility. The Future Advance is a: [Check one]
	_____ Fixed Facility Advance
	_____ Variable Advance

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(c)	Maturity Date. The Maturity Date of the Future Advance is as follows:
	_________________, ______.
(d)	Amortization Period. [For Fixed Facility Advance only] The principal of this Fixed Facility Advance shall be amortized over a period of 30 years.
(e)	Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 5.03 of the Master Agreement, including (i) a Rate Setting Form, (ii) an Advance Confirmation Instrument (for Variable Advances only), (iii) a Fixed Facility Note (for Fixed Facility Advances only) as well as (iv) a Compliance Certificate, and (v) an Organizational Certificate, will be delivered on or before the Closing Date.

          Section 2.          Available Commitment. The information contained in the following table is true, correct and complete, to the undersigned’s knowledge. The undersigned acknowledges and agrees that the final determination of the information shall be made by the Lender, in accordance with the terms of the Master Agreement.

Currently Available Fixed Facility Credit Commitment

Currently Available Variable Advance Credit Commitment

Proposed Amount Drawn on Fixed Facility Credit Commitment

Remaining Fixed Facility Credit Commitment after Proposed Draw

Proposed Amount Drawn on Variable Advance Credit Commitment

Remaining Variable Advance Credit Commitment after the Proposed Draw

          For these purposes, the terms

(a)

“Available Fixed Facility Credit Commitment” means, at any time, the maximum amount of Fixed Facility Advances which could be issued and outstanding without causing: (i) the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period to be less than 1.40:1.0; (ii) the Aggregate Loan to Value Ratio for the Trailing 12 Month Period to be greater than 65%; or (iii) a breach of any of the Financial Covenants set forth in Article XV of the Master Agreement; and

(b)

“Available Variable Advance Credit Commitment” means, at any time, the maximum amount of Variable Advances which could be issued and outstanding without causing: (i) the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period to be less than 1.40:1.0; (ii) the Aggregate Loan to Value Ratio

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for the Trailing 12 Month Period to be greater than 65% or (iii) a breach of any of the Financial Covenants set forth in Article XV of the Master Agreement.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

                                                       Sincerely,

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner

By:
	Simon R.C. Wadsworth
	Executive Vice President

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EXHIBIT Q TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

REBORROWING REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THERE TO OCCUR AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON THE MATURITY DATE OF THE FIXED FACILITY ADVANCE TO WHICH THIS REQUEST RELATES (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS NONE OF THE LIMITATIONS CONTAINED IN SECTION 2.09 OF THE MASTER AGREEMENT IS VIOLATED, AND ALL CONDITIONS CONTAINED IN SECTION 2.10 OF THE MASTER AGREEMENT ARE SATISFIED.

____________________, ________

VIA:

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue
Suite 4900 E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: REBORROWING REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and the Lender (as amended from time to time, the “Master Agreement”).

Ladies and Gentlemen:

This constitutes a Reborrowing Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that there occur a reborrowing of all or a portion of a maturing Fixed Facility Advance as a Variable Advance in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

                (a)          Designation of Amount of Reborrowing. The amount of the reborrowing shall be $_________________________.

                (b)         Repayment of Fixed Facility Advances. The Fixed Facility Advance Outstanding which will be repaid on the Closing Date for the reborrowing is as follows:

Closing Date of Fixed Facility Advance:   ____________________________________

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Maturity Date of Fixed Facility Advance:     ________________________________

Amount of Advance:     ________________________________

(Note: Any Variable Facility Advances made in conjunction with a reborrowing of all or a portion of a maturing Fixed Facility Advance must be accompanied by a Future Advance Request and shall be reviewed in accordance with the terms of the Master Agreement.)

          (c)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 2.10 of the Master Agreement, including (i) the Reborrowing Documents, as well as (ii) a Compliance Certificate and (iii) an Organizational Certificate will be delivered on or before the Closing Date.

          Section 2.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

                                                    Sincerely,

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner

By:
	Simon R.C. Wadsworth
	Executive Vice President

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EXHIBIT R TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO MASTER CREDIT FACILITY AGREEMENT

          THIS ____ AMENDMENT TO MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is made as of the ____ day of _______________, _____, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”); (ii) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas”; MAA of Texas and Borrower being collectively referred to as “Borrower Parties”); and (iii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., formerly known as WMF Washington Mortgage Corp., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties and the Lender are parties to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002, that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003, and that Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.          The parties are executing this Amendment pursuant to the Master Agreement to reflect a conversion of all or a portion of a Fixed Facility Advance to a Variable Advance.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.          Reborrowing. The Variable Facility Commitment shall be increased by $____________________, and the definition of “Variable Facility Commitment” is hereby replaced in its entirety by the following new definition:

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          “Variable Facility Commitment” means an aggregate amount of $_______________, which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 2.          Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 3.          Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 4.          Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[The rest of this page has been intentionally left blank.]

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          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an instrument under seal as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner

By:
	Simon R.C. Wadsworth
	Executive Vice President

[Signatures follow on next page]

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GUARANTOR:
MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation,      its general partner

By:

Name:

Its:

[Signatures follow on next page]

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LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE INC., a
Delaware corporation

By:

    Name:

  Title:

[Signatures follow on next page]

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EXHIBIT S TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL ADDITION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THAT IF (1) YOU CONSENT TO THE ADDITION OF THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO THE COLLATERAL POOL, (2) WE ELECT TO CAUSE THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND (3) ALL CONDITIONS CONTAINED IN SECTION 6.03 OF THE MASTER AGREEMENT ARE SATISFIED, THEN YOU SHALL PERMIT THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN THIRTY (30) BUSINESS DAYS AFTER YOUR RECEIPT OF OUR ELECTION (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE).

________, 20__

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue
Suite 4900E
Dallas, Texas 75201

Re: COLLATERAL ADDITION REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”), Guarantor and Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Addition Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the Multifamily Residential Properties described in this Request be added to the Collateral Pool in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Collateral Addition Description Package. Attached to this Request is the Collateral Addition Description Package and attached thereto are all information and documents relating to the Additional Collateral required by the Collateral Addition Description Package;

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          (b)          Due Diligence Fees. Enclosed with this Request is a check in payment of all Additional Collateral Due Diligence Fees required to be submitted with this Request pursuant to Section 16.03(b) of the Master Agreement; and

          (c)          Accompanying Documents. All reports, certificates and documents required to be delivered pursuant to the conditions contained in Section 6.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Collateral Addition Fee. If the Lender consents to the addition of the Additional Collateral to the Collateral Pool, and the Borrower Parties elect to add the Additional Collateral to the Collateral Pool, Mid-America Apartment Communities, Inc., a Tennessee corporation, and Mid-America Apartments, L.P., a Tennessee limited partnership, shall pay the Collateral Addition Fee for the Additional Collateral to the Lender as one of the conditions to the closing of the addition of the Additional Collateral to the Collateral Pool.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

By:
	Simon R.C. Wadsworth
	Executive Vice President

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,
a Tennessee corporation, its general partner

By:
	Simon R.C. Wadsworth
	Executive Vice President

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EXHIBIT T TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL RELEASE REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES FOR THERE TO OCCUR AT A CLOSING WITHIN 30 BUSINESS DAYS AFTER YOUR RECEIPT OF THIS REQUEST, SUBJECT TO SATISFACTION OF ALL CONDITIONS CONTAINED IN SECTION 7.03 OF THE MASTER AGREEMENT. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Vienna, Virginia 22812

[Note: Subject to change in the event Lender or its address changes]

Re: COLLATERAL RELEASE REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”) and others (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Release Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the Collateral Release Property described in this Request be released from the Collateral Pool in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Description of Collateral Release Property. The name, address and location (county and state) of the Mortgaged Property, or other designation of the Collateral, to be released from the Collateral Pool is as follows:

Name:  

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Address:

Location:

          (b)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 7.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Release Price and Release Fee. The Borrower shall pay the Release Price and the Release Fee as two of the conditions to the closing of the release of the Collateral Release Property from the Collateral Pool.

          Section 3.         Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner

By:
	Simon R.C. Wadsworth
	Executive Vice President

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EXHIBIT U TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CONFIRMATION OF OBLIGATIONS

          THIS CONFIRMATION OF OBLIGATIONS (the “Confirmation of Obligations”) is made as of the ____ day of __________, ____, by and among (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation, (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”; the REIT and OP being collectively referred to as the “Borrower”), (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAC of Texas” or the “Guarantor”; Borrower and the Guarantor being collectively referred to as the “Borrower Parties”) for the benefit of Prudential Multifamily Mortgage, Inc., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties and the Lender are parties to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002, that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003, and that Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.          The Borrower has delivered to the Lender a Collateral Release Request pursuant to the Master Agreement to release a Collateral Release Property from the Collateral Pool.

          D.          The Lender has consented to the Collateral Release Request.

          E.          The parties are executing this Confirmation of Obligations pursuant to the Master Agreement to confirm that each remains liable for all of its obligations under the Master Agreement and the other Loan Documents notwithstanding the release of the Collateral Release Property from the Collateral Pool.

          NOW, THEREFORE, the Borrower Parties, in consideration of the Lender’s consent to the release of the Collateral Release Property from the Collateral Pool and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

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          Section 1.          Confirmation of Obligations. The Borrower Parties confirm that none of their respective obligations under the Master Agreement and the Loan Documents is affected by the release of the Collateral Release Property from the Collateral, and each of their respective obligations under the Master Agreement and the Loan Documents shall remain in full force and effect, and each shall be fully liable for the observance of all such obligations, notwithstanding the release of the Collateral Release Property from the Collateral Pool. The Borrower Parties confirm that, except with respect to the Collateral Release Property, none of their respective obligations under the Master Agreement and the Loan Documents are affected by the release of the Collateral Release Property, and their obligations under the Master Agreement and the Loan Documents shall remain in full force and effect, and they shall be fully liable for the observance of all such obligations, notwithstanding the release of the Collateral Release Property from the Collateral Pool.

          Section 2.          Beneficiaries. This Confirmation of Obligations is made for the express benefit of both the Lender and Fannie Mae.

          Section 3.          Capitalized Terms. All capitalized terms used in this Confirmation of Obligations which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 4.          Counterparts. This Confirmation of Obligations may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

          IN WITNESS WHEREOF, the parties hereto have executed this Confirmation of Obligations as an instrument under seal as of the day and year first above written.

[Signatures on the following pages]

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MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President
MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership

By:	MAC of Delaware, Inc., a Delaware corporation,
	its general partner
	By:
	Name:
	Its:

U-3

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a

Delaware corporation

By:

Name:

Title:

U-4

EXHIBIT V TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CREDIT FACILITY EXPANSION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU TO PERMIT THE REQUESTED INCREASE IN THE COMMITMENT, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN FIFTEEN (15) BUSINESS DAYS AFTER THE YOUR RECEIPT OF THE CREDIT FACILITY EXPANSION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE), AS LONG AS ALL CONDITIONS CONTAINED IN SECTION 8.03 OF THE MASTER AGREEMENT ARE SATISFIED. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: CREDIT FACILITY EXPANSION REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”), the Lender and Mid-America Apartments of Texas, a Texas limited partnership (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Credit Facility Expansion Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests an increase in the maximum credit commitment in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Amount of Increase. The amount of the increase in the maximum credit commitment and the amount of the increases in the Fixed Facility Commitment or the Variable Facility Commitment are as follows:

V-1

NAME INCREASE RESULTING AMOUNT OF
COMMITMENT

MAXIMUM CREDIT

COMMITMENT:

FIXED FACILITY

COMMITMENT:

VARIABLE FACILITY

COMMITMENT:

[Note: Section 8.01 of the Master Agreement limits the maximum credit commitment to $250,000,000 and the increase in the Maximum Credit Commitment must be in the minimum amount of $3,000,000.]

           (b)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 8.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

By:
	Simon R.C. Wadsworth
	Executive Vice President

V-2

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
By:
	Simon R.C. Wadsworth
	Executive Vice President

V-3

EXHIBIT W TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

VARIABLE FACILITY TERMINATION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU TO PERMIT THE VARIABLE FACILITY COMMITMENT TO BE REDUCED TO THE AMOUNT DESIGNATED BY US, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, WITHIN FIFTEEN (15) BUSINESS DAYS AFTER THE YOUR RECEIPT OF THE VARIABLE FACILITY TERMINATION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), IF ALL CONDITIONS CONTAINED IN SECTION 9.03 ARE SATISFIED. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: VARIABLE FACILITY TERMINATION REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”), the Lender and Mid-America Apartments of Texas, L.P., a Texas limited partnership (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Variable Facility Termination Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests a permanent reduction in the amount of the Variable Facility in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

          (a)          Amount of Reduction. The amount of the permanent reduction in the Variable Facility is as follows:

Amount of Reduction:          $________________________________

W-1

Resulting Amount of
Variable Facility:               $____________________________________
(b)     Required Prepayments. Following are any Variable Facilities that shall be prepaid in connection with the permanent reduction in the Variable Facility:
Closing Date of Advance:	__________________________________________
Maturity Date of Advance:	__________________________________________
Amount of Advance:	__________________________________________
(c)          Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 9.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Prepayments and Termination Fee. The Borrower shall pay the required amount of the prepayment for any Variable Facility Advances required to be prepaid, and the required amount of the Termination Fee, pursuant to the terms of Section 9.03 of the Master Agreement, as two of the conditions to the permanent reduction in the Variable Facility.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner
		By:
			Simon R.C. Wadsworth

W-2

Executive Vice President

W-3

EXHIBIT X TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

          THIS ____ AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is made as of the ____ day of _______________, _____, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”; the REIT and OP being collectively referred to as the “Borrower”), (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas” or the “Guarantor”; Borrower and the Guarantor being collectively referred to as the “Borrower Parties”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties and the Lender are parties to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002, that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003, and that Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Advances contemplated by the Master Agreement.

          C.          The parties are executing this Amendment pursuant to the Master Agreement to reflect a permanent reduction of all or a portion of the Variable Facility.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Reduction of Variable Facility Commitment. The Variable Facility Commitment shall be reduced by $____________________, and the definition of “Variable Facility Commitment” is hereby replaced in its entirety by the following new definition:

X-1

          “Variable Facility Commitment” means an aggregate amount of $_______________,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 2.          Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 3.          Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 4.          Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[Signatures on the following pages]

X-2

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an instrument under seal as of the day and year first above written.

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President
MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
	By:
	Name:
	Its:

X-3

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

By:

Name:

Title:

X-4

EXHIBIT Y TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CREDIT FACILITY TERMINATION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THAT THIS AGREEMENT SHALL TERMINATE, AND YOU SHALL CAUSE ALL OF THE COLLATERAL TO BE RELEASED FROM THE COLLATERAL POOL, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, WITHIN 30 BUSINESS DAYS AFTER THE YOUR RECEIPT OF THE CREDIT FACILITY TERMINATION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS ALL CONDITIONS CONTAINED IN SECTION 10.03 OF THE MASTER AGREEMENT ARE SATISFIED. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, _____

VIA: ______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: CREDIT FACILITY TERMINATION REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (the “Borrower”), the Lender and Mid-America Apartments of Texas, L.P., a Texas limited partnership (the “Guarantor”; collectively, the Borrower and the Guarantor are referred to as the “Borrower Parties”) (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Credit Facility Termination Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests a termination of the Master Agreement and the Credit Facility in accordance with the terms of the Master Agreement. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 10.03 of the Master Agreement will be delivered on or before the Closing Date.

Y-1

          Section 2.          Prepayments, Release Fees and Termination Fee. The Borrower shall pay in full all Notes Outstanding, and the required amount of the Release Fees and the required Credit Facility Termination Fee as a condition to the termination of the Master Agreement and the Credit Facility.

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner
		By:
			Simon R.C. Wadsworth
			Executive Vice President
	MID-AMERICA APARTMENTS OF TEXAS, L.P.,
	a Texas limited partnership
	By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
		By:
		Name:
		Its:

Y-2

Y-3

EXHIBIT Z TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL SUBSTITUTION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THAT (1) IF YOU CONSENT TO THE SUBSTITUTION OF THE PROPOSED SUBSTITUTED MORTGAGED PROPERTY FOR THE COLLATERAL RELEASE PROPERTY, (2) WE ELECT TO CAUSE THE PROPOSED SUBSTITUTED MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND THE PROPOSED COLLATERAL RELEASE PROPERTY TO BE RELEASED FROM THE COLLATERAL POOL, AND (3) ALL CONDITIONS CONTAINED IN SECTION 7.04(c) OF THE MASTER AGREEMENT ARE SATISFIED, THEN YOU SHALL PERMIT THE PROPOSED SUBSTITUTED MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND THE PROPOSED COLLATERAL RELEASE PROPERTY TO BE RELEASED FROM THE COLLATERAL POOL AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN 30 BUSINESS DAYS AFTER YOUR RECEIPT OF OUR ELECTION (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE).

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

Re: COLLATERAL SUBSTITUTION REQUEST issued pursuant to the Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and among the undersigned (collectively, the “Borrower”), Mid-America Apartments of Texas, L.P., a Texas limited partnership, and Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Substitution Request pursuant to the terms of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the Multifamily Residential Property described in this Request be added to the Collateral Pool in accordance with the terms

Z-1

of the Master Agreement and that the Collateral Release Property described in this Request be released from the Collateral Pool in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

(a)          Collateral Substitution Description Package. Attached to this Request is the Collateral Substitution Description Package and attached thereto are all information and documents relating to the proposed Substituted Mortgaged Property required by the Collateral Addition Description Package.
(b)          Description of Proposed Collateral Release Property. The name, owner, address and location (county and state) of the Proposed Collateral Release Property to be released from the Collateral Pool is as follows:
	Name:          _______________________________________________
	Record Owner:          ________________________________________
	Beneficial Owner:         ______________________________________
	Address:          _____________________________________________
	_________________________________________________
	Location:           ____________________________________________
(c)          Accompanying Documents. All reports, certificates and documents required to be delivered pursuant to the conditions contained in Section 6.03 of the Master Agreement will be delivered on or before the Closing Date.

          Section 2.          Collateral Substitution Fee. If the Lender consents to the addition of the Substitution to the Collateral Pool and the release of the proposed Collateral Release Property from the Collateral Pool, and the Borrower elects to add the Substituted Mortgaged Property to the Collateral Pool and release the proposed Collateral Release Property from the Collateral Pool, the Borrower shall pay the Collateral Substitution Fee and all legal fees and expenses payable by the Borrower pursuant to Section 16.04 as one of the conditions to the closing of the addition of the Substituted Mortgaged Property to the Collateral Pool and the release of the proposed Collateral Release Property from the Collateral Pool.

Z-2

          Section 3.          Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,
	MID-AMERICA APARTMENT COMMUNITIES,
	INC., a Tennessee corporation
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	MID-AMERICA APARTMENTS, L.P.,
	a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc.,
		a Tennessee corporation, its general partner
		By:
			Simon R.C. Wadsworth
			Executive Vice President

Z-3

EXHIBIT AA TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

	Property Name		Manager
1.	Paddock Club Brandon Phase I & II	Mid-America Apartment Communities, Inc. (Phase II: Owned and managed by MAAC. No separate management agreement.)
2.	Paddock Park Ocala Phase II	Mid-America Apartment Communities, Inc.
3.	Paddock Club Tallahassee Phase I	Mid-America Apartment Communities, Inc.
4.	Woodbridge at the Lake	Mid-America Apartment Communities, Inc.
5.	Courtyards at Campbell Apartments	Mid-America Apartment Communities, Inc.
6.	Deer Run Apartments	Mid-America Apartment Communities, Inc.
7.	Paddock Club Gainesville	Mid-America Apartment Communities, Inc.
8.	Kenwood Club	Mid-America Apartment Communities, Inc.
9.	Balcones Woods	Mid-America Apartment Communities, Inc.
10.	Paddock Club Panama City Apartments	Mid-America Apartment Communities, Inc.
11.	Paddock Club Tallahassee II Apartments	Mid-America Apartment Communities, Inc.
12.	Paddock Club Mandarin	Mid-America Apartment Communities, Inc. (Owned and managed by MAAC. No separate management agreement.)
13.	The Corners	Mid-America Apartments, L.P (Owned and managed by MAALP. No separate management agreement.)
14.	Jefferson Pines	Mid-America Apartments, L.P.
15.	Los Rios	Mid-America Apartments, L.P.

AA-1

EXHIBIT BB TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INDEPENDENT UNIT ENCUMBRANCES

None

BB-1

EXHIBIT CC TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL ADDITION DESCRIPTION PACKAGE

Property Name:			__________________________________________________
Address:			__________________________________________________
City/County/State:			__________________________________________________
General Description, including number of units and amenities:
	__________________________________________________
	__________________________________________________
	__________________________________________________
Year Built:			__________
Year Acquired:			__________
Fee Owner:			__________________________________________________
Valuation:		________________________________________________________
Existing Third Party Reports:
	______________________________________________________________
	______________________________________________________________
Property Contact:			__________________________________________________
Other Pertinent Information:
	______________________________________________________________
	______________________________________________________________
	______________________________________________________________
	______________________________________________________________

CC-1

EXHIBIT DD TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL SUBSTITUTION DESCRIPTION PACKAGE

Property Name:		__________________________________________________
Owner:		__________________________________________________
Address:		__________________________________________________
City/County/State:		__________________________________________________
General Description, including number of units and amenities:
	__________________________________________________
	__________________________________________________
	__________________________________________________
Year Built:		__________
Year Acquired:		__________
Fee Owner:		__________________________________________________
Valuation:		__________________________________________________
Existing Third Party Reports:
	__________________________________________________
	__________________________________________________
Property Contact:		__________________________________________________
Other Pertinent Information:
	__________________________________________________
	__________________________________________________
	__________________________________________________
	__________________________________________________

DD-1

EXHIBIT EE TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ADDITIONS TO COLLATERAL

DUS APPLICATION CHECKLIST

		I.	PROPERTY DATA
REC’D	OUT
_____	_____	*A.	Current month’s rent roll, dated and certified by Borrower; must include apartment number, unit type, tenant name, monthly rent, market rent, move-in date, lease expiration date, and whether furnished or unfurnished.
_____	_____	*B.	Certification of Current Project Rent Roll (Schedule H).
_____	_____	*C.	Borrower’s Concession Statement (Schedule H-1 and H-2).
_____	_____	*D.	Commercial leases (if applicable).
_____	_____	*E.	Current certified year-to-date operating statement and prior three years’ statements. YTD statement must end with the same month as the certified rent roll.
_____	_____	F.	Monthly operating statements for the last six months.
_____	_____	G.	Vacancy/turnover information for prior 24 months; month-by-month breakdown of collections including vacancy, bad debt and concessions (may be provided in operating statements).
_____	_____	H.	Delinquency information for 30, 60, 90+ days. Lender will take this information in whatever form the Borrower has.
_____	_____	I.	Operating Budget (Schedule I, provides instructions).
_____	_____	J.	Copies of existing major service contracts (landscaping, trash, pool, laundry, pest and elevator).
_____	_____	K.	Copy of most recent and prior year tax bills and most recent assessment.
_____	_____	L.	Copy of complete insurance policies including all endorsements, declarations, and premiums. Required only if not on blanket policy; Certificate of Insurance required for all additions.

EE-1

_____	_____	M.	Major improvements during the last two years and projected for the next twelve months.
_____	_____	N.	Existing title report including all easements, restrictions, judgments and liens. (Lender requirements enclosed). Will need to be updated prior to Closing.
_____	_____	*O.	Two copies of the existing as-built survey or site plan (Lender requirements enclosed). Will need to be updated prior to Closing.
_____	_____	*P.	Legal Description.
_____	_____	Q.	Occupancy Certificates. If not available, please provide a letter from the City stating that they are not available, and why.
_____	_____	*R.	Ground Lease; please advise if not applicable.
_____	_____	*S.	Reciprocal Use Agreement; please advise if not applicable.
_____	_____	T.	Operating Licenses.
_____	_____	U.	Termite inspection.
_____	_____	V.	Copy of one bill from each utility for the property.
_____	_____	*W.	Existing reports, if available (e.g., appraisal, market study, engineering, environmental).
_____	_____	X.	Plans, specifications and soil reports (recently completed properties only).
_____	_____	Y.	Copies of any deed or rent restrictions in place; please advise if not applicable.

* STARRED ITEMS ARE REQUIRED AS SOON AS POSSIBLE SO THAT THIRD PARTY REPORTS CAN BE ORDERED.

EE-2

		II.	Management Company
REC’D	OUT
_____	_____	A.	Copy of current or proposed Management Agreement, if applicable.
_____	_____	B.	Sample tenant lease.
_____	_____	C.	Management Resume, if other than Borrower-related management company.
_____	_____	D.	Accounts payable schedule for 30, 60 and 90+ days; list should include vendor name, invoice date, invoice number, description of item and amount.
_____	_____	E.	Market survey done by resident manager; to be provided to Lender underwriter at site inspection.
_____	_____	F.	Leasing brochure and floor plans.
_____	_____	G.	Property Payroll and Benefits (Schedule L).
			Any other information deemed necessary by Lender to complete the underwriting of the addition to collateral.

EE-3

EXHIBIT FF TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SECOND AMENDED AND RESTATED GUARANTY

          This Second Amended and Restated Guaranty (the “Guaranty”) is made and entered into as of the ___ day of ____________, ____, by MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (the “Guarantor”), for the benefit of PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”), whose address is 2200 Ross Avenue, Suite 4900E, Dallas, Texas 75201.

RECITALS

          A.  Lender has agreed to execute that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”), pursuant to which, inter alia, Lender has agreed, subject to the terms, conditions and limitations of the Master Agreement, to loan to Mid-America Apartment Communities, Inc., a Tennessee corporation (the “REIT”) and Mid-America Apartments, L.P., a Tennessee limited partnership (“OP”; the REIT and OP, individually and collectively, the “Borrower”) from time to time Variable Facility Advances and Fixed Facility Advances (each a “Loan” and, collectively, the “Loans”) to be evidenced by the Variable Facility Note and the Fixed Facility Notes, respectively.

          B.  This Guaranty amends and restates in its entirety that certain Amended and Restated Guaranty dated as of August 22, 2002 (the “Original Guaranty”) relating to the Loans. Guarantor became a party to the Original Guaranty pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of August 22, 2002.

          C.  The repayment of the Variable Facility Advances and the Fixed Facility Advances, and all of the other obligations of any Borrower Parties under the Master Agreement or the other Loan Documents are guaranteed by this Guaranty.

          D.  Guarantor will receive a direct and material benefit from the Loans to Borrower.

          E.  Lender is willing to make the Loans to Borrower only if Guarantor agrees to guaranty all obligations of Borrower Parties under the Loan Documents.

          NOW, THEREFORE, in order to induce Lender to make the Loans to Borrower, and in consideration thereof, Guarantor hereby agrees as follows:

          Section 1.     Definitions. All capitalized terms used but not defined in this Guaranty, including, without limitation, the term the “Loan Documents” shall have the meanings ascribed to such terms in the Master Agreement. The term “Notes” shall mean,

FF-1

collectively, the Fixed Facility Notes and the Variable Facility Note, as amended from time to time.

          Section 2.     Guaranty of Payment. Guarantor irrevocably, absolutely and unconditionally guarantees to Lender all of the following (collectively, the “Guaranteed Obligations”):

          (a)     The due and punctual payment of all principal of, interest on and other amounts which become due and payable by Borrower under, the Fixed Facility Notes, and all renewals, extensions, modifications, amendments and restatements of the Fixed Facility Notes, including, without limitation, all Fixed Facility Advances made from time to time to Borrower and the interest accruing on such Fixed Facility Advances;

          (b)     The due and punctual payment of all principal of, interest on and other amounts which become due and payable by Borrower under, the Variable Facility Note (and all Advance Confirmation Instruments issued in connection therewith) and all renewals, extensions, modifications, amendments and restatements of the Variable Facility Note (and all Advance Confirmation Instruments issued in connection therewith), including, without limitation, all Variable Facility Advances made from time to time to Borrower and the imputed interest accruing on such Variable Facility Advances;

          (c)     The due and punctual payment of all amounts which become due and payable by the Borrower under the Master Agreement or any other Loan Documents from time to time executed by the Borrower; and

          (d)     The due and punctual performance of all the obligations of the Borrower under the Master Agreement, and all of the obligations of the Borrower under any other Loan Documents from time to time executed by the Borrower.

This Guaranty shall be an unconditional guaranty of payment and performance and not of collection, and is in no way conditioned upon any attempt by Lender to pursue or exhaust any remedy against Borrower. This Guaranty is a continuing guaranty which shall remain in full force and effect until all of the Guaranteed Obligations have been paid and performed in full; and Guarantor shall not be released from any obligations to Lender under this Guaranty as long as any amount payable by the Borrower to Lender, or any obligation by the Borrower, under the Loan Documents is not performed, satisfied, settled or paid in full.

          Section 3.     Form of Payment. All payments under this Guaranty shall be made to Lender in immediately available funds, without reduction by any recoupment, set-off, counterclaim or cross-claim against Lender.

          Section 4.     Guarantor’s Obligations are Absolute. The obligations of Guarantor under this Guaranty shall be absolute and unconditional, shall not be subject to any counterclaim, set-off, recoupment, deduction or defense based upon any claim Guarantor may have against Lender or Borrower and shall remain in full force and effect without regard to, and shall not be released, discharged or terminated or in any other way

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affected by, any circumstance or condition (whether or not Guarantor shall have any knowledge or notice thereof), including, without limitation:

          (a)     any amendment or modification of, or extension of time for payment of any of the principal of, interest on or other amounts payable under, the Loan Documents (except that liability of Guarantor hereunder shall be deemed to apply to the Loan Documents as so amended or modified or to the payment of all amounts so extended);

          (b)     any exercise or non-exercise by Lender of any right, power or remedy under or in respect of the Loan Documents, or any waiver, consent, forbearance, indulgence or other action, inaction or omission by Lender under or in respect of the Loan Documents;

          (c)     any assignment, sale or other transfer of Borrower’s interest in all or any part of the real or personal property which at any time constitutes collateral for the payment of the Guaranteed Obligations, including, without limitation, a conveyance of such property by Borrower to Lender by deed in lieu of foreclosure;

          (d)     any bankruptcy, insolvency, reorganization, adjustment, dissolution, liquidation or other like proceeding involving or affecting Borrower or Lender or their respective properties or creditors, or any action taken with respect to the Loan Documents by any trustee or receiver of Borrower or Lender, or by any court, in any such proceeding;

          (e)     any invalidity or unenforceability, in whole or in part, of any term or provision of the Loan Documents or Borrower’s incapacity or lack of authority to enter into the Loan Documents;

          (f)     any release, compromise, settlement or discharge with respect to all or any portion of Borrower’s obligations under the Loan Documents;

          (g)     any acceptance of additional or substituted collateral for payment of the Guaranteed Obligations or any release or subordination of any collateral held at any time by Lender as security for the payment of the Guaranteed Obligations; or

          (h)     any resort to Guarantor for payment of all or any portion of the Guaranteed Obligations, whether or not Lender shall have resorted to any collateral securing the Guaranteed Obligations or shall have proceeded to pursue or exhaust its remedies against Borrower (or any other Person) primarily or secondarily liable for the Guaranteed Obligations.

No exercise, delay in exercise or non-exercise by Lender of any right hereby given it, no dealing by Lender with Borrower, Guarantor or any other Person, no change, impairment or suspension of any right or remedy of Lender, and no act or thing which, but for this provision, could act as a release or exoneration of the liabilities of Guarantor hereunder, shall in any way affect, decrease, diminish or impair any of the obligations of Guarantor hereunder or give Guarantor or any other Person any recourse or defense against Lender.

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          Section 5.     Waiver. Guarantor unconditionally waives the following:

          (a)     notice of acceptance of this Guaranty and notice of any of the matters referred to in Section 4 hereof;

          (b)     all notices which may be required by statute, rule of law or otherwise to preserve intact any rights which Lender may have against Guarantor under this Guaranty, including, without limitation, any demand, proof or notice of non-payment of any of the principal of, interest on or other amounts payable under the Loan Documents, and notice of any failure on the part of Borrower to perform and comply with any covenant, agreement, term or condition of the Loan Documents;

          (c)     any right to the enforcement, assertion or exercise of any right, power or remedy conferred upon Lender in the Loan Documents or otherwise;

          (d)     any requirement that Lender act with diligence in enforcing its rights under the Loan Documents or this Guaranty;

          (e)     any right to require Lender to proceed against or exhaust its recourse against Borrower or any security or collateral held by Lender at any time for the payment of the Guaranteed Obligations or to pursue any other remedy in its power before being entitled to payment from Guarantor under this Guaranty or before proceeding against Guarantor;

          (f)     any failure by Lender to file or enforce a claim against the estate (either in administration, bankruptcy or any other proceeding) of Borrower or any other Person;

          (g)     any defense based upon an election of remedies by Lender which destroys or otherwise impairs the subrogation rights of Guarantor or the right of Guarantor (after payment of the Guaranteed Obligations) to proceed against Borrower for reimbursement, or both;

          (h)     any defense based upon any taking, modification or release of any collateral for the Guaranteed Obligations, or any failure to perfect any security interest in, or the taking of, or failure to take any other action with respect to, any collateral securing payment of the Guaranteed Obligations;

          (i)     any defense based upon the addition, substitution or release, in whole or in part, of any Person(s), including, without limitation, another guarantor, primarily or secondarily liable for or in respect of the Guaranteed Obligations;

          (j)     any rights or defenses based upon an offset by Guarantor against any obligation now or hereafter owed to Guarantor by Borrower;

          (k)     any defense of the statute of limitations in any action against Guarantor under this Guaranty; and

          (l)     all other notices which may or might be lawfully waived by Guarantor;

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it being the intention hereof that Guarantor shall remain liable as principal, to the extent set forth in this Guaranty, until the payment and performance in full of the Guaranteed Obligations, notwithstanding any act, omission or thing which might otherwise operate as a legal or equitable discharge of Guarantor other than the payment and performance in full of the Guaranteed Obligations. No delay by Lender in exercising any rights and/or powers hereunder or in taking any action to enforce Borrower’s obligations under the Loan Documents shall operate as a waiver as to such rights or powers or in any manner prejudice any and all of Lender’s rights and powers hereunder against Guarantor. The intention of Guarantor under this Guaranty is that, so long as any of the Guaranteed Obligations remains unsatisfied, the obligations of Guarantor hereunder shall not be discharged except by performance and then only to the extent of such performance. Guarantor agrees that Guarantor’s obligations hereunder shall not be affected by any circumstances, whether or not referred to in this Guaranty, which might constitute a legal or equitable discharge of a surety or guarantor.

          Section 6.     Election of Remedies. This Guaranty may be enforced from time to time, as often as occasion therefor may arise, and without any requirement that Lender must first pursue or exhaust any remedies available to it against Borrower under the Loan Documents or against any other Person or resort to any collateral at any time held by it for performance of the Guaranteed Obligations or any other source or means of obtaining payment of any of the Guaranteed Obligations.

          Section 7.     Expenses. Guarantor agrees to pay all costs and out-of-pocket expenses, including court costs and expenses and the reasonable fees and disbursements of legal counsel, incurred by or on behalf of Lender in connection with the enforcement of Guarantor’s obligations under this Guaranty or the protection of Lender’s rights under this Guaranty. The covenants contained in this Section shall survive the payment of the Guaranteed Obligations.

          Section 8.     Condition of Borrower. Guarantor is fully aware of the financial condition of Borrower and is executing and delivering this Guaranty based solely upon Guarantor’s own independent investigation of all matters pertinent hereto and is not relying in any manner upon any representation or statement made by Lender. Guarantor represents and warrants that Guarantor is in a position to obtain, and Guarantor hereby assumes full responsibility for obtaining, any additional information concerning Borrower’s financial condition and any other matters pertinent hereto as Guarantor may desire and Guarantor is not relying upon or expecting Lender to furnish to Guarantor any information now or hereafter in Lender’s possession concerning the same or any other matter. By executing this Guaranty, Guarantor knowingly accepts the full range of risks encompassed within a contract of this type, which risks Guarantor acknowledges.

          Section 9.     Further Assurances. Guarantor agrees at any time and from time to time upon request by Lender to take, or cause to be taken, any action and to execute and deliver any additional documents which, in the opinion of Lender, may be necessary in order to assure to Lender the full benefits of this Guaranty.

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          Section 10.     Subordination. Guarantor hereby irrevocably and unconditionally agrees that any claims, direct or indirect, Guarantor may have by subrogation or other form of reimbursement, against Borrower or to any security or any interest therein, by virtue of this Guaranty or as a consequence of any payment made by Guarantor pursuant to this Guaranty, shall be fully subordinated in time and right of payment to the payment in full of the Guaranteed Obligations and all other obligations of Guarantor to Lender under this Guaranty.

          Section 11.     No Subrogation. Except as expressly provided in Section 10 above, Guarantor shall not have any right of subrogation against Borrower (or any other Borrower Party) by reason of any payment by Guarantor under this Guaranty until such time as all of the Obligations have been satisfied in full. Nothing in the foregoing shall affect any claim which any Guarantor has against Borrower under the terms of the Contribution Agreement.

          Section 12.     Insolvency and Liability of Borrower (and any other Borrower Party). So long as any of the Guaranteed Obligations is unpaid and this Guaranty is in effect, and to the extent not prohibited by the applicable bankruptcy court, Guarantor agrees to file all claims against Borrower in any bankruptcy or other proceeding in which the filing of claims is required by law in connection with indebtedness owed by Borrower to Guarantor and to assign to Lender all rights of Guarantor thereunder up to the lesser of (i) the amount of such indebtedness or (ii) the amount of the Guaranteed Obligations guaranteed by Guarantor. In all such cases the Person or Persons authorized to pay such claims shall pay to Lender the full amount thereof to the full extent necessary to pay the Guaranteed Obligations, and Guarantor hereby assigns to Lender all of Guarantor’s rights to all such payments to which Guarantor would otherwise be entitled. Notwithstanding the foregoing, and except to the extent that any sums owed by Borrower to Lender under the Loan Documents shall have been fully satisfied thereby, the liability of Guarantor hereunder shall in no way be affected by

          (a)     the release or discharge of Borrower in any creditors’, receivership, bankruptcy or other proceedings; or

          (b)     the impairment, limitation or modification of the liability of Borrower or the estate of Borrower in bankruptcy resulting from the operation of any present or future provisions of the Bankruptcy Code or other statute or from the decision in any court.

          Section 13.     Preferences, Fraudulent Conveyances, Etc. If Lender is required to refund, or voluntarily refunds, any payment received from Borrower because such payment is or may be avoided, invalidated, declared fraudulent, set aside or determined to be void or voidable as a preference, fraudulent conveyance, impermissible setoff or a diversion of trust funds under the bankruptcy laws or for any similar reason, including, without limitation, any judgment, order or decree of any court or administrative body having jurisdiction over Lender or any of its property, or any settlement or compromise of any claim effected by Lender with Borrower or other claimant (a “Rescinded Payment”), then Guarantor’s liability to Lender shall continue in full force and effect, or Guarantor’s liability to Lender shall be reinstated, as the case may

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be, with the same effect and to the same extent as if the Rescinded Payment had not been received by Lender, notwithstanding the cancellation or termination of any Note or any of the other Loan Documents. In addition, Guarantor shall pay, or reimburse Lender for, all expenses (including all reasonable attorneys’ fees, court costs and related disbursements) incurred by Lender in the defense of any claim that a payment received by Lender in respect of all or any part of the Guaranteed Obligations must be refunded. The provisions of this Section shall survive the termination of this Guaranty and any satisfaction and discharge of Borrower by virtue of any payment, court order or any federal or state law.

          Section 14.     Waiver. Neither this Guaranty nor any term hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by Lender and Guarantor expressly referring to this Guaranty and to the provisions so changed or limited. No such waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of Lender in exercising any right under this Guaranty shall operate as a waiver thereof or otherwise by prejudice thereto.

          Section 15.     Cross-Default with Master Agreement. The occurrence of an Event of Default under the Master Agreement shall constitute a default under this Guaranty. Upon the occurrence of an Event of Default under the Master Agreement, Lender, at Lender’s option, may exercise any or all of the remedies to which it may be entitled under this Guaranty or other Loan Documents upon the breach of any covenant or agreement by Guarantor under this Guaranty.

          Section 16.     Security for the Guaranty. Guarantor’s obligations under this Guaranty are secured by the Security Documents, if any, executed by Guarantor from time to time to secure the Guaranty, and reference to the Master Agreement and such documents is made for Lender’s rights upon the occurrence of a default under this Guaranty. Each Security Document shall be released as security for the Guaranty and this Guaranty shall be released in accordance with the provisions of the Master Agreement and the Security Document.

          Section 17.     Limitations on Liability. The provisions of Article XXII of the Master Agreement (entitled “Limits on Personal Liability”) are hereby incorporated into this Guaranty by this reference as if the text of such Article were set forth in its entirety herein.

          Section 18.     Notices. All notices or other communications hereunder shall be sufficiently given and shall be deemed given when sent in the manner prescribed by the Master Agreement.

          Section 19.     Assignability by Lender. Lender may, without notice to Guarantor, assign or transfer the Loans and the Loan Documents, in whole or in part. In such event, each and every immediate and successive assignee, transferee or holder of all or any part of the Loans and the Loan Documents shall have the right to enforce this Guaranty, by legal action or otherwise, as fully as if such assignee, transferee, or holder were by name specifically given such right and power in this Guaranty. Lender shall

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have an unimpaired right to enforce this Guaranty for its benefit as to so much of the Loans and the Loan Documents as Lender has not sold, assigned or transferred.

          Section 20.     Guarantor Bound by Judgment Against Borrower. Guarantor shall be conclusively bound, in any jurisdiction, by the judgment in any action by Lender against Borrower in connection with the Loan Documents (wherever instituted) as if Guarantor were a party to such action even if not so joined as a party.

          Section 21.     Governing Law. The provisions of Section 23.06 of the Master Agreement (entitled Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial) are hereby incorporated into this Agreement by this reference to the fullest extent as if the text of such Section were set forth in its entirety herein.

          Section 22.     Invalid Provisions. If any provision of this Guaranty or the application thereof to Guarantor or any circumstance in any jurisdiction whose laws govern this Guaranty shall, to any extent, be invalid or unenforceable under any applicable statute, regulation or rule of law, then such provision shall be deemed inoperative to the extent of such invalidity or unenforceability and shall be deemed modified to conform to such statute, regulation or rule or law. The remainder of this Guaranty and the application of any such invalid or unenforceable provision to parties, jurisdictions or circumstances other than those to whom or to which it is held invalid or unenforceable, shall not be affected by such invalidity or unenforceability nor shall such invalidity or unenforceability affect the validity or enforceability of any other provision of this Guaranty.

          Section 23.     General Provisions. This Guaranty shall be binding upon the respective successors and assigns of Guarantor, and shall inure to the benefit of Lender and its successors and assigns, including, without limitation, each successive holder of the Notes. The descriptive headings of the Sections of the Guaranty have been inserted herein for convenience of reference only and shall not define or limit the provisions hereof.

          Section 24.     Obligations Joint and Several. All obligations of the Guarantors shall be joint and several.

(Remainder of this page deliberately left blank)

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          IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal as of the day and year first above written.

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
	By:
	Name:
	Its:

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EXHIBIT GG TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTEREST RATE HEDGE SECURITY,
PLEDGE AND ASSIGNMENT AGREEMENT

          This INTEREST RATE HEDGE SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT (this “Agreement”) is made as of the ____ day of _______________, _____, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”; the REIT and OP being collectively referred to as the “Borrower”), (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas” or the “Guarantor”; Borrower and the Guarantor being collectively referred to as the “Grantor”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC. (“Lender”). [ADD SWAP PROVIDER]

RECITALS:

          A.          Grantor and the Lender are parties to that certain Third Amended and Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”), pursuant to which Lender has agreed to provide certain advances in accordance with and subject to the terms of the Master Agreement. As set forth in Section 1.2 of this Agreement, all capitalized terms not otherwise defined herein shall have their respective meanings set forth in the Master Agreement.

          B.          As required by the Master Agreement, the Grantor has made arrangements for the acquisition of a Hedge or Hedges pursuant to certain documents attached as Exhibit A to this Agreement (the “Hedge Documents”).

          C.          As security for the Grantor’s obligations under the Master Agreement and the Note, the Grantor and the Lender are entering into this Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor and the Lender agree as follows:

          1.          Incorporation of Recitals; Definitions; Interpretation; Reference Materials.

                    1.1          Incorporation of Recitals. The recitals set forth in this Agreement are, by this reference, incorporated into and deemed a part of this Agreement.

                    1.2          Definitions. Capitalized terms used in this Agreement shall have the meanings given to those terms in this Agreement. Capitalized terms used in this Agreement and not defined in this Agreement, but defined in the Master Agreement, shall have the meanings given to those terms in the Master Agreement.

                    1.3          Interpretation. Words importing any gender include all genders. The singular form of any word used in this Agreement shall include the plural, and vice versa, unless

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the context otherwise requires. Words importing persons include natural persons, firms, associations, partnerships and corporations. The parties hereto acknowledge that each party and their respective counsel have participated in the drafting and revision of this Agreement. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Agreement or any statement or supplement or exhibit hereto.

                    1.4          Reference Materials. Sections mentioned by number only are the respective sections of this Agreement so numbered. Reference to “this section” or “this subsection” shall refer to the particular section or subsection in which such reference appears. Any captions, titles or headings preceding the text of any section and any table of contents or index attached to this Agreement are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.

          2.          Collateral and Obligations; Further Assurances.

                    2.1          Security Interest in Collateral. To secure the Grantor’s obligations under the Master Agreement, the Note and the other Loan Documents (the “Obligations”), the Grantor hereby assigns, pledges and grants a security interest to the Lender in and to all of the Grantor’s right, title and interest in and to the following (collectively, the “Collateral”):

                         (i)           the Hedge and the Hedge Documents;

                         (ii)         any and all moneys (collectively, “Payments”) payable to the Grantor, from time to time, pursuant to the Hedge Documents by the counterparty under the Hedge Documents (the “Counterparty”);

                         (iii)         all rights of the Grantor under any of the foregoing, including all rights of the Grantor to the Payments, contract rights and general intangibles now existing or hereafter arising with respect to any or all of the foregoing;

                         (iv)         all rights, liens and security interests or guarantees now existing or hereafter granted by the Counterparty or any other person to secure or guaranty payment of the Payments due pursuant to the Hedge Documents;

                         (v)          all documents, writings, books, files, records and other documents arising from or relating to any of the foregoing, whether now existing or hereafter arising;

                         (vi)         all extensions, renewals and replacements of the foregoing; and

                         (vii)        all cash and non-cash proceeds and products of any of the foregoing, including, without limitation, interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed or distributable in respect of or in exchange for any or all of the other Collateral.

                      [(viii)         ADD SWAP PAYMENTS]

          3.          Delivery of Hedge Documents.

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                    3.1          Acquisition of Hedge; Delivery of Hedge Documents. The Grantor has, on or before the date of this Agreement, executed and delivered the Hedge Documents to the Counterparty and has delivered to the Lender fully executed originals of such Hedge Documents. True, complete and correct copies of the Hedge Documents and all amendments thereto, fully executed by all parties, are attached as Exhibit A hereto. The Grantor hereby represents and warrants to the Lender that there is no additional security for or any other arrangements or agreements relating to the Hedge Documents.

                    3.2          Obligations Remain Absolute. Nothing contained herein shall relieve the Grantor of its primary obligation to pay all amounts due in respect of its obligations under the Master Agreement, the Note or the Other Loan Documents.

          4.          Representations and Warranties.

                    4.1          Representations and Warranties of the Grantor. The Grantor represents and warrants to the Lender on the Closing Date that:

                         (i)          it has all requisite power and authority to enter into this Agreement and to carry out its obligations under this Agreement; the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary action on the part of the Grantor; this Agreement has been duly executed and delivered by it and is the valid and binding obligation of the Grantor, enforceable against it in accordance with its terms; and

                         (ii)          it is the legal and beneficial owner of, and has good and marketable title to (and full right and authority to assign), the Collateral, free and clear of all Liens.

          5.          Maintenance, Administration of Hedge.

                    5.1          Compliance with Reimbursement Agreement. The Grantor agrees to comply with the provisions of the Master Agreement related to obtaining and maintaining at all applicable times a Hedge which satisfies the requirements of the Master Agreement.

                    5.2          Event of Default. Upon the occurrence and during the continuance of any “Event of Default” under the Master Agreement, the Lender shall have and may exercise the same rights, powers, and remedies with respect to the Collateral that the Grantor may exercise, which rights, powers, and remedies are incorporated herein by this reference for all purposes. In furtherance and not in limitation of the foregoing, the Lender shall have all rights, remedies and recourses with respect to the Collateral granted in the Master Agreement and any other instrument executed in connection therewith, or existing at common law or equity (including specifically those granted by the Uniform Commercial Code as adopted in the District of Columbia, the right of offset, the right to sell the Collateral at public or private sale, and the right to receive distributions to Grantor, and such rights and remedies (i) shall be cumulative and concurrent, (ii) may be pursued separately, successively or concurrently against the Grantor and any other party obligated under the Obligations, or against the Collateral, or any other security for the Obligations, at the sole discretion of the Lender, (iii) may be exercised as often as occasion therefor shall arise, it being agreed by Grantor that the exercise or failure to exercise

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any of same shall in no event be construed as a waiver or release thereof or of any other right, remedy or recourse, and (iv) are intended to be and shall be, non-exclusive.

          If the proceeds of sale, collection or other realization of or upon the Collateral are insufficient to cover the costs and expenses of such realization and the payment in full of the Obligations, the Grantor shall remain liable for any deficiency (subject to the applicable non-recourse provisions of the Master Agreement).

          Upon the occurrence and continuance of an “Event of Default” under the Master Agreement, in case of any sale by the Lender of any of the Collateral, which may be elected at the option and in the complete discretion of the Lender, the Collateral so sold may be retained by the Lender until the selling price is paid by the purchaser, but the Lender shall not incur any liability in case of failure of the purchaser to take up and pay for the Collateral so sold. In case of any such failure, such Collateral so sold may be again similarly sold. After deducting all costs or expenses of every kind (including, without limitation, the reasonable attorneys’ fees and legal expenses incurred by the Lender), the Lender shall apply the residue of the proceeds of any sale or sales in such manner as the Lender may deem advisable.

          6.     Miscellaneous Provisions.

                  6.1     Termination. This Agreement shall terminate upon the date which is ninety-one (91) days after the date on which all amounts due under the Master Agreement, the Note and the other Loan Documents have been paid in full, provided that during such ninety-one (91) day period no Act of Bankruptcy (as defined below) shall have occurred. “Act of Bankruptcy” means the filing of a petition in bankruptcy or other commencement of a bankruptcy or similar proceeding by or against the Grantor under any applicable bankruptcy, insolvency, reorganization or similar law now in effect or any such proceeding by or against the Grantor under any applicable bankruptcy, insolvency, reorganization or similar law in effect after the date of this Agreement. Upon termination of this Agreement, all Collateral shall be reassigned to the Grantor without recourse, representation or warranty.

                  6.2     Attorney-In-Fact. Without limiting any rights or powers granted by this Agreement to the Lender, upon the occurrence and during the continuance of any “Event of Default” under the Master Agreement, the Lender is hereby appointed the attorney-in-fact of the Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which the Lender may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Lender shall have the right and power to receive, endorse and collect all checks made payable to the order of the Grantor representing any dividend, payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same.

                  6.3     Further Assurances. At any time and from time to time, at the expense of the Grantor, the Grantor shall promptly execute and deliver to Lender all further instruments and documents, and take all further action, that may be necessary or desirable, or that Lender may request, in order to carry out the intent and purposes of this Agreement or to enable Lender to

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exercise and enforce its rights and remedies under this Agreement all at the sole expense of the Grantor.

                  6.4     Expenses. The Grantor agrees to pay to Lender all reasonable out-of-pocket expenses (including reasonable expenses for legal services of every kind) of, or incident to, the preservation of rights under or enforcement of any of the provisions of this Agreement or performance by Lender of any obligations of the Grantor in respect of the Collateral which Grantor has failed or refused to perform, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in Collateral and defending or asserting rights and claims of Lender in respect thereof, by litigation or otherwise, including expenses of insurance, and all such expenses shall be Obligations hereby secured.

                  6.5     No Deemed Waiver. No failure on the part of Lender or any of its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by Lender or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law.

                  6.6     Entire Agreement. This Agreement and the Master Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties to this Agreement with respect to the subject matter of this Agreement. This Agreement may not be amended, changed, waived or modified except by a writing executed by each party hereto.

                  6.6.     Successors and Assigns. This Agreement shall inure to the benefit of, and be enforceable by, the Grantor and Lender and their respective successors and permitted assigns, and nothing herein expressed or implied shall be construed to give any other person any legal or equitable rights under this Agreement.

                  6.7.     Notices. The provisions of Section 17.08 of the Master Agreement (entitled “Notices”) are hereby incorporated into this Agreement by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

                  6.8.     Governing Law. The provisions of Section 17.06 of the Master Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated into this Agreement by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

                  6.9.     Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.

                  6.10.     Multiple Counterparts. This Agreement may be simultaneously executed in multiple counterparts, all of which shall constitute one and the same instrument and each of which shall be, and shall be deemed to be, an original.

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                  6.11.     Limits on Personal Liability. The provisions of Article 15 of the Master Agreement (entitled “Limits on Personal Liability”) are hereby incorporated into this Agreement by this reference to the fullest extent as if the text of such Article were set forth in its entirety herein.

          The Grantor and Lender have caused this Agreement to be signed as an instrument under seal, on the date first written above, by their respective officers duly authorized.

GRANTOR
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President
MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation, its general partner

By:

Name:

Its:

[Signatures continued on following page]

GG-6

LENDER

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
a Delaware corporation

By:

Name:

Title:

[ADD SWAP PROVIDER]

GG-7

EXHIBIT A

Hedge Documents

(See Attached)

EXHIBIT HH TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

DUS PROPERTIES

	Property Name		Location
Lane at Towne Crossing		Mesquite, Texas
Northwood Place		Arlington, Texas
The Woods		Austin, Texas
Walden Run		McDonough, Georgia
Lakeshore Landing		Jackson, Mississippi
Woodstream		Greensboro, North Carolina
Colony at South Park		Aiken, South Carolina
Hamilton Pointe		Chattanooga, Tennessee
Hidden Creek		Chattanooga, Tennessee
Cedar Mill		Memphis, Tennessee
East View		Memphis, Tennessee

HH-1

EXHIBIT II TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

APPROVED SWAPS

	Notional Amount	Maturity	Rate
$	25,000,000.00	9/1/2005	6.813	%	AmSouth	Fannie Accepted
$	25,000,000.00	9/1/2006	6.790	%	AmSouth	Fannie Accepted
$	25,000,000.00	12/1/2005	5.595	%	AmSouth	Fannie Accepted
$	25,000,000.00	6/1/2007	5.730	%	AmSouth	Fannie Accepted
$	25,000,000.00	4/1/2007	5.010	%	AmSouth	Fannie Accepted
$	50,000,000.00	6/1/2008	5.268	%	1st TN	Fannie Accepted
$	50,000,000.00	6/1/2010	4.825	%	Sun Trust	Fannie Enhanced
$	25,000,000.00	9/1/2007	6.220	%	AmSouth	Fannie Accepted
$	25,000,000.00	3/3/2005	5.430	%	1st TN	Fannie Accepted
$	25,000,000.00	3/1/2009	3.910	%	1st TN	Fannie Accepted
$	300,000,000.00		5.474	%
						Fannie Accepted - Forward
$	40,000,000.00	3/31/2010	4.850	%	AmSouth	Swap for 4/1/04
$	340,000,000.00		5.400	%

(1) Excludes swaps and caps purchased for the MAA Tax-Exempt Bond Facility, which requires acceptable hedges on all debt.

1

EX-10.21

EXHIBIT 10.21

FIRST AMENDMENT TO THIRD AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

(MAA I)

THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 31^st day of March, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas” MAA of Texas and Borrower being collectively referred to as the “Borrower Parties”); and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

A.         Borrower Parties and Lender are parties to that certain Amended and Restated Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Third Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004 (as amended from time to time, the “Master Agreement”).

B.         All of the Lender's right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreement and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

C.        Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for (i) the addition of the Mortgaged Properties known as The Woods, Lane at Towne Crossing and Northwood Place to the Collateral Pool under the terms of the Master Agreement and (ii) an expansion of the Variable Facility Commitment as set forth hereinafter.

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and

J:\Jobs\18659\Cycles\Cycle3\FromClient\10-21.htm

- 1 -

valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

Section 1.Collateral Pool. Exhibit A to the Master Agreement is hereby deleted and replaced with the attached Exhibit A to reflect the addition of The Woods, Lane at Towne Crossing and Northwood Place as Additional Mortgaged Properties in the Collateral Pool.

Section 2.Expansion. The Variable Facility Commitment is hereby increased by $24,262,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

“Variable Facility Commitment” means an aggregate amount of $183,769,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

Section 3.Reserved Amount. “Reserved Amount” means $66,231,000, unless Borrower elects in writing a lesser amount not to exceed $250,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $66,231,000. The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount

Section 4.Property Management Agreements. Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

Section 5.Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

Section 6.Reaffirmation. The Borrower Parties hereby reaffirm their obligations under the Agreement.

Section 7. Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

Section 8.Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[Remainder of this page intentionally left blank]

-2-

J:\Jobs\18659\Cycles\Cycle3\FromClient\10-21.htm

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:

MID-AMERICA APARTMENT COMMUNITIES,

INC., a Tennessee corporation

By:	__________________________________
	Simon R.C. Wadsworth
	Executive Vice President

MID-AMERICA APARTMENTS, L.P.,

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,

a Tennessee corporation, its general partner

By:	____________________________
	Simon R.C. Wadsworth
	Executive Vice President

[Signatures follow on next page]

-3-

J:\Jobs\18659\Cycles\Cycle3\FromClient\10-21.htm

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By:	MAC of Delaware, Inc., a Delaware
	corporation, its general partner

By: 

Name: John A. Good

Title:       Assistant Secretary

-4-

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE INC., a         Delaware corporation

By: 

Name:	Sharon D. Singleton
Title:	Vice President

-5-

J:\Jobs\18659\Cycles\Cycle3\FromClient\10-21.htm

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES

AND INITIAL VALUATIONS

Property Name	County	Property Address	Initial Valuation
Paddock Club Brandon I & II	Hillsborough	Brandon, FL	$29,120,000
Paddock Club Mandarin	Duval	Jacksonville, FL	$17,830,000
Woodbridge at the Lake	Duval	Jacksonville, FL	$7,620,000
Paddock Park Ocala II	Marion	Ocala, FL	$15,530,000
Paddock Club Tallahassee I	Leon	Tallahassee, FL	$11,840,000
Courtyards at Campbell Apartments	Dallas	Dallas, TX	$10,910,000
Deer Run Apartments	Dallas	Dallas, TX	$12,930,000
Paddock Club Gainesville	Alachua	Gainesville, FL	$17,100,000
Kenwood Club	Harris	Katy, TX	$18,000,000
Balcones Woods	Travis	Austin, TX	$22,000,000
Paddock Club Panama City Apartments	Bay	Panama City, FL	$13,000,000
Paddock Club Tallahassee II Apartments	Leon	Tallahassee, FL	$6,675,000
The Corners	Forsyth	Winston-Salem, NC	$8,170,000
Jefferson Pines	Harris	Houston, TX	$21,100,000
Los Rios	Collin	Plano, TX	$32,500,000
Lane at Towne Crossing	Dallas	Mesquite, TX	$13,173,000
Northwood Place	Tarrant	Dallas, TX	$8,420,000
The Woods	Travis	Austin, X	$15,735,000

J:\Jobs\18659\Cycles\Cycle3\FromClient\10-21.htm

EXHIBIT AA TO

THIRD AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED

PROPERTY MANAGEMENT AGREEMENTS

	Property Name		Manager
1.	Paddock Club Brandon Phase I & II	Mid-America Apartment Communities, Inc.

(Phase II: Owned and managed by MAAC.

No separate management agreement.)

2.	Paddock Park Ocala Phase II	Mid-America Apartment Communities, Inc.
3.	Paddock Club Tallahassee Phase I	Mid-America Apartment Communities, Inc.
4.	Woodbridge at the Lake	Mid-America Apartment Communities, Inc.
5.	Courtyards at Campbell Apartments	Mid-America Apartment Communities, Inc.
6.	Deer Run Apartments	Mid-America Apartment Communities, Inc.
7.	Paddock Club Gainesville	Mid-America Apartment Communities, Inc.
8.	Kenwood Club	Mid-America Apartment Communities, Inc.
9.	Balcones Woods	Mid-America Apartment Communities, Inc.
10.	Paddock Club Panama City Apartments	Mid-America Apartment Communities, Inc.
11.	Paddock Club Tallahassee II Apartments	Mid-America Apartment Communities, Inc.
12.	Paddock Club Mandarin	Mid-America Apartment Communities, Inc.

(Owned and managed by MAAC. No

separate management agreement.)

13. The Corners Mid-America Apartments, L.P

(Owned and managed by MAALP. No

separate management agreement.)

14.	Jefferson Pines	Mid-America Apartments, L.P.
15.	Los Rios	Mid-America Apartments, L.P.
16.	The Woods	Mid-America Apartments, L.P.
17.	Lane at Towne Crossing	Mid-America Apartments, L.P.
18.	Northwood Place	Mid-America Apartments, L.P.

J:\Jobs\18659\Cycles\Cycle3\FromClient\10-21.htm

EX-10.24

EXHIBIT 10.24

FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

(MAA I)

THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 31^st day of March, 2005, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas” MAA of Texas and Borrower being collectively referred to as the “Borrower Parties”); and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

A.         Borrower Parties and Lender are parties to that certain Amended and Restated Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Third Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, which has been further amended pursuant to that certain First Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, which has been further amended pursuant to that certain Second Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, which has been further amended pursuant to that certain Third Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004 (as amended from time to time, the “Master Agreement”).

B.         All of the Lender's right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreement and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

C.        Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for the amendment of Schedule II to the Master Agreement.

- 1 -

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

Section 1.Schedule II. Schedule II is hereby deleted in its entirety and replaced with the Schedule II attached to this Amendment.

Section 2.Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

Section 3.Reaffirmation. The Borrower Parties hereby reaffirm their obligations under the Agreement.

Section 4. Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

Section 5.Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

-2-

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:

MID-AMERICA APARTMENT COMMUNITIES,

INC., a Tennessee corporation

By:	__________________________________
	Al Campbell
	Senior Vice President and Treasurer

MID-AMERICA APARTMENTS, L.P.,

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,

a Tennessee corporation, its general partner

By:	____________________________
	Al Campbell
	Senior Vice President and Treasurer

[Signatures follow on next page]

-3-

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By:	MAC of Delaware, Inc., a Delaware
	corporation, its general partner

By: 

Name: ______________________________

Title:       ______________________________

-4-

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE INC., a         Delaware corporation

By:	________________________________________
Name:	Linda Clark
Title:	Assistant Vice President

-5-

SCHEDULE II

Credit Enhancement Fee Schedule

Counter Party	Swap Effective Date	Maturity	Principal	Credit Enhancement Fee
SunTrust	K 6/1/2003	6/1/2010	50,000,000	18 basis points
DeutscheBank	U 9/1/2004	9/1/2011	50,000,000	17 basis points
Deutsche Bank	U 12/1/2004	12/1/2011	25,000,000	17 basis points
RBC Capital Markets	5/2/2005	5/1/2012	50,000,000	17 basis points

EX-10.25

EXHIBIT 10.25

FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

(MAA I)

THIS FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 23^rd day of September, 2005, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas” MAA of Texas and Borrower being collectively referred to as the “Borrower Parties”); and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

A.         Borrower Parties and Lender are parties to that certain Amended and Restated Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Third Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, which has been further amended pursuant to that certain First Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, which has been further amended pursuant to that certain Second Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, which has been further amended pursuant to that certain Third Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004, which has been further amended pursuant to that certain Fourth Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of March 31, 2005 (as amended from time to time, the “Master Agreement”).

B.         All of the Lender's right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreement and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

C.        Borrower and Lender are executing this Amendment pursuant to the Master Agreement to (i) reflect the addition of the Mortgaged Property commonly known as Boulder

- 1 -

Ridge to the Collateral Pool, and (ii) provide for the amendment of Schedule II to the Master Agreement, (iii) reflect an increase in the Variable Facility Commitment as set forth herein after, and (iv) reflect a decrease in the maximum amount by which the Commitment may be increased.

.            NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

Section 1.Addition of Mortgaged Property. The Mortgaged Property commonly known as Boulder Ridge is hereby added to the Collateral Pool as an Additional Mortgaged Property.

Section 2.Exhibit A.Exhibit A to the Master Agreement is hereby deleted in its entirety and replaced with Exhibit A to this Amendment.

Section 3.Property Management Agreements. Exhibit AA to the Master Agreement is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

Section 4.Boulder Ridge Subdivision Issue. The parties agree that the proposed Additional Mortgaged Property commonly known as Boulder Ridge is comprised of two tracts of land: a tract of land consisting of 21.1122 acres (“Tract 1”) and a tract of land consisting of 10.5889 acres (“Tract 2”). As of the date hereof, Tract 2 is part of an 11.474 acre tract (the “Unsubdivided Tract”). The remainder of the Unsubdivided Tract contains a .89 acre tract of land (the “Adjacent Property”) which is owned by the prior owner (the “Prior Owner”) of the Unsubdivided Tract. The parties acknowledge that Borrower and Prior Owner are in the process of causing the Unsubdivided Tract to be subdivided; however, as of the date hereof, the assessed property description for Boulder Ridge contains property not owned by Borrower. Lender prohibits property not owned by Borrower and not part of the Additional Mortgaged Property from being included in a tax parcel on which any Mortgage Property is located (the “Subdivision Issue”). Notwithstanding the foregoing, Lender has consented to the addition of Boulder Ridge provided that the following shall be satisfied:

(a)         Borrower shall cause Texas counsel to issue an opinion stating that the failure to resolve the Subdivision Issue shall not preclude Lender, its successors and/or assigns, from enforcing its rights and remedies under the Master Agreement, including the right to foreclose on the entire Boulder Ridge Mortgaged Property, including all of Tract 2.

(b)         Within sixty (60) days of the date hereof (the “Subdivision Deadline”), Borrower shall either (i) cause the subdivision of Tract 2 to be completed or (ii) purchase the Adjacent Property. In the event that Borrower purchases the Adjacent Property, the Borrower shall (A) add such additional property to the Collateral Pool as a portion of Boulder Ridge, (B) cause Lender’s title policy with respect to Boulder Ridge to be amended to include the Adjacent Property, and (C) cause the Security Instrument with respect to Boulder Ridge to be amended to include the Adjacent Property.

-2-

(c)       If the Subdivision Issue is not resolved to Lender’s satisfaction by the Subdivision Deadline, Lender may require Borrower to remove the Mortgaged Property known as Boulder Ridge from the Collateral Pool. Borrower further acknowledges that it will not take an Advance equal to $20,215,000.00 under the Master Agreement until the Subdivision Issue is resolved to Lender’s satisfaction.

Section 5.Expansion. The Variable Facility Commitment is hereby increased by $20,215,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

“Variable Facility Commitment” means an aggregate amount of $93,984,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

Section 6.Reserved Amount. “Reserved Amount” means $46,016,000 unless Borrower elects in writing a lesser amount not to exceed $250,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $46,016,000. The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

Section 7.Schedule II. Schedule II to the Master Agreement is hereby deleted in its entirety and replaced with the Schedule II attached to this Amendment.

Section 8.Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

Section 9.Reaffirmation. The Borrower Parties hereby reaffirm their obligations under the Agreement.

Section 10. Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

Section 11.Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[Signatures follow on next page]

-3-

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:

MID-AMERICA APARTMENT COMMUNITIES,

INC., a Tennessee corporation

By:	__________________________________
	Al Campbell
	Senior Vice President and Treasurer

MID-AMERICA APARTMENTS, L.P.,

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,

a Tennessee corporation, its general partner

By:	____________________________
	Al Campbell
	Senior Vice President and Treasurer

[Signatures follow on next page]

-5-

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By:	MAC of Delaware, Inc., a Delaware
	corporation, its general partner

By: 

Name:	John A. Good
Title:	Assistant Secretary

[Signatures follow on next page]

-6-

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE INC., a         Delaware corporation

By:	________________________________________
Name:	Sharon D. Singleton
Title:	Vice President

-7-

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES

AND INITIAL VALUATIONS

Property Name	County	Property Address	Initial Valuation
Paddock Club Brandon I & II	Hillsborough	Brandon, FL	$29,120,000
Paddock Club Mandarin	Duval	Jacksonville, FL	$17,830,000
Woodbridge at the Lake	Duval	Jacksonville, FL	$7,620,000
Paddock Park Ocala II	Marion	Ocala, FL	$15,530,000
Paddock Club Tallahassee I	Leon	Tallahassee, FL	$11,840,000
Courtyards at Campbell Apartments	Dallas	Dallas, TX	$10,910,000
Deer Run Apartments	Dallas	Dallas, TX	$12,930,000
Paddock Club Gainesville	Alachua	Gainesville, FL	$17,100,000
Kenwood Club	Harris	Katy, TX	$18,000,000
Balcones Woods	Travis	Austin, TX	$22,000,000
Paddock Club Panama City Apartments	Bay	Panama City, FL	$13,000,000
Paddock Club Tallahassee II Apartments	Leon	Tallahassee, FL	$6,675,000
The Corners	Forsyth	Winston-Salem, NC	$8,170,000
Jefferson Pines	Harris	Houston, TX	$21,100,000
Los Rios	Collin	Plano, TX	$32,500,000
Lane at Towne Crossing	Dallas	Mesquite, TX	$13,173,000
Northwood Place	Tarrant	Dallas, TX	$8,420,000
The Woods	Travis	Austin, TX	$15,735,000
Boulder Ridge	Denton	Roanoke, TX	$30,000,000

EXHIBIT AA TO

THIRD AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED

PROPERTY MANAGEMENT AGREEMENTS

	Property Name		Manager
1.	Paddock Club Brandon Phase I & II	Mid-America Apartment Communities, Inc.

(Phase II: Owned and managed by MAAC.

No separate management agreement.)

2.	Paddock Park Ocala Phase II	Mid-America Apartment Communities, Inc.
3.	Paddock Club Tallahassee Phase I	Mid-America Apartment Communities, Inc.
4.	Woodbridge at the Lake	Mid-America Apartment Communities, Inc.
5.	Courtyards at Campbell Apartments	Mid-America Apartment Communities, Inc.
6.	Deer Run Apartments	Mid-America Apartment Communities, Inc.
7.	Paddock Club Gainesville	Mid-America Apartment Communities, Inc.
8.	Kenwood Club	Mid-America Apartment Communities, Inc.
9.	Balcones Woods	Mid-America Apartment Communities, Inc.
10.	Paddock Club Panama City Apartments	Mid-America Apartment Communities, Inc.
11.	Paddock Club Tallahassee II Apartments	Mid-America Apartment Communities, Inc.
12.	Paddock Club Mandarin	Mid-America Apartment Communities, Inc.

(Owned and managed by MAAC. No

separate management agreement.)

13. The Corners Mid-America Apartments, L.P

(Owned and managed by MAALP. No

separate management agreement.)

14.	Jefferson Pines	Mid-America Apartments, L.P.
15.	Los Rios	Mid-America Apartments, L.P.
16.	The Woods	Mid-America Apartments, L.P.
17.	Lane at Towne Crossing	Mid-America Apartments, L.P.
18.	Northwood Place	Mid-America Apartments, L.P.
19.	Boulder Ridge	Mid-America Apartments, L.P.

SCHEDULE II

Credit Enhancement Fee Schedule

Counter Party	Swap Effective Date	Maturity	Principal	Credit Enhancement Fee
SunTrust	K 6/1/2003	6/1/2010	50,000,000	18 basis points
Deutsche Bank	U 9/1/2004	9/1/2011	50,000,000	17 basis points
Deutsche Bank	U 12/1/2004	12/1/2011	25,000,000	17 basis points
RBC Capital Markets	5/2/2005	5/1/2012	50,000,000	17 basis points
Deutsche Bank	12/1/2005	3/1/2012	50,000,000	17 basis points
RBC Capital Markets	12/1/2005	3/1/2013	50,000,000	20 basis points
SunTrust	12/1/2005	TBD	50,000,000	20 basis points
SunTrust	12/1/2005	TBD	50,000,000	20 basis points

EX-10.26

EXHIBIT 10.26

SIXTH AMENDMENT TO THIRD AMENDED AND RESTATED

MASTER CREDIT FACILITY AGREEMENT

(MAA I)

THIS SIXTH AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 22^nd day of February, 2006, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas” MAA of Texas and Borrower being collectively referred to as the “Borrower Parties”); and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

A.Borrower Parties and Lender are parties to that certain Amended and Restated Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Third Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, which has been further amended pursuant to that certain First Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, which has been further amended pursuant to that certain Second Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, which has been further amended pursuant to that certain Third Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004, which has been further amended pursuant to that certain Fourth Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of March 31, 2005, which has been further amended pursuant to that Fifth Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of September 23, 2005 (as amended from time to time, the “Master Agreement”).

B.All of the Lender's right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreement and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

C.        Borrower is a party to that certain Master Reimbursement Agreement by and among Fannie Mae, Borrower and others party thereto dated as of June 1, 2001 (as amended from time to time, the “MAA Bond Reimbursement Agreement”) pursuant to which Fannie Mae agreed to provide credit enhancement for bonds issued pursuant to the provisions thereof. Pursuant to Section 1.2 of the MAA Bond Reimbursement Agreement, the maximum amount to which the commitment under the MAA Bond Reimbursement Agreement may be increased is  $100,000,000 (the “Bond Commitment”). 

D.        Pursuant to the terms of the MAA Bond Reimbursement Agreement, Borrower and Lender intend to add an additional mortgaged property commonly known as St. Augustine Apartments located in Jacksonville, Florida to the collateral pool under the MAA Bond Reimbursement Agreement.   At such time that St. Augustine Apartments is added to the collateral pool under the MAA Bond Reimbursement Agreement, Borrower and Lender desire to increase the maximum amount by which the Bond Commitment may be increased under the MAA Bond Reimbursement Agreement and decrease the maximum amount by which the Commitment may be increased under that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004 (defined in the Master Agreement as the “Other Credit Agreement”) by $9,451,000.   

E.        Borrower and Lender are executing this Amendment to revise Section 8.01(a) of the Master Agreement subject to the terms set forth herein.

.NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

Section 1.         Borrower and Lender hereby agree that at such time that the St. Augustine Apartments is added to the collateral pool under the MAA Bond Reimbursement Agreement, the maximum amount by which Commitment may be increased under the Other Credit Agreement shall be automatically reduced by $9,451,000, and the following revisions to the Master Agreement shall automatically take effect:

(i)         Section 8.01(a) shall be automatically deleted in its entirety and restated as follows:

(a)        Maximum Amount of Increase in Commitment.  Notwithstanding the terms of this Agreement and Section 8.01 of the Other Credit Agreement, Borrower shall have the right, upon repayment in full of the loans secured by those certain Multifamily Residential Properties identified on Exhibit HH (the “DUS Properties”), to increase the Commitment by an additional $46,016,000 (to a maximum Commitment of $250,000,000).  Borrower Parties acknowledge that the DUS Properties are currently subject to liens under the Fannie Mae Delegated Underwriting and Servicing program and are serviced by Lender.  Borrower hereby agrees that the total commitment, when added to the commitment of the Lender to the Borrower under the Other Credit Agreement, shall not exceed $840,549,000.

Section 2.Capitalized Terms. All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

Section 3. Full Force and Effect. Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

Section 4.Counterparts. This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[Signatures follow on next page]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:

MID-AMERICA APARTMENT COMMUNITIES,

INC., a Tennessee corporation

By:	__________________________________
	Al Campbell
	Senior Vice President and Treasurer

MID-AMERICA APARTMENTS, L.P.,

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc.,

a Tennessee corporation, its general partner

By:	____________________________
	Al Campbell
	Senior Vice President and Treasurer

[Signatures follow on next page]

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By:	MAC of Delaware, Inc., a Delaware
	corporation, its general partner

By:

Name:	John A. Good
Title:	Assistant Secretary

[Signatures follow on next page]

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation

By:	________________________________________
Name:	Sharon D. Singleton
Title:	Vice President

EX-10.30

EXHIBIT 10.30

AMENDMENT NO. 3 TO MASTER REIMBURSEMENT AGREEMENT

THIS AMENDMENT NO. 3 TO MASTER REIMBURSEMENT AGREEMENT (this “Amendment No. 3”) amends that certain Master Reimbursement Agreement made and entered into as of June 1, 2001, by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. (as amended, the “Master Reimbursement Agreement”) and is made and entered into as of March 2, 2004 by and among Fannie Mae, Mid-America Apartments, L.P. Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Master Reimbursement Agreement.

RECITALS

WHEREAS, Fannie Mae, Mid-America Apartments, L.P. and Mid-America Apartment Communities, Inc. are parties to the Master Reimbursement Agreement;

WHEREAS, Mid-America Apartments, L.P. and Mid-America Apartment Communities, Inc. have requested and Fannie Mae has agreed to add three Additional Mortgaged Properties to the Collateral Pool;

WHEREAS, Fannie Mae, Mid-America Apartments, L.P. and Mid-America Apartment Communities, Inc. desire to amend the Master Reimbursement Agreement to add certain provisions and to add the following Additional Mortgaged Properties to the Collateral Pool: (a) Park at Hermitage Apartments in Davidson County, Tennessee, (b) Travis Station Apartments Project in Austin, Travis County, Texas, and (c) Stassney Woods Apartments in Austin, Travis County, Texas (the “2004 Additional Mortgaged Properties”);

WHEREAS, Mid-America Apartments of Texas, L.P. owns the Mortgaged Properties known as Stassney Woods Apartments and Travis Station Apartments;

WHEREAS, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. (individually and collectively, “Borrower”) have each determined that being co-Borrowers under the Master Reimbursement Agreement is in each of their economic interests and each has received reasonable consideration for cross-collateralizing and cross-defaulting the Mortgaged Properties which are part of the Collateral Pool;

WHEREAS, Mid-America Apartments, L.P. and Mid-America Apartment Communities, Inc. have entered into a Contribution Agreement dated October 24, 2002, as amended, and the Borrower has entered into an amended and restated Contribution Agreement dated as of even date herewith;

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

WHEREAS, Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) has agreed to make a loan in the amount of $11,720,000 to Borrower pursuant to that certain Master Credit Facility Agreement dated as of the date hereof (the “Credit Agreement”) between Borrower and Lender, and Borrower has secured its obligations under the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) by, among other things, granting in favor of Lender an interest in the second priority Reimbursement Mortgages on each of the 2004 Additional Mortgaged Properties known as Travis Station and Stassney Woods and a third priority Conventional Mortgage on the Additional Mortgaged Property known as Park at Hermitage;

WHEREAS, simultaneously with the closing of the issuance of the Bonds for the benefit of the 2004 Additional Mortgaged Properties, Fannie Mae has agreed to receive an assignment of Lender’s rights under the Credit Agreement and its interests under the related Reimbursement Mortgages, and to purchase a 100% participation interest in each loan made by Lender to Borrower under the Credit Agreement;

WHEREAS, the obligations of Borrower to Fannie Mae under the Credit Agreement and the related Loan Documents, the Master Reimbursement Agreement and the Reimbursement Security Documents shall be cross-defaulted and cross-collateralized;

WHEREAS, Fannie Mae and Borrower intend these Recitals to be a material part of this Amendment No. 3.

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the mutual covenants and agreements set forth herein, and other good and valuable consideration, all of which each party agrees constitutes sufficient consideration received at and before the execution hereof, the parties agree as follows:

AGREEMENTS

1. Section 1.2 is hereby amended by adding the following defined terms:

“Amortization Period” means the period of 30 years.

“Conventional Mortgage” means the third priority Security Instrument (including all riders thereto) executed by Mid-America Apartments, L.P. in favor of Lender on the Mortgaged Property known as The Park at Hermitage and any other third party Security Instrument that may be executed in the future securing the obligations of the Borrower under the Credit Agreement and the Facility Note.

“Credit Agreement” means the Master Credit Facility Agreement dated as of March 2, 2004 between Borrower and Lender, as the same may be amended, modified, supplemented or restated from time to time.

“DMBS Loan” means a “Loan” (as such term is defined in the Credit Agreement).

2

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

“Facility Debt Service” means, as of any specified date, the amount of interest and principal amortization, during the 12 month period immediately succeeding the specified date, with respect to the DMBS Loans Outstanding on the specified date, except that, for these purposes, each DMBS Loan shall be deemed to require level monthly payments of principal and interest (at the Coupon Rate for the DMBS Loan) in an amount necessary to fully amortize the original principal amount of the DMBS Loan over the Amortization Period, with such amortization deemed to commence on the first day of the 12 month period;

“Facility Note” means the DMBS Discount Multifamily Note in the principal amount of $11,720,000 delivered by Borrower to Lender pursuant to the Credit Agreement.

“Lender” shall have the meaning given that term in the Credit Agreement.

“Loan Documents” shall have the meaning given that term in the Credit Agreement.

“2004 Additional Mortgaged Properties” means: (a) Park at Hermitage Apartments in Hermitage, Tennessee, (b) Travis Station Apartments Project in Austin, Texas, and (c) Stassney Woods Apartments in Austin, Texas.

2.          Section 1.2 is hereby amended by deleting the definition of “Aggregate Debt Service” in its entirety and replacing such definition with the following definition:

“Aggregate Debt Service” means, at any time, the sum of (i) the aggregate scheduled debt service for all the Loans for the applicable period, assuming that the scheduled debt service on each Loan is equal to interest at the applicable Underwriting Rate plus principal payments required to be made to the applicable principal reserve fund relating to such Loan and (ii) the Facility Debt Service for all DMBS Loans for the applicable period; provided, however, if the interest rate on any Note has been converted to a Fixed Rate, then the assumed scheduled debt service for such Loan shall be equal to interest at such actual Fixed Rate with respect to such Loan plus the Fee Component plus principal payments and all payments required to be made to each of the principal reserve funds relating to such Loan.

3.          Section 1.2 is hereby amended by deleting the definition of “Aggregate Loan to Value Ratio” in its entirety and replacing such definition with the following definition:

“Aggregate Loan to Value Ratio” means, for any specified date, the ratio of (expressed as a percentage) (a) the sum of the Facility Amount and DMBS Loans outstanding on the specified date to (b) the aggregate of the Valuations most recently obtained prior to the specified date for all of the Mortgaged Properties.

3

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

4.          Section 1.2 is hereby amended by deleting the definition of “Allocable Facility Amount” in its entirety and replacing such definition with the following definition:

“Allocable Facility Amount” means (i) during any period in which there is no Additional Collateral, in relation to each Mortgaged Property, an amount which equals (a) the sum of (x) the aggregate Outstanding principal amount of Bonds issued to finance such Mortgaged Property and (y) the portion of the Outstanding DMBS Loans allocated by Lender to such Mortgaged Property minus (b) the amount on deposit in the Principal Reserve Fund (without regard to earnings) relating to such Mortgaged Property or (ii) during any period in which Additional Collateral exists, in relation to each Mortgaged Property, an amount determined by Fannie Mae in its discretion.”

5.          Section 1.2 is hereby amended by deleting the definition of “Borrower Documents” in its entirety and replacing such definition with the following definition:

“Borrower Documents” means, collectively, the Bond Documents, the Mortgage Loan Documents, the Loan Documents and all other agreements, instruments or documents in connection with the Bonds, the Loans, the DMBS Loans, the Security Instruments, this Agreement, the Credit Agreement or the transactions contemplated thereby or hereby.”

6.          Section 1.2 is hereby amended by deleting the definition of “Commitment” in its entirety and replacing such definition with the following definition:

“Commitment” means one hundred (100) million dollars minus the outstanding principal amount of DMBS Loans.”

7.          Section 1.2 is hereby amended by deleting the definition of “Reimbursement Mortgages” in its entirety and replacing such definition with the following definition:

“Reimbursement Mortgages” means each second priority Security Instrument (including all riders thereto) executed by a Borrower in favor of Fannie Mae or, in the case of the 2004 Additional Mortgaged Properties known as Stassney Woods and Travis Station, in favor of Fannie Mae and Lender on each of the Mortgaged Properties securing the obligations of the Borrower under this Agreement, the Credit Agreement and the Facility Note, including, without limitation, the obligations under Article IV of this Agreement.”

8.          Section 1.2 is hereby amended by deleting the definition of “Reimbursement Security Documents” in its entirety and replacing such definition with the following definition:

“Reimbursement Security Documents” means, collectively, this Agreement, the Reimbursement Mortgages, the Hedge Documents, the Hedge Assignments, the Cash Management Agreement, the Ancillary Collateral Agreements, the Assignment of Management Agreement, the Pledge Agreements,

4

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

the Cash Collateral Agreement, the Letter of Credit, the Credit Agreement, the Facility Note, the Conventional Mortgage and any other documents executed by Borrower from time to time to secure any of Borrower’s obligations under this Agreement or the Loan Documents, title policies, UCC Fixture Filings and Financing Statements, as each such document, agreement or instrument may be amended, supplemented, modified or restated from time to time in accordance with its respective terms.”

9.          Section 1.2 is hereby amended by deleting the definition of “Underwriting Rate” in its entirety and replacing such definition with the following definition:

“Underwriting Rate” means6.9861% for the Mortgaged Property known as Fairways Apartments, 6.9861% for the Mortgaged Property known as Post House North Apartments, 6.9861% for the Mortgaged Property known as Reflection Pointe Apartments, 6.258% for each of the Four Additional Mortgaged Properties, 6.22% for the Mortgaged Property known as Westbury Creek Apartment, 6.1746% for the Mortgaged Property known as Windridge Apartments, 6.13772% for the Mortgaged Property known as The Park at Hermitage, 6.29552% for the Mortgaged Property known as Travis Station Apartments and 6.26444% for the Mortgaged Property known as Stassney Woods Apartments.

10.        Section 6.2(c) is hereby amended by deleting such provision in its entirety and replacing it with the following:

“(c)     Release Price. The “Release Price” for each Mortgaged Property means (i) during the period Section 3.13(1) of this Agreement is in effect, the amount, if any, required to pay the outstanding principal of, interest on and premium relating to the Bonds issued to finance the Collateral Release Property and the portion of the Outstanding DMBS Loans allocated by Lender to such Collateral Release Property, so that, immediately after the release, the Coverage and LTV Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value Ratio for the Trailing 12 Month Period will be increased as a result of such release and (ii) at all times after Section 3.13(1) of this Agreement is no longer in effect the greater of (1) 125% of the Allocable Facility Amount for the Mortgaged Property to be released and (2) the amount, if any, required to pay the outstanding principal of, interest on and premium relating to the Bonds issued to finance the Collateral Release Property and the portion of the Outstanding DMBS Loans allocated by Lender to such Collateral Release Property, so that, immediately after the release, the Coverage and LTV Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to

5

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

Value Ratio for the Trailing 12 Month Period will be increased as a result of such release. In addition to the Release Price, the Borrower shall pay to the Lender all associated prepayment premiums, the Termination Fee, the Termination Fee (as such term is defined in the Credit Agreement) and other amounts due under the Notes, this Agreement and the Credit Agreement. Notwithstanding the above, in lieu of paying all amounts owing on the Bonds issued to finance the Collateral Release Property (but not in lieu of paying the portion of the Outstanding DMBS Loans allocated by Lender to such Collateral Release Property), the Borrower may sell the Collateral Release Property to a Person who is not directly or indirectly owned, controlled or in any way otherwise affiliated with any Borrower or the Key Principal, or any General Partner or any affiliate or subsidiary of any Borrower, the Key Principal or any General Partner and replace Fannie Mae as credit enhancer and liquidity provider with a substitute entity or terminate Fannie Mae as the credit enhancer, if such enhancement is not necessary due to the rating of the purchaser so long as in each case either the substitute entity or purchaser has a long-term credit rating which is “A” or better by S&P and “A” or better by Moody’s. Notwithstanding the above, although Fannie Mae has no obligation to do so, it may, in its sole discretion, agree to provide credit enhancement and liquidity support for the Bonds relating to the Collateral Release Property on terms satisfactory to Fannie Mae in which case, in the event the Loan Servicer is the servicer for the Collateral Release Property no Termination Fee shall be owing as a result of the release (but any Facility Termination Fee shall be due and owing).”

11.        The additional provision added to Section 3.13(1) pursuant to Amendment No. 1 is hereby amended by deleting such provision in its entirety and replacing it with the following:

“Notwithstanding that the obligations under each Note and Bond Mortgage relating to the Four Additional Mortgaged Properties, the Two Additional Properties and the 2004 Additional Mortgaged Properties are not generally personal obligations of the Borrower and notwithstanding that Fannie Mae is a holder of such Notes, each Borrower agrees and acknowledges that the intent of the parties to this Agreement is that each Borrower is and shall remain, except as provided in Section 3.13(2), jointly and severally personally liable to Fannie Mae for the payment and performance of all Obligations throughout the term of this Agreement. Consequently, in the event that Fannie Mae becomes the sole holder of such Notes and Bond Mortgages, by its rights of subrogation or otherwise, any amounts owing to Fannie Mae under such Notes or Bond Mortgages shall be joint and several personal obligations of each Borrower. In addition, it is the intent of the parties that the non-recourse liability of the Borrowers under such Notes shall not in any manner or under any circumstances be interpreted or understood to contradict, undermine, negate or nullify that each Borrower is and shall remain, except as provided in Section 3.13(2), jointly and

6

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

severally personally liable to Fannie Mae for the payment and performance of all Obligations throughout the term of this Agreement.”

12. Section 8.1 is hereby amended by adding a new paragraph (q) to read as follows:

“(q)       the occurrence of an “Event of Default” under and as defined in the Credit Agreement, the Conventional Mortgage or any other Loan Document.”

13.        Section 9.5(a) is hereby amended by deleting the notice address of Borrower in its entirety and replacing it with the following:

“As to the Borrower:

c/o Mid-America Apartment Communities, Inc.

6584 Polar Avenue

Suite 300

Memphis, Tennessee 38138

Attention: Simon R.C. Wadsworth

Chief Financial Officer

Telecopy No.: (901) 682-6667

with a copy to:

Bass, Berry & Sims PLC

The Tower at Peabody Place

100 Peabody Place

Suite 900

Memphis, Tennessee 38103-3672

Attention:	John A. Stemmler, Esq.
Telecopy No.:	(901) 543-5999”

14.        Schedules 2, 3, 4, 5 and 9 are hereby amended and restated in their entirety as set forth in Annex 1 attached hereto.

15.        By execution and delivery of this Amendment No. 3 by Fannie Mae, Fannie Mae hereby consents to the addition of the 2004 Additional Mortgaged Properties to the Fannie Mae Credit Facility as Additional Mortgaged Properties effective as of March 2, 2004 (the “Effective Date”).

16.        In connection with the addition of the 2004 Additional Mortgaged Properties to the Fannie Mae Credit Facility as Additional Mortgaged Properties, Borrower and Fannie Mae acknowledge and agree as follows in relation to such Additional Mortgaged Properties:

(a)	The Facility Fee shall be as follows:
	(i)	Credit Enhancement Rate shall be 57 basis points per annum.

7

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

(ii)	Principal Reserve Fund Rate shall be 15 basis points per annum.
(iii)	Loan Servicer’s Rate shall be 10 basis points.
(iv)	Liquidity Rate shall be 12.5 basis points.

(v)        Swap Credit Enhancement Rate shall be 15basis points for the initial five-year Swaps purchased in connection with the 2004 Additional Mortgaged Properties and otherwise to be determined at the time of the purchase of a Swap.

(b)        Standby Fee shall be 15 basis points on any unused capacity of the Fannie Mae Credit Facility and/or the Fannie Mae Credit Facility expansion capacity.

(c)	Substitution Fee shall be 75 basis points.
(d)	Collateral Addition Fee shall be 75 basis points.
(e)	Release Fee shall be $15,000 per Collateral Release Property.
(f)	The Strike Rate shall be 6% for the Tax-Exempt Bonds.
(g)	The Hedge Rate shall be 6% for the Tax-Exempt Bonds.

(h)        The Underwriting Rate shall be 6.13772% for the Mortgaged Property known as The Park at Hermitage, 6.29552% for the Mortgaged Property known as Travis Station Apartments and 6.26444% for the Mortgaged Property known as Stassney Woods Apartments.

17.        Fannie Mae hereby waives the requirement of Section 17(a)(5) of the Reimbursement Mortgage and the Conventional Mortgage relating to the Mortgaged Property known as The Park at Hermitage that Borrower enter into a written contract for management of such Mortgaged Property, provided however, that

(a)        In the event that the Borrower should ever elect to employ an affiliate or third party management company for the management of the Mortgaged Property, the Borrower agrees that (i) the management company and the management agreement to be executed therewith are subject to the prior written approval of Fannie Mae, which approval may be granted or denied in Fannie Mae’s sole and absolute discretion and (ii) any such approved management company shall not receive a management fee greater than 4% of gross collected rents from the Mortgaged Property;

(b)        In the event that the Borrower should ever elect to contract with an affiliate or third party management company for the management of the Mortgaged Property, the Borrower agrees to execute (and to cause any such management company to execute) in favor of Fannie Mae an “Assignment of Management Agreement” on a form approved by Fannie Mae; and

(c)        Borrower acknowledges that Fannie Mae reserves the right, under the Loan Documents, to require independent, professional third party management of the Mortgaged Property if inadequate or at any time after the occurrence of an Event of Default. At any time after an Event of Default shall have occurred, Fannie Mae shall have the right either (i) to direct the Borrower to contract with a third party management company approved by Fannie Mae for

8

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

the management of the Mortgaged Property or (ii) to assume responsibility for the management of the Mortgaged Property, directly or through its designee. Promptly upon Fannie’s written request after the occurrence of an Event of Default, Borrower shall turn over to Fannie Mae all books and records relating to the Mortgaged Property (copies of which may be retained by Borrower, at Borrower's expense), together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Fannie Mae may reasonably require. Borrower shall cooperate with Fannie Mae in the transfer of management responsibilities to Fannie Mae or its designee.

18.        The Borrower covenants and agrees to protect, defend and save harmless Fannie Mae from all loss, costs and damages, including, without limitation, costs of demolition and restoration of the improvements located on the Mortgaged Property known as Stassney Woods and reasonable attorney’s fees and expenses, that Fannie Mae may suffer, expend or incur arising out of or in connection with the City of Austin’s exercise of any of its rights under that certain Easement dated March 5, 1987, recorded in Volume 10311, page 491 of the Real Property Records of Travis County, Texas and encumbering such Mortgaged Property.

19.        This Amendment No. 3 shall be construed, interpreted and enforced in accordance with, and the rights and remedies of the parties hereto shall be governed pursuant to, the provisions of Section 9.3 of the Master Reimbursement Agreement (entitled “Governing Law; Choice of Law; Consent to Jurisdiction; Waivers of Jury Trial”), which provisions are hereby incorporated into this Amendment No. 3 by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

20.        Except as herein expressly modified or amended, all terms and covenants, and provisions of the Master Reimbursement Agreement are hereby ratified and confirmed by the Borrower and Fannie Mae and remain in full force and effect.

21. The Borrower represents and warrants to Fannie Mae as follows:

(a)        All representations and warranties set forth in the Master Reimbursement Agreement are true and correct as of March 2, 2004.

(b)        There exists no Event of Default or Potential Event of Default as of March 2, 2004.

22.        This Amendment No. 3 may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page.

[The Remainder of This Page Has Been Intentionally Left Blank.]

9

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to be signed, sealed, and delivered by their duly authorized representatives as of the date first above written.

MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: __________________________

Simon R. C. Wadsworth

Executive Vice President

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation

By: __________________________

Simon R. C. Wadsworth

Executive Vice President

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By: MAC of Delaware, Inc., a Delaware corporation, its sole General Partner

By: __________________________

John A. Good

Assistant Secretary

S-1

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

FANNIE MAE

By:                                                                

Name:

Title:

S-2

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

ANNEX 1

(See attached schedules)

A-1

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 2

BONDS, ISSUERS AND MORTGAGED PROPERTIES

Bonds	Issuer	Mortgaged Property
$5,880,000 City of Flowood, Mississippi Variable Rate Multi-Family Housing Refunding Revenue Bonds, Series 2001 (Reflection Pointe Apartments Project)	City of Flowood, Mississippi	Reflection Pointe Apartments
$7,735,000 South Carolina State Housing Finance and Development Authority Multifamily Rental Housing Revenue Refunding Bonds (Fairway Apartments Project), Series 2001 A	South Carolina State Housing Finance and Development Authority	Fairways Apartments
$3,375,000 The Health, Educational and Housing Facility Board of the City of Jackson Multifamily Housing Revenue Refunding Bonds, Series 2001 (Post House North Apartments)	The Health, Educational and Housing Facility Board of the City of Jackson	Post House North Apartments
$7,000,000 Housing Finance Authority of Volusia County, Florida Multifamily Housing Revenue Refunding Bonds, Series 2002 (The Anatole Apartments)	Housing Finance Authority of Volusia County, Florida	The Anatole Apartments
$5,095,000 The Health, Educational and Housing Facility Board of the City of Jackson Multifamily Housing Revenue Refunding Bonds, Series 2002 (Post House Jackson Apartments)	The Health, Educational and Housing Facility Board of the City of Jackson	Post House Jackson Apartments
$6,805,000 Housing Finance Authority of Marion County, Florida Multifamily Housing Revenue Refunding Bonds, Series 2002 (Paddock Park Apartments)	Housing Finance Authority of Marion County, Florida	Paddock Park Apartments I
$10,800,000 Hampton Redevelopment and Housing Authority Variable Rate Demand Multifamily Housing Revenue Refunding Bonds (Township Apartments Project) Series 1998	Hampton Redevelopment and Housing Authority	Township Apartments

Schedule 2-1

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

$2,980,000 The Housing Authority of the City of Augusta, Georgia Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series 2003A (Westbury Creek Apartments) and $500,000 Taxable Variable Rate Demand Multifamily Housing Revenue Bonds, Series 2003B (Westbury Creek Apartments)	The Housing Authority of the City of Augusta, Georgia	Westbury Creek Apartments
$4,965,000 The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee Multifamily Housing Revenue Refunding Bonds, Series 2003A (Windridge Apartments) and $500,000 Taxable Multifamily Housing Revenue Refunding Bonds, Series 2003B (Windridge Apartments)	The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee	Windridge Apartments
$6,645,000 The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County Multifamily Housing Revenue Refunding Bonds, Series 2004 (The Park at Hermitage Project)	The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County	The Park at Hermitage Apartments
$4,050,000 Austin Housing Finance Corporation Multifamily Housing Revenue Refunding Bonds, Series 2004A (Stassney Woods Apartments)	Austin Housing Finance Corporation	Stassney Woods Apartments
$3,585,000Travis County Housing Finance Corporation Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series 2004A (Travis Station Apartments)	Travis County Housing Finance Corporation	Travis Station Apartments

Schedule 2-2

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 3

FEE COMPONENT AND ONGOING FEES

I.INITIAL MORTGAGED PROPERTIES (Fairways Apartments, Post House North Apartments, and Reflection Pointe Apartments)
TYPE OF FEE1	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  South Carolina State Housing Finance and Development Authority (Fairways Apartments)	(i) 0.25% of the principal amount of the Bonds Outstanding or (ii) $8,400	See definition of Issuer’s Fee in Indenture	Annually in monthly installments in advance
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House North Apartments)	None	Not applicable	Not applicable
(c)  City of Flowood, Mississippi (Reflection Pointe Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  South Carolina State Housing Finance and Development Authority (Fairways Apartments)	3.3 basis points	See Section 2.5 of the Financing Agreement	Annually

Schedule 3-1

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

_________________________

1With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the three Initial Mortgaged Properties.

(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House North Apartments)	6.2 basis points	See Section 2.5 of the Financing Agreement	Annually
(c)  City of Flowood, Mississippi (Reflection Pointe Apartments)	4.3 basis points	See Section 2.5 of the Financing Agreement	Annually
3.REMARKETING AGENT FEE	12.5 basis points	See Section 7 of the Remarketing Agreement	Annually , payable quarterly in arrears on each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500 per year	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 3.3(1) of Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 3.3(1)(a) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 3.3(1)(b) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 3.3(1)(d) of Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-2

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

(d)  Liquidity Rate	12.5 basis points	See Section 3.3(1)(d) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(e)  Swap Credit Enhancement Rate	5 basis points for each initial Swap purchased in connection with the Initial Mortgaged Properties and otherwise to be determined at the time of the purchase of a Swap	See Section 3.3(1)(e) of Master Reimbursement Agreement	Payable prior to the 15th of each month

II.ADDITIONAL MORTGAGED PROPERTIES (October 24, 2002 Closing) (The Anatole Apartments, Paddock Park Apartments I, Post House Jackson Apartments, and Township Apartments)
TYPE OF FEE2	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  Housing Finance Authority of Volusia County, Florida (The Anatole Apartments)	0.10% of the principal amount of the Bonds Outstanding	See definition of Issuer’s Fee in Indenture	Annually in arrears on each January 15, commencing January 15, 2003
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House Jackson Apartments)	None	Not applicable	Not applicable

Schedule 3-3

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

_________________________

2With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the Four Additional Mortgaged Properties.

(c)  Housing Finance Authority of Marion County, Florida (Paddock Park Apartments I)	0.20% of the principal amount of the Bonds Outstanding	See definition of Issuer’s Fee in Indenture	Annually in arrears on each October 1 commencing October 1, 2003,
(d)  Hampton Redevelopment and Housing Authority(Township Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  Housing Finance Authority of Volusia County, Florida (The Anatole Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House Jackson Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(c)  Housing Finance Authority of Marion County, Florida (Paddock Park Apartments I)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(d)  Hampton Redevelopment and Housing Authority(Township Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually

Schedule 3-4

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

5.FACILITY FEE		See Section 33 of Amendment No. 1 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	12.5 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-5

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

(e)  Swap Credit Enhancement Rate 13 basis points for the five-year Swap purchased in connection with the Additional Mortgaged Property known as The Anatole Apartments and the five year Swap purchased in connection with the Additional Mortgaged Property known as Township Apartments and otherwise to be determined at the time of the purchase of a Swap See Section 33 of Amendment No. 1 to Master Reimbursement Agreement Payable prior to the 15th of each month

III.ADDITIONAL MORTGAGED PROPERTIES (May 30, 2003 Closing) (Westbury Creek Apartments and Windridge)
TYPE OF FEE3	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  The Housing Authority of the City of Augusta, Georgia (The Westbury Creek Apartments)	None	Not applicable	Not applicable
(b)  The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee (Windridge Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  The Housing Authority of the City of Augusta, Georgia (The Westbury Creek Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15

Schedule 3-6

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

_________________________

3With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the Two Additional Mortgaged Properties.

(b)  The Health Educational and Housing Facility Board of the City of Chattanooga, Tennessee (Windridge Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
3.REMARKETING AGENT FEE	12 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 11 of Amendment No. 2 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 11of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-7

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

(d)  Liquidity Rate	12.5 basis points	See Section 11of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(e)  Swap Credit Enhancement Rate	13basis points for the five-year Swap purchased in connection with the Additional Mortgaged Property known as Windridge Apartments and the five year Swap purchased in connection with the Additional Mortgaged Property known as Westbury Creek and otherwise to be determined at the time of the purchase of a Swap	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month

IV.ADDITIONAL MORTGAGED PROPERTIES (March 2, 2004 Closing) (The Park at Hermitage Apartments, Stassney Woods Apartments and Travis Station Apartments)
TYPE OF FEE4	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE

Schedule 3-8

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

_________________________

4With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the 2004 Additional Mortgaged Properties.

(a)  The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (The Park at Hermitage Apartments)	None	Not applicable	Not applicable
(b)  Austin Housing Finance Corporation (Stassney Woods Apartments)	The greater of (a) .0003 times the amount of Bonds Outstanding on January 1, (b) 12 times the number of units in the Project, or (c) $1,200 per year	Trust Indenture (definition of “Ordinary Issuer Monitoring Fees and Expenses”)	Annually, prorated and payable on each Interest Payment Date
(b)  Travis County Housing Finance Corporation (Travis Station Apartments)	10 basis points	See definition of Issuer Fee in Indenture	Annually, prorated and payable on each Interest Payment Date
2.TRUSTEE FEE
(a)  The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (The Park at Hermitage Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
(b)  Austin Housing Finance Corporation (Stassney Woods Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
(b)  Travis County Housing Finance Corporation (Travis Station Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15

Schedule 3-9

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 16 of Amendment No. 3 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 16 of Amendment No. 3 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 16of Amendment No. 3 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 16 of Amendment No. 3 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	12.5 basis points	See Section 16of Amendment No. 3 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-10

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

(e)  Swap Credit Enhancement Rate 15 basis points for the five-year Swap purchased in connection with the 2004 Additional Mortgaged Properties known as The Park at Hermitage Apartments and Travis Station Apartments and otherwise to be determined at the time of the purchase of a Swap See Section 16 of Amendment No. 3 to Master Reimbursement Agreement Payable prior to the 15th of each month

Schedule 3-11

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 4

MORTGAGED PROPERTIES

INITIAL MORTGAGED PROPERTIES:

PROPERTY NAME	PROPERTY ADDRESS
Fairways Apartments	Columbia, South Carolina
Post House North Apartments	Jackson, Tennessee
Reflection Pointe Apartments	Flowood, Mississippi

ADDITIONAL MORTGAGED PROPERTIES (October 24, 2002 Closing):

Property Name	Property Address
The Anatole Apartments	Daytona Beach, Florida
Post House Jackson Apartments	Jackson, Tennessee
Paddock Park Apartments I	Ocala, Florida
Township Apartments	Hampton, Virginia

ADDITIONAL MORTGAGED PROPERTIES (May 30, 2003 Closing):

Property Name	Property Address
Westbury Creek Apartments	Augusta, Georgia
Windridge Apartments	Chattanooga, Tennessee

ADDITIONAL MORTGAGED PROPERTIES (March 2, 2004 Closing):

Property Name	Property Address
The Park at Hermitage Apartments	Hermitage, Tennessee
Travis Station Apartments	Austin, Texas
Stassney Woods Apartments	Austin, Texas

SUBSTITUTED MORTGAGED PROPERTIES:

Property Name	Property Address
None

Schedule 4-1

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 5

TERMINATION FEE

Any Termination Fee payable under Section 3.3(4) of the Master Reimbursement Agreement shall be equal to the following percentage of the unpaid principal balance of each Loan being prepaid as indicated below, or, in the case of a substitution of an Alternate Credit Facility for the Credit Enhancement Instrument, the unpaid principal balance of each Loan:

Fairways (Loan Originated June 15, 2001)
First Loan Year	5.904%
Second Loan Year	5.479%
Third Loan Year	5.024%
Fourth Loan Year	4.536%
Fifth Loan Year	4.014%
Sixth Loan Year	3.454%
Seventh Loan Year	2.855%
Eighth Loan Year	2.213%
Ninth Loan Year	1.525%
Tenth Loan Year	0.789%

Post House North (Loan Originated June 15, 2001)
First Loan Year	5.965%
Second Loan Year	5.531%
Third Loan Year	5.067%
Fourth Loan Year	4.571%
Fifth Loan Year	4.041%
Sixth Loan Year	3.475%
Seventh Loan Year	2.869%
Eighth Loan Year	2.222%
Ninth Loan Year	1.530%
Tenth Loan Year	0.791%

Reflection Pointe (Loan Originated June 15, 2001)
First Loan Year	5.970%
Second Loan Year	5.535%
Third Loan Year	5.071%
Fourth Loan Year	4.574%
Fifth Loan Year	4.044%
Sixth Loan Year	3.476%
Seventh Loan Year	2.870%
Eighth Loan Year	2.223%
Ninth Loan Year	1.530%
Tenth Loan Year	0.791%

Schedule 5-1

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

The Anatole (Loan Originated October 24, 2002)
First Loan Year	6.700%
Second Loan Year	6.200%
Third Loan Year	5.668%
Fourth Loan Year	5.102%
Fifth Loan Year	4.500%
Sixth Loan Year	3.861%
Seventh Loan Year	3.180%
Eighth Loan Year	2.457%
Ninth Loan Year	1.688%
Tenth Loan Year	0.870%

Paddock Park (Loan Originated October 24, 2002)
First Loan Year	5.766%
Second Loan Year	5.335%
Third Loan Year	4.877%
Fourth Loan Year	4.389%
Fifth Loan Year	3.871%
Sixth Loan Year	3.321%
Seventh Loan Year	2.735%
Eighth Loan Year	2.113%
Ninth Loan Year	1.451%
Tenth Loan Year	0.748%

Post House Jackson (Loan Originated October 24, 2002)
First Loan Year	5.815%
Second Loan Year	5.377%
Third Loan Year	4.911%
Fourth Loan Year	4.417%
Fifth Loan Year	3.893%
Sixth Loan Year	3.337%
Seventh Loan Year	2.747%
Eighth Loan Year	2.120%
Ninth Loan Year	1.455%
Tenth Loan Year	0.749%

Township (Loan Originated October 24, 2002)
First Loan Year	6.734%
Second Loan Year	6.228%
Third Loan Year	5.691%
Fourth Loan Year	5.121%
Fifth Loan Year	4.515%
Sixth Loan Year	3.872%
Seventh Loan Year	3.188%
Eighth Loan Year	2.462%
Ninth Loan Year	1.690%

Schedule 5-2

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

Tenth Loan Year 0.871%

Westbury Creek(Loan Originated May 30, 2003)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.557% 6.068% 5.548% 4.994% 4.406% 3.780% 3.114% 2.406% 1.653% 0.852%

Windridge(Loan Originated May 30, 2003)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.636% 6.139% 5.610% 5.049% 4.452% 3.818% 3.144% 2.429% 1.668% 0.859%

The Park at Hermitage(Loan Originated March2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.910% 6.389% 5.836% 5.250% 4.627% 3.966% 3.264% 2.520% 1.729% 0.890%

Schedule 5-3

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

Stassney Woods Apartments(Loan Originated March2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	5.779% 5.346% 4.886% 4.397% 3.877% 3.325% 2.738% 2.115% 1.452% 0.748%

Travis Station Apartments(Loan Originated March2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.859% 6.346% 5.800% 5.220% 4.604% 3.949% 3.252% 2.512% 1.725% 0.889%

SEE PARAGRAPH 11 OF THE NOTE FOR ALL TERMS AND CONDITIONS APPLICABLE TO PREPAYMENT OF THE LOAN. The Borrower may not have the right to prepay the Loan during certain periods. The Borrower may be required to pay more than the principal amount being prepaid, accrued interest and the Termination Fee. Special timing considerations may also apply.

Each Loan Year is a 12 month period ending on the day before an anniversary date of the Loan.

Schedule 5-4

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 9

SCHEDULE OF DEPOSITS TO EACH PRINCIPAL RESERVE FUND

See attached schedules.

Schedule 9-1

Amendment No. 3 to

Master Reimbursement Agreement

Mid-America Apartments

EX-10.31

EXHIBIT 10.31

AMENDMENT NO. 4 TO MASTER REIMBURSEMENT AGREEMENT

THIS AMENDMENT NO. 4 TO MASTER REIMBURSEMENT AGREEMENT (this “Amendment No. 4”) amends that certain Master Reimbursement Agreement made and entered into as of June 1, 2001, by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. (as amended, the “Master Reimbursement Agreement”) and is made and entered into as of November 17, 2005 by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. (individually and collectively, “Borrower”). All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Master Reimbursement Agreement.

RECITALS

WHEREAS, the Borrower has requested and Fannie Mae has agreed to add an Additional Mortgaged Property to the Collateral Pool;

WHEREAS, Fannie Mae and Borrower desire to amend the Master Reimbursement Agreement to add certain provisions and to add the following Additional Mortgaged Property to the Collateral Pool: Runaway Bay Apartments located in Mount Pleasant, Charleston County, South Carolina (the “2005Additional Mortgaged Property”);

WHEREAS, Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) has agreed to make one or more additional loans to Borrower pursuant to and subject to the terms and conditions of that certain Master Credit Facility Agreement dated as of March 2, 2004 between Borrower and Lender, as assigned by the Lender to Fannie Mae pursuant to the Assignment of Master Credit Facility Agreement and Other Loan Documents dated as of March 2, 2004, and as amended by Amendment No. 1 to Master Credit Facility Agreement dated as of the date hereof (as so amended, the “Credit Agreement”) among Borrower, Lender and Fannie Mae.

WHEREAS, the obligations of Borrower to Fannie Mae under the Credit Agreement and the related Loan Documents, the Master Reimbursement Agreement and the Reimbursement Security Documents are cross-defaulted and cross-collateralized;

WHEREAS, Fannie Mae and Borrower intend these Recitals to be a material part of this Amendment No. 4.

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the mutual covenants and agreements set forth herein, and other good and valuable consideration, all of which each party agrees constitutes sufficient consideration received at and before the execution hereof, the parties agree as follows:

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

AGREEMENTS

1. Section 1.2 is hereby amended by adding the following defined terms:

“2005 Additional Mortgaged Property” means Runaway Bay Apartments located in Mount Pleasant, Charleston County, South Carolina.

2.          Section 1.2 is hereby amended by deleting the definition of “Commitment” in its entirety and replacing such definition with the following definition:

“Commitment” means the aggregate original principal amount of the Bonds. The sum of the Commitment under this Agreement and the “DMBS Loan Commitment” under the Credit Agreement shall not exceed $100,000,000.

3.          Section 1.2 is hereby amended by deleting the definition of “Facility Note” (as added to the Master Reimbursement Agreement by Amendment No. 3 to the Master Reimbursement Agreement dated as of March 2, 2004) in its entirety and replacing such definition with the following definition:

“Facility Note” means the DMBS Discount Multifamily Note in the initial principal amount of $11,720,000 delivered by Borrower to Lender pursuant to the Credit Agreement, as such note may be amended, supplemented or amended and restated from time to time, including without limitation in connection with the making of an additional loan under the Credit Agreement, and any other promissory note issued by the Borrower to Lender to evidence a loan made pursuant to the Credit Agreement.

4.          Section 1.2 is hereby amended by deleting the definition of “Reimbursement Mortgages” in its entirety and replacing such definition with the following definition:

“Reimbursement Mortgages” means (i) each second priority Security Instrument (including all riders thereto) executed by a Borrower in favor of Fannie Mae on each of the Mortgaged Properties securing the obligations of the Borrower under this Agreement, including, without limitation, the obligations under Article IV of this Agreement or (ii) in the case of the 2004 Additional Mortgaged Properties known as Stassney Woods and Travis Station, each second priority Security Instrument (including all riders thereto) executed by a Borrower in favor of Fannie Mae and Lender on each of such Mortgaged Property securing the obligations of the Borrower under this Agreement, the Credit Agreement and the Facility Note.”

5.          Section 1.2 is hereby amended by deleting the definition of “Underwriting Rate” in its entirety and replacing such definition with the following definition:

“Underwriting Rate” means6.9861% for the Mortgaged Property known as Fairways Apartments, 6.9861% for the Mortgaged Property known as Post House North Apartments, 6.9861% for the Mortgaged Property known as

2

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

Reflection Pointe Apartments, 6.258% for each of the Four Additional Mortgaged Properties, 6.22% for the Mortgaged Property known as Westbury Creek Apartment, 6.1746% for the Mortgaged Property known as Windridge Apartments, 6.13772% for the Mortgaged Property known as The Park at Hermitage, 6.29552% for the Mortgaged Property known as Travis Station Apartments, 6.26444% for the Mortgaged Property known as Stassney Woods Apartments and 6.185% for the Mortgaged Property known as Runaway Bay Apartments.

6.          Section 1.2 is hereby amended by deleting the definition of “Unused Capacity” in its entirety and replacing such definition with the following definition:

“Unused Capacity” means, for any month, (i) the Commitment minus (ii) the aggregate outstanding principal balance of the Bonds.

7.          Section 2.6(1) (“Financial Definitions”) is hereby amended by deleting the definition of “Net Worth” in its entirety and replacing it with the following:

“Net Worth” means, as of any specified dated, for any Person, the excess of the Person’s assets over the Person’s liabilities, determined in accordance with GAAP but excluding any adjustment for the fair value of swaps or caps, on a consolidated basis, provided that all real property shall be valued on an undepreciated basis.

8.          Section 2.6(5) (“Compliance with REIT’s Net Worth Test”), which was amended by Amendment No. 1, is hereby amended by deleting such provision in its entirety and replacing it with the following:

“2.6(5). Compliance with REIT’s Net Worth Test. The REIT shall at all times maintain its Net Worth so that it is not less than the highest Net Worth covenant required by any other financial institution where the REIT maintains a bank line (whether secured or unsecured), but in no event less than $550,000,000 plus 65% of proceeds (less all reasonable and customary expenses and costs) of equity offerings, net of redemptions, consummated by the REIT after August 22, 2002.”

9.          The additional provision added to Section 3.13(1) pursuant to Amendment No. 1 is hereby amended by deleting such provision in its entirety and replacing it with the following:

“Notwithstanding that the obligations under each Note and Bond Mortgage relating to the Four Additional Mortgaged Properties, the Two Additional Properties, the 2004 Additional Mortgaged Properties and the 2005 Additional Mortgaged Property are not generally personal obligations of the Borrower and notwithstanding that Fannie Mae is a holder of such Notes, each Borrower agrees and acknowledges that the intent of the parties to this Agreement is that each Borrower is and shall remain, except as provided in Section 3.13(2), jointly and severally personally liable to Fannie Mae for the payment and performance of all Obligations throughout the term of this Agreement.

3

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

Consequently, in the event that Fannie Mae becomes the sole holder of such Notes and Bond Mortgages, by its rights of subrogation or otherwise, any amounts owing to Fannie Mae under such Notes or Bond Mortgages shall be joint and several personal obligations of each Borrower. In addition, it is the intent of the parties that the non-recourse liability of the Borrowers under such Notes shall not in any manner or under any circumstances be interpreted or understood to contradict, undermine, negate or nullify that each Borrower is and shall remain, except as provided in Section 3.13(2), jointly and severally personally liable to Fannie Mae for the payment and performance of all Obligations throughout the term of this Agreement.”

10.        Section 5.3(c) is hereby amended by adding the following sentences to the end thereof:

“If an Additional Mortgaged Property is added to the Collateral Pool after October 1, 2005, the Bonds relating to such Additional Mortgaged Property may mature up to 30 years from the Closing Date relating to such Additional Mortgaged Property, provided that the Credit Enhancement Instrument supporting such Bonds shall have an Expiration Date which is the same as the Expiration Date of the Credit Enhancement Instrument supporting the Initial Bonds. The Principal Reserve Fund schedule, if the Bonds bear interest at the Weekly Variable Rate, or the amortization schedule of the Note, if the Bonds bear interest at the Fixed Rate or Reset Rate, shall be over a time period equal to the term of the Credit Enhancement Instrument or the maturity date of the Bonds if such maturity date is later than the term of the Credit Enhancement Instrument.

11.        Section 9.5(a) is hereby amended by deleting the notice address of the Loan Servicer in its entirety and replacing it with the following:

“As to the Loan Servicer:

Prudential Multifamily Mortgage, Inc.

c/o Prudential Asset Resources

2200 Ross Avenue

Suite 4900 E

Dallas, Texas 75201

Attention:	Fannie Mae Asset Management Department
Telecopy No.:	(214) 777-4556

with a copy to:

Prudential Multifamily Mortgage, Inc.

8401 Greensboro Drive

Suite 200

McLean, Virginia 22102

Attention:	Michele Levoir-Sloan
Telecopy No.:	(703) 610-1401”

4

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

12.        Schedules 2, 3, 4, 5 and 9 are hereby amended and restated in their entirety as set forth in Annex 1 attached hereto.

13.        By execution and delivery of this Amendment No. 4 by Fannie Mae, Fannie Mae hereby consents to the addition of the 2005 Additional Mortgaged Property to the Fannie Mae Credit Facility as an Additional Mortgaged Property effective as of November 17, 2005 (the “Effective Date”).

14.        In connection with the addition of the 2005 Additional Mortgaged Property to the Fannie Mae Credit Facility as an Additional Mortgaged Property, Borrower and Fannie Mae acknowledge and agree as follows in relation to such Additional Mortgaged Property:

(a)	The Facility Fee shall be as follows:
	(i)	Credit Enhancement Rate shall be 57 basis points per annum.
	(ii)	Principal Reserve Fund Rate shall be 15 basis points per annum.
	(iii)	Loan Servicer’s Rate shall be 10 basis points.
	(iv)	Liquidity Rate shall be 12.5 basis points.
	(v)	Swap Credit Enhancement Rate shall be 17 basis points for the initial five-year Swap purchased in connection with the 2005 Additional Mortgaged Property and otherwise to be determined at the time of the purchase of a Swap.

(b)        Standby Fee shall be 15 basis points on any unused capacity of the Fannie Mae Credit Facility and/or the Fannie Mae Credit Facility expansion capacity.

(c)	Substitution Fee shall be 75 basis points.
(d)	Collateral Addition Fee shall be 75 basis points.
(e)	Release Fee shall be $15,000 per Collateral Release Property.
(f)	The Strike Rate shall be 6% for the Tax-Exempt Bonds.
(g)	The Hedge Rate shall be 6% for the Tax-Exempt Bonds.
(h)	The Underwriting Rate shall be 6.185% for the Mortgaged Property known as Runaway Bay Apartment.

15.        Fannie Mae hereby waives the requirement of Section 17(a)(5) of the Reimbursement Mortgage and the Conventional Mortgage relating to the Mortgaged Property known as Runaway Bay Apartments that Borrower enter into a written contract for management of such Mortgaged Property, provided however, that

(a)        In the event that the Borrower should ever elect to employ an affiliate or third party management company for the management of the Mortgaged Property, the Borrower agrees that (i) the management company and the management agreement to be executed therewith are subject to the prior written approval of Fannie Mae, which approval may be

5

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

granted or denied in Fannie Mae’s sole and absolute discretion and (ii) any such approved management company shall not receive a management fee greater than 4% of gross collected rents from the Mortgaged Property;

(b)        In the event that the Borrower should ever elect to contract with an affiliate or third party management company for the management of the Mortgaged Property, the Borrower agrees to execute (and to cause any such management company to execute) in favor of Fannie Mae an “Assignment of Management Agreement” on a form approved by Fannie Mae; and

(c)        Borrower acknowledges that Fannie Mae reserves the right, under the Loan Documents, to require independent, professional third party management of the Mortgaged Property if inadequate or at any time after the occurrence of an Event of Default. At any time after an Event of Default shall have occurred, Fannie Mae shall have the right either (i) to direct the Borrower to contract with a third party management company approved by Fannie Mae for the management of the Mortgaged Property or (ii) to assume responsibility for the management of the Mortgaged Property, directly or through its designee. Promptly upon Fannie Mae’s written request after the occurrence of an Event of Default, Borrower shall turn over to Fannie Mae all books and records relating to the Mortgaged Property (copies of which may be retained by Borrower, at Borrower's expense), together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Fannie Mae may reasonably require. Borrower shall cooperate with Fannie Mae in the transfer of management responsibilities to Fannie Mae or its designee.

16.        The Borrower covenants and agrees to protect, defend and save harmless Fannie Mae and Lender from all loss, costs and damages, including, without limitation, costs of demolition and restoration of the improvements located on the Mortgaged Property known as Stassney Woods and reasonable attorney’s fees and expenses, that Fannie Mae may suffer, expend or incur arising out of or in connection with the City of Austin’s exercise of any of its rights under that certain Easement dated March 5, 1987, recorded in Volume 10311, page 491 of the Real Property Records of Travis County, Texas and encumbering such Mortgaged Property.

17.        This Amendment No. 4 shall be construed, interpreted and enforced in accordance with, and the rights and remedies of the parties hereto shall be governed pursuant to, the provisions of Section 9.3 of the Master Reimbursement Agreement (entitled “Governing Law; Choice of Law; Consent to Jurisdiction; Waivers of Jury Trial”), which provisions are hereby incorporated into this Amendment No. 4 by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

18.        Except as herein expressly modified or amended, all terms and covenants, and provisions of the Master Reimbursement Agreement are hereby ratified and confirmed by the Borrower and Fannie Mae and remain in full force and effect.

19. The Borrower represents and warrants to Fannie Mae as follows:

6

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(a)        All representations and warranties set forth in the Master Reimbursement Agreement are true and correct as of November 17, 2005.

(b)        There exists no Event of Default or Potential Event of Default as described in the Master Reimbursement Agreement as of November 17, 2005.

20.        This Amendment No. 4 may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page.

7

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to be signed, sealed, and delivered by their duly authorized representatives as of the date first above written.

MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By: MAC of Delaware, Inc., a Delaware corporation, its sole General Partner

By: __________________________

John A. Good

Assistant Secretary

S-1

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

FANNIE MAE

By:___________________________

Name:

Title:

S-2

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

ANNEX 1

(See attached schedules)

A-1

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 2

BONDS, ISSUERS AND MORTGAGED PROPERTIES

Bonds	Issuer	Mortgaged Property
$5,880,000 City of Flowood, Mississippi Variable Rate Multi-Family Housing Refunding Revenue Bonds, Series 2001 (Reflection Pointe Apartments Project)	City of Flowood, Mississippi	Reflection Pointe Apartments
$7,735,000 South Carolina State Housing Finance and Development Authority Multifamily Rental Housing Revenue Refunding Bonds (Fairway Apartments Project), Series 2001 A	South Carolina State Housing Finance and Development Authority	Fairways Apartments
$3,375,000 The Health, Educational and Housing Facility Board of the City of Jackson Multifamily Housing Revenue Refunding Bonds, Series 2001 (Post House North Apartments)	The Health, Educational and Housing Facility Board of the City of Jackson	Post House North Apartments
$7,000,000 Housing Finance Authority of Volusia County, Florida Multifamily Housing Revenue Refunding Bonds, Series 2002 (The Anatole Apartments)	Housing Finance Authority of Volusia County, Florida	The Anatole Apartments
$5,095,000 The Health, Educational and Housing Facility Board of the City of Jackson Multifamily Housing Revenue Refunding Bonds, Series 2002 (Post House Jackson Apartments)	The Health, Educational and Housing Facility Board of the City of Jackson	Post House Jackson Apartments
$6,805,000 Housing Finance Authority of Marion County, Florida Multifamily Housing Revenue Refunding Bonds, Series 2002 (Paddock Park Apartments)	Housing Finance Authority of Marion County, Florida	Paddock Park Apartments I
$10,800,000 Hampton Redevelopment and Housing Authority Variable Rate Demand Multifamily Housing Revenue Refunding Bonds (Township Apartments Project) Series 1998	Hampton Redevelopment and Housing Authority	Township Apartments

Schedule 2-1

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

$2,980,000 The Housing Authority of the City of Augusta, Georgia Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series 2003A (Westbury Creek Apartments) and $500,000 Taxable Variable Rate Demand Multifamily Housing Revenue Bonds, Series 2003B (Westbury Creek Apartments)	The Housing Authority of the City of Augusta, Georgia	Westbury Creek Apartments
$4,965,000 The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee Multifamily Housing Revenue Refunding Bonds, Series 2003A (Windridge Apartments) and $500,000 Taxable Multifamily Housing Revenue Refunding Bonds, Series 2003B (Windridge Apartments)	The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee	Windridge Apartments
$6,645,000 The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County Multifamily Housing Revenue Refunding Bonds, Series 2004 (The Park at Hermitage Project)	The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County	The Park at Hermitage Apartments
$4,050,000 Austin Housing Finance Corporation Multifamily Housing Revenue Refunding Bonds, Series 2004A (Stassney Woods Apartments)	Austin Housing Finance Corporation	Stassney Woods Apartments
$3,585,000Travis County Housing Finance Corporation Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series 2004A (Travis Station Apartments)	Travis County Housing Finance Corporation	Travis Station Apartments
$8,365,000 South Carolina State Housing Finance and Development Authority Variable Rate Demand Multifamily Rental Housing Revenue Refunding Bonds (Runaway Bay Apartments Project) Series 2005	South Carolina State Housing Finance and Development Authority	Runaway Bay Apartments

Schedule 2-2

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 3

FEE COMPONENT AND ONGOING FEES

I.INITIAL MORTGAGED PROPERTIES (Fairways Apartments, Post House North Apartments, and Reflection Pointe Apartments)
TYPE OF FEE1	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  South Carolina State Housing Finance and Development Authority (Fairways Apartments)	(i) 0.25% of the principal amount of the Bonds Outstanding or (ii) $8,400	See definition of Issuer’s Fee in Indenture	Annually in monthly installments in advance
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House North Apartments)	None	Not applicable	Not applicable
(c)  City of Flowood, Mississippi (Reflection Pointe Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  South Carolina State Housing Finance and Development Authority (Fairways Apartments)	3.3 basis points	See Section 2.5 of the Financing Agreement	Annually

_________________________

1With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the three Initial Mortgaged Properties.

Schedule 3-1

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House North Apartments)	6.2 basis points	See Section 2.5 of the Financing Agreement	Annually
(c)  City of Flowood, Mississippi (Reflection Pointe Apartments)	4.3 basis points	See Section 2.5 of the Financing Agreement	Annually
3.REMARKETING AGENT FEE	12.5 basis points	See Section 7 of the Remarketing Agreement	Annually , payable quarterly in arrears on each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500 per year	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 3.3(1) of Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 3.3(1)(a) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 3.3(1)(b) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 3.3(1)(d) of Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-2

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(d)  Liquidity Rate	12.5 basis points	See Section 3.3(1)(d) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(e)  Swap Credit Enhancement Rate	5 basis points for each initial Swap purchased in connection with the Initial Mortgaged Properties and otherwise to be determined at the time of the purchase of a Swap	See Section 3.3(1)(e) of Master Reimbursement Agreement	Payable prior to the 15th of each month

II.ADDITIONAL MORTGAGED PROPERTIES (October 24, 2002 Closing) (The Anatole Apartments, Paddock Park Apartments I, Post House Jackson Apartments, and Township Apartments)
TYPE OF FEE2	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  Housing Finance Authority of Volusia County, Florida (The Anatole Apartments)	0.10% of the principal amount of the Bonds Outstanding	See definition of Issuer’s Fee in Indenture	Annually in arrears on each January 15, commencing January 15, 2003
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House Jackson Apartments)	None	Not applicable	Not applicable

_________________________

2With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the Four Additional Mortgaged Properties.

Schedule 3-3

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(c)  Housing Finance Authority of Marion County, Florida (Paddock Park Apartments I)	0.20% of the principal amount of the Bonds Outstanding	See definition of Issuer’s Fee in Indenture	Annually in arrears on each October 1 commencing October 1, 2003,
(d)  Hampton Redevelopment and Housing Authority(Township Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  Housing Finance Authority of Volusia County, Florida (The Anatole Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House Jackson Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(c)  Housing Finance Authority of Marion County, Florida (Paddock Park Apartments I)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(d)  Hampton Redevelopment and Housing Authority(Township Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually

Schedule 3-4

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

5.FACILITY FEE		See Section 33 of Amendment No. 1 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	12.5 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-5

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(e)  Swap Credit Enhancement Rate 13 basis points for the five-year Swap purchased in connection with the Additional Mortgaged Property known as The Anatole Apartments and the five year Swap purchased in connection with the Additional Mortgaged Property known as Township Apartments and otherwise to be determined at the time of the purchase of a Swap See Section 33 of Amendment No. 1 to Master Reimbursement Agreement Payable prior to the 15th of each month

III.ADDITIONAL MORTGAGED PROPERTIES (May 30, 2003 Closing) (Westbury Creek Apartments and Windridge)
TYPE OF FEE3	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  The Housing Authority of the City of Augusta, Georgia (The Westbury Creek Apartments)	None	Not applicable	Not applicable
(b)  The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee (Windridge Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  The Housing Authority of the City of Augusta, Georgia (The Westbury Creek Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15

_________________________

3With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the Two Additional Mortgaged Properties.

Schedule 3-6

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(b)  The Health Educational and Housing Facility Board of the City of Chattanooga, Tennessee (Windridge Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
3.REMARKETING AGENT FEE	12 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 11 of Amendment No. 2 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 11of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-7

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(d)  Liquidity Rate	12.5 basis points	See Section 11of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(e)  Swap Credit Enhancement Rate	13basis points for the five-year Swap purchased in connection with the Additional Mortgaged Property known as Windridge Apartments and the five year Swap purchased in connection with the Additional Mortgaged Property known as Westbury Creek and otherwise to be determined at the time of the purchase of a Swap	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month

IV.ADDITIONAL MORTGAGED PROPERTIES (March 2, 2004 Closing) (The Park at Hermitage Apartments, Stassney Woods Apartments and Travis Station Apartments)
TYPE OF FEE4	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE

_________________________

4With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the 2004 Additional Mortgaged Properties.

Schedule 3-8

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(a)  The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (The Park at Hermitage Apartments)	None	Not applicable	Not applicable
(b)  Austin Housing Finance Corporation (Stassney Woods Apartments)	The greater of (a) .0003 times the amount of Bonds Outstanding on January 1, (b) 12 times the number of units in the Project, or (c) $1,200 per year	Trust Indenture (definition of “Ordinary Issuer Monitoring Fees and Expenses”)	Annually, prorated and payable on each Interest Payment Date
(b)  Travis County Housing Finance Corporation (Travis Station Apartments)	10 basis points	See definition of Issuer Fee in Indenture	Annually, prorated and payable on each Interest Payment Date
2.TRUSTEE FEE
(a)  The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (The Park at Hermitage Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
(b)  Austin Housing Finance Corporation (Stassney Woods Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
(b)  Travis County Housing Finance Corporation (Travis Station Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15

Schedule 3-9

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 16 of Amendment No. 4 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 16 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 16of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 16 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	12.5 basis points	See Section 16of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-10

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(e)  Swap Credit Enhancement Rate	15 basis points for the five-year Swap purchased in connection with the 2004 Additional Mortgaged Properties known as The Park at Hermitage Apartments and Travis Station Apartments and otherwise to be determined at the time of the purchase of a Swap	See Section 16 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
V.ADDITIONAL MORTGAGED PROPERTY (November 17, 2005Closing) (Runaway Bay Apartments)
TYPE OF FEE	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE (South Carolina State Housing Finance and Development Authority)	$10,400	See definition of Issuer’s Fee in the Indenture	Equal monthly installments
2.TRUSTEE FEE	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semiannually payable in advance on each May 15 and November 15
3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually

Schedule 3-11

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

5.FACILITY FEE		See Section 13 of Amendment No. 4 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 13 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 13of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer's Rate	10 basis points	See Section 13of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	12.5 basis points	See Section 13of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-12

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

(e)  Swap Credit Enhancement Rate 17 basis points for the five-year Swap purchased in connection with the 2005 Additional Mortgaged Property known as Runaway Bay Apartments and otherwise to be determined at the time of the purchase of a Swap See Section 13 of Amendment No. 4 to Master Reimbursement Agreement Payable prior to the 15th of each month

Schedule 3-13

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 4

MORTGAGED PROPERTIES

INITIAL MORTGAGED PROPERTIES:

PROPERTY NAME	PROPERTY ADDRESS
Fairways Apartments	Columbia, South Carolina
Post House North Apartments	Jackson, Tennessee
Reflection Pointe Apartments	Flowood, Mississippi

ADDITIONAL MORTGAGED PROPERTIES (October 24, 2002 Closing):

PROPERTY NAME	PROPERTY ADDRESS
The Anatole Apartments	Daytona Beach, Florida
Post House Jackson Apartments	Jackson, Tennessee
Paddock Park Apartments I	Ocala, Florida
Township Apartments	Hampton, Virginia

ADDITIONAL MORTGAGED PROPERTIES (May 30, 2003 Closing):

PROPERTY NAME	PROPERTY ADDRESS
Westbury Creek Apartments	Augusta, Georgia
Windridge Apartments	Chattanooga, Tennessee

ADDITIONAL MORTGAGED PROPERTIES (March 2, 2004 Closing):

PROPERTY NAME	PROPERTY ADDRESS
The Park at Hermitage Apartments	Hermitage, Tennessee
Travis Station Apartments	Austin, Texas
Stassney Woods Apartments	Austin, Texas

ADDITIONAL MORTGAGED PROPERTY (November 17, 2005 Closing):

PROPERTY NAME	PROPERTY ADDRESS
Runaway Bay Apartments	Mount Pleasant, South Carolina

SUBSTITUTED MORTGAGED PROPERTIES:

PROPERTY NAME	PROPERTY ADDRESS
None

Schedule 4-1

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

Schedule 4-2

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 5

TERMINATION FEE

Any Termination Fee payable under Section 3.3(4) of the Master Reimbursement Agreement shall be equal to the following percentage of the unpaid principal balance of each Loan being prepaid as indicated below, or, in the case of a substitution of an Alternate Credit Facility for the Credit Enhancement Instrument, the unpaid principal balance of each Loan:

Fairways (Loan Originated June 15, 2001)
First Loan Year	5.904%
Second Loan Year	5.479%
Third Loan Year	5.024%
Fourth Loan Year	4.536%
Fifth Loan Year	4.014%
Sixth Loan Year	3.454%
Seventh Loan Year	2.855%
Eighth Loan Year	2.213%
Ninth Loan Year	1.525%
Tenth Loan Year	0.789%

Post House North (Loan Originated June 15, 2001)
First Loan Year	5.965%
Second Loan Year	5.531%
Third Loan Year	5.067%
Fourth Loan Year	4.571%
Fifth Loan Year	4.041%
Sixth Loan Year	3.475%
Seventh Loan Year	2.869%
Eighth Loan Year	2.222%
Ninth Loan Year	1.530%
Tenth Loan Year	0.791%

Reflection Pointe (Loan Originated June 15, 2001)
First Loan Year	5.970%
Second Loan Year	5.535%
Third Loan Year	5.071%
Fourth Loan Year	4.574%
Fifth Loan Year	4.044%
Sixth Loan Year	3.476%
Seventh Loan Year	2.870%
Eighth Loan Year	2.223%
Ninth Loan Year	1.530%
Tenth Loan Year	0.791%

Schedule 5-1

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

The Anatole (Loan Originated October 24, 2002)
First Loan Year	6.700%
Second Loan Year	6.200%
Third Loan Year	5.668%
Fourth Loan Year	5.102%
Fifth Loan Year	4.500%
Sixth Loan Year	3.861%
Seventh Loan Year	3.180%
Eighth Loan Year	2.457%
Ninth Loan Year	1.688%
Tenth Loan Year	0.870%

Paddock Park (Loan Originated October 24, 2002)
First Loan Year	5.766%
Second Loan Year	5.335%
Third Loan Year	4.877%
Fourth Loan Year	4.389%
Fifth Loan Year	3.871%
Sixth Loan Year	3.321%
Seventh Loan Year	2.735%
Eighth Loan Year	2.113%
Ninth Loan Year	1.451%
Tenth Loan Year	0.748%

Post House Jackson (Loan Originated October 24, 2002)
First Loan Year	5.815%
Second Loan Year	5.377%
Third Loan Year	4.911%
Fourth Loan Year	4.417%
Fifth Loan Year	3.893%
Sixth Loan Year	3.337%
Seventh Loan Year	2.747%
Eighth Loan Year	2.120%
Ninth Loan Year	1.455%
Tenth Loan Year	0.749%

Township (Loan Originated October 24, 2002)
First Loan Year	6.734%
Second Loan Year	6.228%
Third Loan Year	5.691%
Fourth Loan Year	5.121%
Fifth Loan Year	4.515%
Sixth Loan Year	3.872%
Seventh Loan Year	3.188%
Eighth Loan Year	2.462%
Ninth Loan Year	1.690%

Schedule 5-2

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

Tenth Loan Year 0.871%

Westbury Creek (Loan Originated May 30, 2003)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.557% 6.068% 5.548% 4.994% 4.406% 3.780% 3.114% 2.406% 1.653% 0.852%

Windridge(Loan Originated May 30, 2003)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.636% 6.139% 5.610% 5.049% 4.452% 3.818% 3.144% 2.429% 1.668% 0.859%

The Park at Hermitage(Loan Originated March2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.910% 6.389% 5.836% 5.250% 4.627% 3.966% 3.264% 2.520% 1.729% 0.890%

Schedule 5-3

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

Stassney Woods Apartments(Loan Originated March2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	5.779% 5.346% 4.886% 4.397% 3.877% 3.325% 2.738% 2.115% 1.452% 0.748%

Travis Station Apartments(Loan Originated March2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.859% 6.346% 5.800% 5.220% 4.604% 3.949% 3.252% 2.512% 1.725% 0.889%

Runaway Bay Apartments(Loan Originated November 17, 2005)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	7.140% 6.596% 6.019% 5.409% 4.762% 4.077% 3.352% 2.585% 1.772% 0.911%

SEE PARAGRAPH 11 OF THE NOTE FOR ALL TERMS AND CONDITIONS APPLICABLE TO PREPAYMENT OF THE LOAN. The Borrower may not have the right to prepay the Loan during certain periods. The Borrower may be required to pay more than the principal amount being prepaid, accrued interest and the Termination Fee. Special timing considerations may also apply.

Each Loan Year is a 12 month period ending on the day before an anniversary date of the Loan.

Schedule 5-4

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

SCHEDULE 9

SCHEDULE OF DEPOSITS TO EACH PRINCIPAL RESERVE FUND

See attached schedules.

Schedule 9-1

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

Mid-America Apartment Communities
South Carolina State Housing and Finance Development Agency
Runaway Bay Apartments
Principal Reserve Fund Schedule
		Amortization Term (Years): 20
		Interest Rate: 5.8880%
	PRF Deposit
15-Nov-15	0.00
15-Dec-15	18,938.11
15-Jan-16	19,031.04
15-Feb-16	19,124.42
15-Mar-16	19,218.25
15-Apr-16	19,312.55
15-May-16	19,407.31
15-Jun-16	19,502.54
15-Jul-16	19,598.23
15-Aug-16	19,694.39
15-Sep-16	19,791.02
15-Oct-16	19,888.13
15-Nov-16	19,985.72
15-Dec-16	20,083.78
15-Jan-17	20,182.32
15-Feb-17	20,281.35
15-Mar-17	20,380.87
15-Apr-17	20,480.87
15-May-17	20,581.36
15-Jun-17	20,682.35
15-Jul-17	20,783.83
15-Aug-17	20,885.81
15-Sep-17	20,988.29
15-Oct-17	21,091.27
15-Nov-17	21,194.76
15-Dec-17	21,298.75
15-Jan-18	21,403.26
15-Feb-18	21,508.28
15-Mar-18	21,613.81
15-Apr-18	21,719.86
15-May-18	21,826.44
15-Jun-18	21,933.53
15-Jul-18	22,041.15
15-Aug-18	22,149.30
15-Sep-18	22,257.98

Schedule 9-1

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

15-Oct-18	22,367.19
15-Nov-18	22,476.94
15-Dec-18	22,587.23
15-Jan-19	22,698.05
15-Feb-19	22,809.43
15-Mar-19	22,921.34
15-Apr-19	23,033.81
15-May-19	23,146.83
15-Jun-19	23,260.41
15-Jul-19	23,374.54
15-Aug-19	23,489.23
15-Sep-19	23,604.48
15-Oct-19	23,720.30
15-Nov-19	23,836.69
15-Dec-19	23,953.65
15-Jan-20	24,071.18
15-Feb-20	24,189.29
15-Mar-20	24,307.98
15-Apr-20	24,427.25
15-May-20	24,547.11
15-Jun-20	24,667.55
15-Jul-20	24,788.59
15-Aug-20	24,910.21
15-Sep-20	25,032.44
15-Oct-20	25,155.27
15-Nov-20	25,278.70
15-Dec-20	25,402.73
15-Jan-21	25,527.37
15-Feb-21	25,652.63
15-Mar-21	25,778.50
15-Apr-21	25,904.98
15-May-21	26,032.09
15-Jun-21	26,159.82
15-Jul-21	26,288.18
15-Aug-21	26,417.16

Schedule 9-2

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

15-Sep-21	26,546.78
15-Oct-21	26,677.04
15-Nov-21	26,807.94
15-Dec-21	26,939.47
15-Jan-22	27,071.66
15-Feb-22	27,204.49
15-Mar-22	27,337.97
15-Apr-22	27,472.11
15-May-22	27,606.91
15-Jun-22	27,742.36
15-Jul-22	27,878.49
15-Aug-22	28,015.28
15-Sep-22	28,152.74
15-Oct-22	28,290.88
15-Nov-22	28,429.69
15-Dec-22	28,569.18
15-Jan-23	28,709.36
15-Feb-23	28,850.23
15-Mar-23	28,991.79
15-Apr-23	29,134.04
15-May-23	29,276.99
15-Jun-23	29,420.65
15-Jul-23	29,565.00
15-Aug-23	29,710.07
15-Sep-23	29,855.85
15-Oct-23	30,002.34
15-Nov-23	30,149.55
15-Dec-23	30,297.48
15-Jan-24	30,446.14
15-Feb-24	30,595.53
15-Mar-24	30,745.66
15-Apr-24	30,896.51
15-May-24	31,048.11
15-Jun-24	31,200.46
15-Jul-24	31,353.55

Schedule 9-3

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

15-Aug-24	31,507.39
15-Sep-24	31,661.98
15-Oct-24	31,817.34
15-Nov-24	31,973.46
15-Dec-24	32,130.34
15-Jan-25	32,287.99
15-Feb-25	32,446.42
15-Mar-25	32,605.62
15-Apr-25	32,765.61
15-May-25	32,926.38
15-Jun-25	33,087.94
15-Jul-25	33,250.29
15-Aug-25	33,413.44
15-Sep-25	33,577.38
15-Oct-25	33,742.14
15-Nov-25	33,907.70
15-Dec-25	34,074.07
15-Jan-26	34,241.26
15-Feb-26	34,409.27
15-Mar-26	34,578.11
15-Apr-26	34,747.77
15-May-26	34,918.27
15-Jun-26	35,089.60
15-Jul-26	35,261.77
15-Aug-26	35,434.79
15-Sep-26	35,608.66
15-Oct-26	35,783.38
15-Nov-26	35,958.95
15-Dec-26	36,135.39
15-Jan-27	36,312.70
15-Feb-27	36,490.87
15-Mar-27	36,669.92
15-Apr-27	36,849.85
15-May-27	37,030.66
15-Jun-27	37,212.35

Schedule 9-4

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

15-Jul-27	37,394.94
15-Aug-27	37,578.43
15-Sep-27	37,762.81
15-Oct-27	37,948.10
15-Nov-27	38,134.30
15-Dec-27	38,321.41
15-Jan-28	38,509.44
15-Feb-28	38,698.40
15-Mar-28	38,888.28
15-Apr-28	39,079.09
15-May-28	39,270.84
15-Jun-28	39,463.52
15-Jul-28	39,657.16
15-Aug-28	39,851.74
15-Sep-28	40,047.28
15-Oct-28	40,243.78
15-Nov-28	40,441.24
15-Dec-28	40,639.68
15-Jan-29	40,839.08
15-Feb-29	41,039.46
15-Mar-29	41,240.83
15-Apr-29	41,443.19
15-May-29	41,646.53
15-Jun-29	41,850.88
15-Jul-29	42,056.23
15-Aug-29	42,262.58
15-Sep-29	42,469.95
15-Oct-29	42,678.34
15-Nov-29	42,887.75
15-Dec-29	43,098.18
15-Jan-30	43,309.65
15-Feb-30	43,522.16
15-Mar-30	43,735.71
15-Apr-30	43,950.30
15-May-30	44,165.95

Schedule 9-5

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

15-Jun-30	44,382.66
15-Jul-30	44,600.43
15-Aug-30	44,819.27
15-Sep-30	45,039.18
15-Oct-30	45,260.18
15-Nov-30	45,482.25
15-Dec-30	45,705.42
15-Jan-31	45,929.68
15-Feb-31	46,155.04
15-Mar-31	46,381.51
15-Apr-31	46,609.09
15-May-31	46,837.78
15-Jun-31	47,067.60
15-Jul-31	47,298.55
15-Aug-31	47,530.62
15-Sep-31	47,763.84
15-Oct-31	47,998.20
15-Nov-31	48,233.71
15-Dec-31	48,470.38
15-Jan-32	48,708.21
15-Feb-32	48,947.20
15-Mar-32	49,187.37
15-Apr-32	49,428.72
15-May-32	49,671.25
15-Jun-32	49,914.97
15-Jul-32	50,159.88
15-Aug-32	50,406.00
15-Sep-32	50,653.33
15-Oct-32	50,901.87
15-Nov-32	51,151.62
15-Dec-32	51,402.61
15-Jan-33	51,654.82
15-Feb-33	51,908.28
15-Mar-33	52,162.97
15-Apr-33	52,418.92

Schedule 9-6

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

15-May-33	52,676.12
15-Jun-33	52,934.59
15-Jul-33	53,194.32
15-Aug-33	53,455.33
15-Sep-33	53,717.61
15-Oct-33	53,981.19
15-Nov-33	54,246.05
15-Dec-33	54,512.22
15-Jan-34	54,779.70
15-Feb-34	55,048.48
15-Mar-34	55,318.59
15-Apr-34	55,590.02
15-May-34	55,862.78
15-Jun-34	56,136.88
15-Jul-34	56,412.32
15-Aug-34	56,689.12
15-Sep-34	56,967.27
15-Oct-34	57,246.79
15-Nov-34	57,527.68
15-Dec-34	57,809.95
15-Jan-35	58,093.61
15-Feb-35	58,378.65
15-Mar-35	58,665.10
15-Apr-35	58,952.95
15-May-35	59,242.21
15-Jun-35	59,532.89
15-Jul-35	59,825.00
15-Aug-35	60,118.54
15-Sep-35	60,413.52
15-Oct-35	60,709.95
15-Nov-35	61,007.69
	8,635,000.00

Schedule 9-7

Amendment No. 4 to

Master Reimbursement Agreement

Mid-America Apartments

EX-10.32

EXHIBIT 10.32

AMENDMENT NO. 5 TO MASTER REIMBURSEMENT AGREEMENT

THIS AMENDMENT NO. 5 TO MASTER REIMBURSEMENT AGREEMENT (this “Amendment No. 5”) amends that certain Master Reimbursement Agreement made and entered into as of June 1, 2001, by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. (as amended, the “Master Reimbursement Agreement”) and is made and entered into as of February 23, 2006 by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. (individually and collectively, “Borrower”). All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Master Reimbursement Agreement.

RECITALS

WHEREAS, the Borrower has requested and Fannie Mae has agreed to add an Additional Mortgaged Property to the Collateral Pool;

WHEREAS, Fannie Mae and Borrower desire to amend the Master Reimbursement Agreement to add certain provisions and to add the following Additional Mortgaged Property to the Collateral Pool: St. Augustine Apartments located in the City of Jacksonville, Duval County, Florida (the “2006 Additional Mortgaged Property”);

WHEREAS, Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender”) has agreed to make one or more additional loans to Borrower pursuant to and subject to the terms and conditions of that certain Master Credit Facility Agreement dated as of March 2, 2004 between Borrower and Lender, as assigned by the Lender to Fannie Mae pursuant to the Assignment of Master Credit Facility Agreement and Other Loan Documents dated as of March 2, 2004, and as amended by Amendment No. 1 to Master Credit Facility Agreement dated as of November 17, 2005 (as so amended, the “Credit Agreement” ) among Borrower, Lender and Fannie Mae.

WHEREAS, the obligations of Borrower to Fannie Mae under the Credit Agreement and the related Loan Documents, the Master Reimbursement Agreement and the Reimbursement Security Documents are cross-defaulted and cross-collateralized;

WHEREAS, Fannie Mae and Borrower intend these Recitals to be a material part of this Amendment No. 5.

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the mutual covenants and agreements set forth herein, and other good and valuable consideration, all of which each party agrees constitutes sufficient consideration received at and before the execution hereof, the parties agree as follows:

AGREEMENTS

1.          Section 1.2 is hereby amended by adding the following defined terms:

“2006 Additional Mortgaged Property” means St. Augustine Apartments located in the City of Jacksonville, Duval County, Florida.

2.          Section 1.2 is hereby amended by deleting the definition of “Commitment” in its entirety and replacing such definition with the following definition:

“Commitment” means the aggregate original principal amount of the Bonds. The sum of the Commitment under this Agreement and the “DMBS Loan Commitment” under the Credit Agreement shall not exceed $109,451,000.

3.          Section 1.2 is hereby amended by deleting the definition of “Underwriting Rate” in its entirety and replacing such definition with the following definition:

“Underwriting Rate” means 6.9861% for the Mortgaged Property known as Fairways Apartments, 6.9861% for the Mortgaged Property known as Post House North Apartments, 6.9861% for the Mortgaged Property known as Reflection Pointe Apartments, 6.258% for each of the Four Additional Mortgaged Properties, 6.22% for the Mortgaged Property known as Westbury Creek Apartment, 6.1746% for the Mortgaged Property known as Windridge Apartments, 6.13772% for the Mortgaged Property known as The Park at Hermitage, 6.29552% for the Mortgaged Property known as Travis Station Apartments, 6.26444% for the Mortgaged Property known as Stassney Woods Apartments, 6.185% for the Mortgaged Property known as Runaway Bay Apartments and 6.446% for the Mortgaged Property known as St. Augustine Apartments.

4.          Section 2.2 (Affirmative Covenants) is hereby amended by adding new Sections 2.2(29) and 2.2(30) to read as follows:

2.2(29). Existing Amenities and Leasing Office. The Borrower agrees to maintain and keep on the site of the 2006 Additional Mortgaged Property the leasing office and all amenities currently used in the operation of the Property.

2.2(30). Zoning Compliance. The Borrower will cause the 2006 Additional Mortgage Property and the Adjacent Property (as defined in Section 2.4(16) below) to remain in compliance in all material respects with local zoning laws and regulations.

5.          Section 2.4 (Negative Covenants) is hereby amended by adding a new Section 2.4(16) to read as follows:

2.4(16). Adjacent Property. The parties acknowledge that Mid-America Apartment Communities, Inc. (“MAAC”) owns certain land adjacent to the 2006 Additional Mortgaged Property, as more particularly described on Annex II hereto (the

2

“Adjacent Property”), and that MAAC is considering constructing additional multifamily residential housing facilities on the Adjacent Property. None of the Adjacent Property nor the additional housing facilities to be constructed thereon will be financed by the Bonds issued to finance the 2006 Additional Mortgaged Property, and the Adjacent Property is not currently a part of the Collateral Pool. The Borrower agrees that:

(a)        For so long as the 2006 Additional Mortgaged Property is part of the Collateral Pool, the Borrower shall not sell or otherwise transfer all or any part of the Adjacent Property to a third party unless (i) the Borrower gives Fannie Mae at least sixty (60) days’ prior written notice of any proposed transfer and (ii) on or prior to the date of any such transfer, the Borrower, if Fannie Mae so directs in writing in its sole and absolute discretion, effects a release of the 2006 Additional Mortgage Property from the Collateral Pool established under this Agreement and the Credit Agreement, including by payment of the Release Price and any associated prepayment premiums, termination fees and all other amounts due under the related Note, the Facility Note and the other Borrower Documents in connection therewith.

(b)        During construction of improvements to the Adjacent Property, the Borrower will not impede access to or undermine the value of the 2006 Additional Mortgaged Property.

(c)        If a default occurs and is continuing under any indebtedness secured by the Adjacent Property (other than indebtedness in favor of Fannie Mae), the Borrower shall give Fannie Mae prompt written notice thereof and, if Fannie Mae so directs in writing in its sole and absolute discretion, Borrower shall effect a release of the 2006 Additional Mortgaged Property from the Collateral Pool established under this Agreement and the Credit Agreement within 30 days of receipt of Fannie Mae’s written direction, including by payment of the Release Price and any associated prepayment premiums, termination fees and all other amounts due under the related Note, the Facility Note and the other Borrower Documents in connection therewith.

6.          The additional provision added to Section 3.13(1) pursuant to Amendment No. 1 is hereby amended by deleting such provision in its entirety and replacing it with the following:

“Notwithstanding that the obligations under each Note and Bond Mortgage relating to the Four Additional Mortgaged Properties, the Two Additional Properties, the 2004 Additional Mortgaged Properties, the 2005 Additional Mortgaged Property and the 2006 Additional Mortgaged Property are not generally personal obligations of the Borrower and notwithstanding that Fannie Mae is a holder of such Notes, each Borrower agrees and acknowledges that the intent of the parties to this Agreement is that each Borrower is and shall remain, except as provided in Section 3.13(2), jointly and severally personally liable to Fannie Mae for the payment and performance of all Obligations

3

throughout the term of this Agreement. Consequently, in the event that Fannie Mae becomes the sole holder of such Notes and Bond Mortgages, by its rights of subrogation or otherwise, any amounts owing to Fannie Mae under such Notes or Bond Mortgages shall be joint and several personal obligations of each Borrower. In addition, it is the intent of the parties that the non-recourse liability of the Borrowers under such Notes shall not in any manner or under any circumstances be interpreted or understood to contradict, undermine, negate or nullify that each Borrower is and shall remain, except as provided in Section 3.13(2), jointly and severally personally liable to Fannie Mae for the payment and performance of all Obligations throughout the term of this Agreement.”

7.          Section 8.1 (Events of Default) is hereby amended by adding a new Section 8.1(q) to read as follows:

“(q)       the failure by the Borrower to perform or observe any covenant set forth in Section 2.4(16).”

8.          Schedules 2, 3, 4, 5 and 9 are hereby amended and restated in their entirety as set forth in Annex 1 attached hereto.

9.          By execution and delivery of this Amendment No. 5 by Fannie Mae, Fannie Mae hereby consents to the addition of the 2006 Additional Mortgaged Property to the Fannie Mae Credit Facility as an Additional Mortgaged Property effective as of February 23, 2006 (the “Effective Date ”).

10.        In connection with the addition of the 2006 Additional Mortgaged Property to the Fannie Mae Credit Facility as an Additional Mortgaged Property, Borrower and Fannie Mae acknowledge and agree as follows in relation to such Additional Mortgaged Property:

(a)        The Facility Fee shall be as follows:

(i)	Credit Enhancement Rate shall be 44.5 basis points per annum.
(ii)	Principal Reserve Fund Rate shall be 15 basis points per annum.
(iii)	Loan Servicer’s Rate shall be 10 basis points.
(iv)	Liquidity Rate shall be 25 basis points.
(v)	Swap Credit Enhancement Rate shall be determined at the time of the purchase of a Swap.

(b)        Standby Fee shall be 15 basis points on any unused capacity of the Fannie Mae Credit Facility and/or the Fannie Mae Credit Facility expansion capacity.

(c)        Substitution Fee shall be 75 basis points.

(d)        Collateral Addition Fee shall be 75 basis points.

(e)        Release Fee shall be $15,000 per Collateral Release Property.

(f)        The Strike Rate shall be 6% for the Tax-Exempt Bonds.

4

(g)        The Hedge Rate shall be 6% for the Tax-Exempt Bonds.

(h)        The Underwriting Rate shall be 6.446% for the Mortgaged Property known as St. Augustine Apartment.

11.        Fannie Mae hereby waives the requirement of Section 17(a)(5) of the Reimbursement Mortgage and the Conventional Mortgage relating to the Mortgaged Property known as St. Augustine Apartments that Borrower enter into a written contract for management of such Mortgaged Property, provided however, that

(a)        In the event that the Borrower should ever elect to employ an affiliate or third party management company for the management of the Mortgaged Property, the Borrower agrees that (i) the management company and the management agreement to be executed therewith are subject to the prior written approval of Fannie Mae, which approval may be granted or denied in Fannie Mae’s sole and absolute discretion and (ii) any such approved management company shall not receive a management fee greater than 4% of gross collected rents from the Mortgaged Property;

(b)        In the event that the Borrower should ever elect to contract with an affiliate or third party management company for the management of the Mortgaged Property, the Borrower agrees to execute (and to cause any such management company to execute) in favor of Fannie Mae an “Assignment of Management Agreement” on a form approved by Fannie Mae; and

(c)        Borrower acknowledges that Fannie Mae reserves the right, under the Loan Documents, to require independent, professional third party management of the Mortgaged Property if inadequate or at any time after the occurrence of an Event of Default. At any time after an Event of Default shall have occurred, Fannie Mae shall have the right either (i) to direct the Borrower to contract with a third party management company approved by Fannie Mae for the management of the Mortgaged Property or (ii) to assume responsibility for the management of the Mortgaged Property, directly or through its designee. Promptly upon Fannie Mae’s written request after the occurrence of an Event of Default, Borrower shall turn over to Fannie Mae all books and records relating to the Mortgaged Property (copies of which may be retained by Borrower, at Borrower's expense), together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Fannie Mae may reasonably require. Borrower shall cooperate with Fannie Mae in the transfer of management responsibilities to Fannie Mae or its designee.

12.        This Amendment No. 5 shall be construed, interpreted and enforced in accordance with, and the rights and remedies of the parties hereto shall be governed pursuant to, the provisions of Section 9.3 of the Master Reimbursement Agreement (entitled “Governing Law; Choice of Law; Consent to Jurisdiction; Waivers of Jury Trial”), which provisions are hereby incorporated into this Amendment No. 4 by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

5

13.        Except as herein expressly modified or amended, all terms and covenants, and provisions of the Master Reimbursement Agreement are hereby ratified and confirmed by the Borrower and Fannie Mae and remain in full force and effect.

14.        The Borrower represents and warrants to Fannie Mae as follows:

(a)        The 2006 Additional Mortgage Property and the Adjacent Property comply in all material respects with local zoning laws and regulations.

(b)        All representations and warranties set forth in the Master Reimbursement Agreement are true and correct as of February 23, 2006.

(c)        There exists no Event of Default or Potential Event of Default as described in the Master Reimbursement Agreement as of February 23, 2006.

15.        This Amendment No. 5 may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page.

6

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to be signed, sealed, and delivered by their duly authorized representatives as of the date first above written.

MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By: MAC of Delaware, Inc., a Delaware corporation, its sole General Partner

By: __________________________

John A. Good

Assistant Secretary

S-1

FANNIE MAE

By:_______________________________________________

Name:

Title:

S-2

ANNEX 1

(See attached schedules)

A-1

SCHEDULE 2

BONDS, ISSUERS AND MORTGAGED PROPERTIES

Bonds	Issuer	Mortgaged Property
$5,880,000 City of Flowood, Mississippi Variable Rate Multi-Family Housing Refunding Revenue Bonds, Series 2001 (Reflection Pointe Apartments Project)	City of Flowood, Mississippi	Reflection Pointe Apartments
$7,735,000 South Carolina State Housing Finance and Development Authority Multifamily Rental Housing Revenue Refunding Bonds (Fairway Apartments Project), Series 2001 A	South Carolina State Housing Finance and Development Authority	Fairways Apartments
$3,375,000 The Health, Educational and Housing Facility Board of the City of Jackson Multifamily Housing Revenue Refunding Bonds, Series 2001 (Post House North Apartments)	The Health, Educational and Housing Facility Board of the City of Jackson	Post House North Apartments
$7,000,000 Housing Finance Authority of Volusia County, Florida Multifamily Housing Revenue Refunding Bonds, Series 2002 (The Anatole Apartments)	Housing Finance Authority of Volusia County, Florida	The Anatole Apartments
$5,095,000 The Health, Educational and Housing Facility Board of the City of Jackson Multifamily Housing Revenue Refunding Bonds, Series 2002 (Post House Jackson Apartments)	The Health, Educational and Housing Facility Board of the City of Jackson	Post House Jackson Apartments
$6,805,000 Housing Finance Authority of Marion County, Florida Multifamily Housing Revenue Refunding Bonds, Series 2002 (Paddock Park Apartments)	Housing Finance Authority of Marion County, Florida	Paddock Park Apartments I
$10,800,000 Hampton Redevelopment and Housing Authority Variable Rate Demand Multifamily Housing Revenue Refunding Bonds (Township Apartments Project) Series 1998	Hampton Redevelopment and Housing Authority	Township Apartments

Schedule 2-1

$2,980,000 The Housing Authority of the City of Augusta, Georgia Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series 2003A (Westbury Creek Apartments) and $500,000 Taxable Variable Rate Demand Multifamily Housing Revenue Bonds, Series 2003B (Westbury Creek Apartments)	The Housing Authority of the City of Augusta, Georgia	Westbury Creek Apartments
$4,965,000 The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee Multifamily Housing Revenue Refunding Bonds, Series 2003A (Windridge Apartments) and $500,000 Taxable Multifamily Housing Revenue Refunding Bonds, Series 2003B (Windridge Apartments)	The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee	Windridge Apartments
$6,645,000 The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County Multifamily Housing Revenue Refunding Bonds, Series 2004 (The Park at Hermitage Project)	The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County	The Park at Hermitage Apartments
$4,050,000 Austin Housing Finance Corporation Multifamily Housing Revenue Refunding Bonds, Series 2004A (Stassney Woods Apartments)	Austin Housing Finance Corporation	Stassney Woods Apartments
$3,585,000 Travis County Housing Finance Corporation Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series 2004A (Travis Station Apartments)	Travis County Housing Finance Corporation	Travis Station Apartments
$8,365,000 South Carolina State Housing Finance and Development Authority Variable Rate Demand Multifamily Rental Housing Revenue Refunding Bonds (Runaway Bay Apartments Project) Series 2005	South Carolina State Housing Finance and Development Authority	Runaway Bay Apartments
$13,235,000 Jacksonville Housing Finance Authority Variable Rate Demand Multifamily Housing Revenue Refunding Bonds (St. Augustine Apartments) Series 2006	Jacksonville Housing Finance Authority	St. Augustine Apartments

Schedule 2-2

SCHEDULE 3

FEE COMPONENT AND ONGOING FEES

I. INITIAL MORTGAGED PROPERTIES (Fairways Apartments, Post House North Apartments, and Reflection Pointe Apartments)
TYPE OF FEE1	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  South Carolina State Housing Finance and Development Authority (Fairways Apartments)	(i) 0.25% of the principal amount of the Bonds Outstanding or (ii) $8,400	See definition of Issuer’s Fee in Indenture	Annually in monthly installments in advance
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House North Apartments)	None	Not applicable	Not applicable
(c)  City of Flowood, Mississippi (Reflection Pointe Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  South Carolina State Housing Finance and Development Authority (Fairways Apartments)	3.3 basis points	See Section 2.5 of the Financing Agreement	Annually

_________________________

¹With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the three Initial Mortgaged Properties.

Schedule 3-1

(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House North Apartments)	6.2 basis points	See Section 2.5 of the Financing Agreement	Annually
(c)  City of Flowood, Mississippi (Reflection Pointe Apartments)	4.3 basis points	See Section 2.5 of the Financing Agreement	Annually
3.REMARKETING AGENT FEE	12.5 basis points	See Section 7 of the Remarketing Agreement	Annually , payable quarterly in arrears on each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500 per year	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 3.3(1) of Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 3.3(1)(a) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 3.3(1)(b) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer’s Rate	10 basis points	See Section 3.3(1)(d) of Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-2

(d)  Liquidity Rate	12.5 basis points	See Section 3.3(1)(d) of Master Reimbursement Agreement	Payable prior to the 15th of each month
(e)  Swap Credit Enhancement Rate	5 basis points for each initial Swap purchased in connection with the Initial Mortgaged Properties and otherwise to be determined at the time of the purchase of a Swap	See Section 3.3(1)(e) of Master Reimbursement Agreement	Payable prior to the 15th of each month

II. ADDITIONAL MORTGAGED PROPERTIES (October 24, 2002 Closing) (The Anatole Apartments, Paddock Park Apartments I, Post House Jackson Apartments, and Township Apartments)
TYPE OF FEE2	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  Housing Finance Authority of Volusia County, Florida (The Anatole Apartments)	0.10% of the principal amount of the Bonds Outstanding	See definition of Issuer’s Fee in Indenture	Annually in arrears on each January 15, commencing January 15, 2003
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House Jackson Apartments)	None	Not applicable	Not applicable

_________________________

²With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the Four Additional Mortgaged Properties.

Schedule 3-3

(c)  Housing Finance Authority of Marion County, Florida (Paddock Park Apartments I)	0.20% of the principal amount of the Bonds Outstanding	See definition of Issuer’s Fee in Indenture	Annually in arrears on each October 1 commencing October 1, 2003,
(d)  Hampton Redevelopment and Housing Authority(Township Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  Housing Finance Authority of Volusia County, Florida (The Anatole Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(b)  The Health, Educational and Housing Facility Board of the City of Jackson (Post House Jackson Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(c)  Housing Finance Authority of Marion County, Florida (Paddock Park Apartments I)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
(d)  Hampton Redevelopment and Housing Authority(Township Apartments)	$3,500	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each April 15 and October 15
3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually

Schedule 3-4

5.FACILITY FEE		See Section 33 of Amendment No. 1 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer’s Rate	10 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	12.5 basis points	See Section 33 of Amendment No. 1 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-5

(e)  Swap Credit Enhancement Rate 13 basis points for the five-year Swap purchased in connection with the Additional Mortgaged Property known as The Anatole Apartments and the five year Swap purchased in connection with the Additional Mortgaged Property known as Township Apartments and otherwise to be determined at the time of the purchase of a Swap See Section 33 of Amendment No. 1 to Master Reimbursement Agreement Payable prior to the 15^th of each month

III. ADDITIONAL MORTGAGED PROPERTIES (May 30, 2003 Closing) (Westbury Creek Apartments and Windridge)
TYPE OF FEE3	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE
(a)  The Housing Authority of the City of Augusta, Georgia (The Westbury Creek Apartments)	None	Not applicable	Not applicable
(b)  The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee (Windridge Apartments)	None	Not applicable	Not applicable
2.TRUSTEE FEE
(a)  The Housing Authority of the City of Augusta, Georgia (The Westbury Creek Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15

_________________________

³With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the Two Additional Mortgaged Properties.

Schedule 3-6

(b)  The Health Educational and Housing Facility Board of the City of Chattanooga, Tennessee (Windridge Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
3.REMARKETING AGENT FEE	12 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 11 of Amendment No. 2 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer’s Rate	10 basis points	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-7

(d)  Liquidity Rate	12.5 basis points	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(e)  Swap Credit Enhancement Rate	13 basis points for the five-year Swap purchased in connection with the Additional Mortgaged Property known as Windridge Apartments and the five year Swap purchased in connection with the Additional Mortgaged Property known as Westbury Creek and otherwise to be determined at the time of the purchase of a Swap	See Section 11 of Amendment No. 2 to Master Reimbursement Agreement	Payable prior to the 15th of each month

IV. ADDITIONAL MORTGAGED PROPERTIES (March 2, 2004 Closing) (The Park at Hermitage Apartments, Stassney Woods Apartments and Travis Station Apartments)
TYPE OF FEE4	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE

_________________________

⁴With the exception of the Issuer Fee and Trustee Fee, all indicated fees are the same for each of the 2004 Additional Mortgaged Properties.

Schedule 3-8

(a)  The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (The Park at Hermitage Apartments)	None	Not applicable	Not applicable
(b)  Austin Housing Finance Corporation (Stassney Woods Apartments)	The greater of (a) .0003 times the amount of Bonds Outstanding on January 1, (b) 12 times the number of units in the Project, or ©) $1,200 per year	Trust Indenture (definition of “Ordinary Issuer Monitoring Fees and Expenses”)	Annually, prorated and payable on each Interest Payment Date
(c)  Travis County Housing Finance Corporation (Travis Station Apartments)	10 basis points	See definition of Issuer Fee in Indenture	Annually, prorated and payable on each Interest Payment Date
2.TRUSTEE FEE
(a)  The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (The Park at Hermitage Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
(b)  Austin Housing Finance Corporation (Stassney Woods Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15
(c)  Travis County Housing Finance Corporation (Travis Station Apartments)	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semi-annually payable in advance on each May 15 and November 15

Schedule 3-9

3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually
5.FACILITY FEE		See Section 16 of Amendment No. 4 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 16 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 16 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer’s Rate	10 basis points	See Section 16 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	12.5 basis points	See Section 16 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-10

(e)  Swap Credit Enhancement Rate	15 basis points for the five-year Swap purchased in connection with the 2004 Additional Mortgaged Properties known as The Park at Hermitage Apartments and Travis Station Apartments and otherwise to be determined at the time of the purchase of a Swap	See Section 16 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
V. ADDITIONAL MORTGAGED PROPERTY (November 17, 2005Closing) (Runaway Bay Apartments)
TYPE OF FEE	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE (South Carolina State Housing Finance and Development Authority)	$10,400	See definition of Issuer’s Fee in the Indenture	Equal monthly installments
2.TRUSTEE FEE	$4,000	See definition of Trustee’s Annual Fee in Indenture	Semiannually payable in advance on each May 15 and November 15
3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.REBATE ANALYST FEE	$500	See Section 2.5 of the Financing Agreement	Annually

Schedule 3-11

5.FACILITY FEE		See Section 13 of Amendment No. 4 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	57 basis points	See Section 13 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(b)  Principal Reserve Fund Rate	15 basis points	See Section 13 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer’s Rate	10 basis points	See Section 13 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	12.5 basis points	See Section 13 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-12

(e)  Swap Credit Enhancement Rate	17 basis points for the five-year Swap purchased in connection with the 2005 Additional Mortgaged Property known as Runaway Bay Apartments and otherwise to be determined at the time of the purchase of a Swap	See Section 13 of Amendment No. 4 to Master Reimbursement Agreement	Payable prior to the 15th of each month
VI. ADDITIONAL MORTGAGED PROPERTY (February 23, 2006 Closing) (St. Augustine Apartments)
TYPE OF FEE	FEE	DOCUMENT REFERENCE	TIMING
1.ISSUER FEE (Jacksonville Housing Finance Authority)	20 basis points times the outstanding principal amount of the Bonds	See definition of Issuer’s Fee in the Indenture	Semiannually in arrears on each January 15th and July 15th , commencing July 15, 2006
2.TRUSTEE FEE	$3,000	See definition of Trustee’s Annual Fee in Indenture	Semiannually payable in advance on each January 15 and July 15
3.REMARKETING AGENT FEE	12.5 basis points	See Section  7 of the Remarketing Agreement	Annually, payable quarterly in arrears in each March 1, June 1, September 1 and December 1
4.TENDER AGENT FEE	$1,000	See Definition of Tender Agent Fee in Indenture	Semiannually payable in advance on each January 15 and July 15
5.FACILITY FEE		See Section 10 of Amendment No. 5 to Master Reimbursement Agreement
(a)  Credit Enhancement Rate	44.5 basis points	See Section 10 of Amendment No. 5 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-13

(b)  Principal Reserve Fund Rate	15 basis points	See Section 10 of Amendment No. 5 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(c)  Loan Servicer’s Rate	10 basis points	See Section 10 of Amendment No. 5 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(d)  Liquidity Rate	25 basis points	See Section 10 of Amendment No. 5 to Master Reimbursement Agreement	Payable prior to the 15th of each month
(e)  Swap Credit Enhancement Rate	To be determined at the time of the purchase of a Swap	See Section 10 of Amendment No. 5 to Master Reimbursement Agreement	Payable prior to the 15th of each month

Schedule 3-14

SCHEDULE 4

MORTGAGED PROPERTIES

INITIAL MORTGAGED PROPERTIES:

PROPERTY NAME	PROPERTY ADDRESS
Fairways Apartments	Columbia, South Carolina
Post House North Apartments	Jackson, Tennessee
Reflection Pointe Apartments	Flowood, Mississippi

ADDITIONAL MORTGAGED PROPERTIES (October 24, 2002 Closing):

PROPERTY NAME	PROPERTY ADDRESS
The Anatole Apartments	Daytona Beach, Florida
Post House Jackson Apartments	Jackson, Tennessee
Paddock Park Apartments I	Ocala, Florida
Township Apartments	Hampton, Virginia

ADDITIONAL MORTGAGED PROPERTIES (May 30, 2003 Closing):

PROPERTY NAME	PROPERTY ADDRESS
Westbury Creek Apartments	Augusta, Georgia
Windridge Apartments	Chattanooga, Tennessee

ADDITIONAL MORTGAGED PROPERTIES (March 2, 2004 Closing):

PROPERTY NAME	PROPERTY ADDRESS
The Park at Hermitage Apartments	Hermitage, Tennessee
Travis Station Apartments	Austin, Texas
Stassney Woods Apartments	Austin, Texas

ADDITIONAL MORTGAGED PROPERTY (November 17, 2005 Closing):

PROPERTY NAME	PROPERTY ADDRESS
Runaway Bay Apartments	Mount Pleasant, South Carolina

ADDITIONAL MORTGAGED PROPERTY (February 23, 2006 Closing):

PROPERTY NAME	PROPERTY ADDRESS
St. Augustine Apartments	Jacksonville, Florida

SUBSTITUTED MORTGAGED PROPERTIES:

PROPERTY NAME	PROPERTY ADDRESS
None

Schedule 4-1

SCHEDULE 5

TERMINATION FEE

Any Termination Fee payable under Section 3.3(4) of the Master Reimbursement Agreement shall be equal to the following percentage of the unpaid principal balance of each Loan being prepaid as indicated below, or, in the case of a substitution of an Alternate Credit Facility for the Credit Enhancement Instrument, the unpaid principal balance of each Loan:

Fairways (Loan Originated June 15, 2001)
First Loan Year	5.904%
Second Loan Year	5.479%
Third Loan Year	5.024%
Fourth Loan Year	4.536%
Fifth Loan Year	4.014%
Sixth Loan Year	3.454%
Seventh Loan Year	2.855%
Eighth Loan Year	2.213%
Ninth Loan Year	1.525%
Tenth Loan Year	0.789%

Post House North (Loan Originated June 15, 2001)
First Loan Year	5.965%
Second Loan Year	5.531%
Third Loan Year	5.067%
Fourth Loan Year	4.571%
Fifth Loan Year	4.041%
Sixth Loan Year	3.475%
Seventh Loan Year	2.869%
Eighth Loan Year	2.222%
Ninth Loan Year	1.530%
Tenth Loan Year	0.791%

Reflection Pointe (Loan Originated June 15, 2001)
First Loan Year	5.970%
Second Loan Year	5.535%
Third Loan Year	5.071%
Fourth Loan Year	4.574%
Fifth Loan Year	4.044%
Sixth Loan Year	3.476%
Seventh Loan Year	2.870%
Eighth Loan Year	2.223%
Ninth Loan Year	1.530%
Tenth Loan Year	0.791%

Schedule 5-1

The Anatole (Loan Originated October 24, 2002)
First Loan Year	6.700%
Second Loan Year	6.200%
Third Loan Year	5.668%
Fourth Loan Year	5.102%
Fifth Loan Year	4.500%
Sixth Loan Year	3.861%
Seventh Loan Year	3.180%
Eighth Loan Year	2.457%
Ninth Loan Year	1.688%
Tenth Loan Year	0.870%

Paddock Park (Loan Originated October 24, 2002)
First Loan Year	5.766%
Second Loan Year	5.335%
Third Loan Year	4.877%
Fourth Loan Year	4.389%
Fifth Loan Year	3.871%
Sixth Loan Year	3.321%
Seventh Loan Year	2.735%
Eighth Loan Year	2.113%
Ninth Loan Year	1.451%
Tenth Loan Year	0.748%

Post House Jackson (Loan Originated October 24, 2002)
First Loan Year	5.815%
Second Loan Year	5.377%
Third Loan Year	4.911%
Fourth Loan Year	4.417%
Fifth Loan Year	3.893%
Sixth Loan Year	3.337%
Seventh Loan Year	2.747%
Eighth Loan Year	2.120%
Ninth Loan Year	1.455%
Tenth Loan Year	0.749%

Township (Loan Originated October 24, 2002)
First Loan Year	6.734%
Second Loan Year	6.228%
Third Loan Year	5.691%
Fourth Loan Year	5.121%
Fifth Loan Year	4.515%
Sixth Loan Year	3.872%
Seventh Loan Year	3.188%
Eighth Loan Year	2.462%
Ninth Loan Year	1.690%
Tenth Loan Year	0.871%

Schedule 5-2

Westbury Creek(Loan Originated May 30, 2003)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.557% 6.068% 5.548% 4.994% 4.406% 3.780% 3.114% 2.406% 1.653% 0.852%

Windridge (Loan Originated May 30, 2003)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.636% 6.139% 5.610% 5.049% 4.452% 3.818% 3.144% 2.429% 1.668% 0.859%

The Park at Hermitage(Loan Originated March 2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.910% 6.389% 5.836% 5.250% 4.627% 3.966% 3.264% 2.520% 1.729% 0.890%

Schedule 5-3

Stassney Woods Apartments(Loan Originated March 2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	5.779% 5.346% 4.886% 4.397% 3.877% 3.325% 2.738% 2.115% 1.452% 0.748%

Travis Station Apartments(Loan Originated March 2, 2004)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	6.859% 6.346% 5.800% 5.220% 4.604% 3.949% 3.252% 2.512% 1.725% 0.889%

Runaway Bay Apartments(Loan Originated November 17, 2005)
First Loan Year Second Loan Year Third Loan Year Fourth Loan Year Fifth Loan Year Sixth Loan Year Seventh Loan Year Eighth Loan Year Ninth Loan Year Tenth Loan Year	7.140% 6.596% 6.019% 5.409% 4.762% 4.077% 3.352% 2.585% 1.772% 0.911%

Schedule 5-4

St. Augustine Apartments(Loan Originated February _, 2006)

First Loan Year

Second Loan Year

Third Loan Year

Fourth Loan Year

Fifth Loan Year

Sixth Loan Year

Seventh Loan Year

Eighth Loan Year

Ninth Loan Year

Tenth Loan Year

SEE PARAGRAPH 11 OF THE NOTE FOR ALL TERMS AND CONDITIONS APPLICABLE TO PREPAYMENT OF THE LOAN. The Borrower may not have the right to prepay the Loan during certain periods. The Borrower may be required to pay more than the principal amount being prepaid, accrued interest and the Termination Fee. Special timing considerations may also apply.

Each Loan Year is a 12 month period ending on the day before an anniversary date of the Loan.

Schedule 5-5

SCHEDULE 9

SCHEDULE OF DEPOSITS TO EACH PRINCIPAL RESERVE FUND

See attached schedules.

Schedule 9-1

Annex II

Property Description for Adjacent Property

Annex II-1

EX-10.38

EXHIBIT 10.38

MASTER CREDIT FACILITY AGREEMENT

THIS MASTER CREDIT FACILITY AGREEMENT (this “Agreement”) is made as of the 2nd day of March, 2004 by and among (i) Mid-America Apartments, L.P., a Tennessee limited partnership, Mid-America Apartment Communities, Inc., a Tennessee corporation and Mid-America Apartments of Texas, L.P., a Texas limited partnership (individually and collectively, “Borrower”), and (ii) Prudential Multifamily Mortgage, Inc., a Delaware corporation (“Lender”).

RECITALS

A.Borrower owns one or more Multifamily Residential Properties (unless otherwise defined or the context clearly indicates otherwise, capitalized terms shall have the meanings ascribed to such terms in Appendix I of this Agreement) as more particularly described in Exhibit A to this Agreement.

B.Borrower has requested that Lender make a $11,720,000 loan in favor of Borrower.

C.To secure the obligations of Borrower under this Agreement and the other Loan Documents issued in connection with the Initial Loan, Borrower shall create a Collateral Pool in favor of Lender. The Collateral Pool shall be comprised of (i) second or third priority Security Instruments on the Multifamily Residential Properties listed on Exhibit A and (ii) any other Security Documents executed by Borrower pursuant to this Agreement or any other Loan Documents.

D.Each Security Document shall be cross-defaulted (i.e., a default under any Security Document, or under this Agreement, shall constitute a default under each other Security Document, and this Agreement) and cross-collateralized (i.e., each Security Instrument shall secure all of Borrower’s obligations under this Agreement and the other Loan Documents) and it is the intent of the parties to this Agreement that, in the exercise of its rights and remedies under the Loan Documents, Lender may, except as provided in this Agreement, exercise and perfect any and all of its rights in and under the Loan Documents with regard to any Mortgaged Property without needing to exercise and perfect its rights and remedies with respect to any other Mortgaged Property and that any such exercise shall be without regard to the Allocable Facility Amount assigned to such Mortgaged Property and that Lender may recover an amount equal to the full amount outstanding in respect of the Note in connection with such exercise and any such amount shall be applied as determined by Lender in its sole and absolute discretion.

E.Subject to the terms, conditions and limitations of this Agreement, Lender has agreed to make the Initial Loan to Borrower.

NOW, THEREFORE, Borrower and Lender, in consideration of the mutual promises and agreements contained in this Agreement, hereby agree as follows:

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ARTICLE I

THE LOANS

SECTION 1.01 The Loans. Subject to the terms, conditions and limitations of this Agreement, Lender agrees to make a Loan (“Initial Loan”) to the Borrower in an amount not exceeding $11,720,000 on the Initial Closing Date. After the Initial Closing Date, Lender may agree, in its sole discretion from time to time, to make one or more additional Loans to the Borrower subject to such terms and conditions as Lender may require in its sole discretion. The Initial Loan and any such additional Loan (a “Future Loan”) shall be evidenced by the Note.

Section 1.02 Loan Periods. The term of each Loan shall be divided into periods as follows:

(a)Partial Month Period. If the Closing Date of a Loan is not the first day of a calendar month, the period from the Closing Date to the end of that calendar month is the “Partial Month Period.” For example, if the Loan is made on August 16, the end of the Partial Month Period is August 31.

(b)Discount Periods. After the Partial Month Period (if any) or if the Closing Date of a Loan is the first day of a calendar month, the remainder of the term of the Loan shall be divided into Discount Periods. A “Discount Period” shall mean the period beginning on the first day of a calendar month and ending on the first day of the calendar month three months later. The first Discount Period after a Partial Month Period shall begin on the first day of the calendar month after the month in which the Closing Date occurs. Any other Discount Period shall begin on the last day of the prior Discount Period (which shall be the first day of a calendar month). The Lender agrees that the Borrower may request a Discount Period of one or two calendar months duration for a timing purpose to accommodate the sale of a Multifamily Residential Property financed by the related Loan or some other similar timing purpose. In no event shall any Discount Period begin or end after the Termination Date. To continue the example set out in (a), the beginning of the first Discount Period is September 1 and the last day of that Discount Period is December 1. The beginning of the next Discount Period after that is December 1 and the last day of that Discount Period is March 1 of the following year.

Section 1.03 Discount Mortgage Backed Security. Each Loan will be funded during a Discount Period by the issuance of a discount mortgage backed security (“DMBS”). The principal amount of the Loan shall be equal to the sum of (i) the price (“Price”) of the DMBS for the Discount Period and (ii) the discount (“Discount”) of the DMBS for the Discount Period. The Price is equal to the proceeds of the sale of the DMBS and the Discount is an amount equal to the difference between (i) the face amount of the DMBS and (ii) the Price of the DMBS. The proceeds of the Loan made available by Lender to Borrower on the first day of the Loan shall equal the Price of the initial DMBS issued for the first Discount Period. Each DMBS shall be issued for a term of three months. The issuance date (“MBS Issue Date”) for each DMBS shall be the first day of a calendar month and the maturity date for each DMBS shall be the first day of the calendar month after such three month term. For example, the maturity date for a DMBS issued on December 1 is March 1.

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SECTION 1.04 Interest, Discount and Fees on Loans.

(a)Partial Month Period Interest. If the Loan has a Partial Month Period, Borrower shall pay interest on the principal amount of the Loan for the Partial Month Period at a rate per annum equal to the greater of (1) the Coupon Rate as determined in accordance with Section 1.05 and (2) a rate determined by Lender, based on Lender’s cost of funds and approved in advance, in writing, by Borrower, pursuant to the procedures mutually agreed upon by Borrower and Lender.

(b)Discount. Each Loan shall be treated as a discount loan for each Discount Period. Borrower shall pay to Lender, in advance of the Discount Period, the entire Discount for the Loan for the upcoming Discount Period. If, for a Loan, the amount of the Discount for the DMBS for the following Discount Period is greater than the Discount for the DMBS for the current Discount Period, then, not less than two Business Days prior to the end of the current Discount Period, the Borrower shall pay to Lender the aggregate amount of such difference. If the amount of the Discount for the new DMBS is less than the Discount for the outstanding DMBS, the aggregate amount of such difference shall be credited against the regular monthly payment due on the first day of the following Discount Period.

(c)Loan Fee. Borrower shall also pay monthly installments of the Loan Fee to Lender for each Loan for each Discount Period. The Loan Fee shall be payable in advance, in accordance with the terms of the Note. The first installment shall be payable on or prior to the Closing Date for the Loan and shall apply to the first full calendar month of the first Discount Period beginning with or first occurring after the Closing Date. Subsequent installments shall be payable on the first day of each calendar month, commencing on the first day of the second full calendar month of the first Discount Period until the Loan is paid in full. Each installment of the Loan Fee shall be in an amount equal to the product of (1) the Loan Fee, (2) the Price of the Loan during such Discount Period, and (3) 1/12.

SECTION 1.05 Coupon Rates for a Loan. The Coupon Rate for a Loan shall equal the sum of (1) an interest rate as determined by Lender (rounded to three places) payable for the DMBS pursuant to the DMBS Commitment (“DMBS Imputed Interest Rate”)and (2) the Loan Fee.

SECTION 1.06 Maturity of Loan. The entire unpaid principal of a Loan will be due and payable by the Borrower on the first to occur of:

(a)the last day of a Discount Period unless, not less than five Business Days prior to the maturity date of the outstanding DMBS funding for that Loan for that Discount Period, the Borrower has requested in writing that the outstanding DMBS be renewed with a new DMBS by sending the Lender a completed and executed Rate Form in accordance with Section 1.07;

(b) the Termination Date; and

(c) the maturity date for a Loan established in the Note.

SECTION 1.07 Rate Setting for a Loan for a Discount Period.

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(a)The Borrower may request Lender to renew a DMBS for an additional Discount Period after the then current Discount Period by sending a completed and executed Rate Form to Lender not less than five Business Days prior to the end of the current Discount Period.

(b)If the Borrower has requested that an outstanding DMBS be renewed with a new DMBS, then not less than four Business Days prior to the end of the current Discount Period, Lender shall notify Borrower of the Discount on the new DMBS to be issued on such maturity date by sending Borrower a form confirming the terms and conditions of the new DMBS (the “Rate Confirmation Form”). Borrower shall execute and return the Rate Confirmation Form to Lender not later than three Business Days prior to the end of the current Discount Period. The Lender’s failure to send the Rate Confirmation Form shall not affect in any way the obligation of the Borrower to repay the Loan in accordance with this Agreement, the Note and the other Loan Documents.

SECTION 1.08 Breakage and other Costs. If Lender obtains, and then fails to fulfill, a commitment by an investor to purchase the DMBS for the next Discount Period (“DMBS Commitment”) because the DMBS is not renewed (for a reason other than Lender’s default), the Borrower shall pay all reasonable out-of-pocket costs payable to the potential investor and other reasonable costs, fees and damages incurred by Lender in connection with its failure to fulfill the DMBS Commitment. The Lender reserves the right to require the Borrower to post a deposit at the time the DMBS Commitment is obtained. Such deposit shall be refundable to the Borrower upon the delivery of the related DMBS.

ARTICLE II

ALLOCABLE FACILITY AMOUNT AND VALUATIONS

SECTION 2.01 Determination of Allocable Facility Amount and Valuations.

(a)Initial Determinations. On the Initial Closing Date, Lender shall determine (i) the Allocable Facility Amount and Valuation for each Mortgaged Property and (ii) the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio. The initial determinations made pursuant to this subsection shall remain in effect until the first anniversary of the Initial Closing Date.

(b)Periodic Determinations. From and after the first anniversary of the Initial Closing Date, Lender shall make the following determinations:

(1)Once each Calendar Quarter, within 20 Business Days after Borrower has delivered to Lender the reports required in Section 2.2(4) of the Master Reimbursement Agreement, Lender shall determine the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio.

(2)If Lender reasonably decides that changed market or property conditions warrant, Lender shall determine Allocable Facility Amounts and Valuations.

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(3)Lender shall also redetermine Allocable Facility Amounts to take account of any addition, release or substitution of Collateral or other event which invalidates the outstanding determinations.

In determining Valuations, Lender shall use Cap Rates (as such term is defined in the Master Reimbursement Agreement) based on its internal survey and analysis of cap rates for comparable sales in the vicinity of the Mortgaged Property, with such adjustments as Lender deems appropriate and without any obligation to use any information provided by Borrower. If Lender is unable to determine a Cap Rate for a Mortgaged Property, Lender shall have the right, not more than once annually, to obtain a market study in order to establish a Cap Rate. Lender shall promptly disclose its determinations to Borrower. Until redetermined, the outstanding Allocable Facility Amounts and Valuations shall remain in effect.

ARTICLE III

COLLATERAL CHANGES/TERMINATION OF FACILITY

SECTION 3.01 Right to Obtain Releases of Collateral. Subject to the terms and conditions of this Article, Borrower shall have the right to obtain a release of Collateral from the Collateral Pool as follows:

(a)Request. To obtain a release of Collateral from the Collateral Pool, Borrower may deliver a Release Request to Lender; provided, however, that no Mortgaged Property may be released from the Collateral Pool unless it is simultaneously released from the “Collateral Pool” established under the Master Reimbursement Agreement, and a Release Request with respect to any Mortgaged Property shall not be effective unless it is delivered simultaneously and in conjunction with a “Release Request” with respect to such Mortgaged Property under the Master Reimbursement Agreement. All Loans Outstanding allocated by Lender to a particular Mortgaged Property, including any associated premiums and termination fees, must be paid in full on or prior to the date of redemption of any Bonds issued to finance such Mortgaged Property.

(b)Closing. If all conditions precedent to the release of the Mortgaged Property contained in Section 4.04 and all General Conditions contained in Section 4.01 are satisfied, Lender shall cause the Release Property to be released, simultaneously with the release of the related Collateral Release Property under the Master Reimbursement Agreement, by executing and delivering, and causing all applicable parties to execute and deliver, all at the sole cost and expense of Borrower, the Release Documents. Borrower shall prepare the Release Documents and submit them to Lender for its review.

(c)Release Price. The Release Price for each Mortgaged Property shall be the “Release Price” for such Mortgaged Property under the Master Reimbursement Agreement, and shall be calculated and applied as provided in Section 6.2 of the Master Reimbursement Agreement.

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SECTION 3.02 Right to Terminate Agreement. Subject to the terms and conditions of this Article, Borrower shall have the right to terminate this Agreement and to repay the Loans as follows.

(a)Request. To terminate this Agreement and to repay the Loans, Borrower shall deliver a Termination Request to Lender.

(b)Closing. If all conditions precedent contained in Section 4.05 are satisfied, this Agreement shall terminate, and Lender shall cause all of the Collateral to be released from the Collateral Pool, at a closing to be held at offices designated by Lender on a Closing Date selected by Lender, within 30 Business Days after Lender’s receipt of the Termination Request (or on such other date as Borrower and Lender may agree), by executing and delivering, and causing all applicable parties to execute and deliver, all at the sole cost and expense of Borrower, the Termination Documents.

ARTICLE IV

CONDITIONS PRECEDENT TO ALL REQUESTS

SECTION 4.01 Conditions Applicable to All Requests. The obligation of Lender to close the transaction requested in a Request shall be subject to the following general conditions precedent (“General Conditions”) in addition to any other conditions precedent contained in this Agreement:

(a)Payment of Expenses. The payment by Borrower of Lender’s and Fannie Mae’s reasonable fees and expenses payable in accordance with this Agreement, including, but not limited to, the legal fees and expenses contained in Section 7.03.

(b)No Material Adverse Change. There has been no material adverse change in the financial condition, business or prospects of Borrower or in the physical condition, operating performance or value of any of the Mortgaged Properties since the date of the most recent Compliance Certificate (or, with respect to the conditions precedent to the Initial Loan, from the condition, business or prospects reflected in the financial statements, reports and other information obtained by Lender during its review of Borrower and the Mortgaged Properties).

(c)No Default. There shall exist no Event of Default or Potential Event of Default on the Closing Date for the Request and, after giving effect to the transaction requested in the Request, no Event of Default or Potential Event of Default shall have occurred.

(d)No Insolvency. Receipt by Lender on the Closing Date for the Request of evidence satisfactory to Lender that Borrower is not insolvent (within the meaning of any applicable federal or state laws relating to bankruptcy or fraudulent transfers) or will be rendered insolvent by the transactions contemplated by the Loan Documents, or, after giving effect to such transactions, will be left with an unreasonably small capital with which to engage in its business or undertakings, or will have intended to incur, or believe that it has incurred, debts beyond its

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ability to pay such debts as they mature or will have intended to hinder, delay or defraud any existing or future creditor.

(e)No Untrue Statements. The Loan Documents shall not contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary to make the information contained therein not misleading.

(f)Representations and Warranties. All representations and warranties made by Borrower in the Loan Documents shall be true and correct in all material respects on the Closing Date for the Request with the same force and effect as if such representations and warranties had been made on and as of the Closing Date for the Request.

(g)No Condemnation or Casualty. There shall not be pending or threatened any condemnation or other taking, whether direct or indirect, against any Mortgaged Property and there shall not have occurred any casualty to any improvements located on any Mortgaged Property, which casualty would have a material adverse effect on the continued operations of such Mortgaged Property.

(h)Delivery of Closing Documents. The receipt by Lender of the following, each. dated as of the Closing Date for the Request, in form and substance satisfactory to Lender in all respects:

(i) A Compliance Certificate;

(ii) An Organizational Certificate; and

(iii)Such other documents, instruments, approvals (and, if requested by Lender, certified duplicates of executed copies thereof) and opinions as Lender may reasonably request.

(i)Covenants. Borrower is in full compliance with each of the covenants contained in Article VI of this Agreement, without giving effect to any notice and cure rights of Borrower.

SECTION 4.02 Conditions Precedent to the Initial Loan. The obligation of Lender to make the Initial Loan is subject to the following conditions precedent:

(a) Receipt by Lender of the fully executed Loan Request;

(b)Fully executed original copies of each Loan Document required pursuant to Section 4.01 or 4.03 to be executed in connection with the Request, duly executed and delivered by the parties thereto (other than Lender), each of which shall be in full force and effect.

(c)Favorable opinions of counsel to Borrower, as to the due organization and qualification of Borrower, the due authorization, execution, delivery and enforceability of each Loan Document executed in connection with the Request and such other matters as Lender may reasonably require.

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(d)Receipt by Lender at least five (5) days prior to the Initial Closing Date, of the confirmation of a Hedge commitment;

(e) Receipt by Lender of Hedge Documents, effective as of the Initial Closing Date;

(f)Delivery to the Title Company, for filing and/or recording in all applicable jurisdictions, of all applicable Loan Documents required by Lender, including duly executed and delivered original copies of the Note, the Security Instruments covering the Mortgaged Properties and UCC-1 Financing Statements covering the portion of the Collateral comprised of personal property, and other appropriate instruments, in form and substance satisfactory to Lender and in form proper for recordation, as may be necessary in the opinion of Lender to perfect the Liens created by the applicable Security Instruments and any other Loan Documents creating a Lien in favor of Lender, and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing;

(g)The receipt by Lender of the first installment of Loan Fee and the entire Discount payable by Borrower pursuant to Section 1.04(c);

(h)Receipt by Lender of the Origination Fee pursuant to Section 7.01 and the Due Diligence Fee pursuant to Section 7.02; and

(i) Receipt by Borrower of the conventional Rate Confirmation Form.

SECTION 4.03 Delivery of Property-Related Documents. With respect to each of the Mortgaged Properties, it shall be a condition precedent that Lender receive each of the following, each dated as of the Closing Date for the Initial Loan in form and substance satisfactory to Lender in all respects:

(a)A favorable opinion of local counsel to Borrower or Lender as to the enforceability of the Security Instrument, and any other Loan Documents, executed in connection with the Request.

(b)A commitment for the Title Insurance Policy applicable to the Mortgaged Property and a pro forma Title Insurance Policy based on the Initial Loan.

(c)The Insurance Policy (or a certified copy of the Insurance Policy) applicable to the Mortgaged Property.

(d) The Survey applicable to the Mortgaged Property.

(e)Evidence satisfactory to Lender of compliance of the Mortgaged Property with property laws as required by Sections 205 and 206 of Part III of the DUS Guide.

(f) An Appraisal of the Mortgaged Property.

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(g)A Replacement Reserve Agreement, providing for the establishment of a replacement reserve account, to be pledged to Lender, in which the owner shall (unless waived by Lender) periodically deposit amounts for replacements for improvements at the Mortgaged Property and as additional security for Borrower’s obligations under the Loan Documents.

(h)A Completion/Repair and Security Agreement, together with required escrows, on the standard form required by the DUS Guide.

(i)An Assignment of Management Agreement, on the standard form required by the DUS Guide.

(j)An Assignment of Leases and Rents, if Lender determines one to be necessary or desirable, provided that the provisions of any such assignment shall be substantively identical to those in the Security Instrument covering the Collateral, with such modifications as may be necessitated by applicable state or local law.

SECTION 4.04 Conditions Precedent to Release of Property from the Collateral Pool. The obligation of Lender to release a Property from the Collateral Pool by executing and delivering the Release Documents on the Closing Date, are subject to the satisfaction of the following conditions precedent on or before the Closing Date:

(a)Satisfaction of the conditions precedent to the release of the Property contained in Section 6.3 of the Master Reimbursement Agreement (including without limitation, receipt by Lender of the Release Price);

(b)Receipt by Lender on the Closing Date of one or more counterparts of each Release Document, dated as of the Closing Date, signed by each of the parties (other than Lender) who is a party to such Release Document;

(c)If required by Lender, amendments to the Note and the Security Instruments, reflecting the release of the Release Property from the Collateral Pool and, as to any Security Instrument so amended, the receipt by Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date and other exceptions approved by Lender;

(d)If Lender determines the Release Property to be one phase of a project, and one or more other phases of the project are Mortgaged Properties which will remain in the Collateral Pool (“Remaining Mortgaged Properties”), Lender must determine that the Remaining Mortgaged Properties can be operated separately from the Release Property and any other phases of the project which are not Mortgaged Properties and whether any cross use agreements or easements are necessary. In making this determination, Lender shall evaluate whether the Remaining Mortgaged Properties comply with the terms of Sections 203 and 208 of Part III of the DUS Guide;

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(e)Receipt by Lender of endorsements to the tie-in endorsements of the Title Insurance Policies, if deemed necessary by Lender, to reflect the release; and

(f)Receipt by Lender on the Closing Date of a Confirmation of Obligations, dated as of the Closing Date, signed by Borrower, pursuant to which Borrower confirms its obligations under the Loan Documents.

SECTION 4.05 Conditions Precedent to Termination of Agreement. The right of Borrower to terminate this Agreement and repay the Loans and Lender’s obligation to execute and deliver Release Documents for each of the Mortgaged Properties (the “Termination Documents”) on the Closing Date are subject to the following conditions precedent:

(a)Payment by Borrower in full of all of the Loans Outstanding on the Closing Date, including any associated prepayment premiums or other amounts due under the Note and all other amounts owing by Borrower to Lender under this Agreement; and

(b) Receipt by Lender of the Termination Fee.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF LENDER

SECTION 5.01 Representations and Warranties of Lender. Lender hereby represents and warrants to Borrower as follows:

(a)Due Organization. Lender is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b)Power and Authority. Lender has the requisite power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement.

(c)Due Authorization. The execution and delivery by Lender of this Agreement, and the consummation by it of the transactions contemplated thereby, and the performance by it of its obligations thereunder, have been duly and validly authorized by all necessary action and proceedings by it or on its behalf.

ARTICLE VI

REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER

SECTION 6.01. Representations and Warranties of Borrower. The Borrower hereby makes for the benefit of Lender, at all times during the Term of this Agreement, the representations and warranties set forth in this Section 6.01.

(a)Due Organization and Qualification Each Borrower is a limited partnership or corporation duly organized, validly existing and in good standing under the laws of its state of organization and is duly qualified to do business, and is in good standing, in each state in which it owns a Mortgaged Property and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would

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adversely affect the validity of, the enforceability of, or the ability of the Borrower to perform its obligations under, this Agreement and the other Loan Documents. Each General Partner is a duly organized and validly existing corporation duly qualified to do business in and in good standing under the laws of the State of Tennessee or the State of Delaware, as applicable, and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity, the enforceability, or the ability of any Borrower to perform its obligations under this Agreement and the other Loan Documents. The Borrower’s principal place of business, principal office and office where they keep their books and records as to the Collateral is located at the address set out in Section 14.08.

(b)Power and Authority Each Borrower has the requisite power and authority (i) to own its property and to carry on its business as now conducted and as contemplated to be conducted in connection with the performance of the Obligations hereunder and under the other Loan Documents and (ii) to execute and deliver this Agreement and the other Loan Documents and to carry out the transactions contemplated by this Agreement and the other Loan Documents.

(c)Due Authorization. The execution, delivery and performance of this Agreement and the other Loan Documents have been duly authorized by all necessary action and proceedings by or on behalf of the Borrower, and no further approvals or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of the Borrower as a condition to the valid execution, delivery and performance by the Borrower of this Agreement or any of the other Loan Documents, except for such approvals and filings by or with each Issuer (as defined in the Master Reimbursement Agreement) in connection with the transactions to be effected by the Loan Documents which have been obtained or made and which are in full force and effect as of the date hereof.

(d)Valid and Binding Obligations. This Agreement and the other Loan Documents to which the Borrower is a party have been duly authorized, executed and delivered by the Borrower and constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors’ rights generally or by equitable principles or by the exercise of discretion by any court.

(e)Non-contravention; No Liens. Neither the execution and delivery of this Agreement and the other Loan Documents, nor the fulfillment of or compliance with the terms and conditions of this Agreement and the other Loan Documents nor the performance of the Obligations:

(i)does or will conflict with or result in any breach or violation of any Applicable Law enacted or issued by any Governmental Authority or other agency having jurisdiction over the Borrower, any of the Mortgaged Properties or any other portion of the Collateral or other assets of the Borrower, or any judgment or order applicable to the Borrower or to which the Borrower, any of the Mortgaged Properties or other assets of the Borrower are subject;

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(ii)does or will conflict with or result in any material breach or violation of, or constitute a default under, any of the terms, conditions or provisions of the Borrower’s Organizational Documents, any indenture, existing agreement or other instrument to which the Borrower is a party or to which the Borrower, any of the Mortgaged Properties or any other portion of the Collateral or other assets of the Borrower are subject;

(iii)does or will result in or require the creation of any Lien on all or any portion of the Collateral or any of the Mortgaged Properties, except for the Permitted Liens; or

(iv)does or will require the consent or approval of any creditor of the Borrower, any Governmental Authority or any other Person except such consents or approvals which have already been obtained.

(f)Pending Litigation or Other Proceedings. There is no pending or, to the best knowledge of the Borrower, threatened action, suit, proceeding or investigation, at law or in equity, before any court, board, body or official of any Governmental Authority or arbitrator against or affecting any Borrower, any Mortgaged Property or any other portion of the Collateral or other assets of the Borrower, which, if decided adversely to the Borrower, would have, or may reasonably be expected to have, a Material Adverse Effect or would adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes. The Borrower is not in default with respect to any order of any Governmental Authority.

(g)Master Reimbursement Agreement. Each of the Borrower’s representations and warranties related to the Mortgaged Properties contained in the Master Reimbursement Agreement and the other Borrower Documents is true and correct as of the date hereof.

(h)Reliance. The Borrower acknowledges, represents and warrants that it understands the nature and structure of the transactions contemplated by this Agreement and the other Loan Documents (including, without limitation, the cross-collateralization and cross-default of the Obligations), that it is familiar with the provisions of all of the documents and instruments relating to such transactions; that it understands the risks inherent in such transactions, including the risk of loss of all or any of the Mortgaged Properties; and that it has not relied on Lender for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Agreement or any other Loan Document or otherwise relied on Lender in any manner in connection with interpreting, entering into or otherwise in connection with this Agreement, any other Loan Document or any of the matters contemplated hereby or thereby.

(i)Compliance with Applicable Laws. The Borrower is in compliance with Applicable Law, including all Governmental Approvals, if any, except for such items of noncompliance that, singly or in the aggregate, have not had and are not reasonably expected to cause, a Material Adverse Effect.

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SECTION 6.02 Affirmative Covenants of the Borrower. Each Borrower enters into the covenants and agreements with Lender set forth in this Section 6.02. Each Borrower covenants and agrees that continuously during the Term of this Agreement:

(a)Compliance with the Loan Documents. The Borrower shall comply with all the terms and conditions of the Loan Documents to which it is a party or by which it is bound; provided, however, that the Borrower’s failure to comply with such terms and conditions shall not be an Event of Default until the expiration of the applicable notice and cure periods, if any, specified in the applicable Loan Document and shall use its best efforts to cause the Trustee at all times to comply with the terms of the Bond Documents to which it is a party.

(b)Maintenance of Existence. The Borrower shall maintain its existence and continue to be a limited partnership or corporation, as the case may be, organized under the laws of the state of its organization. The Borrower shall continue to be duly qualified to do business in each jurisdiction in which such qualification is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity of, the enforceability of, or the ability to perform, its obligations under this Agreement or any other Loan Document.

(c)Compliance with Master Reimbursement Agreement. The Borrower shall comply with each of its covenants with respect to the Mortgaged Properties made in the Master Reimbursement Agreement.

(e)Warranty of Title. The Borrower shall warrant and defend (a) the title to each Mortgaged Property and every part of each Mortgaged Property, subject only to Permitted Liens, and (b) the validity and priority of the lien of the applicable Loan Documents, subject only to Permitted Liens, in each case against the claims of all Persons whatsoever. The Borrower shall reimburse Lender for any losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by Lender if an interest in any Mortgaged Property, other than with respect to a Permitted Lien, is claimed by others.

(f) Defense of Actions. The Borrower shall appear in and defend any action or proceeding purporting to affect the security for this Agreement or the rights or powers of Lender hereunder or under the Loan Documents, and shall, pursuant to Section 14.03 of this Agreement, pay all costs and expenses, including the cost of evidence of title and reasonable attorneys’ fees, in any such action or proceeding in which Lender may appear. If the Borrower fails to perform any of the covenants or agreements contained in this Agreement or any Loan Document, or if any action or proceeding is commenced that is not diligently defended by the Borrower which affects in any material respect Lender’s interest in any Mortgaged Property or any part thereof, including eminent domain, code enforcement or proceedings of any nature whatsoever under any Applicable Law, whether now existing or hereafter enacted or amended, then Lender may, but without obligation to do so and without notice to or demand upon the Borrower and without releasing the Borrower from any Obligation, make such appearances, disburse such sums and take such action as Lender deems necessary or appropriate to protect Lender’s interest, including disbursement of attorney’s fees, entry upon such Mortgaged Property to make repairs or take other action to protect the security of said Mortgaged Property, and payment, purchase, contest or compromise of any encumbrance, charge or lien which in the judgment of Lender appears to be prior or superior to the Loan Documents. In the event (i) that any Security Instrument is

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foreclosed in whole or in part or that any Loan Document is put into the hands of an attorney for collection, suit, action or foreclosure, or (ii) of the foreclosure of any mortgage, deed to secure debt, deed of trust or other security instrument prior to or subsequent to any Security Instrument or any Loan Document in which proceeding Lender is made a party or (iii) of the bankruptcy of the Borrower an assignment by the Borrower for the benefit of their respective creditors, the Borrower shall be chargeable with and agrees to pay all reasonable costs of collection and defense, including actual attorneys’ fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes.

(g)Document Taxes. If any tax, assessment or Imposition (other than a franchise tax or excise tax imposed on or measured by, the net income or capital (including branch profits tax) of Lender (or any transferee or assignee thereof, including a participation holder)) (“Document Taxes”) is levied, assessed or charged by the United States, or any State in the United States, or any political subdivision or taxing authority thereof or therein upon any of the Loan Documents or the obligations secured thereby, the interest of Lender in the Mortgaged Properties, or Lender by reason of or as holder of the Loan Documents, the Borrower shall pay all such Document Taxes to, for, or on account of Lender (or provide funds to Lender for such payment, as the case may be) as they become due and payable and shall promptly furnish proof of such payment to Lender, as applicable. In the event of passage of any law or regulation permitting, authorizing or requiring such Document Taxes to be levied, assessed or charged, which law or regulation in the opinion of counsel to Lender may prohibit the Borrower from paying the Document Taxes to or for Lender, the Borrower shall enter into such further instruments as may be permitted by law to obligate the Borrower to pay such Document Taxes.

(h)Further Assurances. The Borrower, at the request of Lender, shall execute and deliver and, if necessary, file or record such statements, documents, agreements, UCC financing and continuation statements and such other instruments and take such further action as Lender from time to time may request as reasonably necessary, desirable or proper to carry out more effectively the purposes of this Agreement or any of the other Loan Documents or to subject the Collateral to the lien and security interests of the Loan Documents or to evidence, perfect or otherwise implement, to assure the lien and security interests intended by the terms of the Loan Documents or in order to exercise or enforce its rights under the Loan Documents.

SECTION 6.03 Negative Covenants of the Borrower. The Borrower will not take, or omit to take, any action that, if taken or omitted would be a violation or breach of its covenants set forth in the Master Reimbursement Agreement or the other Borrower Documents.

ARTICLE VII

FEES AND EXPENSES

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SECTION 7.01 Origination Fees. Borrower shall pay to Lender an origination fee (“Origination Fee”) equal to $87,900.00 (which is equal to the product obtained by multiplying (i) the Initial Loan ($11,720,000), by (ii) .75%).

SECTION 7.02 Due Diligence Fees.

Borrower shall pay to Lender due diligence fees with respect to the Mortgaged Properties in an amount not to exceed $16,000 per property.

Borrower has previously paid to Lender a portion of the Due Diligence Fees and shall pay the remainder of the Due Diligence Fees to Lender on the Initial Closing Date. Any portion of the Due Diligence Fee paid to Lender not actually used by Lender to cover reasonable due diligence expenses shall be promptly refunded to Borrower.

SECTION 7.03 Legal Fees and Expenses.

(a)Initial Legal Fees. Borrower shall pay, or reimburse Lender for, all out-of-pocket legal fees and expenses incurred by Lender and by Fannie Mae in connection with the preparation, review and negotiation of this Agreement and any other Loan Documents executed on the date of this Agreement.

(b)Fees and Expenses Associated with Requests. Borrower shall pay, or reimburse Lender for, all reasonable costs and expenses incurred by Lender, including the out-of-pocket legal fees and expenses incurred by Lender in connection with the preparation, review and negotiation of all documents, instruments and certificates to be executed and delivered in connection with each Request, the performance by Lender of any of its obligations with respect to the Request, the satisfaction of all conditions precedent to Borrower’s rights or Lender’s obligations with respect to the Request, and all transactions related to any of the foregoing, including the cost of title insurance premiums and applicable recordation and transfer taxes and charges and all other reasonable costs and expenses in connection with a Request. The obligations of Borrower under this subsection shall be absolute and unconditional, regardless of whether the transaction requested in the Request actually occurs. Borrower shall pay such costs and expenses to Lender on the Closing Date for the Request, or, as the case may be, after demand by Lender when Lender determines that such Request will not close.

SECTION 7.04 Failure to Close any Request. If Borrower makes a Request and fails to close on the Request for any reason other than the default by Lender, then Borrower shall pay to Lender and Fannie Mae all damages incurred by Lender and Fannie Mae in connection with the failure to close.

SECTION 7.05 MBS-Related Costs. Borrower shall pay to Lender, within 30 days of demand, all reasonable fees and expenses incurred by Lender or Fannie Mae in connection with the issuance of any DMBS backed by a Loan, including the fees charged by The Depository Trust Company and State Street Bank or any successor fiscal agent or custodian.

ARTICLE VIII

EVENTS OF DEFAULT

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SECTION 8.01 Events of Default. Each of the following events shall constitute an “Event of Default” under this Agreement, whatever the reason for such event and whether it shall be voluntary or involuntary, or within or without the control of Borrower or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority:

(a)the occurrence of a default under any Loan Document beyond the cure period, if any, set forth therein; or

(b)the failure by Borrower to pay when due any amount payable by Borrower under the Note, any Security Instrument, this Agreement or any other Loan Document, including any fees, costs or expenses; or

(c)the failure by Borrower to perform or observe any covenant contained in Article VI, provided that such period shall be extended for up to 30 additional days if Borrower, in the discretion of Lender, is diligently pursuing a cure of such default within 30 days after receipt of notice from Lender; or

(d)any warranty, representation or other written statement made by or on behalf of Borrower contained in this Agreement, any other Loan Document or in any instrument furnished in compliance with or in reference to any of the foregoing, is false or misleading in any material respect on any date when made or deemed made; or

(e)if any provision of this Agreement or any other Loan Document or the lien and security interest purported to be created hereunder or under any Loan Document shall at any time for any reason cease to be valid and binding in accordance with its terms on Borrower, or shall be declared to be null and void, or the validity or enforceability hereof or thereof or the validity or priority of the lien and security interest created hereunder or under any other Loan Document shall be contested by Borrower seeking to establish the invalidity or unenforceability hereof or thereof, or Borrower shall deny that it has any further liability or obligation hereunder or thereunder; or

(f)(i) the execution by Borrower of a chattel mortgage or other security agreement on any materials, fixtures or articles used in the construction or operation of the improvements located on any Mortgaged Property or on articles of personal property located therein, or (ii) if any such materials, fixtures or articles are purchased pursuant to any conditional sales contract or other security agreement or otherwise so that the Ownership thereof will not vest unconditionally in Borrower free from encumbrances, or (iii) if Borrower does not furnish to Lender upon request the contracts, bills of sale, statements, receipted vouchers and agreements, or any of them, under which Borrower claim title to such materials, fixtures, or articles; or

(g)the failure by Borrower to perform or observe any material term, covenant, condition or agreement hereunder, other than as contained in subsections (a) through (f) above, or in any other Loan Document, within 30 days after receipt of written notice from Lender identifying such failure;

(h)The occurrence of an Event of Default as defined in the Master Reimbursement Agreement or any of the Reimbursement Security Documents.

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ARTICLE IX

REMEDIES

SECTION 9.01 Remedies; Waivers. Upon the occurrence of an Event of Default, Lender may do any one or more of the following (without presentment, protest or notice of protest, all of which are expressly waived by Borrower):

(a)by written notice to Borrower, to be effective upon dispatch, declare the principal of, and interest on, the Loans and all other sums owing by Borrower to Lender under any of the Loan Documents forthwith due and payable, whereupon the principal of, and interest on, the Loans and all other sums owing by Borrower to Lender under any of the Loan Documents will become forthwith due and payable.

(b)Lender shall have the right to pursue any other remedies available to it under any of the Loan Documents.

(c)Lender shall have the right to pursue all remedies available to it at law or in equity, including obtaining specific performance and injunctive relief.

SECTION 9.02 Waivers; Rescission of Declaration. Lender shall have the right, to be exercised in its complete discretion, to waive any breach hereunder (including the occurrence of an Event of Default), by a writing setting forth the terms, conditions, and extent of such waiver signed by Lender and delivered to Borrower. Unless such writing expressly provides to the contrary, any waiver so granted shall extend only to the specific event or occurrence which gave rise to the waiver and not to any other similar event or occurrence which occurs subsequent to the date of such waiver.

SECTION 9.03 Lender’s Right to Protect Collateral and Perform Covenants and Other Obligations. If Borrower fails to perform the covenants and agreements contained in this Agreement or any of the other Loan Documents, then Lender at Lender’s option may make such appearances, disburse such sums and take such action as Lender deems necessary, in its sole discretion, to protect Lender’s interest, including (i) disbursement of reasonable attorneys’ fees, (ii) entry upon the Mortgaged Property to make repairs and replacements, (iii) procurement of satisfactory insurance as provided in Section 5 of the Security Instrument encumbering the Mortgaged Property, and (iv) if the Security Instrument is on a leasehold, exercise of any option to renew or extend the ground lease on behalf of Borrower and the curing of any default of Borrower in the terms and conditions of the ground lease. Any amounts disbursed by Lender pursuant to this Section, with interest thereon, shall become additional indebtedness of Borrower secured by the Loan Documents. Unless Borrower and Lender agree to other terms of payment, such amounts shall be immediately due and payable and shall bear interest from the date of disbursement at the weighted average, as determined by Lender, of the interest rates in effect from time to time for each Loan unless collection from Borrower of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from Borrower under applicable law. Nothing contained in this Section shall require Lender to incur any expense or take any action hereunder.

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SECTION 9.04 No Remedy Exclusive. Unless otherwise expressly provided, no remedy herein conferred upon or reserved is intended to be exclusive of any other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under the Loan Documents or existing at law or in equity.

SECTION 9.05 No Waiver. No delay or omission to exercise any right or power accruing under any Loan Document upon the happening of any Event of Default or Potential Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.

SECTION 9.06 No Notice. To entitle Lender to exercise any remedy reserved to Lender in this Article, it shall not be necessary to give any notice, other than such notice as may be required under the applicable provisions of this Agreement or any of the other Loan Documents.

ARTICLE X

RIGHTS OF FANNIE MAE

SECTION 10.01 Special Pool Purchase Contract. Borrower acknowledges that Fannie Mae is entering into an agreement with Lender (“Special Pool Purchase Contract”), pursuant to which, interalia, (i) Lender shall agree to assign all of its rights under this Agreement to Fannie Mae, (ii) Fannie Mae shall accept the assignment of the rights, (iii) subject to the terms, limitations and conditions contained in the Special Pool Purchase Contract, Fannie Mae shall agree to purchase a 100% participation interest in each Loan issued under this Agreement by issuing to Lender an DMBS, in the amount and for a term equal to the Loan purchased and backed by an interest in the Note and the Collateral Pool securing the Note, (iv) Lender shall agree to assign to Fannie Mae all of Lender’s interest in the Note and Collateral Pool securing the Note, and (v) Lender shall agree to service the loans evidenced by the Note.

SECTION 10.02 Assignment of Rights. Borrower acknowledges and consents to the assignment to Fannie Mae of all of the rights of Lender under this Agreement and all other Loan Documents, including the right and power to make all decisions on the part of Lender to be made under this Agreement and the other Loan Documents, but Fannie Mae, by virtue of this assignment, shall not be obligated to perform the obligations of Lender under this Agreement or the other Loan Documents.

SECTION 10.03 Replacement of Lender. At the request of Fannie Mae, Borrower and Lender shall agree to the assumption by another lender designated by Fannie Mae (which lender shall meet Fannie Mae’s then current standards for lenders for credit facilities of the type and size of the credit facility evidenced by this Agreement), of all of the obligations of Lender under this Agreement and the other Loan Documents, and/or any related servicing obligations, and, at Fannie Mae’s option, the concurrent release of Lender from its obligations under this Agreement and the other Loan Documents, and/or any related servicing obligations, and shall execute all releases, modifications and other documents which Fannie Mae determines are necessary or desirable to effect such assumption.

SECTION 10.04 Fannie Mae and Lender Fees and Expenses. Borrower agrees that any provision providing for the payment of fees, costs or expenses incurred or charged by Lender

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pursuant to this Agreement shall be deemed to provide for Borrower’s payment of all reasonable fees, costs and expenses incurred or charged by Lender or Fannie Mae in connection with the matter for which fees, costs or expenses are payable.

SECTION 10.05 Third-Party Beneficiary. Borrower hereby acknowledges and agrees that Fannie Mae is a third party beneficiary of all of the representations, warranties and covenants made by Borrower to, and all rights under this Agreement conferred upon, Lender, and, by virtue of its status as third-party beneficiary and/or assignee of Lender’s rights under this Agreement, Fannie Mae shall have the right to enforce all of the provisions of this Agreement against Borrower.

ARTICLE XI

LIMITS ON PERSONAL LIABILITY

SECTION 11.01. Recourse Obligations, Termination of Personal Liability, and Exceptions to Limits on Personal Liability.

(a)Full Recourse Except as provided in Section 11.01(b), each Borrower is and shall remain jointly and severally personally liable to Lender for the payment and performance of all Obligations throughout the term of this Agreement.

(b)Termination of Personal Liability. The provisions of Section 11.01(a) shall be null and void upon the written notice of Borrower to Lender of its election to render such provisions null and void, provided that (i) Borrower’s full recourse liability under the Master Reimbursement Agreement shall have been terminated upon satisfaction of the terms and conditions of Section 3.13(2) of the Master Reimbursement Agreement and (ii) the new borrower required by Section 3.13(2) of the Master Reimbursement Agreement executes and delivers an assumption agreement satisfactory in form and substance to Lender assuming all of the obligations of Borrower under this Agreement and the Loan Documents and delivers to Lender any legal opinions, certificates, recordations and endorsements to title policies or other documents required by Lender.

(c)Exceptions to Limits on Personal Liability. Upon termination of personal liability of Borrower pursuant to Section 11.01(b), Borrower shall be personally liable to Lender on a joint and several basis for repayment of amounts due under this Agreement and the other Loan Documents equal to any loss or damage suffered by Lender as a result of (1) failure of any Borrower to pay to Lender upon written demand after an Event of Default all Rents to which Lender is entitled under Section 3(a) of the applicable Security Instruments encumbering such Mortgaged Property and the amount of all security deposits collected by any Borrower from tenants then in residence; (2) failure of any Borrower to apply all insurance proceeds and condemnation proceeds as required by each Security Instrument encumbering each Mortgaged Property; (3) failure of any Borrower to comply in all material respects with the covenant set forth in Section 2.2(4) of the Master Reimbursement Agreement relating to the delivery of books and records, statements, schedules and reports; (4) fraud or written material

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misrepresentation by any Borrower or any officer, director, partner, member or employee of any Borrower in connection with the application for or creation of the Obligations or any request for any action or consent by Lender; (5) failure to apply the rents, profits, issues, products and income of each Mortgaged Property received or collected by or on behalf of the Borrower (the “Rents and Profits”), first, to the payment of reasonable operating expenses and then to amounts (“Debt Service Amounts”) payable under the Borrower Documents (as defined in the Master Reimbursement Agreement) and the Loan Documents (except that any Borrower will not be personally liable (i) to the extent that such Borrower lacks the legal right to direct the disbursement of such sums because of a bankruptcy, receivership or similar judicial proceeding or otherwise under the Loan Documents, or (ii) with respect to Rents and Profits of any Mortgaged Property that are distributed in any Calendar Quarter if such Borrower has paid all operating expenses and Debt Service Amounts for that Calendar Quarter); or (6) failure of the Borrower to pay any and all documentary stamp taxes, intangible taxes and other taxes, impositions, fees and charges due on or with respect to the Note, the Obligations, this Agreement and/or any of the other Loan Documents.

(d)Full Recourse After Termination of Personal Liability. Upon termination of personal liability of each Borrower pursuant to Section 11.01(b), each Borrower shall become personally liable to Lender for the payment and performance of all Obligations upon the occurrence of any of the following Events of Default: (1) any Borrower’s acquisition of any property or operation of any business not permitted by Section 33 of the Security Instruments; or (2) a breach of any covenant set forth in Section 2.7 of the Master Reimbursement Agreement.

(e)Permitted Transfer Not Release. No Transfer by the Key Principal of its Ownership Interests in any Borrower shall release any Borrower from liability under this Article, this Agreement or any other Loan Document, unless Lender shall have approved the Transfer and shall have expressly released the Borrower in connection with the Transfer.

(f)Miscellaneous. To the extent that Borrower has personal liability under this Section, Lender may exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to Lender under the Loan Documents or applicable law. For purposes of this Article, the term “Mortgaged Property” shall not include any funds that (1) have been applied by Borrower as required or permitted by the Loan Documents prior to the occurrence of an Event of Default, or (2) are owned by Borrower and which Borrower was unable to apply as required or permitted by the Loan Documents because of a bankruptcy, receivership, or similar judicial proceeding.

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ARTICLE XII

INTEREST RATE PROTECTION

SECTION 12.01 Interest Rate Protection.

(a)The Initial Hedge. To protect against fluctuations in interest rates, Borrower shall make arrangements for a Hedge to be in place and maintained at all times with respect to the Loans. The Hedge for the Loans shall be a Cap (as defined in the Master Reimbursement Agreement) for the Initial Hedge Period.

(b)Subsequent Hedges. A Subsequent Hedge shall be required for the remaining term of the Loans, upon the expiration of the Cap in place for the Initial Hedge Period. Any Subsequent Hedge shall be for a period beginning not later than the expiration of the prior Cap and ending on the Termination Date.

SECTION 12.02. Hedge Terms. Each Hedge shall:

(a)provide for a notional principal amount equal at all times to the outstanding principal balance of the Loans; if the principal amount of the Loans Outstanding decreases, Borrower may amend the Hedge or Hedges to provide for a decrease in the notional amount to an amount equal to the reduced amount of the principal amount, provided that Lender gives its prior written approval to the documents reflecting the amendment (which approval shall not be unreasonably withheld, delayed or conditioned);

(b) be in effect for the entire term of the Loans;

(c)provide for a notional interest rate not greater than the lowest interest rate that would result in the ratio of

(i) the aggregate Net Operating Income for the Mortgaged Properties, minus the portion thereof required to satisfy the Coverage and LTV Tests (as defined in the Master Reimbursement Agreement (determined for this purpose using only the scheduled debt service for the Bond loans and the outstanding principal amount of the Bonds)),

to

(ii) Facility Debt Service

of not less than 1.10 to 1 (the “Hedge Rate”);

(d)require the counterparty to make interest payments on the notional principal amount at a rate equal to the amount by which Coupon Rate exceeds the Hedge Rate;

(e)require the counterparty to make such interest payments to an account pledged to Lender pursuant to the Hedge Security Agreement; and

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(f)be evidenced, governed and secured on terms and conditions, and pursuant to documentation (the “Hedge Documents”), in form and content acceptable to Fannie Mae, and with a counterparty approved by Fannie Mae.

SECTION 12.03 Hedge Security Agreement; Delivery of Hedge Payments. Pursuant to a Hedge Security Agreement, Lender shall be granted an enforceable, perfected, first priority lien on and security interest in each Hedge and payments due under the Hedge (including scheduled and termination payments) in order to secure Borrower’s obligations to Lender under this Agreement. With respect to each Hedge, the Hedge Security Agreement must be delivered by Borrower to Lender no later than the effective date of the Hedge.

SECTION 12.04 Termination. Borrower shall not terminate, transfer or consent to any transfer of any existing Hedge without Lender’s prior written consent as long as Borrower is required to maintain a Hedge pursuant to this Agreement; provided, however, that if, and at such time as, the term of the Loans terminates, Borrower shall have the right to terminate the existing Hedge with respect to the Loans.

SECTION 12.05 Performance Under Hedge Documents. Borrower agrees to comply fully with, and to otherwise perform when due, its obligations under, all applicable Hedge Documents and all other agreements evidencing, governing and/or securing any Hedge arrangement contemplated under this Article XII. Borrower shall not exercise, without Lender’s prior written consent, and shall exercise, at Lender’s direction, any rights or remedies under any Hedge Document, including without limitation the right of termination.

ARTICLE XIII

JOINT AND SEVERAL OBLIGATIONS; CROSS GUARANTY AND OTHER INTERBORROWER MATTERS

SECTION 13.01 Joint and Several Obligation; Cross-Guaranty. Notwithstanding anything contained in this Agreement or the other Loan Documents to the contrary (but subject to the provisions of Section 13.10), each Borrower shall have joint and several liability for all Obligations. Notwithstanding the intent of all of the parties to this Agreement that all Obligations of each Borrower under this Agreement and the other Loan Documents shall be joint and several Obligations of each Borrower, each Borrower, on a joint and several basis, hereby irrevocably guarantees to Lender and its successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Lender by each other Borrower. Each Borrower agrees that its guaranty obligation hereunder is an unconditional guaranty of payment and performance and not merely a guaranty of collection. The Obligations of each Borrower under this Agreement shall not be subject to any counterclaim, set-off, recoupment, deduction, cross-claim or defense based upon any claim any Borrower may have against Lender or any other Borrower.

SECTION 13.02 Waivers by Borrower and Other Rights

(a)The obligations of each Borrower under this Article XIII shall survive any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Security Instruments. The obligations of each Borrower under this

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Article XIII shall be performed without demand by Lender and shall be unconditional irrespective of the genuineness, validity, regularity or enforceability of this Agreement, Note, the Security Instruments, or any other Borrower Document, and without regard to any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or a guarantor. Each Borrower hereby waives the benefit of all principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Article XIII and agrees that its obligations shall not be affected by any circumstances, whether or not referred to in this Article XIII, which might otherwise constitute a legal or equitable discharge of a surety or a guarantor. Each Borrower hereby waives the benefits of any right of discharge under any and all statutes or other laws relating to guarantors or sureties and any other rights of sureties and guarantors thereunder. Without limiting the generality of the foregoing, each Borrower hereby waives, to the fullest extent permitted by law, diligence in collecting the indebtedness of such Borrower to Lender, any rights or defenses based upon an offset by any Borrower against any obligation now or hereafter owed to such Borrower by any other Borrower, presentment, demand for payment, protest, all notices with respect to this Agreement and the Note which may be required by statute, rule of law or otherwise to preserve Lender's rights against such Borrower under this Article XIII, including notice of acceptance, notice of any amendment of any Borrower Document, notice of the occurrence of any default, potential Event of Default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest, and notice of the incurring by any Borrower of any obligation or indebtedness. Each Borrower also waives, to the fullest extent permitted by law, all rights to require Lender to (a) proceed against any Borrower or any other guarantor of the Borrower's payment or performance with respect to the Obligations, (b) proceed against or exhaust any Collateral held by Lender to secure the repayment of the obligations, or (c) pursue any other remedy it may now or hereafter have against any Borrower. It is agreed among each Borrower and Lender that all of the foregoing waivers are of the essence of the transaction contemplated by this Agreement and other Documents and that but for the provisions of this Article XIII and such waivers Lender would decline to enter into this Agreement.

(b)At any time or from time to time any number of times, without notice to any Borrower in its capacity as guarantor and without affecting the liability of any Borrower, (a) the time for payment of the principal of or interest on the Note may be extended or the Note may be renewed in whole or in part; (b) the time any Borrower’s performance of or compliance with any covenant or agreement contained in this Agreement, the Note, the Security Instruments or any other Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived; (c) the maturity of the Note may be accelerated as provided in this Agreement, the Note, the Security Instruments, or any other Loan Document; (d) the Note, the Security Instruments, or any other Loan Document may be modified or amended by Lender and any Borrower in any respect, including an increase in the principal amount; and (e) and security for the Note may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Note.

SECTION 13.03 No Impairment. Each Borrower agrees that the provisions of this Article XIII are for the benefit of Lender and its successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower and Lender, the obligations of such other Borrower under the Loan Documents.

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SECTION 13.04 No Subrogation. No Borrower shall have the right of, and hereby waives any claim for, subrogation contribution, indemnity or reimbursement against any other Borrower or any General Partner of any other Borrower by reason of any payment by such Borrower under this Article XIII, whether such right or claim arises at law or in equity or under any contract or statute or otherwise, until the Obligations have been paid in full.

SECTION 13.05 Subordination of Subrogation, Etc Each Borrower hereby irrevocably and unconditionally agrees that in the event that, notwithstanding Section 13.04 hereof, to the extent its agreement and waiver set forth in Section 13.04 is found by a court of competent jurisdiction to be void or voidable for any reason and such Borrower has any subrogation or other rights against any other Borrower by virtue of this Article XIII, any such claims, direct or indirect, that such Borrower may have by subrogation rights or other form of reimbursement, contribution or indemnity, against any other Borrower or to any security or any such Borrower pursuant to this Article XIII, shall be and such rights, claims and indebtedness are hereby deferred, postponed and fully subordinated in time and right of payment to the prior payment, performance and satisfaction in full of the Obligations. Until payment and performance in full with interest (including post-petition interest in any case under the Bankruptcy Code) of the Obligations, each Borrower agrees not to accept any payment or satisfaction of any kind of indebtedness of any other Borrower in respect of any such subrogation rights arising by virtue of payments made pursuant to this Article XIII, and hereby assigns such rights or indebtedness to Lender, including the right to file proofs of claim and to vote thereon in connection with any case under the Bankruptcy Code, including the right to vote on any plan of reorganization. In the event that any payment on account of any such subrogation rights shall be received by any Borrower in violation of the foregoing, such payment shall be held in trust for the benefit of Lender, and any amount so collected should be turned over to Lender for application to the Obligations.

SECTION 13.06 Election of Remedies.

(a)Lender, in its discretion, may (a) bring suit against any one or more Borrower, jointly and severally, without any requirement that Lender first proceed against any other Borrower or any other Person; (b) compromise or settle with any one or more Borrower, or any other Person, for such consideration as Lender may deem proper; (c) release one or more Borrower, or any other Person, from liability; and (d) otherwise deal with any Borrower and any other Person, or any one or more of them, in any manner, or resort to any of the Collateral at any time held by it for performance of the Obligations or any other source or means of obtaining payment of the Obligations, and no such action shall impair the rights of Lender to collect from any Borrower any amount guaranteed by any Borrower under this Article XIII. Nothing contained in this paragraph shall in any way affect or impair the rights or obligations of any Borrower with respect to any other Borrower.

(b)If, in the exercise of any of its rights and remedies, Lender shall forfeit any of its rights or remedies, including its rights to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Borrower hereby consents to such action by Lender and waives any claim based upon such action, even if such action by Lender shall result in a full or partial loss or any rights of subrogation which each Borrower might otherwise have had but for such action by Lender.

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Any election of remedies which results in the denial or impairment of the right of Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. In the event Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or any of the Loan Documents, Lender may bid all or less than the amount of the Obligations and the amount of such bid need not be paid by Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Lender or any other party is the successful bidder, shall be conclusively deemed to be fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be amount of the Obligations guaranteed under this Section 13.06, notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which any Lender might otherwise be entitled but for such bidding at any such sale.

SECTION 13.07 Subordination of Other Obligations.

(a)Each Borrower hereby irrevocably and unconditionally agrees that all amounts payable from time to time to such Borrower by any other Borrower pursuant to any agreement, whether secured or unsecured, whether of principal, interest or otherwise, other than the amounts referred to in this Article XIII (collectively, the “Subordinated Obligations”), shall be and such rights, claims and indebtedness are, hereby deferred, postponed and fully subordinated in time and right of payment to the prior payment, performance and satisfaction in full of the Obligations; provided, however, that payments may be received by any Borrower in accordance with, and only in accordance with, the provisions of Section 13.07(b) hereof.

(b)Until the Obligations under all the Loan Documents have been finally paid in full or fully performed and all the Loan Documents have been terminated, each Borrower irrevocably and unconditionally agrees it will not ask, demand, sue for, take or receive, directly or indirectly, by set-off, redemption, purchase or in any other manner whatsoever, any payment with respect to, or any security or guaranty for, the whole or any part of the Subordinated Obligations, and in issuing documents, instruments or agreements of any kind evidencing the Subordinated Obligations, each Borrower hereby agrees that it will not receive any payment of any kind on account of the Subordinated Obligations, so long as any of the Obligations under all the Loan Documents are outstanding or any of the terms and conditions of any of the Loan Documents are in effect; provided, however, that, notwithstanding anything to the contrary contained herein, if no Potential Event of Default or Event of Default or any other event or condition which would constitute an Event of Default after notice or lapse of time or both has occurred and is continuing under all the Loan Documents, then payments may be received by such Borrower in respect of the Subordinated Obligations in accordance with and provided that such Borrower and each other Borrower make such payment in full. Except as aforesaid, each Borrower agrees not to accept any payment or satisfaction of any kind of indebtedness of any other Borrower in respect of the Subordinated Obligations and hereby assigns such rights or indebtedness to Lender, including the right to file proofs of claim and to vote thereon in connection with any case under the Bankruptcy Code, including the right to vote on any plan of reorganization. In the event that any payment on account of Subordinated Obligations shall be received by any Borrower in

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violation of the foregoing, such payment shall be held in trust for the benefit of Lender, and any amount so collected shall be turned over to Lender upon demand.

SECTION 13.08 Insolvency and Liability of Other Borrower. So long as any of the Obligations are outstanding, if a petition under the Bankruptcy Code is filed by or against any Borrower, each other Borrower agrees to file all claims against such Borrower in any bankruptcy or other proceeding in which the filing of claims is required by law in connection with indebtedness owed by such Borrower and to assign to Lender all rights thereunder up to the amount of such indebtedness. In all such cases, the Person or Persons authorized to pay such claims shall pay to Lender the full amount thereof and Lender agrees to pay such Borrower any amounts received in excess of the amount necessary to pay the Obligations. Such Borrower hereby assigns to Lender all of such Borrower’s rights to all such payments to which such Borrower would otherwise be entitled but not to exceed the full amount of the Obligations. In the event that, notwithstanding the foregoing, any such payment shall be received by any Borrower before the Obligations shall have been finally paid in full, such payment shall be held in trust for the benefit of and shall be paid over to Lender upon demand. Furthermore, notwithstanding the foregoing, the liability of each Borrower hereunder shall in no way be affected by:

(a)the release or discharge of any other Borrower in any creditors’, receivership, bankruptcy or other proceedings; or

(b)the impairment, limitation or modification of the liability of any other Borrower or the estate of any other Borrower in bankruptcy resulting from the operation of any present or future provisions of the Bankruptcy Code or other statute or from the decision in any court.

SECTION 13.09 Preferences, Fraudulent Conveyances, Etc If Lender is required to refund, or voluntarily refunds, any payment received from any Borrower because such payment is or may be avoided, invalidated, declared fraudulent, set aside or determined to be void or voidable as a preference, fraudulent conveyance, impermissible setoff or a diversion of trust funds under the bankruptcy laws or for any similar reason, including without limitation any judgment, order or decree of any court or administrative body having jurisdiction over any Borrower or any of its property, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of, or trustee or similar officer for, any Borrower or any substantial part of its property, or otherwise, or any statement or compromise of any claim effected by Lender with any Borrower or any other claimant (a “Rescinded Payment”), then each other Borrower’s liability to Lender shall continue in full force and effect, or each other Borrower’s liability to Lender shall be reinstated and renewed, as the case may be, with the same effect and to the same extent as if the Rescinded Payment had not been received by Lender, notwithstanding the cancellation or termination of any of the Loan Documents, and regardless of whether Lender contested the order requiring the return of such payment. In addition, each other Borrower shall pay, or reimburse Lender for, all expenses (including all reasonable attorneys’ fees, court costs and related disbursements) incurred by Lender in the defense of any claim that a payment received by Lender in respect of all or any part of the Obligations must be refunded. The provisions of this Section 13.09 shall survive the termination of the Loan Documents and any

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satisfaction and discharge of any Borrower by virtue of any payment, court order or any federal or state law.

SECTION 13.10 Maximum Liability of Each Borrower. Notwithstanding anything contained in this Agreement or any of the Loan Documents to the contrary, if the obligations of any Borrower under this Agreement or any of the other Loan Documents exceed the limitations imposed under any Fraudulent Transfer Law (as hereinafter defined), then such liability of such Borrower shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations under this Agreement or all the other Loan Documents subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the “Fraudulent Transfer Laws”), in each case after giving effect to all other liabilities of such Borrower, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Borrower in respect of indebtedness to any other Borrower or any other Person that is an Affiliate of the other Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Borrower in respect of the Obligations) and after giving effect (as assets) to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Borrower pursuant to applicable law or pursuant to the terms of any agreement including the Contribution Agreement.

SECTION 13.11 Liability Cumulative. The liability of each Borrower under this Article XIII is in addition to and shall be cumulative with all liabilities of such Borrower to Lender under this Agreement and all the other Loan Documents to which such Borrower is a party or in respect of any Obligations of any other Borrower.

ARTICLE XIV

MISCELLANEOUS PROVISIONS

SECTION 14.01 Counterparts. To facilitate execution, this Agreement may be executed in any number of counterparts. It shall not be necessary that the signatures of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart, but it shall be sufficient that the signature of, or on behalf of, each party, appear on one or more counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.

SECTION 14.02 Amendments, Changes and Modifications. This Agreement may be amended, changed, modified, altered or terminated only by written instrument or written instruments signed by all of the parties hereto.

SECTION 14.03 Payment of Costs, Fees and Expenses. Borrower shall pay, on demand, all reasonable fees, costs, charges or expenses (including the fees and expenses of attorneys, accountants and other experts) incurred by Lender in connection with:

(a)Any amendment, consent or waiver to this Agreement or any of the Loan Documents (whether or not any such amendments, consents or waivers are entered into).

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(b)Defending or participating in any litigation arising from actions by third parties and brought against or involving Lender with respect to (i) any Mortgaged Property, (ii) any event, act, condition or circumstance in connection with any Mortgaged Property or (iii) the relationship between Lender and Borrower in connection with this Agreement or any of the transactions contemplated by this Agreement.

(c)The administration or enforcement of, or preservation of rights or remedies under, this Agreement or any other Loan Documents or in connection with the foreclosure upon, sale of or other disposition of any Collateral granted pursuant to the Loan Documents.

(d)Any disclosure documents, including fees payable to any rating agencies, including the reasonable fees and expenses of Lender’s attorneys and accountants.

Borrower shall also pay, on demand, any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution, delivery, filing, recordation, performance or enforcement of any of the Loan Documents or the Loans. However, Borrower will not be obligated to pay any franchise, excise, estate, inheritance, income, excess profits or similar tax on Lender. Any attorneys’ fees and expenses payable by Borrower pursuant to this Section shall be recoverable separately from and in addition to any other amount included in such judgment, and such obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment. Any amounts payable by Borrower pursuant to this Section, with interest thereon if not paid when due, shall become additional indebtedness of Borrower secured by the Loan Documents. Such amounts shall bear interest from the date such amounts are due until paid in full at the weighted average, as determined by Lender, of the interest rates in effect from time to time for each Loan unless collection from Borrower of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from Borrower under applicable law. The provisions of this Section are cumulative with, and do not exclude the application and benefit to Lender of, any provision of any other Loan Document relating to any of the matters covered by this Section.

SECTION 14.04 Payment Procedure. All payments to be made to Lender pursuant to this Agreement or any of the Loan Documents shall be made in lawful currency of the United States of America and in immediately available funds by wire transfer to an account designated by Lender before 1:00 p.m. (Washington, D.C. time) on the date when due.

SECTION 14.05 Payments on Business Days. In any case in which the date of payment to Lender or the expiration of any time period hereunder occurs on a day which is not a Business Day, then such payment or expiration of such time period need not occur on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the day of maturity or expiration of such period, except that interest shall continue to accrue for the period after such date to the next Business Day.

SECTION 14.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial. NOTWITHSTANDING ANYTHING IN THE NOTE, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND RIGHTS AND OBLIGATIONS OF EACH BORROWER

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UNDER THE NOTE, AND EACH BORROWER UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED, (2) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER THAN DEPOSIT ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE DISTRICT OF COLUMBIA UNIFORM COMMERCIAL CODE AND (3) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS LOCATED. BORROWER AGREES THAT ANY CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTE, THE SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN DISTRICT OF COLUMBIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN DISTRICT OF COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTE, THE SECURITY DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. EACH BORROWER IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE NOTE, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST BORROWER AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF DISTRICT OF COLUMBIA SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY BORROWER TO PERSONAL JURISDICTION WITHIN DISTRICT OF COLUMBIA. EACH BORROWER (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED TO

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ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, EACH BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED TO, LENDER’S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO EACH BORROWER THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY BORROWER UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY BORROWER’S FREE WILL.

SECTION 14.07 Severability In the event any provision of this Agreement or in any other Loan Document shall be held invalid, illegal or unenforceable in any jurisdiction, such provision will be severable from the remainder hereof as to such jurisdiction and the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired in any jurisdiction.

SECTION 14.08 Notices.

(a)Manner of Giving Notice. Each notice, direction, certificate or other communication hereunder (in this Section referred to collectively as “notices” and singly as a “notice”) which any party is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if:

(1)personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have been received at the time so delivered);

(2)sent by Federal Express (or other similar overnight courier) designating morning delivery (any notice so delivered shall be deemed to have been received on the Business Day it is delivered by the courier);

(3)sent by telecopier or facsimile machine which automatically generates a transmission report that states the date and time of the transmission, the length of the document transmitted, and the telephone number of the recipient’s telecopier or facsimile machine (to be confirmed with a copy thereof sent in accordance with paragraphs (1) or (2) above within two Business Days) (any notice so delivered shall be deemed to have been received (i) on the date of transmission, if so transmitted before 5:00 p.m. (local time of the recipient) on a Business Day, or (ii) on the next Business Day, if so transmitted on or after 5:00 p.m. (local time of the recipient) on a Business Day or if transmitted on a day other than a Business Day);

addressed to the parties as follows:

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As to Borrower:

c/o Mid-America Apartment Communities, Inc.

6584 Poplar Avenue

Suite 300

Memphis, Tennessee 38138

Attention:	Simon R.C. Wadsworth
	Chief Financial Officer
Telecopier No.		(901) 682-6667

with a copy to:

Bass, Berry & Sims PLC

The Tower at Peabody Place

100 Peabody Place

Suite 900

Memphis, Tennessee 38103-3672

Attention: John A. Stemmler, Esq.

Telecopy No.: (901) 543-5999

As to Lender:

Prudential Multifamily Mortgage, Inc.

C/o Prudential Asset Resources

2200 Ross Avenue, Suite 4900 E

Dallas, Texas 75201

Attention: Asset Management Department

Telecopy No.: (214) 777-4556

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with a copy to:

Prudential Multifamily Mortgage, Inc.

8401 Greensboro Drive

Suite 200

McLean, Virginia 22102

Attention: Laura Eckhardt

Telecopy No.: (703) 610-1422

and

Prudential Multifamily Mortgage, Inc.

Four Embarcadero Center

Suite 2700

San Francisco, California 94111

Attention: Harry N. Mixon, Esq.

Telecopy No.: (415) 956-2197

As to Fannie Mae:

Fannie Mae

3900 Wisconsin Avenue, N.W.

Washington, D.C. 20016-2899

Attention: Vice President for

Multifamily Asset Management

Telecopy No.: (301) 280-2065

with a copy to:

Arent Fox Kintner Plotkin & Kahn, PLLC

1675 Broadway

New York, NY 10019

Attention: David L. Dubrow, Esq.

Telecopy No.: (212) 484-3990

(b)Change of Notice Address. Any party may, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses, for its notices, but notice of a change of address shall only be effective upon receipt. Each party agrees that it shall not refuse or reject delivery of any notice given hereunder, that it shall acknowledge, in writing, receipt of the same upon request by the other party and that any notice rejected or refused by it shall be deemed for all purposes of this Agreement to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service, the courier service or facsimile.

SECTION 14.09 Further Assurances and Corrective Instruments

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(a)Further Assurances. To the extent permitted by law, the parties hereto agree that they shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as Lender or Borrower may request and as may be required in the opinion of Lender or its counsel to effectuate the intention of or facilitate the performance of this Agreement or any Loan Document.

(b)Further Documentation. Without limiting the generality of subsection (a), in the event any further documentation or information is required by Lender to correct patent mistakes in the Loan Documents, materials relating to the Title Insurance Policies or the funding of the Loans, Borrower shall provide, or cause to be provided to Lender, at their cost and expense, such documentation or information. Borrower shall execute and deliver to Lender such documentation, including any amendments, corrections, deletions or additions to the Note, the Security Instruments or the other Loan Documents as is reasonably required by Lender.

(c)Compliance with Investor Requirements. Without limiting the generality of subsection (a), Borrower shall do anything necessary to comply with the reasonable requirements of Lender to enable Lender to sell the DMBS backed by a Loan.

SECTION 14.10 Term of this Agreement. This Agreement shall continue in effect until the later of the Termination Date and the payment of all amounts owing to Lender hereunder.

SECTION 14.11 Assignments; Third-Party Rights. No Borrower shall assign this Agreement, or delegate any of its obligations hereunder, without the prior written consent of Lender. Lender may assign its rights and obligations under this Agreement separately or together, without Borrower’s consent, only to Fannie Mae, but may not delegate its obligations under this Agreement unless required to do so pursuant to Section 10.03.

SECTION 14.12 Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 14.13 General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in Appendix I and elsewhere in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other genders; (ii) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (iii) references herein to “Articles,” “Sections,” “subsections,” “paragraphs” and other subdivisions without reference to a document are to designated Articles, Sections, subsections, paragraphs and other subdivisions of this Agreement; (iv) a reference to a subsection without further reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (v) a reference to an Exhibit or a Schedule without a further reference to the document to which the Exhibit or Schedule is attached is a reference to an Exhibit or Schedule to this Agreement; (vi) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and (vii) the word “including” means “including, but not limited to.”

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SECTION 14.14 Interpretation. The parties hereto acknowledge that each party and their respective counsel have participated in the drafting and revision of this Agreement and the Loan Documents. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Agreement and the Loan Documents or any amendment or supplement or exhibit hereto or thereto.

SECTION 14.15 Standards for Decisions, Etc. Unless otherwise provided herein, if Lender’s approval is required for any matter hereunder, such approval may be granted or withheld in Lender’s sole and absolute discretion. Unless otherwise provided herein, if Lender’s designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such designation, determination, selection, estimate, action or decision shall be made in Lender’s sole and absolute discretion.

SECTION 14.16 Decisions in Writing. Any approval, designation, determination, selection, action or decision of Lender or Borrower must be in writing to be effective.

[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

Borrower

MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: __________________________

Simon R. C. Wadsworth

Executive Vice President

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation

By: __________________________

Simon R. C. Wadsworth

Executive Vice President

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By: MAC of Delaware, Inc., a Delaware corporation, its sole General Partner

By: __________________________

John A. Good

Assistant Secretary

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Lender

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware Corporation

By:

Name:	Sharon D. Singleton
Title:	Vice President - Closing Officer

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APPENDIX I

DEFINITIONS

For all purposes of the Agreement, the following terms shall have the respective meanings set forth below:

“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management (other than property management) and policies of that Person, whether through the ownership of voting securities, partnership interests or by contract or otherwise.

“Aggregate Debt Service Coverage Ratio” has the meaning given such term in the Master Reimbursement Agreement.

“Aggregate Loan to Value Ratio” has the meaning given such term in the Master Reimbursement Agreement.

“Agreement” means the Master Credit Facility Agreement, as it may be amended, supplemented or otherwise modified from time to time, including all Recitals and Exhibits to the Agreement, each of which is hereby incorporated into the Agreement by this reference.

“Allocable Facility Amount” has the meaning given to such term in the Master Reimbursement Agreement.

“Applicable Law” means (a) all applicable provisions of all constitutions, statutes, rules, regulations and orders of all governmental bodies, all Governmental Approvals and all orders, judgments and decrees of all courts and arbitrators, (b) all zoning, building, environmental and other laws, ordinances, rules, regulations and restrictions of any Governmental Authority affecting the ownership, management, use, operation, maintenance or repair of any Mortgaged Property, including the Americans with Disabilities Act (if applicable), the Fair Housing Amendment Act of 1988 and Hazardous Materials Laws (as defined in the Security Instrument), (c) any building permits or any conditions, easements, rights-of-way, covenants, restrictions of record or any recorded or unrecorded agreement affecting or concerning any Mortgaged Property including planned development permits, condominium declarations, and reciprocal easement and regulatory agreements with any Governmental Authority, (d) all laws, ordinances, rules and regulations, whether in the form of rent control, rent stabilization or otherwise, that limit or impose conditions on the amount of rent that may be collected from the units of any Mortgaged Property, and (e) requirements of insurance companies or similar organizations, affecting the operation or use of any Mortgaged Property or the consummation of the transactions to be effected by the Agreement or any of the other Loan Documents.

Appendix I-1

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“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy” as now and hereafter in effect, or any successor statute.

“Borrower Documents” has the meaning given such term in the Master Reimbursement Agreement.

“Business Day” means a day on which Fannie Mae is open for business.

“Calendar Quarter” means, with respect to any year, any of the following three month periods: (a) January-February-March; (b) April-May-June; (c) July-August-September; and (d) October-November-December.

“Calendar Year” means the 12-month period from the first day of January to and including the last day of December, and each 12-month period thereafter.

“Closing Date” means the Initial Closing Date and each date after the Initial Closing Date on which the funding or other transaction requested in a Request is required to take place.

“Collateral” means the Mortgaged Properties and other collateral from time to time or at any time encumbered by the Security Instruments, or any other property securing Borrower’s obligations under the Loan Documents.

“Collateral Pool” means all of the Collateral.

“Compliance Certificate” means a certificate of Borrower substantially in the form of Exhibit C to the Agreement.

“Confirmation of Obligations” has the meaning given such term in the Master Reimbursement Agreement.

“Coupon Rate” means, with respect to a Loan, the imputed interest rate determined by Lender pursuant to Section 1.05.

“Discount” shall have the meaning set forth in Section 1.03.

“Discount Period” shall have the meaning set forth in Section 1.02(b).

“DMBS” shall have the meaning set forth in Section 1.03.

“DMBS Commitment” shall have the meaning set forth in Section 1.08.

“DMBS Imputed Interest Rate” shall have the meaning set forth in Section 1.05.

“DUS Guide” means the Fannie Mae Multifamily Delegated Underwriting and Servicing (DUS) Guide, as such Guide may be amended from time to time, including exhibits to the DUS Guide and amendments in the form of Lender Memos, Guide Updates and Guide Announcements (and, if such Guide is no longer used by Fannie Mae,

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the term “DUS Guide” as used in the Agreement means the Fannie Mae Multifamily Negotiated Transactions Guide, as such Guide may be amended from time to time, including amendments in the form of Lender Memos, Guide Updates and Guide Announcements). All references to specific articles and sections of, and exhibits to, the DUS Guide shall be deemed references to such articles, sections and exhibits as they may be amended, modified, updated, superseded, supplemented or replaced from time to time.

“DUS Underwriting Requirements” means the overall underwriting requirements for Multifamily Residential Properties as set forth in the DUS Guide.

“Event of Default” means any event defined to be an “Event of Default” under Article VIII.

“Facility Debt Service” means, as of any specified date, the amount of interest and principal amortization, during the 12 month period immediately succeeding the specified date, with respect to the Loans Outstanding on the specified date, except that, for these purposes each Loan shall be deemed to require level monthly payments of principal and interest (at the Coupon Rate for the Loan) in an amount necessary to fully amortize the original principal amount of the Loan over [30] years, with such amortization deemed to commence on the first day of the 12 month period.

“Fannie Mae” means the federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716 etseq.

“Future Loan” shall have the meaning set forth in Section 1.01.

“GAAP” means generally accepted accounting principles in the United States in effect from time to time, consistently applied.

“General Conditions” shall have the meaning set forth in Article IV.

“Hedge” means an interest rate cap agreement satisfying the requirements of Article XII.

“Hedge Arrangement” means any interest rate swap, interest rate cap or other arrangement, contractual or otherwise, which has the effect of an interest rate swap or interest rate cap or which otherwise (directly or indirectly, derivatively or synthetically) hedges interest rate risk associated with being a debtor of variable rate debt or any agreement or other arrangement to enter into any of the above on a future date or after the occurrence of one or more events in the future.

“Hedge Documents” has the meaning set forth in Section 12.02.

“Hedge Rate” has the meaning set forth in Section 12.02.

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“Hedge Security Agreement” means, with respect to a Hedge, the Interest Rate Hedge Security, Pledge and Assignment Agreement between Borrower and Lender, for the benefit of Lender, as such agreement may be amended, modified, supplemented or restated from time to time.

“Initial Closing Date” means the date of the Agreement.

“Initial Hedge Period” means the period from the Initial Closing Date to five years thereafter.

“Initial Loan” means the Loan made on the Initial Closing Date in the amount of $11,720,000.

“Insurance Policy” means, with respect to a Mortgaged Property, the insurance coverage and insurance certificates evidencing such insurance required to be maintained pursuant to the Security Instrument encumbering the Mortgaged Property.

“Key Principal” has the meaning given to such term in the Master Reimbursement Agreement.

“Lease” means any lease, any sublease or subsublease, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in any Mortgaged Property, and every modification, amendment or other agreement relating to such lease, sublease, subsublease or other agreement entered into in connection with such lease, sublease, subsublease or other agreement, and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

“Lender” shall have the meaning set forth in the first paragraph of the Agreement, but shall refer to any replacement Lender if the initial Lender is replaced pursuant to the terms of Section 10.03.

“Lien” means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance (including both consensual and non-consensual liens and encumbrances).

“Loan” or “Loans” means the Initial Loan and any Future Loan.

“Loan Documents” means this Agreement, the Note, the Security Documents, all documents executed by Borrower pursuant to the General Conditions set forth in Article IV of the Agreement and any other documents executed by a Borrower from time to time in connection with the Agreement or the transactions contemplated by this Agreement.

“Loan Fee” means 67 basis points per annum (0.67%) for the Loans Outstanding on or before the fifth anniversary of the Initial Closing Date, and for any Loan made after the fifth anniversary of the Initial Closing Date, the number of basis points per

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annum determined by Lender on or before such fifth anniversary as the Loan Fee for such Loan.

“Loan Request” means a written request, substantially in the form of Exhibit G to the Agreement for the Initial Loan.

“Loan Year” means the 12-month period from the first day of the first calendar month after the Initial Closing Date to and including the last day before the first anniversary of the Initial Closing Date, and each 12-month period thereafter.

“Master Reimbursement Agreement” means the Master Reimbursement Agreement dated as of June 1, 2001, as amended, among the Borrower and Fannie Mae, as the same may be amended, modified, supplemented or restated from time to time.

“Material Adverse Effect” means, with respect to any circumstance, act, condition or event of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, or circumstance or circumstances, whether or not related, a material adverse change in or a materially adverse effect upon any of (a) the business, operations, property or condition (financial or otherwise) of the Borrower, (b) the present or future ability of the Borrower to perform the Obligations for which it is liable, (c) the validity, priority, perfection or enforceability of the Agreement or any other Loan Document or the rights or remedies of Lender under any Loan Document, or (d) the value of, or Lender’s ability to have recourse against, any Mortgaged Property.

“MBS Delivery Date” means the date on which an MBS is delivered by Fannie Mae.

“MBS Issue Date” shall have the meaning set forth in Section 1.03.

“Mortgaged Properties” means the Multifamily Residential Properties described on Exhibit A to the Agreement and which represent the Multifamily Residential Properties which are made part of the Collateral Pool on the Initial Closing Date

“Multifamily Residential Property” means a residential property, located in the United States, containing five or more dwelling units in which not more than twenty percent (20%) of the net rentable area is or will be rented to non-residential tenants, and conforming to the requirements of Chapter 2 of Part III of the DUS Guide (Property Requirements).

“Note” means the promissory note, in the form attached as Exhibit A to the Agreement, which has been issued by Borrower to Lender to evidence Borrower’s obligation to repay Loans.

“Obligations” means the aggregate of the obligations of Borrower under the Agreement and the other Loan Documents.

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“Organizational Certificate” means a certificate from Borrower to Lender, in the form of Exhibit D to the Agreement, certifying as to certain organizational matters with respect to Borrower.

“Organizational Documents” means all certificates, instruments and other documents pursuant to which an organization is organized or operates, including but not limited to, (i) with respect to a corporation, its articles of incorporation and bylaws, (ii) with respect to a limited partnership, its limited partnership certificate and partnership agreement, (iii) with respect to a general partnership or joint venture, its partnership or joint venture agreement and (iv) with respect to a limited liability company, its articles of organization and operating agreement.

“Outstanding” means, when used in connection with promissory notes, other debt instruments or Loans, for a specified date, promissory notes or other debt instruments which have been issued, or Loans which have been made, but have not been repaid in full as of the specified date.

“Ownership Interests” means, with respect to any entity, any ownership interests in the entity and any economic rights (such as a right to distributions, net cash flow or net income) to which the owner of such ownership interests is entitled.

“Partial Month Period” shall have the meaning set forth in Section 1.02(a).

“Permitted Liens” means, with respect to a Mortgaged Property, (i) the exceptions to title to the Mortgaged Property set forth in the Title Insurance Policy for the Mortgaged Property which are approved by Lender, (ii) the Security Instrument encumbering the Mortgaged Property, and (iii) any other Liens approved by Lender.

“Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private).

“Potential Event of Default” means any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

“Price” shall have the meaning set forth in Section 1.03.

“Property” means any estate or interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

“Rate Confirmation Form” means the completed and executed document from Lender to Borrower pursuant to Section 1.07(b), substantially in the form of Exhibit F to the Agreement.

“Rate Form” means the completed and executed document from Borrower to Lender pursuant to Section 1.07(a), substantially in the form of Exhibit E to the Agreement, specifying the terms and conditions of the DMBS to be issued for the requested Loan.

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“Reimbursement Security Documents” has the meaning given such term in the Master Reimbursement Agreement.

“Release Documents” means instruments, in the form customarily used by Fannie Mae for releases in the jurisdiction governing the perfection of the security interest being released, releasing the applicable Security Instruments as a lien on the applicable Mortgaged Property, and UCC-3 Termination Statements terminating the UCC-1 Financing Statements perfecting a lien on the portion of the applicable Mortgaged Property comprised of personal property and such other documents and instruments as the Borrower may reasonably request evidencing the release of the applicable Collateral from any lien securing the Obligations (including a termination of any restriction on the use of any accounts relating to the applicable Mortgaged Property) and the release and return to the Borrower of any and all escrowed amounts relating thereto.

“Release Price” shall have the meaning set forth in Section 3.01(c).

“Release Request” means a written request, substantially in the form of Exhibit H to the Agreement, to obtain a release of Collateral from the Collateral Pool pursuant to Section 3.01(a).

“Remaining Mortgaged Properties” shall have the meaning set forth in Section 4.04(d).

“Replacement Reserve Agreement” means a Replacement Reserve and Security Agreement, reasonably required by Lender, and completed in accordance with the requirements of the DUS Guide.

“Request” means a Loan Request, a Release Request or a Termination Request.

“Security” means a “security” as set forth in Section 2(1) of the Securities Act of 1933, as amended.

“Security Documents” means the Security Instruments, the Replacement Reserve Agreements and any other documents executed by Borrower from time to time to secure any of Borrower’s obligations under the Loan Documents.

“Security Instrument” means, for each Mortgaged Property, a separate second or third priority Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement given by a Borrower to or for the benefit of Lender to secure the obligations of Borrower under the Loan Documents. With respect to each Mortgaged Property owned by a Borrower, the Security Instrument shall be substantially in the form published by Fannie Mae for use in the state in which the Mortgaged Property is located. The amount secured by the Security Instrument shall be equal to the Loans.

“Surveys” means the as-built surveys of the Mortgaged Properties prepared in accordance with the requirements of Part III, Section 113 of the DUS Guide, or otherwise approved by Lender.

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“Taxes” means all taxes, assessments, vault rentals and other charges, if any, general, special or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a lien, on the Mortgaged Properties.

“Term of this Agreement” shall be determined as provided in Section 14.10.

“Termination Date” means March 1, 2014.

“Termination Documents” has the meaning set forth in Section 4.05

“Termination Fee” means, with respect to a termination of this Agreement pursuant to Article V, an amount equal to the greater of (a) 1% of the principal balance of the Loans immediately prior to such termination and (b) the product obtained by multiplying--

(1) the reduction in the Loans by

(2) 67 basis points by

(3) the present value factor calculated using the following formula:

1 - (1 + r)^-n

r

[r = Yield Rate

n =the number of years (counting any partial year as a full year) remaining between the Closing Date for the reduction in the Loans and the Termination Date.]

The “Yield Rate” means the rate, determined as of the Initial Closing Date, on the U.S. Treasury security having a maturity closest to the Termination Date.

“Termination Request” means a written request, substantially in the form of Exhibit I to the Agreement, to terminate the Agreement and repay the Loans pursuant to Section 3.02.

“Title Company” means Fidelity National Title Insurance Company of NewYork.

“Title Insurance Policies” means the mortgagee’s policies of title insurance issued by the Title Company from time to time relating to each of the Security Instruments, conforming to the requirements of Part III, Section 111 of the DUS Guide, together with such endorsements, coinsurance, reinsurance and direct access agreements with respect to such policies as Lender may, from time to time, consider necessary or appropriate, whether or not required by the DUS Guide, including variable credit endorsements, if

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available, and tie-in Endorsements, if available, and with a limit of liability under the policy (subject to the limitations contained in Sections 6(a)(i) and 6(a)(iii) of the Stipulations and Conditions of the policy) equal to the Loans.

“Valuation” has the meaning given such term in the Master Reimbursement Agreement.

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TABLE OF CONTENTS

Page

ARTICLE I			2
THE LOANS			2
THE LOANS			2
	SECTION 1.01 The Loans		2
	Section 1.02 Loan Periods		2
	Section 1.03 Discount Mortgage Backed Security		2
	SECTION 1.04 Interest, Discount and Fees on Loans		3
	SECTION 1.05 Coupon Rates for a Loan		3
	SECTION 5.01 Representations and Warranties of Lender		3
	SECTION 1.07 Rate Setting for a Loan for a Discount Period		4
	SECTION 1.08 Breakage and other Costs		4
ARTICLE II		4
ARTICLE II		4
ALLOCABLE FACILITY AMOUNT AND VALUATIONS			4
ALLOCABLE FACILITY AMOUNT AND VALUATIONS			4

SECTION 2.01 DETERMINATION OF ALLOCABLE FACILITY AMOUNT AND VALUATIONS  4

ARTICLE III		5
COLLATERAL CHANGES/TERMINATION OF FACILITY		5
	SECTION 3.01 Right to Obtain Releases of Collateral	5
	SECTION 3.02 Right to Terminate Agreement	6
ARTICLE V		6
CONDITIONS PRECEDENT TO ALL REQUESTS		6
	SECTION 4.01 Conditions Applicable to All Requests	6
	SECTION 4.02 Conditions Precedent to the Initial Loan	8
	SECTION 4.03 Delivery of Property-Related Documents	8

SECTION 4.04 CONDITIONS PRECEDENT TO RELEASE OF PROPERTY FROM THE COLLATERAL POOL  9  

SECTION 4.05 CONDITIONS PRECEDENT TO TERMINATION OF AGREEMENT  10  

ARTICLE V	10
REPRESENTATIONS AND WARRANTIES OF LENDER	10

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Page

	SECTION 5.01 Representations and Warranties of Lender	10
ARTICLE VI		11
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER		11

	SECTION 6.01. REPRESENTATIONS AND WARRANTIES OF BORROWER	11
	SECTION 6.02 Affirmative Covenants of the Borrower	13
	SECTION 6.03 Negative Covenants of the Borrower	15
ARTICLE VII		15
	SECTION 7.01 Origination Fees	15
	SECTION 7.02 Due Diligence Fees	15
	SECTION 7.03 Legal Fees and Expenses	15
	SECTION 7.04 Failure to Close any Request	16
ARTICLE VIII		16
EVENTS OF DEFAULT		16
	SECTION 8.01 Events of Default	16
ARTICLE IX		17
REMEDIES		17
	SECTION 9.01 Remedies; Waivers	17
	SECTION 9.02 Waivers; Rescission of Declaration	17

	SECTION 9.03 LENDER'S RIGHT TO PROTECT COLLATERAL AND PERFORM COVENANTS AND OTHER OBLIGATIONS	17
	SECTION 9.04 No Remedy Exclusive	18
	SECTION 9.05 No Waiver	18
	SECTION 9.06 No Notice	18
ARTICLE X		18
RIGHTS OF FANNIE MAE		18
	SECTION 10.01 Special Pool Purchase Contract	18
	SECTION 10.02 Assignment of Rights	19
	SECTION 10.03 Replacement of Lender	19
	SECTION 10.04 Fannie Mae and Lender Fees and Expenses	19
	SECTION 10.05 Third-Party Beneficiary	19
ARTICLE XI		19

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Page

LIMITS ON PERSONAL LIABILITY 19

SECTION 11.01. RECOURSE OBLIGATIONS, TERMINATION OF PERSONAL LIABILITY, AND EXCEPTIONS TO LIMITS ON PERSONAL LIA		19
ARTICLE XII		21
INTEREST RATE PROTECTION		21
	SECTION 12.01 Interest Rate Protection	21
	SECTION 12.02. Hedge Terms	21

	SECTION 12.03 HEDGE SECURITY AGREEMENT; DELIVERY OF HEDGE PAYMENTS	22
	SECTION 12.04 Termination	22
	SECTION 12.05 Performance Under Hedge Documents	22
ARTICLE XIII		23

	JOINT AND SEVERAL OBLIGATIONS; CROSS GUARANTY AND OTHER INTERBORROWER MATTERS	23
	OBLIGATION; CROSS-GUARANTY 23
	SECTION 13.02 Waivers by Borrower and Other Rights	23
	SECTION 13.03 No Impairment	24
	SECTION 13.04 No Subrogation	24
	SECTION 13.05 Subordination of Subrogation, Etc	24
	SECTION 13.06 Election of Remedies	25
	SECTION 13.07 Subordination of Other Obligations	26
	SECTION 13.08 Insolvency and Liability of Other Borrower	26
	SECTION 13.09 Preferences, Fraudulent Conveyances, Etc	27
	SECTION 13.10 Maximum Liability of Each Borrower	27
	SECTION 13.11 Liability Cumulative	28
ARTICLE XIV			28
MISCELLANEOUS PROVISIONS		28
	SECTION 14.01 Counterparts	28
	SECTION 14.02 Amendments, Changes and Modifications	28
	SECTION 14.03 Payment of Costs, Fees and Expenses	28
	SECTION 14.04 Payment Procedure	29

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Page

SECTION 14.05 Payments on Business Days 29

SECTION 14.06 CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL  29  

SECTION 14.07 Severability	31
SECTION 14.08 Notices	31

SECTION 14.09 FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS 33

SECTION 14.10 Term of this Agreement		33
SECTION 14.11 Assignments; Third-Party Rights		33
SECTION 14.12 Headings		34
SECTION 14.13 General Interpretive Principles		34
SECTION 14.14 Interpretation		34
SECTION 14.15 Standards for Decisions, Etc		34
SECTION 14.16 Decisions in Writing		34
	APPENDIX I		1

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Page

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EX-10.39

EXHIBIT 10.39

AMENDMENT NO. 1 TO MASTER CREDIT FACILITY AGREEMENT

This AMENDMENT NO. 1 TO MASTER CREDIT FACILITY AGREEMENT dated as of November 17, 2005 (this “Amendment”), amends that certain Master Credit Facility Agreement dated as of March 2, 2004, entered into and delivered by Mid-America Apartments, L.P., a Tennessee limited partnership, Mid-America Apartment Communities, Inc., a Tennessee corporation and Mid-America Apartments of Texas, L.P., a Texas limited partnership (individually and collectively the “Borrower”). Capitalized terms used in this Amendment and not otherwise defined shall have the same meanings given to such terms in the Master Credit Agreement (as defined herein below).

RECITALS

A.         The Borrower and Prudential Multifamily Mortgage, Inc., a Delaware corporation (“Lender”) executed that certain Master Credit Facility Agreement dated as of March 2, 2004 (as amended, supplemented or modified from time to time, the “Master Credit Agreement”).

B.         Immediately after the execution of the Master Credit Agreement by the Borrower and the Lender, the Lender assigned its rights under the Master Credit Agreement to Fannie Mae pursuant to that certain Assignment of Master Credit Facility Agreement dated as of March 2, 2004.

C.         Pursuant to the Master Credit Agreement, Lender made an initial Loan to Borrower in the amount of $11,720,000, which Initial Loan was assigned to Fannie Mae.

D.         Borrower has requested that Lender commit to make one or more additional Loans under the Master Credit Agreement and permit the addition of additional Mortgaged Properties to the Collateral Pool established under the Master Credit Agreement, including without limitation a loan in the amount of $2,525,000 with respect to an Additional Mortgaged Property known as Runaway Bay Apartments in Charleston County, South Carolina.

E.         Fannie Mae and the Borrower desire to amend the Master Credit Agreement to establish a $14,245,000DMBS Loan Facility in favor of Borrower (subject to increase as provided herein), to provide for additions to the Collateral Pool and to change certain provisions of the Master Credit Agreement.

F.         Fannie Mae and the Borrower intend these Recitals to be a material part of this Amendment.

AGREEMENTS

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the mutual covenants and agreements set forth herein, and other good and valuable consideration, all of

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which each party agrees constitutes sufficient consideration received at and before the execution hereof, the parties agree as follows:

1.          Section 1.01 of the Master Credit Agreement is hereby amended and restated to read in its entirety as follows:

SECTION 1.01. DMBS Loan Commitment and Loans. (a) Subject to the terms, conditions and limitations of this Agreement, Lender agrees to make an initial Loan (“Initial Loan”) to the Borrower in an amount not exceeding $11,720,000 on the Initial Closing Date and one or more additional Loans from time to time during the Loan Availability Period. The aggregate unpaid principal balance of the Loans Outstanding at any time shall not exceed the DMBS Loan Commitment. Subject to the terms, conditions and limitations of this Agreement, the Borrower may re-borrow any amounts under the DMBS Loan Facility which it has previously borrowed and repaid under the DMBS Loan Facility.

(b) The Borrower shall request a Loan by giving the Lender a Future Loan Request in accordance with Section 1.01(c). The Initial Loan and any such additional Loan (a “Future Loan”) shall be evidenced by the Note.

(c) In order to obtain a Future Loan, the Borrower may from time to time deliver a written request for a Future Loan (“Future Loan Request”) to the Lender, in the form attached as Exhibit J to this Agreement. Each Future Loan Request shall be accompanied by (a) a designation of the amount of the Future Loan requested, and (b) a designation of the maturity date of the Loan. If all conditions contained in Section 4.08 are satisfied, the Lender shall make the requested Future Loan, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring on a date selected by the Borrower, which date shall be not more than three (3) Business Days, after the Borrower’s receipt of the Rate Confirmation Form (or on such other date to which the Borrower and the Lender may agree). The Lender reserves the right to require that the Borrower post a deposit at the time the DMBS Commitment is obtained as an additional condition to the Lender’s obligation to make the Future Loan. The deposit referred to in the preceding sentence shall be refundable to the Borrower upon the delivery of the related DMBS.

2.          Section 1.03 of the Master Credit Agreement is hereby amended by adding the following sentence at the end thereof:

Unless waived by the Lender, any DMBS issued to fund a Future Loan must have a maturity date which coincides with the regularly scheduled rollover date for any outstanding DMBS, so that all outstanding DMBS shall be renewed by the issuance of a new DMBS on regularly scheduled issuance dates.

3.          Section 1.04 of the Master Credit Agreement is hereby amended by deleting the last sentence thereof and substituting therefor the following:

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Each installment of the Loan Fee shall be in an amount equal to the product of (1) the Loan Fee, (2) the principal amount of the Loan during such Discount Period, and (3) 1/12

4.          Article III of the Master Credit Agreement is hereby amended by adding thereto new Sections 3.03 and 3.04 to read in their entirety as follows:

SECTION 3.03. Right to Add Collateral. (a) Borrower shall have the right, from time to time during the Term of this Agreement, to add Multifamily Residential Properties to the Collateral Pool (each an “Additional Mortgaged Property”) simultaneously with the addition of such Multifamily Residential Properties to the “Collateral Pool” established under the Master Reimbursement Agreement.

(b) Request. The Borrower may deliver a written request (“Collateral Addition Request”) to the Lender, in the form attached as Exhibit K to this Agreement, to add one or more Additional Mortgaged Properties to the Collateral Pool, provided that no Mortgaged Property may be added to the Collateral Pool unless it is simultaneously added to the “Collateral Pool” established under the Master Reimbursement Agreement, and a Collateral Addition Request with respect to any Mortgaged Property shall not be effective unless it is delivered simultaneously and in conjunction with a “Collateral Addition Request” with respect to such Mortgaged Property under the Master Reimbursement Agreement. Each Collateral Addition Request shall be accompanied by the following:

(i) The information relating to the proposed Additional Mortgaged Property required by the form attached as Exhibit G to the Master Reimbursement Agreement (“Collateral Addition Description Package”), as amended from time to time to include information required under the DUS Guide; and

(ii) The payment of all Additional Collateral Due Diligence Fees pursuant to Section 7.03(b).

(b)       Additional Information. The Borrower shall promptly deliver to the Lender any additional information concerning the proposed Additional Mortgaged Property that the Lender may from time to time reasonably request.

(c)        Underwriting. The Lender shall evaluate the proposed Additional Mortgaged Property, and shall make underwriting determinations as to the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Periodand the Aggregate Loan to Value Ratio applicable to the Collateral Pool, on the basis of the lesser of (i) if purchased by the Borrower within 12 months of the related Collateral Addition Request, the acquisition price of the proposed Additional Mortgaged Property or (ii) a Valuation made with respect to the proposed Additional Mortgaged Property, and otherwise in accordance with Fannie Mae’s DUS Underwriting Requirements, including applicable underwriting floors, if any. Within 30 days after receipt of (i) the Collateral Addition Request for the

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proposed Additional Mortgaged Property and (ii) all reports, certificates and documents set forth on Exhibit I to the Master Reimbursement Agreement, including a zoning analysis undertaken in accordance with Section 206 of the DUS Guide, the Lender shall notify the Borrower whether or not it shall consent to the addition of the proposed Additional Mortgaged Property to the Collateral Pool and, if it shall so consent, shall set forth the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period and the Aggregate Loan to Value Ratio which it estimates shall result from the addition of the proposed Additional Mortgaged Property to the Collateral Pool. If the Lender declines to consent to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, the Lender shall include, in its notice, a brief statement of the reasons for doing so. Within five Business Days after receipt of the Lender’s notice that it shall consent to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, the Borrower shall notify the Lender whether or not it elects to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool. If the Borrower fails to respond within the period of five Business Days, it shall be conclusively deemed to have elected not to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool.

(d)       Closing. If, pursuant to subsection (c), the Lender consents to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, the Borrower timely elects to cause the proposed Additional Mortgaged Property to be added to the Collateral Pool and all conditions contained in Article V of the Master Reimbursement Agreement and Section 4.06 are satisfied, the Lender shall permit the proposed Additional Mortgaged Property to be added to the Collateral Pool, simultaneously with the addition of such Multifamily Residential Properties to the “Collateral Pool” established under the Master Reimbursement Agreement, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within 30 Business Days after the Lender’s receipt of the Borrower’s election (or on such other date to which the Borrower and the Lender may agree).

SECTION 3.04. Right to Increase Commitment. Subject to the terms, conditions and limitations of this Section, the Borrower shall have the right, at any time or from time to time during the Loan Availability Period, to increase the DMBS Loan Commitment. The DMBS Loan Commitment may be increased by (i) the addition of Collateral to the Collateral Pool and/or (ii) the amount of any DMBS Loan Facility Expansion Request approved by Lender. The Borrower’s right to increase the DMBS Loan Commitment is subject to the following limitations:

(a)        Maximum Amount of Increase in Commitment. Borrower hereby agrees that the total DMBS Loan Commitment, when added to the “Commitment” of Fannie Mae under the Master Reimbursement Agreement, shall not exceed $100,000,000.

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(b)       Minimum Request. Each Request for an increase in the Commitment shall be in the minimum amount of $1,000,000.

(c)        Terms and Conditions. The terms and conditions of this Agreement shall apply to any increase in the DMBS Loan Commitment closed not later than November 17, 2006. The terms and conditions (including pricing,) applicable to any increase in the DMBS Loan Commitment after November 17, 2006 shall be acceptable to Lender in its discretion.

(d)       Request. In order to obtain an increase in the DMBS Loan Commitment, the Borrower shall deliver a written request for an increase (a “DMBS Loan Facility Expansion Request”) to the Lender, in the form attached as Exhibit L to this Agreement. Each DMBS Loan Facility Expansion Request shall be accompanied by the following:

(i) A designation of the amount of the proposed increase;

(ii)         If any Multifamily Residential Properties are proposed to be added to the Collateral Pool, a list of such Multifamily Residential Properties and evidence of compliance with the requirements of Section 4.06 in connection with such addition; and

(iii)        If such request occurs after November 17, 2006,a request that the Lender inform the Borrower of the Loan Fee to apply to Loans drawn from such increase in the Commitment.

(f)          Closing. If all conditions contained in Section 4.08 are satisfied, the Lender shall permit the requested increase in the Commitment, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, and occurring within fifteen (15) Business Days after the Lender’s receipt of the DMBS Loan Facility Expansion Request (or on such other date to which the Borrower and the Lender may agree).

5.          Article IV of the Master Credit Agreement is hereby amended by adding thereto new Sections 4.06, 4.07 and 4.08 to read in their entirety as follows:

SECTION 4.06. Conditions Precedent to Addition of an Additional Mortgaged Property to the Collateral Pool. The addition of an Additional Mortgaged Property to the Collateral Pool on the applicable Closing Date is subject to the satisfaction of the conditions of Section 4.01 and each of the following conditions precedent:

(a) Satisfaction of the conditions precedent to the addition of the Additional Mortgaged Property contained in Article V of the Master Reimbursement Agreement;

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(b)        Delivery to the Title Company, with fully executed instructions directing the Title Company to file and/or record in all applicable jurisdictions, all applicable Addition Loan Documents required by Lender, including duly executed and delivered original copies of any Security Instruments and UCC-1 Financing Statements covering the portion of the Additional Mortgaged Property comprised of personal property, and other appropriate documents, in form and substance satisfactory to Lender and in form proper for recordation, as may be necessary in the opinion of Lender to perfect the Lien created by the applicable additional Security Instrument, and any other Addition Loan Document creating a Lien in favor of Lender, and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing;

(c)         Receipt by Lender of the Collateral Addition Fee and all legal fees and expenses payable by Borrower in connection with the Addition Request pursuant to Section 7.03;

(d)        If required by Lender, amendments to the Note and the Security Instruments, reflecting the addition of the Additional Mortgaged Property to the Collateral Pool and, as to any Security Instrument so amended, the receipt by Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than Permitted Liens;

(e)         If the Title Insurance Policy for the Additional Mortgaged Property contains a Tie-In Endorsement, an endorsement to each other Title Insurance Policy containing a Tie-In Endorsement, adding a reference to the Additional Mortgaged Property; and

(f)         Delivery of the documents set forth in Section 4.03 of this Agreement with respect to the Additional Mortgaged Property and any additional Loan being made in connection with the addition of the Additional Mortgaged Property.

SECTION 4.07. Conditions Precedent to Future Loans. The obligation of the Lender to make a requested Future Loan is subject to the satisfaction of conditions of Section 4.01 and the following conditions precedent:

	(a)	Receipt by Lender of the fully executed Future Loan Request;
(b)		Receipt by Borrower of the Rate Confirmation Form;

(c)         After giving effect to the requested Future Loan, the Coverage and LTV Tests will be satisfied;

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(d)         Receipt by Lender of a new Note, or an amended and restated Note, duly executed by the Borrower, reflecting the amount of the Future Loan;

(e)         For any Title Insurance Policy not containing a Revolving Credit Endorsement, the receipt by the Lender of an endorsement to the Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date, Permitted Liens, and other exceptions approved by the Lender;

(f)          Receipt by Lender at least five (5) days prior to the Closing Date, of the confirmation of a Hedge commitment;

(g)         Receipt by Lender of Hedge Documents, effective as of the Closing Date;

(h)         The receipt by Lender of the first installment of the Loan Fee and the entire Discount payable by Borrower pursuant to Sections 1.04(b) and (c);

(i)          Receipt by Lender of all legal fees and expenses payable by Borrower in connection with the Future Loan Request pursuant to Section 7.03.

SECTION 4.08. Conditions Precedent to Increase in Commitment. The right of the Borrower to increase the DMBS Loan Commitment is subject to the satisfaction of conditions of Section 4.01 and the following conditions precedent on or before the Closing Date of the funding of any DMBS Loan made pursuant to such increase in the DMBS Loan Commitment:

(a)         After giving effect to the requested increase the Coverage and LTV Tests will be satisfied;

(b)         Payment by the Borrower of the Expansion Origination Fee in accordance with Section 7.01(b) and all legal fees and expenses payable by the Borrower in connection with the expansion of the DMBS Loan Commitment pursuant to Section 7.03(b);

(c)         The receipt by the Lender of an endorsement to each Title Insurance Policy, amending the effective date of the Title Insurance Policy to the Closing Date, increasing the limits of liability to the DMBS Loan Commitment, as increased under this Section, showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date (or, if applicable, the last Closing Date with respect to which the Title Insurance Policy was endorsed), the Permitted Liens, and other exceptions approved by the Lender, together with any reinsurance agreements required by the Lender; and

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(d)         The receipt by the Lender of fully executed original copies of all Expansion Loan Documents, each of which shall be in full force and effect, and in form and substance satisfactory to the Lender in all respects;

6.          Section 7.01 (“Origination Fees”) is hereby amended by deleting such Section in its entirety and replacing such Section with the following:

SECTION 7.01. Origination and Standby Fees. . (a) Borrower has paid to Lender an origination fee (“Origination Fee”) equal to $87,900.00 (which is equal to the product obtained by multiplying (i) the Initial Loan ($11,720,000), by (ii) .75%).

(b)         Expansion Origination Fee. Upon the closing of a DMBS Loan Facility Expansion Request under Section 3.04, the Borrower shall pay to the Lender an origination fee (“Expansion Origination Fee”) equal to the product obtained by multiplying (i) the increase in the DMBS Loan Commitment made on the Closing Date for the DMBS Loan Facility Expansion Request, by (ii) .75%. An Expansion Origination Fee shall be reduced by the amount of any Collateral Addition Fee paid by the Borrower in respect of any Additional Mortgaged Properties added to the Collateral Pool in conjunction with such expansion. The Borrower shall pay the Expansion Origination Fee on or before the Closing Date for the DMBS Loan Facility Expansion Request.

(c)         Standby Fee. Borrower shall pay the Standby Fee to Lender for the period from the date of this Agreement to the end of the Term of this Agreement. The Standby Fee shall be payable monthly in arrears, on the first Business Day following the end of the month, except that the Standby Fee for the last month during the Term of this Agreement shall be paid on the last day of the Term of this Agreement. During the period commencing on November 17, 2005 and ending May 17, 2006, Lender waives any Standby Fee payable in connection with the proposed $2,525,000 Future Loan to be made and allocated to the Mortgaged Property known as Runaway Bay Apartments in Charleston County, South Carolina.

7.          Section 7.02 (“Due Diligence Fees”) is hereby amended by deleting such Section in its entirety and replacing such Section with the following:

SECTION 7.02. Due Diligence Fees. (a) Borrower has paid to Lender due diligence fees with respect to the Mortgaged Properties added to the Collateral Pool on the Initial Closing Date in an amount not to exceed $16,000 per property.

(b)Borrower shall pay to Lender additional due diligence fees (“Additional Collateral Due Diligence Fees”) with respect to Additional Mortgaged Properties (including, without limitation, the Mortgaged Property known as Runaway Bay Apartments), in an amount not to exceed $16,000 per property.

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8.          Section 14.08 (“Notices”)is hereby amended by deleting the notice address of the Lender in its entirety and replacing it with the following:

“As to the Lender:

Prudential Multifamily Mortgage, Inc.

c/o Prudential Asset Resources

2200 Ross Avenue

Suite 4900 E

Dallas, Texas 75201

Attention:	Fannie Mae Asset Management Department
Telecopy No.:	(214) 777-4556

with a copy to:

Prudential Multifamily Mortgage, Inc.

8401 Greensboro Drive

Suite 200

McLean, Virginia 22102

Attention:	Michele Levoir-Sloan
Telecopy No.:	(703) 610-1401”

9.          Appendix I is hereby amended by deleting the definitions of “Mortgaged Properties” and “Request” in their entirety and replacing such definitions with the following:

“Mortgaged Properties” means, collectively, the Multifamily Residential Properties described on Exhibit A to the Agreement and which represent the Multifamily Residential Properties which are made part of the Collateral Pool on the Initial Closing Date and any Additional Mortgaged Properties subsequently added to the Collateral Pool, but excluding each Release Property from and after the date of its release from the Collateral Pool.

“Request” means a Loan Request, a Future Loan Request, an Addition Request, an Expansion Request, a Release Request or a Termination Request.

10.        The following definitions are added to Appendix I and placed alphabetically within such Appendix I:

“Addition Loan Documents” means the Security Instruments covering an Additional Mortgaged Property and any other documents, instruments or certificates required by Lender in connection with the addition of the Additional Mortgaged Property to the Collateral Pool pursuant to Section 3.03.

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“Additional Collateral Due Diligence Fees” has the meaning given that term in Section 7.02 hereof.

“Additional Mortgaged Properties” means each Multifamily Residential Property owned by any Borrower (either in fee simple or as tenant under a ground lease meeting all of the requirements of the DUS Guide) and added to the Collateral Pool after the Initial Closing Date pursuant to Section 3.03.

“Collateral Addition Fee” means, with respect to each Additional Mortgaged Property added to the Collateral Pool in accordance with Article III, 75 basis points multiplied by the principal amount of the Loans allocated to such Additional Mortgaged Property as determined by the Lender.

“Collateral Addition Request” ” means a written request, substantially in the form of Exhibit K to the Agreement, to add Additional Mortgaged Properties to the Collateral Pool pursuant to Section 3.03.

“Coverage and LTV Tests” has the meaning given to such term in the Master Reimbursement Agreement.

“DMBS Loan Commitment” means $14,245,000, plus such amount as the Borrower may elect to add to the DMBS Loan Commitment in accordance with Section 3.04.

“DMBS Loan Facility” means the agreement of the Lender to make Loans pursuant to Section 1.01.

DMBS Loan Facility Expansion Request has the meaning given to such term in Section 3.04(d).

“Expansion Loan Documents” means amendments to the Note increasing the amount of such Note to the amount of the DMBS Loan Commitment, as expanded in accordance with Section 3.04 and amendments to the Security Instruments, increasing the amount secured by such Security Instruments to the amount of the DMBS Loan Commitment.

“Future Loan Request” has the meaning given to such term in Section 1.01(c).

“Loan Availability Period” means the period beginning on the Initial Closing Date and ending on the date five (5) years after the Initial Closing Date.

“Release Property” means the Mortgaged Property to be released pursuant to Section 3.01.

“Standby Fee” means, for any month, an amount equal to the product obtained by multiplying: (i) 1/12 by (ii) 15 basis points by (iii) the Unused Capacity for such month.

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“Unused Capacity” means, for any month, the sum of the daily average during such month of the undrawn amount of the DMBS Loan Commitment available under Section 1.01 of the Agreement for the making of Loans, without regard to any unclosed Requests or to the fact that a Request must satisfy conditions precedent.

11.        The “SCHEDULE OF MORTGAGED PROPERTIES AND INITIAL VALUATIONS” attached as Exhibit A to the Master Credit Agreement is hereby amended and restated in its entirety as set forth in Annex I attached hereto.

12.        A new Exhibit J (“Future Loan Request”) is hereby added to the Agreement in the form of Annex II attached hereto.

13.        A new Exhibit K (“CollateralAddition Request”) is hereby added to the Agreement in the form of Annex II attached hereto.

14.        A new Exhibit L (“Expansion Request”) is hereby added to the Agreement in the form of Annex III attached hereto.

15.        This Amendment may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page.

16.        This Amendment shall be construed, interpreted and enforced in accordance with, and the rights and remedies of the parties hereto shall be governed pursuant to, the provisions of Section 14.06 of the Master Credit Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”), which provisions are hereby incorporated into this Amendment No. 1 by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

17.        Except as specifically modified by this Amendment, all of the terms and provisions of the Master Credit Agreement shall remain in full force and effect.

18. The Borrower represents and warrants to Fannie Mae as follows:

(a)        All representations and warranties set forth in the Master Credit Agreement are true and correct as of November 17, 2005.

(c)        No Event of Default or Potential Event of Default as described in the Master Credit Agreement has occurred as of November 17, 2005.

[The Remainder of this Page Has Been Intentionally Left Blank.]

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IN WITNESS WHEREOF, the parties hereto have duly signed, sealed, and delivered this Amendment on the day and year first above written.

BORROWER:

MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By: MAC of Delaware, Inc., a Delaware corporation, its sole General Partner

By: __________________________

John A. Good

Assistant Secretary

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FANNIE MAE

By:	______________________________________________________
		Name:__________________________________
		Title:___________________________________

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LENDER

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware Corporation

By:____________________________________

Name: Sharon D. Singleton

Title: Vice President-Closing Officer

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ANNEX I

EXHIBIT A TO MASTER CREDIT AGREEMENT

SCHEDULE OF MORTGAGED PROPERTIES,

INITIAL VALUATIONS AND INITIAL LOAN ALLOCATIONS

Property Name	Property Address	Initial Valuation	Initial DMBS Loan Allocation
The Park at Hermitage	Davidson County, Tennessee	$19,900,000	$6,755,000
Stassney Woods	Austin, Texas	$11,345,000	$2,620,000
Travis Station Apartments	Austin, Texas	$9,673,000	$2,345,000
Runaway Bay Apartments	Mount Pleasant, Charleston County, South Carolina	$16,400,000	$2,525,000

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ANNEX II

EXHIBIT J TO MASTER CREDIT FACILITY AGREEMENT

FUTURE LOAN REQUEST

THE MASTER AGREEMENT REQUIRES YOU TO MAKE THE REQUESTED FUTURE LOAN, IF ALL CONDITIONS CONTAINED IN SECTION 4.07 OF THE MASTER AGREEMENT ARE SATISFED, AT A CLOSING TO BE HELD ON A CLOSING DATE SELECTED BY BORROWER AND APPROVED BY YOU, WHICH DATE SHALL BE NOT MORE THAN THREE (3) BUSINESS DAYS AFTER OUR RECEIPT OF THE CONFIRMED RATE FORM (OR ON SUCH OTHER DATE AS WE MAY AGREE). LENDER RESERVES THE RIGHT TO REQUIRE THAT WE POST A DEPOSIT AT THE TIME THE MBS COMMITMENT IS OBTAINED AS AN ADDITIONAL CONDITION TO YOUR OBLIGATION TO MAKE THE FUTURE LOAN.

____________________, ______

VIA: _______________________

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.

8401 Greensboro Drive

Suite 200

McLean, Virginia 22101

Re: LOAN REQUEST issued pursuant to Master Credit Facility Agreement, dated as of March 2, 2004, as amended by Amendment No. 1 to Master Credit Facility Agreement dated as of November 17, 2005, by and between Mid-America Apartments, L.P., a Tennessee limited partnership, Mid-America Apartment Communities, Inc., a Tennessee corporation and Mid-America Apartments of Texas, L.P., a Texas limited partnership (collectively, “Borrower”), and Lender (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes Loan Request pursuant to the terms of the above-referenced Master Agreement.

Section 1.Request. The undersigned Borrower Agent, on behalf of Borrower, hereby requests that Lender make a Loan in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

(a)	Amount. The amount of the Future Loan shall be $__________.
(b)	Maturity Date. The Maturity Date of the Loan is as follows: ____________.

(c) Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Article IV of the Master Agreement, including (i) a confirmed Rate Form, (ii) a Compliance Certificate,

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and (iii) an Organizational Certificate, will be delivered on or before the Closing Date.

(d) Wiring Information. Please wire the Loan on or before the Closing Date into our account in accordance with the following wiring information:

___________________________________________

___________________________________________

___________________________________________

Section 2Available Commitment Amount. The information contained in the following table is true, correct and complete, to the undersigned’s knowledge. The undersigned acknowledges and agrees that the final determination of the information shall be made by Lender, in accordance with the terms of the Master Agreement.

Currently Available DMBS Loan Commitment

Proposed Amount Drawn on DMBS Loan Commitment

Remaining DMBS Loan Commitment after Proposed Draw

Section 3.Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,

MID-AMERICA APARTMENTS, L.P.

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: _______________________________

Al Campbell

Senior Vice President and Treasurer

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ANNEX III

EXHIBIT K TO MASTER CREDIT AGREEMENT

ADDITION REQUEST

____________________, ______

VIA: _______________________

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.

8401 Greensboro Drive

Suite 200

McLean, Virginia 22101

Attention:_______________

[Note: Subject to change in the event Lender or its address changes]

Re: REQUEST issued pursuant to Master Credit Facility Agreement, dated as of March 2, 2004, as amended by Amendment No. 1 to Master Credit Facility Agreement dated as of November 17, 2005, by and between Mid-America Apartments, L.P., a Tennessee limited partnership, Mid-America Apartment Communities, Inc., a Tennessee corporation and Mid-America Apartments of Texas, L.P., a Texas limited partnership (collectively, “Borrower”) and Lender (as amended from time to time, the “MasterAgreement”)

Ladies and Gentlemen:

This constitutes an Addition Request pursuant to the terms of the above-referenced Master Agreement.

Section 1.Addition Request. Borrower hereby requests that the Multifamily Residential Property described in this Request be added to the Collateral Pool in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

(a)        Property Description Package. Attached to this Request is the Property Description Package and attached thereto are all information and documents relating to the proposed Additional Mortgaged Property required by the Property Description Package;

(b)        Due Diligence Fees. Enclosed with this Request is a check in payment of all Additional Collateral Due Diligence Fees required to be submitted with this Request pursuant to Section 7.02 of the Master Agreement; and

(c)        Accompanying Documents. All reports, certificates and documents required to be delivered pursuant to the conditions contained in Section 4.06 of the Master Agreement will be delivered on or before the Closing Date.

Section 2.Addition Fee. If Lender consents to the addition of the proposed Additional Mortgaged Property to the Collateral Pool, and Borrower elects to add the Additional Mortgaged Property to the Collateral Pool, Borrower shall pay the Collateral Addition Fee to Lender as one of the conditions to the closing of the Additional Mortgaged Property.

Section. 3. Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

Sincerely,

MID-AMERICA APARTMENTS, L.P.

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: _______________________________

Al Campbell

Senior Vice President and Treasurer

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ANNEX IV

EXHIBIT L TO MASTER CREDIT AGREEMENT

EXPANSION REQUEST

THE MASTER AGREEMENT REQUIRES YOU TO PERMIT THE REQUESTED INCREASE IN THE COMMITMENT, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY BORROWER AND APPROVED BY YOU, AND OCCURRING WITHIN FIFTEEN (15) BUSINESS DAYS AFTER YOUR RECEIPT OF THE EXPANSION REQUEST (OR ON SUCH OTHER DATE AS WE AGREE), AS LONG AS ALL CONDITIONS CONTAINED IN SECTION 4.08 OF THE MASTER AGREEMENT ARE SATISFIED. REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.

8401 Greensboro Drive

Suite 200

McLean, Virginia 22101

Attention:_______________

[Note: Subject to change in the event Lender or its address changes] [________________, _____]

Re: REQUEST issued pursuant to Master Credit Facility Agreement, dated as of March 2, 2004, as amended by Amendment No. 1 to Master Credit Facility Agreement dated as of November 17, 2005, by and between Mid-America Apartments, L.P., a Tennessee limited partnership, Mid-America Apartment Communities, Inc., a Tennessee corporation and Mid-America Apartments of Texas, L.P., a Texas limited partnership (collectively, “Borrower”) and Lender (as amended from time to time, the “MasterAgreement”)

Ladies and Gentlemen:

This constitutes an Expansion Request pursuant to the terms of the above-referenced Master Agreement.

Section 1.Request. Borrower hereby requests an increase in the maximum credit commitment in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:

(a)        Amount of Increase. The amount of the increase in the maximum credit commitment is as follows:

NAME	INCREASE	RESULTING AMOUNT OF COMMITMENT
MAXIMUM CREDIT COMMITMENT:

[Note: Section 3.04(a) of the Master Agreement limits the maximum amount of increase in the DMBS Loan Commitment to the amount which, when added to the “Commitment” of Fannie Mae under the Master Reimbursement Agreement, shall not exceed $100,000,000 and the increase in the DMBS Loan Commitment must be in the minimum amount of $1,000,000.]

(b)        Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 4.08 of the Master Agreement will be delivered on or before the Closing Date.

(c)        The Loan Fee shall be __________ for Loans made from the increase in the Commitment

Section 2.Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.

[Remainder of page intentionally left blank.]

Sincerely,

MID-AMERICA APARTMENTS, L.P.

a Tennessee limited partnership

By: Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: _______________________________

Al Campbell

Senior Vice President and Treasurer

EX-10.40

EXHIBIT 10.40

AMENDMENT NO. 2 TO MASTER CREDIT FACILITY AGREEMENT

This AMENDMENT NO. 2 TO MASTER CREDIT FACILITY AGREEMENT dated as of February 23, 2006 (this “Amendment”) among MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership, MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation and MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (individually and collectively the “Borrower”), PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”), and FANNIE MAE, a corporation organized and existing under the Federal National Mortgage Association Charter Act (“Fannie Mae”), amends that certain Master Credit Facility Agreement dated as of March 2, 2004 by and between the Borrower and the Lender, as amended by Amendment No. 1 to Master Credit Facility Agreement dated as of November 17, 2005 (“Amendment No. 1”) among the Borrower, the Lender and Fannie Mae (as the same may be further amended or supplemented from time to time, the “Master Credit Agreement”) . Capitalized terms used in this Amendment and not otherwise defined shall have the same meanings given to such terms in the Master Credit Agreement.

RECITALS

A.         Pursuant to the Master Credit Agreement, Lender made an initial Loan to Borrower in the amount of $11,720,000, which Initial Loan was assigned to Fannie Mae.

B.         Pursuant to Amendment No. 1, the Lender agreed to make one or more additional Loans under the Master Credit Agreement and to permit the addition of additional Mortgaged Properties to the Collateral Pool, including without limitation a loan in the amount of $2,525,000 with respect to an Additional Mortgaged Property known as Runaway Bay Apartments in Charleston County, South Carolina. Pursuant to Amendment No. 1, the Master Credit Agreement was amended to establish a $14,245,000DMBS Loan Facility in favor of Borrower (subject to increase as provided therein), to provide for additions to the Collateral Pool and to change certain provisions of the Master Credit Agreement.

C.         Borrower has requested and Lender and Fannie Mae have agreed to add an Additional Mortgaged Property to the Collateral Pool, to make an additional Loan in connection therewith in the amount of $3,691,000 and to increase the DMBS Loan Facility to $17,936,000.

D.         Fannie Mae, the Lender and the Borrower intend these Recitals to be a material part of this Amendment.

AGREEMENTS

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the mutual covenants and agreements set forth herein, and other good and valuable consideration, all of

which each party agrees constitutes sufficient consideration received at and before the execution hereof, the parties agree as follows:

1.          Section 3.04(a) of the Master Credit Agreement (as set forth in Amendment No. 1) is hereby amended and restated to read in its entirety as follows:

(a)        Maximum Amount of Increase in Commitment. Borrower hereby agrees that the total DMBS Loan Commitment, when added to the “Commitment” of Fannie Mae under the Master Reimbursement Agreement, shall not exceed $109,451,000.

2.          Appendix I is hereby amended by deleting the definition DMBS Loan Commitment (set forth in Amendment No. 1) in its entirety and replacing such definition with the following

“DMBS Loan Commitment” means $17,936,000, plus such amount as the Borrower may elect to add to the DMBS Loan Commitment in accordance with Section 3.04.”

3.          Appendix I is hereby amended by adding thereto and placing in alphabetical order the following definitions:

“Hedge Reserve Escrow Account”means each Hedge Reserve Escrow Account established and maintained pursuant to the applicable Hedge Reserve Escrow Account Security Agreement.

“Hedge Reserve Escrow Account Security Agreement” means a Hedge Reserve Escrow Account Security Agreement, by and among the Borrower, the Lender and Fannie Mae, substantially in the form of Exhibit O to the Master Reimbursement Agreement (as the same may be modified to provide for the monthly deposits required by Section 12.06 hereof), as such agreement may be amended, supplemented or restated from time to time.

4.          Section 12.01 of the Master Credit Agreement is hereby amended and restated to read in its entirety as follows:

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“SECTION 12.01 Interest Rate Protection.

(a)         Hedges. To protect against fluctuations in interest rates, Borrower shall make arrangements for a Hedge to be in place and maintained at all times with respect to each Loan. Each Hedge must be in place on the applicable Closing Date for a period beginning on such Closing Date and ending not earlier than the date which is the fifth (5th) anniversary of such Closing Date (the “Initial Hedge Period”). The obligation of the Borrower to acquire, maintain and replace Hedges as required by this Article shall not be diminished or otherwise affected by any shortfall between the balance of the Hedge Reserve Escrow Account pursuant to Section 12.06 and the cost of any Hedge.

(b) Subsequent Hedges. A Subsequent Hedge shall be required for the remaining term of each Loan, upon the expiration of the Cap in place for the Initial Hedge Period or any Subsequent Hedge Period. A Subsequent Hedge must be fully executed and delivered on terms and conditions consistent with this Agreement. A Subsequent Hedge must have an effective date not later than the day following the last day of the Initial Hedge Period or any prior Subsequent Hedge Period. Any Subsequent Hedge must terminate on the earlier of (1) a date which is not earlier than the fifth (5th) anniversary of the effective date of such Subsequent Hedge, and (2) the Termination Date (the “Subsequent Hedge Period”). Notwithstanding this Section, if a Hedge unexpectedly and unavoidably terminates on a date other than its scheduled expiration date, the Borrower shall, within ten days of such termination, obtain a new Hedge satisfying the requirements of this Section.”

5. Section 12.02(b) is amended to read as follows:

“(b)             be in effect for the entire Initial Hedge Period or Subsequent Hedge Period, as applicable.”

6. Article XII is amended by adding the following Section 12.06:

“SECTION 12.06. Upon the termination of the effectiveness of Section 11.01(a) pursuant to Section 11.01(b) and during any period in which a Hedge with a term of five (5) years (a “Five Year Hedge”) is in effect, the Borrower shall make monthly deposits (“Monthly Deposit”) to the Loan Servicer (as defined in the Master Reimbursement Agreement) to be held under the Hedge Reserve Escrow Account Security Agreement to provide moneys for the purchase of a Subsequent Hedge. The Borrower shall make the Monthly Deposits on each Servicing Payment Date (as defined in the Master Reimbursement Agreement) during the term of a Five Year Hedge. The first deposit will be due on the Servicing Payment Date in the next month after the effective date of such Five Year Hedge. The amount of each deposit (as adjusted from time to time, “Monthly Deposit Amount”) shall be determined in accordance with this Section.

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(a)       Initial Monthly Deposit Amount. Initially, the Monthly Deposit Amount will be 1/60th of the purchase price of the Five Year Hedge then coming into effect, until changed, if at all, by the recalculation of the Monthly Deposit Amount on any Change Date as described in subsection (b).

(b)       Change Dates. The Monthly Deposit Amount will be subject to adjustment each calendar year. The date on which any adjustment in the Monthly Deposit Amount becomes effective is called a “Change Date.” The Change Date will fall in the same month each year as the month in which the related Five Year Hedge became effective. The Change Date will be the Servicing Payment Date of that month. The first Change Date related to a Five Year Hedge will occur in the next calendar year after such Hedge became effective. Subsequent Change Dates will fall on the Servicing Payment Date for that same month each following calendar year. Whenever a Subsequent Hedge which will be a Five Year Hedge is purchased, the Change Date will change. The new Change Date will fall on the Servicing Payment Date for the month in which the new Five Year Hedge became effective, commencing in the next calendar year after such Hedge became effective. Subsequent Change Dates will fall on the Servicing Payment Date for that same month each following calendar year unless again changed in accordance with this subsection.

(c)       Determination of New Monthly Deposit Amount. One month before each Change Date, the Loan Servicer shall determine the cost of the next Subsequent Hedge, based on then existing market conditions, as if it the next Subsequent Hedge were to be purchased at that time (“Trial Hedge Cost”). The Loan Servicer will then compare (i) the Trial Hedge Cost with (ii) the product of multiplying the Monthly Deposit Amount then in effect times 60. If the Trial Hedge Cost is not the higher number, no adjustment to the Monthly Deposit Amount will be made. If the Trial Hedge Cost is the higher number, the Loan Servicer shall adjust the Monthly Deposit Amount to be effective from (and including) the Change Date then about to occur (“Next Change Date”). The new Monthly Deposit Amount will be that amount which shall cause the deposit balance of the Hedge Reserve Escrow Account, at the expiration date of the then outstanding Hedge, to equal the Trial Hedge Cost, taking into consideration the balance of the Hedge Reserve Escrow Account immediately before the Next Change Date and the number of deposits remaining to be made over the months from (and including) the Next Change Date to the expiration date of the then outstanding Hedge. The Loan Servicer shall make the calculation on the assumption that the applicable Borrower will make each monthly deposit in the full amount when due and no further adjustment to the Monthly Deposit Amount will be made after the adjustment taking effect on the Next Change Date. In calculating the new Monthly Deposit Amount, the Loan Servicer shall ignore any investment income on funds held under the Hedge Reserve Escrow Account Security Agreement.”

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7.          The “SCHEDULE OF MORTGAGED PROPERTIES AND INITIAL VALUATIONS” attached as Exhibit A to the Master Credit Agreement is hereby amended and restated in its entirety as set forth in Annex I attached hereto.

8.          This Amendment may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page.

9.          This Amendment shall be construed, interpreted and enforced in accordance with, and the rights and remedies of the parties hereto shall be governed pursuant to, the provisions of Section 14.06 of the Master Credit Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”), which provisions are hereby incorporated into this Amendment No. 1 by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

10.        Except as specifically modified by this Amendment, all of the terms and provisions of the Master Credit Agreement shall remain in full force and effect.

11.        The Borrower represents and warrants to Fannie Mae as follows:

(a)        All representations and warranties set forth in the Master Credit Agreement are true and correct as of February 23, 2006.

(c)        No Event of Default or Potential Event of Default as described in the Master Credit Agreement has occurred as of February 23, 2006.

[The Remainder of this Page Has Been Intentionally Left Blank.]

5

IN WITNESS WHEREOF, the parties hereto have duly signed, sealed, and delivered this Amendment on the day and year first above written.

BORROWER:

MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership

By:    Mid-America Apartment Communities, Inc., a Tennessee corporation, its sole General Partner

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By:    MAC of Delaware, Inc., a Delaware corporation, its sole General Partner

By: __________________________

John A. Good

Assistant Secretary

S-1

FANNIE MAE

By:__________________________________
	Name:_________________________
	Title:__________________________

S-2

LENDER

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware Corporation

By: 

Name: Sharon D. Singleton
Title: Vice President - Closing Officer

S-3

ANNEX I

EXHIBIT A TO MASTER CREDIT AGREEMENT

SCHEDULE OF MORTGAGED PROPERTIES,

INITIAL VALUATIONS AND INITIAL LOAN ALLOCATIONS

Property Name	Property Address	Initial Valuation	Initial DMBS Loan Allocation
The Park at Hermitage	Davidson County, Tennessee	$19,900,000	$6,755,000
Stassney Woods	Austin, Texas	$11,345,000	$2,620,000
Travis Station Apartments	Austin, Texas	$9,673,000	$2,345,000
Runaway Bay Apartments	Mount Pleasant, Charleston County, South Carolina	$16,400,000	$2,525,000
St. Augustine Apartments	Jacksonville, Duval County, Florida	$29,000,000	$3,691,000

EX-21

EXHIBIT 21

List of Subsidiaries of Mid-America Apartment Communities, Inc.

America First Florida REIT Inc

Green Oaks LLC

Green Oaks Partners Limited Partnership

Jefferson at Sunset Valley, LP

Jefferson Village LP

JPI Coral Springs LP

MAAC of Duval LP

MAACH Holdings II LLC

MAACH Holdings LLC

MAACOD

MAC II of Delaware, Inc

MAC III of Delaware, Inc

MAC of Delaware Inc

MAC of Huntington Chase LLC

Mid America Apartments LP

Mid America Apartments of Duval LP

Mid America Apartments of Little Rock LP

Mid America Apartments of Savannah

Mid America Apartments of Texas LP

Mid-America CH Realty II LP

Mid-America CH Realty LP

Monthaven Management, Inc.

Monthaven Park, LLC

Paddock Club Florence LP

Preserve at Arbor Lakes LLC

Preston Hills, LLC

Timber Glen LP

Timber Manager LLC

Woods of Post House LP

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 33-91416, 333-98065, 333-115834, and 333-123945) and Registration Statements (Forms S-3 No. 333-112469, 333-82526, 333-71315, 333-57309, and 333-123954) of Mid-America Apartment Communities, Inc. of our reports dated February 27, 2006, with respect to the consolidated financial statements and schedule of Mid-America Apartment Communities, Inc., Mid-America Apartment Communities, Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Mid-America Apartment Communities, Inc., included in the 2005 Annual Report (Form 10-K) for the year ended December 31, 2005.

/s/ Ernst & Young LLP

Memphis, Tennessee
February 27, 2006

EX-23.2

EXHIBIT 23.2

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Mid-America Apartment Communities, Inc.

We consent to the incorporation by reference in the registration statement (Nos. 33-91416, 333-98065 and 333-115834) on Form S-8 and the registration statements (Nos. 333-112469, 333-82526, 333-71315, 333-57309, and 333-123954) on Form S-3 of Mid-America Apartments Communities, Inc. of our report dated March 8, 2005, relating to the consolidated balance sheet of Mid-America Apartment Communities, Inc. and subsidiaries as of December 31, 2004, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2004, and the related financial statement schedule 2004 and 2003 information, which report appears in the December 31, 2005 Annual Report on Form 10-K of Mid-America Apartment Communities, Inc.

/s/ KPMG LLP

Memphis, Tennessee
February 27, 2006

EX-31.1

EXHIBIT 31.1

Chief Executive Officer Certification

I, H. Eric Bolton, Jr., certify that:

(1) I have reviewed this annual report on Form 10-K of Mid-America Apartment Communities, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 20, 2006 /s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chief Executive Officer

 

EX-31.2

EXHIBIT 31.2

Chief Financial Officer Certification

I, Simon R.C. Wadsworth, certify that:

(1) I have reviewed this annual report on Form 10-K of Mid-America Apartment Communities, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 20, 2006 /s/ Simon R.C. Wadsworth
Simon R.C. Wadsworth
Chief Financial Officer

 

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Eric Bolton, Jr., President and Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
President and Chief Executive Officer
February 20, 2006

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Simon R.C. Wadsworth, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Simon R.C. Wadsworth
Simon R.C. Wadsworth
Chief Financial Officer
February 20, 2006