EXHIBIT 99.1
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PRESS RELEASE
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FROM: SIMON R.C. WADSWORTH
SUBJECT: MID-AMERICA SECOND QUARTER FUNDS FROM OPERATIONS GROW 4.7%
DATE: AUGUST 7, 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 $15,069,000, or $0.73 per share/unit for
the quarter ended June 30, 2003, a record high FFO/share performance for any
second quarter period for the company and $0.02 ahead of First Call's estimate.
This compares to FFO of $14,392,000, or $0.70 per share/unit for the same period
last year. Net income for the quarter ended June 30, 2003, was $5,105,000, or
$0.07 per common share, as compared to $4,970,000, or $0.05 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 quarter were:
o The company will complete a new $155 million Series H Preferred Stock
offering on August 12th and retire three outstanding preferred stock
series, increasing adjusted funds from operations by $0.04/share/unit on a
full year basis.
o Same store operating conditions remain competitive, with quarter end
occupancy trailing occupancy at the same point last year by 2.2%. However,
occupancy increased from the preceeding quarter end by 0.7%.
o Expense control and efforts to generate new levels of productivity in
property management operations continue with same store property controlled
operating expenses down 0.1% from prior year.
o The company renewed its property and casualty insurance program effective
July 1, reducing overall costs by 5% with coverage and retention levels
consistent with prior year's program.
o Fixed charge coverage ratio continued at a five year high, improving to
2.65 from 2.37 for the same quarter a year ago and 2.48 at the end of the
immediately preceeding quarter.
o The company announced that a tentative agreement has been reached to
acquire 100% of the joint venture interest owned by Blackstone Realty
Advisors, which it expects to be accretive to FFO.
Eric Bolton, Chairman and CEO said, "Second quarter results reflect continued
progress on strengthening FFO performance and dividend coverage. While market
conditions remain very competitive, we remain confident that portfolio occupancy
and revenue performance should hold steady over the course of this year. A
combination of improved job growth in the economy and a rise in interest rates
will be required to materially improve demand levels for apartment housing.
While the timing is difficult to predict, we believe that we should see more
robust occupancy performance and improved pricing leverage in 2004.
Our unique strategy focused on diversifying in large, middle and small tier
markets, coupled with very strong property management capabilities, has
continued to deliver one of the strongest performances of the apartment REIT
sector during this weak operating environment. The current interest rate
environment has provided a number of opportunities to lower our cost of capital
and has, along with several opportunistic new acquisitions, driven our ability
to grow FFO, improve fixed charge coverage and strengthen dividend safety
despite the current weak property operating environment. Our shareholder value
is growing and the portfolio is well positioned to generate stronger revenue
growth as the economy and market conditions improve."
Simon Wadsworth, Executive Vice-President and CFO said, "We were very pleased
with the results of our recently completed Preferred Stock Series H offering and
the corresponding redemption of our Series A, Series B and Series C preferred
stock. This refinancing will add $0.04/share in additional adjusted funds from
operations. During the quarter we successfully renegotiated our bank credit
facility, lowering it to $40 million, and also refinanced a $40 million
mortgage, resulting in annualized savings of $0.03/share. While state and local
government funding continues to put pressure on property taxes, we're expecting
to keep our increase below 2% for this year."
"We have a preliminary agreement with Blackstone to buy their two-thirds
interest in our joint venture of ten properties. We expect to close the purchase
in the next two months and anticipate that the transaction will add to FFO per
share/unit next year, after the existing debt is refinanced mid-year 2004. The
total value of the portfolio is $117 million, or $41,900 per unit. We anticipate
assuming $79.8 million of debt and using $22 million of our available credit
facility and other funding sources to buy Blackstone's equity interest."
"We are raising the mid-point of our forecast of FFO by three and a half cents
per share/unit to a range of $2.79 to $2.83 per share/unit, with $0.67 to $0.69
per share/unit for the third quarter and $0.69 to $0.71 per share/unit for the
fourth quarter, excluding any possible impact of the accounting treatment of the
preferred stock redemption. The forecast assumes the continuation of a weak
operating environment through 2003. Based on early forecast assumptions, an
FFO/share/unit range of $2.82 to $2.90 for 2004 seems to be reasonable,
especially if the Blackstone joint venture purchase is concluded."
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 differences 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 34,815 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 June 30, Six months ended June 30,
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2003 2002 2003 2002
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Property revenues $ 57,842 $ 57,971 $ 115,249 $ 114,843
Property operating expenses 23,808 22,732 46,926 45,132
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Net operating income 34,034 35,239 68,323 69,711
Interest and other non-property income 234 168 463 302
Management and fee income, net 266 193 514 379
FFO from real estate joint ventures 350 155 723 475
Property management expenses 2,276 2,292 4,731 4,605
General & administrative 1,788 1,697 3,420 3,302
Interest expense 10,772 12,362 22,407 24,724
Loss on debt extinguishment(1) 205 33 205 33
Preferred dividend distribution 3,925 4,029 7,850 8,057
Depreciation and amortization non-real estate assets 345 286 689 556
Amortization of deferred financing costs 504 664 1,128 1,321
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Funds from operations(1) 15,069 14,392 29,593 28,269
Depreciation and amortization 13,678 13,361 27,249 26,600
Joint venture depreciation adjustment included in FFO 533 345 1,031 688
Preferred dividend distribution add back (3,925) (4,029) (7,850) (8,057)
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Income before gain on disposition of assets and
minority interest 4,783 4,715 9,163 9,038
Net gain on disposition of assets and
insurance settlement proceeds 528 501 607 565
Minority interest in operating partnership income (206) (246) (339) (333)
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Net income 5,105 4,970 9,431 9,270
Preferred dividend distribution 3,925 4,029 7,850 8,057
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Net income available for common shareholders $ 1,180 $ 941 $ 1,581 $ 1,213
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Weighted average common shares and units - Diluted 20,781 20,659 20,719 20,586
Funds from operations per share and units - Diluted $ 0.73 $ 0.70 $ 1.43 $ 1.37
Weighted average common shares - Diluted 18,047 17,749 17,984 17,673
Net income available for common shareholders $ 0.07 $ 0.05 $ 0.09 $ 0.07
(1) Prior periods have been reclassified to conform with the 2003 presentation of FASB Statement No. 145.
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CONSOLIDATED BALANCE SHEETS
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In thousands
June 30, December 31,
2003 2002
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Assets
Gross real estate assets $ 1,482,769 $ 1,452,362
Accumulated depreciation (310,585) (283,277)
Other real estate assets, net 27,541 23,454
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Real estate assets, net 1,199,725 1,192,539
Cash and cash equivalents, including restricted cash 24,912 18,057
Other assets 28,933 28,871
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Total assets $ 1,253,570 $ 1,239,467
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Liabilities
Bonds and notes payable $ 833,212 $ 803,703
Other liabilities 74,194 64,188
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Total liabilities 907,406 867,891
Shareholders' equity and minority interest 346,164 371,576
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Total liabilities & shareholders' equity $ 1,253,570 $ 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
June 30, 2003 4 Quarters
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Net income $ 5,105 $ 16,302
Net gain on disposition of assets and
insurance settlement proceeds (528) (439)
Depreciation and amortization 14,023 56,045
Amortization of deferred financing costs 504 2,519
Interest expense 10,772 47,131
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EBITDA $ 29,876 $ 121,558
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Annualized Trailing
2Q03 4 Quarters
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Gross Real Estate Assets, Average $1,513,392 $1,498,384
EBITDA $ 119,504 $ 121,558
EBITDA/Gross Real Estate Assets 7.9% 8.1%
Three Months Ended June 30,
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2003 2002
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Common and Preferred Dividends as % of FFO
(12 month rolling) 88% 88%
EBITDA/Debt Service 2.63x 2.34x
EBITDA/Fixed Charges 2.65x 2.37x
Total Debt as % of Gross Real Estate Assets 55% 54%
MAA portion of JV debt $41,548 $26,974
Capitalized Interest YTD $ 0 $ 111
For purposes of these computations, EBITDA is composed of net income before net
gain on disposition of assets and insurance settlement proceeds, plus
depreciation and amortization, interest expense, and amortization of deferred
financing costs. EBITDA is a non-GAAP financial measure we use as a performance
measure. As an owner and operator of real estate, we consider EBITDA to be an
important measure of performance from core operations because EBITDA does not
include various income and expense items that are not indicative of our
operating performance. EBITDA should not be considered as an alternative to net
income as an indicator of financial performance. Our computation of EBITDA may
differ from the methodology utilized by other companies to calculate EBITDA.
AFFO
Three Months Ended June 30, Six Months Ended June 30,
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2003 2002 2003 2002
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FFO $ 15,069 $ 14,392 $ 29,593 $ 28,269
Recurring Capex 3,723 3,595 6,216 5,395
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AFFO $ 11,346 $ 10,797 $ 23,377 $ 22,874
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Average Common Shares and Units - Diluted 20,781 20,659 20,719 20,586
PER SHARE (DILUTED)
FFO $ 0.73 $ 0.70 $ 1.43 $ 1.37
AFFO $ 0.55 $ 0.52 $ 1.13 $ 1.11
For purposes of these computations, adjusted funds from operations ("AFFO") is
composed of FFO less recurring capital expenditures. AFFO is a non-GAAP
financial measure. As an owner and operator of real estate, we consider AFFO to
be an important measure of performance from core operations because AFFO
measures our ability to control revenues, expenses and recurring capital
expenditures.
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COMMUNITY STATISTICS
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Properties are grouped by operational responsibility and exclude properties in lease-up
At June 30, 2003
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Average
Number of Portfolio Rental Rate
Units Concentration Occupancy Per Unit
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Tennessee
Memphis 4,593 13.6% 92.4% $ 630.22
Nashville 966 2.8% 91.6% $ 662.43
Chattanooga 943 2.8% 90.9% $ 566.32
Jackson 664 1.9% 96.7% $ 579.33
Florida
Jacksonville 3,130 9.2% 95.5% $ 722.84
Tampa 1,120 3.3% 90.2% $ 764.71
Other 2,518 7.4% 94.0% $ 725.44
Georgia
Atlanta 2,116 6.2% 87.1% $ 757.38
Columbus / LaGrange 1,509 4.4% 96.8% $ 653.52
Augusta / Aiken / Savannah 1,132 3.3% 94.6% $ 634.57
Other 1,742 5.1% 95.4% $ 661.00
Texas
Dallas 2,356 6.9% 86.9% $ 654.82
Austin 1,254 3.7% 93.1% $ 629.46
Houston 1,310 3.8% 93.2% $ 731.73
South Carolina
Greenville 1,492 4.4% 87.6% $ 558.02
Other 784 2.3% 80.5% $ 681.95
Kentucky
Lexington 924 2.7% 91.1% $ 694.51
Other 624 1.8% 98.7% $ 609.27
Mississippi 1,673 4.9% 94.7% $ 587.78
Alabama 952 2.8% 96.1% $ 646.21
Arkansas 808 2.4% 93.8% $ 622.21
North Carolina 738 2.2% 87.4% $ 549.46
Ohio 414 1.2% 89.1% $ 677.25
Virginia 296 0.9% 95.6% $ 727.81
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Total 34,058 100.0% 92.2% $ 661.81
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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
Jun 30, 2003 Jun 30, 2002 Jun 30, 2002 Mar 31, 2003 Mar 31, 2003
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Revenues $53,702 $54,689 -1.8% $53,461 0.5%
Property Operating Expenses 14,818 14,828 -0.1% 14,136 4.8%
RE Taxes and Insurance 6,951 6,403 8.6% 7,070 -1.7%
Other Expenses 169 107 57.9% 192 -12.0%
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Total Operating Expenses 21,938 21,338 2.8% 21,398 2.5%
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NOI $31,764 $33,351 -4.8% $32,063 -0.9%
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Units (1) 29,043 29,043 28,723
Average Rental Rate (1) $656.05 $658.95 -0.4% $655.97 0.0%
Average Physical Occupancy (1) 92.6% 94.8% -2.2% 91.9% 0.7%
(1) Values are at June 30, 2003 and 2002.
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DEBT AS OF JUNE 30, 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 $ 506,178 10.1 6.6%
Conventional - Forward Swapped(2) 50,000 8.0 2.1%
Tax-free - Fixed Rate or Swapped 121,633 23.5 5.4%
Conventional - Variable Rate 137,741 8.4 2.0%
Tax-free - Variable Rate 17,660 27.7 1.8%
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Total $ 833,212 12.0 5.3%
(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
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2003 $ 1,289 $ 20,000 $ 21,289 1.9%
2004 2,733 71,168 73,901 7.0%
2005 2,916 - 2,916
2006 3,086 4,459 7,545 8.8%
2007 3,205 - 3,205
Thereafter 109,043 615,313 724,356 5.2%
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Total $ 122,272 $ 710,940 $ 833,212 5.3%
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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,
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2003 2002 2003 2002
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Weighted average common shares and units - Basic 20,558 20,408 20,523 20,390
Weighted average common shares and units - Diluted 20,781 20,659 20,719 20,586
Weighted average common shares - Diluted 18,047 17,749 17,984 17,673
Number of apartment units with ownership interest
(excluding development units not delivered) 34,815 33,459 34,815 33,459
Apartment units added(sold) during period, net 308 25 892 48
PER SHARE DATA
Funds from operations per share and units - Basic $ 0.73 $ 0.71 $ 1.44 $ 1.39
Funds from operations per share and units - Diluted $ 0.73 $ 0.70 $ 1.43 $ 1.37
Net income available for common shareholders
per share - Diluted $ 0.07 $ 0.05 $ 0.09 $ 0.07
Dividend declared per common share $ 0.585 $ 0.585 $ 1.170 $ 1.170
DIVIDEND INFORMATION (latest declaration) Payment Payment Record
per Share Date Date
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Common Dividend - quarterly $0.5850 7/31/2003 7/24/2003
Preferred Series A - monthly(1) $0.1979 8/12/2003 8/1/2003
Preferred Series B - monthly(1) $0.1849 8/12/2003 8/1/2003
Preferred Series C - quarterly(1) $0.5859 7/15/2003 7/1/2003
Preferred Series F - monthly $0.1927 8/15/2003 8/1/2003
(1) The Company has announced the redemption of all issued and outstanding
shares of its Preferred Series A and C effective August 12, 2003, and for
its Preferred Series B effective August 12 and 18, 2003.