Exhibit 99.1 Press Release
Mid-America Apartment Communities, Inc.
A self-managed Equity REIT
Press Release, 2nd Quarter Earnings 2002
FROM: Simon R. C. Wadsworth, CFO
SUBJECT: Second Quarter 2002 Earnings In-Line with Forecast
DATE: July 31, 2002
Memphis, TN, Mid-America Apartment Communities, Inc. (NYSE: MAA) reported Funds
From Operations ("FFO"), the generally accepted measure of operating performance
for real estate investment trusts, of $14,425,000 or $0.70 per share for the
quarter ended June 30, 2002. This is in line with the company's earnings
estimates for the quarter. The second quarter FFO performance is an improvement
over the $0.68 per share reported for the first quarter of this year and is only
slightly below the $0.71 per share reported for the second quarter of last year.
Net income available for common shareholders (after non-cash expense for
property depreciation) for the second quarter was $941,000 or $0.05/share. This
compares to $573,000 or $0.03/share of net income available for common
shareholders for the comparable quarter of a year ago.
Highlights for the second quarter were:
o Occupancy improved to 94.7% by quarter end, from 94.2% at the end of
the first quarter and 94.4% at the end of the second quarter last
year.
o A partnership with Crow Holdings was established to pursue acquisition
and redevelopment opportunities; first joint venture related
acquisition was closed in early July.
o Solid balance sheet continues to strengthen further as coverage ratios
show steady improvement.
o Leasing remains challenging as a strong home buying environment and
slow job growth lowers demand.
Eric Bolton, President and CEO said, "Market conditions remain tough. The
combination of a vibrant home buying market and slow job growth, continue to
create a very competitive leasing market. However, we are encouraged by the
significant pull back in new apartment construction starts and believe that once
the economy begins to recover, coupled with an increase in mortgage rates, we
will see apartment leasing in the southeast strengthen. We have planned for this
presently slower part of the cycle and remain comfortable with our balance sheet
and current dividend pay-out."
"We have revisited our forecast for the remainder of this year. Our earlier
outlook included assumptions anticipating a slight improvement in job growth and
a slow down in the robust home buying market later this year. These assumptions
are becoming increasingly dubious, and we now believe that it will be early 2003
before conditions improve. In our updated forecast we foresee that significant
leasing concessions will persist through the remainder of the year. We have
accordingly made a small downward adjustment in our FFO per share forecast from
$2.80 to $2.77, with a range of $2.76 to $2.80."
"It is important to note that this forecast assumes that no additional property
acquisitions are made. New acquisitions that we may close with Crow Holdings
between now and year end are expected to have only a minor impact to earnings
for the remainder of this year and will create more significant contribution in
2003."
"The outlook for increasing demand for multifamily housing over the next 5 to 7
years remains strong, particularly in the solid growth markets of the southeast
and south central regions of the country. Even now, during this slower part of
the economic cycle, we continue to enjoy relatively stable occupancy and
investment performance. Our properties are in great condition and we are
confident that our portfolio will continue to perform in a satisfactory manner
as we wait for improved economic conditions."
Simon Wadsworth, Executive Vice-President and CFO said, "We continue to
strengthen our balance sheet. At the end of the quarter our blended average
interest cost has been reduced to 6.2%, with 87% of our total debt now at a
fixed rate. We have reached a preliminary agreement with Fannie Mae on an
additional credit facility which will be used to refinance $200 million of debt
maturities and prepayments in the next 18 months. We've prelocked the rate on
$100 million of next year's refinancings at a 5.9% average interest rate, with
plans underway to lock in the majority of the remainder of next year's
refinancings. The 5.9% debt pricing will be replacing maturing bonds at an
average interest rate of 6.4%."
"Through proactively addressing next year's refinancings and taking advantage of
the historically low current interest rate environment, we have further
strengthened our balance sheet and reduced exposure to potential increases in
interest rates. Our debt service coverage grew to 2.34 from 2.15 for the same
quarter of a year ago and our fixed charge coverage improved to 1.80 from 1.70
as of a year ago. Both of these coverage ratios were also up year over year
during the first quarter of this year."
"During the second quarter we successfully renewed our property and casualty
insurance program. Given the very difficult pricing and reduced capacity within
the insurance industry, our overall cost of premiums and deductibles will
increase approximately 40% over the prior year's policy costs, which is in line
with what we had anticipated in our forecast."
Al Campbell, Vice-President and Director of Financial Planning said, "Property
revenues remain pressured by competitive market conditions. On a same store
basis, property revenues posted a 1.2% decline from prior year performance.
Property occupancy continues to improve and show steady performance, but leasing
concessions are currently more than off-setting this occupancy improvement. Our
properties continue to outperform market wide occupancy and rent growth trends.
Same store property operating expenses remain under good control with only a
3.4% increase over the prior year, with the largest percentage increase
generated by property insurance costs."
Eric Bolton said, "Our balance sheet continues to strengthen. Coverage ratios
show steady improvement and our dividend remains secure. We are committed to the
current level of cash paid to our owners. Our strategy focuses on generating a
steady improvement to our earnings and per share value growth, along with
further strengthening dividend coverage and remains solidly on track."
MAA is a self-administered, self-managed apartment-only real estate investment
trust which currently owns or has ownership interest in 33,923 apartment units
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, planned acquisitions and
dispositions, 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, 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 June 30, Six months ended June 30,
--------------------------------- ----------------------------
2002 2001 2002 2001
------------- ------------- ----------- ------------
Property revenues $ 56,692 $ 57,453 $ 112,351 $ 113,734
Property operating expenses 21,453 21,170 42,640 41,972
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Net operating income 35,239 36,283 69,711 71,762
Interest and other non-property income 168 429 302 716
Management and development income, net 193 191 379 379
FFO from real estate joint ventures 155 348 475 516
Property management expenses 2,478 2,693 4,950 5,282
General & administrative 1,511 1,472 2,957 2,913
Interest expense 12,362 13,843 24,724 27,302
Gain on disposition of non-depreciable assets - (5) - 229
Preferred dividend distribution 4,029 4,029 8,057 8,057
Depreciation and amortization non-real estate assets 286 158 556 325
Amortization of deferred financing costs 664 636 1,321 1,165
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Funds from operations 14,425 14,415 28,302 28,558
Depreciation and amortization 13,361 12,936 26,600 25,766
Joint venture depreciation adjustment included in FFO 345 314 688 627
Gain on disposition of non-depreciable assets included in FFO - (5) - 229
Preferred dividend distribution add back (4,029) (4,029) (8,057) (8,057)
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Income before gain on disposition of assets,
minority interest and extraordinary items 4,748 5,199 9,071 9,993
Net gain on disposition of assets and
insurance settlement proceeds 501 (5) 565 164
Minority interest in operating partnership income (251) (149) (338) (251)
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Income before extraordinary items 4,998 5,045 9,298 9,906
Ex item - Loss on debt extinguishment , net of MI 28 443 28 443
Preferred dividend distribution 4,029 4,029 8,057 8,057
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Net income available for common shareholders $ 941 $ 573 $ 1,213 $ 1,406
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Weighted average common shares - Diluted 17,749 17,480 17,673 17,495
Weighted average common shares and units - Diluted 20,659 20,416 20,586 20,431
Funds from operations per share and units - Diluted $ 0.70 $ 0.71 $ 1.37 $ 1.40
Net income available for common shareholders
before extraordinary items - Diluted $ 0.05 $ 0.06 $ 0.07 $ 0.11
Net income available for common shareholders
after extraordinary items - Diluted $ 0.05 $ 0.03 $ 0.07 $ 0.08
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CONSOLIDATED BALANCE SHEETS
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In thousands
June 30, December 31,
2002 2001
----------------- -----------------
Assets
Real estate assets, net $1,198,938 $1,216,933
Cash and cash equivalents, including restricted cash 25,344 23,432
Other assets 26,680 23,123
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Total assets $1,250,962 $1,263,488
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Liabilities
Bonds and notes payable $ 788,136 $ 779,664
Other liabilities 46,516 41,564
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Total liabilities 834,652 821,228
Shareholders' equity and minority interest 416,310 442,260
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Total liabilities & shareholders' equity $1,250,962 $1,263,488
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OPERATING RESULTS
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Dollars and shares in thousands except per share data
ROA Annualized Trailing
2Q02 4 Quarters
------------------ ----------------
Gross Real Estate Assets, Average $1,458,661 $1,451,744
EBITDA $ 124,408 $ 123,914
EBITDA/Gross Real Estate Assets 8.5% 8.5%
Three Months Ended June 30, Six Months Ended June 30,
------------------------------------ -----------------------------
2002 2001 2002 2001
----------------- ---------------- ------------- -------------
Common and Preferred Dividends as % of FFO 87% 88%
EBITDA/Debt Service (1) 2.34 2.15
EBITDA/Fixed Charges (2) 1.80 1.70
Total Debt as % of Gross Real Estate Assets 53% 55%
MAA portion of JV debt $26,974 $27,779
Capitalized Interest YTD $ 239 $ 811
FAD
FFO $14,425 $14,415 $28,302 $28,558
Average Units 30,662 30,985 30,634 30,944
Average Shares - Diluted 20,659 20,416 20,586 20,431
Recurring Capex $ 3,595 $ 3,429 $ 5,395 $ 6,377
FAD $10,830 $10,986 $22,907 $22,181
Free Cash Flow (3) $11,780 $11,780 $24,784 $23,671
PER SHARE (DILUTED)
FFO $ 0.70 $ 0.71 $ 1.37 $ 1.40
FAD $ 0.52 $ 0.54 $ 1.11 $ 1.09
Free Cash Flow (3) $ 0.57 $ 0.58 $ 1.20 $ 1.16
Distribution $ 0.585 $ 0.585 $ 1.170 $ 1.170
(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 June 30, Six Months Ended June 30,
---------------------------------- -------------------------------
2002 2001 2002 2001
---------------- --------------- -------------- --------------
Weighted average common shares and units - Basic 20,408 20,332 20,390 20,374
Weighted average common shares and units - Diluted 20,659 20,416 20,586 20,431
Number of apartment units with ownership interest
(excluding development units not delivered) 33,459 33,778 33,459 33,778
Apartment units added during period, net 25 - 48 166
PER SHARE DATA
Funds from operations per share and units - Basic $ 0.71 $ 0.71 $ 1.39 $ 1.40
Funds from operations per share and units - Diluted $ 0.70 $ 0.71 $ 1.37 $ 1.40
Net income available for common shareholders
before extraordinary items - Diluted $ 0.05 $ 0.06 $ 0.07 $ 0.11
Net income available for common shareholders
after extraordinary items - Diluted $ 0.05 $ 0.03 $ 0.07 $ 0.08
Dividend declared per common share $ 0.585 $ 0.585 $ 1.170 $ 1.170
DIVIDEND INFORMATION (latest declaration) Payment Payment Record
per Share Date Date
----------------------- --------------- ----------------
Common Dividend - quarterly $0.5850 7/31/2002 7/24/2002
Preferred Series A - monthly $0.1979 8/15/2002 8/1/2002
Preferred Series B - monthly $0.1849 8/15/2002 8/1/2002
Preferred Series C - quarterly $0.5859 7/15/2002 7/1/2002
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COMMUNITY STATISTICS
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Represents current stabilized communities
At June 30, 2002
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MAA
Average
Number of Portfolio MAA Rental Rate
Units Concentration Occupancy Per Unit
---------------- ----------------- ----------- ---------------
Tennessee
Memphis 4,429 13.9% 95.3% $ 622.30
Nashville 966 3.0% 93.8% $ 692.05
Chattanooga 943 2.9% 94.1% $ 557.62
Jackson 664 2.1% 92.8% $ 612.68
Florida
Jacksonville 2,846 8.9% 93.9% $ 685.03
Tampa 1,120 3.5% 94.2% $ 752.96
Other 2,518 7.8% 94.6% $ 714.22
Georgia
Atlanta 1,652 5.1% 95.7% $ 778.20
Columbus / LaGrange 1,509 4.7% 94.9% $ 650.87
Augusta / Aiken / Savannah 1,132 3.5% 94.6% $ 622.45
Other 1,742 5.4% 96.6% $ 658.77
Texas
Dallas 2,056 6.4% 90.9% $ 656.40
Austin 1,254 3.9% 95.0% $ 713.55
Houston 1,002 3.1% 94.6% $ 670.10
South Carolina
Greenville 1,492 4.6% 96.0% $ 561.94
Other 784 2.4% 96.4% $ 675.34
Kentucky
Lexington 554 1.7% 94.0% $ 607.13
Other 624 1.9% 96.0% $ 615.45
Mississippi 1,673 5.2% 97.2% $ 581.76
Arkansas 808 2.5% 97.4% $ 608.30
Alabama 952 3.0% 94.0% $ 655.07
North Carolina 738 2.3% 91.7% $ 582.14
Ohio 414 1.3% 89.6% $ 702.19
Virginia 296 0.9% 99.0% $ 681.33
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Total 32,168 100.0% 94.7% $ 655.40
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SAME STORE STATISTICS
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Dollars in thousands except Average Rental Rate
Three Months Ended June 30,
---------------------------------------------
Percent
2002 2001 Change
------------ ------------- --------------
Revenues $52,896 $53,520 -1.2%
Property Operating Expenses 13,597 13,292 2.3%
RE Taxes and Insurance 6,274 5,933 5.7%
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Total Operating Expenses 19,871 19,225 3.4%
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NOI $33,025 $34,295 -3.7%
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Units 28,761 28,797
Average Rental Rate $657.47 $650.54 1.1%
Average Physical Occupancy 94.9% 94.3% 0.6%
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DEBT AS OF JUNE 30, 2002
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Dollars in thousands
Principal Average Years Average
Balance to Maturity Rate
---------------- ---------------- ----------
Conventional - Fixed Rate or Swapped $ 570,018 6.3 6.9%
Tax-free - Fixed Rate or Swapped 117,819 23.0 6.1%
Conventional - Variable Rate 77,739 7.4 2.5%
Tax-free - Variable Rate 22,560 25.6 2.4%
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Total $ 788,136 9.5 6.2%
FUTURE PAYMENTS Average
Scheduled Rate for
Amortization Maturities Total Maturities
----------------- ------------- ---------- -------------
2002 $ 1,957 $ 19,183 $ 21,140 5.1%
2003 3,691 154,120 157,811 6.5%
2004 3,808 71,168 74,976 7.0%
2005 4,063 - 4,063
2006 4,167 36,010 40,177 6.4%
Thereafter 129,754 360,215 489,969 5.9%
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Total $ 147,440 $ 640,696 $ 788,136 6.2%
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DEVELOPMENT PIPELINE
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Units Percentage of Available
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Available Units to Lease
-------------------------
Total to Lease Occupied Leased Occupied Leased
-------- ------------- ------------ --------- ------------ -----------
Properties in Lease-up
Grand Reserve Lexington Lexington, KY 370 370 348 363 94% 98%
Grande View Nashville Nashville, TN 433 431 366 398 85% 92%
Reserve at Dexter Lake Phase II Memphis, TN 244 244 180 183 74% 75%
Reserve at Dexter Lake Phase III Memphis, TN 244 244 144 156 59% 64%
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Total 1,291 1,289 1,038 1,100 81% 85%