-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T6N/nInIGGtOVxWu5SQAKk/XpknuNL3IX+/fBn0sc0A3I+9XRS1tBkVUoT6CK7U9 5vul8FnZMpH6DwfnOIO4LA== 0000912595-04-000090.txt : 20040805 0000912595-04-000090.hdr.sgml : 20040805 20040805160722 ACCESSION NUMBER: 0000912595-04-000090 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040805 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MID AMERICA APARTMENT COMMUNITIES INC CENTRAL INDEX KEY: 0000912595 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 621543819 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12762 FILM NUMBER: 04954879 BUSINESS ADDRESS: STREET 1: 6584 POPLAR AVE STREET 2: STE 340 CITY: MEMPHIS STATE: TN ZIP: 38138 BUSINESS PHONE: 9016826600 MAIL ADDRESS: STREET 1: 6584 POPLAR AVE STREET 2: SUITE 340 CITY: MEMPHIS STATE: TN ZIP: 38138 8-K 1 er2q04.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 August 5, 2004 Date of Report (Date of earliest event reported) MID-AMERICA APARTMENT COMMUNITIES, INC. (Exact Name of Registrant as Specified in Charter) TENNESSEE 1-12762 62-1543819 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number) 6584 POPLAR AVENUE, SUITE 300 MEMPHIS, TENNEESSEE 38138 (Address of principal executive offices) (901) 682-6600 (Registrant's telephone number, including area code) (Former name or address, if changed since last report) ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits Exhibit Number Description -------- ----------------------------------- 99.1 Press Release dated August 5, 2004 ITEM 12. Results of Operations and Financial Condition On August 5, 2004, the Registrant issued an earnings release for the quarter ended June 30, 2004, a copy of which is furnished as Exhibit 99.1 to this Current Report. This release is furnished by the Registrant pursuant to Item 12 of Form 8-K and is not to be considered "filed" under the Exchange Act, and shall not be incorporated by reference into any previous or future filing by the Registrant under the Securities Act or the Exchange Act. SIGNATURES Pursuant to the requirements 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: August 5, 2004 /s/Simon R.C. Wadsworth Simon R.C. Wadsworth Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) EX-99 2 er2q04x.txt EXHIBIT 99.1 Press Release Dated August 5, 2004 ================================================================================ PRESS RELEASE ================================================================================ FROM: SIMON R.C. WADSWORTH SUBJECT: MID-AMERICA SECOND QUARTER AHEAD OF EXPECTATIONS AS OPERATING PERFORMANCE IMPROVES DATE: AUGUST 5, 2004 - -------------------------------------------------------------------------------- Memphis, TN, Mid-America Apartment Communities, Inc. (NYSE: MAA) reported Funds From Operations ("FFO") of $17,275,000, or $0.74 per share/unit for the second quarter ended June 30, 2004, a second quarter record. This was $0.02 per share/unit higher than analyst's First Call estimates and compares to $15,069,000, or $0.73 per share/unit for the same quarter of a year ago. FFO is the generally accepted measure of operating performance for real estate investment trusts. Reconciliation and discussion of FFO can be found later in this release. Net income available for common shareholders for the quarter ended June 30, 2004 was $1,286,000 or $0.06 per common share, as compared to $1,180,000, or $0.07 per common share for the same quarter a year ago. Highlights for the quarter were: o Average same store physical occupancy in the second quarter was 93.3%, an increase from 92.6 % in the same quarter a year ago. o Same-store property net operating income grew by 2.1% as compared to the same quarter last year; the best operating performance achieved over the last twelve quarters. o The acquisition of the 240-unit Watermark property in the Dallas metro market was completed during the quarter. o Fixed charge coverage remains strong at 2.61x. o The company's insurance program was successfully renewed resulting in significant cost reductions for the balance of 2004 and 2005. Eric Bolton, Chairman and CEO said, "Our solid second quarter performance underscores the success of our strategy. Mid-America's strong operating capabilities and investment focus on deploying capital in the high growth southeast region of the country, diversified across large, middle and small tier markets, continue to deliver excellent results. We believe that our markets and portfolio will show steady recovery and recapture a higher level of earnings as the improving economy continues to create new jobs and higher interest rates. By remaining committed to protecting property values and long-term FFO growth potential during the weak operating environment of the last three years, Mid-America's portfolio is poised to capture higher FFO as leasing conditions continue to improve. In addition, as we make steady progress in further improving the quality and value of our real estate portfolio through new acquisitions, Mid-America's ability to strengthen dividend coverage and grow value per share is enhanced." Simon Wadsworth, Executive Vice-President and CFO said, "Second quarter results were ahead of expectations as a result of lower than expected interest expense as well as a 1 cent per share refund on last year's insurance program. Our insurance policy renewal effective July 1st will result in 4 cents per share expense savings over the next 12 months compared to our prior expectations, which we've incorporated into our forecasts. As previously disclosed, FFO for the quarter includes $0.015 per share/unit of non-cash income relating to the amortization of the adjustment of the value of debt assumed. We completed over $100 million of debt refinancings through the second quarter of 2004, and initiated a new $100 million credit facility with Freddie Mac in June, all of which contributed to our reduced interest costs. Our improving operations and financing programs have provided us with significant balance sheet flexibility, positioning us to take advantage of current markets. "As a result of the strong second quarter, the insurance savings, and the accretive acquisition of Watermark, w're again raising our forecast range of FFO per share for the year to $2.94 to $2.96, with a mid-point of $2.95, an increase of 3 cents. We expect FFO per share of 69 to 70 cents in the third quarter, and 75 to 76 cents in the fourth quarter." MAA is a self-administered, self-managed apartment-only real estate investment trust which currently owns or has ownership interest in 36,952 apartment units throughout the southeast and southcentral U.S. For further details, please refer to our website at www.maac.net or contact Simon R. C. Wadsworth at (901) 682-6668, ext. 105. 6584 Poplar Ave., Suite 300, Memphis, TN 38138. Certain matters in this press release may constitute forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such statements include, but are not limited to, statements made about anticipated market conditions, anticipated acquisitions, redevelopment opportunities, and property financing. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including a downturn in general economic conditions or the capital markets, competitive factors including overbuilding or other supply/demand imbalances in some or all of our markets, shortage of acceptable property acquisition candidates, changes in interest rates and other items that are difficult to control, as well as the other general risks inherent in the apartment and real estate businesses. Reference is hereby made to the filings of Mid-America Apartment Communities, Inc., with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K, and its annual report on Form 10-K, particularly including the risk factors contained in the latter filing. - ------------------------------------------------------------------------------------------------------------------------------------ CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share data) - ------------------------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended June 30, June 30, ---------------------------------- ---------------------------------- 2004 2003 2004 2003 ------------------ --------------- ---------------- ----------------- Property revenues $ 66,727 $ 57,817 $ 132,927 $ 115,115 Management and fee income, net 149 266 294 514 Property operating expenses (27,624) (23,762) (55,091) (46,820) Depreciation (17,098) (13,983) (34,331) (27,858) Property management expenses (3,014) (2,290) (5,567) (4,551) General and administrative (2,515) (1,774) (4,886) (3,600) - ----------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before non-operating items 16,625 16,274 33,346 32,800 Interest and other non-property income 136 234 279 463 Interest expense (12,191) (10,772) (24,786) (22,407) Loss on debt extinguishment (359) (205) (277) (205) Amortization of deferred financing costs (406) (504) (869) (1,128) Minority interest in operating partnership income (534) (206) (954) (339) Loss from investments in unconsolidated entities (33) (183) (74) (308) Net gain on insurance and other settlement proceeds 1,754 528 3,382 607 - ----------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations 4,992 5,166 10,047 9,483 Discontinued operations: Property operations - (61) - (52) - ----------------------------------------------------------------------------------------------------------------------------------- Net income 4,992 5,105 10,047 9,431 Preferred dividend distribution (3,706) (3,925) (7,412) (7,850) - ----------------------------------------------------------------------------------------------------------------------------------- Net income available for common shareholders $ 1,286 $ 1,180 $ 2,635 $ 1,581 =================================================================================================================================== Weighted average common shares - Diluted 20,585 18,047 20,475 17,984 Net income per share available for common shareholders $0.06 $0.07 $0.13 $0.09 - ----------------------------------------------------------------------------------------------------------------------------------- FUNDS FROM OPERATIONS (in thousands except per share data) - ----------------------------------------------------------------------------------------------------------------------------------- Net income $ 4,992 $ 5,105 $ 10,047 $ 9,431 Addback: Depreciation real estate assets 16,762 13,638 33,661 27,169 Subtract: Net gain on insurance and other settlement proceeds 1,754 528 3,382 607 Addback: Depreciation real estate assets of discontinued operations - 39 - 78 Addback: Depreciation real estate assets of unconsolidated entities 447 534 898 1,033 Subtract: Preferred dividend distribution 3,706 3,925 7,412 7,850 Addback: Minority interest in operating partnership income 534 206 954 339 - ----------------------------------------------------------------------------------------------------------------------------------- Funds from operations 17,275 15,069 34,766 29,593 Recurring capex 3,954 3,723 6,542 6,216 - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted funds from operations $ 13,321 $ 11,346 $ 28,224 $ 23,377 - ----------------------------------------------------------------------------------------------------------------------------------- Weighted average common shares and units - Diluted 23,256 20,781 23,150 20,719 Funds from operations per share and unit - Diluted $ 0.74 $ 0.73 $ 1.50 $ 1.43 Adjusted funds from operations per share and unit - Diluted $ 0.57 $ 0.55 $ 1.22 $ 1.13
- ------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS (in thousands) - -------------------------------------------------------------------------------------------------------------------------
June 30, December 31, 2004 2003 -------------- ---------------- Assets Gross real estate assets $ 1,731,422 $ 1,670,417 Accumulated depreciation (372,631) (339,704) Other real estate assets, net 26,185 21,136 - -------------------------------------------------------------------------------------- Real estate assets, net 1,384,976 1,351,849 Cash and cash equivalents, including restricted cash 45,472 20,880 Other assets 28,357 33,804 - -------------------------------------------------------------------------------------- Total assets $ 1,458,805 $ 1,406,533 ====================================================================================== Liabilities Notes payable $ 1,017,578 $ 951,941 Other liabilities 49,052 61,279 - -------------------------------------------------------------------------------------- Total liabilities 1,066,630 1,013,220 Shareholders' equity and minority interest 392,175 393,313 - -------------------------------------------------------------------------------------- Total liabilities & shareholders' equity $ 1,458,805 $ 1,406,533 ======================================================================================
- ------------------------------------------------------------------------------------------------------------------------- SHARE AND UNIT DATA (in thousands) - -------------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended June 30, June 30, -------------------------------- ----------------------------- 2004 2003 2004 2003 ------------ ----------------- ------------- ------------- Weighted average common shares - Basic 20,275 17,824 20,157 17,788 Weighted average common shares - Diluted 20,585 18,047 20,475 17,984 Weighted average common shares and units - Basic 22,946 20,558 22,832 20,523 Weighted average common shares and units - Diluted 23,256 20,781 23,150 20,719 Common shares at June 30 - Basic 20,385 17,985 20,385 17,985 Common shares at June 30 - Diluted 20,738 18,237 20,738 18,237 Common shares and units at June 30 - Basic 23,057 20,719 23,057 20,719 Common shares and units at June 30 - Diluted 23,409 20,971 23,409 20,971
- ------------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS (Dollars and shares in thousands except per share data) - -------------------------------------------------------------------------------------------------------------------------
ROA Three Months Ended Trailing June 30, 2004 4 Quarters --------------------- ------------ Net income $ 4,992 $ 20,822 Net gain on insurance and other settlement proceeds (1,754) (5,717) Gain on sale of discontinued operations - (1,919) Depreciation 17,098 65,491 Amortization of deferred financing costs 406 1,803 Interest expense 12,191 48,411 - ----------------------------------------------------------------------------------------------------- EBITDA $ 32,933 $ 128,891 =====================================================================================================
Annualized Trailing 2Q04 4 Quarters ----------------- ----------------- Gross Real Estate Assets, Average $1,761,064 $1,710,148 EBITDA $ 131,732 $ 128,891 EBITDA/Gross Real Estate Assets 7.5% 7.5%
Three Months Ended June 30, ---------------------------------- 2004 2003 --------------- ---------------- EBITDA/Debt Service 2.61x 2.60x EBITDA/Fixed Charges 2.61x 2.65x Total Debt as % of Gross Real Estate Assets 58% 55% MAA portion of JV debt at June 30 $24,883 $41,554
- ---------------------------------------------------------------------------------------------------------------- COMMUNITY STATISTICS - ---------------------------------------------------------------------------------------------------------------- Properties are grouped by operational responsibility.
At June 30, 2004 --------------------------------------------------------------- Average Number of Portfolio Rental Rate Units Concentration Occupancy Per Unit -------------- ----------------- --------------- -------------- Tennessee Memphis 4,837 13.08% 94.3% $ 635.17 Nashville 1,855 5.02% 93.9% $ 716.70 Chattanooga 943 2.55% 93.8% $ 576.80 Jackson 664 1.80% 95.8% $ 583.17 Florida Jacksonville 3,631 9.82% 91.1% $ 770.64 Tampa 1,120 3.03% 92.3% $ 778.64 Other 2,518 6.81% 92.7% $ 739.16 Georgia Atlanta 2,116 5.73% 92.4% $ 714.97 Columbus / LaGrange 1,509 4.08% 93.6% $ 663.08 Augusta / Aiken / Savannah 912 2.47% 91.6% $ 618.84 Other 1,962 5.31% 95.1% $ 677.15 Texas Dallas 3,616 9.79% 89.9% $ 725.04 Houston 1,310 3.55% 90.8% $ 717.46 Austin 1,254 3.39% 92.0% $ 618.49 South Carolina Greenville 1,492 4.04% 94.8% $ 548.05 Other 784 2.12% 91.5% $ 685.74 Kentucky Lexington 924 2.50% 93.6% $ 697.82 Other 624 1.69% 96.0% $ 616.73 Mississippi 1,673 4.53% 95.2% $ 607.23 Alabama 952 2.58% 93.6% $ 648.93 Arkansas 808 2.19% 94.8% $ 630.51 North Carolina 738 2.00% 93.0% $ 542.50 Ohio 414 1.12% 93.2% $ 692.82 Virginia 296 0.80% 95.9% $ 766.79 - ----------------------------------------------------------------------------------------------- Total 36,952 100.00% 93.0% $ 677.91
- ---------------------------------------------------------------------------------------------------------------- SAME STORE STATISTICS - ---------------------------------------------------------------------------------------------------------------- Dollars in thousands except Average Rental Rate
Three Months Three Months Percent Change Three Months Percent Change Ended Ended From Ended From June 30, 2004 June 30, 2003 June 30, 2003 Mar 31, 2004 Mar 31, 2004 --------------- --------------- ---------------- -------------- ---------------- Revenues $54,811 $53,702 2.1% $54,506 0.6% Property Operating Expenses 15,134 14,818 2.1% 14,974 1.1% RE Taxes and Insurance 7,087 6,951 2.0% 7,099 -0.2% Other Expenses 148 169 -12.4% 143 3.5% - ---------------------------------------------------------------------------------------------------------------- Total Operating Expenses 22,369 21,938 2.0% 22,216 0.7% - ---------------------------------------------------------------------------------------------------------------- NOI $32,442 $31,764 2.1% $32,290 0.5% - ---------------------------------------------------------------------------------------------------------------- Units (1) 29,043 29,043 29,043 Average Rental Rate (1) $658.25 $656.05 0.3% $658.08 0.0% Average Physical Occupancy (1) 93.3% 92.6% 0.7% 93.5% -0.2%
(1) Values are at June 30, 2004 and 2003, and March 31, 2004. - -------------------------------------------------------------------------------------------------------------------------- DEBT AS OF JUNE 30, 2004 - -------------------------------------------------------------------------------------------------------------------------- Dollars in thousands
Principal Average Years Average Balance to Maturity(1) Rate --------------- ------------------ -------------- Conventional - Fixed Rate or Swapped $ 585,914 9.6 6.3% Tax-free - Fixed Rate or Swapped 108,889 25.0 5.1% Conventional - Variable Rate 289,345 8.4 2.1% Tax-free - Variable Rate 33,430 21.2 1.9% - ---------------------------------------------------------------------------------------- Total $ 1,017,578 11.3 4.8%
(1) Maturities on swapped balances are calculated using the life of the underlying variable debt. FUTURE PAYMENTS
Average Scheduled Rate of Amortization Maturities Total Maturities ---------------- ----------------- --------------- ------------- 2004 $ 1,383 $ 67,500 $ 68,883 4.8% 2005 2,549 - 2,549 - 2006 2,679 18,459 21,138 4.8% 2007 2,767 - 2,767 - 2008 2,602 30,539 33,141 5.5% Thereafter 81,590 807,510 889,100 4.8% - ------------------------------------------------------------------------------------------------------- Total $ 93,570 $ 924,008 $ 1,017,578 4.8%
- -------------------------------------------------------------------------------------------------------------------------- OTHER DATA - --------------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30, Six Months Ended June 30, -------------------------------- ----------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- ------------ Number of apartment units with ownership interest (excluding development units not delivered) 36,952 34,815 36,952 34,815 Apartment units added during period, net 240 308 1,218 892 PER SHARE DATA Dividend declared per common share $ 0.585 $ 0.585 $ 0.585 $ 0.585
DIVIDEND INFORMATION (latest declaration) Payment Payment Record per Share Date Date --------------- ----------------- -------------- Common Dividend - quarterly $0.5850 07/31/2004 07/23/2004 Preferred Series F - monthly $0.1927 08/16/2004 08/01/2004 Preferred Series H - quarterly $0.51875 06/23/2004 06/13/2004
- -------------------------------------------------------------------------------- NON-GAAP FINANCIAL DEFINITIONS - -------------------------------------------------------------------------------- Funds From Operations (FFO) FFO represents net income (computed in accordance with accounting principles generally accepted in the United States of America, 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 definition. Disposition of real estate assets includes sales of discontinued operations as well as proceeds received from insurance and other settlements from property damage. Our calculation of FFO may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs. FFO should not be considered as an alternative to net income. The Company believes that FFO is helpful in understanding the Company's operating performance in that FFO 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. While the Company has included the amount charged to retire preferred stock in excess of carrying values in its FFO calculation in response to the SEC'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 believes that FFO before amount charged to retire preferred stock in excess of carrying values is also an important measure of operating performance as the amount charged to retire preferred stock in excess of carrying values is a non-cash adjustment representing issuance costs in prior periods for preferred stock. Adjusted Funds From Operations (AFFO) For purposes of these computations, AFFO is composed of FFO less recurring capital expenditures plus the premiums and original issuance costs of preferred stock that was redeemed. As an owner and operator of real estate, we consider AFFO to be an important measure of performance from core operations because AFFO measures our ability to control revenues, expenses and recurring capital expenditures. Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) For purposes of these computations, EBITDA is composed of net income before net gain on discontinued operations and insurance settlement proceeds, plus depreciation, interest expense, and amortization of deferred financing costs. EBITDA is a non-GAAP financial measure we use as a performance measure. As an owner and operator of real estate, we consider EBITDA to be an important measure of performance from core operations because EBITDA does not include various income and expense items that are not indicative of our operating performance. EBITDA should not be considered as an alternative to net income as an indicator of financial performance. Our computation of EBITDA may differ from the methodology utilized by other companies to calculate EBITDA. -----END PRIVACY-ENHANCED MESSAGE-----