UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
February 14, 2002
Date of Report (Date of earliest event reported)
MID-AMERICA APARTMENT COMMUNITIES, INC.
(Exact Name of Registrant as Specified in Charter)
TENNESSEE 1-12762 62-1543819
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
6584 POPLAR AVENUE, SUITE 300
MEMPHIS, TENNEESSEE 38138
(Address of principal executive offices)
(901) 682-6600
(Registrant's telephone number, including area code)
(Former name or address, if changed since last report)
ITEM 5. Other Events and Regulation FD Disclosure
Mid-America Apartment Communities, Inc.
A self-managed Equity REIT
Press Release, 4th Quarter Earnings 2001
FROM: Simon R. C. Wadsworth, CFO
SUBJECT: Fourth Quarter and 2001 Earnings Meet Expectations
DATE: February 14, 2002
o Fourth quarter FFO of $0.70 per share; in line with forecast
o Leasing activity slows during fourth quarter; improvement in 2002 expected
o Balance sheet strengthening; positioning for growth through acquisitions
Memphis, TN. Mid-America Apartment Communities, Inc. (NYSE: MAA) announced today
Funds From Operations ("FFO") for the fourth quarter ended December 31, 2001
were $14.4 million, $0.70 per share. For the full year 2001 FFO was reported to
be $57.2 million, $2.80 per share. These results are in line with earnings
estimates.
Net income before extraordinary items for the fourth quarter was 14 cents per
common share, an increase from 12 cents per common share for the comparable
prior year period. For the full year 2001 net income before extraordinary items
was 78 cents per common share versus 79 cents per common share for all of 2000.
After extraordinary items, the Company reported net income of 12 cents per
common share for the quarter and 72 cents per common share for the full year
2001.
Eric Bolton, President and CEO said, "We anticipated a reduced level of leasing
traffic and a resulting decline in occupancy during the fourth quarter. This
traditionally slow leasing quarter was further pressured by a down economy, a
resilient home buying environment and an over-supply of new construction in a
few markets. Leasing concessions and vacancy loss caused revenue for our same
store group of properties to fall by 0.7% during the fourth quarter, compared to
the same period of the prior year. We expect that during the second quarter of
this year, the stronger spring leasing season will generate improved leasing
traffic and occupancy levels. Our efforts to lower resident move-outs during
this slower leasing period continued to show positive results. Unit turnover
declined 0.4% during the fourth quarter. Absent any further deterioration in the
economy, we expect to see a steady improvement in occupancy over the course of
2002."
"Our property management team continues to do an excellent job in limiting the
growth of operating expenses. As a result of new internet-based operating
programs and support systems, as well as a continuation of our utility cost
management and billing initiatives, total operating expenses on a same store
basis were flat (0% increase) as compared to the same period of the prior year.
Our properties are in excellent physical condition and continue to capture
numerous civic and industry awards. Recurring capital spending on our properties
totaled $11.6 million or $375 per unit in 2001, down from $12.7 million or $410
per unit in 2000. We forecast recurring capital spending to remain at this lower
level in 2002."
"Our balance sheet continues to strengthen, steadily gaining additional capacity
as we complete funding and lease-up of our construction pipeline," said Simon
Wadsworth, Executive Vice-President and CFO. "In addition, with over $200
million of our debt refinanced or renegotiated in 2001, we only have $50 million
of financing scheduled for 2002. At year end 2001 our average debt cost was
6.3%, down from 7.2% a year ago. Our Board voted to hold our dividend payout at
its present level given the anticipated softness in property revenues headed
into 2002. We are comfortable with our current payout level, especially given
our growing balance sheet capacity."
"Our current FFO forecast for 2002 calls for $2.80 per share, with a range of
$2.77 to $2.82. The key variables are an anticipated strengthening in the
economy and markets over the second half of the year, movements in interest
rates and the level of anticipated increases in both property insurance and real
estate tax expenses. On a quarterly basis, our overall FFO 2002 forecast is
$0.67 per share for Q1, $0.70 for Q2, $0.71 for Q3 and $0.72 for Q4. We have
assumed growths of 1.6% in same store revenues, 3.5% in operating expenses and
0.5% in same store NOI. We have included no property acquisitions in our 2002
forecast, although we believe that there is an increasing possibility that there
will be some."
Bolton added, "Our team of experienced multifamily real estate operators and
high-quality properties continue to perform in a strong, steady and reasonably
predictable fashion in this weak economy. Our development pipeline is fully
funded and construction will be completed this quarter. Our capital has been
prudently deployed; we have avoided the mistakes made in chasing hi-tech start
up ventures and the accompanying large capital write-offs which accompanied many
of these. Our balance sheet is strengthening and our dividend is secure. While
the current operating environment and market conditions are expected to dampen
earnings over the first part of this year, we believe that opportunities will be
increasing to create more value for our shareholders through attractive
acquisitions and redevelopment of undervalued properties."
MAA is a self-administered, self-managed apartment-only real estate investment
trust which owns or has ownership interest in 33,459 apartment units including
77 units in the development pipeline throughout the southeast and southcentral
U.S. For further details, please refer to our website at www.maac.net or contact
Simon R. C. Wadsworth at (901) 682-6668, ext. 105. 6584 Poplar Ave., Suite 300,
Memphis, TN 38138.
Certain matters in this press release may constitute forward-looking statements
within the meaning of Section 27-A of the Securities Act of 1933 and Section 21E
of the Securities and Exchange Act of 1934. Such statements include, but are not
limited to, statements made about anticipated growth rate of revenues, expenses,
and net operating income at Mid-America's properties, anticipated lease-up (and
rental concessions) at development properties, costs remaining to complete
development properties, planned acquisitions, planned dispositions,
developments, and property financing. Actual results and the timing of certain
events could differ materially from those projected in or contemplated by the
forward-looking statements due to a number of factors, including a downturn in
general economic conditions or the capital markets, competitive factors
including overbuilding or other supply/demand imbalances in some or all of our
markets, construction delays that could cause new and add-on apartment units to
reach the market later than anticipated, changes in interest rates and other
items that are difficult to control such as insurance rates, increases in real
estate taxes in numerous markets, as well as the other general risks inherent in
the apartment and real estate businesses. Reference is hereby made to the
filings of Mid-America Apartment Communities, Inc., with the Securities and
Exchange Commission, including quarterly reports on Form 10-Q, reports on Form
8-K, and its annual report on Form 10-K, particularly including the risk factors
contained in the latter filing.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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In thousands except per share data
Three months ended December 31, Twelve months ended December 31,
---------------------------------- ----------------------------------
2001 2000 2001 2000
--------------- ---------------- ---------------- ----------------
Property revenues $ 55,757 $ 55,979 $ 226,270 $ 222,532
Property operating expenses 20,886 20,844 84,584 83,446
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Net operating income 34,871 35,135 141,686 139,086
Interest and other non-property income 323 503 1,310 1,526
Management and development income, net 186 190 755 739
FFO from real estate joint ventures 203 330 972 1,053
Property management expenses 2,681 2,298 10,204 9,509
General & adminstrative 1,452 1,302 5,879 5,317
Interest expense 12,272 13,192 52,598 50,736
Gain on disposition of non-depreciable assets - - 229 -
Preferred dividend distribution 4,028 4,027 16,113 16,114
Depreciation and amortization non-real estate assets 113 155 594 514
Amortization of deferred financing costs 657 606 2,352 2,758
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Funds from operations 14,380 14,578 57,212 57,456
Depreciation and amortization 12,931 12,834 51,457 51,330
Joint venture depreciation adjustment included in FFO 325 308 1,268 1,210
Gain on disposition of non-depreciable assets included in FFO - - 229 -
Preferred dividend distribution add back (4,028) (4,027) (16,113) (16,114)
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Income before gain on disposition of assets, minority interest
and extraordinary item 5,152 5,463 20,371 21,030
Net gain on disposition of assets 1,869 1,083 11,933 11,587
Minority interest in operating partnership income (469) (346) (2,573) (2,626)
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Income before extraordinary item 6,552 6,200 29,731 29,991
Ex item - Loss on debt extinguishment , net of MI 407 - 1,033 204
Preferred dividend distribution 4,028 4,027 16,113 16,114
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Net income available for common shareholders $ 2,117 $ 2,173 $ 12,585 $ 13,673
====================================================================================================================================
Weighted average common shares - Diluted 17,568 17,512 17,532 17,597
Weighted average common shares and units - Diluted 20,489 20,458 20,464 20,551
Funds from operations per share and units - Diluted $ 0.70 $ 0.71 $ 2.80 $ 2.80
Net income available for common shareholders
before extraordinary items per share - Diluted $ 0.14 $ 0.12 $ 0.78 $ 0.79
Net income available for common shareholders
after extraordinary items per share - Diluted $ 0.12 $ 0.12 $ 0.72 $ 0.78
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CONSOLIDATED BALANCE SHEETS
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In thousands
December 31, December 31,
2001 2000
---------------- ----------------
Assets
Real estate assets, net $1,216,933 $1,244,475
Cash and cash equivalents, including restricted cash 23,432 33,567
Other assets 23,123 25,729
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Total assets $1,263,488 $1,303,771
====================================================================================================================================
Liabilities
Bonds and notes payable $ 779,664 $ 781,089
Other liabilities 41,564 37,306
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Total liabilities 821,228 818,395
Shareholders' equity and minority interest 442,260 485,376
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Total liabilities & shareholders' equity $1,263,488 $1,303,771
====================================================================================================================================
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OPERATING RESULTS
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Dollars and shares in thousands except per share data
ROA Annualized Trailing
4Q01 4 Quarters
------------- -------------
Gross Real Estate Assets, Average $1,449,720 $1,445,061
EBITDA $ 123,172 $ 126,288
EBITDA/Gross Real Estate Asses 8.5% 8.7%
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------- --------------------------------
2001 2000 2001 2000
--------------- --------------- --------------- ----------------
Common and Preferred Dividends as % of FFO 87% 86%
EBITDA/Debt Service (1) 2.28 2.13
EBITDA/Fixed Charges (2) 1.77 1.68
Total Debt as % of Gross Real Estate Assets 54% 55%
MAA portion of JV debt $27,107 $27,353
Capitalized Interest YTD $ 1,382 $ 3,730
FAD
FFO $14,380 $14,578 $57,212 $57,456
Average Units 30,553 30,875 30,778 30,924
Average Shares - Diluted 20,489 20,458 20,464 20,551
Recurring Capex $ 2,892 $ 3,174 $11,567 $12,697
FAD $11,488 $11,404 $45,645 $44,759
Free Cash Flow (3) $12,258 $12,165 $48,591 $48,031
PER SHARE (DILUTED)
FFO $ 0.70 $ 0.71 $ 2.80 $ 2.80
FAD $ 0.56 $ 0.56 $ 2.23 $ 2.18
Free Cash Flow (3) $ 0.60 $ 0.59 $ 2.37 $ 2.34
Distribution $ 0.585 $ 0.585 $ 2.34 $ 2.320
(1) Annualized EBITDA for trailing six months to annualized debt service
(aggregate of principal and interest) for same period.
(2) Annualized EBITDA for trailing six months to annualized fixed charges
(aggregate of preferred distributions, principal and interest) for same period.
(3) Includes addback of other non-cash items, primarily non-real estate
depreciation and amortization.
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OTHER DATA
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Shares and units in thousands except per share data
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------- --------------------------------
2001 2000 2001 2000
-------------- ---------------- --------------- ----------------
Weighted average common shares and units - Basic 20,348 20,426 20,359 20,498
Weighted average common shares and units - Diluted 20,489 20,458 20,464 20,551
Number of apartment units with ownership interest
(excluding development units not delivered) 33,382 33,612 33,382 33,612
Apartment units added during period, net 91 (115) (230) (289)
PER SHARE DATA
Funds from operations per share - Basic $ 0.71 $ 0.71 $ 2.81 $ 2.80
Funds from operations per share - Diluted $ 0.70 $ 0.71 $ 2.80 $ 2.80
Net income available for common shareholders
before extraordinary items - Diluted $ 0.14 $ 0.12 $ 0.78 $ 0.79
Net income available for common shareholders
after extraordinary items - Diluted $ 0.12 $ 0.12 $ 0.72 $ 0.78
Dividend declared per common share $ 0.585 $ 0.585 $ 2.340 $ 2.325
DIVIDEND INFORMATION (latest declaration) Payment Payment Record
per Share Date Date
------------ ------------- -------------
Common Dividend - quarterly $0.5850 1/31/2002 1/24/2002
Preferred Series A - monthly $0.1979 2/15/2002 2/1/2002
Preferred Series B - monthly $0.1849 2/15/2002 2/1/2002
Preferred Series C - quarterly $0.5859 1/15/2002 1/2/2002
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COMMUNITY STATISTICS
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Represents current stabilized communities
At December 31, 2001
------------------------------------------------------------
MAA
Average
Number of Portfolio MAA Rental Rate
Units Concentration Occupancy Per Unit
------------ -------------- -------------- --------------
Tennessee
Memphis 4,177 13.2% 88.9% $ 612.96
Nashville 1,150 3.6% 94.3% $ 674.08
Chattanooga 943 3.0% 95.5% $ 549.31
Jackson 664 2.1% 90.4% $ 605.26
Florida
Jacksonville 2,846 9.0% 93.7% $ 675.58
Tampa 1,120 3.5% 94.1% $ 747.13
Other 2,518 8.0% 94.0% $ 707.22
Georgia
Atlanta 1,652 5.2% 90.7% $ 786.19
Columbus / LaGrange 1,509 4.8% 93.7% $ 646.48
Augusta / Aiken / Savannah 1,132 3.6% 96.2% $ 611.55
Other 1,742 5.5% 93.2% $ 657.01
Texas
Dallas 2,056 6.5% 91.1% $ 651.09
Austin 1,254 4.0% 94.5% $ 718.44
Houston 682 2.2% 96.9% $ 592.33
South Carolina
Greenville 1,492 4.7% 91.4% $ 587.48
Other 784 2.5% 95.3% $ 694.41
Kentucky
Lexington 370 1.2% 92.4% $ 601.96
Other 624 2.0% 93.6% $ 618.94
Mississippi 1,673 5.3% 94.2% $ 582.05
Arkansas 808 2.6% 90.8% $ 613.58
Alabama 952 3.0% 93.8% $ 653.03
North Carolina 738 2.3% 93.6% $ 619.79
Ohio 414 1.3% 87.4% $ 710.55
Virginia 296 0.9% 98.3% $ 673.99
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Total 31,596 100.0% 92.8% $ 652.69
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SAME STORE STATISTICS
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Dollars in thousands except Average Rental Rate
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------------------ ---------------------------------------------
Percent Percent
2001 2000 Change 2001 2000 Change
----------- ------------- -------------- ----------- --------------- ---------------
Revenues $51,695 $52,053 -0.7% $208,534 $205,958 1.3%
Property Operating Expenses 13,325 13,536 -1.6% 52,828 53,021 -0.4%
RE Taxes and Insurance 5,925 5,715 3.7% 23,562 22,368 5.3%
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Total Operating Expenses 19,250 19,251 0.0% 76,390 75,389 1.3%
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NOI $32,445 $32,802 -1.1% $132,144 $130,569 1.2%
- ----------------------------------------------------------------------------------------------------------------------------
Units 28,573 28,567 28,461 28,458
Average Rental Rate $656.82 $642.26 2.3% $ 649.78 $ 632.96 2.7%
Average Physical Occupancy 93.2% 94.7% -1.6% 94.1% 95.2% -1.1%
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DEBT AS OF DECEMBER 31, 2001
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Dollars in thousands
Principal Average Years Average
Balance to Maturity Rate
-------------- -------------- -----------
Fixed Rate - Conventional $451,486 6.5 6.9%
Fixed Rate - Tax-free 118,899 19.8 6.1%
Line of Credit - Swapped to Fixed Rate 125,000 6.6 6.9%
Variable Rate - Tax-free 22,560 26.1 2.8%
Variable Rate - Conventional 61,719 7.9 2.8%
-----------------------------------------
Total $779,664 9.2 6.3%
FUTURE PAYMENTS Average
Scheduled Rate for
Amortization Maturities Total Maturities
-------------- ------------- ---------- ------------
2002 $ 3,956 $ 16,390 $ 20,346 6.2%
2003 3,740 154,120 157,860 6.5%
2004 3,862 71,168 75,030 7.0%
2005 4,086 3,215 7,301 8.8%
2006 4,166 36,010 40,176 6.1%
Thereafter 129,755 349,196 478,951 6.1%
----------------------------------------------------
Total $149,565 $630,099 $779,664 6.3%
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DEVELOPMENT PIPELINE
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Dollars in thousands
DEVELOPMENT STATISTICS Current Actual/Forecast
------------------------------------
Total Estimated Cost to Construction Initial Stabil-
---------------
Units Cost Date Start Finish Occupancy ization
------------- ----------- ---------- ------ -------- ----------- --------
Completed Communities in Lease-up
Grand Reserve Lexington Lexington, KY 370 $31,288 $31,288 3Q98 3Q00 4Q99 2Q02
Reserve at Dexter Lake Phase II Memphis, TN 244 15,973 15,973 2Q99 2Q01 1Q00 2Q02
Grande View Nashville Nashville, TN 433 36,313 36,313 1Q99 2Q01 3Q00 2Q02
-------------------------------------
Total Completed Communities 1,047 83,574 83,574
Under Construction
Reserve at Dexter Lake Phase III Memphis, TN 244 15,541 15,004 3Q00 1Q02 2Q01 4Q02
-------------------------------------
Total Units in Lease-up/Development 1,291 $99,115 $98,578
-------------------------------------
OCCUPANCY STATISTICS Apartments
-------------------------------------
Available Leased Occupied
------------- ----------- -----------
Completed Communities in Lease-up
Grand Reserve Lexington 370 317 307
Reserve at Dexter Lake Phase II 244 192 187
Grande View Nashville 433 338 333
-------------------------------------
Total Completed Communities 1,047 847 827
Under Construction
Reserve at Dexter Lake Phase III 196 22 16
-------------------------------------
Total Units in Lease-up/Development 1,243 869 843
-------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchnage 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 15, 2002 /s/Simon R.C. Wadsworth
Simon R.C. Wadsworth
Executive Vice President
(Principal Financial and Accounting Officer)