Borrowings

The weighted average interest rate at June 30, 2015 for the $3.44 billion of debt outstanding was 3.6%, compared to the weighted average interest rate of 3.7% on $3.52 billion of debt outstanding at December 31, 2014. Our debt consists of an unsecured credit facility, unsecured term loans, senior unsecured notes, a secured credit facility with Fannie Mae, and secured property mortgages. We utilize fixed rate borrowings, interest rate swaps, and interest rate caps to manage our current and future interest rate risk. More details on our borrowings can be found in the schedules presented later in this Report.

At June 30, 2015, we had $105.8 million (after considering the impact of interest rate swap and cap agreements in effect) of secured variable rate debt outstanding at an average interest rate of 0.7% and $176.6 million of capped secured variable rate debt at an average interest rate of 0.9%. The interest rate on all other secured debt, totaling $1.1 billion, was hedged or fixed at an average interest rate of 4.0%. Additionally, we had $1.9 billion of senior unsecured notes and term loans fixed at an average interest rate of 4.0% and a $500 million variable rate credit facility with an average interest rate of 1.3% with $159.0 million borrowed at June 30, 2015.

Unsecured Credit Facility

We maintain a $500.0 million unsecured credit facility with fourteen banks led by KeyBank National Association (the KeyBank Facility). The KeyBank Facility includes an expansion option up to $800.0 million. The KeyBank Facility bears an interest rate of LIBOR plus a spread of 0.90% to 1.70% based on an investment grade pricing grid and is currently bearing interest at 1.28%. This credit line expires in August 2017 with two six-month extension options. At June 30, 2015, we had $496.2 million total capacity under the KeyBank Facility with $159.0 million borrowed. Approximately $3.8 million of the KeyBank Facility is used to support letters of credit.

Unsecured Term Loans

We also have three term loans, one each with KeyBank, Wells Fargo, and US Bank. The KeyBank term loan has a balance of $150 million, matures in 2017, and has a variable interest rate of LIBOR plus a spread of 1.10% to 2.05% based on our credit ratings. The Wells Fargo term loan has a balance of $250 million and matures in 2018. The US Bank term loan has a balance of $150 million and matures in 2020. Both the Wells Fargo and US Bank term loans have variable interest rates of LIBOR plus a spread of 0.90% to 1.90% based on our credit ratings. As of June 30, 2015, the KeyBank term loan was bearing interest at a rate of LIBOR plus 1.35%. As of June 30, 2015, the Wells Fargo and US Bank term loans were bearing interest at a rate of LIBOR plus 1.15%.

Senior Unsecured Notes

We have also issued both public and private unsecured senior notes. As of June 30, 2015, we have approximately $1.0 billion of publicly issued bonds and $310.0 million of private placement notes. These notes are longer term in nature and usually mature within five to 12 years.

Secured Credit Facility

We also maintain a total of $360.0 million of secured credit facilities with Prudential Mortgage Capital, which are credit enhanced by Fannie Mae, or the Fannie Mae Facilities. The Fannie Mae Facilities provide for both fixed and variable rate borrowings and have Fannie Mae rate tranches with maturities from 2015 through 2018. The interest rate on the variable portion renews every 90 days and is based on the Fannie Mae discount mortgage backed security rate on the date of renewal, which, for us, has historically approximated three-month LIBOR less an average of 0.17% over the life of the Fannie Mae Facilities, plus a fee of 0.62%. Borrowings under the Fannie Mae Facilities totaled $320.8 million at June 30, 2015, consisting of $50.0 million under a fixed portion at a rate of 4.7%, and the remaining $270.8 million under the variable rate portion of the Fannie Mae facilities at an average rate of 0.8%. On February 17, 2015, we paid off $91.1 million related to a group of mortgages associated with the tax-free portion of the Fannie Mae Facilities. As part of this transaction, we recorded a $3.1 million loss on debt extinguishment, primarily due to the write-off of unamortized financing costs associated with these mortgages.

Each of our credit facilities is subject to various covenants and conditions on usage, and the secured facilities are subject to periodic re-evaluation of collateral. If we were to fail to satisfy a condition to borrowing, the available credit under one or more of the facilities could not be drawn, which could adversely affect our liquidity. In the event of a reduction in real estate values, the amount of credit could be reduced. Moreover, if we were to fail to make a payment or violate a covenant under a credit facility, after applicable cure periods, one or more of our lenders could declare a default, accelerate the due date for repayment of all amounts outstanding and/or foreclose on properties securing such facilities. A default on an obligation to repay outstanding debt could also create a cross default on a separate piece of debt, whereby one or more of our lenders could accelerate the due date for repayment of all amounts outstanding and/or foreclose on properties securing the related facilities. Any such event could have a material adverse effect on the Company. We believe that we were in compliance with these covenants and conditions on usage at June 30, 2015.

Secured Property Mortgages

At June 30, 2015, we had $1.1 billion of fixed rate conventional property mortgages with an average interest rate of 4.0% and an average maturity in 2019 as well as an $11.6 million variable rate mortgage with an embedded cap rate of 7.0% at an interest rate of 3.1% with a maturity in 2015.

On January 30, 2015, we paid off a $15.2 million mortgage associated with the Farmington Village apartment community. We recorded a $0.2 million loss on debt extinguishment due to paying off the mortgage prior to maturity.

On June 1, 2015, we paid off a $25.5 million mortgage associated with the Colonial Grand at Wilmington apartment community. The payoff was a scheduled maturity of the loan.

On June 15, 2015, we paid off a $10.1 million mortgage associated with the Reserve at Woodwind Lakes apartment community. The payoff was a scheduled maturity of the loan.

Guarantees

Of the debt mentioned above, MAA fully and unconditionally guarantees the following debt incurred by MAALP:


•	$360.0 million of the Fannie Mae Facilities, of which $320.8 million has been borrowed as of June 30, 2015;


•	$500.0 million KeyBank credit facility, of which $159.0 million has been borrowed as of June 30, 2015;


•	$23.5 million of property mortgages, all of which has been borrowed as of June 30, 2015;


•	$310.0 million of senior unsecured notes, all of which has been borrowed as of June 30, 2015; and


•	$550.0 million of term loans, all of which has been borrowed as of June 30, 2015.

Borrowings Overview

The following table summarizes our outstanding debt structure as of June 30, 2015 (dollars in thousands):



	Borrowed Balance		Effective Rate		Average Contract Maturity
Fixed Rate Secured Debt
Individual property mortgages	$	1,081,373	4.0	%	6/10/2019
FNMA credit facilities	50,000		4.7	%	3/31/2017
Total fixed rate secured debt	$	1,131,373	4.0	%	5/6/2019
Variable Rate Secured Debt ⁽¹⁾
FNMA credit facilities	$	270,785	0.7	%	2/18/2017
Freddie Mac mortgages	11,635		3.1	%	8/15/2015
Total variable rate secured debt	$	282,420	0.8	%	1/26/2017
Total Secured Debt	$	1,413,793	3.4	%	11/21/2018

Unsecured Debt
Variable rate credit facility	$	159,000	1.3	%	8/7/2017
Term loans fixed with swaps	$	550,000	3.1	%	11/10/2017
Fixed rate senior bonds	1,319,451		4.5	%	12/3/2021
Total Unsecured Debt	$	2,028,451	3.8	%	6/25/2020

Total Outstanding Debt	$	3,442,244	3.6	%	8/12/2019

⁽¹⁾ Includes capped balances.