Mid-America in all the right places 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . Mid-America Apartment Communities, Inc. 2007 Annual Report We believe Mid-America is in all the right places…and in more ways than just location. We invite you to continue reading our report to hear about 1. the advantages of our Sunbelt regional focus, 2. the strength of our operating platform, 3. the high quality of our apartment communities, and 4. the disciplined nature of our growth strategy. The right location will always be important to achieving success in real estate investing. But getting it right on other variables is also necessary in order to capture long-term success from a real estate investment portfolio. Our track record of strong and stable performance not only reflects the right locations, but also says a lot about the competitive advantages of our operating systems, the award-winning quality of our apartment commu nities, the disciplined nature in which we deploy capital, the strong service commitment of our people and the strength of our company culture. Let us tell you more… MAA PG.1 Mid-America Apartment Communities, Inc. is a publicly-traded real estate investment trust which owned 137 multifamily apartment communities with 40,248 apartment homes throughout the Sunbelt region of the United States at year end. NYSE: MAA S&P SmallCap 600 Financial Highlights (Dollars and shares in thousands, except per share data) Net income Preferred dividend distributions Premiums and original issuance costs associated with the redemption of preferred stock $ Net income available for common shareholders Depreciation of real estate assets Net gain on insurance and other settlement proceeds Gains on dispositions within unconsolidated entities Net loss on insurance and other settlement proceeds of discontinued operations Depreciation of real estate assets of discontinued operations Gains on sale of discontinued operations Depreciation of real estate assets of unconsolidated entities Minority interest in operating partnership income Years Ended December 31, 2007 2006 2005 39,946 13,688 589 25,669 84,916 (589) (5,388) — 133 (9,164) 15 3,510 $ 20,945 13,962 — 6,983 77,521 (84) — — 687 — 500 1,590 $ 19,744 14,329 — 5,415 72,571 (749) (3,034) 25 1,133 — 482 1,571 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . Funds from operations Weighted average shares, diluted Net income available for common shareholders, diluted Weighted average shares and units, diluted Funds from operations per share and unit, diluted Dividends paid per share Real estate owned, at cost Capital improvements in progress Investments in and advances to real estate joint ventures Total debt Shareholders’ equity, redeemable stock and minority interest Market capitalization (shares and units)(1) Number of properties, including joint venture ownership interest(2) Number of apartment units, including joint venture ownership interest(2) $ 99,102 $ 87,197 $ 77,414 25,462 1.01 27,943 3.55 2.42 $ $ $ $ 2,343,130 12,886 $ $ 168 $ 1,264,620 $ 432,398 $ 1,358,100 23,698 0.29 26,204 3.33 2.38 $ $ $ $ 2,218,532 20,689 $ $ 3,718 $ 1,196,349 $ 481,666 $ 1,745,674 21,607 0.25 24,227 3.20 2.35 $ $ $ $ 1,987,853 4,175 $ $ 4,182 $ 1,140,046 $ 392,324 $1,358,725 137 40,248 138 40,293 132 38,227 (1) Market capitalization includes all series of preferred shares (value based on $25 per share liquidation preference) and common shares, regardless of classification on balance sheet, and partnership units (value based on common stock equivalency). (2) Property and apartment unit totals have not been adjusted to exclude properties held for sale. PG.2 H. Eric Bolton, Jr. President, CEO and Chairman of the Board To our fellow shareholders: Significant progress and terrific performance was captured during 2007. In a year characterized by turmoil in the capital markets, growing concerns about the economy and the beginning of a large correction in the single-family and condo housing markets, Mid-America delivered another year of strong performance. During 2007 we completed a number of major steps towards building the foundation for continued strong performance in the coming years. Major enhancements to our operating systems were made during the year. These enhancements will enable more robust decisions concerning pricing and further improve our ability to manage operating expenses. We continued to up-grade our portfolio of properties with the sale of $27 million of older properties and the acquisition of $88 million of new properties. Our balance sheet capacity grew and fixed-charge coverage by year-end was the high- est we have had in our fourteen-year history. And all of this occurred while our team of hardworking professionals also generated Funds From Operations of $3.55 per share/unit, the best performance we’ve ever achieved. 2007 was indeed a year of good progress and great results. However, the year did have some frustration associated with it. While Mid-America’s stock performance was yet again top-tier within the Apartment REIT sector, after seven years of out-performing the broad market indexes and most other sectors of the stock market, the overall REIT sector had a negative year in 2007. Mid-America was clearly caught in the down-draft. Headlines surrounding the single-family housing market and the collapse of many aspects of the debt financing environment combined to drive instability and uncertainty in the pricing of REITs. Ironically, we expect some of the very areas of concern that weighed on the broader REIT market, and pulled on the price of our stock last year, will actually be a positive influence on the long-term performance of our apartment properties. A return to a disciplined mortgage financing environment should result in more households remain ing in the apartment market. The more restrictive capital markets environment will reward conservative strategies and strong balance sheets like ours, which should help generate more attractive investment opportunities. While we certainly can’t predict how the stock market will perform in 2008, we believe that as long as we continue to deliver strong results the market will get it right over the long haul, and pricing will reflect a more complete valuation of our real estate investments, the attractive growth prospects we have as a company and the tremendous fran- chise value inherent in the systems, people and culture that comprise our operating platform. Our focus on the high growth Sunbelt region, with a solid diversification strategy across the area, continues to deliver Average annual growth of FFO per share 0.8% 4.9% Sector MAA Same Store Occupancy in Mid-America’s Markets MAA Market Composite 6 0 Q 3 6 0 Q 4 7 0 Q 1 7 0 Q 2 7 0 Q 3 7 0 Q 4 FFO Per Share/Unit MAA Market Composite $3.20 $3.33 $3.55 $3.00 $2.59 Average annual growth of FFO per share 0.8% 4.9% Sector MAA 97 96 95 94 93 92 91 97.0% 96.0% 95.0% 94.0% 93.0% 4.0 3.5 3.0 Same Store Occupancy in Mid-America’s Markets 6 0 Q 3 PG.3 6 0 Q 4 7 0 Q 1 7 0 Q 2 7 0 Q 3 7 0 Q 4 92.0% 91.0% 2.5 2.0 1.5 1.0 0.5 0.0 97.0% 96.0% 95.0% 94.0% 93.0% 92.0% 91.0% 400% 350% 300% 250% 200% 150% 100% 50% 0% -50% Annualized Total Returns (1) as of December 31, 2007 18.6% 13.7% 12.6% 9.8% 6.2% 4.8% -22.0% -27.3% 2007 3 Year 5 Year 10 Year MAA Peer Average (1) Returns for stock (price & dividend) annualized over the specified period. Same store growth rate Annualized Total Returns (1) as of December 31, 2007 18.6% 13.7% 12.6% 9.8% 6.2% 4.8% 3 0 0 2 4 0 0 2 5 0 0 2 6 0 0 2 7 0 0 2 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% Sector -22.0% MAA -27.3% 2007 3 Year 5 Year 10 Year MAA Peer Average (1) Returns for stock (price & dividend) annualized over the specified period. 2003 2004 2005 2006 2007 Cumulative Total Shareholder Returns Same store growth rate 221.79% 160.11% 77.56% 8.0% 6.0% 4.0% 400 350 300 250 200 150 100 50 0 -50 FFO Per Share/Unit $3.20 $3.33 $3.55 $3.00 $2.59 7 9 - c e D 8 9 - c e D 9 9 - c e D 0 0 - c e D 1 0 - c e D 2 0 - c e D 2.0% 0.0% 3 0 - c e D 4 0 - c e D 5 0 - c e D 6 0 - c e D 3 0 0 2 S&P 500 4 0 0 2 7 0 c e D 5 0 0 2 6 0 0 2 7 0 0 2 2003 2004 2005 2006 2007 MAA Peer Group -2.0% -4.0% -6.0% 400% 350% 300% 250% 200% 150% 100% 50% 0% -50% Cumulative Total Shareholder Returns strong performance and lower volatility. The significant effort we’ve made over the last three years to up-grade systems and operating efficiencies is generating very good results and further solidifies Mid-America as a superior operating platform, with competitive advantages in the southeast and southwest markets. We remain committed to positioning our portfolio not only for continued strong performance over the next couple of years, but also for solid long-term results. Our investment of capital into existing properties, where we see on-going strong performance prospects or unique repositioning oppor tunities, continued in 2007 with $10 million invested 2 0 - in the existing portfolio. Our kitchen and bath remodeling c c e e D D program made great progress during 2007 with over 2,000 units repositioned and rent increases averaging 14%. We expect to complete renovations on over 3,000 units in 2008. Peer Group S&P 500 1 0 - c e D 6 0 - c e D 5 0 - c e D 4 0 - c e D 3 0 - c e D 0 0 - c e D 9 9 - c e D 8 9 - c e D 7 9 - c e D MAA 7 0 During 2007 we established an additional growth plat form for the company with the creation of Mid-America Multifamily Fund I. This joint venture, in which Mid-America’s equity commitment is one third of the capital invested, is aimed at acquiring well located properties that offer high value upside opportunity through physical improve ments to the property, implementing more sophisticated asset management prac- tices and enhancing on-site property management. These sorts of repositioning actions play to the real strength and MAA core competency of our operating platform, and provide a terrific investment opportunity for our shareholders. Sector We are committed to a strategy focused on building value over the long haul for our shareholders. Our regional invest- ment strategy, our unique diversification strategy across the region, our focus on a disciplined investment process, our focus on operations through a strong asset management and property management platform, and our focus on maintain- ing a strong balance sheet, are all part of the process. 221.79% 160.11% 77.56% And delivering on this strategy we have a group of profes- sionals that make it all happen. The critical variable in our business is a team of MAA employees that have a strong desire to serve our residents, our shareholders and each other. The people working at Mid-America are really what make the company special. We are excited about our com- pany’s future prospects and look forward to another year of record performance in 2008. H. Eric Bolton, Jr. President, CEO and Chairman of the Board We are well positioned in the high growth region of the U.S. 93 AR OH VA TX FL GA 97 96 95 94 92 91 KY AL MS AZ NC SC TN 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 400 350 300 250 200 150 100 50 0 -50 We are well positioned in the high growth region of the U.S. KY AL MS AZ NC SC TN AR OH VA TX FL GA PG.4 regional focus Arizona Arizona Ohio Ohio Virginia Virginia Kentucky Kentucky Tennessee Tennessee Arkansas Arkansas North Carolina North Carolina South Carolina South Carolina Texas Texas Mississippi Mississippi Alabama Alabama Georgia Georgia Florida Florida Our goal is to deliver superior, risk-adjusted performance to shareholders over the long haul. Simply chasing markets and specific invest- ment opportunities which are considered “hot” at the moment is not the best way to achieve our long-term perfor- mance goals. Mid-America’s investment strategy centers on the high-growth Sunbelt region of the U.S. Given the region’s prospects for strong job growth, migration, immi- gration and new household formation trends, we believe the Sunbelt region will capture a higher level of demand for apartment housing than other regions. By then diversifying across this region, with a strategy of allocating capital to markets with differing performance characteristics, Mid-America is able to capture the strong benefits of high growth markets while also reducing the risk asso- ciated with excessive new supply that can develop in some of these markets from time to time. So, not only do we avoid limiting our invest- ment concentrations to any one market, we also diversify among market performance profiles in order to capture a higher, risk-adjusted perfor- mance driven by a combina- tion of high growth, growth and income, and steady income markets. The net result is a portfolio of invest- ments that we believe will deliver a superior level of performance within the apartment REIT sector, with the added benefit of lower volatility and risks. Your portfolio of properties has a higher allocation to secondary markets as com- pared to other apartment REITs. What advantages do you believe are captured from this strategy? 1 Thomas L. Grimes, Jr. EVP, Director of Property Management Operations Sunbelt Average annual growth of FFO per share 0.8% 4.9% Sector MAA Same Store Occupancy in Mid-America’s Markets MAA Market Composite 6 0 Q 3 6 0 Q 4 7 0 Q 1 7 0 Q 2 7 0 Q 3 7 0 Q 4 FFO Per Share/Unit $3.20 $3.33 $3.55 $3.00 $2.59 2003 2004 2005 2006 2007 Cumulative Total Shareholder Returns 221.79% 160.11% 77.56% 7 9 - c e D 8 9 - c e D 9 9 - c e D 0 0 - c e D 1 0 - c e D 2 0 - c e D 3 0 - c e D 4 0 - c e D 5 0 - c e D 6 0 - c e D 7 0 c e D MAA Peer Group S&P 500 97.0% 96.0% 95.0% 94.0% 93.0% 92.0% 91.0% 400% 350% 300% 250% 200% 150% 100% 50% 0% -50% Annualized Total Returns (1) as of December 31, 2007 18.6% 13.7% 12.6% 9.8% 6.2% 4.8% -22.0% -27.3% 2007 3 Year 5 Year 10 Year MAA Peer Average (1) Returns for stock (price & dividend) annualized over the specified period. Same store growth rate 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% 3 0 0 2 4 0 0 2 5 0 0 2 6 0 0 2 7 0 0 2 Sector MAA PG.5 97 96 95 94 93 92 91 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 We are well positioned in the high growth region of the U.S. AL MS AZ NC SC KY TN AR OH VA TX FL GA 400 350 300 250 200 150 100 50 0 -50 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . Employment growth projections 2008–2012 annual compounded growth rates National MSA Average Sunbelt Region MSA Average 1.11% 1.62% MAA Markets MSA Average 1.68% PG.6 operating platform What is it about your operating platform that you believe provides a competitive advantage as compared to other apartment owners and management companies that you com- pete with? 2 Over the last five years we have re-tooled essentially every aspect of how we transact business. This ranges from the steps we take to record transactions with our residents, to how we manage our inventory of lease expi- ration dates, to how we set rents and pricing, to how we manage the process of pre- paring vacant apartments for new occupancy. We have a focus on capturing more operating efficiency on site, while also providing our on-site managers with more real-time information to support better decision making. We are currently in the process of enhancing how we utilize the internet to drive more efficiencies in our advertising programs, and to enable prospective renters to lease one of our apartment homes and fully transact their requests, payments, and other needs over the internet. Our business is competitive and those with the ability to operate more effectively and cost efficiently will enjoy a competitive advantage in serving residents and driving higher value from each property. James Andrew Taylor EVP, Director of Asset Management Strong PG.7 97 96 95 94 93 92 91 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 400 350 300 250 200 150 100 50 0 -50 We are well positioned in the high growth region of the U.S. KY AL MS AZ NC SC TN AR OH VA TX FL GA Average annual growth of FFO per share 0.8% 4.9% Sector MAA Same Store Occupancy in Mid-America’s Markets 97.0% 96.0% 95.0% 94.0% 93.0% 92.0% 91.0% 6 0 Q 3 6 0 Q 4 7 0 Q 1 7 0 Q 2 7 0 Q 3 7 0 Q 4 FFO Per Share/Unit $3.20 $3.33 $3.55 $3.00 $2.59 2003 2004 2005 2006 2007 Cumulative Total Shareholder Returns MAA Market Composite 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . 400% The Open Arms Foundation is a nationally-recognized 501(c)3 charity that was started by employees of Mid-America in 1994. Through Open Arms, volunteers made up solely of Mid-America employees provide fully-furnished two-bedroom apartments to individuals or families who have to travel away from their own home to seek medical treatment. The apartment and all utilities are provided free of charge for as long as treatment requires. To date, Open Arms has helped more than 1,800 families by providing over 82,000 nights of accommodations. 300% 350% 250% 200% 150% 100% 50% 0% -50% 7 9 - c e D 8 9 - c e D 9 9 - c e D 0 0 - c e D 1 0 - c e D 2 0 - c e D 3 0 - c e D 4 0 - c e D 5 0 - c e D 6 0 - c e D 7 0 c e D MAA Peer Group S&P 500 Annualized Total Returns (1) as of December 31, 2007 18.6% 13.7% 12.6% 9.8% 6.2% 4.8% -22.0% -27.3% 2007 3 Year 5 Year 10 Year MAA Peer Average (1) Returns for stock (price & dividend) annualized over the specified period. Same store growth rate 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% 3 0 0 2 4 0 0 2 5 0 0 2 6 0 0 2 7 0 0 2 Sector MAA 221.79% 160.11% 77.56% PG.8 properties A young portfolio of proper- ties provides higher rent growth potential, lower capital spending requirements and quicker “turn” capabilities between residents, as com- pared to a portfolio of older properties. As a result, over time, a younger portfolio of properties will tend to out- perform and capture higher net operating income results. In sector research reports we sometimes see rankings of portfolios based on the average rent per unit, with an implication that a higher average rent portfolio denotes a higher quality of properties. Average rent comparisons of large portfolios are mostly a reflection of the geographic concentration of the markets that comprise the portfolio and regional cost-of-living differences, and not a reflec- tion of asset quality and long-term earnings potential. We believe our young port- folio gives us an advantage and we intend to strategically invest capital in a way to maintain that advantage. 3You have one of the youngest apartment port- folios within the apartment REIT sector. What advantages do you believe this offers? Albert M. Campbell, III EVP, Treasurer High Quality PG.9 MAA’s portfolio is newer than the sector average Mid-America Sector Average Average Age 15 years 19 years 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . PG.10 strategy Our goal is to invest capital in a manner that will deliver investment returns to share- holders that exceed our cost of equity capital, and generate growing net pres- ent value per share. We believe it is important to build long-term, increasing and high quality cash flows for our shareholders. We take a long-term perspective to capital deployment decisions and are not swayed from our focus by short-term or low- quality revenue opportunities. Our disciplines start with realistic underwriting and forecast assumptions. As an experienced operator with a focus on the Sunbelt region, we have a thorough under- standing of the markets, sub-markets and neighbor- hood dynamics in which we invest. We spend a lot of time thoroughly underwriting the existing resident profile, identifying the physical needs of the property and analyzing the current on-site operation to identify the opportunities and risks associated with each investment we make. Over our 14-year history as a public company we have remained committed to the principle that consistent long-term success in real estate investing starts with a thorough and conservative approach to valuation and establishing the right going- in price. A pricing mistake made up-front is not easily, if ever, rectified. 4In defining your growth strategy as “disciplined,” what do you mean? Simon R.C. Wadsworth EVP, CFO Growth PG.11 Renovation Program to Date Investment returns as of December 31, 2007 12.7% IRR Full Cycle Property Acquisitions to Dispositions over Last Five Years 14.0% IRR 5-Year Annualized Return to Shareholders 10-Year Annualized Return to Shareholders 18.6% 12.6% 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . Before After Park Estate Kitchen Renovation PG.12 Financial Highlights 2007 Consolidated balance sheets (Dollars in thousands, except per share data) Assets: Real Estate Assets: Land Buildings and improvements Furniture, fixtures and equipment Capital improvements in progress Less accumulated depreciation Land held for future development Commercial properties, net Investments in and advances to real estate joint ventures Real estate assets, net Cash and cash equivalents Restricted cash Deferred financing costs, net Other assets Goodwill Assets held for sale Total assets Liabilities and Shareholders’ Equity: Liabilities: Notes payable Accounts payable Accrued expenses and other liabilities Security deposits Liabilities associated with assets held for sale Total liabilities Minority interest Redeemable stock Shareholders’ equity: Preferred stock, $0.01 par value per share, 20,000,000 shares authorized, $166,863 or $25 per share liquidation preference, 9 1/4% Series F Cumulative Redeemable Preferred Stock, 3,000,000 shares authorized, 0 and 474,500 shares issued and outstanding at December 31, 2007, and December 31, 2006, respectively 8.30% Series H Cumulative Redeemable Preferred Stock, 6,200,000 shares authorized, 6,200,000 shares issued and outstanding Common stock, $0.01 par value per share, 50,000,000 shares authorized, 25,718,800 and 25,093,156 shares issued and outstanding at December 31, 2007, and December 31, 2006, respectively(1) Additional paid-in capital Accumulated distributions in excess of net income Accumulated other comprehensive income Total shareholders’ equity Total liabilities and shareholders’ equity See Form 10-K for related footnote disclosures. December 31, 2007 2006 $ 214,743 2,044,380 55,602 12,886 $ 206,635 1,921,462 51,374 20,689 2,327,611 (616,364) 1,711,247 2,360 6,778 168 1,720,553 17,192 3,724 15,219 23,028 4,106 — 2,200,160 (543,802) 1,656,358 2,360 7,103 3,718 1,669,539 5,545 4,145 16,033 38,865 4,472 8,047 $ 1,783,822 $ 1,746,646 $ 1,264,620 1,099 77,252 8,453 — 1,351,424 28,868 2,574 $ 1,196,349 2,773 57,919 7,670 269 1,264,980 32,600 3,418 — 62 5 62 257 832,511 (414,966) (16,908) 251 814,006 (379,573) 10,897 400,956 445,648 $ 1,783,822 $ 1,746,646 (1) Number of shares issued and outstanding represent total shares of common stock regardless of classification on the consolidated balance sheet. The number of shares classified as redeemable stock on the consolidated balance sheet for December 31, 2007, and 2006, are 64,233 and 59,717, respectively. PG.13 Consolidated statements of operations (Dollars in thousands, except per share data) Operating revenues: Rental revenues Other property revenues Total property revenues Management fee income Total operating revenues Property operating expenses: Personnel Building repairs and maintenance Real estate taxes and insurance Utilities Landscaping Other operating Depreciation Total property operating expenses Property management expenses General and administrative expenses Income from continuing operations before non-operating items Interest and other non-property income Interest expense Loss on debt extinguishment Amortization of deferred financing costs Minority interest in operating partnership income (Loss) gain from investments in real estate joint ventures Incentive fees from real estate joint ventures Net gains on insurance and other settlement proceeds Gains on sale of non-depreciable assets Gains on dispositions within real estate joint ventures Income from continuing operations Discontinued operations: Income from discontinued operations before asset impairment, settlement proceeds and gain on sale Asset impairment on discontinued operations Net loss on insurance and other settlement proceeds on discontinued operations Gains on sale of discontinued operations Net income Preferred dividend distributions Premiums and original issuance costs associated with the redemption of preferred stock Net income available for common shareholders Weighted average shares outstanding (in thousands) Basic Effect of dilutive stock options Diluted Net income available for common shareholders Discontinued property operations Years ended December 31, 2007 2006 2005 $ 337,149 15,774 $ 309,327 14,125 $ 281,420 12,041 352,923 34 323,452 210 293,461 325 352,957 323,662 293,786 42,437 13,270 43,353 20,346 9,265 16,335 86,173 231,179 17,918 10,808 93,052 196 (64,452) (123) (2,407) (3,510) (58) 1,019 589 534 5,388 30,228 554 — — 9,164 39,946 13,688 39,677 11,943 40,589 19,471 8,565 14,879 78,861 36,500 10,886 37,070 17,469 7,805 14,235 73,917 213,985 13,124 9,877 197,882 11,137 9,725 86,676 673 (63,119) (551) (2,036) (1,590) (114) — 84 50 — 75,042 498 (58,142) (407) (2,011) (1,571) 65 1,723 749 334 3,034 20,073 19,314 872 — — — 698 (243) (25) — 20,945 13,962 19,744 14,329 589 — — $ 25,669 $ 6,983 $ 5,415 25,296 166 25,462 23,474 224 21,405 202 23,698 21,607 $ 25,669 (9,718) $ 6,983 (872) $ 5,415 (430) 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . Income from continuing operations available for common shareholders $ 15,951 $ 6,111 $ 4,985 Earnings per share—basic: Income from continuing operations available for common shareholders Discontinued property operations Net income available for common shareholders Earnings per share—diluted: Income from continuing operations available for common shareholders Discontinued property operations Net income available for common shareholders See Form 10-K for related footnote disclosures. $ 0.63 0.38 $ $ 0.26 0.04 0.23 0.02 $ 1.01 $ 0.30 $ 0.25 $ 0.63 0.38 $ $ 0.26 0.03 0.23 0.02 $ 1.01 $ 0.29 $ 0.25 PG.14 Financial Highlights 2007 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Mid-America Apartment Communities, Inc. We have audited the accompanying consolidated balance sheets of Mid-America Apartment Communities, Inc. as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Mid-America Apartment Communities, Inc. at December 31, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2008 expressed an unqualified opinion thereon. Memphis, Tennessee February 26, 2008 PG.15 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Mid-America Apartment Communities, Inc. We have audited Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Mid-America Apartment Communities, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circum- stances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reason- able assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial state- ments in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, Mid-America Apartment Communities, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Mid-America Apartment Communities, Inc. as of December 31, 2007 and 2006, and the related consolidated state- ments of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007, of Mid-America Apartment Communities, Inc. and our report dated February 26, 2008, expressed an unqualified opinion thereon. Memphis, Tennessee February 26, 2008 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . PG.16 Awards 2007 civic and industry awards MID-AMERICA: Best Places to Work in TN— 4th in Large Corporation Category, BusinessTN Magazine MID-AMERICA: Best Places to Work 2007— Top 4 Large Corporation Category, The Memphis Business Journal THE OPEn ARMS FOunDATIOn: NMHC Good Neighbor Award, National Multi Housing Council THE OPEn ARMS FOunDATIOn: Making a Difference Award, National Apartment Association MARk MASSI—InDIGO POInT: “Good Neighbor” Award, The Red Cross ABBInGTOn PLACE: Beautification Award, the City of Huntsville kIRBy STATIOn: Best Landscaping, Apartment Association of Greater Memphis LAkESHORE LAnDInG: Best Entrance, Mississippi Multifamily Council LIGHTHOuSE AT FLEMInG ISLAnD: Maintenance Technician of the Year, First Coast Apartment Association LIGHTHOuSE AT FLEMInG ISLAnD: Marketing Concept of the Year, First Coast Apartment Association LInCOLn On THE GREEn: Best Advertisement of the Year, Apartment Association of Greater Memphis MOnTHAvEn PARk: 2nd Place Beautification Award, Greater Nashville Apartment Association BREnTwOOD DOwnS: 1st Place Beautification Award, Greater Nashville Apartment Association OAkS AT wILMInGTOn ISLAnD: Gold Beautification Award, Savannah Apartment Association GEORGETOwn GROvE: Gold Beautification Award, Savannah Apartment Association PARk ESTATE: Best Landscaping, Apartment Association of Greater Memphis GRAnD COuRTyARDS: Business Landscape of the Quarter, Civic Committee of the Grand Prairie Chamber of Commerce PARk ESTATE: Best Landscaping of the Year for up to 149 Units, Apartment Association of Greater Memphis GRAnD RESERvE: 1st Place Beautification Award, Greater Lexington Apartment Association PARk ESTATE: Property Leader of the Year for up to 149 Units, Apartment Association of Greater Memphis GRAnD RESERvE: Leasing Consultant of the Year, Greater Lexington Apartment Association PARk PLACE: 1st Place Landscape and Floral Design 2007, Upper State Apartment Association GREEnBROOk: Outstanding Maintenance Shop, Apartment Association of Greater Memphis PEAR ORCHARD: Beautification Showcase Winner—Category C, Mississippi Multifamily Council GREEnBROOk: Best Maintenance Team of the Year, Apartment Association of Greater Memphis GREEnBROOk: Property Manager of the Year for 300+ Units, Apartment Association of Greater Memphis HIDDEn CREEk: First Place Beautification Award, Chattanooga Apartment Association POST HOuSE JACkSOn: Golden Apple Award, Madison County School System RESERvE AT DExTER LAkE: Best Land- scaping, Apartment Association of Greater Memphis RESERvE AT DExTER LAkE: Grounds Technician of the Year, Apartment Association of Greater Memphis HOwELL COMMOnS: 2nd Place Landscape and Floral Design 2007, Upper State Apartment Association RESERvE AT DExTER LAkE: Best Land- scaping of the Year for 300+ Units, Apartment Association of Greater Memphis HunTER’S RIDGE AT DEERwOOD: Best Conventional Community Manager of the Year, First Coast Apartment Association RESERvE AT DExTER LAkE: Best Laundry Room of the Year, Apartment Association of Greater Memphis SuTTOn PLACE: Property Manager of the Year for 150 to 300 Units, Apartment Association of Greater Memphis THE COLOny AT SOuTH PARk: 2nd Place Beautification Award, Apartment Association of Greater Augusta THE FAIRwAyS: 1st Place Beautification Award, Columbia Apartment Association THE FAIRwAyS: Maintenance Supervisor of the Year, Columbia Apartment Association THE OAkS: Civic Pride Award, the Mayor of Jackson, TN THE PADDOCk CLuB—HunTSvILLE: Beautification Award, the City of Huntsville THE PADDOCk CLuB—MuRFREESBORO: 1st Place Beautification Award, Greater Nashville Apartment Association THE PADDOCk CLuB—MuRFREESBORO: Best Flowers, Greater Nashville Apartment Association THE PARk AT HERMITAGE: 1st Place Beautification Award, Greater Nashville Apartment Association THE vILLAGE: 1st Place Beautification Award, Greater Lexington Apartment Association TOwnSHIP In HAMPTOn wOODS: Peninsula Award of Excellence—Gold Award, the Peninsula Apartment Council TOwnSHIP In HAMPTOn wOODS: Leasing Consultant of the Year, the Peninsula Apartment Council TOwnSHIP In HAMPTOn wOODS: Property of the Year, Central Virginia Apartment Association vILLAGES AT kIRkwOOD: Beautification Award, City of Stafford wALDEn Run: Merit Award—Multi-Family Residential Landscape Maintenance, Metro Atlanta Landscape and Turf Association wATERMARk: Golden Star Award, Tarrant County Apartment Association wInDRIDGE: First Place Beautification Award, Chattanooga Apartment Association wOODwInDS: 1st Place Beautification Award, Apartment Association of Greater Augusta Corporate Information Corporate Headquarters Mid-America Apartment Communities, Inc. 6584 Poplar Avenue, Suite 300 Memphis, TN 38138 901-682-6600 www.maac.net Independent Registered Public Accounting Firm Ernst & Young LLP, Memphis, TN General Counsel Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Memphis, TN Annual Shareholders Meeting Mid-America Apartment Communities, Inc. will hold its 2008 Annual Meeting of Shareholders on Tuesday, May 20, 2008, at 1:00 p.m. CST at the Reserve at Dexter Lake apartments in Memphis, TN. Stock Listings Mid-America’s stock is listed on the New York Stock Exchange (NYSE). Our common stock is traded under the stock symbol MAA. We have one outstanding series of publicly traded preferred stock which is traded under the stock symbol MAA Pr H. Transfer Agent and Registrar American Stock Transfer & Trust Company 866-668-6550 shareholder toll-free line www.amstock.com Shareholders who have questions about their accounts or who wish to change ownership or address of stock; to report lost, stolen or destroyed certificates; or wish to sign up for our dividend reinvest- ment plan or direct stock purchase plan should contact American Stock Transfer & Trust Company at the shareholder service number listed above or access their account at the web-site listed above. Limited partners of Mid-America Apartments, L.P. wishing to transfer their units or convert units into shares of com- mon stock of Mid-America Apartment Communities, Inc. should contact Mid-America directly at the corporate headquarters. m o c . s r o n n o c - n a r r u c . w w w / . c n I , s r o n n o C & n a r r u C y b d e n g i s e D Annual Report and Form 10-K A copy of Mid-America’s Annual Report and Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission (SEC) will be sent without charge upon written request to the corporate head- quarters address, attention Investor Relations, and is also available on the Investor Relations page of our web-site at www.maac.net. Mid-America’s other SEC filings as well as our corporate governance documents are also available. CEO and CFO Certifications As is required by Section 303A.12(a) of the NYSE’s corporate governance standards, the CEO Certification has been previously filed without qualification with the NYSE. Certifications of the CEO and CFO pursu- ant to Section 302 of the Sarbanes-Oxley Act of 2002 have been filed as exhibits to Mid-America’s Form 10-K. The Open Arms Foundation The Open Arms Foundation is Mid-America’s corporate charity that provides fully- furnished, two-bedroom apartment homes free of charge to families displaced from their own homes by long-term medical care needs. To find out more about The Open Arms Foundation please visit www.openarmshomes.com 2 0 0 7 A n n u a l R e p o r t i M d - A m e r i c a A p a r t m e n t C o m m u n i t i e s , I n c . Board of Directors H. Eric Bolton, Jr. President, Chief Executive Officer and Chairman of the Board Mid-America Apartment Communities, Inc. George E. Cates Past Chief Executive Officer and Chairman of the Board Mid-America Apartment Communities, Inc. Alan B. Graf, Jr. Executive Vice President and Chief Financial Officer FedEx Corporation Committees: Audit (chairman) Major General John S. Grinalds, USMC (Ret.) Past President The Citadel Committees: Audit Ralph Horn Past President, Chief Executive Officer and Chairman of the Board First Horizon National Corporation Committees: Compensation (chairman), Nominating and Corporate Governance (chairman) Mary E. McCormick Past Assistant Investment Officer Ohio Public Employees Retirement System Committees: Audit Philip W. Norwood President and Chief Executive Officer Faison Enterprises, Inc. Committees: Compensation, Nominating and Corporate Governance William B. Sansom President, Chief Executive Officer and Chairman of the Board H.T. Hackney Co. Committees: Compensation, Nominating and Corporate Governance Simon R.C. Wadsworth Executive Vice President and Chief Financial Officer Mid-America Apartment Communities, Inc. Mid-America Apartment Communities, Inc. • 6584 Poplar Avenue, Suite 300 • Memphis, TN 38138 • 901-682-6600 www.maac.net