Shareholders' Equity of MAA

9 Months Ended

Sep. 30, 2021

Shareholders Equity Of M A A [Abstract]

Shareholders' Equity of MAA

8. Shareholders’ Equity of MAA

As of September 30, 2021, 115,138,323 shares of common stock of MAA and 3,402,682 OP Units (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 118,541,005 common shares and units. As of September 30, 2020, 114,369,812 shares of common stock of MAA and 4,058,258 OP Units (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 118,428,070 common shares and units. Options to purchase 813 shares of MAA’s common stock were outstanding as of September 30, 2021, compared to 19,845 outstanding options as of September 30, 2020. During the nine months ended September 30, 2021 and 2020, MAA issued 19,032 common shares and 918 common shares, respectively, related to the exercise of stock options. These exercises resulted in net proceeds of $1.5 million and $0.1 million, respectively.

Preferred Stock

As of September 30, 2021, MAA had one outstanding series of cumulative redeemable preferred stock, which has the following characteristics:

Description	Outstanding Shares		Liquidation Preference(1)		Optional Redemption Date	Redemption Price(2)		Stated Dividend Yield			Approximate Dividend Rate
Series I		867,846	$	50.00	10/1/2026	$	50.00		8.50	%	$	4.25

(1)The total liquidation preference for the outstanding preferred stock is $43.4 million.

(2)The redemption price is the price at which the preferred stock is redeemable, at MAA’s option, for cash.

See Note 7 for details of the valuation of the derivative asset related to the redemption feature embedded in the MAA Series I preferred stock.

Equity Forward Sale Agreements

In August 2021, MAA entered into two 18-month forward sale agreements with respect to a total of 1.1 million shares of its common stock at an initial forward sale price of $190.56 per share. Under the forward sale agreements, the forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor equal to a specified daily rate less a spread and will be decreased based on amounts related to dividends on MAA’s common stock during the term of the forward sale agreements. No shares had been settled under the forward sale agreements as of September 30, 2021. MAA generally has the ability to determine the dates and method of settlement (i.e., gross physical settlement, net share settlement or cash settlement), subject to certain conditions and the right of the counterparty to accelerate settlement under certain circumstances, provided that settlement under each forward sale agreement must occur by February 2, 2023. MAA currently expects to fully physically settle each forward sale agreement with the relevant forward purchaser on one or more dates specified by MAA on or prior to the maturity date of the particular forward sale agreement, in which case MAA expects to receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward sale agreement multiplied by the relevant forward sale price.

The Company accounts for the shares of MAA’s common stock reserved for issuance upon settlement as equity in accordance with ASC 815-40, Contracts in Entity’s Own Equity, which permits equity classification when a contract is considered indexed to its own stock and the contract requires or permits the issuing entity to settle the contract in shares (either physically or net in shares).

The guidance in ASC Topic 815-40 establishes a two-step process for evaluating whether an equity-linked financial instrument is considered indexed to its own stock by evaluating the instrument’s contingent exercise provisions and the instrument’s settlement provisions. When entering into the forward sale agreements, the Company determined that (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market of MAA’s common stock price; and (ii) none of the settlement provisions preclude the agreements from being indexed to MAA’s common stock.

Before the issuance of shares of MAA’s common stock, upon physical or net share settlement of the forward sale agreements, the Company expects that the shares issuable upon settlement of the forward sale agreements will be reflected in its diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of common stock that would be issued upon full physical settlement of the forward sale agreements over the number of shares of common stock that could be purchased by MAA in the open market (based on the average market price during the period) using the proceeds to be received upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). When MAA physically or net

share settles a forward sale agreement, the delivery of shares of common stock would result in an increase in the number of weighted average common shares outstanding and dilution to basic earnings per share. The impact of the forward sale agreements was not dilutive to the Company’s diluted earnings per share for the three and nine months ended September 30, 2021.