Mid-America Apartment Communities
Annual Report 2011

Plain-text annual report

ACCELERATING PERFORMANCE MAA /  2011 ANNUAL REPORT MAA /  2011 ANNUAL REPORT MAA I s A REAL E sTATE IN vEsTMENT TRU sT T hAT O wNs AN d MANAGE s MULTIFAMILy APARTMENTs IN ThE sUNbELT REGION OF ThE UNITEd sTATEs. wE hAvE GROwN FROM 5,580 APARTMENT hOMEs AT ThE TIME OF OUR INITIAL PUbLIC OFFERING IN JANUARy 1994 TO NEARLy 50,000 APARTMENT hOMEs TOdAy, INCLUdING OUR OwNERshIP ThROUGh TwO JOINT-vENTURE FUNds wITh IN sTITUTIONAL IN vE sTORs. MAA’s COMMON shAREs ARE TRAdEd ON ThE NEw yORk sTOCk ExChANGE UNdER ThE TICkER syMbOL MAA. MORE INFORMATION A bOUT MAA MAy bE FOUN d ON OUR w EbsITE AT www. MAAC.COM. ACCELERATING PERFORMANCE COVER: HUE RALEIGH, NORTH CAROLINA THIS PAGE: BELLA CASITA DALLAS, TEXAS MAA /  SHAREHOLDER LETTER OUR APPROACH TO CREATING VALUE FOR SHAREHOLDERS IS CENTERED ON AN INVESTMENT STRATEGY THAT WE BELIEVE WILL DELIVER THE BEST PERFORMANCE OVER THE FULL ECONOMIC CYCLE. To My Fellow Shareholders: The demand for apartment housing across our Sunbelt mar- kets continues to grow. Fueled by an increasing number of young adults choosing to rent their housing needs and enjoy the amenities and flexibility that apartment living has to offer, the outlook for the apartment industry is very positive. The prime renter profile, those between 18 to 34 years of age, represents one of the fastest growing segments of our popula- tion. This growth in young households, coupled with a more rational mortgage financing environment, is expected to gen- erate a positive leasing environment for apartments over the next several years. In addition to capturing the benefits of the strong leasing environment, we are working to ensure that MAA is posi- tioned to continue providing strong and steady future per- formance. As a publicly-owned company with an established 18 year history, we fully understand that the real estate and capital markets will inevitably cycle again. We continue to add high-quality new properties that we believe will provide a strong contribution to our future earnings. We continue to introduce new technologies and efficiencies to our operating platform that will help ensure MAA is capturing full value from the investments we own. We continue to position the balance sheet for broader and favorable access to the capital markets to support future growth and financing needs. In 2011 we accelerated our performance and our team capi- talized on the favorable market conditions. Our record results last year were highlighted by: V Funds from operations per share of $3.98, an all-time high performance in our 18-year history as a publicly owned company. V We achieved strong physical occupancy averaging 95.9% throughout the year. V We acquired $387 million of upscale apartment communi- ties positioning the portfolio for continued earnings growth. V We started development of two new communities in 2011. With another project already started in early 2012, our devel- opment pipeline today totals approximately $150 million. V Invested $13 million in the renovation and redevelopment of several of our communities, positioning them for strong future rent growth. V We sold $24 million of existing properties capturing strong pricing and investment returns. PAGE 01 MAA /  SHAREHOLDER LETTER $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $43,156 MAA INVESTMENT $31,111 PEER GROUP INVESTMENT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 VALUABLE RETURN ON A $10,000 INVESTMENT (SOURCE: SNL EQUITY RESEARCH) We believe the results in 2012 will be even better. We com- pleted a number of important actions last year to further position MAA for even stronger future performance: V We secured an initial investment-grade rating of “BBB” from Fitch Ratings. V Supported by our investment-grade rating, we successfully completed our first unsecured issuance of $135 million in senior unsecured notes. V We ended the year with net-debt-to-gross assets at a historic low of 46% and an unencumbered asset pool of 31% of total gross assets. V Several new web-based operating services were introduced during the year to provide more responsive service to residents and leasing prospects. Our approach to creating value for shareholders centers on building a portfolio of apartment real estate investments that we believe will deliver the best cash flow performance over the full economic and real estate market cycles. As a REIT platform, we believe that, over the long haul, shareholders are best rewarded by a secure and growing dividend through the “up” cycles as well as through the “down” cycles. We believe the best way to achieve this performance for shareholders is to focus our efforts on the Sunbelt markets, where we expect job growth, household formation trends and the demand for rental housing will outpace national trends. This region of the country offers many compelling reasons for attracting new businesses and manufacturers. To provide the best full cycle performance profile, we believe it is also important to diversify investments across both large and secondary markets within the region. Our objective is to deliver strong revenue growth during the up cycles, stability and protection during the down cycles and, as a result, cap- ture outperformance over the full cycle. PAGE 02 MAA /  SHAREHOLDER LETTER 15.7% 13.8% 10.7% 10.5% 11.4% 11.0% 7.6% 7.0% 2.9% 3.1% (0.2)% (0.8)% 5-YR 10-YR SINCE IPO 5-YR 10-YR SINCE IPO 5-YR 10-YR SINCE IPO 5-YR 10-YR SINCE IPO S&P 500 SNL US REIT EQUITY SECTOR AVERAGE MAA-US TOTAL ANNUAL SHAREHOLDER RETURNS (SOURCE: SNL EQUITY RESEARCH) Our diversified market strategy focused in both large and secondary markets across the Sunbelt region is unique within the apartment REIT sector. We believe the region’s long established record of outperforming national trends in gen- erating demand for apartment housing more than offsets the concerns surrounding excessive new apartment construction or affordable single-family housing. New apartment construction, at a level significant enough to materially hinder rent growth performance, is generally fueled by excessive construction financing. As a result of a tougher regulatory environment for lending institutions and disciplined construction financing practices, along with a significant improvement in the timeliness and availability of market data and underwriting information necessary to jus- tify the need for new construction, we expect the delivery of new apartment supply over the next couple of years to remain depressed as compared to historical norms. Eventually, when new development does return at a more robust pace, we PAGE 03 15.7% 10-YEAR SHAREHOLDER RETURN ANNUALIZED 18yrs. STABLE AND GROWING DIVIDEND BBB INITIAL INVESTMENT GRADE* *RATING FROM FITCH RATINGS MAA /  SHAREHOLDER LETTER believe that MAA’s sophisticated operating platform and the efficiencies from operating almost 50,000 apartments, sup- ported by experienced and well trained on-site staffs, will provide MAA with a solid competitive advantage across our markets. Likewise, we do not believe the recovery of the single-family home market is a near term threat. Leading up to the market collapse in 2008, undisciplined mortgage financing spurred excessive home buying that ultimately pulled demand away from apartments. The affordability or pricing of single- family homes was not the issue. It was the ability of our renter to secure mortgage financing with very little to no down payment, and often with income to mortgage payment ratios that were generally weak. This drove renters into home ownership at unsustainable and unhealthy levels. We expect that the hardships created and lessons learned by excessive mortgage financing will cause more disciplined and rational lending practices in the future. With well defined objectives and performance goals, a strat- egy for value creation that has been tested and proven over several cycles, and an operating platform and balance sheet that supports a competitive advantage in the markets where we deploy shareholders’ capital, we are very optimistic about the outlook for MAA. Our company’s success over the past 18 years is a direct reflection of the hard work and the commitment of our Associates. Their dedication and desire to exceed the expec- tations of those we serve provide the differentiation and the ability for MAA to thrive in a very competitive industry. I truly appreciate their support, their hard work and their commitment to serve those folks who depend on MAA. Very truly yours, ERIC BOLTON CHAIRMAN & CEO PAGE 04 MAA PORTFOLIO Includes wholly owned and joint venture properties 167 TOTAL COMMUNITIEs 49,133 UNITs 13 sTATEs AZ 2011 ACQUIsITIONs UNITS ADDED BY MSA OH KY AR TN MS AL TX VA NC SC GA FL AL AR FL GA TN TX VA 0 4 2 M A H G N I M R I B 8 4 K 2 C O R E L T T I L 4 0 2 E L L I V S E N I A G 9 7 4 E L L I V N O S K C A J 0 0 3 E E S S A H A L L A T 6 5 2 H A N N A V A S 0 0 3 E L L I V H S A N 6 5 4 S A L L A D 0 4 O 3 I N O T N A N A S 0 0 3 D N O M H C I R 2 3 2 G R U B S K C I R E D E R F TATTERSALL AT TAPESTRY PARK JACKSONVILLE, FLORIDA MAA /  2011 ANNUAL REPORT ACCELERATING GROWTH $387M ACQUISITIONS $110M DEVELOPMENT PIPELINE 10% AVERAGE IRR ON REDEVELOPMENT Accelerating performance accretive to shareholder value involves smartly growing and enhancing our portfolio. At MAA we employ a variety of growth platforms aligned with this aim primarily through transaction activity (acquisitions/dispositions), select development and repositioning of our communities. In 2011, guided by the experience and research-driven analysis of our team as well as a strengthened balance sheet, MAA capitalized on market conditions favoring apartment fundamentals. As part of our growth strategy to selectively acquire assets in both large and secondary markets of the Sunbelt region with superior rental growth expectations, we successfully closed on $387 million of upscale apartment communities adding 3,355 units in 12 communities to our wholly owned and joint venture portfolio. Our acquisitions were highlighted by our entrance into the Richmond and Fredericksburg, Virginia MSAs. Also in keeping with our overall strategy to align our portfolio with our performance goals, we selectively dispose of assets that no longer meet our ownership criteria. In 2011, we sold two properties located in Houston and Dallas for combined proceeds of $24 million. At year end, MAA had entered into sales agreements for two additional properties, which subsequently sold in the first quarter of 2012. We continue to expand our portfolio with select new projects. In 2011, we had three developments underway in Charlotte, Nashville and Little Rock totaling 950 units with a projected total investment of $110 million and anticipated completion in 2012. We began a fourth development in Charleston, South Carolina in the first quarter of 2012. Our redevelopment program ramped up in 2011. At year end, we had completed the renovation of 3,118 units at select communities throughout our portfolio at an average cost of $3,700 per unit and achieved rental rate increases averaging 10%. PAGE 01 TATTERSALL AT TAPESTRY PARK JACKSONVILLE, FLORIDA MAA /  2011 ANNUAL REPORT INCREASING RETURNS $3.98 FFO/PER SHARE IS A RECORD PERFORMANCE 4.4% YEAR OVER YEAR REVENUE INCREASE 95.9% AVERAGE PHYSICAL OCCUPANCY Our advances in growing shareholder value through a portfolio of high quality properties are further propelled with strong and efficient operations. In 2011, as the economic outlook and the fundamentals for apartment leasing brightened, we were ready to move forward. We achieved successive increases in same store effective rent over the quarters of 2011. As pricing strengthened, we also maintained strong average physical occupancy for the year of 95.9%. Turnover remained at a historic low of 55.9% on an annualized basis. Overall our same store revenues increased 4.4% for the year ended December 31, 2011 as compared to the same period in 2010. We ended the year with a record performance, delivering $3.98 in funds from operations per share. Our efforts in delivering record results are focused on providing a superior product to the market place. This starts with a quality property in the right location within the Sunbelt region. Our award winning landscapes not only provide beautiful homes for our current residents, but also create curb appeal which enhances the communities in which we are located and generates traffic. Our on-site leasing professionals in partnership with our marketing team successfully convert this interest into leases. Through disciplined lease approval and yield management systems we are able to provide for the right resident at the right price. Our first class maintenance helps us retain these residents. We also employ customer service surveys and provide online portals to make communication and responsive service easy and convenient. Our lease renewal programs are highly automated maximizing efficiency at the property. Our efficiencies in operations and our responsiveness to market conditions have created a competitive advantage in the submarkets where we compete. We are intently focused on capitalizing on this advantage to protect and increase the value of each property, gener- ating superior returns for our shareholders’ capital. PAGE 03 TIMES SQUARE AT CRAIG RANCH DALLAS, TEXAS MAA /  2011 ANNUAL REPORT THINKING AHEAD To best equip our professionals to more effectively serve our customers and to efficiently extract value from our operations, we continue to implement technological initiatives. In 2011, we rolled out our STAR Service Program that measures service performance and resident satisfaction on key customer interactions through online resident surveys. Properties are rated on a five star scale that is reflected on property websites. To more effectively capture and manage leads, we also began implementation of the Lead2Lease program, a customer relations management tool aimed at tracking telephone, email and walk-in leads for more timely response and improved lease conversion rates. We continue to make use of real time and online systems to optimize revenues, manage expenses, market to prospective residents and enhance our residents’ overall experience. From the lead to the lease to the revenue to the dividend, at the center of all we do are our people. Our goal is to fully prepare our associates for the objectives before them by equipping them with the tools that they need to deliver record results. Accelerated growth and operational advances are only possible with a team of committed professionals at every level working together for the benefit of our residents, our shareholders and each other. We believe an informed and trained associate is not only more productive but also empowered to take initiative, to be creative and to think ahead. A majority of our property leaders are Certified Apartment Managers, a National Apartment Association designation. Additionally, we have developed our own in-house 18-month, 3-module leadership development program created with the assistance of U.S. Learning, Inc. to further advance our Property and Support Managers’ career objectives. Our experienced senior management is strong. Many have worked together for over 14 years. Together they have weathered multiple market cycles successfully moving our company forward. Culture is the glue that binds us together and leads us toward our common goal. As the culmination of over a year’s effort, in February 2012, MA A unveiled our new culture statement entitled “Our Brighter View”: MAA is committed to remaining true to our rich tradition of service to each other, to our residents, and to our shareholders. We respect the privilege of providing value to those whose lives we touch. We are proud to be people serving people by… V Appreciating the uniqueness of each individual V Communicating openly and with integrity V Embracing opportunities V Doing the right thing at the right time for the right reasons. PAGE 05 ACCELERATING PERFORMANCE 3.8 MAA 3.0 SECTOR FIXED CHARGE COVERAGE (SOURCE: COMPANY DATA AND SNL EQUITY RESEARCH) $2.44B COMMON EQUITY 60% $1.65B DEBT 40% MAA DEBT TO MARKET CAPITALIZATION 12/31/2011 (SOURCE: COMPANY DATA) 70% 65% 60% 55% 50% 45% 40% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 DEBT+PREFERRED/GROSS ASSETS (SOURCE: COMPANY DATA) PAGE 06 PAGE 06 MAA /  2011 ANNUAL REPORT 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 real estate joint ventures Real estate assets, net Cash and cash equivalents Restricted cash Deferred financing costs, net Other assets Goodwill Total assets LIABILITIES AND SHAREHOLDERS’ EQUITY: Liabilities: Secured notes payable Unsecured notes payable Accounts payable Fair market value of interest rate swaps Accrued expenses and other liabilities Security deposits Liabilities associated with assets held for sale Total liabilities Redeemable stock Shareholders’ equity: Common stock, $0.01 par value per share, 50,000,000 shares authorized; 38,959,338 and 34,871,399 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively 1 Additional paid-in capital Accumulated distributions in excess of net income Accumulated other comprehensive losses Total MAA shareholders’ equity Noncontrolling interest Total equity Total liabilities and equity December 31, 2011 December 31, 2010 $ 333,846 2,879,289 92,170 53,790 3,359,095 (961,724) 2,397,371 1,306 8,125 17,006 2,423,808 57,317 1,362 14,680 29,195 4,106 $ 288,890 2,538,205 83,251 11,501 2,921,847 (863,936) 2,057,911 1,306 8,141 17,505 2,084,863 45,942 1,514 13,713 25,910 4,106 $2,530,468 $2,176,048 $1,514,755 135,000 2,091 33,095 91,718 6,310 — 1,782,969 4,037 389 1,375,623 (621,833) (35,848) 718,331 25,131 743,462 $1,500,193 — 1,815 48,936 73,999 6,693 20 1,631,656 3,764 348 1,142,023 (575,021) (48,847) 518,503 22,125 540,628 $2,530,468 $2,176,048 (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, 2011 and December 31, 2010 are 65,771 and 62,234, respectively. PAGE 07 ACCELERATING PERFORMANCE 4.2% MAA 3.1% SECTOR AVERAGE DIVIDEND YIELD (SOURCE: SNL EQUITY RESEARCH) $3.98 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 FFO/SHARE* *FFO/SHARE FOR 2003 AND 2010 EXCLUDES NON-ROUTINE ITEMS (SOURCE: COMPANY DATA) 2.30 2.32 2.34 2.34 2.34 2.34 2.35 2.46 2.46 2.46 $2.51 2.42 2.38 2.20 2.14 2.04 2.00 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 ANNUAL CASH DIVIDENDS PAID (SOURCE: COMPANY DATA) PAGE 08 MAA /  2011 ANNUAL REPORT 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 and amortization Total property operating expenses Acquisition 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 Asset impairment Net casualty (loss) gains and other settlement proceeds Gain on sale of non-depreciable or non-real estate assets Gain on properties contributed to joint ventures Income from continuing operations before loss from real estate joint ventures Loss from real estate joint ventures Income from continuing operations Discontinued operations: Income from discontinued operations before gain (loss) on sale Net casualty loss and other settlement proceeds in discontinued operations Gain (loss) on sale of discontinued operations Consolidated net income Net income attributable to noncontrolling interests Net income attributable to MAA Preferred dividend distributions Premiums and original issuance costs associated with the redemption of preferred stock Years ended December 31, 2010 2009 2011 $ 410,581 37,394 $ 365,754 31,571 $ 353,129 20,943 447,975 1,017 448,992 54,597 15,750 50,924 26,774 10,807 32,664 115,605 307,121 3,319 20,700 18,123 99,729 574 (58,612) (755) (2,902) — (619) 910 — 38,325 (593) 37,732 712 (12) 12,799 51,231 2,410 48,821 — — 397,325 680 398,005 50,723 14,922 45,362 24,122 10,019 27,230 103,088 275,466 2,512 18,035 12,354 89,638 837 (55,895) — (2,627) (1,914) 330 — 752 31,121 (1,149) 29,972 905 — (2) 30,875 1,114 29,761 6,549 5,149 374,072 293 374,365 47,003 13,942 45,046 22,002 9,441 20,128 95,078 252,640 950 17,220 11,320 92,235 385 (56,994) (140) (2,374) — 32 15 — 33,159 (816) 32,343 2,229 — 4,649 39,221 2,010 37,211 12,865 — Net income available for common shareholders $ 48,821 $ 18,063 $ 24,346 Earnings per common 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 Dividends declared per common share $ $ $ $ 0.95 0.37 1.32 0.97 0.34 1.31 $ $ $ $ 0.54 0.03 0.57 0.54 0.02 0.56 $ $ $ $ 0.61 0.24 0.85 0.61 0.24 0.85 $ 2.5425 $ 2.4725 $ 2.4600 PAGE 09 ACCELERATING PERFORMANCE FINANCIAL HIGHLIGHTS (Dollars and shares in thousands, except per share data) Net income attributable to MAA Preferred dividend distribution Premiums and original issuance costs associated with the redemption of preferred stock Net income available for common shareholders Depreciation and amortization of real estate assets Asset impairment Net casualty (gains) loss and other settlement proceeds Gain on properties contributed to joint ventures Net casualty loss on insurance and other settlement proceeds of discontinued operations Loss (gains) on sales of discontinued operations Depreciation and amortization of real estate assets of discontinued operations Depreciation and amortization of real estate assets of real estate joint ventures Net income attributable to noncontrolling interests Funds from operations Non-routine items: Premiums and original issuance costs associated with the redemption of preferred stock Funds from operations before non-routine items (1) In accordance with NAREIT’s current guidance, FFO has been updated to exclude asset impairment write downs. Weighted average shares, diluted Net income per share available for common shareholders, diluted Weighted average shares and units, diluted Funds from operations per share and unit, diluted Funds from operations before non-routine items per share and unit, diluted Dividends paid per share Real estate owned, at cost Capital improvements in progress Investments in real estate joint ventures Total debt Shareholders’ equity, redeemable stock and minority interest Market capitalization (shares and units) 2 Number of properties, including joint venture ownership interest Number of apartment units, including joint venture ownership interest Years ended December 31, 20101 2009 2011 $ 48,821 — — $ 29,761 6,549 5,149 $ 48,821 113,395 — 619 — 12 (12,799) 822 2,262 2,410 18,063 101,024 1,914 (330) (752) — 2 976 1,896 1,114 37,211 12,865 — 24,346 93,079 — (32) — — (4,649) 941 970 2,010 $ 155,542 $ 123,907 $ 116,665 — 5,149 — $ 155,542 $ 129,056 $ 116,665 $ 39,086 1.31 39,087 3.98 $ 3.98 $ $ 2.51 $3,396,934 53,790 $ $ 17,006 $1,649,755 $ 747,499 $2,558,107 167 49,133 $ 31,977 0.56 34,219 3.62 $ 3.77 $ $ 2.46 $2,958,765 11,501 $ $ 17,505 $1,500,193 $ 544,392 $2,353,115 157 46,310 $ 28,417 0.85 30,802 3.79 $ 3.79 $ $ 2.46 $ 2,707,300 10,517 $ $ 8,619 $1,399,596 $ 456,028 $1,671,036 147 43,604 (2) 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). PAGE 10 shAREhOLdER INFORMATION CORPORATE hEAdQUARTERs MAA 6584 Poplar Avenue Memphis, TN 38138 901-682-6600 www.maac.com GENERAL COUNsEL Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Memphis, TN INdEPENdENT REGIsTEREd PUbLIC ACCOUNTING FIRM Ernst & Young LLP, Memphis, TN ANNUAL MEETING MAA will hold its 2012 Annual Meeting of Shareholders on Thursday, May 24, 2012 at 11:00 a.m. CDT at their corporate head- quarters located in Memphis, TN. sTOCk LIsTING MAA’s common stock is listed on the New York Stock Exchange (NYSE) and is traded under the stock symbol MAA. TRANsFER AGENT ANd REGIsTRAR American Stock Transfer & Trust Company 800-937-5449 or www.amstock.com REGIsTEREd shAREhOLdERs who have questions about their accounts or who wish to change ownership or address of stock; to report lost, stolen or destroyed cer- tificates; or wish to enroll in our dividend reinvestment plan or direct stock purchase program should contact American Stock Transfer & Trust Company at the shareholder service number listed to the left or access their account at the website listed to the left. bENEFICIAL OwNERs who own shares held in “street name” should contact their broker or bank for all questions. LIMITEd PARTNER s of Mid-America Apartments, L.P. wishing to transfer their units or convert units into shares of common stock of MAA should contact MAA directly at the corporate headquarters. ANNUAL REPORT ANd FORM 10-k A copy of MAA’s Annual Report and Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission (SEC) will be sent without charge upon written request. Please address requests to the corporate headquarters, attention Investor Relations or email your request to investor.relations@maac.com. MAA SEC filings as well as corporate gover- nance documents are on the For Investors page of our website at www.maac.com. 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 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 have been filed as exhibits to MAA’s Form 10-K. ThE OPEN ARMs FOUNdATION The Open Arms Foundation is MAA’s award-winning corporate charity that provides fully-furnished, two-bedroom apartment homes free of charge to families displaced from their own homes while seek- ing medical treatment. In addition to rent, The Open Arms Foundation also pays for basic utilities including electricity/gas, phone, cable and internet. At the time of printing of this report, The Open Arms Foundation was providing 41 homes to families in medical crisis across 11 states. In its 18-year history, the foundation has provided nearly 2,300 families with over 126,000 nights of rest away from home. To find out more about The Open Arms Foundation please visit www.maac.com. bOARd OF dIRECTORs h. ERIC bOLTON, JR. Chief Executive Officer and Chairman of the Board of Directors MAA 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 of Directors First Horizon National Corporation Committees: Compensation; Nominating and Corporate Governance (Chairman) PhILIP w. NORwOOd President and Chief Executive Officer Faison Enterprises, Inc. Committees: Compensation (Chairman); Nominating and Corporate Governance w. REId sANdERs Managing Partner Chickasaw Partners Committees: Audit wILLIAM b. sANsOM President, Chief Executive Officer and Chairman of the Board of Directors H.T. Hackney Co. Committees: Compensation; Nominating and Corporate Governance sIMON R.C. wAdswORTh Past Executive Vice President and Chief Financial Officer MAA 6584 POPLAR AvENUE MEMPhIs, TN 38138 www.MAAC.COM 

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