Consolidation and Basis of Presentation and Significant Accounting Policies Consolidation and Basis of Presentation and Significant Accounting Policies (Notes)

9 Months Ended

Sep. 30, 2013

Consolidation and Basis of Presentation and Significant Accounting Policies [Abstract]

Consolidation and Basis of Presentation and Significant Accounting Policies

Consolidation and Basis of Presentation and Significant Accounting Policies

Consolidation and Basis of Presentation

Mid-America Apartment Communities, Inc., or we, our, us, or MAA, is a self-administered real estate investment trust, or REIT, that owns, acquires, renovates, develops and manages apartment communities in the Sunbelt region of the United States. As of September 30, 2013, we owned or owned interests in a total of 160 multifamily apartment communities comprising 48,343 apartments located in 13 states including four communities comprising 1,156 apartments owned through our joint venture, Mid-America Multifamily Fund II, LLC. We also had two development communities under construction totaling 564 units as of September 30, 2013. A total of 174 units for the development projects were completed as of September 30, 2013, and therefore have been included in the totals above. Total expected costs for the development projects are $74.0 million, of which $43.1 million has been incurred through September 30, 2013. We expect to complete construction on one of the projects by the fourth quarter of 2013 and the other by the fourth quarter of 2014. Four of our properties include retail components with approximately 107,000 square feet of gross leasable area.

Effective October 1, 2013, pursuant to the Agreement and Plan of Merger, dated as of June 3, 2013, an indirect, wholly-owned subsidiary of Mid-America Apartments, L.P., or the Operating Partnership, or MAALP, merged with and into Colonial Realty Limited Partnership, or Colonial LP, a Delaware limited partnership, with Colonial LP surviving the merger, which is referred to as the partnership merger. Immediately following the partnership merger, Colonial Properties Trust, or Colonial, an Alabama real estate investment trust, merged with and into MAA, with MAA surviving the merger, which is referred to as the parent merger. The partnership merger and parent merger are collectively referred to as the "Merger" in the Quarterly Report on Form 10-Q. The combined company will operate under the name "MAA" and will be run by our existing management team. For additional details, see Item 1. Financial Statements – Notes to Consolidated Financial Statements, Note 11. All other footnotes contained in this Form 10-Q have been prepared as of September 30, 2013.

The accompanying unaudited condensed consolidated financial statements have been prepared by our management in accordance with United States generally accepted accounting principles, or GAAP, for interim financial information and applicable rules and regulations of the Securities and Exchange Commission, or the SEC, and our accounting policies as set forth in our December 31, 2012 annual consolidated financial statements. The consolidated financial statements presented herein include the accounts of MAA, the Operating Partnership and all other subsidiaries in which MAA has a controlling financial interest. MAA owns approximately 96% to 100% of all consolidated subsidiaries. In our opinion, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included, and all such adjustments were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three- and nine-month periods ended September 30, 2013 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 22, 2013. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates.

MAA invests in entities which may qualify as variable interest entities, or VIE. A VIE is a legal entity in which the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack the power to direct the activities of a legal entity as well as the obligation to absorb its expected losses or the right to receive its expected residual returns. MAA consolidates all VIEs for which it is the primary beneficiary and uses the equity method to account for investments that qualify as VIEs but for which we are not the primary beneficiary. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including but not limited to, those activities that most significantly impact the VIE's economic

performance and which party controls such activities.

MAA uses the equity method of accounting for its investments in entities for which we exercise significant influence, but do not have the ability to exercise control. These entities are not variable interest entities. The factors considered in determining that MAA does not have the ability to exercise control include ownership of voting interests and participatory rights of investors.

Earnings per Common Share

Basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of shares outstanding during the period.  All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis with our diluted earnings per share being the more dilutive of the treasury stock or two-class methods.  Operating partnership units are included in dilutive earnings per share calculations when they are dilutive to earnings per share. For the three- and nine-month periods ended September 30, 2013 and 2012, our basic earnings per share is computed using the two-class method, and our diluted earnings per share is computed using the more dilutive of the treasury stock method or two-class method:

(dollars and shares in thousands, except per share amounts)	Three months ended September 30,							Nine months ended September 30,
	2013				2012			2013			2012
Shares Outstanding
Weighted average common shares - basic	42,702				41,405			42,584			40,634
Weighted average partnership units outstanding	—			(1)	1,781			1,709			1,859
Effect of unvested shares assumed	—			(1)	35			53			74
Weighted average common shares - diluted	42,702				43,221			44,346			42,567
Calculation of Earnings per Share - basic
Income from continuing operations	$	16,619			$	15,134		$	53,746		$	43,895
Income from continuing operations attributable to noncontrolling interests	(645		)		(466		)	(1,535		)	(1,731		)
Income from continuing operations allocated to unvested restricted shares	(14		)		(12		)	(47		)	(39		)
Income from continuing operations available for common shareholders, adjusted	$	15,960			$	14,656		$	52,164		$	42,125
Income from discontinued operations	$	29,437			$	16,944		$	75,343		$	42,723
Income from discontinued operations attributable to noncontrolling interest	(1,127		)		(746		)	(3,001		)	(1,971		)
Income from discontinued operations allocated to unvested restricted shares	(24		)		(13		)	(66		)	(38		)
Income from discontinued operations available for common shareholders, adjusted	$	28,286			$	16,185		$	72,276		$	40,714
Weighted average common shares - basic	42,702				41,405			42,584			40,634
Earnings per share - basic	$	1.04			$	0.74		$	2.92		$	2.04
Calculation of Earnings per Share - diluted
Income from continuing operations	$	16,619			$	15,134		$	53,746		$	43,895
Income from continuing operations attributable to noncontrolling interests	(645		)	(1)	—			—			—
Income from continuing operations allocated to unvested restricted shares	(14		)	(1)	—			—			—
Income from continuing operations available for common shareholders, adjusted	$	15,960			$	15,134		$	53,746		$	43,895
Income from discontinued operations	$	29,437			$	16,944		$	75,343		$	42,723
Income from discontinued operations attributable to noncontrolling interest	(1,127		)	(1)	—			—			—
Income from discontinued operations allocated to unvested restricted shares	(23		)	(1)	—			—			—
Income from discontinued operations available for common shareholders, adjusted	$	28,287			$	16,944		$	75,343		$	42,723
Weighted average common shares - diluted	42,702				43,221			44,346			42,567
Earnings per share - diluted	$	1.04			$	0.74		$	2.91		$	2.03

⁽¹⁾ Operating partnership units, unvested shares assumed, and the related income with each are not included in dilutive earnings per share calculations as they were not dilutive.