EX-99.1 2 presentation.htm CAPITAL MARKETS UPDATE presentation.htm
Capital Markets Update
April 2008
 
 
 
2
Statements contained in this presentation, which are not historical facts, are forward-looking statements, as the term is defined
in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties
which can cause actual results to differ materially from those currently anticipated, due to a number of factors, which include, but
are not limited to, unfavorable changes in the apartment market, changing economic conditions, the impact of competition,
acquisitions which may not achieve anticipated results and other risk factors discussed in documents filed with the Securities
and Exchange Commission from time to time including the Company’s Annual Report on Form 10-K and the Company’s
Quarterly Report on Form 10-Q. The statements in this presentation are made based upon information currently known to
management and the company assumes no obligation to update or revise any of its forward-looking statements.
Safe Harbor Disclosure
 
 
 
3
Strong Public Company Platform
• IPO January 1994
• Exclusively Apartment Real Estate
• 13-State Sunbelt Regional Focus
• 40,000 Plus Units
• $3 B Total Capitalization
• Stable and Proven Management Team
• Strong Board of Directors
• 15% Annual Compounded Return
 
 
 
4
Why MAA and Why Now?
Attractive Investment Opportunity
ü Solid Outlook for Apartment Operating
 Fundamentals; Both Near & Long Term
ü MAA is Uniquely Positioned to
 Capitalize on These Opportunities
ü Strong Value Growth Prospects From
 Existing Properties
ü Attractive New Growth Opportunities
ü Strong Balance Sheet; Current
 Dividend Yield of ~5%
ü Attractive Value
 
 
 
5
Apartment Operating Fundamentals
• Near Term
 – Stable job growth prospects;
 regional focus advantage
 – Change in mortgage financing
 environment; higher demand,
 improved retention
 – MAA not exposed as some others to
 supply concerns from (1) condo
 reversions, (2) single-family rental
 shadow supply, and (3) excessive
 new development
• Long Term
 – Growing echo boom demand;
 significant growth in new
 households most likely to rent
 – Immigration; steady trends in those
 very likely to rent
 – Retiring baby boomers; will drive
 more households back to the rental
 housing market
 
 
 
6
National MSA Average
1.20%
Sunbelt Region MSA Average
1.77%
MAA Markets MSA Average
1.78%
Employment Growth Projections ’07 - ’11
Annual Compounded Growth Rates
MAA Markets
Well Positioned in High Growth Region
• MAA is uniquely positioned to capture
 the opportunities of this high growth
 region
• Diversified in three different market
 tiers across the region…creates
 opportunity to capture the strong
 performance profile of the region with
 less volatility
• Market diversity provides less
 exposure to over-building pressure
• Positioned in 7 of the top 10 projected
 U.S. job growth markets through 2015
• MAA portfolio is more “recession
 resistant” than most apartment REIT
 portfolios
 
 
 
7
The change in the mortgage environment will drive higher
levels of demand for apartments while also increasing
retention of existing residents
Apartment Operating Fundamentals
• Home ownership peaked in 2005 at
 69.1%; encouraged by easy credit
 and expectations of price inflation
• Potential benefits of new lending
 environment to MAA
 – Reduction in sub-prime lending
 – More rigorous conventional
 mortgage underwriting
 – Reduced inflation of home prices
 makes home-ownership less
 attractive
• Q3 and Q4 2007 reinforcement
 – Reduction in move-outs attributable
 to home buying
 – Strong traffic levels
 
 
 
8
MRI
Web Portal
Lease
Revenue
Optimizer
Collections
Management
Resident
Screening
Utilities
Management
Unit Interior
Renovation
Lease
Expiration
Mgmt
On-line
Resident
Solutions
Rent and Fee
Management
Unit Turn
Management
Collection Agency
Integration; real-time
Delinquency reporting
Integrated credit scoring
and background screening;
real-time processing
Utility billing company
integration; vacant
utility real-time cut-off
Detailed tracking of
improvements by unit;
real time price monitoring
Automated guidance for
optimum monthly, weekly
and daily scheduling
On-line leasing, internet
response center, payment
processing, work orders
Yield management;
automated bill-up of fees
and charges
Automated tracking and
monitoring of move-out,
get ready, show and move-in
Training and
Procedures
24/7 training availability;
high degree of control;
on-line procedures
Sophisticated Operating Platform
• Innovative Solutions for
 Key Processes
 – Marketing and leasing
 – Payment processing
 – Utility billing integration
 – Vacant utility integration
 – Pricing protocol
 – Lease expiration mgmt
 – Unit turn management
 – Operating expense efficiency
• Cutting Edge
 Technologies
 – Web based property mgmt
 – Yield management platform
 – Web based credit check
 – Web based criminal check
 – Web based leasing
 – Web based payment process
 
 
 
9
Before average rent = $852
Park Estate, Memphis. Case Study - Just over 60% of units
redeveloped at an investment of $8K per unit; >30% IRR
After average rent = $1,123
2,000+ Units Completed in 2007; 3,000+ Units Planned in 2008
Upside From Property Redevelopment
 
 
 
10
Strong Operating Results Continue
• Q4 Same Store NOI Growth of 7.9%
• Year End Occupancy - 11 Year High
• Q4 Leasing Concessions Declined 38%
• Same Store revenues grew by 4%
• Q4 12% Growth in FFO
• Q4 19% Growth in AFFO
• Q4 and 2007 FFO/Share Results Are
 Record Performances for MAA
• Move-Out Due to Home Buying
 Dropped 260 basis points
• Common Dividend Raised Q1’08 to
 $2.46 annual
• 2008 same store guidance is among
 best in sector
 
 
 
11
External Growth Platform
• Acquisitions
 – Focused on newer assets
 – Extensive network
 – Competitive advantage
• Fund Management
 – Turn-around opportunities
 – Monetize platform value
 – Higher current return
• New Development/Lease-Up
 – Unique value add opportunities
 – Attractive NPV returns
 – Regional advantages
 
 
 
12
Value Creation Plan
NPV/share
of value
created
$150 MM/year of 100%-owned
acquisitions
$1.25
$150 MM/year of Fund I
acquisitions
$0.90
$50 MM/year of development
$1.25
$15 MM/year of redevelopment
$0.40
Redevelopment benefit on portfolio
quality (25 bp on cap rate)
$1.50
Total per share impact
$5.30
MAA’s disciplined growth
plan will add to value per
share* from five sources
*NPV of five-year plan discounted at cost of equity
Value of Growth Platform
 
 
 
13
Leverage and Development
Funding Obligations (1)
Dividend Payout as % of ’08F AFFO (2)
Common
48%
Debt
46%
Preferred
6%
(1) Morgan Stanley Weekly Stats Summary 2/1/08 (2) Stifel, Nicolaus Weekly Sector Scorecard 2/8/08
Strong Balance Sheet
• Debt + Preferred as % of entity value is
 slightly lower than avg.
• Lower development funding obligations,
 coupled with low leverage, puts MAA in a
 strong competitive position
• Strong dividend coverage
• Strong Fixed Charge coverage ratio at 2.3
 times
• Total debt is 85% Agency, maturities well
 laddered through 2018
• Preferred H callable Aug. ’08, 8.3% yield at
 $25/share, refi. plans to be determined
 
 
 
14
Portfolio
Age
Units owned
Post
 10
 20,028
Camden
 10
 53,827
Mid-America
 14
 39,968
Avalon Bay
 14
 39,800
Colonial
 15
 31,942
BRE
 15
 22,681
Archstone-Smith
 15
 71,817
Equity Residential
 17
 151,173
Aimco
 18
 132,449
United Dominion
 22
 69,599
Essex
 26
 23,529
Home
 36
 38,160
Average
 18
Source: Green Street (Dec ’07) and MAA
MAA’s portfolio is 20% newer than the sector average.
Steady growth and recycling efforts continue to position MAA’s portfolio
as one of the younger portfolios in the sector; solid long-term upside potential.
High Quality Assets
 
 
 
15
Expectations for another solid year of performance
and results in 2008
*Assumes Preferred H, Callable August ’08, 8.3% yield at $25/share
is not called. If called, $0.18 FFO non-cash charge estimated.
Attractive Investment Opportunity
• Same store projected growth in
 NOI of 4.0% to 5.0%
• FFO growth of 5.6% at mid-point
 of guidance range*
• AFFO growth of 5.2% at mid-
 point of guidance range*
• $150M of acquisitions for Mid-
 America Fund I; $150M of
 acquisitions for wholly-owned
 balance sheet
• Solid growth in FFO/share
 despite carrying $0.10 of drag for
 future value creation activities
• 2008 same store guidance is
 among best in sector
 
 
 
16
A focus on high growth
region with an expanded
allocation to more robust
markets
Disciplined investment
protocol and capital
deployment practices
High quality of
earnings; lower
volatility
Strong asset management
and property management
platforms
Combine to create more stable performance through full real estate
and capital market cycles…driving higher, risk adjusted,
long-term FFO performance and investment returns to capital
2008E is First Call Estimate and Mid-Point of Guidance
Improved Performance Platform
 
 
 
17
A balanced approach
to market tier allocation
in the sunbelt region
markets
A re-tool of our
operating systems
Creation of a strong
asset management
platform
A strong property
management culture
and “hands-on” focus
Annual Same Unit NOI Growth
Combine to create operating results that are materially stronger than the
prior model and are competitive within the sector;
MAA outperforming over the last few years, with reason to believe it will continue.
Source: Green Street Advisors, Apartment REITs:
February ’08 Update
MAA’s same unit NOI growth
performance has been in the
top third of all apartment REITs
over the last 6 years
Improved Performance Platform
 
 
 
18
2008 FFO Multiples
Source: Morgan Stanley Weekly Stat Summary, 3/27/08
Attractive Investment Opportunity
• Significant discount to sector average pricing
• Spread between bi-coastal and significant development
 platforms is too large, especially when considering relative risks
• Achieving just sector average pricing (15.3 X) drives ~10%
 upside opportunity for MAA
 
 
 
19
MAA’s Regional Focus, Unique Market Strategy, Disciplined
Approach To Growth and Heavy Focus on Operations Will
Continue To Deliver Competitive Results
Attractive Investment Opportunity
• The notion that high-barrier markets will out-perform high-growth markets is
 “over done” in terms of expectations and pricing
• High-barrier are not such “high-barrier”; majority of current supply pressure
• Differences in property quality, sub-market location and strength of
 operating platform…among the local competition…has significant impact to
 performance for a portfolio relative to broad market performance averages
• Some analysis is based on questionable market selection criteria and
 subjective weighting of various attributes that are of questionable predictive
 value for revenue/NOI growth prospects
• ARU and Household Income comparisons are distorted by geographic cost
 of living differences, and when comparing portfolios across regions, is not a
 valid proxy for asset quality and revenue growth prospects
• Threat of over-hang of vacant single-family and condo product will vary
 significantly by market
 
 
 
20
MAA
7.5%
HME
7.3%
ESS
7.1%
BRE
6.8%
UDR
6.7%
AEC
6.6%
AIV
6.6%
EQR
6.4%
CLP
6.1%
CPT
6.0%
AVB
5.9%
PPS
5.0%
Return on Invested Capital
Trailing 12 Month EBITDA/Total Assets,
Gross of Depreciation
Source: Morgan Stanley, Weekly Statistical Summary, 3/27/08
 
3 Year
5 Year
10 Year
ESS
21.3%
20.8%
18.5%
MAA
17.6%
23.4%
14.9%
AVB
17.4%
26.1%
15.7%
EQR
14.2%
16.2%
11.1%
BRE
13.7%
14.1%
11.1%
HME
13.4%
14.4%
13.1%
PPS
13.0%
15.5%
6.3%
AEC
11.0%
23.4%
3.8%
UDR
10.8%
14.8%
13.2%
AIV
8.3%
7.7%
6.9%
CPT
7.6%
15.2%
12.5%
CLP
0.8%
5.2%
7.6%
Total Shareholder Returns
A solid record of generating value and
competitive long-term investment returns to capital…
Proven Value Creation
 
 
 
21
Summary
ü Proven Public Company Platform
ü Portfolio Well Positioned
ü Favorable Demand Trends
ü Strong Operating Platform
ü Disciplined Capital Allocation
ü Solid Balance Sheet
ü Strong Coverage Ratios
ü Attractive Value
ü Attractive Yield and Inflation Protection
ü Proven Performer for Shareholders
 
 
 
End of Presentation