Mid-America Apartment Communities (MAA) 10-K 2009 FY Annual report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 2009.

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to 

Commission File Number: 1-12762

 

MID-AMERICA APARTMENT COMMUNITIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

TENNESSEE	62-1543819
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

6584 POPLAR AVENUE MEMPHIS, TENNESSEE	38138
(Address of Principal Executive Offices)	(Zip Code)

(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 Each Exchange on Which Registered
Common 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 if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yesx Noo

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yeso Nox

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 the filing requirements for the past 90 days. Yesx Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yeso Noo

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.x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large Accelerated Filerx	Accelerated Filero
Non-Accelerated Filero (Do not check if a smaller reporting company)	Smaller Reporting Companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Nox

As of June 30, 2009, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $1,022,339,066, based on the closing sale price as reported on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class	Outstanding at February 5, 2010
Common Stock, $.01 par value per share	29,211,776 shares

DOCUMENTS INCORPORATED BY REFERENCE

Document	Parts into Which Incorporated
Certain portions of the Proxy Statement for the Annual Meeting of Shareholders to be held May 27, 2010 to be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.	Part III

MID-AMERICA APARTMENT COMMUNITIES, INC.

TABLE OF CONTENTS

Item	Page
PART I
1. Business		2
1A. Risk Factors		8
1B. Unresolved Staff Comments		16
2. Properties		16
3. Legal Proceedings		23
4. Submission of Matters to Vote of Security Holders		23
PART II
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		24
6. Selected Financial Data		26
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
7A. Quantitative and Qualitative Disclosures About Market Risk		41
8. Financial Statements and Supplementary Data		42
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		42
9A. Controls and Procedures		42
9A(T). Controls and Procedures		42
9B. Other Information		42
PART III
10. Directors, Executive Officers and Corporate Governance		43
11. Executive Compensation		43
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		43
13. Certain Relationships and Related Transactions, and Director Independence		43
14. Principal Accounting Fees and Services		43
PART IV
15. Exhibits, Financial Statement Schedules		44

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PART I

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS

Mid-America Apartment Communities, Inc. considers this and other sections of this Annual Report on Form 10-K to contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, with respect to our expectations for future periods. Forward looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Such forward-looking statements include, without limitation, statements concerning property acquisitions and dispositions, development and renovation activity as well as other capital expenditures, capital raising activities, rent growth, occupancy, and rental expense growth. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Such factors include, among other things, unanticipated adverse business developments affecting us, or our properties, adverse changes in the real estate markets and general and local economies and business conditions. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such forward-looking statements included in this report may not 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 us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.

The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:

• inability to generate sufficient cash flows due to market conditions, changes in supply and/or demand, competition, uninsured losses, changes in tax and housing laws, or other factors;

• increasing real estate taxes and insurance costs;

• failure of new acquisitions to achieve anticipated results or be efficiently integrated into us;

• failure of development communities to lease-up as anticipated;

• inability of a joint venture to perform as expected;

• inability to acquire additional or dispose of existing apartment units on favorable economic terms;

• losses from catastrophes in excess of our insurance coverage;

• unexpected capital needs;

• inability to attract and retain qualified personnel;

• potential liability for environmental contamination;

• adverse legislative or regulatory tax changes;

• litigation and compliance costs associated with laws requiring access for disabled persons;

• imposition of federal taxes if we fail to qualify as a REIT under the Internal Revenue Code in any taxable year or foregone opportunities to ensure REIT status;

• inability to acquire funding through the capital markets;

• inability to pay required distributions to maintain REIT status due to required debt payments;

• changes in interest rate levels, including that of variable rate debt, such as extensively used by us;

• loss of hedge accounting treatment for interest rate swaps;

• the continuation of the good credit of our interest rate swap and cap providers;

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• the availability of credit, including mortgage financing, and the liquidity of the debt markets, including a material deterioration of the financial condition of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, at present operating under the conservatorship of the United States Government;

• inability to meet loan covenants; and

• significant decline in market value of real estate serving as collateral for mortgage obligations.

ITEM 1. BUSINESS

OVERVIEW

Founded in 1994, Mid-America Apartment Communities, Inc. is a Memphis, Tennessee-based self-administered and self-managed real estate investment trust, or REIT, that focuses on acquiring, owning and operating apartment communities in the Sunbelt region of the United States. As of December 31, 2009, we owned 100% of 144 properties representing 42,684 apartment units. As of December 31, 2009, we also had 33.33% ownership interests in Mid-America Multifamily Fund I, LLC, or Fund I, and Mid-America Multifamily Fund II, LLC, or Fund II, which owned two properties containing 626 apartment units and one property containing 294 apartment units, respectively. These apartment communities were located across 13 states.

Our business is conducted principally through Mid-America Apartments, L.P., which we refer to as our operating partnership. We are the sole general partner of the operating partnership, holding 297,176 common units of partnership interest, or common units, comprising a 1% general partnership interest in the operating partnership as of December 31, 2009. Mid-America Apartment Communities, Inc.’s wholly-owned qualified REIT subsidiary, MAC II of Delaware, Inc. is a limited partner in the operating partnership and, as of December 31, 2009, held 27,114,739 common units, or 91.24% of all outstanding common units. Unless the context otherwise requires, all references in this Annual Report on Form 10-K to “we,” “us,” “our,” “the company,” or “Mid-America” refer collectively to Mid-America Apartment Communities, Inc. and its subsidiaries.

Our corporate offices are located at 6584 Poplar Avenue, Memphis Tennessee 38138 and our telephone number is (901) 682-6600. As of December 31, 2009, we had 1,204 full time employees and 78 part time employees.

FINANCIAL INFORMATION ABOUT SEGMENTS

As each of our apartment communities has similar economic characteristics, residents, and products and services, our operations have been aggregated into one reportable segment. See our consolidated financial statements and notes included thereto in Item 15 of this Annual Report on Form 10-K for certain information required by Item 1.

BUSINESS OBJECTIVES

Our primary business objectives are to protect and grow existing property values, to maintain a stable and increasing cash flow that will fund our dividend through all parts of the real estate investment cycle, and to create new shareholder value by growing in a disciplined manner. To achieve these objectives, we intend to continue to pursue the following goals and strategies:

• effectively and efficiently operate our existing properties with intense property and asset management focus and a decentralized structure;

• when accretive to shareholder value, acquire additional high-quality properties throughout the Sunbelt region of the United States;

• selectively dispose of properties that no longer meet our ownership guidelines;

• develop, renovate and reposition existing properties;

• enter into joint ventures to acquire and reposition properties; and

• actively manage our capital structure.

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OPERATION STRATEGY

Our goal is to maximize our return on investment collectively and in each apartment community by increasing revenues, tightly controlling operating expenses, maintaining high occupancy levels and reinvesting as appropriate. The steps taken to meet these objectives include:

• diversifying portfolio investments across both large and secondary markets;

• providing management information and improved customer services through technology innovations;

• utilizing systems to enhance property managers’ ability to optimize revenue by adjusting rents in response to local market conditions and individual unit amenities;

• developing new ancillary income programs aimed at offering new services to residents, including telephone, cable, and internet access, on which we generate revenue;

• implementing programs to control expenses through investment in cost-saving initiatives, including measuring and passing on to residents the cost of various expenses, including water and other utility costs;

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

• proactively maintaining the physical condition of each property;

• improving the “curb appeal” of the apartment communities through extensive landscaping and exterior improvements, and repositioning apartment 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;

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

• aggressively managing lease expirations to align with peak leasing traffic patterns and to maximize productivity of property staffing;

• allocating additional capital, including capital for selective interior and exterior improvements, where the investment will generate the highest returns;

• acquiring and from time to time developing properties when expected returns exceed our investment hurdle rate; and

• maintaining disciplined investment and capital allocation practices as a value investor.

Decentralized Operational Structure

We operate in a decentralized manner. We believe that our 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. To maximize the amount of information shared between senior and executive management and the properties on a real time basis, we utilize a web-based property management system. The system contains property and accounting modules which allow for operating efficiencies, continued expense control, provide for various expanded revenue management practices, and improve the support provided to on-site property operations. We use a “yield management” pricing program that helps our property managers optimize rental revenues and we also utilize purchase order and accounts payable software to provide improved controls and

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management information. We have also implemented revised utility billing processes, rolled out new web-sites enabling on-line lease applications and improved web-based marketing programs.

Intensive Property and Asset Management Focus

We have traditionally emphasized property management, and over the past several years, we have deepened our asset management functions to provide additional support in marketing, training, ancillary income and, most recently, revenue management. A large majority of our property managers are Certified Apartment Managers, a designation established by the National Apartment Association, which provides training for on-site manager professionals. We also provide our own in-house leadership development program consisting of an 18-month, three-module program followed by two comprehensive case studies which was developed with the assistance of U.S. Learning, Inc.

ACQUISITION STRATEGY

One of our growth strategies is to acquire and redevelop apartment communities diversified over both large and secondary markets throughout the Sunbelt region of the United States that meet our investment criteria when the expected leveraged returns exceed our investment hurdle rate, generally defined as our estimated cost of equity plus 20%. We have extensive experience and research-based skills in the acquisition and repositioning of multifamily communities. In addition, Mid-America will acquire newly built and developed communities that can be purchased on a favorable pricing basis. We will continue to evaluate opportunities that arise, and will utilize this strategy to increase the number of apartment communities in strong and growing markets.

The following apartment communities were purchased during 2009:

Property	Location		Number of Units		Date Purchased
100% Owned Properties:
Sky View Ranch	��	Gilbert (Phoenix), AZ		232		June 12, 2009
Park Crest at Innisbrook		Palm Harbor (Tampa), FL		432		October 9, 2009
Stone Ranch at Westover Hills		San Antonio, TX		400		December 4, 2009
Legacy at Western Oaks		Austin, TX		479		December 30, 2009
Village Oaks(1)		Temple Terrace (Tampa), FL		7		Various
				1,550
33.33% Owned Properties Through Joint Ventures:
Ansley Village		Macon, GA		294		July 24, 2009
				294
Total 2009 Acquisitions				1,844

(1) On August 27, 2008, we purchased 215 units of the 234-unit Village Oaks apartments located in Temple Terrace, Florida, a suburb of Tampa. The remaining 19 units had previously been sold as condominiums and it is our intent to acquire these units if and when they become available, and operate them as apartment rentals with the rest of the community. During the remainder of 2008, we acquired four of the remaining 19 units and in 2009 we acquired an additional seven units.

DISPOSITION STRATEGY

We have one of the younger portfolios in the multifamily REIT sector, and strive to maintain a young portfolio of our assets in excellent condition, believing that continuous capital replacement and maintenance will lead to higher long-run returns on investment. From time-to-time we dispose of mature assets, defined as those apartment communities that no longer meet our investment criteria and long-term strategic objectives, to ensure that our portfolio consists primarily of high quality, well-located properties within our market area. Typically, we select assets for disposition that do not meet our present investment criteria, including estimated future return on investment, location, market, potential for growth, and capital needs. From time-to-time we also may dispose of assets for which we receive an offer meeting or exceeding our return on investment criteria even though those assets may not meet the disposition criteria disclosed above.

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The following apartment communities were sold during 2009:

Property	Location		Number of Units		Date Sold
100% Owned Properties:
Woodstream		Greensboro, NC		304		January 15, 2009
Riverhills		Grenada, MS		96		May 12, 2009
River Trace		Memphis, TN		440		December 17, 2009
				840
Total 2009 Dispositions				840

RENOVATION, REPOSITIONING AND DEVELOPMENT STRATEGY

In 2006, we began some limited expansion development projects on adjacent land to existing apartment communities using fixed price contracts. In 2009, we completed construction on these projects. We do not currently have any additional development projects planned nor intend to maintain a dedicated development staff or to expand into development in a significant way. We prefer to capture accretive new growth through opportunistically acquiring new properties.

Beginning in 2005, we began an initiative of upgrading a significant number of our existing apartment communities in key markets across our portfolio. We focus on both interior unit upgrades and shared exterior amenities above and beyond routine capital upkeep in markets that we feel continue to have growth potential and can support the increased rent. As of December 31, 2009, we have renovated 9,090 units achieving a combined 12% rent increase above the normal renewal rate.

JOINT VENTURE STRATEGY

One of our strategies is to co-invest with partners in joint venture opportunities to the extent we believe that a joint venture will enable us to obtain a higher return on our investment through management and other fees, which leverage our 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 us. At present, we have focused our joint venture investment strategy on properties seven years old or older, with younger acquisitions becoming part of the wholly-owned portfolio.

As of December 31, 2009, we were partners in two joint ventures: Mid-America Multifamily Fund I, LLC, or Fund I, and Mid-America Multifamily Fund II, LLC, or Fund II.

CAPITAL STRUCTURE STRATEGY

We use a combination of debt and equity sources to fund our portfolio of assets, focused on producing the overall lowest cost and most flexible capital structure. We focus on improving the net present value of each share of our common stock by generating cash flows from our portfolio of investments above the estimated total cost of debt and equity capital. We routinely make new investments when we believe it can add to value per share. In the past, we have sold assets to fund share repurchases when, in management’s view, shareholder value would be enhanced.

At December 31, 2009, 46% of our total capitalization consisted of borrowings. We currently intend to target our total debt to a range of approximately 45% to 55% of the undepreciated book value of our assets, although our charter and bylaws do not limit our debt levels. We may issue new equity to maintain our debt within this target range. Circumstances may cause us to exceed that target from time-to-time. As of December 31, 2009, our ratio of debt to undepreciated book value was approximately 50%. Our Board of Directors can modify this policy at any time which could allow us to become more highly leveraged but may decrease our ability to make distributions to our shareholders.

COMMON AND PREFERRED STOCK

We continuously review opportunities for lowering our cost of capital, and increasing net present value per share. We evaluate opportunities to repurchase stock when we believe that our stock price is below our net present value. We also look for opportunities where we can acquire or develop apartment communities,

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selectively funded or partially funded by stock sales, when the investment return is projected to substantially exceed our cost of capital. We will also opportunistically seek to lower our cost of capital through refinancing preferred stock.

On November 3, 2006, Mid-America entered into a sales agreement with Cantor Fitzgerald & Co. to sell up to 2,000,000 shares of Mid-America’s common stock, from time-to-time in at-the-market offerings or negotiated transactions through a controlled equity offering program. In July, 2008, we entered into a second controlled equity offering sales agreement with similar terms authorizing the sale of up to 1,350,000 shares of common stock.

The following are the issuances of common stock which have been made through these agreements through December 31, 2009:

	Number of Shares Sold		Net Proceeds		Net Average Sales Price
2006		194,000	$	11,481,292	$	59.18
2007		323,700	$	18,773,485	$	58.00
2008		1,955,300	$	103,588,758	$	52.98
2009		763,000	$	32,774,757	$	42.96
Total		3,236,000	$	166,618,292	$	51.49

In November 2009, we entered into a third controlled equity offering sales agreement with Cantor Fitzgerald & Co. with similar terms authorizing the sale of up to 4,000,000 shares of common stock. No sales were made under this agreement as of December 31, 2009.

In October 2007, we redeemed all of our issued and outstanding 9¼% Series F Cumulative Redeemable Preferred Stock for $11.9 million.

We also have a direct stock purchase plan which allows for the optional cash purchase of common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. We, in our absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. Throughout 2009, we issued a total of 1,100 shares through the direct stock purchase plan. We did not offer a discount during 2009, nor grant any waivers during 2009.

SHARE REPURCHASE PROGRAM

In 1999, our Board of Directors approved an increase in the number of shares of our common stock authorized to be repurchased to 4 million shares. As of December 31, 2009, Mid-America 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, we intend to sell assets based on our disposition strategy outlined in this Annual Report and use the proceeds to repurchase shares when we believe that shareholder value is enhanced. Factors affecting this determination include the share price, asset dispositions and pricing, financing agreements and rates of return. No shares were repurchased from 2002 through 2009 under this plan.

COMPETITION

All of our apartment 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 us, and the managers of these apartment communities may have more experience than our 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.

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. We make capital improvements to both our apartment communities and individual apartments on a regular basis in order to maintain a competitive position in each individual market.

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ENVIRONMENTAL MATTERS

As part of the acquisition process, we obtain environmental studies on all of our apartment communities from various outside environmental engineering firms. The purpose of these studies is to identify potential sources of contamination at the apartment communities and to assess the status of environmental regulatory compliance. These studies generally include historical reviews of the apartment communities, reviews of certain public records, preliminary investigations of the sites and surrounding properties, visual inspection for the presence of asbestos, poly-chlorinated biphenyls, or 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 we take ownership of an acquisition community; 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 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.

We are aware of environmental concerns specifically relating to potential issues resulting from mold in residential properties and have in place an active management and preventive maintenance program that includes procedures specifically related to mold. We have established a policy requiring residents to sign a mold addendum to lease. We have also purchased a $5 million insurance policy that covers remediation and exposure to mold. The current policy expires in 2010 but is renewable at that time. Therefore, we believe that our exposure to this issue is limited and controlled.

The environmental studies we received have not revealed any material environmental liabilities. We are 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 we are not aware. 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.

We believe that our apartment 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.

WEBSITE ACCESS TO REGISTRANT’S REPORTS

We file annual and periodic reports with the Securities and Exchange Commission. All filings made by us with the SEC may be copied or read at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC as Mid-America does. The website is http://www.sec.gov.

Additionally, a copy of this Annual Report on Form 10-K, along with Mid-America’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to the aforementioned filings, are available on our website free of charge. The filings can be found on the Investor Relations page under SEC Filings. Our website also contains our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the committees of the Board of Directors. These items can be found on the Investor Relations page under Governance Documents. Our website address is http://www.maac.net. Reference to our website does not constitute incorporation by reference of the information contained on the site and should not be considered

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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, Memphis, TN 38138.

QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code. To continue to qualify as a REIT, we must continue to meet certain tests which, among other things, generally require that our assets consist primarily of real estate assets, our income be derived primarily from real estate assets, and that we distribute at least 90% of our REIT taxable income (other than our net capital gain) to our shareholders annually. As a qualified REIT, we generally will not be subject to U.S. federal income taxes at the corporate level on our net income to the extent we distribute such net income to our shareholders annually. Even if we continue to qualify as a REIT, we will continue to be subject to certain federal, state and local taxes on our income and our property. In 2009, we declared total distributions of $2.46 per common share to our shareholders which was above the 90% REIT distribution requirement.

RECENT DEVELOPMENTS

Dispositions

On January 28, 2010, Mid-America Apartments, LP sold Legacy at Western Oaks to Fund II, one of our joint ventures. For tax purposes, this transaction was considered a contribution.

ITEM 1A. RISK FACTORS

In addition to the other information contained in this Annual Report on Form 10-K, we have identified the following additional risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. Investors should carefully consider the risks described below before making an investment decision. Our business faces significant risks and the risks described below may not be the only risks we face. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. If any of these risks occur, our business, results of operations or financial condition could suffer, the market price of our common stock could decline and you could lose all or part of your investment in our common stock.

Economic slowdown in the United States and the related downturn in the housing and real estate markets have adversely affected and may continue to adversely affect our financial condition and results of operations

There has been a significant decline in economic growth, both in the United States and globally, in the second half of 2008 and throughout 2009. The trends in both the real estate industry and the broader United States economy continue to be unfavorable and continue to adversely affect our revenues. The weakened economy and related reduction in spending, falling home prices and mounting job losses, together with the price volatility, dislocations and liquidity disruptions in the financial and credit markets could, among other things, impede the ability of our tenants and other parties with which we conduct business to perform their contractual obligations, which could lead to an increase in defaults by our tenants and other contracting parties, which could adversely affect our revenues. Furthermore, our ability to lease our properties at favorable rates, or at all, is adversely affected by the increase in supply and deterioration in the multifamily market and is dependent upon the overall level of spending in the economy, which is adversely affected by, among other things, job losses and unemployment levels, recession, personal debt levels, the downturn in the housing market, stock market volatility and uncertainty about the future. With regard to our ability to lease our multifamily properties, the increasing rental of excess for-sale condominiums and single family homes, which increases the supply of multifamily units and housing alternatives, may further reduce our ability to lease our multifamily units and further depress rental rates in certain markets. We cannot predict how long demand and other factors in the real estate market will remain unfavorable, but if the markets remain weak or deteriorate further, our ability to lease our properties, our ability to increase or maintain rental rates in certain markets may continue to weaken during 2010.

Failure to generate sufficient cash flows could limit our ability to pay distributions to shareholders

Our ability to generate sufficient cash flow in order to pay distributions to our shareholders depends on our ability to generate funds from operations in excess of capital expenditure requirements and/or to have

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access to the markets for debt and equity financing. Funds from operations and the value of our apartment communities may be insufficient because of factors which are beyond our control. Such events or conditions could include:

• competition from other apartment communities;

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

• conversion of condominiums and single family houses to rental use;

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

• 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;

• inability to initially, or subsequently after lease terminations, rent apartments on favorable economic terms;

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

• changes in laws including, but not limited to, tax laws and housing laws including the enactment of rent control laws or other laws regulating multifamily housing;

• withdrawal of Government support of apartment financing through its financial backing of the Federal National Mortgage Association, or FNMA, or the Federal Home Loan Mortgage Corporation, or Freddie Mac;

• an uninsured loss, including those resulting from a catastrophic storm, earthquake, or act of terrorism;

• changes in interest rate levels and the availability of financing, borrower credit standards, and down-payment requirements which could lead renters to purchase homes (if interest rates decrease and home loans are more readily available) or increase our acquisition and operating costs (if interest rates increase and financing is less readily available); and

• the relative illiquidity of real estate investments.

At times, we rely on external funding sources to fully fund the payment of distributions to shareholders and our capital investment program (including our existing property expansion developments). While we have sufficient liquidity to permit distributions at current rates through additional borrowings if necessary, any significant and sustained deterioration in operations could result in our financial resources being insufficient to pay distributions to shareholders at the current rate, in which event we would be required to reduce the distribution rate. Any decline in our funds from operations could adversely affect our ability to make distributions to our shareholders or to meet our loan covenants and could have a material adverse effect on our stock price.

Our financing could be impacted by negative capital market conditions

Recently, domestic financial markets have experienced unusual volatility and uncertainty. Liquidity has tightened in financial markets, including the investment grade debt, the CMBS, commercial paper, and equity capital markets. A large majority of apartment financing, and as of December 31, 2009, 93% of our outstanding debt, is provided by or credit-enhanced by FNMA and Freddie Mac, which are now under the conservatorship of the U.S. Government. We have seen an increase in the volatility of short term interest rates and changes in historic relationships between LIBOR (which is the basis for the majority of the payments to us by our swap counterparties) and the actual interest rate we pay through the FNMA Discount Mortgage Backed Security, or DMBS, and the Freddie Mac Reference Bill programs, which we believe to be temporary. This creates a risk that our interest expense will fluctuate to a greater extent than it has in the past, and it makes forecasting more difficult. Were our credit arrangements with Prudential Mortgage Capital, credit-enhanced by FNMA, or with Financial Federal, credit-enhanced by Freddie Mac, to fail, or their ability

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to lend money to finance apartment communities to become impaired, we would have to seek alternative sources of capital, which might not be available on terms acceptable to us, if at all. In addition, any such event would most likely cause our interest costs to rise. This could also cause our swaps to become ineffective, triggering a default in one or more of our credit agreements. If any of the foregoing events were to occur it could have a material adverse affect on our business, financial condition and prospects.

Various traunches of our credit facilities with FNMA and Freddie Mac mature from 2011 through 2018, and we anticipate that replacement facilities will be at a higher cost and have less attractive terms, if available at all.

A change in U.S. government policy with regard to FNMA and Freddie Mac could seriously impact our financial condition

The U.S. government has committed preferred equity to FNMA and Freddie Mac, placing them in conservatorship and the Treasury Department increased FNMA and Freddie Mac’s portfolio caps which are required to be reduced over time. Through expansion of their off-balance sheet lending products (which form the large majority of our borrowing), we believe that FNMA and Freddie Mac balance sheet limitations will not restrict their support of lending to the multifamily industry and to us in particular. Statements supporting their involvement in apartment lending by the heads of multifamily lending of FNMA, Freddie Mac, and their regulator have been reiterated. Should this support change, it would have a material adverse affect on both us and the multifamily industry, and we would seek alternative sources of funding. This could jeopardize the effectiveness of our interest rate swaps, require us to post collateral up to the value of the interest rate swaps, and either of these occurrences could potentially cause a breach in one or more of our loan covenants, and through reduced loan availability, impact the value of multifamily assets, which could impair the value of our properties.

A change in the value of our assets could cause us to experience a cash shortfall, be in default of our loan covenants, or incur a charge for the impairment of assets

We borrow on a secured basis from FNMA, Freddie Mac, and Regions Bank. A significant reduction in the value of our assets could require us to post additional collateral. While we believe that we have significant excess collateral and capacity, future asset values are uncertain. If we were unable to meet a request to add collateral to a credit facility, this would have a material adverse affect on our liquidity and our ability to meet our loan covenants. We may determine that the value of an individual asset, or group of assets, was irrevocably impaired, and that we may need to record a charge to write-down the value of the asset to reflect its current value.

Debt level, refinancing and loan covenant risk may adversely affect our financial condition and operating results and our ability to maintain our status as a REIT

At December 31, 2009, we had total debt outstanding of $1.4 billion. Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate the apartment communities or pay distributions that are required to be paid in order for us to maintain our qualification as a REIT. We currently intend to limit our total debt to a range of approximately 45% to 55% of the undepreciated book value of our assets, although our charter and bylaws do not limit our debt levels. Circumstances may cause us to exceed that target from time-to-time. As of December 31, 2009, our ratio of debt to undepreciated book value was approximately 50%. Our Board of Directors can modify this policy at any time, which could allow us to become more highly leveraged and decrease our ability to make distributions to our shareholders. In addition, we must repay our debt upon maturity, and the inability to access debt or equity capital at attractive rates could adversely affect our financial condition and/or our funds from operations. We rely on FNMA and Freddie Mac, which we refer to as the Agencies, for the majority of our debt financing and have agreements with the Agencies and with other lenders that require us to comply with certain covenants, including maintaining adequate collateral that is subject to revaluation quarterly. The breach of any one of these covenants would place us in default with our lenders and may have serious consequences on our operations.

Interest rate hedging may be ineffective

We rely on the financial markets to refinance debt maturities, and also are heavily reliant on the Agencies, which provide credit or credit enhancement for approximately $1.3 billion of our outstanding debt as of December 31, 2009. The debt is provided under the terms of credit facilities with Prudential Mortgage

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Capital (credit-enhanced by FNMA) and Financial Federal (credit-enhanced by Freddie Mac). We pay fees to the credit facility providers and the Agencies plus interest which is based on the FNMA DMBS rate, and the Freddie Mac Reference Bill Rate. The Agencies have been placed into conservatorship by the U.S. Government (under the supervision of the Federal Housing Finance Agency), which has committed $200 billion of capital to each, if needed.

The interest rate market for the FNMA DMBS rate and the Freddie Mac Reference Bill Rate, both of which have been highly correlated with LIBOR interest rates, are also an important component of our liquidity and interest rate swap effectiveness. In our experience, the FNMA DMBS rate has historically averaged 16 basis points below three-month LIBOR, and the Freddie Mac Reference Bill rate has averaged 40 basis points below the associated LIBOR rate, but in the past 28 months the spreads increased significantly and have been more volatile than we have historically seen before recently contracting closer to more normal levels. We believe that the current market illiquidity is an anomaly and that the spreads and the volatility will return to more stable historic levels, but we cannot forecast when or if the uncertainty and volatility in the market may change. Continued unusual volatility over a period of time could cause us to lose hedge accounting treatment for our interest rate swaps, resulting in material changes to our consolidated statements of operations and balance sheet, and potentially cause a breach with one of our debt covenants.

Fluctuations in interest rate spreads between the DMBS and Reference Bill rates and three-month LIBOR causes ineffectiveness to flow through interest expense in the current period if in an overhedged position, and together with the unrecognized ineffectiveness, reduces the effectiveness of the swaps.

We also rely on the credit of the counterparties that provide swaps to hedge the interest rate risk on our credit facilities. We use three major banks to provide nearly 80% of our swaps, JP Morgan Chase, Royal Bank of Canada, and Deutsche Bank, all of which have high investment grade ratings from Moody’s and S&P. In the event that one of our swap providers should suffer a significant downgrade of its credit rating or fail, our swaps may become ineffective, in which case the value of the swap would be adjusted to value in the current period, possibly causing a substantial loss sufficient to cause a breach with one of our debt covenants.

One or more interest rate swap or cap counterparties could default, causing us significant financial exposure

We enter into interest rate swap and interest rate cap agreements only with counterparties that are highly rated (generally, AA- or above by Standard & Poors, or Aa3 or above by Moody’s). We also try to diversify our risk amongst several counterparties. In the event one or more of these counterparties were to go into liquidation or to experience a significant rating downgrade, this could cause us to liquidate the interest rate swap, or lose the interest rate protection of an interest rate cap. Liquidation of an interest rate swap could cause us to be required to pay the swap counter party the net present value of the swap, which may represent a significant current period cash charge, possibly sufficient to cause us to breach one or more loan covenants.

Variable interest rates may adversely affect funds from operations

At December 31, 2009, effectively $263 million of our debt bore interest at a variable rate and was not hedged by interest rate swaps or caps. We 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 our funds from operations and the amount of cash available to pay distributions to shareholders. Our $1.0 billion secured credit facilities with Prudential Mortgage Capital, credit enhanced by FNMA, were predominately floating rate facilities during 2009. We also have credit facilities with Freddie Mac totaling $300 million that are variable rate facilities. At December 31, 2009, a total of $1.3 billion was outstanding under these facilities. These facilities represent the majority of the variable interest rates we were exposed to at December 31, 2009. 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, we will be exposed to the risks of varying interest rates.

Losses from catastrophes may exceed our insurance coverage

We carry comprehensive liability and property insurance on our communities, and intend to obtain similar coverage for communities we acquire in the future. Some losses, generally of a catastrophic nature, such as losses from floods, hurricanes or earthquakes, are subject to limitations, and thus may be uninsured. We

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exercise our discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement value of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed.

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

As a result of our substantial real estate holdings, the cost of real estate taxes and insuring our apartment 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 our control. If the costs associated with real estate taxes and insurance should rise, our financial condition could be negatively impacted and our ability to pay our dividend could be affected.

Property insurance limits may be inadequate and deductibles may be excessive in the event of a catastrophic loss or a series of major losses, and may cause a breach of loan covenants

We have a significant proportion of our assets in areas exposed to windstorms and to the New Madrid seismic zone. A major wind or earthquake loss, or series of losses, could require that we pay significant deductibles as well as additional amounts above the per occurrence limit of our insurance for these risks. We may then be judged to have breached one or more of our loan covenants, and any of the foregoing events could have a material adverse effect on our assets, financial condition, and results of operation.

Issuances of additional debt or equity may adversely impact our financial condition

Our capital requirements depend on numerous factors, including the occupancy and turnover rates of our apartment communities, development and capital expenditures, costs of operations and potential acquisitions. We cannot accurately predict the timing and amount of our capital requirements. If our capital requirements vary materially from our plans, we may require additional financing sooner than anticipated. Accordingly, we could become more leveraged, resulting in increased risk of default on our obligations and in an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future.

We are dependent on key personnel

Our success depends in part on our ability to attract and retain the services of executive officers and other personnel. There is substantial competition for qualified personnel in the real estate industry and the loss of several of our key personnel could have an adverse effect on us.

New acquisitions may fail to perform as expected and failure to integrate acquired communities and new personnel could create inefficiencies

We intend to actively acquire and improve multifamily communities for rental operations. We may underestimate the costs necessary to bring an acquired community up to standards established for our intended market position. Additionally, to grow successfully, we must be able to apply our experience in managing our existing portfolio of apartment communities to a larger number of properties. We must also be able to integrate new management and operations personnel as our organization grows in size and complexity. Failures in either area will result in inefficiencies that could adversely affect our overall profitability.

We may not be able to sell communities when appropriate

Real estate investments are relatively illiquid and generally cannot be sold quickly. We may not be able to change our portfolio promptly in response to economic or other conditions. Further, we own seven communities which are subject to restrictions on sale, and are required to be exchanged through a 1031b tax-free exchange, unless we pay the tax liability of the contributing partners. This inability to respond promptly to changes in the performance of our investments could adversely affect our financial condition and ability to make distributions to our security holders.

Environmental problems are possible and can be costly

Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances

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or petroleum product releases at such community. The owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination. These laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamination emanating from that site. All of our communities have been the subject of environmental assessments completed by qualified independent environmental consultant companies. These environmental assessments have not revealed, nor are we aware of, any environmental liability that we believe would have a material adverse effect on our business, results of operations, financial condition or liquidity. Over the past several years, there have been an increasing number of lawsuits against owners and managers of multifamily properties alleging personal injury and property damage caused by the presence of mold in residential real estate.

Some of these lawsuits have resulted in substantial monetary judgments or settlements. We cannot be assured that existing environmental assessments of our communities reveal all environmental liabilities, that any prior owner of any of our properties did not create a material environmental condition not known to us, or that a material environmental condition does not otherwise exist.

Our ownership limit restricts the transferability of our capital stock

Our charter limits ownership of our capital stock by any single shareholder to 9.9% of the value of all outstanding shares of our capital stock, both common and preferred. The charter also prohibits anyone from buying shares if the purchase would result in our losing REIT status. This could happen if a share transaction results in fewer than 100 persons owning all of our shares or in five or fewer persons, applying certain broad attribution rules of the Internal Revenue Code of 1986, as amended, or the Code, owning 50% or more of our shares. If you acquire shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs, we:

• will consider the transfer to be null and void;

• will not reflect the transaction on our books;

• may institute legal action to enjoin the transaction;

• will not pay dividends or other distributions with respect to those shares;

• will not recognize any voting rights for those shares;

• will consider the shares held in trust for our benefit; and

• will either direct you to sell the shares and turn over any profit to us, or we will redeem the shares. If we redeem the shares, you will be paid a price equal to the lesser of:

1. the price you paid for the shares; or

2. the average of the last reported sales prices on the New York Stock Exchange on the ten trading days immediately preceding the date fixed for redemption by our Board of Directors.

If you acquire shares in violation of the limits on ownership described above:

• you may lose your power to dispose of the shares;

• you may not recognize profit from the sale of such shares if the market price of the shares increases; and

• you may be required to recognize a loss from the sale of such shares if the market price decreases.

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Provisions of our charter and Tennessee law may limit the ability of a third party to acquire control of us

Ownership Limit

The 9.9% ownership limit discussed above may have the effect of precluding acquisition of control of us by a third party without the consent of our Board of Directors.

Preferred Stock

Our charter authorizes our Board of Directors to issue up to 20,000,000 shares of preferred stock. The Board of Directors may establish the preferences and rights of any preferred shares issued. The issuance of preferred stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our shareholders’ best interests. Currently, we have 6,200,000 shares of 8.30% Series H Cumulative Redeemable Preferred Stock issued and outstanding.

Tennessee Anti-Takeover Statutes

As a Tennessee corporation, we are subject to various legislative acts, which impose restrictions on and require compliance with procedures designed to protect shareholders against unfair or coercive mergers and acquisitions. These statutes may delay or prevent offers to acquire us and increase the difficulty of consummating any such offers, even if our acquisition would be in our shareholders’ best interests.

Our investments in joint ventures may involve risks

Investments in joint ventures may involve risks that may not otherwise be present in our direct investments such as:

• the potential inability of our joint venture partner to perform;

• the joint venture partner may have economic or business interests or goals which are inconsistent with or adverse to ours;

• the joint venture partner may take actions contrary to our requests or instructions or contrary to our objectives or policies; and

• the joint venturers may not be able to agree on matters relating to the property they jointly own.

Although each joint owner will have a right of first refusal to purchase the other owner’s interest, in the event a sale is desired, the joint owner may not have sufficient resources to exercise such right of first refusal.

Market interest rates and low trading volume may have an adverse effect on the market value of our common shares

The market price of shares of a REIT may be affected by the distribution rate on those shares, as a percentage of the price of the shares, relative to market interest rates. If market interest rates increase, prospective purchasers of our shares may expect a higher annual distribution rate. Higher interest rates would not, however, result in more funds for us to distribute and, in fact, would likely increase our borrowing costs and potentially decrease funds available for distribution. This could cause the market price of our common shares to go down. In addition, although our common shares are listed on the New York Stock Exchange, the daily trading volume of our shares may be lower than the trading volume for other industries. As a result, our investors who desire to liquidate substantial holdings may find that they are unable to dispose of their shares in the market without causing a substantial decline in the market value of the shares.

Changes in market conditions or a failure to meet the market’s expectations with regard to our earnings and cash distributions could adversely affect the market price of our common shares

We believe that the market value of a REIT’s equity securities is based primarily upon the market’s perception of the REIT’s growth potential and its current and potential future cash distributions, and is secondarily based upon the real estate market value of the underlying assets. For that reason, our shares may trade at prices that are higher or lower than the net asset value per share. To the extent we retain operating cash flow for investment purposes, working capital reserves or other purposes, these retained funds, while increasing the value of our underlying assets, may not correspondingly increase the market price of our

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common shares. In addition, we are subject to the risk that our cash flow will be insufficient to pay distributions to our shareholders. Our failure to meet the market’s expectations with regard to future earnings and cash distributions would likely adversely affect the market price of our shares.

The stock markets, including The New York Stock Exchange (NYSE), on which we list our common shares, have experienced significant price and volume fluctuations. As a result, the market price of our common shares could be similarly volatile, and investors in our common shares may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. Among the market conditions that may affect the market price of our publicly traded securities are the following:

• our financial condition and operating performance and the performance of other similar companies;

• actual or anticipated differences in our quarterly operating results;

• changes in our revenues or earnings estimates or recommendations by securities analysts;

• publication of research reports about us or our industry by securities analysts;

• additions and departures of key personnel;

• strategic decisions by us or our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy;

• the reputation of REITs generally and the reputation of REITs with portfolios similar to ours;

• the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies);

• an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for our shares;

• the passage of legislation or other regulatory developments that adversely affect us or our industry;

• speculation in the press or investment community;

• actions by institutional shareholders or hedge funds;

• changes in accounting principles;

• terrorist acts; and

• general market conditions, including factors unrelated to our performance.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.

Failure to qualify as a REIT would cause us to be taxed as a corporation

If we failed to qualify as a REIT for federal income tax purposes, we would be taxed as a corporation. The Internal Revenue Service may challenge our qualification as a REIT for prior years, and new legislation, regulations, administrative interpretations or court decisions may change the tax laws with respect to qualification as a REIT or the federal tax consequences of such qualification. For any taxable year that we fail to qualify as a REIT, we would be subject to federal income tax on our taxable income at corporate rates, plus any applicable alternative minimum tax. In addition, unless entitled to relief under applicable statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. This treatment would reduce our net earnings available for investment or distribution to shareholders because of the additional tax liability for the year or years involved. In addition, distributions would no longer qualify for the dividends paid deduction nor be required to be made in order to preserve REIT status. We might be required to borrow funds or to liquidate some of our investments to pay any applicable tax resulting from our failure to qualify as a REIT.

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Compliance or failure to comply with laws requiring access to our properties by disabled persons could result in substantial cost

The Americans with Disabilities Act, the Fair Housing Act of 1988 and other federal, state and local laws generally require that public accommodations be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the government or the award of damages to private litigants. These laws may require us to modify our existing communities. These laws may also restrict renovations by requiring improved access to such buildings by disabled persons or may require us to add other structural features that increase our construction costs. Legislation or regulations adopted in the future may impose further burdens or restrictions on us with respect to improved access by disabled persons. We cannot ascertain the costs of compliance with these laws, which may be substantial.

Failure to make required distributions would subject us to income taxation

In order to qualify as a REIT, each year we must distribute to stockholders at least 90% of our taxable income (determined without regard to the dividend paid deduction and by excluding net capital gains). To the extent that we satisfy the distribution requirement, but distribute less than 100% of taxable income, we will be subject to federal corporate income tax on the undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of:

• 85% of ordinary income for that year;

• 95% of capital gain net income for that year; and

• 100% of undistributed taxable income from prior years.

Differences in timing between the recognition of income and the related cash receipts or the effect of required debt amortization payments could require us to borrow money or sell assets to pay out enough of the taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4% nondeductible excise tax in a particular year.

Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or engage in marginal investment opportunities

To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of income, the nature and diversification of assets, the amounts distributed to shareholders and the ownership of our stock. In order to meet these tests, we may be required to forgo attractive business or investment opportunities or engage in marginal investment opportunities. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We seek to acquire newer apartment communities and those with opportunities for repositioning through capital additions and management improvement located in the Sunbelt region of the United States that are primarily appealing to middle income residents with the potential for above average growth and return on investment. Approximately 76% of our apartment units are located in Georgia, Florida, Tennessee, and Texas markets. Our strategic focus is to provide our residents high quality apartment units in attractive community settings, characterized by extensive landscaping and attention to aesthetic detail. We utilize our experience and expertise in maintenance, landscaping, marketing and management to effectively reposition many of the apartment communities we acquire to raise occupancy levels and per unit average rents.

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The following table sets forth certain historical information for the apartment communities we owned at December 31, 2009:

	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, 2009		Average Occupancy Percent at December 31, 2009			Encumbrances at December 31, 2009
Property																		Mortgage/ Bond Principal (000's)			Interest Rate			Maturity Date
100% Owned
Eagle Ridge		Birmingham, AL		1986		1998		200		181,400		907	$	699.93		92.50	%	$	—	(1)		(1)			(1)
Abbington Place		Huntsville, AL		1987		1998		152		162,792		1,071	$	622.16		94.08	%	$	—	(1)		(1)			(1)
Paddock Club Huntsville		Huntsville, AL		1989/98		1997		392		414,736		1,058	$	699.47		95.66	%	$	—	(1)		(1)			(1)
Paddock Club Montgomery		Montgomery, AL		1999		1998		208		230,880		1,110	$	730.96		96.63	%	$	—	(1)		(1)			(1)
								952		989,808		1,040	$	694.10		94.96%
Calais Forest		Little Rock, AR		1987		1994		260		195,000		750	$	665.55		96.92	%	$	—	(1)		(1)			(1)
Napa Valley		Little Rock, AR		1984		1996		240		183,120		763	$	631.07		93.75	%	$	—	(1)		(1)			(1)
Westside Creek I & II		Little Rock, AR		1984/86		1997		308		320,936		1,042	$	686.62		97.40	%	$	—	(1)		(1)			(1)
								808		699,056		865	$	663.34		96.16%
Edge at Lyon's Gate		Phoenix, AZ		2007		2008		312		299,208		959	$	790.40		93.27	%	$	—
Talus Ranch		Phoenix, AZ		2005		2006		480		437,280		911	$	690.42		90.63	%	$	—
Sky View Ranch		Gilbert, AZ		2007		2009		232		225,272		971	$	798.80		91.81	%	$	—
								1,024		961,760		939	$	745.44		91.70%
Tiffany Oaks		Altamonte Springs, FL		1985		1996		288		234,144		813	$	720.81		97.57	%	$	—	(1)		(1)			(1)
Marsh Oaks		Atlantic Beach, FL		1986		1995		120		93,240		777	$	658.71		98.33	%	$	—	(1)		(1)			(1)
Indigo Point		Brandon, FL		1989		2000		240		194,640		811	$	781.02		96.25	%	$	—
Paddock Club Brandon		Brandon, FL		1997/99		1997		440		516,120		1,173	$	881.38		95.00	%	$	—	(2)		(2)			(2)
Preserve at Coral Square		Coral Springs, FL		1996		2004		480		528,480		1,101	$	1,249.30		95.63	%	$	—	(6)		(6)			(6)
Anatole		Daytona Beach, FL		1986		1995		208		149,136		717	$	679.18		94.71	%	$	7,000	(9)		1.175	%(9)		10/15/2032	(9)
Paddock Club Gainesville		Gainesville, FL		1999		1998		264		293,040		1,110	$	854.73		98.86	%	$	—	(2)		(2)			(2)
Cooper's Hawk		Jacksonville, FL		1987		1995		208		218,400		1,050	$	762.25		98.08	%	$	—	(2)		(2)			(2)
Hunter's Ridge at Deerwood		Jacksonville, FL		1987		1997		336		295,008		878	$	762.71		95.24	%	$	—	(7)		(7)			(7)
Lakeside		Jacksonville, FL		1985		1996		416		344,032		827	$	693.45		95.43	%	$	—	(1)		(1)			(1)
Lighthouse at Fleming Island		Jacksonville, FL		2003		2003		501		556,110		1,110	$	869.38		96.61	%	$	—	(1)		(1)			(1)
Paddock Club Jacksonville		Jacksonville, FL		1989/96		1997		440		475,200		1,080	$	831.57		92.50	%	$	—	(1)		(1)			(1)
Paddock Club Mandarin		Jacksonville, FL		1998		1998		288		330,336		1,147	$	858.01		97.22	%	$	—	(2)		(2)			(2)
St. Augustine I & II		Jacksonville, FL		1987/2008		1995		524		423,392		808	$	724.60		95.80	%	$	13,235	(19)		(19)			(19)
Woodbridge at the Lake		Jacksonville, FL		1985		1994		188		166,004		883	$	699.79		94.15	%	$	—	(2)		(2)			(2)
Woodhollow		Jacksonville, FL		1986		1997		450		342,000		760	$	666.02		96.22	%	$	—	(1)		(1)			(1)
Paddock Club Lakeland		Lakeland, FL		1988/90		1997		464		505,296		1,089	$	710.59		96.12	%	$	—	(1)		(1)			(1)
Savannahs at James Landing		Melbourne, FL		1990		1995		256		238,592		932	$	699.11		96.09	%	$	—	(2)		(2)			(2)
Paddock Park Ocala		Ocala, FL		1986/88		1997		480		485,280		1,011	$	651.86		95.21	%	$	6,805	(2)(3)		(2)(3)			(2)(3)

17

	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, 2009		Average Occupancy Percent at December 31, 2009			Encumbrances at December 31, 2009
Property																		Mortgage/ Bond Principal (000's)			Interest Rate			Maturity Date
Paddock Club Panama City		Panama City, FL		2000		1998		254		283,972		1,118	$	882.27		94.09	%	$	—	(2)		(2)			(2)
Paddock Club Tallahassee		Tallahassee, FL		1990/95		1997		304		329,232		1,083	$	810.10		93.75	%	$	—	(2)		(2)			(2)
Belmere		Tampa, FL		1984		1994		210		202,440		964	$	777.32		98.10	%	$	—	(1)		(1)			(1)
Links at Carrollwood		Tampa, FL		1980		1998		230		214,820		934	$	831.90		97.83	%	$	—	(1)		(1)			(1)
Village Oaks		Tampa, FL		2005		2008		226		260,804		1,154	$	994.75		97.35	%	$	—
Park Crest at Innisbrook		Palm Harbor, FL		2000		2009		432		461,808		1,069	$	894.98		95.37	%	$	—
								8,247		8,141,526		987	$	806.26		95.85%
High Ridge		Athens, GA		1987		1997		160		186,560		1,166	$	720.07		93.75	%	$	—	(1)		(1)			(1)
Sanctuary at Oglethorpe		Atlanta, GA		1994		2008		250		287,500		1,150	$	1,149.25		97.60	%	$	23,500			6.210	%		11/5/2015
Bradford Pointe		Augusta, GA		1986		1997		192		156,288		814	$	649.29		92.19	%	$	—	(4)		(4)			(4)
Shenandoah Ridge		Augusta, GA		1982		1994		272		222,768		819	$	601.34		93.01	%	$	—	(1)		(1)			(1)
Westbury Creek		Augusta, GA		1984		1997		120		107,040		892	$	671.78		92.50	%	$	3,480	(14)		(14)			5/15/2033	(14)
Fountain Lake		Brunswick, GA		1983		1997		110		129,800		1,180	$	752.18		91.82	%	$	—	(4)		(4)			(4)
Park Walk		College Park, GA		1985		1997		124		112,716		909	$	597.10		95.97	%	$	—	(1)		(1)			(1)
Whisperwood		Columbus, GA		80/82/84/86/98		1997		1,008		1,220,688		1,211	$	765.38		89.88	%	$	—	(1)		(1)			(1)
Willow Creek		Columbus, GA		1971/77		1997		285		246,810		866	$	570.24		94.39	%	$	—	(1)		(1)			(1)
Terraces at Fieldstone		Conyers, GA		1999		1998		316		351,076		1,111	$	780.94		97.15	%	$	—	(1)		(1)			(1)
Prescott		Duluth, GA		2001		2004		384		370,176		964	$	779.63		94.79	%	$	—	(5)		(5)			(5)
Lanier		Gainesville, GA		1998		2005		344		395,944		1,151	$	763.22		94.77	%	$	18,363			5.300	%		3/1/2014
Lake Club		Gainesville, GA		2001		2005		313		359,950		1,150	$	710.07		93.29	%	$	—	(5)		(5)			(5)
Whispering Pines		LaGrange, GA		1982/84		1997		216		223,128		1,033	$	608.28		95.83	%	$	—	(4)		(4)			(4)
Westbury Springs		Lilburn, GA		1983		1997		150		137,700		918	$	639.45		96.00	%	$	—	(1)		(1)			(1)
Austin Chase		Macon, GA		1996		1997		256		292,864		1,144	$	711.42		98.44	%	$	—	(7)		(7)			(7)
The Vistas		Macon, GA		1985		1997		144		153,792		1,068	$	648.02		96.53	%	$	—	(1)		(1)			(1)
Walden Run		McDonough, GA		1997		1998		240		271,200		1,130	$	692.31		99.17	%	$	—	(1)		(1)			(1)
Georgetown Grove		Savannah, GA		1997		1998		220		239,800		1,090	$	824.23		97.27	%	$	—	(6)		(6)			(6)
Oaks at Wilmington Island		Savannah, GA		1999		2006		306		300,492		982	$	837.08		98.04	%	$	—	(6)		(6)			(6)
Wildwood		Thomasville, GA		1980/84		1997		216		223,128		1,033	$	616.45		97.22	%	$	—	(1)		(1)			(1)
Hidden Lake		Union City, GA		1985/87		1997		320		342,400		1,070	$	657.87		96.56	%	$	—	(1)		(1)			(1)
Three Oaks		Valdosta, GA		1983/84		1997		240		247,920		1,033	$	666.47		97.08	%	$	—	(1)		(1)			(1)
Huntington Chase		Warner Robins, GA		1997		2000		200		218,400		1,092	$	695.81		96.50	%	$	—	(6)		(6)			(6)
Southland Station		Warner Robins, GA		1987/90		1997		304		354,768		1,167	$	675.62		97.04	%	$	—	(1)		(1)			(1)
Terraces at Townelake		Woodstock, GA		1999		1998		502		575,794		1,147	$	725.29		96.41	%	$	—	(1)		(1)			(1)
								7,192		7,728,702		1,075	$	724.66		95.06%
Fairways at Hartland		Bowling Green, KY		1996		1997		240		251,280		1,047	$	706.31		96.25	%	$	—	(1)		(1)			(1)
Paddock Club Florence		Florence, KY		1994		1997		200		207,000		1,035	$	736.35		91.00	%	$	9,295			5.875	%		1/1/2044
Grand Reserve Lexington		Lexington, KY		2000		1999		370		432,530		1,169	$	851.01		94.32	%	$	—	(1)		(1)			(1)

18

	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, 2009		Average Occupancy Percent at December 31, 2009			Encumbrances at December 31, 2009
Property																		Mortgage/ Bond Principal (000's)			Interest Rate			Maturity Date
Lakepointe		Lexington, KY		1986		1994		118		90,624		768	$	622.75		98.31	%	$	—	(1)		(1)			(1)
Mansion, The		Lexington, KY		1989		1994		184		138,736		754	$	628.27		96.20	%	$	—	(1)		(1)			(1)
Village, The		Lexington, KY		1989		1994		252		182,700		725	$	617.31		98.41	%	$	—	(1)		(1)			(1)
Stonemill Village		Louisville, KY		1985		1994		384		324,096		844	$	631.49		95.05	%	$	—	(1)		(1)			(1)
								1,748		1,626,966		931	$	697.25		95.42%
Crosswinds		Jackson, MS		1988/90		1996		360		443,160		1,231	$	737.62		97.22	%	$	—	(1)		(1)			(1)
Pear Orchard		Jackson, MS		1985		1994		389		338,430		870	$	701.49		96.92	%	$	—	(1)		(1)			(1)
Reflection Pointe		Jackson, MS		1986		1988		296		254,856		861	$	715.34		98.31	%	$	5,880	(10)		1.035	%(10)		5/15/2031	(10)
Lakeshore Landing		Ridgeland, MS		1974		1994		196		171,108		873	$	651.57		95.41	%	$	—	(1)		(1)			(1)
Savannah Creek		Southaven, MS		1989		1996		204		237,048		1,162	$	722.67		99.02	%	$	—	(1)		(1)			(1)
Sutton Place		Southaven, MS		1991		1996		253		268,686		1,062	$	688.23		98.81	%	$	—	(1)		(1)			(1)
								1,698		1,713,288		1,009	$	706.37		97.59%
Hermitage at Beechtree		Cary, NC		1988		1997		194		169,750		875	$	679.36		92.27	%	$	—	(1)		(1)			(1)
Waterford Forest		Cary, NC		1996		2005		384		344,448		897	$	659.23		97.92	%	$	—	(5)		(5)			(5)
Preserve at Brier Creek		Raleigh, NC		2002/07		2006		450		518,850		1,153	$	896.54		96.22	%	$	—	(1)		(1)			(1)
Providence at Brier Creek		Raleigh, NC		2007		2008		313		297,037		949	$	844.03		94.57	%	$	—
Corners, The		Winston-Salem, NC		1982		1993		240		173,520		723	$	554.33		95.83	%	$	—	(2)		(2)			(2)
								1,581		1,503,605		951	$	749.91		95.76%
Fairways at Royal Oak		Cincinnati, OH		1988		1994		214		214,428		1,002	$	656.61		95.79	%	$	—	(1)		(1)			(1)
								214		214,428		1,002	$	656.61		95.79%
Colony at South Park		Aiken, SC		1989/91		1997		184		174,800		950	$	731.13		96.74	%	$	—	(1)		(1)			(1)
Woodwinds		Aiken, SC		1988		1997		144		165,168		1,147	$	733.69		89.58	%	$	—	(1)		(1)			(1)
Tanglewood		Anderson, SC		1980		1994		168		146,664		873	$	578.56		90.48	%	$	—	(1)		(1)			(1)
Fairways, The		Columbia, SC		1992		1994		240		213,840		891	$	640.43		95.42	%	$	7,735	(11)		1.035	%(11)		5/15/2031	(11)
Paddock Club Columbia		Columbia, SC		1989/95		1997		336		367,584		1,094	$	747.56		92.86	%	$	—	(1)		(1)			(1)
Highland Ridge		Greenville, SC		1984		1995		168		143,976		857	$	524.86		98.81	%	$	—	(1)		(1)			(1)
Howell Commons		Greenville, SC		1986/88		1997		348		292,668		841	$	545.24		95.69	%	$	—	(1)		(1)			(1)
Paddock Club Greenville		Greenville, SC		1996		1997		208		212,160		1,020	$	685.27		92.79	%	$	—	(1)		(1)			(1)
Park Haywood		Greenville, SC		1983		1993		208		156,832		754	$	537.75		90.87	%	$	—	(1)		(1)			(1)
Spring Creek		Greenville, SC		1985		1995		208		182,000		875	$	565.99		95.67	%	$	—	(1)		(1)			(1)
Runaway Bay		Mt. Pleasant, SC		1988		1995		208		177,840		855	$	909.21		94.71	%	$	8,365	(8)		1.205	%(8)		11/15/2035	(8)
Park Place		Spartanburg, SC		1987		1997		184		195,224		1,061	$	624.89		95.65	%	$	—	(1)		(1)			(1)
Farmington Village		Summerville, SC		2007		2007		280		307,440		1,098	$	834.97		93.93	%	$	15,200			3.579	%		12/10/2015
								2,884		2,736,196		949	$	669.27		94.17%
Hamilton Pointe		Chattanooga, TN		1989		1992		361		256,671		711	$	549.17		96.68	%	$	—	(1)		(1)			(1)
Hidden Creek		Chattanooga, TN		1987		1988		300		259,200		864	$	574.48		97.00	%	$	—	(1)		(1)			(1)
Steeplechase		Chattanooga, TN		1986		1991		108		98,604		913	$	653.37		92.59	%	$	—	(1)		(1)			(1)
Windridge		Chattanooga, TN		1984		1997		174		238,728		1,372	$	855.61		95.40	%	$	5,465	(15)		(15)			5/15/2033(15)

19

	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, 2009		Average Occupancy Percent at December 31, 2009			Encumbrances at December 31, 2009
Property																		Mortgage/ Bond Principal (000's)			Interest Rate			Maturity Date
Oaks, The		Jackson, TN		1978		1993		100		87,500		875	$	548.49		98.00	%	$	—	(1)		(1)			(1)
Post House Jackson		Jackson, TN		1987		1989		150		163,650		1,091	$	624.89		98.00	%	$	5,095			1.035	%		10/15/2032
Post House North		Jackson, TN		1987		1989		145		145,725		1,005	$	616.26		97.24	%	$	3,375	(12)		1.035	%(12)		5/15/2031	(12)
Bradford Chase		Jackson, TN		1987		1994		148		121,360		820	$	570.22		95.95	%	$	—	(1)		(1)			(1)
Woods at Post House		Jackson, TN		1997		1995		122		118,950		975	$	652.21		99.18	%	$	4,727			6.070	%		9/1/2035
Cedar Mill		Memphis, TN		1973/86		1982/94		276		297,804		1,079	$	574.40		96.74	%	$	—	(1)		(1)			(1)
Greenbrook		Memphis, TN		1974/78/83/86		1988		1,037		939,522		906	$	608.68		95.08	%	$	—
Kirby Station		Memphis, TN		1978		1994		371		310,156		836	$	673.10		98.92	%	$	—	(1)		(1)			(1)
Lincoln on the Green		Memphis, TN		1988/98		1994		618		535,188		866	$	696.71		93.85	%	$	—	(1)		(1)			(1)
Park Estate		Memphis, TN		1974		1977		82		96,924		1,182	$	992.37		92.68	%	$	—
Reserve at Dexter Lake		Memphis, TN		1999/01		1998		740		792,540		1,071	$	806.48		92.84	%	$	—	(4)		(4)			(4)
Paddock Club Murfreesboro		Murfreesboro, TN		1999		1998		240		268,800		1,120	$	827.15		93.33	%	$	—	(1)		(1)			(1)
Brentwood Downs		Nashville, TN		1986		1994		286		220,220		770	$	762.04		93.01	%	$	—	(1)		(1)			(1)
Grand View Nashville		Nashville, TN		2001		1999		433		479,331		1,107	$	862.31		94.69	%	$	—	(1)		(1)			(1)
Monthaven Park		Nashville, TN		1999/01		2004		456		427,728		938	$	769.64		91.89	%	$	—	(6)		(6)			(6)
Park at Hermitage		Nashville, TN		1987		1995		440		392,480		892	$	626.38		92.50	%	$	6,645	(16)		1.035	%(16)		2/15/2034	(16)
								6,587		6,251,081		949	$	691.75		94.79%
Northwood		Arlington, TX		1980		1998		270		224,100		830	$	587.62		94.81	%	$	—	(2)		(2)			(2)
Balcones Woods		Austin, TX		1983		1997		384		313,728		817	$	738.03		98.18	%	$	—	(2)		(2)			(2)
Grand Reserve at Sunset Valley		Austin, TX		1996		2004		210		198,240		944	$	887.91		96.67	%	$	—	(6)		(6)			(6)
Silverado		Austin, TX		2003		2006		312		303,264		972	$	783.55		96.15	%	$	—	(6)		(6)			(6)
Stassney Woods		Austin, TX		1985		1995		288		248,832		864	$	651.43		95.83	%	$	4,050	(17)		1.035	%(17)		2/15/2034	(17)
Travis Station		Austin, TX		1987		1995		304		249,888		822	$	591.65		90.79	%	$	3,585	(18)		1.035	%(18)		2/15/2034	(18)
Woods, The		Austin, TX		1977		1997		278		214,060		770	$	855.12		91.73	%	$	—	(2)		(2)			(2)
Legacy at Western Oaks		Austin, TX		2001		2009		479		467,504		976	$	968.71		95.20	%	$	—
Celery Stalk		Dallas, TX		1978		1994		410		374,740		914	$	655.92		97.56	%	$	—	(5)		(5)			(5)
Courtyards at Campbell		Dallas, TX		1986		1998		232		168,200		725	$	676.74		96.98	%	$	—	(2)		(2)			(2)
Deer Run		Dallas, TX		1985		1998		304		206,720		680	$	586.55		94.08	%	$	—	(2)		(2)			(2)
Grand Courtyard		Dallas, TX		2000		2006		390		341,250		875	$	801.68		96.15	%	$	—	(6)		(6)			(6)
Lodge at Timberglen		Dallas, TX		1983		1994		260		226,200		870	$	632.45		89.62	%	$	—	(5)		(5)			(5)
Watermark		Dallas, TX		2002		2004		240		205,200		855	$	736.01		95.00	%	$	—	(5)		(5)			(5)
Legacy Pines		Houston, TX		1999		2003		308		283,360		920	$	807.42		93.51	%	$	—	(2)		(2)			(2)
Park Place (Houston)		Houston, TX		1996		2007		229		207,016		904	$	891.98		92.14	%	$	—
Ranchstone		Houston, TX		1996		2007		220		193,160		878	$	791.54		97.73	%	$	—	(6)		(6)			(6)
Reserve at Woodwind Lakes		Houston, TX		1999		2006		328		316,192		964	$	818.56		90.85	%	$	14,191			5.930	%		6/15/2015
Cascade at Fall Creek		Humble, TX		2007		2008		246		227,796		926	$	896.41		92.68	%	$	—
Chalet at Fall Creek		Humble, TX		2006		2007		268		260,228		971	$	890.55		91.04	%	$	—	(6)		(6)			(6)

20

	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, 2009		Average Occupancy Percent at December 31, 2009			Encumbrances at December 31, 2009
Property																		Mortgage/ Bond Principal (000's)			Interest Rate			Maturity Date
Westborough Crossing		Katy, TX		1984		1994		274		197,280		720	$	620.02		97.45	%	$	—	(5)		(5)			(5)
Kenwood Club		Katy, TX		2000		1999		320		318,080		994	$	779.10		94.06	%	$	—	(2)		(2)			(2)
Lane at Towne Crossing		Mesquite, TX		1983		1994		384		277,632		723	$	555.52		97.66	%	$	—	(2)		(2)			(2)
Highwood		Plano, TX		1983		1998		196		156,800		800	$	706.04		95.41	%	$	—
Los Rios Park		Plano, TX		2000		2003		498		470,112		944	$	790.13		95.38	%	$	—	(2)		(2)			(2)
Boulder Ridge		Roanoke, TX		1999/2008		2005		494		446,082		903	$	775.04		95.14	%	$	—	(2)		(2)			(2)
Copper Ridge		Roanoke, TX		2008		2008		245		311,150		1,270	$	937.76		95.10	%	$	—
Stone Ranch at Westover Hills		San Antonio, TX		2008		2009		400		334,400		836	$	754.19		88.00	%	$	—
Cypresswood Court		Spring, TX		1984		1994		208		160,576		772	$	660.27		91.83	%	$	—	(5)		(5)			(5)
Villages at Kirkwood		Stafford, TX		1996		2004		274		244,682		893	$	828.27		95.26	%	$	—	(6)		(6)			(6)
Green Tree Place		Woodlands, TX		1984		1994		200		152,200		761	$	697.12		98.50	%	$	—	(5)		(5)			(5)
								9,453		8,298,672		878	$	709.07		94.56%
Township		Hampton, VA		1987		1995		296		248,048		838	$	944.89		94.26	%	$	10,800	(13)		1.175	%(13)		10/15/2032	(13)
								296		248,048		838	$	944.89		94.26%
Subtotal 100% Owned								42,684		41,113,136		963	$	727.08		95.08%			176,791
Joint Venture Properties
Milstead Village		Kennesaw, GA		1998		2008		310		356,190		1,149	$	862.78		94.52	%		N/A
Greenwood Forest		Houston, TX		1994		2008		316		310,944		984	$	806.90		97.47	%		N/A
Ansley Village		Macon, GA		2007		2009		294		324,354		1,103	$	771.45		92.86	%		N/A
Subtotal Joint Venture Properties								920		991,488		1,078	$	814.40		95.00%		$	—
Total 100% Owned and Joint Venture Properties								43,604		42,104,624		966	$	728.92		95.08%		$	176,791

21

(1) Encumbered by a $691.8 million FNMA facility, with $691.8 million available and $686.8 million outstanding with a variable interest rate of 0.75% on which there exists in combination with the FNMA facility mentioned in note (2) eighteen interest rate swap agreements totaling $640 million at an average rate of 5.37% and three interest rate caps totalling $75 million at an average rate of 4.67% at December 31, 2009.

(2) Encumbered by a $243.2 million FNMA facility, with $243.2 million available and $208.6 million outstanding with a variable interest rate of 0.77% on which there exists interest rate swaps and caps as mentioned in note (1) at December 31, 2009.

(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 6.00% which terminates on October 24, 2012.

(4) Encumbered by a credit line with AmSouth Bank, with no outstanding balance at December 31, 2009.

(5) Encumbered by a $100 million Freddie Mac facility, with $100 million available and an outstanding balance of $100 million and a variable interest rate of 0.78% on which there exists five interest rate swap agreements totaling $83 million at an average rate of 5.41% at December 31, 2009.

(6) Encumbered by a $200 million Freddie Mac facility, with $198.2 million available and an outstanding balance of $198.2 million and a variable interest rate of 0.73% on which there exists eight interest rate swap agreements totaling $134 million at an average rate of 5.18% and a $15 million interest rate cap of 5% at December 31, 2009.

(7) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $11.2 million at December 31, 2009, and an average interest rate of 5.27%.

(8) Encumbered by $8.4 million in bonds on which there exists a $8.4 million interest rate swap agreement fixed at 4.73% and maturing on September 15, 2010.

(9) Encumbered by $7.0 million in bonds on which there exists a $7.0 million interest rate swap agreement fixed at 4.42% and maturing on October 15, 2012.

(10) Encumbered by $5.9 million in bonds on which there exists a $5.9 million interest rate cap of 6.00% which terminates on October 31, 2012.

(11) Encumbered by $7.7 million in bonds on which there exists a $7.7 million interest rate cap of 6.00% which terminates on October 31, 2012.

(12) Encumbered by $3.4 million in bonds on which there exists a $3.4 million interest rate cap of 6.00% which terminates on October 31, 2012.

(13) Encumbered by $10.8 million in bonds on which there exists a $10.8 million interest rate swap agreement fixed at 4.42% and maturing on October 15, 2012.

(14) Encumbered by $3.5 million in bonds $0.5 million having a variable rate of 1.224% and $3.0 million with a variable rate of 1.035% on which there exists a $3.0 million interest rate cap of 6.00% which terminates on May 31, 2013.

(15) Encumbered by $5.5 million in bonds $0.5 million having a variable rate of 1.224% and $5.0 million with a variable rate of 1.035% on which there exists a $5.0 million interest rate cap of 6.00% which terminates on May 31, 2013.

(16) Encumbered by $6.6 million in bonds on which there exists a $6.6 million interest rate cap of 6.00% which terminates on November 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 0.87% which there exists a $6.2 million and a $11.7 million interest rate cap of 6.50% and 5.00% respectively which terminates on March 1, 2011 and March 1, 2014 respectively.

(17) Encumbered by $4.1 million in bonds on which there exists a $4.1 million interest rate cap of 6.00% which terminates on November 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 0.87% which there exists a $6.2 million and a $11.7 million interest rate cap of 6.50% and 5.00% respectively which terminates on March 1, 2011 and March 1, 2014 respectively.

(18) Encumbered by $3.6 million in bonds on which there exists a $3.6 million interest rate cap of 6.00% which terminates on November 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 0.87% which there exists a $6.2 million and a $11.7 million interest rate cap of 6.50% and 5.00% respectively which terminates on March 1, 2011 and March 1, 2014 respectively.

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(19) Phase I of St. Augustine is encumbered by $13.2 million in bonds on which there exists a $13.2 million interest rate cap of 6.00% which terminates on March 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 0.87% which there exists a $6.2 million and a $11.7 million interest rate cap of 6.50% and 5.00% respectively which terminates on March 1, 2011 and March 1, 2014 respectively.

ITEM 3. LEGAL PROCEEDINGS

We are not presently subject to any material litigation nor, to our knowledge, are any material litigation threatened against us. We are 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 our business, financial condition, liquidity or results of operations.

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

None.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock has been listed and traded on the New York Stock Exchange, or NYSE, under the symbol “MAA” since our initial public offering in February 1994. On February 5, 2010, the reported last sale price of our common stock on the NYSE was $46.76 per share, and there were approximately 1,700 holders of record of the common stock. We believe we have a significantly larger number of beneficial owners of our common stock. The following table sets forth the quarterly high and low sales prices of our common stock and the dividends declared by us with respect to the periods indicated.

	Sales Prices				Dividends Paid		Dividends Declared
	High		Low
2009:
First Quarter	$	37.480	$	22.220	$	0.615	$	0.615
Second Quarter	$	39.850	$	29.340	$	0.615	$	0.615
Third Quarter	$	50.580	$	34.770	$	0.615	$	0.615
Fourth Quarter	$	49.820	$	41.950	$	0.615	$	0.615
2008:
First Quarter	$	54.700	$	38.280	$	0.615	$	0.615
Second Quarter	$	57.820	$	49.760	$	0.615	$	0.615
Third Quarter	$	60.660	$	45.000	$	0.615	$	0.615
Fourth Quarter	$	49.560	$	23.630	$	0.615	$	0.615

Our quarterly dividend rate is currently $0.615 per common share. Our Board of Directors reviews and declares the dividend rate quarterly. Actual dividends made by us will be affected by a number of factors, including, but not limited to, the gross revenues received from the apartment communities, our operating expenses, the interest expense incurred on borrowings and unanticipated capital expenditures.

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

We have established the Direct Stock Purchase and Distribution Reinvestment Plan, or DRSPP, under which holders of common stock, preferred stock and limited partnership interests in our operating partnership. can elect to automatically 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. In our absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill our obligations under the DRSPP, we may either issue additional shares of common stock or repurchase common stock in the open market. We may elect to sell shares under the DRSPP at up to a 5% discount.

In 2007, we issued a total of 136,483 shares through our DRSPP and offered an average discount of 1.5% for optional cash purchases. In 2008, we issued a total of 421,794 shares through our DRSPP and offered an average discount of 1.5% for optional cash purchases. In 2009, we issued a total of 25,406 shares through our DRSPP and did not offer a discount for optional cash purchases.

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The following table provides information with respect to compensation plans under which our equity securities are authorized for issuance as of December 31, 2009.

	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a)(1)		Weighted Average Exercise Price of Outstanding Options Warrants and Rights (b)(1)		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)) (c)(2)
Equity compensation plans approved by security holders		23,157	$	25.37		439,063
Equity compensation plans not approved by security holders		N/A		N/A		N/A
Total		23,157	$	25.37		439,063

(1) Columns (a) and (b) above do not include 50,219 shares of restricted stock that are subject to vesting requirements which were issued through our Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan, 30,276 shares of restricted stock that are subject to vesting requirements which were issued through our 2004 Stock Plan, or 71,863 shares of common stock which have been purchased by employees through the Employee Stock Purchase Plan. See Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements, Note 2 for more information on these plans.

(2) Column (c) above includes 360,926 shares available to be issued under our 2004 Stock Plan and 78,137 shares available to be issued under our Employee Stock Purchase Plan. See Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements, Note 2 for more information on these plans.

We have not granted any stock options since 2002.

The following graph compares the cumulative total returns of the shareholders of Mid-America since December 31, 2004 with the S&P 500 Index and the FTSE NAREIT Equity REIT Index prepared by the National Association of Real Estate Investment Trusts, or NAREIT. The graph assumes that the base share price for Mid-America’s common stock and each index is $100 and that all dividends are reinvested. The performance graph is not necessarily indicative of future investment performance.

	Dec '04		Dec '05		Dec '06		Dec '07		Dec '08		Dec '09
Mid-America	$	100.00	$	124.51	$	153.47	$	119.69	$	109.62	$	152.72
S&P 500	$	100.00	$	104.91	$	121.48	$	128.16	$	80.74	$	102.11
FTSE NAREIT Equity Index	$	100.00	$	112.16	$	151.49	$	127.72	$	79.53	$	101.79

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ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial data on a historical basis for us. 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 Current Report on Form 8-K.

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

	Year Ended December 31,
	2009			2008			2007			2006			2005
Operating Data:
Total operating revenues	$	378,544		$	370,011		$	347,444		$	318,475		$	288,643
Expenses:
Property operating expenses		159,705			155,310			142,381			132,608			121,768
Depreciation		96,019			90,168			84,789			77,545			72,590
Acquisition expenses		950			—			—			—			—
Property management and general and administrative expenses		28,540			28,636			28,726			23,001			20,862
Income from continuing operations before non-operating items		93,330			95,897			91,548			85,321			73,423
Interest and other non-property income		385			509			195			663			495
Interest expense		(57,094	)		(62,010	)		(63,639	)		(62,308	)		(57,318	)
Loss on debt extinguishment		(140	)		(116	)		(123	)		(578	)		(419	)
Amortization of deferred financing costs		(2,374	)		(2,307	)		(2,407	)		(2,036	)		(2,011	)
Incentive fees from real estate joint ventures		—			—			1,019			—			1,723
Net casualty gains (loss) and other settlement proceeds		32			(247	)		589			84			749
Gains (loss) on sale of non-depreciable assets		15			(3	)		534			50			18
Income from continuing operations before investments in real estate joint ventures		34,154			31,723			27,716			21,196			16,660
(Loss) gain from real estate joint ventures		(816	)		(844	)		5,330			(114	)		3,099
Income from continuing operations		33,338			30,879			33,046			21,082			19,759
Discontinued operations:
Income from discontinued operations before asset impairment, settlement proceeds and gain on sale		1,234			1,312			1,246			1,453			1,824
Asset impairment of discontinued operations		—			—			—			—			(243	)
Net loss on insurance and other settlement proceeds of discontinued operations		—			—			—			—			(25	)
Gains (loss) on sale of discontinued operations		4,649			(120	)		9,164			—			—
Consolidated net income		39,221			32,071			43,456			22,535			21,315
Net income attributable to noncontrolling interests		(2,010	)		(1,822	)		(3,510	)		(1,590	)		(1,571	)
Net income attributable to Mid-America Apartment Communities, Inc.(1)		37,211			30,249			39,946			20,945			19,744
Preferred dividend distributions		12,865			12,865			13,688			13,962			14,329
Premiums and original issuance costs associated with the redemption of preferred stock		—			—			589			—			—
Net income available for common shareholders	$	24,346		$	17,384		$	25,669		$	6,983		$	5,415
Per Share Data:
Weighted average shares outstanding (in thousands):
Basic		28,341			26,943			25,296			23,474			21,405
Effect of dilutive stock options		7			141			207			258			181
Diluted		28,348			27,084			25,503			23,732			21,586

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	Year Ended December 31,
	2009			2008			2007			2006			2005
Net income available for common shareholders	$	24,346		$	17,384		$	25,669		$	6,983		$	5,415
Discontinued property operations		(5,883	)		(1,192	)		(10,410	)		(1,453	)		(1,556	)
Income from continuing operations available for common shareholders	$	18,463		$	16,192		$	15,259		$	5,530		$	3,859
Earnings per share – basic:(1)
Income from continuing operations available for common shareholders	$	0.65		$	0.60		$	0.60		$	0.24		$	0.18
Discontinued property operations		0.20			0.04			0.41			0.06			0.07
Net income available for common shareholders	$	0.85		$	0.64		$	1.01		$	0.30		$	0.25
Earnings per share – diluted:(1)
Income from continuing operations available for common shareholders	$	0.65		$	0.60		$	0.60		$	0.23		$	0.18
Discontinued property operations		0.20			0.04			0.41			0.06			0.07
Net income available for common shareholders	$	0.85		$	0.64		$	1.01		$	0.29		$	0.25
Dividends declared(2)	$	2.460		$	2.460		$	2.430		$	2.985		$	2.350
Balance Sheet Data:
Real estate owned, at cost	$	2,732,218		$	2,552,808		$	2,343,130		$	2,218,532		$	1,987,853
Real estate assets, net	$	1,935,221		$	1,851,331		$	1,720,553		$	1,669,539		$	1,510,289
Total assets	$	1,986,826		$	1,921,955		$	1,783,822		$	1,746,646		$	1,580,125
Total debt	$	1,399,596		$	1,323,056		$	1,264,620		$	1,196,349		$	1,140,046
Noncontrolling interest	$	22,660		$	25,648		$	27,624		$	33,647		$	30,469
Total Mid-America Apartment Communities, Inc. shareholders’ equity and redeemable stock	$	433,368		$	418,774		$	404,774		$	448,019		$	361,855
Other Data (at end of period):
Market capitalization (shares and units)(3)	$	1,671,036		$	1,293,145		$	1,358,100		$	1,745,674		$	1,358,725
Ratio of total debt to total capitalization(4)		45.6	%		50.6	%		48.2	%		40.7	%		45.6	%
Number of properties, including joint venture ownership interest(5)		147			145			137			138			132
Number of apartment units, including joint venture ownership interest(5)		43,604			42,554			40,248			40,293			38,227

(1) In accordance with a change in accounting standards governing stock based compensation, we recognized $668,862 in net income attributable to Mid-America Apartment Communities, Inc. for the year ended December 31, 2006 resulting in an increase of approximately $0.03 in basic earnings per share and $0.02 in diluted earnings per share.

(2) Beginning in 2006, at their regularly scheduled meetings, the Board of Directors began routinely declaring dividends for payment in the following quarter. This can result in dividends declared during a calendar year being different from dividends paid during a calendar year.

(3) Market capitalization includes all series of preferred shares (value based on $25 per share liquidation preference) and common shares, regardless of classification on balance sheet, as well as partnership units (value based on common stock equivalency).

(4) Total capitalization is market capitalization plus total debt.

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

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

We believe that the estimates and assumptions listed below are most important to the portrayal of our financial condition and results of operations because they require the greatest subjective determinations and form the basis of accounting policies deemed to be most critical. These critical accounting policies include revenue recognition, capitalization of expenditures and depreciation of assets, impairment of long-lived assets, including goodwill, and fair value of derivative financial instruments.

Revenue recognition

We lease 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.

We record all gains and losses on real estate in accordance with accounting standards governing the sale of real estate.

Capitalization of expenditures and depreciation of assets

We carry real estate assets at 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, 3 to 5 years for computers and software, and 6 months for acquired leases, all of which are subjective 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 us in order to elevate the condition of the property to our standards are capitalized as incurred.

Development costs are capitalized in accordance with accounting standards for costs and initial rental operations of real estate projects and standards for the capitalization of interest cost.

Impairment of long-lived assets, including goodwill

We account for long-lived assets in accordance with the provisions of accounting standards for the impairment or disposal on long-lived assets and evaluate goodwill for impairment under accounting standards for goodwill and other intangible assets. We evaluate goodwill for impairment on at least an annual basis, or more frequently if a goodwill impairment indicator is identified. We periodically evaluate long-lived assets, including 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.

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Long-lived assets, such as real estate assets, 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 on 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 for goodwill 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, we determine the fair value of a reporting unit and compare 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. We determine 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 accounting standards for 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

We utilize 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 our variable rate debt or as hedges in anticipation of future debt transactions to manage well-defined interest rate risk associated with the transaction.

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 our calculation of hedge effectiveness contains some subjective determinations, the historical correlation of the hedging instruments and the underlying hedge are measured by us before entering into the hedging relationship and have been found to be highly correlated.

We measure ineffectiveness using the change in the variable cash flows method for interest rate swaps and the hypothetical derivative method for interest rate caps for each reporting period 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 the intrinsic value or fair value of caps designated as cash flow hedges are recorded to accumulated other comprehensive income in the statement of shareholders’ equity.

The valuation of our derivative financial instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. Additionally, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Changes in the fair values of our derivatives are primarily the result of fluctuations in interest rates. See Note 7 of the Consolidated Financial Statements.

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OVERVIEW OF THE YEAR ENDED DECEMBER 31, 2009

We experienced a decrease in income from continuing operations before non-operating items in 2009 as the increases in revenues from new acquisitions and renovation projects were more than offset by the decrease in revenues from our same store portfolio of 1.2% over 2008. Our same store portfolio represents those communities that have been held and have been stabilized for at least 12 months. Communities excluded from the same store portfolio would include recent acquisitions, communities being developed or in lease-up, communities undergoing extensive renovations, and communities identified as discontinued operations.

We have grown externally during the past three years by following our acquisition strategy to invest in large and mid-sized growing markets in the Sunbelt region of the United States. We acquired four properties in 2007, five properties in 2008 and four properties in 2009. We also purchased one property through a joint venture in 2009 and two properties in 2008. Offsetting some of this increased revenue stream were five property dispositions in 2007, one of which was through a joint venture, and three property dispositions in 2009.

We benefited from reduced interest expense in 2009 as our twelve month average interest rate dropped from 4.9% in 2008 to 4.3% in 2009.

As of December 31, 2009, the total number of apartment units Mid-America owned or had an ownership interest in was 43,604 in 147 communities, compared to 42,554 apartment units in 145 communities at December 31, 2008, and 40,248 apartment units in 137 communities at December 31, 2007. For communities owned 100% by Mid-America, the average effective rent per apartment unit, excluding units in lease-up, decreased to $715 at December 31, 2009 from $750 at December 31, 2008, and $737 at December 31, 2007. For these same units, overall occupancy at December 31, 2009, 2008, and 2007 was 95.2%, 93.4%, and 94.7%, respectively.

The following is a discussion of our consolidated financial condition and results of operations for the years ended December 31, 2009, 2008, and 2007. This discussion should be read in conjunction with all of the consolidated financial statements included in this Annual Report on Form 10-K.

30

RESULTS OF OPERATIONS

Comparison of the Year Ended December 31, 2009, to the Year Ended December 31, 2008

Property revenues for the year ended December 31, 2009, increased by approximately $8.4 million from the year ended December 31, 2008, due to (i) a $2.6 million increase in property revenues from the four properties acquired in 2009, or the 2009 acquisitions, (ii) a $7.1 million increase in property revenues from the five properties acquired in 2008, or the 2008 acquisitions, and (iii) a $2.5 million increase in property revenues from our development communities. These increases were partially offset by a decrease in property revenues of $3.8 million from the properties held throughout both periods. The decrease in property revenues from properties held throughout both periods was due primarily to Mid-America’s same store portfolio and was driven by a 2.2% decrease in average effective rent per unit in 2009 over 2008.

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, 2009, increased by approximately $4.4 million from the year ended December 31, 2008, due primarily to increases of property operating expenses of (i) $1.2 million from the 2009 acquisitions, (ii) $2.8 million from the 2008 acquisitions, and (iii) $0.9 million from our development communities. These increases were partially offset by a decrease in property operating expenses of $0.5 million from the properties held throughout both periods. The decrease in property operating expenses from the properties held throughout both periods was due primarily to Mid-America’s same store portfolio and represented real estate tax expense which reflected the favorable impact of successful prior year appeals and assessment challenges.

Depreciation expense increased by approximately $5.9 million primarily due to the increases of depreciation expense of (i) $0.6 million from the 2009 acquisitions, (ii) $2.1 million from the 2008 acquisitions, (iii) $0.7 million from our development communities, and (iv) $3.5 million from fixed asset additions at communities held throughout both periods. These increases were partially offset by a decrease in depreciation expense of $1.0 million from the expiration of the amortization of fair value of in place leases of communities which we previously acquired.

Interest expense decreased approximately $4.9 million in 2009 from 2008 due primarily to the decrease in our average annual borrowing cost from 4.9% in 2008 to 4.3% in 2009. This decrease was somewhat offset by an increase in our average debt outstanding by approximately $34.9 million from 2008 to 2009 to fund acquisitions and our development and redevelopment programs.

For the year ended December 31, 2009, we recorded total gains of approximately $4.6 million from the sale of three communities. We had no property dispositions in 2008.

Primarily as a result of the foregoing, net income attributable to Mid-America Apartment Communities, Inc. increased by approximately $7.0 million in 2009 from 2008.

Comparison of the Year Ended December 31, 2008, to the Year Ended December 31, 2007

Property revenues for the year ended December 31, 2008, increased by approximately $22.4 million from the year ended December 31, 2008, due to (i) a $7.2 million increase in property revenues from the 2008 acquisitions, (ii) a $5.8 million increase in property revenues from the four properties acquired in 2007, or the 2007 acquisitions, (iii) a $1.7 million increase in property revenues from our development communities, and (iv) a $7.7 million increase in property revenues from the properties held throughout both periods. The increase in property revenues from properties held throughout both periods was generated primarily by our same store portfolio and was driven by a 1.8% increase in average effective rent per unit in 2008 over 2007.

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, 2008, increased by approximately $12.9 million from the year ended December 31, 2007, due primarily to increases of property operating expenses of (i) $3.5 million from the 2008 acquisitions, (ii) $2.9 million from the 2007 acquisitions, (iii) $0.8 million from our development communities, and (iv) $5.7 million from the properties held throughout both periods. The increase in property

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operating expenses from the properties held throughout both periods consisted primarily of our same store portfolio and represented an average 3.5% increase over prior year expenses and included $591,000 of expense related to Hurricane Ike.

Depreciation expense increased by approximately $5.4 million primarily due to the increases of depreciation expense of (i) $2.3 million from the 2008 acquisitions, (ii) $1.6 million from the 2007 acquisitions, (iii) $0.3 million from our development communities, and (iv) $3.0 million from fixed asset additions at communities held throughout both periods. These increases were partially offset by a decrease in depreciation expense of $1.8 million from the expiration of the amortization of fair value of in place leases of communities which we previously acquired.

Property management expenses decreased by approximately $1.1 million from the year ended December 31, 2007, to the year ended December 31, 2008, due to decreased incentive compensation. General and administrative expenses increased by approximately $1.0 million over this same period mainly as a result of increased personnel costs.

Interest expense decreased approximately $1.6 million in 2008 from 2007 due primarily to the decrease in our average annual borrowing cost from 5.4% in 2007 to 4.9% in 2008. This decrease was somewhat offset by an increase in our average debt outstanding by approximately $83.8 million from 2007 to 2008 to fund acquisitions and our development and redevelopment programs.

For the year ended December 31, 2007, we recorded total gains of approximately $5.4 million from the sale of a community owned through a joint venture. The sale of this community resulted in an additional incentive fee being paid to us of approximately $1.0 million in 2007. In 2007, we also benefited from a $9.2 million gain resulting from the sale of four communities owned directly by us. We had no property dispositions in 2008.

For the year ended December 31, 2007, we recorded net casualty gains and other settlement proceeds and gains on sale of land totaling $1.1 million. For the year ended December 31, 2008, we recorded a loss of $0.3 million for these same items.

Primarily as a result of the foregoing, net income attributable to Mid-America Apartment Communities, Inc. decreased by approximately $9.7 million in 2008 from 2007.

Funds from Operations

Funds from operations, or 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, gains 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 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.

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, we have included the amount charged to retire preferred stock in excess of carrying values in our FFO calculation.

Our 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. We believe that FFO is helpful to investors in understanding our operating performance in that such calculation excludes depreciation expense on real estate assets. We believe 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. Our 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.

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The following table is a reconciliation of FFO to consolidated net income for the years ended December 31, 2009, 2008, and 2007 (dollars and shares in thousands):

	Years Ended December 31,
	2009			2008			2007
Consolidated net income	$	39,221		$	32,071		$	43,456
Net income attributable to noncontrolling interests		(2,010	)		(1,822	)		(3,510	)
Net income attributable to Mid-America Apartment Communities, Inc.		37,211			30,249			39,946
Depreciation of real estate assets		94,020			88,555			83,532
Net casualty (gains) loss and other settlement proceeds		(32	)		247			(589	)
Gains on dispositions within real estate joint ventures		—			(38	)		(5,388	)
Depreciation of real estate assets of discontinued operations		—			706			1,517
(Gains) loss on sales of discontinued operations		(4,649	)		120			(9,164	)
Depreciation of real estate assets of real estate joint ventures		970			953			15
Preferred dividend distribution		(12,865	)		(12,865	)		(13,688	)
Net income attributable to noncontrolling interests		2,010			1,822			3,510
Premiums and original issuance costs associated with the redemption of preferred stock		—			—			(589	)
Funds from operations	$	116,665		$	109,749		$	99,102

FFO increases for both 2009 over 2008, and 2008 over 2007 benefited from the addition of communities from the 2007 acquisitions, 2008 acquisitions and 2009 acquisitions as previously reviewed in the net income discussion above. The FFO increase for 2008 over 2007 also benefited from improved community operations from our same store portfolio.

Trends

During 2009, rental demand for apartments was weaker in most of our markets when compared to 2008. One of the primary drivers of apartment demand is job formation, and the job losses across our markets impacted apartment demand and pricing. However, relative job losses in 2009 for our markets combined were less than the national average.

An important part of our portfolio strategy is to maintain a broad diversity of markets across the Sunbelt region of the United States. The diversity of markets tends to mitigate exposure to economic issues in any one geographic market or area. We have found that a well diversified portfolio, including both large and select secondary markets, has tended to perform well in “up” cycles as well as weather “down” cycles better. At the end of 2009, we were invested in over 48 separate markets, with 59% of our gross assets in large markets and 41% of our gross assets in select secondary markets.

Partially mitigating the severe job losses in 2009 was lower resident turnover, primarily due to fewer move-outs from buying homes. The primary reason that our residents leave us is to buy a house. In 2009, we saw both the number and the percent of total move-outs due to home buying drop as compared to 2008. According to the Census Bureau, homeownership increased from 65% to 69% of households over the ten years ending 2005. Despite the tightened credit market, in 2009 the home ownership rate was still in the 67% to 68% range. The increase from historical levels was driven primarily by the availability of new mortgage products, many requiring no down-payment and minimal credit ratings. With a reversion of mortgage underwriting back to more traditional standards, it is possible that a long-term correction will occur, and that home ownership may return to more sustainable levels. This could be quite significant for the apartment business, and we believe, if this occurs, it could benefit us for several years.

We also benefited on the supply side, as supply declined from 2008 and ran below historical new supply delivery averages. Competition from condominiums reverting back to rental units, or new condominiums being converted to rental, was not a major factor in our markets because most of our markets and submarkets

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have not been primary areas for condominium development. We have found the same to be true for rental competition from single family homes. We have avoided committing a significant amount of capital to markets where most of the excessive inflation in house prices has occurred. We saw significant rental competition from condominiums and/or single family houses in only a few submarkets. We expect this relative new supply compression to be an even larger factor over the next several quarters as supply is expected to contract even further.

Our focus during 2009 was on sustaining occupancy as we operated in a weaker leasing market. By focusing on aggressive efforts to build and sustain traffic, and pricing aggressively, we were largely successful at this, as our same store occupancy ended the year 170 basis points over year-end 2008 and dropped only 90 basis points from the record levels of the quarter ended September 30, 2009, despite the normal seasonal decline in traffic.

Overall same store revenues decreased 1.2% compared to 2008. We believe that the decline in same store revenue will continue into 2010, primarily due to the impact of lower rents on leases signed in the latter half of 2009. However, revenue growth should resume after the economic growth returns and, most importantly, when job growth resumes which some economists project could be as soon as the middle to latter part of 2010. We also believe reduced availability of financing for new apartment construction will likely limit new apartment supply, and more sustainable credit terms for residential mortgages should work to favor rental demand at existing multi-family properties. At the same time, we expect long-term demographic trends, including the growth of prime age groups for rentals, immigration, and population movement to the southeast and southwest will continue to build apartment rental demand for our markets.

While expected continued weak employment growth is expected to keep new demand subdued, we think that the supply of new apartments is not excessive, and that positive absorption of apartments will return for most of our markets later in 2010. Should the economy fall into a deeper recession, the limited new supply of apartments and the more disciplined mortgage financing for single family home buying should lessen the impact.

We continue to develop improved products, operating systems and procedures that enable us to capture more revenues. The continued roll-out of ancillary services (such as re-selling cable television), improved collections, and utility reimbursements enable us to capture increased revenue dollars. We also actively work on improving processes and products to reduce expenses, such as new web-sites and internet access for our residents that enable them to transact their business with us more simply and effectively.

During 2009, we continued to have the benefit of lower interest rates resulting from an improved market for Federal National Mortgage Association and Federal Home Loan Mortgage Corporation debt securities. Much of this was due to government action to improve liquidity in the credit markets, and resulted in a lower cost of debt for us. Short term interest rates continue to be at historically low levels, and as a result, we are forecasting a continuation of favorable interest rates in the near term with the expectation of rising rates as the economy improves.

Liquidity and Capital Resources

Net cash flow provided by operating activities decreased by approximately $1.0 million to $136.9 million for 2009, compared to $137.9 million for 2008, mainly related to the decrease in rental rates from 2008 to 2009. Net cash flow provided by operating activities increased by approximately $19.3 million to $137.9 million for 2008 compared to $118.6 million for 2007 mainly related to our growth through acquisitions and improved operating results in 2008.

Net cash used in investing activities was approximately $150.5 million, $243.0 million and $108.8 million for 2009, 2008 and 2007, respectively. The change in net cash used in investing activities resulted mainly from the varying levels of acquisition activity. A total of approximately $125.3 million was invested in 2009 to acquire properties, this compares to approximately $156.3 million in 2008 and $88.6 million in 2007. We began limited development activities in 2006, which used net cash of approximately $14.6 million in 2007, $22.7 million in 2008 and $6.8 million in 2009. We have also been renovating select properties using net cash of approximately $7.6 million in 2009, $18.2 million in 2008 and $11.3 million in 2007. In 2007 and

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2009, we received a total of $39.2 million and $29.9 million, respectively, from the disposition of real estate assets, mainly related to property sales. No communities were sold in 2008.

Net cash provided by financing activities was $18.1 million, $97.3 million and $1.9 million for 2009, 2008 and 2007, respectively. The fluctuation in net cash provided by financing activities was mainly impacted by proceeds from issuances of common shares and units. Proceeds from issuances of common shares and units was primarily impacted by sales of common stock through our controlled equity offering program. Mid-America received a total of $32.8 million, $103.6 million and $18.8 million in net proceeds during 2009, 2008 and 2007, respectively, in relation to sales through this program. Net cash provided by financing activities in 2007 was also impacted by the redemption of our 9¼% Series F Cumulative Redeemable Preferred Stock, or Series F, for $11.9 million.

During 2009, Mid-America sold 763,000 shares of common stock through our continuous equity offering program generating net proceeds of approximately $32.8 million. In 2008 and 2007, Mid-America sold 1,955,300 shares and 323,700 shares generating net proceeds of approximately $103.6 million and $18.8 million, respectively.

During 2009, Mid-America did not offer a discount through our DRSPP and issued approximately 1,100 shares of common stock through the direct stock purchase feature of this plan, generating approximately $39,000 in proceeds. However, during 2008 and 2007, Mid-America offered an average 1.5% discount through our DRSPP and issued approximately 403,000 shares and 120,000 shares of common stock through the direct stock purchase feature of this plan, generating approximately $20 million and $6 million in proceeds, respectively.

On October 16, 2007, Mid-America redeemed all of the issued and outstanding shares of Series F for the total redemption price of $11.9 million.

The weighted average interest rate at December 31, 2009 for the $1.4 billion of debt outstanding was 4.0%, compared to the weighted average interest rate of 4.8% on $1.3 billion of debt outstanding at December 31, 2008. We utilize both conventional and tax exempt debt to help finance our activities. Borrowings are made through individual property mortgages as well as company-wide secured credit facilities. We utilize fixed rate borrowings, interest rate swaps and interest rate caps to manage our current and future interest rate risk. More details on our borrowings can be found in the schedules presented later in this section.

At December 31, 2009, we had secured credit facility relationships with Prudential Mortgage Capital which are credit enhanced by the Federal National Mortgage Association, or FNMA, Financial Federal which are credit enhanced by the Federal Home Loan Mortgage Corporation, or Freddie Mac, and a $50 million bank facility with a syndicate of banks. Together, these credit facilities provided a total line capacity of $1.4 billion with all but $6.0 million collateralized and available to borrow at December 31, 2009. We had total borrowings outstanding under these credit facilities of $1.3 billion at December 31, 2009.

Approximately 72% of our outstanding obligations at December 31, 2009 were borrowed through facilities with/or credit enhanced by FNMA, also referred to as the FNMA Facilities. The FNMA Facilities have a combined line limit of $1.04 billion, all of which was collateralized and available to borrow at December 31, 2009. We had total borrowings outstanding under the FNMA Facilities of approximately $1.00 billion at December 31, 2009. Various traunches of the FNMA Facilities mature from 2011 through 2018. The FNMA Facilities provide for both fixed and variable rate borrowings. The interest rate on the majority of the variable portion is based on the FNMA Discount Mortgage Backed Security, or DMBS, rate which are credit-enhanced by FNMA and are typically sold every 90 days by Prudential Mortgage Capital at interest rates approximating three-month LIBOR less a spread that has averaged 0.16% over the life of the FNMA Facilities, plus a credit enhancement fee of 0.49% to 0.67%. We have seen more volatility in the spread between the DMBS and three-month LIBOR since late 2007 than was historically prevalent. While we feel this recent volatility is an anomaly and believe that this spread will return to more historic levels, we cannot forecast when or if the uncertainty and volatility in the market may change.

Approximately 21% of our outstanding obligations at December 31, 2009 were borrowed through facilities with/or credit enhanced by Freddie Mac, also referred to as the Freddie Mac Facilities. The Freddie Mac Facilities have a combined line limit of $300 million, of which $298 million was collateralized and

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available to borrow at December 31, 2009. We had total borrowings outstanding under the Freddie Mac Facilities of approximately $298 million at December 31, 2009. The Freddie Mac facilities mature in 2011 and 2014. The interest rate on the Freddie Mac Facilities renews every 30 or 90 days and is based on the Freddie Mac Reference Bill Rate on the date of renewal, which has historically approximated the equivalent 30 or 90-day LIBOR, plus a credit enhancement fee of 0.65% to 0.69%. The Freddie Mac Reference Bill rate has traded consistently below LIBOR, and the historical average spread has risen to 0.40% below LIBOR.

Each of our secured credit facilities is subject to various covenants and conditions on usage, and is subject to periodic re-evaluation of collateral. If we were to fail to satisfy a condition to borrowing, the available credit under one or more of the facilities could not be drawn, which could adversely affect our liquidity. In the event of a reduction in real estate values the amount of available credit could be reduced. Moreover, if we were to fail to make a payment or violate a covenant under a credit facility, after applicable cure periods, one or more of our lenders could declare a default, accelerate the due date for repayment of all amounts outstanding and/or foreclose on properties securing such facilities. Any such event could have a material adverse effect.

The following schedule details the line limits, collateralized availability and the outstanding balances of our various borrowings as of December 31, 2009 (in thousands):

	Line Limit		Amount Collateralized		Amount Borrowed
FNMA Credit Facilities	$	1,044,429	$	1,044,429	$	1,004,833
Freddie Mac Credit Facilities		300,000		298,247		298,247
Regions Credit Facility		50,000		45,774		—
Other Borrowings		96,516		96,516		96,516
Total Debt	$	1,490,945	$	1,484,966	$	1,399,596

As of December 31, 2009, we had entered into interest rate swaps totaling a notional amount of $883 million. To date, these swaps have proven to be highly effective hedges. We had also entered into interest rate cap agreements totaling a notional amount of approximately $172 million as of December 31, 2009.

The following schedule outlines our variable versus fixed rate debt, including the impact of interest rate swaps and caps, outstanding as of December 31, 2009 (in thousands):

	Principal Balance		Average Years to Contract Maturity		Effective Rate
Conventional – Fixed Rate or Swapped	$	927,076		3.3		5.4	%
Tax-free – Fixed Rate or Swapped		37,405		7.2		4.7	%
Conventional – Variable Rate(1)		262,829		4.9		0.9	%
Conventional – Variable Rate – Capped(2)		107,936		5.5		0.8	%
Tax-free – Variable Rate – Capped(2)		64,350		2.2		1.1	%
Total Debt Outstanding	$	1,399,596		3.9		4.0%

(1) Includes a $15 million mortgage with an imbedded cap at a 7% rate.

(2) When the capped rates are not reached, the average rate represents the rate on the underlying variable debt.

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The following schedule outlines the contractual maturity dates of our outstanding debt as of December 31, 2009 (in thousands):

	Line Limit						Other		Total
	Credit Facilities
	Fannie Mae		Freddie Mac		Regions
2010	$	—	$	—	$	50,000	$	—	$	50,000
2011		80,000		100,000		—		—		180,000
2012		80,000		—		—		—		80,000
2013		203,193		—		—		—		203,193
2014		321,236		200,000		—		18,363		539,599
2015		120,000		—		—		52,891		172,891
Thereafter		240,000		—		—		25,262		265,262
Total	$	1,044,429	$	300,000	$	50,000	$	96,516	$	1,490,945

The following schedule outlines the interest rate maturities of our outstanding interest rate swap agreements and fixed rate debt as of December 31, 2009 (in thousands):

	Swap Balances				Fixed Rate Balances		Total
	LIBOR		SIFMA (formerly BMA)				Balance		Contract Rate
2010	$	140,000	$	8,365	$	—	$	148,365		5.7	%
2011		158,000		—		—		158,000		5.2	%
2012		150,000		17,800		—		167,800		5.1	%
2013		190,000		—		—		190,000		5.2	%
2014		144,000		—		18,363		162,363		5.7	%
2015		75,000		—		37,691		112,691		5.6	%
Thereafter		—		—		25,262		25,262		5.6	%
Total	$	857,000	$	26,165	$	81,316	$	964,481		5.4	%

We believe that we have adequate resources to fund our current operations, annual refurbishment of our properties, and incremental investment in new apartment properties. We rely on the efficient operation of the financial markets to finance debt maturities, and on FNMA and Freddie Mac, or the Agencies, who have now been placed into conservatorship by the U.S. Government, and whose securities are now implicitly Government-guaranteed. The Agencies provide credit enhancement for approximately $1.3 billion of our debt as of December 31, 2009. The Federal Housing Finance Agency, or FHFA, which was appointed conservator of the Agencies, recognizes the importance of multifamily housing finance for healthy secondary market and housing affordability, and expects FNMA and Freddie MAC to continue underwriting and financing sound multifamily business.

The interest rate markets for FNMA DMBS and Freddie Mac Reference Bills, which in our experience are highly liquid and highly correlated with three-month LIBOR interest rates, are also an important component of our liquidity and interest rate swap effectiveness. Prudential Mortgage Capital, a DUS lender for Fannie Mae, markets 90-day Fannie Mae Discount Mortgage Backed Securities monthly, and is obligated to advance funds to us at DMBS rates plus a credit spread under the terms of the credit agreements between Prudential and us. Financial Federal, a Freddie Mac Program Plus Lender and Servicer, is obligated to advance funds under the terms of credit agreements between Financial Federal and us.

For the year ended December 31, 2009, our net cash provided by operating activities was in excess of covering funding improvements to existing real estate assets, distributions to unitholders, and dividends paid on common and preferred shares by approximately $10.2 million, as compared to $12.7 million and $4.1 million for the same periods in 2008 and 2007, respectively. While we had sufficient liquidity to permit distributions at current rates through additional borrowings, if necessary, any significant deterioration in

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operations could result in our financial resources being insufficient to pay distributions to shareholders at the current rate, in which event we would be required to reduce the distribution rate.

The following table reflects our total contractual cash obligations which consist of our long-term debt and operating leases as of December 31, 2009, (dollars in thousands):

Contractual Obligations(1)	2010		2011		2012		2013		2014		Thereafter		Total
Long-Term Debt(2)	$	1,827	$	181,929	$	82,036	$	170,778	$	536,518	$	426,508	$	1,399,596
Fixed Rate or Swapped Interest(3)		43,120		35,404		26,395		18,911		9,742		19,234		152,806
Operating Lease		18		18		10		—		—		—		46
Total	$	44,965	$	217,351	$	108,441	$	189,689	$	546,260	$	445,742	$	1,552,448

(1) Fixed rate and swapped interest are shown in this table. The average interest rates of variable rate debt are shown in preceding and following tables.

(2) Represents principal payments.

(3) Swapped interest is subject to the ineffective portion of cash flow hedges as described in Note 7 to the financial statements.

Off-Balance Sheet Arrangements

At December 31, 2009, and 2008, we did not have any relationships with unconsolidated entities or financial partnerships established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Our two joint ventures with Crow Holdings (one terminated in 2005 and one terminated in 2007) were established to acquire approximately $200 million of multifamily properties and to enhance our return on investment through the generation of fee income. Mid-America Multifamily Fund I, LLC, was established to acquire $500 million of apartment communities with redevelopment upside offering value creation opportunity through capital improvements, operating enhancements and restructuring in-place financing. As of December 31, 2009, Mid-America Multifamily Fund I, LLC owned two properties but does not expect to acquire any additional communities. Mid-America Multifamily Fund II, LLC, was established to acquire $250 million of apartment communities with redevelopment upside offering value creation opportunity through capital improvements, operating enhancements and restructuring in-place financing. As of December 31, 2009, Mid-America Multifamily Fund II, LLC, or Fund II, owned one property. In January 2010, Mid-America contributed a property we had acquired in December 2009 to Fund II. In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships. We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties other than those disclosed in Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements, Note 13.

Our investments in our real estate joint ventures are unconsolidated and are recorded using the equity method as we do not have a controlling interest.

Insurance

We renegotiated our insurance programs effective July 1, 2009. We believe that the property and casualty insurance program in place provides appropriate insurance coverage for financial protection against insurable risks such that any insurable loss experienced that can be reasonably anticipated would not have a significant impact on our liquidity, financial position or results of operation.

Inflation

Substantially all of the resident leases at the apartment communities allow, at the time of renewal, for adjustments in the rent payable there under, and thus may enable Mid-America 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 Mid-America of the adverse effects of inflation.

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Impact of Recently Issued Accounting Standards

In June 2009, the FASB issued ASC 105-10,Generally Accepted Accounting Principles — Overall which establishes the FASB Accounting Standards Codification, or the Codification, as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP. Rules and interpretive releases of the Securities and Exchange Commission, or SEC, under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates, or ASUs. The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. We adopted ASC 105-10 effective July 1, 2009 and all references made to FASB guidance throughout this document have been updated for the Codification.

In September 2006, the FASB issued ASC 820, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 was effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. ASC 820-10-65-1 delayed the effective date of ASC 820 for nonfinancial assets and nonfinancial liabilities except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. For these items, the effective date was for fiscal years beginning after November 15, 2008. We adopted ASC 820 effective January 1, 2008 and ASC 820-10-65-1 effective January 1, 2009. The adoption did not have a material impact on our consolidated financial condition or results of operations taken as a whole.

On December 4, 2007, the FASB revised ASC 805,Business Combinations. The ASC 805 revision significantly changes the accounting for business combinations. The ASC 805 revision requires an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. The ASC 805 revision changes the accounting treatment for certain specific items, including acquisition costs, which will generally be expensed as incurred. This could have a material impact on the way we account for property acquisitions and therefore will have a material impact on our financial statements. The ASC 805 revision applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted the ASC 805 revision effective January 1, 2009, and the expensed acquisition costs increased general and administrative expenses by $950,000 for the year ended December 31, 2009, respectively. The increased expenses decreased both basic and diluted net income available for common shareholders by $0.04 per share for the year ended December 31, 2009.

On December 4, 2007, the FASB issued ASC 810-10-65,Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51. ASC 810-10-65 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this standard requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest is included in consolidated net income on the face of the income statement. The standard clarifies that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. This has impacted our financial statement presentation by requiring the interests in the operating partnership not owned by the company (noncontrolling interests) be presented as a component of equity in the company’s consolidated financial statements and income contributable to the noncontrolling interests be a component of net income. ASC 810-10-65 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We adopted ASC 810-10-65 effective January 1, 2009 and the retrospective presentation increased total equity by $30,471,000 at December 31, 2008. The adoption did not change basic or diluted earnings per share for common shareholders and its effect on net income and income from continuing operations is as follows (dollars in thousands):

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	Year Ended December 31,
	2009		2008		2007
Increase in:
Income from continuing operations	$	1,907	$	1,718	$	3,226
Net income	$	2,010	$	1,822	$	3,510

On March 19, 2008, the FASB issued ASC 815-10-65,Disclosures about Derivative Instruments and Hedging Activities — an Amendment of FASB Statement 133. ASC 815-10-65 enhances required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how an entity uses derivative instruments and how derivative instruments and related hedged items are accounted for under accounting standards for derivative instruments and hedging activities, and how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. ASC 815-10-65 is effective for fiscal years and interim periods beginning after November 15, 2008. We adopted ASC 815-10-65 effective January 1, 2009, and the required disclosures are included in Note 7 to the consolidated financial statements.

In June 2008, the FASB issued ASC 260-10-65,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities to clarify that unvested share-based awards containing nonforfeitable rights to dividends are participating securities and, therefore, need to be included in the earnings allocation in computing earnings per share, or EPS, under the two-class method of computing earnings per share. ASC 260-10-65 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior period EPS data presented are to be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of this standard. We adopted ASC 260-10-65 effective January 1, 2009 and it had a minor impact on our number of shares. The change in our number of shares decreased net income available for common shareholders by $0.01 per share for the year ended December 31, 2008 and by $0.01 per share for the year ended December 31, 2009.

In September 2008, the FASB ratified ASC 820-10-65-3,Issuer’s Accounting for Liabilities Measured at Fair Value with a Third-Party Credit Enhancement. This accounting standard requires that the measurement of liabilities with inseparable, third-party credit enhancements carried at or disclosed at fair value on a recurring basis exclude the effect of the credit enhancement. ASC 820-10-65-3 was effective on a prospective basis in the first reporting period beginning on or after December 15, 2008. We adopted this accounting standard effective January 1, 2009. This accounting standard removed the effect of the agency credit enhancements from our calculation of the fair value of our derivative instruments and materially increased the value represented on the balance sheet. The impact of ASC 820-10-65-3 on our financial position upon adoption was approximately a $2.0 million increase to the fair value of our derivative instruments.

In April 2008, the FASB issued ASC 825-10-65-1,Interim Disclosures About Fair Market Value of Financial Instruments. ASC 825-10-65-1 extends the disclosure requirements concerning the fair value of financial instruments to interim financial statements of publicly traded companies. ASC 825-10-65-1 is effective for interim financial periods ending after June 15, 2009, and the required disclosures are included in Note 7 to the consolidated financial statements.

In May 2009, the FASB issued ASC 855-10,Subsequent Events, which establishes the general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. ASC 855-10 is effective for interim and financial periods ending after June 15, 2009. Adoption of this standard did not have a material impact on our consolidated financial condition or results of operations taken as a whole. For the year ended December 31, 2009, we have considered subsequent events through February 25, 2010, which is the date our consolidated financial statements were filed with the Securities and Exchange Commission on Form 10-K.

In June 2008, the FASB issued ASC 810-10-05, Amendments to FASB Interpretation No. 46(R). ASC 810-10-05 amends events which would require reconsidering whether an entity is a variable interest entity; it amends the criteria used to determine the primary beneficiary of a variable interest entity; and it expands disclosures about an enterprise’s involvement in variable interest entities. ASC 810-10-05 is effective for

40

annual reporting periods beginning after November 15, 2009 and earlier application is prohibited. Management does not believe that the adoption of this standard will have a material impact on our consolidated financial condition or results of operations taken as a whole.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risk exposure is to changes in interest rates obtainable on our secured borrowings. At December 31, 2009, 46% of our total capitalization consisted of borrowings. Our interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve this objective, we manage our exposure to fluctuations in market interest rates for borrowings through the use of fixed rate debt instruments and interest rate swaps and caps which mitigate our interest rate risk on a related financial instrument and effectively fix the interest rate on a portion of our variable debt or on future refinancings. We use our best efforts to ladder fixed rate maturities thereby limiting our exposure to interest rate changes in any one year. We do not enter into derivative instruments for trading or other speculative purposes. Approximately 81% of our outstanding debt was subject to fixed or capped rates after considering related derivative instruments at December 31, 2009. We regularly review interest rate exposure on outstanding borrowings in an effort to minimize the risk of interest rate fluctuations.

The table below provides information about our 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 our 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).

	2010			2011			2012			2013			2014			Total Thereafter			Total			Fair Value
Long-term Debt
Fixed Rate(1)	$	1,827		$	1,929		$	2,036		$	2,149		$	17,035		$	56,340		$	81,316		$	74,435
Average interest rate		5.58	%		5.58	%		5.57	%		5.59	%		5.34	%		5.94	%		5.78	%
Variable Rate(1)	$	—		$	180,000		$	80,000		$	168,629		$	519,483		$	370,168		$	1,318,280		$	1,192,864
Average interest rate		1.74	%		0.78	%		0.77	%		0.76	%		0.80	%		0.87	%		0.81	%
Interest Rate Swaps
Variable to Fixed	$	148,365		$	158,000		$	167,800		$	190,000		$	144,000		$	75,000		$	883,165		$	(55,415	)
Average Pay Rate		5.07	%		4.61	%		4.41	%		4.58	%		4.95	%		4.41	%		4.68	%
Interest Rate Cap
Variable to Fixed	$	5,095		$	33,731		$	23,795		$	7,945		$	26,720		$	75,000		$	172,286		$	3,430
Average Pay Rate		6.00	%		6.09	%		6.00	%		6.00	%		5.00	%		4.67	%		5.28	%

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

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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-2 to F-37 of this Annual Report on Form 10-K.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

MANAGEMENT’S EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of December 31, 2009, (the end of the period covered by this Annual Report on Form 10-K).

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management’s report on our internal control over financial reporting is presented on page F-1 of this Annual Report on Form 10-K. The reports of Ernst & Young LLP relating to the consolidated financial statements, notes to the consolidated financial statements and the effectiveness of internal control over financial reporting are presented on pages F-2 to F-3 of this Annual Report on Form 10-K.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

As of the year ended December 31, 2009, there were no significant changes in our internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9A(T). CONTROLS AND PROCEDURES

Not applicable.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information contained in our 2010 Proxy Statement in the sections entitled “Information About The Board of Directors and Its Committees”, “Proposal 1 — Election of Directors”, “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance,” is incorporated herein by reference in response to this item.

Our Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors and employees, which can be found on our website athttp://www.maac.net, on the Investor Relations page under Governance Documents. We will provide a copy of this document to any person, without charge, upon request, by writing to the Investor Relations Department at Mid-America Apartment Communities, Inc., 6584 Poplar Avenue, Memphis, TN 38138. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics by posting such information on our website at the address and the locations specified above.

ITEM 11. EXECUTIVE COMPENSATION

The information contained in our 2010 Proxy Statement in the section entitled “Executive Compensation”, “Compensation Committee Interlocks and Insider Participation” and “Compensation Discussion and Analysis” is incorporated herein by reference in response to this item.

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

The information contained in our 2010 Proxy Statement in the sections entitled “Security Ownership of Management” and “Security Ownership of Certain Beneficial Owners,” is incorporated herein by reference in response to this item.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information contained in our 2010 Proxy Statement in the sections entitled “Certain Relationships and Related Transactions” and “Information About The Board of Directors and Its Committees” is incorporated herein by reference in response to this item.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information contained in our 2010 Proxy Statement in the section entitled “Proposal 2 — Ratification of Independent Registered Public Accounting Firm,” is incorporated herein by reference in response to this item.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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

1. Management’s Report on Internal Control Over Financial Reporting		F-1
Reports of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2009, and 2008		F-4
Consolidated Statements of Operations for the years ended December 31, 2009, 2008, and 2007		F-5
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2009, 2008, and 2007		F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008, and 2007		F-8
Notes to Consolidated Financial Statements for the years ended December 31, 2009, 2008, and 2007		F-9
2. Financial Statement Schedule required to be filed by Item 8 and Paragraph (b) of this Item 15:
Schedule III — Real Estate Investments and Accumulated Depreciation as of December 31, 2009		F-38
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.

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Exhibit Number	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 (Filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
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 (Filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference).
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 (Filed as Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996 and incorporated herein by reference).
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 (Filed as Exhibit 3.6 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
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 (Filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997 and incorporated herein by reference).
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 25, 1998, as filed with the Tennessee Secretary of State on June 30, 1998 (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on June 26, 1998 and incorporated herein by reference).
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 (Filed as Exhibit 3.7 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
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 (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002 and incorporated herein by reference).
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 (Filed as Exhibit 3.9 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
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 (Filed as Exhibit 3.10 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
3.11	Articles of Amendment to the Charter of Mid-America Apartment Communities, Inc. dated as of May 20, 2008, as filed with the Tennessee Secretary of State on June 2, 2008 (Filed as Exhibit 99.A to the Registrant’s Proxy Statement filed on March 31, 2008 and incorporated herein by reference).

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Exhibit Number	Exhibit Description
3.12	Amended and Restated Bylaws of Mid-America Apartment Communities, Inc. (Filed as an Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on May 21, 2008 and incorporated herein by reference).
4.1	Form of Common Share Certificate (Filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
4.2	Form of 9.5% Series A Cumulative Preferred Stock Certificate (Filed as Exhibit 2 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996 and incorporated herein by reference).
4.3	Form of 8 7/8% Series B Cumulative Preferred Stock Certificate (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997 and incorporated herein by reference).
4.4	Form of 9 3/8% Series C Cumulative Preferred Stock Certificate (Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on June 26, 1998 and incorporated herein by reference).
4.5	Form of 9.5% Series E Cumulative Preferred Stock Certificate (Filed as Exhibit 4.5 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
4.6	Form of 9¼% Series F Cumulative Preferred Stock Certificate (Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002 and incorporated herein by reference).
4.7	Form of 8.30% Series G Cumulative Preferred Stock Certificate (Filed as Exhibit 4.7 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
4.8	Form of 8.30% Series H Cumulative Preferred Stock Certificate (Filed as Exhibit 4.8 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.1	Second Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P., a Tennessee limited partnership (Filed as Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by reference).
10.2†	Employment Agreement between the Registrant and H. Eric Bolton, Jr. dated December 5, 2008 (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 8, 2008 and incorporated herein by reference).
10.3†	Employment Agreement between the Registrant and Simon R.C. Wadsworth, dated January 1, 2010 (Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on January 4, 2010 and incorporated herein by reference).
10.4†	Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan (Filed as Exhibit A to the Registrant’s Proxy Statement filed on April 24, 2002 and incorporated herein by reference).
10.5	AmSouth Revolving Credit Agreement (Amended and Restated) dated July 17, 2003 (Filed as Exhibit 10.10 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.6	First Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated May 19, 2004 (Filed as Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.7	Second Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated May 23, 2005 (Filed as Exhibit 10.7 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.8	Fourth Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated July 16, 2007 (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference).
10.9	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 (Filed as Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).

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Exhibit Number	Exhibit Description
10.10	First Amendment to 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 31, 2004 (Filed as Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.11	Second Amendment to 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 April 30, 2004 (Filed as Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.12	Third Amendment to 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 August 3, 2004 (Filed as Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.13	Fourth Amendment to 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 August 31, 2004 (Filed as Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.14	Fifth Amendment to 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 October 1, 2004 (Filed as Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.15	Sixth Amendment to 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 December 1, 2004 (Filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.16	Seventh Amendment to 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 December 15, 2004 (Filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.17	Eighth Amendment to 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 31, 2005 (Filed as Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.18	Ninth Amendment to 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 September 23, 2005 (Filed as Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.19	Tenth Amendment to 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 December 16, 2005 (Filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).

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Exhibit Number	Exhibit Description
10.20	Eleventh Amendment to 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 February 22, 2006 (Filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.21	Fourteenth Amendment to 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 December 28, 2006 (Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference).
10.22	Eighteenth Amendment to 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 January 30, 2008 (Filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference).
10.23	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 30, 2004 (Filed as Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.24	First Amendment to 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 (Filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.25	Second Amendment to the 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 as of August 3, 2004 (Filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.26	Third Amendment to the 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 as of December 1, 2004 (Filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.27	Fourth Amendment to 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, 2005 (Filed as Exhibit 10.24 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.28	Fifth Amendment to 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 September 23, 2005 (Filed as Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.29	Sixth Amendment to 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 February 22, 2006 (Filed as Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).

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Exhibit Number	Exhibit Description
10.30	Ninth Amendment to 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 December 28, 2006 (Filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference).
10.31	Thirteenth Amendment to 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 January 30, 2008 (Filed as Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference).
10.32	Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated June 1, 2001 (Filed as Exhibit 10.17 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.33	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 (Filed as Exhibit 10.18 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.34	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 (Filed as Exhibit 10.19 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
10.35	Amendment No. 3 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated March 2, 2004 (Filed as Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.36	Amendment No. 4 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated November 17, 2005 (Filed as Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.37	Amendment No. 5 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated February 23, 2006 (Filed as Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.38	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004, (Sunset Valley Apartments, Texas) (Filed as Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.39	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004 (Village Apartments, Texas) (Filed as Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.40	Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004, (Coral Springs Apartments, Florida) (Filed as Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.41	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. (Filed as Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.42	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 (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and incorporated herein by reference).

49

Exhibit Number	Exhibit Description
10.43	Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated March 2, 2004 (Filed as Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.44	Amendment No. 1 to Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated November 17, 2005 (Filed as Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.45	Amendment No. 2 to Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated February 23, 2006 (Filed as Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference).
10.46†	Mid-America Apartment Communities Non-Qualified Deferred Compensation Retirement Plan as Amended Effective January 1, 2005 (Filed as Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
10.47†	Mid-America Apartment Communities 2005 Key Management Restricted Stock Plan (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 20, 2005 and incorporated herein by reference).
10.48†	2007 Executive Annual Bonus Program (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 23, 2007 and incorporated herein by reference).
10.49†	Form of Restricted Stock Agreement (Filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on May 23, 2008 and incorporated herein by reference).
10.50†	Amendment for the Non-Qualified Deferred Compensation Plan for Outside Directors (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 24, 2006 and incorporated herein by reference).
10.51	Limited Liability Company Agreement of Mid-America Multifamily Fund I, dated May 9, 2007 (Filed as Exhibit 10 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated herein by reference).
10.52†	Change of Control and Termination Agreement between the Registrant and Albert M. Campbell, III, dated December 5, 2008 (filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on December 8, 2008 and incorporated herein by reference).
10.53†	Change of Control and Termination Agreement between the Registrant and Thomas L. Grimes, dated December 5, 2008 (filed as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on December 8, 2008 and incorporated herein by reference).
10.54†	Change of Control and Termination Agreement between the Registrant and James Andrew Taylor, dated December 5, 2008 (filed as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on December 8, 2008 and incorporated herein by reference).
10.55†	2008 Long Term Incentive Plan (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on May 23, 2008 and incorporated herein by reference).
10.56†	2008 Annual Bonus Plan (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 31, 2008 and incorporated herein by reference).
10.57†	Sales Agreement between the Registrant and Cantor Fitzgerald & Co., dated July 3, 2008 (filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on July 3, 2008 and incorporated herein by reference).
10.58†	2009 Annual Bonus Plan (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 27, 2009 and incorporated herein by reference).
10.59†	Sales Agreement between the Registrant and Cantor Fitzgerald & Co., dated November 5, 2009 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 5, 2009 and incorporated herein by reference).
11	Statement re: computation of per share earnings (included within the Form 10-K).

50

Exhibit Number	Exhibit Description
14	Code of Ethics (Filed as Exhibit 14.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference).
21	List of Subsidiaries
23.1	Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP
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

† Management contract or compensatory plan or arrangement.

(b) Exhibits:

See Item 15(a)(3) above.

(c) Financial Statement Schedule:

See Item 15(a)(2) above.

51

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: February 24, 2010	/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 below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

Date: February 24, 2010	/s/ H. Eric Bolton, Jr. H. Eric Bolton, Jr. Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)
Date: February 24, 2010	/s/ Albert M. Campbell, III Albert M. Campbell, III Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
Date: February 24, 2010	/s/ Alan B. Graf, Jr. Alan B. Graf, Jr. Director
Date: February 24, 2010	/s/ John S. Grinalds John S. Grinalds Director
Date: February 24, 2010	/s/ Ralph Horn Ralph Horn Director
Date: February 24, 2010	/s/ Philip W. Norwood Philip W. Norwood Director
Date: February 24, 2010	/s/ William B. Sansom William B. Sansom Director
Date: February 24, 2010	/s/ Simon R.C. Wadsworth Simon R.C. Wadsworth Director

52

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Mid-America is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Mid-America’s consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Mid-America; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Mid-America are being made only in accordance with appropriate authorizations of management and directors of Mid-America; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Mid-America’s assets that could have a material effect on the consolidated financial statements.

Due to 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.

Management conducted an assessment of Mid-America’s internal control over financial reporting as of December 31, 2009 using the framework specified inInternal Control  — Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment, management has concluded that Mid-America’s internal control over financial reporting was effective as of December 31, 2009.

The effectiveness of Mid-America’s internal control over financial reporting as of December 31, 2009, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is presented herein.

F-1

Report of Independent Registered Public Accounting Firm

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

We have audited the accompanying consolidated balance sheets of Mid-America Apartment Communities, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Mid-America Apartment Communities, Inc. at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, 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 financial statements taken as a whole, presents 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), Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2010 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Memphis, Tennessee
February 25, 2010

F-2

Report of Independent Registered Public Accounting Firm

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

We have audited Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). 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 included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on 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, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, 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, Mid-America Apartment Communities, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.

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. as of December 31, 2009 and 2008, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2009, of Mid-America Apartment Communities, Inc. and our report dated February 25, 2010, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Memphis, Tennessee
February 25, 2010

F-3

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Consolidated Balance Sheets
December 31, 2009 and 2008
(Dollars in thousands, except per share data)

	December 31, 2009			December 31, 2008
Assets:
Real estate assets:
Land	$	255,425		$	240,426
Buildings and improvements		2,364,918			2,198,063
Furniture, fixtures and equipment		73,975			65,540
Capital improvements in progress		10,517			25,268
		2,704,835			2,529,297
Less accumulated depreciation		(788,260	)		(694,054	)
		1,916,575			1,835,243
Land held for future development		1,306			1,306
Commercial properties, net		8,721			7,958
Investments in real estate joint ventures		8,619			6,824
Real estate assets, net		1,935,221			1,851,331
Cash and cash equivalents		13,819			9,426
Restricted cash		561			414
Deferred financing costs, net		13,369			15,681
Other assets		19,731			16,840
Goodwill		4,106			4,106
Assets held for sale		19			24,157
Total assets	$	1,986,826		$	1,921,955
Liabilities and Shareholders' Equity:
Liabilities:
Notes payable	$	1,399,596		$	1,323,056
Accounts payable		1,702			1,234
Fair market value of interest rate swaps		51,160			76,961
Accrued expenses and other liabilities		69,528			66,982
Security deposits		8,789			8,705
Liabilities associated with assets held for sale		23			595
Total liabilities		1,530,798			1,477,533
Redeemable stock		2,802			1,805
Shareholders' equity:
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized, $155,000 or $25 per share liquidation preference; 8.30% Series H Cumulative Redeemable Preferred Stock, 6,200,000 shares authorized, 6,200,000 shares issued and outstanding		62			62
Common stock, $0.01 par value per share, 50,000,000 shares authorized; 29,095,251 and 28,224,708 shares issued and outstanding at December 31, 2009 and 2008, respectively(1)		290			282
Additional paid-in capital		988,642			954,127
Accumulated distributions in excess of net income		(510,993	)		(464,617	)
Accumulated other comprehensive income		(47,435	)		(72,885	)
Total Mid-America Apartment Communities, Inc. shareholders' equity		430,566			416,969
Noncontrolling interest		22,660			25,648
Total Equity		453,226			442,617
Total liabilities and equity	$	1,986,826		$	1,921,955

(1) Number of shares issued and outstanding represent total shares of common stock regardless of classification on the consolidated balance sheet. The number of shares classified as redeemable stock on the consolidated balance sheet for December 31, 2009, 2008 and 2007, are 58,038, 48,579 and 60,212, respectively.

 
 
See accompanying notes to consolidated financial statements.

F-4

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Consolidated Statements of Operations
Years ended December 31, 2009, 2008 and 2007
(Dollars in thousands, except per share data)

	2009			2008			2007
Operating revenues:
Rental revenues	$	357,008		$	352,414		$	331,640
Other property revenues		21,243			17,391			15,770
Total property revenues		378,251			369,805			347,410
Management fee income		293			206			34
Total operating revenues		378,544			370,011			347,444
Property operating expenses:
Personnel		47,633			46,139			42,102
Building repairs and maintenance		14,161			13,688			12,900
Real estate taxes and insurance		45,572			45,652			42,639
Utilities		22,334			21,908			20,009
Landscaping		9,548			9,146			8,594
Other operating		20,457			18,777			16,137
Depreciation		96,019			90,168			84,789
Total property operating expenses		255,724			245,478			227,170
Acquisition expenses		950			—			—
Property management expenses		17,220			16,799			17,918
General and administrative expenses		11,320			11,837			10,808
Income from continuing operations before non-operating items		93,330			95,897			91,548
Interest and other non-property income		385			509			195
Interest expense		(57,094	)		(62,010	)		(63,639	)
Loss on debt extinguishment		(140	)		(116	)		(123	)
Amortization of deferred financing costs		(2,374	)		(2,307	)		(2,407	)
Incentive fees from real estate joint ventures		—			—			1,019
Net casualty loss and other settlement proceeds		32			(247	)		589
Gain (loss) on sale of non-depreciable assets		15			(3	)		534
Income from continuing operations before loss from real estate joint ventures		34,154			31,723			27,716
(Loss) gain from real estate joint ventures		(816	)		(844	)		5,330
Income from continuing operations		33,338			30,879			33,046
Discontinued operations:
Income from discontinued operations before gain (loss) on sale		1,234			1,312			1,246
Gain (loss) on sale of discontinued operations		4,649			(120	)		9,164
Consolidated net income		39,221			32,071			43,456
Net income attributable to noncontrolling interests		2,010			1,822			3,510
Net income attributable to Mid-America Apartment Communities, Inc.		37,211			30,249			39,946
Preferred dividend distributions		12,865			12,865			13,688
Premiums and original issuance costs associated with the redemption of preferred stock		—			—			589
Net income available for common shareholders	$	24,346		$	17,384		$	25,669
Weighted average shares outstanding (in thousands):
Basic		28,341			26,943			25,296
Effect of dilutive securities		7			141			207
Diluted		28,348			27,084			25,503
Net income available for common shareholders	$	24,346		$	17,384		$	25,669
Discontinued property operations		(5,883	)		(1,192	)		(10,410	)
Income from continuing operations available for common shareholders	$	18,463		$	16,192		$	15,259
Earnings per share – basic:
Income from continuing operations available for common shareholders	$	0.65		$	0.60		$	0.60
Discontinued property operations		0.20			0.04			0.41
Net income available for common shareholders	$	0.85		$	0.64		$	1.01
Earnings per share – diluted:
Income from continuing operations available for common shareholders	$	0.65		$	0.60		$	0.60
Discontinued property operations		0.20			0.04			0.41
Net income available for common shareholders	$	0.85		$	0.64		$	1.01
Dividends declared per common share(1)	$	2.460		$	2.460		$	2.430

(1) Beginning in 2006, at their regularly scheduled meetings, the Board of Directors began routinely declaring dividends for payment in the following quarter. This can result in dividends declared during a calendar year being different from dividends paid during a calendar year. Mid-America paid dividends of $2.46, $2.46 and $2.42 in 2009, 2008 and 2007, respectively.

 
 
See accompanying notes to consolidated financial statements.

F-5

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Consolidated Statements of Equity
Years Ended December 31, 2009, 2008, and 2007
(Dollars and shares in thousands, except per share data)

	Mid-America Apartment Communities, Inc. Shareholders
	Preferred Stock						Common Stock					Additional Paid-In Capital			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total
	Shares			Amount			Shares			Amount
EQUITY AT DECEMBER 31, 2006		6,675		$	67			25,033		$	251	$	814,006		$	(379,573	)	$	9,850		$	33,647		$	478,248
Comprehensive income:
Net income		—			—			—			—		—			39,946			—			3,510			43,456
Other comprehensive income –  derivative instruments (cash flow hedges)		—			—			—			—		—			—			(25,514	)		(2,291	)		(27,805	)
Comprehensive income		—			—			—			—		—			—			—			—			15,651
Issuance and registration of common shares		—			—			461			5		25,381			—			—			—			25,386
Shares repurchased and retired		—			—			(2	)		—		(123	)		—			—			—			(123	)
Exercise of stock options		—			—			81			—		2,040			—			—			—			2,040
Stock issued to employee stock ownership plan		—			—			17			—		876			—			—			—			876
Shares issued in exchange for units		—			—			65			1		762			—			—			(763	)		—
Shares issued in exchange from redeemable stock		—			—			—			—		—			—			—			—			—
Redeemable stock fair market value		—			—			—			—		—			830			—			—			830
Adjustment for Noncontrolling Interest Ownership in operating partnership		—			—			—			—		274			—			—			(274	)		—
Amortization of unearned compensation		—			—			—			—		571			—			—			—			571
Dividends on common stock ($2.43 per share)		—			—			—			—		—			(61,892	)		—			—			(61,892	)
Dividends on noncontrolling interest units ($2.43 per unit)		—			—			—			—		—			—			—			(6,205	)		(6,205	)
Redemption of preferred stock		(475	)		(5	)		—			—		(11,276	)		(589	)		—			—			(11,870	)
Dividends on preferred stock		—			—			—			—		—			(13,688	)		—			—			(13,688	)
EQUITY BALANCE DECEMBER 31, 2007		6,200		$	62			25,655		$	257	$	832,511		$	(414,966	)	$	(15,664	)	$	27,624		$	429,824
Comprehensive income:
Net income		—			—			—			—		—			30,249			—			1,822			32,071
Other comprehensive income –  derivative instruments (cash flow hedges)		—			—			—			—		—			—			(57,221	)		(3,579	)		(60,800	)
Comprehensive income		—			—			—			—		—			—			—			—			(28,729	)
Issuance and registration of common shares		—			—			2,402			24		124,111			—			—			—			124,135
Shares repurchased and retired		—			—			(14	)		—		(679	)		—			—			—			(679	)
Exercise of stock options		—			—			81			1		1,862			—			—			—			1,863
Stock issued to employee stock ownership plan		—			—			22			—		991			—			—			—			991
Shares issued in exchange for units		—			—			20			—		236			—			—			(236	)		—
Shares issued in exchange from redeemable stock		—			—			10			—		413			—			—			—			413
Redeemable stock fair market value		—			—			—			—		—			312			—			—			312
Adjustment for Noncontrolling Interest Ownership in operating partnership		—			—			—			—		(6,317	)		—			—			6,317			—
Amortization of unearned compensation		—			—			—			—		999			—			—			—			999
Dividends on common stock ($2.46 per share)		—			—			—			—		—			(67,347	)		—			—			(67,347	)
Dividends on noncontrolling interest units ($2.46 per unit)		—			—			—			—		—			—			—			(6,300	)		(6,300	)
Dividends on preferred stock		—			—			—			—		—			(12,865	)		—			—			(12,865	)
EQUITY BALANCE DECEMBER 31, 2008		6,200		$	62			28,176		$	282	$	954,127		$	(464,617	)	$	(72,885	)	$	25,648		$	442,617

 
 
See accompanying notes to consolidated financial statements.

F-6

	Mid-America Apartment Communities, Inc. Shareholders
	Preferred Stock				Common Stock					Additional Paid-In Capital			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total
	Shares		Amount		Shares			Amount
Comprehensive income:
Net income		—		—		—			—		—			37,211			—			2,010			39,221
Other comprehensive income –  derivative instruments (cash flow hedges)		—		—		—			—		—			—			25,450			1,509			26,959
Comprehensive income		—		—		—			—		—			—			—			—			66,180
Issuance and registration of common shares		—		—		789			8		33,694			—			—			—			33,702
Shares repurchased and retired		—		—		(27	)		—		(964	)		—			—			—			(964	)
Exercise of stock options		—		—		2			—		54			—			—			—			54
Shares issued in exchange for units		—		—		97			—		1,132			—			—			(1,132	)		—
Redeemable stock fair market value		—		—		—			—		—			(646	)		—			—			(646	)
Adjustment for Noncontrolling Interest Ownership in operating partnership		—		—		—			—		(693	)		—			—			693			—
Amortization of unearned compensation		—		—		—			—		1,292			—			—			—			1,292
Dividends on common stock ($2.46 per share)		—		—		—			—		—			(70,076	)		—			—			(70,076	)
Dividends on noncontrolling interest units ($2.46 per unit)		—		—		—			—		—			—			—			(6,068	)		(6,068	)
Dividends on preferred stock		—		—		—			—		—			(12,865	)		—			—			(12,865	)
EQUITY BALANCE DECEMBER 31, 2009		6,200	$	62		29,037		$	290	$	988,642		$	(510,993	)	$	(47,435	)	$	22,660		$	453,226

 
 
See accompanying notes to consolidated financial statements.

F-7

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Condensed Consolidated Statements of Cash Flows
Years Ended December 31, 2009, 2008, and 2007
(Dollars in thousands)

	2009			2008			2007
Cash flows from operating activities:
Consolidated net income	$	39,221		$	32,071		$	43,456
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of deferred financing costs		98,393			93,181			88,713
Stock compensation expense		1,328			1,027			764
Stock issued to employee stock ownership plan		—			991			876
Compensation expense/redeemable stock issued		351			422			434
Amortization of debt premium		(360	)		(1,410	)		(2,037	)
Loss from investments in real estate joint ventures		816			882			58
Loss on debt extinguishment		140			116			123
Ineffectiveness of derivative contracts		780			39			(397	)
(Gain) loss on sale of non-depreciable assets		(15	)	��	3			(534	)
(Gain) loss on sale of discontinued operations		(4,649	)		120			(9,164	)
Gains on disposition within real estate joint ventures		—			(38	)		(5,388	)
Incentive fees from real estate joint ventures		—			—			(1,019	)
Net casualty loss (gain) and other settlement proceeds		(32	)		247			(589	)
Changes in assets and liabilities:
Restricted cash		(86	)		3,249			421
Other assets		177			5,649			2,559
Accounts payable		473			145			(1,674	)
Accrued expenses and other		446			787			1,279
Security deposits		(113	)		448			696
Net cash provided by operating activities		136,870			137,929			118,577
Cash flows from investing activities:
Purchases of real estate and other assets		(125,299	)		(156,305	)		(88,601	)
Improvements to existing real estate assets		(38,133	)		(40,248	)		(33,261	)
Renovations to existing real estate assets		(7,622	)		(18,192	)		(11,323	)
Development		(6,813	)		(22,699	)		(14,555	)
Distributions from real estate joint ventures		120			1			9,855
Contributions to real estate joint ventures		(2,731	)		(7,567	)		(243	)
Proceeds from disposition of real estate assets		29,932			1,967			29,336
Net cash used in investing activities		(150,546	)		(243,043	)		(108,792	)
Cash flows from financing activities:
Net change in credit lines		121,657			106,058			83,199
Proceeds from notes payable		—			38,700			—
Principal payments on notes payable		(44,757	)		(84,912	)		(12,891	)
Payment of deferred financing costs		(3,123	)		(2,835	)		(1,650	)
Repurchase of common stock		(964	)		(679	)		(123	)
Proceeds from issuances of common shares and units		33,754			126,003			26,454
Distributions to noncontrolling interests		(6,128	)		(6,313	)		(6,221	)
Dividends paid on common shares		(69,505	)		(65,809	)		(61,257	)
Dividends paid on preferred shares		(12,865	)		(12,865	)		(13,779	)
Redemption of preferred stock		—			—			(11,870	)
Net cash provided by financing activities		18,069			97,348			1,862
Net increase in cash and cash equivalents		4,393			(7,766	)		11,647
Cash and cash equivalents, beginning of year		9,426			17,192			5,545
Cash and cash equivalents, end of year	$	13,819		$	9,426		$	17,192
Supplemental disclosure of cash flow information:
Interest paid	$	55,579		$	63,722			67,345
Supplemental disclosure of noncash investing and financing activities:
Conversion of units to common shares	$	1,132		$	236			763
Accrued construction in progress	$	1,209		$	3,416			1,865
Interest capitalized	$	252		$	826			795
Marked-to-market adjustment on derivative instruments	$	26,179		$	(60,707	)		(27,805	)
Reclass of redeemable stock from equity to liabilities	$	—		$	482			448

 
 
See accompanying notes to consolidated financial statements.

F-8

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Formation of Mid-America Apartment Communities, Inc.

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 Sunbelt region of the United States. Mid-America owned and operated 144 apartment communities principally through its majority owned subsidiary, Mid-America Apartments, L.P., or the Operating Partnership, as of December 31, 2009. Mid-America also owned a 33.33% interest in two real estate joint ventures, Mid-America Multifamily Fund I, LLC, or Fund I, and Mid-America Multifamily Fund II, LLC, or Fund II, at December 31, 2009. Through these joint ventures Mid-America owned interest in an additional 3 communities as of December 31, 2009.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements presented herein include the accounts of Mid-America, the Operating Partnership, and all other subsidiaries. Mid-America owns 51% to 100% of all consolidated subsidiaries.

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

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Management of Mid-America 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

Mid-America 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.

Mid-America records all gains and losses on real estate in accordance with accounting standards governing the sale 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

In accordance with the provisions of accounting standards for earnings per share, basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards, which contain rights to non-forfeitable dividends, participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings

F-9

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  – (continued)

per share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. For periods where Mid-America 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, 2009, 2008, and 2007 is presented on the Consolidated Statement of Operations.

Cash and Cash Equivalents

Mid-America 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 scheduled 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, Mid-America’s policy is to provide in its acquisition budgets adequate funds to complete any deferred capital improvement 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.

Development projects and the related carrying costs, including interest, property taxes, insurance and allocated development overhead during the construction period, are capitalized and reported in the accompanying balance sheets as “construction in progress” during the construction period. Upon completion and certification for occupancy of individual units within a development, amounts representing the completed unit's portion of total estimated development costs for the project are transferred to land, buildings, and furniture, fixtures and equipment as real estate held for investment. Capitalization of interest, property taxes, insurance and allocated development overhead costs cease upon the transfer, and the assets are depreciated over their estimated useful lives in accordance with accounting standards governing the capitalization of interest. Total interest capitalized during 2009, 2008 and 2007 was approximately $252,000, $826,000 and $795,000, respectively.

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.

In accordance with accounting standards for 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-10

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  – (continued)

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 to determine the fair value of the in-place leases and resident relationships. 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 then amortized over the remaining term of the resident leases. The amount of these resident lease intangibles included in gross real estate assets totaled $24.9 million, $23.3 million and $20.7 million as of December 31, 2009, 2008, and 2007, respectively. The amortization recorded as depreciation expense was $1.7 million, $2.8 million and $4.6 million for the years ending December 31, 2009, 2008, and 2007, respectively, with accumulated amortization totaling $23.6 million, $20.2 million and $14.8 million as of December 31, 2009, 2008 and 2007, respectively.

Goodwill and Intangible Assets

Mid-America accounts for long-lived assets in accordance with the provisions of accounting standards for the impairment or disposal of long-lived assets and evaluates goodwill for impairment under accounting standards for goodwill and other intangible assets. Mid-America evaluates its goodwill for impairment on at least an annual basis, or more frequently if a goodwill impairment indicator is identified. Mid-America 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.

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, Mid-America 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. Mid-America 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

F-11

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  – (continued)

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 accounting standards for business combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

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 in accordance.

Investment In and Advances to Real Estate Joint Ventures

Mid-America’s investments in our unconsolidated real estate joint ventures are recorded on the equity method as we are able to exert significant influence, but do not have a controlling interest in the joint venture.

Deferred Financing Costs

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

Other Assets

Other assets consist of deferred rental concessions which are recognized on a straight line basis over the life of the leases, receivables and deposits from residents, and other prepaid expenses including prepaid insurance and prepaid interest.

Accrued Expenses and Other Liabilities

Accrued expenses consist of accrued real estate taxes, accrued interest payable, other accrued expenses payable, unearned income and the adjustment for the fair market value of Mid-America’s derivative financial instruments.

Recent Accounting Pronouncements

In June 2009, the FASB issued ASC 105-10,Generally Accepted Accounting Principles — Overallwhich establishes the FASB Accounting Standards Codification, or the Codification, as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP. Rules and interpretive releases of the Securities and Exchange Commission, or SEC, under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates, or ASUs. The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. We adopted ASC 105-10 effective July 1, 2009 and all references made to FASB guidance throughout this document have been updated for the Codification.

In September 2006, the FASB issued ASC 820, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 was effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. ASC 820-10-65-1 delayed the effective date of ASC 820 for nonfinancial assets and nonfinancial liabilities except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. For these items, the

F-12

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  – (continued)

effective date was for fiscal years beginning after November 15, 2008. We adopted ASC 820 effective January 1, 2008 and ASC 820-10-65-1 effective January 1, 2009. The adoption did not have a material impact on our consolidated financial condition or results of operations taken as a whole.

On December 4, 2007, the FASB revised ASC 805,Business Combinations. The ASC 805 revision significantly changes the accounting for business combinations. The ASC 805 revision requires an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. The ASC 805 revision changes the accounting treatment for certain specific items, including acquisition costs, which will generally be expensed as incurred. This could have a material impact on the way we account for property acquisitions and therefore will have a material impact on our financial statements. The ASC 805 revision applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted the ASC 805 revision effective January 1, 2009, and the expensed acquisition costs increased general and administrative expenses by $950,000 for the year ended December 31, 2009, respectively. The increased expenses decreased both basic and diluted net income available for common shareholders by $0.04 per share for the year ended December 31, 2009.

On December 4, 2007, the FASB issued ASC 810-10-65,Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51. ASC 810-10-65 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this standard requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest is included in consolidated net income on the face of the income statement. The standard clarifies that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. This has impacted our financial statement presentation by requiring the interests in the operating partnership not owned by the company (noncontrolling interests) be presented as a component of equity in the company’s consolidated financial statements and income contributable to the noncontrolling interests be a component of net income. ASC 810-10-65 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We adopted ASC 810-10-65 effective January 1, 2009 and the retrospective presentation increased total equity by $30,471,000 at December 31, 2008. The adoption did not change basic or diluted earnings per share for common shareholders and its effect on net income and income from continuing operations is as follows (dollars in thousands):

	Year ended December 31,
	2009		2008		2007
Increase in:
Income from continuing operations	$	1,907	$	1,718	$	3,226
Net income	$	2,010	$	1,822	$	3,510

On March 19, 2008, the FASB issued ASC 815-10-65,Disclosures about Derivative Instruments and Hedging Activities — an Amendment of FASB Statement 133. ASC 815-10-65 enhances required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how an entity uses derivative instruments and how derivative instruments and related hedged items are accounted for under accounting standards for derivative instruments and hedging activities, and how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. ASC 815-10-65 is effective for fiscal years and interim periods beginning after November 15, 2008. We adopted ASC 815-10-65 effective January 1, 2009, and the required disclosures are included in Note 7 to the consolidated financial statements.

F-13

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  – (continued)

In June 2008, the FASB issued ASC 260-10-65,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities to clarify that unvested share-based awards containing nonforfeitable rights to dividends are participating securities and, therefore, need to be included in the earnings allocation in computing earnings per share, or EPS, under the two-class method of computing earnings per share. ASC 260-10-65 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior period EPS data presented are to be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of this standard. We adopted ASC 260-10-65 effective January 1, 2009 and it had a minor impact on our number of shares. The change in our number of shares decreased net income available for common shareholders by $0.01 per share for the year ended December 31, 2008 and $0.01 per share for the year ended December 31, 2009.

In September 2008, the FASB ratified ASC 820-10-65-3,Issuer’s Accounting for Liabilities Measured at Fair Value with a Third-Party Credit Enhancement. This accounting standard requires that the measurement of liabilities with inseparable, third-party credit enhancements carried at or disclosed at fair value on a recurring basis exclude the effect of the credit enhancement. ASC 820-10-65-3 was effective on a prospective basis in the first reporting period beginning on or after December 15, 2008. We adopted this accounting standard effective January 1, 2009. This accounting standard removed the effect of the agency credit enhancements from our calculation of the fair value of our derivative instruments and materially increased the value represented on the balance sheet. The impact of ASC 820-10-65-3 on our financial position upon adoption was approximately a $2.0 million increase to the fair value of our derivative instruments.

In April 2008, the FASB issued ASC 825-10-65-1,Interim Disclosures About Fair Market Value of Financial Instruments. ASC 825-10-65-1 extends the disclosure requirements concerning the fair value of financial instruments to interim financial statements of publicly traded companies. ASC 825-10-65-1 is effective for interim financial periods ending after June 15, 2009, and the required disclosures are included in Note 7 to the consolidated financial statements. See also discussions in Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements, Note 6.

In May 2009, the FASB issued ASC 855-10,Subsequent Events, which establishes the general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. ASC 855-10 is effective for interim and financial periods ending after June 15, 2009. Adoption of this standard did not have a material impact on our consolidated financial condition or results of operations taken as a whole. For the year ended December 31, 2009, we have considered subsequent events through February 25, 2010, which is the date our consolidated financial statements were filed with the Securities and Exchange Commission on Form 10-K.

In June 2008, the FASB issued ASC 810-10-05, Amendments to FASB Interpretation No. 46(R). ASC 810-10-05 amends events which would require reconsidering whether an entity is a variable interest entity; it amends the criteria used to determine the primary beneficiary of a variable interest entity; and it expands disclosures about an enterprise’s involvement in variable interest entities. ASC 810-10-05 is effective for annual reporting periods beginning after November 15, 2009 and earlier application is prohibited. Management does not believe that the adoption of this standard will have a material impact on our consolidated financial condition or results of operations taken as a whole.

Reclassifications

Certain prior period amounts have been reclassified to conform to the 2009 presentation. Approximately $193,000, $148,000, $128,000 and $138,000 of certain bulk cable related revenues have been reclassed from Rental Revenues to Other Property Revenues for 2008, 2007, 2006 and 2005, respectively. Additionally, certain expenses related to bulk cable which were previously netted against revenues were reclassed from Other Property Revenues to Other Operating Expenses. The expense reclassification amounts for prior years

F-14

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  – (continued)

were approximately $160,000, $98,000, $105,000 and $107,000 for 2008, 2007, 2006 and 2005. The reclassifications had no effect on net income available for common shareholders.

2. STOCK BASED COMPENSATION

In accordance with accounting standards governing stock based compensation Mid-American measures the amount of compensation cost based on the grant-date fair value of the equity or the liability instruments issued, and remeasures liability awards at each reporting period. Compensation cost is recognized over the period that an employee provides service in exchange for the award.

Incentive Plans Overview and Summary

Mid-America’s stock compensation plans consist of an employee stock purchase plan and a number of incentives provided to attract and retain independent directors, executive officers and key employees. Incentives are currently granted under the 2004 Stock Plan which was approved at the May 24, 2004 Annual Meeting of Shareholders. This plan replaced the 1994 Restricted Stock and Stock Option Plan (collectively, the “Plans”) under which no further awards may be granted as of January 31, 2004. The 1994 Restricted Stock and Stock Option Plan allowed for the grant of restricted stock and stock options up to a total of 2.4 million shares. The 2004 Stock Plan allows for the grant of restricted stock and stock options up to a total of 500,000 shares. Mid-America believes that such awards better align the interests of our employees with those of our shareholders. Total compensation costs under the Plans were approximately $1,314,000, $1,022,000 and $697,000 for the years ended December 31, 2009, 2008 and 2007, respectively. As of December 31, 2009, the total unrecognized compensation cost related to the Plans was approximately $2,630,000. This cost is expected to be recognized over the remaining weighted average period of 1.7 years. Information concerning specific grants under the Plans is listed below.

Employee Stock Purchase Plan

The Mid-America Apartment Communities, Inc. Employee Stock Purchase Plan, or ESPP, provides a means for employees to purchase common stock of Mid-America at a discounted price. 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 15,000 shares of common stock at a price equal to 85% of the market price of the common stock. Shares are purchased semi-annually on June 30 and December 31. During the years ended December 31, 2009, 2008 and 2007, 6,427, 5,581 and 4,894 shares, respectively, were purchased through the ESPP. Because it is not possible to reasonably estimate fair value at the grant date, Mid-America estimates the compensation costs based on intrinsic values updated until the date of the settlement. Compensation cost recognized for the years ended December 31, 2009, 2008 and 2007, was approximately $38,000, $35,000 and $35,000, respectively.

Options

All option awards made under the Plans have been granted with the exercise price equal to the market price on the day of grant. The options vest over five years of continuous service at a rate of 10%, 10%, 20%, 30% and 30%, and expire 10 years from grant date. Mid-America issues new shares when options are exercised. Dividends are not paid on unexercised options.

The fair value of each option award is estimated on the grant date using the Black-Scholes method, which utilizes the assumptions noted in the following table. Volatility is based on the historical volatility of Mid-America’s common stock. Expected life of the option is estimated using historical data to estimate option exercise and employee termination. Mid-America uses a U.S. constant-maturity Treasury close to the same expected life of the option to represent the risk-free rate. Turnover is based on the historical rate at which

F-15

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

2. STOCK BASED COMPENSATION  – (continued)

options are exercised. Mid-America uses its current dividend yield at the time of grant to estimate the dividend yield over the life of the option. No options were granted during 2009, 2008 or 2007; therefore, no fair value was calculated.

A summary of option activity under the Plans as of December 31, 2009, and the changes during the year then ended follows:

Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2008		25,782		$	25.38
Granted		—			—
Exercised		(2,125	)		25.52
Forfeited		(500	)		25.52
Expired		—			—
Outstanding at December 31, 2009		23,157		$	25.37		2.1	$	530,588
Exercisable at December 31, 2009		23,157		$	25.37		2.1	$	530,588

The total intrinsic value of options exercised during the year ended December 31, 2009, was approximately $29,000. Cash received from the exercise of options for the year ended December 31, 2009, was approximately $54,000.

Executive 2000 Restricted Stock

In 2000, Mid-America issued 10,750 restricted shares of common stock to executive officers with a grant date fair value of $22.1875 per share. The grant date fair value was determined by the closing trading price of Mid-America’s shares on the day prior to the date of the grant. 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, 2009, no shares have been vested early. Recipients receive dividend payments on the shares of restricted stock prior to vesting.

A summary of the status of the Executive 2000 Restricted Stock nonvested shares as of December 31, 2009, and the changes for the year ended December 31, 2009, is presented below:

Nonvested Shares	Shares			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2009		2,150		$	22.19
Granted		—
Vested		(1,075	)	$	22.19
Forfeited		—
Nonvested at December 31, 2009		1,075		$	22.19

As of December 31, 2009, there was approximately $4,000 of total unrecognized compensation cost related to nonvested shares granted. This cost is expected to be recognized over the remaining weighted average period of 0.05 years. The total fair value of shares vesting during the years ended December 31, 2009, 2008, and 2007, was approximately $24,000, $24,000 and $24,000, respectively.

F-16

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

2. STOCK BASED COMPENSATION  – (continued)

Key Managers 2002 Restricted Stock

In 2002, Mid-America issued 97,881 restricted shares of common stock to key managers with a grant date fair value of $25.65 per share. The grant date fair value was determined by the closing trading price of Mid-America’s shares on the day prior to the date of the grant. As a result of three managers leaving the employment of Mid-America, as of December 31, 2009, only 81,916 shares remain issued. These shares will vest 20% on March 31 of each year for five consecutive years beginning in 2008. Recipients receive dividend payments on the shares of restricted stock prior to vesting.

A summary of the status of the Key Management 2002 Restricted Stock nonvested shares as of December 31, 2009, and the changes for the year ended December 31, 2009, is presented below:

Nonvested Shares	Shares			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2009		65,529		$	25.65
Granted		—
Vested		(16,385	)	$	25.65
Forfeited		—
Nonvested at December 31, 2009		49,144		$	25.65

As of December 31, 2009, there was approximately $440,000 of total unrecognized compensation cost related to nonvested shares granted. This cost is expected to be recognized over the remaining weighted average period of 1.5 years. The total fair value of shares vesting during the years ended December 31, 2009 and 2008 was approximately $420,000 and $420,000, respectively. No shares vested during the year ended December 31, 2007.

Director Restricted Stock Plan

Starting with the 2005 Annual Meeting of Shareholders, non-employee directors elected to the Board of Directors received a grant of $75,000 worth of restricted shares of common stock. The shares vest in three equal installments over the director’s three-year term. To begin the program, non-employee directors not sitting for re-election at the 2005 Annual Meeting of Shareholders received a pro-rata grant representing the number of years left in their term. Non-employee directors appointed to the Board outside of the Annual Meeting of Shareholders may be issued partial or initial grants. No shares of restricted stock were granted to non-employee directors during 2007. At our 2008 Annual Meeting of Shareholders, a proposal was approved to move to annual elections of directors and director grants were increased from what was effectively an annual grant of $25,000 under the previous program to annual grants of $30,000. Directors have the right to receive their grants either in shares of restricted stock that will vest after one year of service on the Board of Directors or have them issued into a deferred compensation plan.

F-17

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

2. STOCK BASED COMPENSATION  – (continued)

A summary of the status of the Director Restricted Stock nonvested shares as of December 31, 2009, and the changes for the year ended December 31, 2009, is presented below:

Nonvested Shares	Shares			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2009		4,002		$	54.92
Granted		2,568		$	35.03
Vested		(2,541	)	$	55.04
Forfeited		(477	)	$	52.34
Nonvested at December 31, 2008		3,552		$	40.80

As of December 31, 2009, there was approximately $58,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted. This cost is expected to be recognized over the remaining weighted average period of 0.17 years. The total fair value of shares vesting during the years ended December 31, 2009, 2008, and 2007, was approximately $140,000, $150,000 and $187,000, respectively.

Key Managers 2005 Restricted Stock

In 2005, the Board of Directors adopted the 2005 Key Management Restricted Stock Plan, or the 2005 Plan, a long-term incentive program for key managers and executive officers. The 2005 Plan grants shares of restricted stock based on a sliding scale of total shareholder return over three 12-month periods ending in 2006, 2007 and 2008. Any restricted stock earned will vest 100% three years after the date of the restricted stock issuance. Recipients will receive dividend payments on the shares of restricted stock during the restriction periods. There is no automatic vesting of the shares. Based on Mid-America’s performance from July 1, 2005, through June 30, 2006, 25,034 restricted shares of common stock were issued to key managers and executive officers on June 30, 2006. No shares of restricted stock were issued in 2007 or 2008. As a result of three managers leaving the employment of Mid-America, as of January 1, 2009, only 22,532 shares remained issued under this plan.

The fair value of the stock award was estimated on the grant date using a Monte Carlo simulation with the assumptions noted in the following table. Volatility is based on the historical volatility of Mid-America’s common stock. The expected term of the 2005 Plan is based on the criteria for the plan and the expected life of the awards. Mid-America uses a U.S. constant-maturity Treasury with the same term as the expected term of the 2005 Plan to represent the risk-free rate. Turnover is based on the historical experience for the key managers and executive officers. Mid-America uses its current dividend yield at the time of grant to estimate the dividend yield over the life of the plan.

Volatility		17.10	%
Expected life in years		3
Risk-free rate		3.77	%
Dividend yield		5.20	%

As of December 31, 2009, there was approximately $318,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted. Mid-America’s policy is to recognize compensation cost on a straight-line basis over the requisite service period for an entire award (rather than each portion of an award). Accordingly, the $318,000 unrecognized cost will be recognized over the remaining weighted average period of 1.16 years. The total fair value of shares vesting during the year ended December 31, 2009 was approximately $556,000. No shares vested during the years ended December 31, 2008 or 2007 under this plan.

F-18

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

2. STOCK BASED COMPENSATION  – (continued)

Long-Term Performance Based Incentive Plan for Executive Officers

The Compensation Committee, by authorization of the Board of Directors of Mid-America, 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 allowed executive management to earn performance units that converted into shares of restricted stock based on achieving defined total shareholder investment performance levels. Based on Mid-America’s performance from January 1, 2003, through December 31, 2005, 74,895 restricted shares of common stock were issued to executive management on March 14, 2006. 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 Mid-America, these shares of restricted stock vest 20% annually from 2006 through 2010.

The fair value of the stock award was estimated on the grant date using a Monte Carlo simulation with the assumptions noted in the following table. Volatility is based on the historical volatility of Mid-America’s common stock. The expected term of the Long-Term Plan is based on the criteria for the plan and the expected life of the awards. Mid-America uses a U.S. constant-maturity Treasury for the same term as the expected term of the Long-Term Plan to represent the risk-free rate. Turnover is based on the historical experience for the key managers and executive officers. Mid-America uses its current dividend yield at the time of grant to estimate the dividend yield over the life of the plan.

Volatility		6.38	%
Expected life in years		3
Risk-free rate		1.99	%
Dividend yield		9.60	%

For the year ended December 31, 2009, compensation costs related to the Long-Term Plan were approximately $41,000. As of December 31, 2009, there was approximately $41,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted. This unrecognized cost will be recognized over the remaining weighted average period of 1.0 years. The total fair value of shares vesting during the years ended December 31, 2009, 2008, and 2007, was approximately $66,200, $66,200, and $66,200, respectively.

Key Managers 2008 Restricted Stock

In 2008, the Board of Directors adopted the 2008 Key Management Restricted Stock Plan, or the 2008 Plan, a long-term incentive program for key managers and executive officers. The 2008 Plan consists of both an annual and three year program. Under the annual program participants can earn both service and performance based shares of restricted stock. The service based shares are awarded at the beginning of the 2008 Plan with the timing of vesting dependent on employment and total shareholder return performance. The earning of restricted shares under the performance program is based on employment and total shareholder return performance. Any shares earned through the annual performance program will be issued on January 1, 2010 and will vest 50% annually beginning on January 1, 2010. Participation in the three year program is limited to the executive officers and awards shares of restricted stock based upon both Mid-America’s total shareholder return performance over a three year period and that performance in relation to that of our peers. Any shares earned through the three year program will be issued on January 1, 2012 and will vest 25% annually beginning on January 1, 2013. Recipients will receive dividend payments on any shares of restricted stock earned and issued during the restriction periods. On July 1, 2008, Mid-America issued 15,920 shares of restricted stock under the annual service based program of the 2008 Plan. As a result of two managers leaving the employment of Mid-America, as of December 31, 2009, 149 shares have been forfeited and 473 shares have early vested.

F-19

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

2. STOCK BASED COMPENSATION  – (continued)

The fair value of the stock award was estimated on the grant date using a multifactor Monte Carlo simulation. The valuation used an interest rate term structure as of July 1, 2008 based on a zero coupon risk-free rate to represent the risk-free rate for the simulation which varied between 1.95% for 0.25 years to 3.24% for 4.00 years. The dividend yield assumption was 4.669% and was based on the closing stock price of $52.69 on July 1, 2008. Volatility for Mid-America and our peers was obtained by using a blend of both historical and implied volatility calculations. Historical volatility was based on the standard deviation of daily total continuous returns and implied volatility was based on the trailing month average of interpolating between the volatilities implied by stock call option contracts that were closest to the terms and closest to the money. Volatility for Mid-America was 34.87% for year 1, 30.92% for year 2, 29.63% for year 3, and 28.61% for year 4. Volatilities for our peers ranged from 25.05% to 49.94%. The requisite service period of the 2008 Plan is based on the criteria for the separate programs and is 5.5 years for the annual service based program, 2.5 years for the annual performance based program and 7.5 years for the three-year program. Turnover is based on the historical experience for the key managers and executive officers.

As of December 31, 2009, there was approximately $1,769,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted. Mid-America’s policy is to recognize compensation cost on a straight-line basis over the requisite service period for an entire award (rather than each portion of an award). Accordingly, the $1,769,000 unrecognized cost will be recognized over the remaining weighted average period of 2.0 years. No shares vested during the years ended December 31, 2009 or 2008.

3. COMPREHENSIVE INCOME

Total comprehensive income and its components for the years ended December 31, 2009, 2008, and 2007 were as follows (dollars in thousands):

	Years ended December 31,
	2009		2008			2007
Consolidated net income	$	39,221	$	32,071		$	43,456
Marked-to-market adjustment on derivative instruments		26,959		(60,800	)		(27,805	)
Total comprehensive (loss) income		66,180		(28,729	)		15,651
Comprehensive (loss) income attributable to noncontrolling interests		3,519		(1,757	)		1,219
Comprehensive (loss) income attributable to Mid-America Apartment Communities, Inc.	$	62,661	$	(26,972	)	$	14,432

4. REAL ESTATE JOINT VENTURES

In 2004, Mid-America entered into a joint venture (“CH/Realty II”) with Crow Holdings with the purchase of the Verandas at Timberglen apartments. Mid-America owned a 33.33% interest in CH/Realty II, and contributed 33.33% of the capital necessary to establish the joint venture. On January 12, 2007, CH/Realty II sold the Verandas at Timberglen apartments and Mid-America sold its ownership interest in CH/Realty II to Crow Holdings. As a result, Mid-America booked a gain on sale of $5.4 million and an incentive fee of $1 million, both of which are recorded in Mid-America’s 2007 consolidated financial statements. Following the sale of the property from the joint venture, Mid-America’s relationship with Crow Holdings in CH/Realty II ceased to exist.

F-20

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

4. REAL ESTATE JOINT VENTURES  – (continued)

In 2007, Mid-America entered into a joint venture, Mid-America Multifamily Fund I, LLC, or Fund I, with institutional capital in which we also own a 33.33% interest. In 2008, Fund I acquired two properties with a combined total of 626 units. Mid-America does not expect to make further investments through Fund I.

In 2009, Mid-America entered into a joint venture, Mid-America Multifamily Fund II, LLC, or Fund II, with institutional capital in which we as well own a 33.33% interest. In 2009, Fund II acquired one property with 294 units.

The income, contributions, distributions and ending investment balances related to Mid-America’s joint ventures consisted of the following for the years ended December 31, 2009, 2008, and 2007 (dollars in thousands):

	2009
	CH/Realty II		Fund I			Fund II			Total
Joint venture loss	$	—	$	(649	)	$	(167	)	$	(816	)
Gain on joint venture asset dispositions		—		—			—			—
Management fee income		—		252			41			293
Asset and acquisition fees		—		246			99			345
Incentive fee income		—		—			—			—
Contributions to joint venture		—		(251	)		(2,480	)		(2,731	)
Distributions from joint venture		—		120			—			120
Investment in at December 31		—		6,306			2,313			8,619
Advances to at December 31		—		—			—			—

	2008
	CH/Realty II			Fund I			Fund II		Total
Joint venture income (loss)	$	8		$	(890	)	$	—	$	(882	)
Gain on joint venture asset dispositions		38			—			—		38
Management fee income		—			206			—		206
Incentive fee income		—			257			—		257
Contributions to joint venture		—			—			—		—
Distributions from joint venture		(5	)		(7,562	)		—		(7,567	)
Investment in at December 31		—			1			—		1
Advances to at December 31		—			6,824			—		6,824
		—			—			—		—

	2007
	CH/Realty II			Fund I			Fund II		Total
Joint venture loss	$	(11	)	$	(47	)	$	—	$	(58	)
Gain on joint venture asset dispositions		5,388			—			—		5,388
Management fee income		34			—			—		34
Incentive fee income		1,019			—			—		1,019
Contributions to joint venture		(28	)		(215	)		—		(243	)
Distributions from joint venture		9,855			—			—		9,855
Investment in at December 31		���			168			—		168
Advances to at December 31		—			—			—		—

F-21

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

5. BORROWINGS

Mid-America maintains a total of $1,044 millionof 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 2011 through 2018.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 Mid-America, has historically approximated three-month LIBOR less an average of 0.16% over the life of the FNMA Facilities, plus a fee of 0.49% to 0.67%. Borrowings under the FNMA Facilities totaled $1,005 million at December 31, 2009, with no fixed balances outstanding, and the entire $1,005 million under the variable rate portion of the facility at an average rate of 0.8%. The available borrowing base capacity at December 31, 2009, was $1,044 million. Commitment fees related to our unused FNMA Facilities totaled approximately $186 thousand for the year ended December 31, 2009. Mid-America has 21 interest rate swap agreements, totaling a notional amount of $666 million designed to fix the interest rate on a portion of the variable rate borrowings outstanding under the FNMA Facilities at approximately 5.3%. The interest rate swaps have maturities between 2010 and 2015. The swaps are highly effective and are designed as cash flow hedges. Mid-America has also entered into sixteen interest rate caps totaling a notional amount of $157 million which are designated against the FNMA Facilities. These interest rate caps have maturities between 2010 and 2016 and eleven are set at 6.0%, two set at 5.0%, two set at 4.5%, and one is set at 6.5%. The FNMA Facilities are subject to certain borrowing base calculations that can effectively reduce the amount that may be borrowed.

Mid-America has a $300 million credit facility with Freddie MAC (the “Freddie Mac Facility”). At December 31, 2009, Mid-America had $298 million borrowed against the Freddie Mac Facility at an interest rate of 0.7%. Commitment fees related to our Freddie Mac Facility totaled approximately $11 thousand for the year ended December 31, 2009. Mid-America has thirteen interest rate swap agreements, totaling a notional amount of $217 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 between 2011 and 2014. Mid-America has also entered into one interest rate cap totaling a notional amount of $15 million which is designated against the Freddie Mac Facility. This interest rate cap has a 2014 maturity and is set at 5.0%.

Mid-America also maintains a $50 million secured credit facility with two banks led by Regions Bank (the “AmSouth Credit Line”; formerly with AmSouth Bank before their merger in 2006). The AmSouth Credit Line bears an interest rate of LIBOR plus a spread of 1.25%. This credit line expires in May 2010 and is subject to certain borrowing base calculations that effectively reduce the amount that may be borrowed. At December 31, 2009, Mid-America had $46 million available to be borrowed under the AmSouth Credit Line agreement with $0 borrowed under this facility at an interest rate of 1.7%. Approximately $2 million of the facility is used for letters of credit.

Each of Mid-America’s credit facilities is subject to various covenants and conditions on usage. If Mid-America 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 Mid-America’s liquidity. Moreover, if Mid-America 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 Mid-America. Mid-America believes it was in compliance with these covenants and conditions on usage at December 31, 2009.

At December 31, 2009, Mid-America had $70 million of fixed rate conventional individual property mortgages with an average interest rate of 5.9% and an average maturity of 2020, a $15 million variable rate mortgage with an embedded cap rate of 7% at an interest rate of 3.6% with a maturity in 2015, and a $11 million fixed rate tax exempt individual property mortgage with an interest rate of 5.3% and a maturity in 2028.

F-22

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

5. BORROWINGS  – (continued)

At December 31, 2009, Mid-America had $263 million (after considering the impact of interest rate swap and cap agreements in effect) conventional variable rate debt outstanding at an average interest rate of 0.9%, $108 million of capped conventional variable rate debt at an average interest rate of 0.8%, and an additional $64 million of capped tax-free variable rate debt at an average rate of1.1%. The interest rate on all other debt, totaling $964 million, was hedged or fixed at an average interest rate of 5.4%.

As of December 31, 2009, Mid-America estimated that the weighted average interest rate on Mid-America’s debt was 4.0%.

The following table summarizes Mid-America’s indebtedness at December 31, 2009, and 2008, (dollars in millions):

	At December 31, 2009										Balance at December 31, 2008
	Actual Interest Rates			Average Interest Rate			Maturity		Balance
Fixed Rate:
Taxable		5.30% – 6.21	%		5.86	%		2014 – 2044	$	70.1	$	136.4
Tax-exempt		5.27	%		5.27	%		2028		11.2		11.6
Interest rate swaps		4.38% – 6.42	%		5.32	%		2010 – 2015		883.2		908.2
									$	964.5	$	1,056.2
Variable Rate:(1)
Taxable		0.67% – 1.22	%		0.91	%		2010 – 2018		262.8		179.8
Tax-exempt		—			—			—		—		4.8
Interest rate caps		0.71% – 1.04	%		0.89	%		2010 – 2016		172.3		82.3
										435.1		266.9
									$	1,399.6	$	1,323.1

(1) Amounts are adjusted to reflect interest rate swap and cap agreements in effect at December 31, 2009, and 2008, respectively which results in Mid-America 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.

The following table includes scheduled principal repayments on the borrowings at December 31, 2009, as well as the amortization of the fair market value of debt assumed (dollars in thousands):

Year	Amortization		Maturities		Total
2010	$	1,827	$	—	$	1,827
2011		1,929		180,000		181,929
2012		2,036		80,000		82,036
2013		2,149		168,629		170,778
2014		1,600		534,918		536,518
Thereafter		32,840		393,668		426,508
	$	42,381	$	1,357,215	$	1,399,596

F-23

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

6. DERIVATIVE FINANCIAL INSTRUMENTS

Following are the details of the interest rate swaps that were entered into as of December 31, 2009 (dollars in thousands):

	Notional Balance		Interest Rate					Expiration
			Variable Leg Base		Fixed Leg
Interest rate swaps designated against the FNMA Facilities
	$	50,000		3-month LIBOR		5.48	%		2010
		40,000		3-month LIBOR		5.54	%		2010
		50,000		3-month LIBOR		5.36	%		2011
		25,000		3-month LIBOR		5.15	%		2012
		50,000		3-month LIBOR		5.29	%		2012
		50,000		3-month LIBOR		5.00	%		2012
		50,000		3-month LIBOR		5.06	%		2013
		25,000		3-month LIBOR		5.34	%		2013
		25,000		3-month LIBOR		5.34	%		2013
		25,000		3-month LIBOR		5.89	%		2013
		25,000		3-month LIBOR		6.10	%		2014
		50,000		3-month LIBOR		6.22	%		2010
		25,000		3-month LIBOR		6.09	%		2014
		25,000		3-month LIBOR		5.02	%		2012
		25,000		3-month LIBOR		5.12	%		2013
		50,000		3-month LIBOR		4.94	%		2015
		25,000		3-month LIBOR		4.58	%		2011
		25,000		3-month LIBOR		5.21	%		2015
		640,000				5.37	%
Interest rate swaps designated against the FNMA Tax-Free Bond Facility
		8,365		BMA Municipal Swap Index		4.73	%		2010
		10,800		BMA Municipal Swap Index		4.42	%		2012
		7,000		BMA Municipal Swap Index		4.42	%		2012
		26,165				4.51	%
Interest rate swaps designated against the Freddie Mac Facility
		26,000		3-month LIBOR		5.40	%		2011
		10,000		3-month LIBOR		5.11	%		2011
		15,000		3-month LIBOR		5.19	%		2011
		15,000		3-month LIBOR		5.72	%		2011
		17,000		3-month LIBOR		5.53	%		2011
		10,000		1-month LIBOR		6.25	%		2014
		10,000		1-month LIBOR		6.42	%		2014
		10,000		1-month LIBOR		5.87	%		2014
		10,000		3-month LIBOR		5.72	%		2014
		7,000		3-month LIBOR		5.72	%		2014
		22,000		3-month LIBOR		4.38	%		2014
		40,000		3-month LIBOR		4.82	%		2013
		25,000		3-month LIBOR		4.87	%		2014
		217,000				5.27	%
Total interest rate swaps entered into as of December 31, 2009	$	883,165				5.32	%

F-24

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

6. DERIVATIVE FINANCIAL INSTRUMENTS  – (continued)

At December 31, 2009, all of Mid-America’s interest rate swaps and interest rate caps were designated as cash flow hedges. As of December 31, 2009, and 2008, we recorded a liability for derivatives of approximately $55.4 million and $78.4 million, respectively, to fair market value of interest rate swaps and accrued expenses and other liabilities on the consolidated balance sheet. We also recorded approximately $3.4 million and $0.1 million as of December 31, 2009, and 2008, respectively, to other assets on the consolidated balance sheets. The fair market value of interest rate swaps, accrued expenses and other liabilities, and other assets line items represent the fair values of the interest rate swaps and interest rate caps. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During 2010, we estimate that an additional $32.0 million will be reclassified as an increase to interest expense. See also discussions in Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements, Note 1 and Note 7.

7. 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, 2009, and 2008, total $81 million and $148 million, respectively, and have estimated fair values of $74 million and $142 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, 2009, and 2008. The carrying value of variable rate notes payable (excluding the effect of interest rate swap and cap agreements) at December 31, 2009, and 2008, total $1,318 million and $1,175 million, respectively, and have estimated fair values of $1,193 million and $1,078 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, 2009, and 2008.

In the normal course of business, we use certain derivative financial instruments to manage, or hedge, the interest rate risk associated with our variable rate debt or to hedge anticipated future debt transactions to manage well-defined interest rate risk associated with the transaction.

We do not use derivative financial instruments for speculative or trading purposes. Further, we have 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, we have not sustained any material loss from those instruments nor do we anticipate any material adverse effect on our net income attributable to Mid-America Apartment Communities, Inc. or financial position in the future from the use of derivatives.

We utilize derivative financial instruments that can be designated as cash flow hedges and which are expected to be highly effective in reducing the interest rate risk exposure that they are designed to hedge. This effectiveness is essential for qualifying for hedge accounting. Instruments that meet the criteria qualifying for hedge accounting treatment are formally designated as hedging instruments at the inception of the derivative contract. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective, strategy for undertaking the hedge transaction, and methods of assessing effectiveness and measuring ineffectiveness. This process includes linking all derivatives that are designated as cash flow hedges to specific assets and liabilities on the balance sheet or forecasted transactions. We also formally assess, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives used are highly effective in offsetting changes in cash flows of hedged items. When it is determined that a derivative has ceased to be a highly effective hedge, we discontinue hedge accounting prospectively.

F-25

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

7. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS  – (continued)

All of our derivative financial instruments are reported at fair value, are represented on the consolidated balance sheet within other assets, fair market value of interest rate swaps, and accrued expenses and other liabilities, 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. As of December 31, 2009, we have entered into 34 interest rate swaps and 17 interest rate caps with a total notional balance of $883.2 million and $172.3 million, respectively. As of December 31, 2009, and 2008, we recorded a liability for derivatives of approximately $55.4 million and $78.4 million, respectively, to fair market value of interest rate swaps and accrued expenses and other liabilities on the consolidated balance sheet. We also recorded approximately $3.4 million and $0.1 million as of December 31, 2009, and 2008, respectively, to other assets on the consolidated balance sheets. The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, 2009, and 2008, respectively.

Fair Values of Derivative Instruments on the Condensed Consolidated Balance Sheets as of
December 31, 2009 and 2008

Derivatives designated as hedging instruments	Asset Derivatives								Liability Derivatives
	December 31, 2009 (dollars in thousands)				December 31, 2008 (dollars in thousands)				December 31, 2009 (dollars in thousands)				December 31, 2008 (dollars in thousands)
	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Interest rate contracts		Other assets	$	3,430		Other assets	$	51		Fair Market Value of Interest Rate Swaps & Accrued expenses and other liabilities	$	55,415		Fair Market Value of Interest Rate Swaps & Accrued expenses and other liabilities	$	78,440
Total derivatives designated as hedging instruments			$	3,430			$	51			$	55,415			$	78,440

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. As of December 31, 2009, 2008, and 2007 the year-to-date ineffective portion of the hedging transactions reclassified to earnings was a $724,000 increase, a $93,000 decrease, and a $470,000 decrease, respectively, to interest expense. The current year increase to interest expense consisted of $131,000 attributable to 2009 interest rate and fair value fluctuations and a $593,000 reclassification from other comprehensive income to interest expense. The reclassification resulted from the reversal of prior period realized gains between the derivative instrument and the hedged debt transaction.

F-26

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

7. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS  – (continued)

The table below presents our financial performance of assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2009, and 2008.

The Effect of Derivative Instruments on the Consolidated Statements of Operations
for the Years Ended December 31, 2009 and 2008 (dollars in thousands)

Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)		Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	12/31/2009		12/31/2008					12/31/2009			12/31/2008					12/31/2009			12/31/2008
Interest rate contracts	$	23,478	$	(62,826	)		Interest Expense	$	(31,920	)	$	(10,883	)		Interest Expense	$	(728	)	$	92
Total	$	23,478	$	(62,826	)			$	(31,920	)	$	(10,883	)			$	(728	)	$	92

If it becomes probable that the underlying hedged forecasted debt transactions will not occur, or if a derivative contract no longer qualifies for hedge accounting or is terminated, all future changes in the fair value of the derivative contract are marked-to-market with changes in value included in net income for each period until the derivative instrument matures, is settled, or is re-designated. If the hedged forecasted debt transaction becomes probable of not occurring, amounts previously deferred in accumulated other comprehensive income will immediately be reclassified to net income. If the hedged forecasted debt transaction remains probable to occur, these same previously deferred amounts will be amortized over the remaining hedged forecasted debt transactions.

As of December 31, 2009, the aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position is $54.5 million. Certain of our derivative contracts are credit enhanced by either FNMA or Freddie Mac. These derivative instrument contracts require that our credit enhancing party maintain credit ratings above a certain level. If the credit rating of the credit enhancing party were to fall below these levels, it would trigger additional collateral to be deposited with the counterparty up to 100 percent of the liability position of the derivative contracts. As of December 31, 2009, the total maximum liability was $54.5 million of which our credit enhancing parties would be responsible for posting up to $31.7 million and we would be responsible for posting up to $22.8 million. If our credit enhancing parties are unwilling or unable to post their portion, we could be required to post the full collateral amount. Both FNMA and Freddie Mac are currently rated Aaa by Moody’s and AAA by S&P. The following table summarizes the credit ratings that would trigger the credit-risk-related contingent features, along with the combined amount that would be required to post under each credit rating scenario, if triggered, as of December 31, 2009.

As of December 31, 2009
Credit Rating			Required Collateral
Moody's	S&P
Aaa		AAA	$	—
Aa1		AA+	$	—
Aa2		AA	$	—
Aa3		AA-	$	—
A1		A+	$	(3,194,361	)
A2		A	$	(6,703,499	)
A3		A-	$	(46,114,045	)
Baa1		BBB+	$	(54,497,461	)

F-27

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

7. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS  – (continued)

Certain of our derivative contracts contain a cross default provision under which a default under certain of our other indebtedness in excess of a threshold amount causes an event of default under the agreement. Threshold amounts range from $1 million to $75 million. As of December 31, 2009, the fair value of derivatives containing cross default provisions was in a liability position of $14.2 million. Following an event of default, a termination event may occur, and we would be required to settle our obligations under the agreements at their termination value of $14.7 million as of December 31, 2009. Although our derivative contracts are subject to master netting arrangements which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the consolidated balance sheet.

In accordance with accounting standards for determining fair values, we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy. However, we have determined that the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of our own default as well as the default of our counterparties. As of December 31, 2009, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy.

The table below presents the Mid-America’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2008, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2008
(dollars in thousands)

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2008
Assets
Derivative financial instruments	$	—	$	—	$	51	$	51
Liabilities
Derivative financial instruments	$	—	$	—	$	78,440	$	78,440

The table below presents Mid-America’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2009, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2009
(dollars in thousands)

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2009
Assets
Derivative financial instruments	$	—	$	—	$	3,430	$	3,430
Liabilities
Derivative financial instruments	$	—	$	—	$	55,415	$	55,415

F-28

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

7. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS  – (continued)

The table below presents a reconciliation of the beginning and ending balances of assets and liabilities having fair value measurements based on significant unobservable inputs (Level 3).

Changes in Level 3 Assets/(Liabilities) Measured at Fair Value on a Recurring Basis
at December 31, 2009
(dollars in thousands)

	Balance at 12/31/2008			Total Gain or (Loss) Included in Income			Total Realized and Unrealized Gains Included in Other Comprehensive Income		Purchases, Issuances and Settlements		Net Transfers In and/or Out of Level 3		Balance at 12/31/2009
Derivative financial instruments	$	(78,389	)	$	(32,648	)	$	56,125	$	2,927	$	—	$	(51,985	)

Changes in Level 3 Assets/(Liabilities) Measured at Fair Value on a Recurring Basis
for the period October 1, 2009 to December 31, 2009
(dollars in thousands)

	Balance at 9/30/2009			Total Gain or (Loss) Included in Income			Total Realized and Unrealized Gains Included in Other Comprehensive Income		Purchases, Issuances and Settlements		Net Transfers In and/or Out of Level 3		Balance at 12/31/2009
Derivative financial instruments	$	(60,893	)	$	(9,403	)	$	17,139	$	1,172	$	—	$	(51,985	)

Of the instruments for which Mid-America utilized significant Level 3 inputs to determine fair value and that were still held by Mid-America at December 31, 2009, the unrealized gain for the year ended December 31, 2009 was $56.0 million. The fair value of these instruments is reported on the balance sheet in Other assets, Fair market value of interest rate swaps, and Accrued expenses and other liabilities, with a corresponding adjustment for the unrealized gains/losses to Accumulated other comprehensive income, with any ineffective portion of the hedging transactions reclassified to interest expense. We use three major banks to provide approximately 80% of our swaps, JP Morgan Chase, Royal Bank of Canada, and Deutsche Bank, all of which have high investment grade ratings from Moody’s and S&P. Our interest rate swaps with JP Morgan Chase, Royal Bank of Canada, and Deutsche Bank had liability positions on our Condensed Consolidated Balance Sheets of $5.6 million, $20.8 million and $22.2 million, respectively, as of December 31, 2009.

Both observable and unobservable inputs may be used to determine the fair value of positions that Mid-America has classified within the Level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the Level 3 category presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

The fair value estimates presented herein are based on information available to management as of December 31, 2009, and 2008. These estimates are not necessarily indicative of the amounts Mid-America could ultimately realize. See also discussions in Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements, Note 1 and Note 6.

F-29

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

8. COMMITMENTS AND CONTINGENCIES

Mid-America is not presently subject to any material litigation nor, to Mid-America’s knowledge, with advice of legal counsel, is any material litigation threatened against us. We are 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 our consolidated financial statements.

Mid-America had operating lease expense of approximately $17,600, $13,000 and $11,300 for the years ended December 31, 2009, 2008 and 2007, respectively. Mid-America has commitments of approximately $18,200 in 2010, $17,600 in 2011 and $9,700 in 2012 under operating lease agreements outstanding at December 31, 2009.

9. INCOME TAXES

No provision for federal income taxes has been made in the accompanying consolidated financial statements. Mid-America has made an election to be taxed as a Real Estate Investment Trust, or REIT, under Sections 856 through 860 of the Internal Revenue Code. As a REIT, Mid-America is generally not subject to federal income tax to the extent that we distribute 100% of our taxable income to our shareholders. We must meet certain requirements, including the requirement to distribute at least 90% of our taxable income, to maintain REIT status. If we fail to qualify as a REIT in any taxable year, Mid-America will be subject to the federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. Even though we qualify for taxation as a REIT, Mid-America may be subject to certain federal, state and local taxes on our income and property and to federal income and excise tax on our 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 2008 and 2007 and the estimated taxability for 2009:

	2009		2008		2007
Per common share
Ordinary income	$	1.61	$	1.43	$	1.44
Capital gains		0.17		—		0.47
Return of capital		0.68		1.03		0.51
Total	$	2.46	$	2.46	$	2.42

In June 2006, the FASB issued ASC 740-10-50 which clarifies the accounting for uncertainty in income taxes recognized in financial statements. Mid-America adopted ASC 740-10-50 effective January 1, 2007. ASC 740-10-50 prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken in tax returns. Mid-America has identified and examined our tax positions, including our status as a real estate investment trust, for all open tax years through December 31, 2006, and concluded that the full benefit of each tax position taken should be recognized in the financial statements. There has been no significant changes in unrecognized tax benefits following the adoption date.

ASC 740-10-50 requires that an enterprise must calculate interest and penalties related to unrecognized tax benefits. The decision regarding where to classify interest and penalties on the income statement is an accounting policy decision that should be consistently applied. Interest and penalties calculated on any future uncertain tax positions will be presented as a component of income tax expense. No interest and penalties are accrued on our balance sheet as of December 31, 2009 and 2008.

Mid-America’s tax years that remain subject to examination for U.S. federal purposes range from 2006 through 2008. Our tax years that remain open for state examination vary but range from 2005 through 2008.

F-30

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

10. SHAREHOLDER’S EQUITY

Noncontrolling Interest

Noncontrolling 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, or Operating Partnership Units. Mid-America is the sole general partner of the Operating Partnership. Net income is allocated to the noncontrolling 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 noncontrolling interest and Mid-America. Such transactions and the related proceeds are treated as capital transactions and result in an allocation between shareholders’ equity and noncontrolling interest to account for the change in the respective percentage ownership of the underlying equity of the Operating Partnership.

Mid-America’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 Mid-America. At December 31, 2009, a total of 2,305,652 units were outstanding and redeemable to Mid-America by the holders of the units for 2,305,652 shares of common stock or approximately $111,317,000, based on the closing price of Mid-America’s common stock on December 31, 2009 of $48.28 per share, at Mid-America’s option. At December 31, 2008, a total of 2,403,515 units were outstanding and redeemable to Mid-America by the holders of the units for 2,403,515 shares of common stock or approximately $89,315,000, based on the closing price of Mid-America’s common stock on December 31, 2008 of $37.16 per share, at Mid-America’s option.

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 2009, 2008 and 2007 was allocated approximately 8.2%, 8.7% and 9.4%, respectively, to holders of Operating Partnership Units and 91.8%, 91.3% and 90.6%, respectively, to Mid-America.

Series F Preferred Stock

In 2002, Mid-America issued Series F Cumulative Redeemable Preferred Stock, or 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. On October 16, 2007, Mid-America redeemed all of the 474,500 issued and outstanding shares of the Series F Preferred Stock for $11.9 million.

Series H Preferred Stock

In 2003, Mid-America issued the 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. Mid-America 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 became redeemable for cash at the option of Mid-America, 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

Mid-America has a Dividend and Distribution Reinvestment and Share Purchase Plan, or DRSPP, pursuant to which Mid-America's shareholders have the ability to reinvest all or part of their distributions from Mid-America’s common stock, preferred stock or limited partnership interests in Mid-America Apartments, L.P. into Mid-America’s common stock. The plan also provides the opportunity to make optional cash investments in common shares of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. Mid-America, in our absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill our obligations under the DRSPP, Mid-America may

F-31

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

10. SHAREHOLDER’S EQUITY  – (continued)

either issue additional shares of common stock or repurchase common stock in the open market. We have registered with the Securities and Exchange Commission the offer and sale of up to 7,600,000 shares of common stock pursuant to the DRSPP. We may elect to sell shares under the DRSPP at up to a 5% discount.

Common stock shares totaling 25,406 in 2009, 421,794 in 2008 and 136,483 in 2007 were acquired by shareholders under the DRSPP. Mid-America offered an average of a 1.5% discount for optional cash purchases in 2008 and 2007. We did not offer a discount for optional cash purchases through the DRSPP in 2009.

Controlled Equity Offering

On November 3, 2006, Mid-America entered into a sales agreement with Cantor Fitzgerald & Co. to sell up to 2,000,000 shares of our common stock, from time to time in at-the-market offerings or negotiated transactions through a controlled equity offering program. On July 3, 2008, Mid-America entered into a second agreement with Cantor Fitzgerald & Co. with materially the same terms for an additional 1,350,000 shares and on November 5, 2009 we entered into a third agreement with Cantor Fitzgerald & Co. with materially the same terms for an additional 4,000,000 shares.

During the years ended December 31, 2009, 2008 and 2007, Mid-America sold 763,000, 1,955,300 and 323,700 shares of common stock for net proceeds of $32.8 million, $103.6 million and $18.8 million, respectively.

Stock Repurchase Plan

In 1999, Mid-America’s Board of Directors approved a stock repurchase plan to acquire up to a total of 4.0 million shares of Mid-America’s common stock. Through December 31, 2009, Mid-America 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 through 2009 under the plan.

11. EMPLOYEE BENEFIT PLANS

Following are details of employee benefit plans not previously discussed in Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements, Note 2.

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. Mid-America may, but is not obligated to, make matching contributions up to 6% of the participant’s compensation. Mid-America’s contribution to this plan was approximately $161,000, $405,000 and $483,000 in 2009, 2008, and 2007, respectively.

Non-Qualified Deferred Compensation Retirement Plan

Mid-America has adopted a non-qualified deferred compensation retirement plan for key employees who are not qualified for participation in Mid-America’s 401(k) Savings Plan. Under the terms of the plan, employees may elect to defer a percentage of their compensation and Mid-America may, but is not obligated to, match 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 Mid-America’s 401(k) Savings Plan. Mid-America’s match to this plan in 2009, 2008 and 2007 was approximately $4,000, $63,000 and $43,000, respectively.

F-32

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

11. EMPLOYEE BENEFIT PLANS  – (continued)

Non-Qualified Deferred Compensation Plan for Outside Company Directors

In 1998, Mid-America established the Non-Qualified Deferred Compensation Plan for Outside Company Directors, or the Directors Deferred Compensation Plan, which allows non-employee directors to defer their director fees by having the fees held by Mid-America as shares of Mid-America common stock. Directors can also choose to have their annual restricted stock grants issued into the Directors Deferred Compensation Plan. Amounts deferred through the Directors Deferred Compensation Plan are distributed to the directors in two annual installments beginning in the first 90 days of the year following the director’s departure from the board. Participating directors may choose to have the amount issued to them in shares of Mid-America common stock or paid to them as cash at the market value as of the end of the year the director ceases to serve on the board.

During 2009, 2008 and 2007, Mid-America issued 6,100, 6,600 and 5,572 shares of common stock, respectively, with weighted-average grant date fair values of $37.26, $47.92 and $51.29, respectively, to outside directors.

The shares of common stock held in the Directors Deferred Compensation Plan are classified outside of permanent equity in redeemable stock with changes in redemption amount recorded immediately in Retained Earnings because the directors have redemption rights not solely within the control of Mid-America. Additionally, any shares that become mandatorily redeemable because a departed director has elected to receive a cash payout are recorded as a liability. Accordingly, $0 and $246,000 was recorded in accrued expenses and other liabilities at December 31, 2009, and 2008, respectively.

Employee Stock Ownership Plan

The Mid-America Apartment Communities, Inc. Employee Stock Ownership Plan, or ESOP, is a non-contributory stock bonus plan that satisfies the requirements of Section 401(a) of the Internal Revenue Code. Each employee of Mid-America is eligible to participate in the ESOP after completing one year of service with Mid-America. Participants' ESOP accounts will be 100% vested after three years of continuous service, with no vesting prior to that time. Mid-America contributed 22,500 shares of common stock to the ESOP upon conclusion of the initial offering. During 2008 and 2007, Mid-America contributed approximately $991,000 and $876,000, respectively, to the ESOP which purchased an additional 21,822 shares and 16,613 shares of common stock with weighted-average grant date fair values of $45.41 and $52.75, respectively. Mid-America did not contribute to the ESOP during 2009.

Restricted Stock and Stock Option Plan

Mid-America adopted the 1994 Restricted Stock and Stock Option Plan, or 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, or Options, or grants of restricted shares of common stock, or Restricted Stock. The Plan also allow(ed) Mid-America 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, Mid-America 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. Mid-America 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, Mid-America will pay bonuses to these employees equal to 3% of the original note balance on

F-33

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

11. EMPLOYEE BENEFIT PLANS  – (continued)

each anniversary date of the advance, limited to 15% of the aggregate purchase price of the shares and units. In March of 2002, Mid-America 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 Mid-America. Mid-America 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 Mid-America.

As of December 31, 2009, Mid-America had one advance outstanding relating to the Plan totaling approximately $35,000, which is recorded in other assets in the accompanying consolidated balance sheets. The $35,000 advance at December 31, 2009, is to one former executive officer, has an interest rate of 6.4% and matures in May 2010.

12. EARNINGS FROM DISCONTINUED OPERATIONS

The four communities that Mid-America sold in 2007, along with the three communities that Mid-America sold in 2009, have been classified as discontinued operations in the Consolidated Statements of Operations. The following is a summary of earnings from discontinued operations for the three years ended December 31, 2009, (dollars in thousands):

	2009		2008			2007
Revenues:
Rental revenues	$	3,097	$	5,362		$	7,424
Other revenues		130		274			390
Total revenues		3,227		5,636			7,814
Expenses:
Property operating expenses		1,920		3,130			3,919
Depreciation and amortization		—		706			1,517
Other non-property income		—		—			(1	)
Interest expense		73		488			1,133
Income on debt extinguishment		—		—			—
Total expenses		1,993		4,324			6,568
Earnings from discontinued operations before gain on sale and settlement proceeds		1,234		1,312			1,246
Gain (loss) on sale		4,649		(120	)		9,164
Earnings from discontinued operations	$	5,883	$	1,192		$	10,410

13. RELATED PARTY TRANSACTIONS

Pursuant to management contracts with Mid-America’s joint ventures, Mid-America manages the operations of the joint venture apartment communities for a fee of 4% of the revenues of the joint venture. Mid-America received approximately $293,000, $206,000 and $34,000 as management fees from the joint ventures in 2009, 2008, and 2007, respectively. Also in 2009 and 2008, Mid-America received approximately $83,000 and $50,000, respectively of acquisition fees, $245,000 and $185,000, respectively in asset management fees and $17,000 and $22,000, respectively in construction management fees from our joint ventures. No such fees were received in 2007.

Mid-America has an advance to one former executive officer through the 1994 Plan as discussed in Note 11.

F-34

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

14. SEGMENT INFORMATION

At December 31, 2009, Mid-America owned or had an ownership interest in 147 multifamily apartment communities in 13 different states from which we derive all significant sources of earnings and operating cash flows. Mid-America’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 Mid-America. Mid-America’s senior management 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 Mid-America’s return criteria and long term investment goals. Mid-America defines each of our multifamily communities as an individual operating segment. We have also determined that all of our communities have similar economic characteristics and 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.

15. SUBSEQUENT EVENTS

Dispositions

On January 28, 2010, Mid-America Apartments, LP sold Legacy at Western Oaks to Mid-America Multifamily Fund II, LLC, one of our joint ventures. For tax purposes, this transaction was considered a contribution.

16. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

(Dollars in thousands except per share data)

	Year Ended December 31, 2009
	First			Second			Third			Fourth
Total operating revenues	$	93,664		$	94,562		$	94,999		$	95,319
Income from continuing operations before non-operating items	$	25,084		$	24,526		$	21,749		$	21,971
Interest expense	$	(14,229	)	$	(14,472	)	$	(14,371	)	$	(14,022	)
Net casualty (loss) gains and other settlement proceeds	$	(144	)	$	—		$	(109	)	$	285
(Loss) income from real estate joint ventures	$	(196	)	$	(156	)	$	(288	)	$	(176	)
Discontinued operations:
Income (loss) from discontinued operations before gain (loss) on sale	$	421		$	326		$	311		$	176
(Loss) gain on sale of discontinued operations	$	1,432		$	1,155		$	13		$	2,049
Consolidated net income	$	11,845		$	10,718		$	6,878		$	9,780
Net income attributable to noncontrolling interest	$	(706	)	$	(570	)	$	(260	)	$	(474	)
Net income attributable to Mid-America Apartment Communities, Inc.	$	11,139		$	10,148		$	6,618		$	9,306
Net income available for common shareholders	$	7,923		$	6,931		$	3,402		$	6,090
Per share:
Net income available per common share – basic	$	0.28		$	0.25		$	0.12		$	0.21
Net income available per common share – diluted	$	0.28		$	0.25		$	0.12		$	0.21
Dividend paid	$	0.615		$	0.615		$	0.615		$	0.615

F-35

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

16. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)  – (continued)

	Year Ended December 31, 2008
	First			Second			Third			Fourth
Total operating revenues	$	90,777		$	91,462		$	93,820		$	93,952
Income from continuing operations before non-operating items	$	24,753		$	24,258		$	23,046		$	23,840
Interest expense	$	(16,205	)	$	(15,035	)	$	(15,039	)	$	(15,731	)
Net casualty (loss) gains and other settlement proceeds	$	128		$	416		$	(1,131	)	$	340
(Loss) income from real estate joint ventures	$	(83	)	$	(199	)	$	(274	)	$	(288	)
Discontinued operations:
Income (loss) from discontinued operations before gain (loss) on sale	$	200		$	148		$	386		$	578
(Loss) gain on sale of discontinued operations	$	(59	)	$	(61	)	$	—		$	—
Consolidated net income	$	8,211		$	9,157		$	6,514		$	8,189
Net income attributable to noncontrolling interest	$	(532	)	$	(513	)	$	(321	)	$	(456	)
Net income attributable to Mid-America Apartment Communities, Inc.	$	7,679		$	8,644		$	6,193		$	7,733
Net income available for common shareholders	$	4,463		$	5,427		$	2,977		$	4,517
Per share:
Net income available per common share – basic	$	0.17		$	0.20		$	0.11		$	0.16
Net income available per common share – diluted	$	0.17		$	0.20		$	0.11		$	0.16
Dividend paid	$	0.615		$	0.615		$	0.615		$	0.615

Some of the financial data in the tables above differ from the values as originally reported in their respective Form 10-Qs or Form 10-Ks due to the reclassification of certain properties as discontinued operations and the reclassification of certain expenses related to a bulk cable program which had been previously netted in revenues.

F-36

MID-AMERICA APARTMENT COMMUNITIES, INC.
  
Notes to Consolidated Financial Statements
Years ended December 31, 2009, 2008, and 2007

16. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)  – (continued)

A reconciliation of the affected financial data is below (in thousands):

	Values as Originally Reported			Held For Sale			Bulk Cable Reclass		Values as Reported at December 31, 2009
First Quarter 2009
Total operating revenues	$	93,600		$	—		$	64	$	93,664
Second Quarter 2009
Total operating revenues		94,433			—			129		94,562
Third Quarter 2009
Total operating revenues		94,524			—			475		94,999
First Quarter 2008
Total operating revenues		92,144			(1,395	)		28		90,777
Income from continuing operations before non-operating items		25,082			(329	)		—		24,753
Interest expense		(16,334	)		129			—		(16,205	)
Discontinued operations:
Income (loss) from discontinued operations before gain (loss) on sale		—			200			—		200
Second Quarter 2008
Total operating revenues		92,834			(1,398	)		26		91,462
Income from continuing operations before non-operating items		24,516			(258	)		—		24,258
Interest expense		(15,145	)		110			—		(15,035	)
Discontinued operations:
Income (loss) from discontinued operations before gain (loss) on sale		—			148			—		148
Third Quarter 2008
Total operating revenues		93,473			319			28		93,820
Income from continuing operations before non-operating items		22,887			159			—		23,046
Interest expense		(15,004	)		(35	)		—		(15,039	)
Discontinued operations:
Income (loss) from discontinued operations before gain (loss) on sale		510			(124	)		—		386
Fourth Quarter 2008(1)
Total operating revenues		93,874			—			78		93,952
Income from continuing operations before non-operating items		23,697			143			—		23,840
Interest expense		(15,654	)		(77	)		—		(15,731	)
Discontinued operations:
Income (loss) from discontinued operations before gain (loss) on sale		644			(66	)		—		578

(1) As originally reported in the registrant’s Form 8-K filed on February 5, 2009. In the fourth quarter of 2008, a property which had previously been classified as held for sale was removed from such classification. As a result of the adjustments to remove the property from discontinued operations, some line item values not affecting net income were misadjusted between the third and fourth quarters of 2008. The adjustment did not impact the full year 2008 values.

F-37

Mid-America Apartment Communities, Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2009
(Dollars in thousands)

Property	Location		Encumbrances			Initial Cost				Cost Capitalized Subsequent to Acquisition					Gross Amount Carried at December 31, 2009(21)				Total		Accumulated Depreciation			Net		Date of Construction		Life Used to Compute Depreciation in Latest Income Statement(22)
						Land		Buildings and Fixtures		Land			Buildings and Fixtures		Land		Buildings and Fixtures
Eagle Ridge		Birmingham, AL		—	(1)	$	851	$	7,667	$	—		$	2,700	$	851	$	10,367	$	11,218	$	(4,298	)	$	6,920		1986		1-40
Abbington Place		Huntsville, AL		—	(1)		524		4,724		—			1,764		524		6,488		7,012		(2,994	)		4,018		1987		1-40
Paddock Club Huntsville		Huntsville, AL		—	(1)		909		10,152		830			11,046		1,739		21,198		22,937		(7,823	)		15,114		1989/98		1-40
Paddock Club Montgomery		Montgomery, AL		—	(1)		965		13,190		—			1,148		965		14,338		15,303		(4,700	)		10,603		1999		1-40
Calais Forest		Little Rock, AR		—	(1)		1,026		9,244		—			5,163		1,026		14,407		15,433		(6,820	)		8,613		1987		1-40
Napa Valley		Little Rock, AR		—	(1)		960		8,642		—			2,498		960		11,140		12,100		(5,317	)		6,783		1984		1-40
Westside Creek I & II		Little Rock, AR		—	(1)		1,270		11,463		1			3,285		1,271		14,748		16,019		(6,537	)		9,482		1984/86		1-40
Edge at Lyon’s Gate		Phoenix, AZ		—			7,901		27,577		—			267		7,901		27,844		35,745		(1,716	)		34,029		2007		1-40
Talus Ranch		Phoenix, AZ		—			12,741		49,636		—			556		12,741		50,192		62,933		(7,288	)		55,645		2005		1-40
Sky View Ranch		Gilbert, AZ		—			2,668		14,832		—			171		2,668		15,003		17,671		(542	)		17,129		2007		1-40
Tiffany Oaks		Altamonte Springs, FL		—	(1)		1,024		9,219		—			4,559		1,024		13,778		14,802		(6,603	)		8,199		1985		1-40
Marsh Oaks		Atlantic Beach, FL		—	(1)		244		2,829		—			1,537		244		4,366		4,610		(2,396	)		2,214		1986		1-40
Indigo Point		Brandon, FL		—			1,167		10,500		—			2,690		1,167		13,190		14,357		(4,798	)		9,559		1989		1-40
Paddock Club Brandon		Brandon, FL		—	(2)		2,896		26,111		—			1,943		2,896		28,054		30,950		(11,213	)		19,737		1997/99		1-40
Preserve at Coral Square		Coral Springs, FL		—	(6)		9,600		41,206		—			2,554		9,600		43,760		53,360		(9,239	)		44,121		1996		1-40
Anatole		Daytona Beach, FL		7,000	(9)		1,227		5,879		—			2,468		1,227		8,347		9,574		(4,228	)		5,346		1986		1-40
Paddock Club Gainesville		Gainesville, FL		—	(2)		1,800		15,879		—			1,052		1,800		16,931		18,731		(5,347	)		13,384		1999		1-40
Cooper’s Hawk		Jacksonville, FL		—	(2)		854		7,500		—			2,256		854		9,756		10,610		(5,112	)		5,498		1987		1-40
Hunter’s Ridge at Deerwood		Jacksonville, FL		—	(7)		1,533		13,835		—			4,331		1,533		18,166		19,699		(7,759	)		11,940		1987		1-40
Lakeside		Jacksonville, FL		—	(1)		1,431		12,883		(1	)		6,940		1,430		19,823		21,253		(10,792	)		10,461		1985		1-40
Lighthouse at Fleming Island		Jacksonville, FL		—	(1)		4,047		36,431		—			1,785		4,047		38,216		42,263		(9,404	)		32,859		2003		1-40
Paddock Club Jacksonville		Jacksonville, FL		—	(1)		2,294		20,750		(2	)		2,456		2,292		23,206		25,498		(9,476	)		16,022		1989/96		1-40
Paddock Club Mandarin		Jacksonville, FL		—	(2)		1,410		14,967		1			1,396		1,411		16,363		17,774		(5,074	)		12,700		1998		1-40
St. Augustine		Jacksonville, FL		13,235	(19)		2,858		6,475		(1	)		18,800		2,857		25,275		28,132		(6,767	)		21,365		1987		1-40
Woodbridge at the Lake		Jacksonville, FL		—	(2)		645		5,804		—			3,816		645		9,620		10,265		(5,104	)		5,161		1985		1-40
Woodhollow		Jacksonville, FL		—	(1)		1,686		15,179		(8	)		5,866		1,678		21,045		22,723		(10,200	)		12,523		1986		1-40
Paddock Club Lakeland		Lakeland, FL		—	(1)		2,254		20,452		(1,033	)		5,598		1,221		26,050		27,271		(10,939	)		16,332		1988/90		1-40
Savannahs at James Landing		Melbourne, FL		—	(2)		582		7,868		—			4,158		582		12,026		12,608		(6,308	)		6,300		1990		1-40
Paddock Park Ocala		Ocala, FL		6,805	(2)(3)		2,284		21,970		—			3,124		2,284		25,094		27,378		(11,017	)		16,361		1986/88		1-40
Park Crest at Innisbrook		Palm Harbor, FL		—			3,888		27,112		—			97		3,888		27,209		31,097		(472	)		30,625		2000		1-40
Paddock Club Panama City		Panama City, FL		—	(2)		898		14,276		(5	)		1,933		893		16,209		17,102		(5,764	)		11,338		2000		1-40
Paddock Club Tallahassee		Tallahassee, FL		—	(2)		530		4,805		950			11,278		1,480		16,083		17,563		(6,823	)		10,740		1990/95		1-40
Belmere		Tampa, FL		—	(1)		851		7,667		1			4,107		852		11,774		12,626		(6,443	)		6,183		1984		1-40
Links at Carrollwood		Tampa, FL		—	(1)		817		7,355		110			4,061		927		11,416		12,343		(5,012	)		7,331		1980		1-40
Village Oaks		Tampa, FL		—			2,714		19,137		59			683		2,773		19,820		22,593		(1,239	)		21,354		2007		1-40

F-38

Property	Location		Encumbrances			Initial Cost				Cost Capitalized Subsequent to Acquisition					Gross Amount Carried at December 31, 2009(21)				Total		Accumulated Depreciation			Net		Date of Construction		Life Used to Compute Depreciation in Latest Income Statement(22)
						Land		Buildings and Fixtures		Land			Buildings and Fixtures		Land		Buildings and Fixtures
High Ridge		Athens, GA		—	(1)		884		7,958		—			1,860		884		9,818		10,702		(4,096	)		6,606		1987		1-40
Sanctuary at Oglethorpe		Atlanta, GA		23,500			6,875		31,859		—			898		6,875		32,757		39,632		(1,971	)		37,661		1994		1-40
Bradford Pointe		Augusta, GA		—	(4)		772		6,949		—			1,907		772		8,856		9,628		(3,855	)		5,773		1986		1-40
Shenandoah Ridge		Augusta, GA		—	(1)		650		5,850		8			4,007		658		9,857		10,515		(5,504	)		5,011		1982		1-40
Westbury Creek		Augusta, GA		3,480	(14)		400		3,626		—			1,090		400		4,716		5,116		(2,177	)		2,939		1984		1-40
Fountain Lake		Brunswick, GA		—	(4)		502		4,551		—			1,738		502		6,289		6,791		(2,936	)		3,855		1983		1-40
Park Walk		College Park, GA		—	(1)		536		4,859		—			1,087		536		5,946		6,482		(2,606	)		3,876		1985		1-40
Whisperwood		Columbus, GA		—	(1)		4,290		42,722		(2	)		11,260		4,288		53,982		58,270		(22,528	)		35,742		1980/82/ 84/86/98		1-40
Willow Creek		Columbus, GA		—	(1)		614		5,523		—			3,628		614		9,151		9,765		(4,195	)		5,570		1971/77		1-40
Terraces at Fieldstone		Conyers, GA		—	(1)		1,284		15,819		—			1,046		1,284		16,865		18,149		(5,133	)		13,016		1999		1-40
Prescott		Duluth, GA		—	(5)		3,840		24,876		—			899		3,840		25,775		29,615		(5,780	)		23,835		2001		1-40
Lanier		Gainesville, GA		18,363			3,560		23,248		—			1,046		3,560		24,294		27,854		(4,899	)		22,955		1998		1-40
Lake Club		Gainesville, GA		—	(5)		3,150		18,997		—			475		3,150		19,472		22,622		(3,907	)		18,715		2001		1-40
Whispering Pines		LaGrange, GA		—	(4)		823		7,470		(2	)		2,176		821		9,646		10,467		(4,285	)		6,182		1982/84		1-40
Westbury Springs		Lilburn, GA		—	(1)		665		6,038		—			1,665		665		7,703		8,368		(3,484	)		4,884		1983		1-40
Austin Chase		Macon, GA		—	(7)		1,409		12,687		—			1,623		1,409		14,310		15,719		(5,552	)		10,167		1996		1-40
The Vistas		Macon, GA		—	(1)		595		5,403		—			1,419		595		6,822		7,417		(3,104	)		4,313		1985		1-40
Walden Run		McDonough, GA		—	(1)		1,281		11,935		—			1,033		1,281		12,968		14,249		(3,260	)		10,989		1997		1-40
Georgetown Grove		Savannah, GA		—			1,288		11,579		—			1,406		1,288		12,985		14,273		(5,279	)		8,994		1997		1-40
Oaks at Wilmington Island		Savannah, GA		—	(6)		2,910		26,337		—			1,079		2,910		27,416		30,326		(4,028	)		26,298		1999		1-40
Wildwood		Thomasville, GA		—	(1)		438		3,971		371			5,189		809		9,160		9,969		(4,126	)		5,843		1980/84		1-40
Hidden Lake		Union City, GA		—	(1)		1,296		11,715		—			3,596		1,296		15,311		16,607		(6,508	)		10,099		1985/87		1-40
Three Oaks		Valdosta, GA		—	(1)		462		4,188		459			6,330		921		10,518		11,439		(4,786	)		6,653		1983/84		1-40
Huntington Chase		Warner Robins, GA		—			1,160		10,437		—			1,242		1,160		11,679		12,839		(4,127	)		8,712		1997		1-40
Southland Station		Warner Robins, GA		—	(1)		1,470		13,284		—			2,635		1,470		15,919		17,389		(7,064	)		10,325		1987/90		1-40
Terraces at Townelake		Woodstock, GA		—	(1)		1,331		11,918		1,688			18,915		3,019		30,833		33,852		(11,333	)		22,519		1999		1-40
Fairways at Hartland		Bowling Green, KY		—	(1)		1,038		9,342		—			2,508		1,038		11,850		12,888		(5,175	)		7,713		1996		1-40
Paddock Club Florence		Florence, KY		9,295			1,209		10,969		—			2,260		1,209		13,229		14,438		(5,605	)		8,833		1994		1-40
Grand Reserve Lexington		Lexington, KY		—	(1)		2,024		31,525		—			522		2,024		32,047		34,071		(9,067	)		25,004		2000		1-40
Lakepointe		Lexington, KY		—	(1)		411		3,699		—			1,541		411		5,240		5,651		(2,894	)		2,757		1986		1-40
Mansion, The		Lexington, KY		—	(1)		694		6,242		—			2,258		694		8,500		9,194		(4,558	)		4,636		1989		1-40
Village, The		Lexington, KY		—	(1)		900		8,097		—			3,230		900		11,327		12,227		(6,129	)		6,098		1989		1-40
Stonemill Village		Louisville, KY		—	(1)		1,169		10,518		—			7,287		1,169		17,805		18,974		(8,434	)		10,540		1985		1-40
Crosswinds		Jackson, MS		—	(1)		1,535		13,826		—			3,464		1,535		17,290		18,825		(8,368	)		10,457		1988/90		1-40
Pear Orchard		Jackson, MS		—	(1)		1,352		12,168		(1	)		5,152		1,351		17,320		18,671		(9,042	)		9,629		1985		1-40
Reflection Pointe		Jackson, MS		5,880	(10)		710		8,770		138			4,992		848		13,762		14,610		(6,929	)		7,681		1986		1-40
Lakeshore Landing		Ridgeland, MS		—	(1)		676		6,470		—			953		676		7,423		8,099		(1,926	)		6,173		1974		1-40
Savannah Creek		Southaven, MS		—	(1)		778		7,013		—			2,335		778		9,348		10,126		(4,664	)		5,462		1989		1-40
Sutton Place		Southaven, MS		—	(1)		894		8,053		—			2,792		894		10,845		11,739		(5,351	)		6,388		1991		1-40
Hermitage at Beechtree		Cary, NC		—	(1)		900		8,099		—			3,220		900		11,319		12,219		(4,991	)		7,228		1988		1-40
Waterford Forest		Cary, NC		—	(5)		4,000		20,957		—			993		4,000		21,950		25,950		(4,277	)		21,673		1996		1-40
Preserve at Brier Creek		Raleigh, NC		—	(1)		5,850		22,695		(19	)		21,711		5,831		44,406		50,237		(5,117	)		45,120		2002/07		1-40
Providence at Brier Creek		Raleigh, NC		—			4,695		30,052		—			209		4,695		30,261		34,956		(2,615	)		32,341		2007		1-40

F-39

Property	Location		Encumbrances			Initial Cost				Cost Capitalized Subsequent to Acquisition					Gross Amount Carried at December 31, 2009(21)				Total		Accumulated Depreciation			Net		Date of Construction		Life Used to Compute Depreciation in Latest Income Statement(22)
						Land		Buildings and Fixtures		Land			Buildings and Fixtures		Land		Buildings and Fixtures
Corners, The		Winston-Salem, NC		—	(2)		685		6,165		—			2,123		685		8,288		8,973		(4,691	)		4,282		1982		1-40
Fairways at Royal Oak		Cincinnati, OH		—	(1)		814		7,335		(12	)		2,402		802		9,737		10,539		(5,088	)		5,451		1988		1-40
Colony at South Park		Aiken, SC		—	(1)		862		8,005		—			872		862		8,877		9,739		(2,239	)		7,500		1989/91		1-40
Woodwinds		Aiken, SC		—	(1)		503		4,540		—			1,530		503		6,070		6,573		(2,757	)		3,816		1988		1-40
Tanglewood		Anderson, SC		—	(1)		427		3,853		—			2,281		427		6,134		6,561		(3,346	)		3,215		1980		1-40
Fairways, The		Columbia, SC		7,735	(11)		910		8,207		—			1,833		910		10,040		10,950		(5,268	)		5,682		1992		1-40
Paddock Club Columbia		Columbia, SC		—	(1)		1,840		16,560		—			2,788		1,840		19,348		21,188		(8,262	)		12,926		1989/95		1-40
Highland Ridge		Greenville, SC		—	(1)		482		4,337		—			1,709		482		6,046		6,528		(2,845	)		3,683		1984		1-40
Howell Commons		Greenville, SC		—	(1)		1,304		11,740		—			3,085		1,304		14,825		16,129		(6,770	)		9,359		1986/88		1-40
Paddock Club Greenville		Greenville, SC		—	(1)		1,200		10,800		—			1,483		1,200		12,283		13,483		(5,233	)		8,250		1996		1-40
Park Haywood		Greenville, SC		—	(1)		325		2,925		35			4,033		360		6,958		7,318		(3,861	)		3,457		1983		1-40
Spring Creek		Greenville, SC		—	(1)		597		5,374		(14	)		2,216		583		7,590		8,173		(3,872	)		4,301		1985		1-40
Runaway Bay		Mt. Pleasant, SC		8,365	(8)		1,085		7,269		—			4,889		1,085		12,158		13,243		(5,892	)		7,351		1988		1-40
Park Place		Spartanburg, SC		—	(1)		723		6,504		—			2,082		723		8,586		9,309		(3,979	)		5,330		1987		1-40
Farmington Village		Summerville, SC		15,200			2,800		26,947		—			172		2,800		27,119		29,919		(2,672	)		27,247		2007		1-40
Hamilton Pointe		Chattanooga, TN		—	(1)		1,131		10,861		—			1,261		1,131		12,122		13,253		(3,230	)		10,023		1989		1-40
Hidden Creek		Chattanooga, TN		—	(1)		972		9,201		—			992		972		10,193		11,165		(2,760	)		8,405		1987		1-40
Steeplechase		Chattanooga, TN		—	(1)		217		1,957		—			2,518		217		4,475		4,692		(2,478	)		2,214		1986		1-40
Windridge		Chattanooga, TN		5,465	(15)		817		7,416		—			2,556		817		9,972		10,789		(4,198	)		6,591		1984		1-40
Oaks, The		Jackson, TN		—	(1)		177		1,594		12			1,720		189		3,314		3,503		(1,830	)		1,673		1978		1-40
Post House Jackson		Jackson, TN		5,095			443		5,078		—			3,436		443		8,514		8,957		(3,842	)		5,115		1987		1-40
Post House North		Jackson, TN		3,375	(12)		381		4,299		(57	)		2,067		324		6,366		6,690		(3,397	)		3,293		1987		1-40
Bradford Chase		Jackson, TN		—	(1)		523		4,711		—			1,494		523		6,205		6,728		(3,315	)		3,413		1987		1-40
Woods at Post House		Jackson, TN		4,727			240		6,839		—			1,874		240		8,713		8,953		(4,903	)		4,050		1997		1-40
Cedar Mill		Memphis, TN		—	(1)		824		8,023		—			2,884		824		10,907		11,731		(2,901	)		8,830		1973/86		1-40
Greenbrook		Memphis, TN		—			2,100		24,468		25			21,162		2,125		45,630		47,755		(25,484	)		22,271		1974/78/ 83/86		1-40
Kirby Station		Memphis, TN		—	(1)		1,148		10,337		—			7,044		1,148		17,381		18,529		(7,496	)		11,033		1978		1-40
Lincoln on the Green		Memphis, TN		—	(1)		1,498		20,483		—			11,739		1,498		32,222		33,720		(14,900	)		18,820		1988/98		1-40
Park Estate		Memphis, TN		—			178		1,141		—			3,884		178		5,025		5,203		(3,435	)		1,768		1974		1-40
Reserve at Dexter Lake		Memphis, TN		—	(4)		1,260		16,043		2,147			34,206		3,407		50,249		53,656		(13,065	)		40,591		1999/01		1-40
Paddock Club Murfreesboro		Murfreesboro, TN		—	(1)		915		14,774		—			1,262		915		16,036		16,951		(4,861	)		12,090		1999		1-40
Brentwood Downs		Nashville, TN		—	(1)		1,193		10,739		(2	)		5,685		1,191		16,424		17,615		(7,392	)		10,223		1986		1-40
Grand View Nashville		Nashville, TN		—	(1)		2,963		33,673		—			2,241		2,963		35,914		38,877		(9,576	)		29,301		2001		1-40
Monthaven Park		Nashville, TN		—	(6)		2,736		29,556		—			2,597		2,736		32,153		34,889		(7,372	)		27,517		1999/01		1-40
Park at Hermitage		Nashville, TN		6,645	(16)		1,524		14,800		—			4,996		1,524		19,796		21,320		(10,281	)		11,039		1987		1-40
Northwood		Arlington, TX		—	(2)		886		8,278		—			1,002		886		9,280		10,166		(2,434	)		7,732		1980		1-40
Balcones Woods		Austin, TX		—	(2)		1,598		14,398		—			8,828		1,598		23,226		24,824		(9,812	)		15,012		1983		1-40
Grand Reserve at Sunset Valley		Austin, TX		—	(6)		3,150		11,868		—			2,065		3,150		13,933		17,083		(2,905	)		14,178		1996		1-40
Silverado		Austin, TX		—	(6)		2,900		24,810		—			62		2,900		24,872		27,772		(3,970	)		23,802		2003		1-40
Stassney Woods		Austin, TX		4,050	(17)		1,621		7,501		—			4,295		1,621		11,796		13,417		(6,316	)		7,101		1985		1-40
Travis Station		Austin, TX		3,585	(18)		2,282		6,169		(1	)		4,086		2,281		10,255		12,536		(5,184	)		7,352		1987		1-40
Woods, The		Austin, TX		—	(2)		1,405		13,083		—			2,566		1,405		15,649		17,054		(3,951	)		13,103		1977		1-40

F-40

Property	Location		Encumbrances			Initial Cost				Cost Capitalized Subsequent to Acquisition					Gross Amount Carried at December 31, 2009(21)				Total		Accumulated Depreciation			Net		Date of Construction		Life Used to Compute Depreciation in Latest Income Statement(22)
						Land		Buildings and Fixtures		Land			Buildings and Fixtures		Land		Buildings and Fixtures
Legacy at Western Oaks		Austin, TX		—			4,100		42,400		—			—		4,100		42,400		46,500		—			46,500		2001		1-40
Celery Stalk		Dallas, TX		—	(5)		1,463		13,165		(1	)		5,531		1,462		18,696		20,158		(10,475	)		9,683		1978		1-40
Courtyards at Campbell		Dallas, TX		—	(2)		988		8,893		—			2,499		988		11,392		12,380		(4,726	)		7,654		1986		1-40
Deer Run		Dallas, TX		—	(2)		1,252		11,271		—			3,228		1,252		14,499		15,751		(5,900	)		9,851		1985		1-40
Grand Courtyard		Dallas, TX		—	(6)		2,730		23,219		—			953		2,730		24,172		26,902		(3,957	)		22,945		2000		1-40
Lodge at Timberglen		Dallas, TX		—	(5)		825		7,422		(1	)		4,204		824		11,626		12,450		(6,450	)		6,000		1983		1-40
Watermark		Dallas, TX		—	(5)		960		14,839		—			686		960		15,525		16,485		(3,374	)		13,111		2002		1-40
Legacy Pines		Houston, TX		—	(2)		2,157		19,491		(15	)		2,185		2,142		21,676		23,818		(5,491	)		18,327		1999		1-40
Reserve at Woodwind Lakes		Houston, TX		14,191			1,968		20,718		—			1,626		1,968		22,344		24,312		(3,301	)		21,011		1999		1-40
Park Place (Houston)		Houston, TX		—			2,061		16,386		—			2,049		2,061		18,435		20,496		(2,195	)		18,301		1996		1-40
Ranchstone		Houston, TX		—	(6)		1,480		15,352		—			1,286		1,480		16,638		18,118		(2,012	)		16,106		1996		1-40
Cascade at Fall Creek		Humble, TX		—			3,230		20,308		—			262		3,230		20,570		23,800		(1,792	)		22,008		2007		1-40
Chalet at Fall Creek		Humble, TX		—	(6)		2,755		20,820		—			324		2,755		21,144		23,899		(2,535	)		21,364		2006		1-40
Westborough Crossing		Katy, TX		—	(5)		677		6,091		(1	)		2,959		676		9,050		9,726		(4,880	)		4,846		1984		1-40
Kenwood Club		Katy, TX		—	(2)		1,002		17,288		—			1,101		1,002		18,389		19,391		(5,950	)		13,441		2000		1-40
Lane at Towne Crossing		Mesquite, TX		—	(2)		1,311		12,254		(8	)		1,363		1,303		13,617		14,920		(3,603	)		11,317		1983		1-40
Highwood		Plano, TX		—			864		7,783		—			2,876		864		10,659		11,523		(4,382	)		7,141		1983		1-40
Los Rios Park		Plano, TX		—	(2)		3,273		29,483		—			1,834		3,273		31,317		34,590		(7,715	)		26,875		2000		1-40
Boulder Ridge		Roanoke, TX		—	(2)		3,382		27,930		—			2,844		3,382		30,774		34,156		(5,798	)		28,358		1999		1-40
Copper Ridge		Roanoke, TX		—			4,166		—		—			20,498		4,166		20,498		24,664		(468	)		24,196		2008		1-40
Stone Ranch at Westover Hills		San Antonio, TX		—			4,282		25,518		—			16		4,282		25,534		29,816		(158	)		29,658		2009		1-40
Cypresswood Court		Spring, TX		—	(5)		577		5,190		(1	)		2,253		576		7,443		8,019		(4,117	)		3,902		1984		1-40
Villages at Kirkwood		Stafford, TX		—	(6)		1,918		16,358		—			1,304		1,918		17,662		19,580		(3,775	)		15,805		1996		1-40
Green Tree Place		Woodlands, TX		—	(5)		539		4,850		—			2,062		539		6,912		7,451		(3,737	)		3,714		1984		1-40
Township		Hampton, VA		10,800	(13)		1,509		8,189		—			7,296		1,509		15,485		16,994		(6,177	)		10,817		1987		1-40
Total Properties			$	176,791		$	249,777	$	1,933,389	$	5,648		$	516,021	$	255,425	$	2,449,410	$	2,704,835	$	(788,260)		$	1,916,575
Land Held for Future Developments		Various				$	1,306	$	—	$	—		$	—	$	1,306	$	—	$	1,306	$	—		$	1,306		N/A		N/A
Commercial Properties		Various					—		2,769		—			14,690		—		17,459		17,459		(8,738	)		8,721		Various		1-40
Total Other						$	1,306	$	2,769	$	—		$	14,690	$	1,306	$	17,459	$	18,765	$	(8,738)		$	10,027
Total Real Estate Assets, net of Joint Ventures						$	251,083	$	1,936,158	$	5,648		$	530,711	$	256,731	$	2,466,869	$	2,723,600	$	(796,998)		$	1,926,602
																								$	—

F-41

(1) Encumbered by a $691.8 million FNMA facility, with $691.8 million available and $686.8 million outstanding with a variable interest rate of 0.75% on which there exists in combination with the FNMA facility mentioned in note (2) eighteen interest rate swap agreements totaling $640 million at an average rate of 5.37% and three interest rate caps totalling $75 million at an average rate of 4.67% at December 31, 2009.

(2) Encumbered by a $243.2 million FNMA facility, with $243.2 million available and $208.6 million outstanding with a variable interest rate of 0.77% on which there exists interest rate swaps and caps as mentioned in note (1) at December 31, 2009.

(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 6.00% which terminates on October 24, 2012.

(4) Encumbered by a credit line with AmSouth Bank, with no outstanding balance at December 31, 2009.

(5) Encumbered by a $100 million Freddie Mac facility, with $100 million available and an outstanding balance of $100 million and a variable interest rate of 0.78% on which there exists five interest rate swap agreements totaling $83 million at an average rate of 5.41% at December 31, 2009.

(6) Encumbered by a $200 million Freddie Mac facility, with $198.2 million available and an outstanding balance of $198.2 million and a variable interest rate of 0.73% on which there exists eight interest rate swap agreements totaling $134 million at an average rate of 5.18% and a $15 million interest rate cap of 5% at December 31, 2009.

(7) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $11.2 million at December 31, 2009, and an average interest rate of 5.265%.

(8) Encumbered by $8.4 million in bonds on which there exists a $8.4 million interest rate swap agreement fixed at 4.73% and maturing on September 15, 2010.

(9) Encumbered by $7.0 million in bonds on which there exists a $7.0 million interest rate swap agreement fixed at 4.42% and maturing on October 15, 2012.

(10) Encumbered by $5.9 million in bonds on which there exists a $5.9 million interest rate cap of 6.00% which terminates on October 31, 2012.

(11) Encumbered by $7.7 million in bonds on which there exists a $7.7 million interest rate cap of 6.00% which terminates on October 31, 2012.

(12) Encumbered by $3.4 million in bonds on which there exists a $3.4 million interest rate cap of 6.00% which terminates on October 31, 2012.

(13) Encumbered by $10.8 million in bonds on which there exists a $10.8 million interest rate swap agreement fixed at 4.42% and maturing on October 15, 2012.

(14) Encumbered by $3.5 million in bonds $0.5 million having a variable rate of 1.224% and $3.0 million with a variable rate of 1.035% on which there exists a $3.0 million interest rate cap of 6.00% which terminates on May 31, 2013.

(15) Encumbered by $5.5 million in bonds $0.5 million having a variable rate of 1.224% and $5.0 million with a variable rate of 1.035% on which there exists a $5.0 million interest rate cap of 6.00% which terminates on May 31, 2013.

(16) Encumbered by $6.6 million in bonds on which there exists a $6.6 million interest rate cap of 6.00% which terminates on November 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 0.87% which there exists a $6.2 million and a $11.7 million interest rate cap of 6.50% and 5.00% respectively which terminates on March 1, 2011 and March 1, 2014 respectively.

(17) Encumbered by $4.1 million in bonds on which there exists a $4.1 million interest rate cap of 6.00% which terminates on November 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 0.87% which there exists a $6.2 million and a $11.7 million interest rate cap of 6.50% and 5.00% respectively which terminates on March 1, 2011 and March 1, 2014 respectively.

(18) Encumbered by $3.6 million in bonds on which there exists a $3.6 million interest rate cap of 6.00% which terminates on November 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 0.87% which there exists a $6.2 million and a $11.7 million interest rate cap of 6.50% and 5.00% respectively which terminates on March 1, 2011 and March 1, 2014 respectively.

F-42

(19) Phase I of St. Augustine is encumbered by $13.2 million in bonds on which there exists a $13.2 million interest rate cap of 6.00% which terminates on March 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 0.87% which there exists a $6.2 million and a $11.7 million interest rate cap of 6.50% and 5.00% respectively which terminates on March 1, 2011 and March 1, 2014 respectively.

(20) The aggregate cost for Federal income tax purposes was approximately $2,640 million at December 31, 2009. The aggregate cost for book purposes exceeds the total gross amount of real estate assets for Federal income tax 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, 5 years for furniture, fixtures and equipment, and 6 months for fair market value of leases.

F-43

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,
Dollars in thousands	2009			2008			2007
Real estate investments:
Balance at beginning of year	$	2,545,984		$	2,342,962		$	2,214,814
Acquisitions		125,299			156,305			88,601
Improvement and development		53,784			84,550			61,004
Assets held for sale		—			(34,772	)		—
Disposition of real estate assets(1)		(1,467	)		(3,061	)		(21,457	)
Balance at end of year	$	2,723,600		$	2,545,984		$	2,342,962
Accumulated depreciation:
Balance at beginning of year	$	701,477		$	622,577		$	548,993
Depreciation		95,756			90,611			86,042
Assets held for sale		—			(10,768	)		—
Disposition of real estate assets(1)		(235	)		(943	)		(12,458	)
Balance at end of year	$	796,998		$	701,477		$	622,577

The Company's consolidated balance sheet at December 31, 2009, 2008, and 2007, includes accumulated depreciation of $8,738, $7,423, and $6,213, respectively, in the caption “Commercial properties, net”.

(1) Includes assets sold, casualty losses, and removal of certain fully depreciated assets.

See accompanying reports of independent registered public accounting firms.

F-44