EXHIBIT 99.1
Mid-America Apartment Communities
Investor Update
March 2005
Safe Harbor Statement
Statements contained in this presentation, which
are not historical facts, are forward-looking
statements, as the term is defined in the Private
Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks
and uncertainties which can cause actual results
to differ materially from those currently
anticipated, due to a number of factors, which
include, but are not limited to, unfavorable
changes in the apartment market, changing
economic conditions, the impact of competition,
acquisitions which may not achieve anticipated
results and other risk factors discussed in documents
filed with the Securities and Exchange Commission
from time to time including the Company's
Annual Report on Form 10-K and the Company's
Quarterly Report on Form 10-Q. The
statements in this presentation are made based
upon information currently known to management
and the company assumes no obligation to update or
revise any of its forward-looking statements.
MAA Profile
>> Southeast Regional Focus
Strong apartment demand region; high job growth, migration and household
formation
>> Effective Market Tier Strategy
Diversified across large, middle and small tier markets; stability and
strong growth prospects
>> High Quality Product Focus
Price point caters to largest market segment; lower volatility through full
market cycles
>> Strong Property Operating Focus
Hands-on approach to property management; strong operations and on-site
execution skills
>> Disciplined Capital Deployment
Investment protocol focused on protecting and growing existing shareholder
value
Regionally Focused Strategy
Diversified across a strong and stable growth region of the country...high and
steady demand for apartment housing
Higher Population Growth Projections:
2005 - 2010:
US Total 4.1%
MAA Region 4.7%
2005 - 2015:
US Total 8.4%
MAA Region 9.3%
Source: Dept. of Commerce, Current Population Reports
Both short-term demand
(job growth) and long-term
demand (household
formation) trends favor
this region.
[A map depicts the company's locations in the Southeast and Texas]
Growth and Stability
Unique three-tier market portfolio strategy delivers superior results, with
lower risks and volatility, through the full real estate and economic cycle. We
are two years into a plan to tweak the portfolio towards a more balanced
allocation; better position for an improving market
[A pie chart reflects the following data]
23% Large Tier
Dallas
Atlanta
Houston
Tampa
South FL
Was 17% ...plan approx. 35%
41% Middle Tier
Jacksonville
Memphis
Nashville
Austin
Greenville
Orlando
Birmingham
....others
Was 37% ...plan approx. 35%
36% Small Tier
Jackson
Lexington
Charleston
Little Rock
Savannah
Huntsville
Columbia
....others
Was 46% ...plan approx. 30%
High Quality Product Focus
>> Average age of portfolio is 13.4 years; one of the newer portfolios in the
apartment REIT sector
>> $280 MM of new construction brought on line 1998 - 2002 at $67,000/ unit
>> $250 MM of new acquisitions (average property age of 5 years) added 2003 -
2004 at $74,000/unit
>> $100 MM (net) of JV acquisitions 2002 - 2004
Apartment REIT Sector Position
An efficient operating platform in place...meaningful opportunity for higher
relative external growth performance
Scale of Operation Enterprise Value
Owned units (in billions)
Equity 202,256 Equity $ 18.2
Aimco 156,145 Archstone $ 12.7
United Dominion 77,433 AIMCO $ 11.4
Archstone 61,088 Avalon Bay $ 8.1
Camden 52,088 United Dominion $ 6.3
Home Properties 42,224 Home Properties $ 3.9
Avalon Bay 39,349 Camden $ 3.9
Mid-America 36,618 BRE Properties $ 3.6
AMLI 27,328 Essex Property $ 3.5
Essex Property 26,991 Post Properties $ 2.7
BRE Properties 24,255 Gables $ 2.4
Post Properties 24,034 Mid-America $ 2.2
Cornerstone 22,910 Summit Properties $ 2.0
Gables 22,110 AMLI $ 1.8
Associated Estates 16,615 Cornerstone $ 1.4
Summit Properties 14,098 Town & Country $ 1.0
Town & Country 13,065 Associated Estates $ 0.8
Per 12/31/04 Stifel, Nicolaus Weekly Sector Scorecard Report
and Green Street Advisors Apartment REIT 3Q04 Update 11/15/04.
Strategy Overview
Early 2002 defined a plan to improve share price, 'weather the storm' of
weakening market fundamentals and position for growth
>> Commit to the current dividend
* Grow cash flow; avoid transactions that would dilute coverage
>> Protect shareholder and real estate value
* Resident profile, CapEx spending, stay focused on operating
fundamentals
>> Establish a more balanced portfolio and earnings profile
* Grow capital base in larger tier markets; position for full-cycle
performance
>> Strengthen balance sheet and operating platform to support growth
* Build balance sheet flexibility, high focus on operating productivity
Steady Improvement
Steady progress in growing FFO; dividend coverage improved; expect continued FFO
improvement next year as market conditions strengthen and new growth continues
[A line graph depicts the following data]
2001 2002 2003 2004F 2005F
FFO per share* $ 2.74 $ 2.69 $ 2.87 $ 3.00 $ 3.06
Dividend per share $ 2.34 $ 2.34 $ 2.34 $ 2.34 $ 2.34
* Before write-off of preferred share issuance cost ("non-cash"); Forecast per
First Call.
Consistent Performer
16.6% annualized return since IPO; MAA shareholder returns in the top-tier of
apartment sector performance for all measurement periods
Total Return since February 1994:
MAA vs NAREIT Index
[A line graph depicts the following data]
IPO 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 YTD 11/9/04
MAA 100 142 143 180 192 166 182 201 259 264 395 441
Nareit 100 100 114 156 188 155 147 188 212 222 304 367
Total Return - Three Years
UDR 110.58%
MAA 100.23%
ESS 98.17%
AVB 89.41%
ASN 81.69%
CPT 68.68%
HME 66.67%
TCT 65.25%
SMT 61.71%
AML 59.73%
BRE 55.22%
GBP 53.54%
EQR 51.32%
AEC 50.82%
PPS 24.30%
TCR 13.39%
AIV 6.65%
Total Return - Five Years
UDR 269.50%
ESS 220.90%
MAA 189.91%
AVB 187.73%
ASN 166.33%
SMT 164.39%
CPT 157.58%
BRE 144.44%
AML 134.87%
EQR 131.03%
TCT 130.49%
AEC 130.32%
HME 124.55%
GBP 123.41%
TCR 62.04%
AIV 40.31%
PPS 35.06%
Source: Stifel, Nicolaus Weekly Sector Scorecard - Residential 12/31/04.
Steady Improvement
Expect continued steady progress in 2005 and beyond
>> FFO Forecasts
* 2004: $3.00
* 2005F: $3.00 to $3.10
>> Impact from straight-line concession change
* 2004: + 4 cents
* 2005F: - 3 cents
>> Assume in 2005
* 2% to 2.5% same store NOI growth
* $150 MM of acquisitions
* $20 MM of dispositions
* 5.5% blended average interest rate
>> Forecast external growth funded by DRSPP, dispositions, and existing credit
facilities
Why Buy MAA
Significant FFO upside to capture from same store portfolio as market conditions
improve...earnings potential protected and enhanced
>> Same store pricing power of portfolio has been protected (ARU performance:
2002 -.2%, 2003 .1%, 2004 .7%)
>> Leasing and credit standards have been aggressively managed and protected
>> During normalized market conditions, same store portfolio generated
$0.20/share of higher NOI (or $4MM) than in 2004
>> All three market tier segments (large, middle and small city markets) have
upside to capture
>> Successful implementation in 2004 of new web-based property and revenue
management system; strong productivity and pricing platform
>> New initiative to be launched in 2005 focused on extensive unit interior
renovation opportunities; initially focused on 3,500 units
Why Buy MAA
New web-based property management system implemented in 2004 will provide
significantly enhanced capabilities
Revenue growth opportunities
- - Improved amenity pricing opportunities
- - Added visibility of pricing and concessions will facilitate and support
higher rent growth
- - Higher utility collection recovery (3 to 4 cents/share)
Process improvements
- - Complete, standardized data base
- - More efficient lease expiration management; lower vacancy loss
- - Stronger unit "get-ready" management
- - Improved purchase order control and expense management
Why Buy MAA
A record of disciplined growth; extensive network in place and local knowledge
of markets ensures steady deal flow to capture new growth
>> $415 million (5,579 high quality units) acquired in the last 2 1/2 years at
an average 6.6% cap rate
* Average property age 5 years
* Average $74,000 per unit; below replacement value
* All in major markets: Atlanta, Dallas, Houston, South Florida,
Jacksonville, Austin, Nashville
>> Numerous acquisition opportunities currently under review; deal flow
pipeline very full
Why Buy MAA
Focused on growing portfolio allocation in large tier and higher growth markets;
but remaining committed to an overall three-tier market strategy
>> Large tier market allocation has grown from 17% in 2002 to 23% currently;
plan to grow to ~ 35%
>> Intend to retain a significant commitment to more stable and steady
performance markets; good match with providing a stable and steadily
growing dividend
>> Target growth markets: Atlanta, Dallas, South Florida, Tampa, Orlando,
Houston, Austin, Nashville, Jacksonville, Charlotte
Why Buy MAA
Flexibility, coverage ratios and cost of debt have all materially improved over
the last three years; balance sheet positioned to support growth
>> Balance sheet materially strengthened
>> Equity markets accessed tactically to fund acquisitions on accretive basis
through direct placements
>> DRSPP raises equity of $4MM/month
>> Improving dividend coverage has increased flexibility
>> Fixed charge coverage has improved to 1.80 from 1.68 over last three years
>> Agency credit facilities offer optimum debt financing (price, flexibility)
>> Debt program low cost, flexible and well laddered
Why Buy MAA
Investment decisions are governed by conservative underwriting, a minimum IRR
investment hurdle requirement and a requirement to ensure that meaningful
accretion to existing shareholder value is captured
>> Underwriting assumptions
* Growth rates primarily driven by third party data
* Exit cap rates used in proformas are greater than we are achieving in
our dispositions
* Will only acquire at a discount to replacement value
>> Investment hurdles
* IRR: cost of equity + 300 bp
* AFFO accretion: + 20% on incremental shares
Why Buy MAA
Experienced and independent Board of Directors - expertise in apartment real
estate, capital markets and corporate governance
>> Independent Directors
* Robert Fogelman
President, Fogelman Investments. 30 years of multifamily development
and property management
* Ralph Horn, Chairman Governance and Compensation Committees
Former Chairman/CEO First Tennessee. Director - Gaylord Entertainment,
Harrah's Entertainment
* Mike Starnes
CEO and President MS Carriers, Inc. Director - Swift Transportation
Co., Union Planters Corp
* John Grinalds
President, The Citadel University. Retired, Major General U.S. Marine
Corps
* Alan Graf, Chairman Audit Committee
Executive Vice President and CFO, FedEx Corporation, Director - Nike
Inc., Kimball International
>> Non-Management Directors
* George Cates, Lead Director
Founder, former Chairman/CEO of MAA. 30 years multifamily experience.
Director - First Tennessee
* John Flournoy
Chairman and CEO, Flournoy Development Company (apartments), Director
- Synovus Financial
>> Management Directors
* Eric Bolton
Chairman and CEO, 11 years with MAA, 20 years real estate experience
* Simon Wadsworth
Executive Vice President and CFO, 11 years with MAA
Insiders own 10.1% of MAA
Why Buy MAA
Experienced management team and deep bench strength; succession planning and
leadership development on-going
Senior management team has an average tenure with MAA of 8 years
MAA is the only REIT endorsed by the Nat'l. Apt. Assoc. to provide training and
certification for Certified Apt. Mgr. (CAM designation). MAA currently has 106
CAMs.
Why Buy MAA
Current market pricing of MAA offers a discount to the underlying real estate
value
>> Market pricing is approximately $58,800 per unit, or 6.7% cap rate (at
$38.00/share)
>> One of the newer portfolios in the sector at an average age of 13 years
>> 4,457 units at an average price of $75,000 (which is a discount to
replacement value) added in the last two years
>> Material shift of portfolio to lower cap rate markets over the last three
years
>> Recent transactions (SMT, TCR) imply values of 5.5% to 5.75% cap rates at
$65,000 per unit for similar properties
>> Equivalent pricing of MAA drives price range of $48 to $55 per share
Why Buy MAA
Sales completed in 2004 support higher asset quality and net asset value than
implied in current share price
Age Price/Unit Cap Rate Indicated IRR*
Island Retreat
St. Simon's Island, GA 1978 $ 91,875 5.5% 29.0%
Preserve at Arbor Lake
Jacksonville, FL 1992 $108,641 4.9% 70.0%
*Levergaed IRR
Implied value/pricing of MAA per share at 5.5% cap rate: $56
Why Buy MAA
MAA is under-priced relative to sector multiple average
Stock Price
As Multiple FFO AFFO
MAA 13.3 16.5
All Apts. 16.5 19.4
MAA priced at sector multiple averages: $46 - $50
MAA is better positioned for dividend growth than the sector average.
Dividend
Payout Ratio FFO AFFO
MAA 78% 97%
All Apts. 86% 100%
Source: Morgan Stanley 11-5-04; All Apts. is weighted average; MAA updated
through Q304 release.
Why Buy MAA
Pricing upside relative to sector in terms of dividend yield and market pricing
of apartment real estate
1. Market pricing of equivalent real estate: $48 - $56
2. Market pricing based on equivalent FFO multiple: $46 - $50
Upside opportunity implied in the current pricing of MAA
Current market pricing of MAA: $38
Why Buy MAA
As job growth leads to household growth, MAA's portfolio has the best "rental
demand growth prospects to pricing upside" ratio within the apartment REIT
sector...higher portfolio growth prospects AND higher stock price upside
opportunity
[Scatter charts depict the following data]
Job-Growth Based Rankings 2005 FFO Multiple
AVB 2.2 19.6
ASN 1.9 18.0
ESS 2.1 18.0
BRE 1.9 17.0
TCT 2.3 15.6
HME 1.9 14.0
AEC 1.9 9.0
EQR 1.7 14.2
CPT 1.6 14.0
UDR 1.7 13.9
AIV 1.6 12.8
AML 1.5 15.0
GBP 1.7 15.9
PPS 1.8 17.7
CLP 1.6 10.7
MAA 1.8 13.0
Household-Growth Based Rankings 2005 FFO Multiple
AVB 0.87 19.6
ASN 1.20 18.0
ESS 0.96 18.0
BRE 1.15 17.0
TCT 1.24 15.6
HME 0.93 14.0
AEC 0.97 9.0
EQR 1.27 14.2
CPT 1.46 14.0
UDR 1.43 13.9
AIV 1.27 12.8
AML 1.68 15.0
GBP 1.73 15.9
PPS 1.71 17.7
CLP 1.54 10.7
MAA 1.72 13.0
Reproduced from "Real Estate - Exclusive Power Ranking of Multifamily REITs,"
Wells Fargo Securities, 12/2/04. REITs ranked by two different power rankings:
(1) 2-year job growth estimates, and (2) 5-year straight-lined household growth
estimates. This proxy for property-level earnings growth potential is then
contrasted against current pricing (as a multiple of 2005 FFO forecast) to
assess pricing efficiency of individual REIT names.
Why Buy MAA
MAA is a lower risk investment than most in the sector*
>> Low beta stocks should be more resistant to a market sell-off
>> Apartment REITs have historically been low beta stocks versus most other
REIT sectors
>> MAA has demonstrated a lower beta than most apartment REITs over a 5-year
time horizon
* KeyBanc Capital Markets Monthly REITer January 2005
Summary - Why Buy MAA
Significant internal earnings growth upside + steady and disciplined external
growth prospects + secure dividend + pricing upside to sector
|X| Lower-risk business strategy & operation
|X| Well positioned within the sector
|X| Significant earnings upside to recapture
|X| Solid growth prospects
|X| Disciplined approach to new growth
|X| Secure dividend
|X| Pricing upside relative to sector
|X| Attractive yield and value growth upside
|X| Lower volatility and risks
Mid-America Apartment Communities
Creating Great Places to Live