EXHIBIT 99.1 Press release dated May 8, 2003
MID-America Apartment CommunitieS, INC.
A self-managed Equity REIT
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PRESS RELEASE
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FROM: SIMON R.C. WADSWORTH
SUBJECT: MID-AMERICA FIRST QUARTER FUNDS FROM OPERATIONS GROW 4.7%
DATE: MAY 8, 2003
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Mid-America Funds From Operations Grow 4.7%
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 $14,524,000, or $0.70 per share/unit for
the quarter ended March 31, 2003. This compares to FFO of $13,877,000, or $0.68
per share/unit earned during the same period last year. Net income for the
quarter ended March 31, 2003 was $4,326,000, or $0.02 per common share, as
compared to $4,300,000, or $0.02 per common share for the same quarter of last
year. A reconciliation of FFO to net income is attached as a schedule to this
press release.
Highlights for the first quarter were:
o FFO per share/unit was 5 cents ahead of consensus and 2 cents higher than
the same period of a year ago.
o Leasing conditions remain competitive as same store occupancy at quarter
end of 91.9% trails the same point last year at 94.1%.
o However, leasing concessions have moderated somewhat and were down 27.4%
from the prior year on a same store basis.
o Almost $150 million of refinancing helped to lower the average interest
rate to 5.0% at quarter-end from 5.8% at December 31, 2002.
o Fixed charge coverage ratio continued to strengthen and is at a five year
high.
o Two property acquisitions were completed during the quarter, both
designated for joint venture ownership: the Preserve at Arbor Lakes, a
284-unit community located in Jacksonville, FL and Green Oaks, a 300-unit
community in the Dallas suburb of Grand Prairie, TX.
Eric Bolton, Chairman and CEO said, "As reported in our first quarter earnings
pre-announcement on April 16th, FFO for the quarter was better than we had
forecast earlier. While we still feel considerable pressure on property revenues
due to a very competitive leasing environment, property operating expenses were
lower than expected as a result of a continued drop in resident turnover,
declining 1.7% on a same store basis from the same period a year ago.
Additionally, maintenance costs associated with resident turnover, were lower
than expected as several improvements to the operational management of turnover
were implemented. Revenue performance continues to be sluggish as occupancy
levels remain below prior year levels. However, we continue to feel that soft
market conditions have bottomed out as leasing concessions posted a significant
decline from the prior year. Occupancy should improve over the coming summer
leasing season."
Simon Wadsworth, Executive Vice-President and CFO said, "Coverage ratios
continue to strengthen. For the quarter, our fixed charge coverage improved to
2.49 from 2.44 in the prior quarter, and 2.35 in the same quarter a year ago.
Debt service coverage improved to 2.43 from 2.41 in the prior quarter, and 2.30
in the same quarter a year earlier. In addition to the better than anticipated
operating performance from our properties, interest expense was also lower than
we had anticipated as rates remain low. At quarter-end 84% of our debt was fixed
rate, swapped or forward-swapped and only 10% of our debt is scheduled for
refinance through the end of 2004, giving us protection once the economy
improves and interest rates begin to rise.
We have increased our full-year forecast of FFO to a range of $2.75 to $2.80 per
share/unit, with 70 to 72 cents forecast for the second quarter, 66 to 69 cents
for the third quarter, and 69 to 71 cents for the fourth quarter. The forecast
assumes the continuation of a weak operating environment through 2003."
Al Campbell, Senior Vice-President and Director of Financial Planning said, "Our
Dallas and Atlanta properties continue to feel the brunt of the weak leasing
environment. These markets have been hardest hit by excessive new construction
and weak job growth. We also have seen occupancy in the Tampa, FL market weaken
over the last few months. High leasing concessions persist in these markets.
Our concentration of properties in mid-tier and small markets continue to post
stable results as Memphis, Jacksonville, Jackson, MS and Lexington, KY
properties all generated occupancy results in the 94% to 95% range for the
quarter.
We continue to pursue several property acquisition opportunities. On May
6th we closed on the purchase of Jefferson Pines, a 309-unit apartment community
in Houston and anticipate that we will be acquiring additional properties during
the year."
Bolton said, "We remain on track with our strategy to further increase dividend
coverage. Quarterly coverage ratios have improved on a year-over-year basis for
five straight quarters. Our ability to progress significantly during this down
part of the cycle and keep dividends and shareholder value fully intact is
evident. Our unique portfolio strategy focused on a range of market segments,
from large metro markets to smaller tertiary markets, diversified over the
stable and steady growth region of the country, will continue to generate one of
the best risk adjusted investment returns for the apartment REIT sector. Our
dividend remains secure within the range of our FFO estimates. We are confident
that a recovering economy and continued progress on our acquisitions initiative
will further boost FFO and dividend coverage. Market pricing of the common stock
currently offers a discount to net asset value even as we continue to generate
steady growth in share value."
The Company provides guidance on FFO and does not forecast net income. It is not
possible to reasonably predict the timing and certainty of acquisitions and
dispositions that would materially affect depreciation, capital gains or losses
and minority interest, or to forecast extraordinary items, which, combined,
generally represent the difference between net income and FFO.
MAA is a self-administered, self-managed apartment-only real estate investment
trust which currently owns or has ownership interest in 34,816 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 market conditions, anticipated
acquisitions, redevelopment opportunities, 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, shortage of acceptable property
acquisition candidates, changes in interest rates and other items that are
difficult to control, 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 March 31,
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2003 2002
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Property revenues $ 57,407 $ 56,871
Property operating expenses 23,118 22,399
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Net operating income 34,289 34,472
Interest and other non-property income 229 134
Management and fee income, net 248 186
FFO from real estate joint ventures 373 320
Property management expenses 2,244 2,313
General & administrative 1,843 1,605
Interest expense 11,635 12,362
Preferred dividend distribution 3,925 4,028
Depreciation and amortization non-real estate assets 344 270
Amortization of deferred financing costs 624 657
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Funds from operations 14,524 13,877
Depreciation and amortization 13,571 13,239
Joint venture depreciation adjustment included in FFO 498 343
Preferred dividend distribution add back (3,925) (4,028)
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Income before gain on disposition of assets and
minority interest 4,380 4,323
Net gain on disposition of assets and
insurance settlement proceeds 79 64
Minority interest in operating partnership income (133) (87)
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Net Income 4,326 4,300
Preferred dividend distribution 3,925 4,028
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Net income available for common shareholders $ 401 $ 272
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Weighted average common shares and units - Diluted 20,657 20,512
Funds from operations per share and units - Diluted $ 0.70 $ 0.68
Weighted average common shares - Diluted 17,921 17,596
Net income available for common shareholders $ 0.02 $ 0.02
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CONSOLIDATED BALANCE SHEETS
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In thousands
March 31, December 31,
2003 2002
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Assets
Gross real estate assets $ 1,474,818 $ 1,452,362
Accumulated depreciation (297,053) (283,593)
Other real estate assets, net 25,335 23,454
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Real estate assets, net 1,203,100 1,192,223
Cash and cash equivalents, including restricted cash 12,505 18,057
Other assets 30,256 29,187
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Total assets $ 1,245,861 $ 1,239,467
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Liabilities
Bonds and notes payable $ 825,776 $ 803,703
Other liabilities 60,661 64,188
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Total liabilities 886,437 867,891
Shareholders' equity and minority interest 359,424 371,576
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Total liabilities & shareholders' equity $ 1,245,861 $ 1,239,467
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OPERATING RESULTS
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Dollars and shares in thousands except per share data
ROA
Three Months Ended Trailing
March 31, 2003 4 Quarters
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Net income $ 4,326 $ 16,187
Minority interest in operating partnership income 133 539
Extraordinary items, net of minority interest - 1,339
Net gain on disposition of assets and
insurance settlement proceeds (79) (412)
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Income before gain on disposition of assets, minority
interest and extraordinary items 4,380 17,653
Depreciation and amortization 13,915 55,669
Amortization of deferred financing costs 624 2,679
Interest expense 11,635 48,721
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EBITDA $ 30,554 $ 124,722
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Annualized Trailing
1Q03 4 Quarters
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Gross Real Estate Assets, Average $1,503,486 $1,484,701
EBITDA $ 122,216 $ 124,722
EBITDA/Gross Real Estate Assets 8.1% 8.4%
Three Months Ended March 31,
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2003 2002
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Common and Preferred Dividends as % of FFO (12 month rolling) 87% 87%
EBITDA/Debt Service 2.43x 2.30x
EBITDA/Fixed Charges 2.49x 2.35x
Total Debt as % of Gross Real Estate Assets 55% 54%
MAA portion of JV debt $37,524 $27,036
Capitalized Interest YTD $ - $ 127
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)
excluding the effects of Minority Interest in Operating Partnership Income,
Extraordinary Items, net of Minority Interest, and Net Gain on Disposition of
Assets and Insurance Settlement Proceeds is a non-GAAP financial measure used by
the Company to assist in measuring the Company's ability to service its debt,
and its financial and operating performance.
FAD
Three Months Ended March 31,
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2003 2002
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FFO $ 14,524 $ 13,877
Recurring Capex 2,493 1,800
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FAD 12,031 12,077
Depreciation and amortization non-real estate assets 344 270
Amortization of deferred financing costs 624 657
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Free Cash Flow $ 12,999 $ 13,004
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Average Common Shares and Units - Diluted 20,657 20,512
PER SHARE (DILUTED)
FFO $ 0.70 $ 0.68
FAD $ 0.58 $ 0.59
Free Cash Flow $ 0.63 $ 0.63
Distribution $ 0.585 $ 0.585
Funds Available for Distribution (FAD) and Free Cash Flow are non-GAAP financial
measures the Company believes are appropriate measures of cash flow available
for shareholder distributions after funding normal operating expenses and
recurring capital expenditures.
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COMMUNITY STATISTICS
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Properties are grouped by operational responsibilty and exclude properties in lease-up
At March 31, 2003
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Average
Number of Portfolio Rental Rate
Units Concentration Occupancy Per Unit
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Tennessee
Memphis 4,429 13.2% 92.8% $ 623.71
Nashville 966 2.9% 91.4% $ 676.64
Chattanooga 943 2.8% 91.7% $ 566.19
Jackson 664 2.0% 92.0% $ 591.56
Florida
Jacksonville 3,130 9.3% 94.3% $ 717.09
Tampa 1,120 3.3% 88.3% $ 762.32
Other 2,518 7.5% 93.4% $ 722.69
Georgia
Atlanta 2,116 6.3% 86.9% $ 767.65
Columbus / LaGrange 1,509 4.5% 92.9% $ 650.29
Augusta / Aiken / Savannah 1,132 3.4% 93.9% $ 627.12
Other 1,742 5.2% 90.8% $ 658.88
Texas
Dallas 2,356 7.0% 86.2% $ 661.27
Austin 1,254 3.7% 93.5% $ 646.74
Houston 1,002 3.0% 95.2% $ 676.24
South Carolina
Greenville 1,492 4.4% 87.0% $ 556.17
Other 784 2.3% 84.6% $ 680.35
Kentucky
Lexington 924 2.8% 92.2% $ 696.79
Other 624 1.9% 94.7% $ 606.42
Mississippi 1,673 5.0% 95.0% $ 584.68
Alabama 952 2.8% 91.9% $ 645.78
Arkansas 808 2.4% 94.4% $ 618.70
North Carolina 738 2.2% 87.7% $ 553.76
Ohio 414 1.2% 91.8% $ 676.73
Virginia 296 0.9% 92.6% $ 724.92
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Total 33,586 100.0% 91.5% $ 659.57
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SAME STORE STATISTICS
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Dollars in thousands except Average Rental Rate
Three Months Three Months Percent Change Three Months Percent Change
Ended Ended From Ended From
Mar 31, 2003 Mar 31, 2002 Mar 31, 2002 Dec 31, 2002 Dec 31, 2002
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Revenues $52,689 $53,244 -1.0% $53,196 -1.0%
Property Operating Expenses 13,986 14,228 -1.7% 14,810 -5.6%
RE Taxes and Insurance 6,906 6,179 11.8% 6,789 1.7%
Other Expenses 192 105 82.9% 87 120.7%
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Total Operating Expenses 21,084 20,512 2.8% 21,686 -2.8%
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NOI $31,605 $32,732 -3.4% $31,510 0.3%
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Units (1) 28,723 28,723 28,723
Average Rental Rate (1) $654.28 $656.53 -0.3% $655.73 -0.2%
Average Physical Occupancy (1) 91.9% 94.1% -2.3% 91.9% 0.0%
(1) Values are at March 31, 2003 and 2002
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DEBT AS OF MARCH 31, 2003
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Dollars in thousands
Principal Average Years Average
Balance to Maturity(1) Rate
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Conventional - Fixed Rate or Swapped $ 419,199 9.7 6.9%
Conventional - Forward Swapped(2) 150,000 10.4 2.0%
Tax-free - Fixed Rate or Swapped 122,176 23.8 5.5%
Conventional - Variable Rate 117,741 10.5 2.0%
Tax-free - Variable Rate 16,660 28.3 2.0%
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Total $ 825,776 12.4 5.0%
(1) Maturities on swapped balances are calculated using the life of the
underlying variable debt
(2) As the forward swaps are not yet in effect, the average rate represents the
rate on the underlying variable debt
FUTURE PAYMENTS
Average
Scheduled Rate for
Amortization Maturities Total Maturities
--------------- --------------- ------------ ----------------
2003 $ 2,553 $ 3,605 $ 6,158 7.9%
2004 3,650 71,168 74,818 7.0%
2005 3,891 - 3,891
2006 3,980 36,010 39,990 6.4%
2007 3,427 - 3,427
Thereafter 107,180 590,312 697,492 4.7%
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Total $ 124,681 $ 701,095 $ 825,776 5.0%
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OTHER DATA
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Shares and units in thousands except per share data
Three Months Ended March 31,
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2003 2002
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Weighted average common shares and units - Basic 20,487 20,371
Weighted average common shares and units - Diluted 20,657 20,512
Weighted average common shares - Diluted 17,921 17,596
Number of apartment units with ownership interest
(excluding development units not delivered) 34,507 33,434
Apartment units added(sold) during period, net 584 23
PER SHARE DATA
Funds from operations per share and units - Basic $ 0.71 $ 0.68
Funds from operations per share and units - Diluted $ 0.70 $ 0.68
Net income available for common shareholders
per share - Diluted $ 0.02 $ 0.02
Dividend declared per common share $ 0.585 $ 0.585
DIVIDEND INFORMATION (latest declaration) Payment Payment Record
per Share Date Date
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Common Dividend - quarterly $0.5850 4/30/2003 4/24/2003
Preferred Series A - monthly $0.1979 5/15/2003 5/1/2003
Preferred Series B - monthly $0.1849 5/15/2003 5/1/2003
Preferred Series C - quarterly $0.5859 4/15/2003 4/1/2003
Preferred Series F - monthly $0.1927 5/15/2003 5/1/2003