EX-99 2 ex-99.htm PRESS RELEASE Press Release

MID-AMERICA APARTMENT COMMUNITIES, INC.
A self-managed equity REIT


PRESS RELEASE


 
MID-AMERICA REPORTS STRONG FIRST QUARTER RESULTS
 

Memphis, TN: May 4, 2006. Mid-America Apartment Communities, Inc. (NYSE: MAA) (the “Company”) reported net income available for common shareholders for the quarter ended March 31, 2006, of $1,636,000, or $0.07 per common share, as compared to $613,000, or $0.03 per common share for the quarter ended March 31, 2005. Funds from operations (“FFO”), the widely accepted measure of performance for real estate investment trusts, was $20,781,000, or $0.84 per share/unit for the quarter ended March 31, 2006, compared to $18,741,000 or $0.79 per share/unit for the same quarter in the prior year. This quarter’s FFO per share/unit of $0.84 is the highest first quarter FFO performance in the Company’s twelve-year history and it represents a year over year growth in FFO per share/unit of 6.3%. The quarter’s FFO per share/unit performance was 4 cents ahead of First Call’s estimate prior to the Company issuing revised upward guidance on April 18th. Results for the quarter include a charge of ($550,000), ($0.02) per share/unit, for debt extinguishment; year over year growth of FFO per share/unit before this charge was 8.9%. A reconciliation of FFO to net income and an expanded discussion of the components of FFO can be found later in this release.

Highlights:

·  
Same store net operating income growth of 7.1% is the highest first quarter performance in ten years.
·  
Same store occupancy of 95.3% at the end of the first quarter was 160 basis points ahead of the same point a year ago.
·  
Strong occupancy was evident across all three of the Company’s market tiers with large, mid-sized and small-tier markets all ending the quarter above 95%.
·  
Same store rent growth of 2.1% is the highest first quarter performance since 2001.
·  
The Company completed the acquisition of two new apartment communities; one in Raleigh, NC and one in Austin, TX during the quarter, and announced an additional acquisition in Dallas, TX subsequent to quarter-end.
·  
Fixed charge coverage in the first quarter improved to 2.12 times, from 2.09 times during the same quarter a year ago.

 
Eric Bolton, Chairman and CEO said, “Our operating performance underscores the strength of Mid-America’s portfolio of properties and operating platform. We are well positioned to deliver strong operating results as leasing conditions in the Sunbelt region markets begin to recover. The improvements made this past year to operating systems and revenue management capabilities should further boost performance at our existing properties. We continue to capture very promising rent growth results from our kitchen and bath upgrade initiative at a number of our properties and expect this project will also boost FFO growth from our existing portfolio over the next few years. While the environment for capturing external value growth through acquiring new properties remains competitive, our pace of acquisitions is ahead of last year and we are optimistic about expanding opportunities to acquire additional properties over the course of this year.”

Simon Wadsworth, Executive Vice President and CFO said, “First quarter results were ahead of our initial forecast for the quarter, driven by strong same store revenues. Compared to last year, net delinquency was reduced by almost 44%, and our utility reimbursements increased by 23% in part due to the systems improvements implemented late last year. Higher occupancy, reduced concessions, and increased rents also contributed to another quarter of strong revenue growth.

At quarter end, we had $76 million of unused debt capacity. We continue to be well protected against rising interest rates, with over 84% of our debt fixed, swapped or capped, and only $59 million of fixed rate debt maturing in the balance of the year.

Based on the strong first quarter’s operating performance, we’re increasing our FFO guidance for 2006 to a range of $3.20 to $3.38 per share/unit, with a mid-point of $3.29 per share/unit, up 4 cents from the mid-point that we’d previously established. An important component is our forecast of same-store NOI growth in the 4% to 6% range for the full year. We forecast FFO per share/unit to be in a range of $0.80 to $0.88 in Q2; $0.76 to $0.84 in Q3; and $0.78 to $0.86 in Q4. We’ll review our Q1 results and our 2006 forecast in more detail during our conference call and will post our prepared comments on our web-site”

Supplemental data to this release can be found on the investors page of our web site at www.maac.net. The Company will host a conference call to further discuss first quarter results on Friday, May 5, 2006 at 9:15 AM Central Time. The conference call-in number is 866-206-5917 and the moderator’s name is Eric Bolton.
 
MAA is a self-administered, self-managed apartment-only real estate investment trust, which currently owns or has ownership interest in 39,179 apartment units throughout the Sunbelt region of the U.S. For further details, please refer to our website at www.maac.net or contact Investor Relations at investor.relations@maac.net or (901) 435-5371. 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 and/or dispositions, renovation and development 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, real estate taxes, insurance costs, 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
  
   
March 31,
  
   
2006
 
2005
 
Property revenues
  
$
78,594
  
$
71,575
  
Management and fee income, net
    
52
   
118
 
Property operating expenses
    
(31,500
)
  
(29,626
)
Depreciation
    
(18,930
)
  
(18,049
)
Property management expenses
    
(2,511
)
  
(2,808
)
General and administrative
    
(3,361
)
  
(2,656
)
Income from continuing operations before non-operating items
    
22,344
   
18,554
 
Interest and other non-property income
    
117
   
157
 
Interest expense
    
(15,803
)
  
(13,732
)
Loss on debt extinguishment
    
(550
)
  
(4
)
Amortization of deferred financing costs
    
(485
)
  
(460
)
Minority interest in operating partnership income
    
(413
)
  
(260
)
(Loss) income from investments in unconsolidated entities
    
(84
)
  
318
 
Net gain on insurance and other settlement proceeds
    
-
   
7
 
Income from continuing operations
    
5,126
   
4,580
 
Discontinued operations:
              
    Loss from discontinued operations
    
-
   
(135
)
    Asset impairment of discontinued operations
    
-
   
(94
)
    Net loss on insurance and other settlement proceeds of
              
        discontinued operations
    
-
   
(25
)
Net income
    
5,126
   
4,326
 
Preferred dividend distribution
    
(3,490
)
  
(3,713
)
Net income available for common shareholders
  
$
1,636
  
$
613
  
               
Weighted average common shares - Diluted
    
22,366
   
21,212
 
Net income per share available for common shareholders
  
$
0.07
  
$
0.03
  
 

FUNDS FROM OPERATIONS (in thousands except per share data)
          
           
           
   
Three months ended
  
   
March 31,
  
   
2006
 
2005
 
Net income
  
$
5,126
  
$
4,326
  
Addback: Depreciation of real estate assets
    
18,592
   
17,718
 
Subtract: Net gain on insurance and other settlement proceeds
    
-
   
7
 
Subtract: Net loss on insurance and other settlement
              
    proceeds of discontinued operations
    
-
   
(25
)
Addback: Depreciation of real estate assets
              
    of unconsolidated entities
    
140
   
132
 
Subtract: Preferred dividend distribution
    
3,490
   
3,713
 
Addback: Minority interest in operating partnership income
    
413
   
260
 
Funds from operations
    
20,781
   
18,741
 
Recurring capex
    
(2,982
)
  
(2,805
)
Adjusted funds from operations
  
$
17,799
  
$
15,936
  
               
Weighted average common shares and units - Diluted
    
24,885
   
23,845
 
Funds from operations per share and unit - Diluted
  
$
0.84
  
$
0.79
  
Adjusted funds from operations per share and unit - Diluted
  
$
0.72
  
$
0.67
  

 
CONSOLIDATED BALANCE SHEETS (in thousands)
          
           
   
March 31,
  
December 31,
  
   
2006
  
2005
  
Assets
              
Real estate assets
              
Land 
  
$
189,150
  
$
179,523
  
Buildings and improvements 
    
1,793,119
   
1,740,818
 
Furniture, fixtures and equipment 
    
47,499
   
46,301
 
Capital improvements in progress 
    
1,027
   
4,175
 
Accumulated depreciation 
    
(491,810
)
  
(473,421
)
Land held for future development 
    
1,366
   
1,366
 
Commercial properties, net 
    
7,257
   
7,345
 
Investments in and advances to real estate joint ventures 
    
4,021
   
4,182
 
 Real estate assets, net
    
1,551,629
   
1,510,289
 
Cash and cash equivalents
    
11,073
   
14,064
 
Restricted cash
    
4,402
   
5,534
 
Deferred financing costs, net
    
15,509
   
15,338
 
Other assets
    
29,580
   
20,181
 
Goodwill
    
5,051
   
5,051
 
 Total assets
  
$
1,617,244
  
$
1,570,457
  
               
Liabilities and Shareholders' Equity
              
Liabilities
              
Notes payable 
  
$
1,181,046
  
$
1,140,046
  
Accounts payable 
    
2,663
   
3,278
 
Accrued expenses and other liabilities 
    
28,352
   
28,380
 
Security deposits 
    
6,871
   
6,429
 
 Total liabilities
    
1,218,932
   
1,178,133
 
Minority interest
    
28,356
   
29,798
 
Shareholders' equity
              
Series F cumulative redeemable preferred stock 
    
5
   
5
 
Series H cumulative redeemable preferred stock 
    
62
   
62
 
Common stock 
    
226
   
220
 
Additional paid-in capital 
    
691,429
   
671,885
 
Other 
    
-
   
(2,422
)
Accumulated distributions in excess of net income 
    
(339,311
)
  
(314,352
)
Accumulated other comprehensive income 
    
17,545
   
7,128
 
 Total shareholders' equity
    
369,956
   
362,526
 
 Total liabilities and shareholders' equity
  
$
1,617,244
  
$
1,570,457
  
 

SHARE AND UNIT DATA (in thousands)
          
           
   
Three months ended
  
   
March 31,
  
   
2006
 
2005
 
           
Weighted average common shares - Basic
    
22,134
   
20,928
 
Weighted average common shares - Diluted
    
22,366
   
21,212
 
Weighted average common shares and units - Basic
    
24,653
   
23,561
 
Weighted average common shares and units - Diluted
    
24,885
   
23,845
 
Common shares at March 31 - Basic
    
22,446
   
21,331
 
Common shares at March 31 - Diluted
    
22,678
   
21,599
 
Common shares and units at March 31 - Basic
    
24,962
   
23,964
 
Common shares and units at March 31 - Diluted
    
25,194
   
24,232
 
 
 
 

NON-GAAP FINANCIAL DEFINITIONS
  
   
   
Funds From Operations (FFO)
  
FFO represents net income (computed in accordance with U.S. generally accepted accounting principles,
  
or GAAP) excluding extraordinary items, minority interest in Operating Partnership income,
 
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 real estate included in discontinued operations as well as
 
proceeds received from insurance and other settlements from property damage.
  
   
Our calculation of FFO may differ from the methodology for calculating FFO utilized by other REITs and,
 
accordingly, may not be comparable to such other REITs. FFO should not be considered as an alternative
 
to net income.
  
   
The Company believes that FFO is helpful in understanding the Company's operating performance in that FFO
 
excludes depreciation expense of 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.
  
As an owner and operator of real estate, we consider AFFO to be an important measure of performance from
 
core operations because AFFO measures our ability to control revenues, expenses and recurring capital
 
expenditures.
  
   
   
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
  
For purposes of these computations, EBITDA is composed of net income before net gain on asset
  
sales and insurance and other settlement proceeds, and gain or loss on debt extinguishment, plus depreciation,
 
interest expense, and amortization of deferred financing costs. EBITDA is a non-GAAP financial measure we use
 
as a performance measure. As an owner and operator of real estate, we consider EBITDA to be an important
 
measure of performance from core operations because EBITDA does not include various income and expense
 
items that are not indicative of our operating performance. EBITDA should not be considered as an alternative
 
to net income as an indicator of financial performance. Our computation of EBITDA may differ from the
 
methodology utilized by other companies to calculate EBITDA.