10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004
Commission File Number: 1-12762

MID-AMERICA APARTMENT COMMUNITIES, INC.

(Exact Name of Registrant as Specified in Charter)

TENNESSEE	62-1543819
(State of Incorporation)	(I.R.S. Employer Identification Number)

 

6584 POPLAR AVENUE, SUITE 300
MEMPHIS, TENNESSEE 38138
(Address of principal executive offices)

(901) 682-6600
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12 (b) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Common Stock, par value $.01 per share	New York Stock Exchange
Series F Cumulative Redeemable Preferred Stock, par value $.01 per share Series H Cumulative Redeemable Preferred Stock, par value $.01 per share	New York Stock Exchange New York Stock Exchange

 

Securities registered pursuant to Section 12 (g) of the Act:
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   [X] Yes  [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).   [X] Yes [  ] No

The aggregate market value of the voting stock held by non-affiliates of the Registrant, (based on the closing price of such stock ($37.89 per share), as reported on the New York Stock Exchange, on June 30, 2004) was approximately $721,500,000 (for purposes of this calculation, directors and executive officers are treated as affiliates).

The number of shares of the Registrant’s common stock outstanding as of February 28, 2005, was 21,058,126 shares, of which approximately 1,301,843 were held by affiliates.

The Registrant’s definitive proxy statement in connection with the 2005 Annual Meeting of Shareholders (to be filed pursuant to Regulation 14A) is incorporated by reference into Part III of this Annual Report on Form 10-K.

MID-AMERICA APARTMENT COMMUNITIES, INC.
TABLE OF CONTENTS

Item		Page
	PART I
1.	Business		2
2.	Properties		6
3.	Legal Proceedings		13
4.	Submission of Matters to Vote of Security Holders		13
	PART II
5.	Market for Registrant’s Common Equity and Related Stockholder Matters		13
6.	Selected Financial Data		15
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
7A.	Quantitative and Qualitative Disclosures About Market Risk		29
8.	Financial Statements and Supplementary Data		30
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		30
9A.	Controls and Procedures		30
9B.	Other Information		31
	PART III
10.	Directors and Executive Officers of the Registrant		32
11.	Executive Compensation		32
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		32
13.	Certain Relationships and Related Transactions		32
14.	Principal Accountant Fees and Services		32
	PART IV
15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		33

 

PART I

ITEM 1.   BUSINESS

WEBSITE ACCESS OF REGISTRANT’S REPORTS

A copy of this Annual Report on Form 10-K, along with the Company’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to the aforementioned filings, are available on the Company’s website free of charge. The filings can be found on the Investors’ page under SEC Filings. The Company’s website also contains its Corporate Governance Guidelines, Code of Ethics Policy and the charters of the committees of the Board of Directors. These items can be found on the Investors’ page under Corporate Governance. The Company’s website address is www.maac.net. Reference to the Company’s website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this document. All of the aforementioned materials may also be obtained free of charge by contacting the Investor Relations Department at Mid-America Apartment Communities, Inc., 6584 Poplar Avenue, Suite 300, Memphis, TN 38138.

OVERVIEW OF THE COMPANY

Founded in 1994, Mid-America Apartment Communities, Inc. (the “Company”) is a Memphis, Tennessee-based self-administered and self-managed umbrella partnership real estate investment trust (“REIT”) that focuses on acquiring, owning and operating apartment communities. Between 1994 and December 31, 2004, the Company increased the number of properties of which it is the sole owner from 22 to 129 properties with 36,618 apartment units, representing an increase of 31,038 apartment units. The Company is also participating in two joint ventures with Crow Holdings, Mid-America CH/Realty LP and Mid-America CH/Realty II LP (collectively the “Joint Ventures”). The Joint Ventures owned three properties with 1,286 apartment units at December 31, 2004. The Company retains a 33.33% ownership interest in each of the Joint Ventures and is paid a management fee of 4% of revenues from the apartment communities owned by the Joint Ventures.

The Company’s business is conducted principally through Mid-America Apartments, L.P. (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership, holding 225,820 common units of partnership interest (“Common Units”) comprising a 1% general partnership interest in the Operating Partnership as of December 31, 2004. The Company’s wholly-owned qualified REIT subsidiary, MAC II of Delaware, Inc., a Delaware corporation, is a limited partner in the Operating Partnership and, as of December 31, 2004, held 19,622,605 Common Units, or 86.89% of all outstanding Common Units.

The Company operated apartment communities in 12 states in 2004, employing 1,121 full time and 84 part time employees at December 31, 2004.

OPERATING PHILOSOPHY

The Company’s primary objective is to maintain a stable cash flow that will fund its dividend through all parts of the real estate investment cycle. The Company focuses on growing through its existing investments and, when accretive to cash flow and shareholder value, through external investments.

INVESTMENT FOCUS.    The Company’s primary investment focus is on apartment communities in the Southeastern United States and Texas. Between 1994 and 1997, the Company grew largely through the acquisition and redevelopment of existing communities. Between 1998 and 2000, its concentration was on development of new communities. The Company’s present focus is on the acquisition of properties that it believes can be repositioned with appropriate use of capital and its operating management skills. The Company is also interested in increasing its investment in properties in larger and faster growing markets within its current market area to balance its portfolio between small, middle and large-tier markets, and intends to do this through acquiring apartment communities with the potential for above average growth. The Company will continue its established process of selling mature assets, and will adapt its investment focus to opportunities and markets.

HIGH QUALITY ASSETS.    The Company maintains its assets in excellent condition, believing that continuous maintenance will lead to higher long-run returns on investment. It believes that being recognized

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by civic and industry trade organizations for the high quality of its properties, landscaping, and property management will lead to higher rents and profitability and further supports the high quality of its properties and operations. The Company periodically sells assets selectively in order to ensure that its portfolio consists primarily of high quality, well-located assets within its market area.

DIVERSIFIED MARKET FOCUS.    The Company believes the stability of its cash flow is enhanced and it will generate higher risk adjusted cash flow returns, with lower volatility, through its diversified strategy of investments over large, middle and small-tier markets throughout the southeastern United States and Texas.

INTENSIVE MANAGEMENT FOCUS.    The Company strongly emphasizes on-site property management. Particular attention is paid to opportunities to increase rents, raise average occupancy rates, and control costs. Property managers and regional managers are given the responsibility for monitoring market trends and the discretion to react to such trends. The Company, as part of its intense management focus, has established a number of training programs to produce highly competent property managers, leasing consultants and service technicians who work on-site at the Company’s apartment communities (the “Communities”) to generate the highest possible income from the Company’s assets. At December 31, 2004, the Company employed approximately 106 Certified Apartment Managers (“CAM”). The CAM designation is sponsored through the National Apartment Association and provides training for on-site manager professionals.

DECENTRALIZED OPERATIONAL STRUCTURE.    The Company operates in a decentralized manner. Management believes that its decentralized operating structure capitalizes on specific market knowledge, provides greater personal accountability than a centralized structure and is beneficial in the acquisition and redevelopment processes. To support this decentralized operational structure, senior and executive management, along with various asset management functions, are proactively involved in supporting and reviewing property management through extensive reporting processes and frequent on-site visitations. In 2004 the Company completed the installation of the property and general ledger modules of a new web-based property management system that increases the amount of information shared between senior and executive management and the properties, and does so on a real time basis, improving the support provided to the operating environment. The Company plans to install the purchase order module in 2005.

PROACTIVE BALANCE SHEET AND PORTFOLIO MANAGEMENT

The Company focuses on maximizing the return on assets and adding to the intrinsic underlying value of each share of the Company’s common stock, routinely reviewing each asset based on its determined value and selling those which no longer fit its investment criteria. The Company constantly evaluates the effectiveness of its capital allocations and makes adjustments to its strategy, including investing in existing and new apartment communities, debt retirement, and repurchases or issuances of shares of the Company’s preferred and common stock.

STRATEGIES

The Company seeks to increase operating cash flow and earnings per share to maximize shareholder value through a balanced strategy of internal and external growth.

OPERATING GROWTH STRATEGY.    Management’s goal is to maximize the Company’s return on investment in each Community by increasing rental rates and reducing operating expenses while maintaining high occupancy levels. The Company seeks higher net rental revenues by enhancing and maintaining the competitiveness of the Communities and managing expenses through its system of detailed management reporting and accountability in order to achieve increases in operating cash flow. The steps taken to meet these objectives include:

•   empowering the Company’s property managers to adjust rents in response to local market conditions and to concentrate resident turnover during peak rental demand months;

•   offering new services to residents, including telephone, cable, and internet access, on which the Company generates fee and commission income;

•   implementing programs to control expenses through investment in cost-saving initiatives, such as the installation of individual apartment unit water and utility meters in certain Communities;

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•   analyzing individual asset productivity performances to identify best practices and improvement areas;

•   improving the “curb appeal” of the Communities through extensive landscaping and exterior improvements and repositioning Communities from time to time to maintain market leadership positions;

•   compensating employees through performance-based compensation and stock ownership programs;

•   maintaining a hands-on management style and “flat” organizational structure that emphasizes senior management’s continued close contact with the market and employees;

•   selling or exchanging underperforming assets and repurchasing or issuing shares of common and preferred stock when cost of capital and asset values permit;

•   allocating additional capital where the investment will generate the highest returns for the Company; and

•   developing new ancillary income programs aimed at delivering new consumer services and products to its residents while generating fee income for the Company.

JOINT VENTURE STRATEGY.    One of the Company’s strategies is to co-invest with private capital partners in joint venture opportunities from time to time which enable it to obtain a higher return on its investment through management fees, which leverages the Company’s recognized skills in acquiring, repositioning, redeveloping and managing multifamily investments. In addition, the joint venture investment strategy can provide a platform for creating more capital diversification and lower investment risk for the Company. The Company is currently involved in two joint ventures with Crow Holdings, one established in 2002 and the second in early 2004.

DISPOSITION STRATEGY.    The Company is committed to the selective disposition of mature assets, defined as those apartment communities that no longer meet the Company’s investment criteria and long-term strategic objectives. Typically, the Company selects assets for disposition that do not meet its present investment criteria including future return on investment, location, market, potential for growth, and capital needs. The Company may from time to time also dispose of assets for which the Company receives an offer meeting or exceeding its return on investment criteria even though those assets may not meet the disposition criteria disclosed above.

The following Communities were sold during 2004:

Property	Location	Number of Units		Date Sold
100% Owned Properties:
Island Retreat	St. Simon’s Island, GA		112	October 1, 2004
Joint Venture Properties:
Preserve at Arbor Lakes	Jacksonville, FL		284	November 3, 2004
			396

 

ACQUISITION STRATEGY.    One of the Company’s growth strategies is to acquire and redevelop apartment communities that meet its investment criteria and focus as discussed above. The Company has extensive experience and research-based skills in the acquisition and repositioning of multifamily properties. In addition, the Company will acquire newly built and developed properties that can be purchased on a favorable pricing basis. The Company will continue to evaluate opportunities that arise, and will utilize this strategy to increase the number of properties in strong and growing markets in the Southeast and Texas.

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The following Communities were purchased during 2004:

Property	Location	Number of Units		Date Purchased
100% Owned Properties:
Monthaven Park	Hendersonville, TN (Nashville Metro)		456	January 23, 2004
Watermark	Roanoke, TX (Dallas Metro)		240	June 15, 2004
Prescott	Duluth, GA (Atlanta Metro)		384	August 24, 2004
Grand Reserve at Sunset Valley	Austin, TX		210	November 5, 2004
Preserve at Coral Square	Coral Springs, FL (Ft. Lauderdale Metro)		480	November 5, 2004
Villages at Kirkwood	Stafford, TX (Houston Metro)		274	November 5, 2004
Joint Venture Properties:
Verandas at Timberglen	Dallas, TX		522	January 15, 2004
			2,566

 

DEVELOPMENT STRATEGY.    In late 1997, the Company’s emphasis shifted from acquisitions to development because of its belief that under then-current market conditions, such development would generate higher quality assets and higher long-term investment returns. In 2002, the Company completed a $300 million construction program of high quality apartments in several markets. In 1999, management decided to exit the construction and development business upon completion of the Company’s existing development pipeline after determining that market conditions were changing, making it unlikely that future proposed projects would meet the Company’s profitability targets over the next few years.

At December 31, 2004, the Company had no properties in development. The Company periodically evaluates opportunities for profitable future development investments.

COMMON AND PREFERRED STOCK

The Company continuously reviews opportunities for lowering its cost of capital, and increasing value per share. The Company evaluates opportunities to repurchase stock when it believes that its stock price is below the value of its assets and accordingly repurchased common stock, funded by asset sales, between 1999 and 2001. The Company also looks for opportunities where it can acquire or develop communities, selectively funded or partially funded by stock sales, when it will add to shareholder value and the investment return is projected to substantially exceed its cost of capital. The Company will also opportunistically seek to lower its cost of capital through refinancing preferred stock as it did in 2003.

SHARE REPURCHASE PROGRAM

In 1999, the Company’s Board of Directors approved an increase in the number of shares of the Company’s common stock authorized to be repurchased to 4 million shares. As of December 31, 2004 the Company had repurchased a total of approximately 1.86 million shares (8% of the shares of common stock and Common Units outstanding as of the beginning of the repurchase program). From time to time the Company intends to sell assets based on its disposition strategy outlined in this Annual Report and use the proceeds to repurchase shares when it believes that shareholder value is enhanced. Factors affecting this determination include the share price, asset dispositions and pricing, financing agreements and rates of return of alternative investments. No shares were repurchased from 2002 through 2004 under this plan.

COMPETITION

All of the Company’s Communities are located in areas that include other apartment communities. Occupancy and rental rates are affected by the number of competitive apartment communities in a particular area. The owners of competing apartment communities may have greater resources than the Company, and the managers of these communities may have more experience than the Company’s management. Moreover, single-family rental housing, manufactured housing, condominiums and the new and existing home markets provide housing alternatives to potential residents of apartment communities.

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Apartment communities compete on the basis of monthly rent, discounts, and facilities offered such as apartment size and amenities, and apartment community amenities, including recreational facilities, resident services, and physical property condition. The Company makes capital improvements to both the Communities and individual apartments on a regular basis in order to maintain a competitive position in each individual market.

ENVIRONMENTAL MATTERS

As part of the acquisition process, the Company generally obtains environmental studies on all of its Communities from various outside environmental engineering firms. The purpose of these studies is to identify potential sources of contamination at the Communities and to assess the status of environmental regulatory compliance. These studies generally include historical reviews of the Communities, reviews of certain public records, preliminary investigations of the sites and surrounding properties, visual inspection for the presence of asbestos, PCBs and underground storage tanks and the preparation and issuance of written reports. Depending on the results of these studies, more invasive procedures, such as soil sampling or ground water analysis, will be performed to investigate potential sources of contamination. These studies must be satisfactorily completed before the Company takes ownership of an acquisition property, however, no assurance can be given that the studies identify all significant environmental problems.

Under various Federal, state and local laws and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on properties. Such laws often impose such liability without regard to whether the owner caused or knew of the presence of hazardous or toxic substances and whether or not the storage of such substances was in violation of a resident’s lease. Furthermore, the cost of remediation and removal of such substances may be substantial, and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner’s ability to sell such real estate or to borrow using such real estate as collateral.

The Company is aware of environmental concerns specifically relating to potential issues resulting from mold in residential properties and has in place an active management and preventive maintenance program that includes procedures specifically related to mold. The Company has established a policy requiring residents to sign a mold addendum to lease. The Company has also purchased a $2 million insurance policy that covers remediation and exposure to mold. The current policy expires in 2007, but is renewable at that time. The Company, therefore, believes that its exposure to this issue is limited and controlled.

The environmental studies received by the Company have not revealed any material environmental liabilities. The Company is not aware of any existing conditions that would currently be considered an environmental liability. Nevertheless, it is possible that the studies do not reveal all environmental liabilities or that there are material environmental liabilities of which the Company is unaware. Moreover, no assurance can be given concerning future laws, ordinances or regulations, or the potential introduction of hazardous or toxic substances by neighboring properties or residents.

The Company believes that its Communities are in compliance in all material respects with all applicable Federal, state and local ordinances and regulations regarding hazardous or toxic substances and other environmental matters.

RECENT DEVELOPMENTS

DISTRIBUTION.    In January 2005, the Company announced a quarterly distribution to common shareholders of $0.585 per share, which was paid on January 31, 2005.

ACQUISITIONS.    On February 18, 2005, the Company acquired two communities in the Atlanta-metro area situated on Lake Lanier with a total of 657 units. The Company plans to operate the communities as one property.

ITEM 2.   PROPERTIES

The Company seeks to acquire apartment communities located in the southeastern United States and Texas that are primarily appealing to middle income residents with the potential for above average growth and return on investment. Approximately 75% of the Company’s apartment units are located in Georgia, Florida,

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Tennessee and Texas markets. The Company’s strategic focus is to provide its residents high quality apartment units in attractive community settings, characterized by extensive landscaping and attention to aesthetic detail. The Company utilizes its experience and expertise in maintenance, landscaping, marketing and management to effectively “reposition” many of the apartment communities it acquires to raise occupancy levels and per unit average rents.

The following table sets forth certain historical information for the Communities the Company owned or maintained an ownership interest in, including the 3 properties containing 1,286 apartment units owned by the Company’s Joint Ventures, at December 31, 2004:

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																		Encumbrances at December 31, 2004
Property	Location	Year Completed		Year Management Commenced		Number of Units		Approximate Rentable Area (Square Footage)		Average Unit Size (Square Footage)		Monthly Rent per Unit at December 31, 2004		Average Occupancy Percent at December 31, 2004			Mortgage Principal (000’s)			Interest Rate			Maturity Date
100% Owned
Eagle Ridge	Birmingham, AL		1986		1998		200		181,400		907	$	662.15		98.50	%	$	—	(1)			(1)			(1)
Abbington Place	Huntsville, AL		1987		1998		152		162,792		1,071	$	540.79		87.50	%	$	—	(1)			(1)			(1)
Paddock Club Huntsville	Huntsville, AL		1989/98		1997		392		414,736		1,058	$	660.37		84.18	%	$	—	(1)			(1)			(1)
Paddock Club Montgomery	Montgomery, AL		1999		1998		208		230,880		1,110	$	730.36		91.35	%	$	—	(1)			(1)			(1)
							952		989,808		1,040	$	656.94		89.29	%	$	—
Calais Forest	Little Rock, AR		1987		1994		260		195,000		750	$	610.63		94.62	%	$	—	(1)			(1)			(1)
Napa Valley	Little Rock, AR		1984		1996		240		183,120		763	$	612.78		90.83	%	$	—	(1)			(1)			(1)
Westside Creek I	Little Rock, AR		1984		1997		142		147,964		1,042	$	693.55		90.14	%	$	—	(1)			(1)			(1)
Westside Creek II	Little Rock, AR		1986		1997		166		172,972		1,042	$	650.49		96.39	%	$	4,591			8.760%			10/1/2006
							808		699,056		865	$	634.03		93.07	%	$	4,591
Tiffany Oaks	Altamonte Springs, FL		1985		1996		288		234,144		813	$	671.17		97.22	%	$	—	(1)			(1)			(1)
Marsh Oaks	Atlantic Beach, FL		1986		1995		120		93,240		777	$	652.50		95.00	%	$	—	(1)			(1)			(1)
Indigo Point	Brandon, FL		1989		2000		240		194,640		811	$	729.67		99.17	%	$	—	(4)			(4)			(4)
Paddock Club Brandon	Brandon, FL		1997/99		1997		440		516,120		1,173	$	877.41		95.00	%	$	—	(2)			(2)			(2)
Preserve at Coral Square	Coral Springs, FL		1996		2004		480		528,480		1,101	$	1,040.15		97.71	%	$	33,141			6.983%			9/28/2008
Anatole	Daytona Beach, FL		1986		1995		208		149,136		717	$	666.99		99.52	%	$	7,000	(10)		1.770%	(10)		10/15/2032	(10)
Paddock Club Gainesville	Gainesville, FL		1999		1998		264		293,040		1,110	$	821.36		93.18	%	$	—	(2)			(2)			(2)
Cooper’s Hawk	Jacksonville, FL		1987		1995		208		218,400		1,050	$	768.53		99.04	%	$	—	(6)			(6)			(6)
Hunter’s Ridge at Deerwood	Jacksonville, FL		1987		1997		336		295,008		878	$	721.88		94.64	%	$	—	(7)			(7)			(7)
Lakeside	Jacksonville, FL		1985		1996		416		344,032		827	$	703.46		96.63	%	$	—	(1)			(1)			(1)
Lighthouse Court	Jacksonville, FL		2003		2003		501		556,110		1,110	$	932.43		88.42	%	$	—	(1)			(1)			(1)
Paddock Club Jacksonville	Jacksonville, FL		1989/96		1997		440		475,200		1,080	$	811.79		92.50	%	$	—	(1)			(1)			(1)
Paddock Club Mandarin	Jacksonville, FL		1998		1998		288		330,336		1,147	$	843.10		94.79	%	$	—	(2)			(2)			(2)
St. Augustine	Jacksonville, FL		1987		1995		400		304,400		761	$	639.07		89.25	%	$	—	(6)			(6)			(6)
Woodbridge at the Lake	Jacksonville, FL		1985		1994		188		166,004		883	$	692.12		95.74	%	$	—	(2)			(2)			(2)
Woodhollow	Jacksonville, FL		1986		1997		450		342,000		760	$	705.36		93.78	%	$	—	(1)			(1)			(1)
Paddock Club Lakeland	Lakeland, FL		1988/90		1997		464		505,296		1,089	$	719.85		95.47	%	$	—	(1)			(1)			(1)
Savannahs at James Landing	Melbourne, FL		1990		1995		256		238,592		932	$	691.53		97.27	%	$	—	(6)			(6)			(6)
Paddock Park Ocala	Ocala, FL		1986/88		1997		480		485,280		1,011	$	729.64		93.96	%	$	6,805	(2)(3)			(2)(3)			(2)(3)
Paddock Club Panama City	Panama City, FL		2000		1998		254		283,972		1,118	$	870.39		96.85	%	$	—	(2)			(2)			(2)
Paddock Club Tallahassee	Tallahassee, FL		1990/95		1997		304		329,232		1,083	$	808.02		83.22	%	$	—	(2)			(2)			(2)
Belmere	Tampa, FL		1984		1994		210		202,440		964	$	736.68		92.38	%	$	—	(1)			(1)			(1)
Links at Carrollwood	Tampa, FL		1980		1998		230		214,820		934	$	753.65		96.09	%	$	—	(1)			(1)			(1)
							7,465		7,299,922		978	$	778.17		94.27	%	$	46,946
High Ridge	Athens, GA		1987		1997		160		186,560		1,166	$	683.40		96.25	%	$	—	(1)			(1)			(1)
Bradford Pointe	Augusta, GA		1986		1997		192		156,288		814	$	611.01		91.67	%	$	4,760			2.739%			6/1/2028
Shenandoah Ridge	Augusta, GA		1982		1994		272		222,768		819	$	543.93		95.96	%	$	—	(1)			(1)			(1)
Westbury Creek	Augusta, GA		1984		1997		120		107,040		892	$	632.48		91.67	%	$	3,480	(15)		1.770%	(15)		5/15/2033	(15)
Fountain Lake	Brunswick, GA		1983		1997		110		129,800		1,180	$	744.26		85.45	%	$	—	(5)			(5)			(5)
Park Walk	College Park, GA		1985		1997		124		112,716		909	$	646.27		91.94	%	$	—	(1)			(1)			(1)
Whisperwood	Columbus, GA		1980/82/ 84/86/98		1997		1,008		1,220,688		1,211	$	718.96		95.24	%	$	—	(1)			(1)			(1)
Willow Creek	Columbus, GA		1971/77		1997		285		246,810		866	$	567.88		88.42	%	$	—	(1)			(1)			(1)
Terraces at Fieldstone	Conyers, GA		1999		1998		316		351,076		1,111	$	749.93		96.84	%	$	—	(1)			(1)			(1)
Prescott	Duluth, GA		2001		2004		384		370,176		964	$	878.05		96.88	%	$	—	(8)			(8)			(8)

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																		Encumbrances at December 31, 2004
Property	Location	Year Completed		Year Management Commenced		Number of Units		Approximate Rentable Area (Square Footage)		Average Unit Size (Square Footage)		Monthly Rent per Unit at December 31, 2004		Average Occupancy Percent at December 31, 2004			Mortgage Principal (000’s)			Interest Rate			Maturity Date
Whispering Pines	LaGrange, GA		1982/84		1997		216		223,128		1,033	$	542.25		90.74	%	$	—	(5)			(5)			(5)
Westbury Springs	Lilburn, GA		1983		1997		150		137,700		918	$	658.04		93.33	%	$	—	(1)			(1)			(1)
Austin Chase	Macon, GA		1996		1997		256		292,864		1,144	$	697.21		94.53	%	$	—	(7)			(7)			(7)
The Vistas	Macon, GA		1985		1997		144		153,792		1,068	$	605.78		99.31	%	$	—	(1)			(1)			(1)
Walden Run	McDonough, GA		1997		1998		240		271,200		1,130	$	721.03		95.00	%	$	—	(1)			(1)			(1)
Georgetown Grove	Savannah, GA		1997		1998		220		239,800		1,090	$	821.88		96.36	%	$	10,174			7.750%			7/1/2037
Wildwood	Thomasville, GA		1980/84		1997		216		223,128		1,033	$	567.42		96.30	%	$	—	(1)			(1)			(1)
Hidden Lake	Union City, GA		1985/87		1997		320		342,400		1,070	$	666.02		93.13	%	$	—	(1)			(1)			(1)
Three Oaks	Valdosta, GA		1983/84		1997		240		247,920		1,033	$	613.68		89.58	%	$	—	(1)			(1)			(1)
Huntington Chase	Warner Robins, GA		1997		2000		200		218,400		1,092	$	673.33		96.00	%	$	9,031			6.850%			11/1/2008
Southland Station	Warner Robins, GA		1987/90		1997		304		354,768		1,167	$	677.27		98.68	%	$	—	(1)			(1)			(1)
Terraces at Townelake	Woodstock, GA		1999		1998		502		575,794		1,147	$	704.22		94.02	%	$	—	(1)			(1)			(1)
							5,979		6,384,816		1,068	$	683.34		94.41	%	$	27,445
Fairways at Hartland	Bowling Green, KY		1996		1997		240		251,280		1,047	$	637.02		98.33	%	$	—	(1)			(1)			(1)
Paddock Club Florence	Florence, KY		1994		1997		200		207,000		1,035	$	703.11		96.50	%	$	9,666			5.875%			1/1/2044
Grand Reserve Lexington	Lexington, KY		2000		1999		370		432,530		1,169	$	815.54		91.35	%	$	—	(1)			(1)			(1)
Lakepointe	Lexington, KY		1986		1994		118		90,624		768	$	619.18		93.22	%	$	—	(1)			(1)			(1)
Mansion, The	Lexington, KY		1989		1994		184		138,736		754	$	617.21		94.57	%	$	—	(1)			(1)			(1)
Village, The	Lexington, KY		1989		1994		252		182,700		725	$	598.86		89.68	%	$	—	(1)			(1)			(1)
Stonemill Village	Louisville, KY		1985		1994		384		324,096		844	$	607.17		92.19	%	$	—	(1)			(1)			(1)
							1,748		1,626,966		931	$	667.02		93.31	%	$	9,666
Riverhills	Grenada, MS		1972		1985		96		81,984		854	$	407.41		97.92	%	$	—	(1)			(1)			(1)
Crosswinds	Jackson, MS		1988/90		1996		360		443,160		1,231	$	668.89		94.72	%	$	—	(1)			(1)			(1)
Pear Orchard	Jackson, MS		1985		1994		389		338,430		870	$	624.79		95.89	%	$	—	(1)			(1)			(1)
Reflection Pointe	Jackson, MS		1986		1988		296		254,856		861	$	639.96		96.62	%	$	5,880	(11)		1.770%	(11)		5/15/2031	(11)
Somerset	Jackson, MS		1981		1995		144		126,864		881	$	581.16		95.14	%	$	—	(1)			(1)			(1)
Woodridge	Jackson, MS		1987		1988		192		175,104		912	$	564.30		96.88	%	$	—	(1)			(1)			(1)
Lakeshore Landing	Ridgeland, MS		1974		1994		196		171,108		873	$	586.41		94.90	%	$	—	(1)			(1)			(1)
Savannah Creek	Southaven, MS		1989		1996		204		237,048		1,162	$	663.88		94.61	%	$	—	(1)			(1)			(1)
Sutton Place	Southaven, MS		1991		1996		253		268,686		1,062	$	649.85		92.89	%	$	—	(1)			(1)			(1)
							2,130		2,097,240		985	$	619.34		95.35	%	$	5,880
Hermitage at Beechtree	Cary, NC		1988		1997		194		169,750		875	$	601.47		95.36	%	$	—	(1)			(1)			(1)
Woodstream	Greensboro, NC		1983		1994		304		217,056		714	$	530.83		96.05	%	$	—	(1)			(1)			(1)
Corners, The	Winston-Salem, NC		1982		1993		240		173,520		723	$	538.55		94.58	%	$	—	(2)			(2)			(2)
							738		560,326		759	$	551.91		95.39	%	$	—
Fairways at Royal Oak	Cincinnati, OH		1988		1994		214		214,428		1,002	$	672.94		90.65	%	$	—	(1)			(1)			(1)
Colony at South Park	Aiken, SC		1989/91		1997		184		174,800		950	$	660.86		94.57	%	$	—	(1)			(1)			(1)
Woodwinds	Aiken, SC		1988		1997		144		165,168		1,147	$	625.60		95.14	%	$	—	(1)			(1)			(1)
Tanglewood	Anderson, SC		1980		1994		168		146,664		873	$	554.50		95.24	%	$	—	(1)			(1)			(1)
Fairways, The	Columbia, SC		1992		1994		240		213,840		891	$	589.75		93.75	%	$	7,735	(12)		1.809%	(12)		5/15/2031	(12)
Paddock Club Columbia	Columbia, SC		1989/95		1997		336		367,584		1,094	$	702.03		91.96	%	$	—	(1)			(1)			(1)
Highland Ridge	Greenville, SC		1984		1995		168		143,976		857	$	488.97		97.02	%	$	—	(9)			(9)			(9)
Howell Commons	Greenville, SC		1986/88		1997		348		292,668		841	$	501.60		90.80	%	$	—	(1)			(1)			(1)
Paddock Club Greenville	Greenville, SC		1996		1997		208		212,160		1,020	$	657.71		92.31	%	$	—	(1)			(1)			(1)

9

																		Encumbrances at December 31, 2004
Property	Location	Year Completed		Year Management Commenced		Number of Units		Approximate Rentable Area (Square Footage)		Average Unit Size (Square Footage)		Monthly Rent per Unit at December 31, 2004		Average Occupancy Percent at December 31, 2004			Mortgage Principal (000’s)			Interest Rate			Maturity Date
Park Haywood	Greenville, SC		1983		1993		208		156,832		754	$	505.10		100.00	%	$	—	(1)			(1)			(1)
Spring Creek	Greenville, SC		1985		1995		208		182,000		875	$	495.17		99.52	%	$	—	(9)			(9)			(9)
Runaway Bay	Mt. Pleasant, SC		1988		1995		208		177,840		855	$	758.58		98.56	%	$	—	(9)			(9)			(9)
Park Place	Spartanburg, SC		1987		1997		184		195,224		1,061	$	601.56		90.76	%	$	—	(1)			(1)			(1)
							2,604		2,428,756		933	$	596.12		94.59	%	$	7,735
Hamilton Pointe	Chattanooga, TN		1989		1992		361		256,671		711	$	519.19		95.57	%	$	—	(1)			(1)			(1)
Hidden Creek	Chattanooga, TN		1987		1988		300		259,200		864	$	540.94		90.00	%	$	—	(1)			(1)			(1)
Steeplechase	Chattanooga, TN		1986		1991		108		98,604		913	$	612.69		93.52	%	$	—	(1)			(1)			(1)
Windridge	Chattanooga, TN		1984		1997		174		238,728		1,372	$	702.24		96.55	%	$	5,465	(16)		1.770%	(16)		5/15/2033	(16)
Oaks, The	Jackson, TN		1978		1993		100		87,500		875	$	556.77		90.00	%	$	—	(1)			(1)			(1)
Post House Jackson	Jackson, TN		1987		1989		150		163,650		1,091	$	614.57		94.00	%	$	5,095			1.770%			10/15/2032
Post House North	Jackson, TN		1987		1989		144		144,720		1,005	$	605.12		95.14	%	$	3,375	(13)		1.770%	(13)		5/15/2031	(13)
Bradford Chase	Jackson, TN		1987		1994		148		121,360		820	$	551.73		93.92	%	$	—	(1)			(1)			(1)
Woods at Post House	Jackson, TN		1997		1995		122		118,950		975	$	635.83		95.08	%	$	5,056			6.070%			9/1/2035
Cedar Mill	Memphis, TN		1973/86		1982/94		276		297,804		1,079	$	616.61		92.75	%	$	—	(1)			(1)			(1)
Eastview	Memphis, TN		1973		1984		432		356,400		825	$	537.56		79.17	%	$	—	(1)			(1)			(1)
Gleneagles	Memphis, TN		1975		1990		184		189,520		1,030	$	625.01		92.39	%	$	—	(1)			(1)			(1)
Greenbrook	Memphis, TN		1974/78/83/86		1988		1,037		939,522		906	$	583.14		93.15	%	$	—	(4)			(4)			(4)
Hickory Farm	Memphis, TN		1985		1994		200		150,200		751	$	558.43		96.50	%	$	—	(1)			(1)			(1)
Kirby Station	Memphis, TN		1978		1994		371		310,156		836	$	615.29		94.07	%	$	—	(1)			(1)			(1)
Lincoln on the Green	Memphis, TN		1988/98		1994		618		535,188		866	$	658.57		92.88	%	$	—	(1)			(1)			(1)
Park Estate	Memphis, TN		1974		1977		82		96,924		1,182	$	843.50		98.78	%	$	—	(4)			(4)			(4)
Reserve at Dexter Lake	Memphis, TN		1999/01		1998		740		792,540		1,071	$	737.66		93.51	%	$	—	(5)			(5)			(5)
River Trace	Memphis, TN		1981/85		1997		440		370,920		843	$	571.97		95.23	%	$	—	(1)			(1)			(1)
Paddock Club Murfreesboro	Murfreesboro, TN		1999		1998		240		268,800		1,120	$	800.33		90.42	%	$	—	(1)			(1)			(1)
Brentwood Downs	Nashville, TN		1986		1994		286		220,220		770	$	669.43		100.00	%	$	—	(1)			(1)			(1)
Grand View Nashville	Nashville, TN		2001		1999		433		479,331		1,107	$	825.53		95.61	%	$	—	(1)			(1)			(1)
Monthaven Park	Nashville, TN		2001		2004		456		427,728		938	$	693.61		96.05	%	$	23,028			5.000%			1/11/2008
Park at Hermitage	Nashville, TN		1987		1995		440		392,480		892	$	584.53		96.82	%	$	6,645	(17)		1.770%	(17)		2/15/2034	(17)
							7,842		7,317,116		933	$	635.37		93.47	%	$	48,664
Northwood	Arlington, TX		1980		1998		270		224,100		830	$	577.69		91.11	%	$	—	(2)			(2)			(2)
Balcones Woods	Austin, TX		1983		1997		384		313,728		817	$	628.32		95.57	%	$	—	(2)			(2)			(2)
Grand Reserve at Sunset Valley	Austin, TX		1996		2004		210		198,240		944	$	997.90		96.19	%	$	11,519			6.983%			9/28/2008
Stassney Woods	Austin, TX		1985		1995		288		248,832		864	$	616.63		86.11	%	$	4,050	(18)		1.770%	(18)		10/15/2032	(18)
Travis Station	Austin, TX		1987		1995		304		249,888		822	$	533.73		97.70	%	$	3,585	(19)		1.770%	(19)		2/15/2034	(19)
Woods, The	Austin, TX		1977		1997		278		214,060		770	$	758.31		94.96	%	$	—	(2)			(2)			(2)
Celery Stalk	Dallas, TX		1978		1994		410		374,740		914	$	695.70		85.61	%	$	—	(8)			(8)			(8)
Courtyards at Campbell	Dallas, TX		1986		1998		232		168,200		725	$	656.00		92.67	%	$	—	(2)			(2)			(2)
Deer Run	Dallas, TX		1985		1998		304		206,720		680	$	619.10		93.42	%	$	—	(2)			(2)			(2)
Lodge at Timberglen	Dallas, TX		1983		1994		260		226,200		870	$	659.06		88.08	%	$	—	(8)			(8)			(8)
Watermark	Dallas, TX		2002		2004		240		205,200		855	$	718.42		87.92	%	$	—	(8)			(8)			(8)
Legacy Pines	Houston, TX		1999		2003		308		283,360		920	$	908.06		95.78	%	$	—	(2)			(2)			(2)
Westborough Crossing	Katy, TX		1984		1994		274		197,280		720	$	596.74		87.23	%	$	—	(8)			(8)			(8)
Kenwood Club	Katy, TX		2000		1999		320		318,080		994	$	787.95		92.19	%	$	—	(2)			(2)			(2)
Lane at Towne Crossing	Mesquite, TX		1983		1994		384		277,632		723	$	622.38		86.46	%	$	—	(2)			(2)			(2)

10

																		Encumbrances at December 31, 2004
Property	Location	Year Completed		Year Management Commenced		Number of Units		Approximate Rentable Area (Square Footage)		Average Unit Size (Square Footage)		Monthly Rent per Unit at December 31, 2004		Average Occupancy Percent at December 31, 2004			Mortgage Principal (000’s)			Interest Rate			Maturity Date
Highwood	Plano, TX		1983		1998		196		156,800		800	$	645.27		90.31	%	$	—	(4)			(4)			(4)
Los Rios Park	Plano, TX		2000		2003		498		470,112		944	$	747.43		92.37	%	$	—	(2)			(2)			(2)
Cypresswood Court	Spring, TX		1984		1994		208		160,576		772	$	618.11		88.46	%	$	—	(8)			(8)			(8)
Villages at Kirkwood	Stafford, TX		1996		2004		274		244,682		893	$	866.43		95.62	%	$	14,860			6.983%			9/28/2008
Green Tree Place	Woodlands, TX		1984		1994		200		152,200		761	$	651.33		95.00	%	$	—	(8)			(8)			(8)
							5,842		4,890,630		837	$	694.30		91.54	%	$	34,014
Township	Hampton, VA		1987		1995		296		248,048		838	$	790.41		95.27	%	$	10,800	(14)		1.770%	(14)		10/15/2032	(14)
Subtotal 100% Owned							36,618		34,757,112		949	$	679.82		93.58	%
Joint Venture Properties
Preston Hills at Mill Creek	Buford, GA		2000		2002		464		517,360		1,115	$	758.93		94.40	%		N/A
Verandas at Timberglen	Dallas, TX		1999		2004		522		500,076		958	$	1,124.66		87.93	%		N/A
Seasons at Green Oaks	Grand Prairie, TX		1996		2003		300		286,500		955	$	782.29		92.00	%		N/A
Subtotal Joint Venture Properties							1,286		1,303,936		1,014	$	912.83		91.21	%
Total 100% Owned and Joint Venture Properties							37,904		36,061,048		951	$	687.73		93.50	%

 

(1) Encumbered by a $600 million FNMA facility, with $574.1 million available and $529.8 million outstanding with a variable interest rate of 3.020% on which there exists thirteen interest rate swap agreements totaling $440 million at an average rate of 5.853% at December 31, 2004.

(2) Encumbered by a $250 million FNMA facility, with $183.8 available and $173.6 million outstanding, $63.6 million of which had a variable interest rate of 2.967%, $65 million with a fixed rate of 7.712%, $25 million with a fixed rate of 6.920% and $20 milllion with a fixed rate of 5.770% at December 31, 2004.

(3) Phase I of Paddock Park—Ocala is encumbered by $6.8 million in bonds on which there exists a $6.8 million interest rate cap of 6.000% which terminates on October 24, 2007.

(4) Encumbered, along with one corporate property, by a mortgage with a principal balance of $40 million at December 31, 2004, with a maturity of April 1, 2009 and an interest rate of 3.419% on which there is a $25 million interest rate swap agreement with a rate of 4.580%.

(5) Encumbered by a credit line with AmSouth Bank, with an outstanding balance of $12.3 million at December 31, 2004.

(6) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with principal balance of $13.8 million at December 31, 2004, and an average interest rate of 5.867%.

(7) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $12.7 million at December 31, 2004, and an average interest rate of 5.177%.

(8) Encumbered by a $100 million Freddie Mac facility, with an outstanding balance of $65.4 million and a variable interest rate of 3.061% on which there exists three interest rate swap agreements totaling $51 million at an average rate of 5.280 at December 31, 2004.

(9) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $8.5 million at December 31, 2004, and an average interest rate of 6.090%.

(10) Encumbered by $7.0 million in bonds on which there exists a $7.0 million interest rate swap agreement fixed at 3.948% and maturing on October 24, 2007.

(11) Encumbered by $5.9 million in bonds on which there exists a $5.9 million interest rate swap agreement fixed at 5.049% and maturing on June 15, 2008.

(12) Encumbered by $7.7 million in bonds on which there exists a $7.7 million interest rate swap agreement fixed at 5.049% and maturing on June 15, 2008.

(13) Encumbered by $3.4 million in bonds on which there exists a $3.4 million interest rate swap agreement fixed at 5.049% and maturing on June 15, 2008.

(14) Encumbered by $10.8 million in bonds on which there exists a $10.8 million interest rate swap agreement fixed at 3.948% and maturing on October 24, 2007.

(15) Encumbered by $3.5 million in bonds on which there exist a $3.0 million interest rate swap agreement fixed at 2.301% and maturing on May 30, 2008.

(16) Encumbered by $5.5 million in bonds on which there exists a $5.0 million interest rate swap agreement fixed at 3.226% and maturing on May 30, 2008.

(17) Encumbered by $6.6 million in bonds on which there exists a $6.6 million interest rate swap agreement fixed at 3.622% and maturing on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 3.084% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

11

(18) Encumbered by $4.0 million in bonds on which there exists a $4.0 million interest rate cap of 6.0% which terminates on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 3.084% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

(19) Encumbered by $3.6 million in bonds on which there exists a $3.6 million interest rate swap agreement fixed at 3.622% and maturing on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 3.084% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

12

ITEM 3.   LEGAL PROCEEDINGS

The Company is not presently subject to any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company. The Company is presently subject to routine litigation arising in the ordinary course of business, some of which is expected to be covered by liability insurance and none of which is expected to have a material adverse effect on the business, financial condition, liquidity or results of operations of the Company.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company’s common stock has been listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “MAA” since its initial public offering in February 1994. On February 28, 2005, the reported last sale price of the Company’s common stock on the NYSE was $37.56 per share, and there were approximately 1,500 holders of record of the common stock. The Company estimates there are approximately 11,000 beneficial owners of its common stock. On February 28, 2005, there was one holder of record of the 9-1/4% Series F Cumulative Redeemable Preferred Stock (“Series F”), three holders of record of the 8-5/8% Series G Cumulative Redeemable Preferred Stock (“Series G”) and approximately 18 holders of record of the 8.30% Series H Cumulative Redeemable Preferred Stock (“Series H”). The following table sets forth the quarterly high and low sales prices of the Company’s common stock as reported on the NYSE and the dividends declared by the Company with respect to the periods indicated.

	Sales Prices
	High		Low		Dividends Declared
2004:
First Quarter	$	37.400	$	33.420	$	0.585
Second Quarter	$	38.640	$	30.750	$	0.585
Third Quarter	$	40.900	$	35.130	$	0.585
Fourth Quarter	$	41.740	$	37.920	$	0.585
2003:
First Quarter	$	24.980	$	23.100	$	0.585
Second Quarter	$	27.450	$	23.670	$	0.585
Third Quarter	$	31.450	$	26.740	$	0.585
Fourth Quarter	$	34.290	$	30.020	$	0.585

 

The Company’s quarterly dividend rate is currently $0.585 per common share. The Board of Directors reviews and declares the dividend rate quarterly. Actual dividends made by the Company will be affected by a number of factors, including the gross revenues received from the Communities, the operating expenses of the Company, the interest expense incurred on borrowings and unanticipated capital expenditures.

The Company currently pays a preferential regular distribution on the Series F stock, Series G stock and Series H stock at annual rates of $2.3125, $2.15625 and $2.075 per share, respectively. No distribution may be made on the Company’s common stock unless all accrued distributions have been made with respect to each series of the Company’s preferred stock. No assurance can be given that the Company will be able to maintain its distribution rate on its common stock or make required distributions with respect to the Series F, Series G and Series H preferred stock.

The Company expects to make future quarterly distributions to shareholders; however, future distributions by the Company will be at the discretion of the Board of Directors and will depend on the actual funds from operations of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as the Board of Directors deems relevant.

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The Company has established the Direct Stock Purchase and Distribution Reinvestment Plan (the “DRSPP”) under which holders of common stock, preferred stock and limited partnership interests in Mid-America Apartments, L.P. can elect automatically to reinvest their distributions in additional shares of common stock. The plan also allows for the optional purchase of common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. The Company, in its absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill its obligations under the DRSPP, the Company may either issue additional shares of common stock or repurchase common stock in the open market. The Company may elect to sell shares under the DRSPP at up to a 5% discount.

In 2004, the Company issued a total of 413,598 shares through its DRSPP and offered a 2% discount for optional cash purchases in the months of August through December.

The following table provides information with respect to compensation plans under which our equity securities are authorized for issuance as of December 31, 2004.

	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a))
	(a)(1)		(b)(1)		(c)(2)
Equity compensation plans approved by security holders		674,066	$	24.30		606,599
Equity compensation plans not approved by security holders		N/A		N/A		N/A
Total		674,066	$	24.30		606,599

 

(1)   Columns (a) and (b) above do not include 104,698 shares of restricted stock that are subject to vesting requirements which were issued through the Company’s Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan or 43,401 shares of common stock which have been purchased by employees through the Employee Stock Purchase Plan. See Note 8 of the consolidated financial statements for more information on these plans.

(2)   Column (c) above includes 500,000 shares available to be issued under the Company’s 2004 Stock Plan and 106,599 shares available to be issued under the Company’s Employee Stock Purchase Plan. See Note 8 of the consolidated financial statements for more information on these plans.

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ITEM 6.   SELECTED FINANCIAL DATA

The following table sets forth selected financial data on an historical basis for the Company. This data should be read in conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.

MID-AMERICA APARTMENT COMMUNITIES, INC.
SELECTED FINANCIAL DATA
(Dollars in thousands except per share data)

	Year Ended December 31,
	2004			2003			2002			2001			2000
Operating Data:
Total revenues	$	267,784		$	236,762		$	228,851		$	228,015		$	222,131
Expenses:
Property operating expenses		112,748			98,692			90,869			87,658			84,638
Depreciation		68,653			58,074			54,285			51,091			50,898
Property management and general and administrative expenses		19,597			15,670			15,298			16,083			14,826
Income from continuing operations before non-operating items		66,786			64,326			68,399			73,183			71,769
Interest and other non-property income		593			835			729			1,301			1,511
Interest expense		(50,858	)		(44,991	)		(48,381	)		(51,487	)		(49,556	)
Gain (loss) on debt extinguishment		1,095			111			(1,441	)		(1,189	)		(243	)
Amortization of deferred financing costs		(1,753	)		(2,050	)		(2,700	)		(2,339	)		(2,748	)
Minority interest in operating partnership income		(2,264	)		(1,360	)		(388	)		(2,417	)		(2,587	)
Loss from investments in unconsolidated entities		(287	)		(949	)		(532	)		(296	)		(157	)
Net gain on insurance and other settlement proceeds		2,683			2,860			397			11,933			11,595
Gain on disposition within unconsolidated entities		3,249			—			—			—			—
Income from continuing operations		19,244			18,782			16,083			28,689			29,584
Discontinued operations:
Income (loss) from discontinued operations before asset impairment, settlement proceeds and gain on sale		(197	)		(577	)		58			9			203
Asset impairment of discontinued operations		(200	)		—			—			—			—
Net gain on insurance and other settlement proceeds of discontinued operations		526			82			—			—			—
Gain on sale of discontinued operations		5,825			1,919			—			—			—
Net income		25,198			20,206			16,141			28,698			29,787
Preferred dividend distribution		14,825			15,419			16,029			16,113			16,114
Premiums and original issuance costs associated with the redemption of preferred stock		—			5,987			2,041			—			—
Net income (loss) available for common shareholders	$	10,373		$	(1,200	)	$	(1,929	)	$	12,585		$	13,673

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	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Data:
Weighted average shares outstanding (in thousands):
Basic		20,317			18,374			17,561			17,427			17,544
Effect of dilutive stock options		335			—			—			105			53
Diluted		20,652			18,374			17,561			17,532			17,597
Net income (loss) available for common shareholders	$	10,373		$	(1,200	)	$	(1,929	)	$	12,585		$	13,673
Discontinued property operations		(5,954	)		(1,424	)		(58	)		(9	)		(203	)
Income (loss) from continuing operations available for common shareholders	$	4,419		$	(2,624	)	$	(1,987	)	$	12,576		$	13,470
Earnings per share—basic:
Income (loss) from continuing operations available for common shareholders	$	0.22		$	(0.14	)	$	(0.11	)	$	0.72		$	0.77
Discontinued property operations		0.29			0.07			—			—			0.01
Net income (loss) available for common shareholders	$	0.51		$	(0.07	)	$	(0.11	)	$	0.72		$	0.78
Earnings per share—diluted:
Income (loss) from continuing operations available for common shareholders	$	0.21		$	(0.14	)	$	(0.11	)	$	0.72		$	0.77
Discontinued property operations		0.29			0.07			—			—			0.01
Net income (loss) available for common shareholders	$	0.50		$	(0.07	)	$	(0.11	)	$	0.72		$	0.78
Balance Sheet Data:
Real estate owned, at cost	$	1,862,850		$	1,695,111		$	1,478,793		$	1,449,720		$	1,430,378
Real estate assets, net	$	1,459,952		$	1,351,849		$	1,192,539		$	1,216,933		$	1,244,475
Total assets	$	1,522,307		$	1,406,533		$	1,239,467		$	1,263,488		$	1,303,771
Total debt	$	1,083,473		$	951,941		$	803,703		$	779,664		$	781,089
Minority interest	$	31,376		$	32,019		$	33,405		$	43,902		$	50,020
Shareholders’ equity	$	357,325		$	361,294		$	338,171		$	398,358		$	435,356
Other Data (at end of period):
Market capitalization (shares and units)	$	1,145,183		$	939,581		$	673,431		$	709,224		$	634,903
Ratio of total debt to total capitalization(1)		48.6	%		50.3	%		54.4	%		52.4	%		55.2	%
Number of properties, including joint venture ownership interest(2)		132			127			123			122			124
Number of apartment units, including joint venture ownership interest(2)		37,904			35,734			33,923			33,411			33,612

 

(1)   Total capitalization is total debt and market capitalization of preferred shares (value based on $25 per share liquidation preference), common shares and partnership units (value based on common stock equivalency).

(2)   Property and apartment unit totals have not been adjusted for properties held for sale.

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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS

This and other sections of this Annual Report contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These statements include, but are not limited to, statements about anticipated growth rate of revenues and expenses, planned asset dispositions, disposition pricing, planned acquisition and developments, property financings, and expected interest rates. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report on Form 10-K will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

The following are risks that the Company believes could cause results to differ from projected or forecasted results or could have a material adverse effect on the Company’s business.

The Company’s ability to make distributions may be adversely affected by factors beyond its control

The Company’s ability to generate sufficient cash flow in order to pay common dividends to its shareholders depends on its ability to generate funds from operations in excess of capital expenditure requirements and common dividends, and/or to have access to the markets for debt and equity financing. Funds from operations and the value of the Company’s properties may be less because of factors which are beyond the Company’s control. Such events or conditions could include:

•   competition from other apartment communities;

•   overbuilding of new apartment units or oversupply of available apartment units in the Company’s markets, which might adversely affect apartment occupancy or rental rates and/or require rent concessions in order to lease apartment units;

•   increases in operating costs (including real estate taxes and insurance premiums) due to inflation and other factors, which may not be offset by increased rents;

•   the Company’s inability to rent apartments on favorable economic terms;

•   changes in governmental regulations and the related costs of compliance;

•   changes in tax laws and housing laws including the enactment of rent control laws or other laws regulating multifamily housing;

•   changes in interest rate levels and the availability of financing, which could lead renters to purchase homes (if interest rates decrease and home loans are more readily available) or increase the Company’s acquisition and operating costs (if interest rates increase and financing is less readily available);

•   weakness in the overall economy which lowers job growth and the associated demand for apartment housing;

•   decisions relating to the dispositions of assets by the Company’s Joint Ventures; and

•   the relative illiquidity of real estate investments.

Currently, the Company relies on external funding sources to fully fund the payment of distributions to shareholders at the current rate. While the Company has sufficient liquidity to permit distributions at current rates through additional borrowings, any significant and sustained deterioration in operations could result in the Company’s financial resources being insufficient to pay distributions to shareholders at the current rate, in which event the Company would be required to reduce the distribution rate. Any decline in the Company’s

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funds from operations could adversely affect the Company’s ability to make distributions to its shareholders or to met its loan covenants and could have a material adverse effect on the Company’s stock price.

Debt level and refinancing risk may adversely affect financial condition and operating results

At December 31, 2004, the Company had total debt outstanding of $1.083 billion. Payments of principal and interest on borrowings may leave the Company with insufficient cash resources to operate the Communities or pay distributions required to be paid in order for the Company to maintain its qualification as a REIT. The Company currently intends to limit its total debt to approximately 60% of the undepreciated book value of its assets, although the Company’s charter and bylaws do not limit its debt levels. Circumstances may cause the Company to exceed that target from time to time. As of December 31, 2004, the Company’s ratio of debt to undepreciated book value was approximately 56%. The Company’s Board of Directors can modify this policy at any time which could allow the Company to become more highly leveraged and decrease its ability to make distributions to its shareholders. In addition, the Company must repay its debt upon maturity, and the inability to access debt or equity capital at attractive rates could adversely affect the Company’s financial condition and/or its funds from operations.

Variable interest rates may adversely affect funds from operations

At December 31, 2004, effectively $201.6 million of the Company’s debt bore interest at a variable rate and was not hedged by interest rate swaps or caps. An additional $50 million also bore interest at a variable rate at December 31, 2004, but was hedged by an interest rate swap that becomes operative in May 2005. In addition, the Company may incur additional debt in the future that also bears interest at variable rates. Variable-rate debt creates higher debt service requirements if market interest rates increase, which would adversely affect the Company’s funds from operations and the amounts available to pay distributions to shareholders.

The Company’s $950 million secured credit facilities with Prudential Mortgage Capital, credit enhanced by Fannie Mae, are predominately floating rate facilities. The Company also has a $100 million credit facility with Freddie Mac which is a variable rate facility. These facilities represent the majority of the variable interest rates the Company was exposed to at December 31, 2004. Large portions of the interest rates on these facilities have been hedged by means of a number of interest rate swaps and caps. Upon the termination of these swaps and caps, the Company will be exposed to the risks of varying interest rates.

Increasing real estate taxes and insurance costs may negatively impact financial condition

Because the Company has substantial real estate holdings, the cost of real estate taxes and insuring its Communities is a significant component of expense. Real estate taxes and insurance premiums are subject to significant increases and fluctuations which can be widely outside of the control of the Company. If the costs associated with real estate taxes and insurance should rise, the Company’s financial condition could be negatively impacted and the Company’s ability to pay its dividend could be affected.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The following discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, and the notes thereto, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires the Company to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis, the Company evaluates its estimates and assumptions based upon historical experience and various other factors and circumstances. The Company believes that its estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates and assumptions.

The Company believes that the estimates and assumptions that are most important to the portrayal of its financial condition and results of operations, in that they require the most subjective judgments, form the basis

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of accounting policies deemed to be most critical. These critical accounting policies include capitalization of expenditures and depreciation of assets, impairment of long-lived assets, including goodwill, and fair value of derivative financial instruments.

Capitalization of expenditures and depreciation of assets

The Company carries its real estate assets at their depreciated cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, which range from 8 to 40 years for land improvements and buildings, 5 years for furniture, fixtures, and equipment, and 3 to 5 years for computers and software, all of which are judgmental determinations. Repairs and maintenance costs are expensed as incurred while significant improvements, renovations, and replacements are capitalized. The cost to complete any deferred repairs and maintenance at properties acquired by the Company in order to elevate the condition of the property to the Company’s standards are capitalized as incurred.

Impairment of long-lived assets, including goodwill

The Company accounts for long-lived assets in accordance with the provisions of Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“Statement 144”) and evaluates its goodwill for impairment under Statement No. 142, Goodwill and Other Intangible Assets (“Statement 142”). The Company evaluates its goodwill for impairment on an annual basis in the Company’s fiscal fourth quarter, or sooner if a goodwill impairment indicator is identified. The Company periodically evaluates its long-lived assets, including its investments in real estate and goodwill, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions, and legal factors.

In accordance with Statement 144, long-lived assets, such as real estate assets, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

Goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination is made at the reporting unit level and consists of two steps. First, the Company determines the fair value of a reporting unit and compares it to its carrying amount. In the apartment industry, the primary method used for determining fair value is to divide annual operating cash flows by an appropriate capitalization rate. The Company determines the appropriate capitalization rate by reviewing the prevailing rates in a property’s market or submarket. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with Statement No. 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

Fair value of derivative financial instruments

The Company utilizes certain derivative financial instruments, primarily interest rate swaps and caps, during the normal course of business to manage, or hedge, the interest rate risk associated with the Company’s variable rate debt or as hedges in anticipation of future debt transactions to manage well-defined interest rate

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risk associated with the transaction. The valuation of the derivative financial instruments under Statement No. 133 as amended requires the Company to make estimates and judgments that affect the fair value of the instruments.

In order for a derivative contract to be designated as a hedging instrument, the relationship between the hedging instrument and the hedged item must be highly effective. While the Company’s calculation of hedge effectiveness contains some subjective determinations, the historical correlation of the cash flows of the hedging instruments and the underlying hedged item are measured by the Company before entering into the hedging relationship and have been found to be highly correlated.

The Company performs ineffectiveness tests using the change in the variable cash flows method at the inception of the hedge and for each reporting period thereafter, through the term of the hedging instruments. Any amounts determined to be ineffective are recorded in earnings. The change in fair value of the interest rate swaps and caps designated as cash flow hedges are recorded to accumulated other comprehensive income in the statement of shareholders’ equity.

OVERVIEW OF THE YEAR ENDED DECEMBER 31, 2004

The Company’s results for 2004 were positively impacted by both internal and external growth.

The Company achieved internal growth in 2004 as same store operating results were helped by early signs of economic recovery in the Company’s geographic areas of operation. Occupancy performance improved from the prior year, but was somewhat offset by a continued use of a higher than historical level of rental concessions.

The Company grew externally during 2004 by following its acquisition strategy to invest in large and mid-sized growing markets in the southeastern United States and in Texas. The Company acquired six properties in 2004.

The financings and acquisitions made during 2004 helped the Company continue its strategy of improving the flexibility of its balance sheet and enhancing its ability to strengthen its dividend coverage.

The following is a discussion of the consolidated financial condition and results of operations of the Company for the years ended December 31, 2004, 2003, and 2002. This discussion should be read in conjunction with all of the consolidated financial statements included in this Annual Report on Form 10-K.

As of December 31, 2004, the total number of apartment units the Company owned or had an ownership interest in, including the properties owned by the Company’s Joint Ventures was 37,904 in 132 Communities compared to the 35,734 apartment units in 127 Communities owned at December 31, 2003, and the 33,923 apartment units in 123 Communities owned at December 31, 2002. For properties owned 100% by the Company, the average monthly rental per apartment unit, excluding units in lease-up, increased to $680 at December 31, 2004 from $667 at December 31, 2003 and $661 at December 31, 2002. For these same units, overall occupancy at December 31, 2004, 2003 and 2002 was 93.6%, 92.7%, and 91.9%, respectively.

RESULTS OF OPERATIONS

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2004 TO THE YEAR ENDED DECEMBER 31, 2003

Comparisons of income from property operations for the years ended December 31, 2004 and 2003 were impacted by various factors. As a result of the buyout in August of 2003 of the partnership interest in Bre/Maac Associates, LLC, (the “BreMaac Buyout”), the Company’s joint venture with Blackstone Real Estate Advisors (“Blackstone”), the Company’s consolidated financial statements for 2003 include the impact of approximately only four months of operations of the 10 properties which were previously owned by the joint venture and accounted for using the equity method. The Company’s consolidated financial statements for 2004 include a full twelve months of operations for these 10 properties. The Company’s consolidated financial statements for 2003 also included only partial year results for the four properties acquired during 2003 (one of which was subsequently transferred to Mid-America CH/Realty, LP, the Company’s joint venture with Crow Holdings (the “Green Oaks Transfer”)). The Company also acquired an additional six properties during the

20

course of 2004. During 2003, the Company had two development communities which completed lease-up. Finally, the Company’s performance during 2004 and 2003 was impacted by changes in performance of the communities that were held throughout both periods.

Property revenues for the year ended December 31, 2004, increased by approximately $31,262,000 from the year ended December 31, 2003 due to (i) a $12,481,000 increase in property revenues from the BreMaac Buyout, (ii) a $7,759,000 increase in property revenues from the six communities acquired in 2004 (the “2004 Acquisitions”), (iii) a $7,372,000 increase in property revenues from the acquisitions of the Los Rios Park, Lighthouse Court and Legacy Pines communities in 2003 (the “2003 Acquisitions”), (iv) a $4,062,000 increase in property revenues from the communities held throughout both periods, and (v) a $189,000 increase in property revenues from the communities in lease-up in 2003 (the “Communities in Lease-up”). These increases were partially offset by a decrease in property revenues of $601,000 due to the Green Oaks Transfer.

Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other property related costs. Property operating expenses for the year ended December 31, 2004, increased by approximately $14,056,000 from the year ended December 31, 2003, due primarily to increases of property operating expenses of (i) $6,008,000 from the BreMaac Buyout, (ii) $3,966,000 from the 2003 Acquisitions, (iii) $3,307,000 from the 2004 Acquisitions, (iv) $593,000 from the communities held throughout both periods, (v) $514,000 from expenses related to the extraordinary hurricane season in 2004, and (vi) $27,000 from the Communities in Lease-up. These increases were partially offset by a decrease in property operating expenses of $359,000 from the Green Oaks Transfer.

Depreciation expense increased by approximately $10,579,000 primarily due to the increases of depreciation expense of (i) $3,659,000 from the 2003 Acquisitions, (ii) $3,362,000 from the 2004 Acquisitions, (iii) $2,781,000 from the BreMaac Buyout, and (iv) $802,000 from the communities held throughout both periods. These increases were partially offset by a decrease in depreciation expense of $25,000 from the Communities in Lease-up.

Property management expenses increased by approximately $1,922,000 from the year ended December 31, 2003 to the year ended December 31, 2004 partially due to increased personnel expenses and incentive compensation related to property acquisitions. General and administrative expenses increased by approximately $2,005,000 over this same period partially related to expenses associated with the implementation of new property management software and expenses resulting from new regulatory requirements.

Interest expense increased approximately $5,867,000 from 2003 due primarily to the increase in the amount of debt outstanding from 2003. The Company’s average borrowing cost at December 31, 2004 and 2003 was 5.4%.

For the year ended December 31, 2004, the Company recorded a total of approximately $9,074,000 in gains from two property sales, of which approximately $3,249,000 represented the Company’s share of the gain from the sale of a property which was owned by one of the Company’s joint ventures. In 2003, the Company sold one property and recorded a gain of approximately $1,919,000.

In 2004 and 2003, the Company refinanced the debt on several of its communities primarily to take advantage of the lower interest rate environment. This resulted in gains of approximately $1,095,000 and $111,000 related to the early extinguishment of debt in 2004 and 2003, respectively.

For the years ended December 31, 2004, and 2003, the Company recorded net gains on insurance and other settlement proceeds totaling approximately $2,683,000, mainly related to insurance settlements from fires at some of the Company’s Communities, and approximately $2,860,000, mainly related to insurance settlements from the fire at the Company’s headquarters in March 2002, respectively.

Primarily as a result of the foregoing, net income increased by $4,992,000 in 2004 over 2003.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2003 TO THE YEAR ENDED DECEMBER 31, 2002

Comparisons of income from property operations for the years ended December 31, 2003 and 2002 were impacted by four main factors. First, as a result of the BreMaac Buyout the Company’s consolidated financial statements for 2003 include the impact of only four months of operations of the 10 properties which were

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previously owned by the joint venture and accounted for using the equity method. Second, the Company acquired four properties in 2003 (one of which was subsequently transferred to Mid-America CH/Realty, LP, the Company’s joint venture with Crow Holdings). Third, during the years 2003 and 2002, the Company still had three development communities which were in various stages of lease-up (the “Development Communities”). Finally, the Company’s performance during 2003 and 2002 was impacted by changes in performance of the communities that were held throughout both periods.

Property revenues for 2003 increased by approximately $7,864,000 due primarily to increases of (i) $6,156,000 from the BreMaac Buyout, (ii) $3,841,000 from the 2003 Acquisitions and the purchase of the Green Oaks apartments, and (iii) $1,431,000 from the Development Communities. These increases were partially offset by a decrease in property revenues of $3,564,000 from the communities owned throughout both periods.

Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other property related costs. Property operating expenses for 2003 increased by approximately $7,823,000 due primarily to increases of (i) $2,999,000 due to the BreMaac Buyout, (ii) $2,623,000 from the communities held throughout both periods, (iii) $1,908,000 due to the 2003 Acquisitions and the purchase of the Green Oaks apartments, and (iv) $293,000 due to the Development Communities.

Depreciation and amortization expense increased by approximately $3,789,000 from the prior year primarily due to increases of (i) $2,304,000 due to the BreMaac Buyout, (ii) $1,460,000 due to the 2003 Acquisitions, (iii) $1,000 due to the communities owned throughout both periods and (iv) $24,000 from the Development Communities.

Property management expenses decreased approximately $198,000 as compared to the prior year. The decrease was mainly due to reductions in bonuses. General and administrative expense increased approximately $570,000 as compared to the prior year. This increase was mainly related to increased compensation incentives and salaries, partially related to the addition of new personnel hired to address recent regulatory requirements.

Interest expense decreased approximately $3,390,000 from 2002 due primarily to the Company’s ability to take advantage of the decline in interest rates in 2002 and 2003. The Company’s average borrowing cost at December 31, 2003 was 5.4% as compared to 5.8% on December 31, 2002.

For the years ended December 31, 2003, and 2002, the Company recorded net gains on insurance and other settlement proceeds totaling approximately $2,860,000, mainly related to insurance settlements from the fire at the Company’s headquarters in March 2002, and approximately $397,000, primarily related to insurance settlements, respectively.

In 2003 and 2002, the Company refinanced several of its communities primarily to take advantage of the lower interest rate environment. This resulted in a gain of approximately $111,000 related to the early extinguishment of debt in 2003 and a loss of approximately $1,441,000 in 2002.

In 2003, the Company recorded a gain on discontinued operations of approximately $1,919,000 related to the sale of the Crossings apartments in 2003. No properties were sold in 2002.

Primarily as a result of the foregoing, net income increased by approximately $4,065,000 in 2003 over 2002.

FUNDS FROM OPERATIONS

Funds from operations (“FFO”) represents net income (computed in accordance with U.S. generally accepted accounting principles, or “GAAP”) excluding extraordinary items, minority interest in Operating Partnership income, gain on disposition of real estate assets, plus depreciation of real estate, and adjustments for joint ventures to reflect FFO on the same basis. This definition of FFO is in accordance with the National Association of Real Estate Investment Trust’s (“NAREIT”) definition. Disposition of real estate assets includes sales of discontinued operations as well as proceeds received from insurance and other settlements from property damage.

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In response to the Securities and Exchange Commission’s Staff Policy Statement relating to EITF Topic D-42 concerning the calculation of earnings per share for the redemption of preferred stock, the Company has included the amount charged to retire preferred stock in excess of carrying values in its FFO calculation.

The Company’s policy is to expense the cost of interior painting, vinyl flooring, and blinds as incurred for stabilized properties. During the stabilization period for acquisition properties, these items are capitalized as part of the total repositioning program of newly acquired properties, and, thus are not deducted in calculating FFO.

FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, as an indicator of operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of liquidity. The Company believes that FFO is helpful to investors in understanding the Company’s operating performance in that such calculation excludes depreciation expense on real estate assets. The Company believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. The Company’s calculation of FFO may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs.

The following table is a reconciliation of FFO to net income for the years ended December 31, 2004, 2003 and 2002 (dollars and shares in thousands):

	Years ended December 31,
	2004			2003			2002
Net income	$	25,198		$	20,206		$	16,141
Depreciation real estate assets		67,302			56,701			52,928
Net gain on insurance and other settlement proceeds		(2,683	)		(2,860	)		(397	)
Gain on disposition within unconsolidated entities		(3,249	)		—			—
Net gain on insurance and other settlement proceeds of discontinued operations		(526	)		(82	)		—
Depreciation real estate assets of discontinued operations		681			1,022			978
Gain on sale of discontinued operations		(5,825	)		(1,919	)		—
Depreciation real estate assets of unconsolidated entities		1,688			2,345			1,430
Gain on sale of non-depreciable assets		—			—			(45	)
Preferred dividend distribution		(14,825	)		(15,419	)		(16,029	)
Minority interest in operating partnership income		2,264			1,360			388
Premiums and original issuance costs associated with the redemption of preferred stock		—			(5,987	)		(2,041	)
Funds from operations	$	70,025		$	55,367		$	53,353
Weighted average shares and units:
Basic		22,981			21,093			20,415
Diluted		23,316			21,354			20,613

 

FFO increased during 2004 by approximately $14,658,000 to $70,025,000 versus $55,367,000 in 2003 principally because of the addition of properties through the BreMaac Buyout and 2003 and 2004 Acquisitions as previously reviewed in the net income discussion above. FFO for 2002 was $53,353,000. FFO for 2003 and 2002 included charges of $5,987,000 and $2,041,000, respectively, for premiums and original issuance costs associated with the redemption of preferred stock.

TRENDS

Property performance over the past two years has been pressured by an imbalance between supply and demand for apartment units in many of the Company’s markets. The economic downturn and the related low interest rate environment have combined to contribute to a temporary decline in demand for apartment units, while allowing delivery levels of newly constructed apartment units to remain consistent with and in some cases above historical averages.

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The recent economic environment has impacted demand in two main ways: 1) producing lower job growth, which reduced the number of potential renters in most of the Company’s markets, and 2) producing lower interest rates which has increased the affordability of single family housing, prompting more renters to purchase homes.

On the supply side, the declining interest rates have provided an incentive to developers to construct new apartment units in many of the Company’s markets, especially in the larger metropolitan markets. Delivery of these new units during this period of weakened apartment demand has increased competition, adding pressure to apartment occupancy levels and pricing in a number of the Company’s markets.

As part of its strategy to create continued stable and growing performance, the Company maintains a portfolio of properties diversified across large metropolitan markets, mid-sized markets, and smaller tier markets, as defined by population levels. During the economic downturn, the Company’s smaller-tier and mid-sized markets produced more stable performance, while its larger metropolitan markets proved more susceptible to declining job formation and apartment supply imbalances.

The Company is beginning to see indications of stronger job growth in many of its markets, which could indicate an improvement in the general economic environment. As (and if) the economic environment improves, the Company expects to see more household formations and increasing interest rates, which the Company believes will combine to increase the number of apartment renters and decrease the construction of new apartment units.

While increasing interest rates will increase the Company’s cost of borrowing, the Company expects that this increase in demand will also generate stronger property performance across the Company’s portfolio. The Company’s large-tier markets, which have been under the most pressure during the economic downturn, should begin to absorb the oversupply of new apartment units and return to historical occupancy and pricing levels, while the Company’s smaller-tier and mid-sized markets will also benefit from improving market fundamentals which support continued stable growth.

Over the long term, general demographic trends are expected to favor apartment owners, as immigration growth, combined with the increasing demand for rental housing from the “echo boomers” (children of the “baby boomers”) is expected to produce more apartment renters over the next ten years. The Company believes its portfolio location throughout the Southeast and South central regions of the country position it well to take advantage of these improving demographic trends.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow provided by operating activities increased by approximately $11,709,000 to $88,229,000 for 2004 compared to $76,520,000 for 2003 mainly related to the growth of the Company through the BreMaac Buyout and the 2003 Acquisitions and 2004 Acquisitions.

Net cash used in investing activities remained relatively stable, increasing from approximately $139,555,000 in 2003 to $168,383,000 in 2004. A total of approximately $138,688,000 was invested in 2003 to acquire properties (including the BreMaac Buyout), this compares to approximately $155,088,000 in 2004. These amounts were only slightly offset by proceeds from dispositions of assets of approximately $26,247,000 in 2003 and $15,679,000 in 2004.

Capital improvements to existing real estate assets during 2004 and 2003 totaled approximately $30,413,000 and $22,832,000, respectively. Recurring capital expenditures were approximately $13,012,000 and $12,846,000, respectively during 2004 and 2003.

Net cash provided by financing activities increased approximately $18,812,000 to $80,492,000 in 2004 from $61,680,000 in 2003. Cash provided from financing activities from credit lines and notes payable increased approximately $58,839,000 from 2003 to 2004 as the Company took advantage of refinancing opportunities to manage interest expense and help accommodate property acquisitions. Proceeds from issuances of common shares and units decreased approximately $34,628,000 from 2003 to 2004 as the Company sold 1,765,000 shares of common stock to certain advisory clients of Cohen & Steers Capital Management, Inc. and to Scudder RREEF Real Estate Fund II, Inc. in 2003 to partially

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fund the BreMaac Buyout and acquisitions in 2003. In 2004 the Company issued approximately 414,000 shares of common stock through its Direct Stock Purchase and Distribution Reinvestment Plan as compared to 31,484 shares in 2003, as the Company granted a total of $15 million in waivers for purchases from August 2004 to December 2004.

In the first three months of 2004, the Company refinanced $2.3 million of bonds using its secured credit facility with a group of banks led by AmSouth Bank (the “AmSouth Facility”). The Company refinanced an additional $14.3 million of bonds using its tax-free bond facility, credit enhanced by the Federal National Mortgage Association (“FNMA”) (the “Tax-Free Bond Facility”). The Company also refinanced a total of $52.8 million representing the debt on six of the properties it acquired through its partnership buyout of Bre/Maac Associates, LLC in 2003 using a renegotiated secured credit facility with Prudential Mortgage Capital, credit enhanced by FNMA (the “FNMA Facility”).

During the three month period ended June 30, 2004, the Company refinanced an $11.2 million mortgage using its existing FNMA Facility. The Company amended the AmSouth Facility to extend the maturity by one year and increased the loan to value from 57% to 65%, effectively increasing the borrowing base from $31.7 million to $37.9 million. The Company also paid off the mortgages of five properties. The five properties were then used to collateralize a loan under a new credit agreement with Financial Federal Savings Bank, which was subsequently purchased and credit enhanced by Freddie Mac (the “Freddie Mac Facility”). The Freddie Mac Facility has a commitment amount of $100 million and a maturity date of July 1, 2011.

During the three month period ended September 30, 2004, the Company refinanced the debt on the remaining four properties it acquired through its partnership buyout of Bre/Maac Associates, LLC in 2003 using the FNMA Facility. The Company also borrowed a total of $31 million from its Freddie Mac Facility in the third quarter of 2004 which is collateralized by the Watermark and Prescott apartments purchased in 2004.

During the three month period ended December 31, 2004, the Company paid off the individual mortgages of five properties using its FNMA Facility. The Company also used the FNMA Facility to pay off loans maturing on three properties with Prudential totaling $47.5 million.

At December 31, 2004, the Tax-Free Bond Facility and the FNMA Facility (together the “FNMA Facilities”) had a combined credit line limit of $950 million, $839 million of which was available to borrow. The FNMA Facilities have multiple maturity traunches that range from 2010 through 2014. The FNMA Facilities provide for both fixed and variable rate borrowings. The interest rate on the majority of the variable portion renews every 90 days and is based on the FNMA Discount Mortgage Backed Security (“DMBS”) rate on the date of renewal, which has typically approximated three-month LIBOR less an average spread of 0.04% over the life of the FNMA Facilities, plus a credit enhancement fee of 0.62%.

Each of the Company’s credit facilities is subject to various covenants and conditions on usage. If the Company 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 the Company’s liquidity. Moreover, if the Company were to fail to make a payment or violate a covenant under a credit facility, after applicable cure periods one or more of its lenders could declare a default, accelerate the due date for repayment of all amounts outstanding and/or foreclose on properties securing such facilities. Any such event could have a material adverse effect on the Company.

The Company uses interest rate swaps to manage its current and future interest rate risk. As of December 31, 2004, the Company had 23 interest rate swaps in effect with a total notional amount of $519 million. These swaps have to date proven to be highly effective hedges. The Company has also entered into a future interest rate swap which will go into effect in the second quarter of 2005. The Company had three interest rate cap agreements in effect as of December 31, 2004, representing a total notional amount of $22.6 million.

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The weighted average interest rate at December 31, 2004, for the $1.083 billion of debt outstanding was 5.4% compared to 5.4% on $952 million of debt outstanding at December 31, 2003. Summary details of the debt outstanding at December 31, 2004 follows in the table below:

	Line Limit		Line Availability		Outstanding Balance/ Notional Amount		Interest Rate			Rate Maturity		Contract Maturity
COMBINED DEBT
Fixed Rate or Swapped
Conventional					$	721,327,184		6.4	%		1/28/2010		8/28/2012
Tax Exempt						87,960,000		4.8	%		6/30/2015		12/24/2018
Subtotal Fixed Rate or Swapped						809,287,184		6.2	%		8/31/2010		5/5/2013
Variable Rate
Conventional						240,756,100		3.1	%		3/1/2005		9/21/2011
Tax Exempt						10,855,004		2.6	%		1/31/2005		5/30/2020
Capped						22,575,000		2.8	%		10/3/2008		3/1/2014
Subtotal Variable Rate						274,186,104		3.1	%		6/15/2005		4/7/2012
Total Combined Debt Outstanding					$	1,083,473,288		5.4	%		5/6/2009		1/26/2013
UNDERLYING DEBT
Individual Property Mortgages/Bonds
Conventional Fixed Rate					$	121,065,184		6.6	%		11/22/2014		11/22/2014
Tax Exempt Fixed Rate						34,995,000		5.7	%		4/9/2026		4/9/2026
Tax Exempt Variable Rate						4,760,004		2.7	%		1/31/2005		6/1/2028
FNMA Credit Facilities
Tax Free Variable Rate Bond Facility
Tax Free Borrowings	$	88,280,000	$	69,915,000		69,915,000		2.7	%		1/31/2005		3/1/2014
Taxable Borrowings		11,720,000		11,720,000		11,720,000		3.1	%		1/31/2005		3/1/2014
Facility I
Fixed Rate Borrowings		110,000,000		110,000,000		110,000,000		7.2	%		1/10/2009		1/10/2009
Extended Fixed Rate Borrowings (1)						24,262,000		2.8	%		5/1/2005		12/1/2011
Variable Rate Borrowings		140,000,000		73,769,000		39,367,000		3.0	%		3/31/2005		12/1/2011
Facility II
Variable Rate Borrowings		600,000,000		574,056,000		529,753,000		3.0	%		3/1/2005		5/28/2013
Subtotal FNMA Facilities		950,000,000		839,460,000		785,017,000		3.6	%		9/15/2005		9/30/2012
Freddie Mac Credit Facility		100,000,000		65,374,000		65,374,000		3.1	%		3/13/2005		7/1/2011
AmSouth Credit Facility		40,000,000		32,061,333		12,262,100		4.5	%		1/31/2005		5/24/2006
Union Planters Mortgage						40,000,000		3.4	%		1/31/2005		4/1/2009
Compass Bank Unsecured Note						20,000,000		2.8	%		2/10/2005		2/10/2005
Total Underlying Debt Outstanding					$	1,083,473,288		3.9	%		4/28/2007		1/28/2013
HEDGING INSTRUMENTS IN EFFECT
Taxable Interest Rate Swaps
FNMA Facility					$	390,000,000		5.9	%		9/3/2008		9/3/2008
Freddie Mac Facility						51,000,000		5.3	%		6/1/2011		6/1/2011
Union Planters Mortgage						25,000,000		4.0	%		3/1/2009		3/1/2009
Tax Exempt Interest Rate Swaps
FNMA Tax Free Bond Facility						52,965,000		4.1	%		5/17/2008		5/17/2008
Total Swaps					$	518,965,000		5.6	%		12/7/2008		12/7/2008
Interest Rate Caps
FNMA Tax Free Bond Facility					$	22,575,000		6.0	%		10/3/2008		10/3/2008
HEDGING INSTRUMENTS NOT IN EFFECT
Future Interest Rate Swaps
FNMA Facility					$	50,000,000		5.2	%		5/1/2012		5/1/2012

 

(1)   Represents variable rate debt that reprices after nine months.

 

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On July 10, 2003, in an underwritten public offering, the Company sold 5,600,000 shares of its 8.30% Series H Cumulative Redeemable Preferred Stock (“Series H”) at $25 per share less an underwriting discount of $0.7875 per share. The net proceeds of the sale were applied to the redemption of all the issued and outstanding shares of the Company’s 9.5% Series A Cumulative Preferred Stock and 9-3/8% Series C Cumulative Redeemable Preferred Stock as well as 1,600,000 shares of the 1,938,830 issued and outstanding shares of the Company’s 8-7/8% Series B Cumulative Preferred Stock (“Series B”) on August 12, 2003.

On July 16, 2003, the underwriters of the Company’s Series H offering exercised an option to purchase an additional 525,000 shares of the Series H preferred stock for $25 per share less the underwriting discount, and on August 4, 2003, the underwriters exercised an option to purchase the remaining additional 75,000 shares of the Series H preferred stock for $25 per share less the underwriting discount. The net proceeds were used to redeem the remaining issued and outstanding shares of the Series B preferred stock on August 18, 2003.

On August 22, 2003, the Company sold 700,000 shares of its common stock to certain advisory clients of Cohen & Steers Capital Management, Inc. The stock was sold at a price of $28.40 per share. The $19,870,000 in net proceeds from the sale were used to partially fund the BreMaac Buyout.

On September 19, 2003, the Company sold 665,000 shares of its common stock to certain advisory clients of Cohen & Steers Capital Management, Inc. and to Scudder RREEF Real Estate Fund II, Inc. The stock was sold at a price of $29.36 per share. The $19,500,000 in net proceeds from the sale were used to partially fund the purchase of the Los Rios Park apartments.

On December 2, 2003, the Company sold 400,000 shares of its common stock to RREEF America, L.L.C. on behalf of itself and Scudder RREEF Real Estate Fund II, Inc. The stock was sold at a price of $30.00 per share. The $11,996,000 in net proceeds from the sale were used to partially fund the acquisition of the Lighthouse Court apartments.

The Company believes that it has adequate resources to fund its current operations, annual refurbishment of its properties, and incremental investment in new apartment properties. The Company is relying on the efficient operation of the financial markets to finance debt maturities, and also is heavily reliant on the creditworthiness of FNMA, which provides credit enhancement for approximately $785 million of the Company’s debt. The interest rate market for FNMA DMBS, which in the Company’s experience is highly correlated with threemonth LIBOR interest rates, is also an important component of the Company’s liquidity and interest rate swap effectiveness. In the event that the FNMA DMBS market becomes less efficient, or the credit of FNMA becomes impaired, the Company would seek alternative sources of debt financing.

For the year ended December 31, 2004, the Company’s net cash provided by operating activities was approximately $10.7 million short of funding improvements to existing real estate assets, distributions to unitholders, and dividends paid on common and preferred shares. This compared to a shortfall of approximately $9.5 million for the same period in 2003. While the Company has sufficient liquidity to permit distributions at current rates through additional borrowings, if necessary, any significant deterioration in operations could result in the Company’s financial resources to be insufficient to pay distributions to shareholders at the current rate, in which event the Company would be required to reduce the distribution rate.

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The following table reflects the Company’s total contractual cash obligations which consists of its long-term debt as of December 31, 2004 (dollars in 000’s):

	Payments Due by Period
Contractual Obligations	2005		2006		2007		2008		2009		Thereafter		Total
Long-Term Debt (1)	$	23,954	$	20,816	$	4,199	$	85,165	$	41,640	$	907,699	$	1,083,473
Capital Lease		—		—		—		—		—		—		—
Operating Lease		—		—		—		—		—		—		—
Purchase Obligations		—		—		—		—		—		—		—
Other Long-Term Liabilities														—
Reflected on the Registrant’s Balance Sheet under GAAP		—		—		—		—		—		—		—
Total	$	23,954	$	20,816	$	4,199	$	85,165	$	41,640	$	907,699	$	1,083,473

 

(1)   Represents principal payments.

OFF-BALANCE SHEET ARRANGEMENTS

At December 31, 2004 and 2003, the Company did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as “structured finance” or “special purpose entities,” established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. The Company’s joint venture with Blackstone (terminated in 2003) was established in order to raise capital through asset sales to fund development (while acquiring management fees to help offset the reduction in FFO from the sale), share repurchases, and other capital requirements. The Company’s joint ventures with Crow Holdings were established to acquire approximately $200 million of multifamily properties. In addition, the Company does not engage in trading activities involving non-exchange traded contracts. As such, the Company is not materially exposed to any financing, liquidity, market, or credit risk that could arise if it had engaged in such relationships. The Company does not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with the Company or its related parties other than what is disclosed in Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements, Note 11.

The Company’s investments in its real estate joint ventures are unconsolidated and are recorded on the equity method as the Company does not have a controlling interest. The Company has a mezzanine loan in the amount of $4.5 million at an average rate of 9% receivable from its joint venture, Mid-America CH/Realty, LP.

INSURANCE

The Company put in place a new property and casualty insurance policy effective July 1, 2004. The policy is substantially the same as last year. In the opinion of management, property and casualty insurance is in place that provides adequate coverage to provide financial protection against normal insurable risks such that it believes that any loss experienced would not have a significant impact on the Company’s liquidity, financial position, or results of operations.

INFLATION

Substantially all of the resident leases at the Communities allow, at the time of renewal, for adjustments in the rent payable there under, and thus may enable the Company to seek rent increases. Almost all leases are for one year or less. The short-term nature of these leases generally serves to reduce the risk to the Company of the adverse effects of inflation.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2004, the FASB issued Statement No. 123 (revised December 2004), Share-Based Payment (“Statement 123(R)”). Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. Statement

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123(R) will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or the liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. Statement 123(R) is effective as of the beginning of the first interim reporting period that begins after June 15, 2005. The Company does not believe the adoption of Statement 123(R) will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In December 2004, the FASB issued Statement No. 152, Accounting for Real Estate Time-Sharing Transactions, an amendment of FASB Statements No. 66 and 67 (“Statement 152”). Statement 152 amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. Statement 152 also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. Statement 152 is effective for financial statements for fiscal years beginning after June 15, 2005. The Company does not believe the adoption of Statement 152 will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (“Statement 153”). Statement 153 was a result of a joint effort by the FASB and the IASB to improve financial reporting by eliminating certain narrow differences between their existing accounting standards. Statement 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Statement 153 shall be applied prospectively and is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not believe the adoption of Statement 153 will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s primary market risk exposure is to changes in interest rates obtainable on its secured and unsecured borrowings. At December 31, 2004, 48.6% of the Company’s total capitalization consisted of borrowings. The Company’s interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower its overall borrowing costs. To achieve this objective, the Company manages its exposure to fluctuations in market interest rates for its borrowings through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable with such arrangements and may enter into derivative financial instruments such as interest rate swaps, and caps to mitigate its interest rate risk on a related financial instrument or to effectively fix the interest rate on a portion of its variable debt or on future refinancings. The Company does not enter into derivative instruments for trading purposes. Approximately 75% of the Company’s outstanding debt was subject to fixed rates after considering related derivative instruments with a weighted average of 6.2% at December 31, 2004. After considering the $50 million forward interest rate swap which becomes operative in May 2005, approximately 79% of the Company’s debt was fixed or hedged by interest rate swaps or caps at December 31, 2004. The Company regularly reviews interest rate exposure on its outstanding borrowings in an effort to minimize the risk of interest rate fluctuations.

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The table below provides information about the Company’s financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For the Company’s interest rate swaps and caps, the table presents the notional amount of the swaps and caps and the years in which they expire. Weighted average variable rates are based on rates in effect at the reporting date (dollars in 000’s).

	2005			2006			2007			2008			2009			Total Thereafter			Total			Fair Value
Long-term Debt
Fixed Rate (1)	$	24,262		$	24,591			—		$	116,579		$	65,000		$	59,890		$	290,322		$	240,519
Average interest rate		2.79	%		6.33	%		—			6.57	%		7.71	%		6.10	%		6.39	%
Variable Rate (1)	$	20,000		$	12,262			—			—		$	40,000		$	720,889		$	793,151		$	793,151
Average interest rate		2.83	%		4.50	%		—			—			3.42	%		2.99	%		3.03	%
Interest Rate Swaps (2)
Variable to Fixed	$	75,000		$	25,000		$	92,800		$	74,935		$	35,230		$	266,000		$	568,965		$	(14,598	)
Average Pay Rate		6.67	%		7.49	%		5.89	%		5.46	%		3.88	%		5.20	%		5.56	%
Interest Rate Cap
Variable to Fixed		—			—		$	6,805			—		$	15,770			—		$	22,575		$	66
Average Pay Rate		—			—			6.00	%		—			6.00	%		—			6.00	%

 

(1)   Excluding the effect of interest rate swap and cap agreements.

(2)   Includes the Company’s forward interest rate swap agreement.

 

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Reports of Independent Registered Public Accounting Firm, Consolidated Financial Statements and Selected Quarterly Financial Information are set forth on pages F-1 to F-26 of this Annual Report on Form 10-K.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no disagreements with the Company’s independent accountants on any matter of accounting principles or practices or financial statement disclosure.

ITEM 9A.   CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures which, by their nature, can provide only reasonable assurance regarding management’s control objectives. The Company also has an investment in two unconsolidated entities which are not under its control. Consequently, the Company’s disclosure controls and procedures with respect to these entities are necessarily more limited than those it maintains with respect to its consolidated subsidiaries.

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the

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Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) that is required to be included in the Company’s Exchange Act filings.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company is responsible for establishing and maintaining effective internal controls over financial reporting pursuant to Rule 13a-15(f) of the Exchange Act. As of December 31, 2004, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal controls over financial reporting. Management used the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess the effectiveness of internal control over financial reporting. Based on the Company’s assessment of internal control over financial reporting, management has concluded that, as of December 31, 2004, the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s assessment has been attested to by KPMG LLP the independent registered public accounting firm who audits the Company’s consolidated financial statements.

MANAGEMENT’S EVALUATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING

During the Company’s evaluation of internal controls over financial reporting, management identified items which would have been classified as deficiencies or significant deficiencies within the framework utilized by management to assess the effectiveness of internal control over financial reporting. Management communicated these items to the Audit Committee of the Board of Directors of the Company and all of the significant deficiencies were either remediated or the Company had a remediation plan in place as of the end of the period covered by this report. No material weaknesses were identified by management during its assessment.

Special Note Regarding Analyst Reports

Investors should also be aware that while the Company’s management does, from time to time, communicate with securities analysts, it is against the Company’s policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, shareholders should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of Mid-America Apartment Communities, Inc.

ITEM 9B.   OTHER INFORMATION

None.

31

PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated by reference to the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission.

ITEM 11.   EXECUTIVE COMPENSATION

Incorporated by reference to the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Incorporated by reference to the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated by reference to the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated by reference to the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission.

32

PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1.	Reports of Independent Registered Public Accounting Firm	F-1
	Consolidated Balance Sheets as of December 31, 2004 and 2003	F-3
	Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002	F-4
	Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002	F-5
	Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002	F-6
	Notes to Consolidated Financial Statements for the years ended December 31, 2004, 2003 and 2002	F-8
2.	Financial Statement Schedule required to be filed by Item 8 and Paragraph (d) of this Item 14:
	Schedule III—Real Estate Investments and Accumulated Depreciation as of December 31, 2004	F-27
3.	The exhibits required by Item 601 of Regulation S-K, except as otherwise noted, have been filed with previous reports by the registrant and are herein incorporated by reference.

 

Exhibit Numbers	Exhibit Description
3.1+	Amended and Restated Charter of Mid-America Apartment Communities, Inc. dated as of January 10, 1994, as filed with the Tennessee Secretary of State on January 25, 1994
3.2******	Articles of Amendment to the Charter of Mid-America Apartment Communities, Inc. dated as of January 28, 1994, as filed with the Tennessee Secretary of State on January 28, 1994
3.3**	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Preferred Stock dated as of October 9, 1996, as filed with the Tennessee Secretary of State on October 10, 1996
3.4******	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter dated November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997
3.5***	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997
3.6****	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of June 26, 1998, as filed with the Tennessee Secretary of State on June 30, 1998
3.7@	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of A Series of Shares of Preferred Stock dated as of December 24, 1998, as filed with the Tennessee Secretary of State on December 30, 1998

33

Exhibit Numbers	Exhibit Description
3.8*****	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of October 11, 2002, as filed with the Tennessee Secretary of State on October 14, 2002
3.9@	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of October 28, 2002, as filed with the Tennessee Secretary of State on October 28, 2002
3.10@	Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of August 7, 2003, as filed with the Tennessee Secretary of State on August 7, 2003
3.11*	Bylaws of Mid-America Apartment Communities, Inc.
4.1+	Form of Common Share Certificate
4.2**	Form of 9.5% Series A Cumulative Preferred Stock Certificate
4.3***	Form of 8-7/8% Series B Cumulative Preferred Stock Certificate
4.4****	Form of 9-3/8% Series C Cumulative Preferred Stock Certificate
4.5@	Form of 9.5% Series E Cumulative Preferred Stock Certificate
4.6*****	Form of 9-1/4% Series F Cumulative Preferred Stock Certificate
4.7@	Form of 8.30% Series G Cumulative Preferred Stock Certificate
4.8@	Form of 8.30% Series H Cumulative Preferred Stock Certificate
4.9+++	Shareholder Protection Rights Agreement dated March 1, 1999
10.1###	Second Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P., a Tennessee limited partnership
10.2+++	Employment Agreement between the Registrant and H. Eric Bolton, Jr.
10.3+++	Employment Agreement between the Registrant and Simon R.C. Wadsworth
10.4#	Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan
10.5+++	Revolving Credit Agreement (Amended and Restated) between the Registrant and AmSouth Bank dated March 16, 1998
10.6+++	Sixth Amendment to Revolving Credit Agreement between the Registrant and AmSouth Bank dated November 12, 1999
10.7##	Seventh Amendment to Revolving Credit Agreement between the Registrant and AmSouth Bank dated July 21, 2000
10.8###	Eighth Amendment to Revolving Credit Agreement between the Registrant and AmSouth Bank dated April 19, 200l
10.9@	AmSouth Revolving Credit Agreement (Amended and Restated) dated July 17, 2003
10.10	First Amendment to Amended and Restated Revolving Credit Agreement dated May 19, 2004
10.11+++	Master Credit Facility Agreement between the Registrant and WMF Washington Mortgage Corp. dated November 10, 1999
10.12@	Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 30, 2004

34

Exhibit Numbers	Exhibit Description
10.13	First Amendment to Second Amended and Restated Master Credit Facility Agreement dated March 31, 2004
10.14	Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated April 30, 2004
10.15	Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated August 3, 2004
10.16	Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement dated August 31, 2004
10.17	Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement dated October 1, 2004
10.18	Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement dated December 1, 2004
10.19	Seventh Amendment to Second Amended and Restated Master Credit Facility Agreement dated December 15, 2004
10.20@	Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P., dated March 31, 2004
10.21	Second Amendment to the Third Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004
10.22	Third Amendment to the Third Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004
10.23+	Note Purchase Agreement of the Operating Partnership and the Registrant and Prudential Insurance Company of America
10.24+	Amendment 1 to Note Purchase Agreement of the Operating Partnership and the Registrant and Prudential Insurance Company of America
10.25@	Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated June 1, 2001
10.26@	Amendment No. 1 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated December 24, 2002
10.27@	Amendment No. 2 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated May 30, 2003
10.28	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004 (Sunset Valley Apartments, Texas)
10.29	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004 (Village Apartments, Texas)
10.30	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004 (Coral Springs Apartments, Florida)
10.31	Credit Agreement dated September 28, 1998 by and among Jefferson Village, L.P., Jefferson at Sunset Valley, L.P. and JPI Coral Springs, L.P.
10.32@@	Credit Agreement by and among Mid-America Apartment Communities, Inc., Mid-America Apartments L.P. and Mid-America Apartments of Texas, L.P. and Financial Federal Savings Bank dated June 29, 2004
10.33	Mid-America Apartment Communities, Inc. Non-Qualified Deferred Compensation Plan for Outside Company Directors as Amended Effective January 1, 2005

35

Exhibit Numbers	Exhibit Description
10.34	Mid-America Apartment Communities Non-Qualified Executive Deferred Compensation Retirement Plan as Amended Effective January 1, 2005
11.1	Statement re: computation of per share earnings (included within the Form 10-K)
14.1@@	Code of Ethics
21.1	List of Subsidiaries
23.1	Consent of Independent Registered Public Accounting Firm
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
@	Filed as Exhibit to the Registrant’s Registration Statement on Form S-3 (333-112469) filed with the Commission on February 4, 2004
@@	Filed as an Exhibit to the 2003 Annual Report of the Registrant on Form 10-K for the year ended December 31, 2003
*	Filed as an exhibit to the Registrant’s Registration Statement on Form S-11/A (SEC File No. 33-69434) filed on January 21, 1994
**	Filed as Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996
***	Filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997
****	Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on June 26, 1998
*****	Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002
******	Filed as an exhibit to the 1996 Annual Report of the Registrant on Form 10-K for the year ended December 31, 1996
+	Filed as an exhibit to the 1997 Annual Report of the Registrant on Form 10-K for the year ended December 31, 1997
+++	Filed as an exhibit to the 1999 Annual Report of the Registrant on Form 10-K for the year ended December 31, 1999
#	Filed as an exhibit to the Registrant’s Proxy Statement filed on April 24, 2002
##	Filed as an exhibit to the 2000 Annual Report of the Registrant on Form 10-K for the year ended December 31, 2000
###	Filed as an exhibit to the 2001 Annual Report of the Registrant on Form 10-K for the year ended December 31, 2001
####	Filed as an exhibit to the Quarterly Report of the Registrant on Form 10-Q for the quarterly period ended June 30, 2004

 

36

(b) Reports on Form 8-K

The following reports were filed on Form 8-K by the registrant during the fourth quarter of 2004:

Form	Events Reported	Date of Report
8-K	Sale of Island Retreat and update of hurricane damage		10/1/2004
8-K	3Q04 Earnings Release		11/4/2004
8-K	NAREIT Investor Update		11/17/2004

 

(c) Exhibits:

See Item 15(a)(3) above.

(d) Financial Statement Schedule:

See Item 15(a)(2) above.

37

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MID-AMERICA APARTMENT COMMUNITIES, INC.
Date: March 8, 2005	/s/ H. ERIC BOLTON, JR. H. Eric Bolton, Jr. Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Date: March 8, 2005	/s/ H. ERIC BOLTON, JR.H. Eric Bolton, Jr. Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)
Date: March 8, 2005	/s/ SIMON R.C. WADSWORTHSimon R.C. Wadsworth Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
Date: March 8, 2005	/s/ GEORGE E. CATESGeorge E. Cates Director
Date: March 8, 2005	/s/ JOHN F. FLOURNOYJohn F. Flournoy Director
Date: March 8, 2005	/s/ ROBERT F. FOGELMANRobert F. Fogelman Director
Date: March 8, 2005	/s/ ALAN B. GRAF, JR.Alan B. Graf, Jr. Director
Date: March 8, 2005	/s/ JOHN S. GRINALDSJohn S. Grinalds Director
Date: March 8, 2005	/s/ RALPH HORNRalph Horn Director
Date: March 8, 2005	/s/ MICHAEL S. STARNESMichael S. Starnes Director

 

38

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Mid-America Apartment Communities, Inc.

We have audited the accompanying consolidated balance sheets of Mid-America Apartment Communities, Inc. and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2004. In connection with our audits of the consolidated financial statements, we also have audited the accompanying financial statement Schedule III: Real Estate and Accumulated Depreciation. These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mid-America Apartment Communities, Inc. and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 8, 2005 expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

Memphis, Tennessee
March 8, 2005

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Mid-America Apartment Communities, Inc.

We have audited management’s assessment, included in the accompanying Management’s Report On Internal Control Over Financial Report that Mid-America Apartment Communities, Inc. maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Mid-America Apartment Communities, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Mid-America Apartment Communities, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Mid-America Apartment Communities, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Mid-America Apartment Communities, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2004, and the related financial statement schedule and our report dated March 8, 2005 expressed an unqualified opinion on those consolidated financial statements and the related financial statement schedule.

Memphis, Tennessee
March 8, 2005

F-2

MID-AMERICA APARTMENT COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2004 and 2003
(Dollars in thousands)

	2004			2003
ASSETS:
Real estate assets:
Land	$	163,381		$	142,416
Buildings and improvements		1,625,194			1,481,854
Furniture, fixtures and equipment		41,682			38,812
Capital improvements in progress		6,519			7,335
		1,836,776			1,670,417
Less accumulated depreciation		(399,762	)		(339,704	)
		1,437,014			1,330,713
Land held for future development		1,366			1,366
Commercial properties, net		7,429			7,150
Investments in and advances to real estate joint ventures		14,143			12,620
Real estate assets, net		1,459,952			1,351,849
Cash and cash equivalents		9,133			8,795
Restricted cash		6,041			10,728
Deferred financing costs, net		16,365			13,185
Other assets		16,837			16,214
Goodwill, net		5,400			5,762
Assets held for sale		8,579			—
Total assets	$	1,522,307		$	1,406,533
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Liabilities:
Notes payable	$	1,083,473		$	951,941
Accounts payable		767			1,696
Accrued expenses and other liabilities		43,381			54,547
Security deposits		5,821			5,036
Liabilities associated with assets held for sale		164			—
Total liabilities		1,133,606			1,013,220
Minority interest		31,376			32,019
Shareholders’ equity:
Preferred stock, $.01 par value, 20,000,000 shares authorized, $176,862,500 or $25 per share liquidation preference:
9.25% Series F Cumulative Redeemable Preferred Stock, 3,000,000 shares authorized, 474,500 shares issued and outstanding		5			5
8.625% Series G Cumulative Redeemable Preferred Stock, 400,000 shares authorized, 400,000 shares issued and outstanding		4			4
8.30% Series H Cumulative Redeemable Preferred Stock, 6,200,000 shares authorized, 6,200,000 shares issued and outstanding		62			62
Common stock, $.01 par value per share, 50,000,000 shares authorized; 20,856,791 and 20,031,614 shares issued and outstanding at December 31, 2004 and December 31, 2003, respectively		209			200
Additional paid-in capital		644,516			622,406
Other		(3,252	)		(3,711	)
Accumulated distributions in excess of net income		(269,482	)		(232,224	)
Accumulated other comprehensive loss		(14,737	)		(25,448	)
Total shareholders’ equity		357,325			361,294
Total liabilities and shareholders’ equity	$	1,522,307		$	1,406,533

 

See accompanying notes to consolidated financial statements.

F-3

MID-AMERICA APARTMENT COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except per share data)

	2004			2003			2002
Operating revenues:
Rental revenues	$	257,265		$	227,541		$	220,123
Other property revenues		9,937			8,399			7,953
Total property revenues		267,202			235,940			228,076
Management fee income		582			822			775
Total operating revenues		267,784			236,762			228,851
Property operating expenses:
Personnel		32,154			27,485			25,647
Building repairs and maintenance		9,994			9,119			9,137
Real estate taxes and insurance		35,135			31,331			28,374
Utilities		14,734			12,117			11,207
Landscaping		7,251			6,462			6,100
Other operating		13,480			12,178			10,404
Depreciation		68,653			58,074			54,285
Total property operating expenses		181,401			156,766			145,154
Property management expenses		10,357			8,435			8,633
General and administrative expenses		9,240			7,235			6,665
Income from continuing operations before non-operating items		66,786			64,326			68,399
Interest and other non-property income		593			835			729
Interest expense		(50,858	)		(44,991	)		(48,381	)
Gain (loss) on debt extinguishment		1,095			111			(1,441	)
Amortization of deferred financing costs		(1,753	)		(2,050	)		(2,700	)
Minority interest in operating partnership income		(2,264	)		(1,360	)		(388	)
Loss from investments in unconsolidated entities		(287	)		(949	)		(532	)
Net gain on insurance and other settlement proceeds		2,683			2,860			397
Gain on disposition within unconsolidated entities		3,249			—			—
Income from continuing operations		19,244			18,782			16,083
Discontinued operations:
Income (loss) from discontinued operations before asset impairment, settlement proceeds and gain on sale		(197	)		(577	)		58
Asset impairment on discontinued operations		(200	)		—			—
Net gain on insurance and other settlement proceeds on discontinued operations		526			82			—
Gain on sale of discontinued operations		5,825			1,919			—
Net income		25,198			20,206			16,141
Preferred dividend distribution		14,825			15,419			16,029
Premiums and original issuance costs associated with the redemption of preferred stock		—			5,987			2,041
Net income (loss) available for common shareholders	$	10,373		$	(1,200	)	$	(1,929	)
Weighted average shares outstanding (in thousands):
Basic		20,317			18,374			17,561
Effect of dilutive stock options		335			—			—
Diluted		20,652			18,374			17,561
Net income (loss) available for common shareholders	$	10,373		$	(1,200	)	$	(1,929	)
Discontinued property operations		(5,954	)		(1,424	)		(58	)
Income (loss) from continuing operations available for common shareholders	$	4,419		$	(2,624	)	$	(1,987	)
Earnings per share—basic:
Income (loss) from continuing operations available for common shareholders	$	0.22		$	(0.14	)	$	(0.11	)
Discontinued property operations		0.29			0.07			—
Net income (loss) available for common shareholders	$	0.51		$	(0.07	)	$	(0.11	)
Earnings per share—diluted:
Income (loss) from continuing operations available for common shareholders	$	0.21		$	(0.14	)	$	(0.11	)
Discontinued property operations		0.29			0.07			—
Net income (loss) available for common shareholders	$	0.50		$	(0.07	)	$	(0.11	)

 

See accompanying notes to consolidated financial statements.

F-4

MID-AMERICA APARTMENT COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Years Ended December 31, 2004, 2003 and 2002
(Dollars and Shares in Thousands)

	Preferred Stock							Common Stock
	Shares			Amount			Shares			Amount		Additional Paid-In Capital			Other			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Total
BALANCE DECEMBER 31, 2001		6,939		$	69			17,453		$	175	$	552,705		$	(774	)		(145,061	)	$	(8,756	)	$	398,358
Comprehensive loss:
Net income		—			—			—			—		—			—			16,141			—			16,141
Other comprehensive loss—derivative instruments (cash flow hedges)		—			—			—			—		—			—			—			(19,344	)		(19,344	)
Comprehensive loss																									(3,203	)
Issuance and registration of common shares		—			—			53			1		1,306			—			—			—			1,307
Exercise of stock options		—			—			48			—		1,053			—			—			—			1,053
Restricted shares issued to officers and directors (Note 8)		—			—			104			1		2,665			(2,625	)		—			—			41
Notes receivable issued for shares (Note 8)		—			—			—			—		—			(1,525	)		—			—			(1,525	)
Amortization of LESOP provision employee advances (Note 8)		—			—			—			—		—			486			—			—			486
Shares issued in exchange for units		—			—			182			1		2,602			—			—			—			2,603
Adjustment for Minority Interest Ownership in Operating Partnership		—			—			—			—		1,571			—			—			—			1,571
Amortization of unearned compensation		—			—			—			—		—			139			—			—			139
Cash dividends on common stock ($2.34 per share)		—			—			—			—		—			—			(41,165	)		—			(41,165	)
Redemption of preferred stock		(1,000	)		(10	)		—			—		(24,699	)		—			(2,041	)		—			(26,750	)
Issuance of preferred stock		874			9			—			—		21,276			—			—			—			21,285
Dividends on preferred stock		—			—			—			—		—			—			(16,029	)		—			(16,029	)
BALANCE DECEMBER 31, 2002		6,813			68			17,840			178		558,479			(4,299	)		(188,155	)		(28,100	)		338,171
Comprehensive income:
Net income		—			—			—			—		—			—			20,206			—			20,206
Other comprehensive income—derivative instruments (cash flow hedges)		—			—			—			—		—			—			—			2,652			2,652
Comprehensive income																									22,858
Issuance and registration of common shares		—			—			1,821			18		52,837			—			—			—			52,855
Exercise of stock options		—			—			308			3		7,178			—			—			—			7,181
Repurchase of common shares		—			—			—			—		(47	)		—			—			—			(47	)
Restricted shares issued to officers and directors (Note 8)		—			—			8			—		213			(213	)		—			—			—
Amortization of LESOP provision employee advances (Note 8)		—			—			—			—		—			385			—			—			385
Shares issued in exchange for units		—			—			55			1		627			—			—			—			628
Adjustment for Minority Interest Ownership in Operating Partnership		—			—			—			—		(4,258	)		—			—			—			(4,258	)
Amortization of unearned compensation		—			—			—			—		—			416			—			—			416
Cash dividends on common stock ($2.34 per share)		—			—			—			—		—			—			(42,869	)		—			(42,869	)
Redemption of preferred stock		(5,938	)		(59	)		—			—		(142,447	)		—			(5,987	)		—			(148,493	)
Issuance of preferred stock		6,200			62			—			—		149,824			—			—			—			149,886
Dividends on preferred stock		—			—			—			—		—			—			(15,419	)		—			(15,419	)
BALANCE DECEMBER 31, 2003		7,075			71			20,032			200		622,406			(3,711	)		(232,224	)		(25,448	)		361,294
Comprehensive income:
Net income		—			—			—			—		—			—			25,198			—			25,198
Other comprehensive income—derivative instruments (cash flow hedges)		—			—			—			—		—			—			—			10,711			10,711
Comprehensive income																									35,909
Issuance and registration of common shares		—			—			435			5		16,512			—			—			—			16,517
Exercise of stock options		—			—			343			3		8,888			—			—			—			8,891
Repurchase of common shares		—			—			(2	)		—		(54	)		—			—			—			(54	)
Restricted shares issued to officers and directors (Note 8)		—			—			2			—		104			(104	)		—			—			—
Amortization of LESOP provision employee advances (Note 8)		—			—			—			—		—			293			—			—			293
Shares issued in exchange for units		—			—			47			1		511			—			—			—			512
Adjustment for Minority Interest Ownership in Operating Partnership		—			—			—			—		(3,851	)		—			—			—			(3,851	)
Amortization of unearned compensation		—			—			—			—		—			270			—			—			270
Cash dividends on common stock ($2.34 per share)		—			—			—			—		—			—			(47,631	)		—			(47,631	)
Dividends on preferred stock		—			—			—			—		—			—			(14,825	)		—			(14,825	)
BALANCE DECEMBER 31, 2004		7,075		$	71			20,857		$	209	$	644,516		$	(3,252	)	$	(269,482	)	$	(14,737	)	$	357,325

 

F-5

See accompanying notes to consolidated financial statements.

MID-AMERICA APARTMENT COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands)

	2004			2003			2002
Cash flows from operating activities:
Net income	$	25,198		$	20,206		$	16,141
Adjustments to reconcile net income to net cash provided by operating activities:
(Income) loss from discontinued operations before asset impairment, settlement proceeds and gain on sale		197			577			(58	)
Depreciation and amortization		70,406			60,124			56,985
Amortization of unearned stock compensation		563			801			625
Amortization of debt premium		(1,575	)		(1,429	)		—
Equity in loss of real estate joint ventures		287			949			532
Minority interest in operating partnership income		2,264			1,360			388
(Gain) loss on debt extinguishment		(1,095	)		(111	)		1,441
Gain on the sale of discontinued operations		(5,825	)		(1,919	)		—
Insurance and other settlement proceeds on discontinued operations		(526	)		(82	)		—
Asset impairment on discontinued operations		200			—			—
Net gain on insurance and other settlement proceeds		(2,683	)		(2,860	)		(397	)
Gain on dispositions related to unconsolidated entities		(3,249	)		—			—
Changes in assets and liabilities:
Restricted cash		4,687			(3,265	)		3,777
Other assets		(778	)		(2,517	)		(2,883	)
Accounts payable		(926	)		1,232			(755	)
Accrued expenses and other		264			2,824			4,337
Security deposits		820			630			(108	)
Net cash provided by operating activities		88,229			76,520			80,025
Cash flows from investing activities:
Purchases of real estate and other assets		(155,088	)		(116,835	)		(37,233	)
Improvements to existing real estate assets		(30,413	)		(22,832	)		(22,032	)
Construction of units in progress and future developments		—			—			(2,270	)
Distributions from real estate joint venture		6,427			445			275
Contributions to real estate joint ventures		(5,222	)		(4,727	)		(4,054	)
(Note issued to) payments received from real estate joint ventures		234			—			(4,708	)
Proceeds from disposition of real estate assets		15,679			26,247			36,891
Purchase of Blacksone Joint Venture		—			(21,853	)		—
Net cash used in investing activities		(168,383	)		(139,555	)		(33,131	)
Cash flows from financing activities:
Net change in credit lines		189,496			218,399			60,623
Proceeds from notes payable		91,434			27,498			11,900
Principal payments on notes payable		(152,046	)		(175,852	)		(49,625	)
Payment of deferred financing costs		(5,044	)		(5,083	)		(2,896	)
Repurchase of common stock		(54	)		(47	)		—
Proceeds from issuances of common shares and units		25,408			60,036			875
Distributions to unitholders		(6,246	)		(6,376	)		(6,710	)
Dividends paid on common shares		(47,631	)		(42,869	)		(41,165	)
Dividends paid on preferred shares		(14,825	)		(15,419	)		(16,029	)
Proceeds from isssuance of preferred stock		—			149,886			21,285
Redemption of preferred stock		—			(148,493	)		(26,750	)
Net cash provided by (used in) financing activities		80,492			61,680			(48,492	)
Net increase (decrease) in cash and cash equivalents		338			(1,355	)		(1,598	)
Cash and cash equivalents, beginning of period		8,795			10,150			11,748
Cash and cash equivalents, end of period	$	9,133		$	8,795		$	10,150

See accompanying notes to consolidated financial statements.

F-6

	2004		2003			2002
Supplemental disclosure of cash flow information:
Interest paid	$	53,295	$	45,277		$	49,786
Supplemental disclosure of noncash investing and financing activities:
Conversion of units to common shares	$	512	$	628		$	2,603
Issuance of restricted common shares	$	104	$	213		$	2,665
Interest capitalized						$	239
Marked-to-market adjustment on derivative instruments	$	10,711	$	2,652		$	(19,344	)
Fair value adjustment on debt assumed	$	5,757	$	—		$	—
In August 2003, the Company purchased the limited partnership interest held by Blackstone Real Estate Advisors in BRE/MAAC Associates, LLC. In conjunction with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired	$	—	$	75,091		$	—
Cash paid		—		(21,853	)		—
Debt assumed	$	—	$	53,238		$	—

 

See accompanying notes to consolidated financial statements.

F-7

Mid-America Apartment Communities, Inc.
Notes to Consolidated Financial Statements
Years ended December 31, 2004, 2003 and 2002

1.     Organization and Summary of Significant Accounting Policies

Organization and Formation of the Company

Mid-America Apartment Communities, Inc. (“Mid-America“) is a self-administrated and self-managed real estate investment trust which owns, acquires and operates multifamily apartment communities mainly in the southeastern United States, and in Texas. Mid-America owns and operates 129 apartment communities principally through its majority owned subsidiary, Mid-America Apartments, L.P. (the “Operating Partnership”). Mid-America also owns a 33.33% interest in each of two real estate joint ventures which collectively owned 3 apartment communities at December 31, 2004, for which the Company provides management services.

Basis of Presentation

The consolidated financial statements presented herein include the accounts of Mid-America, the Operating Partnership, and all other subsidiaries (“the Company”). The Company owns 51% to 100% of all consolidated subsidiaries. The Company uses the equity method of accounting for its investments in 20 to 50 percent-owned entities for which the Company does not have the ability to exercise control. All significant intercompany accounts and transactions have been eliminated in consolidation.

Minority Interest

Minority interest in the accompanying consolidated financial statements relates to the ownership interest in the Operating Partnership by the holders of Class A Common Units of the Operating Partnership (“Operating Partnership Units”). Mid-America is the sole general partner of the Operating Partnership. Net income is allocated to the minority interest based on their respective ownership percentage of the Operating Partnership. Issuance of additional common shares or Operating Partnership Units changes the ownership of both the minority interest and Mid-America. Such transactions and the proceeds there from are treated as capital transactions and result in an allocation between shareholders’ equity and minority interest to account for the change in the respective percentage ownership of the underlying equity of the Operating Partnership.

The Company’s Board of Directors established economic rights in respect to each Operating Partnership Unit that were equivalent to the economic rights in respect to each share of common stock. The holder of each unit may redeem their units in exchange for one share of common stock or cash, at the option of the Company. The Operating Partnership has followed the policy of paying the same per unit distribution in respect to the units as the per share distribution in respect to the common stock. Operating Partnership net income for 2004, 2003 and 2002 was allocated approximately 12.1%, 14.6%, and 15.7%, respectively, to holders of Operating Partnership Units and 87.9%, 85.4%, and 84.3%, respectively, to Mid-America.

Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses to prepare these financial statements and notes in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates.

Revenue Recognition

The Company leases multifamily residential apartments under operating leases primarily with terms of one year or less. Rental revenues are recognized using a method that represents a straight-line basis over the term of the lease and other revenues are recorded when earned.

F-8

The Company records all gains and losses on real estate in accordance with Statement No. 66 “Accounting for Sales of Real Estate.”

Rental Costs

Costs associated with rental activities are expensed as incurred. Certain costs associated with the lease-up of development projects, including cost of model units, their furnishings, signs, and “grand openings” are capitalized and amortized over their respective estimated useful lives. All other costs relating to renting development projects are expensed as incurred.

Earnings Per Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding. The computation of diluted earnings per share is based on the weighted average number of common shares outstanding plus the shares resulting from the assumed exercise of all dilutive outstanding options using the treasury stock method. For periods where the Company reports a net loss available for common shareholders, the effect of dilutive shares is excluded from earnings per share calculations because including such shares would be anti-dilutive.

A reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the years ended December 31, 2004, 2003 and 2002 is presented on the Consolidated Statements of Operations.

Cash and Cash Equivalents

The Company considers cash, investments in money market accounts and certificates of deposit with original maturities of three months or less to be cash equivalents.

Restricted Cash

Restricted cash consists of escrow deposits held by lenders for property taxes, insurance, debt service and replacement reserves.

Real Estate Assets and Depreciation

Real estate assets are carried at depreciated cost. Repairs and maintenance costs are expensed as incurred while significant improvements, renovations, and recurring capital replacements are capitalized. Recurring capital replacements typically include whole unit carpet replacement, new roofs, HVAC units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. These expenditures extend the useful life of the property and increase the property’s fair market value. The cost of interior painting, vinyl flooring and blinds are expensed as incurred.

In conjunction with acquisitions of properties, the Company’s policy is to provide in its acquisition budgets adequate funds to complete any deferred maintenance items to bring the properties to the required standard, including the cost of replacement appliances, carpet, interior painting, vinyl flooring and blinds. These costs are capitalized.

Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which range from 8 to 40 years for land improvements and buildings and 5 years for furniture, fixtures and equipment and 3 to 5 years for computers and software.

For real estate acquisitions subsequent to June 30, 2001, the effective date of Statement 141, Business Combinations, the fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, building, furniture, fixtures and equipment, and identified intangible assets and liabilities, consisting of above and below market leases, resident relationship values and the value of in-place leases.

F-9

The fair value of the tangible assets of an acquired property (land, building, furniture, fixtures and equipment) is determined by valuing the property as if it were vacant. The “as-if-vacant” value is then allocated to land, building, furniture, fixtures and equipment based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the period of time that would be required in the current market conditions to lease-up the property. Management includes real estate taxes, insurance, operating expenses and lost rentals as well as the costs required to execute similar leases in the estimated carrying costs.

In allocating the fair value of identified intangible assets and liabilities of an acquired property, the in-place leases are compared to current market conditions. Based on these evaluations, management believes that the leases acquired on each of its property acquisitions were at market rates since the lease terms generally do not extend beyond one year.

The fair value of the in-place leases and resident relationships is measured by the excess of the purchase price over the as-if-vacant value of the property as described above. The fair value of the in-place leases and resident relationships is then amortized over the remaining term of the resident leases. The amount of these resident lease intangibles included in real estate assets totaled $9.1 million and $4.9 million as of December 31, 2004 and 2003, respectively and the amortization recorded as depreciation expense was $4.9 million and $1.4 million for the years ending December 31, 2004 and 2003, respectively.

Goodwill and Intangible Assets

The Company accounts for long-lived assets in accordance with the provisions of Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“Statement 144”) and evaluates its goodwill for impairment under Statement No. 142, Goodwill and Other Intangible Assets (“Statement 142”). The Company evaluates its goodwill for impairment on an annual basis in the Company’s fiscal fourth quarter, or sooner if a goodwill impairment indicator is identified. The Company periodically evaluates its long-lived assets, including its investments in real estate and goodwill, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions, and legal factors.

In accordance with Statement 144, long-lived assets, such as real estate assets, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

Goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination is made at the reporting unit level and consists of two steps. First, the Company determines the fair value of a reporting unit and compares it to its carrying amount. In the apartment industry, the primary method used for determining fair value is to divide annual operating cash flows by an appropriate capitalization rate. The Company determines the appropriate capitalization rate by reviewing the prevailing rates in a property’s market or submarket. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with Statement No. 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

F-10

The Company’s 2004 annual evaluation indicated an impairment of goodwill related to the Eastview apartments, which is classified in the consolidated financial statements as held for sale. Asset impairment of discontinued operations reflects a $200,000 charge related to this evaluation. The Company will continue to test reporting unit goodwill for potential impairment on an annual basis in the Company’s fiscal fourth quarter, or sooner if a goodwill impairment indicator is identified.

Land Held for Future Development

Real estate held for future development are sites intended for future multifamily developments and are carried at the lower of cost or fair value.

Investment In and Advances to Real Estate Joint Ventures

The Company’s investments in its unconsolidated real estate joint ventures are recorded on the equity method as the Company is able to exert significant influence, but does not have a controlling interest in the joint ventures.

Deferred Financing Costs

Deferred financing costs are amortized over the terms of the related debt using a method which approximates the interest method.

Derivative Financial Instruments

In the normal course of business, the Company uses certain derivative financial instruments to manage, or hedge, the interest rate risk associated with the Company’s variable rate debt or as hedges in anticipation of future debt transactions to manage well-defined interest rate risk associated with the transaction.

The Company does not use derivative financial instruments for speculative or trading purposes. Further, the Company has a policy of entering into contracts with major financial institutions based upon their credit rating and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designated to hedge, the Company has not sustained any material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.

The Company requires that derivative financial instruments designated as cash flow hedges be effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Instruments that meet the hedging criteria are formally designated as hedging instruments at the inception of the derivative contract. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking all derivatives that are designated as fair-value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives used are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

All of the Company’s derivative financial instruments are recorded at fair value and reported on the balance sheet, and are characterized as cash flow hedges. These transactions hedge the future cash flows of debt transactions through interest rate swaps that convert variable payments to fixed payments and interest rate caps that limit the exposure to rising interest rates. The unrealized gains/losses in the fair value of these hedging instruments are reported on the balance sheet with a corresponding adjustment to accumulated other comprehensive income, with any ineffective portion of the hedging transactions reclassified to earnings. During the years ended December 31, 2004, 2003 and 2002, the ineffective portion of the hedging transactions was not significant.

F-11

Recent Accounting Pronouncements

In December 2004, the FASB issued Statement No. 123 (revised December 2004), Share-Based Payment (“Statement 123(R)”). Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. Statement 123(R) will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or the liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. Statement 123(R) is effective as of the beginning of the first interim reporting period that begins after June 15, 2005. The Company does not believe the adoption of Statement 123(R) will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In December 2004, the FASB issued Statement No. 152, Accounting for Real Estate Time-Sharing Transactions, an amendment of FASB Statements No. 66 and 67 (“Statement 152”). Statement 152 amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. Statement 152 also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. Statement 152 is effective for financial statements for fiscal years beginning after June 15, 2005. The Company does not believe the adoption of Statement 152 will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (“Statement 153”). Statement 153 was a result of a joint effort by the FASB and the IASB to improve financial reporting by eliminating certain narrow differences between their existing accounting standards. Statement 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Statement 153 shall be applied prospectively and is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not believe the adoption of Statement 153 will have a material impact on the Company’s consolidated financial condition or results of operations taken as a whole.

Stock-Based Compensation

Upon shareholder approval at the May 24, 2004 Annual Meeting of Shareholders, the Company adopted the 2004 Stock Plan to provide incentives to attract and retain independent directors, executive officers and key employees. This plan replaced the 1994 Restricted Stock and Stock Option Plan under which no further awards may be granted as of January 31, 2004. See Note 8 for further details.

The Company has adopted Statement No. 123, “Accounting for Stock-Based Compensation”, which requires either the (i) fair value of employee stock-based compensation plans be recorded as a component of compensation expense in the statement of operations as of the date of grant of awards related to such plans, or (ii) impact of such fair value on net income and earnings per share be disclosed on a pro forma basis in a footnote to financial statements for awards granted after December 15, 1994, if the accounting for such awards continues to be in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (“APB 25”). The Company will continue such accounting under the provisions of APB 25.

F-12

The following table reflects the effect on net income (loss) if the fair value method of accounting allowed under Statement No. 123 had been used by the Company along with the applicable assumptions utilized in the Black-Scholes option pricing model calculation (dollars and shares in thousands, except per share data):

	Years Ended December 31,
	2004		2003			2002
Net income (loss) available for common shareholders	$	10,373	$	(1,200	)	$	(1,929	)
Add: Stock-based employee compensation expense included in reported net income		—		—			—
Less: Stock-based employee compensation expense from employee stock purchase plan discount		27		22			17
Less: Stock-based employee compensation expense determined under fair value method of accounting		144		225			189
Pro forma net income (loss) available for common shareholders	$	10,202	$	(1,447	)	$	(2,135	)
Average common shares outstanding—basic		20,317		18,374			17,561
Average common shares outstanding—diluted		20,652		18,374			17,561
Net income (loss) available per common share:
Basic as reported	$	0.51	$	(0.07	)	$	(0.11	)
Basic pro forma	$	0.50	$	(0.08	)	$	(0.12	)
Diluted as reported	$	0.50	$	(0.07	)	$	(0.11	)
Diluted pro forma	$	0.49	$	(0.08	)	$	(0.12	)
Assumptions:
Risk free interest rate		N/A		N/A			4.30	%
Expected life—years		N/A		N/A			6.5
Expected volatility		N/A		N/A			15.45	%
Expected dividends		N/A		N/A			9.57	%

 

No options were granted in 2004 or 2003.

Reclassification

Certain prior year amounts have been reclassified to conform to 2004 presentation. The reclassifications had no effect on net income available for common shareholders.

2. Real Estate Joint Ventures

The Company currently owns a 33.33% interest in a joint venture (“CH/Realty”) with Crow Holdings which was formed in 2002. In November 2004, CH/Realty sold the Preserve at Arbor Lakes apartments, a 284-unit community in Jacksonville, FL. At December 31, 2004, CH/Realty owned 2 apartment communities with a total of 764 apartment units. Both of these communities were considered held for sale at December 31, 2004. The following is a summary of the financial position of CH/Realty as of December 31, 2004 (dollars in 000’s):

Assets Held for Sale
Real Estate Assets, Net	$	49,221
Other Assets		1,674
Total Assets Held for Sale	$	50,895
Liabilities and Equity Associated with Assets Held for Sale
Mortgage Debt	$	30,009
Debt—Mid-America Apartments, L.P.		4,474
Other Liabilities		725
Total Liabilities Associated with Assets Held for Sale		35,208
Equity		15,687
Total Liabilities and Equity	$	50,895
Total Revenues	$	9,344
Depreciation Expense	$	2,498
Net Gain on Disposition of Real Estate Assets	$	9,746
Net Income	$	10,709

 

F-13

The Company earns interest on a $4.5 million loan to CH/Realty at an average interest rate of 9% and manages the communities for a fee of 4% of revenues.

The Company entered into a second joint venture (“CH/Realty II”) with Crow Holdings in 2004 with the purchase of the Verandas at Timberglen apartments. The Company also owns a 33.33% interest in CH/Realty II. At December 31, 2004, CH/Realty II owned 1 apartment community with 522 apartment units. The following is a summary of the financial position of CH/Realty II as of December 31, 2004 (dollars in 000’s):

Assets
Real Estate Assets, Gross	$	45,381
Real Estate Assets, Net		42,813
Other Assets		1,953
Total Assets	$	44,766
Liabilities and Equity
Mortgage Debt	$	30,000
Other Liabilities		1,517
Equity		13,249
Total Liabilities and Equity	$	44,766
Total Revenues	$	5,016
Depreciation Expense	$	2,568
Net Loss		($1,763	)

 

Through August 25, 2003, the Company owned a 33.33% interest in a joint venture (“Bre/MAAC”) with Blackstone Real Estate Acquisitions, LLC (“Blackstone”) which was formed in 1999 when the Company sold 10 apartment communities containing 2,793 apartment units to Bre/MAAC for $97.9 million. On August 25, 2003 the Company paid $21.9 million in cash and assumed $53.2 million in debt to purchase Blackstone’s 66.67% interest in the joint venture. This acquisition was accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations. The purchase accounting adjustments include an adjustment to the carrying value of the real estate asset resulting from the previously unrecognized deferred gain on the Company’s retained interest from the original sale of the properties to Bre/MAAC in 1999 and the recording of certain intangible assets. The operating results of Bre/MAAC are included in the accompanying statement of operations commencing August 25, 2003.

Investments in and advances to real estate joint ventures consisted of the following at December 31, 2004, 2003 and 2002, (dollars in millions):

	Investment In							Advances To
	2004		2003		2002		2004		2003		2002
CH/Realty	$	5.2	$	7.9	$	4.1	$	4.5	$	4.7	$	4.7
CH/Realty II	$	4.4	$	—	$	—	$	—	$	—	$	—
Bre/MAAC	$	—	$	—	$	2.8	$	—	$	—	$	3.4

 

The equity in loss on real estate joint ventures for the year ended December 31, 2004 represents the Company’s share of both CH/Realty and CH/Realty II’s net losses.

3. Borrowings

The Company maintains a total of $950 million of secured credit facilities with Prudential Mortgage Capital, credit-enhanced by FNMA (the “FNMA Facilities”). The FNMA Facilities provide for both fixed and variable rate borrowings and have traunches with maturities from 2010 through 2014. The interest rate on the majority of the variable portion renews every 90 days and is based on the FNMA discount mortgage backed security rate on the date of renewal, which, for the Company, has historically approximated three-month LIBOR less an average of 0.04% over the life of the FNMA Facilities, plus a fee of 0.62%. Borrowings under the FNMA Facilities totaled $785 million at December 31, 2004, consisting of $110 million under a fixed portion at a rate of 7.2%, and the remaining $675 million under the variable rate portion of the facility at an average rate of 3.0%. The available borrowing base capacity at December 31, 2004 was $839.5 million.

F-14

The Company has nineteen interest rate swap agreements, totaling a notional amount of $443 million designed to fix the interest rate on a portion of the variable rate borrowings outstanding under the FNMA Facilities at approximately 5.7%. The interest rate swaps have maturities between 2005 and 2012. The Company also has a forward interest rate swap for an additional notional amount of $50 million at an interest rate of 5.2% which goes into effect in the second quarter of 2005 and matures in 2012. The swaps are highly effective and are designed as cash flow hedges. The Company has also entered into three interest rate caps totaling a notional amount of $22.6 million which are designated against the FNMA Facilities. These interest rate caps mature in 2007 and 2009 and are set at 6.0%. The FNMA Facilities are subject to certain borrowing base calculations that effectively reduce the amount that may be borrowed.

The Company has a $100 million credit facility with Freddie MAC (the “Freddie Mac Facility”). At December 31, 2004, the Company had $65.4 million borrowed against the Freddie Mac Facility at an interest rate of 3.1%. The Company has three interest rate swap agreements, totaling a notional amount of $51 million designed to fix the interest rate on a portion of the variable rate borrowings outstanding under the Freddie Mac Facility at approximately 5.3%. The interest rate swaps expire in 2011.

The Company also maintains a $40 million secured credit facility with two banks led by AmSouth Bank (the “AmSouth Credit Line”). The AmSouth Credit Line bears an interest rate of LIBOR plus a spread ranging from 1.35% to 1.75% based on certain quarterly coverage calculations established by the agreement. This credit line expires in May 2006 and is subject to certain borrowing base calculations that effectively reduce the amount that may be borrowed. At December 31, 2004, the Company had $32.1 million available to be borrowed under the AmSouth Credit Line agreement with $12.3 million borrowed under this facility at an interest rate of 4.5%. $6.7 million of the facility is used for letters of credit.

Each of the Company’s credit facilities is subject to various covenants and conditions on usage. If the Company 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 the Company’s liquidity. Moreover, if the Company were to fail to make a payment or violate a covenant under a credit facility, after applicable cure periods one or more of its lenders could declare a default, accelerate the due date for repayment of all amounts outstanding and/or foreclose on properties securing such facilities. Any such event could have a material adverse effect on the Company. The Company believes it was in compliance with these covenants and conditions on usage at December 31, 2004.

The Company had outstanding at December 31, 2004 a $20 million unsecured short-term note payable with Compass Bank at an interest rate of 2.8%, which matures in 2005, and a $40 million promissory note with Union Planters at a variable interest rate, (index based on three month LIBOR), of 3.4% which matures in April 2009. The Company has entered into an interest rate swap agreement with a notional amount of $25 million and an interest rate of 4.0% which expires in March 2009 and is designated against the Union Planters promissory note.

At December 31, 2004, the Company had $121.1 million of fixed rate conventional individual property mortgages with an average interest rate of 6.6% and an average maturity of 2014, $35 million of fixed rate tax exempt individual property mortgages with an average interest rate of 5.7% and an average maturity of 2026, and a $4.7 million variable rate tax exempt individual property mortgage at an interest rate of 2.7% with a maturity in 2028.

At December 31, 2004, the Company had $240.8 million (after considering the impact of interest rate swap agreements) conventional variable rate debt outstanding at an average interest rate of 3.1%, $10.8 million (after considering the impact of interest rate swap agreements) of tax-free variable rate debt outstanding at an average rate of 2.6%, and an additional $22.6 million of capped tax-free variable rate debt at an average rate of 2.8%. The interest rate on all other debt, totaling $809.3 million, was hedged or fixed at an average interest rate of 6.2%.

During 2004, the Company refinanced $198.8 million of debt, $67.8 of which was refinanced during the three month period ended December 31, 2004. The refinancings during the three month period ended December 31, 2004 resulted in a gain of $1.3 million. Gain on debt extinguishment for the full year of 2004 was $1.1 million, as the fourth quarter gains were somewhat offset by a net loss on debt extinguishment in the second quarter of 2004.

F-15

As of December 31, 2004, the Company estimated that the weighted average interest rate on the Company’s debt was 5.4%.

The following table summarizes the Company’s indebtedness at December 31, 2004, and 2003 (dollars in millions):

	At December 31, 2004
	Actual Interest Rates		Average Interest Rate			Maturity		Balance		Balance at December 31, 2003
Fixed Rate:
Taxable		2.788–8.760%		6.488	%		2005–2044	$	255.3	$	312.5
Tax-exempt		5.177–6.090%		5.671	%		2020–2028		35.0		73.3
Interest rate swaps		3.226–7.515%		5.591	%		2005–2012		519.0		342.7
								$	809.3	$	728.5
Variable Rate:(1)
Taxable		2.834–4.500%		3.099	%		2005–2014	$	240.8	$	205.7
Tax-exempt		2.565–2.739%		2.648	%		2028–2033		10.8		10.9
Interest rate caps	2.846%			2.846	%		2007–2009		22.6		6.8
								$	274.2	$	223.4
								$	1,083.5	$	951.9

 

(1)   Amounts are adjusted to reflect interest rate swap and cap agreements which results in the Company paying fixed interest payments over the terms of the interest rate swaps and on changes in interest rates above the strike rate of the cap.

Scheduled principal repayments on the borrowings at December 31, 2004 are as follows (dollars in thousands):

Year	Amortization		Maturities		Total
2005	$	3,954	$	20,000	$	23,954
2006		4,095		16,721		20,816
2007		4,199		—		4,199
2008		3,450		81,715		85,165
2009		1,640		40,000		41,640
Thereafter		61,493		846,206		907,699
	$	78,831	$	1,004,642	$	1,083,473

 

4. Fair Value Disclosure of Financial Instruments

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses and other liabilities and security deposits are carried at amounts which reasonably approximate their fair value due to their short term nature.

Fixed rate notes payable at December 31, 2004 and 2003 total $290.3 million and $385.8 million, respectively, and have an estimated fair value of $240.5 million and $368.1 million (excluding prepayment penalties), respectively, based upon interest rates available for the issuance of debt with similar terms and remaining maturities as of December 31, 2004 and 2003. The carrying value of variable rate notes payable (excluding the effect of interest rate swap agreements) at December 31, 2004 and 2003 total $793.2 million and $566.1 million, respectively, which reasonably approximates their fair value because the related variable interest rates available for the issuance of debt with similar terms and remaining maturities reasonably approximate market rates. The notional amount of interest rate and forward interest rate swap agreements at December 31, 2004 and 2003 total $569.0 million and $382.7 million, respectively, and have an estimated fair value of ($14.6) million and ($25.5) million, respectively, based upon interest rates available for interest rate swaps with similar terms and remaining maturities as of December 31, 2004 and 2003. The notional amount of interest rate cap agreements at December 31, 2004 and 2003 total $22.6 million and $6.8 million,

F-16

respectively, and have an estimated fair value of $66 thousand and $7 thousand, respectively, based upon interest rates available for interest rate caps with similar terms and remaining maturities as of December 31, 2004 and 2003.

The fair value estimates presented herein are based on information available to management as of December 31, 2004 and 2003. These estimates are not necessarily indicative of the amounts the Company could ultimately realize.

5. Commitments and Contingencies

The Company is not presently subject to any material litigation nor, to the Company’s knowledge, with advice of legal counsel, is any material litigation threatened against the Company. The Company is subject to routine litigation arising in the ordinary course of business, some of which is expected to be covered by liability insurance and none of which is expected to have a material adverse effect on the consolidated financial statements of the Company.

The Company had no expenses related to operating leases for the years ended December 31, 2004, and 2003 and $16,000, for the year ended December 31, 2002. The Company has no commitments for the next five years under operating lease agreements outstanding at December 31, 2004.

6. Income Taxes

No provision for Federal income taxes has been made in the accompanying consolidated financial statements. The Company has made an election to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code. As a REIT, the Company is generally not subject to Federal income tax on that portion of its income that qualifies as REIT taxable income to the extent that it distributes at least 90% of its taxable income to the Company’s shareholders and complies with certain requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to the Federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Even though the Company qualifies for taxation as a REIT, the Company may be subject to certain Federal, state and local taxes on its income and property and to Federal income and excise tax on its undistributed income.

Earnings and profits, which determine the taxability of dividends to shareholders, differ from net income reported for financial reporting purposes primarily because of differences in depreciable lives, bases of certain assets and liabilities and in the timing of recognition of earnings upon disposition of properties. For Federal income tax purposes, the following summarizes the taxability of cash distributions paid on the common shares in 2003 and 2002 and the estimated taxability for 2004:

	2004		2003		2002
Per common share
Ordinary income	$	1.05	$	1.13	$	1.16
Capital gains		0.26		0.14		—
Return of capital		1.03		1.07		1.18
Total	$	2.34	$	2.34	$	2.34

 

7. Shareholders’ Equity

Series A Preferred Stock

Series A Cumulative Preferred Stock (“Series A Preferred Stock”) had a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.375 per share, payable monthly. In August 2003, the Company used the proceeds from a new issuance of preferred stock to redeem all of the 2,000,000 outstanding shares of its Series A Preferred Stock for $50 million.

F-17

Series B Preferred Stock

Series B Cumulative Preferred Stock (“Series B Preferred Stock”) had a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.21875 per share, payable monthly. In August 2003, the Company used the proceeds from a new issuance of preferred stock to redeem all 1,938,830 outstanding shares of its Series B Preferred Stock for $48.5 million.

Series C Preferred Stock

Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”) had a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.34375 per share, payable quarterly. In August 2003, the Company used the proceeds from a new issuance of preferred stock to redeem all 2,000,000 outstanding shares of its Series C Preferred Stock for $50 million.

Series D Preferred Stock—Shareholders Rights Plan

The Board of Directors authorized a Shareholders Rights Plan (the “Rights Plan”). In implementing the Rights Plan, the Board declared a distribution of one right for each of the Company’s outstanding common shares which would become exercisable only if a person or group (the “Acquiring Person”) becomes the beneficial owner of 10% or more of the common shares or announces a tender or exchange offer that would result in ownership of 10% of the Company’s common shares. The rights will trade with the Company’s common stock until exercisable. Each holder of a right, other than the Acquiring Person, is in that event entitled to purchase one common share of the Company for each right at one half of the then current price.

Series F Preferred Stock

In 2002, the Company issued Series F Cumulative Redeemable Preferred Stock (“Series F Preferred Stock”) with a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.3125 per share, payable monthly. The Company has outstanding 474,500 Series F Preferred shares for which it received aggregate proceeds of $11.9 million. On and after October 16, 2007, the Series F Preferred shares will be redeemable for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation preference plus dividends accrued and unpaid to the redemption date.

Series G Preferred Stock

In 2002, the Company issued Series G Cumulative Redeemable Preferred Stock (“Series G Preferred Stock”) with a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.15625 per share, payable monthly. The Company has outstanding 400,000 Series G Preferred shares issued in a direct placement with a private investor for which it received aggregate proceeds of $10.0 million. On or after October 10, 2004, the Company or the investor may give the required one year notice to redeem or put, respectively, all or part of the Series G Preferred Stock beginning on or after October 10, 2005 in increments of $1 million. As of December 31, 2004 no such notice has been made nor received by the Company.

Series H Preferred Stock

In 2003, the Company issued Series H Cumulative Redeemable Preferred Stock (“Series H Preferred Stock”) with a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.075 per share, payable quarterly. The Company has outstanding 6,200,000 Series H Preferred Stock shares for which it received net proceeds of $150.1 million. On and after August 11, 2008, the Series H Preferred Stock shares will be redeemable for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation preference plus dividends owed and unpaid to the redemption date.

Direct Stock Purchase and Distribution Reinvestment Plan

The Company has a Direct Stock Purchase and Distribution Reinvestment Plan (“DRSPP”) pursuant to which the Company’s shareholders have the ability to reinvest all or part of their distributions from the Company’s common stock, preferred stock or limited partnership interests in Mid-America Apartments, L.P. into the Company’s common stock. The plan also provides the opportunity to make optional cash investments

F-18

in common shares of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. The Company, in its absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill its obligations under the DRSPP, the Company may either issue additional shares of common stock or repurchase common stock in the open market. The Company has registered with the Securities and Exchange Commission the offer and sale of up to 1,600,000 shares of common stock pursuant to the DRSPP. Additional shares will be purchased at the market price on the “Investment Date” each month, which shall in no case be later than ten business days following the distribution payment date. The Company may elect to sell shares under the DRSPP at up to a 5% discount.

Common stock shares totaling 413,598, in 2004, 31,484 in 2003, and 28,715, in 2002 were acquired by shareholders under the DSPDRP. The Company offered a 2% discount for optional cash purchases in the months of August through December in 2004. No discounts were offered in 2003 or 2002.

Stock Repurchase Plan

In 1999, the Company’s Board of Directors approved a stock repurchase plan to acquire up to a total of 4.0 million shares of the Company’s common shares. Through December 31, 2004, the Company has repurchased and retired approximately 1.9 million shares of common stock for a cost of approximately $42 million at an average price per common share of $22.54. No shares were repurchased in 2002, 2003 or 2004 under the plan.

8. Employee Benefit Plans

401 (k) Savings Plan

The Mid-America Apartment Communities, Inc. 401(k) Savings Plan is a defined contribution plan that satisfies the requirements of Section 401(a) and 401(k) of the Code. The Company may, but is not obligated to, make a matching contribution of $0.50 for each $1.00 contributed, up to 6% of the participant’s compensation. The Company’s contribution to this plan was $330,000, $251,000, and $262,000 in 2004, 2003, and 2002, respectively.

Non-Qualified Deferred Compensation Retirement Plan

The Company has adopted a non-qualified deferred compensation retirement plan for key employees who are not qualified for participation in the Company’s 401(k) Savings Plan. Under the terms of the plan, employees may elect to defer a percentage of their compensation and the Company matches a portion of their salary deferral. The plan is designed so that the employees’ investment earnings under the non-qualified plan should be the same as the earning assets in the Company’s 401(k) Savings Plan. The Company’s match to this plan in 2004, 2003, and 2002 was $30,400, $23,700, and $24,200, respectively.

Non-Qualified Deferred Compensation Plan for Outside Company Directors

The Company has adopted a non-qualified deferred compensation plan for the outside directors who serve on the Board of Directors of the Company (the “Directors Deferred Compensation Plan”). The Directors Deferred Compensation Plan allows directors to receive shares of phantom stock in place of cash fees in increments of 25%. The phantom stock is then issued either in shares of common stock of the Company or in a comparable cash value in two annual installments following the director’s retirement from the Board of Directors. In 2004, 2003, and 2002, the Company issued 5,931, 7,879, and 6,078 shares of phantom stock, respectively, to outside directors.

Employee Stock Purchase Plan

The Mid-America Apartment Communities, Inc. Employee Stock Purchase Plan (the “ESPP”) provides a means for employees to purchase common stock of the Company. The Board of Directors has authorized the issuance of 150,000 shares for the plan. The ESPP is administered by the Compensation Committee of the Board of Directors who may annually grant options to employees to purchase annually up to an aggregate of

F-19

15,000 shares of common stock at a price equal to 85% of the market price of the common stock. For 2004, 2003, and 2002, the ESPP purchased 4,801, 5,162, and 4,368 shares of common stock, respectively.

Employee Stock Ownership Plan

The Mid-America Apartment Communities, Inc. Employee Stock Ownership Plan (the “ESOP”) is a non-contributory stock bonus plan that satisfies the requirements of Section 401(a) of the Internal Revenue Code. Each employee of the Company is eligible to participate in the ESOP after attaining the age of 21 years and completing one year of service with the Company. Participants’ ESOP accounts will be 100% vested after five years of continuous service, with no vesting prior to that time. The Company contributed 22,500 shares of common stock to the ESOP upon conclusion of the initial offering. During 2004, 2003 and 2002, the Company contributed approximately $554,000, $568,000, and $570,000, respectively, to the ESOP which purchased an additional 15,104, 20,489, and 22,493 shares of common stock, respectively.

Stock Option Plan

The Company adopted the 1994 Restricted Stock and Stock Option Plan (the “1994 Plan”) to provide incentives to attract and retain independent directors, executive officers and key employees. As of January 31, 2004, no further awards may be granted under this plan. The 1994 Restricted Stock and Stock Option Plan was replaced by the 2004 Stock Plan (collectively the “Plans”) by shareholder approval at the May 24, 2004 Annual Meeting of Shareholders. The Plans provide(d) for the granting of options to purchase a specified number of shares of common stock (“Options”) or grants of restricted shares of common stock (“Restricted Stock”). The Plan also allow(ed) the Company to grant options to purchase Operating Partnership Units at the price of the common stock on the New York Stock Exchange on the day prior to issuance of the units (the “LESOP Provision”). The 1994 Plan authorized the issuance of 2,400,000 common shares or options to acquire shares. The 2004 Stock Plan authorizes the issuance of 500,000 common shares or options to acquire shares. Under the terms of the 1994 Plan, the Company could advance directors, executive officers, and key employees a portion of the cost of the common stock or units. The employee advances mature five years from the date of issuance and accrue interest, payable in arrears, at a rate established at the date of issuance. The Company has also entered into supplemental bonus agreements with the employees which are intended to fund the payment of a portion of the advances over a five year period. Under the terms of the supplemental bonus agreements, the Company will pay bonuses to these employees equal to 3% of the original note balance on each anniversary date of the advance, limited to 15% of the aggregate purchase price of the shares and units. In March of 2002, the Company entered into duplicate supplemental bonus agreements on the then existing options to executive officers, effectively doubling their advances. The advances become due and payable and the bonus agreement will terminate if the employees voluntarily terminate their employment with the Company. The Company also agreed to pay a bonus to certain executive officers in an amount equal to the debt service on the advances for as long as they remain employed by the Company.

As of December 31, 2004, the Company had advances outstanding relating to the Plan totaling approximately $1,147,000, which is presented as a reduction to shareholders’ equity in the accompanying consolidated balance sheets. Advances to current and one former executive officers totaled approximately $1,145,000 at interest rates ranging from 5.59%–6.49% and maturing at various dates from 2005 to 2010. Amounts for key employees consisted of one advance for approximately $2,000 at an interest rate of 8.0% maturing in November 2005.

In 2003, the Company issued 7,471 restricted shares of common stock to executive management. These shares vested in 2004. Recipients received dividend payments on the shares of restricted stock prior to vesting.

In 2002, the Company issued 97,881 restricted shares of common stock to key managers. As a result of two managers leaving the employment of the Company, as of December 31, 2004, only 86,477 shares remain issued. These shares will vest 20% a year for five consecutive years beginning in 2007. Recipients receive dividend payments on the shares of restricted stock prior to vesting.

In 2000, the Company issued 10,750 restricted shares of common stock to executive officers. These shares vest 10% each over ten years through 2010. The executive officers have the option to accelerate the vesting in lieu of bonuses. As of December 31, 2004, no shares have been vested early. Recipients receive dividend payments on the shares of restricted stock prior to vesting.

F-20

Options granted to employees through the 1994 Plan vest(ed) annually over five years in the following consecutive amounts: 10%, 10%, 20%, 30%, and 30%. No options have been granted through the 2004 Stock Plan. A summary of changes in options to acquire shares of the Company’s common stock and Operating Partnership Units, including grants and exercises pursuant to the LESOP provision, for the three years ended December 31, 2004 is as follows:

	Options			Weighted Average Exercise Price
Outstanding at December 31, 2001		1,229,494		$	23.94
Granted		349,400		$	25.52
Exercised		(44,290	)	$	21.64
Forfeited		(110,580	)	$	24.34
Outstanding at December 31, 2002		1,424,024		$	24.37
Granted		—
Exercised		(308,467	)	$	23.12
Forfeited		(77,587	)	$	23.85
Outstanding at December 31, 2003		1,037,970		$	24.78
Granted		—
Exercised		(343,429	)	$	25.76
Forfeited		(20,475	)	$	24.14
Outstanding at December 31, 2004		674,066		$	24.30
Options exercisable:
December 31, 2002		534,819		$	25.58
December 31, 2003		403,070		$	26.75
December 31, 2004		247,216		$	25.06

 

Exercise prices for options outstanding as of December 31, 2004 ranged from $22.14 to $29.50. The weighted average remaining contractual life of those options is 5.5 years.

Long-Term Performance Based Incentive Plan for Executive Officers

The Compensation Committee by authorization of the Board of Directors of the Company submitted the Long-Term Performance Based Incentive Plan for Executive Officers (the “Long-Term Plan”) which was approved by shareholders on June 2, 2003. The Long-Term Plan allows executive management to earn performance units that convert into shares of restricted stock based on achieving defined total shareholder investment performance levels. The potential award of performance units which convert into shares of restricted stock is based on the Company’s performance from January 1, 2003 through December 31, 2005. Any performance units earned will be granted on December 31, 2005 and are immediately convertible into shares of restricted stock. While these shares of restricted stock will be entitled to dividend payments, they will not be transferable or have voting privileges until they vest. Dependent upon the executive officer’s continued employment with the Company, any shares of restricted stock awarded will vest 20% annually from 2006 through 2010.

9. Earnings from Discontinued Operations

In accordance with Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company sold one property in 2003, one property in 2004 and has an additional property identified as held for sale as of December 31, 2004 and has classified them as discontinued operations in the Consolidated Statements of Operations. The following is a summary of earnings from discontinued operations

F-21

for the three years ended December 31, 2004 and the impact of discontinued operations on the consolidated earnings per share calculations:

(Dollars in thousands)	2004			2003			2002
Revenues:
Rental revenues	$	2,857		$	3,355		$	3,997
Other revenues		64			89			94
Total revenues		2,921			3,444			4,091
Expenses:
Property operating expenses		1,798			1,945			1,973
Depreciation and amortization		681			1,023			978
Interest expense		575			1,041			1,067
Loss on debt extinguishment		60			—			3
Amortization of deferred financing costs		4			12			12
Asset impairment		200			—			—
Total expenses		3,318			4,021			4,033
Earnings from discontinued operations before gain on sale and settlement proceeds		(397	)		(577	)		58
Net gain on insurance and other settlement proceeds		526			82			—
Gain on sale		5,825			1,919			—
Earnings from discontinued operations	$	5,954		$	1,424		$	58

 

10. Derivative Financial Instruments

In the normal course of business, the Company uses certain derivative financial instruments to manage, or hedge, the interest rate risk associated with the Company’s variable rate debt or as hedges in anticipation of future debt transactions to manage well-defined interest rate risk associated with the transaction.

The Company does not use derivative financial instruments for speculative or trading purposes. Further, the Company has a policy of entering into contracts with major financial institutions based upon their credit rating and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designated to hedge, the Company has not sustained any material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.

The Company requires that derivative financial instruments designated as cash flow hedges be effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Instruments that meet the hedging criteria are formally designated as hedging instruments at the inception of the derivative contract. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking all derivatives that are designated as fair-value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives used are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

All of the Company’s derivative financial instruments are recorded at fair value and reported on the balance sheet, and are characterized as cash flow hedges. These transactions hedge the future cash flows of debt transactions through interest rate swaps that convert variable payments to fixed payments and interest rate caps that limit the exposure to rising interest rates. The unrealized gains/losses in the fair value of these hedging instruments are reported on the balance sheet with a corresponding adjustment to accumulated other comprehensive income, with any ineffective portion of the hedging transactions reclassified to earnings. During the years ended December 31, 2004 and 2003, the ineffective portion of the hedging transactions was not significant.

F-22

The Company has twelve interest rate swaps designated against the FNMA Facility with a total notional balance of $390 million which have variable legs based on one or three-month Libor, and fixed legs with an average rate of 5.9%. The swaps have expirations between 2005 and 2012, and have to date proven to be highly effective hedges of the Company’s variable rate debt. Through the use of these swaps the Company believes it has effectively fixed the rate during these periods of $390 million of variable rate borrowings issued through the FNMA Facility. The Company also has seven interest rate swaps with a total notional balance of $53 million based on the BMA Municipal Swap Index, which expire in 2007 through 2009, effectively fixing the interest rate of $53 million of the Tax-Free Bond Facility at 4.1% through this period. The Company also entered into three cap agreements with a total notional amount of $22.6 million within the Tax-Free Bond Facility. The cap agreements with expirations in 2007 and 2009, have strike rates of 6% as indexed on the BMA Municipal Swap Index. Additionally, the Company has one interest rate swap with a notional amount of $25 million which has a variable leg based on three-month LIBOR, and a fixed leg with an interest rate of 4.0% which expires in 2009 and three interest rate swaps with a total notional amount of $51 million which have variable legs based on three-month LIBOR, and fixed legs with an average rate of 5.3% which expire in 2011.

The Company has also executed one forward interest rate swap with a notional balance of $50 million which becomes operative in 2005. The variable leg of the forward interest rate swap is based on three-month Libor and the fixed leg has an average rate of 5.2%. The swap expires in 2012 and is designated as a cash flow hedge on the FNMA Facility.

At December 31, 2004 all of these interest rate swaps and interest rate caps were designated as cash flow hedges in accordance with Statement No. 133 as amended and have a net liability fair value of $14.6 million recorded in accrued expenses and other liabilities in the consolidated balance sheet and an asset fair value of $66,000 recorded in other assets in the consolidated balance sheet, respectively.

11. Related Party Transactions

Pursuant to management contracts with the Company’s joint ventures, the Company manages the operations of the joint ventures apartment communities for a fee of 4% of the revenues of the joint ventures. The Company received approximately $582,000, $822,000, and $775,000 as management fees from the joint ventures in 2004, 2003 and 2002, respectively.

The Company earns interest on a $4.5 million loan to CH/Realty at an average interest rate of 9%.

The Company has certain advances to current and one former executive officer and to one key employee through the 1994 Plan as discussed in Note 8.

12. Segment Information

At December 31, 2004, the Company owned or had an ownership interest in 132 multifamily apartment communities, including the apartment communities owned by the Company’s joint ventures, in 12 different states from which it derives all significant sources of earnings and operating cash flows. The Company’s operational structure is organized on a decentralized basis, with individual property managers having overall responsibility and authority regarding the operations of their respective properties. Each property manager individually monitors local and area trends in rental rates, occupancy percentages, and operating costs. Property managers are given the on-site responsibility and discretion to react to such trends in the best interest of the Company. The Company’s chief operating decision maker evaluates the performance of each individual property based on its contribution to net operating income in order to ensure that the individual property continues to meet the Company’s return criteria and long term investment goals. The Company defines each of its multifamily communities as an individual operating segment. It has also determined that all of its communities have similar economic characteristics and also meet the other criteria which permit the communities to be aggregated into one reportable segment, which is acquisition and operation of the multifamily communities owned.

The revenues, net operating income, assets and real estate investment capital expenditures for the aggregated multifamily segment are summarized as follows for the years ended as of December 31, 2004,

F-23

2003 and 2002 (Dollars in 000’s): For purposes of this disclosure, multifamily revenues, net operating income and real estate assets include amounts related to the properties owned by the unconsolidated joint ventures and properties classified as held for sale.

	2004			2003			2002
Multifamily rental revenues	$	274,004		$	250,709		$	242,913
Other multifamily revenues		10,479			9,297			8,212
Segment revenues		284,483			260,006			251,125
Reconciling items to consolidated revenues:
Joint ventures’ revenues including discontinued operations		(14,360	)		(20,622	)		(18,958	)
Discontinued operations revenues		(2,921	)		(3,444	)		(4,091	)
Management fee income		582			822			775
Total revenues	$	267,784		$	236,762		$	228,851
Multifamily net operating income		163,575			149,579			150,360
Reconciling items to net income:
Joint venture net operating income		(7,416	)		(10,010	)		(10,260	)
Discontinued operations net operating income		(1,123	)		(1,499	)		(2,118	)
Interest income and other non-property income		593			835			729
Loss from investments in unconsolidated entities		(287	)		(949	)		(532	)
Depreciation and amortization		(68,653	)		(58,074	)		(54,285	)
Property management expenses		(10,357	)		(8,435	)		(8,633	)
General and administrative expenses		(9,240	)		(7,235	)		(6,665	)
Interest expense		(50,858	)		(44,991	)		(48,381	)
Gain (loss) on debt extinguishment		1,095			111			(1,441	)
Amortization of deferred financing costs		(1,753	)		(2,050	)		(2,700	)
Net gain on insurance and other settlement proceeds		2,683			2,860			397
Gain on disposition within unconsolidated entities		3,249			—			—
Minority interest in operating partnership income		(2,264	)		(1,360	)		(388	)
Discontinued property operations before asset impairment, settlement proceeds and gain on sale		(197	)		(577	)		58
Asset impairment on discontinued operations		(200	)		—			—
Net gain on insurance and settlement proceeds on discontinued operations		526			82			—
Gain on sale of discontinued operations		5,825			1,919			—
Preferred dividend distributions		(14,825	)		(15,419	)		(16,029	)
Premiums and original issuance costs associated with the redemption of preferred stock		—			(5,987	)		(2,041	)
Net income (loss) available for common shareholders	$	10,373		$	(1,200	)	$	(1,929	)
Assets:	2004			2003
Multifamily real estate assets	$	1,950,444		$	1,747,154
Accumulated depreciation—multifamily assets		(412,847	)		(343,968	)
		1,537,597			1,403,186
Reconciling items to total assets:
Joint ventures multifamily real estate assets, net		(92,034	)		(72,473	)
Land held for future development		1,366			1,366
Commercial properties, net		7,429			7,150
Investment in and advances to real estate joint ventures		14,143			12,620
Cash and restricted cash		15,174			19,523
Other assets		38,602			35,161
Non real estate assets held for sale		30			—
Total assets	$	1,522,307		$	1,406,533
	2004			2003			2002
Multifamily expenditures for property improvements and construction	$	30,560		$	25,316		$	23,860
Less reconciling items:
Joint ventures property improvements		(147	)		(2,484	)		(1,828	)
Total expenditures for property improvements and construction	$	30,413		$	22,832		$	22,032

 

F-24

13. Subsequent Events

DISTRIBUTION.    In January 2005, the Company announced a quarterly distribution to common shareholders of $0.585 per share, which was paid on January 31, 2005.

ACQUISITIONS.    On February 18, 2005, the Company acquired two communities in the Atlanta-metro area situated on Lake Lanier with a total of 657 units. The Company plans to operate the communities as one property.

14. Selected Quarterly Financial Information (Unaudited)

Mid-America Apartment Communities, Inc.
Quarterly Financial Data (Unaudited)
(Dollars in thousands except per share data)

	Year Ended December 31, 2004
	First			Second			Third			Fourth
Total revenues	$	65,501		$	66,066		$	67,527		$	68,690
Income from continuing operations before non-operating items	$	16,540		$	16,456		$	16,573		$	17,217
Interest expense	$	12,341		$	12,030		$	12,868		$	13,619
Gain (loss) on debt extinguishment	$	82		$	(299	)	$	38		$	1,274
Minority interest in operating partnership income	$	460		$	405		$	436		$	452
Loss from investments in unconsolidated entities	$	41		$	33		$	61		$	152
Net gain (loss) on insurance and other settlement proceeds	$	1,628		$	1,228		$	248		$	(421	)
Gain on disposition within unconsolidated entities	$	—		$	—		$	—		$	3,249
Discontinued operations:
Loss from discontinued operations before asset impairment, settlement proceeds and gain on sale	$	(76	)	$	(53	)	$	(54	)	$	(14	)
Asset impairment on discontinued operations	$	—		$	—		$	—		$	(200	)
Net gain on insurance and other settlement proceeds on discontinued operations	$	—		$	526		$	—		$	—
Gain on sale of discontinued operations	$	—		$	—		$	—		$	5,825
Net income	$	5,055		$	4,992		$	3,131		$	12,020
Premiums and original issuance costs associated with the redemption of preferred stock	$	—		$	—		$	—		$	—
Net income (loss) available for common shareholders	$	1,349		$	1,286		$	(576	)	$	8,314
Per share:
Net income (loss) available per common share—basic	$	0.07		$	0.06		$	(0.03	)	$	0.40
Net income (loss) available per common share—diluted	$	0.07		$	0.06		$	(0.03	)	$	0.40
Dividend declared	$	0.585		$	0.585		$	0.585		$	0.585

 

F-25

	Year Ended December 31, 2003
	First			Second			Third			Fourth
Total revenues	$	56,721		$	57,241		$	59,332		$	63,468
Income from continuing operations before non-operating items	$	16,354		$	16,113		$	15,021		$	16,838
Interest expense	$	11,380		$	10,510		$	11,426		$	11,675
Gain (loss) on debt extinguishment	$	—		$	(205	)	$	101		$	215
Minority interest in operating partnership income	$	133		$	206		$	778		$	243
Loss from investments in unconsolidated entities	$	125		$	183		$	8		$	633
Net gain (loss) on insurance and other settlement proceeds	$	(3	)	$	528		$	2,075		$	260
Gain on disposition within unconsolidated entities	$	—		$	—		$	—		$	—
Discontinued operations:
Loss from discontinued operations before asset impairment, settlement proceeds and gain on sale	$	(75	)	$	(164	)	$	(177	)	$	(161	)
Asset impairment on discontinued operations	$	—		$	—		$	—		$	—
Net gain on insurance and other settlement proceeds on discontinued operations	$	82		$	—		$	—		$	—
Gain (loss) on sale of discontinued operations	$	—		$	—		$	1,921		$	(2	)
Net income	$	4,326		$	5,105		$	6,470		$	4,305
Premiums and original issuance costs associated with the redemption of preferred stock	$	—		$	—		$	5,987		$	—
Net income (loss) available for common shareholders	$	401		$	1,180		$	(3,062	)	$	281
Per share:
Net income (loss) available per common share—basic	$	0.02		$	0.07		$	(0.17	)	$	0.01
Net income (loss) available per common share—diluted	$	0.02		$	0.07		$	(0.17	)	$	0.01
Dividend declared	$	0.585		$	0.585		$	0.585		$	0.585

 

The above amounts may not agree to previously reported amounts due to changes in presentation as a result of discontinued operations.

F-26

MID-AMERICA APARTMENT COMMUNITIES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2004
(Dollars in thousands)

					Initial Cost				Cost Capitalized subsequent to Acquisition						Gross Amount carried at December 31, 2004 (20)
Property	Location	Encumbrances			Land		Buildings and Fixtures		Land			Buildings and Fixtures			Land		Buildings and Fixtures		Total		Accumulated Depreciation			Net		Date of Construction		Life used to compute depreciation in latest income statement (21)
Eagle Ridge	Birmingham, AL	$	—	(1)	$	851	$	7,667	$	—		$	957		$	851	$	8,624	$	9,475	$	(2,187	)	$	7,288		1986		5–40
Abbington Place	Huntsville, AL		—	(1)		524		4,724		—			1,186			524		5,910		6,434		(1,624	)		4,810		1987		5–40
Paddock Club Huntsville	Huntsville, AL		—	(1)		909		10,152		830			8,759			1,739		18,911		20,650		(4,102	)		16,548		1989/98		5–40
Paddock Club Montgomery	Montgomery, AL		—	(1)		965		13,190		—			535			965		13,725		14,690		(2,538	)		12,152		1999		5–40
Calais Forest	Little Rock, AR		—	(1)		1,026		9,244		—			2,289			1,026		11,533		12,559		(4,361	)		8,198		1987		5–40
Napa Valley	Little Rock, AR		—	(1)		960		8,642		—			1,440			960		10,082		11,042		(3,165	)		7,877		1984		5–40
Westside Creek I	Little Rock, AR		—	(1)		616		5,559		—			1,122			616		6,681		7,297		(1,927	)		5,370		1984		5–40
Westside Creek II	Little Rock, AR		4,591			654		5,904		—			467			654		6,371		7,025		(1,731	)		5,294		1986		5–40
Tiffany Oaks	Altamonte Springs, FL		—	(1)		1,024		9,219		—			2,141			1,024		11,360		12,384		(3,510	)		8,874		1985		5–40
Marsh Oaks	Atlantic Beach, FL		—	(1)		244		2,829		—			989			244		3,818		4,062		(1,479	)		2,583		1986		5–40
Indigo Point	Brandon, FL		—	(4)		1,167		10,500		—			1,413			1,167		11,913		13,080		(2,143	)		10,937		1989		5–40
Paddock Club Brandon	Brandon, FL		—	(2)		2,896		26,111		—			787			2,896		26,898		29,794		(6,267	)		23,527		1997/99		5–40
Preserve at Coral Square	Coral Springs, FL		33,141			9,600		41,206		—			—			9,600		41,206		50,806		(421	)		50,385		1996		5–40
Anatole	Daytona Beach, FL		7,000	(10)		1,227		5,879		—			1,146			1,227		7,025		8,252		(2,523	)		5,729		1986		5–40
Paddock Club Gainesville	Gainesville, FL		—	(2)		1,800		15,879		—			293			1,800		16,172		17,972		(2,751	)		15,221		1999		5–40
Cooper’s Hawk	Jacksonville, FL		—	(6)		854		7,500		—			1,377			854		8,877		9,731		(3,262	)		6,469		1987		5–40
Hunter’s Ridge at Deerwood	Jacksonville, FL		—	(7)		1,533		13,835		—			1,342			1,533		15,177		16,710		(3,952	)		12,758		1987		5–40
Lakeside	Jacksonville, FL		—	(1)		1,431		12,883		(1	)		4,418			1,430		17,301		18,731		(6,453	)		12,278		1985		5–40
Lighthouse Court	Jacksonville, FL		—	(1)		4,047		36,431		—			180			4,047		36,611		40,658		(2,564	)		38,094		2003		5–40
Paddock Club Jacksonville	Jacksonville, FL		—	(1)		2,294		20,750		(2	)		1,035			2,292		21,785		24,077		(5,292	)		18,785		1989/96		5–40
Paddock Club Mandarin	Jacksonville, FL		—	(2)		1,410		14,967		—			541			1,410		15,508		16,918		(2,766	)		14,152		1998		5–40
St. Augustine	Jacksonville, FL		—	(6)		2,858		6,475		(1	)		3,098			2,857		9,573		12,430		(4,022	)		8,408		1987		5–40
Woodbridge at the Lake	Jacksonville, FL		—	(2)		645		5,804		—			1,937			645		7,741		8,386		(3,028	)		5,358		1985		5–40
Woodhollow	Jacksonville, FL		—	(1)		1,686		15,179		—			3,992			1,686		19,171		20,857		(5,675	)		15,182		1986		5–40
Paddock Club Lakeland	Lakeland, FL		—	(1)		2,254		20,452		(1,033	)		2,656			1,221		23,108		24,329		(6,044	)		18,285		1988/90		5–40
Savannahs at James Landing	Melbourne, FL		—	(6)		582		7,868		—			2,390			582		10,258		10,840		(3,599	)		7,241		1990		5–40
Paddock Park Ocala	Ocala, FL		6,805	(2)(3)		2,284		21,970		—			1,135			2,284		23,105		25,389		(6,249	)		19,140		1986/88		5–40
Paddock Club Panama City	Panama City, FL		—	(2)		898		14,276		—			399			898		14,675		15,573		(3,250	)		12,323		2000		5–40
Paddock Club Tallahassee	Tallahassee, FL		—	(2)		530		4,805		950			9,527			1,480		14,332		15,812		(3,667	)		12,145		1990/95		5–40
Belmere	Tampa, FL		—	(1)		851		7,667		1			2,544			852		10,211		11,063		(3,929	)		7,134		1984		5–40
Links at Carrollwood	Tampa, FL		—	(1)		817		7,355		110			2,747			927		10,102		11,029		(2,532	)		8,497		1980		5–40
High Ridge	Athens, GA		—	(1)		884		7,958		—			453			884		8,411		9,295		(2,211	)		7,084		1987		5–40
Bradford Pointe	Augusta, GA		4,760			772		6,949		—			1,068			772		8,017		8,789		(2,117	)		6,672		1986		5–40
Shenandoah Ridge	Augusta, GA		—	(1)		650		5,850		8			2,932			658		8,782		9,440		(3,424	)		6,016		1975/84		5–40
Westbury Creek	Augusta, GA		3,480	(15)		400		3,626		—			687			400		4,313		4,713		(1,211	)		3,502		1984		5–40
Fountain Lake	Brunswick, GA		—	(5)		502		4,551		—			1,198			502		5,749		6,251		(1,671	)		4,580		1983		5–40
Park Walk	College Park, GA		—	(1)		536		4,859		—			605			536		5,464		6,000		(1,450	)		4,550		1985		5–40
Whisperwood	Columbus, GA		—	(1)		4,290		42,722		(2	)		6,072			4,288		48,794		53,082		(12,082	)		41,000		1980/86/88/98		5–40
Willow Creek	Columbus, GA		—	(1)		614		5,523		—			1,767			614		7,290		7,904		(2,079	)		5,825		1968/78		5–40
Terraces at Fieldstone	Conyers, GA		—	(1)		1,284		15,819		—			401			1,284		16,220		17,504		(2,714	)		14,790		1999		5–40
Prescott	Duluth, GA		—	(8)		3,840		24,876		—			220			3,840		25,096		28,936		(584	)		28,352		2000		5–40
Whispering Pines	LaGrange, GA		—	(5)		823		7,470		—			1,282			823		8,752		9,575		(2,424	)		7,151		1982/84		5–40
Westbury Springs	Lilburn, GA		—	(1)		665		6,038		—			935			665		6,973		7,638		(1,849	)		5,789		1983		5–40
Austin Chase	Macon, GA		—	(7)		1,409		12,687		—			48			1,409		12,735		14,144		(2,866	)		11,278		1996		5–40
The Vistas	Macon, GA		—	(1)		595		5,403		—			772			595		6,175		6,770		(1,696	)		5,074		1985		5–40
Walden Run	McDonough, GA		—	(1)		1,281		11,935		—			(45	)		1,281		11,890		13,171		(863	)		12,308		1997		5–40
Georgetown Grove	Savannah, GA		10,174			1,288		11,579		—			653			1,288		12,232		13,520		(2,916	)		10,604		1997		5–40
Wildwood	Thomasville, GA		—	(1)		438		3,971		371			4,342			809		8,313		9,122		(2,270	)		6,852		1980/84		5–40
Hidden Lake	Union City, GA		—	(1)		1,296		11,715		—			1,597			1,296		13,312		14,608		(3,537	)		11,071		1985/87		5–40

F-27

					Initial Cost				Cost Capitalized subsequent to Acquisition						Gross Amount carried at December 31, 2004 (20)
Property	Location	Encumbrances			Land		Buildings and Fixtures		Land			Buildings and Fixtures			Land		Buildings and Fixtures		Total		Accumulated Depreciation			Net		Date of Construction		Life used to compute depreciation in latest income statement (21)
Three Oaks	Valdosta, GA		—	(1)		462		4,188		459			5,426			921		9,614		10,535		(2,659	)		7,876		1983/84		5–40
Huntington Chase	Warner Robins, GA		9,031			1,160		10,437		—			540			1,160		10,977		12,137		(1,913	)		10,224		1997		5–40
Southland Station	Warner Robins, GA		—	(1)		1,470		13,284		—			1,553			1,470		14,837		16,307		(4,091	)		12,216		1987/90		5–40
Terraces at Townelake	Woodstock, GA		—	(1)		1,331		11,918		1,688			16,183			3,019		28,101		31,120		(6,172	)		24,948		1998/99		5–40
Fairways at Hartland	Bowling Green, KY		—	(1)		1,038		9,342		—			1,281			1,038		10,623		11,661		(3,002	)		8,659		1996		5–40
Paddock Club Florence	Florence, KY		9,666			1,209		10,969		—			1,146			1,209		12,115		13,324		(3,053	)		10,271		1994		5–40
Grand Reserve Lexington	Lexington, KY		—	(1)		2,024		31,120		—			—			2,024		31,120		33,144		(4,559	)		28,585		2000		5–40
Lakepointe	Lexington, KY		—	(1)		411		3,699		—			1,041			411		4,740		5,151		(1,808	)		3,343		1986		5–40
Mansion, The	Lexington, KY		—	(1)		694		6,242		—			1,489			694		7,731		8,425		(2,881	)		5,544		1989		5–40
Village, The	Lexington, KY		—	(1)		900		8,097		—			2,238			900		10,335		11,235		(3,888	)		7,347		1987		5–40
Stonemill Village	Louisville, KY		—	(1)		1,169		10,518		—			2,998			1,169		13,516		14,685		(5,198	)		9,487		1985		5–40
Riverhills	Grenada, MS		—	(1)		153		2,092		—			678			153		2,770		2,923		(1,433	)		1,490		1972		5–40
Crosswinds	Jackson, MS		—	(1)		1,535		13,826		—			2,051			1,535		15,877		17,412		(5,090	)		12,322		1988/89		5–40
Pear Orchard	Jackson, MS		—	(1)		1,352		12,168		(1	)		2,999			1,351		15,167		16,518		(5,594	)		10,924		1985		5–40
Reflection Pointe	Jackson, MS		5,880	(11)		710		8,770		140			3,454			850		12,224		13,074		(4,377	)		8,697		1986		5–40
Somerset	Jackson, MS		—	(1)		477		4,294		—			1,159			477		5,453		5,930		(2,049	)		3,881		1980		5–40
Woodridge	Jackson, MS		—	(1)		471		5,522		—			869			471		6,391		6,862		(2,291	)		4,571		1987		5–40
Lakeshore Landing	Ridgeland, MS		—	(1)		676		6,470		—			(16	)		676		6,454		7,130		(468	)		6,662		1974		5–40
Savannah Creek	Southaven, MS		—	(1)		778		7,013		—			1,430			778		8,443		9,221		(2,766	)		6,455		1989		5–40
Sutton Place	Southaven, MS		—	(1)		894		8,053		—			1,564			894		9,617		10,511		(3,209	)		7,302		1991		5–40
Hermitage at Beechtree	Cary, NC		—	(1)		900		8,099		—			1,395			900		9,494		10,394		(2,750	)		7,644		1988		5–40
Woodstream	Greensboro, NC		—	(1)		1,048		9,855		(12	)		168			1,036		10,023		11,059		(734	)		10,325		1983		5–40
Corners, The	Winston-Salem, NC		—	(2)		685		6,165		—			1,281			685		7,446		8,131		(2,977	)		5,154		1982		5–40
Fairways at Royal Oak	Cincinnati, OH		—	(1)		814		7,335		—			1,436			814		8,771		9,585		(3,312	)		6,273		1988		5–40
Colony at South Park	Aiken, SC		—	(1)		862		8,005		—			7			862		8,012		8,874		(527	)		8,347		1989/91		5–40
Woodwinds	Aiken, SC		—	(1)		503		4,540		—			814			503		5,354		5,857		(1,504	)		4,353		1988		5–40
Tanglewood	Anderson, SC		—	(1)		427		3,853		—			1,320			427		5,173		5,600		(2,023	)		3,577		1980		5–40
Fairways, The	Columbia, SC		7,735	(12)		910		8,207		—			717			910		8,924		9,834		(3,318	)		6,516		1992		5–40
Paddock Club Columbia	Columbia, SC		—	(1)		1,840		16,560		—			1,477			1,840		18,037		19,877		(4,629	)		15,248		1989/95		5–40
Highland Ridge	Greenville, SC		—	(9)		482		4,337		—			1,213			482		5,550		6,032		(1,628	)		4,404		1984		5–40
Howell Commons	Greenville, SC		—	(1)		1,304		11,740		—			1,494			1,304		13,234		14,538		(3,838	)		10,700		1986/88		5–40
Paddock Club Greenville	Greenville, SC		—	(1)		1,200		10,800		—			665			1,200		11,465		12,665		(2,948	)		9,717		1996		5–40
Park Haywood	Greenville, SC		—	(1)		325		2,925		35			3,291			360		6,216		6,576		(2,318	)		4,258		1983		5–40
Spring Creek	Greenville, SC		—	(9)		597		5,374		(14	)		1,190			583		6,564		7,147		(2,273	)		4,874		1985		5–40
Runaway Bay	Mt. Pleasant, SC		—	(9)		1,085		7,269		—			1,576			1,085		8,845		9,930		(3,202	)		6,728		1988		5–40
Park Place	Spartanburg, SC		—	(1)		723		6,504		—			1,288			723		7,792		8,515		(2,197	)		6,318		1987		5–40
Hamilton Pointe	Chattanooga, TN		—	(1)		1,131		10,861		—			81			1,131		10,942		12,073		(708	)		11,365		1989		5–40
Hidden Creek	Chattanooga, TN		—	(1)		972		9,201		—			(17	)		972		9,184		10,156		(628	)		9,528		1987		5–40
Steeplechase	Chattanooga, TN		—	(1)		217		1,957		—			1,963			217		3,920		4,137		(1,564	)		2,573		1986		5–40
Windridge	Chattanooga, TN		5,465	(16)		817		7,416		—			1,371			817		8,787		9,604		(2,169	)		7,435		1984		5–40
Oaks, The	Jackson, TN		—	(1)		177		1,594		—			1,082			177		2,676		2,853		(1,119	)		1,734		1978		5–40
Post House Jackson	Jackson, TN		5,095			443		5,078		—			2,890			443		7,968		8,411		(2,209	)		6,202		1987		5–40
Post House North	Jackson, TN		3,375	(13)		381		4,299		(57	)		1,484			324		5,783		6,107		(2,109	)		3,998		1987		5–40
Bradford Chase	Jackson, TN		—	(1)		523		4,711		—			1,010			523		5,721		6,244		(2,114	)		4,130		1987		5–40
Woods at Post House	Jackson, TN		5,056			240		6,839		—			1,129			240		7,968		8,208		(3,288	)		4,920		1997		5–40
Cedar Mill	Memphis, TN		—	(1)		824		8,023		—			124			824		8,147		8,971		(762	)		8,209		1973/86		5–40
Gleneagles	Memphis, TN		—	(1)		443		3,983		—			2,526			443		6,509		6,952		(3,750	)		3,202		1975		5–40
Greenbrook	Memphis, TN		—	(4)		2,100		24,468		25			17,397			2,125		41,865		43,990		(16,308	)		27,682		1980		5–40
Hickory Farm	Memphis, TN		—	(1)		580		5,220		(19	)		1,465			561		6,685		7,246		(2,634	)		4,612		1985		5–40
Kirby Station	Memphis, TN		—	(1)		1,148		10,337		—			3,434			1,148		13,771		14,919		(5,175	)		9,744		1978		5–40
Lincoln on the Green	Memphis, TN		—	(1)		1,498		20,483		—			9,473			1,498		29,956		31,454		(9,761	)		21,693		1988/98		5–40
Park Estate	Memphis, TN		—	(4)		178		1,141		—			3,023			178		4,164		4,342		(2,066	)		2,276		1974		5–40
Reserve at Dexter Lake	Memphis, TN		—	(5)		1,260		16,043		2,147			32,164			3,407		48,207		51,614		(6,154	)		45,460		1999		5–40
River Trace	Memphis, TN		—	(1)		1,622		14,723		1			2,249			1,623		16,972		18,595		(4,716	)		13,879		1981/85		5–40
Paddock Club Murfreesboro	Murfreesboro, TN		—	(1)		915		14,774		—			224			915		14,998		15,913		(2,689	)		13,224		1999		5–40
Brentwood Downs	Nashville, TN		—	(1)		1,193		10,739		(2	)		1,535			1,191		12,274		13,465		(4,651	)		8,814		1986		5–40
Grand View Nashville	Nashville, TN		—	(1)		2,963		33,673		—			884			2,963		34,557		37,520		(4,306	)		33,214		2001		5–40

F-28

					Initial Cost				Cost Capitalized subsequent to Acquisition						Gross Amount carried at December 31, 2004 (20)
Property	Location	Encumbrances			Land		Buildings and Fixtures		Land			Buildings and Fixtures			Land		Buildings and Fixtures		Total		Accumulated Depreciation			Net		Date of Construction		Life used to compute depreciation in latest income statement (21)
Monthaven Park	Nashville, TN		23,028			2,736		29,556		—			603			2,736		30,159		32,895		(1,559	)		31,336		2000		5–40
Park at Hermitage	Nashville, TN		6,645	(17)		1,524		14,800		—			2,874			1,524		17,674		19,198		(6,368	)		12,830		1987		5–40
Northwood	Arlington, TX		—	(2)		886		8,278		—			121			886		8,399		9,285		(557	)		8,728		1980		5–40
Balcones Woods	Austin, TX		—	(2)		1,598		14,398		—			3,127			1,598		17,525		19,123		(5,255	)		13,868		1983		5–40
Grand Reserve at Sunset Valley	Austin, TX		11,519			3,150		11,868		—			4			3,150		11,872		15,022		(140	)		14,882		1996		5–40
Stassney Woods	Austin, TX		4,050	(18)		1,621		7,501		—			2,895			1,621		10,396		12,017		(3,761	)		8,256		1985		5–40
Travis Station	Austin, TX		3,585	(19)		2,282		6,169		(1	)		2,030			2,281		8,199		10,480		(2,955	)		7,525		1987		5–40
Woods, The	Austin, TX		—	(2)		1,405		13,083		—			(38	)		1,405		13,045		14,450		(894	)		13,556		1977		5–40
Celery Stalk	Dallas, TX		—	(8)		1,463		13,165		(1	)		3,753			1,462		16,918		18,380		(6,476	)		11,904		1978		5–40
Courtyards at Campbell	Dallas, TX		—	(2)		988		8,893		—			1,377			988		10,270		11,258		(2,499	)		8,759		1986		5–40
Deer Run	Dallas, TX		—	(2)		1,252		11,271		—			1,661			1,252		12,932		14,184		(3,205	)		10,979		1985		5–40
Lodge at Timberglen	Dallas, TX		—	(8)		825		7,422		(1	)		2,799			824		10,221		11,045		(4,003	)		7,042		1983		5–40
Watermark	Dallas, TX		—	(8)		960		14,839		—			38			960		14,877		15,837		(487	)		15,350		2002		5–40
Legacy Pines	Houston, TX		—	(2)		2,157		19,491		—			207			2,157		19,698		21,855		(1,759	)		20,096		1999		5–40
Westborough Crossing	Katy, TX		—	(8)		677		6,091		(1	)		1,571			676		7,662		8,338		(2,920	)		5,418		1984		5–40
Kenwood Club	Katy, TX		—	(2)		1,002		17,288		—			204			1,002		17,492		18,494		(2,825	)		15,669		2000		5–40
Lane at Towne Crossing	Mesquite, TX		—	(2)		1,311		12,254		—			—			1,311		12,254		13,565		(894	)		12,671		1983		5–40
Highwood	Plano, TX		—	(4)		864		7,783		—			1,143			864		8,926		9,790		(2,313	)		7,477		1983		5–40
Los Rios Park	Plano, TX		—	(2)		3,273		29,483		—			523			3,273		30,006		33,279		(2,256	)		31,023		2000		5–40
Cypresswood Court	Spring, TX		—	(8)		577		5,190		(1	)		1,408			576		6,598		7,174		(2,590	)		4,584		1984		5–40
Villages at Kirkwood	Stafford, TX		14,860			1,918		16,358		—			2			1,918		16,360		18,278		(171	)		18,107		1996		5–40
Green Tree Place	Woodlands, TX		—	(8)		539		4,850		—			1,306			539		6,156		6,695		(2,349	)		4,346		1984		5–40
Township	Hampton, VA		10,800	(14)		1,509		8,189		—			3,226			1,509		11,415		12,924		(2,990	)		9,934		1987		5–40
Total Properties					$	157,765	$	1,401,826	$	5,616		$	271,569		$	163,381	$	1,673,395	$	1,836,776	$	(399,762	)	$	1,437,014
Land Held for Future Developments	Various				$	—	$	1,366	$	—		$	—		$	—	$	1,366	$	1,366	$	—		$	1,366		N/A		N/A
Commercial Properties	Various					—		2,769		—			7,796			—		10,565		10,565		(3,136	)		7,429		Various		5–40
Total Other					$	—	$	4,135	$	—		$	7,796		$	—	$	11,931	$	11,931	$	(3,136	)	$	8,795
Total Real Estate Assets					$	157,765	$	1,405,961	$	5,616		$	279,365		$	163,381	$	1,685,326	$	1,848,707	$	(402,898	)	$	1,445,809

 

 (1) Encumbered by a $600 million FNMA facility, with $574.1 million available and $529.8 million outstanding with a variable interest rate of 3.020% on which there exists thirteen interest rate swap agreements totaling $440 million at an average rate of 5.853% at December 31, 2004.

 (2) Encumbered by a $250 million FNMA facility, with $183.8 available and $173.6 million outstanding, $63.6 million of which had a variable interest rate of 2.967%, $65 million with a fixed rate of 7.712%, $25 million with a fixed rate of 6.920% and $20 milllion with a fixed rate of 5.770% at December 31, 2004.

 (3) Phase I of Paddock Park—Ocala is encumbered by $6.8 million in bonds on which there exists a $6.8 million interest rate cap of 6.000% which terminates on October 24, 2007.

 (4) Encumbered, along with one corporate property, by a mortgage with a principal balance of $40 million at December 31, 2004, with a maturity of April 1, 2009 and an interest rate of 3.419% on which there is a $25 million interest rate swap agreement with a rate of 4.580%.

 (5) Encumbered by a credit line with AmSouth Bank, with an outstanding balance of $12.3 million at December 31, 2004.

 (6) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with principal balance of $13.8 million at December 31, 2004, and an average interest rate of 5.867%.

 (7) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $12.7 million at December 31, 2004, and an average interest rate of 5.177%.

 (8) Encumbered by a $100 million Freddie Mac facility, with an outstanding balance of $65.4 million and a variable interest rate of 3.061% on which there exists three interest rate swap agreements totaling $51 million at an average rate of 5.280 at December 31, 2004.

 (9) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $8.5 million at December 31, 2004, and an average interest rate of 6.090%.

(10) Encumbered by $7.0 million in bonds on which there exists a $7.0 million interest rate swap agreement fixed at 3.948% and maturing on October 24, 2007.

(11) Encumbered by $5.9 million in bonds on which there exists a $5.9 million interest rate swap agreement fixed at 5.049% and maturing on June 15, 2008.

(12) Encumbered by $7.7 million in bonds on which there exists a $7.7 million interest rate swap agreement fixed at 5.049% and maturing on June 15, 2008.

(13) Encumbered by $3.4 million in bonds on which there exists a $3.4 million interest rate swap agreement fixed at 5.049% and maturing on June 15, 2008.

F-29

(14) Encumbered by $10.8 million in bonds on which there exists a $10.8 million interest rate swap agreement fixed at 3.948% and maturing on October 24, 2007.

(15) Encumbered by $3.5 million in bonds on which there exist a $3.0 million interest rate swap agreement fixed at 2.301% and maturing on May 30, 2008.

(16) Encumbered by $5.5 million in bonds on which there exists a $5.0 million interest rate swap agreement fixed at 3.226% and maturing on May 30, 2008.

(17) Encumbered by $6.6 million in bonds on which there exists a $6.6 million interest rate swap agreement fixed at 3.622% and maturing on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 3.084% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

(18) Encumbered by $4.0 million in bonds on which there exists a $4.0 million interest rate cap of 6.0% which terminates on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 3.084% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

(19) Encumbered by $3.6 million in bonds on which there exists a $3.6 million interest rate swap agreement fixed at 3.622% and maturing on March 15, 2009. Also encumbered by a $11.7 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 3.084% which there exists a $11.7 million interest rate cap of 6.0% which terminates on March 1, 2009.

(20) The aggregate cost for Federal income tax purposes was approximately $1,746 million at December 31, 2004. The aggregate cost for Federal income tax purposes exceeds the total gross amount of real estate assets for book purposes, principally due to purchase accounting adjustments recorded under accounting principles generally accepted in the United States of America.

(21) Depreciation is on a straight line basis over the estimated useful asset life which ranges from 8 to 40 years for land improvements and buildings and 5 years for furniture, fixtures and equipment.

F-30

MID-AMERICA APARTMENT COMMUNITIES, INC.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

A summary of activity for real estate investments and accumulated depreciation is as follows:

	Year Ended December 31,
	2004			2003			2002
	Dollars in Thousands
Real estate investments:
Balance at beginning of year	$	1,682,491		$	1,463,793		$	1,442,675
Acquisitions		160,517			200,104			33,933
Improvement and development		30,875			22,374			25,353
Assets held for sale		(14,171	)		—			—
Disposition of real estate assets		(11,005	)		(3,780	)		(38,168	)
Balance at end of year	$	1,848,707		$	1,682,491		$	1,463,793
Accumulated depreciation:
Balance at beginning of year	$	339,704		$	283,277		$	229,913
Depreciation		67,977			56,506			53,779
Assets held for sale		(5,622	)		—			—
Disposition of real estate assets		(2,297	)		(79	)		(415	)
Balance at end of year	$	399,762		$	339,704		$	283,277

 

The Company’s consolidated balance sheet at December 31, 2004, 2003, and 2002 includes accumulated depreciation of $3,136, $3,558 and $2,977, respectively, in the caption “Commercial properties, net.”

See accompanying report of independent registered public accounting firm.

F-31

    

 

EX-10.10

FIRST AMENDMENT TO AMENDED AND 
RESTATED REVOLVING CREDIT AGREEMENT

                     This First Amendment to Amended and Restated Revolving Credit Agreement (this “Amendment”) is dated as of May 19, 2004, among Mid-America Apartment Communities, Inc. (“MAAC”), Mid-America Apartments, L.P. (“Mid-America”), the financial institutions listed on Schedule 1, as amended or supplemented from time to time (the “Lenders”), and AmSouth Bank, an Alabama banking corporation, as Administrative Agent for the Lenders, its successors and assigns (in such capacity, the “Administrative Agent”).

Recitals

                     A.     MAAC, Mid-America, certain Lenders and the Administrative Agent entered into that certain Amended and Restated Revolving Credit Agreement dated as of July 17, 2003 (as it may be amended further from time to time, the “Agreement”).  Unless otherwise defined in this Amendment, capitalized terms shall have the meaning assigned to them in the Agreement.

                     B.     The Borrowers have requested that the Agreement be amended to extend the Maturity Date defined in the Agreement and to amend certain other terms.

                     C.     The parties to the Agreement desire to execute this Amendment to  evidence the extension of the Maturity Date and the modification of certain other provisions set forth in the Agreement.

Agreement

                     NOW, THEREFORE, in consideration of the above Recitals, the parties hereby agree as follows:

          1.         The definition of “Advance Rate” set forth in Section 11.1 of the Agreement is hereby deleted in its entirety and replaced with the following:

Advance Rate shall mean for Mortgaged Properties:  (a) the amount shown as the Advance Rate on Schedule 2 for the Initial Properties from the date hereof until the first quarterly determination of Fair Market Value, which shall occur on June 30, 2004; (b) subject to subclauses (d) and (e) herein, 65% of Fair Market Value for a Stabilized Property (including the Initial Properties after the first quarterly determination of Fair Market Value); (c) subject to adjustment as provided in Section 1.16(c), 40% of the Project Budget to the extent of Work Completed for a Development Project; (d) for the period commencing on the date a Development Project is converted to a Stabilized Property in accordance with Section 3.5(b), until the next succeeding quarterly determination of Fair Market Value, 65% of the appraised value of the subject Development Project, as reflected in the appraisal ordered and approved by the Administrative Agent; and (e) for the period commencing on the date a Stabilized Property is added to the Borrowing Base and continuing thereafter through a full calendar quarter, 65% of the 1900-3958 Mid-America 1st Amendment to Amended and Restated Credit Agreement  appraised value of the subject Stabilized Property, as reflected in the appraisal ordered and approved by the Administrative Agent.

1

          2.      The definition of “Fair Market Value” set forth in Section 11.1 of the Agreement is hereby deleted in its entirety and replaced with the following: 

Fair Market Value shall be determined quarterly, on a “Net Operating Income” basis, not later than the twenty-second (22^nd) day of each calendar quarter, but as of the last day of the immediately preceding calendar quarter, from the Effective Date until the Termination Date of the Loans, by dividing the prior calendar quarter's annualized Adjusted NOI of each Stabilized Property subject to a Mortgage by 9% (with the exception of the Stabilized Properties known as Reserve at Dexter Phase I, Phase II and Phase III, for which the cap rate/denominator shall be 8.75%).

          3.      The definition of “Maturity Date” set forth in Section 11.1 of the Agreement is hereby amended by replacing the date “May 24, 2005” with the date “May 24, 2006.”

          4.      Section 6.7 of the Agreement, Dividend Payout, is hereby deleted in its entirety and replaced with the following:

          6.7.   Dividend Payout

Make a dividend payment (including both common stock dividends and preferred stock dividends) which is greater than ninety percent (90%) of Funds from Operations or that would otherwise violate the United States federal tax laws governing the qualifications of real estate investment trusts.  As used herein, “Funds from Operations” shall mean consolidated net income of MAAC, including minority interest (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring, sales of property, impairment charges, or charges related to the adjustment to the value of assumed debt, plus real property depreciation and goodwill amortization, before extraordinary or unusual items, and after adjustments for unconsolidated partnerships and joint ventures.  Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect Funds from Operations on the same basis.  Upon written pre-approval of the Administrative Agent, exceptions may be made where the Board of Directors of MAAC determines, in good faith, that a special dividend must be paid to avoid taxes due to excess gains from the sale of Property.  In determining compliance with the dividend payout ratio set forth herein, the amount of dividends paid and Funds from Operations shall be calculated on a rolling 12-month period.

          5.      Schedule 2 of the Agreement is hereby deleted in its entirety and replaced with the Schedule 2 attached hereto.

2

          6.      Schedule 5 of the Agreement is hereby revised by amending the notice address for the Agent to show the 15^th floor, instead of the 9^th floor.

          7.      Exhibit F of the Agreement is hereby deleted in its entirety and replaced with the Exhibit F attached hereto.

          8.      In consideration of this Amendment, the Borrowers shall pay to the Lenders on the date hereof an extension fee equal to 17.5 basis points of the Aggregate Commitment ($70,000.00). An additional extension fee shall be payable by the Borrowers to the Administrative Agent on the date hereof pursuant to a separate agreement between the Administrative Agent and the Borrowers.

          9.      This Amendment shall not be effective until the following conditions have been fulfilled:

a.	The Administrative Agent has received a fully executed original of this Amendment;
b.	The fees required herein have been received by the Administrative Agent;
c	The Administrative Agent has received appropriate resolutions of the Borrowers authorizing the transactions contemplated herein;
d.	The Administrative Agent has received an opinion of counsel to each of the Borrowers, which opinion shall be satisfactory to the Administrative Agent in all respects; and
e.	The Administrative Agent has received evidence of the payment of 2003 ad valorem taxes for each Mortgaged Property.

                    Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with its terms.

                    Each Borrower represents and warrants that no Event of Default has occurred and is continuing under the Agreement, nor does any event that upon notice or lapse of time or both would constitute such an Event of Default exist.

                    IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above.

3

Signature page to
First Amendment to Amended and Restated Revolving Credit Agreement

MID-AMERICA APARTMENT
COMMUNITIES, INC.

By______________________________________________________________
Name:  Al Campbell
Title: Senior Vice President and Treasurer

4

Signature page to
First Amendment to Amended and Restated Revolving Credit Agreement

MID-AMERICA APARTMENTS, L.P.

By Mid-America Apartment
Communities, Inc.
Its Sole General Partner

By______________________________________________________________
Name:  Al Campbell
Title: Senior Vice President and Treasurer

5

Signature page to
First Amendment to Amended and Restated Revolving Credit Agreement

AMSOUTH BANK,
in its individual capacity as Lender
and as Administrative Agent

By:___________________________________________________
Name:  Lawrence Clark
Title: Vice President

6

Signature page to
First Amendment to Amended and Restated Revolving Credit Agreement

FIRST TENNESSEE BANK, N.A.

By:___________________________________________________
Name:________________________________________________
Title:_________________________________________________

7

SCHEDULE 2

[Current List of Properties]

Property		Advance Rate			Availability as of the date hereof
I.	Stabilized Properties:
1.	Sterling Ridge (GA)		65	%	$	5,266,603
2.	Reserve at Dexter Phases I, II, & III (TN)		65	%	$	24,019,914
3.	Fountain Lake Apartments (GA)		65	%	$	3,578,727
5.	Whispering Pines Phases I & II (GA)		65	%	$	5,028,277

II.	Development Projects:
	None

8

EX-10.13

FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

(MAA II)

          THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 31^st day of March, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

          A.     Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004 (the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for the addition of the Mortgaged Properties known as Colony at South Park, Woodstream and Walden Creek to the Collateral Pool under the terms of the Master Agreement.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

-1-

          Section 1.     Collateral Pool.  Exhibit A to the Master Agreement is hereby deleted and replaced with the attached Exhibit A to reflect the addition of Colony at South Park, Woodstream and Walden Creek as Additional Mortgaged Properties in the Collateral Pool.

          Section 2.     Expansion.  The Variable Facility Commitment is hereby increased by $20,918,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

          ”Variable Facility Commitment” means an aggregate amount of $457,526,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 3.     Reserved Amount.  “Reserved Amount” means $142,474,000, unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $142,474,000.  The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

          Section 4.     Special Provisions Regarding Lighthouse.  Pursuant to that certain First Amendment to Amended and Restated Master Credit Facility Agreement dated as of December 11, 2003, Borrower thereby agreed that that certain conservation easement affecting the Mortgaged Property commonly known as Lighthouse Court in Florida referenced in the letter attached as Exhibit B thereto shall be released and amended as provided therein to Lender’s satisfaction by April 11, 2004 (the “Conservation Easement Deadline”).  The parties hereby agree the Conservation Easement Deadline is hereby extended to May 15, 2004. Borrower confirms that it shall remove the Mortgaged Property known as Lighthouse Court from the Collateral Pool if the above-referenced conservation easement is not released and amended by the Conservation Easement Deadline.

          Section 5.     Special Provisions Regarding Woodstream.  The parties acknowledge that the Mortgaged Property commonly known as Woodstream located in North Carolina is subject to a condemnation action initiated by the North Carolina Department of Transportation.  In connection with such condemnation action, the Borrower has agreed to relocate the Woodstream entrance drive, which relocation may include the purchase of approximately .366 acres of new land.  The Borrower hereby agrees that any new land purchased in connection with the relocation of the Woodsteam entrance drive shall become part of the Collateral Pool.  The Borrower further agrees to (i) amend the Woodstream Deed of Trust to include such new land as part of the secured property and (ii) cause the Woodstream title policy to be amended to include such  new land as part of the insured land.

-2-

          Section 6.     Property Management Agreements.  Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

          Section 7.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 8.     Reaffirmation.  The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

          Section 9.     Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 10.    Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[Remainder of this page intentionally left blank]

-3-

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	[Signatures follow on next page]

-4-

LENDER:

PRUDENTIAL MULTIFAMILY MORTGAGE INC.,
a Delaware corporation

By:

Name: Sharon D. Singleton

Title:   Vice President

-5-

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL		$	4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL		$	10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA		$	14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA		$	20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC		$	13,420,000
The Mansion	Fayette	Lexington, KY		$	7,630,000
Brentwood Downs	Davidson	Nashville, TN		$	14,600,000
Calais Forest	Pulaski	Little Rock, AR		$	9,900,000
Southland Station II	Houston	Warner Robins, GA		$	8,050,000
Fairways at Hartland	Warren	Bowling Green, KY		$	10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN		$	14,160,000
Whisperwood	Muscogee	Columbus, GA		$	49,900,000
River Trace I	Shelby	Memphis, TN		$	8,975,000
Wildwood I	Thomas	Thomasville, GA		$	3,825,000
Three Oaks I	Lowndes	Valdosta, GA		$	3,950,000
Westbury Springs	Gwinnett	Lilburn, GA		$	6,775,000
Hickory Farms	Shelby	Memphis, TN		$	6,475,000
Gleneagles	Shelby	Memphis, TN		$	6,850,000
The Oaks	Madison	Jackson, TN		$	2,825,000
TPC Greenville	Greenville	Greenville, SC		$	8,930,000
TPC Huntsville	Madison	Huntsville, AL		$	17,800,000
Eagle Ridge	Birmingham	Birmingham, AL		$	8,400,000
River Hills	Grenada	Grenada, MS		$	1,600,000
Stonemill Village	Jefferson	Louisville, KY		$	19,825,000
Woodwinds	Aiken	Aiken, SC		$	7,000,000
Tanglewood	Anderson	Anderson, SC		$	5,110,000
Wood Hollow	Duval	Jacksonville, FL		$	22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA		$	16,450,000
Grand Reserve	Fayette	Lexington, KY		$	23,200,000
Island Retreat	Glynn	St. Simons Island, GA		$	5,400,000
Belmere	Hillsborough	Tampa, FL		$	11,150,000
Bradford Chase (WV)	Madison	Jackson, TN		$	4,960,000
Crosswinds	Rankin	Jackson, MS		$	13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH		$	9,800,000
Hermitage at Beechtree	Wake	Cary, NC		$	8,720,000
Hidden Lake II	Fulton	Union City, GA		$	7,050,000
High Ridge	Clarke	Athens, GA		$	6,600,000
Howell Commons	Greenville	Greenville, SC		$	12,380,000
Kirby Station	Shelby	Memphis, TN		$	15,800,000
Lakepointe	Fayette	Lexington, KY		$	4,425,000
Lakeside	Duval	Jacksonville, FL		$	21,100,000
Marsh Oaks	Duval	Atlantic Beach, FL		$	5,500,000
Napa Valley	Pulaski	Little Rock, AR		$	10,500,000
Park Haywood	Greenville	Greenville, SC		$	5,600,000

Property Name	County	Property Location	Initial Valuation
Park Place	Spartanburg	Spartanburg, SC		$	6,470,000
Pear Orchard	Madison	Jackson, MS		$	15,700,000
Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)		$	9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA		$	9,567,000
Somerset	Hinds	Jackson, MS		$	3,160,000
Southland Station I	Houston	Warner Robins, GA		$	7,300,000
Steeplechase	Hamilton	Chattanooga, TN		$	4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)		$	10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL		$	14,750,000
Village	Fayette	Lexington, KY		$	10,340,000
Westside Creek I	Pulaski	Little Rock, AR		$	7,010,000
Willow Creek	Muscogee	Columbus, GA		$	10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL		$	13,050,000
Grand View	Nashville	Nashville, TN		$	26,805,000
Three Oaks II	Lowndes	Valdosta, GA		$	4,737,000
Wildwood II	Thomas	Thomasville, GA		$	3,950,000
Lighthouse Court	Clay	Orange Park, FL		$	40,092,000
Colony at South Park	Aiken	Aiken, SC		$	8,100,000
Woodstream	Guilford	Greensboro, NC		$	11,300,000
Walden Creek	Henry	McDonough, GA		$	12,783,000

EXHIBIT AA TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

	Property Name	Manager
1.	Abbington Place	Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery	Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II	Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone	Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II	Mid-America Apartment Communities, Inc.
6.	The Mansion	Mid-America Apartment Communities, Inc.
7.	Brentwood Downs	Mid-America Apartment Communities, Inc.
8.	Calais Forest	Mid-America Apartment Communities, Inc.
9.	Southland Station II	Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland	Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro	Mid-America Apartment Communities, Inc.
12.	Whisperwood	Mid-America Apartment Communities, Inc.
13.	River Trace I	Mid-America Apartment Communities, Inc.
14.	Wildwood I	Mid-America Apartment Communities, Inc.
15.	Three Oaks I	Mid-America Apartment Communities, Inc.
16.	Westbury Springs	Mid-America Apartment Communities, Inc.
17.	Hickory Farms	Mid-America Apartment Communities, Inc.
18.	Gleneagles	Mid-America Apartment Communities, Inc.
19.	The Oaks	Mid-America Apartment Communities, Inc.
20.	TPC Greenville	Mid-America Apartment Communities, Inc.
21.	TPC Huntsville	Mid-America Apartment Communities, Inc.
22.	Eagle Ridge	Mid-America Apartment Communities, Inc.
23.	River Hills	Mid-America Apartment Communities, Inc.
24.	Stonemill Village	Mid-America Apartment Communities, Inc.
25.	Woodwinds	Mid-America Apartment Communities, Inc.
26.	Tanglewood	Mid-America Apartment Communities, Inc.
27.	Wood Hollow	Mid-America Apartment Communities, Inc.
28.	Belmere	Mid-America Apartments, L.P.
29.	Bradford Chase (WV)	Mid-America Apartments, L.P.
30.	Crosswinds	Mid-America Apartments, L.P.
31.	Fairways at Royal Oak	Mid-America Apartments, L.P.
32.	Hermitage at Beechtree	Mid-America Apartments, L.P.
33.	Hidden Lake II	Mid-America Apartments, L.P.
34.	High Ridge	Mid-America Apartments, L.P.
35.	Howell Commons	Mid-America Apartments, L.P.
36.	Kirby Station	Mid-America Apartments, L.P.

37.	Lakepointe	Mid-America Apartments, L.P.
38.	Lakeside	Mid-America Apartments, L.P.
39.	Marsh Oaks	Mid-America Apartments, L.P.
40.	Napa Valley	Mid-America Apartments, L.P.
41.	Park Haywood	Mid-America Apartments, L.P.
42.	Park Place	Mid-America Apartments, L.P.
43.	Pear Orchard	Mid-America Apartments, L.P.
44.	Savannah Creek	Mid-America Apartments, L.P.
45.	Shenandoah Petersburg	Mid-America Apartments, L.P.
46.	Somerset	Mid-America Apartments, L.P.
47.	Southland Station I	Mid-America Apartments, L.P.
48.	Steeplechase	Mid-America Apartments, L.P.
49.	Sutton Place	Mid-America Apartments, L.P.
50.	Tiffany Oaks	Mid-America Apartments, L.P.
51.	Village	Mid-America Apartments, L.P.
52.	Westside Creek I	Mid-America Apartments, L.P.
53.	Willow Creek	Mid-America Apartments, L.P.
54.	Links at Carrollwood	Mid-America Apartments, L.P.
55.	Grand View	Mid-America Apartments, L.P.
56.	Three Oaks II	Mid-America Apartments, L.P.
57.	Wildwood II	Mid-America Apartments, L.P.
58.	Lighthouse Court	Mid-America Apartments, L.P.
59.	Colony at South Park	Mid-America Apartments, L.P.
60.	Woodstream	Mid-America Apartments, L.P.
61.	Walden Creek	Mid-America Apartments, L.P.

EX-10.14

SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

(MAA II)

          THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 30^th  day of April, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

          A.     Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004 (as amended from time to time, the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for the addition of the Mortgaged Property known as Eastview to the Collateral Pool under the terms of the Master Agreement.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

- 1 -

          Section 1.     Collateral Pool.  Exhibit A to the Master Agreement is hereby deleted and replaced with the attached Exhibit A to reflect the addition of Eastview as an Additional Mortgaged Property in the Collateral Pool.

          Section 2.     Expansion.  The Variable Facility Commitment is hereby increased by $5,370,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

          “Variable Facility Commitment” means an aggregate amount of $462,896,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 3.     Reserved Amount.  “Reserved Amount” means $137,104,000, unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $137,104,000.  The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

          Section 4.     Property Management Agreements.  Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

          Section 5.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 6.     Reaffirmation.  The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

          Section 7.     Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 8.     Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[Remainder of this page intentionally left blank]

- 2 -

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
	Simon R.C. Wadsworth
	Executive Vice President
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
		Simon R.C. Wadsworth
		Executive Vice President
	[Signatures follow on next page]

- 3 -

LENDER:
PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation
By:
Name:	Sharon D. Singleton
Title:	Vice President

- 4 -

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL	$	4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL	$	10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA	$	14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA	$	20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC	$	13,420,000
The Mansion	Fayette	Lexington, KY	$	7,630,000
Brentwood Downs	Davidson	Nashville, TN	$	14,600,000
Calais Forest	Pulaski	Little Rock, AR	$	9,900,000
Southland Station II	Houston	Warner Robins, GA	$	8,050,000
Fairways at Hartland	Warren	Bowling Green, KY	$	10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN	$	14,160,000
Whisperwood	Muscogee	Columbus, GA	$	49,900,000
River Trace I	Shelby	Memphis, TN	$	8,975,000
Wildwood I	Thomas	Thomasville, GA	$	3,825,000
Three Oaks I	Lowndes	Valdosta, GA	$	3,950,000
Westbury Springs	Gwinnett	Lilburn, GA	$	6,775,000
Hickory Farms	Shelby	Memphis, TN	$	6,475,000
Gleneagles	Shelby	Memphis, TN	$	6,850,000
The Oaks	Madison	Jackson, TN	$	2,825,000
TPC Greenville	Greenville	Greenville, SC	$	8,930,000
TPC Huntsville	Madison	Huntsville, AL	$	17,800,000
Eagle Ridge	Birmingham	Birmingham, AL	$	8,400,000
River Hills	Grenada	Grenada, MS	$	1,600,000
Stonemill Village	Jefferson	Louisville, KY	$	19,825,000
Woodwinds	Aiken	Aiken, SC	$	7,000,000
Tanglewood	Anderson	Anderson, SC	$	5,110,000
Wood Hollow	Duval	Jacksonville, FL	$	22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA	$	16,450,000
Grand Reserve	Fayette	Lexington, KY	$	23,200,000
Island Retreat	Glynn	St. Simons Island, GA	$	5,400,000
Belmere	Hillsborough	Tampa, FL	$	11,150,000
Bradford Chase (WV)	Madison	Jackson, TN	$	4,960,000
Crosswinds	Rankin	Jackson, MS	$	13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH	$	9,800,000
Hermitage at Beechtree	Wake	Cary, NC	$	8,720,000
Hidden Lake II	Fulton	Union City, GA	$	7,050,000
High Ridge	Clarke	Athens, GA	$	6,600,000
Howell Commons	Greenville	Greenville, SC	$	12,380,000
Kirby Station	Shelby	Memphis, TN	$	15,800,000
Lakepointe	Fayette	Lexington, KY	$	4,425,000
Lakeside	Duval	Jacksonville, FL	$	21,100,000
Marsh Oaks	Duval	Atlantic Beach, FL	$	5,500,000
Napa Valley	Pulaski	Little Rock, AR	$	10,500,000
Park Haywood	Greenville	Greenville, SC	$	5,600,000
Park Place	Spartanburg	Spartanburg, SC	$	6,470,000

Property Name	County	Property Location	Initial Valuation
Pear Orchard	Madison	Jackson, MS	$	15,700,000
Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)	$	9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA	$	9,567,000
Somerset	Hinds	Jackson, MS	$	3,160,000
Southland Station I	Houston	Warner Robins, GA	$	7,300,000
Steeplechase	Hamilton	Chattanooga, TN	$	4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)	$	10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL	$	14,750,000
Village	Fayette	Lexington, KY	$	10,340,000
Westside Creek I	Pulaski	Little Rock, AR	$	7,010,000
Willow Creek	Muscogee	Columbus, GA	$	10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL	$	13,050,000
Grand View	Nashville	Nashville, TN	$	26,805,000
Three Oaks II	Lowndes	Valdosta, GA	$	4,737,000
Wildwood II	Thomas	Thomasville, GA	$	3,950,000
Lighthouse Court	Clay	Orange Park, FL	$	40,092,000
Colony at South Park	Aiken	Aiken, SC	$	8,100,000
Woodstream	Guilford	Greensboro, NC	$	11,300,000
Walden Creek	Henry	McDonough, GA	$	12,783,000
Eastview	Shelby	Memphis, TN	$	8,262,000

EXHIBIT AA TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

	Property Name	Manager
1.	Abbington Place	Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery	Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II	Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone	Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II	Mid-America Apartment Communities, Inc.
6.	The Mansion	Mid-America Apartment Communities, Inc.
7.	Brentwood Downs	Mid-America Apartment Communities, Inc.
8.	Calais Forest	Mid-America Apartment Communities, Inc.
9.	Southland Station II	Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland	Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro	Mid-America Apartment Communities, Inc.
12.	Whisperwood	Mid-America Apartment Communities, Inc.
13.	River Trace I	Mid-America Apartment Communities, Inc.
14.	Wildwood I	Mid-America Apartment Communities, Inc.
15.	Three Oaks I	Mid-America Apartment Communities, Inc.
16.	Westbury Springs	Mid-America Apartment Communities, Inc.
17.	Hickory Farms	Mid-America Apartment Communities, Inc.
18.	Gleneagles	Mid-America Apartment Communities, Inc.
19.	The Oaks	Mid-America Apartment Communities, Inc.
20.	TPC Greenville	Mid-America Apartment Communities, Inc.
21.	TPC Huntsville	Mid-America Apartment Communities, Inc.
22.	Eagle Ridge	Mid-America Apartment Communities, Inc.
23.	River Hills	Mid-America Apartment Communities, Inc.
24.	Stonemill Village	Mid-America Apartment Communities, Inc.
25.	Woodwinds	Mid-America Apartment Communities, Inc.
26.	Tanglewood	Mid-America Apartment Communities, Inc.
27.	Wood Hollow	Mid-America Apartment Communities, Inc.
28.	Belmere	Mid-America Apartments, L.P.
29.	Bradford Chase (WV)	Mid-America Apartments, L.P.
30.	Crosswinds	Mid-America Apartments, L.P.
31.	Fairways at Royal Oak	Mid-America Apartments, L.P.
32.	Hermitage at Beechtree	Mid-America Apartments, L.P.
33.	Hidden Lake II	Mid-America Apartments, L.P.
34.	High Ridge	Mid-America Apartments, L.P.
35.	Howell Commons	Mid-America Apartments, L.P.
36.	Kirby Station	Mid-America Apartments, L.P.
37.	Lakepointe	Mid-America Apartments, L.P.

38.	Lakeside	Mid-America Apartments, L.P.
39.	Marsh Oaks	Mid-America Apartments, L.P.
40.	Napa Valley	Mid-America Apartments, L.P.
41.	Park Haywood	Mid-America Apartments, L.P.
42.	Park Place	Mid-America Apartments, L.P.
43.	Pear Orchard	Mid-America Apartments, L.P.
44.	Savannah Creek	Mid-America Apartments, L.P.
45.	Shenandoah Petersburg	Mid-America Apartments, L.P.
46.	Somerset	Mid-America Apartments, L.P.
47.	Southland Station I	Mid-America Apartments, L.P.
48.	Steeplechase	Mid-America Apartments, L.P.
49.	Sutton Place	Mid-America Apartments, L.P.
50.	Tiffany Oaks	Mid-America Apartments, L.P.
51.	Village	Mid-America Apartments, L.P.
52.	Westside Creek I	Mid-America Apartments, L.P.
53.	Willow Creek	Mid-America Apartments, L.P.
54.	Links at Carrollwood	Mid-America Apartments, L.P.
55.	Grand View	Mid-America Apartments, L.P.
56.	Three Oaks II	Mid-America Apartments, L.P.
57.	Wildwood II	Mid-America Apartments, L.P.
58.	Lighthouse Court	Mid-America Apartments, L.P.
59.	Colony at South Park	Mid-America Apartments, L.P.
60.	Woodstream	Mid-America Apartments, L.P.
61.	Walden Creek	Mid-America Apartments, L.P.
62.	Eastview	Mid-America Apartments, L.P.

EX-10.15

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
(MAA II)

          THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 3^rd day of August, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”),  (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”); and (iii) FANNIE MAE.

RECITALS

          A.     Borrower and Lender are parties to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Borrower has entered into that certain ISDA Master Agreement dated as of August 3, 2004 by and between Borrower, Mid-America Apartments of Texas, L.P., a Texas limited partnership (“MAA of Texas”, together with Borrower, the “Borrower Parties”), Deutsche Bank AG, New York (the “Counterparty”), and countersigned by Fannie Mae (together with all schedules thereto, the “Swap Documents”), pursuant to which the Counterparty agreed to provide interest rate protection for the Borrower Parties.

          D.     Fannie Mae has agreed to credit enhance certain obligations under the Swap Documents.

          E.     As a condition to the credit enhancement, Fannie Mae has required that the Borrower Parties enter into this Amendment in order to provide that the Collateral under the Master Agreement also secure any liability Fannie Mae may incur as a result of such credit enhancement of the Swap Documents.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Obligations Secured.  The Collateral under the Master Agreement shall also secure any and all liability Fannie Mae may incur in connection with Fannie Mae’s agreement to provide credit enhancement of the Swap Documents, including but not limited to:

          (a)     any and all amounts provided by Fannie Mae under the credit enhancement;

          (b)     any and all amounts to be paid by the Borrower Parties to replenish fully any reserve funds required under the Swap Documents;

          (c)     any and all reasonable fees, costs, charges and expenses (including the fees and expenses of attorneys, accountants and other experts) which Fannie Mae may pay or incur in connection with any payment under any of the Swap Documents, including payments of any fees and charges in connection with any accounts established to facilitate payments under any Swap Document, or the performance of Fannie Mae’s obligations under any Swap Document;

          (d)     the amount of any fees, costs, or charges or expenses (including the fees and expenses of attorneys, accountants and other experts) incurred by Fannie Mae in connection with the administration or enforcement of or preservation of rights or remedies under this Agreement or any of the Loan Documents or in connection with the foreclosure upon, sale of or other disposition of any security granted pursuant to the Loan Documents;

          (e)     any payments or advances made by Fannie Mae on behalf of any Borrower pursuant to any of the Loan Documents;

          (f)     all costs and expenses incurred in connection with or related to the execution and delivery of each Swap Document, any tax or governmental charge imposed in connection with the execution and delivery of each Swap Document and the reasonable fees and disbursements of Fannie Mae’s counsel and accountants, including fees and expenses relating to any (a) amendments, consents or waivers to this Amendment or any of the Loan Documents (whether or not any such amendments, consents or waivers are entered into), (b) requests to evaluate any substitute or additional Collateral or the release of Collateral, (c) collection, disbursement or application of insurance or condemnation awards, proceeds, damages or other payments including, without limitation, all costs incurred in connection with the application of insurance or condemnation awards to restore or repair any Mortgaged Property, including reasonable appraiser fees; and

          (g)     any transfer taxes, documentary taxes, assessments or charges made by any governmental authority, by reason of the execution, delivery, filing, recordation, performances or enforcement of any of the Loan Documents; provided the Borrower Parties will not be obligated to pay any franchise, excise, estate, inheritance, income, excess profits or similar tax on Fannie Mae.

          Section 2.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 3.     Reaffirmation.  The Borrower Parties hereby reaffirm their obligations under the Master Agreement.

          Section 4.     Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 5.     Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation
By:
	Al Campbell
	Senior Vice President and Treasurer
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
		Al Campbell
		Senior Vice President and Treasurer

[SIGNATURES CONTINUE ON FOLLOWING  PAGE]

LENDER:
PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation
	By:
	Name: Sharon D. Singleton
	Title: Vice President

FANNIE MAE:

FANNIE MAE, a federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716, et seq.

By:

Name:

Title:

EX-10.16

FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

(MAA II)

          THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 31^st day of August, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

          A.     Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004, and as further amended by that certain Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004  (as amended from time to time, the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for the addition of the Mortgaged Properties known as Cedar Mill, Hamilton Pointe, Hidden Creek, and Lakeshore Landing to the Collateral Pool under the terms of the Master Agreement.

- 1 -

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Collateral Pool.  Exhibit A to the Master Agreement is hereby deleted and replaced with the attached Exhibit A to reflect the addition of Cedar Mill, Hamilton Pointe, Hidden Creek, and Lakeshore Landing as Additional Mortgaged Properties in the Collateral Pool.

          Section 2.     Expansion.  The Variable Facility Commitment is hereby increased by $27,461,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

          “Variable Facility Commitment” means an aggregate amount of $490,357,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 3.     Reserved Amount.  “Reserved Amount” means $109,643,000, unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $109,643,000.  The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

          Section 4.     Property Management Agreements.  Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

          Section 5.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 6.     Reaffirmation.  The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

          Section 7.     Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 8.     Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

- 2 -

[Remainder of this page intentionally left blank]

- 3 -

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
Name:	Al Campbell
Title:	Senior Vice President and Treasurer
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
	Name:	Al Campbell
	Title:	Senior Vice President and Treasurer
	[Signatures follow on next page]

- 4 -

LENDER:
PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation
By:
Name:	Sharon D. Singleton
Title:	Vice President

- 5 -

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL	$	4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL	$	10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA	$	14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA	$	20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC	$	13,420,000
The Mansion	Fayette	Lexington, KY	$	7,630,000
Brentwood Downs	Davidson	Nashville, TN	$	14,600,000
Calais Forest	Pulaski	Little Rock, AR	$	9,900,000
Southland Station II	Houston	Warner Robins, GA	$	8,050,000
Fairways at Hartland	Warren	Bowling Green, KY	$	10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN	$	14,160,000
Whisperwood	Muscogee	Columbus, GA	$	49,900,000
River Trace I	Shelby	Memphis, TN	$	8,975,000
Wildwood I	Thomas	Thomasville, GA	$	3,825,000
Three Oaks I	Lowndes	Valdosta, GA	$	3,950,000
Westbury Springs	Gwinnett	Lilburn, GA	$	6,775,000
Hickory Farms	Shelby	Memphis, TN	$	6,475,000
Gleneagles	Shelby	Memphis, TN	$	6,850,000
The Oaks	Madison	Jackson, TN	$	2,825,000
TPC Greenville	Greenville	Greenville, SC	$	8,930,000
TPC Huntsville	Madison	Huntsville, AL	$	17,800,000
Eagle Ridge	Birmingham	Birmingham, AL	$	8,400,000
River Hills	Grenada	Grenada, MS	$	1,600,000
Stonemill Village	Jefferson	Louisville, KY	$	19,825,000
Woodwinds	Aiken	Aiken, SC	$	7,000,000
Tanglewood	Anderson	Anderson, SC	$	5,110,000
Wood Hollow	Duval	Jacksonville, FL	$	22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA	$	16,450,000
Grand Reserve	Fayette	Lexington, KY	$	23,200,000
Island Retreat	Glynn	St. Simons Island, GA	$	5,400,000
Belmere	Hillsborough	Tampa, FL	$	11,150,000
Bradford Chase (WV)	Madison	Jackson, TN	$	4,960,000
Crosswinds	Rankin	Jackson, MS	$	13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH	$	9,800,000
Hermitage at Beechtree	Wake	Cary, NC	$	8,720,000
Hidden Lake II	Fulton	Union City, GA	$	7,050,000
High Ridge	Clarke	Athens, GA	$	6,600,000
Howell Commons	Greenville	Greenville, SC	$	12,380,000
Kirby Station	Shelby	Memphis, TN	$	15,800,000
Lakepointe	Fayette	Lexington, KY	$	4,425,000
Lakeside	Duval	Jacksonville, FL	$	21,100,000
Marsh Oaks	Duval	Atlantic Beach, FL	$	5,500,000
Napa Valley	Pulaski	Little Rock, AR	$	10,500,000
Park Haywood	Greenville	Greenville, SC	$	5,600,000
Park Place	Spartanburg	Spartanburg, SC	$	6,470,000

Property Name	County	Property Location	Initial Valuation
Pear Orchard	Madison	Jackson, MS	$	15,700,000
Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)	$	9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA	$	9,567,000
Somerset	Hinds	Jackson, MS	$	3,160,000
Southland Station I	Houston	Warner Robins, GA	$	7,300,000
Steeplechase	Hamilton	Chattanooga, TN	$	4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)	$	10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL	$	14,750,000
Village	Fayette	Lexington, KY	$	10,340,000
Westside Creek I	Pulaski	Little Rock, AR	$	7,010,000
Willow Creek	Muscogee	Columbus, GA	$	10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL	$	13,050,000
Grand View	Nashville	Nashville, TN	$	26,805,000
Three Oaks II	Lowndes	Valdosta, GA	$	4,737,000
Wildwood II	Thomas	Thomasville, GA	$	3,950,000
Lighthouse Court	Clay	Orange Park, FL	$	40,092,000
Colony at South Park	Aiken	Aiken, SC	$	8,100,000
Woodstream	Guilford	Greensboro, NC	$	11,300,000
Walden Creek	Henry	McDonough, GA	$	12,783,000
Eastview	Shelby	Memphis, TN	$	8,262,000
Cedar Mill	Shelby	Memphis, TN	$	9,130,000
Hamilton Pointe	Hamilton	Chattanooga, TN	$	13,100,000
Hidden Creek	Hamilton	Chattanooga, TN	$	11,100,000
Lakeshore Landing	Madison	Jackson, MS	$	8,925,000

EXHIBIT AA TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

	Property Name	Manager
1.	Abbington Place	Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery	Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II	Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone	Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II	Mid-America Apartment Communities, Inc.
6.	The Mansion	Mid-America Apartment Communities, Inc.
7.	Brentwood Downs	Mid-America Apartment Communities, Inc.
8.	Calais Forest	Mid-America Apartment Communities, Inc.
9.	Southland Station II	Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland	Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro	Mid-America Apartment Communities, Inc.
12.	Whisperwood	Mid-America Apartment Communities, Inc.
13.	River Trace I	Mid-America Apartment Communities, Inc.
14.	Wildwood I	Mid-America Apartment Communities, Inc.
15.	Three Oaks I	Mid-America Apartment Communities, Inc.
16.	Westbury Springs	Mid-America Apartment Communities, Inc.
17.	Hickory Farms	Mid-America Apartment Communities, Inc.
18.	Gleneagles	Mid-America Apartment Communities, Inc.
19.	The Oaks	Mid-America Apartment Communities, Inc.
20.	TPC Greenville	Mid-America Apartment Communities, Inc.
21.	TPC Huntsville	Mid-America Apartment Communities, Inc.
22.	Eagle Ridge	Mid-America Apartment Communities, Inc.
23.	River Hills	Mid-America Apartment Communities, Inc.
24.	Stonemill Village	Mid-America Apartment Communities, Inc.
25.	Woodwinds	Mid-America Apartment Communities, Inc.
26.	Tanglewood	Mid-America Apartment Communities, Inc.
27.	Wood Hollow	Mid-America Apartment Communities, Inc.
28.	Belmere	Mid-America Apartments, L.P.
29.	Bradford Chase (WV)	Mid-America Apartments, L.P.
30.	Crosswinds	Mid-America Apartments, L.P.
31.	Fairways at Royal Oak	Mid-America Apartments, L.P.
32.	Hermitage at Beechtree	Mid-America Apartments, L.P.
33.	Hidden Lake II	Mid-America Apartments, L.P.
34.	High Ridge	Mid-America Apartments, L.P.
35.	Howell Commons	Mid-America Apartments, L.P.
36.	Kirby Station	Mid-America Apartments, L.P.
37.	Lakepointe	Mid-America Apartments, L.P.

38.	Lakeside	Mid-America Apartments, L.P.
39.	Marsh Oaks	Mid-America Apartments, L.P.
40.	Napa Valley	Mid-America Apartments, L.P.
41.	Park Haywood	Mid-America Apartments, L.P.
42.	Park Place	Mid-America Apartments, L.P.
43.	Pear Orchard	Mid-America Apartments, L.P.
44.	Savannah Creek	Mid-America Apartments, L.P.
45.	Shenandoah Petersburg	Mid-America Apartments, L.P.
46.	Somerset	Mid-America Apartments, L.P.
47.	Southland Station I	Mid-America Apartments, L.P.
48.	Steeplechase	Mid-America Apartments, L.P.
49.	Sutton Place	Mid-America Apartments, L.P.
50.	Tiffany Oaks	Mid-America Apartments, L.P.
51.	Village	Mid-America Apartments, L.P.
52.	Westside Creek I	Mid-America Apartments, L.P.
53.	Willow Creek	Mid-America Apartments, L.P.
54.	Links at Carrollwood	Mid-America Apartments, L.P.
55.	Grand View	Mid-America Apartments, L.P.
56.	Three Oaks II	Mid-America Apartments, L.P.
57.	Wildwood II	Mid-America Apartments, L.P.
58.	Lighthouse Court	Mid-America Apartments, L.P.
59.	Colony at South Park	Mid-America Apartments, L.P.
60.	Woodstream	Mid-America Apartments, L.P.
61.	Walden Creek	Mid-America Apartments, L.P.
62.	Eastview	Mid-America Apartments, L.P.
63.	Cedar Mill	Mid-America Apartments, L.P.
64.	Hamilton Pointe	Mid-America Apartments, L.P.
65.	Hidden Creek	Mid-America Apartments, L.P.
66.	Lakeshore Landing	Mid-America Apartments, L.P.

EX-10.17

FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

(MAA II)

          THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 1^st day of October, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”) (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”), and (iii) FANNIE MAE.

RECITALS

          A.     Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004, as further amended by that certain Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, and as further amended by that certain Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 31, 2004 (as amended from time to time, the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Borrower has also entered into that certain ISDA Master Agreement dated as of September 2, 2004 by and between Borrower, Mid-America Apartments of Texas, L.P., a Texas limited partnership (“MAA of Texas”, together with Borrower, the “Borrower Parties”), Deutsche Bank AG, New York (the “Counterparty”), and countersigned by Fannie Mae (together with all schedules thereto, the “Swap Documents”), pursuant to which the Counterparty agreed to provide interest rate protection for the Borrower Parties.

- 1 -

          D.     Fannie Mae has agreed to credit enhance certain obligations under the Swap Documents.

          E.     Borrower and Lender are executing this Amendment pursuant to the Master Agreement (i) to provide for the addition of the Mortgaged Properties known as River Trace II and Vistas to the Collateral Pool, (ii) to provide for the release of the Mortgaged Property known as Island Retreat from, the Collateral Pool under the terms of the Master Agreement, and (iii) to provide that the Collateral under the Master Agreement also secure any liability Fannie Mae may incur as a result of its credit enhancement of the Swap Documents.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Collateral Pool.  Exhibit A to the Master Agreement is hereby deleted and replaced with the attached Exhibit A to reflect (i) the addition of River Trace II and Vistas as Additional Mortgaged Properties in the Collateral Pool, and (ii) the release of Island Retreat as a Mortgaged Property from the Collateral Pool.

          Section 2.     Expansion.  The Variable Facility Commitment is hereby increased by $5,634,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

          “Variable Facility Commitment” means an aggregate amount of $495,991,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 3.     Reserved Amount.  “Reserved Amount” means $104,009,000, unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $104,009,000.  The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

          Section 4.     Obligations Secured.  The Collateral under the Master Agreement shall also secure any and all liability Fannie Mae may incur in connection with Fannie Mae’s agreement to provide credit enhancement of the Swap Documents, including but not limited to:

- 2 -

          (a)     any and all amounts provided by Fannie Mae under the credit enhancement;   

          (b)     any and all amounts to be paid by the Borrower Parties to replenish fully any reserve funds required under the Swap Documents; 

          (c)     any and all reasonable fees, costs, charges and expenses (including the fees and expenses of attorneys, accountants and other experts) which Fannie Mae may pay or incur in connection with any payment under any of the Swap Documents, including payments of any fees and charges in connection with any accounts established to facilitate payments under any Swap Document, or the performance of Fannie Mae’s obligations under any Swap Document;

          (d)     the amount of any fees, costs, or charges or expenses (including the fees and expenses of attorneys, accountants and other experts) incurred by Fannie Mae in connection with the administration or enforcement of or preservation of rights or remedies under this Agreement or any of the Loan Documents or in connection with the foreclosure upon, sale of or other disposition of any security granted pursuant to the Loan Documents;

          (e)     any payments or advances made by Fannie Mae on behalf of any Borrower pursuant to any of the Loan Documents;

          (f)     all costs and expenses incurred in connection with or related to the execution and delivery of each Swap Document, any tax or governmental charge imposed in connection with the execution and delivery of each Swap Document and the reasonable fees and disbursements of Fannie Mae’s counsel and accountants, including fees and expenses relating to any (a) amendments, consents or waivers to this Amendment or any of the Loan Documents (whether or not any such amendments, consents or waivers are entered into), (b) requests to evaluate any substitute or additional Collateral or the release of Collateral, (c) collection, disbursement or application of insurance or condemnation awards, proceeds, damages or other payments including, without limitation, all costs incurred in connection with the application of insurance or condemnation awards to restore or repair any Mortgaged Property, including reasonable appraiser fees; and

          (g)     any transfer taxes, documentary taxes, assessments or charges made by any governmental authority, by reason of the execution, delivery, filing, recordation, performances or enforcement of any of the Loan Documents; provided the Borrower Parties will not be obligated to pay any franchise, excise, estate, inheritance, income, excess profits or similar tax on Fannie Mae.

          Section 5.     Property Management Agreements.  Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

          Section 6.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 7.     Reaffirmation.  The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

- 3 -

          Section 8.     Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 9.     Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

- 4 -

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

	BORROWER:
	MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
	By:
	Name:		Al Campbell
	Title:		Senior Vice President and Treasurer
	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
	By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
		By:
		Name:		Al Campbell
		Title:		Senior Vice President and Treasurer
[SIGNATURES FOLLOW ON NEXT PAGE]

- 5 -

	LENDER:
	PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation
	By:
	Name:	Sharon D. Singleton
	Title:	Vice President
[SIGNATURES FOLLOW ON NEXT PAGE]

- 6 -

FANNIE MAE:

FANNIE MAE, a federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716, et seq.

By:

Name:

Title:

- 7 -

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL	$	4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL	$	10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA	$	14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA	$	20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC	$	13,420,000
The Mansion	Fayette	Lexington, KY	$	7,630,000
Brentwood Downs	Davidson	Nashville, TN	$	14,600,000
Calais Forest	Pulaski	Little Rock, AR	$	9,900,000
Southland Station II	Houston	Warner Robins, GA	$	8,050,000
Fairways at Hartland	Warren	Bowling Green, KY	$	10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN	$	14,160,000
Whisperwood	Muscogee	Columbus, GA	$	49,900,000
River Trace I	Shelby	Memphis, TN	$	8,975,000
Wildwood I	Thomas	Thomasville, GA	$	3,825,000
Three Oaks I	Lowndes	Valdosta, GA	$	3,950,000
Westbury Springs	Gwinnett	Lilburn, GA	$	6,775,000
Hickory Farms	Shelby	Memphis, TN	$	6,475,000
Gleneagles	Shelby	Memphis, TN	$	6,850,000
The Oaks	Madison	Jackson, TN	$	2,825,000
TPC Greenville	Greenville	Greenville, SC	$	8,930,000
TPC Huntsville	Madison	Huntsville, AL	$	17,800,000
Eagle Ridge	Birmingham	Birmingham, AL	$	8,400,000
River Hills	Grenada	Grenada, MS	$	1,600,000
Stonemill Village	Jefferson	Louisville, KY	$	19,825,000
Woodwinds	Aiken	Aiken, SC	$	7,000,000
Tanglewood	Anderson	Anderson, SC	$	5,110,000
Wood Hollow	Duval	Jacksonville, FL	$	22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA	$	16,450,000
Grand Reserve	Fayette	Lexington, KY	$	23,200,000
Belmere	Hillsborough	Tampa, FL	$	11,150,000
Bradford Chase (WV)	Madison	Jackson, TN	$	4,960,000
Crosswinds	Rankin	Jackson, MS	$	13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH	$	9,800,000
Hermitage at Beechtree	Wake	Cary, NC	$	8,720,000
Hidden Lake II	Fulton	Union City, GA	$	7,050,000
High Ridge	Clarke	Athens, GA	$	6,600,000
Howell Commons	Greenville	Greenville, SC	$	12,380,000
Kirby Station	Shelby	Memphis, TN	$	15,800,000
Lakepointe	Fayette	Lexington, KY	$	4,425,000
Lakeside	Duval	Jacksonville, FL	$	21,100,000
Marsh Oaks	Duval	Atlantic Beach, FL	$	5,500,000
Napa Valley	Pulaski	Little Rock, AR	$	10,500,000
Park Haywood	Greenville	Greenville, SC	$	5,600,000
Park Place	Spartanburg	Spartanburg, SC	$	6,470,000
Pear Orchard	Madison	Jackson, MS	$	15,700,000

Property Name	County	Property Location	Initial Valuation
Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)	$	9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA	$	9,567,000
Somerset	Hinds	Jackson, MS	$	3,160,000
Southland Station I	Houston	Warner Robins, GA	$	7,300,000
Steeplechase	Hamilton	Chattanooga, TN	$	4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)	$	10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL	$	14,750,000
Village	Fayette	Lexington, KY	$	10,340,000
Westside Creek I	Pulaski	Little Rock, AR	$	7,010,000
Willow Creek	Muscogee	Columbus, GA	$	10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL	$	13,050,000
Grand View	Nashville	Nashville, TN	$	26,805,000
Three Oaks II	Lowndes	Valdosta, GA	$	4,737,000
Wildwood II	Thomas	Thomasville, GA	$	3,950,000
Lighthouse Court	Clay	Orange Park, FL	$	40,092,000
Colony at South Park	Aiken	Aiken, SC	$	8,100,000
Woodstream	Guilford	Greensboro, NC	$	11,300,000
Walden Creek	Henry	McDonough, GA	$	12,783,000
Eastview	Shelby	Memphis, TN	$	8,262,000
Cedar Mill	Shelby	Memphis, TN	$	9,130,000
Hamilton Pointe	Hamilton	Chattanooga, TN	$	13,100,000
Hidden Creek	Hamilton	Chattanooga, TN	$	11,100,000
Lakeshore Landing	Madison	Jackson, MS	$	8,925,000
River Trace II	Shelby	Memphis, TN	$	6,675,000
Vistas	Bibb	Macon, GA	$	8,000,000

EXHIBIT AA TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

	Property Name	Manager
1.	Abbington Place	Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery	Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II	Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone	Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II	Mid-America Apartment Communities, Inc.
6.	The Mansion	Mid-America Apartment Communities, Inc.
7.	Brentwood Downs	Mid-America Apartment Communities, Inc.
8.	Calais Forest	Mid-America Apartment Communities, Inc.
9.	Southland Station II	Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland	Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro	Mid-America Apartment Communities, Inc.
12.	Whisperwood	Mid-America Apartment Communities, Inc.
13.	River Trace I	Mid-America Apartment Communities, Inc.
14.	Wildwood I	Mid-America Apartment Communities, Inc.
15.	Three Oaks I	Mid-America Apartment Communities, Inc.
16.	Westbury Springs	Mid-America Apartment Communities, Inc.
17.	Hickory Farms	Mid-America Apartment Communities, Inc.
18.	Gleneagles	Mid-America Apartment Communities, Inc.
19.	The Oaks	Mid-America Apartment Communities, Inc.
20.	TPC Greenville	Mid-America Apartment Communities, Inc.
21.	TPC Huntsville	Mid-America Apartment Communities, Inc.
22.	Eagle Ridge	Mid-America Apartment Communities, Inc.
23.	River Hills	Mid-America Apartment Communities, Inc.
24.	Stonemill Village	Mid-America Apartment Communities, Inc.
25.	Woodwinds	Mid-America Apartment Communities, Inc.
26.	Tanglewood	Mid-America Apartment Communities, Inc.
27.	Wood Hollow	Mid-America Apartment Communities, Inc.
28.	Belmere	Mid-America Apartments, L.P.
29.	Bradford Chase (WV)	Mid-America Apartments, L.P.
30.	Crosswinds	Mid-America Apartments, L.P.
31.	Fairways at Royal Oak	Mid-America Apartments, L.P.
32.	Grand Reserve	Mid-America Apartments, L.P.
33.	Hermitage at Beechtree	Mid-America Apartments, L.P.
34.	Hidden Lake II	Mid-America Apartments, L.P.
35.	High Ridge	Mid-America Apartments, L.P.
36.	Howell Commons	Mid-America Apartments, L.P.
37.	Kirby Station	Mid-America Apartments, L.P.

38.	Lakepointe	Mid-America Apartments, L.P.
39.	Lakeside	Mid-America Apartments, L.P.
40.	Marsh Oaks	Mid-America Apartments, L.P.
41.	Napa Valley	Mid-America Apartments, L.P.
42.	Park Haywood	Mid-America Apartments, L.P.
43.	Park Place	Mid-America Apartments, L.P.
44.	Pear Orchard	Mid-America Apartments, L.P.
45.	Savannah Creek	Mid-America Apartments, L.P.
46.	Shenandoah Petersburg	Mid-America Apartments, L.P.
47.	Somerset	Mid-America Apartments, L.P.
48.	Southland Station I	Mid-America Apartments, L.P.
49.	Steeplechase	Mid-America Apartments, L.P.
50.	Sutton Place	Mid-America Apartments, L.P.
51.	Terraces at Towne Lake I	Mid-America Apartments, L.P.
52.	Tiffany Oaks	Mid-America Apartments, L.P.
53.	Village	Mid-America Apartments, L.P.
54.	Westside Creek I	Mid-America Apartments, L.P.
55.	Willow Creek	Mid-America Apartments, L.P.
56.	Links at Carrollwood	Mid-America Apartments, L.P.
57.	Grand View	Mid-America Apartments, L.P.
58.	Three Oaks II	Mid-America Apartments, L.P.
59.	Wildwood II	Mid-America Apartments, L.P.
60.	Lighthouse Court	Mid-America Apartments, L.P.
61.	Colony at South Park	Mid-America Apartments, L.P.
62.	Woodstream	Mid-America Apartments, L.P.
63.	Walden Creek	Mid-America Apartments, L.P.
64.	Eastview	Mid-America Apartments, L.P.
65.	Cedar Mill	Mid-America Apartments, L.P.
66.	Hamilton Pointe	Mid-America Apartments, L.P.
67.	Hidden Creek	Mid-America Apartments, L.P.
68.	Lakeshore Landing	Mid-America Apartments, L.P.
69.	River Trace II	Mid-America Apartments, L.P.
70.	Vistas	Mid-America Apartments, L.P.

EX-10.18

SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

(MAA II)

          THIS SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 1^st day of December, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.     Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004, as further amended by that certain Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, as further amended by that certain Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 31, 2004, and as further amended by that certain Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of October 1, 2004 (as amended from time to time, the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Pursuant to the Master Agreement, Borrower has arranged for various Hedges to be in place and has entered into various ISDA Master Agreements by and among Borrower, Mid-America Apartments of Texas, L.P., a Texas limited partnership (“MAA of Texas”, together with Borrower, the “Borrower Parties”), and the swap providers signatory thereto (collectively, the “Counterparty”) (together with all schedules thereto, the “Hedge Documents”), pursuant to which the Counterparty agreed to provide interest rate protection for the Borrower Parties.

          D.      Fannie Mae has agreed to credit enhance certain obligations with respect to any Credit Enhanced Hedge (as defined below) in consideration for Borrower’s payment of the Credit Enhancement Fee (as defined below).

          E.     Borrower and Lender are executing this Amendment pursuant to the Master Agreement (i) to provide for the addition of the Mortgaged Properties known as Hidden Lake I, Park Walk and Woodridge to the Collateral Pool, and (ii) to provide for Borrower’s payment of the Credit Enhancement Fee. 

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Collateral Pool.  Exhibit A to the Master Agreement is hereby deleted and replaced with the attached Exhibit A to reflect the addition of Hidden Lake I, Park Walk and Woodridge as Additional Mortgaged Properties in the Collateral Pool.

          Section 2.     Expansion.  The Variable Facility Commitment is hereby increased by $14,105,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

          ”Variable Facility Commitment” means an aggregate amount of $510,096,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 3.     Reserved Amount.  “Reserved Amount” means $89,904,000, unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $89,904,000.  The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

          Section 4.     Credit Enhancement.

(a)	The following new definitions are hereby added to the Master Agreement:
”Credit Enhancement Fee” means the fee due from Borrower in consideration for Fannie Mae’s providing credit enhancement of the Credit Enhanced Hedges, as more particularly set forth on Schedule II (“Credit Enhancement Fee Schedule”) attached to this Agreement.

”Credit Enhanced Hedge” means any Hedge executed by Borrower and assigned to Lender which Fannie Mae has agreed to credit enhance.
(b)	A new Section 16.07(g) is hereby added to the Master Agreement as follows:
	(g)     With respect to each applicable Credit Enhanced Hedge, Borrower shall pay the Credit Enhancement Fee monthly, in arrears, on the first Business Day following each end of the month during the Term of this Agreement until such time that Fannie Mae no longer credit enhances such Hedge or until the Credit Enhancement Fee is no longer due and payable, except that the Credit Enhancement Fee for the last month during the Term of this Agreement shall be paid on the last day of the Term of this Agreement.
(c)	The Schedule II attached hereto is hereby added to the Master Agreement as if it were attached thereto in its entirety.

          Section 5.     Property Management Agreements.  Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

          Section 6.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 7.     Reaffirmation.  The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

          Section 8.      Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 9.     Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
Name:		Al Campbell
Title:		Senior Vice President and Treasurer
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
	Name:		Al Campbell
	Title:		Senior Vice President and Treasurer

[SIGNATURES FOLLOW ON NEXT PAGE]

LENDER:
PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation
By:
Name:	Sharon D. Singleton
Title:	Vice President

[SIGNATURES FOLLOW ON NEXT PAGE]

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL		$	4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL		$	10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA		$	14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA		$	20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC		$	13,420,000
The Mansion	Fayette	Lexington, KY		$	7,630,000
Brentwood Downs	Davidson	Nashville, TN		$	14,600,000
Calais Forest	Pulaski	Little Rock, AR		$	9,900,000
Southland Station II	Houston	Warner Robins, GA		$	8,050,000
Fairways at Hartland	Warren	Bowling Green, KY		$	10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN		$	14,160,000
Whisperwood	Muscogee	Columbus, GA		$	49,900,000
River Trace I	Shelby	Memphis, TN		$	8,975,000
Wildwood I	Thomas	Thomasville, GA		$	3,825,000
Three Oaks I	Lowndes	Valdosta, GA		$	3,950,000
Westbury Springs	Gwinnett	Lilburn, GA		$	6,775,000
Hickory Farms	Shelby	Memphis, TN		$	6,475,000
Gleneagles	Shelby	Memphis, TN		$	6,850,000
The Oaks	Madison	Jackson, TN		$	2,825,000
TPC Greenville	Greenville	Greenville, SC		$	8,930,000
TPC Huntsville	Madison	Huntsville, AL		$	17,800,000
Eagle Ridge	Birmingham	Birmingham, AL		$	8,400,000
River Hills	Grenada	Grenada, MS		$	1,600,000
Stonemill Village	Jefferson	Louisville, KY		$	19,825,000
Woodwinds	Aiken	Aiken, SC		$	7,000,000
Tanglewood	Anderson	Anderson, SC		$	5,110,000
Wood Hollow	Duval	Jacksonville, FL		$	22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA		$	16,450,000
Grand Reserve	Fayette	Lexington, KY		$	23,200,000
Belmere	Hillsborough	Tampa, FL		$	11,150,000
Bradford Chase (WV)	Madison	Jackson, TN		$	4,960,000
Crosswinds	Rankin	Jackson, MS		$	13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH		$	9,800,000
Hermitage at Beechtree	Wake	Cary, NC		$	8,720,000
Hidden Lake II	Fulton	Union City, GA		$	7,050,000
High Ridge	Clarke	Athens, GA		$	6,600,000
Howell Commons	Greenville	Greenville, SC		$	12,380,000
Kirby Station	Shelby	Memphis, TN		$	15,800,000
Lakepointe	Fayette	Lexington, KY		$	4,425,000
Lakeside	Duval	Jacksonville, FL		$	21,100,000
Marsh Oaks	Duval	Atlantic Beach, FL		$	5,500,000
Napa Valley	Pulaski	Little Rock, AR		$	10,500,000
Park Haywood	Greenville	Greenville, SC		$	5,600,000
Park Place	Spartanburg	Spartanburg, SC		$	6,470,000
Pear Orchard	Madison	Jackson, MS		$	15,700,000

Property Name	County	Property Location	Initial Valuation
Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)		$	9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA		$	9,567,000
Somerset	Hinds	Jackson, MS		$	3,160,000
Southland Station I	Houston	Warner Robins, GA		$	7,300,000
Steeplechase	Hamilton	Chattanooga, TN		$	4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)		$	10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL		$	14,750,000
Village	Fayette	Lexington, KY		$	10,340,000
Westside Creek I	Pulaski	Little Rock, AR		$	7,010,000
Willow Creek	Muscogee	Columbus, GA		$	10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL		$	13,050,000
Grand View	Nashville	Nashville, TN		$	26,805,000
Three Oaks II	Lowndes	Valdosta, GA		$	4,737,000
Wildwood II	Thomas	Thomasville, GA		$	3,950,000
Lighthouse Court	Clay	Orange Park, FL		$	40,092,000
Colony at South Park	Aiken	Aiken, SC		$	8,100,000
Woodstream	Guilford	Greensboro, NC		$	11,300,000
Walden Creek	Henry	McDonough, GA		$	12,783,000
Eastview	Shelby	Memphis, TN		$	8,262,000
Cedar Mill	Shelby	Memphis, TN		$	9,130,000
Hamilton Pointe	Hamilton	Chattanooga, TN		$	13,100,000
Hidden Creek	Hamilton	Chattanooga, TN		$	11,100,000
Lakeshore Landing	Madison	Jackson, MS		$	8,925,000
River Trace II	Shelby	Memphis, TN		$	6,675,000
Vistas	Bibb	Macon, GA		$	8,000,000
Hidden Lake I	Fulton	Union City, GA		$	7,700,000
Park Walk	Clayton	College Park, GA		$	5,500,000
Woodridge	Hinds	Jackson, MS		$	8,500,000

EXHIBIT AA TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

	Property Name	Manager
1.	Abbington Place	Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery	Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II	Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone	Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II	Mid-America Apartment Communities, Inc.
6.	The Mansion	Mid-America Apartment Communities, Inc.
7.	Brentwood Downs	Mid-America Apartment Communities, Inc.
8.	Calais Forest	Mid-America Apartment Communities, Inc.
9.	Southland Station II	Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland	Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro	Mid-America Apartment Communities, Inc.
12.	Whisperwood	Mid-America Apartment Communities, Inc.
13.	River Trace I	Mid-America Apartment Communities, Inc.
14.	Wildwood I	Mid-America Apartment Communities, Inc.
15.	Three Oaks I	Mid-America Apartment Communities, Inc.
16.	Westbury Springs	Mid-America Apartment Communities, Inc.
17.	Hickory Farms	Mid-America Apartment Communities, Inc.
18.	Gleneagles	Mid-America Apartment Communities, Inc.
19.	The Oaks	Mid-America Apartment Communities, Inc.
20.	TPC Greenville	Mid-America Apartment Communities, Inc.
21.	TPC Huntsville	Mid-America Apartment Communities, Inc.
22	Eagle Ridge	Mid-America Apartment Communities, Inc.
23.	River Hills	Mid-America Apartment Communities, Inc.
24.	Stonemill Village	Mid-America Apartment Communities, Inc.
25.	Woodwinds	Mid-America Apartment Communities, Inc.
26.	Tanglewood	Mid-America Apartment Communities, Inc.
27.	Wood Hollow	Mid-America Apartment Communities, Inc.
28.	Belmere	Mid-America Apartments, L.P.
29.	Bradford Chase (WV)	Mid-America Apartments, L.P.
30.	Crosswinds	Mid-America Apartments, L.P.
31.	Fairways at Royal Oak	Mid-America Apartments, L.P.
32.	Grand Reserve	Mid-America Apartments, L.P.
33.	Hermitage at Beechtree	Mid-America Apartments, L.P.
34.	Hidden Lake II	Mid-America Apartments, L.P.
35.	High Ridge	Mid-America Apartments, L.P.
36.	Howell Commons	Mid-America Apartments, L.P.
37.	Kirby Station	Mid-America Apartments, L.P.

38.	Lakepointe	Mid-America Apartments, L.P.
39.	Lakeside	Mid-America Apartments, L.P.
40.	Marsh Oaks	Mid-America Apartments, L.P.
41.	Napa Valley	Mid-America Apartments, L.P.
42.	Park Haywood	Mid-America Apartments, L.P.
43.	Park Place	Mid-America Apartments, L.P.
44.	Pear Orchard	Mid-America Apartments, L.P.
45.	Savannah Creek	Mid-America Apartments, L.P.
46.	Shenandoah Petersburg	Mid-America Apartments, L.P.
47.	Somerset	Mid-America Apartments, L.P.
48.	Southland Station I	Mid-America Apartments, L.P.
49.	Steeplechase	Mid-America Apartments, L.P.
50.	Sutton Place	Mid-America Apartments, L.P.
51.	Terraces at Towne Lake I	Mid-America Apartments, L.P.
52.	Tiffany Oaks	Mid-America Apartments, L.P.
53.	Village	Mid-America Apartments, L.P.
54.	Westside Creek I	Mid-America Apartments, L.P.
55.	Willow Creek	Mid-America Apartments, L.P.
56.	Links at Carrollwood	Mid-America Apartments, L.P.
57.	Grand View	Mid-America Apartments, L.P.
58.	Three Oaks II	Mid-America Apartments, L.P.
59.	Wildwood II	Mid-America Apartments, L.P.
60.	Lighthouse Court	Mid-America Apartments, L.P.
61.	Colony at South Park	Mid-America Apartments, L.P.
62.	Woodstream	Mid-America Apartments, L.P.
63.	Walden Creek	Mid-America Apartments, L.P.
64.	Eastview	Mid-America Apartments, L.P.
65.	Cedar Mill	Mid-America Apartments, L.P.
66.	Hamilton Pointe	Mid-America Apartments, L.P.
67.	Hidden Creek	Mid-America Apartments, L.P.
68.	Lakeshore Landing	Mid-America Apartments, L.P.
69.	River Trace II	Mid-America Apartments, L.P.
70.	Vistas	Mid-America Apartments, L.P.
71.	Hidden Lake I	Mid-America Apartments, L.P.
72.	Park Walk	Mid-America Apartments, L.P.
73.	Woodridge	Mid-America Apartments, L.P.

SCHEDULE II

Credit Enhancement Fee Schedule

Counter Party	Swap Effective Date	Maturity	Principal	Credit Enhancement Fee
SunTrust	K 6/1/2003	6/1/2010	50,000,000	18 basis points
DeutscheBank	U 9/1/2004	9/1/2011	50,000,000	17 basis points
Deutsche Bank	U 12/1/2004	12/1/2011	25,000,000	17 basis points

EX-10.19

SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

(MAA II)

          THIS SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 15^th day of December, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.     Borrower is a party to that certain Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, as further amended by that certain Second Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of April 30, 2004, as further amended by that certain Third Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004, as further amended by that certain Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of August 31, 2004, as further amended by that certain Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of October 1, 2004, and as further amended by that certain Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement dated as of December 1, 2004 (as amended from time to time, the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreements and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide for the addition of the Mortgaged Properties known as Lincoln on the Green, Paddock Club Lakeland I and II, and Paddock Club Jacksonville I, II, and III to the Collateral Pool. 

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Collateral Pool.  Exhibit A to the Master Agreement is hereby deleted and replaced with the attached Exhibit A to reflect the addition of Lincoln on the Green, Paddock Club Lakeland I and II, and Paddock Club Jacksonville I, II, and III as Additional Mortgaged Properties in the Collateral Pool.

          Section 2.     Expansion.  The Variable Facility Commitment is hereby increased by $63,960,000 and the definition of Variable Facility Commitment is hereby replaced in its entirety with the following new definition:

     “Variable Facility Commitment” means an aggregate amount of $574,056,000,which shall be evidenced by the Variable Facility Note in the form attached hereto as Exhibit I, plus such amount as the Borrower may elect to add to the Variable Facility Commitment in accordance with Article VIII, and plus such amount as the Borrower may elect to reborrow in accordance with Section 2.08, less such amount as the Borrower may elect to convert from the Variable Facility Commitment to the Fixed Facility Commitment in accordance with Article III and less such amount by which the Borrower may elect to reduce the Variable Facility Commitment in accordance with Article IX.

          Section 3.     Reserved Amount.  “Reserved Amount” means $25,944,000 unless Borrower elects in writing a lesser amount not to exceed $600,000,000 minus the amount of the Commitment in effect at any time, but in no event greater than $25,944,000.  The Fixed Facility Fee and the Variable Facility Fee shall not increase with respect to the Reserved Amount in the event of an Expansion for so long as the Borrower timely pays the Rate Preservation Fee on the Reserved Amount.

          Section 4.     Property Management Agreements.  Exhibit AA is hereby deleted in its entirety and replaced with the Exhibit AA attached to this Amendment.

          Section 5.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 6.     Reaffirmation.  The REIT and OP hereby reaffirm their obligations under the Agreement as Borrower.

          Section 7.     Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 8.     Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
Name:		Al Campbell
Title:		Senior Vice President and Treasurer
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc.,
	a Tennessee corporation, its general partner
	By:
	Name:		Al Campbell
	Title:		Senior Vice President and Treasurer

[SIGNATURES FOLLOW ON NEXT PAGE]

LENDER:
PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation
By:
Name:	Sharon D. Singleton
Title:	Vice President

[SIGNATURES FOLLOW ON NEXT PAGE]

EXHIBIT A

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

Property Name	County	Property Location	Initial Valuation
Abbington Place	Madison	Huntsville, AL	$	4,670,000
Paddock Club Montgomery	Montgomery	Montgomery, AL	$	10,370,000
Terraces at Towne Lake II	Cherokee	Woodstock, GA	$	14,870,000
Terraces at Fieldstone	Rockdale	Conyers, GA	$	20,700,000
Paddock Club Columbia I and II	Richland	Columbia, SC	$	13,420,000
The Mansion	Fayette	Lexington, KY	$	7,630,000
Brentwood Downs	Davidson	Nashville, TN	$	14,600,000
Calais Forest	Pulaski	Little Rock, AR	$	9,900,000
Southland Station II	Houston	Warner Robins, GA	$	8,050,000
Fairways at Hartland	Warren	Bowling Green, KY	$	10,900,000
Paddock Club Murfreesboro	Rutherford	Murfreesboro, TN	$	14,160,000
Whisperwood	Muscogee	Columbus, GA	$	49,900,000
River Trace I	Shelby	Memphis, TN	$	8,975,000
Wildwood I	Thomas	Thomasville, GA	$	3,825,000
Three Oaks I	Lowndes	Valdosta, GA	$	3,950,000
Westbury Springs	Gwinnett	Lilburn, GA	$	6,775,000
Hickory Farms	Shelby	Memphis, TN	$	6,475,000
Gleneagles	Shelby	Memphis, TN	$	6,850,000
The Oaks	Madison	Jackson, TN	$	2,825,000
TPC Greenville	Greenville	Greenville, SC	$	8,930,000
TPC Huntsville	Madison	Huntsville, AL	$	17,800,000
Eagle Ridge	Birmingham	Birmingham, AL	$	8,400,000
River Hills	Grenada	Grenada, MS	$	1,600,000
Stonemill Village	Jefferson	Louisville, KY	$	19,825,000
Woodwinds	Aiken	Aiken, SC	$	7,000,000
Tanglewood	Anderson	Anderson, SC	$	5,110,000
Wood Hollow	Duval	Jacksonville, FL	$	22,800,000
Terraces at Towne Lake I	Cherokee	Woodstock, GA	$	16,450,000
Grand Reserve	Fayette	Lexington, KY	$	23,200,000
Belmere	Hillsborough	Tampa, FL	$	11,150,000
Bradford Chase (WV)	Madison	Jackson, TN	$	4,960,000
Crosswinds	Rankin	Jackson, MS	$	13,420,000
Fairways at Royal Oak	Clermont	Cincinnati, OH	$	9,800,000
Hermitage at Beechtree	Wake	Cary, NC	$	8,720,000
Hidden Lake II	Fulton	Union City, GA	$	7,050,000
High Ridge	Clarke	Athens, GA	$	6,600,000
Howell Commons	Greenville	Greenville, SC	$	12,380,000
Kirby Station	Shelby	Memphis, TN	$	15,800,000
Lakepointe	Fayette	Lexington, KY	$	4,425,000
Lakeside	Duval	Jacksonville, FL	$	21,100,000
Marsh Oaks	Duval	Atlantic Beach, FL	$	5,500,000
Napa Valley	Pulaski	Little Rock, AR	$	10,500,000
Park Haywood	Greenville	Greenville, SC	$	5,600,000
Park Place	Spartanburg	Spartanburg, SC	$	6,470,000

Property Name	County	Property Location	Initial Valuation
Pear Orchard	Madison	Jackson, MS	$	15,700,000
Savannah Creek	DeSoto	Southaven, MS (Memphis suburb)	$	9,550,000
Shenandoah Petersburg	Columbia	Augusta, GA	$	9,567,000
Somerset	Hinds	Jackson, MS	$	3,160,000
Southland Station I	Houston	Warner Robins, GA	$	7,300,000
Steeplechase	Hamilton	Chattanooga, TN	$	4,000,000
Sutton Place	DeSoto	Southaven, MS (Memphis suburb)	$	10,800,000
Tiffany Oaks	Seminole	Altamonte Springs, FL	$	14,750,000
Village	Fayette	Lexington, KY	$	10,340,000
Westside Creek I	Pulaski	Little Rock, AR	$	7,010,000
Willow Creek	Muscogee	Columbus, GA	$	10,150,000
Links at Carrollwood	Hillsborough	Tampa, FL	$	13,050,000
Grand View	Nashville	Nashville, TN	$	26,805,000
Three Oaks II	Lowndes	Valdosta, GA	$	4,737,000
Wildwood II	Thomas	Thomasville, GA	$	3,950,000
Lighthouse Court	Clay	Orange Park, FL	$	40,092,000
Colony at South Park	Aiken	Aiken, SC	$	8,100,000
Woodstream	Guilford	Greensboro, NC	$	11,300,000
Walden Creek	Henry	McDonough, GA	$	12,783,000
Eastview	Shelby	Memphis, TN	$	8,262,000
Cedar Mill	Shelby	Memphis, TN	$	9,130,000
Hamilton Pointe	Hamilton	Chattanooga, TN	$	13,100,000
Hidden Creek	Hamilton	Chattanooga, TN	$	11,100,000
Lakeshore Landing	Madison	Jackson, MS	$	8,925,000
River Trace II	Shelby	Memphis, TN	$	6,675,000
Vistas	Bibb	Macon, GA	$	8,000,000
Hidden Lake I	Fulton	Union City, GA	$	7,700,000
Park Walk	Clayton	College Park, GA	$	5,500,000
Woodridge	Hinds	Jackson, MS	$	8,500,000
Lincoln on the Green	Shelby	Memphis, TN	$	34,400,000
Paddock Club Lakeland I and II	Polk	Lakeland, FL	$	30,000,000
Paddock Club Jacksonville I, II, and III	Duval	Jacksonville, FL	$	34,400,000

EXHIBIT AA TO
SECOND AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

	Property Name	Manager
1.	Abbington Place	Mid-America Apartment Communities, Inc.
2.	Paddock Club Montgomery	Mid-America Apartment Communities, Inc.
3.	Terraces at Towne Lake II	Mid-America Apartment Communities, Inc.
4.	Terraces at Fieldstone	Mid-America Apartment Communities, Inc.
5.	Paddock Club Columbia I and II	Mid-America Apartment Communities, Inc.
6.	The Mansion	Mid-America Apartment Communities, Inc.
7.	Brentwood Downs	Mid-America Apartment Communities, Inc.
8.	Calais Forest	Mid-America Apartment Communities, Inc.
9.	Southland Station II	Mid-America Apartment Communities, Inc.
10.	Fairways at Hartland	Mid-America Apartment Communities, Inc.
11.	Paddock Club Murfreesboro	Mid-America Apartment Communities, Inc.
12.	Whisperwood	Mid-America Apartment Communities, Inc.
13.	River Trace I	Mid-America Apartment Communities, Inc.
14.	Wildwood I	Mid-America Apartment Communities, Inc.
15.	Three Oaks I	Mid-America Apartment Communities, Inc.
16.	Westbury Springs	Mid-America Apartment Communities, Inc.
17.	Hickory Farms	Mid-America Apartment Communities, Inc.
18.	Gleneagles	Mid-America Apartment Communities, Inc.
19.	The Oaks	Mid-America Apartment Communities, Inc.
20.	TPC Greenville	Mid-America Apartment Communities, Inc.
21.	TPC Huntsville	Mid-America Apartment Communities, Inc.
22.	Eagle Ridge	Mid-America Apartment Communities, Inc.
23.	River Hills	Mid-America Apartment Communities, Inc.
24.	Stonemill Village	Mid-America Apartment Communities, Inc.
25.	Woodwinds	Mid-America Apartment Communities, Inc.
26.	Tanglewood	Mid-America Apartment Communities, Inc.
27.	Wood Hollow	Mid-America Apartment Communities, Inc.
28.	Belmere	Mid-America Apartments, L.P.
29.	Bradford Chase (WV)	Mid-America Apartments, L.P.
30.	Crosswinds	Mid-America Apartments, L.P.
31.	Fairways at Royal Oak	Mid-America Apartments, L.P.
32.	Grand Reserve	Mid-America Apartments, L.P.
33.	Hermitage at Beechtree	Mid-America Apartments, L.P.
34.	Hidden Lake II	Mid-America Apartments, L.P.
35.	High Ridge	Mid-America Apartments, L.P.
36.	Howell Commons	Mid-America Apartments, L.P.
37.	Kirby Station	Mid-America Apartments, L.P.

38.	Lakepointe	Mid-America Apartments, L.P.
39.	Lakeside	Mid-America Apartments, L.P.
40.	Marsh Oaks	Mid-America Apartments, L.P.
41.	Napa Valley	Mid-America Apartments, L.P.
42.	Park Haywood	Mid-America Apartments, L.P.
43.	Park Place	Mid-America Apartments, L.P.
44.	Pear Orchard	Mid-America Apartments, L.P.
45.	Savannah Creek	Mid-America Apartments, L.P.
46.	Shenandoah Petersburg	Mid-America Apartments, L.P.
47.	Somerset	Mid-America Apartments, L.P.
48.	Southland Station I	Mid-America Apartments, L.P.
49.	Steeplechase	Mid-America Apartments, L.P.
50.	Sutton Place	Mid-America Apartments, L.P.
51.	Terraces at Towne Lake I	Mid-America Apartments, L.P.
52.	Tiffany Oaks	Mid-America Apartments, L.P.
53.	Village	Mid-America Apartments, L.P.
54.	Westside Creek I	Mid-America Apartments, L.P.
55.	Willow Creek	Mid-America Apartments, L.P.
56.	Links at Carrollwood	Mid-America Apartments, L.P.
57.	Grand View	Mid-America Apartments, L.P.
58.	Three Oaks II	Mid-America Apartments, L.P.
59.	Wildwood II	Mid-America Apartments, L.P.
60.	Lighthouse Court	Mid-America Apartments, L.P.
61.	Colony at South Park	Mid-America Apartments, L.P.
62.	Woodstream	Mid-America Apartments, L.P.
63.	Walden Creek	Mid-America Apartments, L.P.
64.	Eastview	Mid-America Apartments, L.P.
65.	Cedar Mill	Mid-America Apartments, L.P.
66.	Hamilton Pointe	Mid-America Apartments, L.P.
67.	Hidden Creek	Mid-America Apartments, L.P.
68.	Lakeshore Landing	Mid-America Apartments, L.P.
69.	River Trace II	Mid-America Apartments, L.P.
70.	Vistas	Mid-America Apartments, L.P.
71.	Hidden Lake I	Mid-America Apartments, L.P.
72.	Park Walk	Mid-America Apartments, L.P.
73.	Woodridge	Mid-America Apartments, L.P.
74.	Lincoln on the Green	Mid-America Apartments, L.P.
75.	Paddock Club Lakeland I and II	Mid-America Apartments, L.P.
76.	Paddock Club Jacksonville I, II and III	Mid-America Apartments, L.P.

EX-10.21

SECOND AMENDMENT TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
(MAA I)

          THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 3^rd day of August, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas”; MAA of Texas and Borrower being collectively referred to as the “Borrower Parties”); (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”); and (iii) FANNIE MAE.

RECITALS

          A.     Borrower Parties and Lender are parties to that certain Amended and Restated Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Third Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, as amended by that certain First Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004 (as amended from time to time, the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreement and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Borrower Parties have entered into that certain ISDA Master Agreement dated as of August 3, 2004 by and between Borrower Parties and Deutsche Bank AG, New York (the “Counterparty”), and countersigned by Fannie Mae (together with all schedules thereto, the “Swap Documents”), pursuant to which the Counterparty agreed to provide interest rate protection for the Borrower Parties.

          D.     Fannie Mae has agreed to credit enhance certain obligations under the Swap Documents.

          E.     As a condition to the credit enhancement, Fannie Mae has required that the Borrower Parties enter into this Amendment in order to provide that the Collateral under the Master Agreement also secure any liability Fannie Mae may incur as a result of such credit enhancement of the Swap Documents.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Obligations Secured.  The Collateral under the Master Agreement shall also secure any and all liability Fannie Mae may incur in connection with Fannie Mae’s agreement to provide credit enhancement of the Swap Documents, including but not limited to:

          (a)     any and all amounts provided by Fannie Mae under the credit enhancement;   

          (b)     any and all amounts to be paid by the Borrower Parties to replenish fully any reserve funds required under the Swap Documents; 

          (c)     any and all reasonable fees, costs, charges and expenses (including the fees and expenses of attorneys, accountants and other experts) which Fannie Mae may pay or incur in connection with any payment under any of the Swap Documents, including payments of any fees and charges in connection with any accounts established to facilitate payments under any Swap Document, or the performance of Fannie Mae’s obligations under any Swap Document;

          (d)     the amount of any fees, costs, or charges or expenses (including the fees and expenses of attorneys, accountants and other experts) incurred by Fannie Mae in connection with the administration or enforcement of or preservation of rights or remedies under this Agreement or any of the Loan Documents or in connection with the foreclosure upon, sale of or other disposition of any security granted pursuant to the Loan Documents;

          (e)     any payments or advances made by Fannie Mae on behalf of any Borrower pursuant to any of the Loan Documents;

          (f)     all costs and expenses incurred in connection with or related to the execution and delivery of each Swap Document, any tax or governmental charge imposed in connection with the execution and delivery of each Swap Document and the reasonable fees and disbursements of Fannie Mae’s counsel and accountants, including fees and expenses relating to any (a) amendments, consents or waivers to this Amendment or any of the Loan Documents (whether or not any such amendments, consents or waivers are entered into), (b) requests to evaluate any substitute or additional Collateral or the release of Collateral, (c) collection, disbursement or application of insurance or condemnation awards, proceeds, damages or other payments including, without limitation, all costs incurred in connection with the application of insurance or condemnation awards to restore or repair any Mortgaged Property, including reasonable appraiser fees;

          (g)     any transfer taxes, documentary taxes, assessments or charges made by any governmental authority, by reason of the execution, delivery, filing, recordation, performances or enforcement of any of the Loan Documents; provided the Borrower Parties will not be obligated to pay any franchise, excise, estate, inheritance, income, excess profits or similar tax on Fannie Mae; and

          Section 2.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 3.     Reaffirmation.  The Borrower Parties hereby reaffirm their obligations under the Master Agreement.

          Section 4.     Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 5.     Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER PARTIES:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
		Al Campbell
		Senior Vice President and Treasurer
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:		Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
			Al Campbell
			Senior Vice President and Treasurer

[SIGNATURES CONTINUE ON FOLLOWING  PAGE]

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
	By:
	Name: John A. Good
	Title: Assistant Secretary

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

LENDER:
PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation
	By:
	Name: Sharon D. Singleton
	Title:Vice President

FANNIE MAE:

FANNIE MAE, a federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716, et seq.

By:

Name:

Title:

EX-10.22

THIRD AMENDMENT TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
(MAA I)

          THIS THIRD AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (the “Amendment”) is effective as of the 1^st day of December, 2004, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”) (the REIT and OP being collectively referred to as “Borrower”), and (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of Texas”; MAA of Texas and Borrower being collectively referred to as the “Borrower Parties”); and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation (“Lender”).

RECITALS

          A.     Borrower Parties and Lender are parties to that certain Amended and Restated Master Credit Facility Agreement dated as of the 22nd day of August, 2002, by and between Borrower and Lender, which was amended and restated pursuant to that certain Second Amended and Restated Master Credit Facility Agreement dated as of December 10, 2003, which has been further amended and restated pursuant to that certain Third Amended and Restated Master Credit Facility Agreement dated as of March 30, 2004, which has been further amended pursuant to that certain First Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of March 31, 2004, which has been further amended pursuant to that certain Second Amendment to Third Amended and Restated Master Credit Facility Agreement dated as of August 3, 2004  (as amended from time to time, the “Master Agreement”).

          B.     All of the Lender’s right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of August 22, 2002 and that certain Assignment of Collateral Agreements and Other Loan Documents, dated as of December 10, 2003 and that certain Assignment of Collateral Agreement and Other Loan Documents dated as of March 31, 2004 (collectively, the “Assignment”).  Fannie Mae has not assumed any of the obligations of the Lender under the Master Agreement or the Loan Documents as a result of the Assignment.  Fannie Mae has designated the Lender as the servicer of the Loans contemplated by the Master Agreement. Lender is entering into this Amendment in its capacity as servicer of the loan set forth in the Master Agreement.

          C.     Pursuant to the Master Agreement, Borrower has arranged for various Hedges to be in place and has entered into various ISDA Master Agreements by and among Borrower Parties and the swap providers signatory thereto (collectively, the “Counterparty”) (together with all schedules thereto, the “Hedge Documents”), pursuant to which the Counterparty agreed to provide interest rate protection for the Borrower Parties.

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          D.     Fannie Mae has agreed to credit enhance certain obligations with respect to any Credit Enhanced Hedge (as defined below) in consideration for Borrower’s payment of the Credit Enhancement Fee (as defined below).

          E.     Borrower and Lender are executing this Amendment pursuant to the Master Agreement to provide (i)  for Borrower’s payment of the Credit Enhancement Fee and (ii) that the Collateral under the Master Agreement also secure any liability Fannie Mae may incur as a result of its credit enhancement of the Credit Enhanced Hedge.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements contained in this Amendment and the Master Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

          Section 1.     Credit Enhancement.

          (a)     The following new definitions are hereby added to the Master Agreement:

“Credit Enhancement Fee” means the fee due from Borrower in consideration for Fannie Mae’s providing credit enhancement of the Credit Enhanced Hedges, as more particularly set forth on Schedule II (“Credit Enhancement Fee Schedule”) attached to this Agreement.
“Credit Enhanced Hedge” means any Hedge executed by Borrower and assigned to Lender which Fannie Mae has agreed to credit enhance.
(b)     A new Section 16.07(g) is hereby added to the Master Agreement as follows:
	(g)     With respect to each applicable Credit Enhanced Hedge, Borrower shall pay the Credit Enhancement Fee monthly, in arrears, on the first Business Day following each end of the month during the Term of this Agreement until such time that Fannie Mae no longer credit enhances such Hedge or until the Credit Enhancement Fee is no longer due and payable, except that the Credit Enhancement Fee for the last month during the Term of this Agreement shall be paid on the last day of the Term of this Agreement.
(c)     The Schedule II attached hereto is hereby added to the Master Agreement as if it were attached thereto in its entirety.

          Section 2.    Obligations Secured.  The Collateral under the Master Agreement shall also secure any and all liability Fannie Mae may incur in connection with Fannie Mae’s agreement to provide credit enhancement of the Credit Enhanced Hedge, including but not limited to:

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          (a)     any and all amounts provided by Fannie Mae under the credit enhancement;    

          (b)     any and all amounts to be paid by the Borrower Parties to replenish fully any reserve funds required under the Credit Enhanced Hedge; 

          (c)     any and all reasonable fees, costs, charges and expenses (including the fees and expenses of attorneys, accountants and other experts) which Fannie Mae may pay or incur in connection with any payment under any of the Credit Enhanced Hedge, including payments of any fees and charges in connection with any accounts established to facilitate payments under any Hedge Document, or the performance of Fannie Mae’s obligations under any Hedge Document;

          (d)     the amount of any fees, costs, or charges or expenses (including the fees and expenses of attorneys, accountants and other experts) incurred by Fannie Mae in connection with the administration or enforcement of or preservation of rights or remedies under this Agreement or any of the Loan Documents or in connection with the foreclosure upon, sale of or other disposition of any security granted pursuant to the Loan Documents;

          (e)     any payments or advances made by Fannie Mae on behalf of any Borrower pursuant to any of the Loan Documents;

          (f)     all costs and expenses incurred in connection with or related to the execution and delivery of each Hedge Document, any tax or governmental charge imposed in connection with the execution and delivery of each Hedge Document and the reasonable fees and disbursements of Fannie Mae’s counsel and accountants, including fees and expenses relating to any (a) amendments, consents or waivers to this Amendment or any of the Loan Documents (whether or not any such amendments, consents or waivers are entered into), (b) requests to evaluate any substitute or additional Collateral or the release of Collateral, (c) collection, disbursement or application of insurance or condemnation awards, proceeds, damages or other payments including, without limitation, all costs incurred in connection with the application of insurance or condemnation awards to restore or repair any Mortgaged Property, including reasonable appraiser fees; and

          (g)     any transfer taxes, documentary taxes, assessments or charges made by any governmental authority, by reason of the execution, delivery, filing, recordation, performances or enforcement of any of the Loan Documents; provided the Borrower Parties will not be obligated to pay any franchise, excise, estate, inheritance, income, excess profits or similar tax on Fannie Mae.

          Section 3.     Capitalized Terms.  All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.

          Section 4.     Reaffirmation.  The Borrower Parties hereby reaffirm their obligations under the Agreement.

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          Section 5.      Full Force and Effect.  Except as expressly modified by this Amendment, all terms and conditions of the Master Agreement shall continue in full force and effect.

          Section 6.     Counterparts.  This Amendment may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

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          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
By:
	Al Campbell
	Senior Vice President and Treasurer
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
	By:
		Al Campbell
		Senior Vice President and Treasurer
	[Signatures follow on next page]

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MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
	By:
	Name:
	Title:

-6-

LENDER:
PRUDENTIAL MULTIFAMILY MORTGAGE INC., a Delaware corporation
By:
Name:	Sharon D. Singleton
Title:	Vice President

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SCHEDULE II

Credit Enhancement Fee Schedule

Counter Party	Swap Effective Date	Maturity	Principal	Credit Enhancement Fee
SunTrust	K 6/1/2003	6/1/2010	50,000,000	18 basis points
DeutscheBank	U 9/1/2004	9/1/2011	50,000,000	17 basis points
Deutsche Bank	U 12/1/2004	12/1/2011	25,000,000	17 basis points

EX-10.28

CONSENT, MODIFICATION, ASSUMPTION OF INDEMNITY OBLIGATIONS AND
RELEASE AGREEMENT

          THIS CONSENT, ASSUMPTION OF INDEMNITY OBLIGATIONS AND RELEASE AGREEMENT is entered into as of the ___ of ____________, 2004 (“Agreement”), by and among JEFFERSON AT SUNSET VALLEY, L.P.,a Texas limited partnership (“Borrower”), JPI PORTFOLIO I GP1 LLC, a Texas limited liability company (“Existing GP”), JPI PORTFOLIO I, L.P., a Texas limited partnership(“Existing LP” and collectively with the Existing GP, the “Existing Partners”),  JPI INVESTMENT COMPANY, L.P.,a Texas limited partnership (the “Existing Indemnitor”), LASALLE BANK NATIONAL ASSOCIATION (f/k/a LaSalle National Bank), as Trustee (“Trustee”) under that certain Pooling and Servicing Agreement dated March 1, 1999 (“PSA”) for Certificateholders of COMM 1999-1 Commercial Mortgage Pass-Through Certificates (the “Lender”), ORIX CAPITAL MARKETS, LLC (f/k/a Banc One Mortgage Capital Markets, L.P.), as Servicer pursuant to the PSA (“Servicer”), MAC OF DELAWARE, INC., a Delaware corporation (“New GP”), MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“New LP” and collectively with the New GP, the “New Partners”) and MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership, MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership, and MID-AMERICA APARTMENT COMMUNITIES, INC.,a Tennessee corporation (each a “New Indemnitor” and collectively the “New Indemnitors”).

RECITALS

          The Borrower is indebted to the Lender (as hereinafter defined) for a loan in the original principal amount of $11,380,000.00 (the “Loan”), which is evidenced by a Promissory Note dated as of September 28, 1998, in said principal amount (the “Note”) payable by the Borrower to the order of German American Capital Corporation, a Maryland corporation (“Original Lender”), which Note is currently held by the Trustee for the benefit of Lender.  The Loan is secured by, among other things, that certain Deed of Trust and Security Agreement dated as of September 28, 1998 (“Security Instrument”), from the Borrower to Original Lender as assigned by that certain Assignment of Deed of Trust and Security Agreement dated as of July 22, 1999, from Borrower to Trustee for the benefit of Lender, encumbering certain improved real estate described in the Security Instrument and located in Travis County, Texas (“Mortgaged Property”).

          The Existing Partners and the New Partners have agreed that the Existing Partners shall transfer and assign 100% of their partnership interests in the Borrower to the New Partners.  Pursuant to Section 6.3 of the Security Instrument, the Borrower, the Existing Partners, the New Partners, the Existing Indemnitor and the New Indemnitors have requested that the Lender (i) consent to the Existing Partners’ transfer and assignment of 100% of their partnership interests in the Borrower to the New Partners (“Interest Transfer”); (ii) release and discharge the Existing Partners and the Existing Indemnitor from their obligations arising after the date of this Agreement pursuant to the Note, the Security Instrument and all other documents evidencing, securing, or otherwise relating to the Loan (collectively, the “Loan Documents”); and (iii) agree to the execution by the New Indemnitors of the that certain Guaranty (as defined hereinafter) and that certain Environmental Indemnity Agreement (as defined hereinafter) (“Assumption”).  The Lender is willing to grant the foregoing request, but only upon the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the Lender to consent to the transactions and events described in the foregoing recitals, the parties hereto agree as follows:

          1.     Consent and Release by the Lender.  In reliance upon and subject to the representations, warranties, conditions, and covenants set forth herein, the Lender hereby consents to the following:

          (a)     The absolute transfer and assignment by the Existing Partners of 100% of the partnership interests in the Borrower to the New Partners;

          (b)     The execution and delivery of that certain Assignment of Partnership Interests and amendment to the partnership agreement of the Borrower, dated as of _____________ (collectively, the “Amended Partnership Documents”);

          (d)     The release and discharge of the Existing Partners and the Existing Indemnitor from their obligations arising after the date hereof pursuant to the Note, the Security Instrument and all other Loan Documents, subject to the terms and conditions of this Agreement; and

          (e)     The execution by the New Indemnitors of the Guaranty and the Environmental Indemnity Agreement.

          Nothing herein shall be construed or interpreted as the Lender’s consent to any subsequent changes, sale, transfer, or encumbrance of any ownership interest in the Borrower or the Mortgaged Property, and any such subsequent change, sale, transfer, or encumbrance shall be governed by the provisions of Section 6.3 of the Security Instrument, as amended.

          The foregoing is not a waiver of any other requirement of the Loan and related Loan Documents and applies only to the specific consent granted herein.  The granting of such consent and the execution of this Agreement in no way obligates the Lender, the Servicer or any subsequent holder of the Note, to grant any future consents or waivers nor does it establish in any way a pattern or practice of dealing that the Borrower, the Existing Partners, the Existing Indemnitor, the New Partners and the New Indemnitors may rely upon in seeking any other consent or waiver.

          2.     Assumption by the New Partners and the New Indemnitors.  The New  Partners hereby adopt, ratify and confirm as of the origination date of the Loan all of the representations, warranties and covenants of the Existing Partners under the Loan Documents (excluding the Original Guaranty [defined hereinafter] and the Original Environmental Indmenity Agreement [defined hereinafter]) as if the New Partners were the Existing Partners named therein and jointly and severally assume all liability of the Existing Partners under the Loan Documents. 

2

          New Indemnitors have executed and delivered to the Lender that certain Limited Indemnity Agreement dated of even date herewith (the “Guaranty”) and that certain Environmental Indemnity Agreement dated of even date herewith (the “Environmental Indemnity Agreement”).

          The New Partners hereby assume and agree to be bound by, and to pay and perform, all covenants, representations, warranties, and other obligations of the Existing Partners relating to or arising from the Loan and the Loan Documents (excluding the Original Guaranty and the Original Environmental Indemnity Agreement) to which they are a party.

          3.     Release of the Existing Partners and the Existing Indemnitor.  In reliance upon the representations, warranties, covenants, and agreements set forth herein, and subject to the conditions precedent set forth in Section 4 below, the Lender hereby releases and discharges the Existing Partners and the Existing Indemnitor from any and all liabilities and obligations arising from or relating to the Loan and the Loan Documents, provided that the Existing Partners or the Existing Indemnitor are not released from any liability pursuant to (i) this Agreement (except that they shall have no liability with respect to any representation or warranty by New Partners or New Indemnitors) or (ii) the provisions of the Limited Indemnity Agreement dated September 29, 1998 made by the Existing Indemnitor for the benefit of the Original Lender (the “Original Guaranty”), the Environmental Indemnity Agreement dated September 29, 1998 made by the Existing Indemnitor for the benefit of Original Lender (the “Original Environmental Indemnity Agreement”), Section 4.1 of the Security Instrument or Section 6(b)(i)-(ix) of the Note, in each case, for any liability that relates to the period prior to the date hereof regardless of when any other condition giving rise to any such liability thereunder is discovered.  If any material element of the representations and warranties contained herein made by the Existing Partners or the Existing Indemnitor is false as of the date of this Agreement or in the event the Existing Partners or the Existing Indemnitor take or cause any other party hereto (other than the Lender) to take any actions which are in contradiction with the provisions of Paragraph 9 of this Agreement, then the release set forth in this Paragraph 3 shall be deemed canceled effective as of the date of this Agreement and the Existing Partner or the Existing Indemnitor shall remain obligated under the Loan Documents as though there had been no such release.

          4.     Conditions Precedent.  Notwithstanding anything to the contrary in this Agreement, the Lender’s consent to the transfer of the partnership interests and the other transactions described herein are subject to the following conditions precedent:

          (a)     The due execution and delivery of this Agreement;

          (b)     The due execution and delivery by the New Partners and the New Indemnitors of the Guaranty and the Environmental Indemnity Agreement, each in substantially the same form as executed by the Existing Partners or the Existing Indemnitor in connection with the Loan;

3

          (c)     Upon the closing of the Interest Transfer to the New Partners, the Borrower is in compliance with the provisions of Section 10.4 of the Security Instrument, as amended hereby, and Section 5.01 of the Credit Agreement dated as of September 28, 1998 between the Borrowers and the Original Lender (the “Credit Agreement”);

          (d)     The Lender shall have received such legal opinions as may be reasonably requested by the Lender in connection with the Interest Transfer, including an enforceability, authorization and organization legal opinion and a non-consolidation legal opinion;

          (e)     The Existing Partners or the Existing Indemnitor pay the Lender, concurrently with the closing of the transfer of the Membership Interest, all out-of-pocket costs and expenses, including, without limitation, the transaction fee equal to 1.0% of the outstanding principal balance of the Loan, which is required to be paid by the Existing Partners or the Existing Indemnitor in consideration of the consent to the Interest Transfer and to the Assumption, reasonable attorneys’ fees incurred by the Lender in connection with the Interest Transfer and the consummation of the other transactions described herein (this paragraph does not affect any separate agreement concerning such fees and expenses between Existing Partners and New Partners);

          (f)     The Borrower shall have provided evidence satisfactory to the Lender that the Borrower has fully satisfied the existing mezzanine loan in the amount of $10,000,000.00 (the “Mezzanine Loan”), which Mezzanine Loan is secured by the beneficial interests in the Existing Partners; and

          (g)     The Borrower and Mid-America Apartments, L.P., a Tennessee limited partnership (the “Property Manager”) shall have executed and delivered that certain Assignment of Management Agreement, Consent and Agreement of Manager dated of even date herewith.

          5.     Representations and Warranties of the Existing GP and the Existing Indemnitor.  As an inducement for the Lender to grant the consent herein provided, the Existing GP and the Existing Indemnitor represent and warrant to the Lender as follows:

          (a)     As of the date hereof, no Event of Default (as such term is defined in the Security Instrument), or to its knowledge, any event which with the giving of notice or lapse of time, or both, would constitute an Event of Default, exists under the Loan Documents;

          (b)     There are no setoffs, defenses, or counterclaims on the part of the Borrower to the payment or performance of the obligations under the Loan Documents.

4

          (c)     They do not have any knowledge that any of the representations, warranties and certifications made by the Borrower in paragraph 7 below are not true and correct. 

          The Existing GP or the Existing Indemnitor understand and intend that the Lender will rely on the representations and warranties contained in this paragraph 5.

          6.     Representations and Warranties of the Borrower, New GP or the New Indemnitors.  As an inducement for the Lender to grant the consent herein provided, the New GP and the New Indemnitors represent and warrant to the Lender as follows:

          (a)     Upon the closing of the Interest Transfer, the representations and warranties contained in the Loan Documents shall be true and correct;

          (b)     The New GP is a corporation duly formed, validly existing, and in good standing under the laws of the State of Delaware and is qualified to do business in the state of Texas, and the New LP is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Tennessee; and

          (c)     All financial statements of the New Partners and the New Indemnitors heretofore given and hereafter to be given to the Lender are and will be true and complete in all respects as of their respective dates and prepared in accordance with generally accepted accounting principles consistently applied, and fairly represent the financial conditions of the business or persons to which they pertain, and no materially adverse change has occurred in the financial conditions reflected therein since the respective dates thereof.

          (d)     The financial statements of the New Indemnitors furnished to the Lender pursuant to the request for consent to the Interest Transfer reflect in each case a positive net worth as of the date thereof.  The financial condition of the New Indemnitors has not significantly deteriorated from that reflected in the most recently provided financial statements. 

          (e)     The financial statements of the Borrower (and those of its principals) furnished to the Lender pursuant to the request for consent to the Interest Transfer and the Assumption, reflect in each case a positive net worth as of the date thereof.

          (f)     After the Interest Transfer and the Assumption, New GP will cause  Borrower to have sufficient working capital, including cash flow from the Mortgaged Property, not only to adequately maintain the Mortgaged Property, but also to pay all of the Borrower’s outstanding debts as they come due.  All closing funds are contributed as a capital contribution and are not secured, directly or indirectly, by an interest in the Borrower or any other collateral assigned to the Lender.

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          They do not have any knowledge that any of the representations, warranties and certifications made by the Borrower in paragraph 7 below are not true and correct. 

          The New GP and the New Indemnitors agree that the foregoing representations and warranties shall be binding upon the New GP and the New Indemnitors and that the falsity or inaccuracy of any of the foregoing representations and warranties in any material respect shall constitute an “Event of Default” pursuant to the Security Instrument and the other Loan Documents that arises after the date of this Agreement.

          7.     Representations of the Borrower.  The Borrower acknowledges, represents, certifies and warrants to the Lender as of the date of this Agreement that:

          (a)  As of October 29, 2004, the Note has an unpaid principal balance as of the date of this Agreement, of $10,668,026.28 and prior to default bears interest at the rate of 6.9825% per annum, subject to adjustment as set forth in the Security Instrument. There is presently a balance of $375,755.04 in the tax escrow account, a balance of $0.00 in the insurance escrow account, a balance of $20,658.03 in the replacement reserves escrow account, and a balance of $37,526.32 in the reserves escrow account, maintained by the Lender in connection with the Loan. 

          (b)  The Note requires that monthly payments of principal and interest in the amount of $77,133.43 be made on or before the first day of each month, continuing to September 28, 2008, the Maturity Date (as such term is defined in the Note), at which time the balance of said principal sum and all accrued but unpaid interest shall be due and payable, pursuant to the terms and conditions of the Security Instrument.

          (c)  The Security Instrument is a valid first lien on the Mortgaged Property for the full unpaid principal amount of the Loan and all other amounts as stated in the Loan Documents.

          (d)  There are no defenses, offsets or counterclaims to the Note, the Security Instrument or the other Loan Documents.

          (e)  There are no defaults by the Borrower under the provisions of the Note, the Security Instrument or the other Loan Documents, nor are there any conditions which with the giving of notice or the passage of time or both may constitute a default by the Borrower under the provisions of the Note, the Security Instrument or the other Loan Documents.

          (f)  All provisions of the Note, the Security Instrument and the other Loan Documents are valid, in full force and effect and enforceable in accordance with their terms.

          (g)  Except Permitted Encumbrances and other matters permitted by the Security Instrument, there are no subordinate liens of any kind covering or relating to the Mortgaged Property, nor are there any recorded mechanics liens or liens for unpaid taxes or assessments encumbering the Mortgaged Property, nor has notice of a lien or notice of intent to file a lien been received that has not been resolved.  There are not presently pending any special assessments against the Mortgaged Property or any part thereof.

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          (h)  Except as set forth in the Disclosure Schedule (as defined in the Security Instrument) attached to the Security Instrument, the Mortgaged Property and the Improvements (as defined in the Security Instrument) and the current intended use thereof by Borrower comply in all material respects with all applicable restrictive covenants, zoning ordinances, subdivision and building codes, flood disaster laws, health and environmental laws and regulations and all other ordinances, orders or requirements issued by any state, federal or municipal authorities having or claiming jurisdiction over the Mortgaged Property.  The Mortgaged Property and Improvements do not require any rights over, or restrictions against, other property in order to comply with any of the aforesaid governmental ordinances, orders or requirements other than those easements in place and insured by the title insurance policy delivered to Original Lender on the origination date of the Loan.  Borrower possess all franchises, patents, copyrights, trademarks, trade names, licenses and permits (the “Licenses”) necessary for the conduct of its business substantially as now conducted, all fees due and payable in connection with such Licenses have been paid and Borrower’s operation of the Mortgaged Property complies with such Licenses.

          (i)  As of the date of this Agreement, the Mortgaged Property is free from unrepaired damage caused by fire, flood, accident or other casualty; all insurance required by the terms of the Security Instrument is in full force and effect and none of the premiums payable therefore have been, nor at any time in the future will be financed.

          (j)  The Borrower has furnished to the Lender all insurance policies and certificates required pursuant to the Loan Documents.

          (k)  No bankruptcy, reorganization or insolvency proceedings are pending or contemplated either by Borrower or, to the best knowledge of Borrower, against Borrower (or, if Borrower is a partnership or a limited liability company, any of its general partners or members) or by or against any endorser or cosigner of the Note or any portion of the Obligations (as defined in the Security Instrument), or any guarantor or indemnitor under any guaranty or indemnity agreement executed in connection with the Note or the loan evidenced thereby and secured by the Security Instrument.

          (l)  As of the date of this Agreement, no part of the Mortgaged Property or the Improvements has been taken in a condemnation, eminent domain or like proceeding nor is any such proceeding pending or, to Borrower’s knowledge and belief, threatened or contemplated.

          (m)  No person, party, firm or corporation has any possessory interest in the Mortgaged Property or right to occupy the same except under and pursuant to the provisions of any existing leases by and between tenants and the Borrower.  To the knowledge or Borrower, true and complete copies of all such leases have been previously disclosed to the Original Lender and/or the Lender.

7

          (n)     The Borrower does not own any real property or assets other than the Mortgaged Property and does not operate any business other than the management and operation of the Mortgaged Property.

          (o)     The Borrower has filed all federal, state, county and municipal tax returns required to have been filed by the Borrower.

          (p)     Except as set forth in the Disclosure Schedule attached to the Security Instrument, there are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrower’s knowledge, threatened against or affecting Borrower (or, if Borrower is a partnership or a limited liability company, any of its general partners or members) or the Mortgaged Property which, if adversely determined, would materially impair either the Mortgaged Property or Borrower’s ability to perform the covenants or obligations required to be performed under the Loan Documents.

          (q)     Schedule 1 attached hereto accurately describes all of the agreements memorializing any rights or obligations of Lender or the Borrower with respect to the Loan, and none of such agreements have been modified or terminated except as set forth in the documents described in Schedule 1.

The Borrower understands and intends that the Lender will rely upon the acknowledgments, representations, certifications and warranties contained herein.

          8.          Lender Acknowledgment. Lender represents and warrants to New Partners and Existing Partners as of the date of this Agreement, that Lender has no actual direct knowledge that any of the acknowledgments, representations and warranties made by Borrower in paragraphs 7(a) and 7(b) above are not true and correct. However, Lender is not waiving and does not hereby waive any existing defaults if any in fact exist and nothing herein is intended to be nor shall it be construed to be a waiver of any existing defaults, material or immaterial, which may in fact exist. New Partners acknowledge and agree that the a breach of the acknowledgements, representations and warranties made by Borrower shall not in any way constitute a defense or give rise to any defense or right of offset, abatement, diminution or rescission as between Lender and New Partners. As used in this paragraph, “actual knowledge” means the actual state of mind of the person or persons directly responsible for the processing of the Borrower’s request for consent to the Interest Transfer and does not include any implied, constructive or imputed knowledge.

8

          9.          COMPLETE RELEASE.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS HEREBY JOINTLY AND SEVERALLY, UNCONDITIONALLY AND IRREVOCABLY RELEASE AND FOREVER DISCHARGE ORIGINAL LENDER, THE LENDER AND THE SERVICER, AND THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES, AND ATTORNEYS, AND EACH CURRENT OR SUBSTITUTE TRUSTEE, IF ANY, UNDER THE SECURITY INSTRUMENT (COLLECTIVELY, THE “INDEMNITEES”) FROM ALL CLAIMS, AS DEFINED BELOW.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER AND THE EXISTING INDEMNITORS JOINTLY AND SEVERALLY AGREE TO INDEMNIFY INDEMNITEES, AND DEFEND AND HOLD THEM HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES OF EVERY KIND OR CHARACTER INCURRED BY OR ASSERTED AGAINST INDEMNITEES IN CONNECTION WITH THE CLAIMS, THE  INTEREST TRANSFER AND ASSUMPTION OR THE BREACH BY THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER OR THE EXISTING INDEMNITORS OF THE LOAN DOCUMENTS, AS AMENDED HEREIN, BUT ONLY TO THE EXTENT THAT SUCH CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES ARISE OUT OF OR ARE IN ANY WAY CONNECTED WITH OR RESULT FROM THE ACTS, ACTIONS OR OMISSIONS OF THE BORROWER (ARISING PRIOR TO THE DATE HEREOF), THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER OR THE EXISTING INDEMNITORS AND TO THE EXTENT THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER AND EXISTING INDEMNITORS ARE LIABLE UNDER THE LOAN DOCUMENTS, AS AMENDED BY THIS AGREEMENT.  THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS JOINTLY AND SEVERALLY AGREE TO INDEMNIFY INDEMNITEES, AND DEFEND AND HOLD THEM HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES OF EVERY KIND OR CHARACTER INCURRED BY OR ASSERTED AGAINST THE INDEMNITEES IN CONNECTION WITH THE CLAIMS, THE INTEREST TRANSFER AND THE ASSUMPTION OR THE BREACH BY THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER OR THE NEW INDEMNITORS OF THE LOAN DOCUMENTS, AS AMENDED HEREIN, BUT ONLY TO THE EXTENT THAT SUCH CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES ARISE OUT OF OR ARE IN ANY WAY CONNECTED WITH OR RESULT FROM THE ACTS, ACTIONS OR OMISSIONS OF THE BORROWER (ARISING ON OR AFTER THE DATE HEREOF), THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER OR THE NEW INDEMNITORS AND TO THE EXTENT THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND NEW INDEMNITORS ARE LIABLE UNDER THE LOAN DOCUMENTS.

9

AS USED IN THIS AGREEMENT, THE TERM “CLAIMS” SHALL MEAN ANY AND ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, FEES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART, ON OR BEFORE THE DATE OF THIS AGREEMENT, WHICH THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS, OR ANY OF THEIR RESPECTIVE PARTNERS, LIMITED PARTNERS, MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, AGENTS OR EMPLOYEES, MAY NOW OR HEREAFTER HAVE AGAINST THE INDEMNITEES, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAWS, OR REGULATIONS, OR OTHERWISE, ARISING OUT OF OR RELATING TO THE LOAN OR ANY OF THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE THERETO AND ANY LOSS, COST OR DAMAGE, OF ANY KIND OR CHARACTER, ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR IN ANY WAY RESULTING FROM THE ACTS, ACTIONS OR OMISSIONS OF INDEMNITEES, INCLUDING ANY REQUIREMENT THAT THE LOAN DOCUMENTS BE MODIFIED AS A CONDITION TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ANY CHARGING, COLLECTING OR CONTRACTING FOR PREPAYMENT PREMIUMS, TRANSFER FEES, OR ASSUMPTION FEES, ANY BREACH OF FIDUCIARY COMMITMENT, UNDUE INFLUENCE, DURESS, ECONOMIC COERCION, VIOLATION OF ANY FEDERAL OR STATE SECURITIES OR BLUE SKY LAWS OR REGULATIONS, CONFLICT OF INTEREST, BAD FAITH, MALPRACTICE, VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, INTENTIONAL OR NEGLIGENT INFLICTION OF MENTAL OR EMOTIONAL DISTRESS, TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS, TORTIOUS, INTERFERENCE WITH CORPORATE GOVERNANCE OR PROSPECTIVE BUSINESS ADVANTAGE, BREACH OF CONTRACT, DECEPTIVE TRADE PRACTICES, LIBEL, SLANDER, CONSPIRACY OR ANY CLAIM FOR WRONGFULLY ACCELERATING THE NOTE OR WRONGFULLY ATTEMPTING TO FORECLOSE ON ANY COLLATERAL RELATING TO THE NOTE BUT IN EACH CASE ONLY TO THE EXTENT PERMITTED BY APPLICABLE LAW.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS  AGREE THAT THE LENDER HAS NO FIDUCIARY OR SIMILAR OBLIGATIONS TO ANY OF SUCH PARTIES AND THAT THEIR RELATIONSHIP IS STRICTLY THAT OF CREDITOR AND DEBTOR.  THIS RELEASE IS ACCEPTED BY THE LENDER PURSUANT TO THIS AGREEMENT AND SHALL NOT BE CONSTRUED AS AN ADMISSION OF LIABILITY ON THE PART OF ANY PARTY HERETO.  EACH OF THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS HEREBY REPRESENTS AND WARRANTS THAT IT IS THE CURRENT LEGAL AND BENEFICIAL OWNER OF ITS RESPECTIVE CLAIMS, IF ANY, RELEASED BY IT HEREBY AND HAS NOT ASSIGNED, PLEDGED OR CONTRACTED TO ASSIGN OR PLEDGE ANY SUCH CLAIMS TO ANY OTHER PERSON.

10

          10.          No Novation. The execution and delivery of this Agreement and the other documents required herein will not be interpreted or construed as, and in fact does not constitute, a novation, payment, or satisfaction of all or any portion of the Loan or any other obligations pursuant to the Loan Documents.  The Loan will continue to be secured by the Security Instrument and the other Loan Documents, without change in nature, amount, or priority.

          11.          Counterparts.  This Agreement may be executed in multiple counterparts and using multiple signature pages, and shall be binding and enforceable at such time as each party has executed and delivered a counterpart of this Agreement.  The signature of any party to a counterpart of this Agreement shall bind such party to the same extent as if all parties executed a single original hereof.

          12.          Interpretation.  No provision of this Agreement shall be construed against or interpreted to the disadvantage of any party to this Agreement by any court or other governmental or judicial authority by reason of such party’s having or being deemed to have structured or dictated such provision.

          13.          Governing Law.  This Agreement shall be construed according to and governed by the laws of the jurisdiction(s) which are specified by the Security Instrument.  In the event the Security Instrument does not specifically state what jurisdictions laws govern, this Agreement shall be construed according to and governed by the laws in which the Mortgaged Property is located without regard to its conflicts of law principles.

          14.          Consent Not A Waiver of Any Other Rights.  This Agreement and the consent evidenced hereby do not waive any rights under applicable laws and regulations and under the Security Instrument with respect to any condition or provision other than the Interest Transfer and the Assumption.  This Agreement is not a waiver of any other requirement of the Loan and related documents and applies only to the specific consent and releases granted herein.  The granting of such consent and releases and the execution of this Agreement in no way obligates the Lender, the Servicer or any subsequent holder of the Note, to grant any future consents or waivers nor does it establish in any way a pattern or practice of dealing that the Borrower, the Existing General Partner, the Existing Limited Partner, the Existing Indemnitors, the New General Partner, the New Limited Partner and the New Indemnitors may rely upon in seeking any other consent or waiver.

          15.          Amendment of Security Instrument.  Section 6.3 of the Security Instrument is hereby amended by deleting all references to permitted transfers of interests among affiliates of the Borrower and by deleting Section 6.3(b)(iv).  All other provisions of the Security Instrument shall remain in full force and effect following the Interest Transfer.

[THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]

11

          IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written, with the intention that this Agreement take effect as an instrument under seal.

BORROWER:
JEFFERSON AT SUNSET VALLEY, L.P., a Texas limited partnership
	By:	JPI Portfolio I GP1 LLC, a Texas limited liability company, its general partner
	By:
	Name:
	Title:

STATE of ___________

COUNTY of ___________

BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

EXISTING GENERAL PARTNER:
JPI PORTFOLIO I GP1 LLC, a Texas limited liability company
	By:	Carmil Capital Corporation, a Texas corporation, its sole member
	By:
	Name:
	Title:

STATE of ___________

COUNTY of ___________

BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

EXISTING LIMITED PARTNER:
JPI PORTFOLIO I, L.P., a Texas limited partnership
	By:	JPI Portfolio I GP2 LLC, a Texas limited liability company, its general partner
	By:
	Name:
	Title:

STATE of ___________

COUNTY of ___________

BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	EXISTING INDEMNITOR:
	JPI INVESTMENT COMPANY, L.P., a Texas limited partnership
		By:		JPI Multifamily Investments, L.P., a Delaware limited partnership, its general partner
			By:		New GP LLC, a Delaware limited liability company, its general partner
			By:
			Name:
			Title:
STATE of
COUNTY of

BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW GP:
	MAC of Delaware, Inc., a Delaware corporation
	By:
	Name: John A. Good
	Title:  Assistant Secretary
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared John A. Good, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW LP:
	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
		By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
		By:
	Name:  Simon R.C. Wadsworth
	Title:  Chief Financial Officer and Executive          Vice President
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared Simon R.C. Wadsworth, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
		By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
		By:
	Name:  John A. Good
	Title:  Assistant Secretary
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared John A. Good, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
		By:		Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
		By:
	Name:  Simon R. C. Wadsworth
	Title:		Chief Financial Officer and Executive Vice President
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared Simon R.C. Wadsworth, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
	By:
	Name:  Simon R. C. Wadsworth
	Title:	Chief Financial Officer and Executive Vice President
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared Simon R.C. Wadsworth, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	LENDER:
	LaSalle Bank National Association (f/k/a LaSalle National Bank), as Trustee under that certain Pooling and Servicing Agreement (the “PSA”) for Certificateholders of COMM 1999-1 Commercial Mortgage Pass-Through Certificates
		By:	ORIX Capital Markets, LLC (f/k/a Banc One Mortgage Capital Markets, LLC),  as Servicer pursuant to the PSA
	By:
	Name:
	Title:
STATE of _______________
COUNTY of _______________

BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

SCHEDULE 1
LOAN DOCUMENT SCHEDULE

1.	Promissory Note dated September 28, 1998 made by the Original Borrower and payable to the Original Lender, in the stated principal amount of $11,380,000.00  (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Note”).
2.	Deed of Trust and Security Agreement dated September 28, 1998 made by the Original Borrower for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Security Instrument”) recorded in the Real Property Records of Travis County, Texas in Volume 13304 at Page 1813, as assigned by Original Lender to Lender pursuant to that certain Assignment of Deed of Trust and Security Agreement recorded in the Real Property Records of Travis County, Texas as Instrument Number 1999090733.
3.	Assignment of Leases and Rents dated September 28, 1998 made by the Original Borrower for the benefit of the Original Lender (together will all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Assignment of Leases and Rents”), recorded in the Real Property Records of Travis County, Texas in Book 13304 at Page 1886, as assigned by Original Lender to Lender pursuant to that certain Assignment of Assignment of Leases and Rents recorded in the Real Property Records of Travis County, Texas as Instrument Number 1999090732.
4.	Limited Indemnity Agreement dated September 28, 1998 made by the Existing Indemnitor for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Guaranty”).
5.	Environmental Indemnity Agreement dated September 28, 1998 made by Original Borrower and Existing Indemnitor for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Original Environmental Indemnity Agreement”).
6.	Subordination Agreement (Management Fees) dated as of September 28, 1998 by and among JPI Apartment Management, L.P., a Texas limited partnership, Borrower and Original Lender.
7.	Cash Management Agreement dated as of September 28, 1998 by and among Borrower, Original Lender and Midland Loan Services, Inc., as Agent.
8.	Credit Agreement dated as of September 28, 1998 in the amount of $58,800,000.00 between Borrower, Jefferson Village, L.P. and JPI Coral Springs, L.P., as the Borrowers, and the Original Lender.
9.	UCC-1 Financing Statement showing Borrower as the Debtor and Original Lender as Secured Party and recorded in the Real Property Records of Travis County, Texas in Book 13304, at Page 1899, as assigned to Lender by UCC-3 Assignment recorded in the Real Property Records of Travis County, Texas as Document No. 2001022763, as continued by that certain UCC-3 Continuation Statement recorded in the Real Property Records of Travis County, Texas as Document No. 2003246925.

10. UCC-1 Financing Statement showing Borrower as the Debtor and Original Lender as Secured Party and recorded on November 4, 1998 in the Texas Secretary of State as Document No. 98220946, as assigned to Lender by UCC-3 Assignment filed December 27, 2000 as Document No. 00-894418, as continued by that certain UCC-3 Continuation Statement filed in the office of the Texas Secretary of State as Document No. 04-00443911. 

EX-10.29

CONSENT, MODIFICATION, ASSUMPTION OF INDEMNITY OBLIGATIONS AND
RELEASE AGREEMENT

          THIS CONSENT, ASSUMPTION OF INDEMNITY OBLIGATIONS AND RELEASE AGREEMENT is entered into as of the ___ of ____________, 2004 (“Agreement”), by and among JEFFERSON VILLAGE, L.P., a Texas limited partnership (“Borrower”), JPI PORTFOLIO I GP1 LLC, a Texas limited liability company (“Existing GP”), JPI PORTFOLIO I, L.P., a Texas limited partnership(“Existing LP” and collectively with the Existing GP, the “Existing Partners”),  JPI INVESTMENT COMPANY, L.P., a Texas limited partnership (the “Existing Indemnitor”), LASALLE BANK NATIONAL ASSOCIATION (f/k/a LaSalle National Bank), as Trustee (“Trustee”) under that certain Pooling and Servicing Agreement dated March 1, 1999 (“PSA”) for Certificateholders of COMM 1999-1 Commercial Mortgage Pass-Through Certificates (the “Lender”), ORIX CAPITAL MARKETS, LLC (f/k/a Banc One Mortgage Capital Markets, L.P.), as Servicer pursuant to the PSA (“Servicer”), MAC OF DELAWARE, INC., a Delaware corporation (“New GP”), MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“New LP” and collectively with the New GP, the “New Partners”) and MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership, MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership, and MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (each a “New Indemnitor” and collectively the “New Indemnitors”).

RECITALS

          The Borrower is indebted to the Lender (as hereinafter defined) for a loan in the original principal amount of $14,680,000.00 (the “Loan”), which is evidenced by a Promissory Note dated as of September 28, 1998, in said principal amount (the “Note”) payable by the Borrower to the order of German American Capital Corporation, a Maryland corporation (“Original Lender”), which Note is currently held by the Trustee for the benefit of Lender.  The Loan is secured by, among other things, that certain Deed of Trust and Security Agreement dated as of September 28, 1998 (“Security Instrument”), from the Borrower to Original Lender as assigned by that certain Assignment of Deed of Trust and Security Agreement dated as of July 22, 1999, from Borrower to Trustee for the benefit of Lender, encumbering certain improved real estate described in the Security Instrument and located in Fort Bend County, Texas (“Mortgaged Property”).

          The Existing Partners and the New Partners have agreed that the Existing Partners shall transfer and assign 100% of their partnership interests in the Borrower to the New Partners.  Pursuant to Section 6.3 of the Security Instrument, the Borrower, the Existing Partners, the New Partners, the Existing Indemnitor and the New Indemnitors have requested that the Lender (i) consent to the Existing Partners’ transfer and assignment of 100% of their partnership interests in the Borrower to the New Partners (“Interest Transfer”); (ii) release and discharge the Existing Partners and the Existing Indemnitor from their obligations arising after the date of this Agreement pursuant to the Note, the Security Instrument and all other documents evidencing, securing, or otherwise relating to the Loan (collectively, the “Loan Documents”); and (iii) agree to the execution by the New Indemnitors of the that certain Guaranty (as defined hereinafter) and that certain Environmental Indemnity Agreement (as defined hereinafter) (“Assumption”).  The Lender is willing to grant the foregoing request, but only upon the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the Lender to consent to the transactions and events described in the foregoing recitals, the parties hereto agree as follows:

          1.     Consent and Release by the Lender.  In reliance upon and subject to the representations, warranties, conditions, and covenants set forth herein, the Lender hereby consents to the following:

          (a)     The absolute transfer and assignment by the Existing Partners of 100% of the partnership interests in the Borrower to the New Partners;

          (b)     The execution and delivery of that certain Assignment of Partnership Interests and amendment to the partnership agreement of the Borrower, dated as of _____________ (collectively, the “Amended Partnership Documents”);

          (d)     The release and discharge of the Existing Partners and the Existing Indemnitor from their obligations arising after the date hereof pursuant to the Note, the Security Instrument and all other Loan Documents, subject to the terms and conditions of this Agreement; and

          (e)     The execution by the New Indemnitors of the Guaranty and the Environmental Indemnity Agreement.

          Nothing herein shall be construed or interpreted as the Lender’s consent to any subsequent changes, sale, transfer, or encumbrance of any ownership interest in the Borrower or the Mortgaged Property, and any such subsequent change, sale, transfer, or encumbrance shall be governed by the provisions of Section 6.3 of the Security Instrument, as amended.

          The foregoing is not a waiver of any other requirement of the Loan and related Loan Documents and applies only to the specific consent granted herein.  The granting of such consent and the execution of this Agreement in no way obligates the Lender, the Servicer or any subsequent holder of the Note, to grant any future consents or waivers nor does it establish in any way a pattern or practice of dealing that the Borrower, the Existing Partners, the Existing Indemnitor, the New Partners and the New Indemnitors may rely upon in seeking any other consent or waiver.

          2.     Assumption by the New Partners and the New Indemnitors.  The New  Partners hereby adopt, ratify and confirm as of the origination date of the Loan all of the representations, warranties and covenants of the Existing Partners under the Loan Documents (excluding the Original Guaranty [defined hereinafter] and the Original Environmental Indmenity Agreement [defined hereinafter]) as if the New Partners were the Existing Partners named therein and jointly and severally assume all liability of the Existing Partners under the Loan Documents. 

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          New Indemnitors have executed and delivered to the Lender that certain Limited Indemnity Agreement dated of even date herewith (the “Guaranty”) and that certain Environmental Indemnity Agreement dated of even date herewith (the “Environmental Indemnity Agreement”).

          The New Partners hereby assume and agree to be bound by, and to pay and perform, all covenants, representations, warranties, and other obligations of the Existing Partners relating to or arising from the Loan and the Loan Documents (excluding the Original Guaranty and the Original Environmental Indemnity Agreement) to which they are a party.

          3.     Release of the Existing Partners and the Existing Indemnitor.  In reliance upon the representations, warranties, covenants, and agreements set forth herein, and subject to the conditions precedent set forth in Section 4 below, the Lender hereby releases and discharges the Existing Partners and the Existing Indemnitor from any and all liabilities and obligations arising from or relating to the Loan and the Loan Documents, provided that the Existing Partners or the Existing Indemnitor are not released from any liability pursuant to (i) this Agreement (except that they shall have no liability with respect to any representation or warranty by New Partners or New Indemnitors) or (ii) the provisions of the Limited Indemnity Agreement dated September 29, 1998 made by the Existing Indemnitor for the benefit of the Original Lender (the “Original Guaranty”), the Environmental Indemnity Agreement dated September 29, 1998 made by the Existing Indemnitor for the benefit of Original Lender (the “Original Environmental Indemnity Agreement”), Section 4.1 of the Security Instrument or Section 6(b)(i)-(ix) of the Note, in each case, for any liability that relates to the period prior to the date hereof regardless of when any other condition giving rise to any such liability thereunder is discovered.  If any material element of the representations and warranties contained herein made by the Existing Partners or the Existing Indemnitor is false as of the date of this Agreement or in the event the Existing Partners or the Existing Indemnitor take or cause any other party hereto (other than the Lender) to take any actions which are in contradiction with the provisions of Paragraph 9 of this Agreement, then the release set forth in this Paragraph 3 shall be deemed canceled effective as of the date of this Agreement and the Existing Partner or the Existing Indemnitor shall remain obligated under the Loan Documents as though there had been no such release.

          4.     Conditions Precedent.  Notwithstanding anything to the contrary in this Agreement, the Lender’s consent to the transfer of the partnership interests and the other transactions described herein are subject to the following conditions precedent:

          (a)     The due execution and delivery of this Agreement;

          (b)     The due execution and delivery by the New Partners and the New Indemnitors of the Guaranty and the Environmental Indemnity Agreement, each in substantially the same form as executed by the Existing Partners or the Existing Indemnitor in connection with the Loan;

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          (c)     Upon the closing of the Interest Transfer to the New Partners, the Borrower is in compliance with the provisions of Section 10.4 of the Security Instrument, as amended hereby, and Section 5.01 of the Credit Agreement dated as of September 28, 1998 between the Borrowers and the Original Lender (the “Credit Agreement”);

          (d)     The Lender shall have received such legal opinions as may be reasonably requested by the Lender in connection with the Interest Transfer, including an enforceability, authorization and organization legal opinion and a non-consolidation legal opinion;

          (e)     The Existing Partners or the Existing Indemnitor pay the Lender, concurrently with the closing of the transfer of the Membership Interest, all out-of-pocket costs and expenses, including, without limitation, the transaction fee equal to 1.0% of the outstanding principal balance of the Loan, which is required to be paid by the Existing Partners or the Existing Indemnitor in consideration of the consent to the Interest Transfer and to the Assumption, reasonable attorneys’ fees incurred by the Lender in connection with the Interest Transfer and the consummation of the other transactions described herein (this paragraph does not affect any separate agreement concerning such fees and expenses between Existing Partners and New Partners);

          (f)     The Borrower shall have provided evidence satisfactory to the Lender that the Borrower has fully satisfied the existing mezzanine loan in the amount of $10,000,000.00 (the “Mezzanine Loan”), which Mezzanine Loan is secured by the beneficial interests in the Existing Partners; and

          (g)     The Borrower and Mid-America Apartments, L.P., a Tennessee limited partnership (the “Property Manager”) shall have executed and delivered that certain Assignment of Management Agreement, Consent and Agreement of Manager dated of even date herewith.

          5.     Representations and Warranties of the Existing GP and the Existing Indemnitor.  As an inducement for the Lender to grant the consent herein provided, the Existing GP and the Existing Indemnitor represent and warrant to the Lender as follows:

          (a)     As of the date hereof, no Event of Default (as such term is defined in the Security Instrument), or to its knowledge, any event which with the giving of notice or lapse of time, or both, would constitute an Event of Default, exists under the Loan Documents;

          (b)     There are no setoffs, defenses, or counterclaims on the part of the Borrower to the payment or performance of the obligations under the Loan Documents.

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          (c)     They do not have any knowledge that any of the representations, warranties and certifications made by the Borrower in paragraph 7 below are not true and correct. 

          The Existing GP or the Existing Indemnitor understand and intend that the Lender will rely on the representations and warranties contained in this paragraph 5.

          6.     Representations and Warranties of the Borrower, New GP or the New Indemnitors.  As an inducement for the Lender to grant the consent herein provided, the New GP and the New Indemnitors represent and warrant to the Lender as follows:

          (a)     Upon the closing of the Interest Transfer, the representations and warranties contained in the Loan Documents shall be true and correct;

          (b)     The New GP is a corporation duly formed, validly existing, and in good standing under the laws of the State of Delaware and is qualified to do business in the state of Texas, and the New LP is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Tennessee; and

          (c)     All financial statements of the New Partners and the New Indemnitors heretofore given and hereafter to be given to the Lender are and will be true and complete in all respects as of their respective dates and prepared in accordance with generally accepted accounting principles consistently applied, and fairly represent the financial conditions of the business or persons to which they pertain, and no materially adverse change has occurred in the financial conditions reflected therein since the respective dates thereof.

          (d)     The financial statements of the New Indemnitors furnished to the Lender pursuant to the request for consent to the Interest Transfer reflect in each case a positive net worth as of the date thereof.  The financial condition of the New Indemnitors has not significantly deteriorated from that reflected in the most recently provided financial statements. 

          (e)     The financial statements of the Borrower (and those of its principals) furnished to the Lender pursuant to the request for consent to the Interest Transfer and the Assumption, reflect in each case a positive net worth as of the date thereof.

          (f)     After the Interest Transfer and the Assumption, New GP will cause  Borrower to have sufficient working capital, including cash flow from the Mortgaged Property, not only to adequately maintain the Mortgaged Property, but also to pay all of the Borrower’s outstanding debts as they come due.  All closing funds are contributed as a capital contribution and are not secured, directly or indirectly, by an interest in the Borrower or any other collateral assigned to the Lender.

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          They do not have any knowledge that any of the representations, warranties and certifications made by the Borrower in paragraph 7 below are not true and correct. 

          The New GP and the New Indemnitors agree that the foregoing representations and warranties shall be binding upon the New GP and the New Indemnitors and that the falsity or inaccuracy of any of the foregoing representations and warranties in any material respect shall constitute an “Event of Default” pursuant to the Security Instrument and the other Loan Documents that arises after the date of this Agreement.

          7.     Representations of the Borrower.  The Borrower acknowledges, represents, certifies and warrants to the Lender as of the date of this Agreement that:

          (a)     As of October 29, 2004, the Note has an unpaid principal balance as of the date of this Agreement, of $13,761,567.10 and prior to default bears interest at the rate of 6.9825% per annum, subject to adjustment as set forth in the Security Instrument. There is presently a balance of $406,853.45 in the tax escrow account, a balance of $0.00 in the insurance escrow account, a balance of $45,659.39 in the replacement reserves escrow account, and a balance of $27,472.68 in the reserves escrow account, maintained by the Lender in connection with the Loan. 

          (b)     The Note requires that monthly payments of principal and interest in the amount of $99,500.76 be made on or before the first day of each month, continuing to September 28, 2008, the Maturity Date           (as such term is defined in the Note), at which time the balance of said principal sum and all accrued but unpaid interest shall be due and payable, pursuant to the terms and conditions of the Security Instrument.

          (c)     The Security Instrument is a valid first lien on the Mortgaged Property for the full unpaid principal amount of the Loan and all other amounts as stated in the Loan Documents.

          (d)     There are no defenses, offsets or counterclaims to the Note, the Security Instrument or the other Loan Documents.

          (e)     There are no defaults by the Borrower under the provisions of the Note, the Security Instrument or the other Loan Documents, nor are there any conditions which with the giving of notice or the passage of time or both may constitute a default by the Borrower under the provisions of the Note, the Security Instrument or the other Loan Documents.

          (f)     All provisions of the Note, the Security Instrument and the other Loan Documents are valid, in full force and effect and enforceable in accordance with their terms.

          (g)     Except Permitted Encumbrances and other matters permitted by the Security Instrument, there are no subordinate liens of any kind covering or relating to the Mortgaged Property, nor are there any recorded mechanics liens or liens for unpaid taxes or assessments encumbering the Mortgaged Property, nor has notice of a lien or notice of intent to file a lien been received that has not been resolved.  There are not presently pending any special assessments against the Mortgaged Property or any part thereof.

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          (h)     Except as set forth in the Disclosure Schedule (as defined in the Security Instrument) attached to the Security Instrument, the Mortgaged Property and the Improvements (as defined in the Security Instrument) and the current intended use thereof by Borrower comply in all material respects with all applicable restrictive covenants, zoning ordinances, subdivision and building codes, flood disaster laws, health and environmental laws and regulations and all other ordinances, orders or requirements issued by any state, federal or municipal authorities having or claiming jurisdiction over the Mortgaged Property.  The Mortgaged Property and Improvements do not require any rights over, or restrictions against, other property in order to comply with any of the aforesaid governmental ordinances, orders or requirements other than those easements in place and insured by the title insurance policy delivered to Original Lender on the origination date of the Loan.  Borrower possess all franchises, patents, copyrights, trademarks, trade names, licenses and permits (the “Licenses”) necessary for the conduct of its business substantially as now conducted, all fees due and payable in connection with such Licenses have been paid and Borrower’s operation of the Mortgaged Property complies with such Licenses.

          (i)     As of the date of this Agreement, the Mortgaged Property is free from unrepaired damage caused by fire, flood, accident or other casualty; all insurance required by the terms of the Security Instrument is in full force and effect and none of the premiums payable therefore have been, nor at any time in the future will be financed.

          (j)     The Borrower has furnished to the Lender all insurance policies and certificates required pursuant to the Loan Documents.

          (k)     No bankruptcy, reorganization or insolvency proceedings are pending or contemplated either by Borrower or, to the best knowledge of Borrower, against Borrower (or, if Borrower is a partnership or a limited liability company, any of its general partners or members) or by or against any endorser or cosigner of the Note or any portion of the Obligations (as defined in the Security Instrument), or any guarantor or indemnitor under any guaranty or indemnity agreement executed in connection with the Note or the loan evidenced thereby and secured by the Security Instrument.

          (l)     As of the date of this Agreement, no part of the Mortgaged Property or the Improvements has been taken in a condemnation, eminent domain or like proceeding nor is any such proceeding pending or, to Borrower’s knowledge and belief, threatened or contemplated.

          (m)     No person, party, firm or corporation has any possessory interest in the Mortgaged Property or right to occupy the same except under and pursuant to the provisions of any existing leases by and between tenants and the Borrower.  To the knowledge or Borrower, true and complete copies of all such leases have been previously disclosed to the Original Lender and/or the Lender.

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          (n)     The Borrower does not own any real property or assets other than the Mortgaged Property and does not operate any business other than the management and operation of the Mortgaged Property.

          (o)     The Borrower has filed all federal, state, county and municipal tax returns required to have been filed by the Borrower.

          (p)     Except as set forth in the Disclosure Schedule attached to the Security Instrument, there are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrower’s knowledge, threatened against or affecting Borrower (or, if Borrower is a partnership or a limited liability company, any of its general partners or members) or the Mortgaged Property which, if adversely determined, would materially impair either the Mortgaged Property or Borrower’s ability to perform the covenants or obligations required to be performed under the Loan Documents.

          (q)     Schedule 1 attached hereto accurately describes all of the agreements memorializing any rights or obligations of Lender or the Borrower with respect to the Loan, and none of such agreements have been modified or terminated except as set forth in the documents described in Schedule 1.

The Borrower understands and intends that the Lender will rely upon the acknowledgments, representations, certifications and warranties contained herein.

          8.     Lender Acknowledgment.   Lender represents and warrants to New Partners and Existing Partners as of the date of this Agreement, that Lender has no actual direct knowledge that any of the acknowledgments, representations and warranties made by Borrower in paragraphs 7(a) and 7(b) above are not true and correct. However, Lender is not waiving and does not hereby waive any existing defaults if any in fact exist and nothing herein is intended to be nor shall it be construed to be a waiver of any existing defaults, material or immaterial, which may in fact exist. New Partners acknowledge and agree that the a breach of the acknowledgements, representations and warranties made by Borrower shall not in any way constitute a defense or give rise to any defense or right of offset, abatement, diminution or rescission as between Lender and New Partners. As used in this paragraph, “actual knowledge” means the actual state of mind of the person or persons directly responsible for the processing of the Borrower’s request for consent to the Interest Transfer and does not include any implied, constructive or imputed knowledge.

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          9.     COMPLETE RELEASE.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS HEREBY JOINTLY AND SEVERALLY, UNCONDITIONALLY AND IRREVOCABLY RELEASE AND FOREVER DISCHARGE ORIGINAL LENDER, THE LENDER AND THE SERVICER, AND THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES, AND ATTORNEYS, AND EACH CURRENT OR SUBSTITUTE TRUSTEE, IF ANY, UNDER THE SECURITY INSTRUMENT (COLLECTIVELY, THE “INDEMNITEES”) FROM ALL CLAIMS, AS DEFINED BELOW.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER AND THE EXISTING INDEMNITORS JOINTLY AND SEVERALLY AGREE TO INDEMNIFY INDEMNITEES, AND DEFEND AND HOLD THEM HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES OF EVERY KIND OR CHARACTER INCURRED BY OR ASSERTED AGAINST INDEMNITEES IN CONNECTION WITH THE CLAIMS, THE  INTEREST TRANSFER AND ASSUMPTION OR THE BREACH BY THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER OR THE EXISTING INDEMNITORS OF THE LOAN DOCUMENTS, AS AMENDED HEREIN, BUT ONLY TO THE EXTENT THAT SUCH CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES ARISE OUT OF OR ARE IN ANY WAY CONNECTED WITH OR RESULT FROM THE ACTS, ACTIONS OR OMISSIONS OF THE BORROWER (ARISING PRIOR TO THE DATE HEREOF), THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER OR THE EXISTING INDEMNITORS AND TO THE EXTENT THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER AND EXISTING INDEMNITORS ARE LIABLE UNDER THE LOAN DOCUMENTS, AS AMENDED BY THIS AGREEMENT.  THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS JOINTLY AND SEVERALLY AGREE TO INDEMNIFY INDEMNITEES, AND DEFEND AND HOLD THEM HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES OF EVERY KIND OR CHARACTER INCURRED BY OR ASSERTED AGAINST THE INDEMNITEES IN CONNECTION WITH THE CLAIMS, THE INTEREST TRANSFER AND THE ASSUMPTION OR THE BREACH BY THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER OR THE NEW INDEMNITORS OF THE LOAN DOCUMENTS, AS AMENDED HEREIN, BUT ONLY TO THE EXTENT THAT SUCH CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES ARISE OUT OF OR ARE IN ANY WAY CONNECTED WITH OR RESULT FROM THE ACTS, ACTIONS OR OMISSIONS OF THE BORROWER (ARISING ON OR AFTER THE DATE HEREOF), THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER OR THE NEW INDEMNITORS AND TO THE EXTENT THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND NEW INDEMNITORS ARE LIABLE UNDER THE LOAN DOCUMENTS. 

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AS USED IN THIS AGREEMENT, THE TERM “CLAIMS” SHALL MEAN ANY AND ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, FEES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART, ON OR BEFORE THE DATE OF THIS AGREEMENT, WHICH THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS, OR ANY OF THEIR RESPECTIVE PARTNERS, LIMITED PARTNERS, MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, AGENTS OR EMPLOYEES, MAY NOW OR HEREAFTER HAVE AGAINST THE INDEMNITEES, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAWS, OR REGULATIONS, OR OTHERWISE, ARISING OUT OF OR RELATING TO THE LOAN OR ANY OF THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE THERETO AND ANY LOSS, COST OR DAMAGE, OF ANY KIND OR CHARACTER, ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR IN ANY WAY RESULTING FROM THE ACTS, ACTIONS OR OMISSIONS OF INDEMNITEES, INCLUDING ANY REQUIREMENT THAT THE LOAN DOCUMENTS BE MODIFIED AS A CONDITION TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ANY CHARGING, COLLECTING OR CONTRACTING FOR PREPAYMENT PREMIUMS, TRANSFER FEES, OR ASSUMPTION FEES, ANY BREACH OF FIDUCIARY COMMITMENT, UNDUE INFLUENCE, DURESS, ECONOMIC COERCION, VIOLATION OF ANY FEDERAL OR STATE SECURITIES OR BLUE SKY LAWS OR REGULATIONS, CONFLICT OF INTEREST, BAD FAITH, MALPRACTICE, VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, INTENTIONAL OR NEGLIGENT INFLICTION OF MENTAL OR EMOTIONAL DISTRESS, TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS, TORTIOUS, INTERFERENCE WITH CORPORATE GOVERNANCE OR PROSPECTIVE BUSINESS ADVANTAGE, BREACH OF CONTRACT, DECEPTIVE TRADE PRACTICES, LIBEL, SLANDER, CONSPIRACY OR ANY CLAIM FOR WRONGFULLY ACCELERATING THE NOTE OR WRONGFULLY ATTEMPTING TO FORECLOSE ON ANY COLLATERAL RELATING TO THE NOTE BUT IN EACH CASE ONLY TO THE EXTENT PERMITTED BY APPLICABLE LAW.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS  AGREE THAT THE LENDER HAS NO FIDUCIARY OR SIMILAR OBLIGATIONS TO ANY OF SUCH PARTIES AND THAT THEIR RELATIONSHIP IS STRICTLY THAT OF CREDITOR AND DEBTOR.  THIS RELEASE IS ACCEPTED BY THE LENDER PURSUANT TO THIS AGREEMENT AND SHALL NOT BE CONSTRUED AS AN ADMISSION OF LIABILITY ON THE PART OF ANY PARTY HERETO.  EACH OF THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS HEREBY REPRESENTS AND WARRANTS THAT IT IS THE CURRENT LEGAL AND BENEFICIAL OWNER OF ITS RESPECTIVE CLAIMS, IF ANY, RELEASED BY IT HEREBY AND HAS NOT ASSIGNED, PLEDGED OR CONTRACTED TO ASSIGN OR PLEDGE ANY SUCH CLAIMS TO ANY OTHER PERSON.

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          10.     No Novation.  The execution and delivery of this Agreement and the other documents required herein will not be interpreted or construed as, and in fact does not constitute, a novation, payment, or satisfaction of all or any portion of the Loan or any other obligations pursuant to the Loan Documents.  The Loan will continue to be secured by the Security Instrument and the other Loan Documents, without change in nature, amount, or priority.

          11.     Counterparts.  This Agreement may be executed in multiple counterparts and using multiple signature pages, and shall be binding and enforceable at such time as each party has executed and delivered a counterpart of this Agreement.  The signature of any party to a counterpart of this Agreement shall bind such party to the same extent as if all parties executed a single original hereof.

          12.     Interpretation.  No provision of this Agreement shall be construed against or interpreted to the disadvantage of any party to this Agreement by any court or other governmental or judicial authority by reason of such party’s having or being deemed to have structured or dictated such provision.

          13.     Governing Law.  This Agreement shall be construed according to and governed by the laws of the jurisdiction(s) which are specified by the Security Instrument.  In the event the Security Instrument does not specifically state what jurisdictions laws govern, this Agreement shall be construed according to and governed by the laws in which the Mortgaged Property is located without regard to its conflicts of law principles.

          14.     Consent Not A Waiver of Any Other Rights.  This Agreement and the consent evidenced hereby do not waive any rights under applicable laws and regulations and under the Security Instrument with respect to any condition or provision other than the Interest Transfer and the Assumption.  This Agreement is not a waiver of any other requirement of the Loan and related documents and applies only to the specific consent and releases granted herein.  The granting of such consent and releases and the execution of this Agreement in no way obligates the Lender, the Servicer or any subsequent holder of the Note, to grant any future consents or waivers nor does it establish in any way a pattern or practice of dealing that the Borrower, the Existing General Partner, the Existing Limited Partner, the Existing Indemnitors, the New General Partner, the New Limited Partner and the New Indemnitors may rely upon in seeking any other consent or waiver.

          15.     Amendment of Security Instrument.  Section 6.3 of the Security Instrument is hereby amended by deleting all references to permitted transfers of interests among affiliates of the Borrower and by deleting Section 6.3(b)(iv).  All other provisions of the Security Instrument shall remain in full force and effect following the Interest Transfer.

[SIGNATURES ON FOLLOWING PAGES]

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          IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written, with the intention that this Agreement take effect as an instrument under seal.

	BORROWER:
	JEFFERSON VILLAGE, L.P., a Texas limited partnership
		By:	JPI Portfolio I GP1 LLC, a Texas limited liability company, its general partner
		By:
		Name:
		Title:
STATE of ___________
COUNTY of ___________
BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..
(SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.
	Notary Public
	My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	EXISTING GENERAL PARTNER:
	JPI PORTFOLIO I GP1 LLC, a Texas limited liability company
		By:	Carmil Capital Corporation, a Texas corporation, its sole member
		By:
		Name:
		Title:
STATE of ___________
COUNTY of ___________
BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..
(SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.
	Notary Public
	My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	EXISTING LIMITED PARTNER:
	JPI PORTFOLIO I, L.P., a Texas limited partnership
		By:	JPI Portfolio I GP2 LLC, a Texas limited liability company, its general partner
		By:
		Name:
		Title:
STATE of
COUNTY of

BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	EXISTING INDEMNITOR:
	JPI INVESTMENT COMPANY, L.P., a Texas limited partnership
		By:		JPI Multifamily Investments, L.P., a Delaware limited partnership, its general partner
			By:		New GP LLC, a Delaware limited liability company, its general partner
			By:
			Name:
			Title:
STATE of
COUNTY of

BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW GP:
	MAC of Delaware, Inc., a Delaware corporation
	By:
	Name:	John A. Good
	Title:	Assistant Secretary
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared John A. Good, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed.

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW LP:
	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
		By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
		By:
		Name:	Simon R.C. Wadsworth
		Title:	Chief Financial Officer and
		Executive Vice President
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared Simon R.C. Wadsworth, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
		By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
		By:
		Name:	John A. Good
		Title:	Assistant Vice President
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared John A. Good, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
		By:	Mid-America Apartment Communities, Inc., a Texas corporation, its general partner
		By:
		Name:		Simon R.C. Wadsworth
		Title:		Chief Financial Officer and Executive Vice President
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared Simon R.C. Wadsworth, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

 [SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
		By:
		Name:	Simon R.C. Wadsworth
		Title:	Chief Financial Officer and Executive Vice President
STATE of Tennessee
COUNTY of Shelby

BEFORE ME, _________________ on this day personally appeared Simon R.C. Wadsworth, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

[SIGNATURES CONTINUED ON NEXT PAGE]

	LENDER:
	LaSalle Bank National Association (f/k/a LaSalle National Bank), as Trustee under that certain Pooling and Servicing Agreement (the “PSA”) for Certificateholders of COMM 1999-1 Commercial Mortgage Pass-Through Certificates
		By:	ORIX Capital Markets, LLC (f/k/a Banc One Mortgage Capital Markets, LLC), as Servicer pursuant to the PSA
		By:
		Name:
		Title:
STATE of
COUNTY of

BEFORE ME, _________________ on this day personally appeared ______________, known to me (or proved to me on the oath of ___________________) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed..

          (SEAL) Given under my hand and seal of office ____ day of ___________, A.D., 2004.

Notary Public

My Commission Expires:

SCHEDULE 1
LOAN DOCUMENT SCHEDULE

1.	Promissory Note dated September 28, 1998 made by the Original Borrower and payable to the Original Lender, in the stated principal amount of $14,680,000.00  (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Note”).
2.	Deed of Trust and Security Agreement dated September 28, 1998 made by the Original Borrower for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Security Instrument”) recorded with the Fort Bend County, Texas Clerk as File No. 9890435, as assigned by Original Lender to Lender pursuant to that certain Assignment of Deed of Trust and Security Agreement recorded with the Fort Bend County, Texas Clerk as File No. 99072680.
3.	Assignment of Leases and Rents dated September 28, 1998 made by the Original Borrower for the benefit of the Original Lender (together will all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Assignment of Leases and Rents”), recorded with the Fort Bend County, Texas Clerk as File No.9890436, as assigned by Original Lender to Lender pursuant to that certain Assignment of Assignment of Leases and Rents recorded with the Fort Bend County, Texas Clerk as File No. 1999072679.
4.	Limited Indemnity Agreement dated September 28, 1998 made by the Existing Indemnitor for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Guaranty”).
5.	Environmental Indemnity Agreement dated September 28, 1998 made by Original Borrower and Existing Indemnitor for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Original Environmental Indemnity Agreement”).
6.	Subordination Agreement (Management Fees) dated as of September 28, 1998 by and among JPI Apartment Management, L.P., a Texas limited partnership, Borrower and Original Lender.
7.	Cash Management Agreement dated as of September 28, 1998 by and among Borrower, Original Lender and Midland Loan Services, Inc., as Agent.
8.	Credit Agreement dated as of September 28, 1998 in the amount of $58,800,000.00 between Borrower, Jefferson Village, L.P. and JPI Coral Springs, L.P., as the Borrowers, and the Original Lender.
9.	UCC-1 Financing Statement showing Borrower as the Debtor and Original Lender as Secured Party and recorded with the Fort Bend County, Texas Clerk as File No.9890437, as assigned to Lender by UCC-3 Assignment recorded with the Fort Bend County, Texas Clerk as File No. 2000108528.
10.	UCC-1 Financing Statement showing Borrower as the Debtor and Original Lender as Secured Party and recorded on November 4, 1998 in the Texas Secretary of State as Document No. 98-220945, as assigned to Lender by UCC-3 Assignment filed December 27, 2000 as Document No. 00-894419, as continued by that certain UCC-3 Continuation Statement filed in the office of the Texas Secretary of State as Document No. 04-00420988.

EX-10.30

CONSENT, MODIFICATION, ASSUMPTION OF INDEMNITY OBLIGATIONS AND
RELEASE AGREEMENT

          THIS CONSENT, ASSUMPTION OF INDEMNITY OBLIGATIONS AND RELEASE AGREEMENT is entered into as of the ___ of ____________, 2004 (“Agreement”), by and among JPI CORAL SPRINGS, L.P., a Texas limited partnership (“Borrower”), JPI PORTFOLIO I GP1 LLC, a Texas limited liability company (“Existing GP”), JPI PORTFOLIO I, L.P., a Texas limited partnership(“Existing LP” and collectively with the Existing GP, the “Existing Partners”),  JPI INVESTMENT COMPANY, L.P.,a Texas limited partnership (the “Existing Indemnitor”), LASALLE BANK NATIONAL ASSOCIATION (f/k/a LaSalle National Bank), as Trustee (“Trustee”) under that certain Pooling and Servicing Agreement dated March 1, 1999 (“PSA”) for Certificateholders of COMM 1999-1 Commercial Mortgage Pass-Through Certificates (the “Lender”), ORIX CAPITAL MARKETS, LLC (f/k/a Banc One Mortgage Capital Markets, L.P.), as Servicer pursuant to the PSA (“Servicer”), MAC III OF DELAWARE, INC., a Delaware corporation (“New GP”), MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“New LP” and collectively with the New GP, the “New Partners”) and MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership, MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership, and MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (each a “New Indemnitor” and collectively the “New Indemnitors”).

RECITALS

          The Borrower is indebted to the Lender (as hereinafter defined) for a loan in the original principal amount of $32,740,000.00 (the “Loan”), which is evidenced by a Promissory Note dated as of September 28, 1998, in said principal amount (the “Note”) payable by the Borrower to the order of German American Capital Corporation, a Maryland corporation (“Original Lender”), which Note is currently held by the Trustee for the benefit of Lender.  The Loan is secured by, among other things, that certain Mortgage and Security Agreement dated as of September 28, 1998 (“Security Instrument”), from the Borrower to Original Lender as assigned by that certain Assignment of Mortgage and Security Agreement dated as of July 22, 1999, from Borrower to Trustee for the benefit of Lender, encumbering certain improved real estate described in the Security Instrument and located in Broward County, Florida (“Mortgaged Property”).

          The Existing Partners and the New Partners have agreed that the Existing Partners shall transfer and assign 100% of their partnership interests in the Borrower to the New Partners.  Pursuant to Section 6.3 of the Security Instrument, the Borrower, the Existing Partners, the New Partners, the Existing Indemnitor and the New Indemnitors have requested that the Lender (i) consent to the Existing Partners’ transfer and assignment of 100% of their partnership interests in the Borrower to the New Partners (“Interest Transfer”); (ii) release and discharge the Existing Partners and the Existing Indemnitor from their obligations arising after the date of this Agreement pursuant to the Note, the Security Instrument and all other documents evidencing, securing, or otherwise relating to the Loan (collectively, the “Loan Documents”); and (iii) agree to the execution by the New Indemnitors of the that certain Guaranty (as defined hereinafter) and that certain Environmental Indemnity Agreement (as defined hereinafter) (“Assumption”).  The Lender is willing to grant the foregoing request, but only upon the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the Lender to consent to the transactions and events described in the foregoing recitals, the parties hereto agree as follows:

          1.        Consent and Release by the Lender.  In reliance upon and subject to the representations, warranties, conditions, and covenants set forth herein, the Lender hereby consents to the following:

          (a)     The absolute transfer and assignment by the Existing Partners of 100% of the partnership interests in the Borrower to the New Partners;

          (b)     The execution and delivery of that certain Assignment of Partnership Interests and amendment to the partnership agreement of the Borrower, dated as of _____________ (collectively, the “Amended Partnership Documents”);

          (d)     The release and discharge of the Existing Partners and the Existing Indemnitor from their obligations arising after the date hereof pursuant to the Note, the Security Instrument and all other Loan Documents, subject to the terms and conditions of this Agreement; and

          (e)     The execution by the New Indemnitors of the Guaranty and the Environmental Indemnity Agreement.

          Nothing herein shall be construed or interpreted as the Lender’s consent to any subsequent changes, sale, transfer, or encumbrance of any ownership interest in the Borrower or the Mortgaged Property, and any such subsequent change, sale, transfer, or encumbrance shall be governed by the provisions of Section 6.3 of the Security Instrument, as amended.

          The foregoing is not a waiver of any other requirement of the Loan and related Loan Documents and applies only to the specific consent granted herein.  The granting of such consent and the execution of this Agreement in no way obligates the Lender, the Servicer or any subsequent holder of the Note, to grant any future consents or waivers nor does it establish in any way a pattern or practice of dealing that the Borrower, the Existing Partners, the Existing Indemnitor, the New Partners and the New Indemnitors may rely upon in seeking any other consent or waiver.

          2.        Assumption by the New Partners and the New Indemnitors.  The New  Partners hereby adopt, ratify and confirm as of the origination date of the Loan all of the representations, warranties and covenants of the Existing Partners under the Loan Documents (excluding the Original Guaranty [defined hereinafter] and the Original Environmental Indmenity Agreement [defined hereinafter]) as if the New Partners were the Existing Partners named therein and jointly and severally assume all liability of the Existing Partners under the Loan Documents.

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          New Indemnitors have executed and delivered to the Lender that certain Limited Indemnity Agreement dated of even date herewith (the “Guaranty”) and that certain Environmental Indemnity Agreement dated of even date herewith (the “Environmental Indemnity Agreement”).

          The New Partners hereby assume and agree to be bound by, and to pay and perform, all covenants, representations, warranties, and other obligations of the Existing Partners relating to or arising from the Loan and the Loan Documents (excluding the Original Guaranty and the Original Environmental Indemnity Agreement) to which they are a party.

          3.        Release of the Existing Partners and the Existing Indemnitor.  In reliance upon the representations, warranties, covenants, and agreements set forth herein, and subject to the conditions precedent set forth in Section 4 below, the Lender hereby releases and discharges the Existing Partners and the Existing Indemnitor from any and all liabilities and obligations arising from or relating to the Loan and the Loan Documents, provided that the Existing Partners or the Existing Indemnitor are not released from any liability pursuant to (i) this Agreement (except that they shall have no liability with respect to any representation or warranty by New Partners or New Indemnitors) or (ii) the provisions of the Limited Indemnity Agreement dated September 29, 1998 made by the Existing Indemnitor for the benefit of the Original Lender (the “Original Guaranty”), the Environmental Indemnity Agreement dated September 29, 1998 made by the Existing Indemnitor for the benefit of Original Lender (the “Original Environmental Indemnity Agreement”), Section 4.1 of the Security Instrument or Section 6(b)(i)-(ix) of the Note, in each case, for any liability that relates to the period prior to the date hereof regardless of when any other condition giving rise to any such liability thereunder is discovered.  If any material element of the representations and warranties contained herein made by the Existing Partners or the Existing Indemnitor is false as of the date of this Agreement or in the event the Existing Partners or the Existing Indemnitor take or cause any other party hereto (other than the Lender) to take any actions which are in contradiction with the provisions of Paragraph 9 of this Agreement, then the release set forth in this Paragraph 3 shall be deemed canceled effective as of the date of this Agreement and the Existing Partner or the Existing Indemnitor shall remain obligated under the Loan Documents as though there had been no such release.

          4.        Conditions Precedent.  Notwithstanding anything to the contrary in this Agreement, the Lender’s consent to the transfer of the partnership interests and the other transactions described herein are subject to the following conditions precedent:

          (a)     The due execution and delivery of this Agreement;

          (b)     The due execution and delivery by the New Partners and the New Indemnitors of the Guaranty and the Environmental Indemnity Agreement, each in substantially the same form as executed by the Existing Partners or the Existing Indemnitor in connection with the Loan;

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          (c)     Upon the closing of the Interest Transfer to the New Partners, the Borrower is in compliance with the provisions of Section 10.4 of the Security Instrument, as amended hereby, and Section 5.01 of the Credit Agreement dated as of September 28, 1998 between the Borrowers and the Original Lender (the “Credit Agreement”);

          (d)     The Lender shall have received such legal opinions as may be reasonably requested by the Lender in connection with the Interest Transfer, including an enforceability, authorization and organization legal opinion and a non-consolidation legal opinion;

          (e)     The Existing Partners or the Existing Indemnitor pay the Lender, concurrently with the closing of the transfer of the Membership Interest, all out-of-pocket costs and expenses, including, without limitation, the transaction fee equal to 1.0% of the outstanding principal balance of the Loan, which is required to be paid by the Existing Partners or the Existing Indemnitor in consideration of the consent to the Interest Transfer and to the Assumption, reasonable attorneys’ fees incurred by the Lender in connection with the Interest Transfer and the consummation of the other transactions described herein (this paragraph does not affect any separate agreement concerning such fees and expenses between Existing Partners and New Partners);

          (f)     The Borrower shall have provided evidence satisfactory to the Lender that the Borrower has fully satisfied the existing mezzanine loan in the amount of $10,000,000.00 (the “Mezzanine Loan”), which Mezzanine Loan is secured by the beneficial interests in the Existing Partners; and

          (g)     The Borrower and Mid-America Apartments, L.P., a Tennessee limited partnership (the “Property Manager”) shall have executed and delivered that certain Assignment of Management Agreement, Consent and Agreement of Manager dated of even date herewith.

          5.        Representations and Warranties of the Existing GP and the Existing Indemnitor.  As an inducement for the Lender to grant the consent herein provided, the Existing GP and the Existing Indemnitor represent and warrant to the Lender as follows:

          (a)     As of the date hereof, no Event of Default (as such term is defined in the Security Instrument), or to its knowledge, any event which with the giving of notice or lapse of time, or both, would constitute an Event of Default, exists under the Loan Documents;

          (b)     There are no setoffs, defenses, or counterclaims on the part of the Borrower to the payment or performance of the obligations under the Loan Documents.

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          (c)     They do not have any knowledge that any of the representations, warranties and certifications made by the Borrower in paragraph 7 below are not true and correct. 

          The Existing GP or the Existing Indemnitor understand and intend that the Lender will rely on the representations and warranties contained in this paragraph 5.

          6.        Representations and Warranties of the Borrower, New GP or the New Indemnitors.  As an inducement for the Lender to grant the consent herein provided, the New GP and the New Indemnitors represent and warrant to the Lender as follows:

          (a)     Upon the closing of the Interest Transfer, the representations and warranties contained in the Loan Documents shall be true and correct;

          (b)     The New GP is a corporation duly formed, validly existing, and in good standing under the laws of the State of Delaware and is qualified to do business in the state of Florida, and the New LP is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Tennessee; and

          (c)     All financial statements of the New Partners and the New Indemnitors heretofore given and hereafter to be given to the Lender are and will be true and complete in all respects as of their respective dates and prepared in accordance with generally accepted accounting principles consistently applied, and fairly represent the financial conditions of the business or persons to which they pertain, and no materially adverse change has occurred in the financial conditions reflected therein since the respective dates thereof.

          (d)     The financial statements of the New Indemnitors furnished to the Lender pursuant to the request for consent to the Interest Transfer reflect in each case a positive net worth as of the date thereof.  The financial condition of the New Indemnitors has not significantly deteriorated from that reflected in the most recently provided financial statements. 

          (e)     The financial statements of the Borrower (and those of its principals) furnished to the Lender pursuant to the request for consent to the Interest Transfer and the Assumption, reflect in each case a positive net worth as of the date thereof.

          (f)     After the Interest Transfer and the Assumption, New GP will cause  Borrower to have sufficient working capital, including cash flow from the Mortgaged Property, not only to adequately maintain the Mortgaged Property, but also to pay all of the Borrower’s outstanding debts as they come due.  All closing funds are contributed as a capital contribution and are not secured, directly or indirectly, by an interest in the Borrower or any other collateral assigned to the Lender.

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          They do not have any knowledge that any of the representations, warranties and certifications made by the Borrower in paragraph 7 below are not true and correct.

          The New GP and the New Indemnitors agree that the foregoing representations and warranties shall be binding upon the New GP and the New Indemnitors and that the falsity or inaccuracy of any of the foregoing representations and warranties in any material respect shall constitute an “Event of Default” pursuant to the Security Instrument and the other Loan Documents that arises after the date of this Agreement.

          7.        Representations of the Borrower.  The Borrower acknowledges, represents, certifies and warrants to the Lender as of the date of this Agreement that:

          (a)  As of October 29, 2004, the Note has an unpaid principal balance as of the date of this Agreement, of $_________________ and prior to default bears interest at the rate of 6.9825% per annum, subject to adjustment as set forth in the Security Instrument. There is presently a balance of $_____________ in the tax escrow account, a balance of $____________ in the insurance escrow account, a balance of $_____________ in the replacement reserves escrow account, and a balance of $______________ in the reserves escrow account, maintained by the Lender in connection with the Loan. 

          (b)  The Note requires that monthly payments of principal and interest in the amount of $221,911.10 be made on or before the first day of each month, continuing to September 28, 2008, the Maturity Date (as such term is defined in the Note), at which time the balance of said principal sum and all accrued but unpaid interest shall be due and payable, pursuant to the terms and conditions of the Security Instrument.

          (c)  The Security Instrument is a valid first lien on the Mortgaged Property for the full unpaid principal amount of the Loan and all other amounts as stated in the Loan Documents.

          (d)  There are no defenses, offsets or counterclaims to the Note, the Security Instrument or the other Loan Documents.

          (e)  There are no defaults by the Borrower under the provisions of the Note, the Security Instrument or the other Loan Documents, nor are there any conditions which with the giving of notice or the passage of time or both may constitute a default by the Borrower under the provisions of the Note, the Security Instrument or the other Loan Documents.

          (f)  All provisions of the Note, the Security Instrument and the other Loan Documents are valid, in full force and effect and enforceable in accordance with their terms.

          (g)  Except Permitted Encumbrances and other matters permitted by the Security Instrument, there are no subordinate liens of any kind covering or relating to the Mortgaged Property, nor are there any recorded mechanics liens or liens for unpaid taxes or assessments encumbering the Mortgaged Property, nor has notice of a lien or notice of intent to file a lien been received that has not been resolved.  There are not presently pending any special assessments against the Mortgaged Property or any part thereof.

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          (h)  Except as set forth in the Disclosure Schedule (as defined in the Security Instrument) attached to the Security Instrument, the Mortgaged Property and the Improvements (as defined in the Security Instrument) and the current intended use thereof by Borrower comply in all material respects with all applicable restrictive covenants, zoning ordinances, subdivision and building codes, flood disaster laws, health and environmental laws and regulations and all other ordinances, orders or requirements issued by any state, federal or municipal authorities having or claiming jurisdiction over the Mortgaged Property.  The Mortgaged Property and Improvements do not require any rights over, or restrictions against, other property in order to comply with any of the aforesaid governmental ordinances, orders or requirements other than those easements in place and insured by the title insurance policy delivered to Original Lender on the origination date of the Loan.  Borrower possess all franchises, patents, copyrights, trademarks, trade names, licenses and permits (the “Licenses”) necessary for the conduct of its business substantially as now conducted, all fees due and payable in connection with such Licenses have been paid and Borrower’s operation of the Mortgaged Property complies with such Licenses.

          (i)  As of the date of this Agreement, the Mortgaged Property is free from unrepaired damage caused by fire, flood, accident or other casualty; all insurance required by the terms of the Security Instrument is in full force and effect and none of the premiums payable therefore have been, nor at any time in the future will be financed.

          (j)  The Borrower has furnished to the Lender all insurance policies and certificates required pursuant to the Loan Documents.

          (k)  No bankruptcy, reorganization or insolvency proceedings are pending or contemplated either by Borrower or, to the best knowledge of Borrower, against Borrower (or, if Borrower is a partnership or a limited liability company, any of its general partners or members) or by or against any endorser or cosigner of the Note or any portion of the Obligations (as defined in the Security Instrument), or any guarantor or indemnitor under any guaranty or indemnity agreement executed in connection with the Note or the loan evidenced thereby and secured by the Security Instrument.

          (l)  As of the date of this Agreement, no part of the Mortgaged Property or the Improvements has been taken in a condemnation, eminent domain or like proceeding nor is any such proceeding pending or, to Borrower’s knowledge and belief, threatened or contemplated.

          (m)  No person, party, firm or corporation has any possessory interest in the Mortgaged Property or right to occupy the same except under and pursuant to the provisions of any existing leases by and between tenants and the Borrower.  To the knowledge or Borrower, true and complete copies of all such leases have been previously disclosed to the Original Lender and/or the Lender.

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          (n)  The Borrower does not own any real property or assets other than the Mortgaged Property and does not operate any business other than the management and operation of the Mortgaged Property.

          (o)  The Borrower has filed all federal, state, county and municipal tax returns required to have been filed by the Borrower.

          (p)  Except as set forth in the Disclosure Schedule attached to the Security Instrument, there are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrower’s knowledge, threatened against or affecting Borrower (or, if Borrower is a partnership or a limited liability company, any of its general partners or members) or the Mortgaged Property which, if adversely determined, would materially impair either the Mortgaged Property or Borrower’s ability to perform the covenants or obligations required to be performed under the Loan Documents.

          (q)  Schedule 1 attached hereto accurately describes all of the agreements memorializing any rights or obligations of Lender or the Borrower with respect to the Loan, and none of such agreements have been modified or terminated except as set forth in the documents described in Schedule 1.

The Borrower understands and intends that the Lender will rely upon the acknowledgments, representations, certifications and warranties contained herein.

          8.        Lender Acknowledgment.  Lender represents and warrants to New Partners and Existing Partners as of the date of this Agreement, that Lender has no actual direct knowledge that any of the acknowledgments, representations and warranties made by Borrower in paragraphs 7(a) and 7(b) above are not true and correct. However, Lender is not waiving and does not hereby waive any existing defaults if any in fact exist and nothing herein is intended to be nor shall it be construed to be a waiver of any existing defaults, material or immaterial, which may in fact exist. New Partners acknowledge and agree that the a breach of the acknowledgements, representations and warranties made by Borrower shall not in any way constitute a defense or give rise to any defense or right of offset, abatement, diminution or rescission as between Lender and New Partners. As used in this paragraph, “actual knowledge” means the actual state of mind of the person or persons directly responsible for the processing of the Borrower’s request for consent to the Interest Transfer and does not include any implied, constructive or imputed knowledge.

8

          9.          COMPLETE RELEASE.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS HEREBY JOINTLY AND SEVERALLY, UNCONDITIONALLY AND IRREVOCABLY RELEASE AND FOREVER DISCHARGE ORIGINAL LENDER, THE LENDER AND THE SERVICER, AND THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES, AND ATTORNEYS, AND EACH CURRENT OR SUBSTITUTE TRUSTEE, IF ANY, UNDER THE SECURITY INSTRUMENT (COLLECTIVELY, THE “INDEMNITEES”) FROM ALL CLAIMS, AS DEFINED BELOW.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER AND THE EXISTING INDEMNITORS JOINTLY AND SEVERALLY AGREE TO INDEMNIFY INDEMNITEES, AND DEFEND AND HOLD THEM HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES OF EVERY KIND OR CHARACTER INCURRED BY OR ASSERTED AGAINST INDEMNITEES IN CONNECTION WITH THE CLAIMS, THE  INTEREST TRANSFER AND ASSUMPTION OR THE BREACH BY THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER OR THE EXISTING INDEMNITORS OF THE LOAN DOCUMENTS, AS AMENDED HEREIN, BUT ONLY TO THE EXTENT THAT SUCH CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES ARISE OUT OF OR ARE IN ANY WAY CONNECTED WITH OR RESULT FROM THE ACTS, ACTIONS OR OMISSIONS OF THE BORROWER (ARISING PRIOR TO THE DATE HEREOF), THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER OR THE EXISTING INDEMNITORS AND TO THE EXTENT THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER AND EXISTING INDEMNITORS ARE LIABLE UNDER THE LOAN DOCUMENTS, AS AMENDED BY THIS AGREEMENT.  THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS JOINTLY AND SEVERALLY AGREE TO INDEMNIFY INDEMNITEES, AND DEFEND AND HOLD THEM HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES OF EVERY KIND OR CHARACTER INCURRED BY OR ASSERTED AGAINST THE INDEMNITEES IN CONNECTION WITH THE CLAIMS, THE INTEREST TRANSFER AND THE ASSUMPTION OR THE BREACH BY THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER OR THE NEW INDEMNITORS OF THE LOAN DOCUMENTS, AS AMENDED HEREIN, BUT ONLY TO THE EXTENT THAT SUCH CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES ARISE OUT OF OR ARE IN ANY WAY CONNECTED WITH OR RESULT FROM THE ACTS, ACTIONS OR OMISSIONS OF THE BORROWER (ARISING ON OR AFTER THE DATE HEREOF), THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER OR THE NEW INDEMNITORS AND TO THE EXTENT THE BORROWER, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND NEW INDEMNITORS ARE LIABLE UNDER THE LOAN DOCUMENTS.

9

AS USED IN THIS AGREEMENT, THE TERM “CLAIMS” SHALL MEAN ANY AND ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, FEES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART, ON OR BEFORE THE DATE OF THIS AGREEMENT, WHICH THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS, OR ANY OF THEIR RESPECTIVE PARTNERS, LIMITED PARTNERS, MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, AGENTS OR EMPLOYEES, MAY NOW OR HEREAFTER HAVE AGAINST THE INDEMNITEES, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAWS, OR REGULATIONS, OR OTHERWISE, ARISING OUT OF OR RELATING TO THE LOAN OR ANY OF THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE THERETO AND ANY LOSS, COST OR DAMAGE, OF ANY KIND OR CHARACTER, ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR IN ANY WAY RESULTING FROM THE ACTS, ACTIONS OR OMISSIONS OF INDEMNITEES, INCLUDING ANY REQUIREMENT THAT THE LOAN DOCUMENTS BE MODIFIED AS A CONDITION TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ANY CHARGING, COLLECTING OR CONTRACTING FOR PREPAYMENT PREMIUMS, TRANSFER FEES, OR ASSUMPTION FEES, ANY BREACH OF FIDUCIARY COMMITMENT, UNDUE INFLUENCE, DURESS, ECONOMIC COERCION, VIOLATION OF ANY FEDERAL OR STATE SECURITIES OR BLUE SKY LAWS OR REGULATIONS, CONFLICT OF INTEREST, BAD FAITH, MALPRACTICE, VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, INTENTIONAL OR NEGLIGENT INFLICTION OF MENTAL OR EMOTIONAL DISTRESS, TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS, TORTIOUS, INTERFERENCE WITH CORPORATE GOVERNANCE OR PROSPECTIVE BUSINESS ADVANTAGE, BREACH OF CONTRACT, DECEPTIVE TRADE PRACTICES, LIBEL, SLANDER, CONSPIRACY OR ANY CLAIM FOR WRONGFULLY ACCELERATING THE NOTE OR WRONGFULLY ATTEMPTING TO FORECLOSE ON ANY COLLATERAL RELATING TO THE NOTE BUT IN EACH CASE ONLY TO THE EXTENT PERMITTED BY APPLICABLE LAW.  THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS  AGREE THAT THE LENDER HAS NO FIDUCIARY OR SIMILAR OBLIGATIONS TO ANY OF SUCH PARTIES AND THAT THEIR RELATIONSHIP IS STRICTLY THAT OF CREDITOR AND DEBTOR.  THIS RELEASE IS ACCEPTED BY THE LENDER PURSUANT TO THIS AGREEMENT AND SHALL NOT BE CONSTRUED AS AN ADMISSION OF LIABILITY ON THE PART OF ANY PARTY HERETO.  EACH OF THE BORROWER, THE EXISTING GENERAL PARTNER, THE EXISTING LIMITED PARTNER, THE EXISTING INDEMNITORS, THE NEW GENERAL PARTNER, THE NEW LIMITED PARTNER AND THE NEW INDEMNITORS HEREBY REPRESENTS AND WARRANTS THAT IT IS THE CURRENT LEGAL AND BENEFICIAL OWNER OF ITS RESPECTIVE CLAIMS, IF ANY, RELEASED BY IT HEREBY AND HAS NOT ASSIGNED, PLEDGED OR CONTRACTED TO ASSIGN OR PLEDGE ANY SUCH CLAIMS TO ANY OTHER PERSON.

10

          10.     No Novation.  The execution and delivery of this Agreement and the other documents required herein will not be interpreted or construed as, and in fact does not constitute, a novation, payment, or satisfaction of all or any portion of the Loan or any other obligations pursuant to the Loan Documents.  The Loan will continue to be secured by the Security Instrument and the other Loan Documents, without change in nature, amount, or priority.

          11.     Counterparts.  This Agreement may be executed in multiple counterparts and using multiple signature pages, and shall be binding and enforceable at such time as each party has executed and delivered a counterpart of this Agreement.  The signature of any party to a counterpart of this Agreement shall bind such party to the same extent as if all parties executed a single original hereof.

          12.     Interpretation.  No provision of this Agreement shall be construed against or interpreted to the disadvantage of any party to this Agreement by any court or other governmental or judicial authority by reason of such party’s having or being deemed to have structured or dictated such provision.

          13.     Governing Law.  This Agreement shall be construed according to and governed by the laws of the jurisdiction(s) which are specified by the Security Instrument.  In the event the Security Instrument does not specifically state what jurisdictions laws govern, this Agreement shall be construed according to and governed by the laws in which the Mortgaged Property is located without regard to its conflicts of law principles.

          14.     Consent Not A Waiver of Any Other Rights.  This Agreement and the consent evidenced hereby do not waive any rights under applicable laws and regulations and under the Security Instrument with respect to any condition or provision other than the Interest Transfer and the Assumption.  This Agreement is not a waiver of any other requirement of the Loan and related documents and applies only to the specific consent and releases granted herein.  The granting of such consent and releases and the execution of this Agreement in no way obligates the Lender, the Servicer or any subsequent holder of the Note, to grant any future consents or waivers nor does it establish in any way a pattern or practice of dealing that the Borrower, the Existing General Partner, the Existing Limited Partner, the Existing Indemnitors, the New General Partner, the New Limited Partner and the New Indemnitors may rely upon in seeking any other consent or waiver.

          15.     Amendment of Security Instrument.  Section 6.3 of the Security Instrument is hereby amended by deleting all references to permitted transfers of interests among affiliates of the Borrower and by deleting Section 6.3(b)(iv).  All other provisions of the Security Instrument shall remain in full force and effect following the Interest Transfer.

[SIGNATURES ON FOLLOWING PAGE]

11

          IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written, with the intention that this Agreement take effect as an instrument under seal.

	BORROWER:
	JPI CORAL SPRINGS, L.P., a Texas limited partnership
		By:	JPI Portfolio I GP1 LLC, a Texas limited liability company, its general partner
		By:
		Name:
		Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	EXISTING GENERAL PARTNER:
	JPI PORTFOLIO I GP1 LLC, a Texas limited liability company
		By:	Carmil Capital Corporation, a Texas corporation, its sole member
		By:
		Name:
		Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	EXISTING LIMITED PARTNER:
	JPI PORTFOLIO I, L.P., a Texas limited partnership
		By:	JPI Portfolio I GP2 LLC, a Texas limited liability company, its general partner
		By:
		Name:
		Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	EXISTING INDEMNITOR:
	JPI INVESTMENT COMPANY, L.P., a Texas limited partnership
		By:		JPI Multifamily Investments, L.P., a Delaware limited partnership, its general partner
			By:		New GP LLC, a Delaware limited liability company, its general partner
			By:
			Name:
			Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW GP:
	MAC III of Delaware, Inc., a Delaware corporation
	By:
	Name:
	Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW LP:
	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
		By:	Mid-America Apartment Communities, Inc., a Tennessee corporation, its general partner
		By:
		Name:
		Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
		By:	MAC of Delaware, Inc., a Delaware corporation, its general partner
		By:
		Name:
		Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
		By:	Mid-America Apartment Communities, Inc., a Texas corporation, its general partner
		By:
		Name:
		Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	NEW INDEMNITOR:
	MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
	By:
	Name:
	Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

[SIGNATURES CONTINUED ON NEXT PAGE]

	LENDER:
	LaSalle Bank National Association (f/k/a LaSalle National Bank), as Trustee under that certain Pooling and Servicing Agreement (the “PSA”) for Certificateholders of COMM 1999-1 Commercial Mortgage Pass-Through Certificates
		By:	ORIX Capital Markets, LLC (f/k/a Banc One Mortgage Capital Markets, LLC), as Servicer pursuant to the PSA
		By:
		Name:
		Title:
State of
County of

The foregoing instrument was acknowledged before me this ___ day of ________, 2004 by _________________, the ________________ , of ______________________, a _______________________, on behalf of the __________________. He/she is personally known to me or did produce ____________________________ as identification.

Notary Public

My commission expires:

(seal)

SCHEDULE 1
LOAN DOCUMENT SCHEDULE

1.	Promissory Note dated September 28, 1998 made by the Original Borrower and payable to the Original Lender, in the stated principal amount of $32,740,000.00  (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Note”).
2.	Mortgage and Security Agreement dated September 28, 1998 made by the Original Borrower for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Security Instrument”) recorded on October 27, 1998 in the Real Property Records of Broward County, Florida in Official Records Book 28948, at Page 151, as assigned by Original Lender to Lender pursuant to that certain Assignment of Mortgage and Security Agreement recorded in the Real Property Records of Broward County, Florida on October 27, 1998 in Official Records Book 29867, at Page 1333.
3.	Assignment of Leases and Rents dated September 28, 1998 made by the Original Borrower for the benefit of the Original Lender (together will all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Assignment of Leases and Rents”), recorded in the Real Property Records of Broward County, Florida in Official Records Book 28948 at Page 222, as assigned by Original Lender to Lender pursuant to that certain Assignment of Assignment of Leases and Rents recorded in the Real Property Records of Broward County, Florida in Official Records Book 29867, at Page 1330.
4.	Limited Indemnity Agreement dated September 28, 1998 made by the Existing Indemnitor for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Guaranty”).
5.	Environmental Indemnity Agreement dated September 28, 1998 made by Original Borrower and Existing Indemnitor for the benefit of the Original Lender (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto, the “Original Environmental Indemnity Agreement”).
6.	Subordination Agreement (Management Fees) dated as of September 28, 1998 by and among JPI Apartment Management, L.P., a Texas limited partnership, Borrower and Original Lender.
7.	Cash Management Agreement dated as of September 28, 1998 by and among Borrower, Original Lender and Midland Loan Services, Inc., as Agent.
8.	Credit Agreement dated as of September 28, 1998 in the amount of $58,800,000.00 between Borrower, Jefferson Village, L.P. and Jefferson at Sunset Valley, L.P., as the Borrowers, and the Original Lender.
9.	UCC-1 Financing Statement showing Borrower as the Debtor and Original Lender as Secured Party and recorded in the Real Property Records of Broward County, Florida in Official Records Book 28948, at Page 235, as assigned to Lender by UCC-3 Assignment recorded in the Real Property Records of Broward County, Florida in Official Records Book 31154, at Page 1478, as continued by that certain UCC-3 Continuation Statement recorded in the Real Property Records of Broward County, Florida in Official Records Book 36211, at Page 1138.

10. UCC-1 Financing Statement showing Borrower as the Debtor and Original Lender as Secured Party and recorded on April 24, 2000 in the Texas Secretary of State as Document No. 00-482122, as assigned to Lender by UCC-3 Assignment filed January 26, 2001 as Document No. 01-610741. 

EX-10.31

$58,800,000

CREDIT AGREEMENT

Dated as of September 28, 1998

Between

JEFFERSON VILLAGE, L.P.,
JEFFERSON AT SUNSET VALLEY, L.P.
AND
JPI CORAL SPRINGS, L. P.

as the Borrowers,

and

GERMAN AMERICAN CAPITAL CORPORATION

as the Lender

TABLE OF CONTENTS

Section		Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01.	Certain Defined Terms		1
1.02.	Computation of Time Periods		11
1.03.	Accounting Terms		12
ARTICLE II AMOUNT AND TERMS OF THE LOAN
2.01.	The Loan		12
2.02.	Making the Loan		12
2.03.	Repayment of the Loan		12
2.04.	Application of Payments		12
2.05.	Prepayment		12
2.06.	Replacement		13
2.07.	Fees		17
2.08.	Taxes		18
2.09.	Increased Costs, Etc		19
2.10.	Security for the Loan		20
2.11.	The Notes		20
ARTICLE III CONDITIONS OF LENDING
3.01.	Conditions Precedent to Disbursement of the Loan		20
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.01.	Representations and Warranties of the Borrowers		25

Section		Page
ARTICLE V COVENANTS
5.01.	Covenants of the Borrowers		26
ARTICLE VI DEFAULT
6.01.	Events of Default		28
ARTICLE VII SECONDARY MARKET SERVICING
7.01.	Assignments and Participations		31
7.02.	Securitization		33
7.03.	Servicing		33
ARTICLE VIII CROSS-GUARANTY
8.01.	Cross-Guaranty of Payment		34
8.02.	Obligations Unconditional		34
8.03.	Modifications		35
8.04.	Waiver of Rights		35
8.05.	Reinstatement		36
8.06.	Remedies		36
8.07.	Limitation of Cross-Guaranty		36
ARTICLE IX PARTIAL RELEASE OF COLLATERAL; ASSUMPTION OF MORTGAGE
9.01.	Partial Release of Collateral		36
9.02.	Application of the Release Payment		38

ii

ARTICLE X MISCELLANEOUS
10.01.	Amendments, Etc.	38
10.02.	Notices, Etc.	38
10.03.	No Waiver; Remedies	39
10.04.	Costs, Expenses	39
10.05.	Binding Effect	42
10.06.	Execution in Counterparts	42
10.07.	Jurisdiction, Etc.	42
10.08.	Governing Law	43
10.09.	Waiver of Jury Trial	43
10.10.	Compliance with Usury Laws	43
10.11.	Limitation on Personal Liability	43
SCHEDULES
Schedule A - List of Properties and Allocated Loan Amounts
Schedule B - Disclosure Schedule
EXHIBITS
Exhibit A - Form of Limited Indemnity
Exhibit B - Form of Assignment and Acceptance
Exhibit C - Partial Release

iii

CREDIT AGREEMENT

               CREDIT AGREEMENT (this “Agreement”) dated as of September 28, 1998 by and among JEFFERSON VILLAGE, L.P., JEFFERSON AT SUNSET VALLEY, L.P. and JPI CORAL SPRINGS, L.P. (each a “Borrower” and collectively, the “Borrowers”), each having an address at 600 East Las Colinas Boulevard, Suite 1800, Irving, Texas 75039 and GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation (together with its successors and assigns, the “Lender”), having an address at 31 West 52^nd Street, New York, New York 10019.

WITNESSETH:

               WHEREAS, the Borrowers are the respective owners of the properties listed on Schedule A attached hereto (each a “Property” and collectively, the “Properties”);

               WHEREAS, the Borrowers have requested and the Lender has agreed to make loans to the Borrowers in an aggregate principal amount of FIFTY-EIGHT MILLION EIGHT DOLLARS ($58,800,000) (the “Loan”), which will be secured, inter alia, by a first mortgage lien on the Properties, all on the terms and conditions of this Agreement;

               WHEREAS, the Borrowers are special purpose Affiliates of JPI Investment Company, L.P.;

               NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

               SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

               “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to vote ten percent (10%) or more of the Voting Stock of such Person or to direct or cause the direction of the management and

policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.

               “Allocated Loan Amount” means, with respect to each Property, the portion of the outstanding principal amount of the Loan as of the relevant date of determination allocated to such Property as set forth on Schedule A attached hereto.

               “Assignee” means any assignee of the Lender pursuant to Section 7.01.

               “Assignment and Acceptance” means an assignment and acceptance entered into by the Lender and an Assignee, and accepted by the Lender, in accordance with Section 7.01 and in substantially the form of Exhibit B hereto.

               “Borrowers” has the meaning specified in the recitals to this Agreement.

               “Business Day” means a day of the year on which banks are not required or authorized by law to close in New York City or the city in which the principal office of the Loan Servicer is located.

               “Carmil” means Carmil Capital Corporation, a Texas corporation, which is the sole member of the General Partner.

               “Change of Control” means with respect to any Person (i) the sale or transfer by Persons who are the direct beneficial owners of such Person as of the Closing Date of more than forty-nine and nine-tenths percent (49.9%) of the direct or indirect right to distributions from such Person in the aggregate to Persons who were not direct beneficial owners as of such date or (ii) the sale or transfer by such direct beneficial owners of such Person as of the Closing Date of more than forty-nine and nine-tenths percent (49.9%) of the direct or indirect voting rights in such Person to Persons who were not direct beneficial owners as of such date.

               “Closing Date” means the date on which the proceeds of the Loan are disbursed to the Borrowers.

               “Collateral” means all “Collateral” referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Lender.

               “Collateral Documents” means the Mortgages and any other agreement that creates or purports to create a Lien in favor of the Lender.

               “Cross-Guarantors” means each of the Borrowers as guarantors in accordance with Article VIII.

2

               “Cross-Guaranty” has the meaning set forth in Section 8.01.

               “Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than ninety (90) days incurred in the ordinary course of such Person’s business), (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities, (g) all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any capital stock of or other ownership or profit interest in such Person or any other Person, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (h) all Debt of others referred to in clauses (a) through (g) above or clause (i) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (i) all Debt referred to in clauses (a) through (h) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt.

               “Debt Service” means, for any period, the principal, interest payment, Default Rate interest and Late Charges that accrue or are due and payable in accordance with the Loan Documents or the Mezzanine Loan Documents during such period. For purposes hereof: (i) “Debt Services” with respect to the Mezzanine Loan shall be determined in accordance with the definition of “Debt Service Coverage Ratios” set forth in the Mezzanine Loan Agreement and (ii) “Debt Service” with respect to the Loan shall be equal to the monthly payments that would be payable with respect to the Loan during the applicable period in accordance with this Agreement and the Notes.

3

               “Debt Service Coverage Ratio” means the ratio, expressed in decimals, obtained by dividing Net Operating Cash Flow by the Debt Service.

               “Default” means any Event of Default or any event that would constitute an Event of Default under this Agreement but for the requirement that notice be given or time elapse or both.

               “Disclosed Litigation” has the meaning specified in Section 3.01(b).

               “Events of Default” has the meaning specified in Section 6.01.

               “Expenses” means, with respect to any Property for any given period, all expenses paid, accrued or payable, as determined in accordance with GAAP by Mezzanine Borrower or the Company or the General Partner, as the case may be, during that period in connection with the operation of such Property, as provided for in the current Approved Operating Budget or expressly approved of in advance by Mezzanine Lender, in each case to be determined without duplication, including, without limitation:

               1. expenses for cleaning, repair, maintenance, decoration and painting of the Properties (including, without limitation, parking lots and roadways), net of any insurance proceeds in respect of any of the foregoing;

               2. wages (including overtime payments), benefits, payroll taxes and all other related expenses for on-site personnel, up to and including (but not above) the level of the on-site property manager, engaged in the repair, operation and maintenance of such Property and service to tenants and on-site personnel engaged in audit and accounting functions performed by Mezzanine Borrower, the Company or the General Partner;

               3. management fees and other costs required to be reimbursed to Manager pursuant to the Management Agreement approved by the Mezzanine Lender. Such fees shall include all fees for management services whether such services are performed at such Property or off-site;

               4. the costs of all electricity, oil, gas, water, steam, heat, ventilation, air conditioning and any other energy, utility or similar item and the costs of building and cleaning supplies;

               5. rent, liability, casualty, fidelity, errors and omissions, workmen’s compensation and other required insurance premiums;

               6. legal, accounting and other professional fees and expenses;

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               7. the cost (including leasing and financing) of all equipment to be used in the ordinary course of business, which is not capitalized in accordance with GAAP;

               8. real estate, personal property and other taxes;

               9. advertising and other marketing costs and expenses;

               10. casualty losses to the extent not reimbursed by an independent third party; and

               11. any payments pursuant to any contractual agreement which provides for the servicing, maintenance, normal replacement or repair (as opposed to capital replacement or capital repair) of the Properties.

               Notwithstanding the foregoing, Expenses shall not include (i) depreciation or amortization; (ii) interest, principal, fees, costs and expense reimbursements of the Mezzanine Lender or the First Mortgage Lender in administering the loans; (iii) any expenditure (including leasing and financial costs, leasing commissions, tenant concessions and improvements, and replacement reserves) which is property treatable as a capital item under GAAP other than those that are included in the Approved Operating Budget or otherwise are approved of, in writing, by Mezzanine Lender; or (iv) any expenditure that would otherwise constitute an Expense to the extent such item is funded from the First Mortgage Loan Reserves, or from any reserve maintained under the Mezzanine Loan Documents.

               “Fiscal Year” means a fiscal year of the Borrowers and their Subsidiaries ending on December 31 in any calendar year or such other fiscal year as the Borrower may select from time to time in accordance with the terms of this Agreement.

               “GAAP” means generally accepted accounting principles consistently applied and consistent with those applied in the preparation of the financial statements referred to in Section 3.01.

               “General Partner” means JPI Portfolio I GP1 LLC, a Texas limited liability company, which is the sole general partner of each Borrower.

               “Governmental Authority” shall mean (i) any nation or government, (ii) any state or other political subdivision thereof, (iii) any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, (iv) any court or arbitrator having jurisdiction over the Loan Parties or any of their

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Subsidiaries, any of their respective Subsidiaries or any of their respective Properties, and (v) any corporation or other entity which is an Affiliate of any of the foregoing.

               “Guaranteed Obligations” shall mean:

               (i) the payment, as and when due, or by stated maturity, acceleration, or otherwise, of the Notes and all other amounts due and payable under the other Loan Documents to the Lender at such times and in the manner provided for in the Loan Documents, and

               (ii) the payment of all other obligations of the Borrowers that can be performed by the payment of monies, to the Lender directly or by reimbursement of advances by it, including, without limitation, the payment of income and other taxes by the Borrowers.

               “Limited Indemnity” has the meaning specified in Section 3.01(d)(viii).

               “Impositions” has the meaning specified in the Mortgages.

               “Indemnified Party” has the meaning specified in Section 9.04(f).

               “Indemnitor” means JPI Investment Company, L.P., together with any successors thereto in accordance with the terms of the Limited Indemnity.

               “Independent” means, with respect to any specified Person, such a Person who (a) does not have any direct financial interest or any material indirect financial interest in JPI Investment Company, L.P., any of the Borrowers or in any of their respective Affiliates, (b) is not connected with JPI Investment Company, L.P. or the Borrowers as an officer, employee, promoter, underwriter, trustee, partner or director and (c) is not controlled by or under common control with JPI Investment Company, L.P., or the Borrowers.

               “Independent Director” who shall not have been at the time of such individual’s appointment, and may not have been at any time during the preceding five years, and shall not be at any time while serving as Independent Director: (i) a shareholder of, or attorney, counsel, partner, member or employee of, such corporation (other than an Independent Director thereof) (ii) supplier to, or other person who derives more than 10% of its purchases or revenues from its activities with such corporation or any Affiliate thereof, (iii) a person or other entity controlling, controlled by or under common control with any such shareholder, officer,

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director, attorney, counsel, partner, member, employee, customer, supplier or other Person, or (iv) a member of the immediate family of any such shareholder, officer, director, attorney, counsel, partner, member, employee, customer, supplier or other Person. As used herein, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person or entity, whether through ownership of voting securities or other beneficial interest, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

               “Interest Payment Date” means the first (1st) day of each calendar month while any portion of the Loan remains unpaid; provided, however, that if such Interest Payment Date is not a Business Day, such Interest Payment Date shall be the immediately succeeding Business Day.

               “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

               “Laws” means all present and future laws, statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules, regulations, determinations, awards and court orders of any federal, state, municipal or local government, governmental authority, regulatory agency or authority.

               “Lender Party” means, collectively Lender and any assignee of all or a portion of Lender’s interests in this Agreement or the Loan and any subsequent assignee of any Lender Party.

               “Lender’s Account” means an account of the Lender or Loan Servicer designated in writing by the Lender or Loan Servicer to the Borrowers.

               “Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

               “Loan” has the meaning specified in the Recitals.

               “Loan Documents” means (i) this Agreement, (ii) the Notes, (iii) the Mortgages, (iv) the Limited Indemnity and (v) any other written agreement, document or instrument evidencing, securing or otherwise related to the Loan, in each case as amended or otherwise modified from time to time.

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               “Loan Parties” means, collectively, the Borrowers (individually and as Cross-Guarantors) and JPI Investment Company, L.P. in its capacity as Indemnitor under the Limited Indemnity.

               “Loan Servicer” has the meaning specified in Section 7.03.

               “Management Agreement” means any management agreement between the Borrowers and a Manager with respect to the management and operation of the Properties.

               “Manager” means any property manager approved by the Lender for any of the Properties.

               “Material Adverse Effect” means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance or properties of any the Borrowers or JPI Investment Company, L.P., (b) the rights and remedies of the Lender under any Loan Document or (c) the ability of any of the Borrowers or JPI Investment Company L.P. to perform its Obligations under any Loan Document to which it is or is to be a party.

               “Maturity Date” means September 28, 2008.

               “Mezzanine Borrower” means JPI Portfolio I, L.P., the limited partner of each Borrower.

               “Mezzanine Lender” means CAPITAL TRUST, a California business trust, having an address at 605 Third Avenue, New York, New York 10016, Attention: Loan Administrator, Telefax Number (212) 655-0044 (together with its successors and assigns).

               “Mezzanine Loan” means three (3) loans (individually, and collectively, the “Mezzanine Loan”) from Mezzanine Lender in the aggregate principal amount of TEN MILLION DOLLARS ($10,000,000.00).

               “Mezzanine Loan Agreement” means that loan agreement dated as of the date hereof between Mezzanine Lender and Mezzanine Borrower, as the same may be amended or modified from time to time..

               “Mortgages” has the meaning specified in Section 3.01(d)(vii).

               “Mortgage Policy” has the meaning specified in Section 3.01(d)(vii)(B).

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               “Net Operating Cash Flow” means, for any 6-month period, calculated on a trailing basis, the amount, determined by Mezzanine Lender, equal to the excess of (a) annualized Receipts for such period (adjusted to give effect, to the extent that the vacancy rate at any Property is less than 5%, to a vacancy factor such that the sum of actual vacancy rate plus such vacancy factor equals 5%), minus (b) annualized Expenses during the applicable period, including amounts required during such period to fund structural replacement and leasing reserves in accordance with the First Mortgage Loan Documents, less amounts, if any, on deposit in the Replacement Reserve Account during the applicable period.

               “Notes” means, collectively, a promissory note of each Borrower payable to the order of the Lender, in form and substance satisfactory to the Lender, evidencing the indebtedness of such Borrower to the Lender resulting from the Loan made by the Lender. The principal amount of each Note shall be equal to the Allocated Loan Value of the Property owned by the applicable Borrower.

               “Obligation” means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding. Without limiting the generality of the foregoing, the Obligations of the Borrowers under the Loan Documents include (a) the obligation to pay principal, interest, charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by the Borrowers under any Loan Document and (b) the obligation of the Borrowers to reimburse any amount in respect of any of the foregoing that the Lender, in its sole discretion, may elect to pay or advance on behalf of any Borrower.

               “Organizational Documents” means, (i) with respect to any Person that is a corporation, the certificate of incorporation or charter and by-laws of such Person, (ii) with respect to any Person that is a partnership, the partnership agreement and, if a limited partnership, certificate of limited partnership of such person, and (iii) with respect to any Person that is a limited liability company, the articles of organization and the operating agreement of such Person.

               “Origination Fee” has the meaning specified in Section 2.09.

               “Owner” and “Owners” means each of, and collectively, JPI Portfolio I GP2 LLC, a Texas limited liability company, which is the sole general partner of the Mezzanine Borrower; and JPI Investment Company, L.P., a Texas limited partnership, which is the

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sole limited partner of the Mezzanine Borrower, and their respective permitted successors and assigns.

               “Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

               “Phase I Reports” means Phase I environmental assessment reports with respect to each of the Properties, in form and substance satisfactory to the Lender, prepared by E.M.G. or such other environmental consulting firm reasonably acceptable to the Lender, which have been provided to Lender.

               “Premises” has the meaning specified in the Mortgages.

               “Principals” means JPIIC and Carmil.

               “Properties” has the meaning specified in the Recitals as listed on Schedule A attached hereto, as more particularly described in the Mortgages.

               “Rating Agencies” means Fitch Investors Services, Inc., Moody’s Investors Service, Inc., Duff & Phelps Credit Rating Co. and S&P or any successor thereto, and any other nationally recognized statistical rating organization to the extent that any of the foregoing have been or will be engaged by Mezzanine Lender or its designees in connection with or in anticipation of a Securitization (each individually a “Rating Agency”).

               “Register” has the meaning specified in Section 7.01(d).

               “Replacement Collateral” has the meaning specified in Section 2.06(C)(2).

               “Replacement Security Agreement” means the pledge and security agreement, in form and substance reasonably satisfactory to Lender in its sole discretion, creating a first priority security interest in favor of Lender in the Replacement Collateral.

               “Responsible Officer” means any officer of any Loan Party or any of its Subsidiaries.

               “Secured Obligations” has the meaning specified in the Mortgages.

               “Solvent” and “Solvency” mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person,

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(b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (c) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

               “Specified Repairs” means those repairs with respect to the Properties set forth on Schedule C attached hereto.

               “Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than fifty percent (50%) of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

               “Title Company” means Lawyers Title Insurance Company.

               SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

               SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP.

ARTICLE II

AMOUNT AND TERMS OF THE LOAN

               SECTION 2.01. The Loan. Subject to the terms and conditions set forth in this Agreement, the Lender shall lend to the Borrowers, and the Borrowers shall borrow from the Lender, a principal amount equal to FIFTY-EIGHT MILLION EIGHT HUNDRED THOUSAND DOLLARS ($58,800,000). Amounts of the Loan borrowed, repaid or prepaid by the Borrower may not be reborrowed.

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               SECTION 2.02. Making the Loan. Upon satisfaction of the conditions precedent set forth in Article III to Lender’s obligation pursuant to this Agreement, the Loan shall be made on the Closing Date. The Lender shall disburse a portion of the aggregate principal amount of the Loan to each of the Borrowers equal to the Allocated Loan Value of the Property owned by the respective Borrowers.

               SECTION 2.03. Repayment of the Loan. Borrowers shall duly and punctually pay or cause to be paid, the principal of and the interest and premium, if any, on the Notes in accordance with the respective terms hereof and thereof, without demand therefor or presentation of the Notes, in lawful money of the United States of America.

               SECTION 2.04. Application of Payments. So long as no Event of Default exists hereunder which has not been waived, each Monthly Payment shall be applied first, to any amounts hereafter advanced by Lender under any Loan Document, second, to any late fees and other amounts payable to Lender, third, to the payment of accrued interest and last to reduction of principal.

               SECTION 2.05. Prepayment.

               (a) Except as otherwise provided in Sections 2.06 and 9.01, the Loan may not be prepaid in whole or in part.

               (b) Partial prepayments of the Loan shall not be permitted, except for partial prepayments resulting from Lender’s election to apply insurance or condemnation proceeds to reduce the outstanding principal balance of the Loan as provided in Section 3.1(b) of the Mortgages, in which event no prepayment fee or premium shall be due unless, at the time of either Lender’s receipt of such proceeds or the application of such proceeds to the outstanding principal balance of the Loan, an Event of Default shall have occurred and not been waived, in which case, the provisions of Section 15.2 of the Mortgages shall be controlling.

               (c) If the indebtedness evidenced by the Notes shall have been declared due and payable by Lender pursuant to the terms thereof or the terms hereof or the provisions of any other Loan Document due to a default by Borrowers, then there shall also then be immediately due and payable, a prepayment fee in an amount equal to the greater of (A) five percent (5%) of the then outstanding principal balance of the Notes on the date of acceleration, and (B) the Premium (as defined and calculated pursuant to Section 2.06 below) or (C) the maximum prepayment fee allowed to be collected by law. In the event that any prepayment fee is due hereunder, Lender shall deliver to Borrowers a statement setting forth the amount and determination of the prepayment fee, and provided that Lender shall have in good faith applied the formula described above, B orrowers shall not have the right to challenge the calculation or the method of calculation set forth in any such statement in the absence of manifest error.

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               SECTION 2.06. Replacement. Notwithstanding any provision of the Mortgages to the contrary, at any time after the date which (1) is two years after the “startup day,” within the meaning of Section 860G(a)(9) of the Internal Revenue Code of 1986, as amended from time to time or any successor statute (the “Code”), of a “real estate mortgage investment conduit,” (“REMIC”) within the meaning of Section 860D of the Code, that holds the Notes and the Mortgages or (2) three (3) years after the date hereof, whichever shall earlier occur, and provided no Event of Default has occurred, Borrowers may cause the release by recordable instrument deed of the Mortgaged Properties from the liens of the Mortgages and the other Loan Documents upon the satisfaction of the following conditions :

     (A) not less than thirty (30) days prior written notice shall be given to Lender specifying a Payment Date (the “Release Date”) on which the Replacement Collateral is to be delivered;

     (B) all accrued and unpaid interest and all other sums due under the Mortgages, the Notes and under the other Loan Documents up to the Release Date, including, without limitation, all costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the review of the proposed Replacement Collateral and the preparation of the Replacement Security Agreement (as hereinafter defined) and related documentation), shall be paid in full on or prior to the Release Date; and

     (C) Borrowers shall deliver to Lender on or prior to the Release Date:

(1) a pledge and security agreement, in form and substance reasonably satisfactory to Lender, creating a first priority security interest in favor of Lender in the Replacement Collateral (the “Replacement Security Agreement”), which shall provide, among other things, that any payments generated by the Replacement Collateral shall be paid directly to Lender and applied by Lender in satisfaction of all amounts then due and payable hereunder and any excess received by Lender from the Replacement Collateral over the amounts payable by Borrowers hereunder or under the Notes shall be refunded to Borrowers promptly after each Payment Date;

(2) direct, non-callable obligations of the United States of America that provide for payments prior, but as close as possible, to all successive Payment Dates occurring after the Release Date, with each such payment being equal to or greater than the amount of the corresponding aggregate installment of principal and interest required to be paid under the Notes (provided that for all purposes of this Section 2.06(C)(2), all principal, accrued interest and other amounts payable under the Mortgages, the Notes and the other Loan Documents shall be due and payable in full on

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the Maturity Date) (the “Replacement Collateral”), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance reasonably satisfactory to Lender (including, without limitation, such instruments as may be required by the depository institution holding such securities or the issuer thereof, as the case may be, to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to perfect upon the delivery of the Replacement Security Agreement the first priority security interest in the Replacement Collateral in favor of Lender in conformity with all applicable state and federal laws governing granting of such security interests;

(3) a certificate of Borrowers certifying that all of the requirements set forth in this Section 2.06 have been satisfied;

(4) an opinion of counsel for Borrowers in form and substance and delivered by counsel reasonably satisfactory to Lender in its sole discretion stating, among other things, that (x) Lender has a perfected first priority security interest in the Replacement Collateral and that the Replacement Security Agreement is enforceable against Borrowers in accordance with its terms and (y) that any trust formed as a REMIC pursuant to a securitization will not fail to maintain its status as a REMIC as a result of such replacement; and

(5) such other certificates, documents or instruments as Lender may reasonably require.

               Upon compliance with the requirements of this Section 2.06, the Mortgaged Properties shall be released from the lien of the Mortgages and the other Loan Documents, and the Replacement Collateral shall constitute collateral which shall secure the Notes and all other obligations under the Loan Documents. Lender will, at Borrowers“ expense, execute and deliver a recordable release instrument as aforesaid and any other instruments reasonably requested by Borrowers to release the Mortgaged Properties from the lien of the Mortgages and the other Loan Documents, with the exception of the Note which shall remain in full force and effect. Upon the release of the Mortgaged Properties in accordance with this Section 2.06, Borrowers may assign all their obligations and rights under the Notes, together with the pledged Replacement C ollateral, to a successor entity designated by Borrowers and approved by Lender in its sole discretion. Such successor entity shall execute an assumption agreement in form and substance reasonably satisfactory to Lender pursuant to which it shall assume Borrowers’ obligations under the Notes and the Replacement Security Agreement. As conditions to such assignment and assumption, Borrowers shall (x) deliver to Lender an opinion of counsel in form and substance and delivered by counsel satisfactory to Lender in its reasonable discretion stating,

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among other things, that such assumption agreement is enforceable against Borrowers and such successor entity in accordance with its terms and that the Notes, the Replacement Security Agreement and the other Loan Documents, as so assumed, are enforceable against such successor entity in accordance with their respective terms, and (y) pay all costs and expenses incurred by Lender or its agents in connection with such assignment and assumption (including, without limitation, the review of the proposed transferee and the preparation of the assumption agreement and related documentation). Upon such assumption, Borrowers shall be relieved of their obligations hereunder, under the other Loan Documents and under the Replacement Security Agreement.

               Anything to the contrary provided in this Section 2.06 notwithstanding, in the event that Borrowers shall be unable to obtain the opinion of counsel described in paragraph (4) above, then, in such event Borrowers may prepay the principal balance of the Notes upon not less than sixty (60) days’ prior written notice to Lender specifying the Payment Date on which prepayment is to be made (the “Tender Date”) and upon payment of (a) interest accrued and unpaid on the principal balance of the Notes to and including the Tender Date, (b) all other sums then due under the Notes, the Mortgages and the other Loan Documents, and (c) a prepayment consideration (the “Premium”) as provided and determined below.

               If any notice of prepayment is given, the principal balance of the Notes and the other sums required under the immediately preceding paragraph shall be due and payable on the Tender Date. Lender shall not be obligated to accept any prepayment of the principal balance of the Notes unless (a) the payment is accompanied by the required Premium and all other sums required under the immediately preceding paragraph and (b) the prepayment is made on the applicable Tender Date. If, for any reason, the principal balance of the Notes is paid on a date other than the first day of a month, in addition to the amounts due and payable hereunder, the Borrowers shall pay interest accrued and unpaid on the principal balance of the Notes to and including the first day of the calendar month immediately following the Tender Date.

               The “Premium” shall be equal to the greater of (a) the present value of the Income Difference (as hereinafter defined), or (b) one percent (1%) of the unpaid principal balance of the Notes immediately preceding such prepayment.

               The “Income Difference” is hereby defined, and shall be calculated, as follows:

     (A) Calculate the total amount of interest (the “Interest Income”) that would accrue to Lender on account of the principal balance of the Notes at the Notes’ Rate (as defined in the Notes) between the Tender Date and the last day of the Yield Maintenance Period (as hereinafter defined); then

     (B) Calculate the total amount of investment income (the “Investment Income”) that would be earned by Lender from the Tender Date through the last day of

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the Yield Maintenance Period if the principal balance of the Notes as of the Tender Date were invested in United States Government general issue Treasury Securities at the Comparable Treasury Rate (as hereinafter defined) during the Yield Maintenance Period, and such investment called for a series of monthly interest payments at that rate throughout the Yield Maintenance Period; then

     (C) Calculate the difference, if any, between the Investment Income and the Interest Income during the Yield Maintenance Period (the “Income Difference”) by subtracting the Investment Income from the Interest Income then

     (D) If the Income Difference is a positive number, the Premium shall be an amount equal to the present value of the Income Difference as of the Tender Date, based on (i) a stream of monthly interest payments corresponding to the stream of payments comprising the Income Difference, and (ii) a discount rate equal to the Comparable Treasury Rate and trading closest to par.

               The “Yield Maintenance Period” means the period of time beginning as of the Tender Date, and ending on the Maturity Date. The “Comparable Treasury Rate” means the rate of interest which is equal to the average yield (determined by Lender as of the date which is seven (7) days prior to the Tender Date) on then generally available United States Government general issue Treasury Securities maturing nearest to the ending date of the Yield Maintenance Period.

               Borrowers acknowledge and agree that such Premium represents a reasonable and fair estimate of compensation for the loss that Lender may sustain from the prepayment of the Notes. Each of the Borrowers acknowledges and agrees that it has no right to prepay the Notes without paying the Premium except as specifically provided hereinafter and each of the Borrowers specifically acknowledges and agrees that it shall be liable for the Premium upon any acceleration of the Notes in accordance with their respective terms at any time, in addition to the principal amount and all outstanding interest, fees, penalties and other sums due hereunder, under the Mortgages or under any of the other collateral documents.

               The Premium provided above shall be due, to the extent permitted by applicable law, under any and all circumstances where all or any portion of the Notes is paid prior to the Maturity Date, whether such prepayment is voluntary or involuntary, even if such prepayment results from Lender’s exercise of its rights upon Borrowers’ default and acceleration of the maturity date of the Notes (irrespective of whether foreclosure proceedings have been commenced), and shall be in addition to any other sums due hereunder, under the Mortgages or under any of the other Loan Documents. Notwithstanding anything contained herein to the contrary, no premium hall be payable in respect of a prepayment made during the last one hundred eighty (180) calender days of the term of a Note.

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               If Lender elects to apply condemnation proceeds or casualty proceeds as a full or partial prepayment of the outstanding principal amount of the Notes, such application shall be without payment of a Premium, unless, however, an Event of Default, or an event which, with notice and/or the passage of time, or both, would constitute an Event of Default, has occurred, in which event the applicable Premium shall be due and payable based upon the amount of the prepayment.

               For purposes of the Notes, the term “Loan Year” shall mean a period of twelve (12) full consecutive calendar months. The first Loan Year shall commence on the first (1st) day of the first (1st) full calendar month after the date hereof or, if the date hereof is the first (1st) day of a calendar month, on the date hereof, and end on the day immediately preceding the day that is the first anniversary of the date on which the first (1st) Loan Year commences. Each Loan Year after the first (1st) Loan Year shall commence on the date following the last day of the immediately preceding Loan Year and shall continue for a period of twelve (12) full consecutive calendar months.

               SECTION 2.07. Fees. (a) Origination Fee. In consideration of the Lender’s commitment to make the Loan pursuant to the terms of this Agreement, the Borrowers shall pay to the Lender on the Closing Date an origination fee (the “Origination Fee”) in the aggregate amount of ONE HUNDRED FIFTY-TWO THOUSAND FIVE HUNDRED DOLLARS ($152,500). Lender hereby acknowledges that such Origination Fee has been paid in full by Borrowers.

               SECTION 2.08. Taxes. (a) Any and all payments by each of the Borrowers hereunder or under the Notes shall be made, in accordance with Section 2.02, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes that are imposed on the Lender’s overall net income by the United States, taxes that are imposed on the Lender’s overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which the Lender is organized or does business or any political subdivision thereof, and taxes that are imposed on Lender’s overall net income in any jurisdiction where Lender does business or where any of the Properties are located (all such excluded taxes being hereafter referred to as “Excluded Taxes” and all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as “Taxes”). If any of the Borrowers shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under the Notes to the Lender (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.08) the Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

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               (b) In addition, the Borrowers shall pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes other than Excluded Taxes (hereinafter referred to as “Other Taxes”).

               (c) The Borrowers shall indemnify the Lender for and hold it harmless against the full amount of Taxes and Other Taxes imposed on or paid by the Lender and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within (30) thirty days from the date the Lender makes written demand therefor.

               (d) Within (30) thirty days after the date of any payment of Taxes, the Borrowers shall furnish to the Lender, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment or a copy of a canceled check evidencing such payment. In the case of any payment hereunder or under the Notes by or on behalf of the Borrowers through an account or branch outside the United States or by or on behalf of the Borrowers by a payor that is not a United States person, if the Borrowers determine that no Taxes are payable in respect thereof, the Borrowers shall furnish, or shall cause such payor to furnish, to the Lender, at such address, an opinion of counsel acceptable to the Lender stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms “United States”and “United States person” shall have the meanings specified in Section 7701 of the Internal Revenue Code.

               (e) The Lender shall, on or prior to the date of its execution and delivery of this Agreement, and from time to time thereafter as requested in writing by the Borrowers (but only so long thereafter as the Lender remains lawfully able to do so), provide the Borrowers with two original Internal Revenue Service forms 1001 or 4224, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that the Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form 1001 or 4224 that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information.

               (f) For any period with respect to which the Lender has failed to provide the Borrowers with the appropriate form described in subsection (e) above (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required under subsection (e) above), the Lender shall not be entitled to indemnification under subsection (a) or (c) with respect to Taxes imposed by

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the United States by reason of such failure; provided, however, that should the Lender become subject to Taxes because of its failure to deliver a form required hereunder, the Borrowers shall take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes.

               SECTION 2.09. Increased Costs. Etc. If, due to either (i) the introduction of or any change in or in the interpretation by any applicable Governmental Authority of any law or regulation or (ii) the compliance with any guideline or requirement from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the amount of capital required by the Lender or any corporation controlling the Lender as a result of or based upon the existence of the Lender’s commitment to lend hereunder, then, five (5) days after written demand by the Lender, the Borrowers shall pay to the Lender, from time to time as specified by the Lender, additional amounts sufficient to compensate the Lender in the light of such circumstances, to the extent that the Lender reasonably determines s uch increase in capital to be allocable to the existence of the Lender’s commitment to lend hereunder. A certificate as to such amounts submitted to the Borrowers by the Lender shall be conclusive and binding for all purposes, absent manifest error. To the extent the Lender delivers such a certificate to any of the Borrowers, such Borrower shall have the right to prepay its Note in whole, not in part, without any exit fee or prepayment premium.

               SECTION 2.10. Security for the Loan. The Notes are secured by, among other things, (a) the Mortgages from Borrowers, as mortgagors, to Lender, as mortgagee, covering certain real property, consisting of land and the buildings and improvements thereon as described on Schedule A attached hereto (the “Mortgaged Properties”) and (b) assignments of leases and rents (the “Assignments”), from Borrowers to Lender. Reference is made to such documents for a description of the nature and extent of the security afforded thereby, the rights of the holder hereof in respect of such security and the terms and conditions upon which the Notes are secured. The holder of the Notes is entitled to the benefits of the Mortgages and the Assignments and may enforce the agreements of Borrowers contained herein and th erein and exercise the remedies provided herein or therein or otherwise in respect hereof or thereof, all in accordance with the terms hereof and thereof.

               SECTION2.1l. The Notes. Each Borrower’s obligation to pay the principal of and interest on its applicable portion of the Loan shall be evidenced by the related Note, which shall be duly executed and delivered by such Borrower on the Closing Date. The Notes shall be payable as to principal, interest and all other amounts due under the Loan Documents, as specified in this Agreement, the Notes, and the other Loan Documents.

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ARTICLE III

CONDITIONS OF LENDING

               SECTION 3.01. Conditions Precedent to Disbursement of the Loan. The obligation of the Lender to make the Loan hereunder is subject to the satisfaction of the following conditions precedent before or concurrently with the Closing Date:

     (a) The following statements shall be true on the Closing Date and each Borrower shall have delivered to the Lender a certificate executed by a Responsible Officer to such effect:

     (i) the representations and warranties contained in each Loan Document are correct on and as of the Closing Date, before and after giving effect to the making of the Loan by the Lender and to the application of the proceeds therefrom, as though made on and as of such date; and

     (ii) no material event has occurred and is continuing, or would result from the making of the Loan by the Lender or from the application of the proceeds therefrom, that constitutes a Default.

     (b) There shall exist no action, suit, investigation, litigation or proceeding affecting the Borrowers or the Properties pending or threatened before any court, governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect other than the matters described on the Disclosure Schedule (the “Disclosed Litigation”) or (ii) purports to affect the legality, validity or enforceability of, this Agreement, the Notes, any other Loan Document or the consummation of the transactions contemplated hereby.

     (c) The Borrowers shall have paid or caused to be paid all reasonable and documented accrued fees and expenses of the Lender which the Borrowers are required to pay under the Loan Documents (including the accrued fees and expenses of counsel to the Lender).

     (d) The Lender shall have received on or before the Closing Date the following, each dated such day (unless otherwise specified), in form and substance satisfactory to the Lender (unless otherwise specified):

     (i) The Notes payable to the order of the Lender.

     (ii) General Partner Resolutions for each Borrower approving this Agreement, the related Note and each other Loan Document to which such

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Borrower is or is to be a party, and of all documents evidencing other necessary action and governmental and other third party approvals and consents, if any, with respect to such Borrower, the Loan, this Agreement, the related Note and each other Loan Document.

     (iii) A copy of the Organizational Documents of each Borrower, in each case together with each amendment thereto, and, in the case of the by-laws of each Borrower, certified (as of the Closing Date) by the Secretary of State of the jurisdiction of its formation or incorporation as being a true and correct copy thereof.

     (iv) For each Borrower, a copy of a certificate of the Texas Secretary of State, dated reasonably near the Closing Date, certifying that (A) such Borrower has paid all applicable franchise taxes to the date of such certificate and (B) such Borrower is duly formed and in good standing under the laws of the State of Texas.

     (v) A copy of a certificate of the Secretary of State of each state in which any of the Properties is located, dated reasonably near the Closing Date, stating that the related Borrower is duly qualified and in good standing in such State and has filed all annual reports required to be filed to the date of such certificate.

     (vi) A certificate of an authorized member of each Borrower certifying the names and true signatures of the officers of such authorized member, authorized to sign this Agreement, the related Note and each other Loan Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder.

     (vii) Deeds of trust, trust deeds, mortgages, deeds to secure debt, leasehold mortgages and leasehold deeds of trust in form and substance satisfactory to the Lender and covering the Properties (as amended, supplemented or otherwise modified from time to time in accordance with their terms, the “Mortgages”), duly executed by the related Borrower, together with:

     (A) evidence that counterparts of the Mortgages have been duly executed and delivered for recording to the Title Company on or before the Closing Date in such form as Lender may deem necessary or desirable in order to create a valid first and subsisting Lien on the properties described therein in favor of the Lender and that provision has been made for the payment of all filing and recording taxes and fees,

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     (B) fully paid mortgagee title insurance policies (the “Mortgage Policies”) in form and substance, with endorsements and in amounts acceptable to, the Lender, issued by the Title Company, insuring the Mortgages to be valid first and subsisting Liens on the properties described therein, free and clear of all defects (including, but not limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting only Permitted Encumbrances (as defined in the Mortgages), and providing for such other affirmative insurance (including endorsements for mechanics’ and materialmen’s Liens) available under applicable law and such coinsurance and direct access reinsurance as the Lender may deem necessary or desirable,

     (C) American Land Title Association form surveys, certified to the Lender and the issuer of the Mortgage Policies in a manner satisfactory to the Lender by a land surveyor duly registered and licensed in the States in which the Properties described in such surveys are located and acceptable to the Lender, showing all buildings and other improvements, any off-site improvements, the location of any easements, parking spaces, rights of way, building set-back lines and other dimensional regulations and the absence of encroachments, either by such improvements onto other property or by improvements of others onto such property, and other defects, other than encroachments and other defects acceptable to the Lender,

     (D) Appraisals of each of the Properties indicating an aggregate Loan-to-Value Ratio (the “Loan to Value Ratio”) for the Properties not in excess of eighty percent (80%) and otherwise in form and substance satisfactory to the Lender,

     (E) engineering reports as to the Properties, in form and substance and from professional firms acceptable to the Lender,

     (F) evidence of the insurance required by the terms of the Mortgages, and

     (G) evidence that all other action that the Lender may deem reasonably necessary or desirable in order to create valid first and subsisting Liens on the Properties has been taken.

     (viii) An Indemnity Agreement in the form attached hereto as Exhibit A (as amended, supplemented or otherwise modified from time to time in accordance

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with its terms, (the “Limited Indemnity”), duly executed by JPI Investment Company, L.P.

     (ix) Such financial, business and other information regarding the Properties, the Borrowers and JPI Investment Company, L.P. as the Lender shall have reasonably requested, including, without limitation, information as to possible contingent liabilities, environmental matters, collective bargaining agreements, interim financial statements dated the end of the most recent fiscal quarter for which financial statements are available (or, in the event the Lender’s due diligence review reveals material changes since such financial statements, as of a later date within forty-five (45) days of the Closing Date).

     (x) The Phase I Reports for each of the Properties.

     (xi) A favorable opinion of Fulbright & Jaworski, counsel for each of the Borrowers, in form satisfactory to the Lender, as to:

     (a) the organization, existence, formation and good standing of the Borrowers; and

     (b) the authorization by the Borrowers of the Loan Documents.

     (xii) A favorable opinion of New York counsel to the Borrowers, in form satisfactory to the Lender, as to:

     (a) the enforceability of the Credit Agreement, the Notes, and the Limited Indemnity.

     (xiv) A favorable opinion of local counsel to each of the Borrowers in each jurisdiction in which any of the Properties are located, in form satisfactory to the Lender, as to:

     (a) the good standing and qualification to do business of the related Borrower in such jurisdiction; and

     (b) the enforceability of the Loan Documents that, by their terms, are governed by the law of such jurisdiction.

     (xv) A favorable opinion of Fulbright & Jaworski, as to the likelihood of the assets of each of the Borrowers being substantively consolidated with those of JPI Investment Company, L.P. or any owner of greater than forty-nine percent

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(49%) interest in the related Borrower or any general partner or managing member of the related Borrower in an insolvency proceeding, with respect to such owner.

     (xvi) On the Closing Date, the Lender shall disburse a portion of the Loan proceeds equal to the amount needed to complete the Specified Repairs into a separate escrow account of the Lender. Such escrow account shall be an interest bearing account and the applicable Borrower shall have the right to have an amount released from such escrow account equal to the amount allocated for a Specified Repair upon a written request to the Lender accompanied by reasonable evidence of completion of such Specified Repair. Until the funds in such escrow account are released, they shall constitute additional security for the Loan. When reasonable evidence has been provided that the Specified Repairs are complete with respect to a particular Borrower, the remaining funds in escrow with respect to such Borrower shall be released to such Borrower.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

               SECTION 4.01. Representations and Warranties of the Borrowers. Each of the Borrowers represents and warrants as follows: (a) No bankruptcy, reorganization or insolvency proceedings are pending or contemplated either by such Borrower or, to the best knowledge of such Borrower, against Borrower (or, if any Borrower is a partnership or a limited liability company, any of its general partners or members) or by or against any endorser or cosigner of the Notes or of any portion of the Loan, or any guarantor or indemnitor under any guaranty or indemnity agreement executed in connection with the Notes or the Loan evidenced thereby and secured hereby or by the Mortgages (an “Indemnitor”);

               (b) To the best of Borrower’s knowledge, all reports, certificates, affidavits, statements and other data furnished by or on behalf of such Borrower or JPI Investment Company, L.P. to Lender in connection with the Loan are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading;

               (c) The execution, delivery and performance of the Mortgages, the Notes and all of the other Loan Documents have been duly authorized by all necessary action to be, and are, binding and enforceable against Borrowers in accordance with the respective terms thereof and do not (i) contravene, result in a breach of or constitute a default (nor upon the giving of notice or the passage of time or both will the same constitute a default) under the organizational documents of Borrowers or any contract or agreement of any nature to which any Borrower is a party or by which any Borrower or any of its property may be bound or (ii) violate or contravene any law, order, decree, rule or regulation to which Borrowers are subject;

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               (d) Except as otherwise set forth in the Disclosure Schedule, there are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrowers’ knowledge, threatened against or affecting Borrowers (or, if any Borrower is a partnership or a limited liability company, any of its general partners or members) or the Mortgaged Properties which, if adversely determined, would materially impair either the Mortgaged Properties or Borrowers’ ability to perform the covenants or obligations required to be performed under the Loan Documents;

               (e) No Borrower is a “foreign person” within the meaning of §1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the related Treasury Department regulations, including temporary regulations;

               (f) Borrowers are not engaged, either directly or indirectly, in any business other than the ownership, management and operation of the Mortgaged Properties;

               (g) Borrowers are solvent; and

               (h) Borrowers have done or caused to be done all things necessary to preserve their existence, and have observed all formalities applicable to it.

ARTICLE V

COVENANTS

               SECTION 5.01. Covenants of the Borrowers. Each of the Borrowers covenants as follows:

     (a) Borrowers will not, nor will any partner, limited or general, member or shareholder thereof, as applicable, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by-laws, operating agreement, articles of organization or other formation agreement or document, as applicable, in any material term or manner, or in a manner which adversely affects such Borrower’s existence as a single purpose entity;

     (b) Borrowers will not liquidate or dissolve (or suffer any liquidation or dissolution), or enter into any transaction of merger or consolidation, or acquire by purchase or otherwise all or substantially all or any part of the business or assets of, or any stock or other evidence of beneficial ownership of, or make any investment in, any entity;

     (c) Other than the obligations pursuant to that certain Mezzanine Loan Agreement between Borrowers and Capital Trust Company dated of even date hereof,

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Borrowers will not guarantee, pledge its assets for the benefit of, or otherwise become liable on or in connection with, any obligation of any other person or entity;

     (d) Borrowers will not enter into any contract or agreement with any general partner, principal, affiliate or member of any Borrower, as applicable, or any affiliate of any general partner, principal or member of any Borrower, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with unrelated third parties;

     (e) Borrowers have not incurred and will not incur any additional Debt other than (i) the Loan, (ii) advances from affiliates, partners or members, as applicable, of any Borrower not to exceed $100,000 per Mortgaged Property to fund capital improvements or operating cash flow deficits, provided the same are fully subordinated to the payment in full of the Loan in a manner acceptable to Lender and are payable solely out of excess cash flow provided that Lender is current on all obligations under the Loan Documents and (iii) trade payables or accrued expenses incurred in the ordinary course of the business of operating the Mortgaged Properties, and no debt other than the Debt will be secured (senior, subordinate or pari passu) by the Mortgaged Properties;

     (f) Borrowers will not make any loans or advances to any third party (including any affiliate);

     (g) Borrowers will be solvent and pay their debts from their assets as the same shall become due;

     (h) Borrowers will do all things necessary to preserve their existence, and will observe all formalities applicable to it;

     (i) Borrowers will conduct and operate their business in their own name and as presently conducted and operated;

     (j) Borrowers will maintain financial statements, books and records and bank accounts separate from those of its affiliates, including, without limitation, their general partners or members, as applicable;

     (k) Borrowers will be, and at all times will hold themselves out to the public as, legal entities separate and distinct from any other entity (including, without limitation, any affiliate, general partner, or member, as applicable, or any affiliate of any general partner or member of any Borrower, as applicable);

     (l) Borrowers will file their own tax returns;

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     (m) Borrowers will maintain adequate capital for the normal obligations reasonably foreseeable in a business of their size and character and in light of its contemplated business operations;

     (n) Borrowers will establish and maintain an office through which their business will be conducted separate and apart from those of its affiliates or, if it shares office space with its affiliates, shall allocate fairly and reasonably any overhead and expense for shared office space;

     (o) Borrowers will not commingle the funds and other assets of Borrowers with those of any general partner, member, affiliate, principal or any other person;

     (p) Borrowers will maintain their assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any affiliate or any other person;

     (q) Borrowers will not hold themselves out to be responsible for the debts or obligations of any other person;

     (r) Borrowers will not engage, either directly or indirectly, in any business other than the ownership, management and operation of the Mortgaged Properties;

     (s) Borrowers will not guarantee, pledge its assets for the benefit of, or otherwise become liable on or in connection with, any obligation of any other person or entity;

     (t) Borrowers will not own any asset other than (i) the Mortgaged Properties, and (ii) incidental personal property necessary for the operation of the Mortgaged Properties;

     (u) Borrowers will pay any liabilities including salaries of their employees, out of their own funds and not funds of any affiliate; and

     (v) Borrowers will at all times during which any portion of the Loan remains outstanding, cause the general partner of each Borrower to maintain at least one Independent Director as set forth in the charter documents of Borrowers.

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ARTICLE VI

DEFAULT

               SECTION 6.01. Events of Default. The occurrence of any of the following events shall be an “Event of Default” hereunder:

     (a) Any Borrower shall fail to timely make payments of principal or interest as stipulated in its related Note and any such payment is not made within seven (7) days of the date such payment is due (provided that no grace period is provided for the payment of principal and interest due on the Maturity Date).

     (b) Any Borrower fails to maintain insurance against the risks or in the amounts required by its related Mortgage or fails to perform any covenant, agreement, obligation, term or condition set forth in Section 4.1 or 6.3 of its related Mortgage or Section 5.01 of this Agreement.

     (c) Any Borrower shall fail to perform any other covenant, agreement, obligation, term or condition set forth herein, other than those otherwise described in this Section 6.01, and, to the extent such failure or default is susceptible of being cured, the continuance of such failure or default for thirty (30) days after written notice thereof from Lender to such Borrower; provided, however, that if such default is susceptible of cure but such cure cannot be accomplished with reasonable diligence within said period of time, and if Borrowers commence to cure such default promptly after receipt of notice thereof from Lender, and thereafter prosecutes the curing of such default with reasonable diligence, such period of time shall be extended for such period of time as may be necessary to cure such default with reasonable diligence, but not to exceed an additional sixty (60) days.

     (d) Any representation or warranty made herein, in or in connection with any application or commitment relating to the Loan or in any of the other Loan Documents to Lender by any Loan Party, by any principal, general partner, manager or member in any Borrower, or by any Indemnitor was false or misleading in any material respect at the time made.

     (e) A default occurs under any of the other Loan Documents which has not been cured within any applicable grace or cure period therein provided or if no such grace period is provided under the applicable Loan Document, within the grace period provided in subsection (c) above.

     (f) Any Loan Party, any general partner or managing member of any Loan Party or any Indemnitor becomes insolvent, or makes a transfer in fraud of creditors, or

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makes an assignment for the benefit of creditors, or files a petition in bankruptcy, or is voluntarily adjudicated insolvent or bankrupt or admits in writing the inability to pay its debts as they mature, or petitions or applies to any tribunal for or consents to or fails to contest the appointment of a receiver, trustee, custodian or similar officer for such Loan Party, for any such general partner or managing member of any Loan Party or for a substantial part of the assets of any Loan Party, of any such general partner or managing member of any Loan Party, or commences any case, proceeding or other action under any bankruptcy, insolvency, reorganization, arrangement, receivership or other debtor relief under any law or statute of any jurisdiction, whether now or hereafter in effect.

     (g) A petition is filed or any case, proceeding or other action is commenced against Borrowers, against any general partner or managing member of any Loan Party seeking to have an order for relief entered against it as debtor or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts or other relief under any law relating to bankruptcy, insolvency, arrangement, reorganization, receivership or other debtor relief under any law or statute of any jurisdiction, whether now or hereafter in effect, or a court of competent jurisdiction enters an order for relief against any Loan Party, against any general partner or managing member of any Loan Party, as debtor, or an order, judgment or decree is entered appointing, with or without the consent of such Loan Party, of any such general partner or managing member of such Loan Party, a receiver, trustee, custodian or similar officer for any Loan Party, for any such general partner or managing member of such Loan Party, or for any substantial part of any of the properties of any Loan Party, of any such general partner or managing member of any Loan Party, and if any such event shall occur, such petition, case, proceeding, action, order, judgment or decree is not dismissed within sixty (60) days after being commenced.

     (h) The Mortgaged Properties or any part thereof is taken on execution or other process of law in any action against Borrowers other than in connection with a condemnation as to which Section 3.1 of the applicable Mortgage shall apply.

     (i) Borrowers abandon all or a portion of the Mortgaged Properties.

     (j) The holder of any Lien on the Mortgaged Properties (without implying the consent of Lender to the existence or creation of any such lien or security interest), whether superior or subordinate to the Mortgages or any of the other Loan Documents, declares a default and such default is not cured within any applicable grace or cure period set forth in the applicable document or such holder institutes foreclosure or other proceedings for the enforcement of its remedies thereunder.

     (k) The Mortgaged Properties, or any part thereof, is subjected to waste or to removal, demolition or material alteration so that the value of the Mortgaged Properties is

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materially diminished thereby and Lender determines that it is not adequately protected from any loss, damage or risk associated therewith.

     (1) Any dissolution, termination, partial or complete liquidation, merger or consolidation of any Loan Party, any of its principals, any general partner or any managing member.

ARTICLE VII

SECONDARY MARKET SERVICING

               SECTION 7.01. Assignments and Participations. (a) The Lender may assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of the Notes) (each, an “Assignee”); provided that the parties to each such assignment shall execute and deliver to the Lender, for its acceptance and recording in the Register, an Assignment and Acceptance. In the event of the foregoing, Lender shall appoint one (1) agent to act, collectively, on behalf of each such Assignee.

               (b) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender, as the case may be, hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

               (c) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or any other Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Documents or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has

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received a copy of this Agreement, together with copies of the financial statements referred to in this Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Lender, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee appoints and authorizes the Lender to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Lender by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender, as the case may be.

               (d) The Lender shall maintain at its address referred to in Section 10.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lender Parties and the principal amount of the Loan owing to each Lender from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Lender and the Lender Parties shall treat each Person whose name is recorded in the Register as a Lender Party hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers or any Lender Party at any reasonable time and from time to time upon reasonable prior notice.

               (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender Party and an assignee, together with any Note or Notes subject to such assignment, the Lender shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrowers. In the case of any assignment by a Lender, within five (5) Business Days after its receipt of such notice, the Borrowers, at the sole cost and expense of such Lender, shall execute and deliver to the Lender in exchange for the surrendered Note or Notes a new Note to the order of such Assignee in an amount equal to the outstanding and unpaid portion of the Loan assigned to it and a new Note to the order of the assigning Lender in an amount equal to the outstanding and unpaid portion of the Loan retained by it hereunder. Such new Note or Notes shall be in an aggregate outstanding and unpaid principal amount equal to the aggregate outstanding and unpaid principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in the for m of the Note.

               (f) Each Lender Party may sell participations to one or more Persons (other than any Loan Party or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of the Note held by it); provided, however, that (i) such Lender Party’s obligations under this Agreement shall remain

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unchanged, (ii) such Lender Party shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender Party shall remain the holder of any such Note for all purposes of this Agreement, and (iv) the Borrowers, the Lender and the other Lender Parties shall continue to deal solely and directly with such Lender Party in connection with such Lender Party’s rights and obligations under this Agreement.

               (g) Any Lender Party may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 7.01, disclose to the assignee or participant or proposed assignee or participant, any information relating to the related Borrower furnished to such Lender Party by or on behalf of the related Borrower; provided, however, that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information received by it from such Lender Party.

               (h) Notwithstanding any other provision set forth in this Agreement, any Lender Party may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

               SECTION 7.02. Securitization. Lender, at its option, may elect to effect a securitization of the Loan by means of the issuance of certificates of interest therein or notes secured thereby (the “Securities”) rated by one or more rating Agencies (the “Securitization”). In such event and upon request by Lender, the Borrowers and JPI Investment Company, L.P. shall cooperate (in each case, at the Lender’s sole cost and expense) in all reasonable respects with Lender in the Securitization, including, but not limited to, (i) amending this Agreement and the other Loan Documents in order to bifurcate the Loan into two or more constituent loans on the same terms as set forth herein and therein, (ii) providing information in connection with obtaining preliminary ratings from two or more Ratings Agencies in preparation of a private placement memorandum or registration statement required to privately place or publicly distribute the Securities in a manner which does not conflict with federal or state securities laws, (iii) delivery of interim audited financials and updated information, to the extent same are in the possession of Borrowers; or (iv) delivery of updated information with respect to the Borrowers or JPI Investment Company, L.P.

               SECTION 7.03. Servicing. At any time after the Closing Date, the Lender shall have the right to transfer the servicing of the Loan and the administration of the Loan Documents to such party as shall be designated by the Lender in its sole discretion (together with any successor service appointed by the Lender, the “Loan Servicer”). The Loan Servicer shall have such right to exercise all rights of the Lender and enforce all obligations of the Borrowers pursuant to the provisions of this Agreement, the Notes and the other Loan Documents, and (provided that Borrowers are sent written notice of the name and address of the Loan Servicer)

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Borrowers shall deliver to Loan Servicer duplicate originals of all notices and other instruments which the Borrowers may deliver pursuant to this Agreement, the Notes and the other Loan Documents (and no delivery of such notices or other instruments by the Borrowers shall be of any force or effect unless delivered to Lender and Loan Servicer as provided above).

ARTICLE VIII

CROSS-GUARANTY

               SECTION 8.01. Cross-Guaranty of Payment. Subject to Section 8.07 below, each Cross-Guarantor hereby, jointly and severally, unconditionally guarantees to the Lender the prompt payment of all Guaranteed Obligations of the other Borrowers in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) (the “Cross-Guaranty”). The Cross-Guarantors additionally, jointly and severally, unconditionally guarantee to the Lender the timely performance of all other obligations of the other Borrowers under the Loan Documents. This Cross-Guaranty is a guaranty of payment and not of collection and is a continuing guaranty and shall apply to Guaranteed Obligations whenever arising.

               SECTION 8.02. Obligations Unconditional. The obligations of the Cross-Guarantors hereunder are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents, or any other agreement or instrument referred to therein, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor. Each Cross-Guarantor agrees that this Cross-Guaranty may be enforced by the Lender without necessity at any time of resorting to or exhausting any other security or collateral and without the necessity at any time of having recourse to the Notes, any other of the Loan Documents or any collateral, if any, hereafter securing the Guaranteed Obli gations or otherwise, and each Cross-Guarantor hereby waives the right to require the Lender to proceed against the other Cross-Guarantors, Indemnitor or any other Person (including a co-guarantor) or to require the Lender to pursue any other remedy or enforce any other right. Each Cross-Guarantor further agrees that it shall have no right of subrogation, indemnity, reimbursement or contribution against the other Cross-Guarantors of the Guaranteed Obligations for amounts paid under this Cross-Guaranty until such time as the Lender has been paid in full, and no Person or Governmental Authority shall have any right to request any return or reimbursement of funds from the Lender in connection with monies received under the Loan Documents. Each Cross-Guarantor further agrees that nothing contained herein shall prevent the Lender from suing on the Notes or any of the other Loan Documents or foreclosing its security interest in or Lien on any collateral, if any, securing Guaranteed Obligations or from exercising a ny other rights available to them under this Agreement, the Notes, any other of the Loan Documents, or other instrument of security, if any, and the exercise of any of the aforesaid rights and the completion of any foreclosure proceedings shall not constitute a discharge of any of any

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Cross-Guarantor’s obligations hereunder; it being the purpose and intent of each Cross-Guarantor that its obligations hereunder shall be absolute, independent and unconditional under any and all circumstances. Neither any of the Cross-Guarantors’ obligations under this Cross-Guaranty nor any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by an impairment, modification, change, release or limitation of the liability of the Borrowers or by reason of the bankruptcy or insolvency of any of the Borrowers. Each Cross-Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by the Lender upon this Cross-Guaranty or acceptance of this Cross-Guaranty. The Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Cross-Guaranty. All dealings between the Borrowers and the Lender shall be conclusively presumed to have been had or consummated in reliance upon this Cross-Guaranty. Notwithstanding anything to the contrary herein, the Cross-Guarantors shall have the right to assert any valid defenses of the Borrowers to any claim by the Lender for payment under the Cross-Guaranty.

               SECTION 8.03. Modifications. Each Cross-Guarantor agrees that: (a) all or any part of the security now or hereafter held for the Guaranteed Obligations, if any, may be exchanged, compromised or surrendered from time to time; (b) the Lender shall not have any obligation to protect, perfect, secure or insure any such security interests, Liens or encumbrances now or hereafter held, if any, for the Guaranteed Obligations or the properties subject thereto; (c) the time or place of payment of the Guaranteed Obligations may be changed or extended, in whole or in part, to a time certain or otherwise, and may be renewed or accelerated, in whole or in part; (d) the Borrowers and any other party liable for payment under the Loan Documents may be granted indulgences generally; (e) any of the provisions of the Notes or any of the other L oan Documents may be modified, amended or waived; (f) any party (including any co-guarantor) liable for the payment thereof may be granted indulgences or be released; and (g) any deposit balance for the credit of the Borrowers or any other party liable for the payment of the Guaranteed Obligations or liable upon any security therefor may be released, in whole or in part, at, before or after the stated, extended or accelerated maturity of the Guaranteed Obligations, all without notice to or further assent by such Cross-Guarantor, which shall remain bound thereon, notwithstanding any such exchange, compromise, surrender, extension, renewal, acceleration, modification, indulgence or release.

               SECTION 8.04. Waiver of Rights. Each Cross-Guarantor expressly waives, to the fullest extent permitted by applicable law: (a) notice of acceptance of this Cross-Guaranty by the Lender and of all extensions of credit to the Borrowers by the Lender; (b) presentment and demand for payment or performance of any of the Guaranteed Obligations; (c) protest and notice of dishonor or of default (except as specifically required in this Agreement) with respect to the Guaranteed Obligations or with respect to any security therefor; (d) notice of the Lender obtaining, amending, substituting for, releasing, waiving or modifying any security interest, Lien or encumbrance, if any, hereafter securing the Guaranteed Obligations, or the Lender

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subordinating, compromising, discharging or releasing such security interests, Liens or encumbrances, if any; (e) all other notices to which such Cross-Guarantor might otherwise be entitled; and (f) demand for payment under this Cross-Guaranty. In addition, each Cross-Guarantor agrees to the waivers set forth in Addendum A hereto, which is incorporated herein by reference, mutatis mutandis, with the same force and effect as if herein fully set forth.

               SECTION 8.05. Reinstatement. The obligations of the Cross-Guarantors under this Article VIII shall be automatically reinstated if and to the extent that, for any reason, any payment by or on behalf of any Person in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Cross-Guarantor agrees that it will indemnify the Lender on demand for all reasonable costs and expenses (including, without limitation, reasonable fees of counsel) incurred by the Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

               SECTION 8.06. Remedies. The Cross-Guarantors agree that, as between the Cross-Guarantors, on the one hand, and the Lender, on the other hand, the Guaranteed Obligations may be declared to be forthwith due and payable as provided in Article VI (and shall be deemed to have become automatically due and payable in the circumstances provided in Article VI) notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing such Guaranteed Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or such Guaranteed Obligations being deemed to have become automatically due and payable), such Guaranteed Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Cross-Guarantors.

               SECTION 8.07. Limitation of Cross-Guaranty. Notwithstanding any provision to the contrary contained herein or in any of the other Loan Documents, to the extent the obligations of any Cross-Guarantor shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers), then the obligations of such Cross-Guarantor hereunder shall be limited to the maximum amount that is permissible under appilicable law (whether federal or state and including, without limitation, the Bankruptcy Code).

ARTICLE IX

PARTIAL RELEASE OF COLLATERAL; ASSUMPTION OF MORTGAGE

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               SECTION 9.01. Partial Release of Collateral. (a) From and after the third (3rd) anniversary of the Closing Date, upon the payment, in cash, by the applicable Borrower to the Lender of an amount equal to the Release Price for the applicable Property, such Borrower shall be entitled to a partial release of the applicable Property and release of the Lender’s security interests and liens thereon (a “Partial Release”) subject to the following terms and conditions:

     (i) the applicable Borrower shall have delivered to the Lender a written request for a Partial Release in connection with a proposed sale in the form of Exhibit C attached hereto, which request shall include (A) the time and place of closing of the sale and (B) documents effecting the Partial Release in form and substance satisfactory to the Lender;

     (ii) no Event of Default has occurred and in continuing (and would continue after the requested Partial Release);

     (iii) the pro forma Debt Service Coverage Ratio for the immediately preceding reporting period (as determined by Lender, exclusive of the Property or Properties subject to the request for Partial Release) shall be equal to or greater than (1) 1.30 to 1.0 when determined solely with respect to the Loan and (2) 1.15 to 1.0 when determined with respect to the Loan and the Mezzanine Loan;

     (iv) the Lender shall have received same day funds in the amount payable by the Borrowers under this Section 9.01 with respect to such Partial Release;

     (v) the Lender shall have received, simultaneously with the Partial Release, payment of all reasonable and documented costs and expenses, including, without limitation, legal fees and disbursements, incurred by the Lender in effecting the Partial Release; and

     (vi) the Lender shall have received, simultaneously with the Partial Release, a certificate signed by a duly authorized officer of the several parties of the applicable Borrower, dated the date of the Partial Release, stating that (A) all of the conditions set forth in this Section 9.01 have been satisfied and (B) the Partial Release of the applicable Property complies with all of the terms and provisions of this Agreement; and

     (vii) the Lender shall, within five (5) Business Days; after receipt by the Lender of the Borrowers’ request, deliver to Borrower all documents required to effect the Partial Release.

               SECTION 9.02. Application of the Release Payment. Upon receipt by the Lender of the amounts payable with respect to any Partial Release pursuant to Section 9.01, such amounts shall be applied as a reduction in the outstanding principal amount of the Loan in the

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manner set forth in, and upon the payment of any additional amounts due under, Sections 2.03, 2.05 and 2.06.

ARTICLE X

MISCELLANEOUS

               SECTION 10.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by the Borrowers therefrom, shall in any event be effective unless the same shall be in writing and signed (or, in the case of the Collateral Documents, consented to) by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

               SECTION 10.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or telex communication) and mailed, telegraphed, telecopied, telexed or delivered, if to any Borrower, at its address at 600 East Las Colinas Boulevard, Suite 1800, Irving, Texas 75039, Attention Mr. Frank B. Schubert, Jr.; and if to the Lender, at its address at 31 West 52nd Street, New York, New York 10019, Attention: General Counsel with a copy to the Loan Servicer at an address specified by the Loan Servicer; or as to each other party, at such other address as shall be designated by such party in a written notice to the Borrowers and the Lender. All such notices and communications shall, when mailed, telecopied or sent via overnight courier, be effective when deposited in the mails, confirmed by telex answerback or delivered to an overnight courier, respectively, except that notices and communications to the Lender pursuant to Article II, III or VII shall not be effective until received by the Lender. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof.

               SECTION 10.03. No Waiver; Remedies. No failure on the part of any Lender Party or the Lender to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

               SECTION 10.04. Costs, Expenses. (a) The Borrowers jointly and severally agree to indemnify and hold harmless the Lender, the Loan Servicer and each of their respective Affiliates and their officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by

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reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Loan, the actual or proposed use of the proceeds of the Loan, the Loan Documents or any of the transactions contemplated thereby, including, without limitation, any acquisition or proposed acquisition (including, without limitation, the acquisition and any of the other transactions contemplated hereby) or (ii) the actual or alleged presence of Hazardous Materials on any Property or any Environmental Action relating in any way to any Property, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnit y in this Section 10.04(a) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnified Party or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. Each Borrower also agrees not to assert any claim against the Lender or any of its Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Loan, the actual or proposed use of the proceeds of the Loan, the Loan Documents or any of the transactions contemplated thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.

               (b) Except as expressly provided to the contrary herein, the Borrowers agree to pay on demand (i) all reasonable costs and expenses of the Lender or Loan Servicer in connection with the preparation, execution, delivery, administration, and when requested by the Borrowers, the modification and amendment of the Loan Documents (including, without limitation, (A) all due diligence, collateral review, appraisal as expressly provided for herein, audit, insurance, consultant, search, filing and recording fees and expenses and (B) the reasonable fees and expenses of counsel for the Lender or Loan Servicer with respect thereto, with respect to advising the Lender or Loan Servicer as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with a ny Loan Party or with other creditors of any Loan Party or any of its subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto) and (ii) all costs and expenses of the Lender or Loan Servicer in connection with the enforcement of the Loan Documents, whether in any action, suit or litigation, any bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally (including, without limitation, the reasonable fees and expenses of counsel for the Lender and with respect thereto).

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               (c) The Borrowers jointly and severally shall indemnify, defend and hold the Lender and Loan Servicer harmless from and against: (i) any and all claims for brokerage (other than brokerage claims in connection with the transactions contemplated by the Loan Documents by parties actually retained by the Lender or Loan Servicer), leasing, finders or similar fees which may be made relating to the Mortgaged Property or the Loan and (ii) any and all liability, obligations, losses, damages, penalties, claims, actions, suits, costs and expenses (including Lender’s or Loan Servicer’s reasonable attorneys’ fees and expenses) of whatever kind or nature which may be asserted against, imposed on or incurred by Lender or Loan Servicer in connection with the Loan and any Loan Document, the Mortgaged Properties, or any part thereof, or the exercise by Lender or Loan Servicer of any rights or remedies granted to it under this Agreement or any other Loan Document; provided, however, that nothing herein shall be construed to obligate Borrowers to indemnify, defend and hold harmless Lender or Loan Servicer from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs and expenses to the extent enacted against, imposed on or incurred by Lender or Loan Servicer by reason of Lender’s or Loan Servicer’s gross negligence or willful misconduct as finally determined by a court of competent jurisdiction.

               (d) Borrowers jointly and severally hereby indemnify and hold Lender and Loan Servicer harmless from and against all loss, cost and expenses with respect to any Event of Default hereof, any liens (i.e., judgments, mechanics’ and materialmen’s liens, or otherwise), charges and encumbrances filed against the Mortgaged Properties, and from any claims and demands for damages or injury, including claims for property damage, personal injury or wrongful death, arising out of or in connection with any accident or fire or other casualty on the Premises or the Improvements or any nuisance made or suffered thereon, except to the extent due to Lender’s or Loan Servicer’s gross negligence or willful misconduct as finally determined by a court of competent jurisdiction, including, without limitation, in any case, reasonable attorney s’ fees, costs and expenses as aforesaid, whether at pretrial, trial or appellate level, and such indemnity shall survive payment in full of the Loan. This Section shall not be construed to require Lender or Loan Servicer to incur any expenses, make any appearances or take any actions.

               (e) If Lender or Loan Servicer is made a party defendant to any litigation or any claim is threatened or brought against Lender or Loan Servicer concerning the Loan, the Mortgaged Properties, or any part thereof and such litigation or claim is subject to the indemnification obligation provided in subsection (c) above, or any interest therein, or the construction, maintenance, operation or occupancy or use thereof, then Borrowers jointly and severally shall defend said litigation or claims at their sole cost and expense (including reasonable attorneys’ fees and expenses incurred by Lender or Loan Servicer in any such litigation or claim), whether or not any such litigation or claim is prosecuted to judgment. If Borrowers fail to perform its obligations with respect to any such litigation or claim in accordance with this Section and Le nder or Loan Servicer commences an action against any Borrower to enforce any of the terms hereof or to prosecute any breach by any Borrower of any of the terms hereof or to recover any sum secured hereby, Borrowers shall pay to Lender or Loan Servicer the reasonable

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attorneys’ fees and expenses incurred by Lender or Loan Servicer in connection therewith. The right to such attorneys’ fees and expenses shall be deemed to have accrued on the commencement of such action, and shall be enforceable whether or not such action is prosecuted to judgment. If any Loan Party breaches any term of this Agreement or any other Loan Document, Lender or Loan Servicer may engage the services of an attorney or attorneys to protect its rights hereunder, and in the event of such engagement following any breach by any Loan Party, Borrowers shall pay Lender’s or Loan Servicer’s reasonable attorneys’ fees and expenses incurred by Lender or Loan Servicer, whether or not an action is actually commenced against Borrowers by reason of such breach. All references to “attorneys” in this Subsection and elsewhere in this Agreement shall include, without limitation, any attorney or law firm engaged by Lender or Loan Servicer and Lender’s or Loan Servicer’s in-house counsel, and all references to “fees and expenses” in this Subsection and elsewhere in this Agreement shall include, without limitation, any fees of such attorney or law firm, any appellate counsel fees, if applicable, and any reasonable allocation charges and reasonable allocation costs of Lender’s or Loan Servicer’s in-house counsel.

               (f) A waiver of subrogation shall be obtained by Borrowers from their insurance carrier and, consequently, Borrowers waive any and all right to claim or recover against Lender or Loan Servicer, their officers, employees, agents and representatives, for loss of or damage to Borrowers, the Mortgaged Properties, Borrowers’ property or the property of others under Borrowers’ control from any cause insured against or required to be insured against by the provisions of the Mortgages or this Agreement.

               (g) If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by the Lender, in its sole discretion.

               (h) Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrowers contained in Sections 2.08 and 2.09 and this Section 10.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents.

               SECTION 10.05. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrowers and the Lender and thereafter shall be binding upon and inure to the benefit of the Borrowers and the Lender and their respective successors and assigns, except that the Borrowers shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender.

               SECTION 10.06. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together

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shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.

               SECTION 10.07. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action o r proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction.

               (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

               SECTION 10.08. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

               SECTION 10.09. Waiver of Jury Trial. To the maximum extent permitted by law, each of the Borrowers, the Lender and the Lender Parties irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the Advances or the actions of the Lender or any Lender Party in the negotiation, administration, performance or enforcement thereof.

               SECTION 10.10. Compliance with Usury Laws. It is expressly stipulated and agreed to be the intent of the Borrowers and the Lender that the Loan made hereunder comply with the usury and other laws relating to the Loan Documents now or hereafter in effect in the state in which the applicable Property is located, to the extent any of the same are applicable thereto. If any such applicable laws render usurious any amount called for under any of the Loan Documents, or contracted for, charged or received with respect to the Loan, or if the acceleration

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of the maturity of the Loan or if any prepayment by any of the Borrowers results in such Borrower having paid any interest in excess of that permitted by law, then it is the express intent of the parties that all excess amounts theretofore collected the Lender be credited on the principal balance of the related Note (or, if such Note has been paid in full, refunded to the related Borrower), and the provisions of the Loan Documents immediately be deemed reformed and the amounts thereafter collected under the Loan Documents reduced, without the necessity of the execution of any new document, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for under the Loan Documents.

               SECTION10.11. Limitation on Personal Liability. Notwithstanding anything contained herein to the contrary, the personal liability of each Borrower for the Obligations under this Agreement and the other Loan Documents (including, without limitation, the obligations of each Borrower under Article VIII of this Agreement) shall be limited as set forth in Section 6 of the Notes.

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[SIGNATURE ON NEXT PAGE]

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               IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

BORROWERS:
JEFFERSON VILLAGE, L.P., a Texas limited partnership
By:	JPI PORTFOLIO I GP1 LLC, a Texas limited liability company, its general partner
	By:	/s/ Scot M. McLaughlin
		Scot M. McLaughlin
		Vice President

JEFFERSON AT SUNSET VALLEY, L.P., a Texas limited partnership
By:	JPI PORTFOLIO I GP1 LLC, a Texas limited liability company, its general partner
	By:	/s/ Scot M. McLaughlin
		Scot M. McLaughlin
		Vice President

JPI CORAL SPRINGS, L.P., a Texas limited partnership
By:	JPI PORTFOLIO I GP1 LLC, a Texas limited liability company, its general partner
	By:	/s/ Scot M. McLaughlin
		Scot M. McLaughlin
		Vice President

LENDER:
GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation
By:	/s/ MICHAEL OFFIT
	Name:	MICHAEL OFFIT
	Title:	VICE PRESIDENT
By:	/s/ CHRISTOPHER TOGNOLA
	Name:	CHRISTOPHER TOGNOLA
	Title:	AUTHORIZED SIGNATORY

EX-10.33

EXHIBIT 10.33

MID-AMERICA APARTMENT COMMUNITIES, INC.
NON-QUALIFIED DEFERRED COMPENSATION PLAN
FOR OUTSIDE COMPANY DIRECTORS
AS AMENDED EFFECTIVE JANUARY 1, 2005

Whereas, the enactment of The American Jobs Creation Act of 2004 requires amendments to the terms of the prior original plan that was previously adopted; and

Whereas, it is deemed advisable to make other plan changes to carry our the intent and purposes of the prior original plan; and

Whereas, the prior original plan allows for the amendment of the plan when signed by the employer and consented to by the Board of Directors;

Now therefore, the plan is hereby amended by the adoption of this restated plan effective January 1, 2005.

PURPOSE OF PLAN

Mid-America Apartment Communities, Inc., Mid-American Apartments, L. P. and Mid-America Apartments of Texas, L. P. (hereafter referred to as “MAC”) had determined that a non-qualified deferred compensation plan (hereafter referred to as “the Plan”) should be made available for its outside company directors. The purpose of this Plan is to enable eligible company directors to defer current taxation on all or a designated portion of their director’s fees that would otherwise be paid to them currently in the form of cash compensation.

PARTICIPATION

Participants are limited to outside company directors which means a company director of Mid-America Apartment Communities, Inc. that is not also employed as an employee of MAC or any of its subsidiaries or affiliated companies.

BENEFITS

1. Deferred Compensation Contributions: Eligible directors may elect to defer all or any portion (in multiples of 25%) of the director’s fees otherwise payable in cash each year. Such election must be made on forms supplied by MAC on or before the dates enumerated in section 2 below. The amounts deferred by a participant shall be credited to the participant’s deferred compensation account, which shall be segregated from other accounts on the books and records of MAC, but which shall be part of the general assets of MAC and shall be subject to the claims of MAC’s general creditors. The participants shall be given the status of general creditor of MAC with respect to their deferred compensation account.

2. When Deferral Election Must be Made The election to defer compensation or to change the amount of compensation to be deferred must be made no later than the dates specified in The American Jobs Creation Act of 2004 as follows:

The election to defer compensation for services performed during a taxable year may be deferred at the participant’s election only if the election to defer such compensation is made no later than the close of the preceding tax year or such other time as provided in regulations.

In the case of the first year in which a participant becomes eligible to participate in the plan, such election may be made with respect to services to be performed subsequent to the election within 30 days after the date the participant becomes eligible to participate in such plan.

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3. Crediting of Plan Earnings: Immediately following each regularly scheduled Board of Directors meeting, MAC will credit the deferred compensation account with the accumulated cash fees owed to the participants in the Plan since the previous regularly scheduled Board of Directors meeting. MAC shall not be liable for, and it makes no warranty with respect to, the results of said investments. It is expressly understood that all assets in these accounts shall at all times remain the unrestricted property of MAC and shall not be held in trust for the participating directors nor shall any such asset be deemed collateral security for the performance of the obligations of MAC. MAC may invest contributions only in the common stock of Mid-America Apartment Communities, Inc. (NYSE: MAA). Each participant will receive annual statements reflecting the value of his or her accounts as reflected on MAC’s records.

4. When Benefits Become Payable: The participant or his beneficiary designated in writing by the participant shall begin receiving distributions from the Plan within 90 days following the end of the calendar year in which the participant ceases to be a director of MAC.

5. Payment of Benefits: At the time benefits begin as described above, the amount of benefits will be calculated as follows:

Cash Payout: For a cash payout, the value of the participant’s deferred compensation account shall be valued as of December 31 immediately preceding the date payments begin, and such amount shall be paid to the participant in 2 equal annual installments. The second and final payment shall include the value of dividend reinvestment shares generated from the unpaid balance then due.

Stock Payout: For a stock payout, shares of common stock shall be issued to the participant in two equal annual issuances. Half of the shares of common stock attributed to the participant as of December 31 immediately preceding the date issuances begin shall be issued to the participant in the first issuance. The second and final issuance shall include any dividend reinvestment shares which accumulated between the first issuance and the second and final issuance.

AMENDMENT AND TERMINATION OF PLAN

The Plan may be amended or terminated when in the sole opinion of MAC such amendment or termination is advisable. The Plan can be amended retroactively at any time, except that it cannot be amended so that it materially adversely affects the rights of a participant as to amounts deferred prior to such amendment. Any amendment or termination shall be made by a written instrument signed by the President of MAC and consented by the Board of Directors.

MISCELLANEOUS PROVISIONS

1. Information to be Furnished: Participants shall provide MAC with such information and evidence, and shall sign such documents, as may reasonably be requested from time to time for the purpose of administration of the Plan.

2. Deferral Election Changes: Once a deferral election is made, the percentage to be deferred will continue unchanged throughout each Plan year. In order to change the percentage, a director must complete a new election form prior to the beginning of a Plan year. The new election change will only be effective beginning with director fees payable during the following calendar year.

3. Spendthrift Clause: No participant or beneficiary shall have the right to transfer, assign, alienate, anticipate, pledge or encumber any part of the benefits provided by this Plan, nor shall such benefits be subject to seizure by legal process by any creditor of such participant or beneficiary.

4. Governing Law: This Plan shall be construed, administered and enforced according to the laws of Tennessee.

5. Construction: A pronoun or adjective in the masculine gender includes the feminine gender and the singular includes the plural, unless the context clearly indicates otherwise.

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6. Successors: This Plan shall not be terminated by a transfer or sale of the assets of MAC or by merger or consolidation of MAC into or with any other corporation or entity, but the Plan shall be continued after such sale, merger or consolidation, and the transferee, purchaser, or successor entity shall be required as part of the sale, merger, or consolidation to agree to such continuation.

IN WITNESS WHEREOF, MAC has caused this Plan to be executed on the 8th day of March, 2005, by the person named below, to be effective as of January 1, 2005.

MID-AMERICA APARTMENT COMMUNITIES, INC.

By: /s/ Simon R.C. Wadsworth
Simon R.C. Wadsworth
Executive Vice President, Chief Financial Officer

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EX-10.34

EXHIBIT 10.34

MID-AMERICA APARTMENT COMMUNITIES NON-QUALIFIED EXECUTIVE DEFERRED
COMPENSATION RETIREMENT PLAN
AS AMENDED EFFECTIVE JANUARY 1, 2005

Whereas, the enactment of The American Jobs Creation Act of 2004 requires amendments to the terms of the prior original plan that was previously adopted during 1995; and

Whereas, it is deemed advisable to make other plan changes to carry out the intent and purposes of the prior original plan; and

Whereas, the prior original plan allows for the amendment of the plan when signed by the employer and consented to by the Board of Directors;

Now therefore, the plan is hereby amended in its entirety by the adoption of this restated plan effective January 1, 2005.

PURPOSE OF PLAN

Mid-America Apartment Communities, Inc. and Mid-America Apartment Communities, L. P. (hereafter referred to as the “Employer”) determined that a supplemental non-qualified deferred compensation plan (hereafter referred to as “The Plan”) should be made available for certain selected executive employees. The purpose of this Plan is to enable executive employees to accumulate retirement benefits to compensate for the limitations on contributions permitted executives under the Company’s 401(k) Qualified Plan. This Plan is intended to be a Plan of the type described in Section 201(2) of the Employer Retirement Income Security Act of 1974 (ERISA).

PARTICIPATION

Participants are limited to a select group of management employees designated as eligible from time to time by the Board of Directors of the Employer.

BENEFITS

1. Contribution of Deferred Compensation: For each plan year, a participant may elect to defer up to 15% of his or her compensation from the corporation. Such election must be made on forms supplied by the corporation on or before the dates enumerated in section 2 below. The amounts deferred by a participant shall be credited to the participant’s deferred compensation account, which shall be segregated from other accounts on the books and records of the Employer, but which shall be part of the general assets of the Employer and shall be subject to the claims of the Employer’s general creditors. The participant shall be given the status of a general creditor of the Employer with respect to his deferred compensation account.

2. When Deferral Election Must be Made The election to defer compensation or to change the amount of compensation to be deferred must be made no later than the dates specified in The American Jobs Creation Act of 2004 as follows:

The election to defer compensation for services performed during a taxable year may be deferred at the participant’s election only if the election to defer such compensation is made no later than the close of the preceding taxable year or such other time as provided in regulations.

In the case of the first year in which a participant becomes eligible to participate in the plan, such election may be made with respect to services to be performed subsequent to the election within 30 days after the date the participant becomes eligible to participate in such plan.

In the case of any performance-based compensation based on services performed over a period of at least 12 months, such election must be made no later than 6 months before the end of the period.

3. Employer Matching Contributions: In addition to the amounts deferred by the participant for each plan year, the corporation will contribute 50% of each participant’s deferred compensation up to a

4

maximum of 3% of such participant’s compensation during the plan year (the “Matching Contribution”). The amounts contributed by the Employer under this Section shall be credited as of the last day of each plan year to the participant’s matching contribution account, which shall be segregated from other accounts on the books and records of the Employer, but which shall be part of the general assets of the Employer and shall be subject to the claims of the Employer’s general creditors. The participant shall be given the status of a general creditor of the Employer with respect to his or her matching contribution account. The matching contribution account shall be paid to terminating employees at the same time and in the same manner as the deferred compensation account. However, if a participant terminates employment prior to having been credited with 3 years of employment service, then the matching contribution account will be subject to the same vesting schedule as described in the employer’s qualified 401(k) plan which is herein incorporated by reference.

4. Crediting of Plan Earnings: At the end of each valuation date, which shall include the end of each plan year and such other date or dates deemed necessary or appropriate by the Employer, the Employer will credit each participant’s deferred compensation account and matching contribution account with plan earnings, either positive or negative, that reasonably reflect the rate of return achieved during the plan year from investments selected by the Employer. The Employer shall not be liable for, and it makes no warranty with respect to, the results of said investments. It is expressly understood that all assets in these accounts shall at all times remain the unrestricted property of the Employer and shall not be held in trust for the participating executive employees nor shall any such asset be deemed collateral security for the performance of the obligations of the Employer. The employer may invest or not invest contributions in any specific assets. However, the Employer shall designate investments each year for the purpose of measuring the earnings to be credited on the accounts at the end of each valuation date. Each participant will receive annual statements reflecting the value of his or her accounts as reflected on the company’s records.

5. When Benefits become Payable: The executive participant or beneficiary designated in writing by the participant shall begin receiving distributions beginning on the first day following the sixth full month occurring after the earliest of the following events:

a. At death of the participant

b. At the date a participant becomes disabled according to the definition of disability as required by The American Jobs Creation Act of 2004 which is incorporated herein by reference.

c. At the date a participant ceases employment as an employee according to the records of the Employer.

6. Payment of Benefits Over 5 Annual Installments: At the time benefits begin as described above, the annual payment amounts will be calculated as follows:

a. As soon as possible following a participant’s separation from employment, the value of such participant’s account balance in the plan will be calculated and extracted from the “pooled investment accounts” of all of the participants. This extracted amount will be reinvested by the employer in a separately identified investment fund for the benefit of that participant. This separately identified fund will be selected by the employer after conferring with the retiring or separating participant and such fund will be used to measure the plan earnings, either positive or negative, that reasonably reflects the rate of return achieved on this separate investment account selected by the employer. The Employer shall not be liable for, and it makes no warranty with respect to, the results of such investment. It is expressly understood that the assets of this account shall at all times remain the unrestricted property of the Employer and shall not be held in trust for the separating participant. The Employer may invest or not invest such amount in any specific assets. However, the Employer shall designate investments each year for the purpose of measuring the earnings to be credited to such participant’s account balance. A separated participant will receive an annual statement reflecting the value of his or her account as reflected on the company’s record.

5

b. On the first day following the sixth full month following the separation from service as described in section 5 above, the Employer will pay one fifth (-1/5th) of the value of the separating participant’s account balance as of that date. One year later the Employer will pay one fourth (-1/4th) of the remaining balance; followed by one third (-1/3rd), etc until a final payment of the remaining balance is paid in the fifth annual installment.

AMENDMENT AND TERMINATION OF PLAN

The plan may be amended or terminated when in the sole opinion of the Employer such or termination is advisable. The plan can be amended retroactively at any time, except that it cannot be amended so that it materially adversely affects the rights of a participant as to amounts deferred or matched prior to such amendment. Any amendment or termination shall be made by a written instrument signed by the Employer and consented to by the Board of Directors.

MISCELLANEOUS PROVISIONS

1. Information to be Furnished: Participants shall provide the Employer with such Information and evidence, and shall sign such documents, as may reasonably be requested from time to time for the purpose of administration of the plan.

2. Spendthrift Clause: No participant or beneficiary shall have the right to transfer, assign, alienate, anticipate, pledge or encumber any part of the benefits provided by this plan, nor shall such benefits be subject to seizure by legal process by any creditor of such participant or beneficiary. Any attempt to effect such a diversion or seizure shall be deemed null and void for all purposes hereunder to the extent permitted by the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Code.

3. Plan not Contract: The plan shall not be deemed to be a contract between the Employer and any employee, or to be consideration or an inducement for the employment of any employee. No participant in the plan shall acquire any right to be retained in the employment by virtue of the plan, nor upon his dismissal or upon his voluntary termination of employment shall he have any right or interest in the plan other than as specifically provided herein.

4. Governing Law: This plan shall be construed, administered and enforced according to the laws of Tennessee.

5. Construction: A pronoun or adjective in the masculine gender includes the feminine gender, and the singular includes the plural, unless the context clearly indicates otherwise.

6. Successors: This plan shall not be terminated by a transfer or sale of the assets of the Employer or by the merger or consolidation of the Employer into or with any other corporation or entity, but the plan shall be continued after such sale, merger or consolidation, and the transferee, purchaser, or successor entity shall be required as part of the sale, merger, or consolidation to agree to such continuation.

IN WITNESS WHEREOF, the Employer has caused this plan to be executed in its name and behalf on the 8th day of March, 2005, by the person named below, to be effective as of January 1, 2005.

MID-AMERICA APARTMENT COMMUNITIES, INC.

By: /s/ Simon R.C. Wadsworth
Simon R.C. Wadsworth
Chief Financial Officer
Mid-America Apartment Communities, Inc.

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EX-21.1

EXHIBIT 21.1

List of Subsidiaries of Mid-America Apartment Communities, Inc.

America First Florida REIT Inc
America First South Carolina REIT Inc
Green Oaks LLC
Green Oaks Partners Limited Partnership
Jefferson at Sunset Valley, LP
Jefferson Village LP
JPI Coral Springs LP
MAAC of Duval LP
MAACH Holdings II LLC
MAACH Holdings LLC
MAACOD
MAC II of Delaware, Inc
MAC III of Delaware, Inc
MAC of Delaware Inc
MAC of Huntington Chase LLC
Mid America Apartments LP
Mid America Apartments of Duval LP
Mid America Apartments of Little Rock LP
Mid America Apartments of Savannah
Mid America Apartments of Texas LP
Mid America Runaway Bay LP
Mid-America CH Realty II LP
Mid-America CH Realty LP
Monthaven Management, Inc.
Monthaven Park, LLC
Paddock Club Florence LP
Preserve at Arbor Lakes LLC
Preston Hills, LLC
Timber Glen LP
Timber Manager LLC
Woods of Post House LP

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Mid-America Apartment Communities, Inc.

We consent to the incorporation by reference in the registration statement (Nos. 33-91416, 333-98065 and 333-115834) on Form S-8 and the registration statements (Nos. 333-112469, 333-82526, 333-71315 and 333-57309) on Form S-3 of Mid-America Apartments Communities, Inc. of our reports dated March 8, 2005, relating to the consolidated balance sheets of Mid-America Apartment Communities, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2004, and the related financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2004 and the effectiveness of internal control over financial reporting as of December 31, 2004, which reports appear in the December 31, 2004 Annual Report on Form 10-K of Mid-America Apartment Communities, Inc.

Memphis, Tennessee
March 15, 2005

EX-31.1

EXHIBIT 31.1

Chief Executive Officer Certification

I, H. Eric Bolton, Jr., certify that:

(1) I have reviewed this annual report on Form 10-K of Mid-America Apartment Communities, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2005 /s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chief Executive Officer

 

EX-31.2

EXHIBIT 31.2

Chief Financial Officer Certification

I, Simon R.C. Wadsworth, certify that:

(1) I have reviewed this annual report on Form 10-K of Mid-America Apartment Communities, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2005 /s/ Simon R.C. Wadsworth
Simon R.C. Wadsworth
Chief Financial Officer

 

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Eric Bolton, Jr., President and Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
President and Chief Executive Officer
March 7, 2005

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Simon R.C. Wadsworth, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Simon R.C. Wadsworth
Simon R.C. Wadsworth
Chief Financial Officer
March 7, 2005