UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-K
(Mark One)
 
 
ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________                     
 
 
 
 
Commission File Number 001-12762 (Mid-America Apartment Communities, Inc.)
Commission File Number 333-190028-01 (Mid-America Apartments, L.P.)
 
 
 
 
 
 
MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P.
(Exact name of registrant as specified in its charter)
Tennessee (Mid-America Apartment Communities, Inc.)
 
 
62-1543819
Tennessee (Mid-America Apartments, L.P.)
 
 
62-1543816
  (State or other jurisdiction of incorporation or organization)
 
 
(I.R.S. Employer Identification No.)
 
 
6584 Poplar Avenue, Memphis, Tennessee, 38138
 
 
 
(Address of principal executive offices) (Zip Code)
 
 
 
Registrant's telephone number, including area code:  (901) 682-6600
 
 
 
 
 
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of each class
 
Name of each exchange on which registered
Common Stock, par value $.01 per share (Mid-America Apartment Communities, Inc.)
 
New York Stock Exchange
8.50% Series I Cumulative Redeemable Preferred Stock, $.01 par value per share (Mid-America Apartment Communities, Inc.)
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
 
 
 
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
Mid-America Apartment Communities, Inc.
YES ý
No o
Mid-America Apartments, L.P.
YES o
No ý
 
 
 
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
 
Mid-America Apartment Communities, Inc.
YES o
No ý
Mid-America Apartments, L.P.
YES o
No ý
 
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Mid-America Apartment Communities, Inc.
YES ý
No o
Mid-America Apartments, L.P.
YES ý
No o
 
 
 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and
post such files).
Mid-America Apartment Communities, Inc.
YES ý
No o
Mid-America Apartments, L.P.
YES ý
No o
 
 
 
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. R
 
 
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Act. (Check one)
Mid-America Apartment Communities, Inc.
 
 
 
Large accelerated filer ý
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 
 
(Do not check if a smaller reporting company)
Mid-America Apartments, L.P.
 
 
 
 
Large accelerated filer o
Accelerated filer o
Non-accelerated filer ý
Smaller reporting company o
 
 
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Mid-America Apartment Communities, Inc.
YES o
No ý
Mid-America Apartments, L.P.
YES o
No ý
The aggregate market value of the 56,652,573 shares of the registrant's common stock held by non-affiliates of Mid-America Apartment Communities, Inc. was approximately $6,027,833,767 based on the closing price of $106.40 as reported on the New York Stock Exchange on June 30, 2016. This calculation excludes shares of common stock held by the registrant's officers and directors and each person known by the registrant to beneficially own more than 5% of the registrant's outstanding shares, as such persons may be deemed to be affiliates. This determination of affiliate status should not be deemed conclusive for any other purpose. As of February 20, 2017 there were 113,545,231 shares of Mid-America Apartment Communities, Inc. common stock outstanding.

There is no public trading market for the partnership units of Mid-America Apartments, L.P. As a result, an aggregate market value of the partnership units of Mid-America Apartments, L.P. cannot be determined.
Documents Incorporated by Reference
Portions of the proxy statement for the annual shareholders meeting of Mid-America Apartment Communities, Inc. to be held on May 23, 2017 are incorporated by reference into Part III of this report. We expect to file our proxy statement within 120 days after December 31, 2016 .

1


MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P. 
 
 
 

TABLE OF CONTENTS
 
Item
 
Page
 
PART I
 
 

1.
Business.
5

1A.
Risk Factors.
13

1B.
Unresolved Staff Comments.
28

2.
Properties.
28

3.
Legal Proceedings.
37

4.
Mine Safety Disclosures.
37

 
 
 

 
PART II
 

 
 
 

5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
38

6.
Selected Financial Data.
41

7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
44

7A.
Quantitative and Qualitative Disclosures About Market Risk.
60

8.
Financial Statements and Supplementary Data.
61

9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
61

9A.
Controls and Procedures.
61

9B.
Other Information.
62

 
 
 

 
PART III
 

 
 
 

10.
Directors, Executive Officers and Corporate Governance.
63

11.
Executive Compensation.
63

12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
63

13.
Certain Relationships and Related Transactions, and Director Independence.
63

14.
Principal Accountant Fees and Services.
63

 
 
 

 
PART IV
 

 
 
 

15.
Exhibits and Financial Statement Schedules.
64

16.
Summary
67






Explanatory Note

This report combines the annual reports on Form 10-K for the year ended December 31, 2016 of Mid-America Apartment Communities, Inc., a Tennessee corporation, and Mid-America Apartments, L.P., a Tennessee limited partnership, of which Mid-America Apartment Communities, Inc. is the sole general partner. Unless the context otherwise requires, all references in this Report to “MAA” refer only to Mid-America Apartment Communities, Inc., and not any of its consolidated subsidiaries. Unless the context otherwise requires, all references in this Report to "we," "us," "our," or the "Company" refer collectively to Mid-America Apartment Communities, Inc., together with its consolidated subsidiaries, including Mid-America Apartments, L.P. Unless the context otherwise requires, the references in this Report to the “Operating Partnership” or “MAALP” refer to Mid-America Apartments, L.P. together with its consolidated subsidiaries. “Common stock” refers to the common stock of MAA and “shareholders” means the holders of shares of MAA’s common stock. The limited partnership interests of the Operating Partnership are referred to as “OP Units” and the holders of the OP Units are referred to as “unitholders”. This combined Form 10-K is being filed separately by MAA and MAALP.

As of December 31, 2016 , MAA owned 113,518,212 OP units (or approximately 96.4% ) of the limited partnership interests of the Operating Partnership. MAA conducts substantially all of its business and holds substantially all of its assets through the Operating Partnership, and by virtue of its ownership of the OP Units and being the Operating Partnership's sole general partner, MAA has the ability to control all of the day-to-day operations of the Operating Partnership.

We believe combining the annual reports on Form 10-K of MAA and the Operating Partnership, including the notes to the consolidated financial statements, into this single report results in the following benefits:

•
enhances investors' understanding of MAA and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;
•
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this Report applies to both MAA and the Operating Partnership; and
•
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

Management operates MAA and the Operating Partnership as one business. The management of the Company is comprised of individuals who are officers of MAA and employees of the Operating Partnership. We believe it is important to understand the few differences between MAA and the Operating Partnership in the context of how MAA and the Operating Partnership operate as a consolidated company. MAA and the Operating Partnership are structured as an "umbrella partnership REIT," or UPREIT. MAA's interest in the Operating Partnership entitles MAA to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to MAA's percentage interest therein and entitles MAA to vote on substantially all matters requiring a vote of the partners. MAA's only material asset is its ownership of limited partnership interests in the Operating Partnership; therefore, MAA does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time-to-time and guaranteeing certain debt of the Operating Partnership. The Operating Partnership holds, directly or indirectly, all of our real estate assets. Except for net proceeds from public equity issuances by MAA, which are contributed to the Operating Partnership in exchange for limited partnership interests, the Operating Partnership generates the capital required by the Company's business through the Operating Partnership's operations, direct or indirect incurrence of indebtedness and issuance of partnership units.

The presentation of MAA's shareholders' equity and the Operating Partnership's capital are the principal areas of difference between the consolidated financial statements of MAA and those of the Operating Partnership. MAA's shareholders' equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative distributions, noncontrolling interest, preferred units, treasury shares, accumulated other comprehensive income and redeemable common units. The Operating Partnership's capital may include common capital and preferred capital of the general partner (MAA), limited partners' preferred capital, limited partners' noncontrolling interest, accumulated other comprehensive income and redeemable common units. Redeemable common units represent the number of outstanding limited partnership units as of the date of the applicable balance sheet, valued at the greater of the closing market price of MAA's common stock or the aggregate value of the individual partners' capital balances. Holders of OP Units (other than MAA and its corporate affiliates) may require us to redeem their OP Units from time to time, in which case we may, at our option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA's common stock on the New York Stock Exchange over a specified period prior to the redemption date) or by delivering one share of our common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.

    


1


In order to highlight the material differences between MAA and the Operating Partnership, this Report includes sections that separately present and discuss areas that are materially different between MAA and the Operating Partnership, including:

•
the selected financial data in Item 6 of this Report;
•
the consolidated financial statements in Item 8 of this Report;
•
certain accompanying notes to the financial statements, including Note 3 - Earnings per Common Share of MAA and Note 4 - Earnings per OP Unit of MAALP; Note 10 - Shareholders' Equity of MAA and Note 11 - Partners' Capital of MAALP; and Note 19 - Selected Quarterly Financial Information of Mid-America Apartment Communities, Inc. (Unaudited) and Note 20 - Selected Quarterly Financial Information of Mid-America Apartments, LP (Unaudited);
•
the controls and procedures in Item 9A of this Report; and
•
the certifications of the Chief Executive Officer and Chief Financial Officer of MAA included as Exhibits 31 and 32 to this Report.

In the sections that combine disclosure for MAA and the Operating Partnership, this Report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership (directly or indirectly through one of its subsidiaries) is generally the entity that enters into contracts, holds assets and issues debt, management believes this presentation is appropriate for the reasons set forth above and because the business is one enterprise and we operate the business through the Operating Partnership.


2


PART I
 
Risks Associated with Forward Looking Statements

We consider this and other sections of this Annual Report on Form 10-K to contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Such forward-looking statements may include, without limitation, statements concerning property acquisitions and dispositions, joint venture activity, development and renovation activity as well as other capital expenditures, capital raising activities, rent and expense growth, occupancy, financing activities and interest rate and other economic expectations and statements regarding the benefits of our merger with Post Properties, Inc. ("Post Properties"), Post GP Holdings, Inc., and Post Apartment Homes, L.P ("Post LP"). Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the results of operations, financial conditions or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such forward-looking statements included in this report may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.

The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:
 
•
inability to generate sufficient cash flows due to market conditions, changes in supply and/or demand, competition, uninsured losses, changes in tax and housing laws, or other factors;
•
exposure, as a multifamily focused REIT, to risks inherent in investments in a single industry and sector;
•
difficulty in integrating Post Properties' operations, systems and personnel with ours;
•
adverse impact of any financial, accounting, operational, legal or regulatory issues that have arisen or may in the future arise in connection with the Merger (as defined below) specifically and the inability to successfully combine the businesses of MAA and Post Properties, which together we refer to as the Combined Corporation, generally;
•
adverse changes in real estate markets, including, but not limited to, the extent of future demand for multifamily units in our significant markets, barriers of entry into new markets which we may seek to enter in the future, limitations on our ability to increase rental rates, competition, our ability to identify and consummate attractive acquisitions or development projects on favorable terms, our ability to consummate any planned dispositions in a timely manner on acceptable terms, and our ability to reinvest sale proceeds in a manner that generates favorable returns;
•
failure of new acquisitions to achieve anticipated results or be efficiently integrated;
•
failure of development communities to be completed, if at all, within budget and on a timely basis or to lease-up as anticipated;
•
unexpected capital needs;
•
changes in operating costs, including real estate taxes, utilities and insurance costs;
•
losses from catastrophes in excess of our insurance coverage;
•
ability to obtain financing at favorable rates, if at all, and refinance existing debt as it matures;
•
level and volatility of interest or capitalization rates or capital market conditions;
•
loss of hedge accounting treatment for interest rate swaps or interest rate caps;
•
the continuation of the good credit of our interest rate swap and cap providers;
•
price volatility, dislocations and liquidity disruptions in the financial markets and the resulting impact on financing;
•
the effect of any rating agency actions on the cost and availability of new debt financing;
•
significant decline in market value of real estate serving as collateral for mortgage obligations;
•
significant change in the mortgage financing market that would cause single-family housing, either as an owned or rental product, to become a more significant competitive product;
•
our ability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax purposes, the ability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, the ability of our taxable REIT subsidiaries to maintain their status as such for federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;
•
inability to attract and retain qualified personnel;

3


•
potential liability for environmental contamination;
•
adverse legislative or regulatory tax changes;
•
litigation and compliance costs; and
•
other risks identified in this Annual Report on Form 10-K including under the caption "Item 1A. Risk Factors" and, from time to time, in other reports we file with the Securities and Exchange Commission, or the SEC, or in other documents that we publicly disseminate.
    
New factors may also emerge from time to time that could have a material adverse effect on our business. Except as otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements to reflect events, circumstances or changes in expectations after the date on which this Annual Report on Form 10-K is filed.


4


ITEM 1. BUSINESS
 
Overview
 
MAA is a multifamily focused, self-administered and self-managed real estate investment trust, or REIT. We own, operate, acquire and selectively develop apartment communities primarily located in the Southeast and Southwest regions of the United States. As of December 31, 2016, activities include full ownership and operation of 302 multi-family properties, which includes commercial space at certain properties, and four additional commercial properties, along with partial ownership in one multifamily property . These properties are located in Alabama, Arizona, Arkansas, Florida, Georgia, Kansas, Kentucky, Maryland, Mississippi, Missouri, Nevada, North Carolina, South Carolina, Tennessee, Texas, Virginia and Washington, D.C.

As of December 31, 2016 , we maintained full or partial ownership in the following properties:

Multifamily:
 
 
 
 
 
 
 
Consolidated Properties
Units
Unconsolidated Properties
Units
Total Properties
Total Units
 
302
99,124
1
269

303
99,393
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
Consolidated Properties
Sq. Ft. (1)
Unconsolidated Properties
Sq. Ft.
Total Properties
Total Sq. Ft.
 
4
269,242
—
—

4
269,242

(1) Excludes space owned by anchor tenants as well as commercial space located at multifamily communities.

Our business is conducted principally through the Operating Partnership. MAA is the sole general partner of the Operating Partnership, holding 113,518,212 OP units, comprising a 96.4% partnership interest in the Operating Partnership as of December 31, 2016 .
 
MAA and MAALP were formed in Tennessee in 1993. Our offices are located at 6584 Poplar Avenue, Memphis, Tennessee 38138 and our telephone number is (901) 682-6600. As of December 31, 2016 , we had 2,466 full-time employees and 62 part-time employees.

Merger of MAA and Post Properties

On December 1, 2016, MAA completed its previously announced merger with Post Properties. Pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), Post Properties merged with and into MAA, with MAA continuing as the surviving corporation (the "Parent Merger"), and Post LP merged with and into MAALP, with MAALP continuing as the surviving entity (the "Partnership Merger"). We refer to the Parent Merger, together with the Partnership Merger, as the Merger in this Annual Report on Form 10-K. Under the terms of the Merger Agreement, each share of Post Properties common stock was converted into the right to receive 0.71 of a newly issued share of MAA common stock including the right, if any, to receive cash in lieu of fractional shares of MAA common stock. In addition, each limited partner interest in Post LP designated as a "Class A Unit" automatically converted into the right to receive 0.71 of a newly issued partnership unit of MAALP. Also, each share of Post Properties Series A Preferred Stock was automatically converted into the right to receive one newly issued share of MAA's 8.50% Series I Cumulative Redeemable Preferred Stock, $0.01 par value per share, which we refer to as MAA Series I preferred stock. Each newly issued share of MAA Series I preferred stock has the same rights, preferences, privileges, and voting powers as those of the Post Properties Series A preferred stock.

The net assets and results of operations of Post Properties are included in our consolidated financial statements from the closing date, December 1, 2016, through December 31, 2016, the end of our fiscal year.









5


Reporting Segments
 
As of December 31, 2016 , we owned 302 multifamily apartment communities located in 16 states from which we derived all significant sources of earnings and operating cash flows. Additionally, we had full ownership of four commercial properties in three states. Senior management evaluates performance and determines resource allocations by reviewing apartment communities individually and in the following reportable operating segments:
•
Large market same store communities are generally communities in markets with a population of at least 1 million and at least 1% of the total public multifamily REIT units that we have owned and that have been stabilized for at least a full 12 months.
•
Secondary market same store communities are generally communities in markets with populations of more than 1 million but less than 1% of the total public multifamily REIT units or markets with populations of less than 1 million that we have owned and that have been stabilized for at least a full 12 months.
•
Non same store communities and other includes recent acquisitions, communities in development or lease-up, communities that have been identified for disposition, and communities that have undergone a significant casualty loss. Also included in non same store communities are non-multifamily activities which represent less than 1% of our portfolio's net operating income.

On the first day of each calendar year, we determine the composition of our same store operating segments for that year as well as adjust the previous year, which allows us to evaluate full period-over-period operating comparisons. For financial reporting purposes, the operating results of the Post Properties assets that we acquired in the Merger are within the "non-same store communities and other" reporting segment. The legacy Post Properties assets will not be eligible to be included in same store segments until January 1, 2018. Properties in development or lease-up will generally be added to the same store portfolio on the first day of the calendar year after they have been owned and stabilized for at least a full 12 months. Communities are considered stabilized after achieving 90% occupancy for 90 days. Communities that have been identified for disposition are excluded from our same store portfolio.

During 2016, we added 12 communities to our same store portfolio and moved 13 communities to our non-same store and other segment. In addition, as a result of the Merger, we added 58 wholly-owned apartment communities to our non-same store and other segment.
 
A summary of segment operating results for 2016 , 2015 and 2014 is included in Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements, Note 16. Additionally, segment operating performance for such years is discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
 
Business Objectives
 
Our primary business objectives are to protect and grow existing property values, to maintain a stable and increasing cash flow that will fund our dividends and distributions through all parts of the real estate investment cycle, and to create shareholder value by growing in a disciplined manner. To achieve these objectives, we intend to continue to pursue the following goals and strategies:

•
effectively and efficiently operate our existing properties with an intense property and asset management focus and a decentralized structure;
•
manage real estate cycles by taking an opportunistic approach to buying, selling, renovating and developing apartment communities;
•
diversify investment capital across both large and secondary markets to achieve a growing and less volatile operating performance; and
•
actively manage our capital structure to help enhance predictability of earnings to fund our dividends and distributions.

2016 Highlights

•
Completed the Merger with Post Properties
•
Independent of the Merger, acquired five multifamily communities, totaling 1,626 units, and sold 12 multifamily communities, totaling 3,263 units.

6


•
Completed the construction of two development communities, and had nine communities, totaling 2,816 units, under construction at the end of the year.
•
During the second half of 2016, both Fitch Ratings and Standard & Poor’s Ratings Services upgraded MAA's senior unsecured rating to BBB+ with a stable outlook.
•
On December 1, 2016, after the close of trading, MAA was added to the benchmark S&P 500 Index.

Operations Strategy
 
Our goal is to generate return on investment collectively and in each apartment community by increasing revenues, controlling operating expenses, maintaining high occupancy levels and reinvesting in the income producing capacity of each community as appropriate. The steps taken to meet these objectives include:

•
providing management information and improved customer services through technology innovations;
•
utilizing systems to enhance property managers’ ability to optimize revenue by adjusting rental rates in response to local market conditions and individual unit amenities;
•
implementing programs to control expenses through investment in cost-saving initiatives;
•
analyzing individual asset productivity performances to identify best practices and improvement areas;
•
proactively maintaining the physical condition of each property through ongoing capital investments;
•
improving the “curb appeal” of the apartment communities through extensive landscaping and exterior improvements, and repositioning apartment communities from time-to-time to enhance or maintain market positions;
•
aggressively managing lease expirations to align with peak leasing traffic patterns and to maximize productivity of property staffing;
•
allocating additional capital, including capital for selective interior and exterior improvements;
•
compensating employees through performance-based compensation and stock ownership programs; and
•
maintaining a hands-on management style and “flat” organizational structure that emphasizes property level decision making coupled with asset management and senior management's monitoring.

We believe that our decentralized operating structure capitalizes on specific market knowledge, provides greater personal accountability than a centralized structure and is beneficial in the acquisition and redevelopment processes. To support this decentralized operational structure, senior and executive management, along with various asset management functions, are proactively involved in supporting and reviewing property management through extensive reporting processes and frequent on-site visits. To maximize the amount of information shared between senior and executive management and the properties on a real time basis, we utilize a web-based property management system. The system contains property and accounting modules that allow for operating efficiencies, continued expense control, provide for various expanded revenue management practices, and improve the support provided to on-site property operations. We use a “yield management” pricing program that helps our property managers optimize rental revenues, and we also utilize purchase order and accounts payable software to provide improved controls and management information.

Advances in technologies continue to drive operating efficiencies in our business and help us to better meet the changing needs of our residents. Since October 2012, our residents have been utilizing our web-based resident internet portal on our website. Our residents have the ability to conduct business with us 24 hours a day, 7 days a week. In February 2013, we completed the roll out of online leasing renewals throughout our portfolio. As a result of transforming our operations through technology, resident’s satisfaction improved, and our operating teams have become more efficient. Web-based technologies have also resulted in declining marketing and advertising costs, improved cash management, and better pricing management of our available apartments.

Acquisition Strategy
 
One of our growth strategies is to acquire apartment communities that are located in large or secondary markets primarily throughout the Southeast and Southwest regions of the United States. Acquisitions, along with dispositions as discussed below, help us achieve and maintain our desired product mix, geographic diversification and asset allocation. Portfolio growth allows for maximizing the efficiency of the existing management and overhead structure. We have extensive experience in the acquisition of multifamily communities. We will continue to evaluate opportunities that arise, and will utilize this strategy to increase the number of apartment communities in strong and growing markets.





7


The following apartment communities and land parcels, in addition to the 61 properties encompassing 20,818 units, along with 6 land parcels, acquired through the Merger, were acquired by us during the year ended December 31, 2016 :

Multifamily Acquisitions
 
Market
 
Apartment Units
 
Year Built
 
Closing Date
The Apartments at Cobblestone Square
 
Fredericksburg, Virginia
 
314
 
2012
 
March 1, 2016
Residences at Fountainhead
 
Phoenix, Arizona
 
322
 
2015
 
June 30, 2016
Yale at 6th
 
Houston, Texas
 
352
 
2015
 
September 8, 2016
Innovation Apartment Homes
 
Greenville, South Carolina
 
336
 
2015
 
September 22, 2016
1201 Midtown
 
Charleston, South Carolina
 
302
 
2015
 
December 15, 2016
Total Multifamily Acquisitions
 
 
 
1,626
 
 
 
 

Land Acquisitions
 
Market
 
Acres
 
 
 
Closing Date
1201 Midtown
 
Charleston, South Carolina
 
4
 
 
 
December 29, 2016


Disposition Strategy
 
We sell apartment communities and other assets that no longer meet our long-term strategy or when market conditions are favorable, and we redeploy the proceeds from those sales to acquire, develop and redevelop additional apartment communities and to rebalance our portfolio across or within geographic regions. Dispositions also allow us to realize a portion of the value created through our investments and provide additional liquidity. We are then able to redeploy the net proceeds from our dispositions in lieu of raising additional capital. When we decide to sell a community, we consider current market conditions and generally solicit competing bids from unrelated parties for these individual assets and consider the sales price and other key terms of each proposal. We also consider portfolio dispositions when such a structure is useful to maximize proceeds and efficiency of execution. During the year ended December 31, 2016 , we disposed of 12 multifamily properties totaling 3,263 units, two commercial properties totaling 325,418 square feet, and four land parcels totaling 67 acres.
 
Development Strategy
 
As another part of our growth strategy, we invest in a limited number of development projects. Development activities may be conducted through wholly-owned affiliated companies or through joint ventures with unaffiliated parties. Fixed price construction contracts are signed with unrelated parties to minimize construction risk. We typically manage the leasing portion of the project as units become available for lease. We may also engage in limited expansion development opportunities on existing communities in which we typically serve as the developer. While we seek opportunistic new development investments offering attractive long-term investment returns, we intend to maintain a total development commitment that we consider modest in relation to our total balance sheet and investment portfolio. During the year ended December 31, 2016 , we incurred $58.9 million in development costs.

















8


The following multifamily projects were under development as of December 31, 2016 (dollars in thousands):

Project:
Market
Total Units
 
Units Completed
 
Cost to Date
 
Budgeted Cost
Estimated Cost Per Unit
Expected Completion
Post Parkside at Wade II
Raleigh/Durham, North Carolina
406

 
263

 
$
55,528

 
$
58,900

$
145

2nd Quarter 2017
Retreat at West Creek II
Richmond, Virginia
82

 
—

 
$
12,530

 
$
15,100

$
184

2nd Quarter 2017
CG at Randal Lakes Phase II
Orlando, Florida
314

 
212

 
$
35,060

 
$
41,300

$
132

2nd Quarter 2017
Post Afton Oaks
Houston, Texas
388

 
225

 
$
76,363

 
$
79,900

$
206

2nd Quarter 2017
The Denton II
Kansas City, Missouri-Kansas
154

 
—

 
$
12,526

 
$
25,400

$
165

4th Quarter 2017
Post South Lamar II
Austin, Texas
344

 
—

 
$
44,351

 
$
65,600

$
191

4th Quarter 2017
Post Millennium Midtown
Atlanta, Georgia
332

 
—

 
$
44,648

 
$
91,100

$
274

1st Quarter 2018
Post River North
Denver, Colorado
358

 
—

 
$
51,391

 
$
88,200

$
246

1st Quarter 2018
Post Centennial Park
Atlanta, Georgia
438

 
—

 
$
34,150

 
$
96,300

$
220

3rd Quarter 2018
 
 
2,816

 
700

 
$
366,547

 
$
561,800

 
 

Redevelopment Strategy

In 2005 we began an initiative of upgrading a significant number of our existing apartment communities in key markets across our portfolio. We focus on both interior unit upgrades and exterior amenities above and beyond routine capital upkeep in markets that we believe continue to have the ability to support additional rent growth. During the year ended December 31, 2016 , we renovated 6,812 units and exterior amenities at an average cost of $4,478 per unit. We believe that the rents received on these renovated units were approximately 9.8% above the normal market rate for similar but non-renovated units.
 
Capital Structure Strategy
 
We use a combination of debt and equity sources to fund our business strategy. We maintain a capital structure, focused on maintaining access, flexibility and low costs, that we believe allows us to proactively source potential investment opportunities in the marketplace. We structure our debt maturity schedule to avoid significant exposure in any given year. Our primary debt financing strategy is to access the unsecured debt markets to provide our debt capital needs, but we also maintain a limited amount of secured debt and maintain our access to both the secured and unsecured debt markets for maximum flexibility. We also believe that we have significant access to the equity capital markets.
 
At December 31, 2016 , 28.1% of our total market capitalization consisted of borrowings, including 19.8% under our unsecured credit facilities or unsecured senior notes and 8.2% under our secured borrowings. We currently intend to target our total debt, net of cash held, to a range of approximately 32% to 38% of the undepreciated book value of our assets. Our charter and bylaws do not limit our debt levels and our Board of Directors can modify this policy at any time. We may also issue new equity to maintain our debt within the target range. Covenants for our unsecured senior notes limit our debt to undepreciated book value of our assets to 60%. As of December 31, 2016 , our ratio of total debt to total assets was approximately 33.9%.

We continuously review opportunities for lowering our cost of capital. We plan to continue using unsecured debt in order to take advantage of the lower cost of capital and flexibility provided by these markets. We will evaluate opportunities to repurchase shares when we believe that our share price is significantly below our net present value. We also look for opportunities where we can acquire or develop apartment communities, selectively funded or partially funded by sales of equity securities, when appropriate opportunities arise. We focus on improving the net present value of our investments by generating cash flows from our portfolio of assets above the estimated total cost of debt and equity capital. We routinely make new investments when we believe it will be accretive to shareholder value over the life of the investments.
 
On December 9, 2015, we entered into distribution agreements with J.P. Morgan Securities, LLC, BMO Capital Markets Corp. and KeyBanc Capital Markets Inc. to sell up to an aggregate of 4.0 million shares of common stock, from time-to-time in at-the-market offerings or negotiated transactions through controlled equity offering programs, or ATMs. As of December 31, 2016 , there were 4.0 million shares remaining under the ATMs.

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The following are the issuances of common stock which have been made through these types of ATM agreements from January 1, 2012, through December 31, 2016 : 

 
 
Number of
Shares Sold
 
Net Proceeds
 
Net
Average
Sales Price
 
Gross Proceeds
 
Gross Average Sales Price
2012
 
1,155,511

 
$
75,863,040

 
$
65.65

 
$
77,019,121

 
$
66.65

2013
 
365,011

 
24,753,492

 
67.82

 
25,067,009

 
68.67

2014
 
—

 
—

 
—

 
—

 
—

2015
 
—

 
—

 
—

 
—

 
—

2016
 
—

 
—

 
—

 
—

 
—

Total
 
1,520,522

 
$
100,616,532

 
$
66.17

 
$
102,086,130

 
$
67.15


We also have a dividend and distribution reinvestment stock purchase plan, or DRSPP, which allows for the optional cash purchase of shares of common stock totaling at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. We, in our absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. During the year ended December 31, 2016 , we issued a total of 1,579 shares through the optional cash purchase feature of the DRSPP, resulting in net proceeds of $152,463 .

Share Repurchase Program
 
On December 8, 2015, MAA's Board of Directors authorized us to repurchase up to 4.0 million shares of MAA common stock, which represented approximately 5.3% of MAA's common stock outstanding at the time of such authorization. This December 2015 authorization replaced and superseded a previous authorization from 1999, under which approximately 2.1 million shares remained at the time of the December 2015 authorization but through which no shares had been repurchased since April 2001.  From time-to-time, we may repurchase shares under the current authorization when we believe that shareholder value would be enhanced. Factors affecting this determination include, among others, the share price and expected rates of return. No shares were repurchased from December 8, 2015 through December 31, 2016 under the current authorization.

Competition
 
All of our apartment communities are located in areas that include other apartment communities. Occupancy and rental rates are affected by the number of competitive apartment communities in a particular area. The owners of competing apartment communities may have greater resources than us, and the managers of these apartment communities may have more experience than our management. Moreover, single-family rental housing, manufactured housing, condominiums and the new and existing home markets provide housing alternatives to potential residents of apartment communities.
 
Competition for new residents is generally intense across all of our markets. Some competing communities offer features that our communities do not have. Competing communities can use concessions or lower rents to obtain temporary competitive advantages. Also, some competing communities are larger or newer than our communities. The competitive position of each community is different depending upon many factors including sub-market supply and demand. In addition, other real estate investors compete with us to acquire existing properties and to develop new properties. These competitors include insurance companies, pension and investment funds, public and private real estate companies, investment companies and other public and private apartment REITs, some of which may have greater resources, or lower capital costs, than we do.

We believe, however, that we are generally well-positioned to compete effectively for residents and investments. We believe our competitive advantages include:

•
a fully integrated organization with property management, development, redevelopment, acquisition, marketing, sales and financing expertise;
•
scalable operating and support systems, which include automated systems to meet the changing electronic needs of our residents;
•
access to a wide variety of debt and equity capital sources;
•
geographic diversification with a presence in approximately 39 defined Metropolitan Statistical Areas, MSAs, across the Southeast and Southwest regions of the United States; and
•
significant presence in many of our major markets that allows us to be a local operating expert.


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Moving forward, we plan to continue to optimize lease management, improve expense control, increase resident retention efforts and align employee incentive plans with our bottom line performance. We believe this plan of operation, coupled with the portfolio’s strengths in targeting residents across a geographically diverse platform, should position us for continued operational upside. We also make capital improvements to both our apartment communities and individual units on a regular basis in order to maintain a competitive position in each individual market.
 
Environmental Matters
 
As a normal part of our apartment community acquisition and development processes, we generally obtain environmental studies of the sites from outside environmental engineering firms. As part of the due diligence process for the Merger, we reviewed the existing environmental studies and other related documents outlining potential risk on the properties acquired through the Merger. The purpose of these studies is to identify potential sources of contamination at the site and to assess the status of environmental regulatory compliance. These studies generally include historical reviews of the site, reviews of certain public records, preliminary investigations of the site and surrounding properties, inspection for the presence of asbestos, poly-chlorinated biphenyls, or PCBs, and underground storage tanks and the preparation and issuance of written reports. Depending on the results of these studies, more invasive procedures, such as soil sampling or ground water analysis, may be performed to investigate potential sources of contamination. These studies must be satisfactorily completed before we take ownership of an acquisition or development property; however, no assurance can be given that the studies or additional documents reviewed identify all significant environmental risks. See "Risk Factors - Risks Relating to Our Real Estate Investments and our Operations - Environmental problems are possible and can be costly."
 
The environmental studies we received on properties that we have acquired have not revealed any material environmental liabilities. Should any potential environmental risks or conditions be discovered during our due diligence process, the potential costs of remediation will be assessed carefully and factored into the cost of acquisition, assuming the identified risks and factors are deemed to be manageable and within reason. We are not aware of any existing conditions that we believe would be considered a material environmental liability. Nevertheless, it is possible that the studies do not reveal all environmental risks or that there are material environmental liabilities of which we are not aware. Moreover, no assurance can be given concerning future laws, ordinances or regulations, or the potential introduction of hazardous or toxic substances by neighboring properties or residents.

Website Access to Our Reports
 
MAA and the Operating Partnership file combined periodic reports with the SEC. These filings are available on the SEC's website which is http://www.sec.gov. In addition, all filings made by MAA and the Operating Partnership with the SEC may be copied or read at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
 
Additionally, a copy of this Annual Report on Form 10-K, along with our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to the aforementioned filings, are available on our website free of charge. The filings can be found on the "For Investors" page under "SEC Filings". Our website also contains our Corporate Governance Guidelines, Code of Conduct and the charters of the committees of the Board of Directors. These items can be found on the "For Investors" page in the "Governance Documents" section under "Corporate Overview". Our website address is http://www.maac.com. Reference to our website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this Annual Report on Form 10-K. All of the aforementioned materials may also be obtained free of charge by contacting our Legal Department, 6584 Poplar Avenue, Memphis, TN 38138.

Qualification as a Real Estate Investment Trust
 
MAA has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code. To continue to qualify as a REIT, MAA must continue to meet certain tests which, among other things, generally require that our assets consist primarily of real estate assets, our income be derived primarily from real estate assets, and that we distribute at least 90% of our REIT taxable income (other than our net capital gains) to our shareholders annually. If MAA maintains its qualification as a REIT, MAA generally will not be subject to U.S. federal income taxes at the corporate level on its net income to the extent it distributes such net income to its shareholders annually. Even if MAA continues to qualify as a REIT, it will continue to be subject to certain federal, state and local taxes on its income and its property. In 2016 , MAA paid total distributions of $3.28 per share of common stock to its shareholders, which was above the 90% REIT distribution requirement and was in excess of REIT taxable income.



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Inflation

We believe that the direct effects of inflation on our operations have been immaterial. While the impact of inflation primarily impacts our results through wage pressures, property taxes, utilities and material costs, substantially all of our leases are for a term of one year or less, which generally enables us to compensate for any inflationary effects by increasing rents on our apartments. Although an escalation in energy and food costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this has had a material impact on our results for the year ended December 31, 2016 .

Insurance

We carry comprehensive general liability coverage on our communities, with limits of liability we believe are customary within the multi-family apartment industry, to insure against liability claims and related defense costs. We also maintain insurance against the risk of direct physical damage to reimburse us on a replacement cost basis for costs incurred to repair or rebuild each property, including loss of rental income during the reconstruction period.

Recent Developments

On February 7, 2017, we paid off the $15.8 million remaining principal balance of the mortgage on the Grand Cypress apartment community.

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ITEM 1A. RISK FACTORS
 
In addition to the other information contained in this Annual Report on Form 10-K, we have identified the following additional risks and uncertainties that may have a material adverse effect on our business prospects, financial condition or results of operations. Investors should carefully consider the risks described below before making an investment decision. Our business faces significant risks and the risks described below may not be the only risks we face. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. If any of these risks occur, our business prospects, results of operations or financial condition could suffer, the market price of our capital stock and the trading price of our debt securities could decline and you could lose all or part of your investment in our capital stock or debt securities.
 
RISKS RELATED TO THE POST PROPERTIES MERGER

We have incurred and expect to incur substantial expenses related to the Merger.

We have incurred and expect to incur substantial expenses in connection with the Merger and integrating Post Properties’ business, operations, networks, systems, technologies, policies and procedures with ours. There are a large number of systems that are in the process of being integrated, including property management, revenue management, resident payment, credit screening, lease administration, website content management, purchasing, accounting, payroll, fixed assets and financial reporting. Moreover, there are a number of factors beyond our control that could affect the total amount or the timing of these integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. As a result, expenses associated with the Merger could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses.

We may be unable to integrate Post Properties' businesses with ours successfully or realize the anticipated synergies and other benefits of the Merger or do so within the anticipated time frame.

Because Post Properties was a public company, we expect to benefit from the elimination of duplicative costs associated with supporting Post Properties' public company platform and the leveraging of our technology and systems. These savings are expected to be realized upon full integration, which is expected to occur during the next 12 months. However, we are required to devote significant management attention and resources to integrating the business practices and operations of Post Properties with our business practices and operations. Potential difficulties we may encounter in the integration process include the following:

•
the inability to successfully combine the businesses of MAA and Post Properties in a manner that permits the Combined Corporation to achieve the cost savings anticipated to result from the Merger, which would result in the anticipated benefits of the Merger not being realized in the timeframe currently anticipated or at all;
•
the complexities associated with managing the combined businesses out of several different locations and integrating personnel from the Combined Corporation;
•
the additional complexities of combining two companies with different histories, cultures, regulatory restrictions, markets and customer bases;
•
potential unknown liabilities and unforeseen increased expenses, delays in completing integration or regulatory conditions associated with the Merger; and
•
performance shortfalls as a result of the diversion of management’s attention caused by completing the Merger and integrating the Combined Corporation’s operations.

For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of the Combined Corporation’s management, the disruption of the Combined Corporation’s ongoing business or inconsistencies in the Combined Corporation’s operations, services, standards, controls, procedures and policies, any of which could adversely affect the ability of the Combined Corporation to maintain relationships with tenants, vendors and employees or to achieve the anticipated benefits of the Merger, or could otherwise adversely affect the business and financial results of the Combined Corporation.

We may be unable to retain key employees as a result of the Merger

The success of the Combined Corporation after the mergers will depend in part upon its ability to retain key MAA employees, including those from Post Properties. Key employees of the Combined Corporation may depart because of, among other things, issues relating to the combination of two companies, and uncertainty and difficulty of integration or a desire not to

13


remain long term with the Combined Corporation. Accordingly, no assurance can be given that we will be able to retain key employees to the same extent as in the past.

The mergers will result in changes to the board of directors and management of the Combined Corporation that may affect the strategy of the Combined Corporation as compared to that of MAA and Post Properties independently.

The composition of MAA's Board of Directors changed as a result of the Merger. MAA’s Board of Directors now consists of thirteen members, including all ten directors from MAA’s Board of Directors prior to the Merger and three directors who were members of the Post Properties’ board of directors prior to the Merger.  This new composition of the Board of Directors of MAA may affect our business strategy and operating decisions going forward.

Our future results will suffer if we do not effectively manage the expansion of its operations following the Merger.

We have expanded our operations as a result of the Merger and intend to continue to expand our operations through additional acquisitions and development of properties, some of which may involve complex challenges. Our future success will depend, in part, upon our ability to manage the integration of Post Properties’ operations and our expansion opportunities, each of which may pose substantial challenges for us to integrate new operations into our existing business in an efficient and timely manner, and upon our ability to successfully monitor our operations, costs, regulatory compliance and service quality, and to maintain other necessary internal controls. There is no assurance that our expansion or acquisition and development opportunities will be successful, or that we will realize any operating efficiencies, cost savings, revenue enhancements, synergies or other benefits from any future acquisitions we may complete.

Our joint ventures could be adversely affected by our lack of sole decision-making authority, our reliance on our joint venture partner’s financial condition and disputes between us and our joint venture partner.

Post Properties had a joint venture investment that now constitutes a portion of our assets as a result of the Merger. In addition, we may enter into additional joint ventures in the future. These joint venture investments involve risks not present with a property wholly owned by us, including that: (i) one or more joint venture partners might become bankrupt or fail to fund a share of required capital contributions and we may be responsible to our partners for indemnifiable losses; (ii) one or more joint venture partners may have economic or other business interests or goals that are inconsistent with our business interests or goals, creating a conflict of interest; or (iii) disputes between us and one or more of our joint venture partners may result in litigation or arbitration that would increase our operating expenses of and divert management time and attention away from our business.

The occurrence of one or more of the events described above could cause unanticipated disruption to our operations or unanticipated costs and liabilities to us, which could in turn adversely affect our financial condition, results of operations and cash flows and limit our ability to make distributions to our shareholders.

We have a significant amount of indebtedness and may need to incur more in the future.

We have substantial indebtedness following completion of the Merger. In addition, in connection with executing our business strategies following the Merger, we expect to continue to evaluate the possibility of acquiring additional properties and making strategic investments, and we may elect to finance these endeavors by incurring additional indebtedness. The amount of such indebtedness could have material adverse consequences for us, including:

•
reducing our credit ratings and thereby raising its borrowing costs;
•
hindering our ability to adjust to changing market, industry or economic conditions;
•
limiting our ability to access the capital markets to refinance maturing debt or to fund acquisitions or emerging businesses;
•
limiting the amount of free cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses;
•
making us more vulnerable to economic or industry downturns, including interest rate increases; and
•
placing us at a competitive disadvantage compared to less leveraged competitors.

Moreover, to respond to competitive challenges, we may be required to raise substantial additional capital to execute our business strategy. Our ability to arrange additional financing will depend on, among other factors, our financial position and performance, as well as prevailing market conditions and other factors beyond our control. If we are able to obtain additional

14


financing, our credit ratings could be further adversely affected, which could further raise our borrowing costs and further limit our future access to capital and our ability to satisfy our obligations under our indebtedness.

RISKS RELATED TO OUR REAL ESTATE INVESTMENTS AND OUR OPERATIONS

Developments such as another economic downturn, instability in the banking sector or a negative impact on economic growth resulting from current or future legislation or government initiatives may materially and adversely affect our financial condition and results of operations.

The industry in which we operate may be adversely affected by national and international economic conditions. Although the U.S. real estate market has recently improved, certain international markets are experiencing increased levels of volatility due to a combination of factors, including, among others, political instability from ongoing geopolitical conflicts, high unemployment rates, fluctuating oil and gas prices and fiscal deficits, and these factors could contribute to another economic downturn in the U.S. If the U.S. experience another downturn in the economy, instability in the banking sector or a negative impact on economic growth resulting from changes in legislation, government tax increases, debt policy or spending restrictions, we may experience adverse effects on our occupancy levels, our rental revenues and the value of our properties, any of which could adversely affect our cash flow, financial condition and results of operations.

Other economic risks which may adversely affect conditions in the markets in which we operate include the following:

•
local conditions, such as an oversupply of apartments or other housing available for rent, or a reduction in demand for apartments in the area;
•
low mortgage interest rates and home pricing, making alternative housing more affordable;
•
government or builder incentives which enable home buyers to put little or no money down, making alternative housing options more attractive; and
•
regional economic downturns which affect one or more of our geographical markets.

Failure to generate sufficient cash flows could limit our ability to make payments on our debt and to pay distributions to shareholders and unitholders.

Our ability to make payments on our debt and to make distributions depends on our ability to generate cash flow in excess of operating costs and capital expenditure requirements and/or to have access to the markets for debt and equity financing. Funds from operations and the value of our apartment communities may be insufficient because of factors that are beyond our control. Such events or conditions could include:

•
competition from other apartment communities;
•
overbuilding of new apartments or oversupply of available apartments in our markets, which might adversely affect occupancy or rental rates and/or require rent concessions in order to lease apartments;
•
conversion of condominiums and single family houses to rental use or the increase in the number condominiums and single family homes available for sale;
•
weakness in the overall economy which lowers job growth and the associated demand for apartment housing;
•
increases in operating costs (including real estate taxes, utilities and insurance premiums) due to inflation and other factors, which may not be offset by increased rental rates;
•
inability to initially, or subsequently after lease terminations, rent apartments on favorable economic terms;
•
failure of development communities to be completed, if at all, within budget and on a timely basis or to lease up as anticipated;
•
changes in governmental regulations and the related costs of compliance;
•
changes in laws including, but not limited to, tax laws and housing laws including the enactment of rent control laws or other laws regulating multifamily housing;
•
withdrawal of government support of apartment financing through its financial backing of the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation;
•
an uninsured loss, including those resulting from a catastrophic storm, earthquake, or act of terrorism;
•
changes in interest rate levels and the availability of financing, borrower credit standards, and down-payment requirements which could lead renters to purchase homes (if interest rates decrease and home loans are more readily available) or increase our acquisition and operating costs (if interest rates increase and financing is less readily available); and
•
the relative illiquidity of real estate investments.


15


At times, we have relied on external funding sources to fully fund the payment of distributions to shareholders and our capital investment program, including our existing property developments. While we have sufficient liquidity to permit distributions at current rates through additional borrowings, if necessary, any significant and sustained deterioration in operations could result in our financial resources being insufficient to make payments on our debt and to pay distributions to shareholders at the current rate, in which event we would be required to reduce the distribution rate. Any decline in our funds from operations could adversely affect our ability to make distributions to our shareholders or to meet our loan covenants and could have a material adverse effect on our stock price or the trading price of our debt securities.

We are dependent on a concentration of our investments in a single asset class, making our results of operations more vulnerable to a downturn or slowdown in the sector or other economic factors.

As of December 31, 2016, substantially all of our investments are concentrated in the multifamily sector. As a result, we will be subject to risks inherent in investments in a single type of property. A downturn or slowdown in the demand for multifamily housing may have more pronounced effects on our results of operations or on the value of our assets than if we had diversified our investments into more than one asset class.

Our operations are concentrated in the Southeast and Southwest regions of the United States; we are subject to general economic conditions in the regions in which we operate.

As of December 31, 2016, approximately 39.7% of our portfolio is located in our top five markets: Atlanta, Georgia; Dallas, Texas; Austin, Texas; Charlotte, North Carolina; and Tampa, Florida. In addition, our overall operations are concentrated in the Southeast and Southwest regions of the United States. Our performance could be adversely affected by economic conditions in, and other factors relating to, these geographic areas, including supply and demand for apartments in these areas, zoning and other regulatory conditions and competition from other communities and alternative forms of housing. In particular our performance is disproportionately influenced by job growth and unemployment. To the extent the aforementioned general economic conditions, job growth and unemployment in any of these markets deteriorate or any of these areas experiences natural disasters, the value of the portfolio, our results of operations and our ability to make distributions to our shareholders and pay amounts due on our debt could be materially adversely affected.

Failure to succeed in new markets or sectors may have adverse consequences on our performance.

We may make acquisitions outside of our existing market areas if appropriate opportunities arise. Our historical experience in our existing markets does not ensure that we will be able to operate successfully in new markets, should we choose to enter them. We may be exposed to a variety of risks if we choose to enter new markets, including an inability to accurately evaluate local market conditions, to identify appropriate acquisition opportunities, to hire and retain key personnel, and a lack of familiarity with local governmental and permitting procedures. In addition, we may abandon opportunities to enter new markets that we have begun to explore for any reason and may, as a result, fail to recover expenses already incurred.

Substantial competition among apartment communities and real estate companies may adversely affect our rental revenues and development and acquisition opportunities.

There are numerous other apartment communities and real estate companies, many of which have greater financial and other resources than we have, within the market area of each of our communities that compete with us for residents and development and acquisition opportunities. The number of competitive apartment communities and real estate companies in these areas could have a material effect on (1) our ability to rent our apartments and the rents charged, and (2) development and acquisition opportunities. The activities of these competitors could cause us to pay a higher price for a new property than we otherwise would have paid or may prevent us from purchasing a desired property at all, which could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt.

Actual or threatened terrorist attacks may have an adverse effect on our business and operating results and could decrease the value of our assets.

Actual or threatened terrorist attacks and other acts of violence or war could have a material adverse effect on our business and operating results. Attacks that directly impact one or more of our apartment communities could significantly affect our ability to operate those communities and thereby impair our ability to achieve our expected results. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have a material adverse effect on our business and results of operations.


16


Breaches of our privacy or information security systems through cyber-attacks, cyber-intrusions or otherwise, could materially adversely affect our business, results of operations, financial condition and/or reputation.

We face risks associated with security breaches or disruptions, which could result from, among other incidents, cyber-attacks or cyber-intrusions over the Internet, malware, computer viruses or employee error or malfeasance. The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments and cyber-terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. The protection of customer and employee data and our network systems is critically important to us. Our business requires us and our service providers (including service providers engaged in providing web hosting, property management, leasing, accounting and/or payroll software/services) to use and store personally identifiable information of our customers and employees, which may include names, addresses, phone numbers, email addresses, contact preferences, tax identification numbers, and payment account information. We also rely extensively on computer systems to process transactions and manage our business.
    
We devote significant resources to protect our customer and employee data and our network systems. However, the security measures put in place by us and our service providers cannot provide absolute security and there can be no assurance that we will not suffer a data security incident in the future, that unauthorized parties will not gain access to sensitive data stored on our systems, that such access will not, whether temporarily or permanently, impact, interfere with or interrupt our operations, or that any such incident will be discovered in a timely manner. Our information technology infrastructure could be compromised as a result of third-party security breaches, employee error, malfeasance, faulty password management, or other irregularity, and result in persons obtaining unauthorized access to company data or accounts. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not be detected and, in fact, may not be detected. Accordingly, we and our service providers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us and our service providers to entirely mitigate this risk. Further, in the future, we may be required to expend additional resources to continue to enhance information security measures and/or to investigate and remediate any information security vulnerabilities.

Any privacy and information incident could compromise our network systems, and the information stored by us could be accessed, misused, publicly disclosed, corrupted, lost, or stolen resulting in fraud or other harm. Moreover, if a data security incident or breach affects our systems or results in the unauthorized release of personally identifiable information, we could be materially damaged and we may be exposed to a risk of loss or litigation, possible liability and remediation costs which could result in a material adverse effect on our business, results of operations, financial condition and/or reputation and adversely affect investor confidence.

We may not realize the anticipated benefits of past or future acquisitions, and the failure to integrate acquired communities and new personnel successfully could create inefficiencies.

We have selectively acquired in the past, and if presented with attractive opportunities we intend to selectively acquire in the future, apartment communities that meet our investment criteria. Our acquisition activities and their success are subject to the following risks:

•
we may be unable to obtain financing for acquisitions on favorable terms or at all;
•
even if we are able to finance the acquisition, cash flow from the acquisition may be insufficient to meet our required principal and interest payments on the acquisition;
•
even if we enter into an acquisition agreement for an apartment community, we may be unable to complete the acquisition after incurring certain acquisition-related costs;
•
we may incur significant costs and divert management attention in connection with the evaluation and negotiation of potential acquisitions, including potential acquisitions that we are subsequently unable to complete;
•
when we acquire an apartment community, we may invest additional amounts in it with the intention of increasing profitability, and these additional investments may not produce the anticipated improvements in profitability;
•
we may be unable to quickly and efficiently integrate acquired apartment communities and new personnel into our existing operations, and the failure to successfully integrate such apartment communities or personnel will result in inefficiencies that could adversely affect our expected return on our investments and our overall profitability; and
•
we may acquire properties that are subject to liabilities or that have problems relating to environmental condition, state of title, physical condition or compliance with zoning laws, building codes or other legal requirements and in each case, our acquisition may be without any, or with only limited, recourse with respect to unknown liabilities or conditions and we may be obligated to pay substantial sums to settle or cure it, which could adversely affect our cash flow and operating results.

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We are subject to certain risks associated with selling apartment communities, which could limit our operational and financial flexibility.

We periodically dispose of apartment communities that no longer meet our strategic objectives, but adverse market conditions may make it difficult to sell apartment communities like the ones we own. We cannot predict whether we will be able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. Furthermore, we may be required to expend funds to correct defects or to make improvements before a property can be sold. These conditions may limit our ability to dispose of properties and to change our portfolio promptly in order to meet our strategic objectives, which may in turn have a material adverse effect on our financial condition and the market value of our securities. We are also subject to the following risks in connection with sales of our apartment communities:

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a significant portion of the proceeds from our overall property sales may be held by intermediaries in order for some sales to qualify as like-kind exchanges under Section 1031 of the Code, so that any related capital gain can be deferred for federal income tax purposes. As a result, we may not have immediate access to all of the cash proceeds generated from our property sales. In addition, if a transaction intended to qualify as a Section 1031 exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax deferred basis. Intermediary agents of Section 1031 exchange transactions typically handle large sums of money in trusts. Misappropriation of funds by one of these agents could have a material negative impact on our results of operations. Additionally, misappropriation of funds could result in the disposal of the property not qualifying for a tax deferred basis and adversely affect our financial condition. It is also possible the qualification of a transaction as a Section 1031 exchange could be successfully challenged and determined to be currently taxable. In such case, our taxable income and earnings and profits would increase, which could increase the dividend income to our shareholders by reducing any return of capital they received. In some circumstances, we may be required to pay additional dividends or, in lieu of additional dividends, corporate income tax, possibly including interest and penalties. As a result, we may be required to borrow funds in order to pay additional dividends or taxes and the payment of such taxes could cause us to have less cash available to distribute to our shareholders. In addition, if a Section 1031 exchange were later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question, including any information reports we sent our shareholders; and
•
federal tax laws applicable to REITs limit our ability to profit on the sale of communities, and this limitation may prevent us from selling communities when market conditions are favorable.

Environmental problems are possible and can be costly.

Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances in, on, around or under such property. Such laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of, or failure to remediate properly, hazardous, toxic substances or petroleum product releases may adversely affect the owner’s or operator’s ability to sell or rent the affected property or to borrow using the property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of hazardous or toxic substances at a disposal or treatment facility, whether or not the facility is owned or operated by the person. Certain environmental laws impose liability for release of asbestos-containing materials into the air, and third parties may also seek recovery from owners or operators of real property for personal injury associated with asbestos-containing materials and other hazardous or toxic substances. Federal and state laws also regulate the operation and subsequent removal of certain underground storage tanks. In connection with the current or former ownership (direct or indirect), operation, management, development or control of real property, we may be considered an owner or operator of such communities or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, may be potentially liable for removal or remediation costs, as well as certain other costs, including governmental fines, and claims for injuries to persons and property.

Our current policy is to obtain a Phase I environmental study on each property we seek to acquire, which generally does not involve invasive techniques such as soil or ground water sampling, and to proceed accordingly. We cannot assure you, however, that the Phase I environmental studies or other environmental studies undertaken with respect to any of our current or future communities will reveal:

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all or the full extent of potential environmental liabilities;
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that any prior owner or operator of a property did not create any material environmental condition unknown to us;

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•
that a material environmental condition does not otherwise exist as to any one or more of such communities; or
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that environmental matters will not have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt.

Certain environmental laws impose liability on a previous owner of property to the extent that hazardous or toxic substances were present during the prior ownership period. A transfer of the property does not relieve an owner of such liability. Thus, we may have liability with respect to communities previously sold by our predecessors or by us.

There have been a number of lawsuits against owners and managers of multifamily communities alleging personal injury and property damage caused by the presence of mold in residential real estate. Some of these lawsuits have resulted in substantial monetary judgments or settlements. Insurance carriers have reacted to these liability awards by excluding mold related claims from standard policies and pricing mold endorsements separately. We have obtained a separate pollution insurance policy that covers mold-related claims and have adopted programs designed to minimize the existence of mold in any of our communities as well as guidelines for promptly addressing and resolving reports of mold. To the extent not covered by our pollution policy, the presence of mold could expose us to liability from residents and others if property damage, health concerns, or allegations thereof, arise.

Losses from catastrophes may exceed our insurance coverage, which may negatively impact our results of operations and reduce the value of our properties.

We carry comprehensive liability and property insurance on our communities and intend to obtain similar coverage for communities we acquire in the future. Some losses, generally of a catastrophic nature, such as losses from floods, hurricanes or earthquakes, are subject to limitations, and thus may be uninsured. We exercise our discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement value of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed. Any losses we experience that are not fully covered by our insurance may negatively impact our results of operations and may reduce the value of our properties.

Increasing real estate taxes, utilities and insurance costs may negatively impact operating results.

As a result of our substantial real estate holdings, the cost of real estate taxes, utilities, and insuring our apartment communities is a significant component of expense. Real estate taxes, utilities costs and insurance premiums are subject to significant increases and fluctuations, which can be widely outside of our control. If the costs associated with real estate taxes, utilities and insurance should rise, without being offset by a corresponding increase in rental rates, our results of operations could be negatively impacted, and our ability to pay our dividends and distributions and senior debt could be affected.

Compliance or failure to comply with laws requiring access to our properties by disabled persons could result in substantial cost.

The Americans with Disabilities Act, the Fair Housing Act of 1988 and other federal, state and local laws generally require that public accommodations be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the government or the award of damages to private litigants. These laws may require us to modify our existing communities. These laws may also restrict renovations by requiring improved access to such buildings by disabled persons or may require us to add other structural features that increase our construction costs. Legislation or regulations adopted in the future may impose further burdens or restrictions on us with respect to improved access by disabled persons. We cannot ascertain the costs of compliance with these laws, which may be substantial.

Development and construction risks could impact our profitability.

As of December 31, 2016, we had nine development communities under construction totaling 2,816 units. We had completed 700 units for these development projects as of December 31, 2016.  We may make further investments in development communities as the opportunities arise and may do so through joint ventures with unaffiliated parties. Our development and construction activities are subject to the following risks:

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we may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, which could result in increased development costs, could delay

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initial occupancy dates for all or a portion of a development community, and could require us to abandon our activities entirely with respect to a project for which we are unable to obtain permits or authorizations;
•
we may be unable to obtain financing for development activities under favorable terms, which could cause a delay in construction resulting in increased costs, decreases in revenue, and potentially cause us to abandon the opportunity;
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yields may be less than anticipated as a result of delays in completing projects, costs that exceed budget and/or higher than expected concessions for lease up and lower rents than pro forma;
•
bankruptcy of developers in our development projects could impose delays and costs on us with respect to the development of our communities and may adversely affect our financial condition and results of operations;
•
we may abandon development opportunities that we have already begun to explore, and we may fail to recover expenses already incurred in connection with exploring such opportunities;
•
we may be unable to complete construction and lease-up of a community on schedule, or incur development or construction costs that exceed our original estimates, and we may be unable to charge rents that would compensate for any increase in such costs;
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occupancy rates and rents at a newly developed community may fluctuate depending on a number of factors, including market and economic conditions, preventing us from meeting our profitability goals for that community;
•
when we sell to third parties communities or properties that we developed or renovated, we may be subject to warranty or construction defects that are uninsured or exceed the limit of our insurance; and
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our failure to successfully enter into a joint venture agreement may prohibit an otherwise advantageous investment if we cannot raise the money through other means.

We may be adversely affected by new Federal laws and regulations.

The Trump Administration and Congress have enacted, or called for consideration of, proposals relating to a variety of issues, including with respect to financial regulation reform, tax reform, infrastructure spending, climate change, executive compensation and others. We believe that these and other potential proposals could have varying degrees of impact on us ranging from minimal to material. At this time, we are unable to predict with certainty what level of impact specific proposals could have on us.

Federal rulemaking and administrative efforts that may have an impact on us focus principally on the areas perceived as contributing to the global financial crisis and the most recent economic recession. These initiatives have created a degree of uncertainty regarding the basic rules governing the real estate industry and many other businesses. The federal legislative response in this area culminated in the enactment on July 21, 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act. Many of the provisions of the Dodd-Frank Act have extended implementation periods and delayed effective dates and continue to require rulemaking by regulatory authorities; thus, the impact on us may not be known for an extended period of time. The Dodd-Frank Act, including rules implementing its provisions and the interpretation of those rules, along with other legislative and regulatory proposals that are proposed or pending in the United States Congress, including the repeal of or additional amendments to the Dodd-Frank Act, may limit our revenues, impose fees or taxes on us, and/or intensify the regulatory framework in which we operate in ways that are not currently identifiable.

Changing laws, regulations and standards relating to corporate governance and public disclosure in particular, including certain provisions of the Dodd-Frank Act and the rules and regulations promulgated thereunder, and the possibility of repeal or amendments to the Dodd-Frank Act, have created uncertainty for public companies like ours and could significantly increase the costs and risks associated with accessing the U.S. public markets. Because we are committed to maintaining high standards of internal control over financial reporting, corporate governance and public disclosure, our management team will need to devote significant time and financial resources to comply with these evolving standards for public companies. We intend to continue to invest appropriate resources to comply with both existing and evolving standards, and this investment has resulted and will likely continue to result in increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.

Short-term leases expose us to the effects of declining market rents.

Our apartment leases are generally for a term of one year or less. As these leases typically permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.





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RISKS RELATED TO OUR INDEBTEDNESS AND FINANCING ACTIVITIES

Our substantial indebtedness could adversely affect our financial condition and results of operations.

As of December 31, 2016 , the amount of our total debt was approximately $4.50 billion . We may incur additional indebtedness in the future in connection with, among other things, our acquisition, development and operating activities.

The degree of our leverage creates significant risks, including the following:

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we may be required to dedicate a substantial portion of our funds from operations to servicing our debt and our cash flow may be insufficient to make required payments of principal and interest;
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debt service obligations will reduce funds available for distribution to our shareholders and funds available for acquisitions, development and redevelopment;
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we may be more vulnerable to economic and industry downturns than our competitors that have less debt;
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we may be limited in our ability to respond to changing business and economic conditions;
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we may default on our indebtedness, which could result in acceleration of those obligations, assignment of rents and leases and loss of properties to foreclosure; and
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if one of our subsidiaries defaults, it could trigger a cross default or cross acceleration provision under other indebtedness, which could cause an immediate default or would could allow the lenders to declare all funds borrowed thereunder to be due and payable.
 
If any one of these events were to occur, our financial condition and results of operations could be materially and adversely affected.

We may be unable to renew, repay or refinance our outstanding debt which could negatively impact our financial condition and results of operations.

We are subject to the normal risks associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest, the risk that either secured or unsecured indebtedness, will not be able to be renewed, repaid or refinanced when due or that the terms of any renewal or refinancing will not be as favorable as the existing terms of such indebtedness. If we were unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of our communities on disadvantageous terms, which might result in losses to us. Such losses could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other remedies, all with a consequent loss of our revenues and asset value. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Code.

Rising interest rates would increase the cost of our variable rate debt.

We have incurred and expect in the future to incur indebtedness that bears interest at variable rates. Accordingly, increases in interest rates would increase our interest costs, which could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt or cause us to be in default under certain debt instruments. In addition, an increase in market interest rates may lead holders of our shares of common stock to demand a higher yield on their shares from distributions by us, which could adversely affect the market price for our common stock.

Additionally, on December 14, 2016, the Federal Reserve reached a decision to raise the federal funds rate by 0.25 points with additional gradual increases anticipated to occur over the next year, subject to ongoing economic uncertainty. This increase in the federal funds rate and any future increases due to other key economic indicators, such as the unemployment rate or inflation, may cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. Any continued adverse economic conditions could have a material adverse effect on our business, financial condition and results of operations.

We may incur additional debt in the future, which may adversely impact our financial condition.

We currently fund the acquisition and development of multifamily apartment communities partially through borrowings (including our revolving credit facility) as well as from other sources such as sales of communities which no longer meet our investment criteria. Our organizational documents do not contain any limitation on the amount of indebtedness that

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we may incur, and we may issue more debt in the future. Accordingly, subject to limitations on indebtedness set forth in various loan agreements and the indentures governing our senior notes, we could become more highly leveraged, resulting in an increase in debt service, which could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt and in an increased risk of default on our obligations.

The restrictive terms of certain of our indebtedness may cause acceleration of debt payments.

At December 31, 2016 , we had outstanding borrowings of approximately $4.50 billion . Our indebtedness contains financial covenants as to interest coverage ratios, maximum secured debt, maintenance of unencumbered asset value, and total debt to gross assets and cross default provisions with other material debt, among others. In the event that an event of default occurs, our lenders may declare borrowings under the respective loan agreements to be due and payable immediately, which could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt.

Failure to hedge effectively against interest rates may adversely affect results of operations.

From time-to-time, we may seek to manage our exposure to interest rate volatility by using interest rate hedging arrangements, such as interest rate cap agreements and interest rate swap agreements. These agreements involve risks, such as the risk that the counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes and that a court could rule that such an agreement is not legally enforceable. Hedging may reduce overall returns on our investments. Failure to hedge effectively against interest rate changes could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt.  

A downgrade in our credit ratings could have a material adverse effect on our business, financial condition and results of operations.

We have a significant amount of debt outstanding. We are currently assigned corporate credit ratings from each of the three ratings agencies based on their evaluation of our creditworthiness. These ratings are based on a number of factors, which included their assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow and earnings. If our credit ratings are downgraded or other negative action is taken, we could be required to pay additional interest and fees on our outstanding borrowings. In addition, a downgrade may adversely impact our ability to borrow secured and unsecured debt and otherwise limit our access to capital, which could adversely affect our business, financial condition and results of operations. 

Issuances of additional debt or equity may adversely impact our financial condition.
 
Our capital requirements depend on numerous factors, including the occupancy and turnover rates of our apartment communities, development and capital expenditures, costs of operations and potential acquisitions. We cannot accurately predict the timing and amount of our capital requirements. If our capital requirements vary materially from our plans, we may require additional financing sooner than anticipated. Accordingly, we could become more leveraged, resulting in increased risk of default on our obligations and in an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future. If we issue additional equity securities to obtain additional financing, the interest of our existing shareholders could be diluted.


RISKS RELATED TO MAA'S ORGANIZATION AND OWNERSHIP OF ITS STOCK
 
MAA's ownership limit restricts the transferability of its capital stock.
 
MAA's charter limits ownership of its capital stock by any single shareholder to 9.9% of the value of all outstanding shares of its capital stock, both common and preferred, unless approved by its Board of Directors. The charter also prohibits anyone from buying shares if the purchase would result in it losing REIT status. This could happen if a share transaction results in fewer than 100 persons owning all of its shares or in five or fewer persons, applying certain broad attribution rules of the Code, owning 50% or more of its shares. If you acquire shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs, MAA:

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will consider the transfer to be null and void;
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will not reflect the transaction on its books;

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•
may institute legal action to enjoin the transaction;
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will not pay dividends or other distributions with respect to those shares;
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will not recognize any voting rights for those shares;
•
will consider the shares held in trust for its benefit; and
•
will either direct you to sell the shares and turn over any profit to MAA, or MAA will redeem the shares. If MAA redeems the shares, you will be paid a price equal to the lesser of:
◦
the principal price paid for the shares by the holder,
◦
a price per share equal to the market price (as determined in the manner set forth in its charter) of the applicable capital stock,
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the market price (as so determined) on the date such holder would, but for the restrictions on transfers set forth in its charter, be deemed to have acquired ownership of the shares and
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the maximum price allowed under Tennessee Greenmail Act (such price being the average of the highest and lowest closing market price for the shares during the 30 trading days preceding the purchase of such shares or, if the holder of such shares has commenced a tender offer or has announced an intention to seek control of MAA, during the 30 trading days preceding the commencement of such tender offer or the making of such announcement).

The redemption price may be paid, at MAA's option, by delivering one common unit (subject to adjustment from time to time in the event of, among other things, stock splits, stock dividends, or recapitalizations affecting its common stock or certain mergers, consolidations or asset transfers by MAA) issued by the Operating Partnership for each Excess Share being redeemed.

If you acquire shares in violation of the limits on ownership described above:

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you may lose your power to dispose of the shares;
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you may not recognize profit from the sale of such shares if the market price of the shares increases; and
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you may be required to recognize a loss from the sale of such shares if the market price decreases.

Future offerings of debt or equity securities, which may rank senior to our common stock, may adversely affect the market price of our common stock.

If we decide to issue additional debt securities in the future, which would rank senior to our common stock, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any equity securities or convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of its future offerings. Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings.

The form, timing and/or amount of dividend distributions in future periods may vary and be impacted by economic and other considerations

Though our Board of Directors has a history of declaring dividends in advance of the quarter they are paid, the form, timing and/or amount of dividend distributions will be declared, and standing practice changed, at the discretion of the Board of Directors. The form, timing and/or amount of dividend distributions will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as our Board of Directors may consider relevant. Our Board of Directors may modify our dividend policy from time to time.

Provisions of MAA's charter and Tennessee law may limit the ability of a third party to acquire control of MAA.
 
Ownership Limit

The 9.9% ownership limit discussed above may have the effect of precluding acquisition of control of MAA by a third party without the consent of our Board of Directors.



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Preferred Stock

MAA's charter authorizes our Board of Directors to issue up to 20,000,000 shares of preferred stock, 868,000 of which have been designated as MAA Series I preferred stock. In addition to the MAA Series I preferred stock, the Board of Directors may establish the preferences and rights of any other series of preferred shares issued. The issuance of preferred stock, including the MAA Series I preferred stock, could have the effect of delaying or preventing someone from taking control of MAA, even if a change in control were in MAA shareholders’ best interests. As of December 31, 2016 , approximately 868,000 shares of preferred stock were issued and outstanding.

Tennessee Anti-Takeover Statutes

As a Tennessee corporation, MAA is subject to various legislative acts, which impose restrictions on and require compliance with procedures designed to protect shareholders against unfair or coercive mergers and acquisitions. These statutes may delay or prevent offers to acquire MAA and increase the difficulty of consummating any such offers, even if MAA's acquisition would be in MAA shareholders’ best interests.
 
Market interest rates and low trading volume may have an adverse effect on the market value of MAA's common stock.
 
The market price of shares of a REIT may be affected by the distribution rate on those shares, as a percentage of the price of the shares, relative to market interest rates. If market interest rates increase, prospective purchasers of MAA's shares may expect a higher annual distribution rate. Higher interest rates would not, however, result in more funds for MAA to distribute and, in fact, would likely increase MAA's borrowing costs and potentially decrease funds available for distribution. This could cause the market price of MAA's common stock to go down. In addition, although MAA's common stock is listed on The New York Stock Exchange, or NYSE, the daily trading volume of MAA's common stock may be lower than the trading volume for other industries. As a result, MAA's investors who desire to liquidate substantial holdings may find that they are unable to dispose of their shares in the market without causing a substantial decline in the market value of MAA's common stock.
 
Changes in market conditions or a failure to meet the market’s expectations with regard to our results of operations and cash distributions could adversely affect the market price of MAA's common stock.
 
We believe that the market value of a REIT’s equity securities is based primarily upon the market’s perception of the REIT’s growth potential and its current and potential future cash distributions, and is secondarily based upon the real estate market value of the underlying assets. For that reason, MAA's common stock may trade at prices that are higher or lower than the net asset value per share. To the extent we retain operating cash flow for investment purposes, working capital reserves or other purposes, these retained funds, while increasing the value of our underlying assets, may not correspondingly increase the market price of MAA's common stock. In addition, we are subject to the risk that our cash flow will be insufficient to pay distributions to MAA's shareholders. Our failure to meet the market’s expectations with regard to future earnings and cash distributions would likely adversely affect the market price of MAA's stock. 
    
The stock markets, including NYSE, on which MAA lists its common stock, have experienced significant price and volume fluctuations. As a result, the market price of MAA's common stock could be similarly volatile, and investors in MAA's common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. Among the market conditions that may affect the market price of MAA's publicly traded securities are the following:

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our financial condition and operating performance and the performance of other similar companies;
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actual or anticipated differences in our quarterly and annual operating results;
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changes in our revenues or earnings estimates or recommendations by securities analysts;
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publication of research reports about us or our industry by securities analysts;
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additions and departures of key personnel;
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inability to access the capital markets;
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strategic decisions by us or our competitors, such as acquisitions, dispositions, spin-offs, joint ventures, strategic investments or changes in business strategy;
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the issuance of additional shares of MAA's common stock, or the perception that such sales may occur, including under MAA's at-the-market offering programs;
•
the reputation of REITs generally and the reputation of REITs with portfolios similar to ours;
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the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies);

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•
an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for MAA's common stock;
•
the passage of legislation or other regulatory developments that adversely affect us or our industry;
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speculation in the press or investment community;
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actions by institutional shareholders or hedge funds;
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changes in accounting principles;
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terrorist acts; and
•
general market conditions, including factors unrelated to our performance.
    
In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.


RISKS RELATED TO THE OPERATING PARTNERSHIP'S ORGANIZATION AND OWNERSHIP OF OP UNITS

The Operating Partnership's existing unitholders have limited approval rights, which may prevent the Operating Partnership's sole general partner, MAA, from completing a change of control transaction that may be in the best interests of all unitholders and of all the shareholders of MAA.

MAA may not engage in a sale or other disposition of all or substantially all of the assets of the Operating Partnership, dissolve the Operating Partnership or, upon the occurrence of certain triggering events, take any action that would result in any unitholder realizing taxable gain, without the approval of the holders of a majority of the outstanding OP Units held by holders other than MAA or its affiliates, or Class A OP Units. The right of the holders of our Class A OP Units to vote on these transactions could limit MAA's ability to complete a change of control transaction that might otherwise be in the best interest of all of our unitholders and all shareholders of MAA.

In certain circumstances, certain of the Operating Partnership's unitholders must approve the Operating Partnership's sale of certain properties contributed by the unitholders.

In certain circumstances as detailed in the partnership agreement of the Operating Partnership, the Operating Partnership may not sell or otherwise transfer certain properties unless a specified percentage of the limited partners who were partners in the limited partnership holding such properties at the time of its acquisition by us approves such sale or transfer. The exercise of these approval rights by the Operating Partnership's unitholders could delay or prevent the Operating Partnership from completing a transaction that may be in the best interest of all of the Operating Partnership's unitholders and all shareholders of MAA.

MAA, its officers and directors have substantial influence over the Operating Partnership's affairs.

MAA, as the Operating Partnership's sole general partner and acting through its officers and directors, has a substantial influence on the Operating Partnership's affairs. MAA, its officers and directors could exercise their influence in a manner that is not in the best interest of the Operating Partnership's unitholders. Also, MAA owns approximately 96.4% of the OP Units and as such, will have substantial influence on the outcome of substantially all matters submitted to the Operating Partnership's unitholders for approval.

Market interest rates and low trading volume may have an adverse effect on the market value of MAA's common stock, which would affect the redemption price of the OP Units.

The market price of shares of a REIT may be affected by the distribution rate on those shares, as a percentage of the price of the shares, relative to market interest rates. If market interest rates increase, prospective purchasers of MAA's common stock may expect a higher annual distribution rate. Higher interest rates would not, however, result in more funds for MAA to distribute and, in fact, would likely increase MAA's borrowing costs and potentially decrease funds available for distribution. This could cause the market price of MAA's common stock to go down, which would reduce the price received upon redemption of any OP Units, or if MAA so elects, the value of MAA's common stock received in lieu of cash upon redemption of such OP Units. In addition, although MAA's common stock is listed on the NYSE, the daily trading volume of MAA's shares may be lower than the trading volume for companies in other industries. As a result, MAA's investors who desire to liquidate substantial holdings may find that they are unable to dispose of their shares in the market without causing a substantial decline in the market value of the shares.


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Insufficient cash flow from operations or a decline in the market price of MAA's common stock may reduce the amount of cash available to the Operating Partnership to meet its obligations.

T he Operating Partnership is subject to the risk that its cash flow will be insufficient to service its debt and to pay distributions to its unitholders, which may cause MAA to not have the funds to pay distributions to its shareholders. MAA’s failure to meet the market’s expectations with regard to future results of operations and cash distributions would likely adversely affect the market price of its shares and thus potentially reduce MAA’s ability to contribute funds from issuances down to the Operating Partnership, resulting in a lower level of cash available for investment or to service our debt or to make distributions to the Operating Partnership’s unitholders.


RISKS RELATED TO TAX LAWS
 
Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to shareholders.

If MAA fails to qualify as a REIT for federal income tax purposes, MAA will be subject to federal income tax on its taxable income at regular corporate rates (subject to any applicable alternative minimum tax) without the benefit of the dividends paid deduction applicable to REITs. In addition, unless MAA is entitled to relief under applicable statutory provisions, MAA would be ineligible to make an election for treatment as a REIT for the four taxable years following the year in which it loses its qualification. The additional tax liability resulting from the failure to qualify as a REIT would significantly reduce or eliminate the amount of funds available for distribution to MAA’s shareholders. MAA’s failure to qualify as a REIT also could impair its ability to expand its business and raise capital, and would adversely affect the value of
MAA’s stock.

MAA believes that it is organized and qualified as a REIT, and MAA intends to operate in a manner that will allow it to continue to qualify as a REIT. MAA cannot assure you, however, that it is qualified or will remain qualified as a REIT. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code for which there are only limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within MAA’s control. In addition, future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to qualification as a REIT for federal income tax purposes or the federal income tax consequences of qualification as a REIT.

Even if MAA qualifies as a REIT, MAA will be subject to various federal, state and local taxes, including property taxes and income taxes on taxable income that MAA does not timely distribute to its shareholders. In addition, MAA may hold certain assets and engage in certain activities that a REIT could not engage in directly through its taxable REIT subsidiaries, or TRSs, and those TRSs will be subject to federal income tax at regular corporate rates on their taxable incomes without the benefit of the dividends paid deduction applicable to REITs.

Furthermore, we have a subsidiary that has elected to be treated as a REIT, and if our subsidiary REIT were to fail to qualify as a REIT, it is possible that we also would fail to qualify as a REIT unless we (or the subsidiary REIT) could qualify for certain relief provisions. The qualification of our subsidiary REIT as a REIT will depend on satisfaction, on an annual or quarterly basis, of numerous requirements set forth in highly technical and complex provisions of the Code for which there are only limited judicial or administrative interpretations. A determination as to whether such requirements are satisfied involves various factual matters and circumstances not entirely within our control. The fact that we hold substantially all of our assets through our operating partnership and its subsidiaries further complicates the application of the REIT requirements for us. No assurance can be given that our subsidiary REIT will qualify as a REIT for any particular year.

If Colonial or Post Properties’ failed to qualify as a REIT for U.S. federal income tax purposes, we would incur adverse tax consequences and our consolidated results of operations and financial condition would be materially adversely affected.

Prior to their respective mergers with MAA, each of Colonial and Post Properties operated in a manner intended to allow it to qualify as a REIT for U.S. federal income tax purposes. If either Colonial or Post Properties (each, a “Merged REIT”) is determined to have lost its REIT status at any time prior to its merger with MAA, MAA would be subject to serious adverse tax consequences, including:


26


•
MAA would be required to pay U.S. federal income tax at regular corporate rates on the taxable income of such Merged REIT without the benefit of the dividends paid deduction for the taxable years that the Merged REIT did not qualify as a REIT and for which the statute of limitations period remains open; and
•
MAA would be required to pay any federal alternative minimum tax liability of the Merged REIT and any applicable state and local tax liability, in each case, for all taxable years that remain open under the applicable statute of limitations periods.

MAA is liable for any tax liability of a Merged REIT with respect to any periods prior to the merger of such Merged REIT with MAA. If a Merged REIT failed to qualify as a REIT, then in the event of a taxable disposition by MAA of an asset previously held by the Merged REIT during a specified period of up to 10 years following the merger of the Merged REIT with MAA, MAA will be subject to corporate income tax with respect to any built-in gain inherent in such asset as of the date of such merger. In addition, unless an applicable statutory relief provision applies, if a Merged REIT failed to qualify as a REIT for a taxable year, then the Merged REIT would not have been entitled to re-elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified. Furthermore, if both MAA and a Merged REIT were “investment companies” under the “investment company” rules set forth in Section 368 of the Code at the time of the merger of MAA and such Merged REIT, the failure of MAA or such Merged REIT to have qualified as a REIT at the time of their merger could result in such merger being treated as taxable for federal income tax purposes. As a result of all these factors, the failure by a Merged REIT to have qualified as a REIT could jeopardize MAA’s qualification as a REIT and require the Operating Partnership to provide material amounts of cash to MAA to satisfy MAA’s additional tax liabilities and, therefore, could have a material adverse effect on MAA’s financial condition, results of operations, business and prospects and on MAA’s ability to make payments on its indebtedness or distributions to its shareholders.

The Operating Partnership may fail to be treated as a partnership for federal income tax purposes.

We believe that the Operating Partnership qualifies, and has so qualified since its formation, as a partnership for federal income tax purposes and not as a publicly traded partnership taxable as a corporation. No assurance can be provided, however, that the Internal Revenue Service, or IRS, will not challenge the treatment of the Operating Partnership as a partnership for federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in treating the Operating Partnership as a corporation for federal income tax purposes, then the taxable income of the Operating Partnership would be taxable at regular corporate income tax rates. In addition, the treatment of the Operating Partnership as a corporation would cause MAA to fail to qualify as a REIT. See “Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to shareholders” above.

Certain dispositions of property by us may generate prohibited transaction income, resulting in a 100% penalty tax on gain attributable to the disposition.

                Any gain resulting from a transfer of property that we hold as inventory or primarily for sale to customers in the ordinary course of business would be treated for federal income tax purposes as income from a prohibited transaction that is subject to a 100% penalty tax.  Since we acquire properties for investment purposes, we do not believe that our occasional transfers or disposals of property would be considered prohibited transactions. Whether property is held for investment purposes is a question of fact that depends on all the facts and circumstances surrounding the particular transaction. As such, the IRS may contend that certain transfers or disposals of properties by us are prohibited transactions. If the IRS were to argue successfully that a transfer or disposition of property constituted a prohibited transaction, then we would be required to pay a 100% penalty tax on any gain allocable to us from the prohibited transaction. In addition, income from a prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a REIT for federal income tax purposes. A safe harbor to the characterization of the disposition of property as a prohibited transaction and the resulting imposition of the 100% tax is available; however, we cannot assure you that we will be able to comply with such safe harbor in connection with any property dispositions.

Recent tax legislation impacts certain U.S. federal income tax rules applicable to REITs and could adversely affect our current tax positions.

The Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”) changed certain aspects of the U.S. federal income tax rules applicable to us. The PATH Act is the most recent example of changes to the REIT rules, and additional legislative changes may occur that could adversely affect our current tax positions. The PATH Act modifies various rules that apply to our ownership of, and business relationship with, our TRSs and reduces the maximum allowable value of our assets attributable to TRSs from 25% to 20% which could impact our ability to enter into future investments. The PATH Act also makes multiple changes related to the Foreign Investment in Real Property Tax Act, expands prohibited transaction safe harbors and qualifying hedges, and repeals the preferential dividend rule for public REITs previously applicable to us. Lastly, the PATH

27


Act adjusts the way we may calculate certain earnings and profits calculations to avoid double taxation at the stockholder level, and expands the types of qualifying assets and income for purposes of the REIT requirements. The provisions enacted by the PATH Act could result in changes in our tax positions or investments, and future legislative changes related to those rules described above could have a materially adverse impact on our results of operations and financial condition.

ITEM 1B. UNRESOLVED STAFF COMMENTS.
 
None.

ITEM 2. PROPERTIES.
 
We seek to acquire newer apartment communities and those with opportunities for repositioning through capital additions and management improvement located in the Southeast and Southwest regions of the United States that are primarily appealing to middle income residents with the potential for above average growth and return on investment. Approximately 68% of our apartment units are located in the Florida, Georgia, North Carolina, and Texas markets. Our strategic focus is to provide our residents high quality apartment units in attractive community settings, characterized by upscale amenities, extensive landscaping and attention to aesthetic detail.

The following table sets forth certain historical information for the apartment communities we owned at December 31, 2016 : 
 
 
 
 
 
 
 
 
 
Approx-imate Rentable Area (Square Footage)
 
Aver-age Unit Size (Square Foot-age)
 
Monthly
Average
Rent per Unit at December 31, 2016 (1)
 
Average
Occupancy Percent at December 31, 2016 (2)
 
Monthly
Effective Rent per Unit at December 31, 2016 (3)
 
 
 
 
 
 
 
 
 
 
 
 
Property
Location
Year Complete
Year Manage-ment Commenced
Report-able Seg-ment
 
Number of Units 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 

 
 

Birchall at Ross Bridge
 Birmingham , AL
2009
2011
(5)
 
240

 
283,680

 
1,182

 
$
1,152.28

 
96.25
%
 
$
1,142.09

CG at Liberty Park
 Birmingham , AL
2000
2013
(5)
 
300

 
338,700

 
1,129

 
$
1,091.86

 
96.67
%
 
$
1,091.77

CG at Riverchase Trails
 Birmingham , AL
1996
2013
(5)
 
346

 
328,008

 
948

 
$
881.56

 
97.98
%
 
$
881.27

CV at Trussville
 Birmingham , AL
1996
2013
(5)
 
376

 
410,216

 
1,091

 
$
843.42

 
95.74
%
 
$
842.09

Eagle Ridge
 Birmingham , AL
1986
1998
(5)
 
200

 
181,600

 
908

 
$
801.10

 
96.50
%
 
$
798.10

CG at Traditions
 Gulf Shores , AL
2008
2013
(5)
 
324

 
321,732

 
993

 
$
860.66

 
95.68
%
 
$
856.48

Cypress Village
 Gulf Shores , AL
2008
2013
(6)
 
96

 
206,016

 
2,146

 
$
1,566.01

 
96.88
%
 
$
1,566.01

CG at Edgewater
 Huntsville , AL
1990/99
2013
(5)
 
500

 
543,000

 
1,086

 
$
767.71

 
96.20
%
 
$
765.47

CG at Madison
 Huntsville , AL
1999
2013
(5)
 
336

 
354,480

 
1,055

 
$
840.12

 
97.32
%
 
$
839.52

The Paddock Club at Providence
 Huntsville , AL
1989/98
1997
(6)
 
392

 
441,000

 
1,125

 
$
753.66

 
94.13
%
 
$
752.45

The Paddock Club Montgomery
 Montgomery, AL
1999
1998
(5)
 
208

 
246,272

 
1,184

 
$
819.74

 
97.60
%
 
$
819.74

Subtotal Alabama
 
 
 
3,318

 
3,654,704

 
1,101

 
$
888.41

 
96.32
%
 
$
886.35

CG at Inverness Commons
 Phoenix , AZ
2002
2013
(4)
 
300

 
306,000

 
1,020

 
$
958.10

 
96.67
%
 
$
949.28

CG at Old Town Scottsdale
 Phoenix , AZ
1994/1995
2013
(4)
 
472

 
470,584

 
997

 
$
1,083.15

 
97.67
%
 
$
1,082.73

CG at Scottsdale
 Phoenix , AZ
1999
2013
(4)
 
180

 
201,600

 
1,120

 
$
1,191.29

 
97.22
%
 
$
1,184.86

Sky View Ranch
 Phoenix , AZ
2007
2009
(4)
 
232

 
225,272

 
971

 
$
1,020.98

 
97.84
%
 
$
1,017.88

SkySong
 Phoenix , AZ
2014
2015
(6)
 
325

 
315,900

 
972

 
$
1,248.90

 
97.54
%
 
$
1,213.03

Talus Ranch at Sonoran Foothills
 Phoenix , AZ
2005
2006
(4)
 
480

 
437,280

 
911

 
$
864.86

 
96.88
%
 
$
860.28

The Edge at Lyons Gate
 Phoenix , AZ
2007
2008
(4)
 
312

 
299,208

 
959

 
$
1,013.03

 
98.08
%
 
$
1,005.66

Subtotal Arizona
 
 
 
2,301

 
2,255,844

 
980

 
$
1,037.40

 
97.39
%
 
$
1,028.33

Calais Forest
Little Rock, AR
1987
1994
(5)
 
260

 
195,000

 
750

 
$
730.67

 
96.54
%
 
$
727.28

Napa Valley
Little Rock, AR
1984
1996
(5)
 
240

 
183,120

 
763

 
$
696.76

 
98.33
%
 
$
691.55

Palisades at Chenal Valley
Little Rock, AR
2006
2011
(5)
 
248

 
319,672

 
1,289

 
$
1,134.98

 
97.58
%
 
$
1,134.98

Ridge at Chenal Valley
Little Rock, AR
2012
2011
(5)
 
312

 
340,080

 
1,090

 
$
1,039.64

 
95.19
%
 
$
1,032.58

Westside Creek
Little Rock, AR
1984/86
1997
(5)
 
308

 
304,612

 
989

 
$
809.10

 
95.13
%
 
$
805.85


28


 
 
 
 
 
 
 
 
Approx-imate Rentable Area (Square Footage)
 
Aver-age Unit Size (Square Foot-age)
 
Monthly
Average
Rent per Unit at December 31, 2016 (1)
 
Average
Occupancy Percent at December 31, 2016 (2)
 
Monthly
Effective Rent per Unit at December 31, 2016 (3)
 
 
 
 
 
 
 
 
 
 
 
 
Property
Location
Year Complete
Year Manage-ment Commenced
Report-able Seg-ment
 
Number of Units 
 
 
 
 
 
Subtotal Arkansas
 
 
 
1,368

 
1,342,484

 
981

 
$
886.14

 
96.42
%
 
$
882.24

The Paddock Club Gainesville
 Gainesville, FL
1999
1998
(5)
 
264

 
326,368

 
1,236

 
$
1,077.32

 
96.59
%
 
$
1,069.68

The Retreat at Magnolia Parke
 Gainesville, FL
2009
2011
(5)
 
204

 
206,088

 
1,010

 
$
1,176.66

 
98.04
%
 
$
1,173.58

220 Riverside
 Jacksonville, FL
2015
2012
(6)
 
294

 
251,958

 
857

 
$
1,359.86

 
98.30
%
 
$
1,359.86

Atlantic Crossing
 Jacksonville, FL
2008
2011
(5)
 
200

 
248,250

 
1,241

 
$
1,226.56

 
97.00
%
 
$
1,226.56

Coopers Hawk
 Jacksonville, FL
1987
1995
(5)
 
208

 
218,400

 
1,050

 
$
957.13

 
98.08
%
 
$
957.13

Hunters Ridge at Deerwood
 Jacksonville, FL
1987
1997
(5)
 
336

 
294,888

 
878

 
$
930.61

 
96.73
%
 
$
925.60

Lakeside Apartments
 Jacksonville, FL
1985
1996
(5)
 
416

 
346,089

 
832

 
$
842.30

 
96.39
%
 
$
841.19

Lighthouse at Fleming Island
 Jacksonville, FL
2003
2003
(5)
 
501

 
556,304

 
1,110

 
$
1,060.30

 
97.60
%
 
$
1,059.48

St. Augustine at the Lake
 Jacksonville, FL
1987/2008
1995
(5)
 
524

 
438,120

 
836

 
$
910.87

 
97.14
%
 
$
909.73

Tattersall at Tapestry Park
 Jacksonville, FL
2009
2011
(5)
 
279

 
307,538

 
1,102

 
$
1,246.52

 
97.85
%
 
$
1,246.20

The Paddock Club Mandarin
 Jacksonville, FL
1998
1998
(5)
 
288

 
334,596

 
1,162

 
$
1,036.07

 
97.22
%
 
$
1,029.94

Woodhollow
 Jacksonville, FL
1986
1997
(5)
 
450

 
379,200

 
843

 
$
870.29

 
98.44
%
 
$
868.11

The Paddock Club Lakeland
 Lakeland, FL
1988/90
1997
(5)
 
464

 
502,112

 
1,082

 
$
868.25

 
96.55
%
 
$
862.59

CG at Randal Lakes
 Orlando, FL
2014
2013
(6)
 
462

 
435,666

 
943

 
$
1,207.15

 
95.45
%
 
$
1,195.25

Post Lake at Baldwin Park
 Orlando, FL
2004-2007, 2013
2016
(6)
 
760

 
752,197

 
990

 
$
1,580.76

 
93.68
%
 
$
1,544.70

Post Lakeside
 Orlando, FL
2013
2016
(6)
 
300

 
321,108

 
1,070

 
$
1,459.08

 
97.00
%
 
$
1,445.12

Post Parkside
 Orlando, FL
1999
2016
(6)
 
248

 
215,050

 
867

 
$
1,598.65

 
94.35
%
 
$
1,589.53

Retreat at Lake Nona
 Orlando, FL
2006
2012
(4)
 
394

 
421,088

 
1,069

 
$
1,234.80

 
95.94
%
 
$
1,234.25

Tiffany Oaks
 Orlando, FL
1985
1996
(4)
 
288

 
232,619

 
808

 
$
966.11

 
97.92
%
 
$
965.53

CG at Heather Glen
 Orlando , FL
2000
2013
(4)
 
448

 
523,228

 
1,168

 
$
1,339.02

 
95.98
%
 
$
1,338.83

CG at Heathrow
 Orlando , FL
1997
2013
(4)
 
312

 
353,040

 
1,132

 
$
1,242.74

 
96.15
%
 
$
1,239.50

CG at Lake Mary I/II/III
 Orlando , FL
2012/2013
2013
(4)
 
472

 
488,520

 
1,035

 
$
1,357.11

 
95.97
%
 
$
1,356.21

CG at Town Park
 Orlando , FL
2002
2013
(4)
 
456

 
535,340

 
1,174

 
$
1,263.39

 
96.49
%
 
$
1,254.61

CG at TownPark Reserve
 Orlando , FL
2004
2013
(6)
 
80

 
77,412

 
968

 
$
1,311.29

 
96.25
%
 
$
1,285.57

CG at Windermere
 Orlando , FL
2009
2013
(4)
 
280

 
283,952

 
1,014

 
$
1,317.66

 
96.79
%
 
$
1,314.45

CV at Twin Lakes
 Orlando , FL
2005
2013
(4)
 
460

 
417,808

 
908

 
$
1,068.13

 
97.83
%
 
$
1,064.00

The Club at Panama Beach
 Panama City, FL
2000
1998
(5)
 
254

 
283,836

 
1,117

 
$
1,120.78

 
98.03
%
 
$
1,119.05

The Preserve at Coral Square
 South Florida, FL
1996
2004
(4)
 
480

 
570,910

 
1,189

 
$
1,586.41

 
96.88
%
 
$
1,578.89

The Paddock Club Tallahassee
 Tallahassee, FL
1990/1995
1997
(5)
 
304

 
329,392

 
1,084

 
$
931.14

 
95.39
%
 
$
929.93

Verandas at Southwood
 Tallahassee, FL
2003
2011
(5)
 
300

 
341,760

 
1,139

 
$
1,076.56

 
93.67
%
 
$
1,073.20

Belmere
 Tampa, FL
1984
1994
(4)
 
210

 
202,440

 
964

 
$
1,001.43

 
96.67
%
 
$
991.83

CG at Hampton Preserve
 Tampa, FL
2012
2013
(4)
 
486

 
515,088

 
1,060

 
$
1,184.59

 
96.09
%
 
$
1,184.59

CG at Lakewood Ranch
 Tampa, FL
1999
2013
(4)
 
288

 
301,656

 
1,047

 
$
1,345.13

 
97.22
%
 
$
1,342.38

CG at Seven Oaks
 Tampa, FL
2004
2013
(4)
 
318

 
301,684

 
949

 
$
1,170.92

 
97.48
%
 
$
1,170.92

Indigo Point
 Tampa, FL
1989
2000
(4)
 
240

 
194,736

 
811

 
$
1,003.04

 
99.17
%
 
$
1,003.04

Links at Carrollwood
 Tampa, FL
1980
1998
(4)
 
230

 
213,252

 
927

 
$
1,069.26

 
98.26
%
 
$
1,068.82

Park Crest at Innisbrook
 Tampa, FL
2000
2009
(4)
 
432

 
461,815

 
1,069

 
$
1,192.59

 
97.22
%
 
$
1,188.52

Post Bay at Rocky Point
 Tampa, FL
1997
2016
(6)
 
150

 
151,786

 
1,012

 
$
1,599.85

 
95.33
%
 
$
1,593.03

Post Harbour Place
 Tampa, FL
2002
2016
(6)
 
578

 
531,900

 
920

 
$
1,654.58

 
95.85
%
 
$
1,652.24

Post Hyde Park
 Tampa, FL
1996/1999/2008
2016
(6)
 
467

 
471,988

 
1,011

 
$
1,629.00

 
96.79
%
 
$
1,614.02

Post Rocky Point
 Tampa, FL
1996/1997/1998
2016
(6)
 
916

 
944,485

 
1,031

 
$
1,425.93

 
96.18
%
 
$
1,416.71

Post Soho Square
 Tampa, FL
2014
2016
(6)
 
231

 
203,338

 
880

 
$
1,884.02

 
96.54
%
 
$
1,859.03

The Paddock Club Brandon
 Tampa, FL
1997/1999
1997
(4)
 
440

 
528,560

 
1,201

 
$
1,135.95

 
97.05
%
 
$
1,134.13


29


 
 
 
 
 
 
 
 
Approx-imate Rentable Area (Square Footage)
 
Aver-age Unit Size (Square Foot-age)
 
Monthly
Average
Rent per Unit at December 31, 2016 (1)
 
Average
Occupancy Percent at December 31, 2016 (2)
 
Monthly
Effective Rent per Unit at December 31, 2016 (3)
 
 
 
 
 
 
 
 
 
 
 
 
Property
Location
Year Complete
Year Manage-ment Commenced
Report-able Seg-ment
 
Number of Units 
 
 
 
 
 
Village Oaks
 Tampa, FL
2005
2008
(4)
 
234

 
279,864

 
1,196

 
$
1,181.76

 
97.86
%
 
$
1,177.29

Subtotal Florida
 
 
 
15,946

 
16,295,429

 
1,022

 
$
1,234.35

 
96.62
%
 
$
1,228.27

Highlands of West Village
 Atlanta, GA
2006/2012
2014
(4)
 
480

 
556,435

 
1,159

 
$
1,445.30

 
97.50
%
 
$
1,445.30

Post Alexander Reserve
 Atlanta, GA
2008
2016
(6)
 
307

 
311,605

 
1,015

 
$
1,795.62

 
95.77
%
 
$
1,779.52

Post Briarcliff
 Atlanta, GA
1999
2016
(6)
 
688

 
692,017

 
1,006

 
$
1,439.77

 
97.09
%
 
$
1,438.48

Post Brookhaven
 Atlanta, GA
1990/1992
2016
(6)
 
735

 
685,728

 
933

 
$
1,338.46

 
98.37
%
 
$
1,336.63

Post Chastain
 Atlanta, GA
1990
2016
(6)
 
558

 
483,488

 
866

 
$
1,392.89

 
96.24
%
 
$
1,392.89

Post Crossing
 Atlanta, GA
1995
2016
(6)
 
354

 
366,848

 
1,036

 
$
1,384.45

 
95.76
%
 
$
1,383.19

Post Gardens
 Atlanta, GA
1998
2016
(6)
 
397

 
412,373

 
1,039

 
$
1,435.86

 
95.47
%
 
$
1,429.97

Post Glen
 Atlanta, GA
1997
2016
(6)
 
314

 
337,772

 
1,076

 
$
1,504.25

 
96.82
%
 
$
1,503.61

Post Parkside
 Atlanta, GA
2000
2016
(6)
 
188

 
166,609

 
886

 
$
1,683.47

 
96.81
%
 
$
1,683.47

Post Peachtree Hills
 Atlanta, GA
1992/1994
2016
(6)
 
300

 
293,320

 
978

 
$
1,519.64

 
96.33
%
 
$
1,515.47

Post Riverside
 Atlanta, GA
1998
2016
(6)
 
522

 
552,577

 
1,059

 
$
1,694.56

 
93.30
%
 
$
1,680.01

Post Spring
 Atlanta, GA
2000
2016
(6)
 
452

 
441,227

 
976

 
$
1,209.14

 
95.80
%
 
$
1,204.94

Post Stratford
 Atlanta, GA
2000
2016
(6)
 
250

 
249,868

 
999

 
$
1,433.41

 
94.80
%
 
$
1,432.13

The High Rise at Post Alexander
 Atlanta, GA
2015
2016
(6)
 
340

 
282,200

 
830

 
$
1,927.82

 
94.41
%
 
$
1,907.47

Allure at Brookwood
 Atlanta , GA
2008
2012
(4)
 
349

 
344,530

 
987

 
$
1,390.41

 
93.12
%
 
$
1,384.02

Allure in Buckhead Village
 Atlanta , GA
2002
2012
(4)
 
228

 
222,646

 
977

 
$
1,415.26

 
97.37
%
 
$
1,410.28

Allure in Buckhead Village III
 Atlanta , GA
2002
2012
(6)
 
3

 
4,978

 
1,659

 
$
2,293.33

 
100.00
%
 
$
2,293.33

CG at Barrett Creek
 Atlanta , GA
1999
2013
(4)
 
332

 
309,962

 
934

 
$
1,044.79

 
95.78
%
 
$
1,034.21

CG at Berkeley Lake
 Atlanta , GA
1998
2013
(4)
 
180

 
244,260

 
1,357

 
$
1,239.88

 
97.22
%
 
$
1,234.33

CG at McDaniel Farm
 Atlanta , GA
1997
2013
(4)
 
425

 
450,783

 
1,061

 
$
1,054.29

 
98.12
%
 
$
1,052.53

CG at Mount Vernon
 Atlanta , GA
1997
2013
(4)
 
213

 
257,180

 
1,207

 
$
1,443.38

 
99.06
%
 
$
1,439.86

CG at Pleasant Hill
 Atlanta , GA
1996
2013
(4)
 
502

 
501,816

 
1,000

 
$
984.80

 
98.41
%
 
$
983.59

CG at River Oaks
 Atlanta , GA
1992
2013
(4)
 
216

 
276,208

 
1,279

 
$
1,172.23

 
96.76
%
 
$
1,170.49

CG at Shiloh
 Atlanta , GA
2002
2013
(4)
 
498

 
533,356

 
1,071

 
$
1,068.88

 
96.18
%
 
$
1,068.88

Lake Lanier Club I
 Atlanta , GA
1998
2005
(4)
 
344

 
396,394

 
1,152

 
$
1,042.43

 
96.51
%
 
$
1,039.56

Lake Lanier Club II
 Atlanta , GA
2001
2005
(4)
 
313

 
359,800

 
1,150

 
$
986.96

 
96.81
%
 
$
984.56

Milstead Village
 Atlanta , GA
1998
2008
(4)
 
310

 
356,340

 
1,149

 
$
1,115.85

 
98.06
%
 
$
1,112.46

River Plantation
 Atlanta , GA
1994
2013
(4)
 
232

 
310,364

 
1,338

 
$
1,191.09

 
97.84
%
 
$
1,191.09

Sanctuary at Oglethorpe
 Atlanta , GA
1994
2008
(4)
 
250

 
287,623

 
1,150

 
$
1,702.57

 
96.40
%
 
$
1,694.43

Terraces at Fieldstone
 Atlanta , GA
1999
1998
(4)
 
316

 
375,198

 
1,187

 
$
962.05

 
96.52
%
 
$
952.52

Terraces at Towne Lake
 Atlanta , GA
1999
1998
(4)
 
502

 
568,220

 
1,132

 
$
972.15

 
95.82
%
 
$
961.72

The Prescott
 Atlanta , GA
2001
2004
(4)
 
384

 
411,574

 
1,072

 
$
1,061.97

 
96.88
%
 
$
1,061.32

Avala at Savannah Quarters
 Savannah, GA
2009
2011
(5)
 
256

 
278,136

 
1,086

 
$
1,005.14

 
99.22
%
 
$
1,002.41

Georgetown Grove
 Savannah, GA
1997
1998
(5)
 
220

 
239,904

 
1,090

 
$
982.07

 
97.73
%
 
$
982.07

The Oaks at Wilmington Island
 Savannah, GA
1999
2006
(5)
 
306

 
333,962

 
1,091

 
$
1,104.52

 
96.41
%
 
$
1,100.43

CG at Godley Lake
 Savannah , GA
2008
2013
(5)
 
288

 
269,504

 
936

 
$
968.60

 
97.57
%
 
$
964.78

CG at Godley Station
 Savannah , GA
2005
2013
(5)
 
312

 
337,344

 
1,081

 
$
986.07

 
97.44
%
 
$
986.07

CG at Hammocks
 Savannah , GA
1997
2013
(5)
 
308

 
323,844

 
1,051

 
$
1,195.25

 
97.08
%
 
$
1,191.84

CV at Greentree
 Savannah , GA
1984
2013
(5)
 
194

 
165,216

 
852

 
$
772.96

 
97.94
%
 
$
772.96

CV at Huntington
 Savannah , GA
1986
2013
(6)
 
147

 
121,112

 
824

 
$
932.60

 
98.64
%
 
$
932.60

CV at Marsh Cove
 Savannah , GA
1983
2013
(6)
 
188

 
197,200

 
1,049

 
$
873.98

 
96.81
%
 
$
873.45

Subtotal Georgia
 
 
 
13,701

 
14,309,521

 
1,044

 
$
1,262.63

 
96.66
%
 
$
1,258.54


30


 
 
 
 
 
 
 
 
Approx-imate Rentable Area (Square Footage)
 
Aver-age Unit Size (Square Foot-age)
 
Monthly
Average
Rent per Unit at December 31, 2016 (1)
 
Average
Occupancy Percent at December 31, 2016 (2)
 
Monthly
Effective Rent per Unit at December 31, 2016 (3)
 
 
 
 
 
 
 
 
 
 
 
 
Property
Location
Year Complete
Year Manage-ment Commenced
Report-able Seg-ment
 
Number of Units 
 
 
 
 
 
The Ranch at Prairie Trace
Kansas City, KS
2015
2015
(6)
 
280

 
257,880

 
921

 
$
1,092.45

 
95.71
%
 
$
1,059.72

Subtotal Kansas
 
 
 
280

 
257,880

 
921

 
$
1,092.45

 
95.71
%
 
$
1,059.72

Grand Reserve at Pinnacle
Lexington, KY
2000
1999
(5)
 
370

 
432,900

 
1,170

 
$
1,048.77

 
95.14
%
 
$
1,037.26

Lakepointe
Lexington, KY
1986
1994
(5)
 
118

 
90,742

 
769

 
$
717.84

 
100.00
%
 
$
715.31

The Mansion
Lexington, KY
1989
1994
(5)
 
184

 
138,736

 
754

 
$
749.64

 
95.65
%
 
$
734.89

The Village
Lexington, KY
1989
1994
(5)
 
252

 
182,700

 
725

 
$
741.26

 
97.22
%
 
$
703.00

Stonemill Village
Louisville, KY
1985
1994
(5)
 
384

 
324,864

 
846

 
$
821.78

 
95.31
%
 
$
818.65

Subtotal Kentucky
 
 
 
1,308

 
1,169,942

 
894

 
$
850.95

 
96.10
%
 
$
837.10

Post Fallsgrove
 Washington DC, MD
2003
2016
(6)
 
361

 
355,019

 
983

 
$
1,697.38

 
97.78
%
 
$
1,697.38

Post Park
 Washington DC, MD
2010
2016
(6)
 
396

 
386,026

 
975

 
$
1,674.00

 
97.98
%
 
$
1,669.06

Subtotal Maryland
 
 
 
757

 
741,045

 
979

 
$
1,685.15

 
97.89
%
 
$
1,682.57

Crosswinds
Jackson, MS
1989
1996
(5)
 
360

 
443,160

 
1,231

 
$
869.91

 
96.39
%
 
$
864.36

Lakeshore Landing
Jackson, MS
1974
1994
(5)
 
196

 
174,244

 
867

 
$
790.31

 
96.94
%
 
$
785.20

Pear Orchard
Jackson, MS
1985
1994
(5)
 
389

 
337,263

 
839

 
$
872.01

 
96.66
%
 
$
868.84

Reflection Pointe
Jackson, MS
1986
1988
(5)
 
296

 
248,344

 
889

 
$
910.45

 
95.61
%
 
$
906.73

Subtotal Mississippi
 
 
 
1,241

 
1,203,011

 
969

 
$
867.67

 
96.37
%
 
$
863.37

Market Station
Kansas City, MO
2010
2012
(5)
 
323

 
324,615

 
1,005

 
$
1,311.98

 
96.28
%
 
$
1,291.85

The Denton (I)
Kansas City, MO
2014
2015
(6)
 
55

 
59,730

 
1,086

 
$
1,287.09

 
96.36
%
 
$
1,287.09

The Denton (III)
Kansas City, MO
2014
2015
(6)
 
298

 
301,278

 
1,011

 
$
1,159.60

 
96.31
%
 
$
1,124.79

Subtotal Missouri
 
 
 
676


685,623

 
1,014

 
$
1,242.78

 
96.30
%
 
$
1,217.82

CG at Desert Vista
Las Vegas, NV
2009
2013
(4)
 
380

 
338,200

 
890

 
$
875.91

 
97.37
%
 
$
873.26

CG at Palm Vista
Las Vegas, NV
2007
2013
(4)
 
341

 
349,184

 
1,024

 
$
909.59

 
98.24
%
 
$
909.59

Subtotal Nevada
 
 
 
721

 
687,384

 
953

 
$
891.84

 
97.78
%
 
$
890.44

Post Ballantyne
 Charlotte, NC
2004
2016
(6)
 
323

 
404,419

 
1,252

 
$
1,271.70

 
95.67
%
 
$
1,250.06

Post Gateway Place
 Charlotte, NC
2000
2016
(6)
 
436

 
350,560

 
804

 
$
1,167.96

 
94.04
%
 
$
1,149.06

Post Park at Phillips Place
 Charlotte, NC
1998
2016
(6)
 
402

 
442,773

 
1,101

 
$
1,479.06

 
94.28
%
 
$
1,472.37

Post South End
 Charlotte, NC
2009
2016
(6)
 
360

 
305,018

 
847

 
$
1,454.26

 
95.00
%
 
$
1,451.49

Post Uptown Place
 Charlotte, NC
2000
2016
(6)
 
227

 
181,598

 
800

 
$
1,240.98

 
95.59
%
 
$
1,233.93

1225 South Church I/II
 Charlotte , NC
2010/2013
2010
(4)
 
406

 
337,792

 
832

 
$
1,323.96

 
97.04
%
 
$
1,314.58

CG at Ayrsley I/II
 Charlotte , NC
2008/2013
2013
(4)
 
449

 
451,840

 
1,006

 
$
1,050.55

 
96.88
%
 
$
1,050.55

CG at Beverly Crest
 Charlotte , NC
1996
2013
(4)
 
300

 
279,823

 
933

 
$
1,019.24

 
96.00
%
 
$
1,000.28

CG at Cornelius
 Charlotte , NC
2009
2013
(4)
 
236

 
251,972

 
1,068

 
$
1,021.97

 
97.88
%
 
$
1,014.55

CG at Huntersville
 Charlotte , NC
2008
2013
(4)
 
250

 
247,908

 
992

 
$
1,104.56

 
96.80
%
 
$
1,094.36

CG at Legacy Park
 Charlotte , NC
2001
2013
(4)
 
288

 
300,768

 
1,044

 
$
986.33

 
96.53
%
 
$
983.56

CG at Mallard Creek
 Charlotte , NC
2005
2013
(4)
 
252

 
232,646

 
923

 
$
983.34

 
96.03
%
 
$
981.36

CG at Mallard Lake
 Charlotte , NC
1998
2013
(4)
 
302

 
300,806

 
996

 
$
994.07

 
99.34
%
 
$
990.10

CG at Matthews Commons
 Charlotte , NC
2008
2013
(4)
 
216

 
203,280

 
941

 
$
1,126.75

 
96.76
%
 
$
1,125.59

CG at University Center
 Charlotte , NC
2005
2013
(4)
 
156

 
167,028

 
1,071

 
$
1,003.88

 
96.15
%
 
$
1,003.88

CR at South End
 Charlotte , NC
2014
2013
(4)
 
353

 
304,639

 
863

 
$
1,291.21

 
96.03
%
 
$
1,266.54

CV at Chancellor Park
 Charlotte , NC
1999
2013
(4)
 
340

 
326,710

 
961

 
$
915.15

 
97.94
%
 
$
914.86

CV at Matthews
 Charlotte , NC
1990
2013
(4)
 
270

 
255,712

 
947

 
$
1,005.80

 
98.89
%
 
$
1,000.25

CV at South Tryon
 Charlotte , NC
2002
2013
(4)
 
216

 
236,088

 
1,093

 
$
1,000.06

 
96.30
%
 
$
998.91

Enclave
 Charlotte , NC
2008
2013
(4)
 
85

 
107,696

 
1,267

 
$
1,899.28

 
100.00
%
 
$
1,881.64

Timber Crest at Greenway
 Charlotte , NC
2000
2013
(4)
 
282

 
273,408

 
970

 
$
872.74

 
97.52
%
 
$
872.74


31


 
 
 
 
 
 
 
 
Approx-imate Rentable Area (Square Footage)
 
Aver-age Unit Size (Square Foot-age)
 
Monthly
Average
Rent per Unit at December 31, 2016 (1)
 
Average
Occupancy Percent at December 31, 2016 (2)
 
Monthly
Effective Rent per Unit at December 31, 2016 (3)
 
 
 
 
 
 
 
 
 
 
 
 
Property
Location
Year Complete
Year Manage-ment Commenced
Report-able Seg-ment
 
Number of Units 
 
 
 
 
 
CG at Brier Creek
 Raleigh-Durham , NC
2009
2013
(4)
 
364

 
401,078

 
1,102

 
$
1,047.32

 
96.43
%
 
$
1,046.49

CG at Brier Falls
 Raleigh-Durham , NC
2008
2013
(4)
 
350

 
381,798

 
1,091

 
$
1,064.54

 
96.86
%
 
$
1,056.61

CG at Crabtree
 Raleigh-Durham , NC
1997
2013
(4)
 
210

 
209,670

 
998

 
$
922.59

 
98.10
%
 
$
922.59

CG at Patterson Place
 Raleigh-Durham , NC
1997
2013
(4)
 
252

 
238,716

 
947

 
$
987.69

 
96.83
%
 
$
968.40

CG at Research Park
 Raleigh-Durham , NC
2002
2013
(4)
 
370

 
384,512

 
1,039

 
$
992.32

 
93.51
%
 
$
990.73

CG at Trinity Commons
 Raleigh-Durham , NC
2000/2002
2013
(4)
 
462

 
484,404

 
1,048

 
$
944.45

 
97.19
%
 
$
943.80

CV at Beaver Creek
 Raleigh-Durham , NC
2007
2013
(4)
 
316

 
308,794

 
977

 
$
1,000.41

 
94.62
%
 
$
996.29

CV at Deerfield
 Raleigh-Durham , NC
1985
2013
(4)
 
204

 
198,180

 
971

 
$
949.35

 
96.57
%
 
$
949.35

Hermitage at Beechtree
 Raleigh-Durham , NC
1988
1997
(4)
 
194

 
169,776

 
875

 
$
894.54

 
97.42
%
 
$
894.54

Hue
 Raleigh-Durham , NC
2009
2010
(4)
 
208

 
185,681

 
893

 
$
1,401.63

 
95.19
%
 
$
1,395.87

Post Parkside at Wade
 Raleigh-Durham , NC
2013
2016
(6)
 
397

 
347,375

 
875

 
$
1,095.64

 
95.97
%
 
$
1,092.78

Preserve at Brier Creek
 Raleigh-Durham , NC
2002/2007
2006
(4)
 
450

 
519,282

 
1,154

 
$
1,106.38

 
97.11
%
 
$
1,095.01

Providence at Brier Creek
 Raleigh-Durham , NC
2007
2008
(4)
 
313

 
297,140

 
949

 
$
977.64

 
96.49
%
 
$
974.28

Reserve at Arringdon
 Raleigh-Durham , NC
2003
2013
(4)
 
320

 
311,200

 
973

 
$
977.42

 
97.19
%
 
$
973.12

Waterford Forest
 Raleigh-Durham , NC
1996
2005
(4)
 
384

 
377,382

 
983

 
$
912.47

 
97.14
%
 
$
911.95

Subtotal North Carolina
 
 
 
10,943

 
10,777,472

 
985

 
$
1,089.56

 
96.45
%
 
$
1,083.23

River's Walk
 Charleston, SC
2013
2013
(5)
 
270

 
248,393

 
920

 
$
1,570.44

 
95.93
%
 
$
1,548.43

River's Walk II
 Charleston, SC
2016
2015
(6)
 
78

 
70,356

 
902

 
$
1,659.77

 
93.59
%
 
$
1,672.59

CG at Commerce Park
 Charleston , SC
2008
2013
(5)
 
312

 
306,336

 
982

 
$
974.21

 
97.76
%
 
$
974.21

CG at Cypress Cove
 Charleston , SC
2001
2013
(5)
 
264

 
303,996

 
1,152

 
$
1,137.75

 
97.35
%
 
$
1,136.80

CV at Hampton Pointe
 Charleston , SC
1986
2013
(5)
 
304

 
314,600

 
1,035

 
$
1,032.77

 
96.05
%
 
$
1,032.77

CV at Waters Edge
 Charleston , SC
1985
2013
(5)
 
204

 
187,640

 
920

 
$
909.94

 
98.04
%
 
$
909.94

CV at Westchase
 Charleston , SC
1985
2013
(5)
 
352

 
258,170

 
733

 
$
868.34

 
97.16
%
 
$
849.16

CV at Windsor Place
 Charleston , SC
1985
2013
(5)
 
224

 
213,440

 
953

 
$
916.26

 
97.32
%
 
$
916.26

Farmington Village
 Charleston , SC
2007
2007
(5)
 
280

 
309,076

 
1,104

 
$
1,093.79

 
97.14
%
 
$
1,088.25

Quarterdeck at James Island
 Charleston , SC
1987
2013
(5)
 
230

 
218,880

 
952

 
$
1,255.98

 
95.22
%
 
$
1,249.94

Runaway Bay
 Charleston , SC
1988
1995
(5)
 
208

 
177,750

 
855

 
$
1,261.37

 
94.71
%
 
$
1,251.75

The Fairways
 Columbia, SC
1992
1994
(5)
 
240

 
213,720

 
891

 
$
781.54

 
96.25
%
 
$
770.74

The Paddock Club Columbia
 Columbia, SC
1989/95
1997
(5)
 
336

 
378,744

 
1,127

 
$
820.65

 
95.24
%
 
$
816.78

535 Brookwood
 Greenville, SC
2008
2010
(5)
 
256

 
254,384

 
994

 
$
970.14

 
97.66
%
 
$
965.84

Highland Ridge
 Greenville, SC
1984
1995
(5)
 
168

 
134,976

 
803

 
$
706.44

 
97.02
%
 
$
706.44

Howell Commons
 Greenville, SC
1986/88
1997
(5)
 
348

 
275,636

 
792

 
$
745.39

 
95.40
%
 
$
741.62

Park Haywood
 Greenville, SC
1983
1993
(5)
 
208

 
158,768

 
763

 
$
724.98

 
97.60
%
 
$
722.34

Park Place
 Greenville, SC
1987
1997
(5)
 
184

 
195,312

 
1,061

 
$
781.50

 
97.28
%
 
$
777.15

Spring Creek
 Greenville, SC
1985
1995
(5)
 
208

 
179,600

 
863

 
$
791.99

 
98.56
%
 
$
790.78

Tanglewood
 Greenville, SC
1980
1994
(5)
 
168

 
146,600

 
873

 
$
764.23

 
97.62
%
 
$
764.23

The Paddock Club Greenville
 Greenville, SC
1996
1997
(5)
 
208

 
231,432

 
1,113

 
$
859.50

 
98.08
%
 
$
849.83

Subtotal South Carolina
 
 
 
5,050

 
4,777,809

 
946

 
$
966.74

 
96.73
%
 
$
961.43

Hamilton Pointe
 Chattanooga, TN
1989
1992
(5)
 
361

 
256,400

 
710

 
$
732.87

 
96.68
%
 
$
730.93

Hidden Creek
 Chattanooga, TN
1987
1988
(5)
 
300

 
260,320

 
868

 
$
723.28

 
95.33
%
 
$
714.21

Steeplechase
 Chattanooga, TN
1986
1991
(5)
 
108

 
98,670

 
914

 
$
855.19

 
99.07
%
 
$
848.56

Windridge
 Chattanooga, TN
1984
1997
(5)
 
174

 
238,704

 
1,372

 
$
1,108.09

 
97.70
%
 
$
1,108.09

Kirby Station
 Memphis, TN
1978
1994
(5)
 
371

 
308,859

 
833

 
$
878.38

 
95.96
%
 
$
866.31

Lincoln on the Green
 Memphis, TN
1988/98
1994
(5)
 
618

 
540,244

 
874

 
$
820.44

 
96.12
%
 
$
810.84


32


 
 
 
 
 
 
 
 
Approx-imate Rentable Area (Square Footage)
 
Aver-age Unit Size (Square Foot-age)
 
Monthly
Average
Rent per Unit at December 31, 2016 (1)
 
Average
Occupancy Percent at December 31, 2016 (2)
 
Monthly
Effective Rent per Unit at December 31, 2016 (3)
 
 
 
 
 
 
 
 
 
 
 
 
Property
Location
Year Complete
Year Manage-ment Commenced
Report-able Seg-ment
 
Number of Units 
 
 
 
 
 
Park Estate
 Memphis, TN
1974
1977
(5)
 
82

 
106,740

 
1,302

 
$
1,173.50

 
100.00
%
 
$
1,170.45

The Reserve at Dexter Lake
 Memphis, TN
1999/01
1998
(5)
 
740

 
807,472

 
1,091

 
$
947.05

 
96.08
%
 
$
944.84

Aventura at Indian Lake Village
 Nashville , TN
2010
2011
(4)
 
300

 
290,976

 
970

 
$
1,154.24

 
95.00
%
 
$
1,031.08

Avondale at Kennesaw Farms
 Nashville , TN
2008
2010
(4)
 
288

 
283,364

 
984

 
$
1,105.72

 
96.33
%
 
$
1,147.54

Brentwood Downs
 Nashville , TN
1986
1994
(4)
 
286

 
220,166

 
770

 
$
1,065.76

 
96.53
%
 
$
1,098.81

CG at Bellevue
 Nashville , TN
1996
2013
(6)
 
349

 
344,954

 
988

 
$
1,221.35

 
97.20
%
 
$
1,065.76

CG at Bellevue II
 Nashville , TN
2015
2013
(6)
 
220

 
237,160

 
1,078

 
$
1,331.46

 
93.70
%
 
$
1,217.72

Grande View
 Nashville , TN
2001
1998
(4)
 
433

 
523,387

 
1,209

 
$
1,226.39

 
97.73
%
 
$
1,329.87

Monthaven Park
 Nashville , TN
1999/01
2004
(4)
 
456

 
427,668

 
938

 
$
1,021.15

 
94.23
%
 
$
1,210.61

Park at Hermitage
 Nashville , TN
1987
1995
(4)
 
440

 
392,520

 
892

 
$
919.00

 
96.27
%
 
$
1,016.25

The Paddock Club Murfreesboro
 Nashville , TN
1999
1998
(4)
 
240

 
281,648

 
1,174

 
$
1,033.80

 
95.00
%
 
$
919.00

Venue at Cool Springs
 Nashville , TN
2012
2010
(4)
 
428

 
457,042

 
1,068

 
$
1,491.80

 
95.79
%
 
$
1,474.97

Verandas at Sam Ridley
 Nashville , TN
2009
2010
(4)
 
336

 
391,128

 
1,164

 
$
1,119.50

 
95.54
%
 
$
1,113.59

Subtotal Tennessee
 
 
 
6,530

 
6,467,422

 
990

 
$
1,043.86

 
96.08
%
 
$
1,037.55

Post Barton Creek
 Austin, TX
1998
2016
(6)
 
160

 
185,846

 
1,162

 
$
1,856.73

 
98.75
%
 
$
1,854.86

Post Park Mesa
 Austin, TX
1992
2016
(6)
 
148

 
161,540

 
1,091

 
$
1,586.14

 
94.59
%
 
$
1,586.14

Post South Lamar
 Austin, TX
2012
2016
(6)
 
298

 
254,149

 
853

 
$
1,574.01

 
94.63
%
 
$
1,568.82

Post West Austin
 Austin, TX
2009
2016
(6)
 
329

 
292,402

 
889

 
$
1,504.60

 
94.22
%
 
$
1,501.30

Balcones Woods
 Austin , TX
1983
1997
(4)
 
384

 
313,756

 
817

 
$
1,010.26

 
96.61
%
 
$
1,010.26

CG at Ashton Oaks
 Austin , TX
2009
2013
(4)
 
362

 
307,514

 
849

 
$
1,023.49

 
95.03
%
 
$
1,023.49

CG at Canyon Creek
 Austin , TX
2007
2013
(4)
 
336

 
348,960

 
1,039

 
$
1,081.99

 
95.83
%
 
$
1,081.99

CG at Canyon Pointe
 Austin , TX
2003
2013
(4)
 
272

 
262,240

 
964

 
$
1,002.99

 
96.69
%
 
$
1,002.72

CG at Double Creek
 Austin , TX
2013
2013
(4)
 
296

 
278,070

 
939

 
$
1,149.78

 
97.30
%
 
$
1,146.40

CG at Onion Creek
 Austin , TX
2009
2013
(4)
 
300

 
312,520

 
1,042

 
$
1,176.37

 
97.33
%
 
$
1,176.37

CG at Round Rock
 Austin , TX
2007
2013
(4)
 
422

 
429,400

 
1,018

 
$
1,136.62

 
96.21
%
 
$
1,135.78

CG at Silverado
 Austin , TX
2005
2013
(4)
 
238

 
239,668

 
1,007

 
$
1,108.23

 
97.06
%
 
$
1,108.23

CG at Silverado Reserve
 Austin , TX
2006
2013
(4)
 
256

 
266,146

 
1,040

 
$
1,174.02

 
96.88
%
 
$
1,174.02

CG at Wells Branch
 Austin , TX
2008
2013
(4)
 
336

 
321,912

 
958

 
$
1,094.20

 
96.43
%
 
$
1,094.20

CV at Quarry Oaks
 Austin , TX
1996
2013
(4)
 
533

 
459,842

 
863

 
$
993.42

 
95.31
%
 
$
993.42

CV at Sierra Vista
 Austin , TX
1999
2013
(4)
 
232

 
205,604

 
886

 
$
1,010.04

 
96.12
%
 
$
1,010.04

Grand Reserve at Sunset Valley
 Austin , TX
1996
2004
(4)
 
210

 
194,490

 
926

 
$
1,260.13

 
96.67
%
 
$
1,260.13

Legacy at Western Oaks
 Austin , TX
2002
2009
(4)
 
479

 
467,672

 
976

 
$
1,301.37

 
96.24
%
 
$
1,301.37

Silverado at Brushy Creek
 Austin , TX
2003
2006
(4)
 
312

 
303,240

 
972

 
$
1,132.89

 
97.12
%
 
$
1,130.48

Sixty 600
 Austin , TX
1987
1995
(4)
 
304

 
244,732

 
805

 
$
859.89

 
97.70
%
 
$
856.47

Stassney Woods
 Austin , TX
1985
1995
(4)
 
288

 
248,784

 
864

 
$
947.85

 
94.10
%
 
$
947.85

The Woods on Barton Skyway
 Austin , TX
1977
1997
(4)
 
278

 
213,970

 
770

 
$
1,257.40

 
96.76
%
 
$
1,241.45

Cityscape at Market Center II
 Dallas, TX
2015
2015
(4)
 
318

 
290,652

 
914

 
$
1,415.65

 
92.77
%
 
$
1,380.10

Post Abbey
 Dallas, TX
1996
2016
(6)
 
34

 
41,598

 
1,223

 
$
2,056.32

 
100.00
%
 
$
2,056.32

Post Addison Circle
 Dallas, TX
1998/2000
2016
(6)
 
1,334

 
1,128,827

 
846

 
$
1,224.09

 
97.00
%
 
$
1,223.83

Post Coles Corner
 Dallas, TX
1998
2016
(6)
 
186

 
148,784

 
800

 
$
1,243.85

 
96.24
%
 
$
1,243.85

Post Eastside
 Dallas, TX
2008
2016
(6)
 
435

 
396,910

 
912

 
$
1,304.26

 
95.63
%
 
$
1,303.28

Post Gallery
 Dallas, TX
1999
2016
(6)
 
34

 
78,421

 
2,307

 
$
3,026.91

 
97.06
%
 
$
3,026.91

Post Heights
 Dallas, TX
1998/1999
2016
(6)
 
368

 
311,096

 
845

 
$
1,411.72

 
95.65
%
 
$
1,406.38

Post Katy Trail
 Dallas, TX
2010
2016
(6)
 
227

 
203,785

 
898

 
$
1,671.68

 
93.39
%
 
$
1,665.07


33


 
 
 
 
 
 
 
 
Approx-imate Rentable Area (Square Footage)
 
Aver-age Unit Size (Square Foot-age)
 
Monthly
Average
Rent per Unit at December 31, 2016 (1)
 
Average
Occupancy Percent at December 31, 2016 (2)
 
Monthly
Effective Rent per Unit at December 31, 2016 (3)
 
 
 
 
 
 
 
 
 
 
 
 
Property
Location
Year Complete
Year Manage-ment Commenced
Report-able Seg-ment
 
Number of Units 
 
 
 
 
 
Post Legacy
 Dallas, TX
2000
2016
(6)
 
384

 
311,201

 
810

 
$
1,209.91

 
95.05
%
 
$
1,209.91

Post Meridian
 Dallas, TX
1991
2016
(6)
 
133

 
103,678

 
780

 
$
1,572.66

 
93.23
%
 
$
1,567.62

Post Sierra at Frisco Bridges
 Dallas, TX
2009
2016
(6)
 
268

 
240,047

 
896

 
$
1,238.32

 
96.64
%
 
$
1,237.01

Post Square
 Dallas, TX
1996
2016
(6)
 
217

 
184,777

 
852

 
$
1,408.53

 
94.47
%
 
$
1,404.60

Post Uptown Village
 Dallas, TX
1995/2000
2016
(6)
 
496

 
364,850

 
736

 
$
1,191.79

 
94.35
%
 
$
1,190.83

Post Vineyard
 Dallas, TX
1996
2016
(6)
 
116

 
85,077

 
733

 
$
1,223.58

 
96.55
%
 
$
1,223.58

Post Vintage
 Dallas, TX
1993
2016
(6)
 
160

 
120,072

 
750

 
$
1,285.89

 
93.13
%
 
$
1,278.55

Post Worthington
 Dallas, TX
1993
2016
(6)
 
334

 
273,785

 
820

 
$
1,481.19

 
93.11
%
 
$
1,481.67

The Venue at Stonebridge Ranch
 Dallas, TX
2000
2013
(4)
 
250

 
214,036

 
856

 
$
1,060.28

 
94.40
%
 
$
1,060.11

Bella Casita at Las Colinas
 Dallas , TX
2007
2010
(4)
 
268

 
258,275

 
964

 
$
1,239.14

 
95.90
%
 
$
1,239.14

CG at Fairview
 Dallas , TX
2012
2013
(4)
 
256

 
258,016

 
1,008

 
$
1,216.68

 
96.09
%
 
$
1,206.92

CG at Valley Ranch
 Dallas , TX
1997
2013
(4)
 
396

 
462,104

 
1,167

 
$
1,322.09

 
96.21
%
 
$
1,321.54

Cityscape at Market Center
 Dallas , TX
2013
2014
(6)
 
454

 
381,360

 
840

 
$
1,257.76

 
94.93
%
 
$
1,248.39

Courtyards at Campbell
 Dallas , TX
1986
1998
(4)
 
232

 
168,631

 
727

 
$
972.21

 
96.98
%
 
$
967.37

CR at Frisco Bridges
 Dallas , TX
2013
2013
(4)
 
252

 
210,420

 
835

 
$
1,229.55

 
94.05
%
 
$
1,216.58

CR at Las Colinas
 Dallas , TX
2006
2013
(4)
 
306

 
277,949

 
908

 
$
1,302.83

 
97.39
%
 
$
1,302.83

CR at Medical District
 Dallas , TX
2007
2013
(4)
 
278

 
241,542

 
869

 
$
1,271.71

 
98.20
%
 
$
1,268.84

Grand Courtyards
 Dallas , TX
2000
2006
(4)
 
390

 
343,992

 
882

 
$
1,065.80

 
95.90
%
 
$
1,061.82

Highwood
 Dallas , TX
1983
1998
(4)
 
196

 
156,220

 
797

 
$
1,048.78

 
93.88
%
 
$
1,048.78

La Valencia at Starwood
 Dallas , TX
2009
2010
(4)
 
270

 
267,810

 
992

 
$
1,328.89

 
97.41
%
 
$
1,300.86

Los Rios Park
 Dallas , TX
2000
2003
(4)
 
498

 
469,918

 
944

 
$
1,082.21

 
96.39
%
 
$
1,081.33

Remington Hills at Las Colinas
 Dallas , TX
1984
2013
(6)
 
362

 
346,592

 
957

 
$
1,015.14

 
95.58
%
 
$
1,012.37

Times Square at Craig Ranch
 Dallas , TX
2009
2010
(4)
 
313

 
320,575

 
1,024

 
$
1,253.84

 
93.61
%
 
$
1,245.10

Boulder Ridge
 Fort Worth , TX
1999/2008
2005
(4)
 
494

 
442,687

 
896

 
$
1,062.24

 
96.56
%
 
$
1,058.09

CG at Bear Creek
 Fort Worth , TX
1998
2013
(4)
 
436

 
395,137

 
906

 
$
1,087.69

 
96.33
%
 
$
1,083.16

CG at Hebron
 Fort Worth , TX
2011
2013
(4)
 
312

 
352,116

 
1,129

 
$
1,304.73

 
96.15
%
 
$
1,303.45

Copper Ridge
 Fort Worth , TX
2009
2008
(4)
 
245

 
229,993

 
939

 
$
1,209.73

 
94.69
%
 
$
1,192.89

CV at Grapevine
 Fort Worth , TX
1985
2013
(4)
 
450

 
387,244

 
861

 
$
971.26

 
96.67
%
 
$
971.26

CV at Oak Bend
 Fort Worth , TX
1997
2013
(6)
 
426

 
382,769

 
899

 
$
981.74

 
94.60
%
 
$
981.74

CV at Shoal Creek
 Fort Worth , TX
1996
2013
(4)
 
408

 
381,756

 
936

 
$
1,001.46

 
97.30
%
 
$
1,001.46

CV at Willow Creek
 Fort Worth , TX
1996
2013
(4)
 
478

 
426,764

 
893

 
$
993.43

 
96.44
%
 
$
993.23

Deer Run
 Fort Worth , TX
1985
1998
(4)
 
304

 
206,716

 
680

 
$
856.57

 
96.38
%
 
$
837.33

Legends at Lowes Farm
 Fort Worth , TX
2008
2011
(4)
 
456

 
425,734

 
934

 
$
1,230.47

 
95.83
%
 
$
1,199.34

Northwood Place
 Fort Worth , TX
1980
1998
(4)
 
270

 
224,022

 
830

 
$
817.70

 
98.15
%
 
$
816.96

Watermark
 Fort Worth , TX
2002
2004
(4)
 
240

 
205,200

 
855

 
$
1,042.79

 
97.50
%
 
$
1,042.79

Cascade at Fall Creek
 Houston, TX
2006/2007
2007/2008
(4)
 
514

 
488,300

 
950

 
$
1,047.34

 
94.94
%
 
$
1,026.59

Cypresswood Court
 Houston, TX
1984
1994
(4)
 
208

 
160,672

 
772

 
$
808.05

 
96.15
%
 
$
803.25

Grand Cypress
 Houston, TX
2008
2013
(4)
 
312

 
280,548

 
899

 
$
1,114.12

 
94.87
%
 
$
1,114.12

Green Tree Place
 Houston, TX
1984
1994
(4)
 
200

 
152,168

 
761

 
$
855.97

 
99.00
%
 
$
855.97

Greenwood Forest
 Houston, TX
1994
2013
(4)
 
316

 
310,844

 
984

 
$
975.96

 
94.94
%
 
$
972.95

Legacy Pines
 Houston, TX
2000
2003
(4)
 
308

 
283,390

 
920

 
$
1,029.61

 
95.78
%
 
$
1,028.80

Park Place Houston
 Houston, TX
1996
2007
(4)
 
229

 
206,940

 
904

 
$
1,081.55

 
95.63
%
 
$
1,072.82

Post 510
 Houston, TX
2014
2016
(6)
 
242

 
207,369

 
857

 
$
1,479.52

 
93.80
%
 
$
1,457.20

Post Midtown Square
 Houston, TX
1999/2000/2013
2016
(6)
 
653

 
511,453

 
783

 
$
1,382.03

 
89.59
%
 
$
1,346.40


34


 
 
 
 
 
 
 
 
Approx-imate Rentable Area (Square Footage)
 
Aver-age Unit Size (Square Foot-age)
 
Monthly
Average
Rent per Unit at December 31, 2016 (1)
 
Average
Occupancy Percent at December 31, 2016 (2)
 
Monthly
Effective Rent per Unit at December 31, 2016 (3)
 
 
 
 
 
 
 
 
 
 
 
 
Property
Location
Year Complete
Year Manage-ment Commenced
Report-able Seg-ment
 
Number of Units 
 
 
 
 
 
Ranchstone
 Houston, TX
1996
2007
(4)
 
220

 
193,088

 
878

 
$
961.61

 
95.00
%
 
$
952.81

Reserve at Woodwind Lakes
 Houston, TX
1999
2006
(4)
 
328

 
316,114

 
964

 
$
1,012.37

 
95.12
%
 
$
1,008.25

Retreat at Vintage Park
 Houston, TX
2014
2014
(4)
 
323

 
296,514

 
918

 
$
1,212.29

 
96.28
%
 
$
1,201.50

Villages at Kirkwood
 Houston, TX
1996
2004
(4)
 
274

 
244,683

 
893

 
$
1,091.05

 
94.53
%
 
$
1,090.69

Yale @ 6th
 Houston, TX
2015
2016
(6)
 
352

 
300,608

 
854

 
$
1,865.16

 
92.05
%
 
$
1,774.21

Alamo Ranch
 San Antonio, TX
2009
2011
(5)
 
340

 
270,520

 
796

 
$
934.14

 
96.47
%
 
$
918.70

Bulverde Oaks
 San Antonio, TX
2014
2014
(5)
 
328

 
300,776

 
917

 
$
1,136.29

 
96.65
%
 
$
1,136.29

Haven at Blanco
 San Antonio, TX
2010
2012
(5)
 
436

 
463,480

 
1,063

 
$
1,197.49

 
95.41
%
 
$
1,195.17

Stone Ranch at Westover Hills
 San Antonio, TX
2008
2009
(5)
 
400

 
334,260

 
836

 
$
981.08

 
96.50
%
 
$
972.34

Subtotal Texas
 
 
 
27,040

 
24,355,322

 
901

 
$
1,173.86

 
95.67
%
 
$
1,167.35

Stonefield Commons
 Charlottesville, VA
2013
2014
(5)
 
251

 
236,807

 
943

 
$
1,436.35

 
97.21
%
 
$
1,436.35

Adalay Bay
 Norfolk-Hampton-Virginia Beach, VA
2002
2012
(5)
 
240

 
246,312

 
1,026

 
$
1,257.17

 
98.33
%
 
$
1,257.17

Radius
 Norfolk-Hampton-Virginia Beach, VA
2012
2015
(6)
 
252

 
234,108

 
929

 
$
1,249.94

 
98.41
%
 
$
1,249.94

Township in Hampton Woods
 Norfolk-Hampton-Virginia Beach, VA
1987
1995
(5)
 
296

 
248,080

 
838

 
$
933.90

 
97.64
%
 
$
931.87

Retreat at West Creek
 Richmond, VA
2015
2015
(6)
 
254

 
255,016

 
1,004

 
$
1,332.90

 
98.82
%
 
$
1,309.67

Ashley Park
 Richmond , VA
1988
2013
(5)
 
272

 
194,464

 
715

 
$
796.82

 
96.69
%
 
$
795.35

CV at Chase Gayton
 Richmond , VA
1984
2013
(5)
 
328

 
311,266

 
949

 
$
958.83

 
94.82
%
 
$
953.25

CV at Hampton Glen
 Richmond , VA
1986
2013
(5)
 
232

 
177,760

 
766

 
$
981.18

 
96.12
%
 
$
973.43

CV at Waterford
 Richmond , VA
1989
2013
(5)
 
312

 
288,840

 
926

 
$
1,000.78

 
96.47
%
 
$
1,000.78

CV at West End
 Richmond , VA
1987
2013
(5)
 
224

 
156,332

 
698

 
$
883.04

 
99.11
%
 
$
883.04

The Hamptons at Hunton Park
 Richmond , VA
2003
2011
(5)
 
300

 
309,618

 
1,032

 
$
1,288.79

 
96.00
%
 
$
1,288.79

CV at Greenbrier
 Washington DC, VA
1980
2013
(5)
 
258

 
216,765

 
840

 
$
1,031.88

 
98.06
%
 
$
1,031.88

Post Carlyle Square
 Washington DC, VA
2006/2013
2016
(6)
 
549

 
488,874

 
890

 
$
2,222.36

 
96.36
%
 
$
2,215.27

Post Corners
 Washington DC, VA
1996
2016
(6)
 
336

 
333,975

 
994

 
$
1,596.25

 
99.40
%
 
$
1,596.10

Post Pentagon Row
 Washington DC, VA
2001
2016
(6)
 
504

 
429,797

 
853

 
$
2,215.47

 
96.83
%
 
$
2,213.84

Post Tysons Corner
 Washington DC, VA
1990
2016
(6)
 
499

 
402,903

 
807

 
$
1,724.96

 
97.80
%
 
$
1,722.56

Seasons at Celebrate Virginia I/II
 Washington DC, VA
2011/2013
2011
(5)
 
483

 
481,408

 
997

 
$
1,340.57

 
96.69
%
 
$
1,324.16

Station Square at Cosner's Corner
 Washington DC, VA
2012
2013
(6)
 
260

 
268,594

 
1,033

 
$
1,336.13

 
99.62
%
 
$
1,336.13

Station Square at Cosner's II
 Washington DC, VA
2016
2015
(6)
 
120

 
124,800

 
1,040

 
$
1,278.70

 
96.67
%
 
$
1,278.70

The Apartments at Cobblestone Square
 Washington DC, VA
2012
2016
(6)
 
314

 
289,822

 
923

 
$
1,430.96

 
96.82
%
 
$
1,426.61

Subtotal Virginia
 
 
 
6,284

 
5,695,541

 
906

 
$
1,407.61

 
97.29
%
 
$
1,403.51

Total
 
 
 
97,464

 
94,676,433

 
973

 
$
1,159.72

 
96.37
%
 
$
1,153.90

 
(1)
Monthly average rent per unit represents the average of gross monthly rent amounts charged for occupied units plus prevalent market rents asked for unoccupied units in the property, divided by the total number of units in the property. This information is provided to represent average pricing for the period and does not represent actual rental revenue collected per unit.
(2)
Average Occupancy is calculated by dividing the number of units occupied at each property by the total number of units at each property.
(3)
Effective rent per unit is equal to the average of gross rent amounts after the effect of leasing concessions for occupied units plus prevalent market rates asked for unoccupied units in the property, divided by the total number of units in the property. Leasing concessions represent discounts to the current market rate. These discounts may be offered from time-to-time by a property for various reasons, including to assist with the initial lease-up of a newly developed property or as a response to a property's local market economics. Concessions are not part of our standard rent offering. Concessions for the year ended December 31, 2016 were $7.6 million. As of December 31, 2016, approximately 14.20% of total leases were subject to concessions. Effective rent is provided to represent average pricing for the period and does not represent actual rental revenue collected per unit.
(4)
Large market same store reportable segment.
(5)
Secondary market same store reportable segment.
(6)
Non-same store reportable segment.

35



Mortgage Financing

As of December 31, 2016 , we had approximately $1.3 billion of indebtedness collateralized, secured, and outstanding as set forth below:

 
 
 
 
Encumbrances at
 
 
 
 
 
 
December 31, 2016
 
 
Property
 
Location
 
Mortgage/Bond Principal (000's)
 
 
 
Interest Rate
 
 
 
Maturity Date
 
 
Eagle Ridge
 
Birmingham, AL
 
—

 
(1)  
 
 
 
(1)  
 
 
 
(1)  
CG at Edgewater
 
Huntsville, AL
 
20,472

 
 
 
3.750
%
 
 
 
6/1/2019
 
 
CG at Madison
 
Madison, AL
 
17,028

 
 
 
3.750
%
 
 
 
6/1/2019
 
 
CG at Liberty Park
 
Vestavia Hills, AL
 
16,404

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
Indigo Point
 
Brandon, FL
 
—

 
(1)  
 
 
 
(1)  
 
 
 
(1)  
CG at Heathrow
 
Heathrow, FL
 
20,310

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
Lighthouse at Fleming Island
 
Jacksonville, FL
 
—

 
(1)  
 
 
 
(1)  
 
 
 
(1)  
Woodhollow
 
Jacksonville, FL
 
—

 
(1)  
 
 
 
(1)  
 
 
 
(1)  
CG at Town Park
 
Lake Mary, FL
 
36,208

 
 
 
3.750
%
 
 
 
6/1/2019
 
 
Park Crest at Innisbrook
 
Palm Harbor, FL
 
27,805

 
 
 
4.430
%
 
 
 
10/1/2020
 
 
CV at Twin Lakes
 
Sanford, FL
 
23,691

 
 
 
4.065
%
 
 
 
7/1/2020
 
 
Belmere
 
Tampa, FL
 
—

 
(1)  
 
 
 
(1)  
 
 
 
(1)  
Post Hyde Park
 
Tampa, FL
 
42,807

 
 
 
3.500
%
 
 
 
2/1/2019
 
 
CG at Seven Oaks
 
Wesley Chapel, FL
 
25,015

 
 
 
3.750
%
 
 
 
6/1/2019
 
 
Post Briarcliff
 
Atlanta, GA
 
55,365

 
 
 
3.500
%
 
 
 
2/1/2019
 
 
Post Crossing
 
Atlanta, GA
 
24,858

 
 
 
3.500
%
 
 
 
2/1/2019
 
 
Post Glen
 
Atlanta, GA
 
25,825

 
 
 
3.500
%
 
 
 
2/1/2019
 
 
Prescott
 
Duluth, GA
 
—

 
(2)  
 
 
 
(2)  
 
 
 
(2)  
CG at River Oaks
 
Duluth, GA
 
15,114

 
 
 
3.750
%
 
 
 
6/1/2019
 
 
CG at Mount Vernon
 
Dunwoody, GA
 
15,430

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
Lake at Lanier Club II
 
Gainesville, GA
 
—

 
(2)  
 
 
 
(2)  
 
 
 
(2)  
CG at Shiloh
 
Kennesaw, GA
 
29,518

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CG at Barrett Creek
 
Marietta, GA
 
22,146

 
 
 
3.750
%
 
 
 
6/1/2019
 
 
CG at Godley Station
 
Pooler, GA
 
11,213

 
 
 
5.000
%
 
 
 
6/1/2025
 
 
Highlands of West Village I
 
Smyrna, GA
 
39,103

 
 
 
3.000
%
 
 
 
5/1/2018
 
 
Waterford Forest
 
Cary, NC
 
—

 
(2)  
 
 
 
(2)  
 
 
 
(2)  
Hermitage at Beechtree
 
Cary, NC
 
—

 
(1)  
 
 
 
(1)  
 
 
 
(1)  
CG at Beverly Crest
 
Charlotte, NC
 
16,462

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CG at Mallard Creek
 
Charlotte, NC
 
14,520

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CG at Mallard Lake
 
Charlotte, NC
 
19,942

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CG at Patterson Place
 
Durham, NC
 
13,343

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CG at Huntersville
 
Huntersville, NC
 
20,376

 
 
 
3.750
%
 
 
 
6/1/2019
 
 
CG at Arringdon
 
Morrisville, NC
 
22,153

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CG at Brier Creek
 
Raleigh, NC
 
28,856

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CG at Crabtree Valley
 
Raleigh, NC
 
12,219

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CG at Trinity Commons
 
Raleigh, NC
 
27,974

 
 
 
3.400
%
 
 
 
4/1/2018
 
 
535 Brookwood
 
Simpsonville, SC
 
12,610

 
 
 
4.430
%
 
 
 
10/1/2020
 
 
Lincoln on the Green
 
Memphis, TN
 
—

 
(1)  
 
 
 
(1)  
 
 
 
(1)  

36


 
 
 
 
Encumbrances at
 
 
 
 
 
 
December 31, 2016
 
 
Property
 
Location
 
Mortgage/Bond Principal (000's)
 
 
 
Interest Rate
 
 
 
Maturity Date
 
 
Avondale at Kennesaw
 
Nashville, TN
 
17,378

 
 
 
4.430
%
 
 
 
10/1/2020
 
 
CG at Bellevue
 
Nashville, TN
 
20,893

 
 
 
4.065
%
 
 
 
7/1/2020
 
 
Verandas at Sam Ridley
 
Nashville, TN
 
21,388

 
 
 
4.430
%
 
 
 
10/1/2020
 
 
CG at Canyon Creek
 
Austin, TX
 
13,951

 
 
 
3.750
%
 
 
 
9/14/2019
 
 
CV at Quarry Oaks
 
Austin, TX
 
30,417

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CV at Shoal Creek
 
Bedford, TX
 
18,662

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CV at Willow Creek
 
Bedford, TX
 
22,425

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
Grand Cypress
 
Cypress, TX
 
15,824

 
 
 
3.400
%
 
 
 
8/5/2017
 
 
Watermark
 
Dallas, TX
 
—

 
(2)  
 
 
 
(2)  
 
 
 
(2)  
CG at Bear Creek
 
Euless, TX
 
22,568

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
La Valencia at Starwood
 
Frisco, TX
 
20,510

 
 
 
4.590
%
 
 
 
3/10/2018
 
 
Legacy Pines
 
Houston, TX
 
—

 
(2)  
 
 
 
(2)  
 
 
 
(2)  
Bella Casita at Las Colinas
 
Irving, TX
 
—

 
(2)  
 
 
 
(2)  
 
 
 
(2)  
CG at Valley Ranch
 
Irving, TX
 
23,690

 
 
 
4.065
%
 
 
 
7/1/2020
 
 
Venue at Stonebridge Ranch
 
McKinney, TX
 
14,152

 
 
 
3.250
%
 
 
 
12/10/2017
 
 
CG at Round Rock
 
Round Rock, TX
 
23,752

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
CV at Sierra Vista
 
Round Rock, TX
 
11,594

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
Stone Ranch at Westover Hills
 
San Antonio, TX
 
18,197

 
 
 
5.490
%
 
 
 
3/1/2020
 
 
Cypresswood Court
 
Spring, TX
 
—

 
(2)  
 
 
 
(2)  
 
 
 
(2)  
Green Tree Place
 
Woodlands, TX
 
—

 
(2)  
 
 
 
(2)  
 
 
 
(2)  
CV at West End
 
Glen Allen, VA
 
11,425

 
 
 
3.700
%
 
 
 
2/27/2019
 
 
Post Corners
 
Washington D.C.
 
37,611

 
 
 
3.500
%
 
 
 
2/1/2019
 
 
Total
 
 
 
$
1,001,204

 
 
 
 
 
 
 
 
 
 

(1)
Encumbered by a $160.0 million Fannie Mae facility, with $160.0 million available and outstanding with a variable interest rate of 1.1% on which there exists two interest rate caps totaling $50 million at an average rate of 4.50% at December 31, 2016.
(2)
Encumbered by a $127 million loan with a fixed interest rate of 5.08% which matures on June 10, 2021.

ITEM 3. LEGAL PROCEEDINGS.
 
In September 2010, the United States Department of Justice (the “DOJ”) filed suit against Post Properties (and by virtue of the Merger, MAA) in United States Distric Court for the District of Columbia alleging that certain of MAA’s apartments violated accessibility requirements of the Fair Housing Act (the “FHA”) and the Americans with Disabilities Act of 1990 (the “ADA”). The DOJ is seeking, among other things, an injunction against MAA, requiring MAA to retrofit the properties and comply with FHA and ADA standards in future design and construction, as well as monetary damages and civil penalties. No trial date has been set and no significant settlement negotiations with the DOJ have occurred.

In addition, MAA is subject to various other legal proceedings and claims that arise in the ordinary course of its business operations. Matters which arise out of allegations of bodily injury, property damage and employment practices are generally covered by insurance. While the resolution of these other matters cannot be predicted with certainty, management currently believes the final outcome of such matters will not have a material adverse effect on MAA’s financial position, results of operations or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

37


PART II
 
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Mid-America Apartment Communities, Inc.

Market Information

MAA's common stock has been listed and traded on the NYSE under the symbol “MAA” since its initial public offering in February 1994. On February 17, 2017 , the reported last sale price of our common stock on the NYSE was $99.62 per share, and there were approximately 2,700 holders of record of the common stock. MAA believes it has a significantly larger number of beneficial owners of its common stock. The following table sets forth the quarterly high and low intra-day sales prices of MAA's common stock and the dividends declared by MAA with respect to the periods indicated.
 
 
Sales Prices
 
Dividends
Paid
 
Dividends
Declared
 
 
High
 
Low
 
 
 
2016:
 

 
 

 
 

 
 

 
First Quarter
$
102.42

 
$
82.91

 
$
0.82

 
$
0.82

 
Second Quarter
$
106.68

 
$
94.57

 
$
0.82

 
$
0.82

 
Third Quarter
$
110.01

 
$
91.77

 
$
0.82

 
$
0.82

 
Fourth Quarter
$
98.35

 
$
85.04

 
$
0.82

 
$
0.87

(1)  
 
 
 
 
 
 
 
 
 
2015:
 

 
 

 
 

 
 

 
First Quarter
$
83.50

 
$
70.67

 
$
0.77

 
$
0.77

 
Second Quarter
$
78.99

 
$
72.72

 
$
0.77

 
$
0.77

 
Third Quarter
$
84.42

 
$
72.51

 
$
0.77

 
$
0.77

 
Fourth Quarter
$
92.80

 
$
81.72

 
$
0.77

 
$
0.82

 

(1) Generally, MAA's Board of Directors declares dividends prior to the quarter in which they are paid. The dividend of $0.87 per share declared in the fourth quarter of 2016 was paid on January 31, 2017 to shareholders of record on January 13, 2017 .

MAA's quarterly dividend rate is currently $0.87 per common share. MAA's Board of Directors reviews and declares the dividend rate quarterly. Actual dividends made by MAA will be affected by a number of factors, including, but not limited to, the gross revenues received from our apartment communities, our operating expenses, the interest expense incurred on borrowings and unanticipated capital expenditures.

MAA expects to make future quarterly distributions to shareholders; however, future distributions by MAA will be at the discretion of its Board of Directors and will depend on our actual funds from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code (see "Business-Qualification as Real Estate Investment Trust" above) and such other factors as MAA's Board of Directors deems relevant.

Direct Stock Purchase and Distribution Reinvestment Plan

We have established the DRSPP, under which holders of common stock, preferred stock and OP units can elect to automatically reinvest their distributions in shares of MAA common stock. The DRSPP also allows for the optional purchase of MAA common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. In our absolute discretion, we may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill our obligations under the DRSPP, we may either issue additional shares of common stock or repurchase common stock in the open market. We may elect to sell shares under the DRSPP at up to a 5% discount.

In 2016 , 2015 , and 2014 , we had issuances with no discounts through our DRSPP of 7,906 shares, 8,562 shares, and 9,055 shares, respectively.



38


Equity Compensation Plans

The following table provides information with respect to compensation plans under which our equity securities are authorized for issuance as of December 31, 2016 :

 
Number of Securities
to be Issued upon
Exercise of Outstanding
Options, Warrants
and Rights
(a)(1)
 
Weighted Average
Exercise Price of
Outstanding Options
Warrants and Rights
(b)(1)
 
Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation Plans
(excluding securities
reflected in column (a))
(c)(2)
Equity compensation
plans approved
by security holders
147,282

 
$
76.16

 
329,090

 
 
 
 
 
 
Equity compensation plans
not approved
by security holders
N/A

 
N/A

 
N/A

 
 
 
 
 
 
Total
147,282

 
$
76.16

 
329,090


(1)
Columns (a) and (b) do not include 225,624 shares of restricted common stock that are subject to vesting requirements which were issued through our 2004 Stock Plan or 2013 Stock Incentive Plan or 118,581 shares of common stock that have been purchased by employees through the Employee Stock Purchase Plan.
(2)
Column (c) includes 297,671 shares available to be issued under our 2013 Stock Incentive Plan and 31,419 shares available to be issued under our Employee Stock Purchase Plan.

The outstanding options noted in the table above were issued in exchange for outstanding Colonial Properties and Post Properties options in connection with the respective parent mergers.

Mid-America Apartments, L.P.

Operating Partnership Units

There is no established public trading market for the Operating Partnership's OP Units. From time-to-time, we issue shares of MAA's common stock in exchange for OP Units tendered to the Operating Partnership for redemption in accordance with the provisions of the Operating Partnership’s limited partnership agreement. At December 31, 2016 , there were 117,738,615 OP Units outstanding in the Operating Partnership, of which 113,518,212 OP Units, or 96.4% , were owned by MAA and 4,220,403 OP Units, or 3.6% were owned by limited partners. Under the terms of the Operating Partnership’s limited partnership agreement, the limited partner holders of OP Units have the right to require the Operating Partnership to redeem all or a portion of the OP Units held by the holder in exchange for one share of MAA common stock per one OP Unit or a cash payment based on the market value of our common stock at the time of redemption, at the option of MAA. During the year ended December 31, 2016 , MAA issued a total of 22,868 shares of common stock upon redemption of OP Units.

Comparison of Five-year Cumulative Total Returns

The following graph compares the cumulative total returns of the shareholders of MAA since December 31, 2011 with the S&P 500 Index and the FTSE NAREIT Equity REIT Index prepared by the National Association of Real Estate Investment Trusts, or NAREIT. The graph assumes that the base share price for our common stock and each index is $100 and that all dividends are reinvested. The performance graph is not necessarily indicative of future investment performance.



39


MAA1231201_CHART-13893.JPG
 
Dec '11
 
Dec '12
 
Dec '13
 
Dec '14
 
Dec '15
 
Dec '16
MAA
$
100.00

 
$
107.84

 
$
105.47

 
$
135.45

 
$
171.29

 
$
191.15

S&P 500
$
100.00

 
$
116.00

 
$
153.57

 
$
174.60

 
$
177.01

 
$
198.18

FTSE NAREIT Equity REIT Index
$
100.00

 
$
118.06

 
$
120.97

 
$
157.43

 
$
162.46

 
$
176.60


Purchases of Equity Securities
 
The following table shows our repurchases of shares for the three-month period ended December 31, 2016 :
 
MAA Purchases of Equity Securities

Period
Total Number
of Shares
Purchased
 
Average
Price Paid
per Share
 
Total
Number of
Shares Purchased
as Part of Publicly Announced Plans
or Programs
 
Maximum
Number of
Shares That
May Yet be
Purchased Under
the Plans or
Programs (1)
October 1, 2016 - October 31, 2016
—

 
$
—

 
—

 
4,000,000
November 1, 2016 - November 30, 2016
—

 
$
—

 
—

 
4,000,000
December 1, 2016 - December 31, 2016
—

 
$
—

 
—

 
4,000,000
Total
—

 
$
—

 
—

 
4,000,000
  
(1)  
This column reflects the number of shares of MAA's common stock that were available for purchase under the 4.0 million share repurchase program authorized by MAA's Board of Directors on December 8, 2015.


40


ITEM 6. SELECTED FINANCIAL DATA.
 
The following tables set forth selected financial data on a historical basis for MAA and the Operating Partnership. As previously discussed, the consolidated assets, liabilities, and results of operations of Post Properties are included in MAA's selected financial data from the closing date of the parent merger, December 1, 2016, through the end of MAA's fiscal year, December 31, 2016 . Likewise, the consolidated assets, liabilities, and results of operations of Post LP are included in the Operating Partnership's selected financial data from the closing date of the partnership merger, December 1, 2016, through the end of the Operating Partnership's fiscal year, December 31, 2016. This data should be read in conjunction with the consolidated financial statements and notes thereto and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.


















































41


Mid-America Apartment Communities, Inc.
Selected Financial Data
(Dollars in thousands, except per share data)
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
Operating Data:
 

 
 

 
 

 
 

 
 

Total operating revenues
$
1,125,348

 
$
1,042,779

 
$
992,332

 
$
635,490

 
$
475,888

Expenses:
 

 
 

 
 

 
 

 
 

Property operating expenses
423,356

 
400,645

 
393,348

 
253,633

 
194,149

Depreciation and amortization
322,958

 
294,520

 
301,812

 
186,979

 
121,211

Acquisition expenses
2,928

 
2,777

 
2,388

 
1,393

 
1,581

Property management and general and administrative expenses
63,133

 
56,706

 
53,004

 
38,652

 
35,043

Merger related expenses
39,033

 
—

 
3,152

 
32,403

 
—

Integration related expenses
1,790

 
—

 
8,395

 
5,102

 
—

Income from continuing operations before non-operating items
272,150

 
288,131

 
230,233

 
117,328

 
123,904

Interest and other non-property income (expense)
724

 
(368
)
 
770

 
466

 
430

Interest expense
(129,947
)
 
(122,344
)
 
(123,953
)
 
(78,978
)
 
(61,489
)
Loss on debt extinguishment
(83
)
 
(3,602
)
 
(2,586
)
 
(426
)
 
(654
)
Net casualty gain (loss) after insurance and other settlement proceeds
448

 
473

 
(476
)
 
(143
)
 
(6
)
Gain on sale of depreciable real estate assets
80,397

 
189,958

 
42,649

 
—

 
—

Gain on sale of non-depreciable real estate assets
2,171

 
172

 
350

 
—

 
45

Income before income tax expense
225,860

 
352,420

 
146,987

 
38,247

 
62,230

Income tax expense
(1,699
)
 
(1,673
)
 
(2,050
)
 
(893
)
 
(803
)
Income from continuing operations before joint venture activity
224,161

 
350,747

 
144,937

 
37,354

 
61,427

Gain (loss) from real estate joint ventures
241

 
(2
)
 
6,009

 
338

 
(223
)
Income from continuing operations
224,402

 
350,745

 
150,946

 
37,692

 
61,204

Discontinued operations:
 

 
 

 
 

 
 

 
 

Income from discontinued operations before (loss) gain on sale
—

 
—

 
(63
)
 
4,743

 
6,986

Gain on sale of discontinued operations
—

 
—

 
5,394

 
76,844

 
41,635

Net income
224,402

 
350,745

 
156,277

 
119,279

 
109,825

Net income attributable to noncontrolling interests
12,180

 
18,458

 
8,297

 
3,998

 
4,602

Dividends to MAA Series I preferred shareholders
307

 
—

 
—

 
—

 
—

Net income available for MAA common shareholders
$
211,915

 
$
332,287

 
$
147,980

 
$
115,281

 
$
105,223

 
 
 
 
 
 
 
 
 
 
Per Share Data:
 

 
 

 
 

 
 

 
 

Weighted average shares outstanding (in thousands):
 

 
 

 
 

 
 

 
 

Basic
78,502

 
75,176

 
74,982

 
50,677

 
41,039

Effect of dilutive stock options and partnership units (1)
298

 
—

 
—

 
2,439

 
1,898

Diluted
78,800

 
75,176

 
74,982

 
53,116

 
42,937

 
 
 
 
 
 
 
 
 
 
Calculation of Earnings per share - basic:
 
 
 
 
 
 
 
 
 
Income from continuing operations, adjusted
$
211,343

 
$
331,515

 
$
142,655

 
$
36,504

 
$
58,737

Income from discontinued operations, adjusted
—

 
—

 
5,037

 
78,669

 
46,392

Net income attributable to common shareholders, adjusted
$
211,343

 
$
331,515

 
$
147,692

 
$
115,173

 
$
105,129

 
 
 
 
 
 
 
 
 
 
Earnings per share - basic:
 

 
 

 
 

 
 

 
 

Income from continuing operations available for common shareholders
$
2.69

 
$
4.41

 
$
1.90

 
$
0.72

 
$
1.43

Discontinued property operations
—

 
—

 
0.07

 
1.55

 
1.13

Net income available for common shareholders
$
2.69

 
$
4.41

 
$
1.97

 
$
2.27

 
$
2.56

 
 
 
 
 
 
 
 
 
 
Calculation of Earnings per share - diluted:
 
 
 
 
 
 
 
 
 
Income from continuing operations, adjusted
$
211,915

 
$
331,515

 
$
142,655

 
$
37,692

 
$
61,204

Income from discontinued operations, adjusted
—

 
—

 
5,037

 
81,587

 
48,621

Net income attributable to common shareholders, adjusted
$
211,915

 
$
331,515

 
$
147,692

 
$
119,279

 
$
109,825

 
 
 
 
 
 
 
 
 
 
Earnings per share - diluted:
 

 
 

 
 

 
 

 
 

Income from continuing operations available for common shareholders
$
2.69

 
$
4.41

 
$
1.90

 
$
0.71

 
$
1.43

Discontinued property operations
—

 
—

 
0.07

 
1.54

 
1.13

Net income available for common shareholders
$
2.69

 
$
4.41

 
$
1.97

 
$
2.25

 
$
2.56

 
 
 
 
 
 
 
 
 
 
Dividends declared (2)
$
3.330

 
$
3.130

 
$
2.960

 
$
2.815

 
$
2.675

 
 
 
 
 
 
 
 
 
 
Balance Sheet Data:
 

 
 

 
 

 
 

 
 

Real estate owned, at cost
$
13,016,663

 
$
8,217,579

 
$
8,071,187

 
$
7,694,618

 
$
3,734,544

Real estate assets, net
$
11,341,862

 
$
6,718,366

 
$
6,697,508

 
$
6,556,303

 
$
2,694,071

Total assets
$
11,604,491

 
$
6,847,781

 
$
6,821,778

 
$
6,835,012

 
$
2,745,292

Total debt
$
4,499,712

 
$
3,427,568

 
$
3,512,699

 
$
3,463,239

 
$
1,668,072

Noncontrolling interest
$
238,282

 
$
165,726

 
$
161,287

 
$
166,726

 
$
31,058

Total MAA shareholders' equity and redeemable stock
$
6,413,892

 
$
3,000,347

 
$
2,896,435

 
$
2,951,861

 
$
918,765

 
 
 
 
 
 
 
 
 
 
Other Data (at end of period):
 

 
 

 
 

 
 

 
 

Market capitalization (shares and units) (3)
$
11,528,965

 
$
7,225,894

 
$
5,933,985

 
$
4,801,990

 
$
2,852,113

Ratio of total debt to total capitalization (4)
28.1
%
 
32.2
%
 
37.3
%
 
42.0
%
 
37.0
%
Number of communities, including joint venture ownership interest (5)
303

 
254

 
268

 
275

 
166

Number of apartment units, including joint venture ownership interest (5)
99,393

 
79,496

 
82,316

 
83,641

 
49,591


(1) See Earnings per common share of MAA note in Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 3 of this Annual Report on Form 10-K.
(2) Beginning in 2006, at their regularly scheduled meetings, our Board of Directors began routinely declaring dividends for payment in the following quarter. This can result in dividends declared during a calendar year being different from dividends paid during a calendar year. As a result of the Merger, our Board of Directors will routinely declare a quarterly dividend with respect to the MAA Series I preferred stock
(3) Market capitalization includes all shares of common stock, regardless of classification on the balance sheet, as well as partnership units (value based on common stock equivalency). 
(4) Total capitalization is market capitalization plus total debt. 
(5) Property and apartment unit totals have not been adjusted to exclude properties held for sale.


42


Mid-America Apartments, L.P.
Selected Financial Data
(Dollars in thousands, except per unit data)
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
Operating Data:
 

 
 

 
 

 
 

 
 

Total operating revenues
$
1,125,348

 
$
1,042,779

 
$
992,332

 
$
635,490

 
$
475,888

Expenses:
 

 
 

 
 

 
 

 
 

Property operating expenses
423,356

 
400,645

 
393,348

 
253,633

 
194,149

Depreciation and amortization
322,958

 
294,520

 
301,812

 
186,979

 
121,211

Acquisition expenses
2,928

 
2,777

 
2,388

 
1,393

 
1,581

Property management and general and administrative expenses
63,133

 
56,706

 
53,004

 
38,652

 
35,043

Merger related expenses
39,033

 
—

 
3,152

 
32,403

 
—

Integration related expenses
1,790

 
—

 
8,395

 
5,102

 
—

Income from continuing operations before non-operating items
272,150

 
288,131

 
230,233

 
117,328

 
123,904

Interest and other non-property income (expense)
724

 
(368
)
 
770

 
466

 
430

Interest expense
(129,947
)
 
(122,344
)
 
(123,953
)
 
(78,978
)
 
(61,489
)
Loss on debt extinguishment
(83
)
 
(3,602
)
 
(2,586
)
 
(426
)
 
(654
)
Net casualty gain (loss) after insurance and other settlement proceeds
448

 
473

 
(476
)
 
(143
)
 
(6
)
Gain on sale of depreciable real estate assets
80,397

 
189,958

 
42,649

 
—

 
—

Gain on sale of non-depreciable real estate assets
2,171

 
172

 
350

 
—

 
45

Income before income tax expense
225,860

 
352,420

 
146,987

 
38,247

 
62,230

Income tax expense
(1,699
)
 
(1,673
)
 
(2,050
)
 
(893
)
 
(803
)
Income from continuing operations before joint venture activity
224,161

 
350,747

 
144,937

 
37,354

 
61,427

Gain (loss) from real estate joint ventures
241

 
(2
)
 
6,009

 
338

 
(223
)
Income from continuing operations
224,402

 
350,745

 
150,946

 
37,692

 
61,204

Discontinued operations:
 

 
 

 
 

 
 

 
 

Income from discontinued operations before (loss) gain on sale
—

 
—

 
(63
)
 
4,332

 
6,201

Gain on sale of discontinued operations
—

 
—

 
5,394

 
65,520

 
41,635

Dividends to MAA Series I preferred shareholders
307

 
—

 
—

 
—

 
—

Net income available for Mid-America Apartments, L.P. common unitholders
$
224,095

 
$
350,745

 
$
156,277

 
$
107,544

 
$
109,040

 
 
 
 
 
 
 
 
 
 
Per Unit Data:
 

 
 

 
 

 
 

 
 

Weighted average units outstanding (in thousands):
 

 
 

 
 

 
 

 
 

Basic
82,661

 
79,361

 
79,188

 
53,075

 
42,911

Effect of dilutive stock options and partnership units (1)
298

 
—

 
—

 
88

 
64

Diluted
82,959

 
79,361

 
79,188

 
53,163

 
42,975

 
 
 
 
 
 
 
 
 
 
Calculation of Earnings per unit - basic:
 
 
 
 
 
 
 
 
 
Income from continuing operations, adjusted
$
223,521

 
$
349,973

 
$
150,668

 
$
37,659

 
$
61,151

Income from discontinued operations, adjusted
—

 
—

 
5,321

 
69,790

 
47,795

Net income available for common unitholders
$
223,521

 
$
349,973

 
$
155,989

 
$
107,449

 
$
108,946

 
 
 
 
 
 
 
 
 
 
Earnings per unit - basic:
 

 
 

 
 

 
 

 
 

Income from continuing operations available for common unitholders
$
2.70

 
$
4.41

 
$
1.90

 
$
0.71

 
$
1.43

Income from discontinued property operations available for common unitholders
—

 
—

 
0.07

 
1.31

 
1.11

Net income available for common unitholders
$
2.70

 
$
4.41

 
$
1.97

 
$
2.02

 
$
2.54

 
 
 
 
 
 
 
 
 
 
Calculation of Earnings per unit - diluted:
 
 
 
 
 
 
 
 
 
Income from continuing operations, adjusted
$
224,095

 
$
349,973

 
$
150,668

 
$
37,692

 
$
61,204

Income from discontinued operations, adjusted
—

 
—

 
5,321

 
69,852

 
47,836

Net income available for common unitholders
$
224,095

 
$
349,973

 
$
155,989

 
$
107,544

 
$
109,040

 
 
 
 
 
 
 
 
 
 
Earnings per unit - diluted:
 

 
 

 
 

 
 

 
 

Income from continuing operations available for common unitholders
$
2.70

 
$
4.41

 
$
1.90

 
$
0.71

 
$
1.43

Discontinued property operations
—

 
—

 
0.07

 
1.31

 
1.11

Net income available for common unitholders
$
2.70

 
$
4.41

 
$
1.97

 
$
2.02

 
$
2.54

 
 
 
 
 
 
 
 
 
 
Distributions declared, per unit (2)
$
3.3300

 
$
3.1300

 
$
2.9600

 
$
2.8150

 
$
2.6750

 
 
 
 
 
 
 
 
 
 
Balance Sheet Data:
 

 
 

 
 

 
 

 
 

Real estate owned, at cost
$
13,016,663

 
$
8,217,579

 
$
8,071,187

 
$
7,694,618

 
$
3,721,028

Real estate assets, net
$
11,341,862

 
$
6,718,366

 
$
6,697,508

 
$
6,556,303

 
$
2,688,549

Total assets
$
11,604,491

 
$
6,847,781

 
$
6,821,778

 
$
6,835,012

 
$
2,739,502

Total debt
$
4,499,712

 
$
3,427,568

 
$
3,512,699

 
$
3,463,239

 
$
1,668,072

Total Operating Partnership capital and
 

 
 

 
 

 
 

 
 

redeemable units
$
6,649,849

 
$
3,166,054

 
$
3,057,703

 
$
3,118,568

 
$
943,720

 
 
 
 
 
 
 
 
 
 
Other Data (at end of period):
 

 
 

 
 

 
 

 
 

Number of communities, including joint venture ownership interest (3)
303

 
254

 
268

 
275

 
165

Number of apartment units, including joint venture ownership interest (3)
99,393

 
79,496

 
82,316

 
83,641

 
49,335


(1) See Earnings Per OP Unit of MAALP note in Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 4 of this Annual Report on Form 10-K.
(2) Beginning in 2006, at their regularly scheduled meetings, the Board of Directors began routinely declaring distributions for payment in the following quarter. This can result in distributions declared during a calendar year being different from distributions paid during a calendar year.
(3) Property and apartment unit totals have not been adjusted to exclude properties held for sale.


43



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion analyzes the financial condition and results of operations of both MAA and the Operating Partnership, of which MAA is the sole general partner and in which MAA owned a 96.4% limited partner interest as of December 31, 2016 . MAA conducts all of its business through the Operating Partnership and the Operating Partnership’s various subsidiaries. This discussion should be read in conjunction with all of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A critical accounting policy is one that is both important to our financial condition and results of operations and that involves some degree of uncertainty. The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements and the notes thereto, which have been prepared in accordance with United States generally accepted accounting principles, or GAAP. The preparation of financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may differ from these estimates and assumptions.
 
We believe that the estimates and assumptions listed below are most important to the portrayal of our financial condition and results of operations because they require the greatest subjective determinations and form the basis of accounting policies deemed to be most critical.

Acquisition of real estate assets

We account for our acquisitions of investments in real estate in accordance with ASC 805-10, Business Combinations , which requires the fair value of the real estate acquired to be allocated to the acquired tangible assets, consisting of land, building and furniture, fixtures and equipment, and identified intangible assets, consisting of the value of in-place leases and other contracts. In calculating the fair value of acquired tangible assets, management uses stabilized net operating income (NOI) and market specific capitalization and discount rates. Management analyzed historical stabilized NOI to determine its estimate for forecasted NOI. Management estimates the market capitalization rate by analyzing the market capitalization rates for properties with comparable ages in similar sized markets. Although management's estimates of the fair value of acquired tangible assets have been materially accurate in the past, additional information becoming available could lead to the modification of the initial fair value calculation and purchase price allocation. Subsequent adjustments made to the purchase price allocation, if any, would be made within the allocation period, which typically does not exceed one year.

Impairment of long-lived assets, including goodwill

We account for long-lived assets in accordance with the provisions of accounting standards for the impairment or disposal of long-lived assets and evaluate our goodwill for impairment under accounting standards for goodwill and other intangible assets. We evaluate goodwill for impairment on at least an annual basis, or more frequently if a goodwill impairment indicator is identified. We periodically evaluate long-lived assets, including investments in real estate and goodwill, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions and legal factors. If impairment indicators exist for a long-lived asset, management compares the carrying amount of the asset to an estimate of the undiscounted future cash flows expected to be generated by the asset. Management estimates future cash flows by analyzing historical cash flows generated by the asset. If impairment indicators exist for goodwill, management compares the carrying amount of the asset to an estimate of the implied fair value of the asset. Management calculates the fair value of the asset by dividing historical operating cash flows by a market capitalization rate. Management estimates the market capitalization rate by analyzing the market capitalization rates for properties with comparable ages in similarly sized markets. No impairment losses have been recognized during the years ended December 31, 2016 , 2015 , and 2014 .
       
Cost capitalization

Repairs and maintenance costs are expensed as incurred while significant improvements, renovations, and replacements are capitalized. The cost to complete any deferred repairs and maintenance at properties acquired by us in order to elevate the condition of the property to our standards are capitalized as incurred. The carrying costs related to development

44


projects, including interest, property taxes, insurance and allocated direct development salary cost during the construction period, are capitalized. Management uses judgment in determining whether costs should be expensed or capitalized.

Loss contingencies

The outcomes of claims, disputes and legal proceedings are subject to significant uncertainty. We record an accrual for loss contingencies when a loss is probable and the amount of the loss can be reasonably estimated. We review these accruals quarterly and make revisions based on changes in facts and circumstances. When a loss contingency is not both probable and reasonably estimable, then we do not accrue the loss. However, for material loss contingencies, if the unrecorded loss (or an additional loss in excess of the accrual) is at least a reasonable possibility and material, then we disclose a reasonable estimate of the possible loss, or range of loss, if such reasonable estimate can be made. If we cannot make a reasonable estimate of the possible loss, or range of loss, then that is disclosed.

The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or range of loss is reasonably estimable, often involves a series of complex judgments about future events. Among the factors that we consider in this assessment, including with respect to the matters disclosed in this Annual Report on Form 10-K, are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if reasonably estimable), the progress of the matter, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar matters, the facts available to us at the time of assessment, and how we intend to respond, or have responded, to the proceeding or claim. Our assessment of these factors may change over time as individual proceedings or claims progress. For matters where we are not currently able to reasonably estimate a range of reasonably possible loss, the factors that have contributed to this determination include the following: (i) the damages sought are indeterminate; (ii) the proceedings are in the early stages; (iii) the matters involve novel or unsettled legal theories or a large or uncertain number of actual or potential cases or parties; and/or (iv) discussions with the parties in matters that are expected ultimately to be resolved through negotiation and settlement have not reached the point where we believe a reasonable estimate of loss, or range of loss, can be made. In such instances, we believe that there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss or business impact, if any.

For more information regarding our significant accounting policies, see Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 1.

OVERVIEW OF THE YEAR ENDED DECEMBER 31, 2016

As noted earlier, on December 1, 2016, we consummated the Merger and acquired all of Post Properties' net assets. As a result of the Merger, the results of operations for 2016 include 12 months of results for MAA and one month of results for Post Properties. Our December 31, 2016 balance sheet includes the combined assets and liabilities of MAA and Post Properties. All properties acquired from Post Properties have been placed in our "non-same store and other" operating segment, as the properties are recent acquisitions and have not been owned and stabilized for at least 12 months.

We experienced a decrease in income from continuing operations in 2016 despite increases in revenues outpacing increases in property operating expenses due to lower gain on sale of depreciable real estate assets and increased merger and integration costs. The increases in revenues came from a 4.9% increase in our large market same store segment, a 3.1% increase in our secondary market same store segment and a 41.7% increase in our non-same store and other segment, which was primarily a result of the Merger. The increase in property operating expenses came from a 3.2% increase in our large market same store segment, a 2.0% increase in our secondary market same store segment and a 30.7% increase in our non-same store and other segment, which was primarily the result of the Merger. Our same store portfolio represents those communities that have been held and have been stabilized for at least 12 months. Communities excluded from the same store portfolio include recent acquisitions, communities being developed or in lease-up, communities undergoing extensive renovations, and communities identified for disposition. Additional information regarding the composition of operating segments is included in the notes to the consolidated financial statements, Note 16 - Segment Information. The drivers of these increases are discussed below in the results of operations section.

We have grown externally during the past three years by following our acquisition strategy to invest in large and mid-sized growing markets in the Southeast and Southwest region of the United States. Apart from the Merger, we acquired four apartment communities for our portfolio in 2014 , seven in 2015 and five in 2016 . Offsetting some of this increased revenue stream were four apartment community dispositions in 2014 , twenty-one in 2015 , and twelve in 2016 .




45


The following table shows our apartment real estate assets as of December 31, 2016 , 2015 , and 2014 :

 
2016
 
2015
 
2014
Properties
303

 
254

 
268

Units (1)
99,393

 
79,496

 
82,316

Development Units
2,816

 
748

 
514

Average Effective Monthly Rent/Unit, excluding lease-up and development
$
1,154

 
$
1,006

 
$
948

Average Physical Occupancy
95.9
%
 
95.6
%
 
94.1
%

(1) includes units owned by nonconsolidated joint venture

Average effective monthly rent per unit is calculated as the average of monthly gross rent amounts for occupied units, after the effect of leasing concessions, plus then-prevailing market rates asked for unoccupied units, divided by the total number of units. Leasing concessions represent discounts to the current market rate. We believe average effective monthly rent is a helpful measurement in evaluating average pricing; however, it does not represent actual rental revenue collected per unit. For additional discussion of same store average rent per unit and occupancy comparisons, see the “Trends” section below.


RESULTS OF OPERATIONS

As a result of the Merger, the results of operations for 2016 include twelve months of results for MAA and one month of results for Post Properties. Our December 31, 2016 balance sheet includes the combined assets and liabilities of MAA and Post Properties.

Comparison of the Year Ended December 31, 2016 to the Year Ended December 31, 2015

Property Revenues

The following table shows our property revenues by segment for the years ended December 31, 2016 and December 31, 2015 (dollars in thousands):

 
Year ended December 31, 2016
 
Year ended December 31, 2015
 
Increase
 
Percentage Increase
Large Market Same Store
$
642,679

 
$
612,934

 
$
29,745

 
4.9
%
Secondary Market Same Store
337,883

 
327,700

 
10,183

 
3.1
%
Same Store Portfolio
980,562

 
940,634

 
39,928

 
4.2
%
Non-Same Store and Other
144,786

 
102,145

 
42,641

 
41.7
%
Total
$
1,125,348

 
$
1,042,779

 
$
82,569

 
7.9
%

The increase in property revenues from our same store portfolio is primarily a result of increased effective rental revenue per occupied unit of 4.9% and 2.9% for our large and secondary markets, respectively. The increase in property revenues from our non-same store and other portfolio is primarily the result of the Merger, which we classified as non-same store. See discussion of our segment classification methodology at Note 16 (Segment Information).












46


Property Operating Expenses

Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping, and depreciation and amortization. The following table shows our property operating expenses by segment excluding depreciation and amortization for the years ended December 31, 2016 and December 31, 2015 (dollars in thousands):

 
Year ended December 31, 2016
 
Year ended December 31, 2015
 
Increase
 
Percentage Increase
Large Market Same Store
$
243,392

 
$
235,909

 
$
7,483

 
3.2
%
Secondary Market Same Store
125,830

 
123,318

 
2,512

 
2.0
%
Same Store Portfolio
369,222

 
359,227

 
9,995

 
2.8
%
Non-Same Store and Other
54,134

 
41,418

 
12,716

 
30.7
%
Total
$
423,356

 
$
400,645

 
$
22,711

 
5.7
%
    
The increase in property operating expenses from our large market same store group is primarily the result of increases in real estate taxes of $5.3 million, personnel expenses of $1.5 million, and utilities expenses of $1.2 million. The increase in our large market same store operating expenses was slightly offset by a decrease in insurance expense of $0.5 million. The increase in property operating expenses from our secondary market same store group is primarily a result of increases in real estate taxes of $1.3 million, personnel expenses of $0.6 million, and utilities expenses of $0.5 million. The increase in property operating expenses from our non-same store and other portfolio is primarily the result of the Merger, which we classified as non-same store. See discussion of our segment classification methodology at Note 16 (Segment Information).

Depreciation and Amortization

The following table shows our depreciation and amortization expense by segment for the years ended December 31, 2016 and December 31, 2015 (dollars in thousands):

 
Year ended December 31, 2016
 
Year ended December 31, 2015
 
Increase
 
Percentage Increase
Large Market Same Store
$
183,131

 
$
176,253

 
$
6,878

 
3.9
%
Secondary Market Same Store
89,031

 
85,799

 
3,232

 
3.8
%
Same Store Portfolio
272,162

 
262,052

 
10,110

 
3.9
%
Non-Same Store and Other
50,796

 
32,468

 
18,328

 
56.4
%
Total
$
322,958

 
$
294,520

 
$
28,438

 
9.7
%

The increase in depreciation and amortization expense of $28.4 million is primarily driven by depreciation expense of $17.4 million related to the Merger. Additionally, the amortization of fair market value of in-place leases began in December of 2016 totaling $4.9 million for the year ended December 31, 2016 .

Merger and Integration Costs

Merger related expenses for the acquisition of Post Properties were approximately $39.0 million for the year ended December 31, 2016 . We also incurred integration related expenses of approximately $1.8 million for the year ended December 31, 2016 . These expenses primarily consisted of legal, management salaries, and professional fees. There were no merger or integration related expenses for the year ended December 31, 2015 because no merger occurred in that year and the expenses associated with our merger with Colonial Properties Trust, or Colonial, had already been incurred.

Interest Expense

Interest expense for the year ended December 31, 2016 was approximately $129.9 million , an increase of $7.6 million from the year ended December 31, 2015 . The increase was due in part to decreased amortization of fair market value of debt adjustments related to debt acquired and increased interest rates towards the end of 2016. Additionally, we assumed several

47


loans through the acquisition of Post Properties, including a secured loan with a face value of $186.0 million and two unsecured loans with face values of $150.0 million and $250.0 million.

Loss on Debt Extinguishment

Loss on debt extinguishment was approximately $83,000 for the year ended December 31, 2016 . For the year ended December 31, 2015 , we recorded a loss of $3.6 million . The decrease of $3.5 million was due primarily to the removal of properties from a secured tax-free debt facility for the year ended December 31, 2015 . With the exception of an $83,000 gain on extinguishment, offset by a $166,000 loss for the write-off of deferred financing costs and related fees, there was no activity for the year ended December 31, 2016 .

Dispositions of Depreciable Real Estate Assets Excluded from Discontinued Operations

We recorded a gain on sale of depreciable assets excluded from discontinued operations of $80.4 million for the year ended December 31, 2016 , a decrease of approximately $109.6 million from the $190.0 million gain on sale of depreciable assets recorded for the year ended December 31, 2015 . The decrease was primarily the result of a decline in disposition activity year over year. Dispositions decreased from twenty-one multifamily properties for the year ended December 31, 2015 , to twelve multifamily properties for the year ended December 31, 2016 .

Dispositions of Non-Depreciable Real Estate Assets Excluded from Discontinued Operations

We recorded a gain on sale of non-depreciable assets excluded from discontinued operations of approximately $2.2 million for the year ended December 31, 2016 , an increase of $2.0 million from the year ended December 31, 2015 . The increase in gain on sale can be attributed to the rise in non-depreciable asset distributions year over year. Dispositions increased from one property for the year ended December 31, 2015 , to four properties for the year ended December 31, 2016 .

Preferred Dividends Distributed

As a result of the Merger, for the year ended December 31, 2016 we recorded a dividend distribution to shareholders of preferred stock of $307,000 . As there were no MAA Series I preferred shares issued and outstanding as of the year ended December 31, 2015, we did not record a dividend distribution.

Comparison of the Year Ended December 31, 2015 to the Year Ended December 31, 2014
 
The comparison of the year ended December 31, 2015 to the year ended December 31, 2014 shows the segment break down based on the 2015 same store portfolios. A comparison using the 2016 same store portfolio would not be comparative due to the nature of the classifications.

Property Revenues
    
The following table shows our property revenues by segment for the years ended December 31, 2015 and December 31, 2014 (dollars in thousands):

 
Year ended December 31, 2015
 
Year ended December 31, 2014
 
Increase
 
Percentage Increase
Large Market Same Store
$
587,896

 
$
553,038

 
$
34,858

 
6.3
%
Secondary Market Same Store
324,771

 
310,281

 
14,490

 
4.7
%
Same Store Portfolio
912,667

 
863,319

 
49,348

 
5.7
%
Non-Same Store and Other
130,112

 
128,859

 
1,253

 
1.0
%
Total
$
1,042,779

 
$
992,178

 
$
50,601

 
5.1
%

The increase in property revenues from our same store portfolio is primarily a result of increased average rental revenue per occupied unit of 5.5% and 3.8% for our large and secondary markets, respectively, and an increased average physical occupancy of 0.8% and 0.9% for our large and secondary markets, respectively.



48


Property Operating Expenses

Property operating expenses include costs for property personnel, property personnel bonuses, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping, and depreciation and amortization. The following table shows our property operating expenses excluding depreciation and amortization by segment for the years ended December 31, 2015 and December 31, 2014 (dollars in thousands):

 
Year ended December 31, 2015
 
Year ended December 31, 2014
 
Increase/(Decrease)
 
Percentage Increase/(Decrease)
Large Market Same Store
$
226,611

 
$
218,784

 
$
7,827

 
3.6
 %
Secondary Market Same Store
123,782

 
119,934

 
3,848

 
3.2
 %
Same Store Portfolio
350,393

 
338,718

 
11,675

 
3.4
 %
Non-Same Store and Other
50,252

 
54,630

 
(4,378
)
 
(8.0
)%
Total
$
400,645

 
$
393,348

 
$
7,297

 
1.9
 %

The increase in property operating expenses from our large market same store group is primarily the result of increases in real estate taxes of $3.2 million, personnel expenses of $1.9 million, water expenses of approximately $1.0 million, cable expenses of $0.5 million, and waste removal expenses of $0.2 million. The increase in property operating expenses from our secondary market same store group is primarily a result of increases in other operating expenses of $1.5 million, real estate taxes of $1.1 million, and personnel expenses of $1.2 million. The decrease in property operating expenses from our non-same store and other group is primarily the result of decreases in personnel expenses of $2.4 million and utility expenses of $1.7 million.

Depreciation and Amortization

The following table shows our depreciation and amortization expense by segment for the years ended December 31, 2015 and December 31, 2014 (dollars in thousands):

 
Year ended December 31, 2015
 
Year ended December 31, 2014
 
Decrease
 
Percentage Decrease
Large Market Same Store
$
168,872

 
$
174,957

 
$
(6,085
)
 
(3.5
)%
Secondary Market Same Store
85,008

 
86,058

 
(1,050
)
 
(1.2
)%
Same Store Portfolio
253,880

 
261,015

 
(7,135
)
 
(2.7
)%
Non-Same Store and Other
40,640

 
40,797

 
(157
)
 
(0.4
)%
Total
$
294,520

 
$
301,812

 
$
(7,292
)
 
(2.4
)%

The decrease in depreciation and amortization expense is primarily due to a decrease of $19.4 million related to the amortization of the fair value of in-place leases and resident relationships acquired as a result of the merger with Colonial from the year ended December 31, 2014 to the year ended December 31, 2015. This decrease was partially offset by an increase in depreciation expense of $11.7 million driven by an increase in gross real estate assets from the year ended December 31, 2014 to the year ended December 31, 2015.

Property Management Expenses

Property management expenses for the year ended December 31, 2015 were approximately $31.0 million , a decrease of $1.1 million from the year ended December 31, 2014 . The majority of the decrease was related to a decrease in state franchise taxes of $2.1 million, partially offset by an increase in insurance expense of $0.6 million, an increase in payroll expense of $0.3 million, and an increase in incentive expense $0.3 million.

General and Administrative Expenses

General and Administrative expenses for the year ended  December 31, 2015 was approximately $25.7 million , an increase of $4.8 million from the year ended December 31, 2014 . The majority of the increase was related to increases in legal fees of $2.7 million and stock option expenses of $1.6 million.

49


Merger and Integration Related Expenses

There were no merger or integration related expenses for the  year ended December 31, 2015 . For the  year ended December 31, 2014 , merger and integration related expenses were approximately $3.2 million and $8.4 million, respectively. These expenses related primarily to severance, legal, professional, temporary systems, staffing, and facilities costs incurred for the acquisition and integration of Colonial.

Interest Expense

Interest expense for the year ended December 31, 2015 was approximately $122.3 million , a decrease of $1.6 million from the year ended December 31, 2014 . The decrease was primarily the result of a decrease in amortization of deferred financing cost from the year ended December 31, 2014 to the year ended December 31, 2015 of approximately $0.9 million. Also, the overall debt balance decreased from $3.5 billion to $3.4 billion, a decrease of $85.1 million. The average effective interest rate remained at 3.7% and the average years to rate maturity increased from 4.4 years to 4.8 years.

Dispositions of Depreciable Real Estate Assets Excluded from Discontinued Operations

We recorded a gain on sale of depreciable assets excluded from discontinued operations of $190.0 million for the year ended December 31, 2015 , an increase of approximately $147.3 million from the $42.6 million gain on sale of depreciable assets recorded for the  year ended December 31, 2014 . The increase was primarily the result of increased disposition activity. Dispositions increased from eight multifamily properties for the  year ended December 31, 2014 , to twenty-one multifamily properties for the year ended December 31, 2015.

Gain from Real Estate Joint Ventures

We recorded a gain from real estate joint ventures of $6.0 million during the year ended December 31, 2014 as opposed to no material gain or loss being recorded during the year ended December 31, 2015 . The decrease was primarily a result of recording a $3.4 million gain for the disposition of Ansley Village by Mid-America Multifamily Fund II, or Fund II, as well as a $2.8 million gain for the promote fee received from our Fund II partner during 2014. The promote fee was received as a result of MAA achieving certain performance metrics in its management of the Fund II properties over the life of the joint venture. There were no such gains recorded during the year ended December 31, 2015 .

Discontinued Operations

We recorded a gain on sale of discontinued operations of $5.4 million for the year ended December 31, 2014 . We did not record a gain or loss on sale of discontinued operations during the year ended December 31, 2015 , due the adoption of ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which resulted in dispositions being included in the gain on sale of depreciable real estate assets excluded from discontinued operations and is discussed further below.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests for the year ended December 31, 2015 was approximately $18.5 million , an increase of $10.2 million from the year ended December 31, 2014 . This increase is consistent with the increase to overall net income and is primarily a result of the items discussed above.

Net Income Attributable to MAA

Primarily as a result of the foregoing, net income attributable to MAA increased by approximately $184.3 million in the year ended December 31, 2015 from the year ended December 31, 2014 .

Funds from Operations

Funds from operations, or FFO, a non-GAAP financial measure, represents net income (computed in accordance with GAAP) excluding extraordinary items, net income attributable to noncontrolling interest, asset impairment, gains or losses on disposition of real estate assets, plus depreciation and amortization of real estate, and adjustments for joint ventures to reflect FFO on the same basis. Disposition of real estate assets includes, but is not limited to, sales of discontinued operations.


50


FFO should not be considered as an alternative to net income, or any other GAAP measurement of performance, as an indicator of operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of liquidity. Management believes that FFO is helpful to investors in understanding our operating performance primarily because its calculation excludes depreciation and amortization expense on real estate assets. We believe 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. 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.

Core FFO, a non-GAAP financial measure, represents FFO excluding certain non-cash or non-routine items such as acquisition, merger and integration expenses, mark-to-market debt adjustments and loss or gain on debt extinguishment. While our definition of Core FFO is similar to others in our industry, our precise methodology for calculating Core FFO may differ from that utilized by other REITs and, accordingly, may not be comparable to such other REITs. Core FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, as an indicator of operating performance or as an alternative to cash flow from operating, investing and financing activities as a measure of liquidity. Management believes that Core FFO is helpful in understanding our operating performance in that it removes certain items that by their nature are not comparable over periods and therefore tend to obscure actual operating performance.

The following table is a reconciliation of Core FFO and FFO to consolidated net income for the years ended December 31, 2016 , 2015 , and 2014 (dollars in thousands): 

 
Years ended December 31,
 
 
2016
 
2015
 
2014
 
Net income available for MAA common shareholders
$
211,915

 
$
332,287

 
$
147,980

 
Depreciation and amortization of real estate assets
319,528

 
291,572

 
299,421

 
Depreciation and amortization of real estate assets of discontinued operations
—

 
—

 
42

 
Gain on sales of discontinued operations
—

 
—

 
(5,394
)
 
Gain on sale of depreciable real estate assets excluded from discontinued operations
(80,397
)
 
(189,958
)
 
(42,649
)
 
Loss (gain) on disposition within unconsolidated entities
98

 
(12
)
 
(4,007
)
(1)  
Depreciation and amortization of real estate assets of real estate joint ventures
61

 
25

 
397

 
Net income attributable to noncontrolling interests
12,180

 
18,458

 
8,297

 
Funds from operations attributable to the Company
463,385

 
452,372

 
404,087

 
Acquisition expenses
2,928

 
2,777

 
2,388

 
Merger related expenses
39,033

 
—

 
3,152

 
Integration related expenses
1,790

 
—

 
8,395

 
Gain on sale of non-depreciable real estate assets
(2,300
)
 
(172
)
 
(350
)
 
Mark-to-market debt adjustment
(14,610
)
 
(19,955
)
 
(25,079
)
 
Loss on debt extinguishment
83

 
3,602

 
3,126

(2)  
Core funds from operations
$
490,309

 
$
438,624

 
$
395,719

 

(1) Gain on disposition within unconsolidated entities excludes the promote fee recognized with the final liquidation of Mid-America Multifamily Fund II (Fund II).

(2) The loss on debt extinguishment for the year ended December 31, 2014 includes MAA's share of debt extinguishment costs incurred by our joint venture, Fund II.

FFO for the year ended December 31, 2016 increased by approximately $11.0 million from the year ended December 31, 2015 primarily as a result of the increase in property revenues of $82.6 million , which was offset by increases in merger and integration related expenses of $40.8 million , property operating expenses, excluding depreciation, of $22.7 million , property management expenses of $3.1 million , and general and administrative expenses of $3.3 million .


51


FFO for the year ended December 31, 2015 increased by approximately $48.3 million from the year ended December 31, 2014 primarily as a result of the increase in property revenues of $50.6 million and a decrease in merger and integration related expenses of $11.5 million , which were partially offset by increases of $7.3 million in property operating expenses and $4.8 million in general and administrative expenses.

Core FFO for the year ended December 31, 2016 increased by approximately $51.7 million from the year ended December 31, 2015 primarily as a result of the increase in total property revenues of $82.6 million , which was offset by increases in property operating expenses, excluding depreciation, of $22.7 million , property management expenses of $3.1 million , and general and administrative expenses of $3.3 million .

Core FFO for the year ended December 31, 2015 increased by approximately $42.9 million from the year ended December 31, 2014 primarily as a result of the increase in total property revenues of $50.6 million and the decrease in interest expense, excluding the mark-to-market debt adjustment, of $6.7 million, which was partially offset by the $7.3 million increase in property operating expenses and the $4.8 million in general and administrative expenses.


TRENDS

During the twelve months ended December 31, 2016, demand for apartments was strong, as it was during the twelve months ended December 31, 2015. This strength was evident on two fronts: occupancy and effective rent per unit. Same store physical occupancy ended December 2016 at a 96.6% and average physical occupancy for the same store portfolio was 96.2% for the twelve months ended December 31, 2016, up 15 basis points from the twelve months ended December 31, 2015. Same store average effective rent per unit continued to grow, up 4.2% in the twelve months ended December 31, 2016 as compared to the twelve months ended December 31, 2015.

An important part of our portfolio strategy is to maintain a diversity of markets, submarkets, product types and price points across the Southeast and Southwest regions of the United States. This diversity tends to mitigate exposure to economic issues in any one geographic market or area. We believe that a well-balanced portfolio, including both large and select secondary markets; inner loop, suburban, and downtown/CBD locations; and various monthly rent price points will perform well in “up” cycles as well as weather “down” cycles better. As of December 31, 2016, including the impact of the Merger, we were invested in approximately 39 defined MSAs, diversified across both large markets and secondary markets, urban and suburban submarkets, and a variety of monthly rent pricing points.

According to U.S. Census Bureau data, as of November 30, 2016, multifamily permitting was down over 7% as compared to November 30, 2015.  While we believe a return to historical permitting will ultimately lead to a further increase in supply, we also believe the lack of new apartments in recent years, the current downward trend of multifamily permitting, and the demand from new households will help keep supply and demand essentially in balance in most markets. Also, we believe that more disciplined credit terms for residential mortgages should continue to favor rental demand at existing multifamily properties. Furthermore, rental competition from single family homes has not been a major competitive factor impacting our portfolio. For the twelve months ended December 31, 2016, total move outs attributable to single family home rentals dropped to 7% of total move outs as compared to 8% of total move outs for the twelve months ended December 31, 2015. We have seen significant rental competition from single family homes in only a few of our submarkets. Long term, we expect demographic trends (including the growth of prime age groups for rentals and immigration and population movement to the Southeast and Southwest) will continue to support apartment rental demand for our markets.

Our focus is on maintaining strong physical occupancy while increasing pricing where possible through our revenue management system. As noted above, physical occupancy ended December 2016 strong and the average for the twelve months ended December 2016 was 15 basis points above the level we achieved in the twelve months ended December 31, 2015. As we move through the remainder of the typically slower winter leasing season and into the typically stronger spring leasing season, the current level of physical occupancy puts us in a good position to capture solid pricing in the first half of 2017.

We continue to develop improved products, operating systems and procedures that we believe enable us to capture more revenues. Benefits of improved practices such as monthly and intra-monthly lease expiration management and collections performance enable us to capture increased revenue. We continue to actively work on improving processes and products to reduce expenses. Furthermore, the Merger provides further opportunity to benefit from economies of scale and to combine best practices across the entire portfolio.




52


LIQUIDITY AND CAPITAL RESOURCES

Our cash flows from operating, investing, and financing activities, as well as general economic and market conditions, are the principal factors affecting our liquidity and capital resources. The significant changes in cash from the year ended December 31, 2015 to the year ended December 31, 2016 due to operating, investing, and financing activities are as follows:

Operating Activities

Net cash flow provided by operating activities increased to $484.0 million for the year ended December 31, 2016 from $463.7 million for the year ended December 31, 2015 . This change was a result of various items, including higher revenues, as discussed above.

Investing Activities

Net cash used in investing activities increased to $710.5 million for the year ended December 31, 2016 from $136.2 million for the year ended December 31, 2015 . The primary drivers of this change are as follows:

 
Primary drivers of cash (outflow)/inflow during the year ended December 31,
 
 
 
Percentage Decrease in Net Cash
 
2016
 
2015
 
Decrease in Net Cash
 
Acquisition of Post, net of cash acquired
$
(427,764
)
 
$
—

 
$
(427,764
)
 
(100.0
)%
Purchases of real estate and other assets
$
(339,186
)
 
$
(328,193
)
 
$
(10,993
)
 
(3.3
)%
Proceeds from disposition of real estate assets
$
296,700

 
$
358,017

 
$
(61,317
)
 
(17.1
)%
Funding of escrow for future acquisitions
$
(58,259
)
 
$
8

 
$
(58,267
)
 
(100.0
)%
Development
$
(58,931
)
 
$
(38,730
)
 
$
(20,201
)
 
(52.2
)%

The increase in cash outflows during the year ended December 31, 2016 , primarily resulted in cash proceeds, net of cash acquired, of $427.8 million being used to satisfy Post Properties' debt, at the time of the Merger and included as consideration provided for the Merger. The increase in cash outflows from purchases of real estate and other assets primarily resulted from the cost of the acquisition of five apartment communities during the year ended December 31, 2016 compared to the cost of the acquisition of seven apartment communities during the year ended December 31, 2015 . The decrease in proceeds from disposition of real estate assets primarily resulted from the sale of twelve apartment communities, one commercial property, and three land parcels during the year ended December 31, 2016 compared to the sale of twenty-one apartment communities, one commercial property, and one land parcel during the year ended December 31, 2015 . The decrease in cash inflows from the funding of escrow for future acquisitions resulted from the funding of one anticipated future1031(b) transactions into escrow during the year ended December 31, 2016 compared to the funding of two 1031(b) transactions during and corresponding return to cash from escrow for those transactions during the year ended December 31, 2015 . The increase in cash outflows for development resulted from the timing of development spending during the year ended December 31, 2016 .
















53


Financing Activities

Net cash provided by financing activities increased to $222.4 million for the year ended December 31, 2016 from $316.6 million used in financing activities for the year ended December 31, 2015 . The primary drivers of this change are as follows:

 
Primary drivers of cash inflow/(outflow) during the year ended December 31,
 
 
 
Percentage Increase/(Decrease) in Net Cash
 
2016
 
2015
 
Increase/(Decrease) in Net Cash
 
Net change in credit lines
$
335,000

 
$
(180,900
)
 
$
515,900

 
285.2
 %
Proceeds from notes payable
$
300,000

 
$
395,960

 
$
(95,960
)
 
(24.2
)%
Principal payments on notes payable
$
(146,026
)
 
$
(279,077
)
 
$
133,051

 
47.7
 %
Dividends paid on common shares
$
(247,652
)
 
$
(232,079
)
 
$
(15,573
)
 
(6.7
)%

The increase in cash inflows related to the net change in credit lines resulted from the increase in borrowings of $335.0 million on the KeyBank Facility (as defined below) during 2016, which included $140.0 million used to pay off Post Properties' line of credit facility, compared to the net decrease of $180.1 million due to net repayments in 2015 of $105.8 million on our Fannie Mae secured credit facility and $91.1 million on our tax free secured property facility, which were partially offset by net increases on our Keybank facility of $16.0 million. The decrease in cash inflows from proceeds from notes payable is primarily due to the fact that during 2015 we issued $400 million in unsecured bonds compared to proceeds of $300 million related to the issuance of the Wells Fargo Term loan received in 2016. The increase in cash outflows from dividends paid on common shares primarily resulted from the increase in the dividend rate to $0.82 per share during the year ended December 31, 2016 from $0.77 per share during the year ended December 31, 2015.

Equity

As of December 31, 2016 , MAA owned 113,518,212 OP Units, comprising a 96.4% limited partnership interest in the Operating Partnership, while the remaining 4,220,403 outstanding OP Units were held by limited partners of the Operating Partnership. Holders of OP Units (other than MAA and its corporate affiliates) may require us to redeem their OP Units from time to time, in which case we may, at our option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA's common stock on the NYSE over a specified period prior to the redemption date) or by delivering one share of our common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed. In addition, we have registered under the Securities Act the 4,220,403 shares of our common stock, which as of December 31, 2016 , were issuable upon redemption of OP Units held by the Operating Partnership's limited partners so that those shares can be sold freely in the public markets. To the extent that additional OP Units are issued to limited partners of the Operating Partnership, we will likely register the additional shares of common stock issuable upon redemption of those OP Units under the Securities Act of 1933, as amended, so that those shares can also be sold in the public markets. If MAA issues shares of common stock upon the redemption of OP Units in the Operating Partnership, sales of substantial amounts of such shares of common stock, or the perception that these sales could occur, may adversely affect prevailing market prices for MAA common stock or may impair MAA's ability to raise capital through the sale of common stock or other equity securities.

In connection with the Merger, we issued to the then-holders of Post Properties capital stock and OP Units approximately 38.0 million shares of MAA common stock, approximately 80,000 OP Units, and approximately 868,000 MAA Series I preferred stock on December 1, 2016.

For more information regarding our equity capital resources, see Note 10 and Note 11 in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.








54


Debt

The following schedule outlines our fixed and variable rate debt, including the impact of interest rate swaps and caps, outstanding as of December 31, 2016 (dollars in thousands):

 
Principal
Balance
 
Average
Years to
Rate
Maturity
 
Effective
Rate
SECURED DEBT
 

 
 

 
 

Conventional - Fixed Rate or Swapped
$
1,128,284

 
2.6

 
3.9
%
Conventional - Variable Rate - Capped (1)
50,000

 
1.3

 
1.1
%
Total Fixed or Hedged Rate Maturity
$
1,178,284

 
2.5

 
4.0
%
Conventional - Variable Rate
110,000

 
0.1

 
1.1
%
Fair Market Value Adjustments and Debt Issuance Costs
30,804

 


 
 
Total Secured Rate Maturity
$
1,319,088

 
2.3

 
3.5
%
UNSECURED DEBT
 

 
 
 
 
Fixed Rate or Swapped
$
2,710,000

 
4.9

 
3.7
%
Variable Rate
490,000

 
0.1

 
1.6
%
Fair Market Value Adjustments, Debt Issuance Costs and Discounts
(19,376
)
 


 
 
Total Unsecured Rate Maturity
$
3,180,624

 
4.2

 
3.4
%
TOTAL DEBT
$
4,499,712

 
3.6

 
3.5
%
TOTAL FIXED OR HEDGED DEBT
$
3,899,712

 
3.6

 
3.8
%
 
(1)
The effective rate represents the average rate on the underlying variable debt, unless the cap rates are reached, which average 4.5% of the London Interbank Offered Rate, or LIBOR, for conventional caps.

As of December 31, 2016 , we had entered into interest rate swaps totaling a notional amount of $850.0 million . To date, these swaps have proven to be highly effective hedges. We had also entered into interest rate cap agreements totaling a notional amount of approximately $50.0 million as of December 31, 2016 .

The following schedule outlines the contractual maturity dates of our outstanding debt, net of fair market value adjustments, debt issuance costs and discounts, as of December 31, 2016 (in thousands):

 
Key Bank Unsecured
 
Public Bonds
 
Other
Unsecured
 
Secured
 
Total
2017
$
—

 
$
152,338

 
$
17,980

 
$
110,305

 
$
280,623

2018
—

 
—

 
300,616

 
169,021

 
469,637

2019
—

 
—

 
19,950

 
734,835

 
754,785

2020
490,000

 
—

 
149,729

 
166,843

 
806,572

2021
—

 
—

 
221,888

 
126,486

 
348,374

Thereafter
—

 
1,380,479

 
447,644

 
11,598

 
1,839,721

Total
$
490,000

 
$
1,532,817

 
$
1,157,807

 
$
1,319,088

 
$
4,499,712














55


The following schedule outlines the interest rate maturities of our outstanding fixed or hedged debt, net of fair market value adjustments, debt issuance costs and discounts, as of December 31, 2016 (dollars in thousands):

 
 
Fixed Rate Debt
 
Interest Rate Swaps
 
Total Fixed Rate Balances
 
Contract Rate
 
Interest Rate Caps
 
Total Fixed or Hedged
2017
 
$
200,623

 
$
299,098

 
$
499,721

 
3.1
%
 
$
25,000

 
$
524,721

2018
 
138,945

 
250,692

 
389,637

 
4.0
%
 
25,000

 
414,637

2019
 
754,785

 
—

 
754,785

 
5.8
%
 
—

 
754,785

2020
 
166,843

 
298,944

 
465,787

 
3.3
%
 
—

 
465,787

2021
 
199,004

 
—

 
199,004

 
5.2
%
 
—

 
199,004

Thereafter
 
1,540,778

 
—

 
1,540,778

 
4.0
%
 
—

 
1,540,778

Total
 
$
3,000,978

 
$
848,734

 
$
3,849,712

 
4.2
%
 
$
50,000

 
$
3,899,712


Unsecured Revolving Credit Facility

On October 15, 2015, our Operating Partnership entered into a $750.0 million unsecured revolving credit facility agreement with KeyBank National Association, KeyBank, and fourteen other banks, the KeyBank Facility. The KeyBank Facility replaced our Operating Partnership's previous unsecured credit facility with KeyBank. The interest rate is determined using an investment grade pricing grid using LIBOR plus a spread of 0.85% to 1.55%. On December 1, 2016, we amended the KeyBank Facility by increasing the borrowing capacity to $1.0 billion . As of December 31, 2016 , we had $490.0 million borrowed under this facility. The KeyBank Facility serves as our primary source of short-term liquidity and has an accordion feature that we may use to expand its capacity to $1.5 billion. The KeyBank Facility matures on April 15, 2020.

Unsecured Term Loans

In addition to our unsecured credit facility, we maintain four unsecured term loans. We had total borrowings of $850.0 million outstanding under these term loan agreements at December 31, 2016 .     

The $250.0 million term loan with Wells Fargo, N.A., or Wells Fargo, bears interest at a rate of LIBOR plus a spread of 0.90% to 1.90% based on the credit ratings of our unsecured debt. The loan matures on August 1, 2018. As of December 31, 2016 , this loan was bearing interest at a rate of LIBOR plus 0.98%.

The $150.0 million term loan with U.S. Bank National Association, or U.S. Bank, bears interest at a rate of LIBOR plus a spread of 0.90% to 1.90% based on the credit ratings of our unsecured debt. The loan matures on March 1, 2020. As of December 31, 2016 , this loan was bearing interest at a rate of LIBOR plus 0.98%.

The $150.0 million term loan with Key Bank bears interest at a rate of LIBOR plus a spread of 0.90% to 1.75% based on the credit ratings of our unsecured debt. The loan matures on March 1, 2021. As of December 31, 2016 , this loan was bearing interest at a rate of LIBOR plus 0.95%.

The $300.0 million term loan with Wells Fargo bears interest at a rate of LIBOR plus a spread of 0.90% to 1.75% based on the credit ratings of our unsecured debt. The loan matures on March 1, 2022. As of December 31, 2016 , this loan was bearing interest at a rate of LIBOR plus 0.95%.

Senior Unsecured Notes

We have also issued public and private unsecured notes.  As of December 31, 2016 , we have approximately $1.6 billion of publicly issued bonds and $310.0 million of unsecured notes issued in two private placements.  In October 2013 we issued $350.0 million senior notes due 2023 with a coupon of 4.30%, paid semi-annually on April 15 and October 15.   In June 2014 we issued $400.0 million senior notes due 2024 with a coupon of 3.75%, paid semi-annually on June 15 and December 15.  In November 2015 we issued $400.0 million senior notes due 2025 with a coupon of 4.00%, paid semi-annually on May 15 and November 15. We also assumed two senior notes totaling $400.0 million as a result of the Post merger. One senior note assumed as a result of the Merger has a face value of $250.0 million, is due 2022, and has a coupon of 3.38% paid semi-annually on June 1 and December 1. The other senior note assumed as a result of the Merger has a face value of $150.0 million, is due 2018, and has a coupon of 4.75% paid semi-annually on April 15 and October 15. As of December 31, 2016 , all of these amounts remained outstanding.

56


On July 29, 2011, we issued $135.0 million of senior unsecured notes. The notes were offered in a private placement with three maturity tranches: $50.0 million at 4.7% maturing on July 29, 2018, $72.8 million at 5.4% maturing on July 29, 2021; and $12.3 million at 5.6% maturing on July 29, 2023; all of which is outstanding at December 31, 2016 .

On August 31, 2012, we issued $175.0 million of senior unsecured notes. The notes were offered in a private placement with four tranches: $18.0 million at 3.15% maturing on November 30, 2017; $20.0 million at 3.61% maturing on November 30, 2019; $117.0 million at 4.17% maturing on November 30, 2022; and $20.0 million at 4.33% maturing on November 30, 2024, all of which is outstanding at December 31, 2016 .

Secured Property Mortgages

We also maintain secured property mortgages with Fannie Mae, Freddie Mac, and various life insurance companies. These mortgages are usually fixed rate and can range from five to ten years in maturity. As of December 31, 2016 , we have $1.1 billion of secured property mortgages.
  
Secured Credit Facility

Approximately 3.6% of our outstanding obligations at December 31, 2016 were borrowed through a credit facility credit enhanced by Fannie Mae, which we also refer to as the Fannie Mae Facility. The Fannie Mae Facility has a line limit of $160.0 million , of which $160.0 million was collateralized, available to borrow, and borrowed, at December 31, 2016 . Various Fannie Mae rate tranches of the Fannie Mae Facility mature from 2017 through 2018.

For more information regarding our debt capital resources, see Note 6 to the audited consolidated financial statements included elsewhere in the Annual Report on Form 10-K.

Contractual Obligations

The following table reflects our total contractual cash obligations which consist of our long-term debt, development fees and operating leases as of December 31, 2016 (dollars in thousands):

Contractual
Obligations (1)
 
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
Long-Term Debt Obligations (2)
 
$
289,666

 
$
476,449

 
$
726,473

 
$
798,281

 
$
342,903

 
$
1,854,512

 
$
4,488,284

Fixed Rate or Swapped Interest (3)
 
150,588

 
129,516

 
91,826

 
76,204

 
67,854

 
140,924

 
656,912

Purchase Obligations (4)
 
1,901

 
542

 
—

 
—

 
—

 
—

 
2,443

Operating Lease Obligations (5)
 
836

 
703

 
687

 
707

 
719

 
63,600

 
67,252

Total
 
$
442,991

 
$
607,210

 
$
818,986

 
$
875,192

 
$
411,476

 
$
2,059,036

 
$
5,214,891


(1) Fixed rate and swapped interest are shown in this table. The average interest rates of variable rate debt are shown in preceding tables.
(2) Represents principal payments gross of discounts, debt issuance costs and fair market value adjustments of debt assumed.
(3) Swapped interest is subject to the ineffective portion of cash flow hedges as described in Note 7 to the audited consolidated financial statements included elsewhere in the Annual Report on Form 10-K. 
(4) Represents development fees.
(5) Primarily comprised of a ground lease underlying one apartment community owned by the Company.

Off-Balance Sheet Arrangements

At December 31, 2016 , and 2015 , we did not have any relationships, including those with unconsolidated entities or financial partnerships, for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

As of December 31, 2016 , we had a 35% ownership interest in the Post Massachusetts Avenue joint venture, which consists of 269 units. Our investment in this real estate joint ventures is unconsolidated and is recorded using the equity method for the joint ventures in which we do not have a controlling interest.


57


In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships. We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties other than those disclosed in Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements, Note 14.

INSURANCE

We renegotiated our primary insurance programs effective July 1, 2016 . We believe that the property and casualty insurance program in place provides appropriate insurance coverage for financial protection against insurable risks such that any insurable loss experienced that can be reasonably anticipated would not have a significant impact on our liquidity, financial position or results of operation.

INFLATION

Our resident leases at the apartment communities allow, at the time of renewal, for adjustments in the rent payable thereunder, and thus may enable us to seek rent increases. Almost all leases are for one year or less. The short-term nature of these leases generally serves to reduce our risk to adverse effects of inflation.


IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The following table provides a brief description of recent accounting pronouncements that could have a material effect on our financial statements:

Standard
Description
Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Accounting Standards Update (ASU) 2015-02 ,  Consolidation (Topic 810)
ASU 2015-02, affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships and (iv) provide a scope exception for certain entities.
This ASU is effective for annual periods ending after December 15, 2015. We adopted this ASU effective January 1, 2016.
We adopted this ASU effective January 1, 2016, and there was no material effect on our consolidated financial position or results of operations taken as a whole. While adoption of the new standard did not result in the consolidation of entities not previously consolidated or the de-consolidation of any entities previously consolidated, the Operating Partnership is now classified as a VIE as the limited partners lack substantive kick-out rights and substantive participating rights. Thus, the Company is the primary beneficiary of, and continues to consolidate MAALP.
ASU 2015-16 ,  Simplifying the Accounting for Measurement -Period Adjustments
This ASU was issued to simplify the accounting for business combinations, specifically as it relates to measurement-period adjustments. Acquiring entities in a business combination must recognize measurement-period adjustments in the reporting period in which the adjustment amounts are determined. Also, ASU 2015-16 requires entities to present separately on the face of the income statement (or disclose in the notes to the financial statements) the portion of the amount recorded in the current period earnings, by line item, that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.
This ASU is effective for annual periods ending after December 15, 2015. We adopted this ASU effective January 1, 2016.
Adoption of this ASU did not have a significant impact on our consolidated financial statements; however, as noted in Note 2, Business Combinations, we will continue to monitor these adjustments related to the Post Merger as the measurement period remains open for twelve months following the 12/1/16 Merger date.

58


ASU 2014-16 - Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity

This ASU clarifies how U.S. GAAP should be applied in determining whether the nature of a host contract in a hybrid financial instrument that is issued in the form of a share is more akin to debt or equity and in evaluating whether the economic characteristics and risks of an embedded feature are "clearly and closely related" to its host contract. 

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015. We adopted this ASU effective January 1, 2016.
Upon initial adoption on January 1, 2016, this ASU did not have an impact on our consolidated financial statements and disclosures. However, as a result of the issuance of the MAA Series I preferred stock resulting from the merger on December 1, 2016, we identified a redemption feature embedded in this preferred stock and determined that we were required to bifurcate the value associated with this feature from its host instrument, the preferred shares, and account for it as a freestanding derivative on the balance sheet at fair value as a result of the call option in accordance with this guidance in ASC 815. (See Note 7 and 8 for details and referenced impact to our consolidated financial statements and disclosures).
ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern
This ASU requires an entity's management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. If substantial doubt exists, the entity must disclose the principal conditions or events that raised the substantial doubt, management's evaluation of the significance of these conditions, and management's plan for alleviating the substantial doubt about the entity's ability to continue as a going concern.
This ASU is effective for annual periods ending after December 15, 2016. We adopted this guidance on December 31, 2016.
We adopted this guidance on December 31, 2016, and the adoption of this guidance did not have an impact to the consolidated financial statements or material impact on our disclosures.
ASU 2014-09,  Revenue from Contracts with Customers
This ASU establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services as outlined in a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. Income from lease contracts is specifically excluded from this ASU.
This ASU is effective for annual reporting periods beginning after December 15, 2017, as a result of a deferral of the effective date arising from the issuance of ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date. Early adoption is permitted.
The amendments may be applied using the full retrospective transition method resulting in adjustments to each prior period presented as of the date of initial application or by using the modified retrospective transition method with a cumulative effect recognized as of the date of initial application. We currently expect to adopt ASU 2014-09 effective January 1, 2018, using the modified retrospective approach. We have identified our revenue streams and are in the process of evaluating the impact on our consolidated financial statements and internal accounting processes; however, the majority of our revenue is derived from real estate lease contracts.
ASU 2016-02,  Leases
This ASU amends existing accounting standards for lease accounting and establishes the principles for lease accounting for both the lessee and lessor. The amendment requires an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendment also requires certain quantitative and qualitative disclosures about leasing arrangements.
This ASU is effective for annual reporting periods beginning after December 15, 2018; however, early adoption is permitted.
The standard must be adopted using a modified retrospective transition and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are currently evaluating the impact this standard may have on our consolidated financial statements and related disclosures upon adoption.
ASU 2016-09,   Improvements to Employee Share-Based Payment Accounting
This ASU amends existing accounting standards for certain aspects of share-based payments to employees. The new guidance will require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur.
This ASU is effective for annual reporting periods beginning after December 15, 2016; however, early adoption is permitted.
The standard must be adopted using a modified retrospective transition method, with a cumulative-effect adjustment to retained earnings. We are currently evaluating the impact this standard may have on our consolidated financial statements and related disclosures upon adoption.

59


ASU 2016-15,  Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)
This ASU clarifies how several specific cash receipts and cash payments are to be presented and classified on the statement of cash flows, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration made after a business combination, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of predominance principle.
This ASU is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted.
Each amendment in this standard must be applied prospectively, retrospectively, or as of the beginning of the earliest comparative period presented in the year of adoption, depending on the type of amendment. We expect to adopt ASU 2016-15 as of January 1, 2018, and we are currently evaluating the impact this standard may have on our consolidated financial statements upon adoption.
 ASU 2016-18,  Statement of Cash Flows (Topic 230):Restricted Cash (A Consensus of the FASB Emerging Issues Task Force)
This ASU requires restricted cash to be presented with cash and cash equivalents when reconciling the beginning and ending amounts in the statements of cash flows.
This ASU  is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. 
The update should be applied retrospectively to each period presented. We expect to adopt ASU 2016-15 as of January 1, 2018. We currently report the change in restricted cash within the investing activities in our consolidated statement of cash flows. If we were to early adopt in 2017, cash and cash equivalents reported in our consolidated statements of cash flows would increase by approximately $88.3 million and $26.1 million in 2016 and 2015, respectively, to reflect the restricted cash balances. Additionally, net cash used in investing activities would increase by $58.3 million in 2016 and decrease by $8 thousand in 2015.
ASU 2017-01, Clarifying the Definition of a Business (Topic 805)
This ASU clarifies the definition of a business and provides further guidance for evaluating whether a transaction will be accounted for as an acquisition of an asset or a business.
This ASU is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted.
The update should be applied prospectively. We adopted ASU 2017-01 as of January 1, 2017 and the adoption did not require any additional disclosures. We believe most of our future acquisitions of operating properties will qualify as asset acquisitions and most future transaction costs associated with these acquisitions will be capitalized.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. Our primary market risk exposure is to changes in interest rates on our borrowings. At December 31, 2016 , 28.1% of our total capitalization consisted of borrowings. Our interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve this objective, we manage our exposure to fluctuations in market interest rates for borrowings through the use of fixed rate debt instruments and interest rate swaps and caps, which mitigate our interest rate risk on a related financial instrument and effectively fix or cap the interest rate on a portion of our variable debt or on future refinancings. We use our best efforts to have our credit facilities, or tranches thereof, mature across multiple years, which we believe limits our exposure to interest rate changes in any one year. We do not enter into derivative instruments for trading or other speculative purposes. At December 31, 2016, approximately 86.7% of our outstanding debt was subject to fixed or capped rates after considering related derivative instruments We regularly review interest rate exposure on outstanding borrowings in an effort to minimize the risk of interest rate fluctuations.
















60


The table below provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For our interest rate swaps and caps, the table presents the notional amount of the swaps and caps and the years in which they expire. Weighted average variable rates are based on rates in effect at the reporting date (dollars in thousands).

 
2017
 
2018
 
2019
 
2020
 
2021
 
Total Thereafter
 
Total
 
Fair
Value
Long-term Debt
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed Rate
$
223,625

 
$
157,129

 
$
726,378

 
$
155,600

 
$
190,171

 
$
1,548,075

 
$
3,000,978

 
$
3,127,719

Average interest rate
4.41
%
 
4.04
%
 
4.28
%
 
4.41
%
 
5.21
%
 
3.93
%
 
4.16
%
 
 

Variable Rate (1)
$
80,010

 
$
329,825

 
$
(457
)
 
$
639,624

 
$
149,770

 
$
299,966

 
$
1,498,738

 
$
1,511,286

Average interest rate
1.08
%
 
1.47
%
 
1.57
%
 
1.63
%
 
1.57
%
 
1.57
%
 
1.55
%
 
 

Interest Rate Swaps
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Variable to Fixed
$
300,000

 
$
250,000

 
$
—

 
$
300,000

 
$
—

 
$
—

 
$
850,000

 
$
(5,198
)
Average Pay Rate
1.08
%
 
2.00
%
 
—
%
 
—
%
 
—
%
 
—
%
 
1.68
%
 
 

Interest Rate Cap
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Variable to Fixed
$
25,000

 
$
25,000

 
$
—

 
$
—

 
$
—

 
$
—

 
$
50,000

 
$
—

Average Pay Rate
4.50
%
 
4.50
%
 
—
%
 
—
%
 
—
%
 
—
%
 
4.50
%
 
 


(1) Excluding the effect of interest rate swap and cap agreements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Reports of Independent Registered Public Accounting Firm, Consolidated Financial Statements and Selected Quarterly Financial Information are set forth on pages F-1 to F-61 of this Annual Report on Form 10-K.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Mid-America Apartment Communities, Inc.

(a)  Evaluation of Disclosure Controls and Procedures:

MAA’s management, with the participation of MAA’s Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of MAA’s disclosure controls and procedures as of December 31, 2016 pursuant to Exchange Act Rule 13a-15. Based on that evaluation, MAA’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December 31, 2016 to ensure that information required to be disclosed by MAA in its Exchange Act filings is accurately recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to MAA’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)  Management’s Report on Internal Control over Financial Reporting:

Management's report on MAA's internal control over financial reporting is presented on page F-1 of this Annual Report on Form 10-K. Ernst & Young LLP, the independent registered public accounting firm that has audited the consolidated financial statements included in this Annual Report on Form 10-K, has issued an report on MAA’s internal control over financial reporting, which is included herein.






61


(c)   Changes in Internal Control over Financial Reporting:

There was no change to MAA’s internal control over financial reporting identified in connection with the evaluation by MAA’s management referred to above that occurred during the quarter ended December 31, 2016 that has materially affected, or is reasonably likely to materially affect, MAA’s internal control over financial reporting.

Mid-America Apartments, L.P.

(a)  Evaluation of Disclosure Controls and Procedures:

Management of the Operating Partnership, with the participation of the Chief Executive Officer and Chief Financial Officer of MAA, as the general partner of the Operating Partnership, carried out an evaluation of the effectiveness of the Operating Partnership’s disclosure controls and procedures as of December 31, 2016 pursuant to Exchange Act Rule  15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of MAA, as the general partner of the Operating Partnership, concluded that the disclosure controls and procedures were effective as of December 31, 2016 to ensure that information required to be disclosed by the Operating Partnership in its Exchange Act filings is accurately recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of MAA, as the general partner of the Operating Partnership, as appropriate to allow timely decisions regarding required disclosure.

(b)  Management’s Report on Internal Control over Financial Reporting:

Management of the Operating Partnership is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 15d-15(f) under the Exchange Act. Management of the Operating Partnership, with the participation the Chief Executive Officer and Chief Financial Officer of MAA, as the general partner of the Operating Partnership, conducted an evaluation of the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2016 based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial statement preparation and presentation.

Based on its evaluation under the framework in Internal Control - Integrated Framework, management of the Operating Partnership concluded that the Operating Partnership’s internal control over financial reporting was effective as of December 31, 2016.

(c)   Changes in Internal Control over Financial Reporting:

There was no change to the Operating Partnership’s internal control over financial reporting identified in connection with the evaluation by the Operating Partnership’s management referred to above that occurred during the quarter ended December 31, 2016 that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.
 
None.

62


PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 
The information contained in MAA's 2017 Proxy Statement in the sections entitled “Information About The Board of Directors and Its Committees”, “Proposal 1 - Election of Directors”, “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance,” is incorporated herein by reference in response to this item.
 
Our Board of Directors has adopted a Code of Conduct applicable to all officers, directors and employees, which can be found on our website at http://www.maac.com, on the For Investors page in the "Governance Documents" section under "Corporate Overview". We will provide a copy of this document to any person, without charge, upon request, by writing to the Legal Department at MAA, 6584 Poplar Avenue, Memphis, TN 38138. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Conduct by posting such information on our website at the address and the locations specified above. Reference to our website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION.

The information contained in MAA's 2017 Proxy Statement in the sections entitled “Executive Compensation”, “Compensation Committee Interlocks and Insider Participation” and “Compensation Discussion and Analysis” is incorporated herein by reference in response to this Item 11.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information contained in MAA's 2017 Proxy Statement in the sections entitled “Security Ownership of Management” and “Security Ownership of Certain Beneficial Owners,” is incorporated herein by reference in response to this Item 12.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information contained in MAA's 2017 Proxy Statement in the sections entitled “Certain Relationships and Related Transactions” and “Information About The Board of Directors and Its Committees” is incorporated herein by reference in response to this Item 13.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information contained in MAA's 2017 Proxy Statement in the section entitled “Proposal 4 - Ratification of Appointment of Independent Registered Public Accounting Firm,” is incorporated herein by reference in response to this Item 14.


63


PART IV
 
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
(a)
The following documents are filed as part of this Annual Report on Form 10-K:
1.
Management’s Report on Internal Control Over Financial Reporting
F – 1
 
Reports of Independent Registered Public Accounting Firm
F – 2
 
 
 
 
Financial Statements of Mid-America Apartment Communities, Inc.:
 
 
Consolidated Balance Sheets as of December 31, 2016, and 2015
F – 5
 
Consolidated Statements of Operations for the years ended December 31, 2016, 2015, and 2014
F – 6
 
Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015, and 2014
F – 7
 
Consolidated Statements of Equity for the years ended December 31, 2016, 2015, and 2014
F – 8
 
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015, and 2014
F – 9
 
 
 
 
Financial Statements of Mid-America Apartments, L.P.:
 
 
Consolidated Balance Sheets as of December 31, 2016, and 2015
F-10
 
Consolidated Statements of Operations for the years ended December 31, 2016, 2015, and 2014
F-11
 
Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015, and 2014
F-12
 
Consolidated Statements of Changes in Capital for the years ended December 31, 2016, 2015, and 2014
F-13
 
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015, and 2014
F-14
 
 
 
 
Notes to Consolidated Financial Statements for the years ended December 31, 2016, 2015, and 2014
F-15
 
 
 
2.
Financial Statement Schedule required to be filed by Item 8 and Paragraph (b) of this Item 15:
 
 
Schedule III - Real Estate Investments and Accumulated Depreciation as of December 31, 2016
F – 53
 
 
 
3.
The exhibits required by Item 601 of Regulation S-K, except as otherwise noted, have been filed with previous reports by the registrant and are herein incorporated by reference.
 
 
 
 
 
Exhibit Number
 
Exhibit Description
2.1
Agreement and Plan of Merger by and among Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P., Martha Merger Sub, L.P., Colonial Properties Trust, and Colonial Realty Limited Partnership, dated as of June 3, 2013 (Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on June 3, 2013 and incorporated herein by reference).
2.2
Agreement and Plan of Merger by and among Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P., Post Properties, Inc., Post GP Holdings, Inc., and Post Apartment Homes, L.P., dated as of August 15, 2016 (Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on August 15, 2016 and incorporated herein by reference).
3.1
Composite Charter of Mid-America Apartment Communities, Inc.
3.2
Third Amended and Restated Bylaws of Mid-America Apartment Communities, Inc., dated as of December 3, 2013 (Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 4, 2013 and incorporated herein by reference).
3.3
Composite Certificate of Limited Partnership of Mid-America Apartments, L.P. (Filed as Exhibit 3.14 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2016 and incorporated herein by reference).
3.4
Third Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P. dated as of October 1, 2013 (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 2, 2013 and incorporated herein by reference).

64


3.5
First Amendment to the Third Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P. (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 10, 2016 and incorporated herein by reference).
4.1
Form of Common Share Certificate (Filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
4.2
Form of 8.50% Series I Cumulative Redeemable Preferred Stock Certificate (Filed as Exhibit 4.2 to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-4 (File No. 333-213591) filed on September 28, 2016 and incorporated herein by reference).
4.3
Indenture, dated as of October 16, 2013, among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and U.S. Bank National Association (Filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 16, 2013 and incorporated herein by reference).
4.4
First Supplemental Indenture, dated as of October 16, 2013, among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and U.S. Bank National Association, including the form of 4.300% Senior Notes due 2023 (Filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on October 16, 2013 and incorporated herein by reference).
4.5
Indenture governing 6.05% Senior Notes due 2016, dated December 13, 2013, by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and U.S. Bank National Association, including the form of 6.05% Senior Notes due 2016 (Filed as Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on December 19, 2013 and incorporated herein by reference).
4.6
Registration Rights Agreement related to the 6.05% Senior Notes due 2016, dated December 13, 2013, between Mid-America Apartments, L.P. and J.P. Morgan Securities LLC (Filed as Exhibit 4.9 to the Registrant’s Current Report on Form 8-K filed on December 19, 2013 and incorporated herein by reference).
4.7
Form of 6.05% Senior Note due 2016 (Included in Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on December 19, 2013 and incorporated herein by reference).
4.8
Second Supplemental Indenture, dated as of June 13, 2014, among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and U.S. Bank National Association, including the form of 3.7500% Senior Notes due 2024 (Filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on June 13, 2014 and incorporated herein by reference).
4.9
Third Supplemental Indenture, dated as of November 9, 2015, among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and U.S. Bank National Association, including the form of 4.000% Senior Notes due 2025 (Filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on November 9, 2015 and incorporated herein by reference).
4.10
Indenture between Post Properties, Inc. and SunTrust Bank, as Trustee (Filed as Exhibit 4.1 to Post Properties’ Registration Statement on Form S-3 (File No. 333-42884), and incorporated herein by reference).
4.11
First Supplemental Indenture to the Indenture between the Post Apartment Homes, L.P., and SunTrust Bank, as Trustee (Filed as Exhibit 4.2 to Post Properties’ Registration Statement on Form S-3ASR (File No. 333-139581) and incorporated herein by reference).
4.12
Form of Post Apartment Homes, L.P. 4.75% Note due 2017 (Filed as Exhibit 4.1 to Post Properties’ Current Report on Form 8-K filed October 18, 2010 and incorporated herein by reference).
4.13
Form of Post Apartment Homes, L.P. 3.375% Note due 2022 (Filed as Exhibit 4.1 to Post Properties’ Current Report on Form 8-K filed November 7, 2012 and incorporated herein by reference).
10.1
Note Purchase Agreement, dated as of July 29, 2011, among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and the purchasers of the notes party thereto (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 1, 2011 and incorporated herein by reference).
10.2
Note Purchase Agreement, dated as of August 31, 2012, among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and the purchasers of the notes party thereto (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 4, 2012 and incorporated herein by reference).
10.3
Distribution Agreement, dated December 9, 2015, by and among Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and J.P. Morgan Securities LLC (Filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on December 9, 2015 and incorporated herein by reference).
10.4
Distribution Agreement, dated December 9, 2015, by and among Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and BMO Capital Markets Corp. (Filed as Exhibit 1.2 to the Registrant’s Current Report on Form 8-K filed on December 9, 2015 and incorporated herein by reference).
10.5
Distribution Agreement, dated December 9, 2015, by and among Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and KeyBanc Capital Markets Inc. (Filed as Exhibit 1.3 to the Registrant’s Current Report on Form 8-K filed on December 9, 2015 and incorporated herein by reference).
10.6†
Employment Agreement between the Registrant and H. Eric Bolton, Jr., dated March 24, 2015 (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 24, 2015 and incorporated herein by reference).

65


10.7†
Non-Qualified Deferred Compensation Plan for Outside Company Directors as Amended Effective November 20, 2010 (Filed as Exhibit 10.7 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2016 and incorporated herein by reference).
10.8†
Amended and Restated Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan (Filed as Appendix B to the Registrant’s Definitive Proxy Statement filed on April 16, 2014 and incorporated herein by reference).
10.9†
Form of Non-Qualified Stock Option Agreement for Company Employees under the Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan (Filed as Exhibit 10.20 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 and incorporated herein by reference).
10.10†
Form of Restricted Stock Award Agreement under the Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 1, 2015 and incorporated herein by reference).
10.11†
Form of Incentive Stock Option Agreement for Company Employees under the Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan (Filed as Exhibit 10.22 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 and incorporated herein by reference).
10.12
MAA Non-Qualified Deferred Executive Compensation Retirement Plan Amended and Restated Effective January 1, 2016 (Filed as Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2016 and incorporated herein by reference).
10.13†
Form of Change in Control and Termination Agreement (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and incorporated herein by reference).
10.14
Second Amended and Restated Credit Agreement, dated as of October 15, 2015, by and among Mid-America Apartments, L.P., KeyBank National Association and the other lenders party thereto (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 16, 2015 and incorporated by reference herein).
10.15
First Amendment to Second Amended and Restated Credit Agreement, dated as of December 1, 2016, by and among Mid-America Apartments, L.P., KeyBank National Association and the other lenders party thereto (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 1, 2016 and incorporated by reference herein).
10.16†
Mid-America Apartment Communities, Inc. Indemnification Agreement (Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 1, 2016 and incorporated by reference herein).
10.17
Amended and Restated Post Properties Inc. 2003 Incentive Stock Plan (Filed as Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8 filed on December 9, 2016 and incorporated herein by reference).
11
Statement re: computation of per share earnings (included within this Annual Report on Form 10-K).
12.1[1]
Statement re: computation of fixed charge coverage ratio for MAA
12.2
Statement re: computation of fixed charge coverage ratio for MAALP
21
List of Subsidiaries
23.1
Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP for MAA
23.2
Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP for MAALP
31.1
MAA Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
MAA Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3
MAA LP Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4
MAA LP Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
MAA Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
MAA Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3*
MAA LP Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.4*
MAA LP Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101
The following financial information from Mid-America Apartment Communities, Inc.’s and MAA LP's Annual Report on Form 10-K for the period ended December 31, 2016, filed with the SEC on February 24, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets as of December 31, 2016 and December 31, 2015; (ii) the Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014; (iii) the Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014; (iv) the Consolidated Statements of Equity for the years ended December 31, 2016, 2015 and 2014; and (v) Notes to Consolidated Financial Statements (Unaudited).


66


† Management contract or compensatory plan or arrangement.
* This certification is being furnished solely to accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of MAA or MAALP, whether made before or after the date hereof, regardless of any general incorporation language in such filings.

(b)
Exhibits:
See Item 15(a)(3) above.
(c)
Financial Statement Schedule:
See Item 15(a)(2) above.
ITEM 16. SUMMARY
 
None

67


SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
MID-AMERICA APARTMENT COMMUNITIES, INC.
 
 
 
Date:
February 24, 2017
/s/ H. Eric Bolton, Jr.
 
 
H. Eric Bolton, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
 













































68


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 
Date:
February 24, 2017
/s/ H. Eric Bolton, Jr.
 
 
H. Eric Bolton, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
 
 
 
Date:
February 24, 2017
/s/ Albert M. Campbell, III
 
 
Albert M. Campbell, III
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
 
 
 
Date:
February 24, 2017
/s/ Russell R. French
 
 
Russell R. French
Director
 
 
 
Date:
February 24, 2017
/s/ Alan B. Graf, Jr.
 
 
Alan B. Graf, Jr.
Director
 
 
 
Date:
February 24, 2017
/s/ Toni Jennings
 
 
Toni Jennings
Director
 
 
 
Date:
February 24, 2017
/s/ James K. Lowder
 
 
James K. Lowder
Director
 
 
 
Date:
February 24, 2017
/s/ Thomas H. Lowder
 
 
Thomas H. Lowder
Director
 
 
 
Date:
February 27, 2017
/s/ Monica McGurk
 
 
Monica McGurk
Director
 
 
 
Date:
February 24, 2017
/s/ Claude B. Nielsen
 
 
Claude B. Nielsen
Director
 
 
 
Date:
February 24, 2017
/s/ Philip W. Norwood
 
 
Philip W. Norwood
Director
 
 
 
Date:
February 24, 2017
/s/ W. Reid Sanders
 
 
W. Reid Sanders
Director
 
 
 
Date:
February 24, 2017
/s/ William B. Sansom
 
 
William B. Sansom
Director
 
 
 
Date:
February 24, 2017
/s/ Gary Shorb
 
 
Gary Shorb
Director
 
 
 
Date:
February 24, 2017
/s/ David P. Stockert
 
 
David P. Stockert
Director
 

69


SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
MID-AMERICA APARTMENTS, L.P.
 
 
a Tennessee Limited Partnership
 
 
By: Mid-America Apartment Communities, Inc., its general partner
 
 
 
Date:
February 24, 2017
/s/ H. Eric Bolton, Jr.
 
 
H. Eric Bolton, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
 
    









































70


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant as an officer or director of Mid-America Apartment Communities, Inc., in its capacity as the general partner of the registrant and on the dates indicated.
Date:
February 24, 2017
/s/ H. Eric Bolton, Jr.
 
 
H. Eric Bolton, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
 
 
 
Date:
February 24, 2017
/s/ Albert M. Campbell, III
 
 
Albert M. Campbell, III
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
 
 
 
Date:
February 24, 2017
/s/ Russell R. French
 
 
Russell R. French
Director
 
 
 
Date:
February 24, 2017
/s/ Alan B. Graf, Jr.
 
 
Alan B. Graf, Jr.
Director
 
 
 
Date:
February 24, 2017
/s/ Toni Jennings
 
 
Toni Jennings
Director
 
 
 
Date:
February 24, 2017
/s/ James K. Lowder
 
 
James K. Lowder
Director
 
 
 
Date:
February 24, 2017
/s/ Thomas H. Lowder
 
 
Thomas H. Lowder
Director
 
 
 
Date:
February 27, 2017
/s/ Monica McGurk
 
 
Monica McGurk
Director
 
 
 
Date:
February 24, 2017
/s/ Claude B. Nielsen
 
 
Claude B. Nielsen
Director
 
 
 
Date:
February 24, 2017
/s/ Philip W. Norwood
 
 
Philip W. Norwood
Director
 
 
 
Date:
February 24, 2017
/s/ W. Reid Sanders
 
 
W. Reid Sanders
Director
 
 
 
Date:
February 24, 2017
/s/ William B. Sansom
 
 
William B. Sansom
Director
 
 
 
Date:
February 24, 2017
/s/ Gary Shorb
 
 
Gary Shorb
Director
 
 
 
Date:
February 24, 2017
/s/ David P. Stockert
 
 
David P. Stockert
Director

71


MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  
Management of MAA is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended.
 
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of MAA’s consolidated financial statements for external purposes in accordance with generally accepted accounting principles.
 
Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of MAA; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of MAA are being made only in accordance with appropriate authorizations of management and directors of MAA; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of MAA’s assets that could have a material effect on the consolidated financial statements.
 
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Management conducted an assessment of MAA’s internal control over financial reporting as of December 31, 2016 using the framework specified in Internal Control - Integrated Framework (2013 framework) , published by the Committee of Sponsoring Organizations of the Treadway Commission. The scope of our efforts included all of our operations other than those that we acquired in the December 1, 2016 merger with Post Properties, Inc. In accordance with the SEC's published guidance, because we acquired these operations during our fiscal year, we excluded these operations from our efforts to comply with Section 404 of the Sarbanes-Oxley Act. Total assets as of December 31, 2016 and total revenues for the year ended December 31, 2016 related to the Post Properties operations were $4.7 billion and $33.5 million respectively. SEC rules require that we complete our assessment of the internal controls over financial reporting of the Post Properties operations within one year after the date of the acquisition. Based on such assessment, management has concluded that MAA’s internal control over financial reporting was effective as of December 31, 2016 .
 
The effectiveness of MAA’s internal control over financial reporting as of December 31, 2016 , has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is presented herein.



 

F-1


Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements

The Board of Directors and Shareholders of
Mid-America Apartment Communities, Inc.
 
We have audited the accompanying consolidated balance sheets of Mid-America Apartment Communities, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Mid-America Apartment Communities, Inc. at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method for reporting discontinued operations effective January 1, 2014.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 24, 2017 expressed an unqualified opinion thereon.



/s/ Ernst & Young LLP

Memphis, Tennessee
February 24, 2017

 


F-2


Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements

The Partners
Mid-America Apartments, L.P.

We have audited the accompanying consolidated balance sheets of Mid-America Apartments, L.P. (the “Partnership”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, changes in capital, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These consolidated financial statements and schedule are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Partnership’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Mid-America Apartments, L.P. at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, the Partnership changed its method for reporting discontinued operations effective January 1, 2014.

 



/s/ Ernst & Young LLP

Memphis, Tennessee
February 24, 2017


F-3



Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
 
The Board of Directors and Shareholders of
Mid-America Apartment Communities, Inc.
 
We have audited Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Mid-America Apartment Communities, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Post Properties, Inc., which is included in the 2016 consolidated financial statements of Mid-America Apartment Communities, Inc. and constituted $4.7 billion of total assets, as of December 31, 2016 and $33.5 million of revenues, for the year then ended. Our audit of internal control over financial reporting of Mid-America Apartment Communities, Inc. also did not include an evaluation of the internal control over financial reporting of Post Properties, Inc.

In our opinion, Mid-America Apartment Communities, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Mid-America Apartment Communities, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2016, of Mid-America Apartment Communities, Inc. and our report dated February 24, 2017, expressed an unqualified opinion thereon.


/s/ Ernst & Young LLP

Memphis, Tennessee
February 24, 2017


 


F-4



Mid-America Apartment Communities, Inc.
Consolidated Balance Sheets
December 31, 2016 and 2015
( Dollars in thousands, except share and per share data)
 
December 31, 2016
 
December 31, 2015
Assets:
 

 
 

Real estate assets:
 

 
 

Land
$
1,816,008

 
$
926,532

Buildings and improvements
10,523,762

 
6,939,288

Furniture, fixtures and equipment
298,204

 
228,157

Development and capital improvements in progress
231,224

 
44,355

 
12,869,198

 
8,138,332

Less accumulated depreciation
(1,656,071
)
 
(1,482,368
)
 
11,213,127

 
6,655,964

 
 
 
 
Undeveloped land
71,464

 
51,779

Corporate properties, net
12,778

 
8,812

Investments in real estate joint ventures
44,493

 
1,811

Real estate assets, net
11,341,862

 
6,718,366

 
 
 
 
Cash and cash equivalents
33,536

 
37,559

Restricted cash
88,264

 
26,082

Deferred financing costs, net
5,065

 
5,232

Other assets
134,525

 
58,935

Goodwill
1,239

 
1,607

Total assets
$
11,604,491

 
$
6,847,781

 
 
 
 
Liabilities and equity:
 

 
 

Liabilities:
 

 
 

Unsecured notes payable
$
3,180,624

 
$
2,141,332

Secured notes payable
1,319,088

 
1,286,236

Accounts payable
11,970

 
5,922

Fair market value of interest rate swaps
7,562

 
10,358

Accrued expenses and other liabilities
414,244

 
226,237

Security deposits
18,829

 
11,623

Total liabilities
4,952,317

 
3,681,708

 
 
 
 
Redeemable common stock
10,073

 
8,250

 
 
 
 
Shareholders' equity:
 

 
 

Preferred stock,   $0.01 par value per share, 20,000,000 shares authorized; 8.50% Series I Cumulative Redeemable Shares, liquidation preference $50 per share, 867,846 and 0 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively
9

 
—

Common stock, $0.01 par value per share, 145,000,000 shares authorized; 113,518,212 and 75,408,571 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively (1)
1,133

 
753

Additional paid-in capital
7,109,012

 
3,627,074

Accumulated distributions in excess of net income
(707,479
)
 
(634,141
)
Accumulated other comprehensive income (loss)
1,144

 
(1,589
)
Total MAA shareholders' equity
6,403,819

 
2,992,097

Noncontrolling interests - operating partnership units
235,976

 
165,726

Total Company's shareholders' equity
6,639,795

 
3,157,823

Noncontrolling interests - consolidated real estate entity
2,306

 
—

Total equity
6,642,101

 
3,157,823

Total liabilities and equity
$
11,604,491

 
$
6,847,781

(1)
Number of shares issued and outstanding represent total shares of common stock regardless of classification on the consolidated balance sheet. The number of shares classified as redeemable common stock on the consolidated balance sheet for December 31, 2016 and December 31, 2015 are 103,578 and 90,844 , respectively.
See accompanying notes to consolidated financial statements.

F-5


Mid-America Apartment Communities, Inc.
Consolidated Statements of Operations
Years ended December 31, 2016 , 2015 and 2014
( Dollars in thousands, except per share data)
 
2016
 
2015
 
2014
Operating revenues:
 

 
 

 
 

Rental revenues
$
1,033,609

 
$
952,196

 
$
902,177

Other property revenues
91,739

 
90,583

 
90,001

Total property revenues
1,125,348

 
1,042,779

 
992,178

Management fee income
—

 
—

 
154

Total operating revenues
1,125,348

 
1,042,779

 
992,332

Property operating expenses:
 

 
 

 
 

Personnel
106,745

 
103,000

 
101,591

Building repairs and maintenance
31,296

 
30,524

 
30,715

Real estate taxes and insurance
142,784

 
129,618

 
123,419

Utilities
93,000

 
89,769

 
89,150

Landscaping
19,816

 
19,458

 
20,113

Other operating
29,715

 
28,276

 
28,360

Depreciation and amortization
322,958

 
294,520

 
301,812

Total property operating expenses
746,314

 
695,165

 
695,160

Acquisition expenses
2,928

 
2,777

 
2,388

Property management expenses
34,093

 
30,990

 
32,095

General and administrative expenses
29,040

 
25,716

 
20,909

Merger related expenses
39,033

 
—

 
3,152

Integration related expenses
1,790

 
—

 
8,395

Income from continuing operations before non-operating items
272,150

 
288,131

 
230,233

Interest and other non-property income (expense)
724

 
(368
)
 
770

Interest expense
(129,947
)
 
(122,344
)
 
(123,953
)
Loss on debt extinguishment
(83
)
 
(3,602
)
 
(2,586
)
Net casualty gain (loss) after insurance and other settlement proceeds
448

 
473

 
(476
)
Gain on sale of depreciable real estate assets excluded from discontinued operations
80,397

 
189,958

 
42,649

Gain on sale of non-depreciable real estate assets
2,171

 
172

 
350

Income before income tax expense
225,860

 
352,420

 
146,987

Income tax expense
(1,699
)
 
(1,673
)
 
(2,050
)
Income from continuing operations before joint venture activity
224,161

 
350,747

 
144,937

Gain (loss) from real estate joint ventures
241

 
(2
)
 
6,009

Income from continuing operations
224,402

 
350,745

 
150,946

Discontinued operations:
 

 
 

 
 

Loss from discontinued operations before gain on sale
—

 
—

 
(63
)
Gain on sale of discontinued operations
—

 
—

 
5,394

Net income
224,402

 
350,745

 
156,277

Net income attributable to noncontrolling interests
12,180

 
18,458

 
8,297

Net income available for shareholders
212,222

 
332,287

 
147,980

Dividends to MAA Series I preferred shareholders
307

 
—

 
—

Net income available for MAA common shareholders
$
211,915

 
$
332,287

 
$
147,980

 
 
 
 
 
 
Earnings per common share - basic:
 

 
 

 
 

Income from continuing operations available for common shareholders
$
2.69

 
$
4.41

 
$
1.90

Discontinued property operations
—

 
—

 
0.07

Net income available for common shareholders
$
2.69

 
$
4.41

 
$
1.97

 
 
 
 
 
 
Earnings per common share - diluted:
 

 
 

 
 

Income from continuing operations available for common shareholders
$
2.69

 
$
4.41

 
$
1.90

Discontinued property operations
—

 
—

 
0.07

Net income available for common shareholders
$
2.69

 
$
4.41

 
$
1.97


See accompanying notes to consolidated financial statements.


F-6


Mid-America Apartment Communities, Inc.
Consolidated Statements of Comprehensive Income
Years ended December 31, 2016 , 2015 and 2014
( Dollars in thousands)

 
2016
 
2015
 
2014
Consolidated net income
$
224,402

 
$
350,745

 
$
156,277

Other Comprehensive Income:
 

 
 

 
 

Unrealized loss from the effective portion of derivative instruments
(1,500
)
 
(8,306
)
 
(12,335
)
Reclassification adjustment for losses included in net income for the
effective portion of derivative instruments
4,364

 
7,064

 
11,785

Total Comprehensive Income
227,266

 
349,503

 
155,727

Less: comprehensive income attributable to noncontrolling interests
(12,311
)
 
(18,393
)
 
(8,267
)
Comprehensive income attributable to MAA
$
214,955

 
$
331,110

 
$
147,460

 
See accompanying notes to consolidated financial statements.
 


F-7


Mid-America Apartment Communities, Inc.
Consolidated Statements of Equity
Years ended December 31, 2016 , 2015 and 2014
( Dollars in thousands, except per share and per unit data)
 
Mid-America Apartment Communities, Inc. Shareholders
 
Noncontrolling Interest Operating Partnership
 
Noncontrolling Interest - Consolidated Real Estate Entity
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional Paid-In Capital
 
Accumulated
Distributions in Excess of Net Income
 
Accumulated
Other Comprehensive Income (Loss)
 
 
 
 
 
 
 
Preferred Stock
 
Common Stock
 
 
 
 
 
 
Total Equity
 
Redeemable Stock
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
 
EQUITY BALANCE DECEMBER 31, 2013
—

 
$
—

 
74,748

 
$
747

 
$
3,599,549

 
$
(653,593
)
 
$
108

 
$
166,726

 
$
—

 
$
3,113,537

 
$
5,050

Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 

 
 

Net income attributable to controlling interest
 

 
 

 
 

 


 


 
147,980

 


 
8,297

 
 
 
156,277

 


Other comprehensive income - derivative instruments (cash flow hedges)
 

 
 

 
 

 


 


 


 
(520
)
 
(30
)
 
 
 
(550
)
 


Issuance and registration of common shares
 

 
 

 
138

 
2

 
1,040

 


 


 
—

 
 
 
1,042

 
874

Shares repurchased and retired
 

 
 

 
(12
)
 
—

 
(465
)
 


 


 


 
 
 
(465
)
 


Exercise of stock options
 

 
 

 
270

 
3

 
12,242

 


 


 


 
 
 
12,245

 


Shares issued in exchange for units
 

 
 

 
36

 
—

 
1,419

 


 


 
(1,419
)
 
 
 
—

 


Shares issued in exchange for redeemable stock
 
 
 
 
 
 
 
 
998

 
 
 
 
 
 
 
 
 
998

 
(998
)
Redeemable stock fair market value
 

 
 

 
 

 


 


 
(985
)
 


 


 
 
 
(985
)
 
985

Adjustment for Noncontrolling Interest Ownership in operating partnership
 

 
 

 
 

 


 
(144
)
 
 
 


 
144

 
 
 
—

 


Amortization of unearned compensation
 

 
 

 
 

 


 
4,631

 


 


 


 
 
 
4,631

 


Dividends on common stock ($2.9600 per share)
 

 
 

 
 

 


 


 
(222,488
)
 


 
 
 
 
 
(222,488
)
 


Dividends on noncontrolling interest units ($2.9600 per unit)
 
 
 

 
 

 


 


 


 


 
(12,431
)
 
 
 
(12,431
)
 


EQUITY BALANCE DECEMBER 31, 2014
—

 
$
—

 
75,180

 
$
752

 
$
3,619,270

 
$
(729,086
)
 
$
(412
)
 
$
161,287

 
$
—

 
$
3,051,811

 
$
5,911

Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 

 
 

Net income attributable to controlling interest
 

 
—

 
 

 
—

 
—

 
332,287

 
—

 
18,458

 
 
 
350,745

 
—

Other comprehensive income - derivative instruments (cash flow hedges)
 

 
—

 
 

 
—

 
—

 
—

 
(1,177
)
 
(65
)
 
 
 
(1,242
)
 
—

Issuance and registration of common shares
 

 
—

 
116

 
1

 
621

 
—

 
—

 
—

 
 
 
622

 
924

Shares repurchased and retired
 

 
—

 
(13
)
 
—

 
(958
)
 
—

 
—

 
—

 
 
 
(958
)
 
—

Exercise of stock options
 

 
—

 
7

 
—

 
420

 


 
—

 
—

 
 
 
420

 
—

Shares issued in exchange for units
 

 
—

 
28

 
—

 
1,121

 
—

 
—

 
(1,121
)
 
 
 
—

 
—

Redeemable stock fair market value
 

 
—

 
 

 
—

 
—

 
(1,415
)
 
—

 
—

 
 
 
(1,415
)
 
1,415

Adjustment for Noncontrolling Interest Ownership in operating partnership
 

 
—

 
 

 
—

 
(252
)
 
—

 
—

 
252

 
 
 
—

 
—

Amortization of unearned compensation
 

 
—

 
 

 
—

 
6,852

 
—

 
—

 
—

 
 
 
6,852

 
—

Dividends on common stock ($3.1300 per share)
 

 
—

 
 

 
—

 
—

 
(235,927
)
 
—

 
 
 
 
 
(235,927
)
 
—

Dividends on noncontrolling interest units ($3.1300 per unit)
 

 
—

 
 

 
—

 
—

 
—

 
—

 
(13,085
)
 
 
 
(13,085
)
 
—

EQUITY BALANCE DECEMBER 31, 2015
—

 
$
—

 
75,318

 
$
753

 
$
3,627,074

 
$
(634,141
)
 
$
(1,589
)
 
$
165,726

 
$
—

 
$
3,157,823

 
$
8,250

Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 

 
 

Net income attributable to controlling interest
 

 
—

 
 

 


 


 
212,222

 


 
12,180

 
 
 
224,402

 


Other comprehensive income - derivative instruments (cash flow hedges)
 

 
—

 
 

 


 


 


 
2,733

 
131

 
 
 
2,864

 


Issuance and registration of common shares
 

 
—

 
38,097

 
380

 
3,406,150

 


 


 
72,759

 
 
 
3,479,289

 
1,240

Issuance and registration of preferred shares
868

 
9

 
 
 
 
 
64,824

 
 
 
 
 
 
 
 
 
64,833

 
 
Shares repurchased and retired
 

 
—

 
(23
)
 
—

 
(2,019
)
 


 


 


 
 
 
(2,019
)
 


Shares issued in exchange for units
 

 
—

 
23

 
—

 
902

 


 


 
(902
)
 
 
 
—

 


Shares issued in exchange for redeemable stock
 
 
 
 
 
 
 
 
122

 
 
 
 
 
 
 
 
 
122

 
(122
)
Redeemable stock fair market value
 

 
—

 
 

 


 


 
(705
)
 


 


 
 
 
(705
)
 
705

Adjustment for Noncontrolling Interest Ownership in operating partnership
 

 
—

 
 

 


 
(192
)
 


 


 
192

 
 
 
—

 


Amortization of unearned compensation
 

 
—

 
 
 


 
12,151

 


 


 


 
 
 
12,151

 


Noncontrolling interest distribution
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(226
)
 
 
 
(226
)
 
 
Dividends on preferred stock
 
 
 
 
 
 
 
 
 
 
(307
)
 
 
 
 
 
 
 
(307
)
 
 
Dividends on common stock ($3.3300 per share)
 

 
—

 
 

 


 


 
(284,548
)
 


 
 
 
 
 
(284,548
)
 


Dividends on noncontrolling interest units ($3.3300 per unit)
 

 
—

 
 

 


 


 


 


 
(13,884
)
 
 
 
(13,884
)
 


Acquired Capital from noncontrolling interests - consolidated real estate entity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,306

 
2,306

 
 
EQUITY BALANCE DECEMBER 31, 2016
868

 
$
9

 
113,415

 
$
1,133

 
$
7,109,012

 
$
(707,479
)
 
$
1,144

 
$
235,976

 
$
2,306

 
$
6,642,101

 
$
10,073


F-8


Mid-America Apartment Communities, Inc.
Consolidated Statements of Cash Flows
Years ended December 31, 2016 , 2015 and 2014
( Dollars in thousands)
 
2016
 
2015
 
2014
Cash flows from operating activities:
 

 
 

 
 

Consolidated net income
$
224,402

 
$
350,745

 
$
156,277

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

 
 

Retail revenue accretion
(150
)
 
(1,083
)
 
(27
)
Depreciation and amortization
323,283

 
294,897

 
301,744

Stock compensation expense
11,486

 
6,147

 
4,226

Redeemable stock expense
557

 
924

 
874

Amortization of debt premium and debt issuance costs
(9,820
)
 
(15,515
)
 
(21,282
)
(Gain) loss from investments in real estate joint ventures
(241
)
 
6

 
(3,142
)
(Gain) loss on debt extinguishment
(56
)
 
2,855

 
2,586

Derivative interest credit
(2,806
)
 
(2,274
)
 
(3,084
)
Settlement of forward swaps
—

 
(1,908
)
 
(3,625
)
Gain on sale of non-depreciable real estate assets
(2,171
)
 
(172
)
 
(350
)
Gain on sale of depreciable real estate assets
(80,397
)
 
(189,958
)
 
(42,649
)
Gain on sale of discontinued operations
—

 
—

 
(5,394
)
Net casualty (gain) loss and other settlement proceeds
(448
)
 
(473
)
 
476

Changes in assets and liabilities:
 
 
 
 
 
Restricted cash
(315
)
 
2,091

 
(8,704
)
Other assets
9,822

 
12,475

 
2,013

Accounts payable
(24,232
)
 
(2,578
)
 
(3,348
)
Accrued expenses and other
34,458

 
6,307

 
7,543

Security deposits
667

 
1,235

 
1,244

Net cash provided by operating activities
484,039

 
463,721

 
385,378

Cash flows from investing activities:
 

 
 

 
 

Purchases of real estate and other assets
(339,186
)
 
(328,193
)
 
(309,174
)
Normal capital improvements
(80,392
)
 
(88,486
)
 
(90,201
)
Construction capital and other improvements
(7,338
)
 
(7,848
)
 
(7,998
)
Renovations to existing real estate assets
(37,316
)
 
(30,957
)
 
(21,089
)
Development
(58,931
)
 
(38,730
)
 
(70,788
)
Distributions from real estate joint ventures
1,999

 
6

 
15,964

Contributions to real estate joint ventures
—

 
(32
)
 
—

Proceeds from disposition of real estate assets
296,700

 
358,017

 
254,638

Funding of escrow for future acquisitions
(58,259
)
 
8

 
24,884

Acquisition of Post, net of cash acquired
(427,764
)
 
—

 
—

Net cash used in investing activities
(710,487
)
 
(136,215
)
 
(203,764
)
Cash flows from financing activities:
 

 
 

 
 

Net change in credit lines
335,000

 
(180,900
)
 
(157,184
)
Proceeds from notes payable
300,000

 
395,960

 
396,855

Principal payments on notes payable
(146,026
)
 
(279,077
)
 
(260,347
)
Payment of deferred financing costs
(2,395
)
 
(7,690
)
 
(4,992
)
Repurchase of common stock
(2,019
)
 
(958
)
 
(465
)
Proceeds from issuances of common shares
291

 
622

 
1,042

Exercise of stock options
—

 
420

 
12,245

Dividends paid on preferred shares
(924
)
 
—

 
—

Distributions to noncontrolling interests
(13,850
)
 
(12,898
)
 
(12,290
)
Dividends paid on common shares
(247,652
)
 
(232,079
)
 
(219,158
)
Net cash provided by (used in) financing activities
222,425

 
(316,600
)
 
(244,294
)
Net (decrease) increase in cash and cash equivalents
(4,023
)
 
10,906

 
(62,680
)
Cash and cash equivalents, beginning of period
37,559

 
26,653

 
89,333

Cash and cash equivalents, end of period
$
33,536

 
$
37,559

 
$
26,653

 
 
 
 
 
 
Supplemental disclosure of cash flow information:
 

 
 

 
 

Interest paid
$
144,843

 
$
140,811

 
$
146,202

Income taxes paid
$
1,582

 
$
2,103

 
$
1,596

Supplemental disclosure of noncash investing and financing activities:
 
 
 
 
 
Conversion of OP Units to shares of common stock
$
902

 
$
1,121

 
$
1,419

Accrued construction in progress
$
31,491

 
$
5,873

 
$
6,626

Interest capitalized
$
2,073

 
$
1,655

 
$
1,722

Mark-to-market adjustment on derivative instruments
$
5,670

 
$
2,963

 
$
6,159

Fair value adjustment on debt assumed
$
8,864

 
$
—

 
$
5,284

Loan assumption
$
586,744

 
$
—

 
$
93,049

Purchase price for Post merger
$
4,006,586

 
$
—

 
$
—

  See accompanying notes to consolidated financial statements.

F-9



Mid-America Apartments, L.P.
Consolidated Balance Sheets
December 31, 2016 and 2015
(Dollars in thousands, except unit data)
 
December 31, 2016
 
December 31, 2015
Assets:
 
 
 
Real estate assets:
 
 
 
Land
$
1,816,008

 
$
926,532

Buildings and improvements
10,523,762

 
6,939,288

Furniture, fixtures and equipment
298,204

 
228,157

Development and capital improvements in progress
231,224

 
44,355

 
12,869,198

 
8,138,332

Less accumulated depreciation
(1,656,071
)
 
(1,482,368
)
 
11,213,127

 
6,655,964

 
 
 
 
Undeveloped land
71,464

 
51,779

Corporate properties, net
12,778

 
8,812

Investments in real estate joint ventures
44,493

 
1,811

Real estate assets, net
11,341,862

 
6,718,366

 
 
 
 
Cash and cash equivalents
33,536

 
37,559

Restricted cash
88,264

 
26,082

Deferred financing costs, net
5,065

 
5,232

Other assets
134,525

 
58,935

Goodwill
1,239

 
1,607

Total assets
$
11,604,491

 
$
6,847,781

 
 
 
 
Liabilities and Capital:
 

 
 

Liabilities:
 

 
 

Unsecured notes payable
$
3,180,624

 
$
2,141,332

Secured notes payable
1,319,088

 
1,286,236

Accounts payable
11,970

 
5,922

Fair market value of interest rate swaps
7,562

 
10,358

Accrued expenses and other liabilities
414,244

 
226,237

Security deposits
18,829

 
11,623

Due to general partner
19

 
19

Total liabilities
4,952,336

 
3,681,727

 
 
 
 
Redeemable common units
10,073

 
8,250

 
 
 
 
Operating Partnership Capital:
 

 
 

Preferred Units: 867,846 Preferred Units outstanding at December 31, 2016 and 0 Preferred Units outstanding at December 31, 2015.
64,833

 
—

Common Units:
 
 
 
General partner: 113,518,212 OP Units outstanding at December 31, 2016 and 75,408,571 OP Units outstanding at December 31, 2015 (1)
6,337,721

 
2,993,696

Limited partners: 4,220,403 OP Units outstanding at December 31, 2016 and 4,162,996 OP Units outstanding at December 31, 2015 (1)
235,976

 
165,726

Accumulated other comprehensive income (loss)
1,246

 
(1,618
)
Total operating partners' capital
6,639,776

 
3,157,804

Noncontrolling interests - consolidated real estate entity
2,306

 
—

Total capital
6,642,082

 
3,157,804

Total liabilities and capital
$
11,604,491

 
$
6,847,781

(1)
Number of units outstanding represent total OP Units regardless of classification on the consolidated balance sheet. The number of units classified as redeemable common units on the consolidated balance sheet at December 31, 2016 and December 31, 2015 are 103,578 and 90,844 , respectively.

See accompanying notes to consolidated financial statements.

F-10


Mid-America Apartments, L.P.
Consolidated Statements of Operations
Years ended December 31, 2016 , 2015 , and 2014
(Dollars in thousands, except per unit data)
 
2016
 
2015
 
2014
Operating revenues:
 
 
 
 
 
Rental revenues
$
1,033,609

 
$
952,196

 
$
902,177

Other property revenues
91,739

 
90,583

 
90,001

Total property revenues
1,125,348

 
1,042,779

 
992,178

Management fee income
—

 
—

 
154

Total operating revenues
1,125,348

 
1,042,779

 
992,332

Property operating expenses:
 

 
 

 
 

Personnel
106,745

 
103,000

 
101,591

Building repairs and maintenance
31,296

 
30,524

 
30,715

Real estate taxes and insurance
142,784

 
129,618

 
123,419

Utilities
93,000

 
89,769

 
89,150

Landscaping
19,816

 
19,458

 
20,113

Other operating
29,715

 
28,276

 
28,360

Depreciation and amortization
322,958

 
294,520

 
301,812

Total property operating expenses
746,314

 
695,165

 
695,160

Acquisition expenses
2,928

 
2,777

 
2,388

Property management expenses
34,093

 
30,990

 
32,095

General and administrative expenses
29,040

 
25,716

 
20,909

Merger related expenses
39,033

 
—

 
3,152

Integration related expenses
1,790

 
—

 
8,395

Income from continuing operations before non-operating items
272,150

 
288,131

 
230,233

Interest and other non-property income (expense)
724

 
(368
)
 
770

Interest expense
(129,947
)
 
(122,344
)
 
(123,953
)
Loss on debt extinguishment
(83
)
 
(3,602
)
 
(2,586
)
Net casualty gain (loss) after insurance and other settlement proceeds
448

 
473

 
(476
)
Gain on sale of depreciable real estate assets excluded from discontinued operations
80,397

 
189,958

 
42,649

Gain on sale of non-depreciable real estate assets
2,171

 
172

 
350

Income before income tax expense
225,860

 
352,420

 
146,987

Income tax expense
(1,699
)
 
(1,673
)
 
(2,050
)
Income from continuing operations before joint venture activity
224,161

 
350,747

 
144,937

Gain (loss) from real estate joint ventures
241

 
(2
)
 
6,009

Income from continuing operations
224,402

 
350,745

 
150,946

Discontinued operations:
 

 
 

 
 

Loss from discontinued operations before gain on sale
—

 
—

 
(63
)
Gain on sale of discontinued operations
—

 
—

 
5,394

Net income
224,402

 
350,745

 
156,277

Dividends to preferred unitholders
307

 
—

 
—

Net income available for Mid-America Apartments, L.P. common unitholders
$
224,095

 
$
350,745

 
$
156,277

 
 
 
 
 
 
Earnings per common unit - basic:
 

 
 

 
 

Income from continuing operations available for common unitholders
$
2.70

 
$
4.41

 
$
1.90

Income from discontinued operations available for common unitholders
—

 
—

 
0.07

Net income available for common unitholders
$
2.70

 
$
4.41

 
$
1.97

 
 
 
 
 
 
Earnings per common unit - diluted:
 

 
 

 
 

Income from continuing operations available for common unitholders
$
2.70

 
$
4.41

 
$
1.90

Income from discontinued operations available for common unitholders
—

 
—

 
0.07

Net income available for common unitholders
$
2.70

 
$
4.41

 
$
1.97


See accompanying notes to consolidated financial statements.


F-11


Mid-America Apartments, L.P.
Consolidated Statements of Comprehensive Income
Years ended December 31, 2016 , 2015 , and 2014
(Dollars in thousands)
 
2016
 
2015
 
2014
Consolidated net income
$
224,402

 
$
350,745

 
$
156,277

Other comprehensive income:
 
 
 
 
 
Unrealized loss from the effective portion of derivative instruments
(1,500
)
 
(8,306
)
 
(12,335
)
Reclassification adjustment for losses included in net income for the effective portion of derivative instruments
4,364

 
7,064

 
11,785

Comprehensive income attributable to Mid-America Apartments, L.P.
$
227,266

 
$
349,503

 
$
155,727

 
 
 
 
 
 
See accompanying notes to consolidated financial statements.


F-12


Mid-America Apartments, L.P.
Consolidated Statements of Changes in Capital
Years ended December 31, 2016 , 2015 and 2014
( Dollars in thousands, except per unit data)

  
 
Mid-America Apartments, L.P. Unitholders
 
Noncontrolling Interest - Consolidated Real Estate Entity
Total Partnership Capital
Redeemable Units
 
 
Limited Partner
 
General Partner
 
Preferred Units
 
Accumulated
Other
Comprehensive
Income (Loss)
 
CAPITAL BALANCE DECEMBER 31, 2013
 
$
166,746

 
$
2,946,598

 
$
—

 
$
174

 
$
—

$
3,113,518

$
5,050

Net income
 
8,297

 
147,980

 
—

 
—

 
—

156,277

—

Other comprehensive income - derivative instruments (cash flow hedges)
 
—

 
—

 
—

 
(550
)
 
—

(550
)
—

Issuance of units
 
—

 
1,042

 
—

 
—

 
—

1,042

874

Units repurchased and retired
 
—

 
(465
)
 
—

 
—

 
—

(465
)
—

Exercise of unit options
 
—

 
12,245

 
—

 
—

 
—

12,245

—

General partner units issued in exchange for limited partner units
 
(1,419
)
 
1,419

 
—

 
—

 
—

—

—

Units issued in exchange for redeemable units
 
 
 
998

 
—

 
—

 
—

998

(998
)
Redeemable units fair market value adjustment
 
—

 
(985
)
 
—

 
—

 
 
(985
)
985

Adjustment for limited partners' capital at redemption value
 
117

 
(117
)
 
—

 
—

 
—

—

—

Amortization of unearned compensation
 
—

 
4,631

 
—

 
—

 
—

4,631

—

Distributions ($2.9600 per unit)
 
(12,431
)
 
(222,488
)
 
—

 
—

 
—

(234,919
)
—

CAPITAL BALANCE DECEMBER 31, 2014
 
$
161,310

 
$
2,890,858

 
$
—

 
$
(376
)
 
$
—

$
3,051,792

$
5,911

Net income
 
18,458

 
332,287

 
—

 
—

 
—

350,745

—

Other comprehensive income - derivative instruments (cash flow hedges)
 
—

 
—

 
—

 
(1,242
)
 
—

(1,242
)
—

Issuance of units
 
—

 
622

 
—

 
—

 
—

622

924

Units repurchased and retired
 
—

 
(958
)
 
—

 
—

 
—

(958
)
—

Exercise of unit options
 
—

 
420

 
—

 
—

 
—

420

—

General partner units issued in exchange for limited partner units
 
(1,121
)
 
1,121

 
—

 
—

 
—

—

—

Units issued in exchange for redeemable units
 
—

 
—

 
—

 
—

 
—

—

—

Redeemable units fair market value adjustment
 
—

 
(1,415
)
 
—

 
—

 
—

(1,415
)
1,415

Adjustment for limited partners' capital at redemption value
 
164

 
(164
)
 
—

 
—

 
—

—

—

Amortization of unearned compensation
 
—

 
6,852

 
—

 
—

 
—

6,852

—

Distributions ($3.1300 per unit)
 
(13,085
)
 
(235,927
)
 
—

 
—

 
—

(249,012
)
—

CAPITAL BALANCE DECEMBER 31, 2015
 
$
165,726

 
$
2,993,696

 
$
—

 
$
(1,618
)
 
$
—

$
3,157,804

$
8,250

Net income
 
12,180

 
211,915

 
307

 
—

 
—

224,402

—

Other comprehensive income - derivative instruments (cash flow hedges)
 
—

 
—

 
—

 
2,864

 
—

2,864

—

Issuance of units
 
72,759

 
3,406,530

 
64,833

 
—

 
—

3,544,122

1,240

Units repurchased and retired
 
—

 
(2,019
)
 
—

 
—

 
—

(2,019
)
—

Exercise of unit options
 
—

 
—

 
—

 
—

 
—

—

—

General partner units issued in exchange for limited partner units
 
(902
)
 
902

 
—

 
—

 
—

—

—

Units issued in exchange for redeemable units
 
—

 
122

 
—

 
—

 
—

122

(122
)
Redeemable units fair market value adjustment
 
—

 
(705
)
 
—

 
—

 
—

(705
)
705

Adjustment for limited partners' capital at redemption value
 
323

 
(323
)
 
—

 
—

 
—

—

—

Amortization of unearned compensation
 
—

 
12,151

 
—

 
—

 
—

12,151

—

Noncontrolling Interest Distribution
 
(226
)
 
 
 
 
 
 
 
 
(226
)
 
Distributions to preferred unitholders
 
—

 
—

 
(307
)
 
—

 
—

(307
)
—

Distributions ($3.3300 per unit)
 
(13,884
)
 
(284,548
)
 
—

 
—

 
—

(298,432
)
—

Acquired Capital from noncontrolling interests - consolidated real estate entity
 
—

 
—

 
—

 
—

 
2,306

2,306

—

CAPITAL BALANCE December 31, 2016
 
$
235,976

 
$
6,337,721

 
$
64,833

 
$
1,246

 
$
2,306

$
6,642,082

$
10,073









F-13


Mid-America Apartments, L.P.
Consolidated Statements of Cash Flows
Years ended December 31, 2016 , 2015 , and 2014
(Dollars in thousands)
 
2016
 
2015
 
2014
Cash flows from operating activities:
 
 
 
 
 
Consolidated net income
$
224,402

 
$
350,745

 
$
156,277

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

 
 

Retail revenue accretion
(150
)
 
(1,083
)
 
(27
)
Depreciation and amortization
323,283

 
294,897

 
301,744

Stock compensation expense
11,486

 
6,147

 
4,226

Redeemable units expense
557

 
924

 
874

Amortization of debt premium and debt issuance costs
(9,820
)
 
(15,515
)
 
(21,282
)
(Gain) loss from investments in real estate joint ventures
(241
)
 
6

 
(3,142
)
(Gain) loss on debt extinguishment
(56
)
 
2,855

 
2,586

Derivative interest credit
(2,806
)
 
(2,274
)
 
(3,084
)
Settlement of forward swaps
—

 
(1,908
)
 
(3,625
)
Gain on sale of non-depreciable real estate assets
(2,171
)
 
(172
)
 
(350
)
Gain on sale of depreciable real estate assets
(80,397
)
 
(189,958
)
 
(42,649
)
Gain on sale of discontinued operations
—

 
—

 
(5,394
)
Net casualty (gain) loss and other settlement proceeds
(448
)
 
(473
)
 
476

Changes in assets and liabilities:
 
 
 
 
 
Restricted cash
(315
)
 
2,091

 
(8,704
)
Other assets
9,822

 
12,475

 
2,013

Accounts payable
(24,232
)
 
(2,578
)
 
(3,348
)
Accrued expenses and other
34,458

 
6,307

 
7,543

Security deposits
667

 
1,235

 
1,244

Net cash provided by operating activities
484,039

 
463,721

 
385,378

Cash flows from investing activities:
 

 
 

 
 

Purchases of real estate and other assets
(339,186
)
 
(328,193
)
 
(309,174
)
Normal capital improvements
(80,392
)
 
(88,486
)
 
(90,201
)
Construction capital and other improvements
(7,338
)
 
(7,848
)
 
(7,998
)
Renovations to existing real estate assets
(37,316
)
 
(30,957
)
 
(21,089
)
Development
(58,931
)
 
(38,730
)
 
(70,788
)
Distributions from real estate joint ventures
1,999

 
6

 
15,964

Contributions to real estate joint ventures
—

 
(32
)
 
—

Proceeds from disposition of real estate assets
296,700

 
358,017

 
254,638

Funding of escrow for future acquisitions
(58,259
)
 
8

 
24,884

Acquisition of Post, net of cash acquired
(427,764
)
 
—

 
—

Net cash used in investing activities
(710,487
)
 
(136,215
)
 
(203,764
)
Cash flows from financing activities:
 

 
 

 
 

Net change in credit lines
335,000

 
(180,900
)
 
(157,184
)
Proceeds from notes payable
300,000

 
395,960

 
396,855

Principal payments on notes payable
(146,026
)
 
(279,077
)
 
(260,347
)
Payment of deferred financing costs
(2,395
)
 
(7,690
)
 
(4,992
)
Repurchase of common units
(2,019
)
 
(958
)
 
(465
)
Distributions paid on preferred units
(924
)
 
—

 
—

Proceeds from issuances of common units
291

 
622

 
1,042

Exercise of unit options
—

 
420

 
12,245

Distributions paid on common units
(261,502
)
 
(244,977
)
 
(231,448
)
Net cash provided by (used in) financing activities
222,425

 
(316,600
)
 
(244,294
)
Net (decrease) increase in cash and cash equivalents
(4,023
)
 
10,906

 
(62,680
)
Cash and cash equivalents, beginning of period
37,559

 
26,653

 
89,333

Cash and cash equivalents, end of period
$
33,536

 
$
37,559

 
$
26,653

 
 
 
 
 
 
Supplemental disclosure of cash flow information:
 

 
 

 
 

Interest paid
$
144,843

 
$
140,811

 
$
146,202

Income taxes paid
$
1,582

 
$
2,103

 
$
1,596

Supplemental disclosure of noncash investing and financing activities:
 
 
 
 
 
Accrued construction in progress
$
31,491

 
$
5,873

 
$
6,626

Interest capitalized
$
2,073

 
$
1,655

 
$
1,722

Mark-to-market adjustment on derivative instruments
$
5,670

 
$
2,963

 
$
6,159

Fair value adjustment on debt assumed
$
8,864

 
$
—

 
$
5,284

Loan assumption
$
586,744

 
$
—

 
$
93,049

Purchase price for Post merger
$
4,006,586

 
$
—

 
$
—

See accompanying notes to consolidated financial statements.

F-14


Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.
Notes to Consolidated Financial Statements
Years ended December 31, 2016 , 2015 , and 2014
 
1.
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Unless the context otherwise requires, all references to "we," "us," "our," or the "Company" refer collectively to Mid-America Apartment Communities, Inc., together with its consolidated subsidiaries, including Mid-America Apartments, L.P. Unless the context otherwise requires, all references to “MAA” refers only to Mid-America Apartment Communities, Inc., and not any of its consolidated subsidiaries. Unless the context otherwise requires, the references to the “Operating Partnership” or “MAALP” refer to Mid-America Apartments, L.P. together with its consolidated subsidiaries. “Common stock” refers to the common stock of MAA and “shareholders” means the holders of shares of MAA’s common stock. The limited partnership interests of the Operating Partnership are referred to as “OP Units” or "common units" and the holders of the OP Units are referred to as “unitholders”.

As of December 31, 2016 , MAA owned 113,518,212 OP Units (or approximately 96.4% ) of the limited partnership interests of the Operating Partnership. MAA conducts substantially all of its business and holds substantially all of its assets through the Operating Partnership, and by virtue of its ownership of the OP Units and being the Operating Partnership's sole general partner, MAA has the ability to control all of the day-to-day operations of the Operating Partnership.

We believe combining the notes to the consolidated financial statements of MAA and MAALP results in the following benefits:

•
enhances a readers' understanding of MAA and the Operating Partnership by enabling the reader to view the business as a whole in the same manner that management views and operates the business;
•
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both MAA and the Operating Partnership.

Management operates MAA and the Operating Partnership as one business. The management of the Company is comprised of individuals who are officers of MAA and employees of the Operating Partnership. We believe it is important to understand the few differences between MAA and the Operating Partnership in the context of how MAA and the Operating Partnership operate as a consolidated company. MAA and the Operating Partnership are structured as an "umbrella partnership REIT," or UPREIT. MAA's interest in the Operating Partnership entitles MAA to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to MAA's percentage interest therein and entitles MAA to vote on substantially all matters requiring a vote of the partners. MAA's only material asset is its ownership of limited partner interests in the Operating Partnership; therefore, MAA does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. The Operating Partnership holds, directly or indirectly, all of our real estate assets. Except for net proceeds from public equity issuances by MAA, which are contributed to the Operating Partnership in exchange for OP Units, the Operating Partnership generates the capital required by our business through the Operating Partnership's operations, direct or indirect incurrence of indebtedness and issuance of OP units.

The presentation of MAA's shareholders' equity and the Operating Partnership's capital are the principal areas of difference between the consolidated financial statements of MAA and those of the Operating Partnership. MAA's shareholders' equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative distributions, noncontrolling interest, preferred units, treasury shares, accumulated other comprehensive income and redeemable common units. The Operating Partnership's capital may include common capital and preferred capital of the general partner (MAA), limited partners' preferred capital, limited partners' noncontrolling interest, accumulated other comprehensive income and redeemable common units. Redeemable common units represent the number of outstanding OP Units as of the date of the applicable balance sheet, valued at the greater of the closing market price of MAA's common stock or the aggregate value of the individual partners' capital balances. Holders of OP Units (other than MAA and its corporate affiliates) may require us to redeem their OP Units from time to time, in which case we may, at our option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA's common stock on the New York Stock Exchange over a specified period prior to the redemption date) or by delivering one share of our common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.

Organization of Mid-America Apartment Communities, Inc.
 
On December 1, 2016, MAA completed its previously announced merger with Post Properties. Pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), Post Properties merged with and into MAA, with MAA continuing as the surviving

F-15


corporation (the "Parent Merger"), and Post LP merged with and into MAALP, with MAALP continuing as the surviving entity (the "Partnership Merger"). We refer to the Parent Merger, together with the Partnership Merger, as the Merger in this Annual Report on Form 10-K. Under the terms of the Merger Agreement, each share of Post Properties common stock was converted into the right to receive 0.71 of a newly issued share of MAA common stock including the right, if any, to receive cash in lieu of fractional shares of MAA common stock. In addition, each limited partner interest in Post LP designated as a "Class A Unit" automatically converted into the right to receive 0.71 of a newly issued partnership unit of MAALP. Also, each share of Post Properties Series A Preferred Stock was automatically converted into the right to receive one newly issued share of MAA's 8.50% Series I Cumulative Redeemable Preferred Stock, $0.01 par value per share, which we refer to as MAA Series I preferred stock. Each newly issued share of MAA Series I preferred stock has the same rights, preferences, privileges, and voting powers as those of the Post Properties Series A preferred stock.

The net assets and results of operations of Post Properties are included in our consolidated financial statements from the closing date, December 1, 2016, through December 31, 2016, the end of our fiscal year. See further discussion surrounding the Merger in Note 2 (Business Combinations) below.

As of December 31, 2016, we owned and operated 302 apartment communities through the Operating Partnership. As of December 31, 2016 , MAA also owned a 35.0% interest in an unconsolidated real estate joint venture.

As of December 31, 2016 , we had nine development communities under construction totaling 2,816 units, with 700 units completed. Total expected costs for the development projects are $561.8 million , of which $366.5 million had been incurred to date. We expect to complete construction on four projects by the second quarter of 2017, two projects by the fourth quarter of 2017, two projects by the first quarter of 2018, and one project by the third quarter of 2018. Twenty-nine of our multifamily properties include retail components with approximately 601,000 square feet of gross leasable area. We also have four wholly owned commercial properties, which we acquired through the Merger, with approximately 269,000 square feet of gross leasable area.

Basis of Presentation and Principles of Consolidation
 
The accompanying consolidated financial statements have been prepared by our management in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or the SEC. The consolidated financial statements of MAA presented herein include the accounts of MAA, the Operating Partnership, and all other subsidiaries in which MAA has a controlling financial interest. MAA owns approximately 92.5% to 100% of all consolidated subsidiaries. The consolidated financial statements of MAALP presented herein include the accounts of MAALP and all other subsidiaries in which MAALP has a controlling financial interest. MAALP owns, directly or indirectly, 100% of all consolidated subsidiaries. In our opinion, all adjustments necessary for a fair presentation of the consolidated financial statements have been included, and all such adjustments were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation.
 
We invest in entities which may qualify as variable interest entities, or VIE. A VIE is a legal entity in which the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack the power to direct the activities of a legal entity as well as the obligation to absorb its expected losses or the right to receive its expected residual returns. We consolidate all VIEs for which we are the primary beneficiary and use the equity method to account for investments that qualify as VIEs but for which we are not the primary beneficiary. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including but not limited to, those activities that most significantly impact the VIE's economic performance and which party controls such activities.

Effective January 1, 2016, we adopted ASU 2015-02, Consolidation: Topic 810, which resulted in the Operating Partnership now being classified as a VIE, since the limited partners of both entities lack substantive kick-out rights and substantive participating rights. The adoption of the new standard did not result in the consolidation of entities not previously consolidated or the de-consolidation of any entities previously consolidated. We are the primary beneficiary of, and continue to consolidate, both entities, and there was no material effect on our financial position or results of operations as a result of this adoption. See , "Recent Accounting Pronouncements", below, for further details on the adoption of this standard.

We use the equity method of accounting for our investments in entities for which we exercise significant influence, but do not have the ability to exercise control. The factors considered in determining that we do not have the ability to exercise control include ownership of voting interests and participatory rights of investors. (see "Investment in Unconsolidated Real Estate Joint Ventures", below)


F-16


Noncontrolling interests

At December 31, 2016, the Company had two types of noncontrolling interests, (1) noncontrolling interests related to the common unitholders of its Operating Partnership (see note 11) and (2) noncontrolling interests related to its consolidated real estate entities (see "Investment in Consolidated Real Estate Joint Ventures", below).

Use of Estimates
 
Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses to prepare these financial statements and notes in conformity with GAAP. Actual results could differ from those estimates.
 
Revenue Recognition and Real Estate Sales
 
We primarily lease multifamily residential apartments under operating leases generally with terms of one year or less. Rental revenues are recognized using a method that represents a straight-line basis over the term of the lease and other revenues are recorded when earned. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt.

We record gains and losses on real estate sales in accordance with accounting standards governing the sale of real estate. For sale transactions meeting the requirements for the full accrual method, we remove the assets and liabilities from our Consolidated Balance Sheets and record the gain or loss in the period the transaction closes.

Rental Costs
 
Costs associated with rental activities, including advertising costs, are expensed as incurred. Advertising expenses were approximately $13.0 million , $13.5 million , and $12.4 million for the years ended December 31, 2016 , 2015 , and 2014 , respectively.

Discontinued Operations

Prior to our January 2014 adoption of ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, properties sold during the year or those classified as held-for-sale at the end of a reporting period were classified as discontinued operations in accordance with accounting standards governing financial statement presentation. Subsequent to our adoption of this ASU on January 1, 2014, only dispositions representing significant changes in operating strategy are classified as discontinued operations. Once a property is classified as held-for-sale, depreciation is no longer recognized.

Real Estate Assets and Depreciation and Amortization
 
Real estate assets are carried at depreciated cost. Repairs and maintenance costs are expensed as incurred while significant improvements, renovations, and recurring capital replacements are capitalized. Recurring capital replacements typically include scheduled carpet replacement, new roofs, HVAC units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. In addition to these costs, we also capitalize salary costs directly identifiable with renovation work. These expenditures extend the useful life of the property and increase the property’s fair market value. The cost of interior painting, vinyl flooring and blinds are expensed as incurred.
 
Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which range from 8 to 40 years for land improvements and buildings, 5 years for furniture, fixtures and equipment, and 3 to 5 years for computers and software.
 
Development Costs

Development projects and the related carrying costs, including interest, property taxes, insurance and allocated direct development salary cost during the construction period, are capitalized and reported in the accompanying Consolidated Balance Sheets as “Development and capital improvements in progress” during the construction period. Interest is capitalized in accordance with accounting standards governing the capitalization of interest. Upon completion and certification for occupancy of individual buildings within a development, amounts representing the completed building's portion of total estimated development costs for the project are transferred to "Land", "Buildings", and "Furniture, fixtures and equipment" as real estate

F-17


held for investment. Capitalization of interest, property taxes, insurance and allocated direct development salary costs cease upon the transfer. The assets are depreciated over their estimated useful lives. Total interest capitalized during the years ended December 31, 2016 , 2015 and 2014 was approximately $2.1 million , $1.7 million , and $1.7 million , respectively. Indirect costs other than interest that we capitalized included capitalized salaries of $0.3 million , $0.4 million , and $1.7 million during the years ended December 31, 2016 , 2015 and 2014 , respectively, and real estate taxes of $0.3 million , $0.2 million , and $0.2 million during the years ended December 31, 2016 , 2015 and 2014 , respectively.

Certain costs associated with the lease-up of development projects, including cost of model units, their furnishings, signs, and “grand openings,” are capitalized and amortized over their respective estimated useful lives. All other costs relating to renting development projects are expensed as incurred.
 
Acquisition of Real Estate Assets
 
In accordance with accounting standards for business combinations, the fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, building, furniture, fixtures and equipment, and identified intangible assets, consisting of the value of in-place leases and other contracts.
 
We allocate the purchase price to the fair value of the tangible assets of an acquired property determined by valuing the building as if it were vacant, based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a building using methods similar to those used by independent appraisers. These methods include using stabilized net operating income, or NOI, and market specific capitalization and discount rates.

In allocating the fair value of identified intangible assets of an acquired property, the in-place leases are valued based on current rent rates and time and cost to lease a unit. Management concluded that the residential leases acquired in connection with each of its property acquisitions are approximately at market rates since the residential lease terms generally do not extend beyond one year.

For larger, portfolio style acquisitions, like the Merger, management engages a third party valuation specialist to perform the fair value assessment, which includes an allocation of the purchase price. Similar to management's methods, the third party uses cash flow analysis as well as an income approach and a market approach to determine the fair value of assets. The third party uses stabilized NOI and market specific capitalization and discount rates. Management reviews the inputs used by the third party specialist as well as the allocation of the purchase price provided by the third party to ensure reasonableness and that the procedures are performed in accordance with management's policy. The initial allocation of the purchase price is based on management’s preliminary assessment, which may differ when final information becomes available. Subsequent adjustments made to the initial purchase price allocation, if any, are made within the allocation period, which typically does not exceed one year.

For residential leases, the fair value of the in-place leases and resident relationships is then amortized over 6 months, the estimated remaining term of the resident leases. For commercial leases, the fair value of in-place leases and resident relationships is amortized over the remaining term of the commercial leases. The amount of these lease intangibles included in Other assets totaled $42.4 million , $6.1 million , and $8.3 million as of December 31, 2016 , 2015 , and 2014 , respectively. Accumulated amortization for these leases totaled $7.3 million , $2.3 million , and $1.8 million as of December 31, 2016 , 2015 and 2014 , respectively. The amortization recorded as depreciation and amortization expense was $8.7 million , $5.0 million , and $24.5 million for the years ended December 31, 2016 , 2015 , and 2014 , respectively. The estimated aggregate future amortization expense of in-place leases is approximately $28.7 million , $2.0 million , $1.6 million , $0.8 million , and $0.5 million for the years ended December 31, 2017, 2018, 2019, 2020, and 2021, respectively.

Our policy is to expense the costs incurred to acquire properties in the period these costs are incurred. Acquisition costs include appraisal fees, title fees, broker fees, and other legal costs to acquire the property. These costs are recorded in our Consolidated Statement of Operations under the line "Acquisition expenses".

Impairment of Long-lived Assets, including Goodwill
 
We account for long-lived assets in accordance with the provisions of accounting standards for the impairment or disposal of long-lived assets and evaluate our goodwill for impairment under accounting standards for goodwill and other intangible assets. We evaluate goodwill for impairment on at least an annual basis, or more frequently if a goodwill impairment indicator is identified. We periodically evaluate long-lived assets, including investments in real estate and goodwill, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions and legal factors.

F-18


 Long-lived assets, such as real estate assets, equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented on the Consolidated Balance Sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group or a property classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.
 
Goodwill is tested annually for impairment and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss for goodwill is recognized to the extent that the carrying amount exceeds the implied fair value of goodwill. This determination is made at the reporting unit level and consists of two steps. First, we determine the fair value of a reporting unit and compare it to its carrying amount. In the apartment industry, the primary method used for determining fair value is to divide annual operating cash flows by an appropriate capitalization rate. We determine the appropriate capitalization rate by reviewing the prevailing rates in a property’s market or submarket. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation in accordance with accounting standards for business combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. There has been no impairment of goodwill in the three year period ended December 31, 2016 .

Goodwill decreased from $1.6 million at December 31, 2015 to $1.2 million at December 31, 2016 as a result of the disposition of the Corners at Crystal Lake apartment community on August 18, 2016. Goodwill decreased from $2.3 million at December 31, 2014 to $1.6 million at December 31, 2015 as a result of the disposition of the Post House Jackson, Post House North, and Oaks apartment communities on April 29, 2015.

Loss Contingencies

The outcomes of claims, disputes and legal proceedings are subject to significant uncertainty. We record an accrual for loss contingencies when a loss is probable and the amount of the loss can be reasonably estimated. We review these accruals quarterly and make revisions based on changes in facts and circumstances. When a loss contingency is not both probable and reasonably estimable, we do not accrue the loss. However, if the loss (or an additional loss in excess of the accrual) is at least a reasonable possibility and material, then we disclose a reasonable estimate of the possible loss, or range of loss, if such reasonable estimate can be made. If we cannot make a reasonable estimate of the possible loss, or range of loss, then a statement to that effect is disclosed.

The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or range of loss is reasonably estimable, often involves a series of complex judgments about future events. Among the factors that we consider in this assessment, are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if reasonably estimable), the progress of the matter, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar matters, the facts available to us at the time of assessment, and how we intend to respond, or have responded, to the proceeding or claim. Our assessment of these factors may change over time as individual proceedings or claims progress. For matters where we are not currently able to reasonably estimate a range of reasonably possible loss, the factors that have contributed to this determination include the following: (i) the damages sought are indeterminate; (ii) the proceedings are in the early stages; (iii) the matters involve novel or unsettled legal theories or a large or uncertain number of actual or potential cases or parties; and/or (iv) discussions with the parties in matters that are expected ultimately to be resolved through negotiation and settlement have not reached the point where we believe a reasonable estimate of loss, or range of loss, can be made. In such instances, we believe that there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss or business impact, if any.

Undeveloped Land
 
Undeveloped land includes sites intended for future multifamily developments, sites for future commercial development and sites intended for residential use, which are carried at the lower of cost or fair value in accordance with GAAP and any costs incurred prior to commencement of pre-development activities are expensed as incurred.
 



F-19


Investment in Unconsolidated Real Estate Joint Ventures

Immediately prior to the effective date of the Merger, Post Properties was an investor in a limited liability company, together with institutional investors that owned one apartment community located in Washington, D.C, or the Apartment LLC.  Post Properties had a 35.0% equity interest in this unconsolidated joint venture, which MAA retained immediately following the effectiveness of the Merger and as of December 31, 2016. MAA provides property and asset management services to the Apartment LLC for which it earns fees.

This joint venture was determined to be a variable interest entity, but we are not designated as a primary beneficiary. As a result, we account for our investment in the Apartment LLC using the equity method of accounting as we are able to exert significant influence, but do not have a controlling interest in this joint venture.  At December 31, 2016 , our investment in the 35.0% owned Apartment LLC totaled $44.5 million .  

Investment in Consolidated Real Estate Joint Ventures

In 2015, Post Properties entered into a joint venture arrangement with a private real estate company to develop, construct and operate a 358 -unit apartment community in Denver, Colorado. At December 31, 2016 , we owned a 92.5% equity interest in the consolidated joint venture. In 2015, this joint venture acquired the land site and initiated the development of the community. The venture partner will generally be responsible for the development and construction of the community and MAA will continue to manage the community upon its completion. This joint venture was determined to be a variable interest entity with us designated as the primary beneficiary. As a result, the accounts of the joint venture are consolidated by us. At December 31, 2016 , our consolidated assets, liabilities and equity included construction in progress of $30.0 million, land of $13.4 million, cash and cash equivalents of $0.6 million, and accounts payable and accrued expenses of $6.7 million.

Cash and Cash Equivalents
 
We consider investments in money market accounts and certificates of deposit with original maturities of three months or less to be cash equivalents.
 
Restricted Cash
 
Restricted cash consists of security deposits required to be held separately, escrow deposits held by lenders for property taxes, insurance, debt service, and replacement reserves, and exchanges under Section 1031(b) of the Internal Revenue Code of 1986, as amended, or the Code. Section 1031(b) exchanges are treated as investing activities in the Consolidated Statement of Cash Flows.

Deferred Financing Costs
 
Deferred financing costs are amortized over the terms of the related debt using a method which approximates the effective interest method. If the terms of renewed or modified debt instruments are deemed to be substantially different, all unamortized financing costs associated with the modified debt are charged to earnings in the current period. If the terms are not substantially different, the costs associated with the renewal are capitalized and amortized over the remaining term of the debt instrument. For modifications affecting a line of credit, fees paid to a creditor and any third party costs will be capitalized and amortized over the remaining term of the new arrangement. Any unamortized deferred financing costs associated with the old arrangement are either deferred and amortized over the life of the new arrangement or written off, depending upon the nature of the modification and cost. The balance of any unamortized financing costs on extinguished debt is expensed upon extinguishment.
 
Other Assets
 
Other assets consist primarily of deferred rental concessions which are recognized on a straight line basis over the life of the leases, receivables and deposits from residents, the value of derivative contracts and other prepaid expenses including prepaid insurance and prepaid interest. Also included in other assets are the fair market value of in place leases and resident relationships, net of accumulated amortization, which totaled $35.0 million and $3.8 million as of December 31, 2016 and 2015 , respectively.





F-20


Accrued Expenses and Other Liabilities
 
Accrued expenses consist of accrued dividends payable, accrued real estate taxes, accrued interest payable, accrued loss contingencies, other accrued expenses payable, and unearned income. Significant accruals include accrued dividends payable of $102.4 million and $65.2 million at December 31, 2016 and 2015 , respectively, accrued real estate taxes of $97.6 million and $63.3 million at December 31, 2016 and 2015 , respectively, unearned income of $39.4 million and $25.4 million at December 31, 2016 and 2015 , respectively, accrued legal contingency loss of $42.1 million and $13.5 million at December 31, 2016 and 2015 , respectively, and accrued interest payable of $15.2 million and $17.2 million at December 31, 2016 and 2015 , respectively.

Self-Insurance

We are self-insured for workers' compensation claims up to $500,000 and for general liability claims up to $100,000 for historical MAA properties and up to $200,000 for Post properties. We accrue for expected liabilities less than these amounts based on third party actuarial estimates of ultimate losses. Claims exceeding these amounts are insured by a third party.

Income Taxes

MAA has elected to be taxed as a REIT under the Code, beginning with the taxable year ended December 31, 1994, and intends to continue to operate in such a manner. The current and continuing qualification as a REIT depends on MAA's ability to meet the various requirements imposed by the Code, which are related to organizational structure, distribution levels, diversity of stock ownership and certain requirements with respect to the nature and diversity of MAA’s assets and sources of MAA’s gross income. As long as MAA qualifies for taxation as a REIT, it will generally not be subject to United States federal corporate income tax on its taxable income that is currently distributed to shareholders. This treatment substantially eliminates the “double taxation” (i.e., income taxation at both the corporate and shareholder levels) that generally results from an investment in a corporation.

Even if MAA qualifies as a REIT, MAA may be subject to United States federal income and excise taxes in certain situations, such as if MAA fails to distribute timely all of its taxable income with respect to a taxable year. MAA also will be required to pay a 100% tax on any net income on non- arm’s length transactions between MAA and its TRSs. In addition, MAA also could be subject to the alternative minimum tax. Furthermore, MAA and its shareholders may be subject to state or local taxation in various state or local jurisdictions, including those in which MAA transacts business or its shareholders reside, and the applicable state and local tax laws may not conform to the United States federal income tax treatment. Any taxes imposed on MAA would reduce its operating cash flow and net income.

Certain of our operations and activities, including asset management and risk management, are conducted through TRSs, which are subject to United States federal corporate income tax without the benefit of the dividends paid deduction applicable to REITs.

MAA accounts for deferred taxes of a TRS by recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax assets will not be realized. Based on this evaluation, at December 31, 2016, net of the valuation allowance, the net deferred tax assets were reduced to zero.

MAA recognizes liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires MAA to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. MAA classifies interest related to income tax liabilities, and if applicable, penalties, as a component of income tax expense. As of December 31, 2016, MAA did not have any unrecognized tax benefits, and MAA does not believe that there will be any material changes in our unrecognized tax positions over the next 12 months. The income tax expense line item shown in the Statement of Operations represents the Texas-based margin tax for all Texas properties.






F-21


Fair value of derivative financial instruments

We utilize certain derivative financial instruments, primarily interest rate swaps and interest rate caps, during the normal course of business to manage, or hedge, the interest rate risk associated with our variable rate debt or as hedges in anticipation of future debt transactions to manage well-defined interest rate risk associated with the transaction.

In order for a derivative contract to be designated as a hedging instrument, changes in the hedging instrument must be highly effective at offsetting changes in the hedged item. The historical correlation of the hedging instruments and the underlying hedged items are assessed before entering into the hedging relationship and on a quarterly basis thereafter, and have been found to be highly effective.

We measure ineffectiveness using the change in the variable cash flows method or the hypothetical derivative method for interest rate swaps and the hypothetical derivative method for interest rate caps for each reporting period through the term of the hedging instruments. Any amounts determined to be ineffective are recorded in earnings if in an overhedged position. The change in fair value of the interest rate swaps and the intrinsic value or fair value of interest rate caps designated as cash flow hedges are recorded to accumulated other comprehensive income in the Statement of Equity.

Additionally, the 867,846 shares of Series I Preferred shares issued as consideration in the Merger are redeemable, at the Company's option, on October 1, 2026, and the redemption price per share, $50 , is the price at which the preferred stock is redeemable (see Note 10). This redemption feature embedded in the preferred stock was evaluated in accordance with ASC 815, Derivatives and Hedging, and the Company determined that it was required to bifurcate the value associated with this feature from its host instrument, the perpetual preferred shares, and account for it as a freestanding derivative on the balance sheet at fair value as a result of the call option. Thus, the redemption feature embedded in the Series I Preferred shares is reported as a derivative asset in Other assets on the accompanying consolidated balance sheet and will be adjusted to its fair value at each reporting date, with a corresponding adjustment to Other non-property expense.

The valuation of our derivative interest rate swaps and caps are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts.  The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.  The fair values of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the interest rate caps.  The variable interest rates used in the calculation of projected receipts on the interest rate cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.   Additionally, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Changes in the fair values of our in our interest rate and cap derivatives are primarily the result of fluctuations in interest rates.

The derivative asset related to the redemption feature embedded in the Series I Preferred shares issued in connection with the Merger are valued using widely accepted valuation techniques, included discounted cash flow analysis in which the perpetual value of the preferred shares are compared to the value with the call option giving the value of the bifurcated call option as the difference between the two values. This analysis reflects the contractual terms of the redeemable preferred shares, redeemable at the Company's option, on October 1, 2026, reflecting the redemption price per share, $50 , as the price at which the preferred stock is redeemable. The analysis uses observable market-based inputs, including discount rates based on the REIT preferred stock indices and adjusted based treasury rates to determine the present value of cash flows for the called value and the perpetual value in addition to trading data available on the preferred shares to interpolate an as called value and discount rate and again adjusted from there to determine the perpetual discount rate using the applicable treasury rates.

See Note 7 (Derivative and Hedging Activities) and Note 8 (Fair Value Disclosure of Financial Information) for further discussion.










F-22


Recent Accounting Pronouncements
 
The following table provides a brief description of recent accounting pronouncements that could have a material effect on our financial statements:

Standard
Description
Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Accounting Standards Update (ASU) 2015-02 ,  Consolidation (Topic 810)
ASU 2015-02, affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships and (iv) provide a scope exception for certain entities.
This ASU is effective for annual periods ending after December 15, 2015. We adopted this ASU effective January 1, 2016.
We adopted this ASU effective January 1, 2016, and there was no material effect on our consolidated financial position or results of operations taken as a whole. While adoption of the new standard did not result in the consolidation of entities not previously consolidated or the de-consolidation of any entities previously consolidated, the Operating Partnership is now classified as a VIE as the limited partners lack substantive kick-out rights and substantive participating rights. Thus, the Company is the primary beneficiary of, and continues to consolidate MAALP.
ASU 2015-16 ,  Simplifying the Accounting for Measurement -Period Adjustments
This ASU was issued to simplify the accounting for business combinations, specifically as it relates to measurement-period adjustments. Acquiring entities in a business combination must recognize measurement-period adjustments in the reporting period in which the adjustment amounts are determined. Also, ASU 2015-16 requires entities to present separately on the face of the income statement (or disclose in the notes to the financial statements) the portion of the amount recorded in the current period earnings, by line item, that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.
This ASU is effective for annual periods ending after December 15, 2015. We adopted this ASU effective January 1, 2016.
Adoption of this ASU did not have a significant impact on our consolidated financial statements; however, as noted in Note 2, Business Combinations, we will continue to monitor these adjustments related to the Post Merger as the measurement period remains open for twelve months following the 12/1/16 Merger date.
ASU 2014-16 - Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity

This ASU clarifies how U.S. GAAP should be applied in determining whether the nature of a host contract in a hybrid financial instrument that is issued in the form of a share is more akin to debt or equity and in evaluating whether the economic characteristics and risks of an embedded feature are "clearly and closely related" to its host contract. 

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015. We adopted this ASU effective January 1, 2016.
Upon initial adoption on January 1, 2016, this ASU did not have an impact on our consolidated financial statements and disclosures. However, as a result of the issuance of the MAA Series I preferred stock resulting from the merger on December 1, 2016, we identified a redemption feature embedded in this preferred stock and determined that we were required to bifurcate the value associated with this feature from its host instrument, the preferred shares, and account for it as a freestanding derivative on the balance sheet at fair value as a result of the call option in accordance with this guidance in ASC 815. (See Note 7 and 8 for details and referenced impact to our consolidated financial statements and disclosures).


F-23


ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern
This ASU requires an entity's management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. If substantial doubt exists, the entity must disclose the principal conditions or events that raised the substantial doubt, management's evaluation of the significance of these conditions, and management's plan for alleviating the substantial doubt about the entity's ability to continue as a going concern.
This ASU is effective for annual periods ending after December 15, 2016. We adopted this guidance on December 31, 2016.
We adopted this guidance on December 31, 2016, and the adoption of this guidance did not have an impact to the consolidated financial statements or material impact on our disclosures.
ASU 2014-09,  Revenue from Contracts with Customers
This ASU establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services as outlined in a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. Income from lease contracts is specifically excluded from this ASU.
This ASU is effective for annual reporting periods beginning after December 15, 2017, as a result of a deferral of the effective date arising from the issuance of ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date. Early adoption is permitted.
The amendments may be applied using the full retrospective transition method resulting in adjustments to each prior period presented as of the date of initial application or by using the modified retrospective transition method with a cumulative effect recognized as of the date of initial application. We currently expect to adopt ASU 2014-09 effective January 1, 2018, using the modified retrospective approach. We have identified our revenue streams and are in the process of evaluating the impact on our consolidated financial statements and internal accounting processes; however, the majority of our revenue is derived from real estate lease contracts.
ASU 2016-02,  Leases
This ASU amends existing accounting standards for lease accounting and establishes the principles for lease accounting for both the lessee and lessor. The amendment requires an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendment also requires certain quantitative and qualitative disclosures about leasing arrangements.
This ASU is effective for annual reporting periods beginning after December 15, 2018; however, early adoption is permitted.
The standard must be adopted using a modified retrospective transition and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are currently evaluating the impact this standard may have on our consolidated financial statements and related disclosures upon adoption.
ASU 2016-09,   Improvements to Employee Share-Based Payment Accounting
This ASU amends existing accounting standards for certain aspects of share-based payments to employees. The new guidance will require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur.
This ASU is effective for annual reporting periods beginning after December 15, 2016; however, early adoption is permitted.
The standard must be adopted using a modified retrospective transition method, with a cumulative-effect adjustment to retained earnings. We are currently evaluating the impact this standard may have on our consolidated financial statements and related disclosures upon adoption.
ASU 2016-15,  Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)
This ASU clarifies how several specific cash receipts and cash payments are to be presented and classified on the statement of cash flows, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration made after a business combination, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of predominance principle.
This ASU is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted.
Each amendment in this standard must be applied prospectively, retrospectively, or as of the beginning of the earliest comparative period presented in the year of adoption, depending on the type of amendment. We expect to adopt ASU 2016-15 as of January 1, 2018, and we are currently evaluating the impact this standard may have on our consolidated financial statements upon adoption.

F-24


 ASU 2016-18,  Statement of Cash Flows (Topic 230):Restricted Cash (A Consensus of the FASB Emerging Issues Task Force)
This ASU requires restricted cash to be presented with cash and cash equivalents when reconciling the beginning and ending amounts in the statements of cash flows.
This ASU  is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. 
The update should be applied retrospectively to each period presented. We expect to adopt ASU 2016-15 as of January 1, 2018. We currently report the change in restricted cash within the investing activities in our consolidated statement of cash flows. If we were to early adopt in 2017, cash and cash equivalents reported in our consolidated statements of cash flows would increase by approximately $88.3 million and $26.1 million in 2016 and 2015, respectively, to reflect the restricted cash balances. Additionally, net cash used in investing activities would increase by $58.3 million in 2016 and decrease by $8 thousand in 2015.
ASU 2017-01, Clarifying the Definition of a Business (Topic 805)
This ASU clarifies the definition of a business and provides further guidance for evaluating whether a transaction will be accounted for as an acquisition of an asset or a business.
This ASU is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted.
The update should be applied prospectively. We adopted ASU 2017-01 as of January 1, 2017 and the adoption did not require any additional disclosures. We believe most of our future acquisitions of operating properties will qualify as asset acquisitions and most future transaction costs associated with these acquisitions will be capitalized.

2.     BUSINESS COMBINATIONS
 
Merger of MAA and POST

On December 1, 2016, we completed the Merger with Post Properties and Post LP , resulting in 100% of the outstanding common shares and voting interest of Post being converted into MAA ownership shares and units. Under the terms of the Merger Agreement, each Post Properties common share and Post Apartment Homes, L.P., or Post LP, unit was converted automatically into the right to receive 0.71 of a newly issued share of MAA common stock, including the right , if any, to receive cash in lieu of fractional shares of MAA common stock, or MAA LP OP unit, respectively, and each of Post Properties’ 8.50% Series A Cumulative Redeemable Preferred Shares, which we refer to as Post Properties preferred stock, converted automatically into the right to receive one newly issued share of 8.50% Series I Cumulative Redeemable Preferred Stock of MAA, which has the same rights, preferences, privileges and voting powers as the Post Properties preferred stock. Following the parent merger, continuing MAA common shareholders held approximately 68 percent of the issued and outstanding shares of common stock of the Combined Corporation and former Post Properties common shareholders held approximately 32 percent.

As part of the Merger, we acquired 61 wholly owned apartment communities encompassing 24,138 units, including 261 apartment units in one community held in an unconsolidated entity, and 2,266 apartment units in six communities currently under development. Post Properties had operations in ten markets across the United States. In addition to the apartment communities, we also acquired four commercial properties totaling approximately 269,000 square feet. The consolidated net assets and results of operations of Post Properties are included in our consolidated financial statements from the closing date, December 1, 2016, going forward.

The total purchase price of approximately $4.0 billion was determined based on the number of Post Properties common shares, Post Properties’ 8.50% Series A Cumulative Redeemable Preferred shares, and Post LP partnership interests outstanding as of December 1, 2016, in addition to cash consideration provided by MAA immediately prior to the Merger to pay off a Post Properties $300 million Post unsecured term loan and a $162 million Post Properties line of credit, both outstanding from Wells Fargo. In all cases in which MAA’s common stock price was a determining factor in arriving at final consideration for the Merger, the stock price used to determine the purchase price was the opening price of MAA’s common stock on December 1, 2016 ( $91.41 per share). The preferred shares consideration was valued at $74.69 per share, which excludes a $12.42 per share bifurcated call option (See Notes 7 & 8). The total purchase price also includes $2.0 million of other consideration, a majority of which relates to assumed stock compensation plans. As a result of the Merger, we issued approximately 38.0 million shares of MAA common stock, approximately 80,000 OP units, and approximately 868,000 newly issued shares of MAA’s 8.50% Series I Cumulative Redeemable Preferred Stock.

F-25


The Merger has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations , which requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair values. For larger, portfolio style acquisitions, like the Merger, management engages a third party valuation specialist to assist with the fair value assessment, which includes an allocation of the purchase price. Similar to management's methods, the third party generally uses cash flow analysis as well as an income approach and a market approach to determine the fair value of assets acquired. The third party uses stabilized NOI and market specific capitalization and discount rates. Management reviews the inputs used by the third party specialist as well as the allocation of the purchase price provided by the third party to ensure reasonableness and that the procedures are performed in accordance with management's policy. The allocation of the purchase price is based on management’s assessment, which may differ as more information becomes available. Subsequent adjustments made to the purchase price allocation, if any, are made within the allocation period, which typically does not exceed one year.

The allocation of the purchase price described above requires a significant amount of judgment and represents management's best estimate of the fair value as of the acquisition date . The following preliminary purchase price allocation was based on our valuation as well as estimates and assumptions of the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed.

The following table summarizes the preliminary purchase price allocation (in thousands):

Land
$
875,737

Buildings and improvements
3,401,983

Furniture, fixtures and equipment
81,389

Development and capital improvements in progress
184,044

Undeveloped land
24,200

Commercial properties, net
3,610

Investment in real estate joint venture
44,435

Lease intangible assets
53,192

Cash and cash equivalents
34,292

Restricted cash
3,608

Deferred costs and other assets, excluding lease intangible assets
40,473

Total assets acquired
4,746,963

 
 
Notes payable
(595,609)

Fair market value of interest rate swaps
(2,118)

Lease intangible liabilities
(1,661)

Accounts payable, accrued expenses, and other liabilities
(138,683)

Total liabilities assumed, including debt
(738,071
)
 
 
Noncontrolling interests - consolidated real estate entity
(2,306
)
 
 
Total purchase price
$
4,006,586


The purchase price accounting reflected in the accompanying financial statements is based upon estimates and assumptions that are subject to change within the measurement period, pursuant to ASC 805. See Note 13, for commitments and contingencies identified, measured, and included in "Accounts payable, accrued expenses, and other liabilities" in the allocation above. We have preliminarily completed our valuation procedures. Adjustments may still occur as the valuation and revised preliminary purchase allocation is finalized in areas such as, real estate related assets and liabilities, equity investments, litigation reserves, debt and debt related instruments, and certain other acquired assets and liabilities assumed.
 
The Merger accounts for  $33.5 million  of consolidated revenue as reported and a  $1.0 million  consolidated net income as reported for 2016.

We incurred total merger and integration related expenses of $40.8 million and $0.0 million for the years ended December 31, 2016 and 2015, respectively. These amounts were expensed as incurred and are included in the Consolidated Statement of

F-26


Operations in the items titled "Merger related expenses", primarily consisting of severance, legal, and professional costs, and "Integration related expenses", primarily consisting of temporary systems, staffing, and facilities costs. We also recognized $1.1 million costs associated with issuing and registering the shares issued as consideration in the business combination. Those costs were deducted from the recognized proceeds of issuance within stockholders' equity.

Pro forma information

The unaudited pro forma information set forth below is based on MAA’s historical Consolidated Statements of Operations for the years ended December 31, 2016 and 2015, adjusted to give effect to the Merger in 2016 as though it occurred on January 1, 2015, the beginning of the comparable prior annual period. The pro forma adjustments primarily relate to the depreciation expense on stepped up fixed assets, amortization of acquired intangibles, Merger and Integration related expenses and estimated interest expense related to new financings. The pro forma information is provided for illustrative purposes only and does not necessarily reflect the actual results of operations had the transactions been consummated at the beginning of the earliest year presented nor is it necessarily indicative of future operating results. The pro forma information does not give effect to any cost synergies or other operating efficiencies that could result or have resulted from the Merger.
 
Pro forma (Unaudited)
 
Period Ended December 31,
(in thousands, except per share data)
 
2016
 
2015
Total revenue
$
1,494,298

 
$
1,426,785

Net income available to common shareholders
$
296,084

 
$
330,886

Earnings per share, diluted
$
2.61

 
$
2.90


The pro forma results are based on estimates and assumptions, which we believe are reasonable. During 2016, we acquired five properties, other than through the Merger, totaling  1,626  units for a total purchase price of $ 339.2 million , paid in cash. The financial results of these acquired properties are included in the Non-Same Store and Other segment from their respective date of acquisition. Further, the financial results of these acquired properties were not material, individually or in the aggregate, to our results of operations and therefore, pro forma financial information has not been presented. See Note 17 for a discussion of acquisitions and dispositions not related to the Merger.

3.    EARNINGS PER COMMON SHARE OF MAA

Basic earnings per share is computed by dividing net income available to MAA common shareholders by the weighted average number of shares outstanding during the period.  All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis with our diluted earnings per share being the more dilutive of the treasury stock or two-class methods.  Operating partnership units are included in dilutive earnings per share calculations when they are dilutive to earnings per share. For the years ended December 31, 2016 , 2015 , and 2014 , MAA's basic earnings per share is computed using the two-class method, and our diluted earnings per share is computed using the more dilutive of the treasury stock method or two-class method:


F-27


(dollars and shares in thousands, except per share amounts)
Years ended December 31,
 
 
2016
 
2015
 
2014
 
Shares Outstanding
 
 
 
 
 
 
Weighted average common shares - basic
78,502

 
75,176

 
74,982

 
Weighted average partnership units outstanding
—

(1)  
—

(1)  
—

(1)  
Effect of dilutive securities
298

 
—

(2)  
—

(2)  
Weighted average common shares - diluted
78,800

 
75,176

 
74,982

 
 
 
 
 
 
 
 
Calculation of Earnings per Share - basic
 

 
 

 
 

 
Income from continuing operations
$
224,402

 
$
350,745

 
$
150,946

 
Income from continuing operations attributable to noncontrolling interests
(12,180
)
 
(18,458
)
 
(8,013
)
 
Income from continuing operations allocated to unvested restricted shares
(572
)
 
(772
)
 
(278
)
 
Preferred dividends
(307
)
 
—

 
—

 
Income from continuing operations available for common shareholders, adjusted
$
211,343

 
$
331,515

 
$
142,655

 
 
 
 
 
 
 
 
Income from discontinued operations
$
—

 
$
—

 
$
5,331

 
Income from discontinued operations attributable to noncontrolling interest
—

 
—

 
(284
)
 
Income from discontinued operations allocated to unvested restricted shares
—

 
—

 
(10
)
 
Income from discontinued operations available for common shareholders, adjusted
$
—

 
$
—

 
$
5,037

 
 
 
 
 
 
 
 
Weighted average common shares - basic
78,502

 
75,176

 
74,982

 
Earnings per share - basic
$
2.69

 
$
4.41

 
$
1.97

 
 
 
 
 
 
 
 
Calculation of Earnings per Share - diluted
 

 
 

 
 

 
Income from continuing operations
$
224,402

 
$
350,745

 
$
150,946

 
Income from continuing operations attributable to noncontrolling interests
(12,180
)
(1)  
(18,458
)
(1)  
(8,013
)
(1)  
Income from continuing operations allocated to unvested restricted shares
—

 
(772
)
(2)  
(278
)
(2)  
Preferred dividends
(307
)
 
—

 
—

 
Income from continuing operations available for common shareholders, adjusted
$
211,915

 
$
331,515

 
$
142,655

 
 
 
 
 
 
 
 
Income from discontinued operations
$
—

 
$
—

 
$
5,331

 
Income from discontinued operations attributable to noncontrolling interest
—

 
—

 
(284
)
(1)  
Income from discontinued operations allocated to unvested restricted shares
—

 
—

 
(10
)
(2)  
Income from discontinued operations available for common shareholders, adjusted
$
—

 
$
—

 
$
5,037

 
 
 
 
 
 
 
 
Weighted average common shares - diluted
78,800

 
75,176

 
74,982

 
Earnings per share - diluted
$
2.69

 
$
4.41

 
$
1.97

 

(1) For the years ended December 31, 2016, 2015, and 2014, 4.2 million OP units and their related income are not included in the diluted earnings per share calculations as they are not dilutive.

(2) For both the years ended December 31, 2015 and 2014, 0.1 million potentially dilutive securities and their related income are not included in the diluted earnings per share calculation as they are not dilutive.

4.    EARNINGS PER OP UNIT OF MAALP

Basic earnings per OP Unit is computed by dividing net income available for common unitholders by the weighted average number of units outstanding during the period. All outstanding unvested restricted unit awards contain rights to non-forfeitable distributions and participate in undistributed earnings with common unitholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per OP unit. Diluted earnings per OP Unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units.

F-28



A reconciliation of the numerators and denominators of the basic and diluted earnings per OP unit computations for the years ended December 31, 2016 , 2015 , and 2014 is presented below:
(dollars and units in thousands, except per unit amounts)
Years ended December 31,
 
 
2016
 
2015
 
2014
 
Units Outstanding
 
 
 
 
 
 
Weighted average common units - basic
82,661

 
79,361

 
79,188

 
Effect of dilutive securities
298

 
—

(1)  
—

(1)  
Weighted average common units - diluted
82,959

 
79,361

 
79,188

 
 
 
 
 
 
 
 
Calculation of Earnings per Unit - basic
 

 
 

 
 

 
Income from continuing operations
$
224,402

 
$
350,745

 
$
150,946

 
Income from continuing operations allocated to unvested restricted shares
(574
)
 
(772
)
 
(278
)
 
Preferred unit distributions
(307
)
 
—

 
—

 
Income from continuing operations available for common unitholders, adjusted
$
223,521

 
$
349,973

 
$
150,668

 
 
 
 
 
 
 
 
Income from discontinued operations
$
—

 
$
—

 
$
5,331

 
Income from discontinued operations allocated to unvested restricted shares
—

 
—

 
(10
)
 
Income from discontinued operations available for common unitholders, adjusted
$
—

 
$
—

 
$
5,321

 
 
 
 
 
 
 
 
Weighted average common units - basic
82,661

 
79,361

 
79,188

 
Earnings per unit - basic:
$
2.70

 
$
4.41

 
$
1.97

 
 
 
 
 
 
 
 
Calculation of Earnings per Unit - diluted
 

 
 

 
 

 
Income from continuing operations
$
224,402

 
$
350,745

 
$
150,946

 
Income from continuing operations allocated to unvested restricted shares
—

 
(772
)
(1)  
(278
)
(1)  
Preferred unit distributions
(307
)
 
—

 
—

 
Income from continuing operations available for common unitholders, adjusted
$
224,095

 
$
349,973

 
$
150,668

 
 
 
 
 
 
 
 
Income from discontinued operations
$
—

 
$
—

 
$
5,331

 
Income from discontinued operations allocated to unvested restricted shares
—

 
—

 
(10
)
(1)  
Income from discontinued operations available for common unitholders, adjusted
$
—

 
$
—

 
$
5,321

 
 
 
 
 
 
 
 
Weighted average common units - diluted
82,959

 
79,361

 
79,188

 
Earnings per unit - diluted:
$
2.70

 
$
4.41

 
$
1.97

 

(1) For both the years ended December 31, 2015 and 2014, 0.1 million potentially dilutive securities and their related income are not included in the diluted earnings per unit calculations as they are not dilutive.


5.      STOCK BASED COMPENSATION
 
Overview

MAA accounts for its stock based employee compensation plans in accordance with accounting standards governing stock based compensation. These standards require an entity to measure the cost of employee services received in exchange for an award of an equity instrument based on the award's fair value on the grant date and recognize the cost over the period during which the employee is required to provide service in exchange for the award, which is generally the vesting period. Any liability awards issued are remeasured at each reporting period.  


F-29


MAA’s stock compensation plans consist of an employee stock purchase plan and a number of incentives provided to attract and retain independent directors, executive officers and key employees. Incentives are currently granted under the 2013 Stock Incentive Plan, as amended, which was originally approved at the September 27, 2013 annual meeting of MAA shareholders. The 2013 Stock Incentive Plan replaced the 2004 Stock Plan (collectively, the “Plans”) under which no further awards may be granted as of October 31, 2013. The 2004 Stock Plan allowed for the grant of restricted stock and stock options up to a total of 500,000 shares. The 2013 Stock Incentive Plan allows for the grant of restricted stock and stock options up to 625,000 shares. MAA believes that such awards better align the interests of its employees with those of its shareholders.

Compensation expense is generally recognized for service based restricted stock awards using the straight-line method over the vesting period of the shares regardless of cliff or ratable vesting distinctions. Compensation expense for market and performance based restricted stock awards is generally recognized using the accelerated amortization method with each vesting tranche valued as a separate award, with a separate vesting date, consistent with the estimated value of the award at each period end. Additionally, we adjust compensation expense for estimated and actual forfeitures for all awards. Compensation expense for stock options is generally recognized on a straight-line basis over the requisite service period. MAA presents stock compensation expense in the Consolidated Statements of Operations on the line labeled “General and administrative expenses”.

Total compensation costs under the Plans were approximately $12.2 million , $6.9 million and $5.2 million for the years ended December 31, 2016 , 2015 , and 2014 , respectively. Of these amounts, total compensation costs capitalized under the Plans were approximately $697,000 , $735,000 , and $431,000 for the years ended December 31, 2016 , 2015 , and 2014 , respectively. As of December 31, 2016 , the total unrecognized compensation cost related to the Plans was approximately $8.1 million . This cost is expected to be recognized over the remaining weighted average period of 1.1 years . Total cash paid for the settlement of plan shares totaled $2.0 million , $1.0 million , and $0.6 million for the years ended December 31, 2016 , 2015 , and 2014 , respectively. Information concerning grants under the Plans is listed below.

Restricted Stock

In general, restricted stock is earned based on either a service condition, performance condition, or market condition, or a combination thereof, and vests ratably over a period from 1 year to 5 years . Service based awards are earned when the employee remains employed over the requisite service period and are valued on the grant date based upon the market price of MAA common stock on the date of grant. Market based awards are earned when MAA reaches a specified stock price or specified return on the stock price (price appreciation plus dividends) and are valued on the grant date using a Monte Carlo simulation. Performance based awards are earned when MAA reaches certain operational goals such as FFO targets and are valued based upon the market price of MAA common stock on the date of grant as well as the probability of reaching the stated targets. MAA remeasures the fair value of the performance based awards each balance sheet date with adjustments made on a cumulative basis until the award is settled and the final compensation is known. The weighted average grant date fair value per share of restricted stock awards granted during the years ended December 31, 2016 , 2015 , and 2014 , was $73.20 , $68.35 , and $62.40 , respectively.

The following is a summary of the key assumptions used in the valuation calculations for market based awards granted during the years ended December 31, 2016 , 2015 , and 2014 :

 
2016
2015
2014
Risk free rate - minimum
0.49%
0.10%
0.02%
Risk free rate - maximum
1.27%
1.05%
0.80%
Dividend yield
3.634%
3.932%
4.755%
Volatility - minimum
18.41%
15.41%
18.31%
Volatility - maximum
19.45%
16.04%
20.48%
Service period
3 years
3 years
3 years

The risk free rate was based on a zero coupon risk-free rate. The minimum risk free rate was based on a period of 0.25 years for the years ended December 31, 2016 , 2015 , and 2014 . The maximum risk free rate was based on a period of 3 years for the years ended December 31, 2016 , 2015 , and 2014 . The dividend yield was based on the closing stock price of MAA stock on the date of grant. Volatility for MAA was obtained by using a blend of both historical and implied volatility calculations. Historical volatility was based on the standard deviation of daily total continuous returns, and implied volatility was based on the trailing month average of daily implied volatilities interpolating between the volatilities implied by stock call option contracts that were closest to the terms shown and closest to the money. The minimum volatility was based on a period of 2

F-30


years , 1 year , and 1 year for the years ended December 31, 2016 , 2015 , and 2014 , respectively. The maximum volatility was based on a period of 1 year , 2 years , and 3 years for the years ended December 31, 2016 , 2015 , and 2014 , respectively. The requisite service period is based on the criteria for the separate programs according to the vesting schedule. Turnover is based on the historical experience for the key managers and executive officers, and is used in estimating forfeitures.

A summary of the status of the nonvested restricted shares as of December 31, 2016 , and the changes for the year ended December 31, 2016 , is presented below:

Nonvested Shares
 
Shares
 
Weighted
Average
Grant-Date
Fair Value
Nonvested at January 1, 2016
 
187,941

 
$
63.36

Issued
 
119,039

 
79.51

Vested
 
(80,342
)
 
64.00

Forfeited
 
(1,014
)
 
71.84

Nonvested at December 31, 2016
 
225,624

 
$
71.61


The total fair value of shares vested during the years ended December 31, 2016 , 2015 , and 2014 was approximately $5.1 million , $2.9 million , and $2.7 million , respectively.

Stock Options

In general, stock options are earned when the employee remains employed over the requisite service period and vest ratably over a period from 0.3 years to 2.3 years . Stock options exercised result in new common shares being issued on the open market by the Company. The fair value of stock option awards is determined using the Black-Scholes or Monte Carlo valuation models. The weighted average grant date fair value of stock option awards granted during the year ended December 31, 2016 was $18.08 per option. All options issued during the year ended December 31, 2016 related to options exchanged during the Post Merger. All options were fully vested at merger. No stock options were granted during the years ended December 31, 2015 and 2014 .

The following is a summary of the key assumptions used in the Monte Carlo valuation calculations for stock options granted during the year ended December 31, 2016 :

 
 
2016
Term - minimum
 
1.11 years
Term - maximum
 
2.11 years
Risk free rate - minimum
 
0.64%
Risk free rate - maximum
 
2.63%
Dividend yield
 
3.81%
Volatility - minimum
 
21.02%
Volatility - maximum
 
21.57%

The term represents an estimate of the period of time options are expected to remain outstanding. The U.S. Treasury bill rate, which approximated the expected life of the option, was used to represent the risk-free rate. The current dividend yield at the time of grant was used to estimate the dividend yield over the life of the option. Volatility is based on the actual changes in the market value of MAA’s stock and is calculated using daily market value changes from the date of grant over a past period equal to the expected life of the stock options. Turnover is based on the historical rate at which options are exercised, and is used in estimating forfeitures.






F-31


A summary of the status of the stock options as of December 31, 2016 and the changes for the year ended December 31, 2016 is presented below:

Stock Options
 
Options
 
Weighted
Average
Exercise Price
Outstanding at January 1, 2016
 
58,112

 
$
86.21

Granted
 
108,198

 
75.58

Exercised
 
—

 
—

Expired
 
(19,028
)
 
103.56

Outstanding at December 31, 2016
 
147,282

 
$
76.16


All 147,282 options outstanding at December 31, 2016 were exercisable with a weighted average exercise price of $76.16 , an intrinsic value of $3,400,000 , and a weighted average remaining term of 6.1 years . No options were exercised during the year ended December 31, 2016 . There was no cash received from the exercise of stock options for the year ended December 31, 2016 . Cash received from the exercise of stock options for the years ended December 31, 2015 and 2014 was $0.4 million and $12.2 million , respectively.

6.    BORROWINGS

The weighted average interest rate at December 31, 2016 for the $4.50 billion of debt outstanding was 3.5% , compared to the weighted average interest rate of 3.7% on $3.43 billion of debt outstanding at December 31, 2015 . Our debt consists of an unsecured credit facility, unsecured term loans, senior unsecured notes, a secured credit facility with Fannie Mae, and secured property mortgages. We utilize fixed rate borrowings, interest rate swaps, and interest rate caps to manage our current and future interest rate risk. More details on our borrowings can be found in the schedules presented later in this section.

At December 31, 2016 , we had $2.7 billion of senior unsecured notes and term loans fixed at an average interest rate of 3.7% and a $1.0 billion variable rate credit facility with an average interest rate of 1.6% with $490.0 million borrowed at December 31, 2016. Additionally, we had $110.0 million of secured variable rate debt outstanding at an average interest rate of 1.1% , $50.0 million of capped secured variable rate debt at an average interest rate of 1.1% . The interest rate on all other secured debt, totaling $1.1 billion , was hedged or fixed at an average interest rate of 3.9% .

Unsecured Revolving Credit Facility

We maintain a $1.0 billion unsecured credit facility with sixteen banks led by KeyBank National Association, or the KeyBank Facility. The KeyBank Facility includes an expansion option up to $1.5 billion . The KeyBank Facility bears an interest rate of LIBOR plus a spread of 0.85% to 1.55% based on an investment grade pricing grid and is currently bearing interest at 1.64% . The KeyBank Facility expires in April 2020 with an option to extend for an additional six months. At December 31, 2016 , we had $490.0 million actually borrowed under this facility, and another approximately $3.3 million of the facility used to support letters of credit.

Unsecured Term Loans

We also maintain four term loans with a syndicate of banks, one led by KeyBank, two by Wells Fargo, and one by US Bank, respectively. The KeyBank term loan has a balance of $150.0 million , matures in 2021, and has a variable interest rate of LIBOR plus a spread of 0.90% to 1.75% based on our credit ratings. The Wells Fargo term loans have balances of $250.0 million and $300.0 million , mature in 2018 and 2022, and have variable interest rates of LIBOR plus a spread of 0.90% to 1.90% and 0.90% to 1.75% , respectively. The US Bank term loan has a balance of $150.0 million , matures in 2020, and has a variable interest rate of LIBOR plus a spread of 0.90% to 1.90% .

Senior Unsecured Notes

As of December 31, 2016 , we had approximately $1.6 billion of publicly issued bonds and $310.0 million of private placement notes. These senior unsecured notes are longer term in nature and usually mature within five to twelve years, averaging 6.4 years remaining until maturity as of December 31, 2016.


F-32


As part of the Merger on December 1, 2016, we assumed two publicly issued bonds, one of $250.0 million and one of $150.0 million , or $250.0 million Post Bond and $150.0 million Post Bond, respectively. The $250.0 million Post Bond matures December 1, 2022 and has an interest rate of 3.375% per annum with interest due on June 1 and December 1 of each year. The $150.0 million Post Bond matures on October 15, 2017 and has an interest rate of 4.75% per annum with interest due on April 15 and October 15 of each year. Both bonds are general unsecured senior obligations of the Operating Partnership and rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership. The carrying values of the $250.0 million Post Bond and the $150.0 million Post Bond were adjusted down $2.3 million and up $2.6 million , respectively, to reflect fair market values at the date of assumption. There were no additional costs capitalized to assume these bonds.

Secured Property Mortgages

At December 31, 2016 , we had $1.1 billion of fixed rate conventional property mortgages with an average interest rate of 3.9% and an average maturity in 2019.

On February 1, 2016, we paid off a $13.4 million mortgage associated the Colonial Village at Matthews apartment community. The loan was scheduled for maturity in March 2016.

On March 1, 2016, we paid off a $20.2 million mortgage associated with the Verandas at Southwood apartment community. The payoff was a scheduled maturity of the loan.

On October 31, 2016, we paid off a $28.9 million mortgage associated with the Legacy at Western Oaks apartment community. We recorded a $0.1M gain on debt extinguishment due to paying off the mortgage prior to its scheduled maturity in February 2017 .

As part of the Merger on December 1, 2016, we assumed $186.7 million of mortgages associated with five properties, or the Post Mortgages. The carrying value of the Post Mortgages was adjusted up by $8.6 million to reflect fair market values. These mortgages mature February 1, 2019 and have an interest rate of 5.99% . There were no additional costs incurred to transfer ownership.

In addition to these payoffs, we have paid $8.4 million associated with property mortgage principal amortizations during the year ended December 31, 2016.

Secured Credit Facility

We maintain a $160.0 million secured credit facility with Prudential Mortgage Capital, which is credit enhanced by Fannie Mae, or Fannie Mae Facility. The Fannie Mae Facility has maturities from 2017 through 2018. Borrowings under the Fannie Mae Facility totaled $160.0 million at December 31, 2016 , all of which was variable rate at an average rate of 1.1% . The available borrowing capacity at December 31, 2016 was $160.0 million .

Guarantees

MAA fully and unconditionally guarantees the following debt incurred by the Operating Partnership:

•
$160.0 million of the Fannie Mae Facility, all of which has been borrowed as of December 31, 2016 ; and
•
$310.0 million of the privately placed senior unsecured notes, all of which has been borrowed as of December 31, 2016 .













F-33


Total Outstanding Debt

The following table summarizes our indebtedness at December 31, 2016 , (dollars in thousands): 

 
Borrowed
Balance
 
Effective
Rate
 
Contract
Maturity
Fixed Rate Secured Debt
 

 
 

 
 
Individual property mortgages
$
1,128,284

 
3.9
%
 
8/11/2019
Total fixed rate secured debt
1,128,284

 
3.9
%
 
8/11/2019
 
 
 
 
 
 
Variable Rate Secured Debt (1)
 
 
 
 
 
Fannie Mae conventional credit facilities
160,000

 
1.1
%
 
6/1/2018
Total variable rate secured debt
160,000

 
1.1
%
 
6/1/2018
 
 
 
 
 
 
Fair market value adjustments and debt issuance costs
30,804

 


 

Total Secured Debt
$
1,319,088

 
3.5
%
 
6/16/2019
 
 
 
 
 
 
Unsecured Debt
 
 
 
 
 
Variable rate credit facility
490,000

 
1.6
%
 
4/15/2020
Term loan fixed with swaps
850,000

 
3.1
%
 
11/10/2017
Fixed rate bonds
1,860,000

 
4.1
%
 
5/29/2023
Fair market value adjustments, debt issuance costs and discounts
(19,376
)
 


 

Total Unsecured Debt
$
3,180,624

 
3.4
%
 
6/7/2021
 
 
 
 
 
 
Total Outstanding Debt
$
4,499,712

 
3.5
%
 
11/8/2020
 

(1) Includes capped balances

The following table summarizes interest rate ranges, maturity and balance of our indebtedness, net of fair market value adjustments, debt issuance costs and discounts, at December 31, 2016 and the balance of our indebtedness, net of fair market value adjustments, debt issuance costs and discounts, at December 31, 2015 (dollars in millions):
 
 
 
At December 31, 2016
 
 
 
 
Actual
Interest
Rates
 
Current Average
Interest
Rate
 
Maturity
 
Balance
 
Balance at
December 31,
2015
Fixed Rate:
 
 
 
 
 
 
 
 

 
 

Secured
 
3.00 - 5.49%
 
3.92%
 
2017-2025
 
$
1,128.3

 
$
1,062.9

Unsecured
 
3.15 - 5.57%
 
4.06%
 
2017-2025
 
1,860.0

 
1,535.2

Interest rate swaps
 
2.63 - 6.63%
 
2.80%
 
2017-2018
 
850.0

 
550.0

 
 
 
 
 
 
 
 
$
3,838.3

 
$
3,148.1

Variable Rate: (1)
 
 
 
 
 
 
 
 

 
 

Secured
 
1.08%
 
1.08%
 
2017
 
110.0

 
65.0

Secured interest rate caps
 
1.08%
 
1.08%
 
2017
 
50.0

 
125.0

Unsecured
 
1.65%
 
1.65%
 
2020
 
490.0

 
75.0

 
 
 
 
 
 
 
 
$
650.0

 
$
265.0

 
 
 
 
 
 
 
 
 
 
 
Fair market value adjustments, debt issuance costs and discounts
 
 
 
$
11.4

 
$
14.5

 
 
 
 
 
 
 
 
$
4,499.7

 
$
3,427.6


(1) Amounts are adjusted to reflect interest rate swap and cap agreements in effect at December 31, 2016 , and 2015 , respectively, which results in us paying fixed interest payments over the terms of the interest rate swaps and on changes in

F-34


interest rates above the strike rate of the cap. Rates and maturities for capped balances are for the underlying debt, unless the strike rate has been reached.

The following table includes scheduled principal repayments on the borrowings at December 31, 2016 , as well as the amortization of the fair market value of debt assumed along with debt discounts and issuance costs (dollars in thousands): 

Year
Amortization
 
Maturities
 
Total
2017
$
26,110

 
$
277,525

 
$
303,635

2018
21,525

 
465,429

 
486,954

2019
6,778

 
719,142

 
725,920

2020
2,768

 
792,456

 
795,224

2021
(677
)
 
340,618

 
339,941

Thereafter
(1,350
)
 
1,849,388

 
1,848,038

 
$
55,154

 
$
4,444,558

 
$
4,499,712


7.    DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives
 
We are exposed to certain risks arising from both business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future contractual and forecasted cash amounts, principally related to the our borrowings, the value of which are determined by changing interest rates, related cash flows and other factors.
 
Cash Flow Hedges of Interest Rate Risk
 
Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we use interest rate swaps and interest rate caps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.
 
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the years ended December 31, 2016 , 2015 and 2014 , such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt and forecasted issuances of fixed-rate debt.  The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings.

During the years ended December 31, 2016 , 2015 and 2014 , we recorded ineffectiveness of $54,000 (increase to interest expense), $100,000 (increase to interest expense) and $157,000 (increase to interest expense), respectively, mainly attributable to a mismatch in the underlying indices of the derivatives and the hedged interest payments made on our variable-rate debt and due to the designation of acquired interest rate swaps with a non-zero fair value at inception.
 
Amounts reported in "Accumulated other comprehensive income/loss" related to derivatives designated as qualifying cash flow hedges will be reclassified to Interest expense as interest payments are made on our variable-rate or fixed-rate debt. During the next twelve months, we estimate that an additional $1.2 million will be reclassified to earnings as an increase to Interest expense, which primarily represents the difference between our fixed interest rate swap payments and the projected variable interest rate swap payments.





F-35


As of December 31, 2016 , we had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
 
Interest Rate Derivative
Number of Instruments
Notional
Interest Rate Caps
2
$50,000,000
Interest Rate Swaps 
15
$850,000,000
 
 
The fair value of our interest rate derivatives designated as hedging instruments at December 31, 2016 included $2,364,000 of asset derivatives reported in Other assets and $7,562,000 of liability derivatives reported in the Fair market value of interest rate swaps in the Consolidated Balance Sheet. The fair value of our interest rate derivatives designated as hedging instruments at December 31, 2015 included $6,000 of asset derivatives reported in Other Assets and $10,358,000 of liability derivatives reported in Fair market value of interest rate swaps in the Consolidated Balance Sheet.

Bifurcated Embedded Derivatives
 
Additionally, as a result of the Merger (see Note 2), on December 1, 2016, we issued 867,846 shares of 8.50% Series I Cumulative Redeemable Preferred shares as consideration. These shares are redeemable, at the Company's option, on October 1, 2026, and the redemption price per share, $50 , is the price at which the preferred stock is redeemable (see Note 10).

This redemption feature embedded in the preferred stock was evaluated in accordance with ASC 815, Derivatives and Hedging, and the Company determined that it was required to bifurcate the value associated with this feature from its host instrument, the perpetual preferred shares, and account for it as a freestanding derivative on the balance sheet at fair value as a result of the call option.

Thus, the redemption feature embedded in the 8.50% Series I Cumulative Redeemable Preferred shares is reported as a derivative asset in Other assets on the accompanying consolidated balance sheet and will be adjusted to its fair value at each reporting date, with a corresponding adjustment to Other non-property expense. The embedded derivative for these preferred shares was initially recorded at a fair value of  $10.8 million  at the date of the Merger and represents the fair value at December 31, 2016.


Tabular Disclosure of the Effect of Derivative Instruments on the Statement of Operations
 
The tables below present the effect of our derivative financial instruments on the Consolidated Statement of Operations for the years ended December 31, 2016 , 2015 and 2014 , respectively (dollars in thousands):
Derivatives in Cash Flow Hedging Relationships
 
Amount of Loss Recognized in OCI on Derivative (Effective Portion)
 
Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
 
Amount of Loss
Reclassified from Accumulated
OCI into Income (Effective Portion)
 
Location of Loss Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness
Testing)
Years ended December 31,
 
2016
 
2015
 
2014
 
 
 
2016
 
2015
 
2014
 
 
 
2016
 
2015
 
2014
Interest rate contracts
 
$
(1,500
)
 
$
(8,306
)
 
$
(12,335
)
 
Interest expense
 
$
(4,364
)
 
$
(7,064
)
 
$
(11,785
)
 
Interest expense
 
$
(54
)
 
$
(100
)
 
$
(157
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivatives in cash flow hedging relationships
 
$
(1,500
)
 
$
(8,306
)
 
$
(12,335
)
 
 
 
$
(4,364
)
 
$
(7,064
)
 
$
(11,785
)
 
 
 
$
(54
)
 
$
(100
)
 
$
(157
)
 
Derivatives Not Designated as
Hedging Instruments
 
Location of Loss Recognized
in Income on Derivative
 
Amount of Loss
Recognized in Income on Derivative
For the year ended December 31,
 
 
 
2016
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Interest rate products
 
Interest expense
 
$
—

 
$
(3
)
 
$
(146
)
 
 
 
 
 
 
 
 
 
Total
 
 
 
$
—

 
$
(3
)
 
$
(146
)

F-36


  Credit-risk-related Contingent Features
 
As of December 31, 2016 , derivatives that were in a net liability position and subject to credit-risk-related contingent features had a termination value of $7.5 million , which includes accrued interest but excludes any adjustment for nonperformance risk. These derivatives had a fair value, gross of asset positions, of $7.6 million at December 31, 2016 .

Certain of our derivative contracts contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of December 31, 2016 , we had not breached the provisions of these agreements.  If we had breached these provisions, we could have been required to settle our obligations under the agreements at the termination value of $7.5 million .

Although our derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the Consolidated Balance Sheet.

We did not have any asset or liability derivative balances that were offsetting that would have resulted in reported net derivative balances differing from the recorded gross amount of derivative assets of $2,364,000 and $6,000 as of December 31, 2016 and 2015, respectively, in addition to gross recorded derivative liabilities of $7,562,000 and $10,358,000 as of December 31, 2016 and 2015, respectively.  

Other Comprehensive Income

MAA's other comprehensive income consists entirely of gains and losses attributable to the effective portion of our cash flow hedges. The chart below shows the change in the balance for the years ended December 31, 2016 , 2015 , and 2014 :

Changes in Accumulated Other Comprehensive Income (Loss) by Component
 
Affected Line Item in the Consolidated Statements Of Operations
 
Gains and Losses on Cash Flow Hedges
For the year ended December 31,
 
 
2016
 
2015
 
2014
Beginning balance
 
 
 
$
(1,589
)
 
$
(412
)
 
$
108

Other comprehensive loss before reclassifications
 
 
 
(1,500
)
 
(8,306
)
 
(12,335
)
Amounts reclassified from accumulated other comprehensive income (interest rate contracts)
 
Interest expense
 
4,364

 
7,064

 
11,785

Net current-period other comprehensive (income) loss attributable to noncontrolling interest
 
 
 
(131
)
 
65

 
30

Net current-period other comprehensive income (loss) attributable to MAA
 
 
 
2,733

 
(1,177
)
 
(520
)
Ending balance
 
 
 
$
1,144

 
$
(1,589
)
 
$
(412
)

See also discussions in Note 8 (Fair Value Disclosure of Financial Instruments) below.

8.    FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
 
Cash and cash equivalents, restricted cash, accounts payable, accrued expenses and other liabilities and security deposits are carried at amounts that reasonably approximate their fair value due to their short term nature.
 
We apply FASB ASC, 820 Fair Value Measurements and Disclosures, or ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value

F-37


hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
 
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Fixed rate notes payable at December 31, 2016 and December 31, 2015 , totaled $3.00 billion and $2.61 billion , respectively, and had estimated fair values of $3.13 billion and $2.71 billion (excluding prepayment penalties), respectively, as of December 31, 2016 and December 31, 2015 . The carrying value of variable rate notes payable (excluding the effect of interest rate swap and cap agreements) at December 31, 2016 and December 31, 2015 , totaled $1.50 billion and $0.82 billion , respectively, and had estimated fair values of $1.51 billion and $0.82 billion (excluding prepayment penalties), respectively, based upon observable interest rates available for the issuance of debt with similar terms and remaining maturities as of December 31, 2016 and December 31, 2015 . The valuation of our debt is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each debt instrument. This analysis reflects the contractual terms of the debt, and uses observable market-based inputs, including interest rate curves and credit spreads. The fair values of fixed debt are determined by using the present value of future cash outflows discounted with the applicable current market rate plus a credit spread. The fair values of variable debt are determined using the stated variable rate plus the current market credit spread. Our variable rates reset every 30 to 90 days and we conclude that these rates reasonably estimate current market rates. We have determined that inputs used to value our debt fall within Level 2 of the fair value hierarchy and therefore our fair market valuation of debt is considered Level 2 in the fair value hierarchy.

Currently, we use interest rate swaps and interest rate caps (options) to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

To comply with the provisions of ASC 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. In conjunction with the FASB's fair value measurement guidance, we made an accounting policy election to measure the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

The derivative asset related to the redemption feature embedded in the 8.50% Series I Cumulative Redeemable Preferred shares issued in connection with Merger are valued using widely accepted valuation techniques, included discounted cash flow analysis in which the perpetual value of the preferred shares are compared to the value with the call option giving the value of the bifurcated call option as the difference between the two values. This analysis reflects the contractual terms of the redeemable preferred shares, redeemable at the Company's option, on October 1, 2026 , reflecting the redemption price per share, $50 , as the price at which the preferred stock is redeemable. The analysis uses observable market-based inputs, including discount rates based on the REIT preferred stock indices and adjusted based treasury rates to determine the present value of cash flows for the called value and the perpetual value in addition to trading data available on the preferred shares to

F-38


interpolate an as called value and discount rate and again adjusted from there to determine the perpetual discount rate using the applicable treasury rates.

We have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, and as a result, all of our derivatives held as of December 31, 2016 and December 31, 2015 were classified as Level 2 of the fair value hierarchy.

The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and December 31, 2015 , aggregated by the level in the fair value hierarchy within which those measurements fall.
 
Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2016
(dollars in thousands)

 
Quoted Prices in
Active Markets
for Identical
Assets and Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs 
(Level 2)
 
Significant
Unobservable
Inputs 
(Level 3)
 
Balance at
December 31, 2016
Assets
 

 
 

 
 

 
 

Interest rate derivative contracts
$
—

 
$
2,364

 
$
—

 
$
2,364

Preferred Stock embedded derivative
—

 
10,783

 
—

 
10,783

Total
$
—

 
$
13,147

 
$
—

 
$
13,147

Liabilities
 

 
 

 
 

 
 

Interest rate derivative contracts
$
—

 
$
7,562

 
$
—

 
$
7,562

 

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2015
(dollars in thousands)  
 
Quoted Prices in
Active Markets
for Identical
Assets and Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs 
(Level 2)
 
Significant
Unobservable
Inputs 
(Level 3)
 
Balance at
December 31, 2015
Assets
 

 
 

 
 

 
 

Interest rate derivative contracts
$
—

 
$
6

 
$
—

 
$
6

Liabilities
 

 
 

 
 

 
 

Interest rate derivative contracts
$
—

 
$
10,358

 
$
—

 
$
10,358


The fair value estimates presented herein are based on information available to management as of December 31, 2016 and December 31, 2015 .  These estimates are not necessarily indicative of the amounts we could ultimately realize.  See also Note 7 (Derivatives and Hedging Activities).















F-39


9.    INCOME TAXES
 
For income tax purposes, dividends paid to holders of common stock primarily consist of ordinary income, return of capital, capital gains, qualified dividends and un-recaptured Section 1250 gains, or a combination thereof. For the years ended December 31, 2016, 2015 and 2014, dividends per share held for the entire year were estimated to be taxable as follows:

 
2016
 
2015
 
2014
 
Amount
Percentage
 
Amount
Percentage
 
Amount
Percentage
Ordinary income
$
3.28

100
%
 
$
3.07

99.7
%
 
$
2.76

94.41
%
Return of capital
—

—
%
 
—

—
%
 
0.16

5.59
%
Un-recaptured Section 1250 gain
—

—
%
 
0.01

0.3
%
 
—

—
%
 
$
3.28

100.00
%
 
$
3.08

100.00
%
 
$
2.92

100.00
%

We designated the per share amounts above as capital gain dividends in accordance with the requirements of the Code. The difference between net income available to common shareholders for financial reporting purposes and taxable income before dividend deductions relates primarily to temporary differences such as depreciation and amortization, and deferral of gains on sold properties utilizing like kind exchanges under Internal Revenue Code, or IRC, section 1031.

Merger

As discussed in Note 2 (Business Combinations), on December 1, 2016, we completed the Merger pursuant to the Merger Agreement, Post Properties merged with and into MAA completing the Parent Merger, and Post LP merged with and into MAALP completing the Partnership Merger. We believe that the Partnership Merger constituted a tax free merger under Code section 708. Additionally, we believe that the Parent Merger constituted a tax free merger under Code section 368(a). As a result of the tax free merger treatment, the merger transactions did not result in the recognition of a gain to any security holder of MAA, Post Properties, MAALP, or Post LP.

On December 1, 2016, MAA re-identified hedging transactions for federal income tax purposes according to Reg. §1.1221-2(f) and all relevant state income tax purposes that were previously held by Post Properties. This re-identification was made because the tax identity of Post Properties changed by virtue of the merger into MAA. These hedging transactions are included in the derivative disclosures in Note 7 (Derivatives and Hedging Activities).

Taxable REIT subsidiaries

We acquired the operations of a taxable REIT subidiary, or TRS, Colonial Properties Services, Inc., or CPSI, through the Colonial Merger in 2013. As a result, CPSI’s tax attributes are now included in the MAA consolidated financial statements. Formerly, CPSI provided property development, construction, leasing and management services for joint venture and third-party owned properties and administrative services to MAA and engaged in for-sale development activity. CPSI also owned and operated two multifamily apartment communities during 2016, however, during 2016, CPSI distributed these communities to MAALP.  The distribution resulted in a reduction of the deferred tax asset for real estate asset basis differences and the valuation allowance. CPSI currently holds undeveloped land held for sale.

We acquired the operations of a TRS, Post Asset Management, Inc., or PAM, through the Post Merger in 2016. As a result, PAM’s tax attributes are now included in the MAA consolidated financial statements. PAM provides third-party to MAA services as well as to MAA owned properties. PAM also currently holds a tract of undeveloped land held for sale.

We also hold certain undeveloped land through another TRS, MAA Copper Ridge, Inc.

We generally reimburse our TRSs for payroll and other costs incurred in providing services to us. All inter-company transactions are eliminated in the accompanying consolidated financial statements. A TRS is an entity that is subject to Federal, state and any applicable local corporate income tax without the benefit of the dividends paid deduction applicable to REITs. Our TRSs recognized no income tax expense for the years ended December 31, 2016, 2015 or 2014.

The TRSs uses the liability method of accounting for income taxes. Deferred income tax assets and liabilities result from temporary differences. Temporary differences are differences between tax bases of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future periods. The net deferred tax

F-40


assets of the Company related to net deferred tax assets of CPSI and the net-loss deferred tax asset acquired by MAA from Colonial in 2013, have been fully offset by a valuation allowance. The net deferred tax assets of PAM were immaterial at December 31, 2016. We record a valuation allowance against our net deferred tax assets when we determine that based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized. We considered the four sources of taxable income that should be considered when determining whether a valuation allowance is required (from least to most subjective):

•
taxable income in prior carryback years, if carryback is permitted under the tax law;
•
future reversals of existing taxable temporary differences (i.e., offset gross deferred tax assets against gross deferred tax liabilities);
•
tax planning strategies; and
•
future taxable income exclusive of reversing temporary differences and carryforwards.

For the years ended December 31, 2016 and 2015, the components of MAA's deferred income tax assets and liabilities were as follows (dollars in thousands):

 
December 31, 2016
 
December 31, 2015
Deferred tax assets:
 
 
 
Real estate asset basis differences
$
13,387

 
$
25,627

Deferred revenue
—

 
22

Deferred expenses
12,481

 
14,106

Net operating loss carryforward
32,585

 
28,493

Accrued liabilities
102

 
3,951

 
$
58,555

 
$
72,199

Deferred tax liabilities:
 
 
 
Real estate asset basis differences
$
(311
)
 
$
(145
)
 
$
(311
)
 
$
(145
)
Net deferred tax assets, before valuation allowance
$
58,244

 
$
72,054

Valuation allowance
(58,244
)
 
(72,054
)
Net deferred tax assets, included in other assets
$
—

 
$
—


For the years ended December 31, 2016, 2015 and 2014, the reconciliation of income tax attributable to continuing operations for the TRSs computed at the U.S. statutory rate to the income tax provision was as follows (dollars in thousands):

 
2016
 
2015
 
2014
Tax expense at U.S. statutory rates on TRS income subject to tax
$
3,185

 
$
2,506

 
$
1,802

Effect of permanent differences and other
—

 
(730
)
 
(1,110
)
Decrease in valuation allowance
(3,185
)
 
(1,776
)
 
(692
)
TRS income tax provision
$
—

 
$
—

 
$
—


At December 31, 2016 and 2015, CPSI had federal net operating loss, or NOL, carryforwards of approximately $76.6 million and $66.0 million , respectively, for income tax purposes that expire in years 2030 to 2036 . Utilization of these NOL carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 of the Code and similar state provisions. The annual limitations may result in the expiration of NOL carryforwards before utilization. CPSI generated approximately $9.4 million of taxable loss before NOL carryforwards for the period ended December 31, 2016.

We had no reserve for uncertain tax positions for the years ended December 31, 2016, 2015 and 2014. If necessary, we accrue interest and penalties on unrecognized tax benefits as a component of income tax expense.

For the years ended December 31, 2016, 2015, and 2014, other expenses include estimated state franchise and other taxes, including franchise taxes in North Carolina and Tennessee. The income tax expense line item shown in the Consolidated Statement of Operations represents the Texas-based margin tax for all Texas properties and federal and state taxes for PAM.

F-41


As of December 31, 2016 and 2015, MAA held federal NOL carryforwards of approximately $71.5 million and $46.3 million, respectively, for income tax purposes that expire in years 2019 to 2033. MAA's NOL increased by $25.2 million through its acquisition of Post Properties’ NOL. Utilization of our NOL carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 of the Code and similar state provisions. The annual limitations may result in the expiration of NOL carryforwards before utilization. We may use these NOLs to offset all or a portion of the taxable income generated at the REIT level.

Tax years 2013 through 2016 are subject to examination by the Internal Revenue Service. No tax examination is currently in process.

10.    SHAREHOLDERS' EQUITY OF MAA
 
On December 31, 2016 , 113,518,212 shares of common stock of MAA and 4,220,403 partnership units in the Operating Partnership (excluding the units held by the Operating Partnership) were issued and outstanding, representing a total of 117,738,615 shares and units. At December 31, 2015 , 75,408,571 shares of common stock of MAA and 4,162,996 partnership units in the Operating Partnership were outstanding, representing a total of 79,571,567 shares and units. There were 147,282 outstanding options as of December 31, 2016 compared to 58,112 outstanding options as of December 31, 2015 .

During the year ended December 31, 2016 , 22,067 shares of our common stock were acquired from employees to satisfy minimum tax withholding obligations that arose upon vesting of restricted stock granted pursuant to approved plans. During the year ended December 31, 2015 , 11,914 shares were acquired for these purposes.

Preferred Stock

As of December 31, 2016 , we had one outstanding series of cumulative redeemable preferred stock which was issued pursuant to the Merger and has the following characteristics:
Description
 
Outstanding Shares
 
Liquidation Preference (2)
 
Optional Redemption Date
 
Redemption Price (1)
 
Stated Dividend Yield
 
Approximate Dividend Rate
 
 
 
 
(per share)
 
 
 
 
 
 
 
 
Series I
 
867,846
 
$50.00
 
10/1/2026
 
$50.00
 
8.50%
 
$4.25
(1) The redemption price is the price at which the preferred stock is redeemable, at our option, for cash.
(2) The total liquidation preference for outstanding preferred stock is $43.4 million .

As discussed in Note 2, these shares of preferred stock were issued in connection with the Merger.

Noncontrolling Interest

Noncontrolling interest in the accompanying Consolidated Financial Statements relates to the limited partnership interest in the Operating Partnership owned by the holders of the Class A limited partner units of the Operating Partnership, or Class A Units. MAA is the sole general partner of the Operating Partnership and holds all of the outstanding Class B general partner units of the Operating Partnership, or Class B Units. Net income (after allocations to preferred ownership interests) is allocated to MAA and the noncontrolling interest based on their respective ownership percentages of the Operating Partnership. Issuance of additional Class A Units or Class B Units changes the ownership percentage of both the noncontrolling interest and MAA. The issuance of Class B Units generally occurs when MAA issues common stock and the issuance proceeds are contributed to the Operating Partnership in exchange for Class B Units equal to the number of shares of common stock issued. At each reporting period, the allocation between total MAA shareholders’ equity and Noncontrolling interest is adjusted to account for the change in the respective percentage ownership of the underlying equity of the Operating Partnership.

MAA’s Board of Directors established economic rights in respect to each Class A Unit that were equivalent to the economic rights in respect to each share of MAA common stock. The holders of Class A Units may redeem each of their units in exchange for one share of common stock in MAA or cash, at the option of MAA. At December 31, 2016 , a total of 4,220,403 Class A Units were outstanding and redeemable to MAA by the holders of the units for 4,220,403 shares of MAA common stock or approximately $413.3 million , based on the closing price of MAA’s common stock on December 31, 2016 of $97.92 per share, at MAA’s option. At December 31, 2015 , a total of 4,162,996 Class A Units were outstanding and redeemable to MAA by the holders of the units for 4,162,996 shares of MAA common stock or approximately $378.0 million , based on the closing price of MAA’s common stock on December 31, 2015 of $90.81 per share, at MAA’s option.


F-42


The Operating Partnership pays the same per unit distribution in respect to the Class A Units as the per share distribution MAA pays in respect to the common stock. Operating Partnership net income for 2016 , 2015 and 2014 was allocated approximately 5.0% , 5.2% and 5.3% , respectively, to holders of Class A Units and 95.0% , 94.8% and 94.7% , respectively, to MAA as the holder of all Class B Units.

MAA further determined that the noncontrolling interests in its consolidated real estate entity totaling $2.3 million (see Note 1 - Organization and Summary of Significant Accounting Policies) met the criterion to be classified and accounted for as a component of permanent equity.

Direct Stock Purchase and Distribution Reinvestment Plan

MAA has a Dividend and Distribution Reinvestment and Share Purchase Plan, or DRSPP, pursuant to which MAA’s shareholders have the ability to reinvest all or part of their distributions from MAA’s stock and holders of Class A Units have the ability to reinvest all or part of their distributions from MAALP into MAA’s common stock. The DRSPP also provides the opportunity to make optional cash investments in MAA's common stock of at least $250 , but not more than $5,000 in any given month, free of brokerage commissions and charges. MAA, in its absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000 . To fulfill its obligations under the DRSPP, MAA may either issue additional shares of common stock or repurchase common stock in the open market. MAA has registered with the SEC the offer and sale of up to 9,600,000 shares of common stock pursuant to the DRSPP. MAA may elect to sell shares under the DRSPP at up to a 5% discount.

Shares of common stock totaling 7,906 in 2016 , 8,562 in 2015 , and 9,055 in 2014 were acquired by shareholders under the DRSPP. MAA did not offer a discount for optional cash purchases in 2016 , 2015 or 2014 .

At the Market Offering

On December 9, 2015, we entered into distribution agreements with J.P. Morgan Securities, LLC, BMO Capital Markets Corp. and KeyBanc Capital Markets Inc. to sell up to an aggregate of 4.0 million shares of common stock, from time-to-time in at-the-market offerings or negotiated transactions through controlled equity offering programs, or ATMs. As of December 31, 2016 , there were 4.0 million shares remaining under the ATM program.

During the years ended December 31, 2016 and 2015 , MAA did not sell any shares of common stock under its ATMs. As of December 31, 2016, there were 4.0 million shares available for issuance under MAA's ATMs.
 
Stock Repurchase Plan

In 1999, MAA’s Board of Directors approved a stock repurchase plan to acquire up to a total of 4.0 million shares of MAA’s common stock. As of December 8, 2015, MAA had repurchased and retired approximately 1.9 million shares of common stock for a cost of approximately $42.0 million at an average price per common share of $22.54 . No shares were repurchased in 2002 through 2016 under the plan. On December 8, 2015, MAA's Board of Directors authorized us to repurchase up to 4.0 million shares of MAA common stock, which represented approximately 5.3% of MAA's common stock outstanding at the time of such authorization. This December 2015 authorization replaced and superseded the 1999 plan, under which approximately 2.1 million shares remained at the time of the December 2015 authorization.  No shares were repurchased from December 8, 2015 through December 31, 2016 under the current authorization.

Exercise of Stock Options

During the years ended December 31, 2015 and 2014 , we issued 7,342 shares and 270,459 shares, respectively, related to the exercise of stock options. These exercises resulted in proceeds of $0.4 million and $12.2 million , respectively. There were no stock options exercised in 2016.


11.    PARTNERS' CAPITAL OF MAALP

Operating Partnership Units

Interests in MAALP are represented by Operating Partnership Units, or OP Units. As of December 31, 2016 , there were 117,738,615 OP Units outstanding, 113,518,212 or 96.4% of which were owned by MAA, MAALP's general partner. The remaining 4,220,403 OP Units were owned by non-affiliated limited partners, or Class A Limited Partners. As of December 31,

F-43


2015 , there were 79,571,567 OP Units outstanding, 75,408,571 or 94.8% of which were owned by MAA and 4,162,996 of which were owned by the Class A Limited Partners.

MAA, as the sole general partner of MAALP, has full, complete and exclusive discretion to manage and control the business of the Operating Partnership subject to the restrictions specifically contained within the Partnership Agreement. Unless otherwise stated in the Partnership Agreement of MAALP, this power includes, but is not limited to, acquiring, leasing, or disposing of any real property; constructing buildings and making other improvements to properties owned; borrowing money, modifying or extinguishing current borrowings, issuing evidence of indebtedness, and securing such indebtedness by mortgage, deed of trust, pledge or other lien on the Operating Partnership's assets; and distribution of Operating Partnership cash or other assets in accordance with the Partnership Agreement. MAA can generally, at its sole discretion, issue and redeem OP Units and determine the consideration to be received or the redemption price to be paid, as applicable. The general partner may delegate these and other powers granted if the general partner remains in supervision of the designee.

Under the Partnership Agreement, the Operating Partnership may issue Class A Units and Class B Units. Class A Units may only be held by limited partners who are not affiliated with MAA, in its capacity as general partner of the Operating Partnership, while Class B Units may only be held by MAA, in its capacity as general partner of the Operating Partnership, and as of December 31, 2016 , a total of 4,220,403 Class A Units in the Operating Partnership were held by limited partners unaffiliated with MAA, while a total of 113,518,212 Class B Units were held by MAA. In general, the limited partners do not have the power to participate in the management or control of the Operating Partnership's business except in limited circumstances including changes in the general partner and protective rights if the general partner acts outside of the provisions provided in the Partnership Agreement. The transferability of Class A Units is also limited by the Partnership Agreement.

Net income (after allocations to preferred ownership interests) is allocated to the general partner and limited partners based on their respective ownership percentages of the Operating Partnership. Issuance or redemption of additional Class A Units or Class B Units changes the relative ownership percentage of the partners. The issuance of Class B Units generally occurs when MAA issues common stock and the proceeds from that issuance are contributed to the Operating Partnership in exchange for the issuance to MAA of a number of OP Units equal to the number of shares of common stock issued. Likewise, if MAA repurchases or redeems outstanding shares of common stock, the Operating Partnership generally redeems an equal number of Class B Units with similar terms held by MAA for a redemption price equal to the purchase price of those shares of common stock. At each reporting period, the allocation between general partner capital and limited partner capital is adjusted to account for the change in the respective percentage ownership of the underlying capital of the Operating Partnership. Holders of the Class A Units may require MAA to redeem their Class A Units, in which case MAA may, at its option, pay the redemption price either in cash (in an amount per Class A Unit equal, in general, to the average closing price of MAA's common stock on the New York Stock Exchange over a specified period prior to the redemption date) or by delivering one share of MAA common stock (subject to adjustment under specified circumstances) for each Class A Unit so redeemed.

At December 31, 2016 , a total of 4,220,403 Class A Units were outstanding and redeemable for 4,220,403 shares of MAA common stock, with an approximate value of $413.3 million , based on the closing price of MAA’s common stock on December 31, 2016 of $97.92 per share. At December 31, 2015 , a total of 4,162,996 Class A Units were outstanding and redeemable for 4,162,996 shares of MAA common stock, with an approximate value of $378.0 million , based on the closing price of MAA’s common stock on December 31, 2015 of $90.81 per share.

The Operating Partnership pays the same per unit distribution in respect to the OP Units as the per share dividend MAA pays in respect to its common and preferred stock.


12.     EMPLOYEE BENEFIT PLANS

Following are details of employee benefit plans not previously discussed in Note 5 (Stock Based Compensation).

401(k) Savings Plans
 
MAA's 401(k) Savings Plan, or 401(k) Plan, is a defined contribution plan that satisfies the requirements of Section 401(a) and 401(k) of the Code. Subsequent to the Merger, eligible employees of Post Properties continued to actively participate in the Post Properties 401(k) Plan, which also is a defined contribution plan that satisfies the requirements of Section 401(a) and 401(k) of the Code. MAA's Board of Directors has the discretion to approve matching contributions to these plans. MAA's contributions to these plans were approximately $2.0 million , $1.0 million and $0.9 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.


F-44


Non-Qualified Deferred Compensation Retirement Plan

MAA has adopted a non-qualified deferred compensation retirement plan for certain selected executive employees. Under the terms of the plan, employees may elect to defer a percentage of the compensation and bonus, and MAA may, but is not obligated to, match a portion of their salary deferral. MAA’s match to this plan for the years ended December 31, 2016 , 2015 and 2014 was approximately $96,000 , $106,000 and $82,000 , respectively.

Non-Qualified Deferred Compensation Plan for Outside Company Directors

In 1998, MAA established the Non-Qualified Deferred Compensation Plan for Outside Company Directors, or the Directors Deferred Compensation Plan, which allows non-employee directors to defer their director fees by having the fees held by MAA as shares of MAA's common stock. Directors can also choose to have their annual restricted stock grants issued into the Directors Deferred Compensation Plan. Amounts deferred through the Directors Deferred Compensation Plan are distributed to the directors in two annual installments beginning in the first 90 days of the year following the director’s departure from the board. Participating directors may choose to have the amount issued to them in shares of MAA's common stock or paid to them as cash at the market value of MAA's common stock as of the end of the year the director ceases to serve on the board.

For the years ended December 31, 2016 , 2015 and 2014 , directors deferred 10,166 shares, 8,466 shares and 9,415 shares of common stock, respectively, with weighted-average grant date fair values of $97.99 , $78.62 and $70.63 , respectively, into the Directors Deferred Compensation Plan.

The shares of common stock held in the Directors Deferred Compensation Plan are classified outside of permanent equity in redeemable stock with changes in redemption amount recorded immediately to retained earnings because the directors have redemption rights not solely within the control of MAA. Additionally, any shares that become mandatorily redeemable because a departed director has elected to receive a cash payout are recorded as a liability. MAA did not record a liability related to mandatorily redeemable shares for the years ended December 31, 2016 , 2015 and 2014 .

Employee Stock Ownership Plan

MAA’s Employee Stock Ownership Plan, or ESOP, is a non-contributory stock bonus plan that satisfies the requirements of Section 401 (a) of the Code. On December 31, 2010, the ESOP was frozen by amendment, whereby effective January 1, 2011, no additional employees became eligible for the plan, no additional contributions were made to the ESOP, and all Participants with an account balance under the ESOP became 100% vested. The Company did not contribute to the ESOP during 2016 , 2015 or 2014 . As of December 31, 2016 , there were 149,051 shares outstanding with a fair value of $14.6 million .


13.     COMMITMENTS AND CONTINGENCIES

Land and equipment leases

We have a ground lease expiring in 2074 related to one of its operating communities acquired in the Merger. This lease contains stated rent increases that generally compensate for the impact of inflation.  We also have office, equipment and other operating leases.  Future minimum lease payments for non-cancelable land, equipment and other operating leases at December 31, 2016, were as follows (dollars in thousands):

2017
$
836

2018
703

2019
687

2020
707

2021
719

2022 and thereafter
63,600


Legal proceedings
 
In September 2010, the United States Department of Justice, or DOJ, filed suit against Post Properties (and by virtue of the Merger, MAA) in the United States District Court for the District of Columbia alleging that certain of Post Properties’

F-45


apartments violated accessibility requirements of the Fair Housing Act, or FHA. and the Americans with Disabilities Act of 1990, or ADA. The DOJ is seeking, among other things, an injunction against MAA, requiring MAA to retrofit the properties and comply with FHA and ADA standards in future design and construction, as well as monetary damages and civil penalties. No trial date has been set and no significant settlement negotiations with the DOJ have occurred.

In addition, we are subject to various other legal proceedings and claims that arise in the ordinary course of its business operations. Matters which arise out of allegations of bodily injury, property damage and employment practices are generally covered by insurance. While the resolution of these other matters cannot be predicted with certainty, management currently believes the final outcome of such matters will not have any additional material adverse effect on our financial position, results of operations or cash flows.

Loss Contingencies

See discussion of our accounting for loss contingencies in Note 1 (Organization and Summary of Significant Accounting Polices). As of December 31, 2016 and December 31, 2015 , the Company's accrual for loss contingencies was $42.1 million and $13.5 million in the aggregate, respectively.

14.    RELATED PARTY TRANSACTIONS
 
In 2016, 2015 and 2014, we held investments in unconsolidated joint ventures accounted for under the equity method of accounting (see note 1). Our portion of all significant intercompany transactions was eliminated in the accompanying consolidated financial statements.

All cash management of the Company is managed by the Operating Partnership. In general, cash receipts are remitted to the Operating Partnership and all cash disbursements are funded by the Operating Partnership. As a result of these transactions, the Operating Partnership had a payable to its General Partner (MAA) of $19,000 at each of the years ended December 31, 2016 , and 2015 . The Partnership Agreement does not require that this due to/due from be settled in cash until liquidation of the Operating Partnership and therefore there is no regular settlement schedule for these amounts.

15.    EARNINGS FROM DISCONTINUED OPERATIONS

In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity . We adopted ASU 2014-08 during the period ending March 31, 2014. Due to the early adoption of ASU 2014-08, none of the wholly owned multifamily real estate dispositions for the years ended December 31, 2016 and December 31, 2015 were classified as discontinued operations, and the majority of the wholly owned multifamily real estate dispositions for the year ended December 31, 2014 were not classified as discontinued operations.
 
One of the ten properties that we sold during 2014 , Willow Creek, was classified as discontinued operations in the accompanying Consolidated Statements of Operations. Willow Creek was included in discontinued operations because it had been designated as held for sale and was shown in discontinued operations as of December 31, 2013, and thus was not subject to ASU 2014-08.


















F-46


As a result of the adoption of ASU No. 2014-08, the Company did not report any discontinued operations for the year ended December 31, 2016 or the year ended December 31, 2015 . The following is a summary of income from continuing and discontinued operations attributable to MAA and noncontrolling interest for the years ended December 31, 2016 , 2015 and 2014 (dollars in thousands):


 
2016
 
2015
 
2014
Income from continuing operations:
 
 
 
 
 
Net Income available for shareholders
$
212,222

 
$
332,287

 
$
142,933

Attributable to noncontrolling interest
12,180

 
18,458

 
8,013

Income from continuing operations
$
224,402

 
$
350,745

 
$
150,946

 
 
 
 
 
 
Income from discontinued operations:
 

 
 

 
 
Attributable to MAA
$
—

 
$
—

 
$
5,047

Attributable to noncontrolling interest
—

 
—

 
284

Income from discontinued operations
$
—

 
$
—

 
$
5,331



The following is a summary of earnings from discontinued operations for MAA and MAALP for the year ended December 31, 2014 (dollars in thousands):

 
2014
Revenues:
 

Rental revenues
$
75

Other revenues
10

Total revenues
85

Expenses:
 

Property operating expenses
74

Depreciation and amortization
42

Interest expense
32

Total expenses
148

Income from discontinued operations before gain on sale
(63
)
Gain on sale of discontinued operations
5,394

Income from discontinued operations
$
5,331




16.     SEGMENT INFORMATION
 
As of December 31, 2016 , we owned or had an ownership interest in 303 multifamily apartment communities in 16 different states and the District of Columbia from which we derived all significant sources of earnings and operating cash flows. Senior management evaluates performance and determines resource allocations of each of our apartment communities on a Large Market Same Store, Secondary Market Same Store, and Non-Same Store and Other basis, as well as an individual apartment community basis.  This is consistent with the aggregation criteria under GAAP as each of our apartment communities generally has similar economic characteristics, facilities, services, and tenants. The following are the three reportable operating segments for MAA and the Operating Partnership:
 
•
Large market same store communities are generally communities in markets with a population of at least 1 million and at least 1% of the total public multifamily REIT units that we have owned and have been stabilized for at least a full 12 months.


F-47


•
Secondary market same store communities are generally communities in markets with populations of more than 1 million but less than 1% of the total public multifamily REIT units or markets with populations of less than 1 million that we have owned and have been stabilized for at least a full 12 months.

•
Non same store communities and other includes recent acquisitions, communities in development or lease-up, communities that have been identified for disposition, and communities that have undergone a significant casualty loss. Also included in non same store communities are non multifamily activities which represent less than 1% of our portfolio's net operating income, or NOI.

On the first day of each calendar year, we determine the composition of our same store operating segments for that year as well as adjusting the previous year, which allows us to evaluate full period-over-period operating comparisons. Properties in development or lease-up will be added to the same store portfolio on the first day of the calendar year after they have been owned and stabilized for at least a full 12 months. Communities are considered stabilized after achieving 90% occupancy for 90 days . Communities that have been identified for disposition are excluded from our same store portfolio.

We utilize NOI in evaluating the performance of the segments.  Total NOI represents total property revenues less total property operating expenses, excluding depreciation and amortization, for all properties held during the period regardless of their status as held for sale. We believe NOI is a helpful tool in evaluating the operating performance of our segments because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.

A redevelopment community is a community with a specific plan in place to upgrade at least half of the community's units over a period of time with new finishes, fixtures, and appliances, among other upgrades.  These plans include spending a pre-defined amount of capital per unit to achieve a rent increase as a result of the upgrades.  We separately identify redevelopment communities that would cause a material distortion of normal same store operating results. Routine renovations occur at a property as items need to be replaced as a normal part of operations and is done with an expectation to maintain the current level of quality at the property. There is no specified plan in place for routine renovations.
































F-48


Revenues and NOI for each reportable segment for the years ended December 31, 2016 , 2015 and 2014 were as follows (dollars in thousands):

 
2016
 
2015
 
2014 (1)
Revenues:
 

 
 

 
 

Large Market Same Store
$
642,679

 
$
612,934

 
$
553,038

Secondary Market Same Store
337,883

 
327,700

 
310,281

Non-Same Store and Other
144,786

 
102,145

 
128,859

Total property revenues
1,125,348

 
1,042,779

 
992,178

Management fee income
—

 
—

 
154

Total operating revenues
$
1,125,348

 
$
1,042,779

 
$
992,332

 
 
 
 
 
 
NOI:
 

 
 

 
 

Large Market Same Store
$
399,287

 
$
377,025

 
$
334,255

Secondary Market Same Store
212,053

 
204,382

 
190,348

Non-Same Store and Other
90,652

 
60,727

 
74,211

Total NOI
701,992

 
642,134

 
598,814

Discontinued operations NOI included above
—

 
—

 
16

Management fee income
—

 
—

 
154

Depreciation and amortization
(322,958
)
 
(294,520
)
 
(301,812
)
Acquisition expenses
(2,928
)
 
(2,777
)
 
(2,388
)
Property management expenses
(34,093
)
 
(30,990
)
 
(32,095
)
General and administrative expenses
(29,040
)
 
(25,716
)
 
(20,909
)
Merger related expenses
(39,033
)
 
—

 
(3,152
)
Integration related costs
(1,790
)
 
—

 
(8,395
)
Interest and other non-property income (expense)
724

 
(368
)
 
770

Interest expense
(129,947
)
 
(122,344
)
 
(123,953
)
Loss on debt extinguishment/modification
(83
)
 
(3,602
)
 
(2,586
)
Net casualty gain (loss) after insurance and other settlement proceeds
448

 
473

 
(476
)
Gain on sale of depreciable real estate assets
80,397

 
189,958

 
42,649

Income tax expense
(1,699
)
 
(1,673
)
 
(2,050
)
Gain on sale of non-depreciable real estate assets
2,171

 
172

 
350

Gain (loss) from real estate joint ventures
241

 
(2
)
 
6,009

Discontinued operations
—

 
—

 
5,331

Net income attributable to noncontrolling interests
(12,180
)
 
(18,458
)
 
(8,297
)
Preferred dividends
(307
)
 
—

 
—

Net income available for MAA common shareholders
$
211,915

 
$
332,287

 
$
147,980


(1) The 2014 column shows the segment break down based on the 2015 same store portfolios. A comparison using the 2016 same store portfolio would not be comparative due to the nature of the segment classifications.

Assets for each reportable segment as of December 31, 2016 and 2015 were as follows (dollars in thousands):
 
 
December 31, 2016
 
December 31, 2015
Assets
 

 
 

Large Market Same Store
$
3,945,122

 
$
4,062,595

Secondary Market Same Store
1,707,495

 
1,756,313

Non-Same Store and Other
5,722,231

 
956,336

Corporate assets
229,643

 
72,537

Total assets
$
11,604,491

 
$
6,847,781

 

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17.      REAL ESTATE ACQUISITIONS AND DISPOSITIONS

The following chart shows our acquisition activity, excluding properties acquired through the Merger, for the year ended December 31, 2016 :

Community
 
Market
 
Units/Acres
 
Date Acquired
The Apartments at Cobblestone Square
 
Fredericksburg, Virginia
 
314
 
March 1, 2016
Residences at Fountainhead
 
Phoenix, Arizona
 
322
 
June 30, 2016
Yale at 6th
 
Houston, Texas
 
352
 
September 8, 2016
Innovation Apartment Homes
 
Greenville, South Carolina
 
336
 
September 22, 2016
1201 Midtown
 
Charleston, South Carolina
 
302
 
December 15, 2016

The following chart shows our disposition activity for the year ended December 31, 2016 :

Community
 
Market
 
Units/Sq. Ft./Acres
 
Date Sold
McKinney (1)
 
Dallas, Texas
 
30 acres
 
February 5, 2016
Colonial Promenade Nord du Lac
 
Covington, Louisiana
 
295,447 sq. ft.
 
March 28, 2016
Colonial Promenade Nord du Lac - Outparcels
 
Covington, Louisiana
 
25 acres
 
March 28, 2016
Colonial Grand at Heathrow - Adjacent Land Parcels
 
Orlando, Florida
 
11 acres
 
April 7, 2016
Land Title Building (2)
 
Birmingham, Alabama
 
29,971 sq. ft.
 
May 23, 2016
Colonial Promenade Huntsville - Outparcel
 
Huntsville, Alabama
 
1 acre
 
June 29, 2016
CG at Autumn Park
 
Greensboro, North Carolina
 
402
 
August 18, 2016
Corners at Crystal Lake
 
Winston-Salem, North Carolina
 
240
 
August 18, 2016
CV at Glen Eagles
 
Winston-Salem, North Carolina
 
310
 
August 18, 2016
CV at Mill Creek
 
Winston-Salem, North Carolina
 
220
 
August 18, 2016
Abbington Place
 
Huntsville, Alabama
 
152
 
September 13, 2016
CV at Stone Point
 
Charlotte, North Carolina
 
192
 
September 13, 2016
CV at Greystone
 
Charlotte, North Carolina
 
408
 
September 13, 2016
CV at Woodlake
 
Raleigh/Durham, North Carolina
 
266
 
November 17, 2016
CV at Tradewinds
 
Norfolk/Hampton/Virginia Beach, Virginia
 
284
 
November 17, 2016
CV Harbour Club
 
Norfolk/Hampton/Virginia Beach, Virginia
 
213
 
November 17, 2016
CV Main Park
 
Dallas, Texas
 
192
 
November 17, 2016
Lane at Towne Crossing
 
Dallas, Texas
 
384
 
November 17, 2016



18.     SUBSEQUENT EVENTS
 
On February 7, 2017, we paid off the $15.8 million remaining principal balance of the mortgage on the Grand Cypress apartment community.

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19.    SELECTED QUARTERLY FINANCIAL INFORMATION OF MID-AMERICA APARTMENT COMMUNITIES, INC. (UNAUDITED)
 
(Dollars in thousands except per share data) 
 
Year Ended December 31, 2016
 
 
First
 
Second
 
Third
 
Fourth
 
Total operating revenues
$
269,016

 
$
272,236

 
$
276,898

 
$
307,198

 
Income from continuing operations before non-operating items
$
76,709

 
$
77,794

 
$
73,790

 
$
43,857

 
Interest expense
$
(32,211
)
 
$
(32,039
)
 
$
(32,168
)
 
$
(33,529
)
 
Gain (loss) from real estate joint ventures
$
128

 
$
(101
)
 
$
—

 
$
214

 
Net income
$
45,808

 
$
47,630

 
$
88,906

 
$
42,058

 
Net income attributable to noncontrolling interest
$
2,395

 
$
2,486

 
$
4,627

 
$
2,672

 
Dividends to preferred shareholders
$
—

 
$
—

 
$
—

 
$
307

 
Net income available for MAA common shareholders
$
43,413

 
$
45,144

 
$
84,279

 
$
39,079

 
 
 
 
 
 
 
 
 
 
Per share:
 

 
 

 
 

 
 

 
Net income available per common share - basic
$
0.58

 
$
0.60

 
$
1.12

 
$
0.44

 
Net income available per common share - diluted
$
0.58

 
$
0.60

 
$
1.12

 
$
0.44

 
Dividend paid
$
0.82

 
$
0.82

 
$
0.82

 
$
0.82

 
 
 
Year Ended December 31, 2015
 
 
First
 
Second
 
Third
 
Fourth
 
Total operating revenues
$
258,552

 
$
258,891

 
$
261,998

 
$
263,337

 
Income from continuing operations before non-operating items
$
69,393

 
$
68,837

 
$
73,138

 
$
76,763

 
Interest expense
$
(30,848
)
 
$
(30,433
)
 
$
(30,229
)
 
$
(30,834
)
 
Gain (loss) from real estate joint ventures
$
19

 
$
(23
)
 
$
(1
)
 
$
3

 
Net income
$
64,677

 
$
143,873

 
$
96,828

 
$
45,367

 
Net income attributable to noncontrolling interest
$
3,410

 
$
7,574

 
$
5,094

 
$
2,380

 
Dividends to preferred shareholders
$
—

 
$
—

 
$
—

 
$
—

 
Net income available for MAA common shareholders
$
61,267

 
$
136,299

 
$
91,734

 
$
42,987

 
 
 
 
 
 
 
 
 
 
Per share:
 

 
 

 
 

 
 

 
Net income available per common share - basic
$
0.81

 
$
1.81

 
$
1.22

 
$
0.57

 
Net income available per common share - diluted
$
0.81

 
$
1.81

 
$
1.22

 
$
0.57

 
Dividend paid
$
0.77

 
$
0.77

 
$
0.77

 
$
0.77

 


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20.    SELECTED QUARTERLY FINANCIAL INFORMATION OF MID-AMERICA APARTMENTS, L.P. (UNAUDITED)

(Dollars in thousands except per unit data)
 
Year Ended December 31, 2016
 
 
First
 
Second
 
Third
 
Fourth
 
Total operating revenues
$
269,016

 
$
272,236

 
$
276,898

 
$
307,198

 
Income from continuing operations before non-operating items
$
76,709

 
$
77,794

 
$
73,790

 
$
43,857

 
Interest expense
$
(32,211
)
 
$
(32,039
)
 
$
(32,168
)
 
$
(33,529
)
 
Gain (loss) from real estate joint ventures
$
128

 
$
(101
)
 
$
—

 
$
214

 
Net Income
$
45,808

 
$
47,630

 
$
88,906

 
$
42,058

 
Dividends to preferred unitholders
$
—

 
$
—

 
$
—

 
$
307

 
Net income available for common unitholders
$
45,808

 
$
47,630

 
$
88,906

 
$
41,751

 
 
 
 
 
 
 
 
 
 
Per unit:
 
 
 
 
 
 
 
 
Net income available per common unit - basic
$
0.61

 
$
0.60

 
$
1.12

 
$
0.45

 
Net income available per common unit - diluted
$
0.61

 
$
0.60

 
$
1.12

 
$
0.45

 
Distribution paid
$
0.82

 
$
0.82

 
$
0.82

 
$
0.82

 

 
Year Ended December 31, 2015
 
 
First
 
Second
 
Third
 
Fourth
 
Total operating revenues
$
258,552

 
$
258,891

 
$
261,998

 
$
263,337

 
Income from continuing operations before non-operating items
$
69,393

 
$
68,837

 
$
73,138

 
$
76,763

 
Interest expense
$
(30,848
)
 
$
(30,433
)
 
$
(30,229
)
 
$
(30,834
)
 
Gain (loss) from real estate joint ventures
$
19

 
$
(23
)
 
$
(1
)
 
$
3

 
Net income
$
64,677

 
$
143,873

 
$
96,828

 
$
45,367

 
Dividends to preferred unitholders
$
—

 
$
—

 
$
—

 
$
—

 
Net income available for common unitholders
$
64,677

 
$
143,873

 
$
96,828

 
$
45,367

 
 
 
 
 
 
 
 
 
 
Per unit:
 
 
 
 
 
 
 
 
Net income available per common unit - basic
$
0.81

 
$
1.81

 
$
1.22

 
$
0.57

 
Net income available per common unit - diluted
$
0.81

 
$
1.81

 
$
1.22

 
$
0.57

 
Distribution paid
$
0.77

 
$
0.77

 
$
0.77

 
$
0.77

 


F-52


Mid-America Apartment Communities, Inc.
Mid-America Apartments, L.P.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Birchall at Ross Bridge
 
Birmingham, AL
 
—

 
 
 
$
2,640

 
$
28,842

 
$
—

 
$
1,072

 
$
2,640

 
$
29,914

 
$
32,554

 
$
(5,587
)
 
$
26,967

 
2009
 
1 - 40
Colonial Grand at Riverchase Trails
 
Birmingham, AL
 
—

 
 
 
3,761

 
22,079

 
—

 
2,259

 
3,761

 
24,338

 
28,099

 
(3,881
)
 
24,218

 
2010
 
1 - 40
Colonial Village at Trussville
 
Birmingham, AL
 
—

 
 
 
3,402

 
31,813

 
—

 
1,694

 
3,402

 
33,507

 
36,909

 
(4,868
)
 
32,041

 
1996/97
 
1 - 40
Eagle Ridge
 
Birmingham, AL
 
—

 
(1)
 
851

 
7,667

 
—

 
3,593

 
851

 
11,260

 
12,111

 
(6,842
)
 
5,269

 
1986
 
1 - 40
Colonial Grand at Traditions
 
Gulf Shores,AL
 
—

 
 
 
3,211

 
25,162

 
—

 
1,558

 
3,211

 
26,720

 
29,931

 
(4,202
)
 
25,729

 
2007
 
1 - 40
Colonial Grand at Edgewater
 
Huntsville, AL
 
20,472

 
 
 
4,943

 
38,673

 
—

 
3,904

 
4,943

 
42,577

 
47,520

 
(5,669
)
 
41,851

 
1990
 
1 - 40
Paddock Club at Providence
 
Huntsville, AL
 
—

 
 
 
909

 
10,152

 
830

 
13,272

 
1,739

 
23,424

 
25,163

 
(12,467
)
 
12,696

 
1993
 
1 - 40
Colonial Grand at Madison
 
Madison, AL
 
17,028

 
 
 
3,601

 
28,934

 
—

 
1,119

 
3,601

 
30,053

 
33,654

 
(4,488
)
 
29,166

 
2000
 
1 - 40
Paddock Club Montgomery
 
Montgomery, AL
 
—

 
 
 
965

 
13,190

 
—

 
1,769

 
965

 
14,959

 
15,924

 
(7,299
)
 
8,625

 
1999
 
1 - 40
Cypress Village
 
Orange Beach, AL
 
—

 
 
 
1,290

 
12,238

 
—

 
583

 
1,290

 
12,821

 
14,111

 
(1,861
)
 
12,250

 
2008
 
1 - 40
Colonial Grand at Liberty Park
 
Vestavia Hills, AL
 
16,404

 
 
 
3,922

 
30,977

 
—

 
3,249

 
3,922

 
34,226

 
38,148

 
(4,992
)
 
33,156

 
2000
 
1 - 40
Edge at Lyon's Gate
 
Phoenix, AZ
 
—

 
 
 
7,901

 
27,182

 
—

 
1,891

 
7,901

 
29,073

 
36,974

 
(8,483
)
 
28,491

 
2007
 
1 - 40
Residences at Fountainhead
 
Phoenix, AZ
 
—

 
 
 
12,212

 
56,705

 
—

 
566

 
12,212

 
57,271

 
69,483

 
(875
)
 
68,608

 
2015
 
1 - 40
Sky View Ranch
 
Gilbert, AZ
 
—

 
 
 
2,668

 
14,577

 
—

 
1,832

 
2,668

 
16,409

 
19,077

 
(4,413
)
 
14,664

 
2007
 
1 - 40
Talus Ranch
 
Phoenix, AZ
 
—

 
 
 
12,741

 
47,701

 
—

 
2,153

 
12,741

 
49,854

 
62,595

 
(17,449
)
 
45,146

 
2005
 
1 - 40
Colonial Grand at Inverness Commons
 
Mesa, AZ
 
—

 
 
 
4,219

 
26,255

 
—

 
1,211

 
4,219

 
27,466

 
31,685

 
(3,931
)
 
27,754

 
2002
 
1 - 40
Colonial Grand at Scottsdale
 
Scottsdale, AZ
 
—

 
 
 
3,612

 
20,273

 
—

 
1,660

 
3,612

 
21,933

 
25,545

 
(3,137
)
 
22,408

 
1999
 
1 - 40
Colonial Grand at OldTown Scottsdale
 
Scottsdale, AZ
 
—

 
 
 
7,820

 
51,627

 
—

 
3,589

 
7,820

 
55,216

 
63,036

 
(7,643
)
 
55,393

 
1994/95
 
1 - 40
SkySong
 
Scottsdale, AZ
 
—

 
 
 
—

 
55,748

 
—

 
609

 
—

 
56,357

 
56,357

 
(2,310
)
 
54,047

 
2014
 
1 - 40
Calais Forest
 
Little Rock, AR
 
—

 
 
 
1,026

 
9,244

 
—

 
7,442

 
1,026

 
16,686

 
17,712

 
(10,657
)
 
7,055

 
1987
 
1 - 40
Napa Valley
 
Little Rock, AR
 
—

 
 
 
960

 
8,642

 
—

 
4,833

 
960

 
13,475

 
14,435

 
(8,507
)
 
5,928

 
1984
 
1 - 40
Palisades at Chenal Valley
 
Little Rock, AR
 
—

 
 
 
2,560

 
25,234

 
—

 
2,941

 
2,560

 
28,175

 
30,735

 
(5,145
)
 
25,590

 
2006
 
1 - 40
Ridge at Chenal Valley
 
Little Rock, AR
 
—

 
 
 
2,626

 
—

 
—

 
27,222

 
2,626

 
27,222

 
29,848

 
(3,130
)
 
26,718

 
2012
 
1 - 40
Westside Creek
 
Little Rock, AR
 
—

 
 
 
1,271

 
11,463

 
—

 
7,554

 
1,271

 
19,017

 
20,288

 
(11,244
)
 
9,044

 
1984/86
 
1 - 40
Tiffany Oaks
 
Altamonte Springs, FL
 
—

 
(1)
 
1,024

 
9,219

 
—

 
4,671

 
1,024

 
13,890

 
14,914

 
(9,016
)
 
5,898

 
1985
 
1 - 40
Indigo Point
 
Brandon, FL
 
—

 
(1)
 
1,167

 
10,500

 
—

 
3,219

 
1,167

 
13,719

 
14,886

 
(7,929
)
 
6,957

 
1989
 
1 - 40

F-53


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Paddock Club Brandon
 
Brandon, FL
 
—

 
 
 
2,896

 
26,111

 
—

 
5,223

 
2,896

 
31,334

 
34,230

 
(17,961
)
 
16,269

 
1998
 
1 - 40
Colonial Grand at Lakewood Ranch
 
Bradenton, FL
 
—

 
 
 
2,980

 
40,230

 
—

 
2,515

 
2,980

 
42,745

 
45,725

 
(5,885
)
 
39,840

 
1999
 
1 - 40
The Preserve at Coral Square
 
Coral Springs, FL
 
—

 
 
 
9,600

 
40,004

 
—

 
8,573

 
9,600

 
48,577

 
58,177

 
(20,516
)
 
37,661

 
1996
 
1 - 40
Paddock Club Gainesville
 
Gainesville, FL
 
—

 
 
 
1,800

 
15,879

 
—

 
4,295

 
1,800

 
20,174

 
21,974

 
(8,645
)
 
13,329

 
1999
 
1 - 40
The Retreat at Magnolia Park
 
Gainesville, FL
 
—

 
 
 
2,040

 
16,338

 
—

 
504

 
2,040

 
16,842

 
18,882

 
(3,299
)
 
15,583

 
2009
 
1 - 40
Colonial Grand at Heathrow
 
Heathrow, FL
 
20,310

 
 
 
4,101

 
35,684

 
—

 
2,072

 
4,101

 
37,756

 
41,857

 
(5,448
)
 
36,409

 
1997
 
1 - 40
220 Riverside
 
Jacksonville, FL
 
—

 
 
 
2,500

 
38,416

 
—

 
2,180

 
2,500

 
40,596

 
43,096

 
(1,362
)
 
41,734

 
2015
 
1 - 40
Atlantic Crossing
 
Jacksonville, FL
 
—

 
 
 
4,000

 
19,495

 
—

 
1,393

 
4,000

 
20,888

 
24,888

 
(4,246
)
 
20,642

 
2008
 
1 - 40
Cooper's Hawk
 
Jacksonville, FL
 
—

 
 
 
854

 
7,500

 
—

 
3,250

 
854

 
10,750

 
11,604

 
(7,460
)
 
4,144

 
1987
 
1 - 40
Hunter's Ridge at Deerwood
 
Jacksonville, FL
 
—

 
 
 
1,533

 
13,835

 
—

 
5,121

 
1,533

 
18,956

 
20,489

 
(11,640
)
 
8,849

 
1987
 
1 - 40
Lakeside
 
Jacksonville, FL
 
—

 
 
 
1,430

 
12,883

 
—

 
7,341

 
1,430

 
20,224

 
21,654

 
(14,045
)
 
7,609

 
1985
 
1 - 40
Lighthouse at Fleming Island
 
Jacksonville, FL
 
—

 
(1)
 
4,047

 
35,052

 
—

 
4,769

 
4,047

 
39,821

 
43,868

 
(17,929
)
 
25,939

 
2003
 
1 - 40
Paddock Club Mandarin
 
Jacksonville, FL
 
—

 
 
 
1,411

 
14,967

 
—

 
2,382

 
1,411

 
17,349

 
18,760

 
(8,381
)
 
10,379

 
1998
 
1 - 40
St. Augustine
 
Jacksonville, FL
 
—

 
 
 
2,857

 
6,475

 
—

 
19,440

 
2,857

 
25,915

 
28,772

 
(11,487
)
 
17,285

 
1987
 
1 - 40
St. Augustine II
 
Jacksonville, FL
 
—

 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2008
 
1 - 40
Tattersall at Tapestry Park
 
Jacksonville, FL
 
—

 
 
 
6,417

 
36,069

 
—

 
859

 
6,417

 
36,928

 
43,345

 
(7,033
)
 
36,312

 
2009
 
1 - 40
Woodhollow
 
Jacksonville, FL
 
—

 
(1)
 
1,686

 
15,179

 
(8
)
 
8,356

 
1,678

 
23,535

 
25,213

 
(15,203
)
 
10,010

 
1986
 
1 - 40
Paddock Club Lakeland
 
Lakeland, FL
 
—

 
 
 
1,221

 
20,452

 
—

 
7,447

 
1,221

 
27,899

 
29,120

 
(17,072
)
 
12,048

 
1988/90
 
1 - 40
Colonial Grand at Town Park
 
Lake Mary, FL
 
36,208

 
 
 
5,742

 
56,562

 
—

 
2,341

 
5,742

 
58,903

 
64,645

 
(8,810
)
 
55,835

 
2005
 
1 - 40
Colonial Grand at Town Park Reserve
 
Lake Mary, FL
 
—

 
 
 
3,481

 
10,311

 
—

 
274

 
3,481

 
10,585

 
14,066

 
(1,610
)
 
12,456

 
2004
 
1 - 40
Colonial Grand at Lake Mary
 
Lake Mary, FL
 
—

 
 
 
6,346

 
41,539

 
—

 
22,933

 
6,346

 
64,472

 
70,818

 
(7,171
)
 
63,647

 
2012
 
1 - 40
Retreat at Lake Nona
 
Orlando, FL
 
—

 
 
 
7,880

 
41,175

 
—

 
2,484

 
7,880

 
43,659

 
51,539

 
(6,803
)
 
44,736

 
2006
 
1 - 40
Colonial Grand at Heather Glen
 
Orlando, FL
 
—

 
 
 
4,662

 
56,988

 
—

 
3,473

 
4,662

 
60,461

 
65,123

 
(8,260
)
 
56,863

 
2000
 
1 - 40
Colonial Grand at Randal Lakes
 
Orlando, FL
 
—

 
 
 
5,659

 
50,553

 
—

 
10,544

 
5,659

 
61,097

 
66,756

 
(4,479
)
 
62,277

 
2013
 
1 - 40
Post Lake at Baldwin Park
 
Orlando, FL
 
—

 
 
 
18,137

 
144,474

 
—

 
129

 
18,137

 
144,603

 
162,740

 
(479
)
 
162,261

 
2011
 
1 - 40
Post Lakeside
 
Orlando, FL
 
—

 
 
 
7,060

 
52,688

 
—

 
39

 
7,060

 
52,727

 
59,787

 
(157
)
 
59,630

 
2013
 
1 - 40
Post Parkside
 
Orlando, FL
 
—

 
 
 
5,680

 
49,849

 
—

 
47

 
5,680

 
49,896

 
55,576

 
(167
)
 
55,409

 
1999
 
1 - 40
Park Crest at Innisbrook
 
Palm Harbor, FL
 
27,805

 
 
 
6,900

 
26,613

 
—

 
1,575

 
6,900

 
28,188

 
35,088

 
(7,835
)
 
27,253

 
2000
 
1 - 40
The Club at Panama Beach
 
Panama City, FL
 
—

 
 
 
898

 
14,276

 
(5
)
 
3,476

 
893

 
17,752

 
18,645

 
(9,179
)
 
9,466

 
2000
 
1 - 40
Colonial Village at Twin Lakes
 
Sanford, FL
 
23,691

 
 
 
3,091

 
47,793

 
—

 
1,325

 
3,091

 
49,118

 
52,209

 
(7,053
)
 
45,156

 
2005
 
1 - 40
Paddock Club Tallahassee
 
Tallahassee, FL
 
—

 
 
 
530

 
4,805

 
950

 
14,079

 
1,480

 
18,884

 
20,364

 
(11,387
)
 
8,977

 
1992
 
1 - 40

F-54


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Verandas at Southwood
 
Tallahassee, FL
 
—

 
 
 
3,600

 
25,914

 
—

 
476

 
3,600

 
26,390

 
29,990

 
(2,217
)
 
27,773

 
2003
 
1 - 40
Belmere
 
Tampa, FL
 
—

 
(1)
 
852

 
7,667

 
—

 
5,654

 
852

 
13,321

 
14,173

 
(9,259
)
 
4,914

 
1984
 
1 - 40
Links at Carrollwood
 
Tampa, FL
 
—

 
 
 
817

 
7,355

 
110

 
4,887

 
927

 
12,242

 
13,169

 
(7,431
)
 
5,738

 
1980
 
1 - 40
Post Bay at Rocky Point
 
Tampa, FL
 
—

 
 
 
4,550

 
28,437

 
—

 
24

 
4,550

 
28,461

 
33,011

 
(90
)
 
32,921

 
1997
 
1 - 40
Post Harbour Place
 
Tampa, FL
 
—

 
 
 
16,329

 
116,412

 
—

 
87

 
16,329

 
116,499

 
132,828

 
(401
)
 
132,427

 
1997
 
1 - 40
Post Hyde Park
 
Tampa, FL
 
42,807

 
 
 
16,925

 
95,441

 
—

 
84

 
16,925

 
95,525

 
112,450

 
(330
)
 
112,120

 
1994
 
1 - 40
Post Rocky Point
 
Tampa, FL
 
—

 
 
 
35,331

 
153,397

 
—

 
137

 
35,331

 
153,534

 
188,865

 
(502
)
 
188,363

 
1994-1996
 
1 - 40
Post Soho Square
 
Tampa, FL
 
—

 
 
 
5,201

 
56,397

 
—

 
38

 
5,201

 
56,435

 
61,636

 
(215
)
 
61,421

 
2012
 
1 - 40
Village Oaks
 
Tampa, FL
 
—

 
 
 
2,738

 
19,055

 
153

 
2,185

 
2,891

 
21,240

 
24,131

 
(6,126
)
 
18,005

 
2005
 
1 - 40
Colonial Grand at Hampton Preserve
 
Tampa, FL
 
—

 
 
 
6,233

 
69,535

 
—

 
981

 
6,233

 
70,516

 
76,749

 
(9,408
)
 
67,341

 
2012
 
1 - 40
Colonial Grand at Seven Oaks
 
Wesley Chapel, FL
 
25,015

 
 
 
3,051

 
42,768

 
—

 
1,306

 
3,051

 
44,074

 
47,125

 
(5,931
)
 
41,194

 
2004
 
1 - 40
Colonial Grand at Windermere
 
Windermere, FL
 
—

 
 
 
2,711

 
36,710

 
—

 
844

 
2,711

 
37,554

 
40,265

 
(4,930
)
 
35,335

 
2009
 
1 - 40
Allure at Brookwood
 
Atlanta, GA
 
—

 
 
 
11,168

 
52,758

 
—

 
3,662

 
11,168

 
56,420

 
67,588

 
(8,811
)
 
58,777

 
2008
 
1 - 40
Allure in Buckhead Village Residential
 
Atlanta, GA
 
—

 
 
 
8,633

 
19,844

 
—

 
5,625

 
8,633

 
25,469

 
34,102

 
(4,603
)
 
29,499

 
2002
 
1 - 40
The High Rise at Post Alexander
 
Atlanta, GA
 
—

 
 
 
8,452

 
92,440

 
—

 
122

 
8,452

 
92,562

 
101,014

 
(450
)
 
100,564

 
2015
 
1 - 40
Post Alexander
 
Atlanta, GA
 
—

 
 
 
15,471

 
73,418

 
—

 
64

 
15,471

 
73,482

 
88,953

 
(237
)
 
88,716

 
2006
 
1 - 40
Post Briarcliff
 
Atlanta, GA
 
55,365

 
 
 
24,694

 
115,145

 
—

 
103

 
24,694

 
115,248

 
139,942

 
(359
)
 
139,583

 
1996
 
1 - 40
Post Brookhaven
 
Atlanta, GA
 
—

 
 
 
29,106

 
106,666

 
—

 
107

 
29,106

 
106,773

 
135,879

 
(361
)
 
135,518

 
1989-1992
 
1 - 40
Post Chastain
 
Atlanta, GA
 
—

 
 
 
30,284

 
83,125

 
—

 
83

 
30,284

 
83,208

 
113,492

 
(258
)
 
113,234

 
1990
 
1 - 40
Post Crossing
 
Atlanta, GA
 
24,858

 
 
 
15,831

 
48,147

 
—

 
56

 
15,831

 
48,203

 
64,034

 
(157
)
 
63,877

 
1995
 
1 - 40
Post Gardens
 
Atlanta, GA
 
—

 
 
 
17,943

 
56,198

 
—

 
102

 
17,943

 
56,300

 
74,243

 
(194
)
 
74,049

 
1996
 
1 - 40
Post Glen
 
Atlanta, GA
 
25,825

 
 
 
13,906

 
51,178

 
—

 
62

 
13,906

 
51,240

 
65,146

 
(162
)
 
64,984

 
1996
 
1 - 40
Post Parkside
 
Atlanta, GA
 
—

 
 
 
11,047

 
34,345

 
—

 
27

 
11,047

 
34,372

 
45,419

 
(102
)
 
45,317

 
1999
 
1 - 40
Post Peachtree Hills
 
Atlanta, GA
 
—

 
 
 
11,998

 
55,372

 
—

 
50

 
11,998

 
55,422

 
67,420

 
(171
)
 
67,249

 
1992-1994/2009
 
1 - 40
Post Riverside
 
Atlanta, GA
 
—

 
 
 
23,813

 
89,532

 
—

 
117

 
23,813

 
89,649

 
113,462

 
(332
)
 
113,130

 
1996
 
1 - 40
Post Spring
 
Atlanta, GA
 
—

 
 
 
18,634

 
57,927

 
—

 
65

 
18,634

 
57,992

 
76,626

 
(204
)
 
76,422

 
1999
 
1 - 40
Post Stratford
 
Atlanta, GA
 
—

 
 
 
—

 
30,107

 
—

 
23

 
—

 
30,130

 
30,130

 
(104
)
 
30,026

 
1999
 
1 - 40
Sanctuary at Oglethorpe
 
Atlanta, GA
 
—

 
 
 
6,875

 
31,441

 
—

 
3,945

 
6,875

 
35,386

 
42,261

 
(10,954
)
 
31,307

 
1994
 
1 - 40
Terraces at Fieldstone
 
Conyers, GA
 
—

 
 
 
1,284

 
15,819

 
—

 
2,464

 
1,284

 
18,283

 
19,567

 
(8,518
)
 
11,049

 
1999
 
1 - 40
Prescott
 
Duluth, GA
 
—

 
(2)
 
3,840

 
24,011

 
—

 
3,216

 
3,840

 
27,227

 
31,067

 
(11,318
)
 
19,749

 
2001
 
1 - 40
Colonial Grand at Berkeley Lake
 
Duluth, GA
 
—

 
 
 
1,960

 
15,707

 
—

 
1,381

 
1,960

 
17,088

 
19,048

 
(2,839
)
 
16,209

 
1998
 
1 - 40

F-55


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Colonial Grand at River Oaks
 
Duluth, GA
 
15,114

 
 
 
4,360

 
13,579

 
—

 
1,375

 
4,360

 
14,954

 
19,314

 
(3,126
)
 
16,188

 
1992
 
1 - 40
Colonial Grand at River Plantation
 
Duluth, GA
 
—

 
 
 
2,059

 
19,158

 
—

 
1,525

 
2,059

 
20,683

 
22,742

 
(3,427
)
 
19,315

 
1994
 
1 - 40
Colonial Grand at McDaniel Farm
 
Duluth, GA
 
—

 
 
 
3,985

 
32,206

 
—

 
2,710

 
3,985

 
34,916

 
38,901

 
(5,734
)
 
33,167

 
1997
 
1 - 40
Colonial Grand at Pleasant Hill
 
Duluth, GA
 
—

 
 
 
6,753

 
32,202

 
—

 
2,677

 
6,753

 
34,879

 
41,632

 
(5,553
)
 
36,079

 
1996
 
1 - 40
Colonial Grand at Mount Vernon
 
Dunwoody, GA
 
15,430

 
 
 
6,861

 
23,748

 
—

 
2,122

 
6,861

 
25,870

 
32,731

 
(3,498
)
 
29,233

 
1997
 
1 - 40
Lake Lanier Club I
 
Gainesville, GA
 
—

 
 
 
3,560

 
22,611

 
—

 
4,445

 
3,560

 
27,056

 
30,616

 
(10,877
)
 
19,739

 
1998
 
1 - 40
Lake Lanier Club II
 
Gainesville, GA
 
—

 
(2)
 
3,150

 
18,383

 
—

 
2,151

 
3,150

 
20,534

 
23,684

 
(8,116
)
 
15,568

 
2001
 
1 - 40
Colonial Grand at Shiloh
 
Kennesaw, GA
 
29,518

 
 
 
4,864

 
45,893

 
—

 
2,454

 
4,864

 
48,347

 
53,211

 
(7,224
)
 
45,987

 
2002
 
1 - 40
Millstead Village
 
LaGrange, GA
 
—

 
 
 
3,100

 
29,240

 
—

 
458

 
3,100

 
29,698

 
32,798

 
(4,135
)
 
28,663

 
1998
 
1 - 40
Colonial Grand at Barrett Creek
 
Marietta, GA
 
22,146

 
 
 
5,661

 
26,186

 
—

 
1,863

 
5,661

 
28,049

 
33,710

 
(4,713
)
 
28,997

 
1999
 
1 - 40
Colonial Grand at Godley Station
 
Pooler, GA
 
11,213

 
 
 
1,800

 
35,454

 
—

 
1,784

 
1,800

 
37,238

 
39,038

 
(5,079
)
 
33,959

 
2001
 
1 - 40
Colonial Grand at Godley Lake
 
Pooler, GA
 
—

 
 
 
1,750

 
30,893

 
—

 
853

 
1,750

 
31,746

 
33,496

 
(4,563
)
 
28,933

 
2008
 
1 - 40
Avala at Savannah Quarters
 
Savannah, GA
 
—

 
 
 
1,500

 
24,862

 
—

 
1,750

 
1,500

 
26,612

 
28,112

 
(4,947
)
 
23,165

 
2009
 
1 - 40
Georgetown Grove
 
Savannah, GA
 
—

 
 
 
1,288

 
11,579

 
—

 
2,976

 
1,288

 
14,555

 
15,843

 
(8,724
)
 
7,119

 
1997
 
1 - 40
Colonial Grand at Hammocks
 
Savannah, GA
 
—

 
 
 
2,441

 
36,863

 
—

 
2,164

 
2,441

 
39,027

 
41,468

 
(5,343
)
 
36,125

 
1997
 
1 - 40
Colonial Village at Greentree
 
Savannah, GA
 
—

 
 
 
1,710

 
10,494

 
—

 
832

 
1,710

 
11,326

 
13,036

 
(2,038
)
 
10,998

 
1984
 
1 - 40
Colonial Village at Huntington
 
Savannah, GA
 
—

 
 
 
2,521

 
8,223

 
—

 
573

 
2,521

 
8,796

 
11,317

 
(1,382
)
 
9,935

 
1986
 
1 - 40
Colonial Village at Marsh Cove
 
Savannah, GA
 
—

 
 
 
5,231

 
8,555

 
—

 
672

 
5,231

 
9,227

 
14,458

 
(1,715
)
 
12,743

 
1983
 
1 - 40
Oaks at Wilmington Island
 
Savannah, GA
 
—

 
 
 
2,910

 
25,315

 
(46
)
 
3,429

 
2,864

 
28,744

 
31,608

 
(10,188
)
 
21,420

 
1999
 
1 - 40
Highlands of West Village I
 
Smyrna, GA
 
38,672

 
 
 
9,052

 
43,395

 
—

 
5,221

 
9,052

 
48,616

 
57,668

 
(3,765
)
 
53,903

 
2006
 
1 - 40
Highlands of West Village II
 
Smyrna, GA
 
—

 
 
 
5,358

 
30,338

 
—

 
78

 
5,358

 
30,416

 
35,774

 
(2,229
)
 
33,545

 
2012
 
1 - 40
Terraces at Townelake
 
Woodstock, GA
 
—

 
 
 
1,331

 
11,918

 
1,688

 
21,692

 
3,019

 
33,610

 
36,629

 
(18,017
)
 
18,612

 
1999
 
1 - 40
Haven at Praire Trace
 
Overland Park, KS
 
—

 
 
 
3,500

 
40,614

 
—

 
787

 
3,500

 
41,401

 
44,901

 
(1,527
)
 
43,374

 
2015
 
1 - 40
Grand Reserve at Pinnacle
 
Lexington, KY
 
—

 
(1)
 
2,024

 
31,525

 
—

 
4,378

 
2,024

 
35,903

 
37,927

 
(15,607
)
 
22,320

 
2000
 
1 - 40
Lakepointe
 
Lexington, KY
 
—

 
 
 
411

 
3,699

 
—

 
2,328

 
411

 
6,027

 
6,438

 
(4,183
)
 
2,255

 
1986
 
1 - 40
Mansion, The
 
Lexington, KY
 
—

 
(1)
 
694

 
6,242

 
—

 
3,225

 
694

 
9,467

 
10,161

 
(6,669
)
 
3,492

 
1989
 
1 - 40
Village, The
 
Lexington, KY
 
—

 
(1)
 
900

 
8,097

 
—

 
4,283

 
900

 
12,380

 
13,280

 
(8,662
)
 
4,618

 
1989
 
1 - 40
Stonemill Village
 
Louisville, KY
 
—

 
 
 
1,169

 
10,518

 
—

 
8,923

 
1,169

 
19,441

 
20,610

 
(12,906
)
 
7,704

 
1985
 
1 - 40
Crosswinds
 
Jackson, MS
 
—

 
 
 
1,535

 
13,826

 
—

 
4,544

 
1,535

 
18,370

 
19,905

 
(12,072
)
 
7,833

 
1989
 
1 - 40
Pear Orchard
 
Jackson, MS
 
—

 
 
 
1,351

 
12,168

 
—

 
8,061

 
1,351

 
20,229

 
21,580

 
(13,723
)
 
7,857

 
1985
 
1 - 40
Reflection Pointe
 
Jackson, MS
 
—

 
 
 
710

 
8,770

 
138

 
8,275

 
848

 
17,045

 
17,893

 
(11,088
)
 
6,805

 
1986
 
1 - 40

F-56


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Lakeshore Landing
 
Ridgeland, MS
 
—

 
 
 
676

 
6,284

 
—

 
2,811

 
676

 
9,095

 
9,771

 
(4,145
)
 
5,626

 
1974
 
1 - 40
Market Station
 
Kansas City, MO
 
—

 
 
 
5,814

 
46,241

 
—

 
1,322

 
5,814

 
47,563

 
53,377

 
(6,925
)
 
46,452

 
2010
 
1 - 40
Residences at Burlington Creek
 
Kansas City, MO
 
—

 
 
 
4,000

 
42,144

 
—

 
514

 
4,000

 
42,658

 
46,658

 
(2,203
)
 
44,455

 
2013/14
 
1 - 40
The Denton
 
Kansas City, MO
 
—

 
 
 
750

 
8,795

 
—

 
48

 
750

 
8,843

 
9,593

 
(225
)
 
9,368

 
2014
 
1 - 40
Colonial Grand at Desert Vista
 
North Las Vegas, NV
 
—

 
 
 
4,091

 
29,826

 
—

 
949

 
4,091

 
30,775

 
34,866

 
(4,535
)
 
30,331

 
2009
 
1 - 40
Colonial Grand at Palm Vista
 
North Las Vegas, NV
 
—

 
 
 
4,909

 
25,643

 
—

 
1,537

 
4,909

 
27,180

 
32,089

 
(4,175
)
 
27,914

 
2007
 
1 - 40
Colonial Village at Beaver Creek
 
Apex, NC
 
—

 
 
 
7,491

 
34,863

 
—

 
1,275

 
7,491

 
36,138

 
43,629

 
(4,968
)
 
38,661

 
2007
 
1 - 40
Hermitage at Beechtree
 
Cary, NC
 
—

 
(1)
 
900

 
8,099

 
—

 
4,377

 
900

 
12,476

 
13,376

 
(7,483
)
 
5,893

 
1988
 
1 - 40
Waterford Forest
 
Cary, NC
 
—

 
(2)
 
4,000

 
20,250

 
—

 
3,221

 
4,000

 
23,471

 
27,471

 
(9,431
)
 
18,040

 
1996
 
1 - 40
1225 South Church I
 
Charlotte, NC
 
—

 
 
 
9,612

 
22,342

 
—

 
24,977

 
9,612

 
47,319

 
56,931

 
(6,178
)
 
50,753

 
2010
 
1 - 40
Colonial Grand at Ayrsley
 
Charlotte, NC
 
—

 
 
 
2,481

 
52,119

 
—

 
12,797

 
2,481

 
64,916

 
67,397

 
(8,282
)
 
59,115

 
2008
 
1 - 40
Colonial Grand at Beverly Crest
 
Charlotte, NC
 
16,462

 
 
 
3,161

 
24,004

 
—

 
2,129

 
3,161

 
26,133

 
29,294

 
(3,617
)
 
25,677

 
1996
 
1 - 40
Colonial Grand at Legacy Park
 
Charlotte, NC
 
—

 
 
 
2,891

 
28,272

 
—

 
1,646

 
2,891

 
29,918

 
32,809

 
(4,282
)
 
28,527

 
2001
 
1 - 40
Colonial Grand at Mallard Creek
 
Charlotte, NC
 
14,520

 
 
 
4,591

 
27,713

 
—

 
959

 
4,591

 
28,672

 
33,263

 
(4,170
)
 
29,093

 
2005
 
1 - 40
Colonial Grand at Mallard Lake
 
Charlotte, NC
 
19,942

 
 
 
3,250

 
31,389

 
—

 
2,327

 
3,250

 
33,716

 
36,966

 
(4,907
)
 
32,059

 
1998
 
1 - 40
Colonial Grand at University Center
 
Charlotte, NC
 
—

 
 
 
1,620

 
17,499

 
—

 
511

 
1,620

 
18,010

 
19,630

 
(2,437
)
 
17,193

 
2005
 
1 - 40
Colonial Reserve at South End
 
Charlotte, NC
 
—

 
 
 
4,628

 
44,282

 
—

 
11,006

 
4,628

 
55,288

 
59,916

 
(3,868
)
 
56,048

 
2013
 
1 - 40
Colonial Village at Chancellor Park
 
Charlotte, NC
 
—

 
 
 
5,311

 
28,016

 
—

 
2,632

 
5,311

 
30,648

 
35,959

 
(4,161
)
 
31,798

 
1999
 
1 - 40
Colonial Village at South Tryon
 
Charlotte, NC
 
—

 
 
 
2,260

 
19,489

 
—

 
1,121

 
2,260

 
20,610

 
22,870

 
(2,951
)
 
19,919

 
2002
 
1 - 40
Colonial Village at Timber Crest
 
Charlotte, NC
 
—

 
 
 
2,901

 
17,192

 
—

 
1,435

 
2,901

 
18,627

 
21,528

 
(2,454
)
 
19,074

 
2000
 
1 - 40
Enclave
 
Charlotte, NC
 
—

 
 
 
1,461

 
18,984

 
—

 
675

 
1,461

 
19,659

 
21,120

 
(2,366
)
 
18,754

 
2008
 
1 - 40
Post Ballantyne
 
Charlotte, NC
 
—

 
 
 
16,249

 
44,904

 
—

 
46

 
16,249

 
44,950

 
61,199

 
(138
)
 
61,061

 
2004
 
1 - 40
Post Gateway Place
 
Charlotte, NC
 
—

 
 
 
17,563

 
57,552

 
—

 
56

 
17,563

 
57,608

 
75,171

 
(199
)
 
74,972

 
2000
 
1 - 40
Post Park at Phillips Place
 
Charlotte, NC
 
—

 
 
 
20,911

 
65,642

 
—

 
116

 
20,911

 
65,758

 
86,669

 
(215
)
 
86,454

 
1996
 
1 - 40
Post South End
 
Charlotte, NC
 
—

 
 
 
18,873

 
58,912

 
—

 
48

 
18,873

 
58,960

 
77,833

 
(169
)
 
77,664

 
2009
 
1 - 40
Post Uptown Place
 
Charlotte, NC
 
—

 
 
 
10,910

 
30,136

 
—

 
28

 
10,910

 
30,164

 
41,074

 
(99
)
 
40,975

 
2000
 
1 - 40
Colonial Grand at Cornelius
 
Cornelius, NC
 
—

 
 
 
4,571

 
29,151

 
—

 
848

 
4,571

 
29,999

 
34,570

 
(4,455
)
 
30,115

 
2009
 
1 - 40
Colonial Grand at Patterson Place
 
Durham, NC
 
13,343

 
 
 
2,590

 
27,126

 
—

 
1,744

 
2,590

 
28,870

 
31,460

 
(4,023
)
 
27,437

 
1997
 
1 - 40
Colonial Village at Deerfield
 
Durham, NC
 
—

 
 
 
3,271

 
15,609

 
—

 
1,016

 
3,271

 
16,625

 
19,896

 
(2,827
)
 
17,069

 
1985
 
1 - 40
Colonial Grand at Research Park
 
Durham, NC
 
—

 
 
 
4,201

 
37,682

 
—

 
1,395

 
4,201

 
39,077

 
43,278

 
(5,671
)
 
37,607

 
2002
 
1 - 40
Colonial Grand at Huntersville
 
Huntersville, NC
 
20,376

 
 
 
4,251

 
31,948

 
—

 
1,300

 
4,251

 
33,248

 
37,499

 
(4,786
)
 
32,713

 
2008
 
1 - 40

F-57


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Colonial Village at Matthews
 
Matthews, NC
 
—

 
 
 
3,071

 
21,830

 
—

 
3,339

 
3,071

 
25,169

 
28,240

 
(3,993
)
 
24,247

 
2008
 
1 - 40
Colonial Grand at Matthews Commons
 
Matthews, NC
 
—

 
 
 
3,690

 
28,536

 
—

 
1,481

 
3,690

 
30,017

 
33,707

 
(4,193
)
 
29,514

 
2008
 
1 - 40
Colonial Grand at Arringdon
 
Morrisville, NC
 
22,153

 
 
 
6,401

 
31,134

 
—

 
1,663

 
6,401

 
32,797

 
39,198

 
(4,680
)
 
34,518

 
2003
 
1 - 40
Colonial Grand at Brier Creek
 
Raleigh, NC
 
28,856

 
 
 
7,372

 
50,202

 
—

 
1,257

 
7,372

 
51,459

 
58,831

 
(7,029
)
 
51,802

 
2010
 
1 - 40
Colonial Grand at Brier Falls
 
Raleigh, NC
 
—

 
 
 
6,572

 
48,910

 
—

 
1,075

 
6,572

 
49,985

 
56,557

 
(6,730
)
 
49,827

 
2008
 
1 - 40
Colonial Grand at Crabtree Valley
 
Raleigh, NC
 
12,219

 
 
 
2,241

 
18,434

 
—

 
1,208

 
2,241

 
19,642

 
21,883

 
(2,581
)
 
19,302

 
1997
 
1 - 40
Hue
 
Raleigh, NC
 
—

 
 
 
3,690

 
29,910

 
—

 
2,161

 
3,690

 
32,071

 
35,761

 
(5,783
)
 
29,978

 
2009
 
1 - 40
Colonial Grand at Trinity Commons
 
Raleigh, NC
 
27,974

 
 
 
5,232

 
45,138

 
—

 
2,084

 
5,232

 
47,222

 
52,454

 
(6,973
)
 
45,481

 
2000/02
 
1 - 40
Post Parkside at Wade
 
Raleigh, NC
 
—

 
 
 
7,211

 
52,064

 
—

 
37

 
7,211

 
52,101

 
59,312

 
(204
)
 
59,108

 
2011
 
1 - 40
Preserve at Brier Creek
 
Raleigh, NC
 
—

 
 
 
5,850

 
21,980

 
(19
)
 
24,242

 
5,831

 
46,222

 
52,053

 
(14,514
)
 
37,539

 
2004
 
1 - 40
Providence at Brier Creek
 
Raleigh, NC
 
—

 
 
 
4,695

 
29,007

 
—

 
1,561

 
4,695

 
30,568

 
35,263

 
(8,939
)
 
26,324

 
2007
 
1 - 40
Tanglewood
 
Anderson, SC
 
—

 
 
 
427

 
3,853

 
—

 
2,911

 
427

 
6,764

 
7,191

 
(4,810
)
 
2,381

 
1980
 
1 - 40
Colonial Grand at Cypress Cove
 
Charleston, SC
 
—

 
 
 
3,610

 
28,645

 
—

 
1,464

 
3,610

 
30,109

 
33,719

 
(4,347
)
 
29,372

 
2001
 
1 - 40
Colonial Village at Hampton Pointe
 
Charleston, SC
 
—

 
 
 
3,971

 
22,790

 
—

 
3,112

 
3,971

 
25,902

 
29,873

 
(3,680
)
 
26,193

 
1986
 
1 - 40
Colonial Grand at Quarterdeck
 
Charleston, SC
 
—

 
 
 
920

 
24,097

 
—

 
4,897

 
920

 
28,994

 
29,914

 
(3,783
)
 
26,131

 
1987
 
1 - 40
Colonial Village at Westchase
 
Charleston, SC
 
—

 
 
 
4,571

 
20,091

 
—

 
1,932

 
4,571

 
22,023

 
26,594

 
(3,634
)
 
22,960

 
1985
 
1 - 40
River's Walk
 
Charleston, SC
 
—

 
 
 
5,200

 
28,682

 
—

 
283

 
5,200

 
28,965

 
34,165

 
(2,314
)
 
31,851

 
2013
 
1 - 40
River's Walk II
 
Charleston, SC
 
—

 
 
 
3,631

 
10,748

 
—

 
8

 
3,631

 
10,756

 
14,387

 
(130
)
 
14,257

 
2016
 
1 - 40
1201 Midtown
 
Charleston, SC
 
—

 
 
 
11,929

 
57,885

 
—

 
50

 
11,929

 
57,935

 
69,864

 
(140
)
 
69,724

 
2015
 
1 - 40
Fairways, The
 
Columbia, SC
 
—

 
 
 
910

 
8,207

 
—

 
3,230

 
910

 
11,437

 
12,347

 
(7,850
)
 
4,497

 
1992
 
1 - 40
Paddock Club Columbia
 
Columbia, SC
 
—

 
 
 
1,840

 
16,560

 
—

 
4,123

 
1,840

 
20,683

 
22,523

 
(12,692
)
 
9,831

 
1991
 
1 - 40
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Colonial Village at Windsor Place
 
Goose Creek, SC
 
—

 
 
 
1,321

 
14,163

 
—

 
1,919

 
1,321

 
16,082

 
17,403

 
(2,593
)
 
14,810

 
1985
 
1 - 40
Highland Ridge
 
Greenville, SC
 
—

 
 
 
482

 
4,337

 
—

 
2,406

 
482

 
6,743

 
7,225

 
(4,298
)
 
2,927

 
1984
 
1 - 40
Howell Commons
 
Greenville, SC
 
—

 
(1)
 
1,304

 
11,740

 
—

 
3,263

 
1,304

 
15,003

 
16,307

 
(9,725
)
 
6,582

 
1987
 
1 - 40
Paddock Club Greenville
 
Greenville, SC
 
—

 
(1)
 
1,200

 
10,800

 
—

 
1,783

 
1,200

 
12,583

 
13,783

 
(7,885
)
 
5,898

 
1996
 
1 - 40
Park Haywood
 
Greenville, SC
 
—

 
(1)
 
325

 
2,925

 
35

 
4,230

 
360

 
7,155

 
7,515

 
(5,087
)
 
2,428

 
1983
 
1 - 40

F-58


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Spring Creek
 
Greenville, SC
 
—

 
 
 
597

 
5,374

 
(14
)
 
2,879

 
583

 
8,253

 
8,836

 
(5,483
)
 
3,353

 
1985
 
1 - 40
Innovation Apartment Homes
 
Greenville, SC
 
—

 
 
 
4,437

 
52,026

 
—

 
171

 
4,437

 
52,197

 
56,634

 
(444
)
 
56,190

 
2015
 
1 - 40
Runaway Bay
 
Mt. Pleasant, SC
 
—

 
 
 
1,085

 
7,269

 
12

 
5,913

 
1,097

 
13,182

 
14,279

 
(8,096
)
 
6,183

 
1988
 
1 - 40
Colonial Grand at Commerce Park
 
North Charleston, SC
 
—

 
 
 
2,780

 
33,966

 
—

 
1,238

 
2,780

 
35,204

 
37,984

 
(4,877
)
 
33,107

 
2008
 
1 - 40
535 Brookwood
 
Simpsonville, SC
 
12,610

 
 
 
1,216

 
18,666

 
—

 
1,057

 
1,216

 
19,723

 
20,939

 
(4,490
)
 
16,449

 
2008
 
1 - 40
Park Place
 
Spartanburg, SC
 
—

 
 
 
723

 
6,504

 
—

 
2,973

 
723

 
9,477

 
10,200

 
(5,972
)
 
4,228

 
1987
 
1 - 40
Farmington Village
 
Summerville, SC
 
—

 
 
 
2,800

 
26,295

 
—

 
1,543

 
2,800

 
27,838

 
30,638

 
(8,718
)
 
21,920

 
2007
 
1 - 40
Colonial Village at Waters Edge
 
Summerville, SC
 
—

 
 
 
2,103

 
9,187

 
—

 
2,949

 
2,103

 
12,136

 
14,239

 
(2,148
)
 
12,091

 
1985
 
1 - 40
Hamilton Pointe
 
Chattanooga, TN
 
—

 
 
 
1,131

 
10,632

 
—

 
4,215

 
1,131

 
14,847

 
15,978

 
(6,593
)
 
9,385

 
1989
 
1 - 40
Hidden Creek
 
Chattanooga, TN
 
—

 
(1)
 
972

 
8,954

 
—

 
4,622

 
972

 
13,576

 
14,548

 
(5,183
)
 
9,365

 
1987
 
1 - 40
Steeplechase
 
Chattanooga, TN
 
—

 
 
 
217

 
1,957

 
—

 
3,055

 
217

 
5,012

 
5,229

 
(3,343
)
 
1,886

 
1986
 
1 - 40
Windridge
 
Chattanooga, TN
 
—

 
 
 
817

 
7,416

 
—

 
3,854

 
817

 
11,270

 
12,087

 
(7,018
)
 
5,069

 
1984
 
1 - 40
Kirby Station
 
Memphis, TN
 
—

 
 
 
1,148

 
10,337

 
—

 
9,713

 
1,148

 
20,050

 
21,198

 
(12,593
)
 
8,605

 
1978
 
1 - 40
Lincoln on the Green
 
Memphis, TN
 
—

 
(1)
 
1,498

 
20,483

 
—

 
14,800

 
1,498

 
35,283

 
36,781

 
(23,470
)
 
13,311

 
1992
 
1 - 40
Park Estate
 
Memphis, TN
 
—

 
 
 
178

 
1,141

 
—

 
4,690

 
178

 
5,831

 
6,009

 
(4,515
)
 
1,494

 
1974
 
1 - 40
Reserve at Dexter Lake
 
Memphis, TN
 
—

 
 
 
1,260

 
16,043

 
2,147

 
38,978

 
3,407

 
55,021

 
58,428

 
(23,640
)
 
34,788

 
2000
 
1 - 40
Paddock Club Murfreesboro
 
Murfreesboro, TN
 
—

 
 
 
915

 
14,774

 
—

 
2,950

 
915

 
17,724

 
18,639

 
(8,414
)
 
10,225

 
1999
 
1 - 40
Aventura at Indian Lake Village
 
Nashville, TN
 
—

 
 
 
4,950

 
28,053

 
—

 
1,217

 
4,950

 
29,270

 
34,220

 
(5,466
)
 
28,754

 
2010
 
1 - 40
Avondale at Kennesaw
 
Nashville, TN
 
17,378

 
 
 
3,456

 
22,443

 
—

 
1,705

 
3,456

 
24,148

 
27,604

 
(5,550
)
 
22,054

 
2008
 
1 - 40
Brentwood Downs
 
Nashville, TN
 
—

 
 
 
1,193

 
10,739

 
(2
)
 
6,091

 
1,191

 
16,830

 
18,021

 
(10,992
)
 
7,029

 
1986
 
1 - 40
Colonial Grand at Bellevue
 
Nashville, TN
 
20,893

 
 
 
8,622

 
34,229

 
—

 
1,763

 
8,622

 
35,992

 
44,614

 
(5,451
)
 
39,163

 
1996
 
1 - 40
Colonial Grand at Bellevue (Phase II)
 
Nashville, TN
 
—

 
 
 
8,656

 
29,967

 
—

 
64

 
8,656

 
30,031

 
38,687

 
(1,294
)
 
37,393

 
2015
 
1 - 40
Grand View Nashville
 
Nashville, TN
 
—

 
 
 
2,963

 
33,673

 
—

 
6,414

 
2,963

 
40,087

 
43,050

 
(17,055
)
 
25,995

 
2001
 
1 - 40
Monthaven Park
 
Nashville, TN
 
—

 
 
 
2,736

 
28,902

 
—

 
4,821

 
2,736

 
33,723

 
36,459

 
(14,774
)
 
21,685

 
2000
 
1 - 40
Park at Hermitage
 
Nashville, TN
 
—

 
 
 
1,524

 
14,800

 
—

 
8,308

 
1,524

 
23,108

 
24,632

 
(15,306
)
 
9,326

 
1987
 
1 - 40
Venue at Cool Springs
 
Nashville, TN
 
—

 
 
 
6,670

 
—

 
—

 
50,973

 
6,670

 
50,973

 
57,643

 
(5,770
)
 
51,873

 
2012
 
1 - 40
Verandas at Sam Ridley
 
Nashville, TN
 
21,388

 
 
 
3,350

 
28,308

 
—

 
1,541

 
3,350

 
29,849

 
33,199

 
(6,687
)
 
26,512

 
2009
 
1 - 40
Northwood
 
Arlington, TX
 
—

 
 
 
886

 
8,051

 
—

 
2,826

 
886

 
10,877

 
11,763

 
(4,828
)
 
6,935

 
1980
 
1 - 40
Balcones Woods
 
Austin, TX
 
—

 
 
 
1,598

 
14,398

 
—

 
8,516

 
1,598

 
22,914

 
24,512

 
(14,395
)
 
10,117

 
1983
 
1 - 40
Colonial Grand at Canyon Creek
 
Austin, TX
 
13,951

 
 
 
3,621

 
32,137

 
—

 
1,305

 
3,621

 
33,442

 
37,063

 
(4,854
)
 
32,209

 
2008
 
1 - 40
Colonial Grand at Canyon Ranch
 
Austin, TX
 
—

 
 
 
3,778

 
20,201

 
—

 
1,489

 
3,778

 
21,690

 
25,468

 
(3,477
)
 
21,991

 
2003
 
1 - 40

F-59


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Colonial Grand at Double Creek
 
Austin, TX
 
—

 
 
 
3,131

 
29,375

 
—

 
443

 
3,131

 
29,818

 
32,949

 
(4,408
)
 
28,541

 
2013
 
1 - 40
Colonial Grand at Onion Creek
 
Austin, TX
 
—

 
 
 
4,902

 
33,010

 
—

 
1,080

 
4,902

 
34,090

 
38,992

 
(5,034
)
 
33,958

 
2009
 
1 - 40
Grand Reserve at Sunset Valley
 
Austin, TX
 
—

 
 
 
3,150

 
11,393

 
—

 
3,126

 
3,150

 
14,519

 
17,669

 
(6,067
)
 
11,602

 
1996
 
1 - 40
Colonial Village at Quarry Oaks
 
Austin, TX
 
30,417

 
 
 
4,621

 
34,461

 
—

 
4,799

 
4,621

 
39,260

 
43,881

 
(6,005
)
 
37,876

 
1996
 
1 - 40
Colonial Grand at Wells Branch
 
Austin, TX
 
—

 
 
 
3,094

 
32,283

 
294

 
1,084

 
3,388

 
33,367

 
36,755

 
(4,581
)
 
32,174

 
2008
 
1 - 40
Legacy at Western Oaks
 
Austin, TX
 
—

 
 
 
9,100

 
49,339

 
—

 
(1,358
)
 
9,100

 
47,981

 
57,081

 
(7,921
)
 
49,160

 
2001
 
1 - 40
Post Barton Creek
 
Austin, TX
 
—

 
 
 
8,700

 
21,538

 
—

 
28

 
8,700

 
21,566

 
30,266

 
(80
)
 
30,186

 
1998
 
1 - 40
Post Park Mesa
 
Austin, TX
 
—

 
 
 
4,662

 
19,867

 
—

 
15

 
4,662

 
19,882

 
24,544

 
(64
)
 
24,480

 
1992
 
1 - 40
Post South Lamar
 
Austin, TX
 
—

 
 
 
11,565

 
41,361

 
—

 
33

 
11,565

 
41,394

 
52,959

 
(176
)
 
52,783

 
2011
 
1 - 40
Post West Austin
 
Austin, TX
 
—

 
 
 
7,821

 
48,925

 
—

 
37

 
7,821

 
48,962

 
56,783

 
(203
)
 
56,580

 
2009
 
1 - 40
Silverado
 
Austin, TX
 
—

 
 
 
2,900

 
24,009

 
—

 
3,060

 
2,900

 
27,069

 
29,969

 
(9,956
)
 
20,013

 
2003
 
1 - 40
Stassney Woods
 
Austin, TX
 
—

 
 
 
1,621

 
7,501

 
—

 
7,850

 
1,621

 
15,351

 
16,972

 
(8,978
)
 
7,994

 
1985
 
1 - 40
Travis Station
 
Austin, TX
 
—

 
 
 
2,281

 
6,169

 
—

 
7,100

 
2,281

 
13,269

 
15,550

 
(8,010
)
 
7,540

 
1987
 
1 - 40
Woods, The
 
Austin, TX
 
—

 
 
 
1,405

 
12,769

 
—

 
7,173

 
1,405

 
19,942

 
21,347

 
(8,465
)
 
12,882

 
1977
 
1 - 40
Colonial Village at Shoal Creek
 
Bedford, TX
 
18,662

 
 
 
4,982

 
27,377

 
—

 
2,402

 
4,982

 
29,779

 
34,761

 
(4,597
)
 
30,164

 
1996
 
1 - 40
Colonial Village at Willow Creek
 
Bedford, TX
 
22,425

 
 
 
3,109

 
33,488

 
—

 
4,927

 
3,109

 
38,415

 
41,524

 
(5,661
)
 
35,863

 
1996
 
1 - 40
Colonial Grand at Hebron
 
Carrollton, TX
 
—

 
 
 
4,231

 
42,237

 
—

 
742

 
4,231

 
42,979

 
47,210

 
(5,655
)
 
41,555

 
2011
 
1 - 40
Colonial Grand at Silverado
 
Cedar Park, TX
 
—

 
 
 
3,282

 
24,935

 
—

 
930

 
3,282

 
25,865

 
29,147

 
(3,709
)
 
25,438

 
2005
 
1 - 40
Colonial Grand at Silverado Reserve
 
Cedar Park, TX
 
—

 
 
 
3,951

 
31,705

 
—

 
1,263

 
3,951

 
32,968

 
36,919

 
(4,624
)
 
32,295

 
2005
 
1 - 40
Grand Cypress
 
Cypress, TX
 
15,824

 
 
 
3,881

 
24,267

 
—

 
927

 
3,881

 
25,194

 
29,075

 
(2,642
)
 
26,433

 
2008
 
1 - 40
Courtyards at Campbell
 
Dallas, TX
 
—

 
 
 
988

 
8,893

 
—

 
3,476

 
988

 
12,369

 
13,357

 
(7,562
)
 
5,795

 
1986
 
1 - 40
Deer Run
 
Dallas, TX
 
—

 
 
 
1,252

 
11,271

 
—

 
4,383

 
1,252

 
15,654

 
16,906

 
(9,517
)
 
7,389

 
1985
 
1 - 40
Grand Courtyard
 
Dallas, TX
 
—

 
 
 
2,730

 
22,240

 
—

 
2,628

 
2,730

 
24,868

 
27,598

 
(9,366
)
 
18,232

 
2000
 
1 - 40
Legends at Lowe's Farm
 
Dallas, TX
 
—

 
 
 
5,016

 
41,091

 
—

 
1,881

 
5,016

 
42,972

 
47,988

 
(8,011
)
 
39,977

 
2008
 
1 - 40
Colonial Reserve at Medical District
 
Dallas, TX
 
—

 
 
 
4,050

 
33,779

 
—

 
1,331

 
4,050

 
35,110

 
39,160

 
(4,402
)
 
34,758

 
2007
 
1 - 40
Post Abbey
 
Dallas, TX
 
—

 
 
 
2,716

 
4,377

 
—

 
5

 
2,716

 
4,382

 
7,098

 
(15
)
 
7,083

 
1996
 
1 - 40
Post Addison Circle
 
Dallas, TX
 
—

 
 
 
12,333

 
189,783

 
—

 
157

 
12,333

 
189,940

 
202,273

 
(617
)
 
201,656

 
1998-2000
 
1 - 40
Post Cole's Corner
 
Dallas, TX
 
—

 
 
 
13,056

 
14,409

 
—

 
21

 
13,056

 
14,430

 
27,486

 
(55
)
 
27,431

 
1998
 
1 - 40
Post Eastside
 
Dallas, TX
 
—

 
 
 
7,148

 
58,200

 
—

 
46

 
7,148

 
58,246

 
65,394

 
(179
)
 
65,215

 
2008
 
1 - 40
Post Gallery
 
Dallas, TX
 
—

 
 
 
4,399

 
7,924

 
—

 
9

 
4,399

 
7,933

 
12,332

 
(34
)
 
12,298

 
1999
 
1 - 40
Post Heights
 
Dallas, TX
 
—

 
 
 
26,297

 
37,993

 
—

 
42

 
26,297

 
38,035

 
64,332

 
(137
)
 
64,195

 
1998-1999/2009
 
1 - 40

F-60


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Post Katy Trail
 
Dallas, TX
 
—

 
 
 
10,353

 
32,521

 
—

 
33

 
10,353

 
32,554

 
42,907

 
(94
)
 
42,813

 
2010
 
1 - 40
Post Legacy
 
Dallas, TX
 
—

 
 
 
6,588

 
55,385

 
—

 
38

 
6,588

 
55,423

 
62,011

 
(179
)
 
61,832

 
2000
 
1 - 40
Post Meridian
 
Dallas, TX
 
—

 
 
 
8,798

 
13,680

 
—

 
20

 
8,798

 
13,700

 
22,498

 
(51
)
 
22,447

 
1991
 
1 - 40
Post Sierra at Frisco Bridges
 
Dallas, TX
 
—

 
 
 
6,790

 
32,607

 
—

 
26

 
6,790

 
32,633

 
39,423

 
(138
)
 
39,285

 
2009
 
1 - 40
Post Square
 
Dallas, TX
 
—

 
 
 
13,204

 
24,095

 
—

 
27

 
13,204

 
24,122

 
37,326

 
(74
)
 
37,252

 
1996
 
1 - 40
Post Uptown Village
 
Dallas, TX
 
—

 
 
 
35,044

 
33,276

 
—

 
48

 
35,044

 
33,324

 
68,368

 
(115
)
 
68,253

 
1995-2000
 
1 - 40
Post Vineyard
 
Dallas, TX
 
—

 
 
 
7,982

 
7,486

 
—

 
14

 
7,982

 
7,500

 
15,482

 
(24
)
 
15,458

 
1996
 
1 - 40
Post Vintage
 
Dallas, TX
 
—

 
 
 
13,648

 
8,624

 
—

 
14

 
13,648

 
8,638

 
22,286

 
(31
)
 
22,255

 
1993
 
1 - 40
Post Worthington
 
Dallas, TX
 
—

 
 
 
13,740

 
43,352

 
—

 
48

 
13,740

 
43,400

 
57,140

 
(139
)
 
57,001

 
1993/2008
 
1 - 40
Watermark
 
Dallas, TX
 
—

 
(2)
 
960

 
14,438

 
—

 
2,253

 
960

 
16,691

 
17,651

 
(7,161
)
 
10,490

 
2002
 
1 - 40
Colonial Grand at Bear Creek
 
Euless, TX
 
22,568

 
 
 
6,453

 
30,048

 
—

 
2,155

 
6,453

 
32,203

 
38,656

 
(5,161
)
 
33,495

 
1998
 
1 - 40
Colonial Grand at Fairview
 
Fairview, TX
 
—

 
 
 
2,171

 
35,077

 
—

 
581

 
2,171

 
35,658

 
37,829

 
(4,648
)
 
33,181

 
2012
 
1 - 40
La Valencia at Starwood
 
Frisco, TX
 
20,510

 
 
 
3,240

 
26,069

 
—

 
1,214

 
3,240

 
27,283

 
30,523

 
(6,049
)
 
24,474

 
2009
 
1 - 40
Colonial Reserve at Frisco Bridges
 
Frisco, TX
 
—

 
 
 
1,968

 
34,018

 
—

 
1,005

 
1,968

 
35,023

 
36,991

 
(4,489
)
 
32,502

 
2013
 
1 - 40
Colonial Village at Grapevine
 
Grapevine, TX
 
—

 
 
 
2,351

 
29,757

 
—

 
3,989

 
2,351

 
33,746

 
36,097

 
(4,811
)
 
31,286

 
1985/1986
 
1 - 40
Greenwood Forest
 
Houston, TX
 
—

 
 
 
3,465

 
23,482

 
—

 
72

 
3,465

 
23,554

 
27,019

 
(3,071
)
 
23,948

 
1994
 
1 - 40
Legacy Pines
 
Houston, TX
 
—

 
(2)
 
2,157

 
19,066

 
(15
)
 
3,109

 
2,142

 
22,175

 
24,317

 
(10,323
)
 
13,994

 
1999
 
1 - 40
Park Place (Houston)
 
Houston, TX
 
—

 
 
 
2,061

 
15,830

 
—

 
2,924

 
2,061

 
18,754

 
20,815

 
(6,667
)
 
14,148

 
1996
 
1 - 40
Post Midtown Square
 
Houston, TX
 
—

 
 
 
19,076

 
89,736

 
—

 
92

 
19,076

 
89,828

 
108,904

 
(319
)
 
108,585

 
1999/2013
 
1 - 40
Post 510
 
Houston, TX
 
—

 
 
 
7,241

 
33,421

 
—

 
24

 
7,241

 
33,445

 
40,686

 
(157
)
 
40,529

 
2014
 
1 - 40
Ranchstone
 
Houston, TX
 
—

 
 
 
1,480

 
14,807

 
—

 
2,206

 
1,480

 
17,013

 
18,493

 
(5,864
)
 
12,629

 
1996
 
1 - 40
Reserve at Woodwind Lakes
 
Houston, TX
 
—

 
 
 
1,968

 
19,928

 
—

 
3,029

 
1,968

 
22,957

 
24,925

 
(8,399
)
 
16,526

 
1999
 
1 - 40
Retreat at Vintage Park
 
Houston, TX
 
—

 
 
 
8,211

 
40,352

 
—

 
507

 
8,211

 
40,859

 
49,070

 
(2,197
)
 
46,873

 
2014
 
1 - 40
Yale at 6th
 
Houston, TX
 
—

 
 
 
13,107

 
62,764

 
—

 
169

 
13,107

 
62,933

 
76,040

 
(599
)
 
75,441

 
2015
 
1 - 40
Cascade at Fall Creek
 
Humble, TX
 
—

 
 
 
5,985

 
40,011

 
—

 
1,933

 
5,985

 
41,944

 
47,929

 
(13,492
)
 
34,437

 
2007
 
1 - 40
Bella Casita
 
Irving, TX
 
—

 
(2)
 
2,521

 
26,432

 
—

 
1,726

 
2,521

 
28,158

 
30,679

 
(5,978
)
 
24,701

 
2007
 
1 - 40
Remington Hills
 
Irving, TX
 
—

 
 
 
4,390

 
21,822

 
—

 
7,408

 
4,390

 
29,230

 
33,620

 
(4,049
)
 
29,571

 
1984
 
1 - 40
Colonial Reserve at Las Colinas
 
Irving, TX
 
—

 
 
 
3,902

 
40,691

 
—

 
1,225

 
3,902

 
41,916

 
45,818

 
(5,332
)
 
40,486

 
2006
 
1 - 40
Colonial Grand at Valley Ranch
 
Irving, TX
 
23,690

 
 
 
5,072

 
37,397

 
—

 
7,594

 
5,072

 
44,991

 
50,063

 
(6,544
)
 
43,519

 
1997
 
1 - 40
Colonial Village at Oakbend
 
Lewisville, TX
 
—

 
 
 
5,598

 
28,616

 
—

 
2,845

 
5,598

 
31,461

 
37,059

 
(4,673
)
 
32,386

 
1997
 
1 - 40
Times Square at Craig Ranch
 
McKinney, TX
 
—

 
 
 
1,130

 
28,058

 
—

 
3,382

 
1,130

 
31,440

 
32,570

 
(7,329
)
 
25,241

 
2009
 
1 - 40

F-61


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Venue at Stonebridge Ranch
 
McKinney, TX
 
14,152

 
 
 
4,034

 
19,528

 
—

 
503

 
4,034

 
20,031

 
24,065

 
(2,113
)
 
21,952

 
2000
 
1 - 40
Cityscape at Market Center
 
Plano, TX
 
—

 
 
 
8,626

 
60,407

 
—

 
646

 
8,626

 
61,053

 
69,679

 
(4,101
)
 
65,578

 
2013
 
1 - 40
Cityscape at Market Center II
 
Plano, TX
 
—

 
 
 
8,268

 
50,298

 
—

 
507

 
8,268

 
50,805

 
59,073

 
(1,412
)
 
57,661

 
2015
 
1 - 40
Highwood
 
Plano, TX
 
—

 
 
 
864

 
7,783

 
—

 
3,035

 
864

 
10,818

 
11,682

 
(6,667
)
 
5,015

 
1983
 
1 - 40
Los Rios Park
 
Plano, TX
 
—

 
 
 
3,273

 
28,823

 
—

 
5,082

 
3,273

 
33,905

 
37,178

 
(15,229
)
 
21,949

 
2000
 
1 - 40
Boulder Ridge
 
Roanoke, TX
 
—

 
 
 
3,382

 
26,930

 
—

 
5,547

 
3,382

 
32,477

 
35,859

 
(12,766
)
 
23,093

 
1999
 
1 - 40
Copper Ridge
 
Roanoke, TX
 
—

 
 
 
4,166

 
—

 
—

 
21,471

 
4,166

 
21,471

 
25,637

 
(4,581
)
 
21,056

 
2009
 
1 - 40
Colonial Grand at Ashton Oaks
 
Round Rock, TX
 
—

 
 
 
5,511

 
36,241

 
—

 
1,339

 
5,511

 
37,580

 
43,091

 
(5,364
)
 
37,727

 
2009
 
1 - 40
Colonial Grand at Round Rock
 
Round Rock, TX
 
23,752

 
 
 
4,691

 
45,379

 
—

 
1,661

 
4,691

 
47,040

 
51,731

 
(6,525
)
 
45,206

 
1997
 
1 - 40
Colonial Village at Sierra Vista
 
Round Rock, TX
 
11,594

 
 
 
2,561

 
16,488

 
—

 
2,652

 
2,561

 
19,140

 
21,701

 
(2,857
)
 
18,844

 
1999
 
1 - 40
Alamo Ranch
 
San Antonio, TX
 
—

 
 
 
2,380

 
26,982

 
—

 
2,213

 
2,380

 
29,195

 
31,575

 
(6,200
)
 
25,375

 
2009
 
1 - 40
Bulverde Oaks
 
San Antonio, TX
 
—

 
 
 
4,257

 
36,759

 
—

 
788

 
4,257

 
37,547

 
41,804

 
(2,134
)
 
39,670

 
2014
 
1 - 40
Haven at Blanco
 
San Antonio, TX
 
—

 
 
 
5,450

 
45,958

 
—

 
2,227

 
5,450

 
48,185

 
53,635

 
(7,409
)
 
46,226

 
2010
 
1 - 40
Stone Ranch at Westover Hills
 
San Antonio, TX
 
18,197

 
 
 
4,000

 
24,992

 
—

 
2,219

 
4,000

 
27,211

 
31,211

 
(6,727
)
 
24,484

 
2009
 
1 - 40
Cypresswood Court
 
Spring, TX
 
—

 
(2)
 
576

 
5,190

 
—

 
3,103

 
576

 
8,293

 
8,869

 
(5,725
)
 
3,144

 
1984
 
1 - 40
Villages at Kirkwood
 
Stafford, TX
 
—

 
 
 
1,918

 
15,846

 
—

 
2,500

 
1,918

 
18,346

 
20,264

 
(7,725
)
 
12,539

 
1996
 
1 - 40
Green Tree Place
 
Woodlands, TX
 
—

 
(2)
 
539

 
4,850

 
—

 
3,185

 
539

 
8,035

 
8,574

 
(5,406
)
 
3,168

 
1984
 
1 - 40
Stonefield Commons
 
Charlottesville, VA
 
—

 
 
 
11,044

 
36,689

 
—

 
426

 
11,044

 
37,115

 
48,159

 
(2,484
)
 
45,675

 
2013
 
1 - 40
Adalay Bay
 
Chesapeake, VA
 
—

 
 
 
5,280

 
31,341

 
—

 
2,193

 
5,280

 
33,534

 
38,814

 
(5,695
)
 
33,119

 
2002
 
1 - 40
Colonial Village at Greenbrier
 
Fredericksburg, VA
 
—

 
 
 
4,842

 
21,677

 
—

 
1,048

 
4,842

 
22,725

 
27,567

 
(3,036
)
 
24,531

 
1980
 
1 - 40
Seasons at Celebrate Virginia I
 
Fredericksburg, VA
 
—

 
 
 
14,490

 
32,083

 
—

 
38,736

 
14,490

 
70,819

 
85,309

 
(8,852
)
 
76,457

 
2011
 
1 - 40
Station Square at Cosner's Corner
 
Fredericksburg, VA
 
—

 
 
 
8,580

 
35,700

 
—

 
520

 
8,580

 
36,220

 
44,800

 
(3,379
)
 
41,421

 
2013
 
1 - 40
Station Square at Cosner's Corner II
 
Fredericksburg, VA
 
—

 
 
 
4,245

 
15,378

 
—

 
187

 
4,245

 
15,565

 
19,810

 
(322
)
 
19,488

 
2016
 
1 - 40
Apartments at Cobblestone Square
 
Fredericksburg, VA
 
—

 
 
 
10,990

 
48,696

 
—

 
1,808

 
10,990

 
50,504

 
61,494

 
(1,540
)
 
59,954

 
2012
 
1 - 40
Colonial Village at Hampton Glen
 
Glen Allen, VA
 
—

 
 
 
4,851

 
21,678

 
—

 
1,507

 
4,851

 
23,185

 
28,036

 
(3,308
)
 
24,728

 
1986
 
1 - 40
Colonial Village at West End
 
Glen Allen, VA
 
11,425

 
 
 
4,661

 
18,908

 
—

 
1,888

 
4,661

 
20,796

 
25,457

 
(2,845
)
 
22,612

 
1987
 
1 - 40
Township
 
Hampton, VA
 
—

 
 
 
1,509

 
8,189

 
—

 
7,653

 
1,509

 
15,842

 
17,351

 
(9,291
)
 
8,060

 
1987
 
1 - 40
Colonial Village at Waterford
 
Midlothian, VA
 
—

 
 
 
6,733

 
29,221

 
—

 
2,424

 
6,733

 
31,645

 
38,378

 
(4,709
)
 
33,669

 
1989
 
1 - 40
Ashley Park
 
Richmond, VA
 
—

 
 
 
4,761

 
13,365

 
—

 
1,314

 
4,761

 
14,679

 
19,440

 
(2,432
)
 
17,008

 
1988
 
1 - 40
Colonial Village at Chase Gayton
 
Richmond, VA
 
—

 
 
 
6,021

 
29,004

 
—

 
1,491

 
6,021

 
30,495

 
36,516

 
(4,533
)
 
31,983

 
1984
 
1 - 40
Hamptons at Hunton Park
 
Richmond, VA
 
—

 
 
 
4,930

 
35,598

 
—

 
2,963

 
4,930

 
38,561

 
43,491

 
(7,722
)
 
35,769

 
2003
 
1 - 40

F-62


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Retreat at West Creek
 
Richmond, VA
 
—

 
 
 
7,112

 
36,136

 
—

 
663

 
7,112

 
36,799

 
43,911

 
(1,509
)
 
42,402

 
2015
 
1 - 40
Radius
 
Newport News, VA
 
—

 
 
 
5,040

 
36,481

 
—

 
851

 
5,040

 
37,332

 
42,372

 
(1,378
)
 
40,994

 
2012
 
1 - 40
Post Carlyle Square
 
Washington D.C.
 
—

 
 
 
29,788

 
154,607

 
—

 
114

 
29,788

 
154,721

 
184,509

 
(480
)
 
184,029

 
2006/2013
 
1 - 40
Post Corners at Trinity Centre
 
Washington D.C.
 
37,611

 
 
 
7,679

 
70,149

 
—

 
54

 
7,679

 
70,203

 
77,882

 
(216
)
 
77,666

 
1996
 
1 - 40
Post Fallsgrove
 
Washington D.C.
 
—

 
 
 
17,559

 
59,010

 
—

 
57

 
17,559

 
59,067

 
76,626

 
(192
)
 
76,434

 
2003
 
1 - 40
Post Park
 
Washington D.C.
 
—

 
 
 
5,365

 
79,970

 
—

 
66

 
5,365

 
80,036

 
85,401

 
(356
)
 
85,045

 
2010
 
1 - 40
Post Pentagon Row
 
Washington D.C.
 
—

 
 
 
30,513

 
125,332

 
—

 
95

 
30,513

 
125,427

 
155,940

 
(409
)
 
155,531

 
2001
 
1 - 40
Post Tysons Corner
 
Washington D.C.
 
—

 
 
 
30,838

 
82,180

 
—

 
73

 
30,838

 
82,253

 
113,091

 
(260
)
 
112,831

 
1990
 
1 - 40
Total Residential Properties
 
 
 
1,000,773

 
 
 
1,705,646

 
9,579,476

 
6,248

 
997,866

 
1,711,894

 
10,577,342

 
12,289,236

 
(1,653,436
)
 
10,635,800

 
 
 
 
Allure at Buckhead
 
Atlanta, GA
 
—

 
 
 
867

 
3,465

 
—

 
22

 
867

 
3,487

 
4,354

 
(542
)
 
3,812

 
2012
 
1 - 40
Highlands of West Village
 
Smyrna, GA
 
431

 
 
 
2,500

 
8,446

 
—

 
948

 
2,500

 
9,394

 
11,894

 
(702
)
 
11,192

 
2012
 
1 - 40
The Denton
 
Kansas City, MO
 
—

 
 
 
700

 
4,439

 
—

 
—

 
700

 
4,439

 
5,139

 
(133
)
 
5,006

 
2014
 
1 - 40
1225 South Church
 
Charlotte, NC
 
—

 
 
 
43

 
199

 
9

 
242

 
52

 
441

 
493

 
(86
)
 
407

 
2010
 
1 - 40
Bella Casita at Las Colinas
 
Irving, TX
 
—

 
(2)
 
46

 
186

 
—

 
126

 
46

 
312

 
358

 
(66
)
 
292

 
2007
 
1 - 40
Times Square at Craig Ranch
 
McKinney, TX
 
—

 
 
 
253

 
1,310

 
—

 
1,387

 
253

 
2,697

 
2,950

 
(372
)
 
2,578

 
2009
 
1 - 40
Post Rocky Point
 
Tampa, FL
 
—

 
 
 
34

 
51

 
—

 
—

 
34

 
51

 
85

 
—

 
85

 
1994-1996
 
1 - 40
Post Training Facility
 
Atlanta, GA
 
—

 
 
 
1,094

 
969

 
—

 
—

 
1,094

 
969

 
2,063

 
(4
)
 
2,059

 
1999
 
1 - 40
Post Riverside Office
 
Atlanta, GA
 
—

 
 
 
9,699

 
22,145

 
—

 
18

 
9,699

 
22,163

 
31,862

 
(61
)
 
31,801

 
1996
 
1 - 40
Post Riverside Retail
 
Atlanta, GA
 
—

 
 
 
890

 
2,344

 
—

 
1

 
890

 
2,345

 
3,235

 
(5
)
 
3,230

 
1996
 
1 - 40
Post Harbour Place
 
Tampa, FL
 
—

 
 
 
387

 
4,324

 
—

 
—

 
387

 
4,324

 
4,711

 
(9
)
 
4,702

 
1997
 
1 - 40
Post Soho Square Retail
 
Tampa, FL
 
—

 
 
 
268

 
4,039

 
—

 
—

 
268

 
4,039

 
4,307

 
(14
)
 
4,293

 
2012
 
1 - 40
Post Parkside Atlanta Retail
 
Atlanta, GA
 
—

 
 
 
427

 
1,091

 
—

 
—

 
427

 
1,091

 
1,518

 
(2
)
 
1,516

 
1999
 
1 - 40
Post Uptown Place Retail
 
Charlotte, NC
 
—

 
 
 
320

 
1,146

 
—

 
—

 
320

 
1,146

 
1,466

 
(3
)
 
1,463

 
1998
 
1 - 40
Post Uptown Leasing Center
 
Charlotte, NC
 
—

 
 
 
1,293

 
1,491

 
—

 
—

 
1,293

 
1,491

 
2,784

 
(3
)
 
2,781

 
1998
 
1 - 40
Post Park Maryland Retail
 
Washington DC, MD
 
—

 
 
 
25

 
137

 
—

 
—

 
25

 
137

 
162

 
—

 
162

 
2007
 
1 - 40
Post South End Retail
 
Charlotte, NC
 
—

 
 
 
471

 
1,291

 
—

 
—

 
471

 
1,291

 
1,762

 
(3
)
 
1,759

 
2009
 
1 - 40
Post Gateway Place Retail
 
Charlotte, NC
 
—

 
 
 
319

 
1,433

 
—

 
—

 
319

 
1,433

 
1,752

 
(3
)
 
1,749

 
2000
 
1 - 40
Post Parkside at Wade Retail
 
Raleigh, NC
 
—

 
 
 
317

 
4,559

 
—

 
—

 
317

 
4,559

 
4,876

 
(15
)
 
4,861

 
2011
 
1 - 40
Post Parkside Orlando Retail
 
Orlando, FL
 
—

 
 
 
743

 
11,947

 
—

 
1

 
743

 
11,948

 
12,691

 
(28
)
 
12,663

 
1999
 
1 - 40
Post Carlyle Square Retail
 
Washington DC, VA
 
—

 
 
 
1,050

 
7,945

 
—

 
—

 
1,050

 
7,945

 
8,995

 
(18
)
 
8,977

 
2006/2016
 
1 - 40

F-63


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life used to compute depreciation in latest income statement (4)
 
 
 
 
 
 
 
 
Initial Cost
 
Costs Capitalized subsequent to Acquisition
 
Gross Amount carried at December 31, 2016  (3)
 
 
 
 
 
 
 
 
 
Property
 
Location
 
Encumbrances
 
 
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Land
 
Buildings and Fixtures
 
Total
 
Accumulated Depreciation
 
Net
 
Date of Construction
 
Post Coles Corner Retail
 
Dallas, TX
 
—

 
 
 
348

 
717

 
—

 
—

 
348

 
717

 
1,065

 
(2
)
 
1,063

 
1998
 
1 - 40
Post Square Retail
 
Dallas, TX
 
—

 
 
 
1,584

 
5,994

 
—

 
1

 
1,584

 
5,995

 
7,579

 
(14
)
 
7,565

 
1996
 
1 - 40
Post Worthington Retail
 
Dallas, TX
 
—

 
 
 
108

 
496

 
—

 
1

 
108

 
497

 
605

 
(1
)
 
604

 
1993/2008
 
1 - 40
Post Heights Retail
 
Dallas, TX
 
—

 
 
 
1,068

 
3,319

 
—

 
—

 
1,068

 
3,319

 
4,387

 
(8
)
 
4,379

 
1997
 
1 - 40
Post Eastside Retail
 
Dallas, TX
 
—

 
 
 
684

 
10,665

 
—

 
—

 
684

 
10,665

 
11,349

 
(21
)
 
11,328

 
2008
 
1 - 40
Post Addison Circle Retail
 
Dallas, TX
 
—

 
 
 
449

 
21,426

 
—

 
111

 
449

 
21,537

 
21,986

 
(50
)
 
21,936

 
1998-2000
 
1 - 40
Post Addison Circle Office
 
Dallas, TX
 
—

 
 
 
1,397

 
4,288

 
—

 
5

 
1,397

 
4,293

 
5,690

 
(13
)
 
5,677

 
1998-2000
 
1 - 40
Post Sierra Frisco Br Retail
 
Dallas, TX
 
—

 
 
 
780

 
6,605

 
—

 
1

 
780

 
6,606

 
7,386

 
(16
)
 
7,370

 
2009
 
1 - 40
Post Katy Trail Retail
 
Dallas, TX
 
—

 
 
 
466

 
4,893

 
—

 
—

 
466

 
4,893

 
5,359

 
(11
)
 
5,348

 
2010
 
1 - 40
Post Midtown Square Retail
 
Houston, TX
 
—

 
 
 
1,325

 
16,036

 
5

 
17

 
1,330

 
16,053

 
17,383

 
(36
)
 
17,347

 
1999/2013
 
1 - 40
Rise Condo Devel LP Retail
 
Houston, TX
 
—

 
 
 
—

 
2,284

 
—

 
—

 
—

 
2,284

 
2,284

 
(5
)
 
2,279

 
1999/2013
 
1 - 40
Post Legacy Retail
 
Dallas, TX
 
—

 
 
 
150

 
3,341

 
—

 
—

 
150

 
3,341

 
3,491

 
(7
)
 
3,484

 
2000
 
1 - 40
Post South Lamar Retail
 
Austin, TX
 
—

 
 
 
422

 
3,078

 
—

 
1

 
422

 
3,079

 
3,501

 
(7
)
 
3,494

 
2011
 
1 - 40
Total Commercial Properties
 

 
431

 
 
 
30,527

 
166,099

 
14

 
2,882

 
30,541

 
168,981

 
199,522

 
(2,260
)
 
197,262

 

 
 
Colonial Promenade Huntsville
 
Huntsville, AL
 
—

 
 
 
2,000

 
—

 
—

 
—

 
2,000

 
—

 
2,000

 
—

 
2,000

 
N/A
 
N/A
Colonial Grand at Randall Lakes (Phase II)
 
Jacksonville, FL
 
—

 
 
 
3,200

 
—

 
—

 
33,725

 
3,200

 
33,725

 
36,925

 
(123
)
 
36,802

 
N/A
 
N/A
Post Parkside at Wade II
 
Raleigh, NC
 
—

 
 
 
9,450

 
46,350

 
—

 
1,848

 
9,450

 
48,198

 
57,648

 
(143
)
 
57,505

 
N/A
 
N/A
Post Afton Oaks
 
Houston, TX
 
—

 
 
 
12,090

 
68,810

 
—

 
1,445

 
12,090

 
70,255

 
82,345

 
(109
)
 
82,236

 
N/A
 
N/A
Post South Lamar II
 
Austin, TX
 
—

 
 
 
9,000

 
32,800

 
—

 
3,307

 
9,000

 
36,107

 
45,107

 
—

 
45,107

 
N/A
 
N/A
Post Millennium Midtown
 
Atlanta, GA
 
—

 
 
 
7,000

 
44,000

 
—

 
8,312

 
7,000

 
52,312

 
59,312

 
—

 
59,312

 
N/A
 
N/A
Post River North
 
Denver, CO
 
—

 
 
 
13,413

 
26,732

 
—

 
3,287

 
13,413

 
30,019

 
43,432

 
—

 
43,432

 
N/A
 
N/A
Post Centennial Park
 
Atlanta, GA
 
—

 
 
 
13,650

 
10,950

 
—

 
2,321

 
13,650

 
13,271

 
26,921

 
—

 
26,921

 
N/A
 
N/A
The Denton (Phase II)
 
Kansas City, MO
 
—

 
 
 
770

 
—

 
—

 
12,806

 
770

 
12,806

 
13,576

 
—

 
13,576

 
N/A
 
N/A
Retreat at West Creek (Phase II)
 
Richmond, VA
 
—

 
 
 
3,000

 
—

 
—

 
10,174

 
3,000

 
10,174

 
13,174

 
—

 
13,174

 
N/A
 
N/A
Total Active Development Properties
 
 
 
—

 
 
 
73,573

 
229,642

 
—

 
77,225

 
73,573

 
306,867

 
380,440

 
(375
)
 
380,065

 
 
 
 
Total Properties
 
 
 
1,001,204

 
 
 
1,809,746

 
9,975,217

 
6,262

 
1,077,973

 
1,816,008

 
11,053,190

 
12,869,198

 
(1,656,071
)
 
11,213,127

 
 
 
 
Total Land Held for Future Developments
 
—

 
 
 
71,464

 
—

 
—

 
—

 
71,464

 
—

 
71,464

 
—

 
71,464

 
N/A
 
N/A
Corporate Properties
 
 
 
—

 
 
 
—

 
—

 
—

 
31,508

 
—

 
31,508

 
31,508

 
(18,730
)
 
12,778

 
Various
 
1-40
Total Other
 


 
 
 
71,464

 
—

 
—

 
31,508

 
71,464

 
31,508

 
102,972

 
(18,730
)
 
84,242

 
 
 
 
Total Real Estate Assets, net of Joint Ventures
 
$
1,001,204

 
 
 
$
1,881,210

 
$
9,975,217

 
$
6,262

 
$
1,109,481

 
$
1,887,472

 
$
11,084,698

 
$
12,972,170

 
$
(1,674,801
)
 
$
11,297,369

 
 
 
 

F-64



(1)
Encumbered by a $160.0 million Fannie Mae facility, with $160.0 million available and outstanding with a variable interest rate of 1.1% on which there exists two interest rate caps totaling $50 million at an average rate of 4.50% at December 31, 2016.
(2)
Encumbered by a $127 million loan with a fixed interest rate of 5.08% which matures on June 10, 2021.  
(3)
The aggregate cost for Federal income tax purposes was approximately $10.45 billion at December 31, 2016. The aggregate cost for book purposes exceeds the total gross amount of real estate assets for Federal income tax purposes, principally due to purchase accounting adjustments recorded under accounting principles generally accepted in the United States of America.
(4)
Depreciation is on a straight line basis over the estimated useful asset life which ranges from 8 to 40 years for land improvements and buildings, 5 years for furniture, fixtures and equipment, and 6 months for fair market value of residential leases.































F-65


Mid-America Apartment Communities, Inc.
Mid-America Apartments, L.P.
Schedule III
Real Estate Investments and Accumulated Depreciation
A summary of activity for real estate investments and accumulated depreciation is as follows (dollars in thousands):

 
Year Ended December 31,
 
2016
 
2015
 
2014
Real estate investments:
 

 
 

 
 

Balance at beginning of year
$
8,215,768

 
$
8,069,395

 
$
7,722,181

Acquisitions (1)
4,961,140

 
316,151

 
407,889

Less:  FMV of Leases included in Acquisitions
(51,588
)
 
(4,438
)
 
(4,968
)
Improvement and development
202,614

 
165,000

 
186,043

Assets held for sale
—

 
—

 
—

Disposition of real estate assets (2)
(355,764
)
 
(330,340
)
 
(241,750
)
Balance at end of year
$
12,972,170

 
$
8,215,768

 
$
8,069,395

 
 
 
 
 
 
Accumulated depreciation:
 

 
 

 
 

Balance at beginning of year
$
1,499,213

 
$
1,373,678

 
$
1,138,315

Depreciation
314,076

 
289,177

 
276,991

Assets held for sale
—

 
—

 
—

Disposition of real estate assets (2)
(138,488
)
 
(163,642
)
 
(41,628
)
Balance at end of year
$
1,674,801

 
$
1,499,213

 
$
1,373,678

 
MAA's consolidated balance sheet at December 31, 2016 , 2015 , and 2014 , includes accumulated depreciation of $18,730,000 , $16,845,000 , and $15,279,000 , respectively, in the caption "Corporate properties, net".

(1) Includes non-cash activity related to acquisitions.
(2) Includes assets sold, casualty losses, and removal of certain fully depreciated assets.

 
See accompanying reports of independent registered public accounting firm

F-66
Exhibit 3.1

COMPOSITE
CHARTER
OF
MID-AMERICA APARTMENT COMMUNITIES, INC.
(As amended through February 24, 2017)

The undersigned corporation hereby amends and restates its Charter under the Tennessee Business Corporation Act.

A.    The name of the corporation is Mid-America Apartment Communities, Inc. (the “Corporation”).

B.    The Charter of the Corporation is amended and restated as follows:

1.     Name . The name of the corporation (which is hereinafter called the “Corporation”) is Mid-America Apartment Communities, Inc.

2.     For Profit . The Corporation is for profit.

3.     Principal and Registered Office . The address of the Corporation’s registered office is 800 S. Gay Street, Suite 2021, Knoxville, TN 37929 and its principal office is 6584 Poplar Avenue, Suite 300, Memphis, Tennessee 38138.

4.     Registered Agent . The name of the Corporation’s registered agent at that office is CT Corporation System.

5.     Incorporator . The name and address of the incorporator is John A. Good, 6075 Poplar Avenue, Suite 623, Memphis, Tennessee 38119.

6.     Authorized Capital Stock . The total number of shares of stock which the Corporation has authority to issue is one hundred forty-five million (145,000,000) shares of Common Stock, $.01 par value per share, and twenty million (20,000,000) shares of Preferred Stock, $.01 par value per share.

The Preferred Stock may be issued from time to time by the Board of Directors of the Corporation, in such series and with such preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or other provisions as may be fixed by the Board of Directors. For ease of reference, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or other provisions for each series of Preferred Stock previously designated by the Board of Directors are set forth on Schedules A, B, C, E, F, G, H and I to this Composite Charter. As of February 24, 2017, the Preferred Stock designated as “8.50% Series I Cumulative Redeemable Preferred Stock”, the rights, preferences, privileges and voting powers of which are set forth on Schedule I to this Composite Charter, is the only Preferred Stock of the Corporation that remains issued and outstanding.

7.     Directors .

(a)    The Corporation shall have a Board of Directors consisting of not less than three (3) nor more than nine (9) members unless otherwise determined from time to time by resolution adopted by the affirmative vote of at least eighty percent (80%) of the members of the Board of Directors. However, the number of directors shall never be less than the minimum number required by the Tennessee Business Corporation Act. A director need not be a shareholder. Prior to the 2008 annual meeting of shareholders, the Corporation had a classified board of directors. Commencing with the 2008 annual meeting of shareholders, as the terms of the classified directors expire, such directors will subject to election annually to serve a one year term and until their successors are duly elected and qualified. The effect of this provision is that beginning with the annual meeting of shareholders in 2010 and for each annual shareholder meeting thereafter, the shareholders shall elect directors to serve one-year terms and until their successors are duly elected and qualified.

(b)     Independent Directors . Notwithstanding anything herein to the contrary, at all times (except during a period not to exceed sixty (60) days following the death, resignation, incapacity or removal from office of a director prior to expiration of the director’s term of office), a majority of the Board of Directors shall be comprised of persons who are not officers


Exhibit 3.1

or employees of the Corporation, “Affiliates” of the Corporation, or “Affiliates” of (i) any subsidiary of the Corporation, or (ii) any partnership which is an Affiliate of the Corporation.

(c)     Definition of Affiliate . For purposes of the foregoing subsection, “Affiliate” of a person shall mean (i) any person that, directly or indirectly, controls or is controlled by or is under common control with such person, (ii) any other person that owns, beneficially, directly or indirectly, five percent (5%) or more of the outstanding capital stock, shares or equity interests of such person, or (iii) any officer, director, employee, partner or trustee of such person or any person controlling, controlled by or under common control with such person (excluding trustees and persons serving in similar capacities who are not otherwise an Affiliate of such person). The term “person” means and includes individuals, corporations, general and limited partnerships, stock companies or associations, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, or other entities and governments and agencies and political subdivisions thereof. For the purposes of this definition, “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, through the ownership of voting securities, partnership interests or other equity interests.

(d)     Amendment of this Article . Notwithstanding any other provision of this Charter or the Bylaws of the Corporation (and notwithstanding that some lesser percentage may be specified by law, this Charter or the Bylaws of the Corporation), the provisions of this Article 7 shall not be amended, altered, changed or repealed without the affirmative vote of at last eighty percent (80%) of the members of the Board of Directors or the affirmative vote of the holders of not less than a majority of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting as a single voting group.

8.     Dividends . All shares of Common Stock will participate equally in dividends payable to holders of shares of Common Stock when and as declared by the Board of Directors and in net assets available for distribution to holders of shares of Common Stock upon liquidation or dissolution.

9.     Preemptive Rights . No holder of shares of capital stock of the Corporation shall have any preemptive or preferential right to subscribe to or purchase (i) any shares of any class of the Corporation, whether now or hereafter authorized; (ii) any warrants, rights, or options to purchase any such shares; or (iii) any securities or obligations convertible into any such shares or into warrants, rights, or options to purchase any such shares.

10.     Limitation of Director Liability . No director of the Corporation shall be liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director; provided, that this provision shall not eliminate or limit the liability of a director: (A) for any breach of the director’s duty of loyalty to the Corporation or its shareholders; (B) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or (C) under Section 48-18-304 of the Tennessee Business Corporation Act. This provision shall not eliminate or limit the liability of a director for any act or omission occurring prior to the date when this provision became effective. No amendment of this provision after the time of its effectiveness shall affect in any manner the elimination or limitation on liability of directors for acts occurring prior to the time of such amendment.

11.     Indemnification . Any word or words defined in Part 5 of Chapter 18 of Title 48 of the Tennessee Code Annotated, as amended from time to time (the “Indemnification Article”) used in this Article 11, shall have the same meaning as provided in the Indemnification Article.

The Corporation shall indemnify and advance expenses to a director, officer, employee or agent of the Corporation in connection with a proceeding to the fullest extent permitted by and in accordance with the Indemnification Article.

12.     Insurance . The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or who, while a director, officer, employee or agent of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against liability asserted against or incurred by such person in that capacity or arising from such person’s status as a director, officer, employee or agent, whether or not the Corporation would have power to indemnify such person against the same liability under the Indemnification Article.

13.     REIT Status . The Corporation shall seek to elect and maintain status as a real estate investment trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”). It shall be the duty of the Board of Directors to ensure that the Corporation satisfies the requirements for qualification as a REIT under the Code, including, but not limited to, the ownership of its outstanding stock, the nature of its assets, the sources of its income, and the amount and timing of its distributions to its shareholders. The Board of Directors shall take no action to disqualify the Corporation


Exhibit 3.1

as a REIT or to otherwise revoke the Corporation’s election to be taxed as a REIT without the affirmative vote of two-thirds (2/3) of the number of shares of Common Stock entitled to vote on such matter at a special meeting of the Shareholders.

14.     Restrictions on Transfer .


(a)     Affidavits of Transferees . Whenever it is deemed by the Board of Directors to be prudent in protecting the tax status of the Corporation as a REIT under the Code and regulations issued under the Code, the Board of Directors may require to be filed with the Corporation a statement or affidavit from each proposed transferee of shares of capital stock of the Corporation setting forth the number of such shares already owned by the transferee and any related person(s) specified in the form prescribed by the Board of Directors for that purpose. Any contract for the sale or other transfer of shares of capital stock of the Corporation shall be subject to this provision.

(b)     Affidavits of Shareholders . Prior to any transfer or transaction which would cause a shareholder to own, directly or indirectly, shares in excess of the “Limit” as defined in paragraph (d) of this Article 14, and in any event upon demand of the Board of Directors, such shareholder shall file with the Corporation an affidavit setting forth the number of shares of capital stock of the Corporation (a) owned directly and (b) owned indirectly by the person filing the affidavit. For purposes of this paragraph (b), shares of capital stock not owned directly shall be deemed to be owned indirectly by a person if that person would be the beneficial owner of such shares for purposes of Rule 13d-3, or any successor rule thereto, promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) and/or would be considered to own such shares by reason of the attribution rules in Section 544 (as modified by Section 856(h)) of the Code or the regulations issued thereunder.

The affidavit to be filed with the Corporation shall set forth all information required to be reported in returns filed by shareholders under Treasury Regulation Section 1.857-9 issued under the Code or similar provisions of any successor regulation, and in reports to be filed under section 13(d), or any successor rule thereto, of the Exchange Act. The affidavit, or an amendment thereto, shall be filed with the Corporation within ten (10) days after demand therefor and at least fifteen (15) days prior to any transfer or transaction which, if consummated, would cause the filing person to hold a number of shares of capital stock of the Corporation in excess of the “Limit” as defined in paragraph (d) of this Article 14.

(c)     Void Transfers . Notwithstanding any other provision hereof to the contrary, except Sections 14(e) and 14(k), any acquisition of shares of capital stock that (i) causes any person’s ownership to exceed the Limit (as defined in Section 14(d)) or (ii) would result in the disqualification of the Corporation as a REIT under the Code shall be void ab initio to the fullest extent permitted under applicable law and the intended transferee of those shares shall be deemed never to have had an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then those shares shall be deemed to be Excess Shares (as defined in Section 14(d)) and subject to Section 14(f) below.

(d)     Excess Shares . Except as provided in Section 14(e), no person shall at any time directly or indirectly own in the aggregate more than 9.9% of the outstanding shares of capital stock of the Corporation (the “Limit”). Shares which but for this Section 14(d) would be owned by a person and would, at any time, be in excess of the Limit shall be deemed “Excess Shares” and shall become subject to Section 14(f). For the purpose of determining whether shares are Excess Shares, “ownership” of shares shall be deemed to include shares constructively owned by a person under the provisions of Section 544 (as modified by Section 856(h)) of the Code. All shares of capital stock of the Corporation which any person has the right to acquire upon exercise of outstanding rights, options and warrants, and upon conversion of any securities convertible into those shares, if any, shall be considered outstanding for purposes of determining the applicable Limit if such inclusion will cause such person to own more than the Limit.

(e)     Exemptions . The ownership limits set forth in Sections 14(c) and 14(d) shall not apply to the acquisition of shares of capital stock of the Corporation by an underwriter in a public offering of those shares or in any transaction involving the issuance of shares of capital stock by the Corporation in which the Board of Directors determines that the underwriter or other person or party initially acquiring those shares will timely distribute those shares to or among others so that, following such distribution, the ownership of those shares will not be in violation of Section 14(c) or 14(d). The Board of Directors in its discretion may exempt from the Limit and from the filing requirements of Section 14(b) ownership or transfers of certain designated shares of capital stock of the Corporation while owned by or transferred to a person who has provided the Board of Directors with evidence and assurances acceptable to the Board of Directors that the qualification of the Corporation as a REIT under the Code and the regulations issued under the Code would not be jeopardized thereby.

(f)     Treatment of Excess Shares .



Exhibit 3.1

(i)    If the Board of Directors of the Corporation shall at any time determine that a transaction has taken place within the scope of Section 14(c) or that any person intends to acquire Excess Shares, the Board of Directors shall take such action as it or they deem advisable to refuse to give effect to or to prevent such transaction, including but not limited to refusing to give effect to such transfer on the books of the Corporation.

(ii)    If, notwithstanding Sections 14(c) and (f)(i), a purported transferee (“Record Transferee”) acquires Excess Shares, the Record Transferee shall be deemed to have received such Excess Shares as agent on behalf of, and to hold such Excess Shares in trust for the exclusive benefit of, the person(s) to whom the Excess Shares may be later transferred pursuant to Section 14(f)(iii). The Record Transferee shall have no right to receive dividends or other distributions on the Excess Shares and shall have no right to vote the Excess Shares. The Record Transferee shall have no claim, cause of action, or any other recourse whatsoever against the transferor of the Excess Shares. The Record Transferee’s sole right with respect to the trust shall be to receive, at the Corporation’s sole and absolute discretion, either (i) an amount upon the resale of the Excess Shares as directed by the Corporation pursuant to Section 14(f)(iii) or (ii) an amount upon the redemption of the Excess Shares by the Corporation pursuant to Section 14(f)(iii).

(iii)    The Board of Directors shall, within six months after receiving notice of a transfer that causes a Record Transferee to own Excess Shares, either, in its sole and absolute discretion, (a) direct the Record Transferee to sell all of the Excess Shares held in trust pursuant to Section 14(f)(ii) for cash in such manner as the Board of Directors directs or (b) redeem such Excess Shares for the price and on the terms set forth in Section 14(f)(iii)(b) on such date within such six month period as the Board of Directors may determine.

(a) If the Board of Directors directs the Record Transferee to sell the Excess Shares held in trust, the Record Transferee shall pay the Corporation out of the proceeds of such sale all expenses incurred by the Corporation in connection with such sale plus any remaining amount of such Proceeds that exceeds the amount paid by the Record Transferee for the Excess Shares, and the Record Transferee shall be entitled to retain only any proceeds in excess of such amount required to be paid to the Corporation.

(b)    If the Board of Directors determines to redeem the Excess Shares, written notice of redemption (the “Notice”) shall be provided to the Record Transferee of the Excess Shares not less than one week prior to the redemption date (the “Redemption Date”) determined by the Board of Directors and included in the Notice. The redemption price per share to be paid for Excess Shares will be equal to the lesser of (i) the principal price paid by the Record Transferee from whom Excess Shares are being redeemed or (ii) (a) the closing price per share of the shares on the principal national securities exchange on which the shares are listed or admitted to trading, (b) if the shares are not so listed or admitted to trading, the closing bid price on the date of Notice as reported on the National Association of Securities Dealers, Inc. System, if quoted thereon (the price per share determined under clause (a) or (b) being herein defined as the “Market Price”), or (c) if a Market Price is not determinable in accordance with either clause (a) or (b) of this sentence, the net asset value per share on the date of Notice determined in good faith by the Board of Directors, (iii) the Market Price on the date on which the person would but for this Article 14 have been deemed to acquire ownership of the Excess Shares, or (iv) the maximum price allowed under Part 5 of Chapter 35 of Title 48 of the Tennessee Code Annotated. The amount payable to the Record Transferee for Excess Shares so redeemed may be paid, at the option of the Corporation, in the form of the number of “Units” equal to the number of shares redeemed divided by the “Conversion Factor,” as those terms are defined in the Partnership Agreement of Mid-America Apartment Communities, Inc. The redemption price for any shares of capital stock of the Corporation so redeemed shall be paid on the Redemption Date. From and after the Redemption Date, the holder of any redeemed shares of capital stock of the Corporation shall cease to be entitled to any distributions or other benefits with respect to redeemed shares, except the right to receive payment of the redemption price fixed as aforesaid.

(g)     Application of Article . Subject to the provisions of Section 14(k) hereof, nothing contained in this Article 14 or in any other provision hereof shall limit the authority of the Board of Directors to take any and all other action as it in its sole discretion deems necessary or advisable to protect the Corporation and the interests of its shareholders by maintaining the Corporation’s eligibility to be, and preserving the Corporation’s status as, a REIT under the Code.

(h)     Definition of “Person” . For purposes of this Article only, the term “person” shall include individuals, corporations, limited partnerships, general partnerships, joint stock companies or associations, joint ventures, associations, consortia, companies, trusts, banks, trust companies, land trusts, common law trusts, business trusts, or other entities and governments and agencies and political subdivisions thereof.

(i)     Severability . If any provision of this Article 14 or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issue, the validity of the remaining provisions shall not be


Exhibit 3.1

affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of that court.

(j)     Legend . Certificates representing shares of capital stock of the Corporation shall bear a legend referencing the restrictions set forth in this Article 14.

(k)     NYSE Settlement . Nothing in these Articles of Incorporation shall preclude any settlement transaction with respect to the Common Stock of the Company entered into through the facilities of the New York Exchange.








Exhibit 3.1

SCHEDULE A

DESIGNATION OF
9.5% SERIES A CUMULATIVE PREFERRED STOCK

1.     Designation and Number . A series of Preferred Stock, designated the “9.5% Series A Cumulative Preferred Stock” (the “Series A Preferred Stock”), is hereby established. The number of shares of the Series A Preferred Stock shall be 2,000,000.
2.     Maturity . The Series A Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption.
3.     Rank . The Series A Preferred Stock will, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, rank (i) senior to all classes or series of Common Stock of the Company, and to all equity securities ranking junior to the Series A Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company; (ii) on a parity with all equity securities issued by the Company the terms of which specifically provide that such equity securities rank on a parity with the Series A Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company; and (iii) junior to all existing and future indebtedness of the Company. The term “equity securities” does not include convertible debt securities, which will rank senior to the Series A Preferred Stock prior to conversion.
4.     Dividends
(a)    Holders of shares of the Series A Preferred Stock are entitled to receive, when and as declared by the Board of Directors (or a duly authorized committee thereof), out of funds legally available for the payment of dividends, preferential cumulative cash dividends at the rate of 9.5% per annum of the Liquidation Preference (as defined below) per share (equivalent to a fixed annual amount of $2.375 per share). Dividends on the Series A Preferred Stock shall be cumulative from the date of original issue and shall be payable monthly in arrears on or before the 15th day of each month, or, if not a business day, the next succeeding business day (each, a “Dividend Payment Date”). The first dividend, which will be paid on November 15, 1996, will be for less than a full month. Such dividend and any dividend payable on the Series A Preferred Stock for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Company at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Dividend Payment Date falls or on such other date designated by the Board of Directors of the Company for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).
(b)    No dividends on shares of Series A Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Company at such time as the terms and provisions of any agreement of the Company, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.
(c)    Notwithstanding the foregoing, dividends on the Series A Preferred Stock will accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accrued but unpaid dividends on the Series A Preferred Stock will not bear interest and holders of the Series A Preferred Stock will not be entitled to any distributions in excess of full cumulative distributions described above. Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any capital stock of the Company or any other series of Preferred Stock ranking, as to dividends, on a parity with or junior to the Series A Preferred Stock (other than a dividend in shares of the Company’s Common Stock or in shares of any other class of stock ranking junior to the Series A Preferred Stock as to dividends and upon liquidation) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series A Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series A Preferred Stock and the shares of any other series of Preferred Stock ranking on a parity as to dividends with the Series A Preferred Stock, all dividends declared upon the Series A Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with the Series A Preferred Stock shall be declared pro rata so that the amount of dividends declared per share of Series A Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series A Preferred Stock and such other series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other.


Exhibit 3.1

(d)    Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series A Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in shares of Common Stock or other shares of capital stock ranking junior to the Series A Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other capital stock of the Company ranking junior to or on a parity with the Series A Preferred Stock as to dividends or upon liquidation, nor shall any shares of Common Stock, or any other shares of capital stock of the Company ranking junior to or on a parity with the Series A Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Company (except by conversion into or exchange for other capital stock of the Company ranking junior to the Series A Preferred Stock as to dividends and upon liquidation or redemptions for the purpose of preserving the Company’s qualification as a REIT). Holders of shares of the Series A Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series A Preferred Stock as provided above. Any dividend payment made on shares of the Series A Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.
5.     Liquidation Preference . Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the. Company, the holders of shares of Series A Preferred Stock are entitled to be paid out of the assets of the Company legally available for distribution to its shareholders a liquidation preference of $25 per share (the “Liquidation Preference”), plus an amount equal to any accrued and unpaid dividends to the date of payment, but without interest, before any distribution of assets is made to holders of Common Stock or any other class or series of capital stock of the Company that ranks junior to the Series A Preferred Stock as to liquidation rights. The Company will promptly provide to the holders of Series A Preferred Stock written notice of any event triggering the right to receive such Liquidation Preference. After payment of the full amount of the Liquidation Preference, plus any accrued and unpaid dividends to which they are entitled, the holders of Series A Preferred Stock will have no right or claim to any of the remaining assets of the Company. The consolidation or merger of the Company with or into any other corporation, trust or entity or of any other corporation with or into the Company, or the sale, lease or conveyance of all or substantially all of the property or business of the Company, shall not be deemed to constitute a liquidation, dissolution or winding up of the Company.
6.     Redemption .
(a)    The Series A Preferred Stock is not redeemable prior to November 1, 2001. On and after November 1, 2001, the Company, at its option upon not less than 30 nor more than 60 days’ written notice, may redeem shares of the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25 per share, plus all accrued and unpaid dividends thereon to the date fixed for redemption (except with respect to Excess Shares), without interest. Holders of Series A Preferred Stock to be redeemed shall surrender such Series A Preferred Stock at the place designated in such notice and shall be entitled to the redemption price and any accrued and unpaid dividends payable upon such redemption following such surrender. If notice of redemption of any shares of Series A Preferred Stock has been given and if the funds necessary for such redemption have been set aside by the Company in trust for the benefit of the holders of any shares of Series A Preferred Stock so called for redemption, then from and after the redemption date dividends will cease to accrue on such shares of Series A Preferred Stock, such shares of Series A Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. If less than all of the outstanding Series A Preferred Stock is to be redeemed, the Series A Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Company.
(b)    Unless full cumulative dividends on all shares of Series A Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series A Preferred Stock shall be redeemed unless all outstanding shares of Series A Preferred Stock are simultaneously redeemed and the Company shall not purchase or otherwise acquire directly or indirectly any shares of Series A Preferred Stock (except by exchange for capital stock of the Company ranking junior to the Series A Preferred Stock as to dividends and upon liquidation); provided, however , that the foregoing shall not prevent the purchase by the Company of Excess Shares in order to ensure that the Company continues to meet the requirements for qualification as a REIT, or the purchase or acquisition of shares of Series A Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred Stock. So long as no dividends are in arrears, the Company shall be entitled at any time and from time to time to repurchase shares of Series A Preferred Stock in open-market transactions duly authorized by the Board of Directors and effected in compliance with applicable laws.
(c)    Notice of redemption will be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the redemption date. A similar notice will be mailed by the Company, postage prepaid, not less than 30 nor more than 60 days


Exhibit 3.1

prior to the redemption date, addressed to the respective holders of record of the Series A Preferred Stock to be redeemed at their respective addresses as they appear on the stock transfer records of the Company. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the redemption date; (ii) the redemption price; (iii) the number of shares of Series A Preferred Stock to be redeemed; (iv) the place or places where the Series A Preferred Stock is to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If less than all of the Series A Preferred Stock held by any holder is to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series A Preferred Stock held by such holder to be redeemed.
(d)    Immediately prior to any redemption of Series A Preferred Stock, the Company shall pay, in cash, any accumulated and unpaid dividends through the redemption date, unless a redemption date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series A Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.
(e)    Excess Shares may be redeemed, in whole or in part, at any time when outstanding shares of Series A Preferred Stock are being redeemed, for cash at a redemption price of $25 per share, but excluding accrued and unpaid dividends on such Excess Shares, without interest. Such Excess Shares shall be redeemed in such proportion and in accordance with such procedures as shares of Series A Preferred Stock are being redeemed.
7.     Voting Rights .

(a)    Holders of the Series A Preferred Stock will not have any voting rights, except as set forth below or as otherwise from time to time required by law.

(b)    Whenever dividends on any shares of Series A Preferred Stock shall be in arrears for eighteen or more months (a “Preferred Dividend Default”), the holders of such shares of Series A Preferred Stock (voting separately as a class with all other series of Preferred Stock ranking on a parity with the Series A Preferred Stock as to dividends or upon liquidation (“Parity Preferred”) upon which like voting rights have been conferred and are exercisable) will be entitled to vote separately as a class for the election of a total of two additional directors of the Company (the “Preferred Stock Directors”) at a special meeting called by the holders of record of at least 20% of the Series A Preferred Stock or the holders of record of at least 20% of any series of Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting until all dividends accumulated on such shares of Series A Preferred Stock for the past dividend periods and the dividend for the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. A quorum for any such meeting shall exist if at least a majority of the outstanding shares of Series A Preferred Stock and shares of Parity Preferred upon which like voting rights have been conferred and are exercisable are represented in person or by proxy at such meeting. Such Preferred Stock Directors shall be elected upon the affirmative vote of a plurality of the shares of Series A Preferred Stock and such Parity Preferred present and voting in person or by proxy at a duly called and held meeting at which a quorum is present. If and when all accumulated dividends and the dividend for the then current dividend period on the Series A Preferred Stock shall have been paid in full or declared and set aside for payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the then current dividend period have been paid in full or set aside for payment in full on all series of Parity Preferred upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate. Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding shares of the Series A Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series A Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall each be entitled to one vote per director on any matter.

(c)    So long as any shares of Series A Preferred Stock remain outstanding, the Company will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series A Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal the provisions of the Charter or the Designating Amendment, whether by merger, consolidation or otherwise (an “Event”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series A Preferred Stock or the holders thereof; provided ,


Exhibit 3.1

however , that with respect to the occurrence of any Event set forth above, so long as the Series A Preferred Stock remains outstanding with the terms thereof materially unchanged, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of the Series A Preferred Stock and provided , further that (i) any increase in the amount of the authorized Preferred Stock or the creation of issuance of any other series of Preferred Stock, or (ii) any increase in the amount of authorized shares of such series, in each case ranking on a parity with or junior to the Series A Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d)    The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series A Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

8.     Conversion . The Series A Preferred Stock is not convertible into or exchangeable for any other property or securities of the Company.




Exhibit 3.1

SCHEDULE B

DESIGNATION OF
8 7/8% SERIES B CUMULATIVE PREFERRED STOCK

1.     Designation and Number . A series of Preferred Stock, designated the “8 7/8% Series B Cumulative Preferred Stock” (the “Series B Preferred”), is hereby established. The number of shares of the Series B Preferred shall be 2,156,250.

2.     Maturity . The Series B Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption.

3.     Rank . The Series B Preferred Stock, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, will rank (i) senior to all classes or series of Common Stock of the Company, and to all equity securities ranking junior to the Series B Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company; (ii) on a parity with all equity securities issued by the Company, including the Company’s 9.5% Series A Cumulative Preferred Stock (the “Series A Preferred Stock”) the terms of which specifically provide that such equity securities rank on a parity with the Series B Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company (the “Parity Preferred Stock”); and (iii) junior to all existing and future indebtedness of the Company. The term “equity securities” does not include convertible debt securities, which will rank senior to the Series B Preferred Stock prior to conversion.

4.     Dividends .

(a)    Holders of shares of the Series B Preferred Stock are entitled to receive, when and as declared by the Board of Directors (or a duly authorized committee thereof), out of funds legally available for the payments of dividends, preferential cumulative cash dividends at the rate of 8 7/8% per annum of the $25 liquidation preference (the “Liquidation Preference”) per share (equivalent to a fixed annual amount of $2.21875 per share). Dividends on the Series B Preferred Stock shall be cumulative from the date of original issue and shall be payable monthly in arrears on or before the 15th day of each month, or, if not a business day, the next succeeding business day (each, a “Dividend Payment Date”). The first dividend, which will be payable on December 15, 1997, will be for less than a full month. Such dividend and any dividend payable on the Series B Preferred Stock for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Company at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Dividend Payment Date falls or on such other date designated by the Board of Directors of the Company for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

(b)    No dividends on shares of Series B Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Company at such time as the terms and provisions of any agreement of the Company, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)    Notwithstanding the foregoing, dividends on the Series B Preferred Stock will accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accrued but unpaid dividends on the Series B Preferred Stock will not bear interest and holders of the Series B Preferred Stock will not be entitled to any distributions in excess of full cumulative distributions described above. Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any capital stock of the Company or any other series of Parity Preferred Stock or any series or class of equity securities ranking junior to the Series B Preferred Stock (other than a dividend in shares of the Company’s Common Stock or in shares of any other class of stock ranking junior to the Series B Preferred Stock as to dividends and upon liquidation) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series B Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series B Preferred Stock and the shares of any other series of Parity Preferred Stock, all dividends declared upon the Series B Preferred Stock and any other series of Parity Preferred Stock, shall be declared pro rata so that the amount of dividends declared per share of Series B Preferred Stock and such other series of Parity Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series B Preferred Stock and such other series of Parity Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Parity Preferred Stock does not have a cumulative dividend) bear to each other.



Exhibit 3.1

(d)    Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series B Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in shares of Common Stock or other shares of capital stock ranking junior to the Series B Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other capital stock of the Company ranking junior to or on a parity with the Series B Preferred Stock as to dividends or upon liquidation, nor shall any shares of Common Stock, or any other shares of capital stock of the Company ranking junior to or on a parity with the Series B Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such shares) by the Company (except by conversion into or exchange for other capital stock of the Company ranking junior to the Series B Preferred Stock as to dividends and upon liquidation or redemptions for the purpose of preserving the Company’s qualification as a real estate investment trust (“REIT”)). Holders of shares of the Series B Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series B Preferred Stock as provided above. Any dividend payment made on shares of the Series B Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.

5.     Liquidation Preference . Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of shares of Series B Preferred Stock are entitled to be paid out of the assets of the Company legally available for distribution to its shareholders a liquidation preference of $25 per share, plus an amount equal to any accrued and unpaid dividends to the date of payment, but without interest, before any distribution of assets is made to holders of Common Stock or any other class or series of capital stock of the Company that ranks junior to the Series B Preferred Stock as to liquidation rights. If the assets of the Company legally available for distribution to shareholders are insufficient to pay in full the Liquidation Preference on the Series B Preferred Stock and the Liquidation Preference on any shares of Parity Preferred Stock, all assets distributed to the holders of the Series B Preferred Stock and any other series of Parity Preferred Stock shall be distributed pro rata so that the amount of assets distributed per share of Series B Preferred Stock and such other series of Parity Preferred Stock shall in all cases bear to each other the same ratio that the Liquidation Preference per share on the Series B Preferred Stock and such other series of Parity Preferred Stock bear to each other. Holders of Series B Preferred Stock will be entitled to written notice of any event triggering the right to receive such Liquidation Preference. After payment of the full amount of the Liquidation Preference, plus any accrued and unpaid dividends to which they are entitled, the holders of Series B Preferred Stock will have no right or claim to any of the remaining assets of the Company. The consolidation or merger of the Company with or into any other corporation, trust or entity or of any other corporation with or into the Company, or the sale, lease or conveyance of all or substantially all of the property or business of the Company, shall not be deemed to constitute a liquidation, dissolution or winding up of the Company.

6.     Redemption .

(a)    The Series B Preferred Stock is not redeemable prior to December 1, 2002. However, in order to ensure that the Company will continue to meet the requirement for qualification as a REIT, the Series B Preferred Stock will be subject to provisions in the Company’s Charter (the “Charter”) pursuant to which shares of capital stock of the Company owned by a shareholder in excess of 9.9% in value of the outstanding shares of capital stock of the Company (the “Ownership Limit”) will be deemed “Excess Shares,” and the Company will have the right to purchase such Excess Shares from the holder. On and after December 1, 2002, the Company, at its option upon not less than 30 nor more than 60 days’ written notice, may redeem shares of the Series B Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25 per share, plus all accrued and unpaid dividends thereon to the date fixed for redemption (except with respect to Excess Shares), without interest. Holders of Series B Preferred Stock to be redeemed shall surrender such Series B Preferred Stock at the place designated in such notice and upon such surrender shall be entitled to the redemption price and any accrued and unpaid dividends payable upon such redemption. If notice of redemption of any shares of Series B Preferred Stock has been given and if the funds necessary for such redemption have been set aside by the Company in trust for the benefit of the holders of any shares of Series B Preferred Stock so called for redemption, then from and after the redemption date dividends will cease to accrue on such shares of Series B Preferred Stock, such shares of Series B Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. If less than all of the outstanding Series B Preferred Stock is to be redeemed, the Series B Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Company.

(b)    Unless full cumulative dividends on all shares of Series B Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series B Preferred Stock shall be redeemed unless all outstanding shares of Series B Preferred Stock are simultaneously redeemed and the Company shall not purchase or otherwise acquire directly or indirectly any shares of Series B Preferred Stock (except by exchange for capital stock of the Company ranking junior to the Series B Preferred Stock as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase by


Exhibit 3.1

the Company of Excess Shares in order to ensure that the Company continues to meet the requirements for qualification as a REIT, or the purchase or acquisition of shares of Series B Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series B Preferred Stock. So long as no dividends are in arrears, the Company shall be entitled at any time and from time to time to repurchase shares of Series B Preferred Stock in open-market transactions duly authorized by the Board of Directors and effected in compliance with applicable laws.

(c)    Notice of redemption will be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the redemption date. A similar notice will be mailed by the Company, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series B Preferred Stock to be redeemed at their respective addresses as they appear on the stock transfer records of the Company. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series B Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the redemption date; (ii) the redemption price; (iii) the number of shares of Series B Preferred Stock to be redeemed; (iv) the place or places where the Series B Preferred Stock is to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If less than all of the Series B Preferred Stock held by any holder is to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series B Preferred Stock held by such holder to be redeemed.

(d)    Immediately prior to any redemption of Series B Preferred Stock, the Company shall pay, in cash, any accumulated and unpaid dividends through the redemption date, unless a redemption date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series B Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

(e)    The Series B Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption. However, in order to ensure that the Company continues to meet the requirements for qualification as a REIT, Series B Preferred Stock acquired by a shareholder in excess of the Ownership Limit will automatically become Excess Shares, and the Company will have the right to purchase such Excess Shares from the holder. In addition, Excess Shares may be redeemed, in whole or in part, at any time when outstanding shares of Series B Preferred Stock are being redeemed, for cash at a redemption price of $25 per share, but excluding accrued and unpaid dividends on such Excess Shares, without interest. Such Excess Shares shall be redeemed in such proportion and in accordance with such procedures as shares of Series B Preferred Stock are being redeemed.

7.     Voting Rights .
(a)    Holders of the Series B Preferred Stock will not have any voting rights, except as set forth below or as otherwise from time to time required by law.

(b)    Whenever dividends on any shares of Series B Preferred Stock shall be in arrears for eighteen or more months (a “Preferred Dividend Default”), the holders of such shares of Series B Preferred Stock voting separately as a class together with the holders of the Series A Preferred Stock and all other series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable will be entitled to vote separately as a class for the election of a total of two additional directors of the Company (the “Preferred Stock Directors”) at a special meeting called by the holders of record of at least 20% of the Series B Preferred Stock or the holders of record of at least 20% of any series of Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting until all dividends accumulated on such shares of Series B Preferred Stock for the past dividend periods and the dividend for the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. A quorum for any such meeting shall exist if at least a majority of the outstanding shares of Series B Preferred Stock and shares of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable are represented in person or by proxy at such meeting. The Preferred Stock Directors shall be elected upon the affirmative vote of a plurality of the shares of Series B Preferred Stock and such Parity Preferred Stock present and voting in person or by proxy at a duly called and held meeting at which a quorum is present voting separately as a class. If and when all accumulated dividends and the dividend for the then current dividend period on the Series B Preferred Stock shall have been paid in full or declared and set aside for payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the then current dividend period have been paid in full or declared and set aside for payment in full on all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate. Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding shares of the Series B Preferred Stock


Exhibit 3.1

when they have the voting rights described above (voting separately as a class with all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series B Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall each be entitled to one vote per director on any matter.

(c)    So long as any shares of Series B Preferred Stock remain outstanding, the Company will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series B Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal the provisions of the Charter or the Designating Amendment, whether by merger, consolidation or otherwise (an “Event”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series B Preferred Stock or the holders thereof; provided, however, that with respect to the occurrence of any Event set forth above, so long as the Series B Preferred Stock remains outstanding with the terms thereof materially unchanged, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of the Series B Preferred Stock and provided, further that (i) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or (ii) any increase in the amount of authorized shares of such series, in each case ranking on a parity with or junior to the Series B Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d)    The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series B Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

8.     Conversion . The Series B Preferred Stock is not convertible into or exchangeable for any other property or securities of the Company.





Exhibit 3.1

SCHEDULE C

DESIGNATION OF
9 3/8% SERIES C CUMULATIVE REDEEMABLE PREFERRED STOCK


1.     Designation and Number . A series of Preferred Stock, designated the “9 3/8% Series C Cumulative Redeemable Preferred Stock” (the “Series C Preferred Stock”), is hereby established. The number of shares of the Series C Preferred shall be 2,000,000.

2.     Maturity . The Series C Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption.

3.     Rank . The Series C Preferred Stock ranks senior to the Common Stock with respect to payment of dividends and amounts upon liquidation, dissolution or winding up. The Series C Preferred Stock ranks on a parity with the Company’s 9.5% Series A Cumulative Preferred Stock (the “Series A Preferred Stock”) and the Company’s 8 7/8% Series B Cumulative Preferred Stock (the “Series B Preferred Stock”) with respect to payment of dividends and amounts upon liquidation, dissolution and winding up. While any shares of Series C Preferred Stock are outstanding, the Company shall not authorize, create or increase the authorized amount of any class or series of stock that ranks senior to the Series C Preferred Stock with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up without the consent of the holders of two-thirds of the outstanding shares of Series C Preferred Stock and all other Voting Preferred Shares (defined below), voting as a single class. However, the Company may create additional classes of stock or issue series of Preferred Stock ranking on a parity with the Series C Preferred Stock with respect, in each case, to the payment of dividends and amounts upon liquidation, dissolution and winding up (a “Parity Stock”) without the consent of any holder of Series C Preferred Stock.

4.     Dividends . Holders of shares of Series C Preferred Stock will be entitled to receive, when, as and if declared by the Board of Directors of the Company, out of funds of the Company legally available for payment, cumulative cash dividends payable at the rate of 9 3/8% of the liquidation preference per annum (equivalent to $2.34375 per annum per share). Dividends on the Series C Preferred Stock will accrue and be cumulative from the date of original issuance of the Series C Preferred Stock and shall be payable quarterly in arrears on the 15th calendar day of January, April, July, and October of each year (and if such day is not a business day, then no later than the next succeeding business day), commencing October 15, 1998 (and, in the case of any accrued but unpaid dividends, at such additional times and for such interim periods, if any, as determined by the Board of Directors). Each such dividend will be payable to holders of record as they appear on the stock records of the Company at the close of business on such record dates, which shall be on or about the 1st day of the calendar months in which the dividend payment dates fall or such other dates not less than 10 days nor more than 60 days preceding the payment dates thereof, as shall be fixed by the Board of Directors of the Company. Accumulations of dividends on shares of Series C Preferred Stock will not bear interest. Dividends payable on the Series C Preferred Stock for any period greater or less than a full dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months.

Except as provided in the next sentence, no dividend will be declared or paid on any Parity Stock unless full cumulative dividends have been declared and paid or are contemporaneously declared and funds sufficient for payment set aside on the Series C Preferred Stock for all prior dividend periods. If accrued dividends on the Series C Preferred Stock for all prior dividend periods have not been paid in full, then any dividend declared on the Series C Preferred Stock for any dividend period and on any Parity Stock will be declared ratably in proportion to accrued and unpaid dividends on the Series C Preferred Stock and such Parity Stock.

The Company will not (i) declare, pay or set apart funds for the payment of any dividend or other distribution with respect to any Junior Stock (as defined below) or (ii) redeem, purchase or otherwise acquire for consideration any Junior Stock through a sinking fund or otherwise (other than a redemption or purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Company or any subsidiary), unless (A) all cumulative dividends with respect to the Series C Preferred Stock and any Parity Stock at the time such dividends are payable have been paid or funds have been set apart for payment of such dividends and (B) sufficient funds have been paid or set apart for the payment of the dividend for the current dividend period with respect to the Series C Preferred Stock and any Parity Stock. The foregoing limitations do not restrict the Company’s ability to take the foregoing actions with respect to any Parity Stock.

As used herein, (i) the term “dividend” does not include dividends payable solely in shares of Junior Stock on Junior Stock, or in options, warrants or rights to holders of Junior Stock to subscribe for or purchase any Junior Stock, and (ii) the term “Junior Stock” means the Common Stock, and any other class of capital stock of the Company now or hereafter issued and outstanding that ranks junior as to the payment of dividends or amounts upon liquidation, dissolution and winding up to the Series C Preferred Stock.



Exhibit 3.1

5.     Liquidation Preference . In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of shares of Series C Preferred Stock will be entitled to receive $25.00 per share of Series C Preferred Stock plus an amount per share of Series C Preferred Stock equal to all dividends (whether or not declared) accrued and unpaid thereon to the date of final distribution to such holders (the “Liquidation Preference”), and no more. Until the holders of the Series C Preferred Stock have been paid the Liquidation Preference in full, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Company. If, upon any liquidation, dissolution or winding up of the Company, the assets of the Company, or proceeds thereof, distributable among the holders of the shares of Series C Preferred Stock are insufficient to pay in full the Liquidation Preference and the liquidation preference with respect to any other shares of Parity Stock, then such assets, or the proceeds thereof, will be distributed among the holders of shares of Series C Preferred Stock and any such Parity Stock ratably in accordance with the respective amounts which would be payable on such shares of Series C Preferred Stock and any such Parity Stock if all amounts payable thereon were paid in full. Neither a consolidation or merger of the Company with another corporation, a statutory share exchange by the Company nor a sale or transfer of all or substantially all of the Company’s assets will be considered a liquidation, dissolution or winding up, voluntary or involuntary, of the Company.

6.     Redemption . On or after June 30, 2003, the shares of Series C Preferred Stock will be redeemable at the option of the Company, in whole or in part, at a redemption price equal to the Liquidation Preference of the Series C Preferred Stock to be redeemed, including accrued and unpaid dividends. The redemption price (other than the portion thereof consisting of accrued and unpaid dividends) is payable solely out of the sale proceeds of other capital stock of the Company, and not from any other source. For purposes of the preceding sentence, the term “capital stock” means any equity securities (including Common Stock and Preferred Stock), shares, interests, participation or other ownership interests (however designated), depositary shares representing any of the foregoing, and any rights (other than debt securities convertible into or exchangeable for equity securities) or options to purchase any of the foregoing. In order to exercise its redemption option, the Company must issue a press release announcing the redemption. Notice of redemption will be given by mail or by publication in a newspaper of general circulation in the City of New York once per week for at least two successive weeks to the holders of the Series C Preferred Stock not more than four business days after the Company issues the press release announcing its intention to redeem the Series C Preferred Stock. A similar notice furnished by the Company will be mailed by the registrar, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series C Preferred Stock to be redeemed at their respective addresses as they appear on the share transfer records of the registrar. The redemption date will be a date selected by the Company not less than 30 nor more than 60 days after the date on which the Company issues the press release announcing its intention to redeem the Series C Preferred Stock. If fewer than all of the shares of Series C Preferred Stock are to be redeemed, the shares to be redeemed shall be selected by lot or pro rata or in some other equitable manner determined by the Company. On the redemption date, the Company must pay on each share of Series C Preferred Stock to be redeemed any accrued and unpaid dividends, in arrears up to the redemption date, except that in the case of a redemption date falling after a dividend payment record date and prior to the related payment date, the holders of the Series C Preferred Stock at the close of business on such record date will be entitled to receive the dividend payable on such shares on the corresponding dividend payment date, notwithstanding the redemption of such shares following such dividend payment record date. Except as provided for in the preceding sentence, no payment or allowance will be made for accrued dividends on any shares of Series C Preferred Stock called for redemption after the redemption date. In the event that full cumulative dividends on the Series C Preferred Stock and any Parity Stock have not been paid or declared and set apart for payment, the Series C Preferred Stock may not be redeemed in whole or in part, and the Company may not purchase or acquire shares of Series C Preferred Stock otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Series C Preferred Stock. On and after the date fixed for redemption, provided that the Company has made available at the office of the registrar sufficient net proceeds from the sale of other capital stock of the Company to effect the redemption, dividends will cease to accrue on the Series C Preferred Stock called for redemption (except that, in the case of a redemption date after a dividend payment record date and prior to the related dividend payment date, holders of Series C Preferred Stock at the close of business on the dividend payment record date will be entitled on such dividend payment date to receive the dividend payable on such shares), such shares shall no longer be deemed to be outstanding and all rights of the holders of such shares of Series C Preferred Stock shall cease except the right to receive the cash payable upon such redemption, without interest from the date of such redemption. At the close of business on the redemption date, each holder of Series C Preferred Stock (unless the Company defaults in the delivery of the shares of Common Stock deliverable in exchange therefor) will without any further action no longer be deemed a holder of the number of shares of Series C Preferred Stock to be redeemed.

7.     Voting Rights . Except as indicated below, or except as otherwise from time to time required by applicable law, the holders of shares of Series C Preferred Stock will have no voting rights. If six or more quarterly dividends payable on the Series C Preferred Stock or any other Parity Stock are in arrears, whether or not declared and whether or not consecutive, the number of directors then constituting the Board of Directors of the Company will be increased by two and the holders of shares of Series C Preferred Stock, voting together as a class with the holders of any other series of Parity Stock (any such other series, the “Voting Preferred Shares”), will have the right to elect two additional directors to serve on the Company’s Board of Directors at an annual meeting of shareholders or a properly called special meeting of the holders of the Series C Preferred Stock and such Voting Preferred Shares and at each subsequent annual meeting of shareholders until all such dividends and dividends for the current quarterly period on


Exhibit 3.1

the Series C Preferred Stock and such other Voting Preferred Shares have been paid or declared and set aside for payment. The approval of two-thirds of the outstanding shares of Series C Preferred Stock and all other series of Voting Preferred Shares similarly affected, voting as a single class, will be required in order to amend the Charter or this Designating Amendment to affect materially and adversely the rights, preferences or voting power of the holders of the Series C Preferred Stock or the Voting Preferred Shares or to authorize, create, or increase the authorized amount of, any class of stock having rights senior to the Series C Preferred Stock with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up. However, the Company may create additional classes of Parity and Junior Stock, increase the authorized number of shares of Parity and Junior Stock and issue additional series of Parity and Junior Stock without the consent of any holder of Series C Preferred Stock. When exercising the voting rights described above, each share of Series C Preferred Stock shall have one vote per share, except that when voting as a single class with the Voting Preferred Shares, each share of Series C Preferred Stock and Voting Preferred Shares shall have one vote per $25.00 of stated liquidation preference. Except as required by law, the holders of Series C Preferred Stock will not be entitled to vote on any merger or consolidation involving the Company or a sale of all or substantially all of the assets of the Company. In addition, under Tennessee law, the Series C Preferred Stock will be entitled to vote as a separate voting group if the Series C Preferred Stock is affected by certain amendments to the Charter, whether made by filing articles of amendment or by a merger or share exchange. In particular, if a proposed amendment to the Charter requires shareholder action, a separate class or series of shares will be entitled to vote as a separate voting group on any amendment that would: (i) increase or decrease the aggregate number of authorized shares of that class; (ii) effect an exchange or reclassification of all or part of the shares of the class into shares of another class; (iii) effect an exchange or reclassification, or create a right of exchange, of all or part of the shares of another class into shares of the class; (iv) change the designation, rights, preferences, or limitations of any shares of the class; (v) change the shares of all or part of the class into a different number of shares of the same class; (vi) create a new class or change a class with subordinate and inferior rights into a class of shares, having rights or preferences with respect to distributions or dissolution that are prior, superior, or substantially equal to the shares of the class, or increase the rights, preferences or number of authorized shares of any class having rights or preferences with respect to distributions or to dissolution that are prior, superior, or substantially equal to the shares of the class; (vii) limit or deny an existing preemptive right of all or part of the shares of the class, if any; (viii) authorize the issuance as a share dividend of shares of such class in respect of shares of another class; (ix) cancel or otherwise affect rights to distributions or dividends that have accumulated but not yet been declared on any shares of that class; or (x) change the corporation into a non-profit corporation or a cooperative organization. If a proposed amendment would affect a series or class of shares in one or more of the ways described in this paragraph, the shares of that series or class are entitled to vote as a separate voting group on the proposed amendment. The above mandatory voting rights apply regardless of whether the change is favorable or unfavorable to the affected series or class. A mandatory voting right also is given to class or series of shares for approval of a share dividend payable in the shares of that class or series on the shares of another class or series. Unless the Charter, the Company’s Bylaws, or the Board of Directors requires a higher vote, the vote required within each voting group will be a majority of shares actually cast at a meeting at which a quorum is present, except that if the proposed amendment creates dissenters’ rights for any voting group, the vote required within that voting group will be a majority of the total votes in that voting group entitled to be cast on the amendment. The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series C Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

8.     Conversion . Shares of Series C Preferred Stock will not be convertible into any other securities of the Company.




Exhibit 3.1

SCHEDULE E


DESIGNATION OF
9.5% SERIES E CUMULATIVE REDEEMABLE PREFERRED STOCK

1.     Designation and Number . A series of Preferred Stock designated the “9.5% Series E Cumulative Redeemable Preferred Stock” (the “Series E Preferred Stock”), is hereby established. The number of shares of the Series E Preferred Stock shall be 1,000,000.

2.     Maturity . The Series E Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption.

3.     Rank . The Series E Preferred Stock will, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, rank (i) senior to all classes or series of Junior Stock (as defined below) (ii) on a parity with all Parity Stock (as defined below); and (iii) junior to all existing and future debt for money borrowed of the Company. The term “equity securities” does not include convertible debt securities, which will rank senior to the Series E Preferred Stock prior to conversion. While any shares of Series E Preferred Stock are outstanding, the Company shall not issue or authorize the issuance of any Senior Stock (as defined below) without the consent of the holders of two-thirds of the outstanding shares of Series E Preferred Stock, voting separately as a class.

4.     Dividends .

(a)    Holders of shares of the Series E Preferred Stock are entitled to receive, when and as declared by the Board of Directors (or a duly authorized committee thereof), out of funds legally available for the payment of dividends, preferential cumulative cash dividends at the Series E Dividend Rate (as defined below). Dividends on the Series E Preferred Stock shall be cumulative, whether or not declared, on a daily basis from the date of original issue and shall be payable monthly (each such monthly period being herein called a “Dividend Period”) in arrears on or before the 15 th day of each month, or, if not a business day, the next succeeding business day (each, a “Dividend Payment Date”). The first dividend, which will be paid on January 15, 1999, will be for less than a full month. Such dividend and any dividend payable on the Series E Preferred Stock for any partial Dividend Period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Company at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Dividend Payment Date falls or on such other date designated by the Board of Directors of the Company for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Notwithstanding anything herein to the contrary, dividends on any dividend that is accrued and unpaid on the Series E Preferred Stock shall accrue from the Dividend Payment Date on which such dividend was payable.

(b)    Dividends on account of arrears for any past Dividend Period may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, not more than forty-five (45) days prior to the payment thereof, as may be fixed by the Board of Directors.

(c)    Holders of shares of the Series E Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, other than as provided above or in Section 6. Any dividend payment made on shares of the Series E Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.

5.     Redemption .

(a)    The Series E Preferred Stock is not redeemable by the Company other than upon the request of a holder of Series E Preferred Stock as provided below.

(b)    Any holder of Series E Preferred Stock may, at such holder’s option upon not less than 150 days’ written notice (such notice, a “Redemption Notice”), cause the Company to redeem such holder’s shares of the Series E Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price (the “Redemption Price”) per share equal to the amount (including with respect to accrued and unpaid dividends) that would be payable to the holder of such shares if the Company were liquidated, dissolved or wound up (determined as provided below) on the date of redemption, less any dividend payable as provided in the first sentence of Section 5(d) and actually paid on the applicable Dividend Payment Date; provided , however , that a Redemption Notice may be sent by a holder of Series E Preferred Stock prior to August 1, 2003 only (i) in the event of a Change of Control (as defined below) or (ii) upon the occurrence and during the continuance of a Series E Event of Non-Compliance (in


Exhibit 3.1

which case the Company shall redeem such holder’s shares in accordance with the provisions hereof whether or not such Series E Event of Non-Compliance exists at the date fixed for redemption in such Redemption Notice). Any Redemption Notice shall be addressed to the secretary of the Company at the Company’s principal executive office, and shall state the name of the applicable holder of Series E Preferred Stock, the address of such holder, the number of shares to be redeemed (which shall be no less than 4,000 shares) and the date fixed for redemption of such shares. Holders of Series E Preferred Stock to be redeemed shall surrender such Series E Preferred Stock at a place designated by the Company in writing at least ten days prior to the date fixed for redemption and shall be entitled to the Redemption Price following such surrender. If notice of redemption with respect to any shares of Series E Preferred Stock has been given and if the funds or the full required number from time to time of Set Aside Shares (as defined below) necessary for such redemption have been set aside by the Company in irrevocable trust for the benefit of the holders of any shares of Series E Preferred Stock to be redeemed (and, the Redemption Price (including cash proceeds described in the final paragraph of Section 5(c), if applicable) with respect to such shares is in fact paid to such holders on the applicable redemption date), then from and after such redemption date dividends will cease to accrue on such shares of Series E Preferred Stock, such shares of Series E Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the Redemption Price.

(c)    The Company may elect to redeem shares of Series E Preferred Stock in shares of Common Stock of the Company in lieu of cash or to make such redemption partially in Common Stock and partially in cash by giving notice of such election not less than 90 days after receipt of an applicable Redemption Notice to each holder of Series E Preferred Stock to which the Company desires such election to apply; provided , however , that any such election by the Company shall apply equally to all shares of Series E Preferred Stock to be redeemed on the same redemption date. Such election may be revoked (or modified to decrease the proportion of Common Stock to be received by holders) by the Company, notwithstanding any statement of such election in the notice to holders referred to in the immediately preceding sentence, at any time prior to the applicable redemption date, with or without notice of such revocation to the holders hereof. The number of shares of Common Stock per share of Series E Preferred Stock to be delivered to the holders of the shares of Series E Preferred Stock Company shall be calculated as follows:

(1)    the cash that would otherwise be payable by the Company to a holder of a share of Series E Preferred Stock upon a cash redemption of such shares, divided by

(2)    the Common Stock Price on the third business day prior to the redemption date.

If the Company elects to redeem shares of Series E Preferred Stock in shares of Common Stock, upon the request of holders of shares of the Series E Preferred Stock which are the subject of redemption, which request is received by the Company at least 30 calendar days prior to the applicable redemption date, the Company shall have the obligation to register such shares of Common Stock for public offering and sale under the Federal securities laws and such holders shall have the obligations to cooperate with the Company with respect to such registration. The Company shall select the underwriter for any public distribution of such shares of Common Stock. Any underwriting agreement entered into in connection with such public distribution shall provide for a “firm commitment” underwriting and shall provide for a scheduled closing date not later than three business days following the date fixed for redemption. The underwriting discount and all other expenses of registration and sale shall be borne by the Company. If for any reason the net proceeds from such public distribution of shares of Common Stock received by such holders shall be less than 100% of the portion of the Redemption Price for the shares of Series E Preferred Stock redeemed that is paid for in Common Stock (the “Deficiency”), the Company shall pay to the holders of such shares on a pro rata basis (i) an amount equal to the Deficiency in cash or a sufficient number of additional shares of Common Stock which shall be registered and sold as described above to pay the Deficiency in full and (ii) interest on the Deficiency at the Series E Dividend Rate for the period from and including the applicable redemption date to the date on which cash in the amount of the Deficiency plus all accrued interest thereon pursuant to this clause (ii) is finally paid in full to the holders of shares of Series E Preferred Stock to which such Deficiency relates.

(d)    If a redemption date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, each holder of Series E Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date. Otherwise, upon redemption of any shares of Series E Preferred Stock and payment or setting aside in irrevocable trust of the full Redemption Price, no further dividend (including accrued and unpaid dividends) shall be payable with respect to such shares.

6.     Certain Payment Restrictions .

(a)    Notwithstanding Sections 4 and 5, no dividends on shares of Series E Preferred Stock shall be declared by the Board of Directors nor shall any dividends or cash amounts payable by the Company in respect of shares of Series E Preferred Stock being redeemed at the election of the holders thereof be paid or set apart for payment by the Company at such time as the


Exhibit 3.1

terms and provisions of any agreement of the Company in effect on the date of original issuance of the Series E Preferred Stock, including any such agreement relating to its indebtedness (or any refinancings of such agreements), prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. The Company shall use its best efforts (i) to permit dividends on the Series E Preferred Stock to be paid and cash redemptions of shares of the Series E Preferred Stock to be made without causing any such breach or default and (ii) not to be subject to any such restriction or prohibition of law.

(b)    Notwithstanding the foregoing, dividends on the Series E Preferred Stock will accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends or the payment of dividends would cause any breach or default and whether or not such dividends are declared. Except as set forth in the immediately succeeding sentence, no dividends will be declared or paid or set aside for payment on any Parity Stock or Junior Stock (other than a dividend in shares of Junior Stock) for any period unless full cumulative dividends have been or contemporaneously are likewise declared and paid or declared and a sum sufficient for the payment thereof is set apart in irrevocable trust for the benefit of the holders of Series E Preferred Stock for such payment on the Series E Preferred Stock for all past Dividend Periods and the then current Dividend Period. Notwithstanding the foregoing, the Company may from time to time declare dividends on Parity Stock at times when dividends are not paid in full (or a sum sufficient for such full payment is not so set apart in irrevocable trust) upon the Series E Preferred Stock and the shares of any series of Parity Stock, provided that all dividends declared upon the Series E Preferred Stock and any series of Parity Stock shall be declared pro rata so that the amount of dividends declared per share of Series E Preferred Stock and the Parity Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series E Preferred Stock and the Parity Stock (which shall not include any accrual in respect of unpaid dividends for prior Dividend Periods for any Parity Stock which does not have a cumulative dividend) bear to each other.

(c)    No dividends (other than in shares of Junior Stock) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon any Parity Stock or Junior Stock or any warrants, rights, calls or options exercisable for or convertible into any Parity Stock or Junior Stock, nor shall any shares of Parity Stock or Junior Stock or any warrants, rights, calls or options exercisable for or convertible into any Parity Stock or Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Company or by any Person (as defined below) directly or indirectly controlled by the Company (except by conversion into or exchange for Junior Stock for the purpose of preserving the Company’s qualification as a REIT), unless full cumulative dividends on the Series E Preferred Stock likewise have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart in irrevocable trust for the benefit of the holders of the Series E Preferred Stock for payment for all past Dividend Periods and the then current Dividend Period.

(d)    No dividends (other than in shares of Junior Stock) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon any Junior Stock or any warrants, rights, calls or options exercisable for or convertible into any Junior Stock, nor shall any shares of Junior Stock or any warrants, rights, calls or options exercisable for or convertible into any Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Company or by any Person directly or indirectly controlled by the Company (except by conversion into or exchange for Junior Stock for the purpose of preserving the Company’s qualification as a REIT) on any date unless the full Redemption Price with respect to all shares of Series E Preferred Stock as to which there has been delivered a Redemption Notice on or before the earlier of (i) such date and (ii) with respect to redemptions, purchases or other acquisitions of Junior Stock, the date, if any, on which the applicable notice of redemption, purchase or other acquisition of such Junior Stock was sent or received, as applicable, by the Company (or applicable Person directly or indirectly controlled by the Company) has been paid in full to or set aside in irrevocable trust (in cash or in shares of Common Stock in accordance with Section 5(b) and 5(c)) for the benefit of the applicable holder of Series E Preferred Stock; provided , however , that the Company may pay Regular Dividends that were declared prior to the date on which the Company received an applicable Redemption Notice.

(e)    No Parity Stock shall be redeemed, purchased, or otherwise acquired for any consideration (nor shall any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Company or any Person directly or indirectly controlled by the Company (except by conversion into or exchange for Junior Stock for the purpose of preserving the Company’s qualification as a REIT) on any date unless the full Redemption Price with respect to all shares of Series E Preferred Stock as to which there has been delivered a Redemption Notice on or before the earlier of (i) such date and (ii) the date, if any, on which the applicable notice of redemption, purchase or other acquisition of such Parity Stock was sent or received, as applicable, by the Company (or applicable Person directly or indirectly controlled by the Company) has been paid to or set aside in irrevocable trust (in cash or in shares of Common Stock in accordance with Section 5(b) and 5(c)) for the benefit of the applicable holders of Series E Preferred Stock.



Exhibit 3.1

(f)    Notwithstanding anything in Section 5 or this Section 6 to the contrary, whenever the Company shall set aside shares of Common Stock in irrevocable trust for the benefit of holders of Series E Preferred Stock, such trust shall nevertheless terminate and such shares of Common Stock shall be released to the Company if the Company (i) pays to or (ii) sets aside in irrevocable trust for the benefit of the applicable holders, cash in the full amount then required to be paid with respect to all shares of Series E Preferred Stock with respect to which such set aside was originally required.

7     Liquidation Preference .

(a)    Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of shares of Series E Preferred Stock are entitled to be paid out of the assets of the Company legally available for distribution to its shareholders a liquidation preference of $25 per share (the “Liquidation Preference”), plus an amount equal to any accrued and unpaid dividends to the date of payment (including an amount equal to a prorated dividend for the period from the last Dividend Payment Date to the date fixed for liquidation, dissolution or winding-up), before any distribution of assets is made to holders of Junior Stock (including, without limitation, Common Stock). The Company will promptly provide to the holders of Series E Preferred Stock written notice of any event triggering the right to receive such Liquidation Preference. After payment of the full amount of the Liquidation Preference, plus any accrued and unpaid dividends to which they are entitled, the holders of Series E Preferred Stock will have no right or claim to any of the remaining assets of the Company. If, upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company, the assets of the Company are not sufficient to pay in full the liquidation preference payments payable to the holders of outstanding shares of the Series E Preferred Stock and all other Parity Stock, then the holders of all such shares shall share equally and ratably in any such distribution of assets in proportion to the full liquidation preference to which each is entitled until such liquidation preferences are paid in full, and then in proportion to their respective amounts of accumulated but unpaid dividends.

(b)    The consolidation or merger of the Company with or into any other corporation, trust or entity or of any other corporation with or into the Company, or the sale, lease or conveyance of all or substantially all the property or business of the Company shall not be deemed to constitute a liquidation, dissolution or winding up of the Company.

8.     Voting Rights .

(a)    Holders of the Series E Preferred Stock will not have any voting rights, except as set forth below or as otherwise from time to time required by law.

(b)    In the event of any Series E Event of Non-Compliance, the number of directors constituting the Board of Directors shall be adjusted by the number, if any, necessary to permit, and the holders of the Series E Preferred Stock will be entitled to vote separately as a class for the election of, a total of two additional directors of the Company (the “Series E Directors”) at a special meeting called by the holders of record of at least 20% of the Series E Preferred Stock or at the next annual meeting of shareholders, and at each subsequent annual meeting until the first such meeting as of which no Series E Event of Non-Compliance exists and as of which the dividend for the then current Dividend Period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. A quorum for any such meeting shall exist if at least a majority of the outstanding shares of Series E Preferred Stock are represented in person or by proxy at such meeting. Such Series E Directors shall be elected upon the affirmative vote of a plurality of the shares of Series E Preferred Stock present and voting in person or by proxy at a duly called and held meeting at which a quorum is present. If and when no Series E Event of Non-Compliance exists and the dividend for the then current Dividend Period on the Series E Preferred Stock shall have been paid in full or declared and set aside for payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to revesting in the event of each and every subsequent Series E Event of Non-Compliance) and the term of office of each Series E Director so elected shall terminate. Any Series E Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding shares of the Series E Preferred Stock when they have the voting rights described above (voting separately as a class). So long as a Series E Event of Non-Compliance shall continue, any vacancy in the office of a Series E Director may be filled by written consent of the Series E Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series E Preferred Stock when they have the voting rights described above (voting separately as a class). The Series E Directors shall each be entitled to one vote per director on any matter.

(c)    During the continuance of a Series E Event of Non-Compliance, the Company shall not (and shall not allow any of its subsidiaries, including the Operating Partnership, to) without the consent of the Series E Directors (or, if there are no Series E Directors, the consent of holders of two-thirds of the shares of the Series E Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class)): (i) amend, alter or repeal the Charter (including the Series E Articles), the By-Laws or the Partnership Agreement (as defined below); (ii) directly or indirectly sell, lease, exchange, transfer or otherwise dispose of all or any substantial part of the assets of the Company or the Operating Partnership (in one or a


Exhibit 3.1

series of transactions); (iii) merge or consolidate with or into any other Person (in one or a series of transactions) or consummate any similar transaction; (iv) create, issue or increase the amount of authorized shares of any series of Preferred Stock or (v) incur any Indebtedness in excess of $1 million; provided , however , that the Series E Directors or holders of the Series E Preferred Stock, as applicable, shall be deemed to consent without any vote to any event described in clause (iv) or clause (v) above if (A) the documents governing any such transaction specifically provide that such portion of the proceeds thereof as is necessary to pay in cash the full Redemption Price with respect to all outstanding shares of Series E Preferred Stock on the date such transaction occurs shall be paid directly to the holders of the Series E Preferred Stock (without being first paid over to the Company) as of such date (and such holders shall be deemed to have requested redemption of all outstanding shares of the Series E Preferred Stock as of such date and the Company shall be deemed to have agreed to such redemption and to waived any requirement of notice with respect thereto) and (B) such Redemption Price is in fact paid in cash to such holders as of such date.

(d)    So long as any shares of Series E Preferred Stock remain outstanding, the Company will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series E Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), (i) liquidate, wind up or dissolve the Company or the Operating Partnership or (ii) amend, alter or repeal the provisions of the Charter (including the Series E Articles), the By-Laws or the Partnership Agreement, whether by merger, consolidation or otherwise, in a manner that would adversely affect any right, preference, privilege or voting power of the Series E Preferred Stock or the holders thereof.

(e)    The preceding voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series E Preferred Stock shall have been redeemed as provided above.

9.     Conversion . The Series E Preferred Stock is not convertible into or exchangeable for any other property or securities of the Company.

10.     Reports . So long as any shares of Series E Preferred Stock are outstanding, the Company will provide to the holders of Series E Preferred Stock copies of the annual reports and of the information, documents and other reports that the Company is required to file with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For so long as any of the shares of the Series E Preferred Stock are outstanding, the Company will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, provide to each holder and to each prospective purchaser (as designated by such holder) of Series E Preferred Stock, any information required to be provided by Rule 144A(d)(4) under the Securities Act of 1933, as amended.

11.     Certain Definitions . In addition to the terms defined elsewhere herein, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa):

“Change of Control” shall be deemed to occur if (i) the sale, conveyance, transfer or lease of all or substantially all the assets of the Company or the Operating Partnership to any “person” or “group” (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor provisions to either of the foregoing, including any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(i) under the Exchange Act) (other than any subsidiary of the Company) shall have occurred: (ii) any “person” or “group” as aforesaid becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 20% of the total voting power of all classes of the voting stock of the Company and/or warrants or options to acquire such voting stock, calculated on a fully diluted basis; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such board or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office.

“Common Stock Price” means the closing price of the Common Stock on the New York Stock Exchange (“NYSE”) Composite tape or, if the Common Stock is not then listed for trading on the NYSE, the closing price of the Common Stock as reported on the consolidated transaction reporting system for the principal securities exchange on which the Common Stock is so listed or, if the Common Stock is not so listed on any such exchange, the last quoted price in the over-the-counter market as reported on the National Association of Securities Dealers, Inc. Automated Quotation System or, if the Common Stock is not so listed or so quoted, the higher of the then book value per share of Common Stock and the then fair market value per share of Common Stock, determined by a nationally recognized independent investment banking firm selected by the Company.

“Indebtedness” means at any time (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person, and whether or not contingent, (i) any obligation of such Person for money borrowed, (ii) any obligation


Exhibit 3.1

of such Person evidenced by bonds, debentures, notes, guarantees or other similar instruments, including, without limitation, any such obligations incurred in connection with the acquisition of property, assets or businesses, excluding trade accounts payable made in the ordinary course of business, (iii) any reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person, (iv) any obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business, which in either case are not more than 60 days overdue or which are being contested in good faith), (v) any capital lease obligation of such Person, (vi) the notional amount of any interest hedging obligations or exchange rate obligations of such person, (vii) any indebtedness attributable to any sale and leaseback transaction to which such person is a party and (viii) any obligation of the type referred to in clauses (i) through (viii) of this definition of another Person and all dividends and distributions of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor, guarantor or otherwise.

“Junior Stock” means all Common Stock of the Company, and all equity securities ranking junior to the Series E Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company, including the Company’s Series D Junior Participating Preferred Stock.

“Operating Partnership” means Mid-America Apartments, L.P., a Tennessee limited partnership.

“Partnership Agreement” means the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership dated as of November 24, 1997.

“Parity Stock” means collectively, (A)(1) the Company’s 9.5% Series A Cumulative Preferred Stock (the “Series A Preferred Stock”), (2) the Company’s 8 7/8% Series B Cumulative Preferred Stock (the “Series B Preferred Stock”) and (3) the Company’s 9.375% Series C Cumulative Preferred Stock (the “Series C Preferred Stock”) and (B) all equity securities issued by the Company at any time or from time to time in accordance with the provisions hereof the terms of which specifically provide that such equity securities rank on a parity with the Series E Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company.

“Person” means any individual, corporation, limited liability company, partnership, joint venture, trust, unincorporated organization or other form of entity or any government or any agency or subdivision thereof.

“Regular Dividend” means (i) with respect to the Company’s Common Stock, the annual dividend announced by the Company’s Board of Directors with respect to the year of determination, to the extent that such dividend does not exceed the announced dividend for the immediately preceding a year by more than five percent and (ii) with respect to any series or class of the Company’s Preferred Stock, the annual dividend set forth in the Articles of Amendment to the Company’s Amended and Restated Charter which originally divided and classified such class or series of Preferred Stock.

“Senior Stock” means any class or series of equity securities issued by the Company the terms of which specifically provide that such equity securities rank senior to the Series E Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company.

“Series E Articles” means the Articles of Amendment to the Charter which designated and fixed the terms, rights and preferences of the Series E Preferred Stock.

“Series E Dividend Amount” means the sum of (i) the Liquidation Preference and (ii) all accrued and unpaid dividends with respect to the Series E Preferred Stock; provided , however , that no dividend with respect to the Series E Preferred Stock will be considered unpaid, nor shall payment thereof be considered in arrears, if such dividend is paid on the Dividend Payment Date on which it originally accrues.

“Series E Dividend Rate” means, with respect to each share of Series E Preferred Stock, a rate of 9.5% per annum of the Series E Dividend Amount; provided , however , that upon the occurrence and during the continuance of any Series E Event of Non-Compliance (as defined below), the Series E Dividend Rate shall increase to 14.5% per annum of the Series E Dividend Amount. Such increase in the Series E Dividend Rate shall be in addition to any other rights and remedies the holders of the Series E Preferred Stock may have at law or in equity upon the occurrence of a Series E Event of Non-Compliance.

“Series E Event of Non-Compliance” means the occurrence of any of the following events: (i) all accrued dividends with respect to the Series E Preferred Stock shall not be paid in full for any three consecutive Dividend Payment Dates (after giving effect to any dividends paid on the third such Dividend Payment Date), (ii) the Company for any reason, including the applicability of Section 6 (Certain Payment Restrictions) hereof, shall not redeem any share of Series E Preferred Stock on the date fixed for


Exhibit 3.1

redemption thereof in the applicable Redemption Notice or fulfill all its obligations under Section 5(c), (iii) the Company shall breach any of its other material obligations under Series E Articles, (iv) the Company shall fail to pay at the final stated maturity (giving effect to any extensions thereof) the principal amount of any Indebtedness of the Company or any subsidiary of the Company, or the final stated maturity of any such Indebtedness is accelerated, if the aggregate principal amount of such Indebtedness together with the aggregate principal amount of any other such Indebtedness in default for failure to pay principal at the final stated maturity (giving effect to any extensions thereof) or that has been accelerated, aggregates $1 million or more at the time of such default, in each case (with respect to this cause (iv) only), after a 30-day period during which such default shall not have been cured or such acceleration rescinded, (v) the Company or the Operating Partnership files, or has filed against it, a petition to have it declared bankrupt or calling for its reorganization or arrangement under any law relating to bankruptcy or insolvency, unless, in the case of a petition filed against the Company or the Operating Partnership, as applicable, such petition is dismissed within sixty days or (vi) the Company or the Operating Partnership applies for or consents to the appointment of a receiver, trustee or conservator for any portion of its property or such appointment is made without the consent of the Company or the Operating Partnership, as applicable, and is not vacated within sixty days.

“Set Aside Shares” means, with respect to any shares of Series E Preferred Stock to be redeemed by the holder thereof, a number of shares of Common Stock equal to the cash Redemption Price set forth in the applicable Redemption Notice divided by the average Common Stock Price over the three most recent business days; provided , however , that the number of Set Aside Shares shall be readjusted (i) every thirty days after the initial determination thereof with respect to any redemption of shares of Series Preferred Stock based upon the average Common Stock Price over the three then most recent business days and (ii) any time the Common Stock Price on any business day is five percent or more below the Common Stock Price most recently determined for purposes of calculating the number of Set Aside Shares with respect to such redemption of Series E Preferred Stock, and upon any such recalculation pursuant to clause (i) or clause (ii) of this definition the number of Set Aside Shares with respect to such redemption of Series E Preferred Stock shall be adjusted upward or downward (as applicable) by the Company within two business days thereafter such that the product of the number of Set Aside Shares and the Common Stock Price most recently determined with respect to such redemption of Series E Preferred Stock is equal to the applicable Redemption Price.




Exhibit 3.1

SCHEDULE F

DESIGNATION OF
9¼% SERIES F CUMULATIVE REDEEMABLE PREFERRED STOCK

1.     Designation and Number . A series of Preferred Stock, designated the “9¼% Series F Cumulative Redeemable Preferred Stock” (the “Series F Preferred”), is hereby established. The number of shares of the Series F Preferred shall be 3,000,000.

2.     Maturity . The Series F Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption.

3.     Rank . The Series F Preferred Stock, with respect to dividend rights and rights upon liquidation, dissolution, or winding up of the Company, will rank (i) senior to all classes or series of common stock, $.01 par value per share, of the Company (the “Common Stock”), and to all equity securities ranking junior to the Series F Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution, or winding up of the Company; (ii) on a parity with all equity securities issued by the Company, including the Company’s 9.5% Series A Cumulative Preferred Stock (the “Series A Preferred Stock”), 8 7/8% Series B Cumulative Preferred Stock (the “Series B Preferred Stock”) and the 9 3/8% Series Cumulative Preferred Stock (the “Series C Preferred Stock”), and the 9.5% Series E Cumulative Preferred Stock (the “Series E Preferred Stock”), the terms of which specifically provide that such series of equity securities rank on a parity with the Series F Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution, or winding up of the Company (the “Parity Preferred Stock”); and (iii) junior to all existing and future indebtedness of the Company. The term “equity securities” does not include convertible debt securities, which will rank senior to the Series F Preferred Stock prior to conversion.

4.     Dividends .

(a)    Holders of shares of the Series F Preferred Stock are entitled to receive, when and as declared by the Board of Directors (or a duly authorized committee thereof), out of funds legally available for the payment of dividends, preferential cumulative cash dividends at the rate of 9¼% per annum of the $25 liquidation preference (the “Liquidation Preference”) per share (equivalent to a fixed annual amount of $2.3125 per share). Dividends on the Series F Preferred Stock shall be cumulative from (but excluding) the date of original issue and shall be payable monthly in arrears on the 15 th day of each calendar month, or, if not a business day, on the next succeeding business day (each, a “Dividend Payment Date”). The first dividend, which will be payable on November 15, 2002, will be for less than a full month. Such dividend and any dividend payable on the Series F Preferred Stock for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Company at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Dividend Payment Date falls or on such other date designated by the Board of Directors of the Company for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

(b)    No dividends on shares of Series F Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Company at any time that the terms and provisions of any agreement of the Company, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment of such dividends would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)    Notwithstanding the foregoing, dividends on the Series F Preferred Stock will accumulate whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accumulated but unpaid dividends on the Series F Preferred Stock will not bear interest, and holders of the Series F Preferred Stock will not be entitled to any distributions in excess of full cumulative distributions described above. Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any common stock of the Company or any other series of Parity Preferred Stock or any series or class of equity securities ranking junior to the Series F Preferred Stock (other than a dividend in shares of the Common Stock or in shares of any other class of stock ranking junior to the Series F Preferred Stock as to dividends and upon liquidation) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series F Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not declared and paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series F Preferred Stock and the shares of any other series of Parity Preferred Stock, all dividends declared upon the Series F Preferred Stock and any other series of Parity Preferred Stock, shall be allocated pro rata so that the amount of dividends declared per share of Series F Preferred Stock and such other series of Parity Preferred Stock shall in all cases bear to each other the same ratio that accrued and unpaid dividends per share on the Series F Preferred Stock and such other series of Parity Preferred Stock (which shall not include any accrual in respect


Exhibit 3.1

of unpaid dividends for prior dividend periods if such Parity Preferred Stock does not have a cumulative dividend) bear to each other.

(d)    Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series F Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in shares of Common Stock or other shares of capital stock ranking junior to the Series F Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other capital stock of the Company ranking junior to or on a parity with the Series F Preferred Stock as to dividends or upon liquidation, nor shall any shares of Common Stock, or any other shares of capital stock of the Company ranking junior to or on a parity with the Series F Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such shares) by the Company (except by conversion into or exchange for other capital stock of the Company ranking junior to the Series F Preferred Stock as to dividends and upon liquidation or redemptions for the purpose of preserving the Company’s qualification as a real estate investment trust (“REIT”)). Holders of shares of the Series F Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series F Preferred Stock as provided above. Any dividend payment made on shares of the Series F Preferred Stock shall first be credited against the earliest accumulated but unpaid dividend due with respect to such shares which remains payable.

5.     Liquidation Preference . Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of shares of Series F Preferred Stock are entitled to be paid out of the assets of the Company legally available for distribution to its shareholders a liquidation preference of $25 per share, plus an amount equal to any accumulated, accrued and unpaid dividends to and including the date of payment, but without interest, before any distribution of assets is made to holders of Common Stock or any other class or series of capital stock of the Company that ranks junior to the Series F Preferred Stock as to liquidation rights. If the assets of the Company legally available for distribution to shareholders are insufficient to pay in full the Liquidation Preference on the Series F Preferred Stock and the Liquidation Preference on any shares of Parity Preferred Stock, all assets distributed to the holders of the Series F Preferred Stock and any other series of Parity Preferred Stock shall be distributed pro rata so that the amount of assets distributed per share of Series F Preferred Stock and such other series of Parity Preferred Stock shall in all cases bear to each other the same ratio that the Liquidation Preference per share on the Series F Preferred Stock and such other series of Parity Preferred Stock bear to each other. Holders of Series F Preferred Stock will be entitled to written notice of any event triggering the right to receive such Liquidation Preference. After payment of the full amount of the Liquidation Preference, plus any accumulated and unpaid dividends to which they are entitled, the holders of Series F Preferred Stock will have no right or claim to any of the remaining assets of the Company. The consolidation or merger of the Company with or into any other corporation, trust or entity or of any other corporation with or into the Company, or the sale, lease or conveyance of all or substantially all of the property or business of the Company, shall not be deemed to constitute a liquidation, dissolution or winding up of the Company.

6.     Redemption .

(a)    The Series F Preferred Stock is not redeemable prior to October 16, 2007. However, in order to ensure that the Company will continue to meet the requirements for qualification as a REIT, the Series F Preferred Stock will be subject to provisions in the Company’s Charter (the “Charter”) pursuant to which shares of capital stock of the Company owned by a shareholder in excess of 9.9% in value of the outstanding shares of capital stock of the Company (the “Ownership Limit”) will be deemed “Excess Shares,” and the Company will have the right to purchase such Excess Shares from the holder. On and after October 16, 2007, the Company, at its sole option upon not less than 30 nor more than 60 days’ written notice, may redeem shares of the Series F Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25 per share, plus all accumulated and unpaid dividends thereon to the date fixed for redemption (except with respect to Excess Shares), without interest. Holders of Series F Preferred Stock to be redeemed shall surrender such Series F Preferred Stock at the place designated in such notice and upon such surrender shall be entitled to the redemption price and any accumulated and unpaid dividends payable upon such redemption. If notice of redemption of any shares of Series F Preferred Stock has been given and if the Company has set aside the funds necessary for such redemption in trust for the benefit of the holders of any shares of Series F Preferred Stock to be redeemed, then from and after the redemption date dividends will cease to accumulate on such shares of Series F Preferred Stock, such shares of Series F Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. If less than all of the outstanding Series F Preferred Stock is to be redeemed, the Series F Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Company.

(b)    Unless full cumulative dividends on all shares of Series F Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods


Exhibit 3.1

and the then current dividend period, no shares of Series F Preferred Stock shall be redeemed unless all outstanding shares of Series F Preferred Stock are simultaneously redeemed and in such event, the Company shall not purchase or otherwise acquire directly or indirectly any shares of Series F Preferred Stock (except, by exchange for capital stock of the Company ranking junior to the Series F Preferred Stock as to dividends and upon liquidation); provided , however , that the foregoing shall not prevent the purchase by the Company of Excess Shares in order to ensure that the Company continues to meet the requirements for qualification as a REIT, or the purchase or acquisition of shares of Series F Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series F Preferred Stock. So long as no dividends are in arrears, the Company shall be entitled at any time and from time to time to repurchase shares of Series F Preferred Stock in open-market transactions duly authorized by the Board of Directors and effected in compliance with applicable laws.

(c)    Notice of redemption will be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the redemption date. A similar notice will be mailed by the Company, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series F Preferred Stock to be redeemed at their respective addresses as they appear on the stock transfer records of the Company. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series F Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the redemption date; (ii) the redemption price, (iii) the number of shares of Series F Preferred Stock to be redeemed; (iv) the place or places where the Series F Preferred Stock is to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If less than all of the Series F Preferred Stock held by any holder is to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series F Preferred Stock held by such holder to be redeemed.

(d)    Immediately prior to any redemption of Series F Preferred Stock, the Company shall pay, in cash, any accumulated and unpaid dividends through the redemption date, unless a redemption date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series F Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

(e)    The Series F Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption. However, in order to ensure that the Company continues to meet the requirements for qualification as a REIT, Series F Preferred Stock acquired by a shareholder in excess of the Ownership Limit will automatically become Excess Shares, and the Company will have the right to purchase such Excess Shares from the holder. In addition, Excess Shares may be redeemed, in whole or in part, at any time when outstanding shares of Series F Preferred Stock are being redeemed, for cash at a redemption price of $25 per share, but excluding accumulated and unpaid dividends on such Excess Shares, without interest. Such Excess Shares shall be redeemed in the same proportion and in accordance with the same procedures as shares of Series F Preferred Stock are being redeemed.  

7.     Voting Rights .

(a)    Holders of the Series F Preferred Stock will not have any voting rights, except as set forth below or as otherwise from time to time required by law.

(b)    Whenever dividends on any shares of Series F Preferred Stock shall be in arrears for eighteen or more months (a “Preferred Dividend Default”), the holders of such shares of Series F Preferred Stock voting separately as a class together with the holders of the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series E Preferred Stock and all other series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable will be entitled to vote separately as a class for the election of a total of two additional directors of the Company (the “Preferred Stock Directors”) at a special meeting called by the holders of record of at least 20% of the Series F Preferred Stock or the holders of record of at least 20% of any series of Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting until all dividends accumulated on such shares of Series F Preferred Stock for the past dividend periods and the dividend for the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. A quorum for any such meeting shall exist if at least a majority of the total outstanding shares of Series F Preferred Stock and shares of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable are represented in person or by proxy at such meeting. The Preferred Stock Directors shall be elected upon the affirmative vote of a plurality of the shares of Series F Preferred Stock and such Parity Preferred Stock present and voting in person or by proxy at a duly called and held meeting at which a quorum is present, voting separately as a single class. If and when all accumulated dividends and the dividend for the then current dividend period on the Series F Preferred Stock shall have been paid in full or declared and


Exhibit 3.1

set aside for payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the then current dividend period have been paid in full or declared and set aside for payment in full on all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate. Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding shares of the Series F Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series F Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall be entitled to one vote per director on any matter. 

(c)    So long as any shares of Series F Preferred Stock remain outstanding, the Company will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series F Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal the provisions of the Charter or the Designating Amendment, whether by merger, consolidation or otherwise (an “Event”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series F Preferred Stock of the holders thereof; provided, however, that with respect to the occurrence of any Event set forth above, so long as the Series F Preferred Stock remains outstanding with the terms thereof materially unchanged, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of the Series F Preferred Stock and provided, further that (i) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or (ii) any increase in the amount of authorized shares of such series, in each case ranking on a parity with or junior to the Series F Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers. When exercising the voting rights described above, each share of Series F Preferred Stock shall have one vote per share.

(d)    The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected; all outstanding shares of Series F Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

8.     Conversion . The Series F Preferred Stock is not convertible into or exchangeable for any other property or securities of the Company.




Exhibit 3.1

SCHEDULE G

DESIGNATION OF
8 5/8% SERIES G CUMULATIVE REDEEMABLE PREFERRED STOCK

1.     Designation and Number . A series of Preferred Stock, designated the “8 5/8% Series G Cumulative Redeemable Preferred Stock” (the “Series G Preferred Stock”), is hereby established. The number of shares of the Series G Preferred Stock shall be 400,000.

2.     Maturity . The Series G Preferred Stock has no stated maturity.

3.     Rank . The Series G Preferred Stock, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, will rank (i) senior to all classes or series of common stock of the Company (the “Common Stock”), and to all equity securities ranking junior to the Series G Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company; (ii) on a parity with all equity securities issued by the Company, the terms of which specifically provide that such series of equity securities rank on a parity with the Series G Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company (the “Parity Preferred Stock”), including the Company’s 9.5% Series A Cumulative Preferred Stock (the “Series A Preferred Stock”), 8.875% Series B Cumulative Preferred Stock (the “Series B Preferred Stock”) the 9.5% Series C Cumulative Preferred Stock (the “Series C Preferred Stock”), and the 9 1/4% Series F Cumulative Redeemable Preferred Stock (the “Series F Preferred Stock”); and (iii) junior to all existing and future indebtedness of the Company, The term “equity securities” does not include convertible debt securities, which will rank senior to the Series G Preferred Stock prior to conversion.

4.     Dividends .

(a)    Holders of shares of the Series G Preferred Stock are entitled to receive, when and as declared by the Board of Directors (or a duly authorized committee thereof), out of funds legally available for the payment of dividends, preferential cumulative cash dividends at the rate of 8 5/8% per annum of the $25 liquidation preference (the “Liquidation Preference”) per share (equivalent to a fixed annual amount of $2.15625 per share). Dividends on the Series G Preferred Stock shall be cumulative from (but excluding) the date of original issue and shall be payable monthly in arrears on the 15 th day of each calendar month, or, if not a business day, on the next succeeding business day (each, a “Dividend Payment Date”). The first dividend will be for less than a full month. Such dividend and any dividend payable on the Series G Preferred Stock for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Company at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Dividend Payment Date falls or on such other date designated by the Board of Directors of the Company for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

(b)    No dividends on shares of Series G Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Company at any time that the terms and provisions of any agreement of the Company, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment of such dividends would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)    Notwithstanding the foregoing, dividends on the Series G Preferred Stock will accumulate whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accumulated but unpaid dividends on the Series G Preferred Stock will not bear interest, and holders of the Series G Preferred Stock will not be entitled to any distributions in excess of full cumulative distributions described above. Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any capital stock of the Company or any other series of Parity Preferred Stock or any series or class of equity securities ranking junior to the Series G Preferred Stock (other than a dividend in shares of the Common Stock or in shares of any other class of stock ranking junior to the Series G Preferred Stock as to dividends and upon liquidation) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series G Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not declared and paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series G Preferred Stock and the shares of any other series of Parity Preferred Stock, all dividends declared upon the Series G Preferred Stock and any other series of Parity Preferred Stock, shall be allocated pro rata so that the amount of dividends declared per share of Series G Preferred Stock and such other series of Parity Preferred Stock shall in all cases bear to each other the same ratio that accrued and unpaid dividends per share of the Series G Preferred Stock and such other series of Parity Preferred Stock (which shall not include any accrual in


Exhibit 3.1

respect of unpaid dividends for prior dividend periods if such Parity Preferred Stock does not have a cumulative dividend) bear to each other.

(d)    Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series G Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in shares of Common Stock or other shares of capital stock ranking junior to the Series G Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other capital stock of the Company ranking junior to or on a parity with the Series G Preferred Stock as to dividends or upon liquidation, nor shall any shares of Common Stock, or any other shares of capital stock of the Company ranking junior to or on a parity with the Series G Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such shares) by the Company (except by conversion into or exchange for other capital stock of the Company ranking junior to the Series G Preferred Stock as to dividends and upon liquidation or redemptions for the purpose of preserving the Company’s qualification as a real estate investment trust (“REIT”)). Holders of shares of the Series G Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series G Preferred Stock as provided above. Any dividend payment made on shares of the Series G Preferred Stock shall first be credited against the earliest accumulated but unpaid dividend due with respect to such shares which remains payable.

5.     Liquidation Preference . Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of shares of Series G Preferred Stock are entitled to be paid out of the assets of the Company legally available for distribution to its shareholders a liquidation preference of $25 per share (the “Liquidation Preference”), plus an amount equal to any accumulated, accrued and unpaid dividends to and including the date of payment, but without interest, before any distribution of assets is made to holders of Common Stock or any other class or series of capital stock of the Company that ranks junior to the Series G Preferred Stock as to liquidation rights. If the assets of the Company legally available for distribution to shareholders are insufficient to pay in full the Liquidation Preference on the Series G Preferred Stock and the Liquidation Preference on any shares of Parity Preferred Stock, all assets distributed to the holders of the Series G Preferred Stock and any other series of Parity Preferred Stock shall be distributed pro rata so that the amount of assets distributed per share of Series G Preferred Stock and such other series of Parity Preferred Stock shall in all cases bear to each other the same ratio that the Liquidation Preference per share of the Series G Preferred Stock and such other series of Parity Preferred Stock bear to each other. Holders of Series G Preferred Stock will be entitled to written notice of any event triggering the right to receive such Liquidation Preference. After payment of the full amount of the Liquidation Preference, plus any accumulated and unpaid dividends to which they are entitled, the holders of Series G Preferred Stock will have no right or claim to any of the remaining assets of the Company. The consolidation or merger of the Company with or into any other corporation, trust or entity or of any other corporation with or into the Company, or the sale, lease or conveyance of all or substantially all of the property or business of the Company, shall not be deemed to constitute a liquidation, dissolution or winding up of the Company.

6.     Redemption .

(a)    Except as otherwise provided herein, the Series G Preferred Stock is not redeemable prior to November 15, 2005. After November 15, 2005, the Series G Preferred Stock shall be redeemable, in whole or in part, at any time or from time to time, by either the Company or the holders of the Series G Preferred Stock upon one year’s prior written notice given on or after November 15, 2004 (such notice, a “Redemption Notice”) as provided below. Any partial redemption by either the Company or the holder must be made in increments of one million dollars ($1,000,000) of aggregate Liquidation Preference. Any Redemption Notice given by a holder of Series G Preferred Stock shall be addressed to the secretary of the Company at the Company’s principal executive office, and any Redemption Notice given by the Company shall be addressed to the holders whose Series G Preferred Stock is to be redeemed at the address of such holders as set forth in the records of the Company. In each case, a Redemption Notice shall state the name of the applicable holder of Series G Preferred Stock, the address of such holder, the number of shares to be redeemed (which shall be no less than 4,000 shares) and the date fixed for redemption of such shares, which must be at least one year after the date of such notice (the “Redemption Date”).

(b)    The redemption price (the “Redemption Price”) per share shall be payable in cash (except as otherwise provided herein) and shall be equal to $25.00 per share plus all accumulated, accrued and/or unpaid dividends to and including the date of payment. Holders of Series G Preferred Stock to be redeemed shall surrender such shares of Series G Preferred Stock at a place designated by the Company in writing at least ten days prior to the date fixed for redemption and shall be entitled to the Redemption Price following such surrender. If a Redemption Notice with respect to any shares of Series G Preferred Stock has been given and if (i) the funds (or shares of Common Stock, if the Company has elected to deliver shares of Common Stock of the Company in lieu of cash to pay the entire Redemption Price or to make such redemption partially in Common Stock and partially in cash pursuant to Section 6(c) hereof) necessary for such redemption have been set aside by the Company in irrevocable trust for the


Exhibit 3.1

benefit of the holders of any shares of Series G Preferred Stock to be redeemed and (ii) the Redemption Price with respect to such shares is in fact paid to such holders on the applicable redemption date, then from and after such redemption date dividends will cease to accrue on such shares of Series G Preferred Stock, such shares of Series G Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the Redemption Price.

(c)    If the Redemption Notice (other than a Change of Control Redemption Notice) is given by a holder of Series G Preferred Stock, the Company may elect (a “Common Stock Election”) to redeem shares of Series G Preferred Stock in shares of Common Stock of the Company in lieu of cash or to make such redemption partially Common Stock and partially in cash by giving notice of such election (a “Common Stock Election Notice”) not less than 90 days prior to the Redemption Date to each holder of Series G Preferred Stock to which the Company desires such Common Stock Election to apply; provided , however , that any Common Stock Election by the Company shall apply to all shares of Series G Preferred Stock to be redeemed on the same Redemption Date. A Common Stock Election may be revoked (or modified to decrease the proportion of Common Stock to be received by holders) by the Company, notwithstanding any statement of the Common Stock Election Notice, at any time prior to the applicable Redemption Date, with or without notice of such revocation to the holders hereof. The number of shares of Common Stock per share of Series G Preferred Stock to be delivered to the holders of the shares of Series G Preferred Stock by the Company shall be calculated as follows:

(1)    the cash that would otherwise be payable by the Company to a holder of a share of Series G Preferred Stock upon a cash redemption of such shares,

divided by

(2)    the Common Stock Price on the business day prior to the Redemption Date (the “Measurement Date”).

For purposes hereof, “Common Stock Price” shall mean the closing price (as reported in the Wall Street Journal ) of the Common Stock on the New York Stock Exchange (“NYSE”) Composite tape.

On or before (if permissible under the rules of the Securities and Exchange Commission (the “SEC”)) the Redemption Date, the Company shall file with the SEC a registration statement on Form S-3 (or any successor form adopted by the SEC) for the resale of any Common Stock delivered by the Company in redemption of any Series G Preferred Stock pursuant to any Common Stock Election. All registration fees, attorney fees, accounting fees, printing costs and other reasonable fees and expenses incurred by the Company or the holders of Common Stock covered by such registration statement in connection with the registration of the resale of such Common Stock shall be borne by the Company; provided, however, that such fees and expenses shall exclude all selling commissions, underwriting discounts and placement fees payable in connection with the subsequent resale of shares of Common Stock pursuant to such registration statement or otherwise. Once it shall have filed such registration statement, the Company shall use its reasonable best efforts to cause the SEC to declare such registration statement effective and shall provide all holders of Common Stock received in such redemption prompt notice of the effectiveness of such registration statement. Until the effectiveness of any such registration statement, the certificates representing shares of Common Stock issued in such redemption shall bear a customary restricted stock legend. Upon request of the holder of any such certificate, after effectiveness of any registration statement the Company shall use all reasonable means to remove any legend on any certificate representing shares of Common Stock covered by such registration statement. If the Company shall fail in any respect to comply with the provisions of this paragraph after demand shall have been made by the holder(s) of at least twenty percent (20%) of the Series G Preferred Stock subject to redemption pursuant to this Section 6(c) and the Company shall have failed within ten (10) business days after receipt of such demand to satisfy any such demand or cure any default, the Common Stock Election shall be deemed to have been revoked as of the Measurement Date. In such event the Company shall redeem all shares of Series G Preferred Stock subject to the Redemption Notice at the Redemption Price and on the terms specified in Section 6(b) or, if the Common Stock shall have been issued on the Redemption Date pursuant to this Section 6(c), the Company shall redeem the Common Stock so issued at the Redemption Price that would have been paid on the Redemption Date for the Series G Preferred Stock pursuant to Section 6(b). Such redemption shall occur no later than five (5) business days after the expiration of the Company’s ten (10) day curative period specified above.

Notwithstanding any provision in this Section 6(c) to the contrary, if on the Measurement Date the Common Stock is not listed on the NYSE, then the Common Stock Election shall be deemed to have terminated on the Measurement Date and the Company shall pay the Redemption Price in cash on the Redemption Date.

(d)    If a Redemption Date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, each holder of Series G Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date. Otherwise, upon redemption of any share of Series G Preferred Stock and payment or setting aside in


Exhibit 3.1

irrevocable trust of the full Redemption Price, no further dividend (including accrued and unpaid dividends) shall be payable with respect to such shares.

(e)    Notwithstanding any other provision hereof, any holder of Series G Preferred Stock may send a Redemption Notice prior to November 15, 2004, and such holder shall have the right to cause the Company to redeem his shares of Series G Preferred Stock prior to November 15, 2005, if, but only if, a Change of Control (as defined below) of the Company shall occur. The Company shall give the holders of Series G Preferred Stock prompt notice of the occurrence of any Change of Control. Any Redemption Notice must state that it is given in connection with and premised upon the occurrence of a Change of Control (a “Change of Control Redemption Notice”). Upon receipt of a Change of Control Redemption Notice from any holder of Series G Preferred Stock, the Company shall redeem the number of shares of Series G Preferred Stock set forth in the Change of Control Redemption Notice (which shall in no event be less than 4,000 shares) at the closing of the event causing the Change in Control. Notwithstanding any other provision hereof, the Company shall not have the right to elect to redeem any shares of Series G Preferred Stock in shares of Common Stock if a valid Change of Control Redemption Notice has been given. Moreover, in the event of a Change of Control, if either the Company or a holder of Series G Preferred Stock shall have previously given a Redemption Notice pursuant to Section 6(a) above and a holder of Series G preferred Stock shall have given a Change of Control Redemption Notice, such prior Redemption Notice, any Common Stock Election and any pending redemption transaction pursuant thereto shall be terminated without further action by either party and redemption shall instead occur pursuant to the provisions of this Section 6(e).

For purposes hereof, a “Change of Control” shall be deemed to occur if (i) the sale, conveyance, transfer or lease of all of substantially all of the assets of the Company or of Mid-America Apartments, L.P. to any “person” or “group” (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor provisions to either of the foregoing, including any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(i) under the Exchange Act) (other than any subsidiary of the Company) shall have occurred; (ii) any “person” or “group” as aforesaid becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 20% of the total voting power of all classes of the voting stock of the Company and/or warrants or options to acquire such voting stock, calculated on a fully diluted basis; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such board or whose nomination for election by the shareholders of the Company was approved by a majority of the directors still in office who were either directors at the beginning of such period or a nominating committee comprised of independent directors who were members of such committee at the beginning of such period, or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office.

7.     Voting Rights .

(a)    Holders of the Series G Preferred Stock will not have any voting rights, except as set forth below or as otherwise from time to time required by law.

(b)    Whenever dividends on any share of Series G Preferred Stock shall be in arrears for eighteen or more months (a “Preferred Dividend Default”), the holders of such shares of Series G Preferred Stock voting separately as a class together with the holders of the Series A Preferred stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series F Preferred Stock and all other series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable will be entitled to vote separately as a class for the election of a total of two additional directors of the Company (the “Preferred Stock Directors”) at a special meeting called by the holders of record of at least 20% of the Series G Preferred Stock or the holders of record of at least 20% of any series of Parity Preferred Stock so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting until all dividends accumulated on such shares of Series G Preferred Stock for the past dividend periods and the dividend for the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. A quorum for any such meeting shall exist if at least a majority of the total outstanding shares of Series G Preferred Stock and shares of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable are represented in person or by proxy at such meeting. The Preferred Stock Directors shall be elected upon the affirmative vote of a plurality of the shares of Series G Preferred Stock and such Parity Preferred Stock present and voting in person or by proxy at a duly called and held meeting at which a quorum in present, voting separately as a single class. If and when all accumulated dividends and the dividend for the then current dividend period on the Series G Preferred Stock shall have been paid in full or declared and set aside for payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the then current dividend period have been paid in full or declared and set aside for payment in full on all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate. Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed


Exhibit 3.1

otherwise than by the vote of, the holders of record of a majority of the outstanding shares of the series G Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable). So long as Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series G Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall be entitled to one vote per director on any matter.

(c)    So long as any shares of Series G Preferred Stock remain outstanding, the Company will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series G Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal the provisions of the Charter or the Designating Amendment, whether by merger, consolidation or otherwise (an “Event”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series G Preferred Stock or the holders thereof; provided, however, that with respect to the occurrence of any Event set forth above, so long as the Series G Preferred Stock remains outstanding with the terms thereof materially unchanged, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of the Series G Preferred stock and provided, further that (i) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or (ii) any increase in the amount of authorized shares of such series, in each case (whether described in the immediately preceding clauses (i) or (ii)) ranking on a parity with or junior to the Series G Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers. When exercising the voting rights described above, each share of Series G Preferred Stock shall have one vote per share.

(d)    The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series G Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

8.     Conversion . The Series G Preferred stock is not convertible into or exchangeable for any other property or securities of the Company.




Exhibit 3.1

SCHEDULE H

DESIGNATION OF
8.30% SERIES H CUMULATIVE REDEEMABLE PREFERRED STOCK

The preferences, rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the shares of Series H Preferred Stock are as follows:

1.     Designation and Number . A series of Preferred Stock, designated the “8.30% Series H Cumulative Redeemable Preferred Stock” (the “Series H Preferred Stock”), is hereby established. The number of shares of the Series H Preferred Stock shall be 6,200,000.

2.     Maturity . The Series H Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption.

3.     Rank . The Series H Preferred Stock, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, will rank (i) senior to all classes or series of common stock of the Company, $.01 par value per share (the “Common Stock”), and to all equity securities ranking junior to the Series H Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company; (ii) on a parity with all equity securities issued by the Company, including the Company’s 9.5% Series A Cumulative Preferred Stock (the “Series A Preferred Stock”), 8.875% Series B Cumulative Preferred Stock (the “Series B Preferred Stock”), 9.375% Series C Cumulative Preferred Stock (the “Series C Preferred Stock”), 9¼% Series F Cumulative Preferred Stock (the “Series F Preferred Stock”) and 8 5/8% Series G Cumulative Preferred Stock (the “Series G Preferred Stock”), the terms of which Preferred Stock specifically provide that such equity securities rank on a parity with the Series H Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Company (the “Parity Preferred Stock”); and (iii) junior to all existing and future indebtedness of the Company. The term “equity securities” does not include convertible debt securities, which will rank senior to the Series H Preferred Stock prior to conversion.

4.     Dividends .

(a)    Holders of shares of the Series H Preferred Stock are entitled to receive, when and as declared by the Board of Directors (or a duly authorized committee thereof), out of funds legally available for the payment of dividends, preferential cumulative cash dividends at the rate of 8.30% per annum of the $25 liquidation preference (the “Liquidation Preference”) per share (equivalent to a fixed annual amount of $2.075 per share). Dividends on the Series H Preferred Stock shall be cumulative from the date of original issue and shall be payable quarterly in arrears on or before the 23rd day of September, December, March and June, or, if not a business day, the next succeeding business day (each, a “Dividend Payment Date”). The first dividend, which will be payable on September 23, 2003, will be for less than a full quarter. Such dividend and any dividend payable on the Series H Preferred Stock for any partial dividend period will be computed on the basis of a 360-day year consisting of four 90-day quarters. Dividends will be payable to holders of record as they appear in the stock records of the Company at the close of business on the applicable record date, which shall be such date designated by the Board of Directors of the Company that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

(b)    No dividends on shares of Series H Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Company at such time as the terms and provisions of any agreement of the Company, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)    Notwithstanding the foregoing, dividends on the Series H Preferred Stock will accumulate whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accumulated but unpaid dividends on the Series H Preferred Stock will not bear interest and holders of the Series H Preferred Stock will not be entitled to any distributions in excess of full cumulative distributions described above. Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any capital stock of the Company or any other series of Parity Preferred Stock or any series or class of equity securities ranking junior to the Series H Preferred Stock (other than a dividend in shares of the Company’s Common Stock or in shares of any other class of stock ranking junior to the Series H Preferred Stock as to dividends and upon liquidation) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series H Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series H Preferred Stock and the shares of any other series of Parity Preferred Stock, all dividends declared upon the Series H Preferred Stock and any other series of Parity


Exhibit 3.1

Preferred Stock, shall be declared pro rata so that the amount of dividends declared per share of Series H Preferred Stock and such other series of Parity Preferred Stock shall in all cases bear to each other the same ratio that accumulated dividends per share on the Series H Preferred Stock and such other series of Parity Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Parity Preferred Stock does not have a cumulative dividend) bear to each other.

(d)    Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series H Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in shares of Common Stock or other shares of capital stock ranking junior to the Series H Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other capital stock of the Company ranking junior to or on a parity with the Series H Preferred Stock as to dividends or upon liquidation, nor shall any share of Common Stock, or any other shares of capital stock of the Company ranking junior to or on a parity with the Series H Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such shares) by the Company (except by conversion into or exchange for other capital stock of the Company ranking junior to the Series H Preferred Stock as to dividends and upon liquidation or redemption for the purpose of preserving the Company’s qualification as a real estate investment trust (“REIT”)). Holders of shares of the Series H Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series H Preferred Stock as provided above. Any dividend payment made on shares of the Series H Preferred Stock shall first be credited against the earliest accumulated but unpaid dividend due with respect to such shares which remains payable.

5.     Liquidation Preference . Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of shares of Series H Preferred Stock are entitled to be paid out of the assets of the Company legally available for distribution to its shareholders a liquidation preference of $25 per share, plus an amount equal to any accumulated and unpaid dividends to and including the date of payment, but without interest, before any distribution of assets is made to holders of Common Stock or any other class or series of capital stock of the Company that ranks junior to the Series H Preferred Stock as to liquidation rights. If the assets of the Company legally available for distribution to shareholders are insufficient to pay in full the Liquidation Preference on the Series H Preferred Stock and the Liquidation Preference on any shares of Parity Preferred Stock, all assets distributed to the holders of the Series H Preferred Stock and any other series of Parity Preferred Stock shall be distributed pro rata so that the amount of assets distributed per share of Series H Preferred Stock and such other series of Parity Preferred Stock shall in all cases bear to each other the same ratio that the Liquidation Preference per share on the Series H Preferred Stock and such other series of Parity Preferred Stock bear to each other. Holders of Series H Preferred Stock will be entitled to written notice of any event triggering the right to receive such Liquidation Preference. After payment of the full amount of the Liquidation Preference, plus any accumulated and unpaid dividends to which they are entitled, the holders of Series H Preferred Stock will have no right or claim to any of the remaining assets of the Company. The consolidation or merger of the Company with or into any other corporation, trust or entity or of any other corporation with or into the Company, or the sale, lease or conveyance of all or substantially all of the property or business of the Company, shall not be deemed to constitute a liquidation, dissolution or winding up of the Company.

6.     Redemption

(a)    The Series H Preferred Stock is not redeemable prior to August 11, 2008. However, in order to ensure that the Company will continue to meet the requirement for qualification as a REIT, the Series H Preferred Stock will be subject to provisions in the Company’s Charter (the “Charter”) pursuant to which shares of capital stock of the Company owned by a shareholder in excess of 9.9% in value of the outstanding shares of capital stock of the Company (the “Ownership Limit”) will be deemed “Excess Shares,” and the Company will have the right to purchase such Excess Shares from the holder. On and after August 11, 2008, the Company, at its option upon not less than 30 nor more than 60 days’ written notice, may redeem shares of the Series H Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25 per share, plus all accumulated and unpaid dividends thereon to the date fixed for redemption (except with respect to Excess Shares), without interest. Holders of Series H Preferred Stock to be redeemed shall surrender such Series H Preferred Stock at the place designated in such notice and upon such surrender shall be entitled to the redemption price and any accumulated and unpaid dividends payable upon such redemption. If notice of redemption of any shares of Series H Preferred Stock has been given and if the funds necessary for such redemption have been set aside by the Company in trust for the benefit of the holders of any shares of Series H Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. If less than all of the outstanding Series H Preferred Stock is to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Company. After redemption, all shares of Series H Preferred Stock previously outstanding shall be unclassified and shall constitute authorized and unissued shares of the Company’s preferred stock that may be designated by the Company’s Board of Directors pursuant to Article 6 of the Company’s Second Amended and Restated Charter, as further amended.


Exhibit 3.1


(b)    Unless full cumulative dividends on all shares of Series H Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series H Preferred Stock shall be redeemed unless all outstanding share of Series H Preferred Stock are simultaneously redeemed and the Company shall not purchase or otherwise acquire directly or indirectly any shares of Series H Preferred Stock (except by exchange for capital stock of the Company ranking junior to the Series H Preferred Stock as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase by the Company of Excess Shares in order to ensure that the Company continues to meet the requirements for qualification as a REIT, or the purchase or acquisition of shares of Series H Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series H Preferred Stock. So long as no dividends are in arrears, the Company shall be entitled at any time and from time to time to repurchase shares of Series H Preferred Stock in open-market transactions duly authorized by the Board of Directors and effected in compliance with applicable laws.

(c)    Notice of redemption will be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the redemption date. A similar notice will be mailed by the Company, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series H Preferred Stock to be redeemed at their respective addresses as they appear on the stock transfer records of the Company. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series H Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the redemption date; (ii) the redemption price, (iii) the number of shares of Series H Preferred Stock to be redeemed; (iv) the place or places where the Series H Preferred Stock is to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If less than all of the Series H Preferred Stock held by any holder is to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series H Preferred Stock held by such holder to be redeemed.

(d)    Immediately prior to any redemption of Series H Preferred Stock, the Company shall pay, in cash, any accumulated and unpaid dividends through the redemption date, unless a redemption date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series H Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

(e)    The Series H Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption. However, in order to ensure that the Company continues to meet the requirements for qualification as a REIT, Series H Preferred Stock acquired by a shareholder in excess of the Ownership Limit will automatically become Excess Shares, and the Company will have the right to purchase such Excess Shares from the holder. In addition, Excess Shares may be redeemed, in whole or in part, at any time when outstanding shares of Series H Preferred Stock are being redeemed, for cash at a redemption price of $25 per share, but excluding accumulated and unpaid dividends on such Excess Shares, without interest. Such Excess Shares shall be redeemed in such proportion and in accordance with such procedures as shares of Series H Preferred Stock are being redeemed.

7.     Voting Rights .

(a)    Holder of Series H Preferred Stock will not have any voting rights, except as set forth below or as otherwise from time to time required by law.

(b)    Whenever dividends on any shares of Series H Preferred Stock shall be in arrears for eighteen or more months (a “Preferred Dividend Default”), the holders of such shares of Series H Preferred Stock voting separately as a class together with the holders of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series F Preferred Stock, the Series G Preferred Stock and all other series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable will be entitled to vote separately as a class for the election of a total of two additional directors of the Company (the “Preferred Stock Directors”) at a special meeting called by the holders of record of at least 20% of the Series H Preferred Stock or the holders of record of at least 20% of any series of Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting until all dividends accumulated on such shares of Series H Preferred Stock for the past dividend periods and the dividend for the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. A quorum for any such meeting shall exist if at least a majority of the outstanding shares of Series H Preferred Stock and shares of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable are represented in person or by proxy at such meeting. The Preferred Stock Directors shall be elected upon the affirmative vote of a


Exhibit 3.1

plurality of the shares of Series H Preferred Stock and such Parity Preferred Stock present and voting in person or by proxy at a fully called and held meeting at which a quorum is present voting separately as a class. If and when all accumulated dividends and the dividend for the then current dividend period on the Series H Preferred Stock shall have been paid in full or declared and set aside for payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the then current dividend period have been paid in full or declared and set aside for payment in full on all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate. Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding shares of the Series H Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series H Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred Stock upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall be entitled to one vote per director on any matter.

(c)    So long as any shares of Series H Preferred Stock remain outstanding, the Company will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series H Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal the provisions of the Charter or the Designating Amendment, whether by merger, consolidation or otherwise (an “Event”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series H Preferred Stock of the holders thereof; provided, however, that with respect to the occurrence of any Event set forth above, so long as the Series H Preferred Stock remains outstanding with the terms thereof materially unchanged, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges, or voting power of holders of the Series H Preferred Stock and provided, further that (i) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or (ii) any increase in the amount of authorized shares of such series, in each case ranking on a parity with or junior to the Series H Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d)    The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series H Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

8.     Conversion . The Series H Preferred Stock is not convertible into or exchangeable for any other property or securities of the Company.




Exhibit 3.1

SCHEDULE I

DESIGNATION OF
8.50% SERIES I CUMULATIVE REDEEMABLE PREFERRED STOCK

The preferences, rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption of the shares of Series I Preferred Stock are as follows:
(1) DESIGNATION AND NUMBER. A series of Preferred Stock, designated the “8.50% Series I Cumulative Redeemable Preferred Stock” (the “ Series I Preferred Stock ”), is hereby established. The maximum number of authorized shares of the Series I Preferred Stock shall be 868,000.
(2) RELATIVE SENIORITY. In respect of rights to receive dividends and to participate in distributions of payments in the event of any liquidation, dissolution or winding up of the Corporation, the Series I Preferred Stock shall rank senior to the Common Stock, and any other class or series of shares of the Corporation ranking, as to dividends and upon liquidation, junior to the Series I Preferred Stock (collectively, “ Junior Shares ”).
(3) DIVIDENDS.
(a) The holders of the then outstanding Series I Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of any funds legally available therefor, cumulative dividends at the rate of $4.25 per share per year, payable in equal amounts of $1.0625 per share quarterly in cash on the last day of each March, June, September, and December or, if not a Business Day (as hereinafter defined), the next succeeding Business Day. Dividends shall begin on December 31, 2016 (each such day being hereafter called a “ Quarterly Dividend Date ” and each period ending on a Quarterly Dividend Date being hereinafter called a “ Dividend Period ”). Dividends shall be payable to holders of record as they appear in the share records of the Corporation at the close of business on the applicable record date (the “ Record Date ”), which shall be the 15th day of the calendar month in which the applicable Quarterly Dividend Date falls on or such other date designated by the Board of Directors for the payment of dividends that is not more than 30 nor less than 10 days prior to such Quarterly Dividend Date. The amount of any dividend payable for any Dividend Period shorter than a full Dividend Period

shall be prorated and computed on the basis of a 360-day year of twelve 30-day months. Dividends paid on the Series I Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a per share basis among all such shares at the time outstanding.
“ Business Day ” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.
(b) The amount of any dividends accrued on any Series I Preferred Stock at any Quarterly Dividend Date shall be the amount of any unpaid dividends accumulated thereon, to and including such Quarterly Dividend Date, whether or not earned or declared, and the amount of dividends accrued on any shares of Series I Preferred Stock at any date other than a Quarterly Dividend Date shall be equal to the sum of the amount of any unpaid dividends accumulated thereon, to and including the last preceding Quarterly Dividend Date, whether or not earned or declared, plus an amount calculated on the basis of the annual dividend rate of $4.25 per share for the period after such last preceding Quarterly Dividend Date to and including the date as of which the calculation is made based on a 360-day year of twelve 30-day months.
(c) Except as provided below in Section 4 (Liquidation Rights), the Series I Preferred Stock will not be entitled to any dividends in excess of full cumulative dividends as described above and shall not be entitled to participate in the earnings or assets of the Corporation, and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series I Preferred Stock which may be in arrears.
(d) Any dividend payment made on the Series I Preferred Stock shall be first credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.
(e) If, for any taxable year, the Corporation elects to designate as “capital gain dividends” (as defined in Section 857 of the Internal Revenue Code of 1986, as amended (the “ Code ”)), any portion (the “ Capital Gains Amount ”) of the dividends paid or made available for the year to holders of all classes of shares (the “ Total Dividends ”), then the portion of the Capital Gains Amount that shall be allocated to the holders of the Series I Preferred Stock shall equal (i) the Capital Gains Amount multiplied


Exhibit 3.1

by (ii) a fraction that is equal to (a) the total dividends paid or made available to the holders of the Series I Preferred Stock for the year over (b) the Total Dividends.
(f) No dividends on the Series I Preferred Stock shall be declared by the Board of Directors or be paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibit such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. Notwithstanding the foregoing, dividends on the Series I Preferred Stock will accrue whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared.
(4) LIQUIDATION RIGHTS.
(a) Upon the voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the holders of the Series I Preferred Stock then outstanding shall be entitled to receive and to be paid out of the assets of the Corporation legally available for distribution to its shareholders, before any payment or distribution shall be made on any Junior Shares, the amount of $50.00 per share, plus accrued and unpaid dividends thereon.

(b) After the payment to the holders of the Series I Preferred Stock of the full preferential amounts provided for in paragraph (a) above, the holders of the Series I Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Corporation.
(c) If, upon any voluntary or involuntary dissolution, liquidation, or winding up of the Corporation, the amounts payable with respect to the preference value of the Series I Preferred Stock and any other shares of the Corporation ranking as to any such distribution on a parity with the Series I Preferred Stock are not paid in full, the holders of the Series I Preferred Stock and of such other shares will share ratably in any such distribution of assets of the Corporation in proportion to the full respective preference amounts to which they are entitled.
(d) Neither the sale, lease, transfer or conveyance of all or substantially all of the property or business of the Corporation, nor the merger or consolidation of the Corporation into or with any other entity or the merger or consolidation of any other entity into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 4 (Liquidation Rights).
(5) REDEMPTION.
(a) OPTIONAL REDEMPTION. On and after October 1, 2026, the Corporation may, at its option, redeem at any time all or, from time to time, part of the Series I Preferred Stock at a price per share (the “ Redemption Price ”), payable in cash, of $50.00, together with all accrued and unpaid dividends to and including the date fixed for redemption (the “ Redemption Date ”), without interest, to the full extent the Corporation has funds legally available therefor. The Series I Preferred Stock shall have no stated maturity, except as provided for in Section 8 (Restriction on Ownership), and will not be subject to any sinking fund or mandatory redemption provisions.
(b) PROCEDURES OF REDEMPTION.
(1) Notice of redemption will be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the Redemption Date. Notice of any redemption will also be mailed by the registrar, postage prepaid, not less than 30 nor more than 60 days prior to the Redemption Date, addressed to each holder of record of the Series I Preferred Stock to be redeemed at the address set forth in the share transfer records of the registrar. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series I Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which Series I Preferred Stock may be listed or admitted to trading, such notice shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the number of shares of Series I Preferred Stock to be redeemed; (d) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price; and (e) that dividends on the shares to be redeemed will cease to accumulate on the Redemption Date. If fewer than all of the shares of the Series I Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series I Preferred Stock to be redeemed from such holder.



Exhibit 3.1

(2) If notice has been mailed in accordance with Section (5)(b)(1) above and provided that on or before the Redemption Date specified in such notice all funds necessary for such redemption shall have been irrevocably set aside by the Corporation, separate and apart from its other funds in trust for the pro rata benefit of the holders of the Series I Preferred Stock so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Redemption Date, dividends on the Series I Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of Series I Preferred Stock and all rights of the holders thereof as shareholders of the Corporation (except the right to receive the Redemption Price) shall cease. Upon surrender, in accordance with such notice, of the certificates for any Series I Preferred Stock so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such Series I Preferred Stock shall be redeemed by the Corporation at the Redemption Price. In case fewer than all the shares of Series I Preferred Stock represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares of Series I Preferred Stock without cost to the holder thereof.
(3) Any funds deposited with a bank or trust company for the purpose of redeeming Series I Preferred Stock shall be irrevocable except that:
(A) The Corporation shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and
(B) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series I Preferred Stock entitled thereto at the expiration of two years from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings.
(4) No Series I Preferred Stock may be redeemed except from proceeds from the sale of other capital stock of the Corporation, including but not limited to common stock, preferred stock, depositary shares, interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable for equity securities) or options to purchase any of the foregoing.
(5) Unless full accumulated dividends on all Series I Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past Dividend Periods and the then current Dividend Period, no Series I Preferred Stock shall be redeemed or purchased or otherwise acquired directly or indirectly (except by conversion into or exchange for Junior Shares); provided, however, that the foregoing shall not prevent the redemption of Series I Preferred Stock to preserve the Corporation’s REIT status or the purchase or acquisition of Series I Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series I Preferred Stock.
(6) If the Redemption Date is after a Record Date and before the related Quarterly Dividend Date, the dividend payable on such Quarterly Dividend Date shall be paid to the holder in whose name the shares of Series I Preferred Stock to be redeemed are registered at the close of business on such Record Date notwithstanding the redemption thereof between such Record Date and the related Quarterly Dividend Date or the Corporation’s default in the payment of the dividend due. Except as provided above, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on shares of the Series I Preferred Stock to be redeemed.
(7) In case of redemption of less than all Series I Preferred Stock at the time outstanding, the Series I Preferred Stock to be redeemed shall be selected pro rata from the holders of record of such shares in proportion to the number of shares of Series I Preferred Stock held by such holders (with adjustments to avoid redemption of fractional shares) or by any other equitable method determined by the Corporation.
(6) VOTING RIGHTS. Except as required by law or as set forth below, the holders of the Series I Preferred Stock shall not be entitled to vote at any meeting of the shareholders for election of directors or for any other purpose or otherwise to participate in any action taken by the Corporation or the shareholders thereof, or to receive notice of any meeting of shareholders.
(a) Whenever dividends on any Series I Preferred Stock shall be in arrears for six or more quarterly periods, whether or not such quarterly periods are consecutive, the holders of such Series I Preferred Stock (voting separately as a class with all other series of preferred shares upon which like voting rights have been conferred and are exercisable) will be entitled to vote


Exhibit 3.1

for the election of two additional directors of the Corporation at a special meeting called by the holders of record of at least ten percent (10%) of any series of preferred shares so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting until all dividends accumulated on such Series I Preferred Stock for the past Dividend Periods and the then current Dividend Period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In such case, the entire Board of Directors will be increased by two directors.
(b) So long as any Series I Preferred Stock remains outstanding, the Corporation will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series I Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (such series voting separately as a class), (i) authorize or create, or increase the authorized or issued amount of, any class or series of shares of capital stock ranking prior to the Series I Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or reclassify any authorized shares of the Corporation into such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares; or (ii) amend, alter or repeal the provisions of the Charter, including this amendment to the Charter, whether by merger, consolidation or otherwise (an “ Event ”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series I Preferred Stock or the holders thereof; provided, however, with respect to the occurrence of any of the Events set forth in (ii) above, so long as the Series I Preferred Stock remains outstanding with the terms thereof materially unchanged, taking into account that upon the occurrence of an Event, the Corporation may not be the surviving entity, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of Series I Preferred Stock and provided further that (x) any increase in the amount of the authorized Preferred Stock or the creating or issuance of any other series of Preferred Stock, or (y) any increase in the amount of authorized Series I Preferred Stock or any other series of Preferred Stock, in each case ranking on a parity with or junior to the Series I Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(c) On each matter submitted to a vote of the holders of Series I Preferred Stock in accordance with this Section 6 (Voting Rights), or as otherwise required by law, each share of Series I Preferred Stock shall be entitled to one vote. With respect to each share of Series I Preferred Stock, the holder thereof may designate a proxy, with each such proxy having the right to vote on behalf of the holder.
The foregoing voting provisions of this Section 6 (Voting Rights) will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series I Preferred Stock shall have been redeemed or called for redemption and sufficient funds shall have been deposited in trust to effect such redemption.
(7) CONVERSION. The Series I Preferred Stock is not convertible into or exchangeable for any other property or securities of the Corporation.
(8) RESTRICTIONS ON OWNERSHIP.
(a) Definitions. The following terms shall have the following meanings:
(1) “ Acquire ” shall mean the acquisition of Beneficial Ownership of Series I Preferred Stock by any means whatsoever including, without limitation, (A) the acquisition of direct ownership of shares by any Person, including through the exercise of any option, warrant, pledge, security interest or similar right to acquire shares, and (B) the acquisition of indirect ownership of shares taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(l)(B) of the Code, and also applying the look-through rule contained in Section 856(h)(3)(A) of the Code to pension trusts described in Section 401(a) of the Code, by a Person who is an “individual” within the meaning of Section 542(a)(2) of the Code, including through the acquisition by any Person of any option, warrant, pledge, security interest or similar right to acquire shares.
(2) “ Beneficial Ownership ” shall mean, with respect to any Person that is an “individual” as defined in Section 542(a)(2) of the Code, the Series I Preferred Stock owned by such Person after taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and after applying the pension trust look-through rule contained in Section 856(h)(3)(A) of the Code. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.
(3) “ Code ” shall mean the Internal Revenue Code of 1986, as amended. Any reference herein to any current provision of the Code shall be deemed to refer to any future successor provision of federal income tax law.


Exhibit 3.1

(4) “ Initial Public Offering ” means the public issuance of Series I Preferred Stock pursuant to the Corporation’s prospectus supplement dated September 30, 2016 as filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) promulgated under the Securities Act of 1933, as amended.
(5) “ Ownership Limit ” shall initially mean 6% of the outstanding Series I Preferred Stock of the Corporation, and after any adjustment as set forth in Section (8)(h) below, shall mean such greater percentage (but not greater than 9.8%) of the outstanding Series I Preferred Stock as so adjusted.
(6) “ Person ” shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; but does not include an underwriter that participates in a public offering of the Series I Preferred Stock for a period of 90 days following the purchase by such underwriter of the Series I Preferred Stock.

(7) “ REIT ” shall mean a Real Estate Investment Trust under Section 856 of the Code.
(8) “ Restricted Transfer Redemption Price ” shall mean the lower of (A) the price paid by the transferee from whom shares are being redeemed and (B) the average of the last reported sales prices on the New York Stock Exchange of Series I Preferred Stock on the ten trading days immediately preceding the date fixed for redemption by the Board of Directors, or if the Series I Preferred Stock is not then traded on the New York Stock Exchange, the average of the last reported sales prices of the Series I Preferred Stock on the ten trading days immediately preceding the relevant date as reported on any exchange or quotation system over which the Series I Preferred Stock may be traded, or if the Series I Preferred Stock are not then traded over any exchange or quotation system, then the price determined in good faith by the Board of Directors as the fair market value of Series I Preferred Stock on the relevant date.
(9) “ Restriction Termination Date ” shall mean the first day after the date of the Initial Public Offering on which the Corporation determines pursuant to Section (8)(k) below that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT.
(10) “ Transfer ” shall mean any sale, transfer, gift, assignment, devise or other disposition that results in a change in the record ownership or Beneficial Ownership of Series I Preferred Stock or the right to vote or receive dividends on Series I Preferred Stock (including (A) the granting of any option or entering into any agreement for the sale, transfer or other disposition of Series I Preferred Stock or the right to vote or receive dividends on Series I Preferred Stock or (B) the sale, transfer, assignment or other disposition or grant of any securities or rights convertible into or exchangeable for Series I Preferred Stock, or the right to vote or receive dividends on Series I Preferred Stock), whether voluntary or involuntary and whether by operation of law or otherwise.
(b) Restrictions.
(1) During the period commencing on the date of the Initial Public Offering and prior to the Restriction Termination Date: (a) no Person shall Acquire any Series I Preferred Stock if, as a result of such acquisition, any “individual”, as defined in Section 542(a)(2) of the Code (other than a pension trust which is described in Section 401(a) of the Code), shall Beneficially Own an amount of Series I Preferred Stock in excess of the Ownership Limit; (b) no Person shall Acquire any shares of Series I Preferred Stock if, as a result of such acquisition, the Series I Preferred Stock and Common Stock of the Corporation would be directly or indirectly owned by less than 100 Persons (determined without reference to the rules of attribution under Section 544 of the Code); and (c) no Person shall Acquire any shares if, as a result of such acquisition, the Corporation would be “closely held” within the meaning of Section 856(h) of the Code.
(2) Any Transfer that (x) would result in a violation of the restrictions in Section (8)(b)(1)(b) or (c), or (y) a transferring shareholder has actual knowledge will result in a violation of any of the restrictions in Section (8)(b)(1)(a), shall be void ab initio as to the Transfer of such Series I Preferred Stock that would cause the violation of the applicable restriction in Section (8)(b)(1), and the intended transferee shall acquire no rights in such Series I Preferred Stock.

(c) Remedies for Breach.
(1) If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer has taken place that falls within the scope of Section (8)(b)(2) or that a Person intends to Acquire Beneficial Ownership of any shares of the Corporation that will result in violation of Section (8)(b)(1) or (2) (whether or not such violation is intended), the


Exhibit 3.1

Board of Directors or a committee thereof shall take such action as it or they deem advisable to refuse to give effect to or to prevent such Transfer, including, but not limited to, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer.
(2) Without limitation to Section (8)(b)(2) or (c)(1), any purported transferee of Beneficial Ownership of Series I Preferred Stock acquired in violation of Section (8)(b) shall, if it shall be deemed to have received any such Beneficial Ownership, be deemed to have acted as agent on behalf of the Corporation in acquiring such of the interests as result in a violation of Section (8)(b) and shall be deemed to hold such interests in trust on behalf and for the benefit of the Corporation. The transferee shall have no right to receive dividends or other distributions with respect to such interests, and shall have no right to vote such interests. Such transferee shall have no claim, cause of action, or any other recourse whatsoever against a transferor of interests acquired in violation of Section (8)(b). The transferee’s sole right with respect to such interests shall be to receive at the Corporation’s sole and absolute discretion, either (A) consideration for such interests upon the resale of the interests as directed by the Corporation pursuant to Section (8)(c)(3), or (B) the Restricted Transfer Redemption Price pursuant to Section (8)(c)(3).
(3) The Board of Directors shall, within 6 months after receiving notice of a Transfer that violates Section (8)(c)(2), either (in its sole and absolute discretion) (A) direct the transferee of such interests to sell all interests held in trust for the Corporation pursuant to Section (8)(c)(2) for cash in such manner as the Board of Directors directs or (B) redeem such interests for the Restricted Transfer Redemption Price on such date within such 6 month period as the Board of Directors may determine. If the Board of Directors directs the transferee to sell the interests, the transferee shall receive such proceeds as trustee for the Corporation and pay the Corporation out of the proceeds of such sale all expenses incurred by the Corporation in connection with such sale plus any remaining amount of such proceeds that exceeds the amount paid by the transferee for the interests, and the transferee shall be entitled to retain only the proceeds in excess of such amounts required to be paid to the Corporation.
(d) Notice of Restricted Transfer. Any Person who Acquires or attempts or intends to Acquire shares in violation of Section (8)(b) shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted or intended Transfer on the Corporation’s status as a REIT.
(e) Owners Required To Provide Information. From the date of the Initial Public Offering and prior to the Restriction Termination Date, each person who is a Beneficial Owner of Series I Preferred Stock and each Person (including the shareholder of record) who is holding Series I Preferred Stock for a Beneficial Owner shall provide to the Corporation such information as the Corporation may request, in good faith, in order to determine the Corporation’s status as a REIT.
(f) Remedies Not Limited. Except as provided in Section (8)(m), nothing contained in this Section (8) shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its shareholder in preserving the Corporation’s status as a REIT.
(g) Ambiguity. In the case of an ambiguity in the application of any of the provisions of this Section (8), including any definition contained in Section (8)(a), the Board of Directors shall have the power to determine the application of the provisions of this Section (8) with respect to any situation based on the facts known to it.
(h) Modification of Ownership Limit. Subject to the limitations provided in Section (8)(i), the Board of Directors may from time to time increase the Ownership Limit.
(i) Limitations on Modifications.
(1) The Ownership Limit may not be increased if, after giving effect to such increase, five Persons who are considered “individuals” pursuant to Section 542(a)(2) of the Code could Beneficially Own (including ownership of Common Stock for purposes of this subparagraph (8)(i)(1)), in the aggregate, more than 49.0% in value of the outstanding shares of stock of the Corporation.
(2) Prior to the modification of the Ownership Limit pursuant to subparagraph (8)(h), the Board of Directors may require such opinions of counsel, affidavits, undertakings or agreements as it may deem necessary or advisable in order to determine or ensure the Corporation’s status as a REIT.
(j) Legend. Each certificate for Series I Preferred Stock shall bear a legend referring to the restrictions described above.


Exhibit 3.1

(k) Termination of REIT Status. The Board of Directors shall take no action to terminate the Corporation’s status as a REIT or to amend the provisions of this Section (8) until such time as (A) the Board of Directors adopts a resolution recommending that the Corporation terminate its status as a REIT or amend this Section (8), as the case may be, (B) the Board of Directors presents the resolution at an annual or special meeting of the shareholders, and (C) such resolution is approved by holders of a majority of the issued and outstanding Series I Preferred Stock.
(l) Severability. If any provision of this Section (8) or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.
(m) NYSE Settlement. Nothing herein shall preclude the settlement of any transaction with respect to the Series I Preferred Stock of the Corporation entered into through the facilities of the New York Stock Exchange.





EXHIBIT 12.1


Mid-America Apartment Communities, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)


 
 
Year ended December 31,
 
 
2016
 
2015
 
2014
 
2013
 
2012
Earnings:
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
224,402

 
$
350,745

 
$
150,946

 
$
37,692

 
$
61,204

Equity in loss (income) of unconsolidated entities
 
(241
)
 
2

 
(6,009
)
 
(338
)
 
223

Income tax expense
 
1,699

 
1,673

 
2,050

 
893

 
803

Income from continuing operations before equity in loss (income) of unconsolidated entities and income tax expense
 
225,860

 
352,420

 
146,987

 
38,247

 
62,230

Add:
 
 
 
 
 
 
 
 
 
 
Distribution of income from investments in unconsolidated entities
 
1,999

 
6

 
15,964

 
9,768

 
12,164

Fixed charges, less preferred distribution requirement of consolidated subsidiaries
 
132,020

 
123,999

 
125,675

 
81,067

 
63,807

Deduct:
 
 
 
 
 
 
 
 
 
 
Capitalized interest
 
2,073

 
1,655

 
1,722

 
2,089

 
2,318

Total Earnings (A)
 
$
357,806

 
$
474,770

 
$
286,904

 
$
126,993

 
$
135,883

Fixed charges and preferred dividends:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
129,947

 
$
122,344

 
$
123,953

 
$
78,978

 
$
61,489

Capitalized interest
 
2,073

 
1,655

 
1,722

 
2,089

 
2,318

Total Fixed Charges (B)
 
$
132,020

 
$
123,999

 
$
125,675

 
$
81,067

 
$
63,807

Preferred dividends, including redemption costs
 
307

 
—

 
—

 
—

 
—

Total Fixed Charges and Stock Dividends (C)
 
$
132,327

 
$
123,999

 
$
125,675

 
$
81,067

 
$
63,807

 
 
 
 
 
 
 
 
 
 
 
Ratio of Earnings to Fixed Charges (A/B)
 
2.7 x

 
3.8 x

 
2.3 x

 
1.6 x

 
2.1 x

Ratio of Earnings to Fixed Charges and Preferred Dividends (A/C)
 
2.7 x

 
3.8 x

 
2.3 x

 
1.6 x

 
2.1 x






EXHIBIT 12.2


Mid-America Apartments, L.P.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)


 
 
Year ended December 31,
 
 
2016
 
2015
 
2014
 
2013
 
2012
Earnings:
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
224,402

 
$
350,745

 
$
150,946

 
$
37,692

 
$
61,204

Equity in loss (income) of unconsolidated entities
 
(241
)
 
2

 
(6,009
)
 
(338
)
 
223

Income tax expense
 
1,699

 
1,673

 
2,050

 
893

 
803

Income from continuing operations before equity in loss (income) of unconsolidated entities and income tax expense
 
225,860

 
352,420

 
146,987

 
38,247

 
62,230

Add:
 
 
 
 
 
 
 
 
 
 
Distribution of income from investments in unconsolidated entities
 
1,999

 
6

 
15,964

 
9,768

 
12,164

Fixed charges, less preferred distribution requirement of consolidated subsidiaries
 
132,020

 
123,999

 
125,675

 
81,067

 
63,807

Deduct:
 
 
 
 
 
 
 
 
 
 
Capitalized interest
 
2,073

 
1,655

 
1,722

 
2,089

 
2,318

Total Earnings (A)
 
$
357,806

 
$
474,770

 
$
286,904

 
$
126,993

 
$
135,883

Fixed charges and preferred dividends:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
129,947

 
$
122,344

 
$
123,953

 
$
78,978

 
$
61,489

Capitalized interest
 
2,073

 
1,655

 
1,722

 
2,089

 
2,318

Total Fixed Charges (B)
 
$
132,020

 
$
123,999

 
$
125,675

 
$
81,067

 
$
63,807

Preferred dividends, including redemption costs
 
307

 
—

 
—

 
—

 
—

Total Fixed Charges and Stock Dividends (C)
 
$
132,327

 
$
123,999

 
$
125,675

 
$
81,067

 
$
63,807

 
 
 
 
 
 
 
 
 
 
 
Ratio of Earnings to Fixed Charges (A/B)
 
2.7 x

 
3.8 x

 
2.3 x

 
1.6 x

 
2.1 x

Ratio of Earnings to Fixed Charges and Preferred Dividends (A/C)
 
2.7 x

 
3.8 x

 
2.3 x

 
1.6 x

 
2.1 x








EXHIBIT 21.1
 
List of Subsidiaries of Mid-America Apartment Communities, Inc.

Alabama
Colonial Properties Services, Inc.
Colonial/DPL JV, LLC
CPSI-UCO Spanish Oaks, LLC
CPSI-UCO, LLC
Forty Seven Canal Place, LLC
Highway 31 Alabaster Two, LLC
Highway 31 Alabaster, LLC
Six Hundred Building Partners
Walkers Chapel Road, LLC

Delaware
1499 Massachusetts Avenue, Inc.
1499 Massachusetts Holding, LLC
1755 Central Park Road Condominiums, LLC
Bham Lending, LLC
Brighton Apartments, LLC
Capri at Hunters Creek Condominium, LLC
CMF 15 Portfolio, LLC
CMF 7 Portfolio, LLC
CMS/Colonial Multifamily Canyon Creek JV, LP
Colonial Commercial Contracting, LLC
Colonial Construction Services, LLC
Colonial Office Holdings LLC
Colonial Multifamily Canyon Creek GP, LLC
CP D'Iberville JV, LLC
CP Nord du Lac JV, LLC
CPSI James Island, LLC
CPSI Mizner, LLC
CPSI St. Andrews LLC
CRLP Bellevue, LLC
CRLP CPSI Nord du Lac Membership, LLC
CRLP Frisco Bridges LLC
CRLP Huntsville TIC Investor I LLC
CRLP Huntsville TIC Investor II LLC
CRLP Huntsville TIC Investor III LLC
CRLP Twin Lakes, LLC
CRLP Valley Ranch, LLC
Heathrow 3, LLC
Heathrow 4, LLC
Heathrow I, LLC
LaValencia at Starwood, LLC
MAA Arkansas REIT, LLC
MAA BRIK, LLC
MAA Highlands, LLC
MAA Holdings, LLC
MAA Holdings II, LLC
MAA TANC, LLC
McDowell-CRLP McKinney JV, LLC
MMFII Grand Cypress, LLC
MMFII Venue at Stonebridge Ranch, LLC
Montecito James Island, LLC
Montecito Mizner, LLC
Montecito St. Andrews, LLC




P/C First Avenue, LLC
PCH Atlanta Venture, LLC
PCH CCL Holding, LLC
PCH Collier Hills Venture, LLC
PCH Crest Venture, LLC
PCH Crest Lake Venture, LLC
PCH Lindbergh Venture, LLC
Post Biltmore, LLC
Post Carlyle II, LLC
Post Paseo Colorado, LLC
Sam Ridley, LLC
Stone Ranch at Westover Hills, LLC
The Azur at Metrowest, LLC
The Colonnade/CLP LLC

Georgia
3630 South Tower Residential, LLC
98 San Jac Holdings, LLC
Carlyle Condominium Development, LLC
Clyde Lane Condominium Development, LLC
Cumberland Lake, LLC
Merritt at Godley Station, LLC
ML James Island Apartments, L.P.
PAH Lender, LLC
Park Land Development, LLC
PBP Apartments, LLC
PF Apartments, LLC
PL Conservation, LLC
Post 1499 Massachusetts, LLC
Post Alexander II, LLC
Post Asset Management, Inc.
Post Atlanta Venture, LLC
Post Briarcliff, LLC
Post Carlyle, LLC
Post Centennial Park, LLC
Post Corners, LLC
Post Crossing, LLC
Post Denver Investor, LLC
Post Galleria, LLC
Post Glen, LLC
Post Hyde Park, LLC
Post Midtown Atlanta, LLC
Post Midtown Square GP, LLC
Post Midtown Square, L.P.
Post Park, LLC
Post Park Development, LLC
Post Parkside at Wade II GP, LLC
Post Parkside at Wade II, L.P.
Post Services, LLC
Post South End GP, LLC
Post South End, L.P.
Post South Lamar II, LLC
Post Toscana, LLC
Post Wade Tract M-2, L.P.
Post-Amerus Rice Lofts, L.P.
Regents Park, LLC
Rise Condominium Development, LLC
Rocky Point Management, LLC
Spring Land, LLC





North Carolina
Midtown Redevelopment Partners, LLC
Trinity Commons Apartments, LLC
Trinity Commons II, LLC

Tennessee
Mid-America Apartments, L.P.
Parkside Drive Farragut, LLC

Texas
Akard-McKinney Investment Company, LLC
MAA of Copper Ridge, Inc.
Post Rice Lofts, LLC
Rice Lofts, L.P.






EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm


We consent to the incorporation by reference in the following Registration Statements:

(1)
Registration Statements (Form S-3 Nos. 33-96852, 333-82526, 333-190028, 333-191243 and 333-208398) of Mid-America Apartment Communities, Inc.,
(2)
Registration Statement (Form S-3 No. 333-202905) pertaining to the Dividend and Distribution Reinvestment and Share Purchase Plan of Mid-America Apartment Communities, Inc.,
(3)
Registration Statement (Form S-8 No. 333-123945) pertaining to the Non-Qualified Deferred Compensation Plan for Outside Company Directors of Mid-America Apartment Communities, Inc.,
(4)
Registration Statement (Form S-8 No. 333-115834) pertaining to the Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan and the 2004 Stock Plan of Mid-America Apartment Communities, Inc.,
(5)
Registration Statement (Form S-8 No. 33-91416) pertaining to the 1994 Employee Stock Purchase Plan of Mid-America Apartment Communities, Inc.,
(6)
Registration Statement (Form S-8 No. 333-191541) pertaining to the Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan, Colonial Properties Trust 2008 Omnibus Incentive Plan and Colonial Properties Trust Third Amended and Restated Shares Option and Restricted Shares Plan,
(7)
Registration Statement (Form S-8 No. 333-196250) pertaining to the Amended and Restated Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan, and
(8)
Registration Statement (Form S-8 No. 333-214993) pertaining to the Amended and Restated Post Properties, Inc. 2003 Incentive Stock Plan.

of our reports dated February 24, 2017, with respect to the consolidated financial statements and schedule of Mid-America Apartment Communities, Inc., and the effectiveness of internal control over financial reporting of Mid-America Apartment Communities, Inc. included in this Annual Report (Form 10-K) of Mid-America Apartment Communities, Inc. for the year ended December 31, 2016.




Memphis, Tennessee
February 24, 2017    








EXHIBIT 23.2

Consent of Independent Registered Public Accounting Firm


We consent to the incorporation by reference in the Registration Statements (Form S-3 No. 333-191243-01 and 333-208398-01) of Mid-America Apartments, L.P. and in the related Prospectus of our report dated February 24, 2017, with respect to the consolidated financial statements and schedule of Mid-America Apartments, L.P. included in this Annual Report (Form 10-K) for the year ended December 31, 2016.




Memphis, Tennessee
February 24, 2017





EXHIBIT 31.1
CERTIFICATION

I, H. Eric Bolton, Jr., certify that:

1.    I have reviewed this annual report on Form 10-K of Mid-America Apartment Communities, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
February 24, 2017
/s/ H. Eric Bolton, Jr.
 
 
H. Eric Bolton, Jr.
 
 
Chief Executive Officer





EXHIBIT 31.2
CERTIFICATION

I, Albert M. Campbell, III, certify that:

1.    I have reviewed this annual report on Form 10-K of Mid-America Apartment Communities, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
February 24, 2017
/s/ Albert M. Campbell, III
 
 
Albert M. Campbell, III
 
 
Chief Financial Officer





EXHIBIT 31.3
CERTIFICATION

I, H. Eric Bolton, Jr., certify that:

1.    I have reviewed this annual report on Form 10-K of Mid-America Apartments, L.P.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
February 24, 2017
/s/ H. Eric Bolton, Jr.
 
 
H. Eric Bolton, Jr.
 
 
Chief Executive Officer of Mid-America Apartment Communities, Inc., general partner of Mid-America Apartments, L.P.





EXHIBIT 31.4
CERTIFICATION

I, Albert M. Campbell, III, certify that:

1.    I have reviewed this annual report on Form 10-K of Mid-America Apartments, L.P.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:
February 24, 2017
/s/ Albert M. Campbell, III
 
 
Albert M. Campbell, III
 
 
Chief Financial Officer of Mid-America Apartment Communities, Inc., general partner of Mid-America Apartments, L.P.





EXHIBIT 32.1


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Eric Bolton, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chief Executive Officer
February 24, 2017





EXHIBIT 32.2


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Albert M. Campbell, III, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Albert M. Campbell, III
Albert M. Campbell, III
Chief Financial Officer
February 24, 2017





EXHIBIT 32.3


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Mid-America Apartments, L.P. (the “Operating Partnership”) on Form 10-K for the period ended December 31, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Eric Bolton, Jr., President and Chief Executive Officer of Mid-America Apartment Communities, Inc., general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.



/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chief Executive Officer of Mid-America Apartment Communities, Inc., general partner of Mid-America Apartments, L.P.
February 24, 2017





EXHIBIT 32.4


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Mid-America Apartments, L.P. (the “Operating Partnership”) on Form 10-K for the period ended December 31, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Albert M. Campbell, III, Executive Vice President and Chief Financial Officer of Mid-America Apartment Communities, Inc., general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.


/s/ Albert M. Campbell, III
Albert M. Campbell, III
Chief Financial Officer of Mid-America Apartment Communities, Inc., general partner of Mid-America Apartments, L.P.
February 24, 2017