EX-99 2 ex99.htm EXHIBIT 99
 
Come inside and see the difference
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Generate sector leading shareholder total investment
returns through the acquisition, repositioning and
aggressive operation of multifamily real estate
What We Do
§
Sunbelt Region Focus
§
Three-Tier Market Allocation
§
Moderate to Upper End Product Focus
§
Disciplined Investment Hurdles
§
Growth Through Acquisitions
§
Limited Amount of Value Added New Development
§
Committed to Strong Asset Management Programs
§
Focus on Property Management and Property Level
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
MAA provides investment capital a number of unique
attributes and capabilities for creating value
Competitive Edge
§
Sunbelt Region Only Focus
§
Apartment Only Focus
§
Extensive Multi-Tier Market Knowledge
§
Full Range of Experience in Repositioning and Operating to Full
Value
§
Extensive Deal Flow Sourcing
§
Disciplined and Proven Underwriting Capabilities
§
Buyer of Choice
§
Strong Operating Platform
§
Experienced Public Company Disciplines
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Finance &
Accounting
Human
Resources
Asset
Management
Transactions
Property
Management
Shareholder
Value
Leasing
Resident Service
Unit Turn Mgmt
On Site Execution
Process Development
Marketing & Advertising
Training
Capital Improvements
Landscape Operations
Utility Programs
Ancillary Income
Deal Sourcing
Acquisitions
Dispositions
Accounting
Reporting
Analysis
Systems
Risk Management
Treasury
Investor Relations
Employment
Leadership Development
Recruiting
Culture
Employee Relations
Management Team Introduction
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
MAA is well positioned for continued strong same store
NOI growth.  We expect to remain very competitive
within the multifamily REIT sector.
Internal Growth Prospects
§
Repositioned Portfolio
§
Enhanced Performance Profile
§
Pricing Recovery Underway
§
Aggressive Inventory Management Practices
§
Enhancement to Pricing Program Practices
§
Unit Interior and Property Repositioning Opportunities
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Well positioned to capture increasing levels of
new FFO growth as market conditions evolve and
capacity for growth expands
External or New Growth Prospects
§
Primarily Acquisitions; Minimal New Development
§
Acquisitions Environment
§
Opportunities: Lease-up, Reposition and Institutional Holdings
§
Three Tier Market Interest
§
Execution Capability
§
Extensive Network Developed
§
Size or Scale Advantage
§
Joint Venture Platform Potential
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Key Takeaways
§
Re-affirm our strategy and plans
§
Depth of our management team
§
Continued strong operating conditions in 2007
§
Meaningful internal earnings growth opportunity
§
Improving external growth prospects
§
Plans for execution
§
An attractive investment opportunity within the
Apartment REIT sector
 
 
 
 
 
 
 
Highlights
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
§
Shareholder Returns
§
Returns out-performed the
sector
§
Solid 18.6% annual return since
IPO
§
Rising FFO and Dividends
§
Sound, conservative business
plan
§
High quality earnings
§
Produced steady and growing
FFO and dividends
§
Stronger Balance Sheet
§
Dividend payout below sector
median
§
Coverage ratios are at sector
median
§
Capacity for growth
Source: Morgan Stanley Statistical Update (8/31).
Proven Performance
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Coral Square, Ft. Lauderdale
Using All Aspects of Business
Ability to Create Value
§
Portfolio Diversification 
§
Balanced allocation
§
High quality assets
§
Stable and growing cash flow
§
Operating Platform
§
Intense focus on property operations
§
Increased Technology (MRI, LRO,
etc.)
§
Acquisitions/Repositioning
§
Market expertise/deal sourcing
§
Strength and flexibility (operating
platform and balance sheet)
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Large Markets - Dallas, Atlanta, Tampa, Houston...
Mid Markets - Jacksonville, Austin, Nashville, Memphis...
Small Markets - Charleston, Savannah, Melbourne, Augusta...
30% Large Tier Markets
§
 Increased Allocation
§
 Higher Growth Characteristics
38% Mid Tier Markets
§
 Jacksonville 3rd Largest Market
in Portfolio (8.3%)
32% Small Tier Markets
Portfolio Diversification
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Lighthouse Court
§
Developed early in cycle
§
Struggling lease-up (70%
occupied)
§
MAA brought:
§
Ability to carry asset with
negative cash flow
§
Marketing expertise
§
Operating strength
§
Stabilized asset in 9 months
Year Built/Acquired:
2003
Gross Investment:
$40.9M
Units:
501
Current Market Value (6% Cap Rate):
$62.0M
Purchase Price:
$40.5M
Value Created:
$21.1M
Capex-to-Date:
$.4M
Leveraged Return (Cash on Cash IRR):
38%
Creating Value: Case Study 1
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
St. Augustine at the Lake
Year Built:
1987
  
Gross Investment:
$12.4M
Year Acquired:
1995
  
Current Market Value (6.5% Cap Rate):
$31.4M
Units:
400
  
Value Created:
$19.0M
Purchase Price:
$9.3M
  
Leveraged Return (Cash on Cash IRR):
33%
Capex-to-Date:
$3.1M
      
§
Portfolio acquisition
§
Underperforming/undercapitalized asset
§
Difficult resident profile
§
MAA brought:
§
Repositioning capital/expertise
§
Operations and marketing expertise
§
Financing expertise (tax-free bonds)
Creating Value: Case Study 2
 
 
 
Jacksonville
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Why Jacksonville?
§
Good example of our Mid-Tier markets
§
Ability to see a representative range of MAA’s product
type from mid-80’s built early acquisition to new
construction
§
Jacksonville represents 8.3% of our gross assets and is
our largest market in terms of NOI contribution (11%)
§
Our same store group of communities have produced
compounded annual NOI growth of 5.4% since 1998
 
 
 
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Property Statistics
§
Built 1987
§
Bought 1999 from AFR
§
400 units
§
Annual compounded NOI growth
of 5.2% since purchase
§
Current ARU $679
§
Rent per sft $.89
§
Q3 occupancy 93.8%
St. Augustine at the Lake
§
Located in the Mandarin submarket
§
Acquired in the America First Merger
§
At close to 20 years old it is one our older
assets
§
Complete reposition in planning stages
§
add 124 units
§
interior unit upgrade
§
improve club house and common area amenities
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Property Statistics
§
Built 1998
§
288 units
§
Annual compounded
NOI growth of 4.3%
since stabilization
§
Current ARU $883
§
Rent per sft $.77
§
Q3 occupancy 96.5%
The Paddock Club Mandarin
§
Located in Mandarin submarket
§
Built by Flournoy Development Company (MAA subsidiary at the
time)
§
Approximately 12,000 MAA units are Flournoy built
§
10% of our portfolio uses the Paddock Club brand
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Property Statistics
•
Built 2003
•
Bought 2003
•
501 units
•
Annual compounded NOI
growth of 9.6% since
stabilization
•
Current ARU $943
•
Rent per sft $.85
•
Q3 occupancy 97.6%
Lighthouse Court
§
Location in rapidly growing Fleming Island submarket 
§
Purchased from developer, distressed lease
opportunity
§
70% leased at purchase
§
Stabilized in 9 months
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Property Statistics
•
Built 1987
•
Bought 1997 from Met-Life
•
336 units
•
Annual compounded NOI
growth of 5.15% since purchase
•
Current ARU $783
•
Rent per sft $.89
•
Q3 occupancy 93.8%
Hunter’s Ridge at Deerwood
§
Location adjacent to the  prestigious Deerwood County Club development
§
Serves both JTB and Southside Blvd growth corridors
§
Trammel Crow Built Niles Bolton Design
§
Interior redevelopment begun 2006
§
9-A/Baymeadows Extension completed 1998 significantly
improved location
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
 
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Development
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Developments (as of October 2006)
§
MAA development
strategy and objectives
§
Current projects –
overview
§
Project details
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Development Strategy Overview
MAA Expansion
§
Superior Investment Return
§
Development in familiar, high growth markets
§
Look for opportunities with clear cost advantages
§
Partner with experts
§
Limited Risk
§
Limited MAA overhead commitment
§
Manageable number of projects
§
“Fix” as much construction cost as able
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Project
Units
Location
Budget
Contract
Developer
Brier Creek II
200
Raleigh, NC
$24.0M
Fixed Price
Cannon Partners
Copper Ridge I
216
Dallas, TX
$20.3M
TBD
Barnes Development
St. Augustine II
               
124
            
540
Jacksonville, FL
$12.2M
TBD
Flournoy Development
Total
  
$56.5M
    
Development Pipeline  (as of October 2006)
§
Proforma stabilized NOI yields ± 7.5%
§
Expected stabilized contribution - $1.3M
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Brier Creek Phase II
§
200 units
§
Located in Research Triangle area of Raleigh, NC
§
The Cannon Company Developers
§
Total budget - $24M
§
Construction started – June 2006
§
Estimated initial occupancy – 2Q07
§
Estimated construction completion – 4Q07
§
Estimated stable operations – 2Q08
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Copper Ridge Phase I
§
216 units initially with a potential of 400
§
Located in Roanoke growth corridor area of
Dallas, TX
§
Alpha-Barnes Development
§
Total budget - $20.3M
§
Architectural planning underway
§
Estimated construction start date – 2Q07
§
Estimated initial occupancy – 1Q08
§
Estimated construction completion – 3Q08
§
Estimated stable operations – 1Q09
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
St. Augustine Phase II
§
124 units
§
Located in Jacksonville, FL contiguous to
St. Augustine and Woodbridge
properties
§
Flournoy Development & Construction
§
Total budget - $12.2M
§
Engineered drawings complete – Bidding the project
§
Estimated construction start date - 1Q07
§
Estimated initial occupancy – 4Q07
§
Estimated construction completion – 1Q08
§
Estimated stable operations – 3Q08
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Lease Rent Options
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Yield Management Software
§
Based on airline pricing
software
§
In use (or being tested) by a
number of other large
apartment companies
including:
§
Archstone/Smith
§
Equity Residential
§
Post Properties
§
Simpson
§
Camden
§
Interfaces with property
operating software and
examines 
§
Availability and lease expirations
(supply)
§
Historical traffic (demand)
§
Competitor information
§
Other data
§
Sets optimal pricing on a daily
basis for varying lease terms
 
 
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
MAA Yield Management Evolution
§
MRI – Web-based platform in 2003
§
Internal Pricing Process in 2004/2005
§
LRO - Yield Management rollout in 2006
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
MAA
Project Role
Title
Shelton Barron
Project Director
VP, Director of MIS
Chris Lynn
Project Team Manager
Director of Pricing
James Maclin
Implementation Project Team
VP, Director of
Corporate Support
 
Melintha Ogle
 
 
 
Implementation Project Team
VP, Director of Marketing
Sr. VP, Director of
Marketing/Support
 
Ginny Doane
 
Implementation Project Team
Chris Strickland
Implementation Project Team
Property Systems
Analyst
Denise Hutchens
Implementation Project Team
Corporate Trainer
Formed 4Q 2005
MAA Project Team
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Metric
YieldStar
LRO
Functionality:
Robust
Robust
Compatibility with MRI:
No – requires
development
Yes
5 Year Project Cost:
$5.0M
$4.8M
Time in Use:
n/a
3-5 Years
Yield Management – Internal Review
§
Initial Investment – $1.9M
§
Annual Staff and Maintenance Expense - $550k
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Property
City, State
Region
Market Size
Property Size
Hamilton Pointe
Chattanooga, TN
North
Small
Large
Calais Forrest
Little Rock, AR
Central
Small
Medium
Celery Stalk
Dallas, TX
West
Large
Large
Boulder Ridge
Dallas, TX
West
Large
Large
Huntington Chase
Atlanta, GA
South
Large
Small
Howell Commons
Greenville, SC
East
Medium
Large
Indigo Pointe
Jacksonville, FL
Coastal
Large
Small
§
Regional Exposure
§
Market Sizes
§
Property Sizes
Initial LRO Pilot Group
 
Representative Mix of:
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Industry
Gross Revenue Impact
4% to 8%
*Based on early results and
long-term expectations. Source:
Multifamily Executive, 10/2005,
p.80.
Airlines
Hotels
Rental Cars
Advertising
Multifamily*
LRO Potential at MAA
4% to 8%
3% to 6%
2% to 5%
2% to 5%
2% to 4%
Revenue Lift
FFO Full First Year
0.25%
 
1.00%
 
1.50%
 
2.00%
 
2.50%
 
3.00%
 
3.50%
 
4.00%
$(0.00)
 
$0.09
 
$0.15
 
$0.21
 
$0.27
 
$0.33
 
$0.40
 
$0.46
LRO – Huge Potential
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
How It Works
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Four Step Process
How It Works
1.
Market Composite Calculation
2.
Reference Rent Calculation
3.
Forecast & Optimization
4.
Pricing Presentation
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Competitor Weights
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Competitor Positions
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Competitor Rents
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Reference Rent
§
Uses market information, exposure and leasing data
§
Updates weekly
§
Calculates a basis for LRO to “Price Around”
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Forecast & Optimization
§
Optimizes revenue by using price to leverage supply
and demand
§
Updates daily
§
Uses transactions from MRI to forecast supply and
demand
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Pricing Presentation
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Week
 1       2       3      4       5      6       7      8       9     10
Reference Rent
Market Composite
Medium Exposure
Low Exposure
High Exposure
60 Day
Exposure
LRO in Action: Hamilton Pointe Efficiency
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Corporate
§
Enhanced control of pricing strategy at the corporate level
§
Consistent pricing strategy through associate turnover
Associate
§
Greater confidence in presenting pricing…disciplined approach
§
Daily price updates creates urgency…encourages prospect
commitment 
Customer
§
We can  say “yes” to any lease term
§
On site staff can focus on customer service, not setting prices
Benefits
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
 
 
 
 
Renovations
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Renovations That Work
Great Remakes
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Our goal is to:
§
Capture superior investment returns
§
Enhance property values
§
Accelerate our pricing in strong markets
These goals are achieved by:
§
Approving only after careful evaluation and testing in each market
§
Implementing with standardized products that allow for purchase
power & easy replication across the portfolio
§
Executing the project with minimal interruption to current property
operations
Interior Renovations – Objectives
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
By the end of 2006 we’re projected to have:
§
Upgraded 1,100 homes
§
Increased revenues by 16.8% per home
§
Spent an average of $4,900 per home
§
Returned an un-leveraged 13% IRR
In 2007 we plan to:
§
Upgrade between 1,500 and 3,000 homes
§
Spend an average of $3,800 per home
§
Continue to accelerate program if returns meet or exceed current
performance measures
Interior Renovations - Overview
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
2) Analyze
3) Implement
4) Monitor
1) Evaluate
Decision matrix
Market surveys
Resident feedback
Test upgrades
Decide on full or light
scope renovation
Leasing velocity
Renovate during turn process
Control labor costs by
including internal team
Web-based system links
daily to production inventory,
leasing velocity and pricing
results
Interior Renovation
Management Cycle
Managing the Program
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Web-based data updated daily on production,
leasing and pricing:
15 Days to start, complete and lease unit
24% Pricing increase for renovation
Monitor
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
§
 Built in 1987, purchased by MAA in 1997
§
 Full scope renovation nearing end of year 1 of 3 to completion
§
 336 units
§
 Rehab price increase has been 17% above normal rents
Hunters Ridge – Jacksonville, FL
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Hunters Ridge – Jacksonville, FL
Full Scope Rehab
§
New Formica countertops in kitchen
and bath(s)
§
New kitchen appliances
§
Wood plank vinyl flooring in kitchen,
entry court and bath(s)
§
Light fixtures upgraded in all rooms
§
Plumbing fixtures upgraded in
kitchen and bath(s)
§
Ceiling fans added to all bedrooms
§
Two-tone paint
§
Hardware upgraded on all doors
 
 
 
MAA Institutional Investor Day – Jacksonville, Florida – October 17th and 18th, 2006
Hunters Ridge: Jacksonville, FL
Budget
Monthly
Units
YTD
Units
§
 61 units completed YTD
§
 56 units leased YTD
§
 52 units budgeted YTD
Hunters Ridge - Proven Results in 2006