EXHIBIT 99.1 Press Release Dated May 6, 2004
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PRESS RELEASE
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FROM: SIMON R.C. WADSWORTH
SUBJECT: SOLID OPERATING RESULTS BOOST MID-AMERICA APARTMENTS' FUNDS FROM
OPERATIONS
DATE: MAY 6, 2004
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Memphis, TN, Mid-America Apartment Communities, Inc. (NYSE: MAA) reported Funds
From Operations ("FFO") of $17,491,000 or $0.76 per share/unit for the first
quarter ended March 31, 2004. This was $0.05 per share/unit higher than
analysts' prior First Call estimates, $0.06 per share/unit higher than the $0.70
FFO per share/unit reported for the same quarter a year ago, and was a first
quarter record.
FFO for the quarter includes $0.03 per share/unit of non-cash income relating to
the amortization of the adjustment of the value of debt assumed during the 3rd
quarter of 2003. Before this adjustment, FFO per share/unit grew by 4.3% over
the comparable quarter of a year ago. FFO is the generally accepted measure of
operating performance for real estate investment trusts. On a similar basis,
AFFO for the quarter was 65 cents per share/unit, also a record, and compares to
58 cents for the same period a year ago. Reconciliation and discussions of FFO
and AFFO can be found later in this release.
The net income available for common shareholders for the quarter ended March 31,
2004 was $1,349,000, or $0.07 per common share, as compared to $401,000, or
$0.02 per common share for the same quarter a year ago.
The Company paid a common dividend of 58.5 cents per share on April 30, 2004 to
shareholders of record on April 24, 2004.
Highlights for the quarter were:
o Average same store physical occupancy in the first quarter increased to
93.5% from 91.9 % in the same quarter a year ago.
o Same-store revenues grew by 2.0% as compared to the same quarter last year
and property net operating income grew by 0.7%.
o Same store resident turnover dropped 6% from the first quarter of 2003.
o The acquisition of Verandas at Timberglen in Dallas (in our joint venture
with Crow Holdings) and Monthaven Park in Nashville were completed during
the quarter.
o Fixed charge coverage strengthened to 2.58 times, from 2.48 a year ago.
o The Company increased the capacity of its credit facilities with Fannie Mae
to $950 million and extended maturities to between 2010 and 2014.
Eric Bolton, Chairman and CEO said, "Mid-America's strong operating capabilities
and investment strategy focused on deploying capital in the high growth
southeastern and south central regions of the country, diversified across large,
middle and small tier markets, continues to deliver one of the best operating
and shareholder performances for the sector. By remaining committed to
protecting property values and long-term FFO growth potential during the weak
operating environment of the last two years, the portfolio remains poised to
capture higher FFO as leasing conditions improve."
Simon Wadsworth, Executive Vice-President and CFO said, "Our growth in FFO and
fixed charge coverage has improved our financial flexibility. We're also pleased
that the modification to our credit agreement with Fannie Mae not only extends
our debt maturities and increases our borrowing potential, but also reduces the
credit-enhancement fee later this year. At the end of March we successfully
refinanced $40 million of the debt acquired with the acquisition of our joint
venture assets last year. Excluding the impact of the fair value amortization
discussed above, we expect annualized interest savings of 3 cents per share/unit
with a further 6 cents per share/unit of annualized interest savings from $60
million of refinancings planned during the second quarter. We are in the final
stages of negotiating a $100 million credit agreement with Freddie Mac, which we
plan to use for part of our debt financing program over the next couple of
years.
"We're increasing our FFO forecast for this year to a mid-point of $2.92 per
share/unit, with a range of $2.90 to $2.94 per share/unit. We expect improved
occupancy and revenue performance to continue for the balance of the year,
partially offset by rising interest rates. We've not projected any additional
acquisitions, although we are continuing to seek transactions that pass our
stringent investment hurdles.
MAA is a self-administered, self-managed apartment-only real estate investment
trust which currently owns or has ownership interest in 36,712 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 (in thousands except per share data)
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Three months ended
March 31,
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2004 2003
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Property revenues $ 66,200 $ 57,298
Property operating expenses 27,467 23,058
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Net operating income 38,733 34,240
Interest and other non-property income 143 229
Management and fee income, net 145 248
Property management expenses 2,553 2,261
General & administrative 2,371 1,826
Depreciation 17,233 13,875
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Income from continuing operations before
non-operating items 16,864 16,755
Interest expense (12,595) (11,635)
Gain on debt extinguishment 82 -
Amortization of deferred financing costs (463) (624)
Minority interest in operating partnership income (420) (133)
Loss from investments in unconsolidated entities (41) (125)
Net gain on insurance settlement proceeds 1,628 79
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Income from continuing operations 5,055 4,317
Discontinued operations:
Property operations - 9
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Net income 5,055 4,326
Preferred dividend distribution 3,706 3,925
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Net income available for common shareholders $ 1,349 $ 401
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Weighted average common shares - Diluted 20,365 17,921
Net income available for common shareholders $ 0.07 $ 0.02
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FUNDS FROM OPERATIONS (in thousands except per share data)
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Net income $ 5,055 $ 4,326
Addback: Depreciation real estate assets 16,899 13,531
Subtract: Net gain on insurance settlement proceeds 1,628 79
Addback: Depreciation real estate assets
of discontinued operations - 39
Addback: Depreciation real estate assets
of unconsolidated entities 451 499
Subtract: Preferred dividend distribution 3,706 3,925
Addback: Minority interest in operating partnership income (420) (133)
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Funds from operations 17,491 14,524
Recurring Capex 2,588 2,493
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Adjusted funds from operations $ 14,903 $ 12,031
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Weighted average common shares and units - Diluted 23,044 20,657
Funds from operations per shares and units - Diluted $ 0.76 $ 0.70
Adjusted funds from operations per shares and units - Diluted $ 0.65 $ 0.58
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CONSOLIDATED BALANCE SHEETS (in thousands)
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March 31, December 31,
2004 2003
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Assets
Gross real estate assets $ 1,708,331 $ 1,670,417
Accumulated depreciation (356,309) (339,704)
Other real estate assets, net 25,523 21,136
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Real estate assets, net 1,377,545 1,351,849
Cash and cash equivalents, including restricted cash 17,662 20,880
Other assets 29,611 33,804
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Total assets $ 1,424,818 $ 1,406,533
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Liabilities
Notes payable $ 979,495 $ 951,941
Other liabilities 59,867 61,279
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Total liabilities 1,039,362 1,013,220
Shareholders' equity and minority interest 385,456 393,313
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Total liabilities & shareholders' equity $ 1,424,818 $ 1,406,533
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SHARE AND UNIT DATA (in thousands)
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Three months ended
March 31,
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2004 2003
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Weighted average common shares - Basic 20,038 17,752
Weighted average common shares - Diluted 20,365 17,921
Weighted average common shares and units - Basic 22,717 20,487
Weighted average common shares and units - Diluted 23,044 20,657
Common shares at March 31 - Basic 20,354 17,882
Common shares at March 31 - Diluted 20,607 17,936
Common shares and units at March 31 - Basic 23,025 20,616
Common shares and units at March 31 - Diluted 23,278 20,670
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OPERATING RESULTS (Dollars and shares in thousands except per share data)
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ROA Three Months Ended Trailing
March 31, 2004 4 Quarters
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Net income $ 5,055 $ 20,935
Net gain on insurance settlement proceeds (1,628) (4,491)
Gain on sale of discontinued operations - (1,919)
Depreciation 17,233 62,376
Amortization of deferred financing costs (463) 2,223
Interest expense 12,595 46,992
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EBITDA $ 32,792 $ 126,116
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Annualized Trailing
1Q04 4 Quarters
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Gross Real Estate Assets, Average $1,737,666 $1,648,230
EBITDA $ 131,168 $ 126,116
EBITDA/Gross Real Estate Assets 7.5% 7.7%
Three Months Ended March 31,
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2004 2003
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EBITDA/Debt Service 2.50x 2.42x
EBITDA/Fixed Charges 2.58x 2.48x
Total Debt as % of Gross Real Estate Assets 56% 55%
MAA portion of JV debt $24,883 $37,524
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COMMUNITY STATISTICS
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Properties are grouped by operational responsibility.
At March 31, 2004
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Average
Number of Portfolio Rental Rate
Units Concentration Occupancy Per Unit
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Tennessee
Memphis 4,837 13.17% 92.7% $ 646.16
Nashville 1,855 5.05% 91.7% $ 713.05
Chattanooga 943 2.57% 93.1% $ 564.07
Jackson 664 1.81% 93.1% $ 577.61
Florida
Jacksonville 3,631 9.89% 90.8% $ 759.65
Tampa 1,120 3.05% 94.4% $ 770.15
Other 2,518 6.86% 94.3% $ 736.01
Georgia
Atlanta 2,116 5.76% 94.0% $ 729.14
Columbus / LaGrange 1,509 4.11% 95.5% $ 657.54
Augusta / Aiken / Savannah 912 2.48% 92.9% $ 619.49
Other 1,962 5.34% 95.1% $ 675.41
Texas
Dallas 3,376 9.20% 90.6% $ 724.85
Houston 1,310 3.57% 91.1% $ 730.78
Austin 1,254 3.42% 91.7% $ 621.95
South Carolina
Greenville 1,492 4.06% 94.0% $ 549.19
Other 784 2.14% 93.9% $ 690.58
Kentucky
Lexington 924 2.52% 94.3% $ 705.08
Other 624 1.70% 95.2% $ 608.89
Mississippi 1,673 4.56% 95.5% $ 601.12
Alabama 952 2.59% 91.6% $ 650.53
Arkansas 808 2.20% 96.2% $ 627.47
North Carolina 738 2.01% 93.8% $ 541.53
Ohio 414 1.13% 91.3% $ 683.70
Virginia 296 0.81% 97.3% $ 759.31
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Total 36,712 100.00% 93.1% $ 677.68
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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, 2004 Mar 31, 2003 Mar 31, 2003 Dec 31, 2003 Dec 31, 2003
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Revenues $54,506 $53,461 2.0% $54,323 0.3%
Property Operating Expenses 14,974 14,136 5.9% 15,909 -5.9%
RE Taxes and Insurance 7,099 7,070 0.4% 6,774 4.8%
Other Expenses 143 192 -25.5% 152 -5.9%
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Total Operating Expenses 22,216 21,398 3.8% 22,835 -2.7%
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NOI $32,290 $32,063 0.7% $31,488 2.5%
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Units (1) 29,043 29,043 29,043
Average Rental Rate (1) $657.54 $655.97 0.2% $657.81 0.0%
Average Physical Occupancy (1) 93.5% 91.9% 1.6% 93.1% 0.4%
(1) Values are at March 31, 2004 and 2003, and December 31, 2003.
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DEBT AS OF MARCH 31, 2004
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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 $ 581,286 9.3 6.5%
Conventional - Forward Swapped(2) 40,000 10.7 1.7%
Tax-free - Fixed Rate or Swapped 113,219 23.6 5.3%
Conventional - Variable Rate 215,610 8.8 1.9%
Tax-free - Variable Rate 29,380 20.4 1.8%
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Total $ 979,495 11.2 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 of
Amortization Maturities Total Maturities
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2004 $ 2,713 $ 91,168 $ 93,881 5.8%
2005 3,311 7,689 11,000 3.3%
2006 3,492 4,459 7,951 8.8%
2007 3,623 - 3,623
2008 3,529 30,539 34,068 5.5%
Thereafter 92,821 736,151 828,972 4.9%
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Total $ 109,489 $ 870,006 $ 979,495 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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2004 2003
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Number of apartment units with ownership interest
(excluding development units not delivered) 36,712 34,507
Apartment units added during period, net 978 584
PER SHARE DATA
Dividend declared per common share $ 0.585 $ 0.585
DIVIDEND INFORMATION (latest declaration) Payment Payment Record
per Share Date Date
---------------- -------------- -----------------------------
Common Dividend - quarterly $0.5850 04/30/2004 04/24/2004
Preferred Series F - monthly $0.1927 05/15/2004 05/01/2004
Preferred Series H - quarterly $0.51875 03/23/2004 03/13/2004
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NON-GAAP FINANCIAL DEFINITIONS
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Funds From Operations (FFO)
FFO represents net income (computed in accordance with accounting
principles generally accepted in the United States of America, or GAAP)
excluding extraordinary items, minority interest in Operating Partnership
income, gain 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 National
Association of Real Estate Investment Trust's definition.
Disposition of real estate assets includes sales of discontinued operations
as well as proceeds received from insurance settlements from property
damage.
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. FFO should not be considered as an alternative to net income.
The Company believes that FFO is helpful in understanding the Company's
operating performance in that FFO excludes depreciation expense on real
estate assets. The Company believes 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.
While the Company has included the amount charged to retire preferred stock
in excess of carrying values in its FFO calculation in response to the
SEC's July 31st Staff Policy Statement relating to EITF Topic D-42
concerning the calculation of earnings per share for the redemption of
preferred stock, the Company believes that FFO before amount charged to
retire preferred stock in excess of carrying values is also an important
measure of operating performance as the amount charged to retire preferred
stock in excess of carrying values is a non-cash adjustment representing
issuance costs in prior periods for preferred stock.
Adjusted Funds From Operations (AFFO)
For purposes of these computations, AFFO is composed of FFO less recurring
capital expenditures plus the premiums and original issuance costs of
preferred stock that was redeemed. 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.
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
For purposes of these computations, EBITDA is composed of net income before
net gain on discontinued operations and insurance settlement proceeds, plus
depreciation, 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.