UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022
or
☐ |
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.) |
6815 Poplar Ave., Suite 500, Germantown, TN 38138
(Address of principal executive offices) (Zip Code)
(901) 682-6600
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $.01 per share (Mid-America Apartment Communities, Inc.) |
MAA |
New York Stock Exchange |
8.50% Series I Cumulative Redeemable Preferred Stock, $.01 par value per share (Mid-America Apartment Communities, Inc.) |
MAA*I |
New York Stock Exchange |
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 ☒ |
No ☐ |
Mid-America Apartments, L.P. |
Yes ☒ |
No ☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Mid-America Apartment Communities, Inc. |
Yes ☒ |
No ☐ |
Mid-America Apartments, L.P. |
Yes ☒ |
No ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Mid-America Apartment Communities, Inc. |
|
|
|
|
Large accelerated filer ☒ |
Accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company ☐ |
Emerging growth company ☐ |
Mid-America Apartments, L.P. |
|
|
|
|
Large accelerated filer ☐ |
Accelerated filer ☐ |
Non-accelerated filer ☒ |
Smaller reporting company ☐ |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Mid-America Apartment Communities, Inc. ☐ |
Mid-America Apartments, L.P. ☐ |
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 ☐ |
No ☒ |
Mid-America Apartments, L.P. |
Yes ☐ |
No ☒ |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Mid-America Apartment Communities, Inc. |
Number of Shares Outstanding at |
Class |
July 25, 2022 |
Common Stock, $0.01 par value |
115,438,832 |
MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P.
TABLE OF CONTENTS
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Page |
PART I – FINANCIAL INFORMATION |
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Item 1. |
5 |
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Mid-America Apartment Communities, Inc. |
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Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021. |
5 |
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6 |
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7 |
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021. |
8 |
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Mid-America Apartments, L.P. |
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Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021. |
9 |
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10 |
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11 |
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021. |
12 |
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13 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
28 |
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Item 3. |
38 |
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Item 4. |
38 |
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PART II – OTHER INFORMATION |
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Item 1. |
39 |
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Item 1A. |
39 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
39 |
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Item 3. |
39 |
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Item 4. |
39 |
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Item 5. |
39 |
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Item 6. |
40 |
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41 |
2
Explanatory Note
This report combines the Quarterly Reports on Form 10-Q for the quarter ended June 30, 2022 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. Mid-America Apartment Communities, Inc. and its 97.3% owned subsidiary, Mid-America Apartments, L.P., are both required to file quarterly reports under the Securities Exchange Act of 1934, as amended.
Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q 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, all 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, “preferred stock” refers to the preferred stock of MAA, and “shareholders” refers to the holders of shares of MAA’s common stock or preferred stock, as applicable. The common units of limited partnership interest in the Operating Partnership are referred to as “OP Units” and the holders of the OP Units are referred to as “common unitholders.”
As of June 30, 2022, MAA owned 115,438,832 OP Units (97.3% of the total number of OP Units). MAA conducts substantially all of its business and holds substantially all of its assets, directly or indirectly, 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 periodic reports of MAA and the Operating Partnership, including the notes to the condensed consolidated financial statements, into this report results in the following benefits:
MAA, an S&P 500 company, is a multifamily-focused, self-administered and self-managed real estate investment trust, or REIT. Management operates MAA and the Operating Partnership as one business. 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 (other than cash held by MAA from time to time); therefore, MAA’s primary function is 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 from time to time. The Operating Partnership holds, directly or indirectly, all of the 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 OP Units.
The presentation of MAA’s shareholders’ equity and the Operating Partnership’s capital are the principal areas of difference between the condensed 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 interests, treasury shares, accumulated other comprehensive income or loss and redeemable common stock. The Operating Partnership’s capital may include common capital and preferred capital of the general partner (MAA), limited partners’ common capital and preferred capital, noncontrolling interests, accumulated other comprehensive income or loss and redeemable common units. Holders of OP Units (other than MAA) may require the Operating Partnership to redeem their OP Units from time to time, in which case the Operating Partnership may, at its 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, or NYSE, over a specified period prior to the redemption date) or by delivering one share of MAA’s common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.
3
In order to highlight the material differences between MAA and the Operating Partnership, this Quarterly Report on Form 10-Q includes sections that separately present and discuss areas that are materially different between MAA and the Operating Partnership, including:
In the sections that combine disclosures for MAA and the Operating Partnership, this Quarterly Report on Form 10-Q 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 we operate the business through the Operating Partnership. MAA, the Operating Partnership and its subsidiaries operate as one consolidated business, but MAA, the Operating Partnership and each of its subsidiaries are separate, distinct legal entities.
4
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
Mid-America Apartment Communities, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except per share data)
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Assets |
|
|
|
|
|
|
||
Real estate assets: |
|
|
|
|
|
|
||
Land |
|
$ |
1,971,660 |
|
|
$ |
1,977,813 |
|
Buildings and improvements and other |
|
|
12,613,378 |
|
|
|
12,454,439 |
|
Development and capital improvements in progress |
|
|
267,691 |
|
|
|
247,970 |
|
|
|
|
14,852,729 |
|
|
|
14,680,222 |
|
Less: Accumulated depreciation |
|
|
(4,089,694 |
) |
|
|
(3,848,161 |
) |
|
|
|
10,763,035 |
|
|
|
10,832,061 |
|
Undeveloped land |
|
|
41,298 |
|
|
|
24,015 |
|
Investment in real estate joint venture |
|
|
42,476 |
|
|
|
42,827 |
|
Real estate assets, net |
|
|
10,846,809 |
|
|
|
10,898,903 |
|
|
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
60,568 |
|
|
|
54,302 |
|
Restricted cash |
|
|
161,134 |
|
|
|
76,296 |
|
Other assets |
|
|
211,890 |
|
|
|
255,681 |
|
Total assets |
|
$ |
11,280,401 |
|
|
$ |
11,285,182 |
|
|
|
|
|
|
|
|
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Liabilities and equity |
|
|
|
|
|
|
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Liabilities: |
|
|
|
|
|
|
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Unsecured notes payable |
|
$ |
4,153,650 |
|
|
$ |
4,151,375 |
|
Secured notes payable |
|
|
364,664 |
|
|
|
365,315 |
|
Accrued expenses and other liabilities |
|
|
571,568 |
|
|
|
584,400 |
|
Total liabilities |
|
|
5,089,882 |
|
|
|
5,101,090 |
|
|
|
|
|
|
|
|
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Redeemable common stock |
|
|
22,403 |
|
|
|
30,185 |
|
|
|
|
|
|
|
|
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Shareholders’ equity: |
|
|
|
|
|
|
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Preferred stock, $0.01 par value per share, 20,000,000 shares authorized; |
|
|
9 |
|
|
|
9 |
|
Common stock, $0.01 par value per share, 145,000,000 shares authorized; |
|
|
1,152 |
|
|
|
1,151 |
|
Additional paid-in capital |
|
|
7,191,920 |
|
|
|
7,230,956 |
|
Accumulated distributions in excess of net income |
|
|
(1,199,216 |
) |
|
|
(1,255,807 |
) |
Accumulated other comprehensive loss |
|
|
(10,591 |
) |
|
|
(11,132 |
) |
Total MAA shareholders’ equity |
|
|
5,983,274 |
|
|
|
5,965,177 |
|
Noncontrolling interests - OP Units |
|
|
165,062 |
|
|
|
165,116 |
|
Total Company’s shareholders’ equity |
|
|
6,148,336 |
|
|
|
6,130,293 |
|
Noncontrolling interests - consolidated real estate entities |
|
|
19,780 |
|
|
|
23,614 |
|
Total equity |
|
|
6,168,116 |
|
|
|
6,153,907 |
|
Total liabilities and equity |
|
$ |
11,280,401 |
|
|
$ |
11,285,182 |
|
See accompanying notes to condensed consolidated financial statements.
5
Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share data)
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental and other property revenues |
|
$ |
495,040 |
|
|
$ |
436,927 |
|
|
$ |
971,118 |
|
|
$ |
861,932 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses, excluding real estate taxes and insurance |
|
|
110,007 |
|
|
|
101,751 |
|
|
|
211,124 |
|
|
|
197,712 |
|
Real estate taxes and insurance |
|
|
71,670 |
|
|
|
67,010 |
|
|
|
139,973 |
|
|
|
133,517 |
|
Depreciation and amortization |
|
|
134,144 |
|
|
|
131,824 |
|
|
|
267,882 |
|
|
|
263,327 |
|
Total property operating expenses |
|
|
315,821 |
|
|
|
300,585 |
|
|
|
618,979 |
|
|
|
594,556 |
|
Property management expenses |
|
|
15,630 |
|
|
|
13,752 |
|
|
|
32,167 |
|
|
|
26,691 |
|
General and administrative expenses |
|
|
15,580 |
|
|
|
13,114 |
|
|
|
31,903 |
|
|
|
26,093 |
|
Interest expense |
|
|
38,905 |
|
|
|
38,867 |
|
|
|
78,026 |
|
|
|
78,539 |
|
Gain on sale of depreciable real estate assets |
|
|
(131,965 |
) |
|
|
(134,828 |
) |
|
|
(131,964 |
) |
|
|
(134,828 |
) |
Gain on sale of non-depreciable real estate assets |
|
|
(355 |
) |
|
|
(32 |
) |
|
|
(378 |
) |
|
|
(32 |
) |
Other non-operating expense (income) |
|
|
28,325 |
|
|
|
(20,126 |
) |
|
|
17,530 |
|
|
|
(4,213 |
) |
Income before income tax benefit (expense) |
|
|
213,099 |
|
|
|
225,595 |
|
|
|
324,855 |
|
|
|
275,126 |
|
Income tax benefit (expense) |
|
|
3,052 |
|
|
|
(2,045 |
) |
|
|
4,494 |
|
|
|
(3,044 |
) |
Income from continuing operations before real estate joint |
|
|
216,151 |
|
|
|
223,550 |
|
|
|
329,349 |
|
|
|
272,082 |
|
Income from real estate joint venture |
|
|
409 |
|
|
|
325 |
|
|
|
788 |
|
|
|
657 |
|
Net income |
|
|
216,560 |
|
|
|
223,875 |
|
|
|
330,137 |
|
|
|
272,739 |
|
Net income attributable to noncontrolling interests |
|
|
5,858 |
|
|
|
7,397 |
|
|
|
8,633 |
|
|
|
9,068 |
|
Net income available for shareholders |
|
|
210,702 |
|
|
|
216,478 |
|
|
|
321,504 |
|
|
|
263,671 |
|
Dividends to MAA Series I preferred shareholders |
|
|
922 |
|
|
|
922 |
|
|
|
1,844 |
|
|
|
1,844 |
|
Net income available for MAA common shareholders |
|
$ |
209,780 |
|
|
$ |
215,556 |
|
|
$ |
319,660 |
|
|
$ |
261,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share - basic: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available for MAA common shareholders |
|
$ |
1.82 |
|
|
$ |
1.88 |
|
|
$ |
2.77 |
|
|
$ |
2.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share - diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available for MAA common shareholders |
|
$ |
1.82 |
|
|
$ |
1.88 |
|
|
$ |
2.76 |
|
|
$ |
2.28 |
|
See accompanying notes to condensed consolidated financial statements.
6
Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(Dollars in thousands)
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income |
|
$ |
216,560 |
|
|
$ |
223,875 |
|
|
$ |
330,137 |
|
|
$ |
272,739 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustment for net losses reclassified to net income from |
|
|
277 |
|
|
|
278 |
|
|
|
556 |
|
|
|
557 |
|
Total comprehensive income |
|
|
216,837 |
|
|
|
224,153 |
|
|
|
330,693 |
|
|
|
273,296 |
|
Less: Comprehensive income attributable to |
|
|
(5,866 |
) |
|
|
(7,448 |
) |
|
|
(8,648 |
) |
|
|
(9,129 |
) |
Comprehensive income attributable to MAA |
|
$ |
210,971 |
|
|
$ |
216,705 |
|
|
$ |
322,045 |
|
|
$ |
264,167 |
|
See accompanying notes to condensed consolidated financial statements.
7
Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
|
|
Six months ended June 30, |
|
|||||
Cash flows from operating activities: |
|
2022 |
|
|
2021 |
|
||
Net income |
|
$ |
330,137 |
|
|
$ |
272,739 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
268,389 |
|
|
|
263,912 |
|
Gain on sale of depreciable real estate assets |
|
|
(131,964 |
) |
|
|
(134,828 |
) |
Gain on sale of non-depreciable real estate assets |
|
|
(378 |
) |
|
|
(32 |
) |
Loss on embedded derivative in preferred shares |
|
|
9,939 |
|
|
|
1,940 |
|
Stock compensation expense |
|
|
10,740 |
|
|
|
9,212 |
|
Amortization of debt issuance costs, discounts and premiums |
|
|
3,018 |
|
|
|
2,674 |
|
Loss (gain) on investments |
|
|
31,093 |
|
|
|
(7,901 |
) |
Net change in operating accounts and other operating activities |
|
|
(57,067 |
) |
|
|
(10,398 |
) |
Net cash provided by operating activities |
|
|
463,907 |
|
|
|
397,318 |
|
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of real estate and other assets |
|
|
(17,238 |
) |
|
|
(46,028 |
) |
Capital improvements and other |
|
|
(132,849 |
) |
|
|
(127,932 |
) |
Development costs |
|
|
(84,636 |
) |
|
|
(119,612 |
) |
Distributions from real estate joint venture |
|
|
352 |
|
|
|
392 |
|
Contributions to affiliates |
|
|
(9,300 |
) |
|
|
(1,114 |
) |
Proceeds from real estate asset dispositions |
|
|
165,201 |
|
|
|
158,136 |
|
Proceeds from insurance recoveries |
|
|
20,675 |
|
|
|
3,620 |
|
Net cash used in investing activities |
|
|
(57,795 |
) |
|
|
(132,538 |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Net proceeds from commercial paper |
|
|
— |
|
|
|
108,000 |
|
Principal payments on notes payable |
|
|
(691 |
) |
|
|
(119,481 |
) |
Distributions to noncontrolling interests |
|
|
(6,965 |
) |
|
|
(8,302 |
) |
Dividends paid on common shares |
|
|
(250,960 |
) |
|
|
(234,591 |
) |
Dividends paid on preferred shares |
|
|
(1,844 |
) |
|
|
(1,844 |
) |
Acquisition of noncontrolling interests |
|
|
(43,070 |
) |
|
|
— |
|
Net change in other financing activities |
|
|
(11,478 |
) |
|
|
(1,173 |
) |
Net cash used in financing activities |
|
|
(315,008 |
) |
|
|
(257,391 |
) |
|
|
|
|
|
|
|
||
Net increase in cash, cash equivalents and restricted cash |
|
|
91,104 |
|
|
|
7,389 |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
130,598 |
|
|
|
35,615 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
221,702 |
|
|
$ |
43,004 |
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:
See accompanying notes to condensed consolidated financial statements.
8
Mid-America Apartments, L.P.
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Assets |
|
|
|
|
|
|
||
Real estate assets: |
|
|
|
|
|
|
||
Land |
|
$ |
1,971,660 |
|
|
$ |
1,977,813 |
|
Buildings and improvements and other |
|
|
12,613,378 |
|
|
|
12,454,439 |
|
Development and capital improvements in progress |
|
|
267,691 |
|
|
|
247,970 |
|
|
|
|
14,852,729 |
|
|
|
14,680,222 |
|
Less: Accumulated depreciation |
|
|
(4,089,694 |
) |
|
|
(3,848,161 |
) |
|
|
|
10,763,035 |
|
|
|
10,832,061 |
|
Undeveloped land |
|
|
41,298 |
|
|
|
24,015 |
|
Investment in real estate joint venture |
|
|
42,476 |
|
|
|
42,827 |
|
Real estate assets, net |
|
|
10,846,809 |
|
|
|
10,898,903 |
|
|
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
60,568 |
|
|
|
54,302 |
|
Restricted cash |
|
|
161,134 |
|
|
|
76,296 |
|
Other assets |
|
|
211,890 |
|
|
|
255,681 |
|
Total assets |
|
$ |
11,280,401 |
|
|
$ |
11,285,182 |
|
|
|
|
|
|
|
|
||
Liabilities and capital |
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
||
Unsecured notes payable |
|
$ |
4,153,650 |
|
|
$ |
4,151,375 |
|
Secured notes payable |
|
|
364,664 |
|
|
|
365,315 |
|
Accrued expenses and other liabilities |
|
|
571,568 |
|
|
|
584,400 |
|
Due to general partner |
|
|
19 |
|
|
|
19 |
|
Total liabilities |
|
|
5,089,901 |
|
|
|
5,101,109 |
|
|
|
|
|
|
|
|
||
Redeemable common units |
|
|
22,403 |
|
|
|
30,185 |
|
|
|
|
|
|
|
|
||
Operating Partnership capital: |
|
|
|
|
|
|
||
Preferred units, 867,846 preferred units outstanding as of June 30, 2022 |
|
|
66,840 |
|
|
|
66,840 |
|
General partner, 115,438,832 and 115,336,876 OP Units outstanding as of |
|
|
5,927,241 |
|
|
|
5,909,700 |
|
Limited partners, 3,202,377 and 3,206,118 OP Units outstanding as of |
|
|
165,062 |
|
|
|
165,116 |
|
Accumulated other comprehensive loss |
|
|
(10,826 |
) |
|
|
(11,382 |
) |
Total operating partners’ capital |
|
|
6,148,317 |
|
|
|
6,130,274 |
|
Noncontrolling interests - consolidated real estate entities |
|
|
19,780 |
|
|
|
23,614 |
|
Total equity |
|
|
6,168,097 |
|
|
|
6,153,888 |
|
Total liabilities and equity |
|
$ |
11,280,401 |
|
|
$ |
11,285,182 |
|
(1) Number of units outstanding represents total OP Units regardless of classification on the Condensed Consolidated Balance Sheets. The number of units classified as redeemable common units on the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 are 132,944 and 131,559, respectively.
See accompanying notes to condensed consolidated financial statements.
9
Mid-America Apartments, L.P.
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per unit data)
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental and other property revenues |
|
$ |
495,040 |
|
|
$ |
436,927 |
|
|
$ |
971,118 |
|
|
$ |
861,932 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses, excluding real estate taxes and insurance |
|
|
110,007 |
|
|
|
101,751 |
|
|
|
211,124 |
|
|
|
197,712 |
|
Real estate taxes and insurance |
|
|
71,670 |
|
|
|
67,010 |
|
|
|
139,973 |
|
|
|
133,517 |
|
Depreciation and amortization |
|
|
134,144 |
|
|
|
131,824 |
|
|
|
267,882 |
|
|
|
263,327 |
|
Total property operating expenses |
|
|
315,821 |
|
|
|
300,585 |
|
|
|
618,979 |
|
|
|
594,556 |
|
Property management expenses |
|
|
15,630 |
|
|
|
13,752 |
|
|
|
32,167 |
|
|
|
26,691 |
|
General and administrative expenses |
|
|
15,580 |
|
|
|
13,114 |
|
|
|
31,903 |
|
|
|
26,093 |
|
Interest expense |
|
|
38,905 |
|
|
|
38,867 |
|
|
|
78,026 |
|
|
|
78,539 |
|
Gain on sale of depreciable real estate assets |
|
|
(131,965 |
) |
|
|
(134,828 |
) |
|
|
(131,964 |
) |
|
|
(134,828 |
) |
Gain on sale of non-depreciable real estate assets |
|
|
(355 |
) |
|
|
(32 |
) |
|
|
(378 |
) |
|
|
(32 |
) |
Other non-operating expense (income) |
|
|
28,325 |
|
|
|
(20,126 |
) |
|
|
17,530 |
|
|
|
(4,213 |
) |
Income before income tax benefit (expense) |
|
|
213,099 |
|
|
|
225,595 |
|
|
|
324,855 |
|
|
|
275,126 |
|
Income tax benefit (expense) |
|
|
3,052 |
|
|
|
(2,045 |
) |
|
|
4,494 |
|
|
|
(3,044 |
) |
Income from continuing operations before real estate joint |
|
|
216,151 |
|
|
|
223,550 |
|
|
|
329,349 |
|
|
|
272,082 |
|
Income from real estate joint venture |
|
|
409 |
|
|
|
325 |
|
|
|
788 |
|
|
|
657 |
|
Net income |
|
|
216,560 |
|
|
|
223,875 |
|
|
|
330,137 |
|
|
|
272,739 |
|
Net loss attributable to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
(293 |
) |
|
|
— |
|
Net income available for MAALP unitholders |
|
|
216,560 |
|
|
|
223,875 |
|
|
|
330,430 |
|
|
|
272,739 |
|
Distributions to MAALP preferred unitholders |
|
|
922 |
|
|
|
922 |
|
|
|
1,844 |
|
|
|
1,844 |
|
Net income available for MAALP common unitholders |
|
$ |
215,638 |
|
|
$ |
222,953 |
|
|
$ |
328,586 |
|
|
$ |
270,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common unit - basic: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available for MAALP common unitholders |
|
$ |
1.82 |
|
|
$ |
1.88 |
|
|
$ |
2.77 |
|
|
$ |
2.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common unit - diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available for MAALP common unitholders |
|
$ |
1.82 |
|
|
$ |
1.88 |
|
|
$ |
2.76 |
|
|
$ |
2.28 |
|
See accompanying notes to condensed consolidated financial statements.
10
Mid-America Apartments, L.P.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(Dollars in thousands)
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income |
|
$ |
216,560 |
|
|
$ |
223,875 |
|
|
$ |
330,137 |
|
|
$ |
272,739 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustment for net losses reclassified to net income from |
|
|
277 |
|
|
|
278 |
|
|
|
556 |
|
|
|
557 |
|
Total comprehensive income |
|
|
216,837 |
|
|
|
224,153 |
|
|
|
330,693 |
|
|
|
273,296 |
|
Add: Comprehensive loss attributable to noncontrolling |
|
|
— |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
Comprehensive income attributable to MAALP |
|
$ |
216,837 |
|
|
$ |
224,153 |
|
|
$ |
330,986 |
|
|
$ |
273,296 |
|
See accompanying notes to condensed consolidated financial statements.
11
Mid-America Apartments, L.P.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
|
|
Six months ended June 30, |
|
|||||
Cash flows from operating activities: |
|
2022 |
|
|
2021 |
|
||
Net income |
|
$ |
330,137 |
|
|
$ |
272,739 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
268,389 |
|
|
|
263,912 |
|
Gain on sale of depreciable real estate assets |
|
|
(131,964 |
) |
|
|
(134,828 |
) |
Gain on sale of non-depreciable real estate assets |
|
|
(378 |
) |
|
|
(32 |
) |
Loss on embedded derivative in preferred shares |
|
|
9,939 |
|
|
|
1,940 |
|
Stock compensation expense |
|
|
10,740 |
|
|
|
9,212 |
|
Amortization of debt issuance costs, discounts and premiums |
|
|
3,018 |
|
|
|
2,674 |
|
Loss (gain) on investments |
|
|
31,093 |
|
|
|
(7,901 |
) |
Net change in operating accounts and other operating activities |
|
|
(57,067 |
) |
|
|
(10,398 |
) |
Net cash provided by operating activities |
|
|
463,907 |
|
|
|
397,318 |
|
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of real estate and other assets |
|
|
(17,238 |
) |
|
|
(46,028 |
) |
Capital improvements and other |
|
|
(132,849 |
) |
|
|
(127,932 |
) |
Development costs |
|
|
(84,636 |
) |
|
|
(119,612 |
) |
Distributions from real estate joint venture |
|
|
352 |
|
|
|
392 |
|
Contributions to affiliates |
|
|
(9,300 |
) |
|
|
(1,114 |
) |
Proceeds from real estate asset dispositions |
|
|
165,201 |
|
|
|
158,136 |
|
Proceeds from insurance recoveries |
|
|
20,675 |
|
|
|
3,620 |
|
Net cash used in investing activities |
|
|
(57,795 |
) |
|
|
(132,538 |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Net proceeds from commercial paper |
|
|
— |
|
|
|
108,000 |
|
Principal payments on notes payable |
|
|
(691 |
) |
|
|
(119,481 |
) |
Distributions paid on common units |
|
|
(257,925 |
) |
|
|
(242,893 |
) |
Distributions paid on preferred units |
|
|
(1,844 |
) |
|
|
(1,844 |
) |
Acquisition of noncontrolling interests |
|
|
(43,070 |
) |
|
|
— |
|
Net change in other financing activities |
|
|
(11,478 |
) |
|
|
(1,173 |
) |
Net cash used in financing activities |
|
|
(315,008 |
) |
|
|
(257,391 |
) |
|
|
|
|
|
|
|
||
Net increase in cash, cash equivalents and restricted cash |
|
|
91,104 |
|
|
|
7,389 |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
130,598 |
|
|
|
35,615 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
221,702 |
|
|
$ |
43,004 |
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:
See accompanying notes to condensed consolidated financial statements.
12
Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
Unless the context otherwise requires, all references to 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” refer 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, “preferred stock” refers to the preferred stock of MAA, and “shareholders” refers to the holders of shares of MAA’s common stock or preferred stock, as applicable. The common units of limited partnership interests in the Operating Partnership are referred to as “OP Units,” and the holders of the OP Units are referred to as “common unitholders”.
As of June 30, 2022, MAA owned 115,438,832 OP Units (or 97.3% of the total number of OP Units). MAA conducts substantially all of its business and holds substantially all of its assets, directly or indirectly, 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.
Management believes combining the notes to the condensed consolidated financial statements of MAA and the Operating Partnership results in the following benefits:
MAA, an S&P 500 company, is a multifamily-focused, self-administered and self-managed real estate investment trust, or REIT. 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. Management believes 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 (other than cash held by MAA from time to time); therefore, MAA’s primary function is 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 from time to time. The Operating Partnership holds, directly or indirectly, all of the Company’s 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 business through the Operating Partnership’s operations, direct or indirect incurrence of indebtedness and issuance of OP Units.
The presentations of MAA’s shareholders’ equity and the Operating Partnership’s capital are the principal areas of difference between the condensed 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 interests, treasury shares, accumulated other comprehensive income or loss and redeemable common stock. The Operating Partnership’s capital may include common capital and preferred capital of the general partner (MAA), limited partners’ common capital and preferred capital, noncontrolling interests, accumulated other comprehensive income or loss and redeemable common units. Holders of OP Units (other than MAA) may require the Operating Partnership to redeem their OP Units from time to time, in which case the Operating Partnership may, at its 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, or NYSE, over a specified period prior to the redemption date) or by delivering one share of MAA’s common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.
Organization of Mid-America Apartment Communities, Inc.
The Company owns, operates, acquires and selectively develops apartment communities primarily located in the Southeast, Southwest and Mid-Atlantic regions of the United States. As of June 30, 2022, the Company owned and operated 290 apartment communities (which does not include development communities under construction) through the Operating Partnership and its subsidiaries and had an ownership interest in one apartment community through an unconsolidated real estate joint venture. As of June 30, 2022, the Company also had five development communities under construction totaling 1,759 apartment units once complete. Total expected costs for the five development projects are $444.0
13
million, of which $230.4 million had been incurred through June 30, 2022. The Company expects to complete one of these developments in 2022, three developments in 2023, and one development in 2024. As of June 30, 2022, 33 of the Company’s apartment communities included retail components. The Company’s apartment communities, including development communities under construction, were located across 16 states and the District of Columbia as of June 30, 2022.
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared by the Company’s 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 condensed 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, directly or indirectly, approximately 80% to 100% of all consolidated subsidiaries, including the Operating Partnership. In management’s opinion, all adjustments necessary for a fair presentation of the condensed 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.
The Company invests in entities that may qualify as variable interest entities, or VIEs, and MAALP is considered a 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. MAALP is classified as a VIE because the limited partners lack substantive kick-out rights and substantive participating rights. The Company consolidates all VIEs for which it is the primary beneficiary and uses the equity method to account for investments that qualify as VIEs but for which it is not the primary beneficiary. In determining whether the Company is the primary beneficiary of a VIE, management considers both 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. The Company uses the equity method of accounting for its investments in entities for which the Company exercises significant influence, but does not have the ability to exercise control. The factors considered in determining whether the Company has the ability to exercise control include ownership of voting interests and participatory rights of investors (see “Investments in Unconsolidated Affiliates” below).
Noncontrolling Interests
As of June 30, 2022, the Company had two types of noncontrolling interests with respect to its consolidated subsidiaries: (1) noncontrolling interests related to the common unitholders of its Operating Partnership; and (2) noncontrolling interests related to its consolidated real estate entities. The noncontrolling interests relating to the limited partnership interests in the Operating Partnership are owned by the holders of the Class A OP Units. MAA is the sole general partner of the Operating Partnership and holds all of the outstanding Class B OP Units. Net income (after allocations to preferred ownership interests) is allocated to MAA and the noncontrolling interests based on their respective ownership percentages of the Operating Partnership. Issuance of additional Class A OP Units or Class B OP Units changes the ownership percentage of both the noncontrolling interests and MAA. The issuance of Class B OP Units generally occurs when MAA issues common stock and the issuance proceeds are contributed to the Operating Partnership in exchange for Class B OP Units equal to the number of shares of MAA’s common stock issued. At each reporting period, the allocation between total MAA shareholders’ equity and noncontrolling interests 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 OP Unit that were equivalent to the economic rights in respect to each share of MAA common stock. See Note 9 for additional details.
The noncontrolling interests relating to the Company’s four consolidated real estate entities are owned by private real estate companies that are generally responsible for the development, construction and lease-up of the apartment communities that are owned through the consolidated real estate entities with a noncontrolling interest. The entities were determined to be VIE’s with the Company designated as the primary beneficiary. As a result, the accounts of the entities are consolidated by the Company. As of June 30, 2022, the consolidated assets of the Company’s consolidated real estate entities with a noncontrolling interest were $218.5 million, and consolidated liabilities were $14.7 million. As of December 31, 2021, the consolidated assets of the Company’s consolidated real estate entities with a noncontrolling interest were $252.8 million, and consolidated liabilities were $15.9 million. During the six months ended June 30, 2022, the Company paid $43.1 million to acquire the noncontrolling interest of one consolidated real estate entity.
Investments in Unconsolidated Affiliates
The Company uses the equity method to account for its investments in a real estate joint venture and three technology-focused limited partnerships that each qualify as a VIE. Management determined the Company is not the primary beneficiary in any of these investments but does have the ability to exert significant influence over the operations and financial policies of the real estate joint venture and considers its investments in the limited partnerships to be more than minor. The Company’s investment in the real estate joint venture was $42.5 million and $42.8 million as of June 30, 2022 and December 31, 2021, respectively.
The Company accounts for its investments in the technology-focused limited partnerships on a three month lag due to the timing the limited partnerships’ financial information is made available to the Company. As of June 30, 2022 and December 31, 2021, the Company’s investments in the limited partnerships were $44.6 million and $79.4 million, respectively, and are included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets. The decrease in the Company’s investment in the limited partnerships was driven by the recognition of unrealized losses, which were primarily a result of a decrease in the valuation of an underlying investment that recently became publicly traded.
14
As of June 30, 2022, the Company was committed to make additional capital contributions totaling $31.7 million if and when called by the general partners of the limited partnerships.
Marketable Equity Securities
During the six months ended June 30, 2022, two of the technology-focused limited partnerships that are accounted for as unconsolidated affiliates distributed publicly traded marketable equity securities to the Company and the other limited partners. The Company’s investment in marketable equity securities is measured at fair value based on the quoted share price of the securities, with any related gains and losses, including unrealized gains and losses, recognized in “Other non-operating expense (income)” in the accompanying Condensed Consolidated Statements of Operations. As of June 30, 2022, the Company’s investment in the marketable equity securities was $9.8 million.
Revenue Recognition
The Company primarily leases multifamily residential apartments to residents under operating leases generally due on a monthly basis with terms of approximately one year or less. Rental revenues are recognized in accordance with ASC Topic 842, Leases, using a method that represents a straight-line basis over the term of the lease. In addition, in circumstances where a lease incentive is provided to residents, the incentive is recognized as a reduction of rental revenues on a straight-line basis over the reasonably assured lease term. Rental revenues represent approximately 94% of the Company’s total revenues and include gross rents charged less adjustments for concessions and bad debt. Approximately 5% of the Company’s total revenues represent non-lease reimbursable property revenues from its residents for utility reimbursements, which are generally recognized and due on a monthly basis as residents obtain control of the service over the term of the lease. The remaining 1% of the Company’s total revenues represents other non-lease property revenues primarily driven by nonrefundable fees and commissions which are recognized when earned.
In accordance with ASC Topic 842, rental revenues and non-lease reimbursable property revenues meet the criteria to be aggregated into a single lease component and are reported on a combined basis in the line item “Rental revenues,” as presented in the disaggregation of the Company’s revenues in Note 11. Other non-lease property revenues are accounted for in accordance with ASC Topic 606, Revenue from Contracts with Customers, which requires revenue recognized outside of the scope of ASC Topic 842 to be recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. Other non-lease property revenues are reported in the line item “Other property revenues”, as presented in the disaggregation of the Company’s revenues in Note 11.
Leases
The Company is the lessee under certain ground, office, equipment and other operational leases, all of which are accounted for as operating leases in accordance with ASC Topic 842. The Company recognizes a right-of-use asset for the right to use the underlying asset for all leases where the Company is the lessee with terms of more than twelve months, and a related lease liability for the obligation to make lease payments. Expenses related to leases determined to be operating leases are recognized on a straight-line basis. As of June 30, 2022 and December 31, 2021, right-of-use assets recorded within “Other assets” totaled $45.9 million and $47.0 million, respectively, and related lease liabilities recorded within “Accrued expenses and other liabilities” totaled $29.5 million and $30.3 million, respectively, in the Condensed Consolidated Balance Sheets. Lease expense recognized for the three and six months ended June 30, 2022 and 2021 was immaterial to the Company. Cash paid for amounts included in the measurement of operating lease liabilities during the six months ended June 30, 2022 and 2021 was also immaterial. See Note 10 for additional disclosures regarding leases.
Fair Value Measurements
The Company applies the guidance in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, to the valuation of real estate assets recorded at fair value, to its impairment valuation analysis of real estate assets and to its valuation and disclosure of the fair value of financial instruments, which primarily consists of marketable equity securities, indebtedness and derivative instruments. Fair value disclosures required under ASC Topic 820 as well as the Company’s derivative accounting policies are summarized in Note 7 utilizing the following hierarchy:
Level 1 - Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
Level 3 - Unobservable inputs for the assets or liability.
15
2. Earnings per Common Share of MAA
Basic earnings per share is computed using the two-class method by dividing net income available to MAA common shareholders by the weighted average number of common 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 diluted earnings per share being the more dilutive of the treasury stock or two-class methods. OP Units are included in dilutive earnings per share calculations when the units are dilutive to earnings per share.
For the three and six months ended June 30, 2022 and 2021, MAA’s diluted earnings per share was computed using the treasury stock method as presented below (dollars and shares in thousands, except per share amounts):
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Calculation of Earnings per common share - basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
216,560 |
|
|
$ |
223,875 |
|
|
$ |
330,137 |
|
|
$ |
272,739 |
|
Net income attributable to noncontrolling interests |
|
|
(5,858 |
) |
|
|
(7,397 |
) |
|
|
(8,633 |
) |
|
|
(9,068 |
) |
Unvested restricted shares (allocation of earnings) |
|
|
(149 |
) |
|
|
(234 |
) |
|
|
(228 |
) |
|
|
(294 |
) |
Preferred dividends |
|
|
(922 |
) |
|
|
(922 |
) |
|
|
(1,844 |
) |
|
|
(1,844 |
) |
Net income available for MAA common shareholders, adjusted |
|
$ |
209,631 |
|
|
$ |
215,322 |
|
|
$ |
319,432 |
|
|
$ |
261,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares - basic |
|
|
115,353 |
|
|
|
114,494 |
|
|
|
115,306 |
|
|
|
114,379 |
|
Earnings per common share - basic |
|
$ |
1.82 |
|
|
$ |
1.88 |
|
|
$ |
2.77 |
|
|
$ |
2.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Calculation of Earnings per common share - diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
216,560 |
|
|
$ |
223,875 |
|
|
$ |
330,137 |
|
|
$ |
272,739 |
|
Net income attributable to noncontrolling interests (1) |
|
|
(5,858 |
) |
|
|
(7,397 |
) |
|
|
(8,633 |
) |
|
|
(9,068 |
) |
Preferred dividends |
|
|
(922 |
) |
|
|
(922 |
) |
|
|
(1,844 |
) |
|
|
(1,844 |
) |
Net income available for MAA common shareholders, adjusted |
|
$ |
209,780 |
|
|
$ |
215,556 |
|
|
$ |
319,660 |
|
|
$ |
261,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares - basic |
|
|
115,353 |
|
|
|
114,494 |
|
|
|
115,306 |
|
|
|
114,379 |
|
Effect of dilutive securities |
|
|
203 |
|
|
|
318 |
|
|
|
336 |
|
|
|
311 |
|
Weighted average common shares - diluted |
|
|
115,556 |
|
|
|
114,812 |
|
|
|
115,642 |
|
|
|
114,690 |
|
Earnings per common share - diluted |
|
$ |
1.82 |
|
|
$ |
1.88 |
|
|
$ |
2.76 |
|
|
$ |
2.28 |
|
16
3. Earnings per OP Unit of MAALP
Basic earnings per common unit is computed by dividing net income available for common unitholders by the weighted average number of OP 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 common unit. Diluted earnings per common unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units. Both the unvested restricted unit awards and other potentially dilutive common units, and the related impact to earnings, are considered when calculating earnings per common unit on a diluted basis with diluted earnings per common unit being the more dilutive of the treasury stock or two-class methods.
For the three and six months ended June 30, 2022 and 2021, MAALP’s diluted earnings per common unit was computed using the treasury stock method as presented below (dollars and units in thousands, except per unit amounts):
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Calculation of Earnings per common unit - basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
216,560 |
|
|
$ |
223,875 |
|
|
$ |
330,137 |
|
|
$ |
272,739 |
|
Net loss attributable to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
Unvested restricted units (allocation of earnings) |
|
|
(149 |
) |
|
|
(234 |
) |
|
|
(228 |
) |
|
|
(294 |
) |
Preferred unit distributions |
|
|
(922 |
) |
|
|
(922 |
) |
|
|
(1,844 |
) |
|
|
(1,844 |
) |
Net income available for MAALP common unitholders, adjusted |
|
$ |
215,489 |
|
|
$ |
222,719 |
|
|
$ |
328,358 |
|
|
$ |
270,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common units - basic |
|
|
118,555 |
|
|
|
118,411 |
|
|
|
118,509 |
|
|
|
118,365 |
|
Earnings per common unit - basic |
|
$ |
1.82 |
|
|
$ |
1.88 |
|
|
$ |
2.77 |
|
|
$ |
2.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Calculation of Earnings per common unit - diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
216,560 |
|
|
$ |
223,875 |
|
|
$ |
330,137 |
|
|
$ |
272,739 |
|
Net loss attributable to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
Preferred unit distributions |
|
|
(922 |
) |
|
|
(922 |
) |
|
|
(1,844 |
) |
|
|
(1,844 |
) |
Net income available for MAALP common unitholders, adjusted |
|
$ |
215,638 |
|
|
$ |
222,953 |
|
|
$ |
328,586 |
|
|
$ |
270,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common units - basic |
|
|
118,555 |
|
|
|
118,411 |
|
|
|
118,509 |
|
|
|
118,365 |
|
Effect of dilutive securities |
|
|
203 |
|
|
|
318 |
|
|
|
336 |
|
|
|
311 |
|
Weighted average common units - diluted |
|
|
118,758 |
|
|
|
118,729 |
|
|
|
118,845 |
|
|
|
118,676 |
|
Earnings per common unit - diluted |
|
$ |
1.82 |
|
|
$ |
1.88 |
|
|
$ |
2.76 |
|
|
$ |
2.28 |
|
17
4. MAA Equity
Changes in MAA’s total equity and its components for the three months ended June 30, 2022 and 2021 were as follows (dollars in thousands):
|
|
Mid-America Apartment Communities, Inc. Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Preferred |
|
|
Common |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Noncontrolling |
|
|
Total |
|
||||||||
EQUITY BALANCE MARCH 31, 2022 |
|
$ |
9 |
|
|
$ |
1,151 |
|
|
$ |
7,198,474 |
|
|
$ |
(1,268,827 |
) |
|
$ |
(10,860 |
) |
|
$ |
163,566 |
|
|
$ |
19,849 |
|
|
$ |
6,103,362 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
210,702 |
|
|
|
— |
|
|
|
5,858 |
|
|
|
— |
|
|
|
216,560 |
|
Other comprehensive income - derivative |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
269 |
|
|
|
8 |
|
|
|
— |
|
|
|
277 |
|
Issuance and registration of common shares |
|
|
— |
|
|
|
1 |
|
|
|
(454 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(453 |
) |
Shares repurchased and retired |
|
|
— |
|
|
|
— |
|
|
|
(10,869 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,869 |
) |
Redeemable stock fair market value adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,227 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,227 |
|
Adjustment for noncontrolling interests in |
|
|
— |
|
|
|
— |
|
|
|
368 |
|
|
|
— |
|
|
|
— |
|
|
|
(368 |
) |
|
|
— |
|
|
|
— |
|
Amortization of unearned compensation |
|
|
— |
|
|
|
— |
|
|
|
4,401 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,401 |
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(922 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(922 |
) |
Dividends on common stock ($1.2500 per |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(144,396 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(144,396 |
) |
Dividends on noncontrolling interests units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,002 |
) |
|
|
— |
|
|
|
(4,002 |
) |
Distribution to noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(69 |
) |
|
|
(69 |
) |
EQUITY BALANCE JUNE 30, 2022 |
|
$ |
9 |
|
|
$ |
1,152 |
|
|
$ |
7,191,920 |
|
|
$ |
(1,199,216 |
) |
|
$ |
(10,591 |
) |
|
$ |
165,062 |
|
|
$ |
19,780 |
|
|
$ |
6,168,116 |
|
|
|
Mid-America Apartment Communities, Inc. Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Preferred |
|
|
Common |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Noncontrolling |
|
|
Total |
|
||||||||
EQUITY BALANCE MARCH 31, 2021 |
|
$ |
9 |
|
|
$ |
1,142 |
|
|
$ |
7,182,771 |
|
|
$ |
(1,367,347 |
) |
|
$ |
(11,859 |
) |
|
$ |
204,336 |
|
|
$ |
10,481 |
|
|
$ |
6,019,533 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
216,478 |
|
|
|
— |
|
|
|
7,397 |
|
|
|
— |
|
|
|
223,875 |
|
Other comprehensive income - derivative |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
227 |
|
|
|
51 |
|
|
|
— |
|
|
|
278 |
|
Issuance and registration of common shares |
|
|
— |
|
|
|
1 |
|
|
|
(468 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(467 |
) |
Shares repurchased and retired |
|
|
— |
|
|
|
— |
|
|
|
(7,313 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,313 |
) |
Shares issued in exchange for common units |
|
|
— |
|
|
|
4 |
|
|
|
21,928 |
|
|
|
— |
|
|
|
— |
|
|
|
(21,932 |
) |
|
|
— |
|
|
|
— |
|
Redeemable stock fair market value adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,031 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,031 |
) |
Adjustment for noncontrolling interests in |
|
|
— |
|
|
|
— |
|
|
|
816 |
|
|
|
— |
|
|
|
— |
|
|
|
(816 |
) |
|
|
— |
|
|
|
— |
|
Amortization of unearned compensation |
|
|
— |
|
|
|
— |
|
|
|
4,151 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,151 |
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(922 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(922 |
) |
Dividends on common stock ($1.0250 per |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(117,872 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(117,872 |
) |
Dividends on noncontrolling interests units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,696 |
) |
|
|
— |
|
|
|
(3,696 |
) |
Contribution from noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,131 |
|
|
|
6,131 |
|
EQUITY BALANCE JUNE 30, 2021 |
|
$ |
9 |
|
|
$ |
1,147 |
|
|
$ |
7,201,885 |
|
|
$ |
(1,272,694 |
) |
|
$ |
(11,632 |
) |
|
$ |
185,340 |
|
|
$ |
16,612 |
|
|
$ |
6,120,667 |
|
18
Changes in MAA’s total equity and its components for the six months ended June 30, 2022 and 2021 were as follows (dollars in thousands):
|
|
Mid-America Apartment Communities, Inc. Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Preferred |
|
|
Common |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Noncontrolling |
|
|
Total |
|
||||||||
EQUITY BALANCE DECEMBER 31, 2021 |
|
$ |
9 |
|
|
$ |
1,151 |
|
|
$ |
7,230,956 |
|
|
$ |
(1,255,807 |
) |
|
$ |
(11,132 |
) |
|
$ |
165,116 |
|
|
$ |
23,614 |
|
|
$ |
6,153,907 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
321,504 |
|
|
|
— |
|
|
|
8,926 |
|
|
|
(293 |
) |
|
|
330,137 |
|
Other comprehensive income - derivative |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
541 |
|
|
|
15 |
|
|
|
— |
|
|
|
556 |
|
Issuance and registration of common shares |
|
|
— |
|
|
|
1 |
|
|
|
(433 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(432 |
) |
Shares repurchased and retired |
|
|
— |
|
|
|
— |
|
|
|
(14,031 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14,031 |
) |
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
28 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
28 |
|
Shares issued in exchange for common units |
|
|
— |
|
|
|
— |
|
|
|
193 |
|
|
|
— |
|
|
|
— |
|
|
|
(193 |
) |
|
|
— |
|
|
|
— |
|
Redeemable stock fair market value adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,760 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,760 |
|
Adjustment for noncontrolling interests in |
|
|
— |
|
|
|
— |
|
|
|
1,321 |
|
|
|
— |
|
|
|
— |
|
|
|
(1,321 |
) |
|
|
— |
|
|
|
— |
|
Amortization of unearned compensation |
|
|
— |
|
|
|
— |
|
|
|
11,329 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,329 |
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
(1,844 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,844 |
) |
|
Dividends on common stock ($2.3375 per |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(269,829 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(269,829 |
) |
Dividends on noncontrolling interests units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,481 |
) |
|
|
— |
|
|
|
(7,481 |
) |
Acquisition of noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
(37,443 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,627 |
) |
|
|
(43,070 |
) |
Contribution from noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,086 |
|
|
|
2,086 |
|
EQUITY BALANCE JUNE 30, 2022 |
|
$ |
9 |
|
|
$ |
1,152 |
|
|
$ |
7,191,920 |
|
|
$ |
(1,199,216 |
) |
|
$ |
(10,591 |
) |
|
$ |
165,062 |
|
|
$ |
19,780 |
|
|
$ |
6,168,116 |
|
|
|
Mid-America Apartment Communities, Inc. Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Preferred |
|
|
Common |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Noncontrolling |
|
|
Total |
|
||||||||
EQUITY BALANCE DECEMBER 31, 2020 |
|
$ |
9 |
|
|
$ |
1,141 |
|
|
$ |
7,176,793 |
|
|
$ |
(1,294,182 |
) |
|
$ |
(12,128 |
) |
|
$ |
206,927 |
|
|
$ |
9,848 |
|
|
$ |
6,088,408 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
263,671 |
|
|
|
— |
|
|
|
9,068 |
|
|
|
— |
|
|
|
272,739 |
|
Other comprehensive income - derivative |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
496 |
|
|
|
61 |
|
|
|
— |
|
|
|
557 |
|
Issuance and registration of common shares |
|
|
— |
|
|
|
2 |
|
|
|
(335 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(333 |
) |
Shares repurchased and retired |
|
|
— |
|
|
|
— |
|
|
|
(9,043 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,043 |
) |
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
1,466 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,466 |
|
Shares issued in exchange for common units |
|
|
— |
|
|
|
4 |
|
|
|
22,160 |
|
|
|
— |
|
|
|
— |
|
|
|
(22,164 |
) |
|
|
— |
|
|
|
— |
|
Redeemable stock fair market value adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,189 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,189 |
) |
Adjustment for noncontrolling interests in |
|
|
— |
|
|
|
— |
|
|
|
700 |
|
|
|
— |
|
|
|
— |
|
|
|
(700 |
) |
|
|
— |
|
|
|
— |
|
Amortization of unearned compensation |
|
|
— |
|
|
|
— |
|
|
|
10,144 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,144 |
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,844 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,844 |
) |
Dividends on common stock ($2.0500 per |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(235,150 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(235,150 |
) |
Dividends on noncontrolling interests units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,852 |
) |
|
|
— |
|
|
|
(7,852 |
) |
Contribution from noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,764 |
|
|
|
6,764 |
|
EQUITY BALANCE JUNE 30, 2021 |
|
$ |
9 |
|
|
$ |
1,147 |
|
|
$ |
7,201,885 |
|
|
$ |
(1,272,694 |
) |
|
$ |
(11,632 |
) |
|
$ |
185,340 |
|
|
$ |
16,612 |
|
|
$ |
6,120,667 |
|
19
5. MAALP Capital
Changes in MAALP’s total capital and its components for the three months ended June 30, 2022 and 2021 were as follows (dollars in thousands):
|
|
Mid-America Apartments, L.P. Unitholders’ Capital |
|
|
|
|
|
|
|
|||||||||||||||
|
|
Preferred |
|
|
General |
|
|
Limited |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Total |
|
||||||
CAPITAL BALANCE MARCH 31, 2022 |
|
$ |
66,840 |
|
|
$ |
5,864,191 |
|
|
$ |
163,566 |
|
|
$ |
(11,103 |
) |
|
$ |
19,849 |
|
|
$ |
6,103,343 |
|
Net income |
|
|
922 |
|
|
|
209,780 |
|
|
|
5,858 |
|
|
|
— |
|
|
|
— |
|
|
|
216,560 |
|
Other comprehensive income - derivative instruments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
277 |
|
|
|
— |
|
|
|
277 |
|
Issuance of units |
|
|
— |
|
|
|
(453 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(453 |
) |
Units repurchased and retired |
|
|
— |
|
|
|
(10,869 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,869 |
) |
Redeemable units fair market value adjustment |
|
|
— |
|
|
|
4,227 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,227 |
|
Adjustment for limited partners’ capital at redemption value |
|
|
— |
|
|
|
360 |
|
|
|
(360 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Amortization of unearned compensation |
|
|
— |
|
|
|
4,401 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,401 |
|
Distributions to preferred unitholders |
|
|
(922 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(922 |
) |
Distributions to common unitholders ($1.2500 per unit) |
|
|
— |
|
|
|
(144,396 |
) |
|
|
(4,002 |
) |
|
|
— |
|
|
|
— |
|
|
|
(148,398 |
) |
Distribution to noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(69 |
) |
|
|
(69 |
) |
CAPITAL BALANCE JUNE 30, 2022 |
|
$ |
66,840 |
|
|
$ |
5,927,241 |
|
|
$ |
165,062 |
|
|
$ |
(10,826 |
) |
|
$ |
19,780 |
|
|
$ |
6,168,097 |
|
|
|
Mid-America Apartments, L.P. Unitholders’ Capital |
|
|
|
|
|
|
|
|||||||||||||||
|
|
Preferred |
|
|
General |
|
|
Limited |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Total |
|
||||||
CAPITAL BALANCE MARCH 31, 2021 |
|
$ |
66,840 |
|
|
$ |
5,750,074 |
|
|
$ |
204,336 |
|
|
$ |
(12,217 |
) |
|
$ |
10,481 |
|
|
$ |
6,019,514 |
|
Net income |
|
|
922 |
|
|
|
215,556 |
|
|
|
7,397 |
|
|
|
— |
|
|
|
— |
|
|
|
223,875 |
|
Other comprehensive income - derivative instruments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
278 |
|
|
|
— |
|
|
|
278 |
|
Issuance of units |
|
|
— |
|
|
|
(467 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(467 |
) |
Units repurchased and retired |
|
|
— |
|
|
|
(7,313 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,313 |
) |
General partnership units issued in exchange for limited |
|
|
— |
|
|
|
21,932 |
|
|
|
(21,932 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Redeemable units fair market value adjustment |
|
|
— |
|
|
|
(3,031 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,031 |
) |
Adjustment for limited partners’ capital at redemption value |
|
|
— |
|
|
|
765 |
|
|
|
(765 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Amortization of unearned compensation |
|
|
— |
|
|
|
4,151 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,151 |
|
Distributions to preferred unitholders |
|
|
(922 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(922 |
) |
Distributions to common unitholders ($1.0250 per unit) |
|
|
— |
|
|
|
(117,872 |
) |
|
|
(3,696 |
) |
|
|
— |
|
|
|
— |
|
|
|
(121,568 |
) |
Contribution from noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,131 |
|
|
|
6,131 |
|
CAPITAL BALANCE JUNE 30, 2021 |
|
$ |
66,840 |
|
|
$ |
5,863,795 |
|
|
$ |
185,340 |
|
|
$ |
(11,939 |
) |
|
$ |
16,612 |
|
|
$ |
6,120,648 |
|
20
Changes in MAALP’s total capital and its components for the six months ended June 30, 2022 and 2021 were as follows (dollars in thousands):
|
|
Mid-America Apartments, L.P. Unitholders’ Capital |
|
|
|
|
|
|
|
|||||||||||||||
|
|
Preferred |
|
|
General |
|
|
Limited |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Total |
|
||||||
CAPITAL BALANCE DECEMBER 31, 2021 |
|
$ |
66,840 |
|
|
$ |
5,909,700 |
|
|
$ |
165,116 |
|
|
$ |
(11,382 |
) |
|
$ |
23,614 |
|
|
$ |
6,153,888 |
|
Net income (loss) |
|
|
1,844 |
|
|
|
319,660 |
|
|
|
8,926 |
|
|
|
— |
|
|
|
(293 |
) |
|
|
330,137 |
|
Other comprehensive income - derivative instruments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
556 |
|
|
|
— |
|
|
|
556 |
|
Issuance of units |
|
|
— |
|
|
|
(432 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(432 |
) |
Units repurchased and retired |
|
|
— |
|
|
|
(14,031 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14,031 |
) |
Exercise of unit options |
|
|
— |
|
|
|
28 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
28 |
|
General partnership units issued in exchange for limited |
|
|
— |
|
|
|
193 |
|
|
|
(193 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Redeemable units fair market value adjustment |
|
|
— |
|
|
|
6,760 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,760 |
|
Adjustment for limited partners’ capital at redemption value |
|
|
— |
|
|
|
1,306 |
|
|
|
(1,306 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Amortization of unearned compensation |
|
|
— |
|
|
|
11,329 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,329 |
|
Distributions to preferred unitholders |
|
|
(1,844 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,844 |
) |
Distributions to common unitholders ($2.3375 per unit) |
|
|
— |
|
|
|
(269,829 |
) |
|
|
(7,481 |
) |
|
|
— |
|
|
|
— |
|
|
|
(277,310 |
) |
Acquisition of noncontrolling interest |
|
|
— |
|
|
|
(37,443 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,627 |
) |
|
|
(43,070 |
) |
Contribution from noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,086 |
|
|
|
2,086 |
|
CAPITAL BALANCE JUNE 30, 2022 |
|
$ |
66,840 |
|
|
$ |
5,927,241 |
|
|
$ |
165,062 |
|
|
$ |
(10,826 |
) |
|
$ |
19,780 |
|
|
$ |
6,168,097 |
|
|
|
Mid-America Apartments, L.P. Unitholders’ Capital |
|
|
|
|
|
|
|
|||||||||||||||
|
|
Preferred |
|
|
General |
|
|
Limited |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Total |
|
||||||
CAPITAL BALANCE DECEMBER 31, 2020 |
|
$ |
66,840 |
|
|
$ |
5,817,270 |
|
|
$ |
206,927 |
|
|
$ |
(12,496 |
) |
|
$ |
9,848 |
|
|
$ |
6,088,389 |
|
Net income |
|
|
1,844 |
|
|
|
261,827 |
|
|
|
9,068 |
|
|
|
— |
|
|
|
— |
|
|
|
272,739 |
|
Other comprehensive income - derivative instruments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
557 |
|
|
|
— |
|
|
|
557 |
|
Issuance of units |
|
|
— |
|
|
|
(333 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(333 |
) |
Units repurchased and retired |
|
|
— |
|
|
|
(9,043 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,043 |
) |
Exercise of unit options |
|
|
— |
|
|
|
1,466 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,466 |
|
General partnership units issued in exchange for limited |
|
|
— |
|
|
|
22,164 |
|
|
|
(22,164 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Redeemable units fair market value adjustment |
|
|
— |
|
|
|
(5,189 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,189 |
) |
Adjustment for limited partners’ capital at redemption value |
|
|
— |
|
|
|
639 |
|
|
|
(639 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Amortization of unearned compensation |
|
|
— |
|
|
|
10,144 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,144 |
|
Distributions to preferred unitholders |
|
|
(1,844 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,844 |
) |
Distributions to common unitholders ($2.0500 per unit) |
|
|
— |
|
|
|
(235,150 |
) |
|
|
(7,852 |
) |
|
|
— |
|
|
|
— |
|
|
|
(243,002 |
) |
Contribution from noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,764 |
|
|
|
6,764 |
|
CAPITAL BALANCE JUNE 30, 2021 |
|
$ |
66,840 |
|
|
$ |
5,863,795 |
|
|
$ |
185,340 |
|
|
$ |
(11,939 |
) |
|
$ |
16,612 |
|
|
$ |
6,120,648 |
|
6. Borrowings
The following table summarizes the Company’s outstanding debt as of June 30, 2022 (dollars in thousands):
|
|
Balance |
|
|
Weighted Average Effective Rate |
|
|
Weighted Average Contract Maturity |
||
Unsecured debt |
|
|
|
|
|
|
|
|
||
Fixed rate senior notes |
|
$ |
4,175,000 |
|
|
|
3.3 |
% |
|
3/4/2029 |
Debt issuance costs, discounts, premiums and fair market value adjustments |
|
|
(21,350 |
) |
|
|
|
|
|
|
Total unsecured debt |
|
$ |
4,153,650 |
|
|
|
3.3 |
% |
|
|
Secured debt |
|
|
|
|
|
|
|
|
||
Fixed rate property mortgages |
|
$ |
367,864 |
|
|
|
4.4 |
% |
|
10/10/2048 |
Debt issuance costs |
|
|
(3,200 |
) |
|
|
|
|
|
|
Total secured debt |
|
$ |
364,664 |
|
|
|
4.4 |
% |
|
|
Total outstanding debt |
|
$ |
4,518,314 |
|
|
|
3.4 |
% |
|
|
Unsecured Revolving Credit Facility
As of June 30, 2022, MAALP had a $1.0 billion unsecured revolving credit facility with an option to expand to $1.5 billion. The revolving credit facility bore an interest rate of the London Interbank Offered Rate plus a spread of 0.75% to 1.45% based on an investment grade pricing grid. The revolving credit facility was scheduled to mature in with an option to extend for two additional six-month periods. As of June 30,
21
2022, there was no outstanding balance under the revolving credit facility, while $4.0 million of capacity was used to support outstanding letters of credit.
In July 2022, MAALP amended its unsecured revolving credit facility, increasing borrowing capacity to $1.25 billion with an option to expand to $2.0 billion. The amended revolving credit facility has a maturity date of with two six-month extension options and bears interest at an adjusted Secured Overnight Financing Rate plus a spread of 0.70% to 1.40% based on an investment grade pricing grid.
Unsecured Commercial Paper
MAALP has established an unsecured commercial paper program whereby MAALP may issue unsecured commercial paper notes with varying maturities not to exceed 397 days up to a maximum aggregate principal amount outstanding of $500.0 million. As of June 30, 2022, there was no outstanding balance under the commercial paper program. For the three months ended June 30, 2022, the average daily borrowings outstanding under the commercial paper program were $16.3 million.
Unsecured Senior Notes
As of June 30, 2022, MAALP had $4.2 billion of publicly issued unsecured senior notes outstanding. The unsecured senior notes had maturities at issuance ranging from 5 to 30 years, with a weighted average maturity in 2029.
Secured Property Mortgages
As of June 30, 2022, MAALP had $367.9 million of fixed rate conventional property mortgages with a weighted average maturity in .
7. Financial Instruments and Derivatives
Financial Instruments Not Carried at Fair Value
Cash and cash equivalents, restricted cash and accrued expenses and other liabilities are carried at amounts that reasonably approximate their fair value due to their short term nature.
Fixed rate notes payable as of June 30, 2022 and December 31, 2021 totaled $4.5 billion and $4.5 billion, respectively, and had estimated fair values of $4.2 billion and $4.8 billion (excluding prepayment penalties) as of June 30, 2022 and December 31, 2021, respectively. The fair values of fixed rate debt are determined by using the present value of future cash outflows discounted with the applicable current market rate plus a credit spread. As of June 30, 2022 and December 31, 2021, the Company had no variable rate debt outstanding.
Financial Instruments Measured at Fair Value on a Recurring Basis
As of June 30, 2022, the Company had one outstanding series of cumulative redeemable preferred stock, which is referred to as the MAA Series I preferred stock (see Note 8). The Company has recognized a derivative asset related to the redemption feature embedded in the MAA Series I preferred stock. The derivative asset is valued using widely accepted valuation techniques, including a discounted cash flow analysis in which the perpetual value of the preferred shares is compared to the value of the preferred shares assuming the call option is exercised, with the value of the bifurcated call option as the difference between the two values. The analysis reflects the contractual terms of the redeemable preferred shares, which are redeemable at the Company’s option beginning on October 1, 2026 at the redemption price of $50.00 per share. The Company uses various inputs in the analysis, including trading data available on the preferred shares, coupon yields on preferred stock issuances from REITs with similar credit ratings as MAA and treasury rates to determine the fair value of the bifurcated call option.
The redemption feature embedded in the MAA Series I preferred stock is reported as a derivative asset in “Other assets” in the accompanying Condensed Consolidated Balance Sheets and is adjusted to its fair value at each reporting date, with a corresponding non-cash adjustment to “Other non-operating expense (income)” in the accompanying Condensed Consolidated Statements of Operations. As of June 30, 2022 and December 31, 2021, the fair value of the embedded derivative was $24.5 million and $34.5 million, respectively.
The Company has determined the majority of the inputs used to value its outstanding debt and its embedded derivative fall within Level 2 of the fair value hierarchy, and as a result, the fair value valuations of its debt and embedded derivative held as of June 30, 2022 and December 31, 2021 were classified as Level 2 in the fair value hierarchy.
The fair value of the Company’s marketable equity securities discussed in Note 1 is based on quoted market prices and the fair value valuation of the marketable equity securities held as of June 30, 2022 was classified as Level 1 in the fair value hierarchy.
Terminated Cash Flow Hedges of Interest
As of June 30, 2022, the Company had $10.8 million recorded in “Accumulated other comprehensive loss”, or AOCL, related to realized losses associated with terminated interest rate swaps that were designated as cash flow hedging instruments prior to their termination. The realized
22
losses associated with the terminated interest rate swaps are reclassified to interest expense as interest payments are made on the Company’s debt and will continue to be reclassified to interest expense until the debt’s maturity. During the next twelve months, the Company estimates an additional $1.1 million will be reclassified to earnings as an increase to “Interest expense.”
Tabular Disclosure of the Effect of Derivative Instruments on the Condensed Consolidated Statements of Operations
The tables below present the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):
|
|
|
|
Net Loss Reclassified from AOCL into Interest Expense |
|
|||||
|
|
Location of Loss Reclassified |
|
Three months ended June 30, |
|
|||||
Derivatives in Cash Flow Hedging Relationships |
|
from AOCL into Income |
|
2022 |
|
|
2021 |
|
||
Terminated interest rate swaps |
|
Interest expense |
|
$ |
(277 |
) |
|
$ |
(278 |
) |
|
|
|
|
Six months ended June 30, |
|
|||||
|
|
|
|
2022 |
|
|
2021 |
|
||
Terminated interest rate swaps |
|
Interest expense |
|
$ |
(556 |
) |
|
$ |
(557 |
) |
|
|
|
|
(Loss) Gain Recognized in Earnings on Derivative |
|
|||||
|
|
Location of (Loss) Gain Recognized |
|
Three months ended June 30, |
|
|||||
Derivative Not Designated as Hedging Instrument |
|
in Earnings on Derivative |
|
2022 |
|
|
2021 |
|
||
Preferred stock embedded derivative |
|
Other non-operating expense (income) |
|
$ |
(21,835 |
) |
|
$ |
13,168 |
|
|
|
|
|
Six months ended June 30, |
|
|||||
|
|
|
|
2022 |
|
|
2021 |
|
||
Preferred stock embedded derivative |
|
Other non-operating expense (income) |
|
$ |
(9,939 |
) |
|
$ |
(1,940 |
) |
8. Shareholders’ Equity of MAA
As of June 30, 2022, 115,438,832 shares of common stock of MAA and 3,202,377 OP Units (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 118,641,209 common shares and units. As of June 30, 2021, 114,919,922 shares of common stock of MAA and 3,618,955 OP Units (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 118,538,877 common shares and units. Options to purchase 463 shares of MAA’s common stock were outstanding as of June 30, 2022, compared to 963 outstanding options as of June 30, 2021. During the six months ended June 30, 2022 and 2021, MAA issued 350 common shares and 18,882 common shares, respectively, related to the exercise of stock options. These exercises resulted in net proceeds that were negligible during the six months ended June 30, 2022 and $1.5 million during the six months ended June 30, 2021.
Preferred Stock
As of June 30, 2022, MAA had one outstanding series of cumulative redeemable preferred stock, which has the following characteristics:
Description |
|
Outstanding Shares |
|
|
Liquidation Preference(1) |
|
|
Optional Redemption Date |
|
Redemption Price(2) |
|
|
Stated Dividend Yield |
|
|
Approximate Dividend Rate |
|
|||||
MAA Series I |
|
|
867,846 |
|
|
$ |
50.00 |
|
|
10/1/2026 |
|
$ |
50.00 |
|
|
|
8.50 |
% |
|
$ |
4.25 |
|
See Note 7 for details of the valuation of the derivative asset related to the redemption feature embedded in the MAA Series I preferred stock.
Equity Forward Sale Agreements
In August 2021, MAA entered into two 18-month forward sale agreements with respect to a total of 1.1 million shares of its common stock at an initial forward sale price of $190.56 per share, which price is net of issuance costs. Under the forward sale agreements, the forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor equal to a specified daily rate less a spread and will be decreased based on amounts related to dividends on MAA’s common stock during the term of the forward sale agreements. No shares had been settled under the forward sale agreements as of June 30, 2022. MAA generally has the ability to determine the dates and method of settlement (i.e., gross physical settlement, net share settlement or cash settlement), subject to certain conditions and the right of the counterparty to accelerate settlement under certain circumstances, provided that settlement under each forward sale agreement must occur by February 2, 2023. MAA currently expects to fully physically settle each forward sale agreement with the relevant forward purchaser on one or more dates specified by MAA on or prior to the maturity date of the particular forward sale agreement, in which case MAA expects to receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward sale agreement multiplied by the relevant forward sale price. For the three months ended June 30, 2022, the impact of the forward sale agreements was not dilutive to the Company’s diluted earnings
23
per share. For the six months ended June 30, 2022, approximately 62 thousand shares from the equity forward sale agreements were dilutive to the Company’s diluted earnings per share.
At-the-Market Share Offering Program
In November 2021, the Company entered into an equity distribution agreement to establish a new at-the-market, or ATM, share offering program, replacing MAA’s previous ATM program and allowing MAA to sell shares of its common stock from time to time to or through its sales agents into the existing market at current market prices, and to enter into separate forward sales agreements to or through its forward purchasers. Under its current ATM program, MAA has the authority to issue up to an aggregate of 4.0 million shares of its common stock, at such times to be determined by MAA. MAA has no obligation to issue shares through the ATM program. During the three and six months ended June 30, 2022 and 2021, MAA did not sell any shares of common stock under its ATM program. As of June 30, 2022, 4.0 million shares remained issuable under the ATM program.
9. Partners’ Capital of MAALP
Common units of limited partnership interests in MAALP are represented by OP Units. As of June 30, 2022, there were 118,641,209 OP Units outstanding, 115,438,832, or 97.3%, of which represent Class B OP Units (common units issued to or held by MAALP’s general partner or any of its subsidiaries), which were owned by MAA, MAALP’s general partner. The remaining 3,202,377 OP Units were Class A OP Units owned by Class A limited partners. As of June 30, 2021, there were 118,538,877 OP Units outstanding, 114,919,922, or 96.9%, of which were owned by MAA and 3,618,955 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 MAALP subject to the restrictions specifically contained within MAALP’s agreement of limited partnership, or the Partnership Agreement. Unless otherwise stated in the Partnership Agreement, 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 MAALP’s assets; and distribution of MAALP’s 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 to it if the general partner remains in supervision of the designee.
Under the Partnership Agreement, MAALP may issue Class A OP Units and Class B OP Units. Class A OP Units are any OP Units other than Class B OP Units, while Class B OP Units are those issued to or held by MAALP’s general partner or any of its subsidiaries. In general, the limited partners do not have the power to participate in the management or control of MAALP’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 OP Units is also limited by the Partnership Agreement.
Net income of MAALP (after allocations to preferred ownership interests) is allocated to the general partner and limited partners based on their respective ownership percentages of MAALP. Issuance or redemption of additional Class A OP Units or Class B OP Units changes the relative ownership percentage of the partners. The issuance of Class B OP Units generally occurs when MAA issues common stock and the proceeds from that issuance are contributed to MAALP 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, MAALP generally redeems an equal number of Class B OP 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 MAALP. Holders of the Class A OP Units may require MAA to redeem their Class A OP Units, in which case MAA may, at its option, pay the redemption price either in cash (in an amount per Class A 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 MAA common stock (subject to adjustment under specified circumstances) for each Class A OP Unit so redeemed.
As of June 30, 2022, a total of 3,202,377 Class A OP Units were outstanding and redeemable for 3,202,377 shares of MAA common stock, with an approximate value of $559.4 million, based on the closing price of MAA’s common stock on June 30, 2022 of $174.67 per share. As of June 30, 2021, a total of 3,618,955 Class A OP Units were outstanding and redeemable for 3,618,955 shares of MAA common stock, with an approximate value of $609.5 million, based on the closing price of MAA’s common stock on June 30, 2021 of $168.42 per share. MAALP pays the same per unit distributions in respect to the OP Units as the per share dividends MAA pays in respect to its common stock.
As of June 30, 2022, MAALP had one outstanding series of cumulative redeemable preferred units, or the MAALP Series I preferred units. The MAALP Series I preferred units have the same characteristics as the MAA Series I preferred stock described in Note 8. As of June 30, 2022, 867,846 units of the MAALP Series I preferred units were outstanding. See Note 7 for details of the valuation of the derivative asset related to the redemption feature embedded in the MAALP Series I preferred units.
24
10. Commitments and Contingencies
Leases
The Company’s operating leases include a ground lease expiring in 2074 related to one of its apartment communities and an office lease expiring in 2028 related to its corporate headquarters. Both leases contain stated rent increases that are generally intended to compensate for the impact of inflation. The Company also has other commitments related to immaterial office and equipment operating leases. As of June 30, 2022, the Company’s operating leases had a weighted average remaining lease term of approximately 32 years and a weighted average discount rate of approximately 4.4%.
The table below reconciles undiscounted cash flows for each of the first five years and total of the remaining years to the right-of-use lease liabilities recorded on the Condensed Consolidated Balance Sheets as of June 30, 2022 (in thousands):
|
|
Operating Leases |
|
|
2022 |
|
$ |
1,459 |
|
2023 |
|
|
2,885 |
|
2024 |
|
|
2,862 |
|
2025 |
|
|
2,872 |
|
2026 |
|
|
2,920 |
|
Thereafter |
|
|
59,993 |
|
Total minimum lease payments |
|
|
72,991 |
|
Net present value adjustments |
|
|
(43,463 |
) |
|
$ |
29,528 |
|
Legal Proceedings
The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business operations. While the resolution of these matters cannot be predicted with certainty, management does not currently believe that these matters, either individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows in the event of a negative outcome. Matters that arise out of allegations of bodily injury, property damage and employment practices are generally covered by insurance.
As of June 30, 2022 and December 31, 2021, the Company’s accrual for loss contingencies relating to unresolved legal matters was $2.0 million and $5.2 million in the aggregate, respectively. The loss contingencies are presented in “Accrued expenses and other liabilities” in the accompanying Condensed Consolidated Balance Sheets.
11. Segment Information
As of June 30, 2022, the Company owned and operated 290 multifamily apartment communities (which does not include development communities under construction) in 15 different states from which it derived all significant sources of earnings and operating cash flows. The Company views each consolidated apartment community as an operating segment. The Company’s chief operating decision maker, which is the Company’s Chief Executive Officer, evaluates performance and determines resource allocations of each of the apartment communities on a Same Store and Non-Same Store and Other basis, as well as an individual apartment community basis. The Company has aggregated its operating segments into two reportable segments as management believes the apartment communities in each reportable segment generally have similar economic characteristics, facilities, services and residents.
The following reflects the two reportable segments for the Company:
On the first day of each calendar year, the Company determines the composition of its Same Store and Non-Same Store and Other reportable segments for that year as well as adjusts the previous year, which allows the Company to evaluate full period-over-period operating comparisons. Communities previously in development or lease-up are added to the Same Store segment on the first day of the calendar year after the community has been owned and stabilized for at least a full 12 months. Communities are considered stabilized when achieving 90% average physical occupancy for 90 days.
25
The chief operating decision maker utilizes net operating income, or NOI, in evaluating the performance of its operating 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. Management believes that NOI is a helpful tool in evaluating the operating performance of the segments because it measures the core operations of property performance by excluding corporate level expenses and other items not directly related to property operating performance.
Revenues and NOI for each reportable segment for the three and six months ended June 30, 2022 and 2021 were as follows (in thousands):
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Same Store |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental revenues |
|
$ |
468,427 |
|
|
$ |
412,079 |
|
|
$ |
920,143 |
|
|
$ |
814,273 |
|
Other property revenues |
|
|
3,733 |
|
|
|
3,324 |
|
|
|
6,494 |
|
|
|
6,276 |
|
Total Same Store revenues |
|
|
472,160 |
|
|
|
415,403 |
|
|
|
926,637 |
|
|
|
820,549 |
|
Non-Same Store and Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental revenues |
|
|
22,705 |
|
|
|
21,088 |
|
|
|
44,104 |
|
|
|
40,675 |
|
Other property revenues |
|
|
175 |
|
|
|
436 |
|
|
|
377 |
|
|
|
708 |
|
Total Non-Same Store and Other revenues |
|
|
22,880 |
|
|
|
21,524 |
|
|
|
44,481 |
|
|
|
41,383 |
|
Total rental and other property revenues |
|
$ |
495,040 |
|
|
$ |
436,927 |
|
|
$ |
971,118 |
|
|
$ |
861,932 |
|
Net Operating Income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Same Store NOI |
|
$ |
300,238 |
|
|
$ |
256,325 |
|
|
$ |
594,880 |
|
|
$ |
508,265 |
|
Non-Same Store and Other NOI |
|
|
13,125 |
|
|
|
11,841 |
|
|
|
25,141 |
|
|
|
22,438 |
|
Total NOI |
|
|
313,363 |
|
|
|
268,166 |
|
|
|
620,021 |
|
|
|
530,703 |
|
Depreciation and amortization |
|
|
(134,144 |
) |
|
|
(131,824 |
) |
|
|
(267,882 |
) |
|
|
(263,327 |
) |
Property management expenses |
|
|
(15,630 |
) |
|
|
(13,752 |
) |
|
|
(32,167 |
) |
|
|
(26,691 |
) |
General and administrative expenses |
|
|
(15,580 |
) |
|
|
(13,114 |
) |
|
|
(31,903 |
) |
|
|
(26,093 |
) |
Interest expense |
|
|
(38,905 |
) |
|
|
(38,867 |
) |
|
|
(78,026 |
) |
|
|
(78,539 |
) |
Gain on sale of depreciable real estate assets |
|
|
131,965 |
|
|
|
134,828 |
|
|
|
131,964 |
|
|
|
134,828 |
|
Gain on sale of non-depreciable real estate assets |
|
|
355 |
|
|
|
32 |
|
|
|
378 |
|
|
|
32 |
|
Other non-operating (expense) income |
|
|
(28,325 |
) |
|
|
20,126 |
|
|
|
(17,530 |
) |
|
|
4,213 |
|
Income tax benefit (expense) |
|
|
3,052 |
|
|
|
(2,045 |
) |
|
|
4,494 |
|
|
|
(3,044 |
) |
Income from real estate joint venture |
|
|
409 |
|
|
|
325 |
|
|
|
788 |
|
|
|
657 |
|
Net income attributable to noncontrolling interests |
|
|
(5,858 |
) |
|
|
(7,397 |
) |
|
|
(8,633 |
) |
|
|
(9,068 |
) |
Dividends to MAA Series I preferred shareholders |
|
|
(922 |
) |
|
|
(922 |
) |
|
|
(1,844 |
) |
|
|
(1,844 |
) |
Net income available for MAA common shareholders |
|
$ |
209,780 |
|
|
$ |
215,556 |
|
|
$ |
319,660 |
|
|
$ |
261,827 |
|
Assets for each reportable segment as of June 30, 2022 and December 31, 2021 were as follows (in thousands):
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Assets: |
|
|
|
|
|
|
||
Same Store |
|
$ |
9,798,283 |
|
|
$ |
9,907,740 |
|
Non-Same Store and Other |
|
|
1,125,506 |
|
|
|
1,106,039 |
|
Corporate assets |
|
|
356,612 |
|
|
|
271,403 |
|
Total assets |
|
$ |
11,280,401 |
|
|
$ |
11,285,182 |
|
26
12. Real Estate Acquisitions and Dispositions
The following table reflects the Company’s acquisition activity for the six months ended June 30, 2022:
Land Acquisitions |
|
Market |
|
Acres |
|
Date Acquired |
MAA Florida Street Station |
|
Denver, CO |
|
4 |
|
March 2022 |
MAA Packing District |
|
Orlando, FL |
|
4 |
|
May 2022 |
The following table reflects the Company’s disposition activity for the six months ended June 30, 2022:
Multifamily Dispositions |
|
Market |
|
Units |
|
Date Sold |
MAA Deer Run |
|
Fort Worth, TX |
|
304 |
|
June 2022 |
MAA Oakbend |
|
Fort Worth, TX |
|
426 |
|
June 2022 |
|
|
|
|
|
|
|
Land Disposition |
|
Market |
|
Acres |
|
Date Sold |
Colonial Promenade |
|
Huntsville, AL |
|
2 |
|
April 2022 |
13. Subsequent Events
In July 2022, MAA acquired a 196-unit multifamily apartment community located in the Tampa, Florida market and a 6 acre land parcel located in the Denver, Colorado market.
27
Item 2. 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 97.3% interest as of June 30, 2022. MAA conducts all of its business through the Operating Partnership and its various subsidiaries. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.
MAA, an S&P 500 company, 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, Southwest and Mid-Atlantic regions of the United States. As of June 30, 2022, we owned and operated 290 apartment communities (which does not include development communities under construction) through the Operating Partnership and its subsidiaries, and we had an ownership interest in one apartment community through an unconsolidated real estate joint venture and had five development communities under construction. In addition, as of June 30, 2022, 33 of our apartment communities included retail components. Our apartment communities, including development communities under construction, were located across 16 states and the District of Columbia as of June 30, 2022.
We report in two segments, Same Store and Non-Same Store and Other. Our Same Store segment represents those apartment communities that have been owned and stabilized for at least 12 months as of the first day of the calendar year. Our Non-Same Store and Other segment includes recently acquired communities, communities being developed or in lease-up, communities that have been disposed of or identified for disposition, communities that have experienced a significant casualty loss and stabilized communities that do not meet the requirements to be Same Store communities. Also included in our Non-Same Store and Other segment are non-multifamily activities. Additional information regarding the composition of our segments is included in Note 11 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Note Regarding Forward-Looking Statements
This and other sections of this Quarterly Report on Form 10-Q may 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 include, without limitation, statements regarding expected operating performance and results, property stabilizations, property acquisition and disposition activity, joint venture activity, development and renovation activity and other capital expenditures, and capital raising and financing activity, as well as lease pricing, revenue and expense growth, occupancy, interest rate and other economic expectations. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” “projects,” “assumes,” “will,” “may,” “could,” “should,” “budget,” “target,” “outlook,” “proforma,” “opportunity,” “guidance” 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, as described below, 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 actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements:
28
New factors may also emerge from time to time that could have a material adverse effect on our business. Except as required by law, we undertake no obligation to publicly update or revise forward-looking statements contained in this Quarterly Report on Form 10-Q to reflect events, circumstances or changes in expectations after the date on which this Quarterly Report on Form 10-Q is filed.
Overview of the Three Months Ended June 30, 2022
For the three months ended June 30, 2022, net income available for MAA common shareholders was $209.8 million as compared to $215.6 million for the three months ended June 30, 2021. Results for the three months ended June 30, 2022 included $21.8 million of non-cash loss related to the fair value adjustment of the embedded derivative in the MAA Series I preferred shares. Results for the three months ended June 30, 2021 included $13.2 million of non-cash gain related to the embedded derivative in the MAA Series I preferred shares. Revenues for the three months ended June 30, 2022 increased 13.3% as compared to the three months ended June 30, 2021, driven by a 13.7% increase in our Same Store segment. Property operating expenses, excluding depreciation and amortization, for the three months ended June 30, 2022 increased by 7.7% as compared to the three months ended June 30, 2021, driven by an 8.1% increase in our Same Store segment. The drivers of these changes are discussed in the “Results of Operations” section.
Trends
During the three months ended June 30, 2022, revenue growth for our Same Store segment continued to be primarily driven by growth in average effective rent per unit. The average effective rent per unit in our Same Store segment continued to increase from the prior year, up 14.3% for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. Average effective rent per unit represents the average of gross rent amounts, after the effect of leasing concessions, for occupied apartment units plus prevalent market rates asked for unoccupied apartment units, divided by the total number of units. Leasing concessions represent discounts to the current market rate. We believe average effective rent per unit is a helpful measurement in evaluating average pricing; however, it does not represent actual rental revenue collected per unit.
In addition, for the three months ended June 30, 2022, average physical occupancy for our Same Store segment was 95.7%, as compared to 96.4% for the three months ended June 30, 2021. Average physical occupancy is a measurement of the total number of our apartment units that are occupied by residents, and it represents the average of the daily physical occupancy for the period.
An important part of our portfolio strategy is to maintain diversity of markets, submarkets, product types and price points primarily in the Southeast, Southwest and Mid-Atlantic 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 urban and suburban locations, with a broad range of monthly rent price points, will perform well in “up” cycles as well as better weather “down” cycles. Through our investment in 39 defined markets, we are diversified across markets, urban and suburban submarkets, and a variety of product types and monthly rent price points.
29
Demand for apartments during the second quarter of 2022 was very strong, as evidenced by the rent growth we achieved. Demand for apartments is primarily driven by general economic conditions in our markets and is particularly correlated to job growth, population growth, household formation and in-migration. While our rent growth and rent collection trends in the second quarter of 2022 were strong, we continue to monitor pressures surrounding supply chain challenges and inflation trends. A worsening of the current environment could contribute to uncertain rent collections going forward and suppress demand for apartments and would likely drive rent growth on new leases and renewals lower than what we achieved in the three and six months ended June 30, 2022. Current elevated supply levels could further affect rent growth for our portfolio though we expect the demand side to continue to be more impactful in the short term. Supply chain and inflationary pressures have driven higher operating expenses during the three and six months ended June 30, 2022, particularly in personnel and repairs and maintenance, and this trend may continue going forward.
Access to the financial markets remains available for high-credit rated borrowers. However, a prolonged disruption of the markets or a decline in credit and financing conditions could negatively affect our ability to access capital necessary to fund our operations or refinance maturing debt in the future. Additionally, rising interest rates could negatively impact our borrowing costs for any variable rate borrowings or refinancing activity.
Results of Operations
Comparison of the three months ended June 30, 2022 to the three months ended June 30, 2021
For the three months ended June 30, 2022, we achieved net income available for MAA common shareholders of $209.8 million, a 2.7% decrease as compared to the three months ended June 30, 2021, and total revenue growth of $58.1 million, representing a 13.3% increase in property revenues as compared to the three months ended June 30, 2021. The following discussion describes the primary drivers of the decrease in net income available for MAA common shareholders for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.
Property Revenues
The following table reflects our property revenues by segment for the three months ended June 30, 2022 and 2021 (dollars in thousands):
|
|
Three months ended June 30, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Increase |
|
|
% Increase |
|
||||
Same Store |
|
$ |
472,160 |
|
|
$ |
415,403 |
|
|
$ |
56,757 |
|
|
|
13.7 |
% |
Non-Same Store and Other |
|
|
22,880 |
|
|
|
21,524 |
|
|
|
1,356 |
|
|
|
6.3 |
% |
Total |
|
$ |
495,040 |
|
|
$ |
436,927 |
|
|
$ |
58,113 |
|
|
|
13.3 |
% |
The increase in rental revenues for our Same Store segment for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was the primary driver of total property revenue growth. The Same Store segment generated an 13.7% increase in revenues for the three months ended June 30, 2022, primarily the result of average effective rent per unit growth of 14.3% as compared to the three months ended June 30, 2021. The increase in property revenues from the Non-Same Store and Other segment for the three months ended June 30, 2022 as compared to three months ended June 30, 2021 was primarily the result of increased revenues from recently completed development communities.
Property Operating Expenses
Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other operating expenses. The following table reflects our property operating expenses by segment for the three months ended June 30, 2022 and 2021 (dollars in thousands):
|
|
Three months ended June 30, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Increase |
|
|
% Increase |
|
||||
Same Store |
|
$ |
171,922 |
|
|
$ |
159,078 |
|
|
$ |
12,844 |
|
|
|
8.1 |
% |
Non-Same Store and Other |
|
|
9,755 |
|
|
|
9,683 |
|
|
|
72 |
|
|
|
0.7 |
% |
Total |
|
$ |
181,677 |
|
|
$ |
168,761 |
|
|
$ |
12,916 |
|
|
|
7.7 |
% |
30
The increase in property operating expenses for our Same Store segment for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily driven by increases in real estate tax expense of $3.2 million, building repairs and maintenance of $2.9 million, personnel expense of $2.6 million, utilities expense of $1.5 million, and office operations expense of $0.9 million.
Depreciation and Amortization
Depreciation and amortization expense for the three months ended June 30, 2022 was $134.1 million, an increase of $2.3 million as compared to the three months ended June 30, 2021. The increase was primarily driven by the recognition of depreciation expense associated with our development and capital spend activities completed after June 30, 2021 in the normal course of business through June 30, 2022.
Other Income and Expenses
Property management expenses for the three months ended June 30, 2022 were $15.6 million, an increase of $1.9 million as compared to the three months ended June 30, 2021. General and administrative expenses for the three months ended June 30, 2022 were $15.6 million, an increase of $2.5 million as compared to the three months ended June 30, 2021.
Interest expense for the three months ended June 30, 2022 was $38.9 million, consistent with the three months ended June 30, 2021.
For the three months ended June 30, 2022, we disposed of two apartment communities, resulting in gains on sale of depreciable assets of $132.0 million. For the three months ended June 30, 2021, we disposed of four apartment communities, resulting in gains on sale of depreciable assets of $134.8 million.
Other non-operating expense (income) for the three months ended June 30, 2022 was $28.3 million of expense as compared to $20.1 million of income for the three months ended June 30, 2021, a decrease of $48.4 million. The expense for the three months ended June 30, 2022 was driven by $21.8 million of non-cash loss related to the fair value adjustment of the embedded derivative and $20.9 million of non-cash loss from investments, partially offset by $14.4 million in casualty gains due to winter storm Uri. The income for the three months ended June 30, 2021 was driven by $13.2 million of non-cash gain related to the fair value adjustment of the embedded derivative and $6.3 million of non-cash gain from investments.
Comparison of the six months ended June 30, 2022 to the six months ended June 30, 2021
For the six months ended June 30, 2022, we achieved net income available for MAA common shareholders of $319.7 million, a 22.1% increase as compared to the six months ended June 30, 2021, and total revenue growth of $109.2 million, representing a 12.7% increase in property revenues as compared to the six months ended June 30, 2021. The following discussion describes the primary drivers of the increase in net income available for MAA common shareholders for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.
Property Revenues
The following table reflects our property revenues by segment for the six months ended June 30, 2022 and 2021 (dollars in thousands):
|
|
Six months ended June 30, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Increase |
|
|
% Increase |
|
||||
Same Store |
|
$ |
926,637 |
|
|
$ |
820,549 |
|
|
$ |
106,088 |
|
|
|
12.9 |
% |
Non-Same Store and Other |
|
|
44,481 |
|
|
|
41,383 |
|
|
|
3,098 |
|
|
|
7.5 |
% |
Total |
|
$ |
971,118 |
|
|
$ |
861,932 |
|
|
$ |
109,186 |
|
|
|
12.7 |
% |
The increase in rental revenues for our Same Store segment for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was the primary driver of total property revenue growth. The Same Store segment generated a 12.9% increase in revenues for the six months ended June 30, 2022, primarily the result of average effective rent per unit growth of 13.3% as compared to the six months ended June 30, 2021. The increase in property revenues from the Non-Same Store and Other segment for the six months ended June 30, 2022 as compared to six months ended June 30, 2021 was primarily the result of increased revenues from recently completed development communities.
31
Property Operating Expenses
Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other operating expenses. The following table reflects our property operating expenses by segment for the six months ended June 30, 2022 and 2021 (dollars in thousands):
|
|
Six months ended June 30, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Increase |
|
|
% Increase |
|
||||
Same Store |
|
$ |
331,757 |
|
|
$ |
312,284 |
|
|
$ |
19,473 |
|
|
|
6.2 |
% |
Non-Same Store and Other |
|
|
19,340 |
|
|
|
18,945 |
|
|
|
395 |
|
|
|
2.1 |
% |
Total |
|
$ |
351,097 |
|
|
$ |
331,229 |
|
|
$ |
19,868 |
|
|
|
6.0 |
% |
The increase in property operating expenses for our Same Store segment for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily driven by increases in building repairs and maintenance of $4.5 million, personnel expense of $4.4 million, real estate tax expense of $3.6 million, utilities expense of $2.4 million, office operations expense of $2.3 million and insurance expense of $1.5 million.
Depreciation and Amortization
Depreciation and amortization expense for the six months ended June 30, 2022 was $267.9 million, an increase of $4.6 million as compared to the six months ended June 30, 2021. The increase was primarily driven by the recognition of depreciation expense associated with our development and capital spend activities completed after June 30, 2021 in the normal course of business through June 30, 2022.
Other Income and Expenses
Property management expenses for the six months ended June 30, 2022 were $32.2 million, an increase of $5.5 million as compared to the six months ended June 30, 2021. General and administrative expenses for the six months ended June 30, 2022 were $31.9 million, an increase of $5.8 million as compared to the six months ended June 30, 2021.
Interest expense for the six months ended June 30, 2022 was $78.0 million, a decrease of $0.5 million as compared to the six months ended June 30, 2021. The decrease was primarily due to a decrease in our effective interest rate during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.
For the six months ended June 30, 2022, we disposed of two apartment communities, resulting in gains on sale of depreciable assets of $132.0 million. For the six months ended June 30, 2021, we disposed of four apartment communities, resulting in gains on sale of depreciable assets of $134.8 million.
Other non-operating expense (income) for the six months ended June 30, 2022 was $17.5 million of expense as compared to $4.2 million of income for the six months ended June 30, 2021, a decrease of $21.7 million. The expense for the six months ended June 30, 2022 was driven by $9.9 million of non-cash loss related to the fair value adjustment of the embedded derivative and $31.1 million of non-cash loss from investments, partially offset by $22.1 million in casualty gains due to winter storm Uri. The income for the six months ended June 30, 2021 was driven by the recognition of $7.9 million of non-cash gain from investments, partially offset by $1.9 million of non-cash loss related to the fair value adjustment of the embedded derivative and $1.8 million in casualty losses.
Funds from Operations and Core Funds from Operations
Funds from operations, or FFO, a non-GAAP financial measure, represents net income available for MAA common shareholders (computed in accordance with the United States generally accepted accounting principles, or GAAP) excluding gains or losses on disposition of operating properties and asset impairment, plus depreciation and amortization of real estate assets, net income attributable to noncontrolling interests and adjustments for joint ventures. Because net income attributable to noncontrolling interests is added back, FFO, when used in this Quarterly Report on Form 10-Q, represents FFO attributable to the Company.
FFO should not be considered as an alternative to net income available for MAA common shareholders, or any other GAAP measurement, 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. While our calculation of FFO is in accordance with the National Association of Real Estate Investment Trusts’, or NAREIT’s, definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs.
32
Core FFO represents FFO as adjusted for items that are not considered part of our core business operations such as adjustments related to the fair value of the embedded derivative in the MAA Series I preferred shares, gain or loss on sale of non-depreciable assets, gain or loss on investments, net casualty gain or loss, gain or loss on debt extinguishment, legal costs and settlements, net, COVID-19 related costs and mark-to-market debt adjustments. While our definition of Core FFO may be similar to others in the industry, our 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 available for MAA common shareholders, or any other GAAP measurement, as an indicator of operating performance or as an alternative to cash flow from operating, investing and financing activities as a measure of liquidity. We believe that Core FFO is helpful in understanding our core operating performance between periods 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 presents a reconciliation of net income available for MAA common shareholders to FFO and Core FFO for the three and six months ended June 30, 2022 and 2021, as we believe net income available for MAA common shareholders is the most directly comparable GAAP measure (dollars in thousands):
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income available for MAA common shareholders |
|
$ |
209,780 |
|
|
$ |
215,556 |
|
|
$ |
319,660 |
|
|
$ |
261,827 |
|
Depreciation and amortization of real estate assets |
|
|
132,333 |
|
|
|
130,031 |
|
|
|
264,343 |
|
|
|
259,783 |
|
Gain on sale of depreciable real estate assets |
|
|
(131,965 |
) |
|
|
(134,828 |
) |
|
|
(131,964 |
) |
|
|
(134,828 |
) |
Depreciation and amortization of real estate assets |
|
|
156 |
|
|
|
154 |
|
|
|
310 |
|
|
|
309 |
|
Net income attributable to noncontrolling interests |
|
|
5,858 |
|
|
|
7,397 |
|
|
|
8,633 |
|
|
|
9,068 |
|
FFO attributable to the Company |
|
|
216,162 |
|
|
|
218,310 |
|
|
|
460,982 |
|
|
|
396,159 |
|
Loss (gain) from embedded derivative in preferred shares(1) |
|
|
21,835 |
|
|
|
(13,168 |
) |
|
|
9,939 |
|
|
|
1,940 |
|
Gain on sale of non-depreciable real estate assets |
|
|
(355 |
) |
|
|
(32 |
) |
|
|
(378 |
) |
|
|
(32 |
) |
Loss (gain) on investments, net of tax(1)(2) |
|
|
16,489 |
|
|
|
(4,962 |
) |
|
|
24,566 |
|
|
|
(6,246 |
) |
Net casualty (gain) loss and other settlement proceeds(3) |
|
|
(14,413 |
) |
|
|
(595 |
) |
|
|
(22,125 |
) |
|
|
1,760 |
|
Loss on debt extinguishment(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37 |
|
Legal costs and settlements, net(1) |
|
|
(2 |
) |
|
|
— |
|
|
|
535 |
|
|
|
(16 |
) |
COVID-19 related costs(1) |
|
|
105 |
|
|
|
109 |
|
|
|
442 |
|
|
|
419 |
|
Mark-to-market debt adjustments(4) |
|
|
35 |
|
|
|
83 |
|
|
|
71 |
|
|
|
166 |
|
Core FFO |
|
$ |
239,856 |
|
|
$ |
199,745 |
|
|
$ |
474,032 |
|
|
$ |
394,187 |
|
Core FFO for the three months ended June 30, 2022 was $239.9 million, an increase of $40.1 million as compared to the three months ended June 30, 2021, primarily as a result of an increase in property revenues of $58.1 million, partially offset by increases in property operating expenses, excluding depreciation and amortization, of $12.9 million, general and administrative expenses of $2.5 million and property management expenses of $1.9 million.
Core FFO for the six months ended June 30, 2022 was $474.0 million, an increase of $79.8 million as compared to the six months ended June 30, 2021, primarily as a result of an increase in property revenues of $109.2 million, partially offset by increases in property operating expenses, excluding depreciation and amortization, of $19.9 million, general and administrative expenses of $5.8 million and property management expenses of $5.5 million.
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.
We expect that our primary uses of cash will be to fund our ongoing operating needs, to fund our ongoing capital spending requirements, which relate primarily to our development, redevelopment and property repositioning activities, to repay maturing borrowings, to fund the future acquisition of assets and to pay shareholder dividends. We expect to meet our cash requirements through net cash flows from
33
operating activities, existing unrestricted cash and cash equivalents, borrowings under our commercial paper program and our revolving credit facility, the future issuance of debt and equity and the future disposition of assets.
We historically have had positive net cash flows from operating activities. We believe that future net cash flows generated from operating activities, existing unrestricted cash and cash equivalents, borrowing capacity under our current commercial paper program and revolving credit facility, and our ability to issue debt and equity will provide sufficient liquidity to fund the cash requirements for our business over the next 12 months and the foreseeable future.
As of June 30, 2022, we had $1.1 billion of combined unrestricted cash and cash equivalents and available capacity under our revolving credit facility.
Cash Flows from Operating Activities
Net cash provided by operating activities was $463.9 million for the six months ended June 30, 2022 as compared to $397.3 million for the six months ended June 30, 2021. The increase in operating cash flows was primarily driven by our operating performance, partially offset by the timing of cash payments.
Cash Flows from Investing Activities
Net cash used in investing activities was $57.8 million for the six months ended June 30, 2022 as compared to $132.5 million for the six months ended June 30, 2021. The primary drivers of the change were as follows (dollars in thousands):
|
|
Primary drivers of cash (outflow) inflow |
|
|
|
|
||||||
|
|
during the six months ended June 30, |
|
|
Increase (Decrease) |
|
||||||
|
|
2022 |
|
|
2021 |
|
|
in Net Cash |
|
|||
Purchases of real estate and other assets |
|
$ |
(17,238 |
) |
|
$ |
(46,028 |
) |
|
$ |
28,790 |
|
Capital improvements and other |
|
|
(132,849 |
) |
|
|
(127,932 |
) |
|
|
(4,917 |
) |
Development costs |
|
|
(84,636 |
) |
|
|
(119,612 |
) |
|
|
34,976 |
|
Contributions to affiliates |
|
|
(9,300 |
) |
|
|
(1,114 |
) |
|
|
(8,186 |
) |
Proceeds from real estate asset dispositions |
|
|
165,201 |
|
|
|
158,136 |
|
|
|
7,065 |
|
Proceeds from insurance recoveries |
|
|
20,675 |
|
|
|
3,620 |
|
|
|
17,055 |
|
The decrease in cash outflows for purchases of real estate and other assets was driven by acquisition activity during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The increase in cash outflows for capital improvements and other was primarily driven by increased redevelopment capital spend during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The decrease in cash outflows for development costs was primarily driven by decreased development spend during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The increase in cash outflows for contributions to affiliates was driven by investments in the technology-focused limited partnerships during the six months ended June 30, 2022, while less limited partnership contributions were made during the six months ended June 30, 2021. The increase in cash inflows from proceeds from real estate asset dispositions was driven by the nature of the real estate assets sold during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. During the six months ended June 30, 2022, we sold two apartment communities as compared to four apartment communities during the six months ended June 30, 2021. The increase in cash inflows from proceeds from insurance recoveries was driven by insurance reimbursements received for casualty claims related to winter storm Uri during the six months ended June 30, 2022.
Cash Flows from Financing Activities
Net cash used in financing activities was $315.0 million for the six months ended June 30, 2022 as compared to $257.4 million for the six months ended June 30, 2021. The primary drivers of the change were as follows (dollars in thousands):
|
|
Primary drivers of cash inflow (outflow) |
|
|
|
|
||||||
|
|
during the six months ended June 30, |
|
|
(Decrease) Increase |
|
||||||
|
|
2022 |
|
|
2021 |
|
|
in Net Cash |
|
|||
Net change in commercial paper |
|
$ |
— |
|
|
$ |
108,000 |
|
|
|
(108,000 |
) |
Principal payments on notes payable |
|
|
(691 |
) |
|
|
(119,481 |
) |
|
|
118,790 |
|
Dividends paid on common shares |
|
|
(250,960 |
) |
|
|
(234,591 |
) |
|
|
(16,369 |
) |
Acquisition of noncontrolling interests |
|
|
(43,070 |
) |
|
|
— |
|
|
|
(43,070 |
) |
Net change in other financing activities |
|
|
(11,478 |
) |
|
|
(1,173 |
) |
|
|
(10,305 |
) |
The decrease in cash inflows related to the net change in commercial paper resulted from no net borrowings on our commercial paper program during the six months ended June 30, 2022 as compared to net borrowings of $108.0 million on our commercial paper program during the six months ended June 30, 2021. The decrease in cash outflows from principal payments on notes payable primarily resulted from the
34
retirement of $118.6 million of property mortgages during the six months ended June 30, 2021. The increase in cash outflows from dividends paid on common shares primarily resulted from the increase in the dividend rate to $2.175 per share during the six months ended June 30, 2022 as compared to the dividend rate of $2.0500 per share during the six months ended June 30, 2021. The increase in cash outflows from the acquisition of noncontrolling interests resulted from the acquisition of the noncontrolling interest of a consolidated real estate entity for $43.1 million during the six months ended June 30, 2022. The increase in cash outflows from the net change in other financing activities was primarily driven by shares of MAA’s common stock surrendered by employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted shares during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.
Debt
The following schedule reflects our debt outstanding as of June 30, 2022 (dollars in thousands):
|
|
Principal Balance |
|
|
Average Years to Rate Maturity |
|
|
Effective Rate |
|
|||
Unsecured debt |
|
|
|
|
|
|
|
|
|
|||
Fixed rate senior notes |
|
$ |
4,175,000 |
|
|
|
6.7 |
|
|
|
3.3 |
% |
Debt issuance costs, discounts, premiums and fair market value adjustments |
|
|
(21,350 |
) |
|
|
|
|
|
|
||
Total unsecured debt |
|
$ |
4,153,650 |
|
|
|
6.7 |
|
|
|
3.3 |
% |
Secured debt |
|
|
|
|
|
|
|
|
|
|||
Fixed rate property mortgages |
|
$ |
367,864 |
|
|
|
26.3 |
|
|
|
4.4 |
% |
Debt issuance costs |
|
|
(3,200 |
) |
|
|
|
|
|
|
||
Total secured debt |
|
$ |
364,664 |
|
|
|
26.3 |
|
|
|
4.4 |
% |
Total debt |
|
$ |
4,518,314 |
|
|
|
8.2 |
|
|
|
3.4 |
% |
The following schedule presents the contractual maturity dates of our outstanding debt, net of debt issuance costs, discounts, premiums and fair market value adjustments, as of June 30, 2022 (dollars in thousands):
|
|
Commercial Paper & Revolving Credit Facility⁽¹⁾⁽²⁾ |
|
|
Senior Notes |
|
|
Property Mortgages |
|
|
Total |
|
||||
2022 |
|
$ |
— |
|
|
$ |
124,921 |
|
|
$ |
— |
|
|
$ |
124,921 |
|
2023 |
|
|
— |
|
|
|
349,172 |
|
|
|
— |
|
|
|
349,172 |
|
2024 |
|
|
— |
|
|
|
398,433 |
|
|
|
— |
|
|
|
398,433 |
|
2025 |
|
|
— |
|
|
|
397,386 |
|
|
|
4,712 |
|
|
|
402,098 |
|
2026 |
|
|
— |
|
|
|
296,816 |
|
|
|
— |
|
|
|
296,816 |
|
2027 |
|
|
— |
|
|
|
596,155 |
|
|
|
— |
|
|
|
596,155 |
|
2028 |
|
|
— |
|
|
|
396,391 |
|
|
|
— |
|
|
|
396,391 |
|
2029 |
|
|
— |
|
|
|
559,749 |
|
|
|
— |
|
|
|
559,749 |
|
2030 |
|
|
— |
|
|
|
297,369 |
|
|
|
— |
|
|
|
297,369 |
|
2031 |
|
|
— |
|
|
|
444,654 |
|
|
|
— |
|
|
|
444,654 |
|
Thereafter |
|
|
— |
|
|
|
292,604 |
|
|
|
359,952 |
|
|
|
652,556 |
|
Total |
|
$ |
— |
|
|
$ |
4,153,650 |
|
|
$ |
364,664 |
|
|
$ |
4,518,314 |
|
35
The following schedule reflects the interest rate maturities of our outstanding fixed rate debt, net of debt issuance costs, discounts, premiums and fair market value adjustments, as of June 30, 2022 (dollars in thousands):
|
|
Fixed Rate Debt |
|
|
Effective Rate |
|
||
2022 |
|
$ |
124,921 |
|
|
|
3.3 |
% |
2023 |
|
|
349,172 |
|
|
|
4.2 |
% |
2024 |
|
|
398,433 |
|
|
|
4.0 |
% |
2025 |
|
|
402,098 |
|
|
|
4.2 |
% |
2026 |
|
|
296,816 |
|
|
|
1.2 |
% |
2027 |
|
|
596,155 |
|
|
|
3.7 |
% |
2028 |
|
|
396,391 |
|
|
|
4.2 |
% |
2029 |
|
|
559,749 |
|
|
|
3.7 |
% |
2030 |
|
|
297,369 |
|
|
|
3.1 |
% |
2031 |
|
|
444,654 |
|
|
|
1.8 |
% |
Thereafter |
|
|
652,556 |
|
|
|
3.8 |
% |
Total |
|
$ |
4,518,314 |
|
|
|
3.4 |
% |
Unsecured Revolving Credit Facility & Commercial Paper
As of June 30, 2022, MAALP had a $1.0 billion unsecured revolving credit facility with an option to expand to $1.5 billion. The revolving credit facility bore an interest rate of the London Interbank Offered Rate plus a spread of 0.75% to 1.45% based on an investment grade pricing grid. The revolving credit facility was scheduled to mature in May 2023 with an option to extend for two additional six-month periods. As of June 30, 2022, there was no outstanding balance under the revolving credit facility, while $4.0 million of capacity was used to support outstanding letters of credit.
In July 2022, MAALP amended its unsecured revolving credit facility, increasing borrowing capacity to $1.25 billion with an option to expand to $2.0 billion. The amended revolving credit facility has a maturity date of October 2026 with two six-month extension options and bears interest at an adjusted Secured Overnight Financing Rate plus a spread of 0.70% to 1.40% based on an investment grade pricing grid, currently at 0.775%. This revolving credit facility serves as our primary source of short-term liquidity.
MAALP has established an unsecured commercial paper program, whereby it can issue unsecured commercial paper notes with varying maturities not to exceed 397 days up to a maximum aggregate amount outstanding of $500.0 million. As of June 30, 2022, there were no borrowings outstanding under the commercial paper program.
Unsecured Senior Notes
As of June 30, 2022, MAALP had $4.2 billion of publicly issued unsecured senior notes outstanding.
Secured Property Mortgages
MAALP maintains secured property mortgages with various life insurance companies. As of June 30, 2022, we had $367.9 million of secured property mortgages outstanding.
For more information regarding our debt capital resources, see Note 6 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Equity
As of June 30, 2022, MAA owned 115,438,832 OP Units, comprising a 97.3% limited partnership interest in MAALP, while the remaining 3,202,377 outstanding OP Units were held by limited partners of MAALP other than MAA. Holders of OP Units (other than MAA) 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 MAA’s common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed. MAA has registered under the Securities Act the 3,202,377 shares of its common stock that, as of June 30, 2022, were issuable upon redemption of OP Units, in order for those shares to be sold freely in the public markets.
In August 2021, MAA entered into two 18-month forward sale agreements with respect to a total of 1.1 million shares of its common stock at an initial forward sale price of $190.56 per share, which is net of issuance costs. Under the forward sale agreements, the forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor equal to a specified daily rate less a spread and will be decreased based on amounts related to dividends on MAA’s common stock during the term of the forward sale agreements. No shares had been settled under the forward sale agreements as of June 30, 2022. Subject to certain conditions, we generally have the right to elect cash or net share
36
settlement under the forward sale agreements, although we expect to settle the forward sale agreements entirely by the full physical delivery of shares of MAA’s common stock in exchange for cash proceeds. We intend to use any cash proceeds upon settlement of the forward sale agreements to fund our development and redevelopment activities, among other potential uses.
In November 2021, the Company entered into an equity distribution agreement to establish a new at-the-market, or ATM, sharing offering program, replacing MAA’s previous ATM program and allowing MAA to sell shares of its common stock from time to time to or through its sales agents into the existing market at current market prices, and to enter into separate forward sales agreements to or through its forward purchasers. Under its current ATM program, MAA has the authority to issue up to an aggregate of 4.0 million shares of its common stock, at such times to be determined by MAA. MAA has no obligation to issue shares through the ATM program. During the six months ended June 30, 2022 and 2021, MAA did not sell any shares of common stock under its ATM program. As of June 30, 2022, there were 4.0 million shares remaining under the ATM program.
For more information regarding our equity capital resources, see Note 8 and Note 9 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Material Cash Requirements
As of June 30, 2022, we had $125.7 million in debt obligations maturing in the year ending December 31, 2022 as well as interest payments on fixed rate debt obligations of $78.1 million. As of June 30, 2022, we also had obligations to make additional capital contributions to three technology-focused limited partnerships in which we hold equity interests. The capital contributions may be called by the general partners at any time after giving appropriate notice. As of June 30, 2022, we had committed to make additional capital contributions totaling up to $31.7 million if and when called by the general partners of the limited partnerships.
We have other material cash requirements that do not represent contractual obligations, but we expect to incur in the ordinary course of our business.
As of June 30, 2022, we had five development communities under construction totaling 1,759 apartment units once complete. Expected total costs for the five development projects are $444.0 million, of which $230.4 million had been incurred through June 30, 2022. We expect to have additional development projects in the future. In addition, our property redevelopment and repositioning activities are ongoing, and we incur expenditures relating to recurring capital replacements, which typically include scheduled carpet replacement, new roofs, HVAC units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. For the year ending December 31, 2022, we expect that our total capital expenditures relating to our development activities, our property redevelopment and repositioning activities and recurring capital replacements will be in line with our total capital expenditures for the year ended December 31, 2021.
In July 2022, we funded the acquisition of a multifamily apartment community for approximately $73.0 million primarily from the proceeds we received from the sale of two multifamily apartment communities in June 2022.
We typically declare cash dividends on MAA’s common stock on a quarterly basis, subject to approval by MAA’s Board of Directors. The current annual dividend rate is $5.00 per common share. The timing and amount of future dividends will depend on actual cash flows from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986 and other factors as MAA’s Board of Directors deems relevant. MAA’s Board of Directors may modify our dividend policy from time to time.
For information regarding our material cash requirements as of December 31, 2021, see Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022.
Inflation
Our resident leases at our apartment communities allow for adjustments in the rental rate at the time of renewal, which may enable us to seek rent increases. The majority of our 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 on our revenues.
37
Critical Accounting Estimates
Please refer to our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022, for discussions of our critical accounting estimates. During the three months ended June 30, 2022, there were no material changes to these estimates.
Item 3. 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. As of June 30, 2022, 17.9% of our total market capitalization consisted of debt 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 from time to time interest rate swaps to effectively fix the interest rate on anticipated future debt transactions. We use our best efforts to have our debt instruments 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. As of June 30, 2022, 100.0% of our outstanding debt was subject to fixed rates. We regularly review interest rate exposure on outstanding borrowings in an effort to minimize the risk of interest rate fluctuations. There have been no material changes in our market risk as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022.
Item 4. Controls and Procedures.
Mid-America Apartment Communities, Inc.
(a) Evaluation of Disclosure Controls and Procedures
MAA is required to maintain disclosure controls and procedures, within the meaning of Exchange Act Rules 13a-15 and 15d-15. 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 June 30, 2022. Based on that evaluation, MAA’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2022 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) Changes in Internal Control over Financial Reporting
There was no change to MAA’s internal control over financial reporting, within the meaning of Exchange Act Rules 13a-15 and 15d-15, that occurred during the quarter ended June 30, 2022 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
The Operating Partnership is required to maintain disclosure controls and procedures, within the meaning of Exchange Act Rules 13a-15 and 15d-15. 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 June 30, 2022. 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 June 30, 2022 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) Changes in Internal Control over Financial Reporting
There was no change to the Operating Partnership’s internal control over financial reporting, within the meaning of Exchange Act Rules 13a-15 and 15d-15, that occurred during the quarter ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.
38
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We are subject to various legal proceedings and claims that arise in the ordinary course of our business operations. While the resolution of these matters cannot be predicted with certainty, we do not currently believe that these matters, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows in the event of a negative outcome. Matters that arise out of allegations of bodily injury, property damage and employment practices are generally covered by insurance.
Item 1A. Risk Factors.
There have been no material changes to the risk factors that were discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Purchases of Equity Securities
The following table reflects repurchases of shares of MAA’s common stock during the three months ended June 30, 2022:
Period |
|
Total Number of Shares Purchased (1) |
|
|
Average Price Paid per Share (2) |
|
|
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 (3) |
|
||||
April 1, 2022 - April 30, 2022 |
|
|
50,957 |
|
|
$ |
213.32 |
|
|
|
— |
|
|
|
4,000,000 |
|
May 1, 2022 - May 31, 2022 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
4,000,000 |
|
June 1, 2022 - June 30, 2022 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
4,000,000 |
|
Total |
|
|
50,957 |
|
|
|
|
|
|
— |
|
|
|
4,000,000 |
|
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not applicable.
39
Item 6. Exhibits.
Exhibit Number |
|
Exhibit Description |
|
|
|
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
3.3 |
|
|
|
|
|
3.4 |
|
|
|
|
|
3.5 |
|
|
|
|
|
10.1 |
|
|
|
|
|
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
31.3 |
|
|
|
|
|
31.4 |
|
|
|
|
|
32.1 |
|
|
|
|
|
32.2 |
|
|
|
|
|
32.3 |
|
|
|
|
|
32.4 |
|
|
|
|
|
101 |
|
Interactive Data Files submitted pursuant to Rule 405 of Regulation S-T formatted in Inline eXtensible Business Reporting Language (Inline XBRL) |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
MID-AMERICA APARTMENT COMMUNITIES, INC. |
|
|
|
|
Date: |
July 28, 2022 |
By: |
/s/ A. Clay Holder |
|
|
|
A. Clay Holder |
|
|
|
Senior Vice President and Chief Accounting Officer |
|
|
|
(Duly Authorized Officer) |
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
MID-AMERICA APARTMENTS, L.P. |
|
|
By: |
Mid-America Apartment Communities, Inc., its general partner |
|
|
|
|
Date: |
July 28, 2022 |
|
/s/ A. Clay Holder |
|
|
|
A. Clay Holder |
|
|
|
Senior Vice President and Chief Accounting Officer |
|
|
|
(Duly Authorized Officer) |
42
EXHIBIT 10.1
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JULY 25, 2022
BY AND AMONG
MID-AMERICA APARTMENTS, L.P.,
as Borrower,
THE LENDERS WHICH ARE PARTIES TO THIS AGREEMENT
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT,
WELLS FARGO SECURITIES, LLC,
KEYBANC CAPITAL MARKETS INC.,
AND
JPMORGAN CHASE BANK, N.A.,
AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS
KEYBANK NATIONAL ASSOCIATION,
AND
JPMORGAN CHASE BANK, N.A.,
AS CO-SYNDICATION AGENTS,
AND
TRUIST BANK,
U.S. BANK NATIONAL ASSOCIATION,
PNC BANK, NATIONAL ASSOCIATION,
CITIBANK, N.A.,
TD BANK, N.A.,
AND
MIZUHO BANK, LTD.,
AS CO-DOCUMENTATION AGENTS
TABLE OF CONTENTS
|
|
|
Page |
|
|
|
|
§1. |
DEFINITIONS AND RULES OF INTERPRETATION. |
1 |
|
|
§1.1 |
Definitions |
1 |
|
§1.2 |
Rules of Interpretation |
33 |
|
|
|
|
§2. |
THE CREDIT FACILITY. |
35 |
|
|
§2.1 |
Revolving Credit Loans |
35 |
|
§2.2 |
Facility Fee |
35 |
|
§2.3 |
Reduction and Termination of the Commitments |
36 |
|
§2.4 |
Swing Loan Commitment |
36 |
|
§2.5 |
Interest on Loans |
39 |
|
§2.6 |
Requests for Revolving Credit Loans |
40 |
|
§2.7 |
Funds for Loans |
40 |
|
§2.8 |
Use of Proceeds |
41 |
|
§2.9 |
Letters of Credit |
41 |
|
§2.10 |
Increase in Total Commitment |
46 |
|
§2.11 |
Extension of Maturity Date |
48 |
|
§2.12 |
Defaulting Lenders |
49 |
|
§2.13 |
Pro Rata Share |
52 |
|
|
|
|
§3. |
REPAYMENT OF THE LOANS. |
53 |
|
|
§3.1 |
Stated Maturity |
53 |
|
§3.2 |
Mandatory Prepayments |
53 |
|
§3.3 |
Optional Prepayments |
53 |
|
§3.4 |
Partial Prepayments |
53 |
|
§3.5 |
Effect of Prepayments |
54 |
|
|
|
|
§4. |
CERTAIN GENERAL PROVISIONS. |
54 |
|
|
§4.1 |
Conversion Options |
54 |
|
§4.2 |
Fees |
55 |
|
§4.3 |
Agent’s Fee |
55 |
|
§4.4 |
Funds for Payments |
55 |
|
§4.5 |
Computations |
56 |
|
§4.6 |
Suspension of Term SOFR Loans |
56 |
|
§4.7 |
Illegality |
58 |
|
§4.8 |
Additional Interest |
58 |
|
§4.9 |
Additional Costs, Etc. |
59 |
|
§4.10 |
Capital Adequacy |
60 |
|
§4.11 |
Breakage Costs |
60 |
|
§4.12 |
Default Interest |
60 |
|
§4.13 |
Certificate |
61 |
|
§4.14 |
Limitation on Interest |
61 |
|
§4.15 |
Certain Provisions Relating to Increased Costs |
61 |
|
§4.16 |
Taxes |
62 |
|
|
|
|
§5. |
UNSECURED OBLIGATIONS; GUARANTY. |
66 |
|
|
§5.1 |
Unsecured Obligations |
66 |
|
§5.2 |
Guarantors |
66 |
|
§5.3 |
Release of a Guarantor |
67 |
|
|
|
|
§6. |
REPRESENTATIONS AND WARRANTIES. |
67 |
|
|
§6.1 |
Corporate Authority, Etc. |
67 |
|
§6.2 |
Governmental Approvals |
68 |
|
§6.3 |
Title to Properties |
68 |
|
§6.4 |
Financial Statements |
69 |
|
§6.5 |
No Material Changes |
69 |
|
§6.6 |
Franchises, Patents, Copyrights, Etc. |
69 |
|
§6.7 |
Litigation |
69 |
|
§6.8 |
No Material Adverse Contracts, Etc. |
70 |
|
§6.9 |
Compliance with Other Instruments, Laws, Etc. |
70 |
|
§6.10 |
Tax Status |
70 |
|
§6.11 |
No Event of Default |
70 |
|
§6.12 |
Investment Company Act |
70 |
|
§6.13 |
Partners and the REIT |
70 |
|
§6.14 |
Employee Benefit Plans |
70 |
|
§6.15 |
Disclosure |
71 |
|
§6.16 |
Regulations T, U and X |
71 |
|
§6.17 |
Environmental Compliance |
72 |
|
§6.18 |
Subsidiaries; Organizational Structure |
72 |
|
§6.19 |
Property |
72 |
|
§6.20 |
Other Debt |
72 |
|
§6.21 |
Solvency |
73 |
|
§6.22 |
No Bankruptcy Filing |
73 |
|
§6.23 |
No Fraudulent Intent |
73 |
|
§6.24 |
[Reserved] |
73 |
|
§6.25 |
Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions |
73 |
|
§6.26 |
Unencumbered Properties |
74 |
|
§6.27 |
Affected Financial Information. |
74 |
|
|
|
|
§7. |
AFFIRMATIVE COVENANTS. |
74 |
|
|
§7.1 |
Punctual Payment |
74 |
|
§7.2 |
Maintenance of Office |
74 |
|
§7.3 |
Records and Accounts |
74 |
|
§7.4 |
Financial Statements, Certificates and Information |
74 |
|
§7.5 |
Notices |
77 |
|
§7.6 |
Existence; Maintenance of Properties |
78 |
|
§7.7 |
Insurance |
79 |
|
§7.8 |
Taxes; Liens |
79 |
|
§7.9 |
Inspection of Properties and Books |
79 |
|
§7.10 |
Compliance with Laws, Contracts, Licenses, and Permits |
80 |
|
§7.11 |
Further Assurances |
80 |
|
§7.12 |
Limiting Agreements |
80 |
|
§7.13 |
Business Operations |
81 |
|
§7.14 |
Distributions of Income to Borrower |
81 |
|
§7.15 |
Plan Assets |
81 |
|
§7.16 |
Unencumbered Properties |
81 |
|
§7.17 |
Compliance with Anti-Corruption Laws; Beneficial Ownership Regulation, Anti-Money Laundering Laws and Sanctions |
82 |
|
§7.18 |
REIT Covenants |
83 |
|
§7.19 |
Use of Proceeds. |
84 |
|
|
|
|
§8. |
NEGATIVE COVENANTS. |
84 |
|
|
§8.1 |
Restrictions on Indebtedness |
84 |
|
§8.2 |
Restrictions on Liens, Etc. |
85 |
|
§8.3 |
Merger, Consolidation |
86 |
|
§8.4 |
Distributions |
87 |
|
§8.5 |
Asset Sales |
87 |
|
§8.6 |
Restriction on Prepayment of Indebtedness |
87 |
|
§8.7 |
Derivatives Contracts |
88 |
|
§8.8 |
Transactions with Affiliates |
88 |
|
|
|
|
§9. |
FINANCIAL COVENANTS. |
88 |
|
|
§9.1 |
Unencumbered Leverage Ratio |
88 |
|
§9.2 |
Total Leverage Ratio |
88 |
|
§9.3 |
Total Secured Leverage Ratio |
88 |
|
§9.4 |
Adjusted Consolidated EBITDA to Consolidated Fixed Charges |
88 |
|
|
|
|
§10. |
CLOSING CONDITIONS. |
88 |
|
|
§10.1 |
Loan Documents |
88 |
|
§10.2 |
Certified Copies of Organizational Documents |
89 |
|
§10.3 |
Resolutions |
89 |
|
§10.4 |
Incumbency Certificate; Authorized Signers |
89 |
|
§10.5 |
Opinion of Counsel |
89 |
|
§10.6 |
Payment of Fees |
89 |
|
§10.7 |
Performance; No Default |
89 |
|
§10.8 |
Representations and Warranties |
89 |
|
§10.9 |
Proceedings and Documents |
89 |
|
§10.10 |
Compliance Certificate |
90 |
|
§10.11 |
Consents |
90 |
|
§10.12 |
[Reserved] |
90 |
|
§10.13 |
Other |
90 |
|
§10.14 |
Disbursement Instruction Agreement |
90 |
|
§10.15 |
No Material Adverse Change |
90 |
|
§10.16 |
Know Your Customer |
90 |
|
|
|
§11. |
CONDITIONS TO ALL BORROWINGS. |
90 |
|
|
§11.1 |
Representations True; No Default |
90 |
|
§11.2 |
Borrowing Documents |
91 |
|
|
|
|
§12. |
EVENTS OF DEFAULT; ACCELERATION; ETC. |
91 |
|
|
§12.1 |
Events of Default and Acceleration |
91 |
|
§12.2 |
Certain Cure Periods; Limitation of Cure Periods |
93 |
|
§12.3 |
Termination of Commitments |
94 |
|
§12.4 |
Remedies |
94 |
|
§12.5 |
Distribution of Proceeds |
95 |
|
§12.6 |
Collateral Account |
95 |
|
|
|
|
§13. |
SETOFF. |
97 |
|
|
|
|
|
§14. |
THE AGENT. |
98 |
|
|
§14.1 |
Authorization |
98 |
|
§14.2 |
Employees and Agents |
98 |
|
§14.3 |
No Liability |
98 |
|
§14.4 |
No Representations |
99 |
|
§14.5 |
Payments |
99 |
|
§14.6 |
Holders of Notes |
100 |
|
§14.7 |
Indemnity |
100 |
|
§14.8 |
Agent as Lender |
100 |
|
§14.9 |
Resignation; Removal |
100 |
|
§14.10 |
Duties in the Case of Enforcement |
101 |
|
§14.11 |
Agent May File Proofs of Claim |
102 |
|
§14.12 |
Reliance by Agent |
102 |
|
§14.13 |
Approvals |
103 |
|
§14.14 |
Borrower Not Beneficiary |
103 |
|
§14.15 |
Lender Credit Decision |
103 |
|
§14.16 |
Rates |
104 |
|
§14.17 |
Erroneous Payments |
104 |
|
§14.18 |
Sustainability Structuring Agent |
106 |
|
|
|
|
§15. |
EXPENSES. |
106 |
|
|
|
|
|
§16. |
INDEMNIFICATION. |
107 |
|
|
|
|
|
§17. |
SURVIVAL OF COVENANTS, ETC. |
108 |
|
|
|
|
|
§18. |
ASSIGNMENT AND PARTICIPATION. |
108 |
|
|
§18.1 |
Conditions to Assignment by Lenders |
108 |
|
§18.2 |
Register |
110 |
|
§18.3 |
New Notes |
110 |
|
§18.4 |
Participations |
110 |
|
§18.5 |
Pledge by Lender |
111 |
|
§18.6 |
No Assignment by the Borrower or the Guarantors |
111 |
|
§18.7 |
Disclosure |
112 |
|
§18.8 |
Amendments to Loan Documents |
112 |
|
§18.9 |
Mandatory Assignment |
112 |
|
§18.10 |
Titled Agents |
113 |
|
|
|
|
§19. |
NOTICES. |
113 |
|
|
|
|
|
§20. |
RELATIONSHIP. |
116 |
|
|
|
|
|
§21. |
GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. |
116 |
|
|
|
|
|
§22. |
HEADINGS. |
117 |
|
|
|
|
|
§23. |
COUNTERPARTS. |
117 |
|
|
|
|
|
§24. |
ENTIRE AGREEMENT, ETC. |
117 |
|
|
|
|
|
§25. |
WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. |
117 |
|
|
|
|
|
§26. |
DEALINGS WITH THE BORROWER. |
118 |
|
|
|
|
|
§27. |
CONSENTS, AMENDMENTS, WAIVERS, ETC. |
118 |
|
|
|
|
|
§28. |
SEVERABILITY. |
120 |
|
|
|
|
|
§29. |
TIME OF THE ESSENCE. |
120 |
|
|
|
|
|
§30. |
NO UNWRITTEN AGREEMENTS. |
120 |
|
|
|
|
|
§31. |
REPLACEMENT NOTES. |
121 |
|
|
|
|
|
§32. |
NO THIRD PARTIES BENEFITED. |
121 |
|
|
|
|
|
§33. |
PATRIOT ACT; ANTI-MONEY LAUNDERING LAWS. |
121 |
|
|
|
|
|
§34. |
JOINT AND SEVERAL LIABILITY. |
121 |
|
|
|
|
|
§35. |
TERMINATION; SURVIVAL. |
122 |
|
|
|
|
|
§36. |
PERFORMANCE BY REIT. |
122 |
|
|
|
|
|
§37. |
ACKNOWLEDGEMENT AND CONSENT TO BAIL-IN OF AFFECTED FINANCIAL INSTITUTIONS. |
122 |
|
|
|
|
|
§38. |
EFFECT OF AMENDMENT AND RESTATEMENT. |
123 |
EXHIBITS AND SCHEDULES
Exhibit A |
FORM OF REVOLVING CREDIT NOTE |
|
|
Exhibit B |
FORM OF SWING LOAN NOTE |
|
|
Exhibit C |
FORM OF JOINDER AGREEMENT |
|
|
Exhibit D |
FORM OF LOAN REQUEST NOTICE |
|
|
Exhibit E |
FORM OF LETTER OF CREDIT REQUEST |
|
|
Exhibit F |
FORM OF LETTER OF CREDIT APPLICATION |
|
|
Exhibit G |
FORM OF COMPLIANCE CERTIFICATE |
|
|
Exhibit H |
FORM OF GUARANTY |
|
|
Exhibit I |
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT |
|
|
Exhibit J |
FORM OF CONTRIBUTION AGREEMENT |
|
|
Exhibits K |
FORMS OF U.S. TAX COMPLIANCE CERTIFICATES |
|
|
Exhibit L |
DISBURSEMENT INSTRUCTION AGREEMENT |
|
|
Schedule 1.1 |
LENDERS AND COMMITMENTS |
|
|
Schedule 1.2 |
INITIAL UNENCUMBERED PROPERTIES |
|
|
Schedule 1.4 |
EXISTING LETTERS OF CREDIT |
|
|
Schedule 6.3 |
LIST OF ALL ENCUMBRANCES ON ASSETS |
|
|
Schedule 6.18(a) |
BORROWER’S SUBSIDIARIES |
|
|
Schedule 6.18(b) |
UNCONSOLIDATED ENTITIES OF BORROWER AND ITS SUBSIDIARIES |
|
|
Schedule 7.18 |
EXISTING INDEBTEDNESS |
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is made as of the 25th day of July, 2022, by and among MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (the “Borrower”), the Lenders party hereto and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent (as defined herein) for the Lenders.
R E C I T A L S
WHEREAS, the Borrower, the Agent (as defined herein) and certain of the Lenders are parties to that certain Third Amended and Restated Credit Agreement dated as of May 21, 2019 (as amended and in effect immediately prior to the date hereof, the “Existing Credit Agreement”);
WHEREAS, the Borrower has requested that the Agent and the Lenders amend and restate the Existing Credit Agreement;
WHEREAS, the Agent and the Lenders have agreed, subject to certain terms and conditions set forth herein, to amend and restate the Existing Credit Agreement in its entirety;
NOW, THEREFORE, in consideration of the recitals herein and mutual covenants and agreements contained herein, the parties hereto hereby amend and restate the Existing Credit Agreement in its entirety and covenant and agree as follows:
Additional Commitment Request Notice. See §2.10(a).
Adjusted Consolidated EBITDA. On any date of determination, the sum of (a) the Consolidated EBITDA for the preceding four (4) fiscal quarters minus (b) the Capital Reserves for such period.
Adjusted Daily Simple SOFR. For any day (a “Simple SOFR Rate Day”), a rate per annum equal to the greater of (a) the sum of (i) SOFR for the day (such day, a “Simple SOFR Determination Day”) that is five (5) U.S. Government Securities Business Days prior to (A) if such Simple SOFR Rate Day is a U.S. Government Securities Business Day, such Simple SOFR Rate Day or (B) if such Simple SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such Simple SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website; provided that if by 5:00 p.m. on the second (2nd) U.S. Government Securities Business Day immediately following any Simple SOFR Determination Day, SOFR in respect of such Simple SOFR Determination Day has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to Adjusted Daily Simple SOFR has not occurred, then SOFR for such Simple SOFR Determination Day will be
1
SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided further that SOFR as determined pursuant to this proviso shall be utilized for purposes of calculation of Adjusted Daily Simple SOFR for no more than three (3) consecutive Simple SOFR Rate Days and (ii) the Simple SOFR Adjustment and (b) the Floor. Any change in Adjusted Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
Adjusted Net Operating Income. On any date of determination, the sum of (a) the Net Operating Income for the preceding two (2) fiscal quarters annualized minus (b) the Capital Reserves for such period.
Adjusted Term SOFR. For purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the Term SOFR Adjustment; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.
Administrative Questionnaire. The Administrative Questionnaire completed by each Lender and delivered to the Agent in a form supplied by the Agent to the Lenders from time to time.
Affected Financial Institution. (a) Any EEA Financial Institution or (b) any UK Financial Institution.
Affected Lender. See §4.15.
Affiliate. With respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. Unless explicitly set forth to the contrary, a reference to an “Affiliate” means an Affiliate of the Borrower.
Agent. Wells Fargo Bank, National Association, acting as administrative agent for the Lenders, and its successors and assigns.
Agent’s Head Office. The Agent’s head office located at 600 South 4th Street, 9th Floor, Minneapolis, Minnesota 55415, or at such other location as the Agent may designate from time to time by notice to the Borrower and the Lenders.
Agent’s Special Counsel. Alston & Bird LLP or such other counsel as selected by Agent.
Agreement. This Fourth Amended and Restated Credit Agreement, including the Schedules and Exhibits hereto.
Agreement Regarding Fees. See §4.2.
Anti-Corruption Laws. All laws, rules, and regulations of any jurisdiction applicable to the Borrower, REIT or the Borrower’s Subsidiaries from time to time concerning or
2
relating to bribery or corruption, including, without limitation, the United States Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder and the U.K. Bribery Act 2010 and the rules and regulations thereunder.
Anti-Money Laundering Laws. Any and all laws, statutes, regulations or obligatory government orders, decrees, ordinances or rules applicable to the Borrower, REIT, the Borrower’s Subsidiaries or Affiliates related to terrorism financing or money laundering, including any applicable provision of the Patriot Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12U.S.C. §§ 1818(s), 1820(b) and 1951-1959).
Applicable Law. As to any Person, all applicable international, foreign, federal, state and local constitutions, statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof to which such Person is subject, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law to which such Person is subject.
Applicable Margin. The Applicable Margin shall mean, as of any date of determination, a percentage per annum determined by reference to the Credit Rating Level as set forth below:
Pricing Level |
Credit Rating Level |
Applicable Margin for SOFR Loans |
Applicable Margin for Base Rate Loans |
I |
Credit Rating Level 1 |
0.700% |
0.000% |
II |
Credit Rating Level 2 |
0.725% |
0.000% |
III |
Credit Rating Level 3 |
0.775% |
0.000% |
IV |
Credit Rating Level 4 |
0.850% |
0.000% |
V |
Credit Rating Level 5 |
1.050% |
0.050% |
VI |
Credit Rating Level 6 |
1.400% |
0.400% |
The Applicable Margin shall be determined by reference to the Credit Rating Level in effect from time to time; provided, however that no change in the Applicable Margin resulting from the application of the Credit Rating Levels or a change in the Credit Rating Level shall be effective until three Business Days after the date on which the Agent receives written notice of the application of the Credit Rating Levels or a change in such Credit Rating Level.
Approved Fund. Any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
Arranger. Collectively and individually as the context may require, Wells Fargo Securities, LLC, KeyBanc Capital Markets Inc. and JPM, or any successor, as joint lead arrangers and joint bookrunners.
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Assignment and Acceptance Agreement. See §18.1.
Authorized Officer. Any of the following Persons: Albert M. Campbell, Andrew Schaeffer, Robert Russ, Leslie B.C. Wolfgang, Robert J. DelPriore, H. Eric Bolton, Jr. and such other Persons as the Borrower shall designate in a written notice to Agent.
Available Tenor. As of any date of determination and with respect to the then-current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to §4.6(b)(iv).
Bail-In Action. The exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
Bail-In Legislation. (a) With respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
Balance Sheet Date. March 31, 2022.
Bankruptcy Code. Title 11, U.S.C.A., as amended from time to time or any successor statute thereto.
Base Rate. At any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or Adjusted Term SOFR, as applicable (provided that clause (c) shall not be applicable during any period in which Adjusted Term SOFR is unavailable or unascertainable). Notwithstanding the foregoing, in no event shall the Base Rate be less than 0.00%.
Base Rate Loans. Revolving Credit Loans and Swing Loans bearing interest calculated by reference to the Base Rate.
Benchmark. Initially, Adjusted Term SOFR; provided that if a Benchmark Transition Event has occurred with respect to Adjusted Term SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to §4.6(b)(i).
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Benchmark Replacement. With respect to any Benchmark Transition Event, the sum of: (a) the alternate benchmark rate that has been selected by the Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
Benchmark Replacement Adjustment. With respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Available Tenor, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
Benchmark Replacement Date. The earliest to occur of the following events with respect to the then-current Benchmark: (a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or (b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
Benchmark Transition Event. The occurrence of one or more of the following events with respect to the then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of
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such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the FRB, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
Benchmark Transition Start Date. In the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication).
Benchmark Unavailability Period. The period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with §4.6(b)(i) and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with §4.6(b)(i).
Beneficial Ownership Certification. A certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
Beneficial Ownership Regulation. 31 CFR § 1010.230.
Board. As defined in the definition of Change of Control.
Borrower. As defined in the preamble hereto.
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Breakage Costs. As reasonably determined by the Agent, the cost to any Lender of re-employing funds bearing interest at Adjusted Term SOFR incurred (or reasonably expected to be incurred) in connection with (i) any payment of any portion of the Loans bearing interest at Adjusted Term SOFR prior to the termination of any applicable Interest Period, (ii) the conversion of a Term SOFR Loan to any other applicable interest rate on a date other than the last day of the relevant Interest Period, or (iii) the failure of the Borrower to draw down, convert or continue, on the first day of the applicable Interest Period, any amount as to which the Borrower has elected a Term SOFR Loan.
Building. With respect to each Unencumbered Property or parcel of Real Estate, all of the buildings, structures and improvements now or hereafter located thereon.
Business Day. (a) Any day on which banking institutions located in the same city and State as the Agent’s Head Office are located and New York, New York are open for the transaction of banking business and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any SOFR Loans, or any Base Rate Loan as to which the interest rate is determined by reference to Adjusted Term SOFR, any day that is a Business Day described in clause (a) and that is also a U.S. Government Securities Business Day. Unless specifically referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.
Capital Reserve. For any period and with respect to any improved multifamily Real Estate, an amount equal to (i) $200 per apartment unit multiplied by (ii) a fraction, the numerator of which is the number of days in such period and the denominator of which is 365. For any period and with respect to any improved office Real Estate an amount equal to (i) $0.25 multiplied by (ii) the square footage of all office Real Estate multiplied by (iii) a fraction, the numerator of which is the number of days in such period and the denominator of which is 365. For any period and with respect to any improved Real Estate which is not multifamily or office Real Estate, an amount equal to (i) $0.15 multiplied by (ii) the square footage of any such Real Estate multiplied by (iii) a fraction, the numerator of which is the number of days in such period and the denominator of which is 365. If the term Capital Reserve is used without reference to any specific Real Estate, then the amount shall be determined on an aggregate basis with respect to all Real Estate of Borrower and its Subsidiaries and a proportionate share of all Real Estate of all Unconsolidated Entities.
Capitalization Rate. Five and three quarters percent (5.75%).
Capitalized Lease. A finance lease as defined under Accounting Standards Codification 842 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) (and related interpretations) under which the discounted future rental payment obligations of the lessee or the obligor are required to be capitalized on the balance sheet of such Person in accordance with GAAP.
Capitalized Value. For any Real Estate as of any date of determination, an amount equal to (a) the Adjusted Net Operating Income for such Real Estate for the previous two (2) fiscal quarters annualized divided by (b) the Capitalization Rate.
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Cash Collateralize. To pledge and deposit with or deliver to the Agent, for the benefit of the Issuing Lenders or the Lenders, as collateral for Letter of Credit Liabilities or obligations of Lenders to fund participations in respect of Letter of Credit Liabilities, cash or deposit account balances or, if the Agent and the Issuing Lenders shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Agent and the Issuing Lender. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
Cash Equivalents. As of any date, (i) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than one year from such date, (ii) time deposits and certificates of deposits having maturities of not more than one year from such date and issued by any domestic commercial bank having, (A) senior long term unsecured debt rated at least A or the equivalent thereof by S&P or A2 or the equivalent thereof by Moody’s and (B) capital and surplus in excess of $100,000,000.00; (iii) commercial paper rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing within one hundred twenty (120) days from such date, and (iv) shares of any money market mutual fund rated at least AAA or the equivalent thereof by S&P or at least Aaa or the equivalent thereof by Moody’s.
Change of Control. A Change of Control shall exist upon the occurrence of any of the following:
(a) any Person (including a Person’s Affiliates and associates) or group (as that term is understood under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations thereunder) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of a percentage (based on voting power, in the event different classes of stock shall have different voting powers) of the voting stock of REIT equal to at least fifty percent (50%);
(b) as of any date a majority of the Board of Directors or similar body (the “Board”) of REIT consists of individuals who were not either (i) directors of REIT as of the corresponding date of the previous year, or (ii) selected, nominated or approved for consideration by the shareholders to become directors by the Board of REIT of which a majority consisted of individuals described in clause (b)(i) above, or (iii) selected, nominated or approved for consideration by the shareholders to become directors by the Board of REIT, which majority consisted of individuals described in clause (b)(i) above and individuals described in clause (b) (ii), above; or
(c) REIT (i) fails to own directly or indirectly, free of any lien, encumbrance or other adverse claim, at least sixty percent (60%) of the economic, voting and beneficial interests of the Borrower, (ii) or one or more Wholly Owned Subsidiaries of the REIT (or one or more Wholly Owned Subsidiaries of a Wholly Owned Subsidiary of the REIT), fails to be the sole general partner of the Borrower, or (iii) shall fail to control the management and policies of the Borrower. For the avoidance of doubt and notwithstanding anything herein or in any other Loan Document to the contrary, REIT may hold any ownership interest of the Borrower directly or indirectly through one or more of its Wholly Owned Subsidiaries.
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Closing Date. The first date on which all of the conditions set forth in §10 and §11 have been satisfied.
Code. The Internal Revenue Code of 1986, as amended, and all regulations and formal guidance issued thereunder.
Collateral Account. A special deposit account established by the Agent pursuant to §12.6 and under its sole dominion and control.
Commitment. With respect to each Lender, the amount set forth on Schedule 1.1 hereto as the amount of such Lender’s Commitment to make or maintain Loans (other than Swing Loans) to the Borrower and to participate in Swing Loans and Letters of Credit, as the same may be changed from time to time in accordance with the terms of this Agreement.
Commitment Increase. See §2.10.
Commitment Percentage. With respect to each Lender, the percentage set forth on Schedule 1.1 hereto as such Lender’s percentage of the aggregate Commitments of all of the Lenders, as the same may be changed from time to time in accordance with the terms of this Agreement; provided that if the Commitments of the Lenders have been terminated as provided in this Agreement, then the Commitment Percentage of each Lender shall be determined based on the Commitment Percentage of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof.
Communications. See §7.4.
Compliance Certificate. See §7.4(c).
Conforming Changes. With respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of §4.6 and other technical, administrative or operational matters) that the Agent decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
Connection Income Taxes. Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
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Consolidated. With reference to any term defined herein, that term as applied to the accounts of a Person and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.
Consolidated EBITDA. For any period, the sum, without duplication of (i) Consolidated Net Income of the Consolidated Entities for such period determined in accordance with GAAP, plus amounts which have been deducted and minus amounts which have been added for (a) Consolidated Interest Expense; (b) provision for taxes based on income; (c) amortization of debt discount, deferred charges and deferred financing costs, or similar items; and (d) depreciation and amortization; plus (ii) the Unconsolidated Allocation Percentage of any of the items described above in this definition that are attributable to any Unconsolidated Entity for such period.
Consolidated Entities. Collectively, the Borrower and all Subsidiaries of the Borrower.
Consolidated Fixed Charges. For any period of determination, the sum (without duplication) of (a) Consolidated Interest Expense for such period, plus (b) all Preferred Distributions paid during such period (other than Preferred Distributions paid by a Consolidated Entity to another Consolidated Entity), plus (c) the scheduled principal amount of all amortization payments in respect to Indebtedness of the Consolidated Entities during such period (other than any such Indebtedness owed to another Consolidated Entity and any balloon payments), plus(d) the Consolidated Entities’ Unconsolidated Allocation Percentage in the fixed charges referred to above of their Unconsolidated Entities for such period.
Consolidated Interest Expense. For any period of determination, (a) consolidated total interest (whether accrued or paid) actually payable by the Consolidated Entities, together with the interest portion of payments on Capitalized Leases of the Consolidated Entities, determined on a Consolidated basis for such period minus (b) any non-cash amounts included in such total Consolidated Interest Expense which reflect the amortization of deferred financing charges for such period.
Consolidated Net Income. For any period, the amount of net income (or loss) of the Consolidated Entities for such period determined in accordance with GAAP but excluding (without duplication): (1) gains and losses on sales of properties and other investments; (2) extraordinary items and the effect of any item that is non-cash and non-recurring; (3) property valuation gains and losses (including impairment charges); (4) the portion of net income (loss) of the Consolidated Entities allocable to noncontrolling interest; (5) the income or expense attributable to transactions involving derivative instruments that do not qualify for hedge accounting in accordance with GAAP; (6) gains or losses on early extinguishment of Indebtedness, and (7) all prepayment penalties and all legal, accounting, financial advisory and similar costs or fees incurred in connection with any debt financing or amendment thereto, acquisition, disposition, recapitalization or similar transaction (regardless of whether such transaction is completed).
Consolidated Total Asset Value. On any date of determination, on a Consolidated basis for the Consolidated Entities, Consolidated Total Asset Value shall mean as of any date of determination the sum of the following (without duplication):
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(a) with respect to multi-family Real Estate owned or leased pursuant to a Ground Lease by the Consolidated Entities for four (4) full fiscal quarters or more (other than those included under clauses (c) and (d) below), (x) the Adjusted Net Operating Income attributable to such Real Estate divided by (y) the Capitalization Rate; plus
(b) with respect to multi-family Real Estate owned or leased pursuant to a Ground Lease by the Consolidated Entities for less than four (4) full fiscal quarters (other than those included under clauses (c) and (d) below), the undepreciated book value determined in accordance with GAAP of all such Real Estate; plus
(c) the undepreciated book value determined in accordance with GAAP of all Development Properties owned or leased pursuant to a Ground Lease by the Consolidated Entities; plus
(d) the undepreciated book value determined in accordance with GAAP of all Unimproved Land owned or leased pursuant to a Ground Lease by the Consolidated Entities; plus
(e) the aggregate amount of all Unrestricted Cash and Cash Equivalents of the Consolidated Entities as of the date of determination determined in accordance with GAAP; plus
(f) with respect to other Real Estate owned by the Consolidated Entities not included in (a),
(b), (c), and (d), the undepreciated book value determined in accordance with GAAP of all such Real Estate; plus
(g) the Borrower’s Unconsolidated Allocation Percentage of the Consolidated Total Asset Value attributable to any of the items listed above in (a) – (f) above in this definition owned by an Unconsolidated Entity.
For purposes of determining Consolidated Total Asset Value, assets no longer owned as of a date of determination shall be excluded from such calculation. To the extent that in the aggregate the Consolidated Total Asset Value attributable to assets owned by Unconsolidated Entities, Subsidiaries that are not Wholly Owned Subsidiaries, Unimproved Land, Development Properties, Mortgage Notes and other promissory notes, Stock Investments and Real Estate other than multi-family Real Estate would exceed 25.0% of Consolidated Total Asset Value, such excess shall be excluded from Consolidated Total Asset Value.
Consolidated Total Indebtedness. On any date of determination, all Indebtedness of the Consolidated Entities determined on a Consolidated basis and shall include (without duplication) the Consolidated Entities’ Unconsolidated Allocation Percentage of the Indebtedness of their Unconsolidated Entities.
Consolidated Total Secured Indebtedness. On any date of determination, all Secured Indebtedness of the Consolidated Entities determined on a Consolidated basis and shall include (without duplication) the Consolidated Entities’ Unconsolidated Allocation Percentage of the Secured Indebtedness of their Unconsolidated Entities.
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Consolidated Total Unsecured Indebtedness. On any date of determination, all Unsecured Indebtedness of the Consolidated Entities determined on a Consolidated basis and shall include (without duplication) the Consolidated Entities’ Unconsolidated Allocation Percentage of the Unsecured Indebtedness of their Unconsolidated Entities.
Contribution Agreement. That certain Contribution Agreement as may be required to be executed by the Borrower and the Guarantors, if any, pursuant to the terms hereof, in the form attached hereto as Exhibit J, as the same may be modified, amended or ratified from time to time.
Control. The possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
Controlled JV Entity(ies). A Subsidiary of Borrower (a) that is not a Wholly Owned Subsidiary
of the Borrower, (b) in respect of which the Borrower or a Wholly Owned Subsidiary of the Borrower owns and controls at least 65.0% of all outstanding Equity Interests, (c) in respect of which the Borrower or a Wholly Owned Subsidiary of the Borrower has the ability, in its sole discretion, to acquire any outstanding Equity Interests of each other Person at an ascertainable price set forth in such entity’s constituent documents and (d) which owns or leases under a Ground Lease an Unencumbered Property. A Wholly Owned Subsidiary of a Controlled JV Entity shall be a Controlled JV Entity.
Conversion/Continuation Request. A notice given by the Borrower to the Agent of its election to convert or continue a Loan in accordance with §4.1.
Credit Rating. As of any date of determination, the higher of the credit ratings (or their equivalents) then assigned to Borrower’s long-term senior unsecured non-credit enhanced debt by either of the Rating Agencies. A credit rating of BBB- from S&P is equivalent to a credit rating of Baa3 from Moody’s and vice versa. A credit rating of BBB from S&P is equivalent to a credit rating of Baa2 from Moody’s and vice versa. A credit rating of BBB+ from S&P is equivalent to a credit rating of Baa1 by Moody’s and vice versa. It is the intention of the parties that if Borrower shall only obtain a credit rating from one of the Rating Agencies without seeking a credit rating from the other of the Rating Agencies, the Borrower shall be entitled to the benefit of the Credit Rating Level for such credit rating. If Borrower shall have obtained a credit rating from both of the Rating Agencies, the higher of the two ratings shall control, provided that the lower rating is only one level below that of the higher rating. If the lower rating is more than one level below that of the higher credit rating, the operative rating shall be deemed to be one rating level lower than the higher of the two ratings. In the event that Borrower shall have obtained a credit rating from both of the Rating Agencies and shall thereafter lose such rating (whether as a result of a withdrawal, suspension, election to not obtain a rating, or otherwise) from one of the Rating Agencies, the operative rating would be deemed to be one rating level lower than the remaining rating. In the event that Borrower shall have obtained a credit rating from both of the Rating Agencies and shall thereafter lose such rating (whether as a result of withdrawal,
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suspension, election to not obtain a rating, or otherwise) from both of the Rating Agencies, Borrower shall be deemed for the purposes hereof not to have a credit rating. If at any time either of the Rating Agencies shall no longer perform the functions of a securities rating agency, then the Borrower and the Agent shall promptly negotiate in good faith to agree upon a substitute rating agency or agencies (and to correlate the system of ratings of each substitute rating agency with that of the rating agency being replaced), and pending such amendment, the Credit Rating of the other of the Rating Agencies, if one has been provided, shall continue to apply. A Credit Rating that rates the Borrower and REIT jointly shall for the purposes of this Agreement constitute a Credit Rating of the Borrower.
Credit Rating Level. One of the following five pricing levels, as applicable, and provided, that the initial Applicable Margin shall be at Credit Rating Level 3:
Credit Rating Level 1. The Credit Rating Level which would be applicable for so long as the Credit Rating is greater than or equal to A by S&P or A2 by Moody’s;
Credit Rating Level 2. The Credit Rating Level which would be applicable for so long as the Credit Rating is greater than or equal to A- by S&P or A3 by Moody’s and Credit Rating Level 1 is not applicable;
Credit Rating Level 3. The Credit Rating Level which would be applicable for so long as the Credit Rating is greater than or equal to BBB+ by S&P or Baa1 by Moody’s and Credit Rating Levels 1 and 2 are not applicable;
Credit Rating Level 4. The Credit Rating Level which would be applicable for so long as the Credit Rating is greater than or equal to BBB by S&P or Baa2 by Moody’s and Credit Rating Levels 1, 2 and 3 are not applicable;
Credit Rating Level 5. The Credit Rating Level which would be applicable for so long as the Credit Rating is greater than or equal to BBB- by S&P or Baa3 by Moody’s and Credit Rating Levels 1, 2, 3 and 4 are not applicable; and
Credit Rating Level 6. The Credit Rating Level which would be applicable for so long as the Credit Rating is less than BBB- by S&P or Baa3 by Moody’s or there is no Credit Rating.
Debtor Relief Laws. The Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar Applicable Laws or regulations relating to the relief of debtors in the United States of America or other applicable jurisdictions from time to time in effect.
Default. See §12.1.
Default Rate. See §4.12.
Defaulting Lender. Subject to §2.12(f), any Lender that (a) has failed to (i) fund all or any portion of its Loan within two (2) Business Days of the date such Loans were required to
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be funded hereunder unless such Lender notifies the Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied or waived, or (ii) pay to the Agent or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Borrower and the Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within two (2) Business Days after written request by the Agent or the Borrower, to confirm in writing to the Agent and the Borrower that it will comply with its prospective funding obligations, if any, hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to §2.12(f)) upon delivery of written notice of such determination to the Borrower and each Lender.
Derivatives Contract. Any and all rate swap transactions, basis swaps, credit derivative transactions, rate cap transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement. Not in limitation of the foregoing, the term “Derivatives Contract” includes any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement.
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Development Property. Any Real Estate owned or acquired by Borrower or any of its Subsidiaries and on which the Borrower or any of its Subsidiaries is actively pursuing construction of one or more buildings for primary use as a multifamily property; provided that any such property will no longer be considered to be a Development Property at the earlier to occur of (i) the first date that not less than 90% of the apartment units in such multifamily property are occupied subject to a lease and (ii) such Real Estate having been in operation for six (6) full fiscal quarters.
Directions. See §14.13.
Disbursement Instruction Agreement. An agreement substantially in the form of Exhibit L to be executed and delivered by the Borrower pursuant to §10.14, as the same may be amended, restated or modified from time to time with the prior written approval of the Agent.
Distribution. Any (a) dividend or other distribution, direct or indirect, on account of any Equity Interest of the Guarantors, the Borrower, or any of their respective Subsidiaries now or hereafter outstanding, except a dividend payable solely in Equity Interests of identical class to the holders of that class; (b) redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interest of the Guarantors, the Borrower, or any of their respective Subsidiaries now or hereafter outstanding; and (c) payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity Interests of the Guarantors, the Borrower, or any of their respective Subsidiaries now or hereafter outstanding.
Dollars or $. Dollars in lawful currency of the United States of America.
Drawdown Date. The date on which any Loan is made or is to be made, and the date on which any Loan is converted in accordance with §4.1.
EEA Financial Institution. (a) Any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
EEA Member Country. Any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
EEA Resolution Authority. Any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any credit institution or investment firm established in any EEA Member Country.
Electronic System. See §7.4.
Eligible Real Estate. Real Estate:
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(a) which is wholly-owned in fee (or leased under a Ground Lease) by Borrower, a Wholly Owned Subsidiary of Borrower or a Controlled JV Entity;
(b) which is located within the continental United States or Hawaii;
(c) which is (i) Unimproved Land, (ii) a Development Property, (iii) Real Estate that is not income-producing multifamily property, Unimproved Land or Development Property or (iv) an income-producing multifamily property, which contains improvements that are in operating condition and available for occupancy, is currently open for business to the public and has been fully and continuously operating during the immediately preceding three (3) month period, and with respect to which valid certificates of occupancy and all other operating permits and licenses have been validly issued and are in full force and effect.
(d) as to which all of the representations set forth in §6 of this Agreement concerning Unencumbered Property are true and correct; and
(e) which is in compliance with and would not cause a Default or Event of Default under this Agreement.
Employee Benefit Plan. Any employee benefit plan within the meaning of §3(3) of ERISA maintained or contributed to by the Borrower, the REIT, any Guarantor or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. Any Applicable Law whether now existing or hereinafter enacted, promulgated or issued, with respect to any Hazardous Substances, mold, drinking water and groundwater (as relates to pollution or contamination), wetlands, landfills, open dumps, storage tanks, underground storage tanks, solid waste, waste water, storm water run-off, or waste emissions. Without limiting the generality of the foregoing, the term shall encompass each of the following statutes and their state and local equivalents, and regulations promulgated thereunder, and amendments and successors to such statutes and regulations, as may be enacted and promulgated from time to time: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (codified in scattered sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42 U.S.C. §9601 et seq.); (ii) the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.); (iii) the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.); (iv) the Toxic Substances Control Act (15 U.S.C. §2061 et seq.); (v) the Clean Water Act (33 U.S.C. §1251 et seq.); (vi) the Clean Air Act (42 U.S.C. §7401 et seq.); (vii) the Safe Drinking Water Act (21 U.S.C. §349; 42 U.S.C. §201 and §300f et seq.); (viii) the National Environmental Policy Act of 1969 (42 U.S.C. §4321); (ix) the Superfund Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); and (x) Title III of the Superfund Amendment and Reauthorization Act (40 U.S.C. §1101 et seq.).
Equity Interests. With respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any
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other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.
Equity Offering. The issuance and sale after the Closing Date by REIT of any equity securities of REIT.
ERISA. The Employee Retirement Income Security Act of 1974, as amended and in effect from time to time, and all regulations and formal guidance issued thereunder.
ERISA Affiliate. Any Person which is treated as a single employer with Borrower or its Subsidiaries under §414 of the Code or §4001 of ERISA, and any predecessor entity of any of them.
ERISA Reportable Event. A reportable event with respect to a Guaranteed Pension Plan within the meaning of §4043 of ERISA as to which the requirement of notice has not been waived or any other event with respect to which the Borrower or an ERISA Affiliate could have liability under ERISA §4062(e) or §4063.
ESG. As defined in §27(b).
ESG Amendment. As defined in §27(b).
ESG Pricing Provisions. As defined in §27(b).
ESG Ratings. As defined in §27(b).
EU Bail-In Legislation Schedule. The EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time.
Erroneous Payment. As defined in §14.17(a).
Erroneous Payment Deficiency Assignment. As defined in §14.17(d).
Erroneous Payment Impacted Class. As defined in §14.17(d).
Erroneous Payment Return Deficiency. As defined in §14.17(d).
Exchange Act. As defined in the definition of Change of Control.
Excluded Tax. Any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts
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payable to or for the account of such Lender with respect to an applicable interest in a Loan or its Commitment pursuant to an Applicable Law in effect on the date on which (i) such Lender acquires such interest in the Loan or its Commitment (other than pursuant to an assignment request by Borrower under §4.15 as a result of costs sought to be reimbursed pursuant to §4.16) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to §4.16, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with §4.16(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.
Event of Default. See §12.1.
Existing Credit Agreement. As defined in the Recitals hereto.
Existing Letters of Credit. The letters of credit issued by KeyBank and described on Schedule 1.4 hereto.
Extended Letter of Credit. See §2.9(a).
Extension Request. See §2.11(a).
Facility Fee. See §2.2.
FATCA. Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
Federal Funds Rate. For any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotation for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by the Agent. Notwithstanding the foregoing, if the Federal Funds Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
Federal Reserve Bank of New York’s Website. The website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.
Fee Letter. That certain fee letter dated as of June 27, 2022 by and among Borrower, Wells Fargo Bank, KeyBank and the Arrangers.
Floor. A rate of interest equal to 0.00%.
Foreign Lender. A Lender that is not a U.S. Person.
FRB. The Board of Governors of the Federal Reserve System of the United States.
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Fronting Exposure. At any time there is a Defaulting Lender, (a) with respect to an Issuing Lender, such Defaulting Lender’s Commitment Percentage of the outstanding Letter of Credit Liabilities with respect to Letters of Credit issued by such Issuing Lender other than Letter of Credit Liabilities as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (b) with respect to a Swing Loan Lender, such Defaulting Lender’s Commitment Percentage of Swing Loans made by such Swing Loan Lender other than Swing Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders, repaid by the Borrower or Cash Collateralized in accordance with the terms hereof.
Fund. Any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
GAAP. Generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.
Governmental Authority. Any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau, commission, board, department or other entity (including, without limitation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority, or any taxing authority) or any arbitrator, in each case exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government and with authority to bind the applicable party at law, and including any supra-national bodies such as the European Union or the European Central Bank.
Ground Lease. A ground lease containing (a) the following terms and conditions: (i) a remaining term (inclusive of any unexercised extension options exercisable at lessee’s sole option) of thirty (30) years or more from the Closing Date or in the event that such remaining term is less than thirty (30) years, such ground lease either (x) contains an unconditional end-of-term purchase option in favor of the lessee for consideration that is nominal or reasonably estimated by Borrower to be less than twenty percent (20%) of the fair market value of such property, as confirmed by the Agent or (y) provides that the lessee’s leasehold interest therein automatically becomes a fee-owned interest at the end of the term; (ii) the right of the lessee to mortgage and encumber its interest in the leased property without the consent of the lessor; (iii) the obligation of the lessor to give the holder of any mortgage Lien on such leased property written notice of any defaults on the part of the lessee and agreement of such lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or complete foreclosure, and fails to do so; (iv) reasonable transferability of the lessee’s interest under such lease, including the ability to sublease; and (v) such other rights customarily required by mortgagees making a loan secured by the interest of the holder of the leasehold estate demised pursuant to a ground lease; or (b) terms and conditions otherwise reasonably acceptable to the Agent.
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Guaranteed Pension Plan. Any employee pension benefit plan within the meaning of §3(2) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.
Guarantors. Collectively, the Persons, if any, that are party to the Guaranty (including all guarantors pursuant to §5.2), and individually any one of them.
Guaranty. The Unconditional Guaranty of Payment and Performance given, if required by the terms of this Agreement, by the Guarantors, if any, to and for the benefit of Agent and the Lenders, as the same may be modified, amended, restated or ratified, such Guaranty to be in the form attached hereto as Exhibit H.
Hazardous Substances. Each and every element, compound, chemical mixture, contaminant, pollutant, toxic substances, oil, material, waste or other substance which is defined, determined or identified as hazardous or toxic under any Environmental Law. Without limiting the generality of the foregoing, the term shall mean and include:
(i) “hazardous substances” as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendment and Reauthorization Act of 1986, or Title III of the Superfund Amendment and Reauthorization Act, each as amended, and regulations promulgated thereunder;
(ii) “hazardous waste” and “regulated substances” as defined in the Resource Conservation and Recovery Act of 1976, as amended, and regulations promulgated thereunder; and
(iii) “hazardous materials” as defined in the Hazardous Materials Transportation Act, as amended, and regulations promulgated thereunder.
Increase Date. See §2.10(a).
Increase Notice. See §2.10(a).
Indebtedness. With respect to a Person, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed (other than trade debt incurred in the ordinary course of business); (b) all obligations of such Person, whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit (but only to the extent of any outstanding balance), (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property or services rendered; (c) obligation of such Person as a lessee or obligor under a Capitalized Lease; (d) reimbursement obligations, contingent or otherwise, in connection with any letters of credit actually issued (other than letters of credit issued to provide credit enhancement or support with respect to other Indebtedness of such Person or any of its Subsidiaries if such other Indebtedness appears as a liability on the consolidated balance sheet of such Person and its consolidated Subsidiaries in accordance with GAAP) or amounts representing
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the balance deferred and unpaid of the purchase price of any property except any such balance that constitutes an accrued expense or trade payable; (e) all obligations of such Person in respect of any purchase obligation, repurchase obligation, takeout commitment or forward equity commitment, in each case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be solely satisfied by the issuance of Equity Interests); (f) all Indebtedness of other Persons which such Person has guaranteed or is otherwise recourse to such Person (except for guaranties of customary exceptions for fraud, misapplication of funds, environmental indemnities, violation of “special purpose entity” covenants, and other similar exceptions to recourse liability until a claim is made with respect thereto, and then shall be included only to the extent of the amount of such claim), including any obligation to supply funds to or in any manner to invest directly or indirectly in a Person, to maintain working capital or equity capital of a Person or otherwise to maintain net worth, solvency or other financial condition of a Person, to purchase indebtedness, or to assure the owner of indebtedness against loss, including, without limitation, through an agreement to purchase property, securities, goods, supplies or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise; and (g) such Person’s Unconsolidated Allocation Percentage of the Indebtedness of any Unconsolidated Entity of such Person. Indebtedness of any Person shall include Indebtedness of any partnership in which such Person is a general partner to the extent of such Person’s pro rata share of the ownership of such partnership (except if such Indebtedness, or portion thereof, is recourse to such Person, in which case the greater of such Person’s pro rata portion of such Indebtedness or the amount of the recourse portion of the Indebtedness, shall be included as Indebtedness of such Person). All Loans and Letter of Credit Liabilities shall constitute Indebtedness of the Borrower.
Indemnified Taxes. (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower or any Guarantor under any Loan Document and (b) to the extent not otherwise described in the immediately preceding clause (a), Other Taxes.
Information Materials. See §7.4.
Interest Payment Date. As to each Base Rate Loan, the first (1st) day of each calendar month during the term of such Loan. As to each Swing Loan, as provided in §2.4. As to each Term SOFR Loan, the last day of the applicable Interest Period and on the date such Term SOFR Loan is converted or paid in full, provided that in the event that the Interest Period shall be for a period in excess of one (1) month, then interest shall also be payable on the one (1) month anniversary of the commencement of such Interest Period.
Interest Period. With respect to each Term SOFR Loan (a) initially, the period commencing on the Drawdown Date of such Term SOFR Loan and ending one, three or six months thereafter, and (b) thereafter, each period commencing on the day following the last day of the next preceding Interest Period applicable to such Loan and ending on the last day of one of the periods set forth above, as selected by the Borrower in a Loan Request Notice or Conversion/Continuation Request; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:
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(i) if any Interest Period with respect to a Term SOFR Loan would otherwise end on a day that is not a Business Day, such Interest Period shall end on the next succeeding Business Day, unless such next succeeding Business Day occurs in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, as determined conclusively by the Agent in accordance with the then current bank practice;
(ii) if the Borrower shall fail to give notice as provided in §4.1(c), the Borrower shall be deemed to have requested a Term SOFR Loan with respect to the affected Term SOFR Loan with an Interest Period of one month as provided in, and subject to, the terms of §4.1(c);
(iii) any Interest Period pertaining to a Term SOFR Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the applicable calendar month;
(iv) no Interest Period relating to any Term SOFR Loan shall extend beyond the Maturity Date; and
(v) No tenor that has been removed from this definition pursuant to §4.6(b)(iv) shall be available for specification in any Loan Request Notice or Conversion/Continuation Request.
Investments. With respect to any Person, all shares of capital stock, evidences of Indebtedness and other securities issued by any other Person and owned by such Person, all loans, advances, or extensions of credit to, or contributions to the capital of, any other Person, all purchases of the securities or business or integral part of the business of any other Person and commitments and options to make such purchases, all interests in real property, and all other investments; provided, however, that the term “Investment” shall not include (i) equipment, inventory and other tangible personal property acquired in the ordinary course of business, or (ii) current trade and customer accounts receivable for services rendered in the ordinary course of business and payable in accordance with customary trade terms. In determining the aggregate amount of Investments outstanding at any particular time: (a) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (b) there shall be deducted in respect of each Investment any amount received as a return of capital; (c) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (a) may be deducted when paid; and (d) there shall not be deducted in respect of any Investment any decrease in the value thereof.
Issuing Lender. Each of Wells Fargo Bank, KeyBank and JPM, each in its capacity as the Lender issuing the Letters of Credit, and any successor thereto. KeyBank shall be the Issuing Lender with respect to the Existing Letters of Credit.
Joinder Agreement. The Joinder Agreement with respect to the Guaranty and the Contribution Agreement to be executed and delivered pursuant to §5.2 by any Guarantor, such Joinder Agreement to be substantially in the form of Exhibit C hereto.
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JPM. JPMorgan Chase Bank, N.A.
KeyBank. KeyBank National Association.
KPIs. As defined in §27(b).
L/C Commitment Amount. See §2.9(a).
Leases. Leases, licenses and agreements, whether written or oral, relating to the use or occupation of space in any Building or of any Real Estate.
Lenders. Wells Fargo Bank, the other lending institutions which are party hereto and any other Person which becomes an assignee of any rights of a Lender pursuant to §18 (but not including any participant as described in §18). The Issuing Lenders and Swing Loan Lenders shall each be a Lender, as applicable.
Lending Office. For each Lender and for each Type of Loan, the office of such Lender specified in such Lender’s Administrative Questionnaire or in the applicable Assignment and Acceptance Agreement, or such other office of such Lender as such Lender may notify the Agent in writing from time to time.
Letter of Credit. Any standby letter of credit issued at the request of the Borrower and for the account of the Borrower or its Subsidiaries in accordance with §2.9.
Letter of Credit Liabilities. At any time and in respect of any Letter of Credit, without duplication, the sum of (a) the Stated Amount of such Letter of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement Obligations of the Borrower at such time due and payable in respect of all drawings made under such Letter of Credit. For purposes of this Agreement, a Lender (other than the Lender acting as the Issuing Lender of such Letter of Credit) shall be deemed to hold a Letter of Credit Liability in an amount equal to its participation interest in the related Letter of Credit under §2.9, and the Lender acting as the Issuing Lender for such Letter of Credit shall be deemed to hold a Letter of Credit Liability in an amount equal to its retained interest in the related Letter of Credit after giving effect to the acquisition by the Lenders of their participation interests under §2.9.
Letter of Credit Request. See §2.9(a).
Lien. See §8.2.
Loan Documents. This Agreement, the Notes, the Guaranty (if any), the Contribution Agreement (if any), the Joinder Agreement (if any), the Letter of Credit Requests and all other documents, instruments or agreements now or hereafter executed or delivered by the Borrower or a Guarantor, if any, in connection with the Loans.
Loan Request Notice. A written notice substantially in the form of Exhibit D to be executed and delivered to the Agent pursuant to §2.6 evidencing the Borrower’s request for a borrowing of Loans.
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Loan and Loans. An individual loan or the aggregate loans (including Revolving Credit Loans and Swing Loans), as the case may be, in the maximum principal amount of $1,250,000,000.00 (subject to increase in §2.10) to be made by the Lenders hereunder. All Loans shall be made in Dollars. Amounts drawn under Letters of Credit shall also be considered Revolving Credit Loans as provided in §2.9(i).
Manager. Mid-America Apartments, L.P., a Tennessee limited partnership and any Wholly Owned Subsidiary of Mid-America Apartments, L.P.
Material Acquisition. An acquisition or series of acquisitions by Borrower or any Subsidiary of Borrower that are in excess of ten percent (10%) of Consolidated Total Asset Value immediately prior to such acquisition or series of acquisitions.
Material Adverse Effect. A material adverse effect on (a) the business, properties, assets, financial condition or results of operations of Borrower and its Subsidiaries considered as a whole; (b) the ability of the Borrower or any Guarantor, if any, to perform any of its obligations under the Loan Documents; or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of Agent or the Lenders thereunder.
Material Subsidiary. Any Subsidiary of Borrower which has total asset value that constitutes in excess of five percent (5%) of Consolidated Total Asset Value. For the purposes of this definition, the asset value of each Subsidiary of Borrower shall be calculated consistent with the definition of Consolidated Total Asset Value.
Maturity Date. October 15, 2026, as such date may be extended as provided in §2.11, or such earlier date on which the Loan shall become due and payable pursuant to the terms hereof.
Moody’s. Moody’s Investor Service, Inc. or its successor.
Mortgage Notes. Seller financing notes that the Borrower has received from purchasers of its properties. For purposes of calculations in this Agreement, Mortgage Notes shall be valued in accordance with GAAP (including write-offs for uncollectability).
Multiemployer Plan. Any multiemployer plan within the meaning of §3(37) or §4001(a)(3) of ERISA or §414(f) of the Code maintained or contributed to by the Borrower, the REIT, any Guarantor or any ERISA Affiliate.
Net Operating Income. For any Real Estate and for a given period, the sum of the following (without duplication): (a) gross revenues (including interest income) received in the ordinary course from such Real Estate minus (b) all expenses paid or accrued related to the ownership, operation or maintenance of such Real Estate, including but not limited to taxes, assessments and the like, insurance, utilities, payroll costs, maintenance, repair and landscaping expenses, marketing expenses, and general and administrative expenses (including an appropriate allocation for legal, accounting, advertising, marketing and other expenses incurred in connection with such Real Estate, but specifically excluding general overhead expenses of the REIT, Borrower or any Subsidiary, any property management fees, debt service charges, income taxes, depreciation, amortization, other non-cash expenses, and any extraordinary, non-recurring expense
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associated with any financing, merger, acquisition, divestiture or other capital transaction) minus (c) a management fee in the amount of three percent (3.0%) of the gross revenues for such Real Estate for such period.
Non-Consenting Lender. See §18.9.
Non-Defaulting Lender. At any time, any Lender that is not a Defaulting Lender at such time.
Non-Recourse Exclusions. With respect to any Non-Recourse Indebtedness of any Person, any usual and customary exclusions from the non‑recourse limitations governing such Indebtedness, including, without limitation, exclusions for claims that (i) are based on fraud, intentional misrepresentation, misapplication of funds, gross negligence or willful misconduct, (ii) result from intentional mismanagement of or waste at the Real Estate securing such Non-Recourse Indebtedness, (iii) arise from the presence of Hazardous Substances in violation of Environmental Law on the Real Estate securing such Non-Recourse Indebtedness; or (iv) are the result of any unpaid real estate taxes and assessments (whether contained in a loan agreement, promissory note, indemnity agreement or other document).
Non-Recourse Indebtedness. Indebtedness of a Person for borrowed money (other than construction completion guaranties with respect to Development Properties) in respect of which recourse for payment (except for Non-Recourse Exclusions until a claim is made with respect thereto, and then such Indebtedness shall not constitute “Non-Recourse Indebtedness” only to the extent of the amount of such claim) is contractually and solely limited to specific assets of such Person encumbered by a Lien securing such Indebtedness and is not a general obligation of such Person.
Notes. Collectively, the Revolving Credit Notes and the Swing Loan Note.
Notice. See §19.
Obligations. All indebtedness, obligations and liabilities of the Borrower and the Guarantors, if any, to any of the Lenders or the Agent, individually or collectively, under this Agreement or any of the other Loan Documents or in respect of any of the Loans, the Notes, the Letters of Credit or other instruments at any time evidencing any of the foregoing, whether existing on the date of this Agreement or arising or incurred hereafter, or arising or incurred after the commencement of any bankruptcy or insolvency proceeding (whether or not the same is allowed as an enforceable claim in such proceeding), direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise.
OFAC. The U.S. Department of the Treasury’s Office of Foreign Assets Control.
Other Connection Taxes. With respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security
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interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
Other Permitted Liens. Collectively, (a) Liens for Taxes, assessments and governmental charges not yet due and payable or that are being contested in good faith by appropriate proceedings diligently conducted, and for which reserves in accordance with GAAP or otherwise reasonably acceptable to Agent have been provided, or Liens imposed by mandatory provisions of law such as for materialmen’s, mechanics’, warehousemen’s and other similar Liens arising in the ordinary course of business, securing payment of any liability whose payment is not yet due, and (b) Liens filed by mechanics and materialmen which have been bonded in accordance with statutory lien bonding procedures or which are being diligently contested in good faith, for which appropriate reserves have been established on the books of the Borrower or the Unencumbered Property Subsidiary as required by GAAP.
Other Taxes. All present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to §4.15 as a result of costs sought to be reimbursed pursuant to §4.16).
Outstanding. With respect to the Loans, the aggregate unpaid principal thereof as of any date of determination. With respect to Letters of Credit, the aggregate undrawn face amount of issued Letters of Credit.
Participant Register. See §18.4.
Patriot Act. The USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
PBGC. The Pension Benefit Guaranty Corporation created by §4002 of ERISA and any successor entity or entities having similar responsibilities.
Permitted Liens. Liens, security interests and other encumbrances not prohibited by §8.2.
Person. Any individual, corporation, limited liability company, partnership, trust, bank, trust company, land trust, business trust, unincorporated association, joint venture, business, or other legal entity or organization (whether or not a legal entity), or any other nongovernmental entity, and any government or any governmental agency or political subdivision thereof.
Plan Assets. Assets of any employee benefit plan subject to Part 4, Subtitle B, Title I of ERISA.
Preferred Distributions. For any period and without duplication, all Distributions paid, declared but not yet paid or otherwise due and payable during such period on Preferred Securities issued by any of the Consolidated Entities. Preferred Distributions shall not include dividends or distributions (a) paid or payable solely in Equity Interests of identical class payable
26
to holders of such class of Equity Interests; (b) paid or payable to any of the Consolidated Entities; or (c) constituting or resulting in the redemption of Preferred Securities, other than scheduled redemptions not constituting balloon, bullet or similar redemptions in full.
Preferred Securities. With respect to any Person, Equity Interests in such Person, which are entitled to preference or priority over any other Equity Interest in such Person in respect of the payment of dividends or distribution of assets upon liquidation, or both.
Prime Rate. At any time, the rate of interest per annum publicly announced from time to time by the Lender then acting as the Agent as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by the Lender acting as Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.
Public Lender. See §7.4.
Rating Agencies. S&P and Moody’s, collectively, and Rating Agency means either S&P or Moody’s.
Real Estate. All real property at any time owned or leased (in whole or in part) or operated by the Borrower or any of its Subsidiaries or Unconsolidated Entities and which is located in the continental United States or Hawaii, including, without limitation, the Unencumbered Properties.
Recipient. The Agent and any Lender, as applicable.
Record. The grid attached to any Note, or the continuation of such grid, or any other similar record, including computer records, maintained by the Agent with respect to any Loan referred to in such Note.
Register. See §18.2.
Reimbursement Obligation. The absolute, unconditional and irrevocable obligation of the Borrower to reimburse an Issuing Lender for any drawing honored by such Issuing Lender under a Letter of Credit issued by such Issuing Lender.
REIT. Mid-America Apartment Communities, Inc., a Tennessee corporation. Except with respect to clause (c)(ii) of the definition of Change of Control and §§6.1(a), 7.18(c) and (d), the definition of REIT shall also include any Wholly Owned Subsidiary of REIT through which REIT owns a limited partnership interest or general partnership interest in Borrower.
REIT Status. With respect to an entity, its status as a real estate investment trust as defined in §856(a) of the Code.
Relevant Governmental Body. The FRB or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the FRB or the Federal Reserve Bank of New York, or any successor thereto.
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Required Filing Date. The respective dates on which the Borrower is required to file with the SEC annual reports and quarterly reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Required Lenders. As of any date, (a) the Lender or Lenders whose aggregate Commitment Percentage is greater than fifty percent (50%) of the Total Commitment or (b) if the Commitments have been terminated or reduced to zero, Lenders holding more than fifty (50%) of the principal amount of the aggregate outstanding Loans and Letter of Credit Liabilities; provided that in determining said percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded and the Commitment Percentages of the Lenders shall be redetermined for voting purposes only to exclude the Commitment Percentages of such Defaulting Lenders; provided further that in the event that there are at least two (2) Lenders that are not Defaulting Lenders, in no event shall the “Required Lenders” include less than two (2) Lenders that are not Defaulting Lenders. For purposes of this definition, a Lender shall be deemed to hold a Swing Loan or a Letter of Credit Liability to the extent such Lender has acquired a participation therein under the terms of this Agreement and has not failed to perform its obligations in respect of such participation.
Revolving Credit Exposure. As to any Lender at any time, the aggregate principal amount at such time of its outstanding Loans and such Lender’s participation in Letter of Credit Liabilities and Swing Loans at such time.
Revolving Credit Loan. An individual Revolving Credit Loan or the aggregate Revolving Credit Loans, as the case may be, in the maximum principal amount of $1,250,000,000.00 (subject to increase as provided in §2.10) to be made by the Lenders hereunder as more particularly described in §2. Without limiting the foregoing, Revolving Credit Loans shall also include Revolving Credit Loans made pursuant to §2.9(g).
Revolving Credit Notes. See §2.1(b).
SEC. The United States Securities and Exchange Commission.
S&P. Standard & Poor’s Ratings Group or its successor.
Sanctioned Country. At any time, a country or territory which is itself the subject or target of any Sanctions (including, without limitation, as of the Closing Date, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic or Luhansk People’s Republic regions of Ukraine, Cuba, Iran, North Korea and Syria).
Sanctioned Person. At any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (including, without limitation, OFAC’s Specially Designated Nationals and Blocked Persons List and OFAC’s Consolidated Non-SDN List), the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in clauses (a) and (b), including a Person that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Peron(s).
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Sanctions. Any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by the U.S. government (including those administered by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority with jurisdiction over any Lender, the Borrower or any of its Subsidiaries or Affiliates.
Secured Indebtedness. Any Indebtedness of a Person that is secured by a Lien on any Real Estate or on any ownership interests in any other Person or on any other assets, provided that the portion of such Indebtedness included in Secured Indebtedness shall not exceed the sum of the aggregate value of the assets securing such Indebtedness at the time such Indebtedness was incurred, plus the aggregate value of any improvements to such assets, plus the value of any additional assets provided to secure such Indebtedness. Notwithstanding the foregoing, Secured Indebtedness shall exclude Indebtedness that is secured solely by ownership interests in another Person that owns Real Estate which is encumbered by a mortgage securing Indebtedness.
Simple SOFR Adjustment. A percentage equal to 0.10% per annum.
SOFR. A rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
SOFR Administrator. The Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
SOFR Administrator’s Website. The website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
SOFR Loans. Swing Loans bearing interest calculated by reference to Adjusted Daily Simple SOFR or Term SOFR Loans.
State. A state of the United States of America and the District of Columbia.
Stated Amount. The amount available to be drawn by a beneficiary under a Letter of Credit from time to time, as such amount may be increased or reduced from time to time in accordance with the terms of such Letter of Credit.
Stock Investments. Investment in Persons that are not Unconsolidated Entities or Subsidiaries.
Subsidiary. For any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other individuals performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and shall include all Persons
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the accounts of which are consolidated with those of such Person pursuant to GAAP. Without limiting the foregoing, each Controlled JV Entity is a Subsidiary of the Borrower.
Sustainability Metric Auditor. An internationally recognized “big four” auditing firm or a reputable sustainability assurance provider reasonably satisfactory to Agent and the Sustainability Structuring Agent.
Sustainability Structuring Agent. Wells Fargo Securities, LLC or its successor.
Swing Loan. A loan made by a Swing Loan Lender pursuant to §2.4(a).
Swing Loan Availability. See §2.4(a).
Swing Loan Commitment. The sum of $125,000,000.00, as the same may be changed from time to time in accordance with the terms of this Agreement.
Swing Loan Lender. Each of Wells Fargo Bank, KeyBank and JPM, each in its capacity as Swing Loan Lender and any successor thereof.
Swing Loan Note. See §2.4(b).
Taxes. All present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Term SOFR.
(a) For any calculation with respect to a Term SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (Eastern time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and
(b) for any calculation with respect to a Base Rate Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (Eastern time) on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred,
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then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Base Rate SOFR Determination Day.
Term SOFR Adjustment. A percentage equal to 0.10% per annum.
Term SOFR Administrator. CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Agent in its reasonable discretion).
Term SOFR Loans. Loans bearing interest calculated by reference to Adjusted Term SOFR (other than pursuant to the Adjusted Term SOFR component of the definition of “Base Rate”).
Term SOFR Reference Rate. The forward-looking term rate based on SOFR.
Titled Agents. The Arranger, any syndication agent or documentation agent, and the Sustainability Structuring Agent.
Total Commitment. The sum of the Commitments of the Lenders, as in effect from time to time. As of the Closing Date, the Total Commitment is $1,250,000,000.00.
Type. As to any Loan, its nature as a Base Rate Loan or a Term SOFR Loan.
Unadjusted Benchmark Replacement. The applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
Unconsolidated Allocation Percentage. As of any date of determination with respect to any Unconsolidated Entity, the aggregate percentage ownership interest of the Consolidated Entities in such Unconsolidated Entity as of such date.
Unconsolidated Entity. Any Person in which the Borrower directly or indirectly has an Investment that (a) is not consolidated with Borrower in accordance with GAAP or (b) is not a Subsidiary.
Unencumbered Asset Value. As of the date of determination, without duplication, the sum of the following amounts on such date, all as determined for the Consolidated Entities on a consolidated basis in accordance with GAAP: (i) Unrestricted Cash and Cash Equivalents, (ii) the Capitalized Value of all Unencumbered Properties owned or leased under a Ground Lease by a Consolidated Entity or a Controlled JV Entity (excluding the Capitalized Value of Unencumbered Properties that are classified as Development Properties as of such date and the Capitalized Value of all Unencumbered Properties that were not owned by any Consolidated Entity or Controlled JV Entity for four full fiscal quarters as of such date) which are multifamily properties, (iii) the undepreciated book value of all Unencumbered Properties which are multifamily properties and are owned or in operation by any Consolidated Entity or Controlled JV Entity for less than four (4) full fiscal quarters as of such date and all Unencumbered Properties
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that are classified as Development Properties as of such date, and (iv) the undepreciated book value of all Unencumbered Properties that are classified as other improved Real Estate owned or leased under a Ground Lease by a Consolidated Entity or Controlled JV Entity that is not a multifamily property or Unimproved Land as of such date. With respect to any Unencumbered Properties that are owned or leased by a Controlled JV Entity, the Unencumbered Asset Value attributable to such Unencumbered Properties shall be equal to Borrower’s pro rata economic share of the Capitalized Value or undepreciated book value, as applicable, of such Unencumbered Property. For purposes of this definition, to the extent the Unencumbered Asset Value attributable to the total of all of Development Properties, Controlled JV Entities, other Real Estate that is not a multifamily property and Unimproved Land would exceed twenty percent (20%) of Unencumbered Asset Value, such excess shall be excluded.
Unencumbered Properties. Eligible Real Estate which satisfy all conditions set forth in §7.16(a), or which have been included in the calculation of Unencumbered Asset Value pursuant to §7.16(b). The initial properties designated by the Borrower to be Unencumbered Properties are described on Schedule 1.2 hereto.
Unencumbered Property Subsidiary. As defined in §7.16(a)(i). Each Subsidiary of the Borrower or Controlled JV Entity which is or becomes a Guarantor pursuant to §5.2(a) shall be an Unencumbered Property Subsidiary.
Unimproved Land. Land on which no development (other than improvements that are not material and are temporary in nature) has occurred and on which no development is scheduled to occur within the following twelve (12) months.
Unrestricted Cash and Cash Equivalents. As of any date of determination, the sum of (a) the aggregate amount of Unrestricted cash and (b) the aggregate amount of Unrestricted Cash Equivalents (valued at fair market value). Notwithstanding the foregoing, however, cash held in escrow in connection with the completion of “like-kind” exchanges pursuant to Section 1031 of the Code shall be deemed to be cash of the Borrower for purposes hereof. As used in this definition, “Unrestricted” means the specified asset is not subject to any escrow, cash trap, negative pledge, reserves or Liens or claims of any kind in favor of any Person.
Unsecured Indebtedness. With respect to the Borrower and its Subsidiaries as of any date of determination, the Indebtedness of such Persons which is not Secured Indebtedness.
U.S. Government Securities Business Day. Any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities; provided, that for purposes of notice requirements in §2.6 and §4.1, in each case, such day is also a Business Day.
U.S. Person. Any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
U.S. Tax Compliance Certificate. See §4.16(g).
Wells Fargo Bank. As defined in the preamble hereto.
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Wholly Owned Subsidiary. As to a Person, any Subsidiary of such first Person that is directly or indirectly owned one hundred percent (100%) by such first Person.
Withholding Agent. The Borrower, any Guarantor and the Agent, as applicable.
Write-Down and Conversion Powers. (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
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34
35
Credit Rating Level |
Facility Fee Rate |
Credit Rating Level 1 |
0.100% |
Credit Rating Level 2 |
0.125% |
Credit Rating Level 3 |
0.150% |
Credit Rating Level 4 |
0.200% |
Credit Rating Level 5 |
0.250% |
Credit Rating Level 6 |
0.300% |
The Facility Fee shall be calculated for each day and shall be payable quarterly in arrears on the first (1st) day of each fiscal quarter for the immediately preceding fiscal quarter or portion thereof, and on any earlier date on which the Commitments shall be reduced or shall terminate as provided in §2.3, with a final payment on the Maturity Date. The Facility Fee shall be determined by reference to the Credit Rating Level in effect from time to time; provided, however, that no change in the Facility Fee rate resulting from a change in the Credit Rating Level shall be effective until three (3) Business Days after the date on which the Agent receives written notice of a change.
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37
38
39
40
41
42
43
44
45
46
47
48
(a) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and in §27.
(b) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to §12 or otherwise) or received by the Agent from a Defaulting Lender pursuant to §13 shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the Issuing Lender or the Swing Loan Lender hereunder; third, to Cash Collateralize the Issuing Lenders’ Fronting Exposures with respect to such Defaulting Lender in accordance with subsection (e) below; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; fifth, if so determined by the Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Issuing Lenders’ future Fronting Exposures with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with subsection (e) below; sixth, to the payment of any amounts owing to the Lenders, the Issuing Lenders or the Swing Loan Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender, any Issuing Lender or Swing Loan Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or amounts owing by such Defaulting Lender under §2.9(i) in respect of Letters of Credit (such amounts “L/C Disbursements”), in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in §11 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in Letter of Credit Liabilities and Swing Loans are held by the Lenders pro rata in accordance with their respective Commitment Percentages (determined without giving effect to the immediately following subsection (d)). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this subsection shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents thereto.
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(c) Certain Fees.
(i) No Defaulting Lender shall be entitled to receive any Facility Fee payable under §2.2 for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender)
(ii) Each Defaulting Lender shall be entitled to receive the fee payable under §2.9(e)(ii) for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Commitment Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to the immediately following subsection (e).
(iii) With respect to any Facility Fee or Letter of Credit fee not required to be paid to any Defaulting Lender pursuant to the immediately preceding clauses (i) or (ii), the Borrower shall (x) pay to each Non‑Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letter of Credit Liabilities or Swing Loans that has been reallocated to such Non‑Defaulting Lender pursuant to the immediately following subsection (d), (y) pay to the Issuing Lenders and the Swing Loan Lenders, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Lenders’ or Swing Loan Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(d) Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in Letter of Credit Liabilities and Swing Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Commitment Percentages (determined without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. Subject to §37, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.
(e) Cash Collateral, Repayment of Swing Loans.
(i) If the reallocation described in the immediately preceding subsection (d) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x) first, prepay Swing Loans in an amount equal to the Swing Loan Lender’s Fronting Exposure and (y) second, Cash Collateralize the Issuing Lenders’ Fronting Exposures in accordance with the procedures set forth in this subsection.
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(ii) At any time that there shall exist a Defaulting Lender, within five (5) Business Days following the written request of the Agent or an Issuing Lender (with a copy to the Agent), the Borrower shall Cash Collateralize such Issuing Lender’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to the immediately preceding subsection (d) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the aggregate Fronting Exposure of such Issuing Lender with respect to Letters of Credit issued and outstanding at such time.
(iii) The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grant to the Agent, for the benefit of the Issuing Lenders, and agree to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of Letter of Credit Liabilities, to be applied pursuant to the immediately following clause (iv). If at any time the Agent reasonably determines that Cash Collateral is subject to any right or claim of any Person other than the Agent and the Issuing Lenders as herein provided, or that the total amount of such Cash Collateral is less than the aggregate Fronting Exposures of the Issuing Lenders with respect to Letters of Credit issued and outstanding at such time, the Borrower will, within five (5) Business Days following the written request of the Agent, pay or provide to the Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).
(iv) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of Letter of Credit Liabilities (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(v) Cash Collateral (or the appropriate portion thereof) provided to reduce the Issuing Lenders’ Fronting Exposures shall no longer be required to be held as Cash Collateral pursuant to this subsection following (x) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (y) the determination by the Agent and the Issuing Lenders that there exists excess Cash Collateral; provided that, subject to the immediately preceding subsection (b), the Person providing Cash Collateral and the Issuing Lenders may (but shall not be obligated to) agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Loan Documents.
(f) Defaulting Lender Cure. If the Borrower, the Agent, the Swing Loan Lenders and the Issuing Lenders agree in writing that a Lender is no longer a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swing Loans to be held pro rata by the Lenders in accordance with their respective
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Commitment Percentages (determined without giving effect to the immediately preceding subsection (d)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to Fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
(g) Purchase of Defaulting Lender’s Commitment/Loans. During any period that a Lender is a Defaulting Lender, the Borrower may, by the Borrower giving written notice thereof to the Agent, such Defaulting Lender and the other Lenders, demand that such Defaulting Lender assign its Commitment and Loans to an assignee subject to and in accordance with the provisions of §18. No party hereto shall have any obligation whatsoever to initiate any such replacement or to assist in finding an assignee. In addition, any Lender who is not a Defaulting Lender may, but shall not be obligated, in its sole discretion, acquire the face amount of all or a portion of such Defaulting Lender’s Commitment and Loans via an assignment subject to and in accordance with the provisions of §18. In connection with any such assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment and Assumption and, notwithstanding §18, shall pay to the Agent an assignment fee in the amount of $7,500. The exercise by the Borrower of its rights under this Section shall be at the Borrower’s sole cost and expense and at no cost or expense to the Agent or any of the Lenders.
2.13 Pro Rata Share. Except to the extent otherwise provided herein: (a) each borrowing from the Lenders under §2.1, §2.4 and §2.9 shall be made from the Lenders, each payment of the fees under §2.2, §2.9(e)(ii) and §2.11(b) shall be made for the account of the Lenders, and each termination or reduction of the amount of the Commitments under §2.3 shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (b) each payment or prepayment of principal of Loans shall be made for the account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them, provided that, subject to §2.12, if immediately prior to giving effect to any such payment in respect of any Loans the outstanding principal amount of the Loans shall not be held by the Lenders pro rata in accordance with their respective Commitments in effect at the time such Loans were made, then such payment shall be applied to the Loans in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the Loans being held by the Lenders pro rata in accordance with such respective Commitments; (c) each payment of interest on Loans shall be made for the account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders; (d) the conversion and continuation of Loans of a particular Type shall be made pro rata among the Lenders according to the amounts of their respective Loans and the then current Interest Period for each Lender’s portion of each such Loan of such Type shall be coterminous; (e) the Lenders’ participation in, and payment obligations in respect of, Swing Loans under §2.4, shall be in accordance with their respective Commitment Percentages; and (f) the Lenders’ participation in, and payment obligations in respect of, Letters of Credit under §2.9, shall be in accordance with their respective Commitment Percentages. All payments of principal, interest, fees and other amounts in respect of the Swing Loans shall be for the account of the Swing Loan Lender only (except to the extent
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any Lender shall have acquired a participating interest in any such Swing Loan pursuant to §2.4(e), in which case such payments shall be pro rata in accordance with such participating interests).
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(a) Issuing Lender. For purposes of this Section, the term “Lender” includes the Issuing Lenders and the term “Applicable Law” includes FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower or any other Guarantor under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower or other applicable Guarantor shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c) Payment of Other Taxes by the Borrower. The Borrower and the other Guarantors shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.
(d) Indemnification by the Borrower. The Borrower and the other Guarantors shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
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(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower or another Guarantor has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower and the other Guarantors to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of §18 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Agent to the Lender from any other source against any amount due to the Agent under this subsection. The provisions of this subsection shall continue to inure to the benefit of an Agent following its resignation or removal as Agent.
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower or any Guarantor to a Governmental Authority pursuant to this Section, the Borrower or such other Guarantor shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.
(g) Status of Lenders.
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in the immediately following clauses (ii)(A), (ii)(B) and (ii)(D)) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person:
(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), an electronic
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copy of an executed IRS Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), whichever of the following is applicable:
(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, an electronic copy of an executed IRS Form W-8BEN, or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(II) an electronic copy of an executed IRS Form W-8ECI;
(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit K-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) an electronic copy of IRS Form W-8BEN or W-8BEN-E, as applicable,; or
(IV) to the extent a Foreign Lender is not the beneficial owner, an electronic copy of an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-2 or Exhibit K-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), an electronic copy of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Agent to determine the withholding or deduction required to be made; and
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(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Agent at the time or times prescribed by Applicable Law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent in writing of its legal inability to do so.
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(i) Survival. Each party’s obligations under this Section shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
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Incorporation; Good Standing. REIT is a corporation duly organized pursuant to its charter filed with the Tennessee Secretary of State, and is validly existing and in good standing under the laws of Tennessee. REIT is organized and conducts its business in a manner which enables it to qualify as a real estate investment trust under, and is entitled to the benefits of, §856 of the Code, and has elected to be treated as a real estate investment trust pursuant to the Code. The Borrower is a limited partnership duly organized pursuant to its certificate of limited partnership filed with the Tennessee Secretary of State, and is validly existing and in good standing under the laws of Tennessee. The Borrower (i) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated, and (ii) is in good standing and is duly authorized to do business in the jurisdictions where the Unencumbered Properties owned or leased by it are located and in each other jurisdiction where a failure to be so qualified in such other jurisdiction could reasonably be expected to have a Material Adverse Effect.
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Notwithstanding anything in this Agreement to the contrary, (i) none of the Guarantors, if any, nor Unencumbered Property Subsidiaries (including without limitation any Controlled JV Entity which owns a Controlled JV Entity) shall create, incur, assume, guarantee or be or remain liable contingently or otherwise, with respect to any Indebtedness described in §8.1(f) or any Indebtedness described in §8.1(g) that is Secured Indebtedness, (ii) a Guarantor, if any, shall only provide a guaranty of other Unsecured Indebtedness of the Borrower permitted pursuant to §8.1(g), and (iii) none of the Indebtedness described in §8.1(f) or §8.1(g) that is Secured Indebtedness shall have any of the Unencumbered Properties or any interest therein or equipment related thereto or any direct or indirect ownership interest in any Guarantor, if any, or Unencumbered Property Subsidiary as collateral, a borrowing base, asset pool or any similar form of credit support for such Indebtedness (provided that the foregoing shall not preclude the Borrower from incurring liability with respect to Non-Recourse Exclusions in connection with the Indebtedness described in §8.1(f)).
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Notwithstanding anything in this Agreement to the contrary, (A) no Unencumbered Property Subsidiary or Subsidiary of Borrower or a Controlled JV Entity owning an interest in an Unencumbered Property Subsidiary shall create or incur or suffer to be created or incurred or to exist any Lien other than Liens contemplated in §8.2(i)(A) and (iii); and (B) no Lien may be granted, suffered or incurred on any property, assets or revenues in favor of the lenders or holders under Unsecured Indebtedness without effectively providing that all Obligations shall be secured equally and ratably with such Indebtedness pursuant to agreements in form and substance reasonably satisfactory to the Agent. In addition, the provisions of §8.2(f) shall not apply to any agreement referred to in the last sentence of §7.12(a).
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The Borrower covenants and agrees that, so long as any Loan, Note or Letter of Credit is outstanding or any Lender has any obligation to make any Loans or issue any Letter of Credit, the following financial covenants will be met as of the end of each fiscal quarter of each fiscal year:
The obligation of the Lenders to close this Agreement and the obligation of the Lenders to make the Loans or issue any Letter of Credit shall be subject to the satisfaction or waiver of the following conditions precedent:
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The obligations of the Lenders to make any Loan or issue any Letter of Credit, whether on or after the Closing Date, shall also be subject to the satisfaction (or waiver in accordance with the terms of this Agreement) of the following conditions precedent:
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then, and in any such event, the Agent may, and upon the request of the Required Lenders shall, by notice in writing to the Borrower declare (i) all amounts owing with respect to this Agreement, the Notes, the Letters of Credit and the other Loan Documents to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower and (ii) an amount equal to 103% of the aggregate amount of all Letter of Credit Liabilities shall become immediately due and payable for deposit into the Collateral Account; provided that in the event of any Event of Default specified in §12.1(g), §12.1(h) or §12.1(i), all such amounts shall become immediately due and payable automatically and without any requirement of presentment, demand, protest or other notice of any kind from any of the Lenders or the Agent. Such amounts will be pledged to and held by Agent for the benefit of the Lenders as security for any amounts that become payable under the Letters of Credit and all other Obligations. Upon any draws under Letters of Credit, at Agent’s sole discretion, Agent may apply any such amounts to the repayment of amounts drawn thereunder and upon the expiration of the Letters of Credit any remaining amounts will be applied to the payment of all other Obligations or if there are no outstanding Obligations and Lenders have no further obligation to make Loans or issue Letters of Credit or if such excess no longer exists, such proceeds deposited by the Borrower will be released to the Borrower.
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(b) Notwithstanding the terms of §12.2(a), in the event that there shall occur any Default or Event of Default under §7.16 that affects only certain Unencumbered Properties or the owner(s) thereof, then the Borrower may elect to cure such Default or Event of Default under §7.16 (so long as no other Default or Event of Default would arise as a result) if Borrower, by written notice to Agent, removes such Unencumbered Property from the calculation of Unencumbered Asset Value and reduces the outstanding Loans and Letters of Credit, if necessary, so that no Default or Event of Default exists under this Agreement, in which event such notice, removal and reduction shall be completed within five (5) Business Days of such occurrence.
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Regardless of the adequacy of any collateral, during the continuance of any Event of Default, any deposits (general or specific, time or demand, provisional or final, regardless of currency, maturity, or the branch where such deposits are held) or other sums credited by or due from any Lender to the Borrower or the Guarantors, if any, and any securities or other property of the Borrower or the Guarantors, if any, in the possession of such Lender (or such Lender’s Affiliate) may, without notice to the Borrower or any Guarantor, if any, (any such notice being expressly waived by the Borrower and the Guarantors, if any) but with the prior written approval of Agent, be applied to or set off against the payment of Obligations and any and all other liabilities, direct, or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower or the Guarantors , if any, to such Lender, Agent will promptly provide Borrower with notice of any such set off of which Agent has received written notice. Each of the Lenders agrees with each other Lender that if such Lender shall receive from the Borrower or a Guarantor, if any, whether by voluntary payment, exercise of the right of setoff, or otherwise, and shall retain and apply to the payment of the Note or Notes held by such Lender (but excluding any Swing Loan Notes) any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Notes held by all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Lender receiving in respect of the Notes held by it its proportionate payment as contemplated by this Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. In the event that any Defaulting Lender shall exercise any such right of setoff, (a) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of this Agreement and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Agent and the Lenders, and (b) the Defaulting Lender shall provide promptly to the Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.
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The Borrower and the Guarantors, if any, agree to pay (a) the reasonable and documented out of pocket costs of producing and reproducing this Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) any Indemnified Taxes (including any interest and penalties in respect thereto) payable by the Agent or any of the Lenders, and including any taxes payable on or with respect to the transactions contemplated by this Agreement, and further including any such taxes payable by the Agent or any of the Lenders after the Closing Date (the Borrower and the Guarantors, if any, hereby agreeing to indemnify the Agent and each Lender with respect thereto), (c) the reasonable and documented out of pocket fees, expenses and disbursements of the counsel to the Agent and the Sustainability Structuring
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Agent and any local counsel to the Agent and the Sustainability Structuring Agent incurred in connection with the preparation, administration, or interpretation of the Loan Documents and other instruments mentioned herein, and amendments, modifications, approvals, consents or waivers hereto or hereunder, (d) the reasonable and documented out-of-pocket fees, costs, expenses and disbursements of Agent incurred in connection with the syndication and/or participation of the Loans in connection with the primary syndication of the Loans, (e) all other reasonable actual and verifiable out-of-pocket fees, expenses and disbursements of the Agent incurred by the Agent in connection with the preparation or interpretation of the Loan Documents and other instruments mentioned herein and the making of each advance and issuance of each Letter of Credit hereunder (without duplication of those items addressed in subparagraph (d), above), (f) all out-of-pocket expenses (including reasonable attorneys’ fees and costs, and the reasonable fees and costs of appraisers, engineers, investment bankers or other experts retained by any Lender or the Agent) incurred by any Lender, the Agent or the Sustainability Structuring Agent in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Borrower and the Guarantors, if any, or the administration thereof after the occurrence of a Default or Event of Default, including all such out-of-pocket expenses incurred in connection with any workout, restructuring or negotiation with respect thereto following the occurrence of a Default or an Event of Default and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to the Agent’s, the Sustainability Structuring Agent’s or any of the Lenders’ relationship with the Borrower or the Guarantors, if any, (g) all reasonable and documented out of pocket fees, expenses and disbursements of the Agent incurred in connection with UCC searches and title searches, (h) all reasonable out-of-pocket fees, expenses and disbursements (including reasonable attorneys’ fees and costs) which may be incurred by Wells Fargo Bank in connection with the execution and delivery of this Agreement and the other Loan Documents (without duplication of any of the items listed above), and (i) all expenses relating to the use of Intralinks, SyndTrak or any other similar system for the dissemination and sharing of documents and information in connection with the Loans. The covenants of this §15 shall survive the repayment of the Loans and the termination of the obligations of the Lenders hereunder.
The Borrower agrees to indemnify and hold harmless the Agent, the Sustainability Structuring Agent, the Lenders and each Arranger and each director, officer, employee, agent and Affiliate thereof and Person who controls the Agent, the Sustainability Structuring Agent or any Lender or any Arranger against any and all claims, actions and suits, whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character arising out of or relating to this Agreement or any of the other Loan Documents or the transactions contemplated hereby and thereby including, without limitation, (a) any and all claims for brokerage, leasing, finders or similar fees which may be made relating to the Unencumbered Properties or the Loans, (b) any condition of the Unencumbered Properties or any other Real Estate, (c) any actual or proposed use by the Borrower of the proceeds of any of the Loans or Letters of Credit, (d) any actual or alleged infringement of any patent, copyright, trademark, service mark or similar right of the Borrower or any of its Subsidiaries or the REIT, (e) the Borrower and the Guarantors, if any, entering into or performing this Agreement or any of the other Loan Documents, (f) any actual or alleged violation of any law, ordinance, code, order, rule, regulation, approval, consent, permit or license relating to the Unencumbered Properties or any other Real Estate, (g) with respect to the Borrower and its Subsidiaries and their respective
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properties and assets, the violation of any Environmental Law, (including, but not limited to, claims with respect to wrongful death, personal injury, nuisance or damage to property), (h) any use of Intralinks, Syndtrak or any other system for the dissemination and sharing of documents and information, and (i) shareholder or other lawsuits threatened or filed, or investigation undertaken as a result of the consummation of any transactions contemplated hereby, in each case including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding; provided, however, that the Borrower and the Guarantors, if any, shall not be obligated under this §16 to indemnify any Person for liabilities arising from such Person’s own material breach of its obligations under this Agreement or any other Loan Document, or otherwise as a result of such Person’s own gross negligence or willful misconduct, in each case, as determined by a court of competent jurisdiction after the exhaustion of all applicable appeal periods. If, and to the extent that the obligations of the Borrower and the Guarantors, if any, under this §16 are unenforceable for any reason, the Borrower and the Guarantors, if any, hereby agree to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under Applicable Law. The provisions of this §16 shall survive the repayment of the Loans, the return of the Letters of Credit and the termination of the obligations of the Lenders hereunder.
All covenants, agreements, representations and warranties made herein, in the Notes, in any of the other Loan Documents or in any documents or other papers delivered by the Borrower or any of its Subsidiaries pursuant hereto or thereto shall be deemed to have been relied upon by the Lenders, the Agent and the Sustainability Structuring Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Lenders of any of the Loans and issuance of any Letters of Credit, as herein contemplated, and shall continue in full force and effect so long as any amount due under this Agreement or the Notes or any of the other Loan Documents remains outstanding or any Letter of Credit remains Outstanding or any Lender has any obligation to make any Loans or issue any Letter of Credit. The indemnification obligations of the Borrower provided herein and in the other Loan Documents shall survive the full repayment of amounts due and the termination of the obligations of the Lenders hereunder and thereunder to the extent provided herein and therein. All statements contained in any certificate delivered to any Lender, the Agent or the Sustainability Structuring Agent at any time by the Borrower or any of its Subsidiaries pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by such Person hereunder.
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If to the Agent or Wells Fargo Bank:
Wells Fargo Bank, National Association
333 S. Grand Ave, 9th Floor
Los Angeles, CA 90071
Attn: Nina Johnnie
Email: Nina.C.Johnnie@wellsfargo.com
Telecopy No: (213) 358-7529
With an informational copy to:
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Wells Fargo Bank, National Association
550 S. Tryon St, 21st Floor
Charlotte, NC 28202
Attn: Carlette Mings
Email: Carlette.Mings@wellsfargo.com
Telecopy No: (980) 900-1295
If to the Agent under §2:
Wells Fargo Bank, National Association
Minneapolis Loan Center
600 South 4th Street, 9thFloor
Minneapolis, Minnesota 55415
Attn: Disbursement Administrator
Telecopy No.: (866) 595-7861
If to the Borrower:
Mid-America Apartments, L.P.
6815 Poplar Avenue, Suite 500
Germantown, TN 38138
Attn: Andrew Schaeffer
Email: andrew.schaeffer@maac.com
With a copy to:
Bass, Berry & Sims, PLC
100 Peabody Place, Suite 1300
Memphis, Tennessee 38103
Attn: T. Gaillard Uhlhorn
Email: guhlhorn@bassberry.com
to any other Lender which is a party hereto, at the address for such Lender set forth in its Administrative Questionnaire. Upon the Borrower’s request, the Agent shall give the Borrower the address for notice of a Lender provided in such Lender’s most current Administrative Questionnaire. Each Notice shall be effective upon being personally delivered or upon being sent by overnight courier or upon being deposited in the United States Mail as aforesaid, or if transmitted by telecopy (if a telecopy number is provided), upon being sent and confirmation of receipt, or if by electronic mail, as provided in §19(c) with respect to electronic mail. The time period in which a response to such Notice must be given or any action taken with respect thereto (if any), however, shall commence to run from the date of receipt if personally delivered or sent by overnight courier, or if so deposited in the United States Mail, the earlier of three (3) Business Days following such deposit or the date of receipt as disclosed on the return receipt or upon confirmation of delivery if transmitted by telecopy, electronic mail or other similar form of communication. Rejection or other refusal to accept or the inability to deliver because of changed address for which no notice was given shall be deemed to be receipt of the Notice sent. By giving at least five (5) days’ prior Notice thereof, the Borrower, a Lender or Agent shall have the right
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from time to time and at any time during the term of this Agreement to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America.
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Neither the Agent nor any Lender has any fiduciary relationship with or fiduciary duty to the Borrower, the REIT, or their respective Subsidiaries arising out of or in connection with this Agreement or the other Loan Documents or the transactions contemplated hereunder and thereunder, and the relationship between each Lender and Agent, and the Borrower is solely that of a lender and borrower, and nothing contained herein or in any of the other Loan Documents shall in any manner be construed as making the parties hereto partners, joint venturers or any other relationship other than lender and borrower.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN OR THEREIN, SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION 5‑1401, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE AGENT, ANY LENDER, THE ARRANGER, ANY OF SUCH PERSONS’ RESPECTIVE AFFILIATES OR ANY OF THE PARTNERS, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, COUNSEL, OTHER ADVISORS AND REPRESENTATIVES OF ANY OF SUCH PERSONS AND OF SUCH PERSON’S RESPECTIVE AFFILIATES IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE AGENT, ANY LENDER OR THE ARRANGER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY GUARANTOR OR ITS RESPECTIVE PROPERTIES IN THE COURTS OF ANY JURISDICTION. EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE
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SAME. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT, THE ARRANGER OR ANY LENDER OR THE ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
THE PROVISIONS OF THIS SECTION AND OF §25 HAVE BEEN CONSIDERED BY EACH PARTY WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS AND UNDER THE FEE LETTER, AND THE TERMINATION OF THIS AGREEMENT.
The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof.
This Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart (which may be effectively delivered by facsimile, in portable document format (“PDF”) or other similar electronic means), each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. In proving this Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.
This Agreement and the Loan Documents are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Agreement and the Loan Documents. All prior or contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superseded by this Agreement and the Loan Documents, and no party is relying on any promise, agreement or understanding not set forth in this Agreement and the Loan Documents. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in §27.
EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES AND TO THE EXTENT PERMITTED
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BY APPLICABLE LAW, PUNITIVE OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES OR DAMAGES OR OTHER REMEDIES EXPRESSLY PROVIDED FOR IN THIS AGREEMENT; PROVIDED THAT THE FOREGOING SHALL NOT WAIVE ANY CLAIM SUBJECT TO INDEMNIFICATION PURSUANT TO §16. THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER OR THE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER OR THE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS §25. THE BORROWER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS §25 WITH LEGAL COUNSEL AND THE BORROWER AGREES TO THE FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.
The Agent, the Lenders and their affiliates may accept deposits from, extend credit to, invest in, act as trustee under indentures of, serve as financial advisor of, and generally engage in any kind of banking, trust or other business with the Borrower, and its Subsidiaries, the REIT or any of their Affiliates regardless of the capacity of the Agent or the Lender hereunder. The Lenders acknowledge that, pursuant to such activities, Wells Fargo Bank or its Affiliates may receive information regarding such Persons (including information that may be subject to confidentiality obligations in favor of such Person) and acknowledge that the Agent shall be under no obligation to provide such information to them.
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The provisions of this Agreement are severable, and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.
Time is of the essence with respect to each and every covenant, agreement and obligation of the Borrower, the REIT and the Guarantors, if any, under this Agreement and the other Loan Documents.
THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. ANY ADDITIONAL TERMS OF THE AGREEMENT BETWEEN THE PARTIES ARE SET FORTH BELOW.
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Upon receipt of evidence reasonably satisfactory to the Borrower of the loss, theft, destruction or mutilation of any Note, and in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to the Borrower or, in the case of any such mutilation, upon surrender and cancellation of the applicable Note, the Borrower will execute and deliver, in lieu thereof, a replacement Note, identical in form and substance to the applicable Note and dated as of the date of the applicable Note and upon such execution and delivery all references in the Loan Documents to such Note shall be deemed to refer to such replacement Note.
This Agreement and the other Loan Documents are made and entered into for the sole protection and legal benefit of the Borrower, the Guarantors, if any, the Lenders, the Agent and their permitted successors and assigns, and no other Person (other than any Person expressly entitled to indemnification under §16 hereof) shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. All conditions to the performance of the obligations of the Agent and the Lenders under this Agreement, including the obligation to make Loans and issue Letters of Credit, are imposed solely and exclusively for the benefit of the Agent and the Lenders and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that the Agent and the Lenders will refuse to make Loans or issue Letters of Credit in the absence of strict compliance with any or all thereof and no other Person shall, under any circumstances, be deemed to be a beneficiary of such conditions, any and all of which may be freely waived in whole or in part by the Agent and the Lenders at any time if in their sole discretion they deem it desirable to do so. In particular, the Agent and the Lenders make no representations and assume no obligations as to third parties concerning the quality of the construction by the Borrower or any of its Subsidiaries of any development or the absence therefrom of defects.
The Agent and each Lender hereby notifies the Borrower, the REIT and the Guarantors, if any, that, pursuant to the requirements of the Patriot Act or any other Anti-Money Laundering Laws, each of them is required to obtain, verify and record information that identifies the Borrower and each Guarantor, if any, which information includes the name and address of the Borrower or Guarantor and other information that will allow such Lender or the Agent, as applicable, to identify the Borrower and each Guarantor, if any, in accordance with the Patriot Act or such Anti-Money Laundering Laws.
Each of the Borrower and the Guarantors, if any, covenants and agrees that each and every covenant and obligation of the Borrower or any Guarantor, if any, hereunder and under the other Loan Documents to which each is a party shall be the joint and several obligations of the Borrower and each Guarantor, if any.
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At such time as all Obligations (other than contingent indemnification obligations not yet due and payable and obligations which survive as provided in the following sentence) have been paid and satisfied in full, this Agreement shall terminate. The indemnities to which the Agent and the Lenders are entitled under the provisions of §§4.16(b), 4.9, 4.10, 4.11, 14.7, 15 and 16 and any other provision of this Agreement and the other Loan Documents, and the provisions of §21, shall continue in full force and effect and shall protect the Agent and the Lenders (i) notwithstanding any termination of this Agreement, or of the other Loan Documents, against events arising after such termination as well as before and (ii) at all times after any such party ceases to be a party to this Agreement with respect to all matters and events existing on or prior to the date such party ceased to be a party to this Agreement.
The Borrower shall cause the REIT to perform and comply with each covenant and agreement in this Agreement that is applicable to the REIT, and shall cause each warranty and representation in this Agreement that is applicable to the REIT to be and remain true and correct as and when such representations or warranties are made or repeated (subject to any applicable materiality qualifications), in each case regardless of whether Borrower has the power or ability to cause the same.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
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IN WITNESS WHEREOF, each of the undersigned have caused this Agreement to be executed by its duly authorized representatives as of the date first set forth above.
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BORROWER: |
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MID-AMERICA APARTMENTS, L.P., |
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a Tennessee limited partnership |
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By: |
Mid-America Apartment Communities, Inc., |
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a Tennessee corporation, its sole general partner |
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By: |
/s/ Andrew Schaeffer |
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Andrew Schaeffer |
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Senior Vice President, Treasurer and Director of Capital Markets |
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AGENT AND LENDERS: |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, |
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as Issuing Bank, Swing Loan Lender and Lender |
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By: |
/s/ Cristina Johnnie |
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Cristina Johnnie |
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Vice President |
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KEYBANK NATIONAL ASSOCIATION, |
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as Issuing Bank, Swing Loan Lender and Lender |
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By: |
/s/ Tayven Hike |
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Tayven Hike |
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Senior Vice President |
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JP MORGAN CHASE BANK, N.A., |
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as Issuing Bank, Swing Loan Lender and Lender |
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By: |
/s/ Nadeige Dang |
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Nadeige Dang |
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Executive Director |
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TRUIST BANK, f/k/a Branch Banking and Trust Company, |
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as a Lender |
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By: |
/s/ C. Vincent Hughes, Jr. |
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C. Vincent Hughes, Jr. |
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Director |
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U.S. BANK NATIONAL ASSOCIATION, |
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as a Lender |
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By: |
/s/ Timothy J. Tillman |
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Timothy J. Tillman |
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Senior Vice President |
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PNC BANK, NATIONAL ASSOCIATION, |
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as a Lender |
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By: |
/s/ Andrew T. White |
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Andrew T. White |
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Senior Vice President |
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CITIBANK, N.A., |
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as a Lender |
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By: |
/s/ Christopher J. Albano |
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Christopher J. Albano |
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Authorized Signatory |
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TD BANK, N.A., |
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as a Lender |
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By: |
/s/ Michael Duganich |
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Michael Duganich |
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Vice President |
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MIZUHO BANK, LTD., |
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as a Lender |
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By: |
/s/ Donna DeMagistris |
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Donna DeMagistris |
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Executive Director |
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SUMITOMO MITSUI BANKING CORPORATION, |
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as a Lender |
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By: |
/s/ Irlen Mak |
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Irlen Mak |
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Director |
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REGIONS BANK, |
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as a Lender |
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By: |
/s/ William Chalmers |
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William Chalmers |
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Senior Vice President |
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THE BANK OF NOVA SCOTIA, |
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as a Lender |
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By: |
/s/ Chelsea McCune |
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Chelsea McCune |
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Associate Director |
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FIFTH THIRD BANK, NATIONAL ASSOCIATION, |
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as a Lender |
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By: |
/s/ Joel Dalson |
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Joel Dalson |
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Senior Vice President |
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SCHEDULE 1.1
LENDERS AND COMMITMENTS
Lender |
Commitment
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Commitment Percentage |
Wells Fargo Bank, National Association |
$110,000,000.00 |
8.80% |
KeyBank National Association |
$110,000,000.00 |
8.80% |
JPMorgan Chase Bank, N.A. |
$110,000,000.00 |
8.80% |
Truist Bank |
$100,000,000.00 |
8.00% |
U.S. Bank National Association |
$100,000,000.00 |
8.00% |
PNC Bank, National Association |
$100,000,000.00 |
8.00% |
Citibank, N.A. |
$100,000,000.00 |
8.00% |
TD Bank, N.A. |
$100,000,000.00 |
8.00% |
Mizuho Bank, Ltd. |
$100,000,000.00 |
8.00% |
Sumitomo Mitsui Banking Corporation |
$85,000,000.00 |
6.80% |
Regions Bank |
$85,000,000.00 |
6.80% |
The Bank of Nova Scotia |
$85,000,000.00 |
6.80% |
Fifth Third Bank, National Association |
$65,000,000.00 |
5.20% |
Total |
$1,250,000,000.00 |
100.00% |
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EXHIBIT 31.1
CERTIFICATION
I, H. Eric Bolton, Jr., certify that:
Date: |
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July 28, 2022 |
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/s/ H. Eric Bolton, Jr. |
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H. Eric Bolton, Jr. |
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Chairman of the Board of Directors |
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Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Albert M. Campbell, III, certify that:
Date: |
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July 28, 2022 |
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/s/ Albert M. Campbell, III |
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Albert M. Campbell, III |
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Executive Vice President and Chief Financial Officer |
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EXHIBIT 31.3
CERTIFICATION
I, H. Eric Bolton, Jr., certify that:
Date: |
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July 28, 2022 |
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/s/ H. Eric Bolton, Jr. |
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H. Eric Bolton, Jr. |
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Chairman of the Board of Directors |
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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:
Date: |
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July 28, 2022 |
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/s/ Albert M. Campbell, III |
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Albert M. Campbell, III |
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Executive Vice President and 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 Quarterly Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Eric Bolton, Jr., Chairman of the Board of Directors 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:
Date: |
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July 28, 2022 |
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/s/ H. Eric Bolton, Jr. |
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H. Eric Bolton, Jr. |
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Chairman of the Board of Directors |
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Chief Executive Officer |
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 Quarterly Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, 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:
Date: |
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July 28, 2022 |
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/s/ Albert M. Campbell, III |
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Albert M. Campbell, III |
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Executive Vice President and Chief Financial Officer |
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 Quarterly Report of Mid-America Apartments, L.P. (the “Operating Partnership”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Eric Bolton, Jr., Chairman of the Board of Directors 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:
Date: |
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July 28, 2022 |
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/s/ H. Eric Bolton, Jr. |
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H. Eric Bolton, Jr. |
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Chairman of the Board of Directors |
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Chief Executive Officer of Mid-America Apartment Communities, Inc., general partner of Mid-America Apartments, L.P. |
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 Quarterly Report of Mid-America Apartments, L.P. (the “Operating Partnership”) on Form 10-Q for the period ended June 30, 2022, 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:
Date: |
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July 28, 2022 |
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/s/ Albert M. Campbell, III |
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Albert M. Campbell, III |
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Executive Vice President and Chief Financial Officer of Mid-America Apartment Communities, Inc., general partner of Mid-America Apartments, L.P. |