2 0 1 7 A N N U A L R E P O R T
1
MAA is a real estate company focused on providing a
high-quality apartment living experience to residents across
the Sunbelt region of the United States. As an active buyer and
developer of apartment communities, MAA is currently the
largest owner-operator of apartment homes in the country and
is an S&P 500 company listed on the New York Stock Exchange.
For over 24 years we have focused on the high growth Sunbelt
markets to provide investors with exposure to the strong
population growth and robust housing demand dynamics of
these markets. With an investment portfolio that is uniquely
balanced and diversified across the region, MAA has successfully
navigated numerous business cycles, captured significant growth
and built an efficient, technology-driven operating platform.
At the end of 2017 we declared our 96th consecutive quarterly
common dividend supported by a strong investment-grade
balance sheet. MAA’s mission to create value for those we serve
has fueled a long-term return to shareholders that ranks in the
top-tier of performances within the overall REIT sector.
H I S T O R I C A L D I V I D E N D R E C O R D
95 CONSECUTIVE CASH DIVIDENDS PAID TO COMMON SHAREHOLDERS OVER 24 YEARS
0
3
2
$
.
.
2
3
2
$
0
2
2
$
.
4
3
.
2
$
4
3
.
2
$
4
3
.
2
$
4
3
.
2
$
5
3
.
2
$
.
8
3
2
$
2
4
2
$
.
6
4
2
$
.
6
4
2
$
.
6
4
2
$
.
.
1
5
2
$
0
0
2
$
.
4
0
2
$
.
4
1
.
2
$
1
2
.
1
$
8
4
.
3
$
8
2
.
3
$
8
0
3
$
.
.
2
9
2
$
.
8
7
2
$
4
6
2
$
.
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
12
13
14
15
16
17
Source: Company Data
ATLANTA , GA
1
L E T T E R
TO MY
FELLOW
SHAREHOLDERS:
Your company and our long-term prospects for
quality and diversification of our property portfolio,
growth in value are strong. We expect continued
the addition of a high-quality development
steady value growth from both our existing real
operation, new and expanded technologies added
estate portfolio as well as from an increasing
to our asset management programs, and the
number of external growth opportunities.
strengthening of our balance sheet have enhanced
Conditions began to change across a number
our ability to capture and effectively execute on
of our markets during calendar year 2017 after
new growth opportunities, while also growing value
several years of very favorable trends in rent
from our existing portfolio.
growth resulting from low levels of new apartment
construction coupled with growing demand.
This shift, along with the changes introduced to
corporate tax rates from the new “Tax Cuts and
Jobs Act” passed by Congress this past December,
have had a near-term impact on both the
apartment business and how the public capital
markets are approaching their capital allocation
decisions towards the overall REIT sector. While
these influences have combined to put some
short-term pressure on the apartment sector, I
believe the opportunities for MAA over the next
few years are growing, and we are excited about
the outlook for our company.
The demand for apartment housing continues to
increase. The number of households in the prime
renter age group of 20–34 year olds is growing,
and their preference for flexibility, convenience
and the lifestyle offered by multifamily housing
remains high. In addition, the large baby boomer
demographic continues an increasing trend
towards retiring, down-sizing and simplifying their
housing choices, potentially generating growing
demand from this segment of the housing market.
And while developers will periodically react to this
demand by adding new apartment housing to the
market, it is the demand side of the equation that
ultimately defines long-term performance trends
We have significantly strengthened our platform
and value creation for shareholder capital. As a
over the past few years. The improvements in
result of MAA’s focus on the highest population
2
and job growth region in the country, with a high-
integration work associated with the merger is
quality portfolio of properties diversified across
nearing completion. Efforts towards fully aligning
a number of markets, submarkets and price points,
policies, procedures and practices is also nearing
our company is well positioned to capture this
completion and we expect more operating
growing demand while also balanced to be better
efficiencies and expense synergies to be realized
protected from periodic new construction
over the course of 2018.
supply pressure.
While we are in the midst of cycling through a
To date, rising interest rates have not had much,
time of changing influences and variables that
if any, impact on the value of apartment real
impact apartment leasing and the capital markets’
estate. The private equity markets continue to
approach to the real estate sector, at MAA we
find apartment real estate a very attractive long-
have used the last few years to build strength in
term investment alternative and as a consequence
a number of important ways and as a result have
of strong investor demand, pricing and values of
boosted our competitive position and capabilities.
apartment real estate remain high. It is logical to
These enhancements have MAA in a solid position
assume that at some point rising interest rates
to harvest value from our existing portfolio,
will impact asset pricing. It is at that point when
take advantage of continued solid demand for
MAA’s strong investment-grade balance sheet will
apartment housing across our markets and seek new
provide an increasingly competitive advantage
opportunities to further boost shareholder value.
by supporting a value-accretive and more robust
external growth opportunity. The discipline
surrounding deployment of shareholder capital
that has defined our company’s long-term success
remains firmly in place.
MAA’s platform has been significantly strengthened
over the past few years as a result of increased
scale and efficiency gained from two significant
and successful merger transactions. Additionally,
we have taken steps to materially deleverage the
balance sheet, enhance coverage ratios and grow
our unencumbered asset base. As a result, we now
capture broader and less expensive access to the
debt capital markets. This strengthened position not
only provides enhanced protection during slower
parts of the economic cycle, but also puts MAA in
a stronger position to capture new value accretive
opportunities as they develop.
We are now a little over a year past our merger
with Post Properties and the long-term value
proposition that we initially identified has increased.
The opportunity surrounding redevelopment of
apartment home interiors to take full advantage
of the high quality locations of these properties
is something we look forward to capturing over
the next few years. Our back office and systems
While we have transformed and
strengthened many aspects of our
company, we remain committed
to the principles, values and
culture that have defined our
success over the past 24 years.
Our particular real estate service is uniquely
personal and very important to those we serve.
Likewise, investing and managing shareholder
capital is a privilege and responsibility we take
seriously. Our mission at MAA to deliver value for
our residents and shareholders is important. Our
company’s long-term success is anchored in the
strong commitment and dedication that each of
our associates bring to this mission. I appreciate
their work and service to our residents, to our
shareholders and to each other.
Thank you for your support and investment in MAA.
Sincerely,
H. Eric Bolton, Jr.
Chairman and Chief Executive Officer
3
M A R K E T S
100,489
U N I T S
303
C O M M U N I T I E S
17
S T A T E S P L U S T H E
D I S T R I C T O F C O L U M B I A
MULTIFAMILY MARKETS
REGIONAL OFFICES
CORPORATE HEADQUARTERS
Outperforming in the Full Cycle
D I V E R S I F I E D I N S U B M A R K E T S 1
MAA’s balanced and diversified portfolio across
the high growth Sunbelt region of the U.S. appeals
to the largest segment of the rental market.
MAA’s competitive advantages in these markets
support long-term outperformance and superior
value creation for shareholders.
50%
Inner Loop
23%
18%
9%
Suburban
Satellite City
Downtown/CBD
B A L A N C E D P R I C E P O I N T S 1 , 2
48%
52%
A to A+
B to B+
1 Based on total multifamily portfolio gross asset value
2 Average effective rent/unit of $1,250 or higher for A to A+ and lower than $1,250 for B to B+ for total multifamily portfolio
4
NASHVILLE , TN
5
$85,908
MAA INVESTMENT
$60,810
MULTIFAMILY PEERS*
$51,066
SNL US REIT EQUITY
$41,333
S&P 500
* Multifamily Peers:
AIV, AVB, CPT, EQR,
ESS, UDR
Source: S&P Global
Market Intelligence
R E T U R N O N I N V E S T M E N T
Value of $10,000 Investment at December 31
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
T O T A L A N N U A L S H A R E H O L D E R R E T U R N S
at December 31, 20 1 7
3-YEAR
10-YEAR
15-YEAR
* Multifamily Peers:
AIV, AVB, CPT, EQR,
ESS, UDR
Source: S&P Global
Market Intelligence
6
S T R O N G L O N G - T E R M P E R F O R M A N C E
Compounded AFFO Grow th of 6.2%
$2.91
$3.09
A
F
F
O
/
S
H
A
R
E
F
F
O
/
S
H
A
R
E
T O T A L C A P I T A L I Z A T I O N *
at December 31, 20 1 7
$0.98B
Secured Debt 5.9%
$0.04B
Preferred Equit y 0. 3%
$11.85B
Common Equit y 72. 3%
$3.52B
Unsecured Debt 21.5%
*Total Capitalization equals common shares and units outstanding multiplied by the closing stock price on
12/29/2017, plus preferred shares outstanding at the $50 per share redemption price, plus total debt outstanding.
S I G N I F I C A N T P L A T F O R M S T R E N G T H
B U I L T O V E R T H E P A S T F I V E Y E A R S
I N V E S T M E N T G R A D E
C R E D I T R A T I N G S
TOTAL ADJUSTED EBITDA
TO FIXED CHARGES
UNENCUMBERED GROSS ASSETS
TO GROSS ASSETS
4.73x
12-31-2017
84.0%
12-31-2017
3.86x
12-31-2012
52.7%
12-31-2012
TOTAL DEBT TO GROSS ASSETS
44.1%
12-31-2012
33.2%
12-31-2017
STANDARD & POOR’S RATING SERVICES1
BBB+
Outlook Stable
MOODY ’S INVESTORS SERVICE 2
Baa1
Outlook Stable
FITCH RATINGS1
BBB+
Outlook Stable
1 Mid-America Apartment Communities, Inc.
and Mid-America Apartments, L.P.
2 Mid-America Apartments, L.P. only
Note: For definitions of terms used on this page, as well as a reconciliation of non-GAAP terms to the most comparable GAAP measure, please refer to
our earnings release for the fourth quarter of 2017, which may be found at our website, www.maac.com, under the “For Investors” tab and the “Financial
Results” and “Earnings Releases with Supplements” sub-tabs.
7
CHARLESTON, SC
S U S T A I N A B I L I T Y
E N H A N C I N G L O N G - T E R M
S H A R E H O L D E R V A L U E
As a real estate company we
are mindful of the long-lasting
nature of our business and the
impact we have not just on the
environment but on the people
who depend on our communities.
We are committed to the vision
of good corporate citizenship and
have established practices in each
of the areas of environmental
stewardship, social responsibility
and corporate governance as
part of that commitment.
E N V I R O N M E N T A L S T E W A R D S H I P
Sustainable practices not only benefit a community’s overall
performance, they reduce environmental impact. We have
implemented initiatives in our landscaping, renovation and
development programs to reduce resource depletion on our
environment and capture cost savings for our investors. Efforts include
thoughtful landscape design to reduce water usage and runoff, the
use of energy saving appliances and certified green building practices.
S O C I A L R E S P O N S I B I L I T Y
At MAA we understand the importance of providing a home as well
as our responsibility to each other. Through our corporate charity, the
Open Arms Foundation, we provide a home away from home for those
who must travel for medical treatment. The charity is the centerpiece
of our community outreach efforts and reflects the true heart of our
associates and MAA’s culture by allowing us to provide a place of
peace and comfort to those in need within our broader community.
C O R P O R A T E G O V E R N A N C E
We believe that effective corporate governance is critical to the
long-term health of our company and our ability to create value for
our shareholders. We have established governance guidelines and
standards of conduct covering our Board of Directors, executive
officers and all MAA associates. We continue to monitor emerging
developments in corporate governance and review our policies in
comparison to other public companies. We recently amended our
company bylaws to provide proxy access.
88
2 0 1 7 F O R M 1 0 - K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
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.)
Tennessee (Mid-America Apartments, L.P.)
(State or other jurisdiction of incorporation or organization)
62-1543819
62-1543816
(I.R.S. Employer Identification No.)
6584 Poplar Avenue, Memphis, Tennessee, 38138
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 682-6600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $.01 per share (Mid-America Apartment
Communities, Inc.)
8.50% Series I Cumulative Redeemable Preferred Stock, $.01 par value per
share (Mid-America Apartment Communities, Inc.)
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Mid-America Apartment Communities, Inc.
Mid-America Apartments, L.P.
Yes
Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Mid-America Apartment Communities, Inc.
Mid-America Apartments, L.P.
Yes
Yes
No
No
No
No
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.
Mid-America Apartments, L.P.
Yes
Yes
No
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and
post such files).
Mid-America Apartment Communities, Inc.
Mid-America Apartments, L.P.
Yes
Yes
No
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. (Check one)
Mid-America Apartment Communities, Inc.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
Mid-America Apartments, L.P.
(Do not check if a smaller reporting company)
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
(Do not check if a smaller reporting 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.
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.
Mid-America Apartments, L.P.
Yes
Yes
No
No
The aggregate market value of the 78,829,719 shares of common stock of Mid-America Apartment Communities, Inc. held by non-affiliates was approximately $8,307,075,788 based
on the closing price of $105.38 as reported on the New York Stock Exchange on June 30, 2017. This calculation excludes shares of common stock held by the registrant's officers and directors
and each person known by the registrant to beneficially own more than 5% of the registrant's outstanding shares, as such persons may be deemed to be affiliates. This determination of affiliate
status should not be deemed conclusive for any other purpose. As of February 19, 2018 there were 113,688,972 shares of Mid-America Apartment Communities, Inc. common stock
outstanding.
There is no public trading market for the partnership units of Mid-America Apartments, L.P. As a result, an aggregate market value of the partnership units of Mid-America
Apartments, L.P. cannot be determined.
Documents Incorporated by Reference
Portions of the proxy statement for the annual shareholders meeting of Mid-America Apartment Communities, Inc. to be held on May 22, 2018 are incorporated by reference into Part III
of this report. We expect to file our proxy statement within 120 days after December 31, 2017.
1
MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P.
TABLE OF CONTENTS
PART I
Page
Business.
Risk Factors.
Unresolved Staff Comments.
Properties.
Legal Proceedings.
Mine Safety Disclosures.
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Selected Financial Data.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Quantitative and Qualitative Disclosures About Market Risk.
Financial Statements and Supplementary Data.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Controls and Procedures.
Other Information.
PART III
Directors, Executive Officers and Corporate Governance.
Executive Compensation.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Certain Relationships and Related Transactions, and Director Independence.
Principal Accounting Fees and Services.
PART IV
Exhibits and Financial Statement Schedules.
Form 10-K Summary
3
8
21
22
23
23
23
27
28
41
41
41
41
43
43
43
43
43
43
44
46
Item
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
10.
11.
12.
13.
14.
15.
16.
Explanatory Note
This report combines the Annual Reports on Form 10-K for the year ended December 31, 2017 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 96.4% owned subsidiary, Mid-America Apartments, L.P., are both required to file annual reports under the Securities
Exchange Act of 1934, as amended.
Unless the context otherwise requires, all references in this Annual Report on Form 10-K 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" means 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 December 31, 2017, MAA owned 113,643,166 OP units (or approximately 96.4% of the total number of OP
Units). MAA conducts substantially all of its business and holds substantially all of its assets through the Operating
Partnership, and by virtue of its ownership of the OP Units and being the Operating Partnership's sole general partner, MAA
has the ability to control all of the day-to-day operations of the Operating Partnership.
We believe combining the Annual Reports on Form 10-K of MAA and the Operating Partnership, including the notes
to the consolidated financial statements, into this report results in the following benefits:
•
•
•
enhances investors' understanding of MAA and the Operating Partnership by enabling investors to view the business
as a whole in the same manner that management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion
of the disclosure in this report applies to both MAA and the Operating Partnership; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
MAA 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 does not conduct business itself,
other than acting as the sole general partner of the Operating Partnership, issuing public equity from time-to-time and
guaranteeing certain debt of the Operating Partnership. The Operating Partnership holds, directly or indirectly, all of 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 units of
limited partnership interest.
The presentation of MAA's shareholders' equity and the Operating Partnership's capital are the principal areas of
difference between the consolidated financial statements of MAA and those of the Operating Partnership. MAA's shareholders'
equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings,
cumulative distributions, noncontrolling interest, treasury shares, accumulated other comprehensive income 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 interest, accumulated other comprehensive
income and redeemable common units. Redeemable common units represent the number of outstanding limited partnership
units as of the date of the applicable balance sheet, valued at the greater of the closing market price of MAA's common stock or
the aggregate value of the individual partners' capital balances. Holders of OP Units (other than MAA and its entity affiliates)
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
1
date) or by delivering one share of MAA's common stock (subject to adjustment under specified circumstances) for each OP
Unit so redeemed.
In order to highlight the material differences between MAA and the Operating Partnership, this Annual Report on
Form 10-K includes sections that separately present and discuss areas that are materially different between MAA and the
Operating Partnership, including:
•
•
•
•
•
the selected financial data in Item 6 of this report;
the consolidated financial statements in Item 8 of this report;
certain accompanying notes to the consolidated financial statements, including Note 3 - Earnings per Common
Share of MAA and Note 4 - Earnings per OP Unit of MAALP; Note 9 - Shareholders' Equity of MAA and Note
10 - Partners' Capital of MAALP; and Note 16 - Selected Quarterly Financial Information of MAA (Unaudited)
and Note 17 - Selected Quarterly Financial Information of MAALP (Unaudited);
the controls and procedures in Item 9A of this report; and
the certifications included as Exhibits 31 and 32 to this report.
In the sections that combine disclosures for MAA and the Operating Partnership, this report refers to actions or
holdings as being actions or holdings of the Company. Although the Operating Partnership (directly or indirectly through one
of its subsidiaries) is generally the entity that enters into contracts, holds assets and issues debt, management believes this
presentation is appropriate for the reasons set forth above and because the business is one enterprise, and we operate the
business through the Operating Partnership.
Risks Associated with Forward Looking Statements
PART I
We consider this and other sections of this Annual Report on Form 10-K to contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act, with respect to our expectations for future periods. Forward-looking
statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other
items related to the future. Such forward-looking statements may include, without limitation, statements concerning property
acquisitions and dispositions, joint venture activity, development and renovation activity as well as other capital expenditures,
capital raising activities, rent and expense growth, occupancy, financing activities and interest rate and other economic
expectations, and the anticipated benefits of our merger with Post Properties, Inc., or "Post Properties" and Post Apartment
Homes, L.P., or "Post LP". Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and
variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-
looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from the results of operations, financial conditions or plans expressed or
implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such forward-looking
statements included in this report may not prove to be accurate. In light of the significant uncertainties inherent in the forward-
looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any
other person that the results or conditions described in such statements or our objectives and plans will be achieved.
The following factors, among others, could cause our future results to differ materially from those expressed in the
forward-looking statements:
•
•
•
•
•
inability to generate sufficient cash flows due to market conditions, changes in supply and/or demand, competition,
uninsured losses, changes in tax and housing laws, or other factors;
exposure, as a multifamily focused REIT, to risks inherent in investments in a single industry and sector;
adverse changes in real estate markets, including, but not limited to, the extent of future demand for multifamily units in
our significant markets, barriers of entry into new markets, which we may seek to enter in the future, limitations on our
ability to increase rental rates, competition, our ability to identify and consummate attractive acquisitions or development
projects on favorable terms, our ability to consummate any planned dispositions in a timely manner on acceptable terms,
and our ability to reinvest sale proceeds in a manner that generates favorable returns;
failure of new acquisitions to achieve anticipated results or be efficiently integrated;
failure of development communities to be completed within budget and on a timely basis or to lease-up as anticipated,
if at all;
• unexpected capital needs;
2
ability to obtain financing at favorable rates, if at all, and refinance existing debt as it matures;
level and volatility of interest or capitalization rates or capital market conditions;
loss of hedge accounting treatment for interest rate swaps or interest rate caps;
the continuation of the good credit of our interest rate swap and cap providers;
•
changes in operating costs, including real estate taxes, utilities and insurance costs;
•
losses from catastrophes in excess of our insurance coverage;
• difficulty in integrating MAA's and Post Properties' businesses;
•
•
•
•
• price volatility, dislocations and liquidity disruptions in the financial markets and the resulting impact on financing;
•
•
•
the effect of any rating agency actions on the cost and availability of new debt financing;
significant decline in market value of real estate serving as collateral for mortgage obligations;
significant change in the mortgage financing market that would cause single-family housing, either as an owned or
rental product, to become a more significant competitive product;
• our ability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax
purposes, the ability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal
income tax purposes, the ability of our taxable REIT subsidiaries to maintain their status as such for federal income
tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by
these rules;
inability to attract and retain qualified personnel;
cyberliability or potential liability for breaches of our privacy or information security systems;
•
•
• potential liability for environmental contamination;
•
adverse legislative or regulatory tax changes;
•
litigation and compliance costs associated with laws requiring access for disabled persons; and
• other risks identified in this Annual Report on Form 10-K including under the caption "Item 1A. Risk Factors" and,
from time to time, in other reports we file with the Securities and Exchange Commission, or the SEC, or in other
documents that we publicly disseminate.
New factors may also emerge from time to time that could have a material adverse effect on our business. Except as
otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements to reflect
events, circumstances or changes in expectations after the date on which this Annual Report on Form 10-K is filed.
ITEM 1. BUSINESS
Overview
MAA is a multifamily focused, self-administered and self-managed real estate investment trust, or REIT. We own,
operate, acquire and selectively develop apartment communities primarily located in the Southeast and Southwest regions of
the United States. As of December 31, 2017, activities include full ownership and operation of 301 multifamily properties,
which includes commercial space at certain properties, four additional commercial properties, and a partial ownership in one
multifamily property. These properties are located in Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Kansas,
Kentucky, Maryland, Mississippi, Missouri, Nevada, North Carolina, South Carolina, Tennessee, Texas, Virginia and
Washington, D.C. As of December 31, 2017, we maintained full or partial ownership in the following properties:
Multifamily:
Commercial:
Consolidated Properties Units Unconsolidated Properties Units Total Properties Total Units
301
99,523
1
269
302
99,792
Consolidated Properties Sq. Ft. (1) Unconsolidated Properties Sq. Ft. Total Properties Total Sq. Ft.
4
231,821
—
—
4
231,821
(1) Excludes commercial space located at our multifamily communities, which totals approximately 620,000 square feet of gross
leasable space.
Our business is conducted principally through the Operating Partnership. MAA is the sole general partner of the
Operating Partnership, holding 113,643,166 OP units, comprising a 96.4% partnership interest in the Operating Partnership as
of December 31, 2017. MAA and MAALP were formed in Tennessee in 1993. As of December 31, 2017, we had 2,419 full
time employees and 45 part-time employees.
3
Business Objectives
Our primary business objectives are to protect and grow existing property values, to maintain a stable and increasing
cash flow that will fund our dividends and distributions through all parts of the real estate investment cycle, and to create
shareholder value by growing in a disciplined manner. To achieve these objectives, we intend to continue to pursue the
following goals and strategies:
•
effectively and efficiently operate our existing properties with an intense property and asset management focus and a
decentralized structure;
• manage real estate cycles by taking an opportunistic approach to buying, selling, developing and renovating apartment
communities;
• diversify investment capital across markets in which we operate to achieve a balanced portfolio and minimize volatile
operating performance; and
actively manage our capital structure to enhance predictability of earnings to fund our dividends and distributions.
•
Operations
Our goal is to generate return on investment collectively and in each apartment community by increasing revenues,
controlling operating expenses, maintaining high occupancy levels and reinvesting in the income producing capacity of each
apartment community as appropriate. The steps taken to meet these objectives include:
• providing management information and improved customer services through technology innovations;
• utilizing systems to enhance property managers’ ability to optimize revenue by adjusting rental rates in response to
local market conditions and individual unit amenities;
implementing programs to control expenses through investment in cost-saving initiatives;
analyzing individual asset productivity performances to identify best practices and improvement areas;
•
•
• maintaining the physical condition of each property through ongoing capital investments;
•
improving the "curb appeal" of the apartment communities through extensive landscaping and exterior improvements,
and repositioning apartment communities from time-to-time to enhance or maintain market positions;
• managing lease expirations to align with peak leasing traffic patterns and to maximize productivity of property
staffing;
allocating additional capital, including capital for selective interior and exterior improvements;
compensating employees through performance-based compensation and stock ownership programs; and
•
•
• maintaining a hands-on management style and "flat" organizational structure that emphasizes property level decision
making coupled with asset management and senior management's monitoring.
We believe that our decentralized operating structure capitalizes on specific market knowledge, provides greater
personal accountability than a centralized structure and is beneficial in the acquisition and redevelopment processes. To
support this decentralized operational structure, senior management, along with various asset management functions, are
proactively involved in supporting and reviewing property management through extensive reporting processes and frequent on-
site visits. To maximize the amount of information shared between senior management and the properties on a real-time basis,
we utilize a web-based property management system. The system contains property and accounting modules that allow for
operating efficiencies and continued expense control, provide for various expanded revenue management practices, and
improve the support provided to on-site property operations. We use a "yield management" pricing program that helps our
property managers optimize rental revenues, and we also utilize purchase order and accounts payable software to provide
improved controls and management information.
Investment in technology continues to drive operating efficiencies in our business and help us to better meet the
changing needs of our residents. Our residents have the ability to conduct business with us 24 hours a day, 7 days a week and
complete online leasing applications and renewals via the use of our web-based resident Internet portal. Interacting with our
residents through such technology has allowed us to improve resident satisfaction ratings and increase the efficiency of our
operating teams.
We report in the following operating segments:
• Large market same store communities are generally communities in markets with a population of at least 1
million and at least 1% of the total public multifamily REIT units that we have owned and have been stabilized
for at least a full 12 months.
4
• Secondary market same store communities are generally communities in markets with populations of more than 1
million but less than 1% of the total public multifamily REIT units or markets with populations of less than 1
million that we have owned and have been stabilized for at least a full 12 months.
• Non-same store communities and other includes recent acquisitions, communities in development or lease-up,
communities that have been identified for disposition, and communities that have undergone a significant casualty
loss. Also included in non-same store communities are non-multifamily activities.
On the first day of each calendar year, we determine the composition of our same store operating segments for that
year as well as adjust the previous year, which allows us to evaluate full period-over-period operating comparisons. An
apartment community in development or lease-up is added to the same store portfolio on the first day of the calendar year after
it has been owned and stabilized for at least a full 12 months. Communities are considered stabilized after achieving 90%
occupancy for 90 days. Communities that have been identified for disposition are excluded from the same store portfolio.
All properties acquired from Post Properties in the Merger remained in the Non-Same Store and Other operating
segment during 2017, as the properties were recent acquisitions and had not been owned and stabilized for at least 12 months as
of January 1, 2017. For additional information regarding our operating segments, see Note 14 to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.
Acquisitions
One of our growth strategies is to acquire apartment communities that are located in various large or secondary
markets primarily throughout the Southeast and Southwest regions of the United States. Acquisitions, along with dispositions,
help us achieve and maintain our desired product mix, geographic diversification and asset allocation. Portfolio growth allows
for maximizing the efficiency of the existing management and overhead structure. We have extensive experience in the
acquisition of multifamily communities. We will continue to evaluate opportunities that arise, and we will utilize this strategy
to increase our number of apartment communities in strong and growing markets.
We acquired the following apartment communities during the year ended December 31, 2017:
Community
Charlotte at Midtown
Acklen West End
Market
Nashville, TN
Nashville, TN
Units
279
320
Closing Date
March 16, 2017
December 28, 2017
Dispositions
We sell apartment communities and other assets that no longer meet our long-term strategy or when market conditions
are favorable, and we redeploy the proceeds from those sales to acquire, develop and redevelop additional apartment
communities and rebalance our portfolio across or within geographic regions. Dispositions also allow us to realize a portion of
the value created through our investments and provide additional liquidity. We are then able to redeploy the net proceeds from
our dispositions in lieu of raising additional capital. In deciding to sell an apartment community, we consider current market
conditions and generally solicit competing bids from unrelated parties for these individual assets, considering the sales price
and other key terms of each proposal. We also consider portfolio dispositions when such a structure is useful to maximize
proceeds and efficiency of execution. During the year ended December 31, 2017, we disposed of five multifamily properties
totaling 1,760 units and four land parcels totaling approximately 23 acres.
Development
As another part of our growth strategy, we invest in a limited number of development projects. Development activities
may be conducted through wholly-owned affiliated companies or through joint ventures with unaffiliated parties. Fixed price
construction contracts are signed with unrelated parties to minimize construction risk. We typically manage the leasing portion
of the project as units become available for lease. We may also engage in limited expansion development opportunities on
existing communities in which we typically serve as the developer. While we seek opportunistic new development investments
offering attractive long-term investment returns, we intend to maintain a total development commitment that we consider
modest in relation to our total balance sheet and investment portfolio. During the year ended December 31, 2017, we incurred
$170.1 million in development costs and completed 7 development projects.
5
The following multifamily projects were under development as of December 31, 2017 (dollars in thousands):
Project:
Post River North
Market
Denver, CO
1201 Midtown II
Charleston, SC
Post Centennial Park
Atlanta, GA
Total
Units
Units
Completed
359
140
438
937
240
—
—
240
Cost to
Date
$81,195
12,624
73,837
Budgeted
Cost
Estimated
Cost Per Unit
Expected
Completion
$88,200
29,500
96,300
$246
211
220
1st Quarter 2018
4th Quarter 2018
3rd Quarter 2018
$167,656
$214,000
Redevelopment
We focus on both interior unit upgrades and exterior amenities above and beyond routine capital upkeep on existing
apartment communities across our portfolio that we believe have the ability to support additional rent growth. During the year
ended December 31, 2017, we renovated 8,375 units at an average cost of $5,463 per unit, achieving average rental rate
increases of 8.8% above the normal market rate for similar but non-renovated units.
Capital Structure
We use a combination of debt and equity sources to fund our business objectives. We maintain a capital structure,
focused on maintaining access, flexibility and low costs, that we believe allows us to proactively source potential investment
opportunities in the marketplace. We structure our debt maturities to avoid disproportionate exposure in any given year. Our
primary debt financing strategy is to access the unsecured debt markets to provide our debt capital needs, but we also maintain
a limited amount of secured debt and maintain our access to both the secured and unsecured debt markets for maximum
flexibility. We also believe that we have significant access to the equity capital markets.
At December 31, 2017, 27.5% of our total market capitalization consisted of debt borrowings, including 21.5% under
unsecured credit facilities and unsecured senior notes and 6.0% under secured borrowings. We currently intend to target our
total debt, net of cash held, to a range of approximately 32% to 38% of the undepreciated book value of our assets. Our charter
and bylaws do not limit our debt levels and our Board of Directors can modify this policy at any time. We may issue new equity
to maintain our debt within the target range. Covenants for our unsecured senior notes limit our debt to undepreciated book
value of our assets to 60%. As of December 31, 2017, our ratio of total debt to our adjusted total assets (as defined in the
covenants for the bonds issued by MAALP) was approximately 33.2%. We continuously review opportunities for lowering our
cost of capital. We plan to continue using unsecured debt in order to take advantage of the lower cost of capital and flexibility
provided by these markets. We will evaluate opportunities to repurchase shares when we believe that our share price is
significantly below our net present value. We also look for opportunities where we can acquire or develop apartment
communities, selectively funded or partially funded by sales of equity securities, when appropriate opportunities arise. We
focus on improving the net present value of our investments by generating cash flows from our portfolio of assets above the
estimated total cost of debt and equity capital. We routinely make new investments when we believe it will be accretive to
shareholder value over the life of the investments.
Competition
All of our apartment communities are located in areas that include other apartment communities. Occupancy and
rental rates are affected by the number of competitive apartment communities in a particular area. The owners of competing
apartment communities may have greater resources than us, and the managers of these apartment communities may have more
experience than our management. Moreover, single-family rental housing, manufactured housing, condominiums and the new
and existing home markets provide housing alternatives to potential residents of apartment communities. Competition for new
residents is generally intense across all of our markets. Some competing communities offer features that our communities do
not have. Competing communities can use concessions or lower rents to obtain temporary competitive advantages. Also, some
competing communities are larger or newer than our communities. The competitive position of each community is different
depending upon many factors including sub-market supply and demand. In addition, other real estate investors compete with us
to acquire existing properties and to develop new properties. These competitors include insurance companies, pension and
investment funds, public and private real estate companies, investment companies and other public and private apartment
REITs, some of which may have greater resources, or lower capital costs, than we do.
6
We believe, however, that we are generally well-positioned to compete effectively for residents and investments. We
believe our competitive advantages include:
•
•
a fully integrated organization with property management, development, redevelopment, acquisition, marketing, sales
and financing expertise;
scalable operating and support systems, which include automated systems to meet the changing technological needs of
our residents;
access to a wide variety of debt and equity capital sources;
•
• geographic diversification with a presence in approximately 37 defined Metropolitan Statistical Areas, or MSAs,
across the Southeast and Southwest regions of the United States; and
significant presence in many of our major markets that allows us to be a local operating expert.
•
Moving forward, we plan to continue to optimize lease expiration management, improve expense control, increase
resident retention efforts and align employee incentive plans with our performance. We believe this plan of operation, coupled
with the portfolio’s strengths in targeting residents across a geographically diverse platform, should position us for continued
operational upside. We also make capital improvements to both our apartment communities and individual units on a regular
basis in order to maintain a competitive position in each individual market.
Environmental Matters
As a part of our standard apartment community acquisition and development processes, we generally obtain
environmental studies of the sites from outside environmental engineering firms. The purpose of these studies is to identify
potential sources of contamination at the site and to assess the status of environmental regulatory compliance. These studies
generally include historical reviews of the site, reviews of certain public records, preliminary investigations of the site and
surrounding properties, inspection for the presence of asbestos, poly-chlorinated biphenyls, or PCBs, and underground storage
tanks and the preparation and issuance of written reports. Depending on the results of these studies, more invasive procedures,
such as soil sampling or ground water analysis, may be performed to investigate potential sources of contamination. These
studies must be satisfactorily completed before we take ownership of an acquisition or development property; however, no
assurance can be given that the studies or additional documents reviewed identify all significant environmental risks. See
"Risk Factors - Risks Relating to Our Real Estate Investments and Our Operations - Environmental problems are possible and
can be costly."
The environmental studies we received on properties that we have acquired have not revealed any material
environmental liabilities. Should any potential environmental risks or conditions be discovered during our due diligence
process, the potential costs of remediation will be assessed carefully and factored into the cost of acquisition, assuming the
identified risks and factors are deemed to be manageable and within reason. We are not aware of any existing conditions that
we believe would be considered a material environmental liability. Nevertheless, it is possible that the studies do not reveal all
environmental risks or that there are material environmental liabilities of which we are not aware. Moreover, no assurance can
be given concerning future laws, ordinances or regulations, or the potential introduction of hazardous or toxic substances by
neighboring properties or residents.
Merger of MAA and Post Properties
On December 1, 2016, MAA completed its merger with Post Properties. Pursuant to the Agreement and Plan of
Merger, or the Merger Agreement, Post Properties merged with and into MAA, with MAA continuing as the surviving
corporation, or the Parent Merger, and Post LP merged with and into MAALP, with MAALP continuing as the surviving entity,
or the Partnership Merger. We refer to the Parent Merger, together with the Partnership Merger, as the Merger in this Annual
Report on Form 10-K. The consolidated net assets and results of operations of Post Properties are included in our consolidated
financial statements from and after the closing date of the Merger. The 2016 and 2017 operating results of the Post Properties
assets we acquired in the Merger are included in our non-same store and other operating segment, as those assets were not
eligible to be included in our same store segments until January 1, 2018.
Qualification as a Real Estate Investment Trust
MAA has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code. To
continue to qualify as a REIT, MAA must continue to meet certain tests which, among other things, generally require that our
assets consist primarily of real estate assets, our income be derived primarily from real estate assets, and that we distribute at
least 90% of our REIT taxable income (other than our net capital gains) to our shareholders annually. If MAA maintains its
qualification as a REIT, MAA generally will not be subject to U.S. federal income taxes at the corporate level on its net income
7
to the extent it distributes such net income to its shareholders annually. Even if MAA continues to qualify as a REIT, it will
continue to be subject to certain federal, state and local taxes on its income and its property. In 2017, MAA paid total
distributions of $3.48 per share of common stock to its shareholders, which was above the 90% REIT distribution requirement
and was in excess of REIT taxable income.
Recent Developments
On February 1, 2018, the Company retired a $38.5 million mortgage associated with Highlands of West Village. The
mortgage was scheduled to mature in May 2018.
Website Access to Our Reports
MAA and the Operating Partnership file combined periodic reports with the SEC. Our Annual Reports on Form 10-K,
along with our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, are
available on our website at www.maac.com as soon as reasonably practicable after such material is electronically filed with, or
furnished to, the SEC. Reference to our website does not constitute incorporation by reference of the information contained on
the site and should not be considered part of this Annual Report on Form 10-K. All of the aforementioned materials may also
be obtained free of charge by contacting our Legal Department, 6584 Poplar Avenue, Memphis, TN 38138.
ITEM 1A. RISK FACTORS
In addition to the other information contained in this Annual Report on Form 10-K, we have identified the following
additional risks and uncertainties that may have a material adverse effect on our business prospects, financial condition or
results of operations. Investors should carefully consider the risks described below before making an investment decision. Our
business faces significant risks and the risks described below may not be the only risks we face. Additional risks not presently
known to us or that we currently believe are immaterial may also significantly impact our business operations. If any of these
risks occur, our business prospects, financial condition or results of operations could suffer, the market price of our capital
stock and the trading price of our debt securities could decline and you could lose all or part of your investment in our capital
stock or debt securities.
RISKS RELATED TO OUR REAL ESTATE INVESTMENTS AND OUR OPERATIONS
Developments such as an economic downturn, instability in the banking sector or a negative impact on economic growth
resulting from current or future legislation or government initiatives may materially and adversely affect our financial
condition and results of operations.
The industry in which we operate may be adversely affected by national and international economic conditions.
Although the U.S. real estate market has recently improved, certain international markets are experiencing increased levels of
volatility due to a combination of factors, including, among others, political instability from ongoing geopolitical conflicts,
high unemployment rates, fluctuating oil and gas prices and fiscal deficits, and these factors could contribute to an economic
downturn in the U.S. If the U.S. experiences a downturn in the economy, instability in the banking sector or a negative impact
on economic growth resulting from changes in legislation, government tax increases, debt policy or spending restrictions, we
may experience adverse effects on our occupancy levels, our rental revenues and the value of our properties, any of which
could adversely affect our cash flow, financial condition and results of operations.
Other economic risks which may adversely affect conditions in the markets in which we operate include the following:
•
local conditions, such as an oversupply of apartments or other housing available for rent, or a reduction in demand for
apartments in the area;
low mortgage interest rates and home pricing, making alternative housing more affordable;
•
• government or builder incentives with respect to home ownership, making alternative housing options more attractive;
and
regional economic downturns which affect one or more of our geographical markets.
•
Failure to generate sufficient cash flows could limit our ability to make payments on our debt and to make distributions.
Our ability to make payments on our debt and to make distributions depends on our ability to generate cash flow in
excess of operating costs and capital expenditure requirements and/or to have access to the markets for debt and equity
8
financing. Our funds from operations may be insufficient because of factors that are beyond our control. Such events or
conditions could include:
competition from other apartment communities;
•
• overbuilding of new apartments or oversupply of available apartments in our markets, which might adversely affect
•
occupancy or rental rates and/or require rent concessions in order to lease apartments;
conversion of condominiums and single family houses to rental use or the increase in the number condominiums and
single family homes available for sale;
• weakness in the overall economy which lowers job growth and the associated demand for apartment housing;
•
increases in operating costs (including real estate taxes, utilities and insurance premiums) due to inflation and other
factors, which may not be offset by increased rental rates;
inability to initially, or subsequently after lease terminations, rent apartments on favorable economic terms;
failure of development communities to be completed within budget and on a timely basis or to lease-up as anticipated,
if at all;
changes in governmental regulations and the related costs of compliance;
changes in laws including, but not limited to, tax laws and housing laws including the enactment of rent control laws
or other laws regulating multifamily housing;
•
•
•
•
•
•
• withdrawal of government support of apartment financing through its financial backing of the Federal National
Mortgage Association, or Fannie Mae, or the Federal Home Loan Mortgage Corporation, or Freddie Mac;
an uninsured loss, including those resulting from a catastrophic storm, earthquake, or act of terrorism;
changes in interest rate levels and the availability of financing, borrower credit standards, and down-payment
requirements which could lead renters to purchase homes (if interest rates decrease and home loans are more readily
available) or increase our acquisition and operating costs (if interest rates increase and financing is less readily
available); and
the relative illiquidity of real estate investments.
•
At times, we have relied on external funding sources to fully fund the payment of distributions to shareholders and our
capital investment program, including our existing property developments. While we have sufficient liquidity to permit
distributions at current rates through additional borrowings, if necessary, any significant and sustained deterioration in
operations could result in our financial resources being insufficient to make payments on our debt and to make distributions at
the current rate, in which event we would be required to reduce the distribution rate. Any decline in our funds from operations
could adversely affect our ability to make distributions or to meet our loan covenants and could have a material adverse effect
on our stock price or the trading price of our debt securities.
We are dependent on a concentration of our investments in a single asset class, making our results of operations more
vulnerable to a downturn or slowdown in the sector or other economic factors.
As of December 31, 2017, substantially all of our investments are concentrated in the multifamily sector. As a result,
we will be subject to risks inherent in investments in a single type of property. A downturn or slowdown in the demand for
multifamily housing may have more pronounced effects on our results of operations or on the value of our assets than if we had
diversified our investments into more than one asset class.
Our operations are concentrated in the Southeast and Southwest regions of the United States; we are subject to general
economic conditions in the regions in which we operate.
As of December 31, 2017, approximately 39.4% of our portfolio is located in our top five markets: Atlanta, Georgia;
Dallas, Texas; Austin, Texas; Charlotte, North Carolina; and Orlando, Florida. In addition, our overall operations are
concentrated in the Southeast and Southwest regions of the United States. Our performance could be adversely affected by
economic conditions in, and other factors relating to, these geographic areas, including supply and demand for apartments in
these areas, zoning and other regulatory conditions and competition from other communities and alternative forms of housing.
In particular our performance is disproportionately influenced by job growth and unemployment. To the extent the economic
conditions, job growth and unemployment in any of these markets deteriorate or any of these areas experiences natural
disasters, the value of our portfolio, our results of operations and our ability to make payments on our debt and to make
distributions could be adversely affected.
Failure to succeed in new markets or sectors may have adverse consequences on our performance.
We may make acquisitions outside of our existing market areas if appropriate opportunities arise. Our historical
experience in our existing markets does not ensure that we will be able to operate successfully in new markets, should we
9
choose to enter them. We may be exposed to a variety of risks if we choose to enter new markets, including an inability to
accurately evaluate local market conditions, to identify appropriate acquisition opportunities, to hire and retain key personnel,
and a lack of familiarity with local governmental and permitting procedures. In addition, we may abandon opportunities to
enter new markets that we have begun to explore for any reason and may, as a result, fail to recover expenses already incurred.
Substantial competition among apartment communities and real estate companies may adversely affect our revenues and
development and acquisition opportunities.
There are numerous other apartment communities and real estate companies, some of which may have greater
financial and other resources than we have, within the market area of each of our communities that compete with us for
residents and development and acquisition opportunities. The number of competitive apartment communities and real estate
companies in these areas could have a material effect on (1) our ability to rent our apartments and generate revenues, and (2)
development and acquisition opportunities. The activities of these competitors could cause us to pay a higher price for a new
property than we otherwise would have paid or may prevent us from purchasing a desired property at all, which could have a
material adverse effect on us and our ability to make payments on our debt and make distributions.
Actual or threatened terrorist attacks may have an adverse effect on our business and operating results and could
decrease the value of our assets.
Actual or threatened terrorist attacks and other acts of violence or war could have a material adverse effect on our
business and operating results. Attacks that directly impact one or more of our apartment communities could significantly affect
our ability to operate those communities and thereby impair our ability to achieve our expected results. Further, our insurance
coverage may not cover all losses caused by a terrorist attack. In addition, the adverse effects that such violent acts and threats
of future attacks could have on the U.S. economy could similarly have a material adverse effect on our business and results of
operations.
We rely on information technology systems in our operations, and any breach or security failure of those systems could
materially adversely affect our business, results of operations, financial condition and reputation.
We rely on information technology systems to process, transmit and store information and to manage or support our
business processes. We maintain confidential financial and business information regarding us and persons with which we do
business on our information technology systems. We also collect and hold personally identifiable information of our residents
and prospective residents in connection with our leasing and property management activities, and we collect and hold
personally identifiable information of our employees in connection with their employment. In addition, we engage third party
service providers that may collect and hold personally identifiable information of our residents, prospective residents and
employees in connection with providing business services to us, including web hosting, property management, leasing,
accounting and payroll services. The protection of the information technology systems on which we rely is critically important
to us. We take steps, and generally require third party service providers to take steps, to protect the security of the information
maintained in our and our service providers' information technology systems, including the use of systems, software, tools and
monitoring to provide security for processing, transmitting and storing of the information. However, we face risks associated
with breaches or security failures of the information technology systems on which we rely, which could result from, among
other incidents, cyber-attacks or cyber-intrusions over the Internet, malware, computer viruses or employee error or
misconduct. This risk of a breach or security failure, particularly through cyber-attacks or cyber-intrusion, has generally
increased due to the rise in new technologies and the increased sophistication and activities of the perpetrators of attempted
attacks and intrusions.
The security measures put in place by us and our service providers cannot provide absolute security and there can be
no assurance that we or our service providers will not suffer a data security incident in the future, that unauthorized parties will
not gain access to sensitive information stored on our or our service providers' systems, that such access will not, whether
temporarily or permanently, impact, interfere with or interrupt our operations, or that any such incident will be discovered in a
timely manner. Even the most well protected information, networks, systems and facilities remain potentially vulnerable as the
techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target,
and in some cases are designed to not be detected and, in fact, may not be detected. Accordingly, we and our providers may be
unable to anticipate these techniques or to implement adequate security barriers or other preventative measures. Further, in the
future, we may be required to expend additional resources to continue to enhance information security measures or to
investigate and remediate any information security vulnerabilities.
A data security incident could compromise our or our service providers' information technology systems, and the
information stored by us or our service providers, including personally identifiable information of residents, prospective
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residents and employees, could be accessed, misused, publicly disclosed, corrupted, lost or stolen. Any failure to prevent a
breach or a security failure of our or our service providers' information technology systems could interrupt our operations,
damage our reputation and brand, damage our competitive position, make it difficult for us to attract and retain residents,
subject us to liability claims or regulatory penalties and could materially and adversely affect our business, financial condition
or results of operations.
We may not realize the anticipated benefits of past or future apartment community acquisitions, and the failure to integrate
acquired apartment communities and new personnel successfully could create inefficiencies.
We have acquired in the past, and if presented with attractive opportunities we intend to acquire in the future, apartment
communities that meet our investment criteria. Our acquisition activities and their success are subject to the following risks:
• we may be unable to obtain financing for acquisitions on favorable terms or at all;
•
even if we are able to finance the acquisition, cash flow from the acquisition may be insufficient to meet our required
principal and interest payments on the acquisition;
even if we enter into an acquisition agreement for an apartment community, we may be unable to complete the
acquisition after incurring certain acquisition-related costs;
•
• we may incur significant costs and divert management's attention in connection with the evaluation and negotiation of
potential acquisitions, including potential acquisitions that we are subsequently unable to complete;
• when we acquire an apartment community, we may invest additional amounts in it with the intention of increasing
profitability, and these additional investments may not produce the anticipated improvements in profitability;
• we may be unable to quickly and efficiently integrate acquired apartment communities and new personnel into our
existing operations, and the failure to successfully integrate such apartment communities or personnel will result in
inefficiencies that could adversely affect our expected return on our investments and our overall profitability; and
• we may acquire properties that are subject to liabilities or that have problems relating to environmental condition, state
of title, physical condition or compliance with zoning laws, building codes or other legal requirements and in each
case, our acquisition may be without any, or with only limited, recourse with respect to unknown liabilities or
conditions and we may be obligated to pay substantial sums to settle or cure it, which could adversely affect our cash
flow and operating results.
We are subject to certain risks associated with selling apartment communities, which could limit our operational and
financial flexibility.
We periodically dispose of apartment communities that no longer meet our strategic objectives, but adverse market
conditions may make it difficult to sell apartment communities like the ones we own. We cannot predict whether we will be
able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective
purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close
the sale of a property. Furthermore, we may be required to expend funds to correct defects or to make improvements before a
property can be sold. These conditions may limit our ability to dispose of properties and to change our portfolio promptly in
order to meet our strategic objectives, which may in turn have a material adverse effect on our financial condition and the
market value of our securities. We are also subject to the following risks in connection with sales of our apartment
communities:
•
a significant portion of the proceeds from our overall property sales may be held by intermediaries in order for some
sales to qualify as like-kind exchanges under Section 1031 of the Code, so that any related capital gain can be deferred
for federal income tax purposes. As a result, we may not have immediate access to all of the cash proceeds generated
from our property sales. In addition, if a transaction intended to qualify as a Section 1031 exchange is later determined
to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or
repealed, we may not be able to dispose of properties on a tax deferred basis. Intermediary agents of Section 1031
exchange transactions typically handle large sums of money in trusts. Misappropriation of funds by one of these
agents could have a material negative impact on our results of operations. Additionally, misappropriation of funds
could result in the disposal of the property not qualifying for a tax deferred basis and adversely affect our financial
condition. It is also possible the qualification of a transaction as a Section 1031 exchange could be successfully
challenged and determined to be currently taxable. In such case, our taxable income and earnings and profits would
increase, which could increase the dividend income to our shareholders by reducing any return of capital they
received. In some circumstances, we may be required to pay additional dividends or, in lieu of additional dividends,
corporate income tax, possibly including interest and penalties. As a result, we may be required to borrow funds in
order to pay additional dividends or taxes and the payment of such taxes could cause us to have less cash available to
distribute to our shareholders. In addition, if a Section 1031 exchange were later to be determined to be taxable, we
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may be required to amend our tax returns for the applicable year in question, including any information reports sent to
our shareholders; and
•
federal tax laws applicable to REITs limit our ability to profit on the sale of communities, and this limitation may
prevent us from selling communities when market conditions are favorable.
Property ownership through joint ventures could limit our ability to act exclusively in our interest.
From time to time we may acquire and/or develop properties in joint ventures with other persons or entities when we
believe circumstances warrant the use of such structures. In that case, we could become engaged in a dispute with one or more
of our partners which might affect our ability to operate a jointly-owned property. Moreover, our partners could have business,
economic or other objectives that are inconsistent with our objectives, including objectives that relate to the appropriate timing
and terms of any sale or refinancing of a property. In some instances, our partners could have competing interests in our
markets that could create conflicts of interest. Also, our partners might refuse to make capital contributions when due and we
may be responsible to our partners for indemnifiable losses. In general, we and our partners could each have the right to trigger
a buy-sell arrangement, which could cause us to sell our interest, or acquire our partners' interest, at a time when we otherwise
would not have initiated such a transaction and may result in the valuation of our interest in the joint venture (if we are the
seller) or of our partners' interest in the joint venture (if we are the buyer) at levels which may not be representative of the
valuation that would result from an arm's length marketing process. Other potential risks of a jointly-owned property include (i)
a deadlock if we and our partners are unable to agree upon certain major and other decisions, (ii) a limitation of our ability to
liquidate our position in the partnership or joint venture without the consent of the other partners and (iii) a requirement to
provide guarantees in favor of lenders with respect to the indebtedness of the joint venture.
Environmental problems are possible and can be costly.
Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real
estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances in, on, around or under
such property. Such laws often impose such liability without regard to whether the owner or operator knew of, or was
responsible for, the presence of such hazardous or toxic substances. The presence of, or failure to properly remediate,
hazardous, toxic substances or petroleum product releases may adversely affect the owner's or operator’s ability to sell or rent
the affected property or to borrow using the property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or remediation of hazardous or toxic substances at a
disposal or treatment facility, whether or not the facility is owned or operated by the person. Certain environmental laws
impose liability for the release of asbestos-containing materials into the air, and third parties may also seek recovery from
owners or operators of real property for personal injury associated with asbestos-containing materials and other hazardous or
toxic substances. Federal and state laws also regulate the operation and subsequent removal of certain underground storage
tanks. In connection with the current or former ownership (direct or indirect), operation, management, development or control
of real property, we may be considered an owner or operator of such communities or as having arranged for the disposal or
treatment of hazardous or toxic substances and, therefore, may be potentially liable for removal or remediation costs, as well as
certain other costs, including governmental fines, and claims for injuries to persons and property.
Our current policy is to obtain a Phase I environmental study on each apartment community that we seek to acquire or
develop, which generally does not involve invasive techniques such as soil or ground water sampling, and to proceed accordingly.
We cannot assure you, however, that the Phase I environmental studies or other environmental studies undertaken with respect to
any of our current or future apartment communities will reveal:
•
•
•
•
all or the full extent of potential environmental liabilities;
that any prior owner or operator of a property did not create any material environmental condition unknown to us;
that a material environmental condition does not otherwise exist as to any one or more of such apartment
communities; or
that environmental matters will not have a material adverse effect on us and our ability to make distributions and pay
amounts due on our debt.
Certain environmental laws impose liability on a previous owner of property to the extent that hazardous or toxic
substances were present during the prior ownership period. A transfer of the property does not relieve an owner of such liability.
Thus, we may have liability with respect to apartment communities previously sold by our predecessors or by us. There have
been a number of lawsuits against owners and operators of multifamily communities alleging personal injury and property
damage caused by the presence of mold in residential real estate. Some of these lawsuits have resulted in substantial monetary
judgments or settlements. Insurance carriers have reacted to these liability awards by excluding mold-related claims from
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standard policies and pricing mold endorsements separately. We have obtained a separate pollution insurance policy that covers
mold-related claims and have adopted programs designed to minimize the existence of mold in any of our communities as well
as guidelines for promptly addressing and resolving reports of mold. To the extent not covered by our pollution policy, the
presence of mold could expose us to liability from residents and others if property damage or health concerns, or allegations
thereof, arise.
Extreme weather or natural disasters may cause property damage or disrupt business, which could harm our business
and operating results.
We have properties located in areas that may be subject to extreme weather and natural disasters, including, but not limited
to, earthquakes, winds, floods, hurricanes and fires. Such conditions may damage our properties, disrupt our operations and
adversely impact our tenants. There can be no assurances that such conditions will not have a material adverse effect on our
properties, operations or business.
Losses from catastrophes may exceed our insurance coverage, which may negatively impact our results of operations and
reduce the value of our properties.
We carry comprehensive liability and property insurance on our communities and intend to obtain similar coverage for
apartment communities we acquire in the future. Some losses, generally of a catastrophic nature, such as losses from floods,
hurricanes or earthquakes, are subject to limitations, and thus may be uninsured. We exercise our discretion in determining
amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our
investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may not be
sufficient to pay the full current market value or current replacement value of our lost investment. Inflation, changes in building
codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to
replace a property after it has been damaged or destroyed. Any losses we experience that are not fully covered by our insurance
may negatively impact our results of operations and may reduce the value of our properties.
Increasing real estate taxes, utilities and insurance premiums may negatively impact operating results.
As a result of our substantial real estate holdings, the cost of real estate taxes, utilities and insuring our apartment
communities is a significant component of expense. Real estate taxes, utilities and insurance premiums are subject to
significant increases and fluctuations, which can be widely outside of our control. If the costs associated with real estate taxes,
utilities and insurance premiums should rise, without being offset by a corresponding increase in revenues, our results of
operations could be negatively impacted, and our ability to make payments on our debt and to make distributions could be
adversely affected.
Compliance or failure to comply with laws requiring access to our properties by disabled persons could result in substantial
cost.
The Americans with Disabilities Act of 1990, or the ADA, the Fair Housing Act of 1988, or the FHA, and other
federal, state and local laws generally require that public accommodations be made accessible to disabled persons.
Noncompliance could result in the imposition of fines by the government or the award of damages to private litigants. These
laws may require us to modify our existing apartment communities. These laws may also restrict renovations by requiring
improved access to such buildings by disabled persons or may require us to add other structural features that increase our
construction costs. Legislation or regulations adopted in the future may impose further burdens or restrictions on us with
respect to improved access by disabled persons. We cannot ascertain the costs of compliance with these laws, which may be
substantial.
Development and construction risks could impact our profitability.
As of December 31, 2017, we had three development communities under construction totaling 937 units. We may
make further investments in these and other development communities as opportunities arise and may do so through joint
ventures with unaffiliated parties. Our development and construction activities are subject to the following risks:
• we may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy and other
required governmental permits and authorizations, which could result in increased development costs, could delay
initial occupancy dates for all or a portion of a development community, and could require us to abandon our activities
entirely with respect to a project for which we are unable to obtain permits or authorizations;
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• we may be unable to obtain financing for development activities under favorable terms, which could cause a delay in
construction resulting in increased costs, decreases in revenue, and potentially cause us to abandon the opportunity;
• yields may be less than anticipated as a result of delays in completing projects, costs that exceed budget, higher than
expected concessions for lease-up and lower rents than initially estimated;
• bankruptcy of developers in our development projects could impose delays and costs on us with respect to the
development of our communities and may adversely affect our financial condition and results of operations;
• we may abandon development opportunities that we have already begun to explore, and we may fail to recover
expenses already incurred in connection with exploring such opportunities;
• we may be unable to complete construction and lease-up of an apartment community on schedule, or incur
development or construction costs that exceed our original estimates, and we may be unable to charge rents that would
compensate for any increase in such costs;
• occupancy rates and rents at a newly developed apartment community may fluctuate depending on a number of
factors, including market and economic conditions, preventing us from meeting our profitability goals for that
community;
• when we sell to third parties apartment communities or properties that we developed or renovated, we may be subject
to warranty or construction defects that are uninsured or exceed the limit of our insurance; and
• our failure to successfully enter into a joint venture agreement may prohibit an otherwise advantageous investment if
we cannot raise the money through other means.
Short-term leases expose us to the effects of declining market rents.
Our apartment leases are generally for a term of one year or less. As these leases typically permit the residents to leave
at the end of the lease term without penalty, our revenues are impacted by declines in market rents more quickly than if our
leases were for longer terms.
We may not realize the anticipated synergies and other benefits of the Merger or do so within the anticipated time
frame.
Because Post Properties was a public company, we expect to benefit from the elimination of duplicative costs
associated with supporting Post Properties' public company platform and the leveraging of our technology and systems. These
savings are expected to be realized upon full integration. Integration efforts are ongoing, and we may encounter difficulties and
delays in the integration process. If we are unable to manage and complete the integration of Post Properties' business in an
efficient and timely manner, we may not achieve the cost savings anticipated to result from the Merger in the expected time
frame, or at all. Likewise, there can be no assurance that we will realize other anticipated operating efficiencies and synergies
from the Merger.
RISKS RELATED TO OUR INDEBTEDNESS AND FINANCING ACTIVITIES
Our substantial indebtedness could adversely affect our financial condition and results of operations.
As of December 31, 2017, the amount of our total debt was approximately $4.5 billion. We may incur additional
indebtedness in the future in connection with, among other things, our acquisition, development and operating activities.
The degree of our leverage creates significant risks, including the following:
• we may be required to dedicate a substantial portion of our funds from operations to servicing our debt and our cash
flow may be insufficient to make required payments of principal and interest;
• debt service obligations will reduce funds available for distribution and funds available for acquisitions, development
and redevelopment;
• we may be more vulnerable to economic and industry downturns than our competitors that have less debt;
• we may be limited in our ability to respond to changing business and economic conditions;
• we may default on our indebtedness, which could result in acceleration of those obligations, assignment of rents and
•
leases and loss of properties to foreclosure; and
if one of our subsidiaries defaults, it could trigger a cross default or cross acceleration provision under other
indebtedness, which could cause an immediate default or could allow the lenders to declare all funds borrowed
thereunder to be due and payable.
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If any one of these events were to occur, our financial condition and results of operations could be materially and
adversely affected.
We may be unable to renew, repay or refinance our outstanding debt, which could negatively impact our financial
condition and results of operations.
We are subject to the normal risks associated with debt financing, including the risk that our cash flow will be
insufficient to meet required payments of principal and interest, the risk that either secured or unsecured indebtedness, will not
be able to be renewed, repaid or refinanced when due or that the terms of any renewal or refinancing will not be as favorable as
the existing terms of such indebtedness. If we are unable to refinance our indebtedness on acceptable terms, if at all, we might
be forced to dispose of one or more of our apartment communities on disadvantageous terms, which might result in losses to us.
Such losses could have a material adverse effect on us and our ability to make distributions and pay amounts due on our debt.
Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the
mortgagee could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other
remedies, all with a consequent loss of our revenues and asset value. Foreclosures could also create taxable income without
accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Code.
Rising interest rates would increase the cost of our variable rate debt and could adversely impact additional debt we
may incur in the future.
We have incurred and expect in the future to incur indebtedness that bears interest at variable rates. Accordingly,
increases in interest rates would increase our interest costs, which could have a material adverse effect on us and our ability to
make distributions and pay amounts due on our debt or cause us to be in default under certain debt instruments. In addition, an
increase in market interest rates may lead holders of shares of our common stock to demand a higher yield on their shares from
distributions by us, which could adversely affect the market price for our common stock. In June 2017, the Federal Reserve
reached a decision to raise the federal funds rate by 0.25 points with additional gradual increases anticipated to occur over the
next year, subject to ongoing economic uncertainty. In December 2017, the Federal Reserve increased the federal funds rate by
another 0.25 points to a range of 1.25 percent to 1.5 percent. These increases in the federal funds rate and any future increases
due to other key economic indicators, such as the unemployment rate or inflation, may cause interest rates and borrowing costs
to rise, which may negatively impact our ability to access the debt markets on favorable terms. Any continued adverse
economic conditions could have a material adverse effect on our business, financial condition and results of operations.
We may incur additional debt in the future, which may adversely impact our financial condition.
We currently fund the acquisition and development of apartment communities partially through borrowings (including
our revolving credit facility) as well as from other sources such as sales of communities which no longer meet our investment
criteria. In addition, we may fund other of our capital requirements through debt. Our organizational documents do not contain
any limitation on the amount of indebtedness that we may incur, and we may incur more debt in the future. Accordingly,
subject to limitations on indebtedness set forth in various loan agreements and the indentures governing our senior notes, we
could become more highly leveraged, resulting in an increase in debt service and an increased risk of default on our
obligations, which could have a material adverse effect on our financial condition, our ability to access debt and equity capital
markets in the future and our ability to make payments on our debt and to make distributions.
The restrictive terms of certain of our indebtedness may cause acceleration of debt payments.
At December 31, 2017, we had outstanding borrowings of approximately $4.5 billion. Our indebtedness contains
financial covenants as to interest coverage ratios, maximum secured debt, maintenance of unencumbered asset value, and total
debt to gross assets, among others, and cross default provisions with other material debt. In the event that an event of default
occurs, our lenders may declare borrowings under the respective loan agreements to be due and payable immediately, which
could have a material adverse effect on our financial condition and our ability to make payments on our debt and to make
distributions.
Failure to hedge effectively against interest rates may adversely affect results of operations.
From time-to-time, we may seek to manage our exposure to interest rate volatility by using interest rate hedging
arrangements, such as interest rate cap agreements and interest rate swap agreements. These agreements involve risks, such as
the risk that the counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be
effective in reducing our exposure to interest rate changes and that a court could rule that such an agreement is not legally
enforceable. Hedging may reduce overall returns on our investments. Failure to hedge effectively against interest rate changes
could have a material adverse effect on us and our ability to make payments on our debt and to make distributions.
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A downgrade in our credit ratings could have a material adverse effect on our business, financial condition and results
of operations.
We have a significant amount of debt outstanding. We are currently assigned corporate credit ratings from each of the
three ratings agencies based on their evaluation of our creditworthiness. These ratings are based on a number of factors, which
include their assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flows and
earnings. If our credit ratings are downgraded or other negative action is taken, we could be required to pay additional interest
and fees on our outstanding borrowings. In addition, a downgrade may adversely impact our ability to borrow secured and
unsecured debt and otherwise limit our access to capital, which could adversely affect our business, financial condition and
results of operations.
Financing may not be available and could be dilutive.
Our capital requirements depend on numerous factors, including the occupancy and turnover rates of our apartment
communities, development and capital expenditures, costs of operations and potential acquisitions. We cannot accurately
predict the timing and amount of our capital requirements. If our capital requirements vary materially from our plans, we may
require additional financing sooner than anticipated. We and other companies in the real estate industry have experienced
limited availability of financing from time to time. Restricted lending practices could impact our ability to obtain debt
financing. If we issue additional equity securities to obtain additional financing, the interest of our existing shareholders could
be diluted.
RISKS RELATED TO MAA'S ORGANIZATION AND OWNERSHIP OF ITS STOCK
MAA's ownership limit restricts the transferability of its capital stock.
MAA's charter limits ownership of its capital stock by any single shareholder to 9.9% of the value of all outstanding
shares of its capital stock, both common and preferred, unless approved by its Board of Directors. The charter also prohibits
anyone from buying shares if the purchase would result in it losing REIT status. This could happen if a share transaction results
in fewer than 100 persons owning all of its shares or in five or fewer persons, applying certain broad attribution rules of the
Code, owning 50% or more of its shares. If an investor acquires shares in excess of the ownership limit or in violation of the
ownership requirements of the Code for REITs, MAA:
• will consider the transfer to be null and void;
• will not reflect the transaction on its books;
• may institute legal action to enjoin the transaction;
• will not pay dividends or other distributions with respect to those shares;
• will not recognize any voting rights for those shares;
• will consider the shares held in trust for its benefit; and
• will either direct the holder to sell the shares and turn over any profit to MAA, or MAA will redeem the shares. If
MAA redeems the shares, the holder will be paid a price equal to the lesser of:
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the principal price paid for the shares by the holder,
a price per share equal to the market price (as determined in the manner set forth in its charter) of the
applicable capital stock,
the market price (as so determined) on the date such holder would, but for the restrictions on transfers set
forth in its charter, be deemed to have acquired ownership of the shares and
the maximum price allowed under the Tennessee Greenmail Act (such price being the average of the highest
and lowest closing market price for the shares during the 30 trading days preceding the purchase of such
shares or, if the holder of such shares has commenced a tender offer or has announced an intention to seek
control of MAA, during the 30 trading days preceding the commencement of such tender offer or the making
of such announcement).
The redemption price may be paid, at MAA's option, by delivering one common unit (subject to adjustment from time
to time in the event of, among other things, stock splits, stock dividends, or recapitalizations affecting its common stock or
certain mergers, consolidations or asset transfers by MAA) issued by the Operating Partnership for each excess share being
redeemed.
If an investor acquires shares in violation of the limits on ownership described above:
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the holder may lose its power to dispose of the shares;
the holder may not recognize profit from the sale of such shares if the market price of the shares increases; and
the holder may be required to recognize a loss from the sale of such shares if the market price decreases.
Future offerings of debt or equity securities, which may rank senior to our common stock, may adversely affect the
market price of our common stock.
If we decide to issue additional debt securities in the future, which would rank senior to our common stock, it is likely
that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility.
Additionally, any equity securities or convertible or exchangeable securities that we issue in the future may have rights,
preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common
stock. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities. Because our decision to
issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we
cannot predict or estimate the amount, timing or nature of any future offerings. Thus, holders of our common stock will bear
the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings.
The form, timing and amount of dividend distributions in future periods may vary and be impacted by economic and
other considerations.
Though our Board of Directors has a history of declaring dividends in advance of the quarter they are paid, the form,
timing and amount of dividend distributions will be declared, and standing practice changed, at the discretion of the Board of
Directors. The form, timing and amount of dividend distributions will depend on actual cash from operations, our financial
condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors
as our Board of Directors may consider relevant. Our Board of Directors may modify our dividend policy from time to time.
Provisions of MAA's charter and Tennessee law may limit the ability of a third party to acquire control of MAA.
Ownership Limit
The 9.9% ownership limit discussed above may have the effect of precluding acquisition of control of MAA by a third
party without the consent of our Board of Directors.
Preferred Stock
MAA's charter authorizes our Board of Directors to issue up to 20,000,000 shares of preferred stock, 867,846 of which
have been designated as 8.50% Series I Cumulative Redeemable Preferred Stock, which we refer to as MAA Series I preferred
stock. In addition to the MAA Series I preferred stock, the Board of Directors may establish the preferences and rights of any
other series of preferred shares issued. The issuance of preferred stock could have the effect of delaying or preventing someone
from taking control of MAA, even if a change in control were in MAA shareholders’ best interests. As of December 31, 2017,
867,846 shares of preferred stock were issued and outstanding, all of which shares were MAA Series I preferred stock.
Tennessee Anti-Takeover Statutes
As a Tennessee corporation, MAA is subject to various legislative acts, which impose restrictions on and require
compliance with procedures designed to protect shareholders against unfair or coercive mergers and acquisitions. These statutes
may delay or prevent offers to acquire MAA and increase the difficulty of consummating any such offers, even if MAA's
acquisition would be in MAA shareholders’ best interests.
Market interest rates and low trading volume may have an adverse effect on the market value of MAA's common stock.
The market price of shares of common stock of a REIT may be affected by the distribution rate on those shares, as a
percentage of the price of the shares, relative to market interest rates. If market interest rates increase, prospective purchasers of
MAA's common stock may expect a higher annual distribution rate. Higher interest rates would not, however, result in more
funds for MAA to distribute and, in fact, would likely increase MAA's borrowing costs and potentially decrease funds available
for distribution. This could cause the market price of MAA's common stock to go down. In addition, although MAA's common
stock is listed on the NYSE, the daily trading volume of MAA's common stock may be lower than the trading volume for other
industries. As a result, MAA's investors who desire to liquidate substantial holdings may find that they are unable to dispose of
their shares in the market without causing a substantial decline in the market value of MAA's common stock.
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Changes in market conditions or a failure to meet the market’s expectations with regard to our results of operations and
cash distributions could adversely affect the market price of MAA's common stock.
We believe that the market value of a REIT’s equity securities is based primarily upon the market’s perception of the
REIT’s growth potential and its current and potential future cash distributions, and is secondarily based upon the real estate
market value of the underlying assets. For that reason, MAA's common stock may trade at prices that are higher or lower than
the net asset value per share. To the extent we retain operating cash flow for investment purposes, working capital reserves or
other purposes, these retained funds, while increasing the value of our underlying assets, may not correspondingly increase the
market price of MAA's common stock. In addition, we are subject to the risk that our cash flow will be insufficient to pay
distributions to MAA's shareholders. Our failure to meet the market’s expectations with regard to future earnings and cash
distributions would likely adversely affect the market price of MAA's common stock.
The stock markets, including the NYSE, on which MAA lists its common stock, have, at times, experienced
significant price and volume fluctuations. As a result, the market price of MAA's common stock could be similarly volatile, and
investors in MAA's common stock may experience a decrease in the value of their shares, including decreases unrelated to our
operating performance or prospects. Among the market conditions that may affect the market price of MAA's publicly traded
securities are the following:
actual or anticipated differences in our quarterly and annual operating results;
changes in our revenues or earnings estimates or recommendations by securities analysts;
• our financial condition and operating performance and the performance of other similar companies;
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• publication of research reports about us or our industry by securities analysts;
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additions and departures of key personnel;
inability to access the capital markets;
strategic decisions by us or our competitors, such as acquisitions, dispositions, spin-offs, joint ventures, strategic
investments or changes in business strategy;
the issuance of additional shares of MAA's common stock, or the perception that such sales may occur, including
under MAA's at-the-market offering programs;
the reputation of REITs generally and the reputation of REITs with portfolios similar to ours;
the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities
issued by other real estate companies);
an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in
relation to the price paid for MAA's common stock;
the passage of legislation or other regulatory developments that adversely affect us or our industry;
speculation in the press or investment community;
actions by institutional shareholders or hedge funds;
changes in accounting principles;
terrorist acts; and
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• general market conditions, including factors unrelated to our performance.
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In the past, securities class action litigation has often been instituted against companies following periods of volatility
in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.
RISKS RELATED TO THE OPERATING PARTNERSHIP'S ORGANIZATION AND OWNERSHIP OF OP UNITS
The Operating Partnership's existing unitholders have limited approval rights, which may prevent the Operating
Partnership's sole general partner, MAA, from completing a change of control transaction that may be in the best
interests of all unitholders and of all the shareholders of MAA.
MAA may not engage in a sale or other disposition of all or substantially all of the assets of the Operating Partnership,
dissolve the Operating Partnership or, upon the occurrence of certain triggering events, take any action that would result in any
unitholder realizing taxable gain, without the approval of the holders of a majority of the outstanding OP Units held by holders
other than MAA or its affiliates, or Class A OP Units. The right of the holders of our Class A OP Units to vote on these
transactions could limit MAA's ability to complete a change of control transaction that might otherwise be in the best interest of
all unitholders of the Operating Partnership and all shareholders of MAA.
18
In certain circumstances, certain of the Operating Partnership's unitholders must approve the Operating Partnership's
sale of certain properties contributed by the unitholders.
In certain circumstances as detailed in the partnership agreement of the Operating Partnership, the Operating
Partnership may not sell or otherwise transfer certain properties unless a specified percentage of the limited partners who were
partners in the limited partnership holding such properties at the time of its acquisition by us approves such sale or transfer. The
exercise of these approval rights by the Operating Partnership's unitholders could delay or prevent the Operating Partnership
from completing a transaction that may be in the best interest of all of the Operating Partnership's unitholders and all
shareholders of MAA.
MAA, its officers and directors have substantial influence over the Operating Partnership's affairs.
MAA, as the Operating Partnership's sole general partner and acting through its officers and directors, has a
substantial influence on the Operating Partnership's affairs. MAA, its officers and directors could exercise their influence in a
manner that is not in the best interest of the Operating Partnership's unitholders. Also, MAA owns approximately 96.4% of the
OP Units and as such, will have substantial influence on the outcome of substantially all matters submitted to the Operating
Partnership's unitholders for approval.
Market interest rates and low trading volume may have an adverse effect on the market value of MAA's common stock,
which would affect the redemption price of the OP Units.
The market price of shares of common stock of a REIT may be affected by the distribution rate on those shares, as a
percentage of the price of the shares, relative to market interest rates. If market interest rates increase, prospective purchasers of
MAA's common stock may expect a higher annual distribution rate. Higher interest rates would not, however, result in more
funds for MAA to distribute and, in fact, would likely increase MAA's borrowing costs and potentially decrease funds available
for distribution. This could cause the market price of MAA's common stock to go down, which would reduce the price received
upon redemption of any OP Units, or if MAA so elects, the value of MAA's common stock received in lieu of cash upon
redemption of such OP Units. In addition, although MAA's common stock is listed on the NYSE, the daily trading volume of
MAA's shares may be lower than the trading volume for companies in other industries. As a result, MAA's investors who desire
to liquidate substantial holdings may find that they are unable to dispose of their shares in the market without causing a
substantial decline in the market value of the shares.
Insufficient cash flow from operations or a decline in the market price of MAA's common stock may reduce the amount
of cash available to the Operating Partnership to meet its obligations.
The Operating Partnership is subject to the risk that its cash flow will be insufficient to service its debt and to pay
distributions to its unitholders, which may cause MAA to not have the funds to pay distributions to its shareholders. MAA’s
failure to meet the market’s expectations with regard to future results of operations and cash distributions would likely
adversely affect the market price of its shares and thus potentially reduce MAA’s ability to contribute funds from issuances
down to the Operating Partnership, resulting in a lower level of cash available for investment, to service debt or to make
distributions to the Operating Partnership’s unitholders.
RISKS RELATED TO TAX LAWS
Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds
available for distribution to shareholders.
If MAA fails to qualify as a REIT for federal income tax purposes, MAA will be subject to federal income tax on its
taxable income at regular corporate rates (subject to any applicable alternative minimum tax) without the benefit of the
dividends paid deduction applicable to REITs. In addition, unless MAA is entitled to relief under applicable statutory
provisions, MAA would be ineligible to make an election for treatment as a REIT for the four taxable years following the year
in which it loses its qualification. The additional tax liability resulting from the failure to qualify as a REIT would significantly
reduce or eliminate the amount of funds available for distribution to MAA’s shareholders. MAA’s failure to qualify as a REIT
also could impair its ability to expand its business and raise capital, and would adversely affect the value of
MAA’s stock.
MAA believes that it is organized and qualified as a REIT, and MAA intends to operate in a manner that will allow
it to continue to qualify as a REIT. MAA cannot assure, however, that it is qualified or will remain qualified as a REIT. This
is because qualification as a REIT involves the application of highly technical and complex provisions of the Code for which
19
there are only limited judicial and administrative interpretations and involves the determination of a variety of factual matters
and circumstances not entirely within MAA’s control. In addition, future legislation, new regulations, administrative
interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to
qualification as a REIT for federal income tax purposes or the federal income tax consequences of qualification as a REIT.
Even if MAA qualifies as a REIT, MAA will be subject to various federal, state and local taxes, including property
taxes and income taxes on taxable income that MAA does not timely distribute to its shareholders. In addition, MAA may hold
certain assets and engage in certain activities that a REIT could not engage in directly through its taxable REIT subsidiaries, or
TRSs, and those TRSs will be subject to federal income tax at regular corporate rates on their taxable income without the
benefit of the dividends paid deduction applicable to REITs.
Furthermore, we have a subsidiary that has elected to be treated as a REIT, and if our subsidiary REIT were to fail to
qualify as a REIT, it is possible that we also would fail to qualify as a REIT unless we (or the subsidiary REIT) could qualify
for certain relief provisions. The qualification of our subsidiary REIT as a REIT will depend on satisfaction, on an annual or
quarterly basis, of numerous requirements set forth in highly technical and complex provisions of the Code for which there are
only limited judicial or administrative interpretations. A determination as to whether such requirements are satisfied involves
various factual matters and circumstances not entirely within our control. The fact that we hold substantially all of our assets
through the Operating Partnership and its subsidiaries further complicates the application of the REIT requirements for us. No
assurance can be given that our subsidiary REIT will qualify as a REIT for any particular year.
If Post Properties, or any other REIT previously acquired by us, failed to qualify as a REIT for U.S. federal income
tax purposes, we would incur adverse tax consequences and our financial condition and results of operations would
be materially adversely affected.
Prior to the Merger, Post Properties operated in a manner intended to allow it to qualify as a REIT for U.S. federal
income tax purposes. If Post Properties, or any other REIT previously acquired by MAA (each, a "Merged REIT"), is
determined to have lost its REIT status at any time prior to its merger with MAA, MAA would be subject to serious adverse tax
consequences, including:
• MAA would be required to pay U.S. federal income tax at regular corporate rates on the taxable income of such
Merged REIT without the benefit of the dividends paid deduction for the taxable years that the Merged REIT did not
qualify as a REIT and for which the statute of limitations period remains open; and
• MAA would be required to pay any federal alternative minimum tax liability of the Merged REIT and any applicable
state and local tax liability, in each case, for all taxable years that remain open under the applicable statute of
limitations periods.
MAA is liable for any tax liability of a Merged REIT with respect to any periods prior to the merger of such Merged
REIT with MAA. If a Merged REIT failed to qualify as a REIT, then in the event of a taxable disposition by MAA of an asset
previously held by the Merged REIT during a specified period of up to 5 years following the merger of the Merged REIT with
MAA, MAA will be subject to corporate income tax with respect to any built-in gain inherent in such asset as of the date of
such merger. In addition, unless an applicable statutory relief provision applies, if a Merged REIT failed to qualify as a REIT
for a taxable year, then the Merged REIT would not have been entitled to re-elect to be taxed as a REIT until the fifth taxable
year following the year during which it was disqualified. Furthermore, if both MAA and a Merged REIT were "investment
companies" under the "investment company" rules set forth in Section 368 of the Code at the time of the merger of MAA and
such Merged REIT, the failure of MAA or such Merged REIT to have qualified as a REIT at the time of their merger could
result in such merger being treated as taxable for federal income tax purposes. As a result of all these factors, the failure by a
Merged REIT to have qualified as a REIT could jeopardize MAA’s qualification as a REIT and require the Operating
Partnership to provide material amounts of cash to MAA to satisfy MAA’s additional tax liabilities and, therefore, could have a
material adverse effect on MAA’s business prospects, financial condition or results of operations and on MAA’s ability to make
payments on our debt and to make distributions.
The Operating Partnership may fail to be treated as a partnership for federal income tax purposes.
We believe that the Operating Partnership qualifies, and has so qualified since its formation, as a partnership for
federal income tax purposes and not as a publicly traded partnership taxable as a corporation. No assurance can be provided,
however, that the Internal Revenue Service, or IRS, will not challenge the treatment of the Operating Partnership as a
partnership for federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in
treating the Operating Partnership as a corporation for federal income tax purposes, then the taxable income of the Operating
Partnership would be taxable at regular corporate income tax rates. In addition, the treatment of the Operating Partnership as a
20
corporation would cause MAA to fail to qualify as a REIT. See "Failure to qualify as a REIT would cause us to be taxed as a
corporation, which would significantly reduce funds available for distribution to shareholders" above.
Certain dispositions of property by us may generate prohibited transaction income, resulting in a 100% penalty tax on
any gain attributable to the disposition.
Any gain resulting from a transfer of property that we hold as inventory or primarily for sale to customers in the
ordinary course of business would be treated for federal income tax purposes as income from a prohibited transaction that is
subject to a 100% penalty tax. Since we acquire properties for investment purposes, we do not believe that our occasional
transfers or disposals of property would be considered prohibited transactions. Whether property is held for investment
purposes is a question of fact that depends on all the facts and circumstances surrounding the particular transaction. As such,
the IRS may contend that certain transfers or disposals of properties by us are prohibited transactions. If the IRS were to argue
successfully that a transfer or disposition of property constituted a prohibited transaction, then we would be required to pay a
100% penalty tax on any gain allocable to us from the prohibited transaction. In addition, income from a prohibited transaction
might adversely affect our ability to satisfy the income tests for qualification as a REIT for federal income tax purposes. A safe
harbor to the characterization of the disposition of property as a prohibited transaction and the resulting imposition of the 100%
tax is available; however, we cannot assure that we will be able to comply with such safe harbor in connection with any
property dispositions.
The recently enacted legislation informally titled the Tax Cuts and Jobs Act and other legislative, regulatory and
administrative developments may adversely affect MAA or its shareholders.
On December 22, 2017, President Trump signed into law P.L. 115-97, informally titled the Tax Cuts and Jobs Act, or
the Tax Act. The Tax Act makes major changes to the Code, including a number of provisions of the Code that affect the
taxation of REITs and their shareholders. Certain provisions of the Tax Act that may impact us and our shareholders include:
•
•
temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal
income tax rate will be reduced from 39.6% to 37% (through taxable years ending in 2025);
reducing the maximum corporate income tax rate from 35% to 21%;
•
• permitting a deduction for certain pass-through business income, including dividends received from REITs that are not
designated as capital gain dividends or qualified dividend income, which generally will allow individuals, trusts and
estates to deduct up to 20% of such amounts, resulting in an effective maximum U.S. federal income tax rate of 29.6%
on such dividends (through taxable years ending in 2025);
reducing the highest rate of withholding with respect to distributions to non-U.S. shareholders attributable to gains
from the sale or exchange of U.S. real property interests from 35% to 21%;
limiting the deduction for net operating losses to 80% of taxable income (prior to the application of dividends paid
deduction);
amending the limitation on the deduction of net interest expense for all businesses, other than certain electing
businesses, including real estate businesses (which could adversely affect the taxation of any taxable REIT
subsidiaries); and
eliminating the corporate alternative minimum tax.
•
•
•
The individual and collective impact of these provisions and other provisions of the Tax Act on MAA and its
shareholders is uncertain, and may not become evident for some period of time. In addition, other legislative, regulatory or
administrative changes may be enacted or promulgated, either prospectively or with retroactive effect, and may adversely affect
MAA or its shareholders. MAA's shareholders and prospective shareholders should consult their individual tax advisors
regarding the implications of the Tax Act and other potential legislative, regulatory or administrative changes on their
investment in MAA's capital stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
21
ITEM 2. PROPERTIES.
We seek to acquire newer apartment communities and those with opportunities for repositioning through capital additions
and management improvement located in the Southeast and Southwest regions of the United States with the potential for above
average growth and return on investment. Approximately 68% of our apartment units are located in the Florida, Georgia, North
Carolina, and Texas markets. Our strategic focus is to provide our residents high quality apartment units in attractive community
settings, characterized by upscale amenities, extensive landscaping and attention to aesthetic detail.
The following table summarizes our apartment community portfolio and occupancy levels by location, as of December 31,
Number of Communities
Number of Units (1)
Average Unit Size (Square Footage)
Average Occupancy(2)
2017:
Atlanta, GA
Dallas, TX
Austin, TX
Charlotte, NC
Orlando, FL
Tampa, FL
Raleigh/ Durham, NC
Houston, TX
Nashville, TN
Fort Worth, TX
Washington, DC
Phoenix, AZ
South Florida, FL
Jacksonville, FL
Charleston, SC
Savannah, GA
Greenville, SC
Richmond, VA
Memphis, TN
San Antonio, TX
Birmingham, AL
Little Rock, AR
Jackson, MS
Huntsville, AL
Chattanooga, TN
Lexington, KY
Large Market Same Store
Norfolk / Hampton / Virginia Beach, VA
Secondary Market Same Store
Las Vegas, NV
Tallahassee, FL
Kansas City, MO
Columbia, SC
Gainesville, FL
Louisville, KY
Gulf Shores, AL
Panama City, FL
Charlottesville, VA
Atlanta, GA
Dallas, TX
Washington, DC
Tampa, FL
Orlando, FL
Charlotte, NC
Houston, TX
Austin, TX
Raleigh/Durham, NC
Nashville, TN
Kansas City, MO
Charleston, SC
Greenville, SC
Richmond, VA
Phoenix, AZ
Denver, CO
Gulf Shores, AL
15
14
18
16
9
9
14
11
10
11
2
7
1
137
10
10
9
8
6
4
4
5
5
4
3
4
4
3
2
2
2
2
2
1
1
1
1
93
14
16
9
5
4
5
4
4
1
2
2
1
1
1
1
1
1
72
302
5,259
4,359
5,838
4,401
3,190
2,878
4,397
3,232
3,776
4,249
741
2,301
480
45,101
3,496
2,648
2,219
1,748
1,668
1,811
1,504
1,462
1,368
1,241
1,228
943
924
788
721
604
603
576
468
384
324
254
251
27,233
5,737
5,406
3,608
2,342
2,084
1,748
1,635
1,279
803
599
507
380
336
336
322
240
96
27,458
99,792
1,106.5
924.7
928.2
965.6
1,044.8
1,041.8
1,016.5
907.5
1,019.6
902.9
944.5
981.1
1,189.4
985.9
964.4
958.6
1,021.3
902.0
862.3
974.2
910.3
1,054.8
981.5
970.1
1,089.9
905.7
914.4
924.5
953.5
1,111.2
965.9
1,028.6
1,137.7
845.7
993.0
1,117.5
943.5
969.9
973.2
856.5
919.4
983.6
985.7
963.6
829.2
896.2
892.6
811.2
1,383.8
932.3
1,029.4
994.2
901.3
819.5
2,145.8
936.2
97.2 %
96.7 %
96.8 %
97.2 %
97.2 %
97.4 %
97.5 %
98.2 %
96.2 %
96.2 %
97.6 %
97.9 %
97.7 %
97.1%
97.7 %
96.9 %
97.3 %
97.0 %
97.0 %
95.1 %
96.3 %
95.6 %
96.8 %
96.9 %
96.9 %
96.1 %
96.7 %
97.8 %
97.1 %
97.0 %
95.4 %
96.4 %
97.4 %
96.4 %
98.2 %
97.6 %
96.4 %
96.8%
92.6 %
95.8 %
96.3 %
96.8 %
96.9 %
96.1 %
96.1 %
94.8 %
97.5 %
88.3 %
73.0 %
96.1 %
95.5 %
96.1 %
96.3 %
33.4 %
95.8 %
94.3%
Non-Same Store
Total
Number of Units excludes development units not yet delivered.
Average Occupancy is calculated by dividing the number of units occupied by the total number of units at each property.
(1)
(2)
Twenty -nine of our multifamily properties reflected in the above table also include commercial components totaling
approximately 620,000 square feet of gross leasable space. We also owned four commercial properties totaling approximately
230,000 square feet of combined gross leasable space as of December 31, 2017.
22
Mortgage Financing
As of December 31, 2017, we had approximately $962.8 million of indebtedness collateralized, secured, and outstanding
as set forth in Schedule III, Real Estate and Accumulated Depreciation.
ITEM 3. LEGAL PROCEEDINGS.
In September 2010, the United States Department of Justice, or the DOJ, filed suit against Post Properties (and by
virtue of the Merger, MAA) in the United States District Court for the District of Columbia alleging that certain of our
apartments violated accessibility requirements of the FHA and the ADA. The DOJ is seeking, among other things, an injunction
against us, requiring us to retrofit the properties and comply with FHA and ADA standards in future design and construction, as
well as monetary damages and civil penalties. No trial date has been set.
In December 2017, The Equal Rights Center, a non-profit civil rights organization, filed suit against MAA and the
Operating Partnership in the United States District Court for the District of Columbia. This suit alleges that we maintained and
enforced a criminal records screening policy at certain of our apartment communities, all of which are communities that we
acquired from Post Properties in the Merger, which violates the FHA. The suit seeks injunctive relief, actual and punitive
damages and attorneys' fees and costs.
In addition, we are involved in various other legal proceedings arising in the course of our business operations. While
no assurances can be given, we do not currently believe that any of these other outstanding matters will have a material adverse
effect on our financial condition, results of operations or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Mid-America Apartment Communities, Inc.
Market Information
MAA's common stock has been listed and traded on the NYSE under the symbol "MAA" since its initial public
offering in February 1994. On February 16, 2018, the reported last sale price of our common stock on the NYSE was $88.75
per share, and there were approximately 2,800 holders of record of the common stock. MAA believes it has a significantly
larger number of beneficial owners of its common stock. The following table sets forth the quarterly high and low intra-day
sales prices of MAA's common stock and the dividends declared and paid by MAA with respect to the periods indicated.
2017:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2016:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Sales Prices
High
Low
Dividends
Paid
Dividends
Declared
$
$
103.64 $
110.95
109.25
110.24
102.42 $
106.68
110.01
98.35
92.50 $
96.20
99.06
98.54
82.91 $
94.57
91.77
85.04
0.8700 $
0.8700
0.8700
0.8700
0.8200 $
0.8200
0.8200
0.8200
0.8700
0.8700
0.8700
0.9225
(1)
0.8200
0.8200
0.8200
0.8700
(1)
Generally, MAA's Board of Directors declares dividends prior to the quarter in which they are paid. The dividend declared in the fourth quarter of
2017 was paid on January 31, 2018 to shareholders of record on January 12, 2018.
23
MAA's quarterly dividend rate is currently $0.9225 per common share. MAA's Board of Directors reviews and
declares the dividend rate quarterly. Actual dividends made by MAA will be affected by a number of factors, including, but not
limited to, the gross revenues received from our apartment communities, our operating expenses, the interest expense incurred
on borrowings and unanticipated capital expenditures. MAA expects to make future quarterly distributions to shareholders;
however, future distributions by MAA will be at the discretion of its Board of Directors and will depend on our actual funds
from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions
of the Code (see "Business - Qualification as a Real Estate Investment Trust" above) and such other factors as MAA's Board of
Directors deems relevant.
Direct Stock Purchase and Distribution Reinvestment Plan
We have established the dividend and distribution reinvestment stock purchase plan, or DRSPP, under which holders
of common stock, preferred stock and OP units can elect to automatically reinvest their distributions in shares of MAA
common stock. The DRSPP also allows for the optional purchase of MAA common stock of at least $250, but not more
than$5,000 in any given month, free of brokerage commissions and charges. In our absolute discretion, we may grant waivers
to allow for optional cash payments in excess of $5,000. To fulfill our obligations under the DRSPP, we may either issue
additional shares of common stock or repurchase common stock in the open market. We may elect to sell shares under the
DRSPP at up to a 5% discount. In 2017, 2016, and 2015, we had issuances with no discounts through our DRSPP of 9,568
shares, 7,906 shares, and 8,562 shares, respectively.
Equity Compensation Plans
The following table provides information with respect to compensation plans under which our equity securities are
authorized for issuance as of December 31, 2017:
Number of Securities to
be Issued upon Exercise
of Outstanding Options,
Warrants and Rights
(a)(1)
Weighted Average
Exercise Price of
Outstanding Options
Warrants and Rights
(b)(1)
Number of Securities Remaining
Available for Future Issuance
under Equity Compensation
Plans (excluding securities
reflected in column (a))
(c)(2)
108,438
$
N/A
108,438 $
72.93
N/A
72.93
224,393
N/A
224,393
Columns (a) and (b) do not include 180,692 shares of restricted common stock that are subject to vesting requirements which were issued through
our 2004 Stock Plan or the Amended and Restated 2013 Stock Incentive Plan or 127,711 shares of common stock that have been purchased by
employees through the Employee Stock Purchase Plan.
Column (c) includes 202,104 shares available to be issued under our 2013 Stock Incentive Plan and 22,289 shares available to be issued under our
Employee Stock Purchase Plan.
The outstanding options noted in the table above were issued in exchange for outstanding options in connection with
previous parent mergers, including the Parent Merger.
Mid-America Apartments, L.P.
Operating Partnership Units
There is no established public trading market for the Operating Partnership's OP Units. From time-to-time, we issue
shares of MAA's common stock in exchange for OP Units tendered to the Operating Partnership for redemption in accordance
with the provisions of the Operating Partnership’s limited partnership agreement. At December 31, 2017, there were
117,834,752 OP Units outstanding in the Operating Partnership, of which 113,643,166 OP Units, or 96.4%, were owned by
MAA and 4,191,586 OP Units, or 3.6% were owned by limited partners. Under the terms of the Operating Partnership’s limited
partnership agreement, the limited partner holders of OP Units have the right to require the Operating Partnership to redeem all
or a portion of the OP Units held by the holder in exchange for one share of MAA common stock per one OP Unit or a cash
payment based on the market value of our common stock at the time of redemption, at the option of MAA. During the year
ended December 31, 2017, MAA issued a total of 28,813 shares of common stock upon redemption of OP Units.
24
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
(1)
(2)
At-the-Market Offering
On December 9, 2015, we entered into distribution agreements with J.P. Morgan Securities LLC, BMO Capital
Markets Corp. and KeyBanc Capital Markets Inc. to sell up to an aggregate of 4.0 million shares of common stock, from time-
to-time in at-the-market offerings or negotiated transactions through controlled equity offering programs, or ATMs. As of
December 31, 2017, there were 4.0 million shares available to be sold under the ATMs.
Stock Repurchase Plan
On December 8, 2015, MAA's Board of Directors authorized the repurchase of up to 4.0 million shares of MAA common
stock, which represented approximately 5.3% of MAA's common stock outstanding at the time of such authorization. This
December 2015 authorization replaced and superseded a previous authorization from 1999, under which approximately 2.1 million
shares remained to be repurchased at the time of the December 2015 authorization but through which no shares had been
repurchased since April 2001. From time to time, we may repurchase shares under the current authorization when we believe that
shareholder value would be enhanced. Factors affecting this determination include, among others, the share price and expected rates
of return. As of December 31, 2017, no shares have been repurchased under the current authorization.
Purchases of Equity Securities
The following table reflects repurchases of shares of MAA's common stock during the three months ended December 31, 2017:
Total
Number of
Shares
Purchased
Average
Price
Paid per
Share
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Number of
Shares That May Yet be
Purchased Under the
Plans or Programs(1)
October 1, 2017 - October 31, 2017
November 1, 2017 - November 30, 2017
December 1, 2017 - December 31, 2017
Total
— $
— $
— $
— $
—
—
—
—
—
—
—
—
4,000,000
4,000,000
4,000,000
4,000,000
(1)
This column reflects the number of shares of MAA's common stock that were available for purchase under the 4.0 million share repurchase program
authorized by MAA's Board of Directors in December 2015.
25
Comparison of Five-year Cumulative Total Returns
The following graph compares the cumulative total returns of the shareholders of MAA since December 31, 2012 with
the S&P 500 Index and the FTSE NAREIT Equity REIT Index . The graph assumes that the base share price for our common
stock and each index is $100 and that all dividends are reinvested. The performance graph is not necessarily indicative of
future investment performance.
MAA
S&P 500
FTSE NAREIT Equity REIT Index
$
2012
100.00 $
100.00
100.00
2013
97.81 $
132.39
102.47
2014
125.60 $
150.51
133.35
2015
158.84 $
152.59
137.61
2016
177.25 $
170.84
149.33
2017
188.37
208.14
157.14
Year Ending December 31,
26
ITEM 6. SELECTED FINANCIAL DATA.
The following tables set forth selected financial data on a historical basis for MAA and the Operating Partnership. As
previously discussed, the consolidated assets, liabilities, and results of operations of Post Properties are included in MAA's
selected financial data from the closing date of the Merger through the end of MAA's fiscal year, December 31, 2017.
Likewise, the consolidated assets, liabilities, and results of operations of Post LP are included in the Operating Partnership's
selected financial data from the closing date of the Partnership Merger, December 1, 2016, through the end of the Operating
Partnership's fiscal year, December 31, 2017. This data should be read in conjunction with the consolidated financial
statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Annual Report on Form 10-K.
Mid-America Apartment Communities, Inc.
Selected Financial Data
(In thousands, except per share data)
Operating Data:
Rental and other property revenues
Income from continuing operations
Discontinued operations:
Income from discontinued operations before (loss) gain on sale
Gain on sale of discontinued operations
Net income
Net income attributable to noncontrolling interests
Dividends to MAA Series I preferred shareholders
Net income available for MAA common shareholders
Per Common Share Data:
Weighted average shares outstanding:
Basic
Effect of dilutive securities and partnership units (1)
Diluted
Earnings per common share - basic:
Income from continuing operations available for common shareholders
Discontinued property operations
Net income available for common shareholders
Earnings per common share - diluted:
Income from continuing operations available for common shareholders
Discontinued property operations
Net income available for common shareholders
Dividends declared per common share(2)
Balance Sheet Data:
Real estate owned, at cost
Real estate assets, net
Total assets
Total debt
Noncontrolling interest
Total MAA shareholders' equity and redeemable stock
Other Data (at end of period):
Funds from operations
Market capitalization (shares and units) (3)
Ratio of total debt to total capitalization (4)
Number of multifamily properties, including joint venture ownership interest (5)
Number of multifamily units, including joint venture ownership interest (5)
2017
2016
Year Ended December 31,
2015
2014
2013
$
$
$
$
$
$
$
$
$
$
1,528,987
340,536
$
1,125,348
224,402
$
1,042,779
350,745
$
992,332
150,946
$
—
—
340,536
12,157
3,688
324,691
113,407
280
113,687
2.86
—
2.86
2.86
—
2.86
3.5325
13,336,995
11,261,924
11,491,919
4,502,057
233,982
6,350,320
699,561
11,849,463
27.5%
302
99,792
$
$
$
$
$
$
$
$
$
—
—
224,402
12,180
307
211,915
78,502
298
78,800
2.69
—
2.69
2.69
—
2.69
3.3300
13,016,663
11,341,862
11,604,491
4,499,712
238,282
6,413,892
463,385
11,528,965
28.1%
303
99,393
$
$
$
$
$
$
$
$
$
—
—
350,745
18,458
—
332,287
75,176
—
75,176
4.41
—
4.41
4.41
—
4.41
3.1300
8,217,579
6,718,366
6,847,781
3,427,568
165,726
3,000,347
452,372
7,225,894
32.2%
254
79,496
$
$
$
$
$
$
$
$
$
(63)
5,394
156,277
8,297
—
147,980
74,982
—
74,982
1.90
0.07
1.97
1.90
0.07
1.97
2.9600
8,071,187
6,697,508
6,821,778
3,512,699
161,287
2,896,435
404,087
5,933,985
37.3%
268
82,316
$
$
$
$
$
$
$
$
$
635,490
37,692
4,743
76,844
119,279
3,998
—
115,281
50,677
2,439
53,116
0.72
1.55
2.27
0.71
1.54
2.25
2.8150
7,694,618
6,556,303
6,835,012
3,463,239
166,726
2,951,861
231,025
4,801,990
42.0%
275
83,641
(1) See Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
(2) Beginning in 2006, at their regularly scheduled meetings, our Board of Directors began routinely declaring dividends for payment in the following quarter. This can result in
dividends declared during a calendar year being different from dividends paid during a calendar year.
(3) Market capitalization includes all shares of common stock, regardless of classification on the balance sheet, as well as partnership units (value based on common stock
equivalency).
(4) Total capitalization is market capitalization plus total debt.
(5) Multifamily properties and unit totals have not been adjusted to exclude properties held for sale.
27
Mid-America Apartments, L.P.
Selected Financial Data
(In thousands, except per unit data)
Operating Data:
Rental and other property revenues
Income from continuing operations
Discontinued operations:
Income from discontinued operations before (loss) gain on sale
Gain on sale of discontinued operations
Net income
Dividends to preferred unitholders
Net income available for common unitholders
Per Common Unit Data:
Weighted average units outstanding:
Basic
Effect of dilutive securities(1)
Diluted
Earnings per common unit - basic:
Income from continuing operations available for common unitholders
Discontinued property operations
Net income available for common unitholders
Earnings per common unit - diluted:
Income from continuing operations available for common unitholders
Discontinued property operations
Net income available for common unitholders
Distributions declared per common unit (2)
Balance Sheet Data:
Real estate owned, at cost
Real estate assets, net
Total assets
Total debt
Total Operating Partnership capital and redeemable units
Other Data (at end of period):
Number of multifamily properties, including joint venture ownership interest (3)
Number of multifamily units, including joint venture ownership interest (3)
2017
2016
Year Ended December 31,
2015
2014
2013
$
$
$
$
$
$
$
$
1,528,987 $
340,536
1,125,348 $
224,402
1,042,779 $
350,745
—
—
340,536
3,688
336,848
$
117,617
280
117,897
2.86 $
—
2.86
$
2.86 $
—
2.86
$
3.5325 $
—
—
224,402
307
224,095
$
82,661
298
82,959
2.70 $
—
2.70
$
2.70 $
—
2.70
$
3.3300 $
13,336,995 $
11,261,924
11,491,919
4,502,057
6,581,977
302
99,792
13,016,663 $
11,341,862
11,604,491
4,499,712
6,649,849
303
99,393
—
—
350,745
—
350,745
$
79,361
—
79,361
4.41 $
—
4.41
$
4.41 $
—
4.41
$
3.1300 $
8,217,579 $
6,718,366
6,847,781
3,427,568
3,166,054
254
79,496
992,332 $
150,946
(63)
5,394
156,277
—
156,277
$
79,188
—
79,188
1.90 $
0.07
1.97
$
1.90 $
0.07
1.97
$
2.9600 $
8,071,187 $
6,697,508
6,821,778
3,512,699
3,057,703
268
82,316
635,490
37,692
4,332
65,520
107,544
—
107,544
53,075
88
53,163
0.71
1.31
2.02
0.71
1.31
2.02
2.8150
7,694,618
6,556,303
6,835,012
3,463,239
3,118,568
275
83,641
(1) See Note 4 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
(2) Beginning in 2006, at their regularly scheduled meetings, the Board of Directors began routinely declaring distributions for payment in the following quarter. This can result in
distributions declared during a calendar year being different from distributions paid during a calendar year.
(3) Multifamily property and unit totals have not been adjusted to exclude properties held for sale.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The following discussion analyzes the financial condition and results of operations of both MAA and the Operating
Partnership, of which MAA is the sole general partner and in which MAA owned a 96.4% limited partner interest as of
December 31, 2017. MAA conducts all of its business through the Operating Partnership and its various subsidiaries. This
discussion should be read in conjunction with the consolidated financial statements included elsewhere in this Annual Report
on Form 10-K.
MAA is a multifamily focused, self-administered and self-managed real estate investment trust, or REIT. We own,
operate, acquire and selectively develop apartment communities primarily located in the Southeast and Southwest regions of
the United States. As of December 31, 2017, activities include full ownership and operation of 301 multifamily properties,
which includes commercial space at certain properties, four additional commercial properties, and a partial ownership in one
multifamily property. These properties are located in Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Kansas,
Kentucky, Maryland, Mississippi, Missouri, Nevada, North Carolina, South Carolina, Tennessee, Texas, Virginia and
Washington, D.C.
Our primary business objectives are to protect and grow existing property values, to maintain a stable and increasing
cash flow that will fund our dividends and distributions through all parts of the real estate investment cycle, and to create
shareholder value by growing in a disciplined manner. To achieve these objectives, we intend to continue to pursue the
following goals and strategies:
•
effectively and efficiently operate our existing properties with an intense property and asset management focus and a
decentralized structure;
• manage real estate cycles by taking an opportunistic approach to buying, selling, renovating and developing apartment
communities;
28
• diversify investment capital across markets in which we operate to achieve a balanced portfolio with less volatile
operating performance; and
actively manage our capital structure to enhance predictability of earnings to fund our dividends and distributions.
•
OVERVIEW
We experienced an increase in net income available for MAA common shareholders for the year ended December 31,
2017 as the growth in revenues outpaced increases in our property operating expenses. The increase in revenues was primarily
driven by a 3.0% increase in our Large Market Same Store segment, a 2.6% increase in our Secondary Market Same Store
segment and a $375.2 million increase in our Non-Same Store and Other segment, which was primarily a result of the Merger.
The increase in property operating expenses was primarily due to a 2.0% increase in our Large Market Same Store segment, a
2.7% increase in our Secondary Market Same Store segment and a $145.1 million increase in our Non-Same Store and Other
segment, which was primarily the result of the Merger. The drivers of these increases are discussed below in the "Results of
Operations" section.
On December 1, 2016, we consummated the Merger and acquired all of Post Properties' consolidated net assets. The
consolidated net assets and results of operations of Post Properties are included in our consolidated financial statements from
the closing date of the Merger going forward. All properties acquired from Post Properties are included in our Non-Same Store
and Other operating segment, as the properties are recent acquisitions and had not been owned and stabilized for at least twelve
months as of January 1, 2017.
Over the past three years, our growth has been driven by our acquisition strategy to invest in large and mid-sized
growing markets in the Southeast and Southwest region of the United States. As a result of the Merger, we acquired 61
apartment communities in 2016. We acquired two apartment communities in 2017, five in 2016 apart from the Merger, and
seven in 2015. We disposed of five apartment communities in 2017, 12 in 2016, and 21 in 2015.
TRENDS
During the year ended December 31, 2017, demand for apartments continued to be relatively strong, as it was during
the year ended December 31, 2016. This strength was evident on two fronts: occupancy and effective rent per unit. Same store
physical occupancy at December 31, 2017 was 97%. Average physical occupancy for the same store portfolio was 96.2% for
the year ended December 31, 2017, consistent with the year ended December 31, 2016. Same store average effective rent per
unit continued to increase, and was up 3.0% for the year ended December 31, 2017 as compared to the year ended
December 31, 2016. As we move through the remainder of the typically slower winter leasing season and into the typically
stronger spring leasing season, we believe the current level of physical occupancy puts us in a good position to capture solid
pricing in the first half of 2018.
An important part of our portfolio strategy is to maintain a diversity of markets, submarkets, product types and price
points across the Southeast and Southwest regions of the United States. This diversity tends to mitigate exposure to economic
issues in any one geographic market or area. We believe that a well-balanced portfolio, including inner loop, suburban, and
downtown/central business district locations and various monthly rent price points, will perform well in "up" cycles as well as
weather "down" cycles better. Through our investment in 37 defined Metropolitan Statistical Areas, or MSAs, we are
diversified across markets, urban and suburban submarkets, and a variety of monthly rent pricing points.
Current supply levels are impacting our total portfolio from a demand standpoint, particularly properties located in
urban submarkets, the majority of which were acquired in the Merger. Properties in our same store portfolio have been
impacted somewhat less by supply, primarily because less new development has occurred in those submarkets. Encouragingly,
according to U.S. Census Bureau data, full year 2017 multifamily permitting across our markets was down 5% as compared to
the prior year. This activity should result in relatively lower supply in our markets in the future as compared to the current
environment.
Demand for our apartments is primarily driven by general economic conditions in our markets. In particular, job
growth relative to new supply is a critical factor in our ability to maintain occupancy and increase rents. To the extent that the
Tax Cuts and Jobs Act results in improving economic conditions such as increased job growth or more disposable income, we
believe that we may be able to maintain occupancy more effectively and increase rents.
Also, we believe that more disciplined credit terms for residential mortgages should continue to favor rental demand at
existing multifamily properties. Furthermore, rental competition from single family homes has not been a major competitive
factor impacting our portfolio. For the year ended December 31, 2017, total move outs attributable to single family home
29
rentals for our combined portfolio represented about 6% of total move outs, in line with the year ended December 31, 2016. We
have seen significant rental competition from single family homes in only a few of our submarkets. Long term, we expect
demographic trends (including the growth of prime age groups for rentals and immigration and population movement to the
Southeast and Southwest regions) will continue to support apartment rental demand in our markets.
Rising interest rates may have a significant impact on our business and results of operations. As of December 31,
2017, we had approximately $4.5 billion of debt, of which 17% had variable rate interest and 83% had fixed or hedged interest
rates. To the extent interest rates rise, our net interest expense on variable rate debt will increase as will potentially our net
interest expense on any debt refinancing. Given the short-term nature of our leases, to the extent interest rates rise due to
general economic growth, we would expect increases in interest expense to be somewhat offset by positive leasing trends.
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2017 to the Year Ended December 31, 2016
For the year ended December 31, 2017, we achieved net income available for MAA common shareholders of $324.7
million, a 53.2% increase over the prior year, and total revenue growth of $403.6 million, a 35.9% increase over the prior year.
The following discussion describes the primary drivers of the increase in net income for MAA common shareholders for the
year ended December 31, 2017.
Property Revenues
The following table presents our property revenues by segment for the years ended December 31, 2017 and
December 31, 2016 (dollars in thousands):
December 31, 2017 December 31, 2016
$
Large Market Same Store
Secondary Market Same Store
Same Store Portfolio
Non-Same Store and Other
Total
$
672,131 $
349,007
1,021,138
507,849
1,528,987 $
652,560 $
340,161
992,721
132,627
1,125,348 $
Increase
% Increase
19,571
8,846
28,417
375,222
403,639
3.0 %
2.6 %
2.9 %
282.9 %
35.9%
The increases in property revenues from our Large Market Same Store and Secondary Market Same Store portfolio
were primarily a result of increased effective rent per unit of 3.1% and 2.7%, respectively, as compared to the year ended
December 31, 2016. The increase in property revenues from our Non-Same Store and Other portfolio was primarily the result
of the Merger, as we classified the properties we acquired as Non-Same Store.
Property Operating Expenses
Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes
and insurance, utilities, landscaping, other operating expenses and depreciation and amortization. The following table reflects
our property operating expenses by segment excluding depreciation and amortization for the years ended December 31, 2017
and December 31, 2016 (dollars in thousands):
December 31, 2017 December 31, 2016
Increase
% Increase
Large Market Same Store
Secondary Market Same Store
Same Store Portfolio
Non-Same Store and Other
Total
$
$
250,056 $
130,334
380,390
196,341
576,731 $
245,266 $
126,888
372,154
51,202
423,356 $
4,790
3,446
8,236
145,139
153,375
2.0 %
2.7 %
2.2 %
283.5 %
36.2%
The increase in property operating expenses for our Large Market Same Store segment was primarily the result of
increases in real estate taxes of $4.7 million, personnel expenses of $1.0 million, and utilities expense of $0.7 million, partially
offset by a decrease in insurance expense of $1.5 million. The increase in property operating expenses for our Secondary
Market Same Store segment was primarily driven by increases in real estate taxes of $1.5 million, personnel expenses of $1.3
million, and utilities expense of $0.9 million, partially offset by a decrease in insurance expense of $0.3 million. The increase
in property operating expenses for our Non-Same Store and Other portfolio was primarily due to the Merger.
30
Depreciation and Amortization
Depreciation and amortization expense for the year ended December 31, 2017 was approximately $493.7 million, an
increase of $170.8 million from the year ended December 31, 2016. In addition to asset acquisitions made in the normal course
of business, the increase was primarily driven by the full year of depreciation and amortization expense resulting from the
Merger compared to only one month of comparable depreciation and amortization in 2016. As a result of the Merger,
depreciation expense and amortization expense increased $138.2 million and $23.2 million, respectively, for year ended
December 31, 2017 compared to the year ended December 31, 2016.
Other Operating Expenses
Property management expenses for the year ended December 31, 2017 were approximately $43.6 million, an increase
of $9.5 million compared to the year ended December 31, 2016. The increase was primarily due to the growth in our portfolio
as a result of the Merger.
Merger and integration expenses for the year ended December 31, 2017 were primarily comprised of $16.0 million of
systems and professional costs and $4.0 million of legal costs, as we integrated Post Properties into our consolidated
operations. Merger and integration expenses for the year ended December 31, 2017 were approximately $20.8 million less than
merger and integration expenses for the year ended December 31, 2016, as we incurred significant merger related expenses in
2016 to complete the Merger on December 1, 2016.
General and administrative expenses for the year ended December 31, 2017 were approximately $40.2 million, an
increase of $11.2 million compared to the year ended December 31, 2016. The increase was primarily driven by legal
expenses.
Non-Operating Expenses and Other
Interest expense for the year ended December 31, 2017 was approximately $154.8 million, an increase of $24.8
million from the year ended December 31, 2016. The increase was primarily due to increased borrowing as we assumed
several loans as a result of the Merger, including a secured loan with a face value of $186.0 million and two unsecured loans
with face values of $150.0 million and $250.0 million, respectively. We entered into a new $300.0 million term loan on the
closing date of the Merger. Interest expense for the year ended December 31, 2017 increased $16.0 million due to these
borrowings resulting from the Merger. In addition, in May 2017, we publicly issued senior unsecured notes with a face value
of $600.0 million, bearing interest at 3.60% per annum, which resulted in additional interest expense of approximately $14.0
million for the year ended December 31, 2017. Such increases were offset by a slight decreases in interest expense as a result of
retirements of secured property mortgages and unsecured notes during the year ended December 31, 2017; the notes were
scheduled to mature in October 2017.
Gains on sale of depreciable assets totaled $127.4 million for the year ended December 31, 2017, an increase of
approximately $47.0 million from the year ended December 31, 2016. Although disposition activity decreased year-over-year,
the gain on sale of depreciable assets increased primarily due to the nature of the real estate assets sold.
Other non-operating income for the year ended December 31, 2017 was $14.4 million, an increase of approximately
$16.2 million compared to the year ended December 31, 2016. The year-over-year increase was primarily due to an $8.8
million increase in the net mark-to-market adjustments of the bifurcated embedded derivative related to the MAA Series I
preferred stock issued in the Merger. The year-over-year increase was also driven by the $3.3 million increase in the net gain on
debt extinguishment, primarily due to gains of $4.8 million from the write-offs of mark-to-market debt adjustments related to
the retirement of secured mortgages and a term loan, partially offset by a cash prepayment penalty of $1.6 million.
During the year ended December 31, 2017 we recorded quarterly dividend distributions to holders of MAA's Series I
preferred stock totaling $3.7 million. As there were no shares of MAA Series I preferred stock issued and outstanding until
completion of the Merger on December 1, 2016, preferred dividends only impacted our results of operations for one month
totaling $0.3 million for the year ended December 31, 2016.
Comparison of the Year Ended December 31, 2016 to the Year Ended December 31, 2015
For the year ended December 31, 2016, we achieved net income available for MAA common shareholders of $211.9
million, a 36.2% decrease over the prior year, and total revenue growth of $82.6 million, a 7.9% increase over the prior year.
31
The following discussion describes the primary drivers of the decrease in net income for MAA common shareholders for the
year ended December 31, 2016.
The comparison of the year ended December 31, 2016 to the year ended December 31, 2015 shows the segment break
down based on the 2016 same store portfolios. A comparison using the 2017 same store portfolio would not be comparative
due to the nature of the classifications.
Property Revenues
The following table presents our property revenues by segment for the years ended December 31, 2016 and
December 31, 2015 (dollars in thousands):
Large Market Same Store
Secondary Market Same Store
Same Store Portfolio
Non-Same Store and Other
Total
December 31, 2016 December 31, 2015
Increase
% Increase
$
$
642,679 $
337,883
980,562
144,786
1,125,348 $
612,934 $
327,700
940,634
102,145
1,042,779 $
29,745
10,183
39,928
42,641
82,569
4.9 %
3.1 %
4.2 %
41.7 %
7.9%
The increase in property revenues from our same store portfolio was primarily a result of increased effective rent per
unit of 4.9% and 2.9% for our large and secondary markets, respectively. The increase in property revenues from our Non-
Same Store and Other segment was due to the Merger.
Property Operating Expenses
Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes
and insurance, utilities, landscaping, other operating expenses and depreciation and amortization. The following table reflects
our property operating expenses excluding depreciation and amortization by segment for the years ended December 31, 2016
and December 31, 2015 (dollars in thousands):
December 31, 2016 December 31, 2015
Increase
% Increase
Large Market Same Store
Secondary Market Same Store
Same Store Portfolio
Non-Same Store and Other
Total
$
$
243,392 $
125,830
369,222
54,134
423,356 $
235,909 $
123,318
359,227
41,418
400,645 $
7,483
2,512
9,995
12,716
22,711
3.2 %
2.0 %
2.8 %
30.7 %
5.7%
The increase in property operating expenses from our Large Market Same Store segment was primarily the result of
increases in real estate taxes of $5.3 million, personnel expenses of $1.5 million and utilities expenses of $1.2 million. The
increase in property operating expenses from our Secondary Market Same Store segment was primarily driven by increases in
real estate taxes of $1.3 million. The increase in property operating expenses from our Non-Same Store and Other segment was
due to the Merger.
Depreciation and Amortization
Depreciation and amortization expense for the year ended December 31, 2016 was $323.0 million, an increase of
$28.4 million, from the year ended December 31, 2015. The increase was primarily driven by depreciation expense of $17.4
million related to the Merger. Additionally, the amortization of the fair market value of in-place leases related to the Merger
began in December 2016, and totaled $4.9 million for the year ended December 31, 2016.
Other Operating Expenses
Merger and integration expenses for the year ended December 31, 2016 were $40.8 million as a result of the expenses
associated with the Merger, which closed on December 1, 2016. There were no merger and integration expenses for the year
ended December 31, 2015 as no merger occurred in that year.
Interest expense for the year ended December 31, 2016 was approximately $129.9 million, an increase of $7.6 million
from the year ended December 31, 2015. The increase was due in part to decreased amortization of the fair market value of
32
debt adjustments related to debt acquired and increased interest rates towards the end of 2016. Additionally, we assumed
additional debt as a result of the Merger, including a secured loan in the principal amount of $186.0 million and two series of
unsecured senior notes with face values of $150.0 million and $250.0 million, respectively. Additionally, we entered into a new
$300.0 million term loan on the closing date of the Merger.
We recorded a gain on sale of depreciable assets of $80.4 million for the year ended December 31, 2016, a decrease of
approximately $109.6 million from the year ended December 31, 2015. The decrease was primarily the result of a decline in
disposition activity year-over-year. Dispositions decreased from 21 multifamily properties for the year ended December 31,
2015, to 12 multifamily properties for the year ended December 31, 2016.
Non-Operating Expenses and Other
Other non-operating expense for the year ended December 31, 2016 was $1.8 million, a decrease of approximately
$4.4 million compared to the year ended December 31, 2015. The year-over-year decrease was primarily due to the $3.5
million decrease in loss on debt extinguishment due to the 2015 removal of properties from a secured tax-free debt facility;
there was an immaterial loss on debt extinguishment activity for the year ended December 31, 2016.
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
extraordinary items, asset impairment and gains or losses on disposition of real estate assets, plus net income attributable to
noncontrolling interests, depreciation and amortization of real estate, and adjustments for joint ventures to reflect FFO on the
same basis. Because noncontrolling interest is added back, FFO, when used in this Annual Report on Form 10-K, represents
FFO attributable to the Company.
FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, as an
indicator of operating performance or as an alternative to cash flows 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 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.
The following table presents a reconciliation of net income available for MAA common shareholders to FFO for the
years ended December 31, 2017, 2016, and 2015, as we believe net income available for MAA common shareholders is the
closest corresponding GAAP measure (dollars in thousands):
Net income available for MAA common shareholders
Depreciation and amortization of real estate assets
Gain on sale of depreciable real estate assets
Loss (gain) on disposition within unconsolidated entities
Depreciation and amortization of real estate assets of real estate joint ventures
Net income attributable to noncontrolling interests
Funds from operations attributable to the Company
$
$
Year ended December 31,
2016
211,915 $
319,528
(80,397)
98
61
12,180
463,385 $
2017
324,691 $
489,503
(127,386)
—
596
12,157
699,561 $
2015
332,287
291,572
(189,958)
(12)
25
18,458
452,372
FFO for the year ended December 31, 2017 increased by approximately $236.2 million from the year ended
December 31, 2016 primarily as a result of the increases in property revenues of $403.6 million and other non-operating
income of $16.2 million, in addition to decreased merger and integration expenses of $20.8 million. The increases to FFO
were offset by the impact of increases in property operating expenses, excluding depreciation and amortization, of $153.4
million, interest expense of $24.8 million, general and administrative expenses of $11.2 million, property management
expenses of $9.5 million and preferred dividends of $3.4 million.
33
FFO for the year ended December 31, 2016 increased by approximately $11.0 million from the year ended
December 31, 2015 primarily as a result of the increase in property revenues of $82.6 million, which was offset by increases in
merger and integration expenses of $40.8 million, property operating expenses, excluding depreciation and amortization, of
$22.7 million, general and administrative expenses of $3.3 million and property management expenses of $3.1 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.
Operating Activities
Net cash flow provided by operating activities increased to $658.5 million for the year ended December 31, 2017 from
$484.0 million for the year ended December 31, 2016. The increase was primarily driven by the inclusion of twelve months of
operating results of Post Properties for the year ended December 31, 2017 as compared to one month of operating results for
the year ended December 31, 2016.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2017 was $283.4 million compared to net cash
used in investing activities for the year ended December 31, 2016 of $710.5 million. The primary drivers of the change were as
follows:
Purchases of real estate and other assets
$
Capital improvements, development and other
Proceeds from disposition of real estate assets
Return (funding) of escrow for future acquisitions
Acquisition of Post Properties, net of cash acquired
(136,065) $
(343,890)
187,429
10,591
—
Primary drivers of cash inflow (outflow)
during the year ended December 31,
2017
2016
Increase
(Decrease)
in Net
Cash
203,121
(159,913)
(109,271)
68,850
427,764
Percentage
Increase
(Decrease)
in Net Cash
59.9 %
(86.9)%
(36.8)%
118.2 %
(100.0)%
(339,186) $
(183,977)
296,700
(58,259)
(427,764)
The decrease in cash outflows for purchases of real estate and other assets resulted from the acquisition of two
apartment communities during the year ended December 31, 2017 compared to the acquisition of five apartment communities
during the year ended December 31, 2016. The increase in cash outflows for capital improvements, development and other
during the year ended December 31, 2017 compared to the prior year resulted from the property portfolio increase and
development pipeline increase as a result of the Merger. The decrease in proceeds from the disposition of real estate assets
primarily resulted from the sale of five apartment communities and four land parcels during the year ended December 31, 2017
compared to the sale of 12 apartment communities, one commercial property, and three land parcels during the year ended
December 31, 2016. The increase in cash inflows from the funding of escrow for future acquisitions resulted from the funding
of three anticipated future 1031(b) transactions offset by the release of three 1031(b) transactions that never occurred during the
year ended December 31, 2017 compared to the funding of one anticipated future 1031(b) transaction during the year ended
December 31, 2016. The decrease in cash outflows for the acquisition of Post Properties, net of cash acquired, compared to
prior year resulted from the completion of the Merger; there were no mergers during the year ended December 31, 2017.
34
Financing Activities
Net cash used by financing activities was $397.9 million for the year ended December 31, 2017 compared to net cash
provided by financing activities of $222.4 million for the year ended December 31, 2016. The primary drivers of the change
were as follows:
Net change in credit lines
Proceeds from notes payable
Principal payments on notes payable
Dividends paid on common shares
$
(160,000) $
597,480
(413,557)
(395,294)
Primary drivers of cash inflow (outflow)
during the year ended December 31,
2017
2016
Increase
(Decrease)
in Net Cash
(495,000)
297,480
(267,531)
(147,642)
Percentage
Increase
(Decrease)
in Net Cash
(147.8)%
99.2 %
(183.2)%
(59.6)%
335,000 $
300,000
(146,026)
(247,652)
The decrease in cash outflows related to the net change in credit lines resulted from the decrease in net borrowings of
$80.0 million on our unsecured revolving credit facility and $80.0 million on our secured credit facility during the year ended
December 31, 2017, compared to an increase in net borrowings of $415.0 million on the unsecured revolving credit facility and
a decrease of $80.0 million on the secured credit facility during the year ended December 31, 2016. The increase in proceeds
from notes payable during the year ended December 31, 2017 related to the May 2017 issuance of $600.0 million senior
unsecured notes, as discussed in Note 6, compared to the 2016 issuance of the unsecured term loan in the amount of $300.0
million. The increase in cash outflows from principal payments on notes payable primarily resulted from paying off
approximately $233.6 million of secured property mortgages and $168.0 million of senior unsecured notes during the year
ended December 31, 2017 compared to paying off the $140.0 million legacy Post Properties' line of credit facility during the
year ended December 31, 2016. The increase in cash outflows from dividends paid on common shares primarily resulted from
the increased number of common shares outstanding as a result of the Merger and the increase in the annual dividend rate to
$3.48 per share during the year ended December 31, 2017 compared to the dividend rate of $3.28 per share during the year
ended December 31, 2016.
Equity
As of December 31, 2017, MAA owned 113,643,166 OP Units, comprising a 96.4% limited partnership interest in the
Operating Partnership, while the remaining 4,191,586 outstanding OP Units were held by third party limited partners of the
Operating Partnership. Holders of OP Units (other than MAA and its corporate affiliates) may require us to redeem their OP
Units from time to time, in which case MAA 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 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. In addition, MAA has registered under the Securities Act the 4,191,586 shares of its common
stock, that as of December 31, 2017, were issuable upon redemption of OP Units, so that those shares can be sold freely in the
public markets.
For more information regarding our equity capital resources, see Note 9 and Note 10 to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.
35
Debt
The following schedule outlines our fixed and variable rate debt, including the impact of our interest rate swaps and
cap, outstanding as of December 31, 2017 (dollars in thousands):
Unsecured debt
Fixed rate or swapped
Variable rate
Fair market value adjustments, debt issuance costs and discounts
Total unsecured rate maturity
Secured debt
Conventional - fixed rate or swapped
Conventional - variable rate - capped (1)
Total fixed or hedged rate maturity
Conventional - variable rate
Fair market value adjustments and debt issuance costs
Total secured rate maturity
Total debt
Total fixed or hedged debt
(1)
Principal
Balance
Average Years
to Maturity
Effective
Rate
$
$
$
$
$
$
$
2,842,000
710,000
(26,235 )
3,525,765
882,752
25,000
907,752
55,000
13,540
976,292
4,502,057
3,737,763
5.5
0.1
4.9
1.8
0.1
1.7
0.1
1.6
3.9
4.7
3.8 %
2.4 %
3.5 %
4.0 %
1.8 %
3.9 %
1.8 %
3.8 %
3.6%
3.8%
The effective rate represents the average rate on the underlying variable debt unless the cap rate of 4.5% of the London Interbank Offered Rate, or
LIBOR, is reached.
As of December 31, 2017, we had entered into interest rate swaps totaling a notional amount of $550.0 million related
to issued debt. To date, these swaps have proven to be highly effective hedges. We had also entered into an interest rate cap
agreement totaling a notional amount of $25.0 million as of December 31, 2017.
The following schedule outlines the contractual maturity dates of our outstanding debt, net of fair market value
adjustments, debt issuance costs and discounts, as of December 31, 2017 (dollars in thousands):
Key Bank Unsecured
Credit Facility
Public Bonds
Other Unsecured
Secured
Total
2018
2019
2020
2021
2022
Thereafter
Total
$
$
— $
—
410,000
—
—
—
410,000 $
— $
—
—
—
248,144
1,727,590
1,975,734 $
300,261 $
19,967
149,773
222,091
415,798
32,141
1,140,031 $
118,658 $
559,378
163,054
124,711
—
10,491
976,292 $
418,919
579,345
722,827
346,802
663,942
1,770,222
4,502,057
The following schedule outlines the interest rate maturities of our outstanding fixed or hedged debt, net of fair market
value adjustments, debt issuance costs and discounts, as of December 31, 2017 (dollars in thousands):
Fixed Rate
Debt
Interest Rate
Swaps
Total Fixed
Rate Balances Contract Rate
Interest Rate
Cap
Total Fixed or
Hedged
2018
2019
2020
2021
2022
Thereafter
Total
$
$
88,633 $
579,345
163,054
197,281
364,794
1,770,222
3,163,329 $
250,286 $
—
299,148
—
—
—
549,434 $
338,919
579,345
462,202
197,281
364,794
1,770,222
3,712,763
3.1 % $
5.9 %
3.7 %
5.2 %
3.6 %
3.7 %
4.0% $
25,000 $
—
—
—
—
—
25,000 $
363,919
579,345
462,202
197,281
364,794
1,770,222
3,737,763
36
Unsecured Revolving Credit Facility
On October 15, 2015, the Operating Partnership entered into an unsecured revolving credit facility agreement with a
syndicate of banks led by KeyBank National Association, or KeyBank, and fourteen other banks, the KeyBank Facility. The
KeyBank Facility replaced our Operating Partnership's previous unsecured credit facility with KeyBank. The interest rate is
determined using an investment grade pricing grid using LIBOR plus a spread of 0.85% to 1.55%. On December 1, 2016, the
Operating Partnership amended the KeyBank Facility by increasing the borrowing capacity from $750.0 million to $1.0 billion.
As of December 31, 2017, we had $410.0 million borrowed under the KeyBank Facility, bearing interest at a rate of LIBOR
plus 0.90%. The KeyBank Facility serves as our primary source of short-term liquidity and has an accordion feature that we
may use to expand its capacity to $1.5 billion. This facility matures on April 15, 2020, with an option to extend for an
additional six months.
Senior Unsecured Notes
We have also issued both public and private unsecured notes. As of December 31, 2017, we had approximately $2.0
billion (face value) of publicly issued notes and $292.0 million of unsecured notes issued in two private placements. In
October 2013, we publicly issued $350.0 million of senior unsecured notes due 2023 with a coupon of 4.30%, paid semi-
annually on April 15 and October 15. In June 2014, we publicly issued $400.0 million of senior unsecured notes due 2024 with
a coupon of 3.75%, paid semi-annually on June 15 and December 15. In November 2015, we publicly issued $400.0 million
senior unsecured notes due 2025 with a coupon of 4.00%, paid semi-annually on May 15 and November 15. As a result of the
Merger in December 2016, we assumed two series of publicly issued senior notes totaling $400.0 million. One series of senior
notes assumed as a result of the Merger has a face value of $250.0 million, is due 2022, and has a coupon of 3.38% paid semi-
annually on June 1 and December 1. The other series of senior notes assumed as a result of the Merger had a face value of
$150.0 million and was due in October 2017, but was paid off in July 2017. In May 2017, we publicly issued $600.0 million of
senior unsecured notes due June 1, 2027 with a coupon of 3.60%, paid semi-annually on June 1 and December 1. The proceeds
from the senior unsecured notes issued in May 2017 were used to pay down outstanding amounts of the Key Bank Facility. As
of December 31, 2017, all of these amounts, with the exception of the series of senior unsecured notes assumed in the Merger
with a face value of $150.0 million that was paid off in July 2017, remained outstanding.
In July 2011, we issued $135.0 million of senior unsecured notes. The notes were offered and sold in a private
placement with three maturity tranches: $50.0 million at 4.7% maturing on July 29, 2018, $72.8 million at 5.4% maturing on
July 29, 2021; and $12.3 million at 5.6% maturing on July 29, 2023; all of which were outstanding at December 31, 2017. On
August 31, 2012, we issued $175.0 million of senior unsecured notes. The notes were offered and sold in a private placement
with four tranches: $18.0 million at 3.15% maturing on November 30, 2017; $20.0 million at 3.61% maturing on November 30,
2019; $117.0 million at 4.17% maturing on November 30, 2022; and $20.0 million at 4.33% maturing on November 30, 2024.
The $18 million tranche was paid off on its maturity date. The remaining tranches were outstanding as of December 31, 2017.
Unsecured Term Loans
In addition to the KeyBank Facility, we maintain four unsecured term loans. We had total borrowings of $850.0
million outstanding under these term loan agreements at December 31, 2017, comprised of:
A $250.0 million term loan with Wells Fargo, N.A., or Wells Fargo, that bears interest at a rate of LIBOR plus a spread
of 0.90% to 1.90% based on the credit ratings of our unsecured debt. The loan matures on August 1, 2018. As of December 31,
2017, this loan was bearing interest at a rate of LIBOR plus 0.98%.
A $150.0 million term loan with U.S. Bank National Association, or U.S. Bank, that bears interest at a rate of LIBOR
plus a spread of 0.90% to 1.90% based on the credit ratings of our unsecured debt. The loan matures on March 1, 2020. As of
December 31, 2017, this loan was bearing interest at a rate of LIBOR plus 0.98%.
A $150.0 million term loan with Key Bank that bears interest at a rate of LIBOR plus a spread of 0.90% to 1.75%
based on the credit ratings of our unsecured debt. The loan matures on March 1, 2021. As of December 31, 2017, this loan was
bearing interest at a rate of LIBOR plus 0.95%.
A $300.0 million term loan with Wells Fargo that bears interest at a rate of LIBOR plus a spread of 0.90% to 1.75%
based on the credit ratings of our unsecured debt. The loan matures on March 1, 2022. As of December 31, 2017, this loan
was bearing interest at a rate of LIBOR plus 0.95%.
37
Secured Property Mortgages
We also maintain secured property mortgages with Fannie Mae, Freddie Mac and various life insurance companies.
These mortgages are usually fixed rate and can range from five to ten years in maturity. As of December 31, 2017, we had
$882.8 million of secured property mortgages.
Secured Credit Facility
Approximately 1.8% of our outstanding obligations at December 31, 2017 were borrowed through a credit facility
with Prudential Mortgage Capital, which is credit enhanced by Fannie Mae, or the Fannie Mae Facility. The Fannie Mae
Facility has a combined line limit of $80.0 million, of which $80.0 million was collateralized, available to borrow, and
borrowed, at December 31, 2017. The Fannie Mae Facility matures in 2018.
For more information regarding our debt capital resources, see Note 6 to the consolidated financial statements
included elsewhere in this Annual Report on Form 10-K.
Contractual Obligations
The following table reflects our total contractual cash obligations as of December 31, 2017, which consist of our long-
term debt, development fees and operating leases (dollars in thousands):
2020
2022
2019
2018
Thereafter
Contractual Obligations (1)
Long-term debt obligations (2)
Fixed rate or swapped interest (3)
Purchase obligations (4)
Operating lease obligations (5)
2021
$ 428,942 $ 570,114 $ 718,281 $ 342,903 $ 668,401 $ 1,786,111 $ 4,514,752
725,642
89,454
145,867
672
672
—
66,553
718
882
$ 576,363 $ 684,177 $ 817,010 $ 433,075 $ 751,905 $ 2,045,089 $ 5,307,619
Total
(1) Fixed rate and swapped interest are reflected in this table. The average interest rates of variable rate debt are presented in preceding tables.
(2) Represents principal payments gross of discounts, debt issuance costs and fair market value adjustments of debt assumed.
(3) Swapped interest is subject to the ineffective portion of cash flow hedges as described in Note 7 to the consolidated financial statements
included elsewhere in this Annual Report on Form 10-K.
(4) Represents development fees.
(5) Primarily comprised of a ground lease underlying one apartment community we own.
196,190
—
62,788
113,339
—
724
82,771
—
733
98,021
—
708
Total
We have a commitment, which is not reflected in the table above, to make additional capital contributions to a limited
partnership in which we hold an equity interest. The capital contributions may be called by the general partner at any time until
September 2022 after giving appropriate notice. At December 31, 2017, we had committed to make additional capital
contributions totaling up to $13.5 million if and when called by the general partner of the limited partnership and prior to
September 2022.
Off-Balance Sheet Arrangements
At December 31, 2017, and 2016, we did not have any relationships, including those with unconsolidated entities or
financial partnerships, for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited
purposes.
As of December 31, 2017, we had a 35.0% ownership interest in a limited liability company, which owns one
apartment community comprised of 269 units, located in Washington, D.C. We also had a 31.0% ownership interest in a limited
partnership. Our interests in these investments are unconsolidated and are recorded using the equity method for the investments
as we do not have a controlling interest.
In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not
materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.
We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent
relationships with us or our related parties other than those disclosed in Note 13 to the consolidated financial statements
included elsewhere in this Annual Report on Form 10-K.
38
INSURANCE
We carry comprehensive general liability coverage on our communities, with limits of liability we believe are
customary within the multifamily apartment industry, to insure against liability claims and related defense costs. We also
maintain insurance against the risk of direct physical damage to reimburse us on a replacement cost basis for costs incurred to
repair or rebuild each property, including loss of rental income during the reconstruction period.
We renegotiated our primary insurance programs effective July 1, 2017. We believe that the current property and
casualty insurance program in place provides appropriate insurance coverage for financial protection against insurable risks
such that any insurable loss experienced that can be reasonably anticipated would not have a significant impact on our liquidity,
financial position or results of operation.
INFLATION
Our resident leases at our apartment communities allow, at the time of renewal, for adjustments in the rent payable
thereunder, and thus may enable us to seek rent increases. Almost all leases are for one year or less. The short-term nature of
these leases generally serves to reduce our risk to adverse effects of inflation.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
A critical accounting policy is one that is both important to our financial condition and results of operations and that
involves some degree of uncertainty. The preceding discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements and the notes thereto, which have been prepared in accordance with
GAAP. The preparation of financial statements in conformity with GAAP requires management to make a number of estimates
and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis,
we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. We
believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may differ from
these estimates and assumptions.
We believe that the estimates and assumptions listed below are most important to the portrayal of our financial
condition and results of operations because they require the greatest subjective determinations and form the basis of accounting
policies deemed to be most critical.
Acquisition of real estate assets
We account for our acquisitions of investments in real estate as asset acquisitions in accordance with ASU 2017-01,
Business Combinations (Topic 805): Clarifying the Definition of a Business, which requires the cost of the of the real estate
acquired to be allocated to the individual acquired tangible assets, consisting of land, buildings and improvements and other,
and identified intangible assets, consisting of the value of in-place leases and other contracts, on a relative fair value basis. In
calculating the total asset value of acquired tangible assets, management uses stabilized net operating income, or NOI, and
market specific capitalization and discount rates. Management analyzed historical stabilized NOI to determine its estimate for
forecasted NOI. Management estimates the market capitalization rate by analyzing the market capitalization rates for properties
with comparable ages in similarly sized markets. Management then allocates the purchase price of the asset acquisition based
on the relative fair value of the individual components as a proportion of the total assets acquired.
Impairment of long-lived assets
We account for long-lived assets in accordance with the provisions of accounting standards for the impairment or
disposal of long-lived assets. We periodically evaluate long-lived assets, including investments in real estate, for indicators that
would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such
indicators are based on factors such as operating performance, market conditions and legal factors. Long-lived assets, such as
real estate assets, equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows
expected to be generated by the asset, which is estimated by analyzing historical cash flows of the asset. If the carrying amount
of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying
amount of the asset exceeds the fair value of the asset. We calculate the fair value of an asset by dividing historical operating
cash flows by a market capitalization rate. We estimate the market capitalization rate by analyzing the market capitalization
39
rates for properties with comparable ages in similarly sized markets. No material impairment losses have been recognized
during the years ended December 31, 2017, 2016, and 2015.
Cost capitalization
In conformity with GAAP, we capitalize those expenditures that materially enhance the value of an existing asset or
substantially extend the useful life of an existing asset. Expenditures necessary to maintain an existing property in ordinary
operating condition are expensed as incurred. Therefore, repairs and maintenance costs are expensed as incurred while
significant improvements, renovations, and replacements are capitalized. The cost to complete any deferred repairs and
maintenance at properties acquired by us in order to elevate the condition of the property to our standards are capitalized as
incurred. The carrying costs related to development projects, including interest, property taxes, insurance and allocated direct
development salary cost during the construction period, are capitalized. Management uses judgment in determining whether
costs should be expensed or capitalized. See Note 1 to the consolidated financial statements included elsewhere in this Annual
Report on Form 10-K for additional detail.
Loss contingencies
The outcomes of claims, disputes and legal proceedings are subject to significant uncertainty. We record an accrual for
loss contingencies when a loss is probable and the amount of the loss can be reasonably estimated. We review these accruals
quarterly and make revisions based on changes in facts and circumstances. When a loss contingency is not both probable and
reasonably estimable, then we do not accrue the loss. However, for material loss contingencies, if the unrecorded loss (or an
additional loss in excess of the accrual) is at least a reasonable possibility and material, then we disclose a reasonable estimate
of the possible loss, or range of loss, if such reasonable estimate can be made. If we cannot make a reasonable estimate of the
possible loss, or range of loss, then that is disclosed.
The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or range of loss is
reasonably estimable, often involves a series of complex judgments about future events. Among the factors that we consider in
this assessment, including with respect to the matters disclosed in this Annual Report on Form 10-K, are the nature of existing
legal proceedings and claims, the asserted or possible damages or loss contingency (if reasonably estimable), the progress of
the matter, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar
matters, the facts available to us at the time of assessment, and how we intend to respond, or have responded, to the proceeding
or claim. Our assessment of these factors may change over time as individual proceedings or claims progress. For matters
where we are not currently able to reasonably estimate a range of reasonably possible loss, the factors that have contributed to
this determination include the following: (i) the damages sought are indeterminate; (ii) the proceedings are in the early stages;
(iii) the matters involve novel or unsettled legal theories or a large or uncertain number of actual or potential cases or parties;
and/or (iv) discussions with the parties in matters that are expected ultimately to be resolved through negotiation and settlement
have not reached the point where we believe a reasonable estimate of loss, or range of loss, can be made. In such instances, we
believe that there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible
eventual loss or business impact, if any.
For more information regarding our significant accounting policies, including a brief description of recent accounting
pronouncements that could have a material impact on our financial statements, see Note 1 to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.
40
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices,
equity prices and other market changes that affect market sensitive instruments. Our primary market risk exposure is to changes in
interest rates on our borrowings. At December 31, 2017, 27.5% of our total capitalization consisted of borrowings. Our interest rate
risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs.
To achieve this objective, we manage our exposure to fluctuations in market interest rates for borrowings through the use of fixed
rate debt instruments and interest rate swaps and caps, which mitigate our interest rate risk on a related financial instrument and
effectively fix or cap the interest rate on a portion of our variable debt or on future refinancings. We use our best efforts to have our
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. At December 31, 2017, approximately 83.0% of our
outstanding debt was subject to fixed or capped rates after considering related derivative instruments We regularly review interest
rate exposure on outstanding borrowings in an effort to minimize the risk of interest rate fluctuations.
The table below provides information about our financial instruments that are sensitive to changes in interest rates. For
debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For
our interest rate swaps and cap, the table presents the notional amount of the swaps and cap and the years in which they expire.
Weighted average variable rates are based on rates in effect at the reporting date (dollars in thousands).
$
$
Long-term debt
Fixed rate
Average interest rate
Variable rate (1)
Average interest rate
Interest rate swaps
Variable to fixed
Average pay rate
Interest rate cap
Variable to fixed
Average pay rate
2018
2019
2020
2021
2022
Total
Thereafter
Total
Fair
Value
98,942
$ 570,114
$ 158,281
$ 192,903
$ 368,401
$ 1,786,111
$ 3,174,752
$ 3,289,428
4.06%
55,000
$
1.76%
4.43%
—
—%
4.40%
5.19%
$ 560,000
$ 150,000
$
2.43%
2.31%
$ 550,000
$
2.00%
$
25,000
$
4.50%
$
—
—%
$
—
—%
$
—
—%
$
—
—%
$
—
—%
$
—
—%
3.63%
—
—%
$
$
—
—%
$
—
—%
3.88%
—
—%
4.06%
2.36%
$ 765,000
$ 1,346,309
—
—%
$ 550,000
$
2.00%
$
—
—%
25,000
$
4.50%
2,235
—
(1)
Excluding the effect of interest rate swap and cap agreements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and related financial information required to be filed are set forth on pages F-1
to F-55 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Mid-America Apartment Communities, Inc.
(a) Evaluation of Disclosure Controls and Procedures
MAA 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 December 31, 2017. Based on that
evaluation, MAA’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures
were effective as of December 31, 2017 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
41
is accumulated and communicated to MAA's management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
(b) Management’s Report on Internal Control over Financial Reporting
MAA's management is responsible for establishing and maintaining adequate internal control over financial reporting
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, conducted an evaluation of the effectiveness of MAA's internal control over
financial reporting as of December 31, 2017 based on the framework specified in Internal Control - Integrated Framework
(2013) published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation,
MAA's management concluded that MAA's internal control over financial reporting was effective as of December 31, 2017.
Ernst & Young LLP, the independent registered public accounting firm that has audited the consolidated financial
statements included in this Annual Report on Form 10-K, has issued an attestation report on MAA’s internal control over
financial reporting, which is included herein.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial
statement preparation and presentation.
(c) Changes in Internal Control over Financial Reporting
There was no change to MAA’s internal control over financial reporting identified in connection with the evaluation
by MAA’s management referred to above that occurred during the quarter ended December 31, 2017 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 December 31, 2017. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer of MAA, as the general partner of the Operating
Partnership, concluded that the disclosure controls and procedures were effective as of December 31, 2017 to ensure that
information required to be disclosed by the Operating Partnership in its in Exchange Act filings is accurately recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and
communicated to the Operating Partnership's management, including the Chief Executive Officer and Chief Financial Officer
of MAA, as the general partner of the Operating Partnership, as appropriate to allow timely decisions regarding required
disclosure.
(b) Management’s Report on Internal Control over Financial Reporting
Management of the Operating Partnership is responsible for establishing and maintaining adequate internal control
over financial reporting within the meaning of Exchange Act Rule 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, conducted an evaluation of the effectiveness of the Operating Partnership’s internal control over
financial reporting as of December 31, 2017 based on the framework specified in Internal Control - Integrated Framework
(2013), published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation,
management of the Operating Partnership has concluded that the Operating Partnership's internal control over financial
reporting was effective as of December 31, 2017. An attestation report of the independent registered public accounting firm of
the Operating Partnership will not be required as long as the Operating Partnership is a non-accelerated filer.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial
statement preparation and presentation.
42
(c) Changes in Internal Control over Financial Reporting
There was no change to the Operating Partnership’s internal control over financial reporting identified in connection
with the evaluation by the Operating Partnership’s management referred to above that occurred during the quarter ended
December 31, 2017 that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information contained in MAA's 2018 Proxy Statement in the sections entitled "Information About The Board of
Directors and Its Committees", "Proposal 1 - Election of Directors", "Executive Officers" and "Section 16(a) Beneficial
Ownership Reporting Compliance," is incorporated herein by reference in response to this Item 10.
Our Board of Directors has adopted a Code of Conduct applicable to all officers, directors and employees, which can
be found on our website at http://www.maac.com, on the For Investors page in the "Governance Documents" section under
"Corporate Overview". We will provide a copy of this document to any person, without charge, upon request, by writing to the
Legal Department at MAA, 6584 Poplar Avenue, Memphis, TN 38138. We intend to satisfy the disclosure requirement under
Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Conduct by posting such
information on our website at the address and the locations specified above. Reference to our website does not constitute
incorporation by reference of the information contained on the site and should not be considered part of this Annual Report on
Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained in MAA's 2018 Proxy Statement in the sections entitled "Executive Compensation",
"Compensation Committee Interlocks and Insider Participation" and "Compensation Discussion and Analysis" is incorporated
herein by reference in response to this Item 11.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
The information contained in MAA's 2018 Proxy Statement in the sections entitled "Security Ownership of
Management" and "Security Ownership of Certain Beneficial Owners," is incorporated herein by reference in response to this
Item 12.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information contained in MAA's 2018 Proxy Statement in the sections entitled "Certain Relationships and Related
Transactions" and "Information About The Board of Directors and Its Committees" is incorporated herein by reference in
response to this Item 13.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information contained in MAA's 2018 Proxy Statement in the section entitled "Proposal 4 - Ratification of
Appointment of Independent Registered Public Accounting Firm," is incorporated herein by reference in response to this Item
14.
43
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Annual Report on Form 10-K:
1.
Reports of Independent Registered Public Accounting Firm
Financial Statements of Mid-America Apartment Communities, Inc.:
Consolidated Balance Sheets as of December 31, 2017, and 2016
Consolidated Statements of Operations for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016, and
2015
Consolidated Statements of Equity for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015
Financial Statements of Mid-America Apartments, L.P.:
Consolidated Balance Sheets as of December 31, 2017, and 2016
Consolidated Statements of Operations for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016, and
2015
Consolidated Statements of Changes in Capital for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015
Notes to Consolidated Financial Statements for the years ended December 31, 2017, 2016, and 2015
Financial Statement Schedule required to be filed by Item 8 and Paragraph (b) of this Item 15:
Schedule III - Real Estate Investments and Accumulated Depreciation as of December 31, 2017
The exhibits required by Item 601 of Regulation S-K, except as otherwise noted, have been filed with
previous reports by the registrant and are herein incorporated by reference.
2.
3.
1
4
5
6
7
8
9
10
11
12
13
14
43
Exhibit
Number
2.1
3.1
3.2
3.3
3.4
3.5
4.1
4.2
Exhibit Description
Agreement and Plan of Merger by and among Mid-America Apartment Communities, Inc., Mid-America
Apartments, L.P., Post Properties, Inc., Post GP Holdings, Inc., and Post Apartment Homes, L.P., dated as of
August 15, 2016 (Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on August 15, 2016
and incorporated herein by reference).
Composite Charter of Mid-America Apartment Communities, Inc. (Filed as Exhibit 3.1 to the Registrant’s Annual
Report on Form 10-K filed on February 24, 2016 and incorporated herein by reference).
Third Amended and Restated Bylaws of Mid-America Apartment Communities, Inc., dated as of December 3,
2013 (Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 4, 2013 and
incorporated herein by reference).
Composite Certificate of Limited Partnership of Mid-America Apartments, L.P. (Filed as Exhibit 3.14 to the
Registrant’s Annual Report on Form 10-K filed on February 26, 2016 and incorporated herein by reference).
Third Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P. dated as of
October 1, 2013 (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 2, 2013
and incorporated herein by reference).
First Amendment to the Third Amended and Restated Agreement of Limited Partnership of Mid-America
Apartments, L.P. (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 10,
2016 and incorporated herein by reference).
Form of Common Share Certificate.
Form of 8.50% Series I Cumulative Redeemable Preferred Stock Certificate (Filed as Exhibit 4.2 to Pre-Effective
Amendment No. 1 to the Registrant’s Registration Statement on Form S-4 filed on September 28, 2016 and
incorporated herein by reference).
44
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
10.1
10.2
10.3
10.4
10.5
10.6†
10.7†
10.8†
10.9†
10.10†
10.11†
Indenture, dated as of October 16, 2013, by and among Mid-America Apartments, L.P., Mid-America Apartment
Communities, Inc. and U.S. Bank National Association (Filed as Exhibit 4.1 to the Registrant’s Current Report on
Form 8-K filed on October 16, 2013 and incorporated herein by reference).
First Supplemental Indenture, dated as of October 16, 2013, by and among Mid-America Apartments, L.P., Mid-
America Apartment Communities, Inc. and U.S. Bank National Association, including the form of 4.300% Senior
Notes due 2023 (Filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on October 16, 2013
and incorporated herein by reference).
Second Supplemental Indenture, dated as of June 13, 2014, by and among Mid-America Apartments, L.P., Mid-
America Apartment Communities, Inc. and U.S. Bank National Association, including the form of 3.7500%
Senior Notes due 2024 (Filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on June 13, 2014
and incorporated herein by reference).
Third Supplemental Indenture, dated as of November 9, 2015, by and among Mid-America Apartments, L.P., Mid-
America Apartment Communities, Inc. and U.S. Bank National Association, including the form of 4.000% Senior
Notes due 2025 (Filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on November 9, 2015
and incorporated herein by reference).
Indenture between Post Properties, Inc. and SunTrust Bank, as Trustee (Filed as Exhibit 4.1 to Post Properties’
Registration Statement on Form S-3 (File No. 333-42884), and incorporated herein by reference).
First Supplemental Indenture to the Indenture between the Post Apartment Homes, L.P., and SunTrust Bank, as
Trustee (Filed as Exhibit 4.2 to Post Properties’ Registration Statement on Form S-3ASR (File No. 333-139581)
and incorporated herein by reference).
Form of Post Apartment Homes, L.P. 3.375% Note due 2022 (Filed as Exhibit 4.1 to Post Properties’ Current
Report on Form 8-K filed November 7, 2012 and incorporated herein by reference).
Indenture, dated as of May 9, 2017, by and between Mid-America Apartments, L.P. and U.S. Bank National
Association (Filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on May 9, 2017 and
incorporated herein by reference).
First Supplemental Indenture, dated as of May 9, 2017, by and by and between Mid-America Apartments, L.P. and
U.S. Bank National Association (Filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on May
9, 2017 and incorporated herein by reference).
Note Purchase Agreement, dated as of July 29, 2011, by and among Mid-America Apartments, L.P., Mid-America
Apartment Communities, Inc. and the purchasers of the notes party thereto (Filed as Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed on August 1, 2011 and incorporated herein by reference).
Note Purchase Agreement, dated as of August 31, 2012, by and among Mid-America Apartments, L.P., Mid-
America Apartment Communities, Inc. and the purchasers of the notes party thereto (Filed as Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed on September 4, 2012 and incorporated herein by reference).
Distribution Agreement, dated as of December 9, 2015, by and among Mid-America Apartment Communities,
Inc., Mid-America Apartments, L.P. and J.P. Morgan Securities LLC (Filed as Exhibit 1.1 to the Registrant’s
Current Report on Form 8-K filed on December 9, 2015 and incorporated herein by reference).
Distribution Agreement, dated as of December 9, 2015, by and among Mid-America Apartment Communities,
Inc., Mid-America Apartments, L.P. and BMO Capital Markets Corp. (Filed as Exhibit 1.2 to the Registrant’s
Current Report on Form 8-K filed on December 9, 2015 and incorporated herein by reference).
Distribution Agreement, dated as of December 9, 2015, by and among Mid-America Apartment Communities,
Inc., Mid-America Apartments, L.P. and KeyBanc Capital Markets Inc. (Filed as Exhibit 1.3 to the Registrant’s
Current Report on Form 8-K filed on December 9, 2015 and incorporated herein by reference).
Employment Agreement, dated as of March 24, 2015, by and between the Registrant and H. Eric Bolton, Jr. (Filed
as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 24, 2015 and incorporated herein
by reference).
Non-Qualified Deferred Compensation Plan for Outside Company Directors as Amended Effective November 20,
2010 (Filed as Exhibit 10.7 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2016 and
incorporated herein by reference).
Amended and Restated Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan (Filed as Appendix
B to the Registrant’s Definitive Proxy Statement filed on April 16, 2014 and incorporated herein by reference).
Form of Non-Qualified Stock Option Agreement for Company Employees under the Mid-America Apartment
Communities, Inc. 2013 Stock Incentive Plan (Filed as Exhibit 10.20 to the Registrant’s Quarterly Report on Form
10-Q filed on November 7, 2013 and incorporated herein by reference).
Form of Restricted Stock Award Agreement under the Mid-America Apartment Communities, Inc. 2013 Stock
Incentive Plan (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 1, 2015 and
incorporated herein by reference).
Form of Incentive Stock Option Agreement for Company Employees under the Mid-America Apartment
Communities, Inc. 2013 Stock Incentive Plan (Filed as Exhibit 10.22 to the Registrant’s Quarterly Report on Form
10-Q filed on November 7, 2017 and incorporated herein by reference).
45
10.13†
10.14
10.15
10.17†
11.1
11.2
12.1
12.2
21.1
23.1
23.2
31.1
31.2
31.3
31.4
32.1*
32.2*
32.3*
32.4*
101
10.12† MAA Non-Qualified Deferred Executive Compensation Retirement Plan Amended and Restated Effective January
1, 2016 (Filed as Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2016 and
incorporated herein by reference).
Form of Change in Control and Termination Agreement (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report
on Form 10-Q filed on May 2, 2014 and incorporated herein by reference).
Second Amended and Restated Credit Agreement, dated as of October 15, 2015, by and among Mid-America
Apartments, L.P., KeyBank National Association and the other lenders party thereto (Filed as Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed on October 16, 2015 and incorporated by reference herein).
First Amendment to Second Amended and Restated Credit Agreement, dated as of December 1, 2016, by and
among Mid-America Apartments, L.P., KeyBank National Association and the other lenders party thereto (Filed as
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 1, 2016 and incorporated by
reference herein).
10.16† Mid-America Apartment Communities, Inc. Indemnification Agreement (Filed as Exhibit 10.2 to the Registrant’s
Current Report on Form 8-K filed on December 1, 2016 and incorporated by reference herein).
Amended and Restated Post Properties Inc. 2003 Incentive Stock Plan (Filed as Exhibit 99.1 to the Registrant’s
Registration Statement on Form S-8 filed on December 9, 2016 and incorporated herein by reference).
Statement re Computation of Per Share Earnings for MAA
Statement re Computation of Per Unit Earnings for MAALP
Statement re Computation of Ratio of Earnings to Fixed Charges for MAA
Statement re Computation of Ratio of Earnings to Fixed Charges for MAALP
List of Subsidiaries
Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP for MAA
Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP for MAALP
MAA Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
MAA Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
MAALP Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
MAALP Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
MAA Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
MAA Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
MAALP Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
MAALP Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
The following financial information from Mid-America Apartment Communities, Inc.’s and Mid-America
Apartments, L.P.'s Annual Report on Form 10-K for the period ended December 31, 2017, filed with the SEC on
February 22, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance
Sheets as of December 31, 2017 and December 31, 2016; (ii) the Consolidated Statements of Operations for the
years ended December 31, 2017, 2016 and 2015; (iii) the Consolidated Statements of Comprehensive Income for
the years ended December 31, 2017, 2016 and 2015; (iv) the Consolidated Statements of Equity/Changes in
Capital for the years ended December 31, 2017, 2016 and 2015; (v) the Consolidated Statements of Cash Flows
for the years ended December 31, 2017, 2016 and 2015; (vi) Notes to Consolidated Financial Statements; and (vii)
Schedule III - Real Estate Investments and Accumulated Depreciation as of December 31, 2017.
† Management contract or compensatory plan or arrangement.
* This certification is being furnished solely to accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section
1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated
by reference into any filing of MAA or MAALP, whether made before or after the date hereof, regardless of any general
incorporation language in such filings.
(b) Exhibits: See Item 15(a)(3) above.
(c) Financial Statement Schedule: See Item 15(a)(2) above.
ITEM 16. FORM 10-K SUMMARY
None.
46
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 22, 2018
MID-AMERICA APARTMENT COMMUNITIES, INC.
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
47
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Albert M. Campbell, III
Albert M. Campbell, III
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ A. Clay Holder
A. Clay Holder
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
/s/ Russell R. French
Russell R. French
Director
/s/ Alan B. Graf, Jr.
Alan B. Graf, Jr.
Director
/s/ Toni Jennings
Toni Jennings
Director
/s/ James K. Lowder
James K. Lowder
Director
/s/ Thomas H. Lowder
Thomas H. Lowder
Director
/s/ Monica McGurk
Monica McGurk
Director
/s/ Claude B. Nielsen
Claude B. Nielsen
Director
/s/ Philip W. Norwood
Philip W. Norwood
Director
/s/ W. Reid Sanders
W. Reid Sanders
Director
/s/ Gary Shorb
Gary Shorb
Director
/s/ David P. Stockert
David P. Stockert
Director
48
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 22, 2018
MID-AMERICA APARTMENTS, L.P.
a Tennessee Limited Partnership
By: Mid-America Apartment Communities, Inc., its general partner
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
49
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant as an officer or director of Mid-America Apartment Communities, Inc., in its capacity as the
general partner of the registrant and on the dates indicated.
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
Date: February 22, 2018
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Albert M. Campbell, III
Albert M. Campbell, III
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ A. Clay Holder
A. Clay Holder
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
/s/ Russell R. French
Russell R. French
Director
/s/ Alan B. Graf, Jr.
Alan B. Graf, Jr.
Director
/s/ Toni Jennings
Toni Jennings
Director
/s/ James K. Lowder
James K. Lowder
Director
/s/ Thomas H. Lowder
Thomas H. Lowder
Director
/s/ Monica McGurk
Monica McGurk
Director
/s/ Claude B. Nielsen
Claude B. Nielsen
Director
/s/ Philip W. Norwood
Philip W. Norwood
Director
/s/ W. Reid Sanders
W. Reid Sanders
Director
/s/ Gary Shorb
Gary Shorb
Director
/s/ David P. Stockert
David P. Stockert
Director
50
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Mid-America Apartment Communities, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Mid-America Apartment Communities, Inc. (the Company) as of
December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, equity, and cash flows for
each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule listed in the
Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, 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)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated February 22, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2005.
Memphis, Tennessee
February 22, 2018
F-1
Report of Independent Registered Public Accounting Firm
To the Partners of Mid-America Apartments, L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Mid-America Apartments, L.P. (the Partnership) as of
December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, changes in capital, and cash
flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule
listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Partnership at December 31,
2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2017, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the
Partnership's financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we
express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Partnership's auditor since 2012.
Memphis, Tennessee
February 22, 2018
F-2
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Mid-America Apartment Communities, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2017,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Mid-America Apartment Communities, Inc. (the
Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on
the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements
of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2017, and
the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 22, 2018
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Memphis, Tennessee
February 22, 2018
F-3
Mid-America Apartment Communities, Inc.
Consolidated Balance Sheets
December 31, 2017 and 2016
(Dollars in thousands, except share and per share data)
December 31, 2017 December 31, 2016
Assets
Real estate assets:
Land
Buildings and improvements and other
Development and capital improvements in progress
Less: Accumulated depreciation
Undeveloped land
Investment in real estate joint venture
Real estate assets, net
Cash and cash equivalents
Restricted cash
Other assets
Assets held for sale
Total assets
Liabilities and equity
Liabilities:
Unsecured notes payable
Secured notes payable
Accrued expenses and other liabilities
Total liabilities
Redeemable common stock
Shareholders' equity:
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized; 8.50% Series I Cumulative Redeemable
Shares, liquidation preference $50 per share, 867,846 shares issued and outstanding at December 31, 2017 and December
31, 2016, respectively.
Common stock, $0.01 par value per share, 145,000,000 shares authorized; 113,643,166 and 113,518,212 shares issued
and outstanding at December 31, 2017 and December 31, 2016, respectively (1)
Additional paid-in capital
Accumulated distributions in excess of net income
Accumulated other comprehensive income
Total MAA shareholders' equity
Noncontrolling interest - Operating Partnership units
Total Company's shareholders' equity
Noncontrolling interest - consolidated real estate entity
Total equity
Total liabilities and equity
$
$
$
$
1,836,417 $
11,281,504
116,833
13,234,754
(2,075,071 )
11,159,683
57,285
44,956
11,261,924
10,750
78,117
135,807
5,321
11,491,919 $
1,816,008
10,853,474
231,224
12,900,706
(1,674,801)
11,225,905
71,464
44,493
11,341,862
33,536
88,264
140,829
—
11,604,491
3,525,765 $
976,292
405,560
4,907,617
3,180,624
1,319,088
452,605
4,952,317
10,408
10,073
9
9
1,134
7,121,112
(784,500 )
2,157
6,339,912
231,676
6,571,588
2,306
6,573,894
11,491,919 $
1,133
7,109,012
(707,479)
1,144
6,403,819
235,976
6,639,795
2,306
6,642,101
11,604,491
(1)
Number of shares issued and outstanding represent total shares of common stock regardless of classification on the Consolidated Balance Sheets. The
number of shares classified as redeemable common stock on the Consolidated Balance Sheets for December 31, 2017 and December 31, 2016 are
103,504 and 103,578, respectively.
See accompanying notes to consolidated financial statements.
F-4
Mid-America Apartment Communities, Inc.
Consolidated Statements of Operations
Years ended December 31, 2017, 2016 and 2015
(Dollars in thousands, except per share data)
Revenues:
Rental and other property revenues
Expenses:
Operating expense, excluding real estate taxes and insurance
Real estate taxes and insurance
Depreciation and amortization
Total property operating expenses
Property management expenses
General and administrative expenses
Merger and integration related expenses
Income before non-operating items
Interest expense
Gain on sale of depreciable real estate assets
Gain on sale of non-depreciable real estate assets
Other non-operating income (expense)
Income before income tax expense
Income tax expense
Income from continuing operations before joint venture activity
Gain (loss) from real estate joint ventures
Net income
Net income attributable to noncontrolling interests
Net income available for shareholders
Dividends to MAA Series I preferred shareholders
Net income available for MAA common shareholders
Earnings per common share - basic:
Net income available for common shareholders
Earnings per common share - diluted:
Net income available for common shareholders
Dividends declared per common share
2017
2016
2015
$
1,528,987 $
1,125,348 $
1,042,779
364,190
212,541
493,708
1,070,439
43,588
40,194
19,990
354,776
(154,751)
127,386
21
14,353
341,785
(2,619)
339,166
1,370
340,536
12,157
328,379
3,688
324,691 $
280,572
142,784
322,958
746,314
34,093
29,040
40,823
275,078
(129,947)
80,397
2,171
(1,839)
225,860
(1,699)
224,161
241
224,402
12,180
212,222
307
211,915 $
2.86 $
2.69 $
2.86 $
2.69 $
271,027
129,618
294,520
695,165
30,990
25,716
—
290,908
(122,344)
189,958
172
(6,274)
352,420
(1,673)
350,747
(2)
350,745
18,458
332,287
—
332,287
4.41
4.41
3.5325 $
3.3300 $
3.1300
$
$
$
$
See accompanying notes to consolidated financial statements.
F-5
Mid-America Apartment Communities, Inc.
Consolidated Statements of Comprehensive Income
Years ended December 31, 2017, 2016 and 2015
(Dollars in thousands)
Net income
Other comprehensive income:
Unrealized gain (loss) from the effective portion of derivative instruments
Reclassification adjustment for losses included in net income for the
effective portion of derivative instruments
Total comprehensive income
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to MAA
2017
340,536 $
2016
224,402 $
2015
350,745
$
319
(1,500)
(8,306)
730
341,585
(12,193 )
329,392 $
4,364
227,266
(12,311)
214,955 $
7,064
349,503
(18,393)
331,110
$
See accompanying notes to consolidated financial statements.
F-6
EQUITY BALANCE DECEMBER 31, 2014
Net income attributable to controlling interests
Other comprehensive income - derivative instruments
Issuance and registration of common shares
Shares repurchased and retired
Exercise of stock options
Shares issued in exchange for common units
Redeemable stock fair market value adjustment
Adjustment for noncontrolling interests in Operating Partnership
Amortization of unearned compensation
Dividends on common stock
Dividends on noncontrolling interests units
EQUITY BALANCE DECEMBER 31, 2015
Net income attributable to controlling interests
Other comprehensive income - derivative instruments
Issuance and registration of common shares
Issuance and registration of preferred shares
Shares repurchased and retired
Shares issued in exchange for common units
Shares issued in exchange for redeemable stock
Redeemable stock fair market value adjustment
Adjustment for noncontrolling interests in Operating Partnership
Amortization of unearned compensation
Noncontrolling interests distribution
Dividends on preferred stock
Dividends on common stock
Dividends on noncontrolling interests units
Acquired capital from noncontrolling interest - consolidated real estate entity
EQUITY BALANCE DECEMBER 31, 2016
Net income attributable to controlling interests
Other comprehensive income - derivative instruments
Issuance and registration of common shares
Issuance and registration of preferred shares
Shares repurchased and retired
Exercise of stock options
Shares issued in exchange for common units
Shares issued in exchange for redeemable stock
Redeemable stock fair market value adjustment
Adjustment for noncontrolling interests in Operating Partnership
Amortization of unearned compensation
Dividends on preferred stock
Dividends on common stock
Dividends on noncontrolling interests units
EQUITY BALANCE DECEMBER 31, 2017
Preferred Stock
Common Stock
Shares
Amount
Shares
Amount
Accumulated
Distributions
in Excess of
Net Income
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interests -
Operating
Partnership
Noncontrolling
Interest -
Consolidated
Real Estate
Entity
Total Equity
Mid-America Apartment Communities, Inc.
Consolidated Statements of Equity
Years ended December 31, 2017, 2016 and 2015
(Dollars and shares in thousands)
Mid-America Apartment Communities, Inc. Shareholders
—
(235,927)
—
(729,086) $
332,287
—
—
—
—
—
(1,415)
752 $
—
—
1
—
—
—
—
—
—
—
—
753 $
—
—
380
—
—
—
—
—
—
—
—
—
—
—
—
1,133 $
—
—
1
—
—
—
—
—
—
—
—
—
—
—
1,134 $
See accompanying notes to consolidated financial statements.
Additional
Paid-In
Capital
3,619,270 $
—
—
621
(958)
420
1,121
—
(252)
6,852
—
—
3,627,074 $
—
—
3,406,150
64,824
(2,019)
902
122
—
(192)
12,151
—
—
—
—
—
7,109,012 $
—
—
615
2,007
(4,782)
218
1,602
1,482
—
42
10,916
—
—
—
7,121,112 $
75,180 $
—
—
116
(13)
7
28
—
—
—
—
—
75,318 $
—
—
38,097
—
(23)
23
—
—
—
—
—
—
—
—
—
113,415 $
—
—
137
—
(51)
10
29
—
—
—
—
—
—
—
113,540 $
(634,141) $
212,222
—
—
—
—
—
—
(705)
—
—
—
(307)
(284,548)
—
—
(707,479) $
328,379
—
—
—
—
—
—
—
(229)
—
(114)
(3,688)
(401,369)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
9
—
—
—
—
—
—
—
—
—
—
—
9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
9
— $
—
—
—
—
—
—
—
—
—
—
—
— $
—
—
—
868
—
—
—
—
—
—
—
—
—
—
—
868 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
868 $
(784,500) $
F-7
(412) $
—
(1,177)
—
—
—
—
—
—
—
—
—
(1,589) $
—
2,733
—
—
—
—
—
—
—
—
—
—
—
—
—
1,144 $
—
1,013
—
—
—
—
—
—
—
—
—
—
—
—
2,157 $
161,287 $
18,458
(65)
—
—
—
(1,121)
—
252
—
(13,085)
165,726 $
12,180
131
72,759
—
—
(902)
—
—
192
—
(226)
—
—
(13,884)
—
235,976 $
12,157
36
—
—
—
—
(1,602)
—
—
(42)
—
—
—
(14,849)
231,676 $
— $
—
—
—
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,306
2,306 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,306 $
3,051,811 $
350,745
(1,242)
622
(958)
420
—
(1,415)
—
6,852
(235,927)
(13,085)
3,157,823 $
224,402
2,864
3,479,289
64,833
(2,019)
—
122
(705)
—
12,151
(226)
(307)
(284,548)
(13,884)
2,306
6,642,101 $
340,536
1,049
616
2,007
(4,782)
218
—
1,482
(229)
—
10,802
(3,688)
(401,369)
(14,849)
6,573,894 $
Redeemable Stock
5,911
—
—
924
—
—
—
1,415
—
—
—
—
8,250
—
—
1,240
—
—
—
(122)
705
—
—
—
—
—
—
—
10,073
—
—
1,588
—
—
—
—
(1,482)
229
—
—
—
—
—
10,408
Mid-America Apartment Communities, Inc.
Consolidated Statements of Cash Flows
Years ended December 31, 2017, 2016 and 2015
(Dollars in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Gain on sale of depreciable real estate assets
Gain on sale of non-depreciable real estate assets
Stock compensation expense
Amortization of debt premium and debt issuance costs
Net change in operating accounts and other
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of real estate and other assets
Capital improvements, development and other
Distributions from real estate joint ventures
Contributions to affiliates, including joint ventures
Proceeds from disposition of real estate assets
Return (funding) of escrow for future acquisitions
Acquisition of Post Properties, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities:
Net change in credit lines
Proceeds from notes payable
Principal payments on notes payable
Payment of deferred financing costs
Repurchase of common stock
Dividends paid on preferred shares
Proceeds from issuances of common shares
Exercise of stock options
Distributions to noncontrolling interests
Dividends paid on common shares
Net cash (used in) provided by financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental disclosure of cash flow information:
Interest paid
Income taxes paid
Supplemental disclosure of noncash investing and financing activities:
Conversion of OP Units to shares of common stock
Accrued construction in progress
Interest capitalized
Mark-to-market adjustment on derivative instruments
Fair value adjustment on debt assumed from the Post Properties merger
Loan assumption from the Post Properties merger
Purchase price for the Post Properties merger
2017
2016
2015
$
340,536 $
224,402 $
350,745
494,540
(127,386)
(21)
10,570
(9,810)
(49,916)
658,513
(136,065)
(343,890)
—
(1,500)
187,429
10,591
—
(283,435)
(160,000)
597,480
(413,557)
(5,358)
(4,782)
(3,688)
1,557
432
(14,654)
(395,294)
(397,864)
323,283
(80,397)
(2,171)
11,486
(9,820)
17,256
484,039
(339,186)
(183,977)
1,999
—
296,700
(58,259)
(427,764)
(710,487)
335,000
300,000
(146,026)
(2,395)
(2,019)
(924)
291
—
(13,850)
(247,652)
222,425
(22,786)
33,536
10,750 $
(4,023)
37,559
33,536 $
294,897
(189,958 )
(172 )
6,147
(15,515 )
17,577
463,721
(328,193 )
(166,021 )
6
(32 )
358,017
8
—
(136,215 )
(180,900 )
395,960
(279,077 )
(7,690 )
(958 )
—
622
420
(12,898 )
(232,079 )
(316,600 )
10,906
26,653
37,559
166,757 $
2,366
144,843 $
1,582
140,811
2,103
1,602 $
7,852
7,238
17,806
—
—
—
902 $
31,491
2,073
5,670
8,864
586,744
4,006,586
1,121
5,873
1,655
2,963
—
—
—
$
$
$
See accompanying notes to consolidated financial statements.
F-8
Mid-America Apartments, L.P.
Consolidated Balance Sheets
December 31, 2017 and 2016
(Dollars in thousands, except unit data)
December 31, 2017 December 31, 2016
Assets
Real estate assets:
Land
Buildings and improvements and other
Development and capital improvements in progress
Less: Accumulated depreciation
Undeveloped land
Investment in real estate joint venture
Real estate assets, net
Cash and cash equivalents
Restricted cash
Other assets
Assets held for sale
Total assets
Liabilities and capital
Liabilities:
Unsecured notes payable
Secured notes payable
Accrued expenses and other liabilities
Due to general partner
Total liabilities
Redeemable common units
Operating Partnership capital:
Preferred units, 867,846 preferred units outstanding at December 31, 2017 and at December
31, 2016
Common Units:
General partner, 113,643,166 and 113,518,212 OP Units outstanding at December 31, 2017
and December 31, 2016, respectively (1)
Limited partners, 4,191,586 and 4,220,403 OP Units outstanding at December 31, 2017 and
December 31, 2016, respectively (1)
Accumulated other comprehensive income
Total operating partners' capital
Noncontrolling interest - consolidated real estate entity
Total capital
Total liabilities and capital
$
$
$
$
1,836,417 $
11,281,504
116,833
13,234,754
(2,075,071)
11,159,683
57,285
44,956
11,261,924
10,750
78,117
135,807
5,321
11,491,919 $
1,816,008
10,853,474
231,224
12,900,706
(1,674,801)
11,225,905
71,464
44,493
11,341,862
33,536
88,264
140,829
—
11,604,491
3,525,765 $
976,292
405,560
19
4,907,636
3,180,624
1,319,088
452,605
19
4,952,336
10,408
10,073
66,840
64,833
6,270,758
6,337,721
231,676
2,295
6,571,569
2,306
6,573,875
11,491,919 $
235,976
1,246
6,639,776
2,306
6,642,082
11,604,491
(1)
Number of units outstanding represent total OP Units regardless of classification on the Consolidated Balance Sheets. The number of units classified
as redeemable common units on the Consolidated Balance Sheets at December 31, 2017 and December 31, 2016 are 103,504 and 103,578,
respectively.
See accompanying notes to consolidated financial statements.
F-9
Mid-America Apartments, L.P.
Consolidated Statements of Operations
Years ended December 31, 2017, 2016, and 2015
(Dollars in thousands, except per unit data)
Revenues:
Rental and other property revenues
Expenses:
Operating expense, excluding real estate taxes and insurance
Real estate taxes and insurance
Depreciation and amortization
Total property operating expenses
Property management expenses
General and administrative expenses
Merger and integration related expenses
Income before non-operating items
Interest expense
Gain on sale of depreciable real estate assets
Gain on sale of non-depreciable real estate assets
Other non-operating income (expense)
Income before income tax expense
Income tax expense
Income from continuing operations before joint venture activity
Gain (loss) from real estate joint ventures
Net income
Dividends to preferred unitholders
Net income available for MAALP common unitholders
Earnings per common unit - basic:
Net income available for common unitholders
Earnings per common unit - diluted:
Net income available for common unitholders
Distributions declared per common unit
2017
2016
2015
$
1,528,987 $
1,125,348 $
1,042,779
364,190
212,541
493,708
1,070,439
43,588
40,194
19,990
354,776
(154,751)
127,386
21
14,353
341,785
(2,619)
339,166
1,370
340,536
3,688
336,848 $
280,572
142,784
322,958
746,314
34,093
29,040
40,823
275,078
(129,947)
80,397
2,171
(1,839)
225,860
(1,699)
224,161
241
224,402
307
224,095 $
271,027
129,618
294,520
695,165
30,990
25,716
—
290,908
(122,344)
189,958
172
(6,274)
352,420
(1,673)
350,747
(2)
350,745
—
350,745
2.86 $
2.70 $
4.41
2.86 $
2.70 $
3.5325 $
3.3300 $
4.41
3.1300
$
$
$
$
See accompanying notes to consolidated financial statements.
F-10
Mid-America Apartments, L.P.
Consolidated Statements of Comprehensive Income
Years ended December 31, 2017, 2016, and 2015
(Dollars in thousands)
Net income
Other comprehensive income:
Unrealized gain (loss) from the effective portion of derivative instruments
Reclassification adjustment for losses included in net income for the
effective portion of derivative instruments
Comprehensive income attributable to MAALP
2017
340,536 $
2016
224,402 $
2015
350,745
319
(1,500)
(8,306)
730
341,585 $
4,364
227,266 $
7,064
349,503
$
$
See accompanying notes to consolidated financial statements.
F-11
Mid-America Apartments, L.P.
Consolidated Statements of Changes in Capital
Years ended December 31, 2017, 2016 and 2015
(Dollars in thousands)
Mid-America Apartments, L.P. Unitholders
CAPITAL BALANCE DECEMBER 31, 2014
Net income attributable to controlling interest
Other comprehensive income - derivative instruments
Issuance of units
Units repurchased and retired
Exercise of unit options
General partner units issued in exchange for limited partner units
Redeemable units fair market value adjustment
Adjustment for limited partners' capital at redemption value
Amortization of unearned compensation
Distributions to common unitholders
CAPITAL BALANCE DECEMBER 31, 2015
Net income attributable to controlling interest
Other comprehensive income - derivative instruments
Issuance of units
Units repurchased and retired
General partner units issued in exchange for limited partner units
Units issued in exchange for redeemable units
Redeemable units fair market value adjustment
Adjustment for limited partners' capital at redemption value
Amortization of unearned compensation
Noncontrolling interest distribution
Distributions to preferred unitholders
Distributions to common unitholders
Acquired capital from noncontrolling interest - consolidated real estate entity
CAPITAL BALANCE DECEMBER 31, 2016
Net income attributable to controlling interest
Other comprehensive income - derivative instruments
Issuance of units
Units repurchased and retired
Exercise of unit options
General partner units issued in exchange for limited partner units
Units issued in exchange for redeemable units
Redeemable units fair market value adjustment
Adjustment for limited partners' capital at redemption value
Amortization of unearned compensation
Distributions to preferred unitholders
Distributions to common unitholders
CAPITAL BALANCE DECEMBER 31, 2017
$
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interest -
Consolidated
Real Estate
Entity
Total
Partnership
Capital
Preferred
Units
Limited
Partner
$
$
$
General
Partner
161,310 $ 2,890,858 $
332,287
18,458
—
—
622
—
—
(958)
420
—
1,121
(1,121)
—
(1,415)
164
(164)
6,852
—
(235,927)
(13,085)
165,726 $ 2,993,696 $
211,915
12,180
—
—
3,406,530
72,759
—
(2,019)
902
(902)
122
—
—
(705)
323
(323)
12,151
—
—
(226)
—
—
(284,548)
(13,884)
—
—
235,976 $ 6,337,721 $
324,691
12,157
—
—
616
—
—
(4,782)
218
—
1,602
(1,602)
1,482
—
—
(229)
6
(6)
10,802
—
—
—
(401,369)
(14,849)
231,676 $ 6,270,758 $
— $
—
—
—
—
—
—
—
—
—
—
— $
307
—
64,833
—
—
—
—
—
—
—
(307)
—
—
64,833 $
3,688
—
2,007
—
—
—
—
—
—
—
(3,688)
—
66,840 $
(376 ) $
—
(1,242)
—
—
—
—
—
—
—
—
(1,618 ) $
—
2,864
—
—
—
—
—
—
—
—
—
—
—
1,246 $
—
1,049
—
—
—
—
—
—
—
—
—
—
2,295 $
— $
—
—
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
—
—
—
—
2,306
2,306 $
—
—
—
—
—
—
—
—
—
—
—
—
2,306 $
3,051,792 $
350,745
(1,242 )
622
(958 )
420
—
(1,415 )
—
6,852
(249,012 )
3,157,804 $
224,402
2,864
3,544,122
(2,019 )
—
122
(705 )
—
12,151
(226 )
(307 )
(298,432 )
2,306
6,642,082 $
340,536
1,049
2,623
(4,782 )
218
—
1,482
(229 )
—
10,802
(3,688 )
(416,218 )
6,573,875 $
Redeemable
Units
5,911
—
—
924
—
—
—
1,415
—
—
—
8,250
—
—
1,240
—
—
(122)
705
—
—
—
—
—
—
10,073
—
—
1,588
—
—
—
(1,482)
229
—
—
—
—
10,408
See accompanying notes to consolidated financial statements.
F-12
Mid-America Apartments, L.P.
Consolidated Statements of Cash Flows
Years ended December 31, 2017, 2016, and 2015
(Dollars in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Gain on sale of depreciable real estate assets
Gain on sale of non-depreciable real estate assets
Stock compensation expense
Amortization of debt premium and debt issuance costs
Net change in operating accounts and other
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of real estate and other assets
Capital improvements, development and other
Distributions from real estate joint ventures
Contributions to affiliates, including joint ventures
Proceeds from disposition of real estate assets
Return (funding) of escrow for future acquisitions
Acquisition of Post Properties, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities:
Net change in credit lines
Proceeds from notes payable
Principal payments on notes payable
Payment of deferred financing costs
Repurchase of common units
Distributions paid on preferred units
Proceeds from issuances of common units
Exercise of unit options
Distributions paid on common units
Net cash (used in) provided by financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental disclosure of cash flow information:
Interest paid
Income taxes paid
Supplemental disclosure of noncash investing and financing activities:
Accrued construction in progress
Interest capitalized
Mark-to-market adjustment on derivative instruments
Fair value adjustment on debt assumed from the Post Properties merger
Loan assumption from the Post Properties merger
Purchase price for the Post Properties merger
2017
2016
2015
$
340,536 $
224,402 $
350,745
494,540
(127,386)
(21)
10,570
(9,810)
(49,916)
658,513
(136,065)
(343,890)
—
(1,500)
187,429
10,591
—
(283,435)
(160,000)
597,480
(413,557)
(5,358)
(4,782)
(3,688)
1,557
432
(409,948)
(397,864)
323,283
(80,397)
(2,171)
11,486
(9,820)
17,256
484,039
(339,186)
(183,977)
1,999
—
296,700
(58,259)
(427,764)
(710,487)
335,000
300,000
(146,026)
(2,395)
(2,019)
(924)
291
—
(261,502)
222,425
(22,786)
33,536
10,750 $
(4,023)
37,559
33,536 $
294,897
(189,958)
(172)
6,147
(15,515)
17,577
463,721
(328,193)
(166,021)
6
(32)
358,017
8
—
(136,215)
(180,900)
395,960
(279,077)
(7,690)
(958)
—
622
420
(244,977)
(316,600)
10,906
26,653
37,559
166,757 $
2,366
144,843 $
1,582
140,811
2,103
7,852 $
7,238
17,806
—
—
—
31,491 $
2,073
5,670
8,864
586,744
4,006,586
5,873
1,655
2,963
—
—
—
$
$
$
See accompanying notes to consolidated financial statements.
F-13
Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.
Notes to Consolidated Financial Statements
Years ended December 31, 2017, 2016, and 2015
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" refers only to Mid-America Apartment Communities, Inc., and not any of its
consolidated subsidiaries. Unless the context otherwise requires, the references to the "Operating Partnership" or "MAALP"
refer to Mid-America Apartments, L.P. together with its consolidated subsidiaries. "Common stock" refers to the common stock
of MAA and, unless the context otherwise requires, "shareholders" means the holders of shares of MAA’s common stock. 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 December 31, 2017, MAA owned 113,643,166 OP Units (or approximately 96.4% of the total number of OP units).
MAA conducts substantially all of its business and holds substantially all of its assets through the Operating Partnership, and by
virtue of its ownership of the OP Units and being the Operating Partnership's sole general partner, MAA has the ability to
control all of the day-to-day operations of the Operating Partnership.
Management believes combining the notes to the consolidated financial statements of MAA and MAALP results in the
following benefits:
•
•
•
enhances a readers' understanding of MAA and the Operating Partnership by enabling the reader to view the business
as a whole in the same manner that management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion
of the disclosure applies to both MAA and the Operating Partnership; and
creates time and cost efficiencies through the preparation of one combined set of notes instead of two separate sets
MAA is a multifamily focused, self-administered and self-managed real estate 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 partner interests in the Operating
Partnership; therefore, MAA does not conduct business itself, other than acting as the sole general partner of the Operating
Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. The Operating
Partnership holds, directly or indirectly, all of 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 OP Units, 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 presentation of MAA's shareholders' equity and the Operating Partnership's capital are the principal areas of difference
between the consolidated financial statements of MAA and those of the Operating Partnership. MAA's shareholders' equity
may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative
distributions, noncontrolling interest, treasury shares, accumulated other comprehensive income 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 interest, accumulated other comprehensive income and
redeemable common units. Redeemable common units represent the number of outstanding OP Units as of the date of the
applicable balance sheet, valued at the greater of the closing market price of MAA's common stock or the aggregate value of
the individual partners' capital balances. Holders of OP Units (other than MAA and its corporate affiliates) may require 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.
F-14
Organization of Mid-America Apartment Communities, Inc.
On December 1, 2016, MAA completed a merger with Post Properties, Inc., or Post Properties. Pursuant to the Agreement and
Plan of Merger, or the Merger Agreement, Post Properties merged with and into MAA, with MAA continuing as the surviving
corporation, or the Parent Merger, and Post Apartment Homes, L.P., or Post LP, merged with and into MAALP, with MAALP
continuing as the surviving entity, or the Partnership Merger. The Company refers to the Parent Merger, together with the
Partnership Merger, as the Merger in this Annual Report on Form 10-K. Under the terms of the Merger Agreement, each share
of Post Properties common stock was converted into the right to receive 0.71 of a newly issued share of MAA common stock,
including the right, if any, to receive cash in lieu of fractional shares of MAA common stock. In addition, each limited partner
interest in Post LP designated as a "Class A Unit" automatically converted into the right to receive 0.71 of a newly issued
partnership unit of MAALP. Also, each share of Post Properties' 8 1/2% Series A Cumulative Redeemable Preferred Stock,
which is referred to as the Post Properties Series A preferred stock, was automatically converted into the right to receive one
newly issued share of MAA's 8.50% Series I Cumulative Redeemable Preferred Stock, $0.01 par value per share, which is
referred to as MAA Series I preferred stock. Each newly issued share of MAA Series I preferred stock has substantially the
same rights, preferences, privileges, and voting powers as those of the Post Properties Series A preferred stock. The net assets
and results of operations of Post Properties are included in the consolidated financial statements from the closing date going
forward. See further discussion regarding the Merger in Note 2.
As of December 31, 2017, the Company owned and operated 301 apartment communities through the Operating Partnership.
As of December 31, 2017, MAA also owned a 35.0% interest in an unconsolidated real estate joint venture and a 31.0% interest
in an unconsolidated limited partnership. As of December 31, 2017, the Company had three development communities under
construction totaling 937 apartment units, of which 240 units were completed during the year. Total expected costs for these
three development projects are $214.0 million, of which $167.7 million had been incurred through December 31, 2017. The
Company expects to complete construction on one project by the first quarter of 2018, one project by the third quarter of 2018
and one project by the fourth quarter of 2018. Twenty-nine of the multifamily properties include retail components with
approximately 620,000 square feet of gross leasable space. The Company also has four wholly-owned commercial properties,
which were acquired through the Merger, with approximately 230,000 square feet of combined gross leasable area.
Basis of Presentation and Principles of Consolidation
The accompanying 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 consolidated financial statements of MAA presented herein include the accounts of
MAA, the Operating Partnership, and all other subsidiaries in which MAA has a controlling financial interest. MAA owns
approximately 92.5% to 100% of all consolidated subsidiaries, including the Operating Partnership. The consolidated financial
statements of MAALP presented herein include the accounts of MAALP and all other subsidiaries in which MAALP has a
controlling financial interest. MAALP owns, directly or indirectly, 92.5% to 100% of all consolidated subsidiaries. In
management's opinion, all adjustments necessary for a fair presentation of the consolidated financial statements have been
included, and all such adjustments were of a normal recurring nature. All significant intercompany accounts and transactions
have been eliminated in consolidation.
The Company invests in entities which 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, since 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 "Investment in
Unconsolidated Affiliates" below).
Changes in Presentation
In an effort to align the Company's presentation of assets, liabilities and equity in the Consolidated Balance Sheets with the
presentation utilized by competitors in its industry and to enhance comparability, the Company combined "Buildings and
F-15
improvements", "Furniture, fixtures and equipment" and "Corporate properties, net" into one line item "Buildings and
improvements and other." The Company also combined "Deferred financing costs, net", "Other assets", and "Goodwill" into a
single line item "Other assets." Finally, the Company aggregated "Accounts payable", "Fair market value of interest rate
swaps", "Security deposits" and "Accrued expenses and other liabilities" into one line item "Accrued expenses and other
liabilities". Prior year amounts have been changed to conform to the Company's current year presentation. These changes in
presentation had no effect on the Company's total assets or total liabilities and equity.
In an effort to align the Company's presentation of revenues and expenses in the Consolidated Statements of Operations with
the presentation utilized by competitors in its industry and to enhance comparability, the Company combined "Rental
revenues", "Other property revenues" and "Management fee income" into one line item "Rental and other property revenues".
The Company also combined "Personnel", "Building repairs and maintenance", "Utilities", "Landscaping" and "Other
operating" into one line item "Operating expense, excluding real estate taxes." Additionally, the Company combined "Merger
related expense" and "Integration expense" into one line item "Merger and integration expense." Further, the Company
aggregated the line items "Acquisition expense", "Interest and other non-property income (expense)", "Loss on debt
extinguishment" and "Net casualty loss (gain)" into a single line item "Other non-operating expense." Prior year amounts have
been changed to conform to the Company's current year presentation. These changes in presentation had no effect on the
Company's net income.
In an effort to align the Company's presentation of cash flows from operating activities and investing activities within the
Consolidated Statements of Cash Flows with the presentation utilized by competitors in its industry and to enhance
comparability, the Company combined "Retail revenue accretion"; "Redeemable stock expense"; "Gain (loss) from investments
in real estate joint venture"; "Gain (loss) on debt extinguishment"; "Derivative interest credit"; "Settlement of forward swaps";
"Net casualty gain (loss)" and "Changes in restricted cash, other assets, accounts payable, accrued expenses and security
deposits" into one line "Net change in operating accounts and other" within the cash flows from operating activities section. In
addition, the Company aggregated "Normal capital improvements", "Construction capital and other", "Renovations to existing
assets" and "Development" into one line "Capital improvements, development and other" within the cash flows from investing
activities section. No presentation changes were made to the cash flows from financing activities section of the Consolidated
Statements of Cash Flows. Prior year amounts have been changed to conform to the Company's current year presentation.
These changes in presentation had no effect on the Company's ending cash and cash equivalents balance and did not impact the
classification of cash flows between operating, investing and financing activities.
Noncontrolling Interests
At December 31, 2017, the Company had two types of noncontrolling interests, (1) noncontrolling interests related to the
common unitholders of its Operating Partnership (see Note 10) and (2) noncontrolling interest related to its consolidated real
estate entity (see "Investment in Consolidated Real Estate Joint Venture" below).
Use of Estimates
Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure
of contingent assets and liabilities, and the reported amounts of revenues and expenses to prepare these financial statements and
notes in conformity with GAAP. Actual results could differ from those estimates.
Revenue Recognition and Real Estate Sales Gain Recognition
The Company primarily leases multifamily residential apartments under operating leases generally with terms of one year or
less, which are recorded as operating leases. Rental lease revenues are recognized in accordance with Accounting Standards
Codification, or ASC, 840, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income
represents gross market rent less adjustments for concessions, vacancy loss and bad debt. Other non-lease revenues are
recognized in accordance with ASC, 605, Revenue Recognition, when such sources of revenue are earned, and the amounts are
fixed and determinable. The Company records gains and losses on real estate sales in accordance with accounting standards
governing the sale of real estate. For sale transactions meeting the requirements for the full accrual method, the Company
removes the assets and liabilities from its Consolidated Balance Sheets and recognizes the gain or loss in the period the
transaction closes.
Rental Costs
Costs associated with rental activities are expensed as incurred and include advertising expenses, which were
approximately$18.8 million, $13.0 million, and $13.5 million for the years ended December 31, 2017, 2016, and 2015,
respectively.
F-16
Real Estate Assets and Depreciation and Amortization
Real estate assets are carried at depreciated cost and consist of land, buildings and improvements and other and development
and capital improvements in progress (see "Development Costs" below). Repairs and maintenance costs are expensed as
incurred, while significant improvements, renovations, and recurring capital replacements are capitalized and depreciated over
their estimated useful lives. Recurring capital replacements typically include scheduled carpet replacement, new roofs, HVAC
units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. In addition to these
costs, the Company also capitalizes salary costs directly identifiable with renovation work. These expenditures extend the
useful life of the property and increase the property’s fair market value. The cost of interior painting, vinyl flooring and blinds
are expensed as incurred.
Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, which range from five to
40 years. The Consolidated Balance Sheets line "Buildings and improvements and other" includes land improvements and
buildings, which have a useful life ranging from eight to 40 years, as well as furniture, fixtures and equipment, which have a
useful life of five years.
Development Costs
Development projects and the related carrying costs, including interest, property taxes, insurance and allocated direct
development salary cost during the construction period, are capitalized and reported in the accompanying Consolidated Balance
Sheets as "Development and capital improvements in progress" during the construction period. Interest is capitalized in
accordance with accounting standards governing the capitalization of interest. Upon completion and certification for occupancy
of individual buildings or floors within a development, amounts representing the completed portion of total estimated
development costs for the project are transferred to "Land" and "Buildings and improvements and other" as real estate held for
investment. Capitalization of interest, property taxes, insurance and allocated direct development salary costs cease upon the
transfer. The assets are depreciated over their estimated useful lives. Total capitalized costs (including capitalized interest,
salaries and real estate taxes) during the years ended December 31, 2017, 2016 and 2015 was approximately $11.0 million, $2.7
million and $2.3 million, respectively. Certain costs associated with the lease-up of development projects, including cost of
model units, furnishings, signs and grand openings, are capitalized and amortized over their respective estimated useful lives.
All other costs relating to renting development projects are expensed as incurred.
Acquisition of Real Estate Assets
The Company adopted ASU 2017-01, Clarifying the Definition of a Business (Topic 805), effective January 1, 2017.
Subsequent to the adoption of ASU 2017-01, most acquisitions of operating properties qualify as asset acquisitions rather than
business combinations. Accordingly, the cost of the real estate acquired is allocated to the acquired tangible assets, consisting of
land, buildings and improvements and other, and identified intangible assets, consisting of the value of in-place leases and other
contracts, on a relative fair value basis.
The purchase price of an acquired property is allocated based on the relative fair value of the individual components as a
proportion of the total assets acquired. The Company allocates the cost of the tangible assets of an acquired property by
valuing the building as if it were vacant, based on management’s determination of the relative fair values of these assets.
Management determines the as-if-vacant fair value of a building using methods similar to those used by independent
appraisers. These methods include using stabilized net operating income, or NOI, and market specific capitalization and
discount rates. In allocating the cost of identified intangible assets of an acquired property, the in-place leases are valued based
on current rent rates and time and cost to lease a unit. Management concluded that the residential leases acquired in connection
with each of its property acquisitions approximate at-market rates since the residential lease terms generally do not extend
beyond one year.
For residential leases, the fair value of the in-place leases and resident relationships is amortized over 6 months, which
represents the estimated remaining term of the tenant leases. For commercial leases, the fair value of in-place leases and
resident relationships is amortized over the remaining term of the commercial leases. The amount of these lease intangibles
included in "Other assets" totaled $11.2 million and $42.4 million as of December 31, 2017, and 2016, respectively.
Accumulated amortization for these leases totaled $4.1 million and $7.3 million as of December 31, 2017 and 2016,
respectively. The amortization of these intangibles recorded as "Depreciation and amortization expense" was $29.4 million,
$8.7 million, and $5.0 million for the years ended December 31, 2017, 2016, and 2015, respectively. The estimated aggregate
future amortization expense of in-place leases is approximately $2.8 million, $1.6 million, $0.8 million, $0.5 million, and $0.3
million for the years ended December 31, 2018, 2019, 2020, 2021, and 2022, respectively.
F-17
As a result of the adoption of ASU 2017-01, the Company believes most acquisitions of operating properties will qualify as
asset acquisitions and associated transaction costs will be capitalized. Acquisition costs include appraisal fees, title fees, broker
fees, and other legal costs to acquire the property. For the year ended December 31, 2017, acquisition costs totaling $1.3
million related to the Company's acquisitions of Charlotte at Midtown and Acklen West End were capitalized and allocated to
the assets based on the relative fair market value of those underlying assets; see Note 15 for additional information on 2017
acquisitions. For the accounting policy on larger, portfolio style acquisitions which qualify as business combinations (rather
than asset acquisitions), see Note 2.
Impairment of Long-lived Assets
The Company accounts for long-lived assets in accordance with the provisions of accounting standards for the impairment or
disposal of long-lived assets. Management periodically evaluates long-lived assets, including investments in real estate, for
indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the
existence of such indicators are based on factors such as operating performance, market conditions and legal factors. Long-
lived assets, such as real estate assets, equipment and purchased intangibles subject to amortization, are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated
undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Assets to be disposed of are separately presented in the Consolidated Balance Sheets and reported at the
lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a
disposed group or a property classified as held for sale are presented separately in the appropriate asset and liability sections of
the Consolidated Balance Sheets.
Loss Contingencies
The outcomes of claims, disputes and legal proceedings are subject to significant uncertainty. The Company records an accrual
for loss contingencies when a loss is probable and the amount of the loss can be reasonably estimated. Management reviews
these accruals quarterly and makes revisions based on changes in facts and circumstances. When a loss contingency is not both
probable and reasonably estimable, management does not accrue the loss. However, if the loss (or an additional loss in excess
of the accrual) is at least a reasonable possibility and material, then management discloses a reasonable estimate of the possible
loss, or range of loss, if such reasonable estimate can be made. If the Company cannot make a reasonable estimate of the
possible loss, or range of loss, then a statement to that effect is disclosed.
The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or range of loss is reasonably
estimable, often involves a series of complex judgments about future events. Among the factors considered in this assessment,
are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if reasonably
estimable), the progress of the matter, existing law and precedent, the opinions or views of legal counsel and other advisers,
management's experience in similar matters, the facts available to management at the time of assessment, and how the
Company intends to respond, or has responded, to the proceeding or claim. Management's assessment of these factors may
change over time as individual proceedings or claims progress. For matters where management is not currently able to
reasonably estimate a range of reasonably possible loss, the factors that have contributed to this determination may include the
following: (i) the damages sought are indeterminate; (ii) the proceedings are in the early stages; (iii) the matters involve novel
or unsettled legal theories or a large or uncertain number of actual or potential cases or parties; and/or (iv) discussions with the
parties in matters that are expected ultimately to be resolved through negotiation and settlement have not reached the point
where management believes a reasonable estimate of loss, or range of loss, can be made. The Company believes that there is
considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss or
business impact, if any. See Note 12 for additional information on loss contingencies.
Undeveloped Land
Undeveloped land includes sites intended for future multifamily developments, sites for future commercial development and
sites intended for residential use, which are carried at the lower of cost or fair value in accordance with GAAP and any costs
incurred prior to commencement of pre-development activities are expensed as incurred.
Investment in Unconsolidated Affiliates
Immediately prior to the effective date of the Merger, Post Properties was an investor, together with other institutional
investors, in a limited liability company, or the Apartment LLC, that indirectly owned one apartment community, Post
F-18
Massachusetts Avenue, located in Washington, D.C. Post Properties owned a 35.0% equity interest in the unconsolidated joint
venture, which was retained by MAA immediately following the close of the Merger and as of December 31, 2017. The
Company provides property and asset management services to the Apartment LLC for which it earns fees. The joint venture
was determined to be a VIE, but the Company is not designated as a primary beneficiary. As a result, the Company accounts
for its investment in the Apartment LLC using the equity method of accounting as the Company is able to exert significant
influence over the joint venture but does not have a controlling interest. At December 31, 2017, the Company's investment in
the Apartment LLC totaled $45.0 million.
During September 2017, a subsidiary of the Operating Partnership entered into a limited partnership together with a general
partner and other limited partners to form Real Estate Technology Ventures, L.P. The Operating Partnership indirectly owns
31.0% of the limited partnership. The limited partnership was determined to be a VIE, but the Company is not designated as a
primary beneficiary. As a result, the Company accounts for its investment in the limited partnership using the equity method of
accounting as the investment is considered more than minor. At December 31, 2017, the Company's investment in the limited
partnership totaled $1.5 million. The Company is committed to make additional capital contributions totaling $13.5 million if
and when called by the general partner of the limited partnership prior to September 2022.
Investment in Consolidated Real Estate Joint Venture
In 2015, Post Properties entered into a joint venture arrangement with a private real estate company to develop, construct and
operate a 359-unit apartment community in Denver, Colorado. At December 31, 2017, the Company owned a 92.5% equity
interest in the consolidated joint venture. In 2015, the joint venture acquired the land site and initiated the development of the
apartment community. The venture partner will generally be responsible for the development and construction of the
community and the Company will continue to manage the community upon its completion. The joint venture was determined
to be a VIE with the Company designated as the primary beneficiary. As a result, the accounts of the joint venture are
consolidated by the Company. At December 31, 2017, the consolidated assets, liabilities and equity included construction in
progress of $36.9 million; buildings and improvements and other of $33.9 million; land of $14.9 million; and accrued expenses
and other liabilities of $6.5 million.
Cash and Cash Equivalents
Investments in money market accounts and certificates of deposit with original maturities of three months or less are
considered to be cash equivalents.
Restricted Cash
Restricted cash consists of security deposits required to be held separately, escrow deposits held by lenders for property taxes,
insurance, debt service, and replacement reserves, and exchanges under Section 1031(b) of the Internal Revenue Code of 1986,
as amended, or the Code. Section 1031(b) exchanges are treated as investing activities in the Consolidated Statements of Cash
Flows.
Other Assets
Other assets consist primarily of receivables and deposits from residents, the value of derivative contracts, deferred rental
concessions, deferred financing costs relating to lines of credit, and other prepaid expenses. Also included in other assets are
the fair market value of in-place leases and resident relationships, net of accumulated amortization.
Accrued Expenses and Other Liabilities
Accrued expenses consist of accrued dividends payable, accrued real estate taxes, accrued interest payable, accrued loss
contingencies, accounts payable, fair market value of interest rate swaps (see Note 7), security deposits not related to restricted
cash, other accrued expenses, and unearned income. Significant accruals include accrued dividends payable of $108.7 million
and $102.4 million at December 31, 2017 and 2016, respectively; accrued real estate taxes of $99.6 million and $97.6 million at
December 31, 2017 and 2016, respectively; unearned income of $40.8 million and $39.4 million at December 31, 2017 and
2016, respectively; accrued loss contingencies of $32.1 million and $42.1 million at December 31, 2017 and 2016,
respectively; security deposits of $19.1 million and $18.8 million at December 31, 2017 and 2016, respectively; and accrued
interest payable of $18.1 million and $19.1 million at December 31, 2017 and 2016, respectively.
F-19
Self-Insurance
The Company is self-insured for workers' compensation claims up to $500,000 and for general liability claims up to $100,000.
The Company accrues for expected liabilities less than these amounts based on third party actuarial estimates of ultimate losses.
Claims exceeding these amounts are insured by a third party.
Income Taxes
MAA has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, and intends to
continue to operate in such a manner. The current and continuing qualification as a REIT depends on MAA's ability to meet the
various requirements imposed by the Code, which are related to organizational structure, distribution levels, diversity of stock
ownership and certain requirements with respect to the nature and diversity of MAA’s assets and sources of MAA’s gross
income. As long as MAA qualifies for taxation as a REIT, it will generally not be subject to United States federal corporate
income tax on its taxable income that is currently distributed to shareholders. This treatment substantially eliminates the
"double taxation" (i.e., income taxation at both the corporate and shareholder levels) that generally results from an investment
in a corporation. Even if MAA qualifies as a REIT, MAA may be subject to United States federal income and excise taxes in
certain situations, such as if MAA fails to distribute timely all of its taxable income with respect to a taxable year. MAA also
will be required to pay a 100% tax on any net income on non-arm’s length transactions between MAA and one of its taxable
REIT subsidiaries, or TRS. In addition, MAA could be subject to the alternative minimum tax. Furthermore, MAA and its
shareholders may be subject to state or local taxation in various state or local jurisdictions, including those in which MAA
transacts business or its shareholders reside, and the applicable state and local tax laws may not conform to the United States
federal income tax treatment. Any taxes imposed on MAA would reduce its operating cash flow and net income.
Certain of the Company's operations and activities, including asset management and risk management, are conducted through
TRSs, which are subject to United States federal corporate income tax without the benefit of the dividends paid deduction
applicable to REITs. MAA accounts for deferred taxes of a TRS by recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis
of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation
allowance is provided when it is more likely than not that all or some portion of the deferred tax assets will not be realized.
Based on this evaluation, at December 31, 2017, net of the valuation allowance, the net deferred tax assets were reduced to
zero. MAA recognizes liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate
the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that
the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step
requires MAA to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon
ultimate settlement. MAA classifies interest related to income tax liabilities, and if applicable, penalties, as a component of
income tax expense. As of December 31, 2017, MAA did not have any unrecognized tax benefits, and MAA does not believe
that there will be any material changes in its unrecognized tax positions over the next 12 months. "Income tax expense"
reflected in the Consolidated Statements of Operations represents the Texas-based margin tax for all Texas properties and state
taxes for a TRS.
Derivative Financial Instruments
The Company utilizes certain derivative financial instruments, primarily interest rate swaps and interest rate caps, during the
normal course of business to manage, or hedge, the interest rate risk associated with our variable rate debt or as hedges in
anticipation of future debt transactions to manage well-defined interest rate risk associated with the transaction.
Additionally, the 867,846 shares of MAA's Series I preferred stock issued as consideration in the Merger are redeemable, at the
Company's option, beginning on October 1, 2026, at the redemption price of $50 per share (see Note 9). The redemption
feature embedded in the preferred stock was evaluated in accordance with ASC 815, Derivatives and Hedging, and the
Company determined that it was required to bifurcate the value associated with the redemption feature from the host
instrument, the perpetual preferred shares. The redemption feature embedded in the MAA Series I preferred stock is reported
as a derivative asset in "Other assets" in the accompanying Consolidated Balance Sheets at its fair value and will be adjusted to
its fair value at each reporting date, with a corresponding adjustment to "Other non-operating income (expense)". See Note 7
for further discussion on derivatives and the fair value of financial instruments.
Fair Value Measurements
The Company applies the guidance in ASC Topic 820, Fair Value Measurements and Disclosures, to the valuation of real estate
assets recorded at fair value, if any; to its impairment valuation analysis of real estate assets; to its disclosure of the fair value of
F-20
financial instruments, principally indebtedness; and to its derivative financial instruments. Fair value disclosures required
under ASC Topic 820 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.
Assets Held for Sale
As of December 31, 2017, one land parcel was classified as held for sale. The criteria for classifying the land parcel as held for
sale were met during June 2017; however, the sale is not expected to close until the first quarter of 2018. As a result, the assets
associated with the land parcel were presented as held for sale in the accompanying Consolidated Balance Sheets.
Recent Accounting Pronouncements
The following table provides a brief description of recent accounting pronouncements that could have a material effect on the
Company's consolidated financial statements:
Standard
ASU 2014-09,
Revenue from
Contracts with
Customers
Description
The ASU establishes principles for
recognizing revenue upon the transfer
of promised goods or services to
customers, in an amount that reflects the
expected consideration received in
exchange for those goods or services as
outlined in a five-step model whereby
revenue is recognized as performance
obligations within a contract are
satisfied. Income from lease contracts is
specifically excluded from this ASU.
Date of Adoption
The ASU is effective for
annual reporting periods
beginning after
December 15, 2017
Early adoption is
permitted.
The ASU is effective for
annual reporting periods
beginning after
December 15, 2018;
however, early adoption
is permitted.
ASU 2016-02,
Leases
The ASU amends existing accounting
standards for lease accounting and
establishes the principles for lease
accounting for both the lessee and
lessor. The amendment requires an
entity to recognize a right-of-use asset
and lease liability for all leases with
terms of more than 12 months.
Recognition, measurement and
presentation of expenses will depend on
classification as a finance or operating
lease. The amendment also requires
certain quantitative and qualitative
disclosures about leasing arrangements.
Effect on the Financial Statements or Other
Significant Matters
The amendments may be applied using the full
retrospective transition method or by using the
modified retrospective transition method with a
cumulative effect recognized as of the date of initial
application. The Company adopted ASU 2014-09
effective January 1, 2018, using the modified
retrospective approach. The majority of the Company's
revenue is derived from real estate lease contracts,
which falls outside the scope of the ASU. The
Company has completed its analysis of non-lease
related revenues. The adoption of the ASU does not
have a material impact on the Company's consolidated
financial statements or to the Company's internal
accounting policies. The guidance does require
additional disclosures regarding the nature and timing
of the Company's revenue transactions upon adoption.
The standard must be adopted using a modified
retrospective transition and provides for certain
practical expedients. Transition will require application
of the new guidance at the beginning of the earliest
comparative period presented. Management is
currently evaluating the impact the standard will have
on the consolidated financial statements and related
disclosures upon adoption. The Company plans to
adopt the ASU effective January 1, 2019.
F-21
ASU 2016-15,
Classification
of Certain
Cash Receipts
and Cash
Payments (a
consensus of
the Emerging
Issues Task
Force)
The ASU clarifies how several specific
cash receipts and cash payments are to
be presented and classified on the
statement of cash flows, including debt
prepayment or debt extinguishment
costs, settlement of zero-coupon debt
instruments, contingent consideration
made after a business combination,
distributions received from equity
method investees, beneficial interests in
securitization transactions, and
separately identifiable cash flows and
application of predominance principle.
The ASU is effective for
interim and annual
periods beginning after
December 15, 2017, and
early adoption is
permitted.
The ASU requires restricted cash to be
presented with cash and cash
equivalents when reconciling the
beginning and ending amounts in the
consolidated statements of cash flows.
The ASU is effective for
interim and annual
periods beginning after
December 15, 2017, and
early adoption is
permitted.
ASU 2016-18,
Statement of
Cash Flows
(Topic 230):
Restricted
Cash (A
Consensus of
the FASB
Emerging
Issues Task
Force)
ASU 2017-12,
Derivatives
and Hedging
(Topic 815)
The ASU clarifies hedge accounting
requirements, improves disclosure of
hedging arrangements, and better aligns
risk management activities and financial
reporting for hedging relationships.
The ASU is effective for
interim and annual
periods beginning after
December 15, 2018, and
early adoption is
permitted.
Each amendment in this standard must be applied
prospectively, retrospectively, or as of the beginning of
the earliest comparative period presented in the year of
adoption, depending on the type of amendment. The
Company adopted ASU 2016-15 as of January 1, 2018.
Management has determined three of the eight
transactions in the update are relevant to MAA and its
cash flows, including: 1) debt prepayment or debt
extinguishment costs, 2) proceeds from the settlement
of insurance claims and 3) distributions received from
equity method investees. Management performed an
analysis and determined only the change in
classification of debt prepayment or debt
extinguishment costs, which is currently reported in
operating activities, will have a significant impact on
the consolidated statements of cash flows. Upon
adoption in the first quarter of 2018, $1.7 million of
cash outflows for debt prepayment or extinguishment
costs currently reported in net cash provided by
operating activities for the year ended December 31,
2017, will be re-classified to and reported in net cash
used in financing activities.
The update should be applied retrospectively to each
period presented. The Company adopted ASU 2016-18
as of January 1, 2018. The Company currently reports
the change in restricted cash within the operating and
investing activities in the consolidated statements of
cash flows. Upon adoption in the first quarter of 2018,
cash and cash equivalents reported in the consolidated
statements of cash flows for the year ended December
31, 2017 will increase by approximately $78.1 million
to reflect the restricted cash balances. Additionally, net
cash used in investing activities will decrease by $10.6
million for the year ended December 31, 2017.
The standard should be adopted using a modified
retrospective approach. This adoption method will
require the Company to recognize the cumulative
effect of initially applying ASU 2017-12 as an
adjustment to accumulated other comprehensive
income with a corresponding adjustment to the
opening balance of retained earnings. The Company
elected to early adopt the ASU as of January 1, 2018.
Management has completed its assessment of the
impact the standard has on the Company's consolidated
financial statements and related disclosures. Adoption
of the ASU does not have a material impact on the
consolidated financial statements or the Company's
internal accounting policies.
2.
BUSINESS COMBINATIONS
Merger of MAA and Post Properties
The Company completed the Merger on December 1, 2016. As part of the Merger, the Company acquired 61 wholly-owned
apartment communities encompassing 24,138 units, including 269 apartment units in one community held in an unconsolidated
entity, and 2,262 apartment units in six communities that were under development at the date of the Merger. Post Properties
had operations in ten markets across the United States. In addition to the apartment communities, the Company also acquired
four commercial properties, totaling approximately 232,000 square feet of combined gross leasable area. The consolidated net
assets and results of operations of Post Properties are included in the Company's consolidated financial statements from the
closing date going forward.
The total purchase price of approximately $4.0 billion was determined based on the number of shares of Post Properties'
common stock, the number of shares of Post Properties’ Series A preferred stock, and the number of shares of Post LP's Class A
Units of limited partnership interest outstanding as of December 1, 2016, in addition to cash consideration provided by the
Operating Partnership immediately prior to the Merger to retire a $300.0 million unsecured term loan and a $162.0 million line
of credit. In all cases in which MAA’s common stock price was a determining factor in arriving at final consideration for the
Merger, the stock price used to determine the purchase price was the opening price of MAA’s common stock on December 1,
F-22
2016 ($91.41 per share). At the date of acquisition, the MAA Series I preferred stock consideration was valued at $77 per
share, which included a $14.24 per share bifurcated call option (See Notes 7 and 9). The total purchase price also included
$2.0 million of other consideration, a majority of which related to assumed stock compensation plans. As a result of the
Merger, the Company issued approximately 38.0 million shares of MAA common stock, approximately 80,000 OP units, and
867,846 newly issued shares of MAA’s Series I preferred stock.
The Merger has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business
Combinations, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their
acquisition date fair values.
For larger, portfolio style acquisitions, such as the Merger, management engages a third party valuation specialist to assist with
the fair value assessment, which includes an allocation of the purchase price. Similar to management's methods, the third party
generally uses cash flow analysis as well as an income approach and a market approach to determine the fair value of assets
acquired. The third party specialist uses stabilized NOI and market specific capitalization and discount rates. Management
reviews the inputs used by the third party specialist as well as the allocation of the purchase price provided by the third party
specialist to ensure reasonableness and the procedures are performed in accordance with management's policies.
The allocation of the purchase price valuation described above required a significant amount of judgment and represents
management's best estimate of the fair value as of the acquisition date. The following final purchase price allocation for the
Merger was based on the Company's valuation as well as estimates and assumptions of the acquisition date fair value of the
tangible and intangible assets acquired and liabilities assumed.
The following table summarizes the final purchase price allocation as of the date of the Merger (in thousands):
Land
Buildings and improvements and other
Development and capital improvements in progress
Undeveloped land
Investment in real estate joint venture
Cash and cash equivalents
Restricted cash
Other assets
Total assets acquired
Notes payable
Accrued expenses and other liabilities
Total liabilities assumed, including debt
Noncontrolling interests - consolidated real estate entity
$
December 1, 2016
874,616
3,479,483
183,881
24,200
44,435
34,292
3,608
94,899
4,739,414
(595,609)
(132,906)
(728,515)
(2,306)
Total purchase price
$
4,008,593
The allocation of fair values of the assets acquired and liabilities assumed changed from the allocation reported in Note 2 to the
consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2016, filed
with the SEC on February 24, 2017. The changes were based on information concerning the subject assets and liabilities that
was not yet known at the time of the filing of the Annual Report on Form 10-K for the year ended December 31, 2016.
Specifically, the purchase price allocation was updated primarily due to an adjustment to litigation reserves offset by an
increase in the derivative asset value of the preferred share bifurcated call option (included in "Other assets") and real estate
values.
The Company incurred total merger and integration related expenses of $20.0 million and $40.8 million for the years ended
December 31, 2017 and 2016, respectively. The amounts were expensed as incurred and are included in the Consolidated
Statements of Operations in "Merger and integration expenses". Merger related expenses primarily consisted of severance and
professional costs, and integration related expenses primarily consisted of temporary systems, staffing, and facilities costs.
F-23
3.
EARNINGS PER COMMON SHARE OF MAA
Basic earnings per share is computed by dividing net income available to MAA common shareholders by the weighted average
number of common shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-
forfeitable dividends and participate in undistributed earnings with 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 years
ended December 31, 2017, 2016, and 2015, MAA's basic earnings per share is computed using the two-class method, as the
two-class method is the more dilutive calculation, and is presented below (dollars and shares in thousands, except per share
amounts):
Common Shares Outstanding
Weighted average common shares - basic
Effect of dilutive securities
Weighted average common shares - diluted
Calculation of Earnings per Common Share - basic
Net income
Net income attributable to noncontrolling interests
Unvested restricted stock (allocation of earnings)
Preferred dividends
Net income available for common shareholders, adjusted
Weighted average common shares - basic
Earnings per common share - basic
Calculation of Earnings per Common Share - diluted
Net income
Net income attributable to noncontrolling interests
Unvested restricted stock (allocation of earnings)
Preferred dividends
Net income available for common shareholders, adjusted
Weighted average common shares - diluted
Earnings per common share - diluted
2017
2016
2015
113,407
280
113,687
78,502
298
78,800
75,176
— (1)
75,176
$ 340,536 $ 224,402 $ 350,745
(18,458)
(772)
—
$ 324,156 $ 211,343 $ 331,515
(12,180)
(572)
(307)
(12,157)
(535)
(3,688)
113,407
78,502
$
2.86 $
2.69 $
75,176
4.41
$ 340,536 $ 224,402 $ 350,745
(12,157) (2)
(12,180) (2)
(18,458) (2)
(772) (1)
—
$ 324,691 $ 211,915 $ 331,515
—
(3,688)
—
(307)
113,687
78,800
$
2.86 $
2.69 $
75,176
4.41
(1)For the year ended December 31, 2015, 0.1 million potentially dilutive securities and their related income are not included in
the diluted earnings per share calculation as they are not dilutive.
(2) For the years ended December 31, 2017, 2016, and 2015, 4.2 million OP units and their related income are not included in the
diluted earnings per share calculations as they are not dilutive.
F-24
4.
EARNINGS PER OP UNIT OF MAALP
Basic earnings per OP Unit is computed by dividing net income available for common unitholders by the weighted average
number of 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 OP Unit. Diluted earnings per
OP Unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or
converted into OP Units. A reconciliation of the numerators and denominators of the basic and diluted earnings per OP Unit
computations for the years ended December 31, 2017, 2016, and 2015 is presented below (dollars and units in thousands,
except per unit amounts):
Common Units Outstanding
Weighted average common units - basic
Effect of dilutive securities
Weighted average common units - diluted
Calculation of Earnings per Common Unit - basic
Net income
Unvested restricted stock (allocation of earnings)
Preferred unit distributions
Net income available for common unitholders, adjusted
Weighted average common units - basic
Earnings per common unit - basic:
Calculation of Earnings per Common Unit - diluted
Net income
Unvested restricted stock (allocation of earnings)
Preferred unit distributions
Net income available for common unitholders, adjusted
Weighted average common units - diluted
Earnings per common unit - diluted:
2017
2016
2015
117,617
280
117,897
82,661
298
82,959
79,361
— (1)
79,361
$ 340,536 $ 224,402 $ 350,745
(772)
—
$ 336,313 $ 223,521 $ 349,973
(535)
(3,688)
(574)
(307)
117,617
82,661
$
2.86 $
2.70 $
79,361
4.41
$ 340,536 $ 224,402 $ 350,745
—
(3,688)
(772) (1)
—
$ 336,848 $ 224,095 $ 349,973
—
(307)
117,897
82,959
$
2.86 $
2.70 $
79,361
4.41
(1) For the year ended December 31, 2015, 0.1 million potentially dilutive securities and their related income are not included in
the diluted earnings per unit calculations as they are not dilutive.
5.
STOCK BASED COMPENSATION
Overview
MAA accounts for its stock based employee compensation plans in accordance with accounting standards governing stock
based compensation. These standards require an entity to measure the cost of employee services received in exchange for an
award of an equity instrument based on the award's fair value on the grant date and recognize the cost over the period during
which the employee is required to provide service in exchange for the award, which is generally the vesting period. Any
liability awards issued are remeasured at each reporting period.
MAA’s stock compensation plans consist of a number of incentives provided to attract and retain independent directors,
executive officers and key employees. Incentives are currently granted under the Amended and Restated 2013 Stock Incentive
Plan, or the Stock Plan, which was approved at the 2014 annual meeting of MAA shareholders. The Stock Plan allows for the
grant of restricted stock and stock options up to 625,000 shares. MAA believes that such awards better align the interests of its
employees with those of its shareholders.
Compensation expense is generally recognized for service based restricted stock awards using the straight-line method over the
vesting period of the shares regardless of cliff or ratable vesting distinctions. Compensation expense for market and
F-25
performance based restricted stock awards is generally recognized using the accelerated amortization method with each vesting
tranche valued as a separate award, with a separate vesting date, consistent with the estimated value of the award at each period
end. Additionally, compensation expense is adjusted for actual forfeitures for all awards in the period that the award was
forfeited. Compensation expense for stock options is generally recognized on a straight-line basis over the requisite service
period. MAA presents stock compensation expense in the Consolidated Statements of Operations in "General and
administrative expenses". Effective January 1, 2017, the Company adopted ASU 2016-09, Improvements to Employee Share-
Based Payment Accounting, which allows employers to make a policy election to account for forfeitures as they occur. The
Company elected this option using the modified retrospective transition method, with a cumulative effect adjustment to
retained earnings, and there was no material effect on the consolidated financial position or results of operations taken as a
whole resulting from the reversal of previously estimated forfeitures.
Total compensation expense under the Stock Plan was approximately $10.8 million, $12.2 million and $6.9 million for the
years ended December 31, 2017, 2016 and 2015, respectively. Of these amounts, total compensation expense capitalized was
approximately $0.2 million, $0.7 million and $0.7 million for the years ended December 31, 2017, 2016 and 2015, respectively.
As of December 31, 2017, the total unrecognized compensation expense was approximately $14.1 million. This cost is
expected to be recognized over the remaining weighted average period of 1.2 years. Total cash paid for the settlement of plan
shares totaled $4.8 million, $2.0 million and $1.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Information concerning grants under the Stock Plan is listed below.
Restricted Stock
In general, restricted stock is earned based on either a service condition, performance condition, or market condition, or a
combination thereof, and generally vests ratably over a period from 1 year to 5 years. Service based awards are earned when
the employee remains employed over the requisite service period and are valued on the grant date based upon the market price
of MAA common stock on the date of grant. Market based awards are earned when MAA reaches a specified stock price or
specified return on the stock price (price appreciation plus dividends) and are valued on the grant date using a Monte Carlo
simulation. Performance based awards are earned when MAA reaches certain operational goals such as funds from operations,
or FFO, targets and are valued based upon the market price of MAA common stock on the date of grant as well as the
probability of reaching the stated targets. MAA remeasures the fair value of the performance based awards each balance sheet
date with adjustments made on a cumulative basis until the award is settled and the final compensation is known. The weighted
average grant date fair value per share of restricted stock awards granted during the years ended December 31, 2017, 2016 and
2015, was $84.53, $73.20 and $68.35, respectively.
The following is a summary of the key assumptions used in the valuation calculations for market based awards granted during
the years ended December 31, 2017, 2016 and 2015:
Risk free rate
Dividend yield
Volatility
Requisite service period
2017
0.65% - 1.57%
3.573%
20.43% - 21.85%
3 years
2016
0.49% - 1.27%
3.634%
18.41% - 19.45%
3 years
2015
0.10% - 1.05%
3.932%
15.41% - 16.04%
3 years
The risk free rate was based on a zero coupon risk-free rate. The minimum risk free rate was based on a period of 0.25 years
for the years ended December 31, 2017, 2016 and 2015. The maximum risk free rate was based on a period of 3 years for the
years ended December 31, 2017, 2016 and 2015. The dividend yield was based on the closing stock price of MAA stock on the
date of grant. Volatility for MAA was obtained by using a blend of both historical and implied volatility calculations.
Historical volatility was based on the standard deviation of daily total continuous returns, and implied volatility was based on
the trailing month average of daily implied volatilities interpolating between the volatilities implied by stock call option
contracts that were closest to the terms shown and closest to the money. The minimum volatility was based on a period of 3
years, 2 years and 1 year for the years ended December 31, 2017, 2016 and 2015, respectively. The maximum volatility was
based on a period of 1 year, 1 year and 2 years for the years ended December 31, 2017, 2016 and 2015, respectively. The
requisite service period is based on the criteria for the separate programs according to the vesting schedule.
F-26
A summary of the status of the nonvested restricted shares as of December 31, 2017, and the changes for the year ended
December 31, 2017, is presented below:
Nonvested Shares
Shares
Nonvested at January 1, 2017
Issued
Vested
Forfeited
Nonvested at December 31, 2017
Weighted Average
Grant-Date Fair Value
71.61
87.09
70.90
84.97
81.13
225,624 $
106,113
(147,687)
(3,358)
180,692 $
The total fair value of shares vested during the years ended December 31, 2017, 2016 and 2015 was approximately $10.5
million, $5.1 million and $2.9 million, respectively.
Stock Options
Stock options are earned when the employee remains employed over the requisite service period and vest ratably over a period
from 0.3 years to 2.3 years. Stock options exercised result in new common shares being issued on the open market by the
Company. The fair value of stock option awards is determined using the Black-Scholes or Monte Carlo valuation models. No
stock options were granted during the years ended December 31, 2017 or December 31, 2015. During the year ended
December 31, 2016, 108,198 fully vested stock options were granted with a weighted average grant date fair value of $18.08
per option as a result of options exchanged during the Merger.
The following is a summary of the key assumptions used in the Monte Carlo valuation calculations for stock options granted
during the year ended December 31, 2016:
Risk free rate
Dividend yield
Volatility
Expected term
2016
0.64% - 2.63%
3.81%
21.02% - 21.57%
1.11 - 2.11 years
The U.S. Treasury bill rate was used to represent the risk-free rate based on the expected life of the option. The current
dividend yield at the time of grant was used to estimate the dividend yield over the life of the option. Volatility is based on the
actual changes in the market value of MAA’s stock and is calculated using daily market value changes from the date of grant
over a past period equal to the expected term of the stock options. The expected term represents an estimate of the period of
time options are expected to remain outstanding.
A summary of the status of the stock options as of December 31, 2017 and the changes for the year ended December 31, 2017
is presented below:
Stock Options
Options
Weighted Average
Exercise Price
Outstanding at January 1, 2017
Granted
Exercised
Expired
Outstanding at December 31, 2017
147,282 $
—
(21,006)
(17,838)
108,438 $
76.16
—
64.92
109.05
72.93
All options outstanding at December 31, 2017 were exercisable and had an intrinsic value of $3.0 million with a weighted
average remaining term of 6.0 years. There were 21,006 options and 7,342 options exercised during the years ended
December 31, 2017 and 2015, respectively. Cash received from the exercise of stock options totaled $0.4 million for both the
years ended December 31, 2017 and 2015, respectively. During the year ended December 31, 2016, no cash was received from
the exercise of stock options as no options were exercised.
F-27
6.
BORROWINGS
The following table summarizes the Company's outstanding debt as of December 31, 2017 (dollars in thousands):
Unsecured debt
Variable rate revolving credit facility
Fixed rate senior notes
Term loans fixed with swaps
Variable rate term loans
Fair market value adjustments, debt issuance costs and discounts
Total unsecured debt
Fixed rate secured debt
Individual property mortgages
Variable rate secured debt (1)
Fannie Mae Facility
Fair market value adjustments and debt issuance costs
Total secured debt
Total outstanding debt
(1) Includes capped balances
Unsecured Revolving Credit Facility
Borrowed
Balance
Effective
Rate
Contract
Maturity
$
410,000
2,292,000
550,000
300,000
(26,235)
$ 3,525,765
2.5 %
4/15/2020
4.0 % 11/13/2024
4/17/2018
3.0 %
8/29/2020
2.3 %
3.5 % 12/19/2022
$
882,752
4.0 %
10/9/2019
80,000
13,540
976,292
$
1.8 %
12/1/2018
3.8 %
9/13/2019
$ 4,502,057
3.6 %
3/11/2022
The Company maintains a $1.0 billion unsecured credit facility with a syndicate of banks led by KeyBank National
Association, or the KeyBank Facility. The KeyBank Facility includes an expansion option up to $1.5 billion. The KeyBank
Facility bears an interest rate of the London Interbank Offered Rate, or LIBOR, plus a spread of 0.85% to 1.55% based on an
investment grade pricing grid and is currently bearing interest at 2.47%. The KeyBank Facility expires in April 2020 with an
option to extend for an additional six months. At December 31, 2017, the Company had $410.0 million outstanding under the
facility with another approximate $2.5 million of additional capacity used to support outstanding letters of credit. During the
year ended December 31, 2017, the facility balance decreased by $80.0 million as result of $885.0 million in payments to the
facility offset by $805.0 million in proceeds from the facility.
Senior Unsecured Notes
As of December 31, 2017, the Company had approximately $2.0 billion in principal amount of publicly issued senior
unsecured notes and $292.0 million of privately placed senior unsecured notes. These senior unsecured notes had maturities at
issuance ranging from seven to twelve years, averaging 6.9 years remaining until maturity as of December 31, 2017.
In May 2017, the Operating Partnership publicly issued $600.0 million in aggregate principal amount of notes, maturing on
June 1, 2027 with an interest rate of 3.60% per annum, or the 2027 Notes. The purchase price paid by the initial purchasers
was 99.58% of the principal amount. The 2027 Notes are general unsecured senior obligations of the Operating Partnership
and rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership. Interest on the
2027 Notes is payable on June 1 and December 1 of each year, beginning on December 1, 2017. The net proceeds from the
offering, after deducting the original issue discount of approximately $2.5 million and underwriting commissions and expenses
of approximately $3.9 million, were approximately $593.6 million. The 2027 Notes have been reflected net of discount and
debt issuance costs in the Consolidated Balance Sheets. In connection with the issuance of the 2027 Notes, the Operating
Partnership cash settled $300 million in forward interest rate swap agreements. After considering the forward interest rate
swaps, the effective interest rate of the 2027 Notes was 3.68% over the ten year term.
In July 2017, the Company retired $150.0 million of senior unsecured notes that had been assumed as part of the Merger. The
notes were scheduled to mature in October 2017.
In November 2017, the Company retired $18.0 million of privately placed senior unsecured notes at maturity.
F-28
Unsecured Term Loans
The Company maintains four term loans with a syndicate of banks, one led by KeyBank National Association, or KeyBank,
two by Wells Fargo Bank, N.A., or Wells Fargo, and one by U.S. Bank National Association, or U.S. Bank, respectively. The
KeyBank term loan has a balance of $150.0 million, matures in 2021, and has a variable interest rate of LIBOR plus a spread of
0.90% to 1.75% based on the Company's credit ratings. The Wells Fargo term loans have balances of $250.0 million and
$300.0 million, respectively, mature in 2018 and 2022, respectively, and have variable interest rates of LIBOR plus spreads of
0.90% to 1.90% and 0.90% to 1.75%, respectively, based on the Company's credit ratings. The U.S. Bank term loan has a
balance of $150.0 million, matures in 2020, and has a variable interest rate of LIBOR plus a spread of 0.90% to 1.90% based
on the Company's credit ratings.
Secured Property Mortgages
As of December 31, 2017, the Company had $882.8 million of fixed rate conventional property mortgages with an average
interest rate of 4.0% and an average maturity in 2019.
In February 2017, the Company retired a $15.8 million mortgage associated with the Grand Cypress apartment community.
The mortgage was scheduled to mature in August 2017.
In May 2017, the Company retired a $156.4 million mortgage associated with the following apartment communities: CG at
Edgewater, CG at Madison, CG at Seven Oaks, CG at Town Park, CG at Barrett Creek, CG at River Oaks, and CG at
Huntersville. The mortgage was scheduled to mature in June 2019.
In September 2017, the Company retired a $13.9 million mortgage associated with the Venue at Stonebridge Ranch. The
mortgage was scheduled to mature in December 2017.
In December 2017, the Company retired a $20.1 million mortgage associated with La Valencia at Starwood. The mortgage was
scheduled to mature in March 2018.
In December 2017, the Company retired a $27.4 million mortgage associated with CG at Trinity Commons. The mortgage was
scheduled to mature in April 2018.
In addition to these retirements, the Company paid $12.0 million associated with property mortgage principal amortizations
during the year ended December 31, 2017.
Secured Credit Facility
The Company maintains a $80.0 million secured credit facility with Prudential Mortgage Capital, which is credit enhanced by
the Federal National Mortgage Association, or the Fannie Mae Facility. The Fannie Mae Facility matures in 2018. Borrowings
under the Fannie Mae Facility totaled $80.0 million at December 31, 2017, all of which was variable rate at an average interest
rate of 1.8%. The available borrowing capacity at December 31, 2017 was $80.0 million. During the year ended December 31,
2017, the Fannie Mae Facility outstanding balance decreased $80.0 million as the result of a November 2017 maturity payment.
F-29
The following table summarizes interest rate ranges, maturity and balance of the Company's indebtedness, net of fair market
value adjustments, debt issuance costs and discounts, as of December 31, 2017 and the balance of the Company's indebtedness,
net of fair market value adjustments, debt issuance costs and discounts, as of December 31, 2016 (dollars in millions):
December 31, 2017
Actual
Interest
Rates
Current
Average
Interest
Rate
Maturity
Balance
Balance as of
December 31,
2016
Fixed rate
Unsecured
Secured
Interest rate swaps
Variable rate(1)
Unsecured
Secured
Secured interest rate cap
3.38 - 5.57%
3.00 - 5.49%
2.45 - 3.55%
3.97%
3.97%
2.96%
2018-2027
2018-2025
2018
2.31 - 2.47%
1.76%
1.76%
2.41%
1.76%
1.76%
2020-2021
2018
2018
Fair market value adjustments, debt issuance costs and discounts
$
$
$
$
$
2,292.0 $
882.8
550.0
3,724.8 $
710.0 $
55.0
25.0
790.0 $
(12.7)
4,502.1 $
1,860.0
1,128.3
850.0
3,838.3
490.0
110.0
50.0
650.0
11.4
4,499.7
(1) Amounts are adjusted to reflect interest rate swap and cap agreements in effect at December 31, 2017, and 2016, respectively, which
results in paying fixed interest payments over the terms of the interest rate swaps and on changes in interest rates above the strike rate of the
cap. Rates and maturities for capped balances are for the underlying debt, unless the strike rate has been reached.
The following table includes scheduled principal repayments on the Company's outstanding borrowings at December 31, 2017,
as well as the amortization of the fair market value of debt assumed, debt discounts and issuance costs (in thousands):
Year
Amortization
Maturities
Total
2018
2019
2020
2021
2022
Thereafter
Guarantees
$
$
19,016 $
4,653
1,967
(1,462)
(2,037)
(3,468)
18,669 $
418,141 $
562,784
712,456
340,618
667,000
1,782,389
4,483,388 $
437,157
567,437
714,423
339,156
664,963
1,778,921
4,502,057
MAA fully and unconditionally guarantees the following debt incurred by the Operating Partnership:
• $80.0 million of the Fannie Mae Facility, all of which has been borrowed as of December 31, 2017; and
• $292.0 million of the privately placed senior unsecured notes.
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.
F-30
Fixed rate notes payable at December 31, 2017 and December 31, 2016, totaled $3.2 billion and $3.0 billion, respectively, and
had estimated fair values of $3.3 billion and $3.1 billion (excluding prepayment penalties), respectively, as of December 31,
2017 and December 31, 2016. The carrying value of variable rate notes payable (excluding the effect of interest rate swap and
cap agreements) at December 31, 2017 and December 31, 2016, totaled $1.3 billion and $1.5 billion, respectively, and had
estimated fair values of $1.3 billion and $1.5 billion (excluding prepayment penalties), respectively, as of December 31, 2017
and December 31, 2016. 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. The fair values of variable rate debt are determined
using the stated variable rate plus the current market credit spread. The variable rates reset every 30 to 90 days, and
management concluded that these rates reasonably estimate current market rates. Management has determined the inputs used
to value the outstanding debt fall within Level 2 of the fair value hierarchy, and therefore, the fair market valuation of debt is
considered Level 2 in the fair value hierarchy.
Financial Instruments Measured at Fair Value on a Recurring Basis
The Company uses interest rate swaps and interest rate caps to add stability to interest expense and to manage its exposure to
interest rate movements. The fair values of interest rate swaps are determined using the market standard methodology of netting
the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The
variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from
observable market interest rate curves.
The fair values of interest rate options are determined using the market standard methodology of discounting the future
expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates
used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from
observable market interest rate curves and volatilities. The fair value of interest rate derivative contracts designated as hedging
instruments recorded in "Other assets" in the accompanying Consolidated Balance Sheets was $3.6 million and $2.4 million as
of December 31, 2017 and December 31, 2016, respectively. The fair value of interest rate derivative contract liabilities
recorded in "Accrued expenses and other liabilities" in the accompanying Consolidated Balance Sheets was $1.3 million and
$7.6 million as of December 31, 2017 and December 31, 2016, respectively.
To comply with the provisions of ASC 820, management incorporates credit valuation adjustments to appropriately reflect both
its nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the
fair value of the derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting
and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Based on the fair
value measurement guidance issued by the Financial Accounting Standard Board, the Company made an accounting policy
election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net
basis by counterparty portfolio.
The derivative asset related to the redemption feature embedded in the MAA Series I preferred stock issued in connection with
Merger 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 share assuming the call option is exercised, with the
value of the bifurcated call option as the difference between the two values. This analysis reflects the contractual terms of the
redeemable preferred shares, which are redeemable at the Company's option beginning on October 1, 2026 and at the
redemption price of $50 per share (see Note 9). The analysis uses observable market-based inputs, 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 Consolidated Balance Sheets and is adjusted to its fair value at each reporting date, with a corresponding non-
cash adjustment to "Other non-operating income or expense" in the accompanying Consolidated Statements of Operations. The
embedded derivative for these preferred shares was initially recorded at a fair value of $10.8 million at the date of the Merger
and as of December 31, 2016 and then subsequently adjusted to its fair value of $21.2 million at December 31, 2017. The $10.4
million increase includes a purchase price allocation adjustment of $1.6 million, which is included in the Merger's opening
balance sheet, and was recorded in the first quarter of 2017, as well as $8.8 million of mark to market adjustments of non-cash
income recorded to reflect the change in fair value of the derivative asset in the year ended December 31, 2017.
The Company has determined the majority of the inputs used to value its derivatives fall within Level 2 of the fair value
hierarchy, and as a result, all of its derivatives held as of December 31, 2017 and December 31, 2016 were classified as Level 2
in the fair value hierarchy.
F-31
Cash Flow Hedges of Interest Rate Risk
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in
accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged
forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized
directly in earnings and is mainly attributable to a mismatch in the underlying indices of the derivatives and the hedged interest
payments made on the variable rate debt and due to the designation of acquired interest rate swaps with a non-zero fair value at
inception.
Amounts reported in "Accumulated other comprehensive income" related to derivatives designated as qualifying cash flow
hedges will be reclassified to interest expense as interest payments are made on the Company's variable rate or fixed rate debt.
During the next twelve months, the Company estimates that an additional $0.9 million will be reclassified to earnings as an
increase to "Interest expense", which primarily represents the difference between the fixed interest rate swap payments and the
projected variable interest rate swap receipts.
As of December 31, 2017, the Company had the following outstanding interest rate derivatives that were designated as cash
flow hedges of interest rate risk:
Interest Rate Derivative
Interest rate cap
Interest rate swaps
Number of Instruments
1
10
Notional
$25,000,000
$550,000,000
Tabular Disclosure of the Effect of Derivative Instruments on the Statements of Operations
The tables below present the effect of the Company's derivative financial instruments on the Consolidated Statements of
Operations for the years ended December 31, 2017, 2016 and 2015, respectively (in thousands):
Derivatives in Cash Flow
Hedging Relationships
Amount of Gain (Loss)
Recognized in OCI on
Derivative (Effective Portion)
Year ended December 31,
2017
Interest rate contracts
$
319 $
2015
2016
(1,500) $ (8,306)
Derivatives Not Designated as
Hedging Instruments
For the year ended December 31,
Interest rate products
Preferred stock embedded derivative
Total derivatives not designated as hedging instruments
Credit-risk-related Contingent Features
Location of Gain
(Loss)
Reclassified from
Accumulated
OCI into
Earnings
(Effective
Portion)
Amount of Gain (Loss)
Reclassified from Accumulated
OCI into Interest Expense
(Effective Portion)
Interest expense
$
(730 ) $
2017
2016
(4,364) $
2015
(7,064)
Location of Gain
(Loss) Recognized in
Earnings on
Derivative
(Ineffective Portion
and Amount
Excluded from
Effectiveness
Testing)
Interest expense
Amount of Gain (Loss)
Recognized in Interest
Expense (Ineffective
Portion and Amount
Excluded from
Effectiveness
Testing)
2017 2016 2015
$ 197 $
(54) $ (100)
Location of Gain (Loss)
Recognized
in Income on Derivative
Amount of Gain (Loss)
Recognized in Earnings on Derivative
2017
2016
2015
Interest expense
Non-operating income
$
$
— $
8,807
8,807 $
— $
—
— $
(3)
—
(3)
Certain of the Company's derivative contracts contain a provision where the Company could be declared in default on its
derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on
the indebtedness. As of December 31, 2017, the Company had not breached the provisions of these agreements. If the
provisions had been breached, the Company could have been required to settle its obligations under the agreements at the
termination value of $1.6 million.
Although the Company's derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both
the Company and its counterparties under certain situations, the Company does not net its derivative fair values or any existing
rights or obligations to cash collateral in the Consolidated Balance Sheets.
F-32
Other Comprehensive Income
The Company's other comprehensive income consists entirely of gains and losses attributable to the effective portion of its cash
flow hedges. The chart below reflects the change in the balance for the years ended December 31, 2017, 2016, and 2015 (in
thousands):
Changes in Accumulated Other Comprehensive Income (Loss) from Cash Flow Hedges by Component
Beginning balance
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from Accumulated other
comprehensive income (interest rate contracts)
Net current period other comprehensive (income) loss
attributable to noncontrolling interests
Net current period other comprehensive income (loss)
attributable to MAA
Ending balance
8.
INCOME TAXES
Affected Line Item in
the Consolidated
Statements of
Operations
Interest expense
2017
2016
2015
$
1,144 $
(1,589) $
(412)
319
730
(1,500)
(8,306)
4,364
7,064
(36)
(131)
65
1,013
2,157 $
2,733
1,144 $
(1,177)
(1,589)
$
Due to the structure of MAA as a REIT and the nature of the operations of its operating properties, no provision for federal income
taxes has been made at the MAA level. In addition, as MAALP is structured as a limited partnership, and its partners recognize their
proportionate share of income or loss in their tax returns, no provision for federal income taxes has been made at the MAALP level.
Historically, the Company has incurred certain state and local income, excise and franchise taxes. The Company has elected TRS
status for certain of its corporate subsidiaries. As a result, the TRSs incur both federal and state income taxes on any taxable income
after consideration of any net operating losses.
Taxable REIT Subsidiaries
The Company acquired the operations of a TRS, Colonial Properties Services, Inc., or CPSI, through an acquisition in 2013.
As a result, CPSI’s tax attributes were included in MAA’s consolidated financial statements subsequent to the acquisition date.
CPSI has provided property development, construction, leasing and management services for joint venture and third-party
owned properties, administrative services to MAA and engaged in for-sale development activity. CPSI also owned and
operated two multifamily apartment communities; however, during 2016, CPSI distributed these communities to MAALP. The
distribution resulted in a reduction of the deferred tax asset for real estate asset basis differences and the valuation allowance.
In 2017, CPSI converted from a corporation to a limited liability company, which resulted in a deemed liquidation for income
tax purposes. At the date of conversion, CPSI changed its name to CPSI, LLC and is no longer a TRS. CPSI, LLC is currently
a disregarded entity for income tax purposes, is solely owned by MAALP and owns undeveloped land.
The Company acquired the operations of a TRS, Post Asset Management, Inc., or PAM, through the Merger in 2016. As a
result, PAM’s tax attributes are included in MAA’s consolidated financial statements subsequent to the acquisition date. PAM
provides third-party services to MAA and MAA’s indirectly owned properties. PAM also owns a tract of undeveloped land.
The Company generally reimburses its TRSs for payroll and other costs incurred in providing services to MAA. All
intercompany transactions are eliminated in the accompanying consolidated financial statements. A TRS is an entity that is
subject to federal, state and any applicable local corporate income tax without the benefit of the dividends paid deduction
applicable to REITs. The Company’s TRSs did not generate any material taxable income or income tax expense for the years
ended December 31, 2017, 2016 and 2015.
The TRSs use the liability method of accounting for income taxes. Deferred income tax assets and liabilities are recognized for
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.
F-33
As a result of the CPSI conversion to CPSI, LLC and deemed liquidation, the Company’s deferred tax asset and liability
balances as of December 31, 2017 were immaterial. As of December 31, 2016, the Company had recorded net deferred tax
assets relating to CPSI, which included a net operating loss, or NOL, of $58.2 million. The net deferred tax assets were fully
offset by a valuation allowance as it was more likely than not the net deferred tax assets would not be realized.
For the years ended December 31, 2017 and 2016, the components of the Company’s deferred income tax assets and liabilities
were as follows (in thousands):
December 31, 2017
December 31, 2016
Deferred tax assets
Real estate asset basis differences
Deferred expenses
Net operating loss carryforward
Accrued liabilities
Deferred tax liabilities
Real estate asset basis differences
Net deferred tax assets, before valuation allowance
Valuation allowance
Net deferred tax assets
$
$
$
$
$
— $
—
—
—
— $
— $
— $
—
— $
13,387
12,481
32,585
102
58,555
(311)
58,244
(58,244)
—
For the years ended December 31, 2017, 2016, and 2015, the reconciliation of income tax attributable to continuing operations
for the TRSs computed at the U.S. statutory rate to the income tax provision was as follows (in thousands):
Tax expense at U.S. statutory rates on TRS income subject to tax
Effect of permanent differences and other
Decrease in valuation allowance
TRS income tax provision
2017
2016
2015
2,177 $
—
(2,177)
— $
3,185 $
—
(3,185)
— $
2,506
(730)
(1,776)
—
$
$
The Company had no reserve for uncertain tax positions for the years ended December 31, 2017, 2016 and 2015. If necessary,
the Company accrues interest and penalties on unrecognized tax benefits as a component of income tax expense. For the years
ended December 31, 2017, 2016 and 2015, other expenses include estimated state franchise and other taxes, including franchise
taxes in North Carolina and Tennessee. The income tax expense line item shown in the Consolidated Statements of Operations
represents the Texas-based margin tax for all Texas properties and federal and state taxes for PAM.
As of December 31, 2017 and 2016, the Company held federal NOL carryforwards of approximately $71.5 million for income
tax purposes that expire in years 2019 to 2033. During the year ended December 31, 2016, the Company's NOL increased by
$25.2 million through its acquisition of Post Properties. Utilization of any NOL carryforwards is subject to an annual limitation
due to ownership change limitations provided by Section 382 of the Code and similar state provisions. The annual limitations
may result in the expiration of NOL carryforwards before utilization. The Company may use these NOLs to offset all or a
portion of the taxable income generated at the REIT level.
Tax years 2014 through 2017 are subject to examination by the Internal Revenue Service. No tax examination is currently in
process.
F-34
For income tax purposes, dividends paid to holders of common stock primarily consist of ordinary income, return of capital,
capital gains, qualified dividends and un-recaptured Section 1250 gains, or a combination thereof. For the years ended
December 31, 2017, 2016 and 2015, dividends per share held for the entire year were estimated to be taxable as follows:
2017
2016
2015
Ordinary income
Capital gain
Un-recaptured Section 1250 gain
Amount
2.79
$
0.31
0.38
3.48
$
Percentage
80.2% $
8.9%
10.9%
100.00% $
Amount
3.28
—
—
3.28
Percentage
Amount
100% $
—%
—%
100.00% $
Percentage
99.7%
—%
0.3%
100.00%
3.07
—
0.01
3.08
The Company designated the per share amounts above as capital gain dividends in accordance with the requirements of the
Code. The difference between net income available to common shareholders for financial reporting purposes and taxable
income before dividend deductions relates primarily to temporary differences such as depreciation and amortization and
taxable gains on sold properties in 2017.
Merger
As discussed in Note 2, on December 1, 2016, the Company completed the Merger, whereby Post Properties merged with
and into MAA completing the Parent Merger and Post LP merged with and into MAALP completing the Partnership Merger.
The Company believes the Parent Merger constituted a tax free merger under Code Section 368(a). Additionally, the
Company believes the Partnership Merger constituted a tax free merger under Code Section 708. As a result of the tax free
merger treatment, the Merger did not result in the recognition of a gain to any security holder of MAA, Post Properties,
MAALP or Post LP.
U.S. Tax Reform
In December 2017, the Tax Cuts and Jobs Act, or the Act, was enacted in the United States, requiring companies to account
in 2017 for the current and future effects of the legislative changes. As REITs are pass-through entities for the purpose of
U.S. federal taxation, the legislative changes created by the Act are largely not applicable to the Company. Generally, the
effects to REITs resulting from the Act include a reduction in the TRS federal statutory tax rate to 21% and a one-time
inclusion in REIT taxable income of foreign subsidiary earnings. As noted above, the TRS’s recognized no material taxable
income in 2017 and the Company has no foreign subsidiaries. Management has concluded there was no material effect to the
Company’s consolidated financial statements from either a tax or financial statement perspective as a result of the Act.
9.
SHAREHOLDERS' EQUITY OF MAA
On December 31, 2017, 113,643,166 shares of common stock of MAA and 4,191,586 OP Units (excluding the OP Units held
by MAA) were issued and outstanding, representing a total of 117,834,752 shares and units. At December 31, 2016,
113,518,212 shares of common stock of MAA and 4,220,403 OP units were outstanding, representing a total of 117,738,615
shares and units. Options to purchase 108,438 shares of MAA's common stock were outstanding as of December 31, 2017
compared to 147,282 outstanding options as of December 31, 2016. During the year ended December 31, 2017, 47,956
shares of MAA's common stock were acquired from employees to satisfy minimum tax withholding obligations that arose
upon vesting of restricted stock granted pursuant to approved plans. During the year ended December 31, 2016, 22,067
shares were acquired for such purposes.
Preferred Stock
As of December 31, 2017, MAA had one outstanding series of cumulative redeemable preferred stock which has the
following characteristics:
Outstanding
Shares
867,846
Liquidation
Preference(1)
Description
Series I
$50.00
(1) The total liquidation preference for the outstanding preferred stock is $43.4 million.
(2) The redemption price is the price at which the preferred stock is redeemable, at MAA's option, for cash.
Optional
Redemption Date
10/1/2026
Redemption
Price (2)
$50.00
Stated
Dividend Yield
8.50%
Approximate
Dividend Rate
$4.25
F-35
Noncontrolling Interests
Noncontrolling interests in the accompanying consolidated financial statements relates to the limited partnership interests in the
Operating Partnership owned by the holders of the Class A OP Units, or Class A Units. MAA is the sole general partner of the
Operating Partnership and holds all of the outstanding Class B OP Units, or Class B 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 Units or Class B Units changes the ownership
percentage of both the noncontrolling interests and MAA. The issuance of Class B Units generally occurs when MAA issues
common stock and the issuance proceeds are contributed to the Operating Partnership in exchange for Class B Units equal to
the number of shares of 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 Unit that were equivalent to the economic
rights in respect to each share of MAA common stock. The holders of Class A Units may redeem each of their units in
exchange for one share of common stock in MAA or cash, at the option of MAA. At December 31, 2017, a total of 4,191,586
Class A Units were outstanding and redeemable by the holders of the units for 4,191,586 shares of MAA common stock or
approximately $421.5 million, based on the closing price of MAA’s common stock on December 31, 2017 of $100.56 per
share, at MAA’s option. At December 31, 2016, a total of 4,220,403 Class A Units were outstanding and redeemable by the
holders of the units for 4,220,403 shares of MAA common stock or approximately $413.3 million, based on the closing price of
MAA’s common stock on December 31, 2016 of $97.92 per share, at MAA’s option. The Operating Partnership pays the same
per unit distribution in respect to the Class A Units as the per share distribution MAA pays in respect to the common stock. The
Operating Partnership's net income for 2017, 2016 and 2015 was allocated approximately 3.6%, 5.0% and 5.2%, respectively,
to holders of Class A Units and 96.4%, 95.0% and 94.8%, respectively, to MAA as the holder of all Class B Units.
MAA further determined that the noncontrolling interest in its consolidated real estate entity totaling $2.3 million (see Note 1)
met the criterion to be classified and accounted for as a component of permanent equity.
Direct Stock Purchase and Distribution Reinvestment Plan
MAA has a Dividend and Distribution Reinvestment and Share Purchase Plan, or DRSPP, pursuant to which MAA’s common
shareholders have the ability to reinvest all or part of their distributions from MAA into shares of MAA’s common stock and
holders of Class A Units have the ability to reinvest all or part of their distributions from the Operating Partnership into MAA’s
common stock. The DRSPP also provides the opportunity to make optional cash investments in MAA's common stock of at
least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. MAA, in its absolute
discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill its obligations under the
DRSPP, MAA may either issue additional shares of common stock or repurchase common stock in the open market. MAA has
registered with the SEC the offer and sale of up to 9,600,000 shares of common stock pursuant to the DRSPP. MAA may elect
to sell shares under the DRSPP at up to a 5% discount. Shares of MAA's common stock totaling 9,568 in 2017, 7,906 in 2016,
and 8,562 in 2015 were acquired by participants under the DRSPP. MAA did not offer a discount for optional cash purchases
in 2017, 2016 or 2015.
10.
PARTNERS' CAPITAL OF MAALP
OP Units
Interests in MAALP are represented by OP Units. As of December 31, 2017, there were 117,834,752 OP Units outstanding,
113,643,166 or 96.4% of which were owned by MAA, MAALP's general partner. The remaining 4,191,586 OP Units were
owned by non-affiliated limited partners, or Class A Limited Partners. As of December 31, 2016, there were 117,738,615 OP
Units outstanding, 113,518,212 or 96.4% of which were owned by MAA and 4,220,403 of which were owned by the Class A
Limited Partners.
MAA, as the sole general partner of MAALP, has full, complete and exclusive discretion to manage and control the business of
the Operating Partnership subject to the restrictions specifically contained within MAALP's agreement of limited partnership,
or the Partnership Agreement. Unless otherwise stated in the Partnership Agreement of MAALP, this power includes, but is not
limited to, acquiring, leasing, or disposing of any real property; constructing buildings and making other improvements to
properties owned; borrowing money, modifying or extinguishing current borrowings, issuing evidence of indebtedness, and
F-36
securing such indebtedness by mortgage, deed of trust, pledge or other lien on the Operating Partnership's assets; and
distribution of Operating Partnership cash or other assets in accordance with the Partnership Agreement. MAA can generally,
at its sole discretion, issue and redeem OP Units and determine the consideration to be received or the redemption price to be
paid, as applicable. The general partner may delegate these and other powers granted if the general partner remains in
supervision of the designee.
Under the Partnership Agreement, the Operating Partnership may issue Class A Units and Class B Units. Class A Units may
only be held by limited partners who are not affiliated with MAA, in its capacity as general partner of the Operating
Partnership, while Class B Units may only be held by MAA, in its capacity as general partner of the Operating Partnership, and
as of December 31, 2017, a total of 4,191,586 Class A Units in the Operating Partnership were held by limited partners
unaffiliated with MAA, while a total of 113,643,166 Class B Units were held by MAA. In general, the limited partners do not
have the power to participate in the management or control of the Operating Partnership's business except in limited
circumstances including changes in the general partner and protective rights if the general partner acts outside of the provisions
provided in the Partnership Agreement. The transferability of Class A Units is also limited by the Partnership Agreement.
Net income (after allocations to preferred ownership interests) is allocated to the general partner and limited partners based on
their respective ownership percentages of the Operating Partnership. Issuance or redemption of additional Class A Units or
Class B Units changes the relative ownership percentage of the partners. The issuance of Class B Units generally occurs when
MAA issues common stock and the proceeds from that issuance are contributed to the Operating Partnership in exchange for
the issuance to MAA of a number of OP Units equal to the number of shares of common stock issued. Likewise, if MAA
repurchases or redeems outstanding shares of common stock, the Operating Partnership generally redeems an equal number of
Class B Units with similar terms held by MAA for a redemption price equal to the purchase price of those shares of common
stock. At each reporting period, the allocation between general partner capital and limited partner capital is adjusted to account
for the change in the respective percentage ownership of the underlying capital of the Operating Partnership. Holders of the
Class A Units may require MAA to redeem their Class A Units, in which case MAA may, at its option, pay the redemption price
either in cash (in an amount per Class A Unit equal, in general, to the average closing price of MAA's common stock on the
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 Unit so redeemed.
At December 31, 2017, a total of 4,191,586 Class A Units were outstanding and redeemable for 4,191,586 shares of MAA
common stock, with an approximate value of $421.5 million, based on the closing price of MAA’s common stock on
December 31, 2017 of $100.56 per share. At December 31, 2016, a total of 4,220,403 Class A Units were outstanding and
redeemable for 4,220,403 shares of MAA common stock, with an approximate value of $413.3 million, based on the closing
price of MAA’s common stock on December 31, 2016 of $97.92 per share. The Operating Partnership pays the same per unit
distribution in respect to the OP Units as the per share dividend MAA pays in respect to its common and preferred stock.
11.
EMPLOYEE BENEFIT PLANS
The following provides details of the employee benefit plans not previously discussed in Note 5.
401(k) Savings Plans
MAA's 401(k) Savings Plan, or 401(k) Plan, is a defined contribution plan that satisfies the requirements of Section 401(a) and
401(k) of the Code. Subsequent to the Merger, eligible employees of Post Properties continued to actively participate in the
Post Properties 401(k) Plan, which also is a defined contribution plan that satisfies the requirements of Section 401(a) and
401(k) of the Code. MAA's Board of Directors has the discretion to approve matching contributions to these plans. MAA's
contributions to these plans were approximately $2.8 million, $2.0 million and $1.0 million for the years ended December 31,
2017, 2016 and 2015, respectively.
Non-Qualified Deferred Compensation Retirement Plan
MAA has adopted a non-qualified deferred compensation retirement plan for certain selected executive employees. Under the
terms of the plan, employees may elect to defer a percentage of the compensation and bonus, and MAA may, but is not
obligated to, match a portion of their salary deferral. MAA’s match to this plan for the years ended December 31, 2017, 2016
and 2015 was approximately $249,000, $96,000 and $106,000, respectively.
F-37
Non-Qualified Deferred Compensation Plan for Outside Company Directors
In 1998, MAA established the Non-Qualified Deferred Compensation Plan for Outside Company Directors, or the Directors
Deferred Compensation Plan, which allows non-employee directors to defer their director fees by having the fees held by MAA
as shares of MAA's common stock. Directors can also choose to have their annual restricted stock grants issued into the
Directors Deferred Compensation Plan. Amounts deferred through the Directors Deferred Compensation Plan are distributed to
the directors in two annual installments beginning in the first 90 days of the year following the director’s departure from the
board. Participating directors may choose to have the amount issued to them in shares of MAA's common stock or paid to them
as cash at the market value of MAA's common stock as of the end of the year the director ceases to serve on the board.
For the years ended December 31, 2017, 2016 and 2015, directors deferred 12,293 shares, 10,166 shares and 8,466 shares of
common stock, respectively, with weighted-average grant date fair values of $101.34, $97.99 and $78.62, respectively, into the
Directors Deferred Compensation Plan. The shares of common stock held in the Directors Deferred Compensation Plan are
classified outside of permanent equity in redeemable stock with changes in redemption amount recorded immediately to
retained earnings because the directors have redemption rights not solely within the control of MAA. Additionally, any shares
that become mandatorily redeemable because a departed director has elected to receive a cash payout are recorded as a liability.
MAA did not record a liability related to mandatorily redeemable shares for the years ended December 31, 2017, 2016 and
2015.
Employee Stock Ownership Plan
MAA’s Employee Stock Ownership Plan, or ESOP, is a non-contributory stock bonus plan that satisfies the requirements of
Section 401 (a) of the Code. On December 31, 2010, the ESOP was frozen by amendment, whereby effective January 1, 2011,
no additional employees became eligible for the plan, no additional contributions were made to the ESOP, and all Participants
with an account balance under the ESOP became 100% vested. The Company did not contribute to the ESOP during 2017,
2016 or 2015. As of December 31, 2017, there were 145,598 shares outstanding with a fair value of $14.6 million.
12.
COMMITMENTS AND CONTINGENCIES
Land and Equipment Leases
The Company has a ground lease expiring in 2074 related to one of its apartment communities acquired in the Merger. This
lease contains stated rent increases that generally compensate for the impact of inflation. The Company also has office,
equipment and other operating leases. Future minimum lease payments for non-cancelable land, equipment and other operating
leases at December 31, 2017, were as follows (in thousands):
2018
2019
2020
2021
2022
Thereafter
Total
Legal Proceedings
$
$
Minimum Lease Payments
882
724
708
718
733
62,788
66,553
In September 2010, the United States Department of Justice, or DOJ, filed suit against Post Properties (and by virtue of the
Merger, MAA) in the United States District Court for the District of Columbia alleging that certain of Post Properties’
apartments violated accessibility requirements of the Fair Housing Act, or FHA. and the Americans with Disabilities Act of
1990, or ADA. The DOJ is seeking, among other things, an injunction against MAA, requiring MAA to retrofit the properties
and comply with FHA and ADA standards in future design and construction, as well as monetary damages and civil penalties.
No trial date has been set.
In December 2017, a non-profit civil rights organization filed suit against MAA and the Operating Partnership in the United
States District Court for the District of Columbia. The suit alleges the Company maintained and enforced a criminal records
F-38
screening policy at certain of its apartment communities, all of which are apartments acquired from Post Properties in the
Merger, which violates the FHA. The suit seeks injunctive relief, actual and punitive damages and attorneys' fees and costs.
The Company is subject to various other legal proceedings and claims that arise in the ordinary course of our business
operations. Matters which arise out of allegations of bodily injury, property damage and employment practices are generally
covered by insurance. While the resolution of these other matters cannot be predicted with certainty, management does not
currently believe such matters, either individually or in the aggregate, will have a material adverse effect on the Company's
financial position, results of operations or cash flows.
As of December 31, 2017 and December 31, 2016, the Company's accrual for loss contingencies, including the legal
proceedings referenced above, was $32.1 million and $42.1 million in the aggregate, respectively. The loss contingencies are
presented in "Accrued expenses and other liabilities" in the accompanying Consolidated Balance Sheets.
13.
RELATED PARTY TRANSACTIONS
The Company holds investments in unconsolidated affiliates accounted for under the equity method of accounting. All
significant intercompany transactions were eliminated in the accompanying consolidated financial statements.
The cash management of the Company is managed by the Operating Partnership. In general, cash receipts are remitted to the
Operating Partnership and all cash disbursements are funded by the Operating Partnership. As a result of these transactions, the
Operating Partnership had a payable to MAA, its general partner, of $19,000 at each of the years ended December 31, 2017,
and 2016. The Partnership Agreement does not require the due to/due from balance to be settled in cash until liquidation of the
Operating Partnership, and therefore, there is no regular settlement schedule for such amounts.
14.
SEGMENT INFORMATION
As of December 31, 2017, the Company owned or had an ownership interest in 302 multifamily apartment communities in 17
different states and the District of Columbia from which it derived all significant sources of earnings and operating cash flows.
Management evaluates performance and determines resource allocations of each of the apartment communities on a Large
Market Same Store, Secondary Market Same Store, and Non-Same Store and Other basis, as well as an individual apartment
community basis. This is consistent with the aggregation criteria under GAAP as each of the apartment communities generally
has similar economic characteristics, facilities, services, and tenants. The following reflects the three reportable operating
segments for the Company:
• Large Market Same Store communities are generally communities in markets with a population of at least 1 million
and at least 1% of the total public multifamily REIT units that the Company has owned and has been stabilized for at
least a full 12 months.
• Secondary Market Same Store communities are generally communities in markets with populations of more than 1
million but less than 1% of the total public multifamily REIT units or markets with populations of less than 1 million
that the Company has owned and has been stabilized for at least a full 12 months.
• Non-Same Store and Other includes recent acquisitions, communities in development or lease-up, communities that
have been identified for disposition, and communities that have undergone a significant casualty loss. Also included
in non-same store communities are non-multifamily activities.
On the first day of each calendar year, the Company determines the composition of its same store operating segments for that
year as well as adjust the previous year, which allows the Company to evaluate full period-over-period operating
comparisons. Properties in development or lease-up are added to the same store portfolio on the first day of the calendar year
after it has been owned and stabilized for at least a full 12 months. Communities are considered stabilized after achieving 90%
occupancy for 90 days. Communities that have been identified for disposition are excluded from the same store portfolio.
The Company utilizes NOI in evaluating the performance of the segments. Total NOI represents total property revenues less
total property operating expenses, excluding depreciation and amortization, for all properties held during the period regardless
of their status as held for sale. Management believes 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 related to property operating performance.
F-39
All properties acquired as a result of the Merger have been placed in the Non-Same Store and Other operating segment, as the
properties were recent acquisitions and had not been owned and stabilized for at least 12 months as of the first day of the
applicable calendar year.
Revenues and NOI for each reportable segment for the years ended December 31, 2017, 2016 and 2015 were as follows (in
thousands):
Revenues:
Large Market Same Store
Secondary Market Same Store
Non-Same Store and Other
Total rental and other property revenues
NOI:
Large Market Same Store
Secondary Market Same Store
Non-Same Store and Other
Total NOI
Depreciation and amortization
Property management expenses
General and administrative expenses
Merger and integration expenses
Interest expense
Gain on sale of depreciable real estate assets
Income tax expense
Gain on sale of non-depreciable real estate assets
Other non-operating income (expense)
Gain (loss) from real estate joint ventures
Net income attributable to noncontrolling interests
Dividends to MAA Series I preferred shareholders
Net income available for MAA common shareholders
2017
2016
2015 (1)
672,131 $
349,007
507,849
1,528,987 $
652,560 $
340,161
132,627
1,125,348 $
612,934
327,700
102,145
1,042,779
422,075 $
218,673
311,508
952,256
(493,708)
(43,588)
(40,194)
(19,990)
(154,751)
127,386
(2,619)
21
14,353
1,370
(12,157)
(3,688)
324,691 $
407,294 $
213,273
81,425
701,992
(322,958)
(34,093)
(29,040)
(40,823)
(129,947)
80,397
(1,699)
2,171
(1,839)
241
(12,180)
(307)
211,915 $
377,025
204,382
60,727
642,134
(294,520)
(30,990)
(25,716)
—
(122,344)
189,958
(1,673)
172
(6,274)
(2)
(18,458)
—
332,287
$
$
$
$
(1) The 2015 column shows the segment break down based on the 2016 same store portfolios. A comparison using the 2017
same store portfolio would not be comparative due to the nature of the segment classifications.
Assets for each reportable segment as of December 31, 2017 and 2016 were as follows (in thousands):
Assets
Large Market Same Store
Secondary Market Same Store
Non-Same Store and Other
Corporate assets
Total assets
December 31, 2017
December 31, 2016
$
$
4,003,859 $
1,718,237
5,570,003
199,820
11,491,919 $
4,126,885
1,768,183
5,479,780
229,643
11,604,491
F-40
15.
REAL ESTATE ACQUISITIONS AND DISPOSITIONS
The following table reflects the Company's acquisition activity for the year ended December 31, 2017:
Community
Charlotte at Midtown
Acklen West End
Market
Nashville, TN
Nashville, TN
Units
279
320
Date Acquired
March 16, 2017
December 28, 2017
The following table reflects the Company's disposition activity for the year ended December 31, 2017:
Community
Lakewood Ranch - Outparcel
Post Alexander - Outparcel
Paddock Club Lakeland
Paddock Club Lakeland - Outparcel
Paddock Club Montgomery
Northwood Place
Town Park Lot 12
Terraces at Fieldstone
Terraces at Towne Lake
Market
Tampa, FL
Atlanta, GA
Lakeland, FL
Lakeland, FL
Montgomery, AL
Fort Worth, TX
Orlando, FL
Atlanta, GA
Atlanta, GA
Units/Acres
12 acres
1 acre
464 units
9 acres
208 units
270 units
1 acre
316 units
502 units
Date Sold
April 7, 2017
June 12, 2017
July 13, 2017
July 13, 2017
July 20, 2017
July 20, 2017
August 7, 2017
November 30, 2017
November 30, 2017
16.
SELECTED QUARTERLY FINANCIAL INFORMATION OF MAA (UNAUDITED)
The following table reflects MAA's selected quarterly financial information for the year ended December 31, 2017 (dollars in
thousands, except per share data):
Rental and other property revenues
Income before non-operating items
Net income
Net income available for MAA common shareholders
Per share:
Earnings per common share - basic
Earnings per common share - diluted
Year Ended December 31, 2017
First
$ 378,908
77,656
43,416
40,983
Second
$ 382,791
85,976
50,155
47,393
Third
$ 384,550
94,671
118,958
113,787
Fourth
$ 382,738
96,473
128,007
122,528
$
$
0.36
0.36
$
0.42
0.42
$
1.00
1.00
1.08
1.08
The following table reflects MAA's selected quarterly financial information for the year ended December 31, 2016 (dollars in
thousands, except per share data):
Rental and other property revenues
Income before non-operating items
Net income
Net income available for MAA common shareholders
Per share:
Earnings per common share - basic
Earnings per common share - diluted
Year Ended December 31, 2016
First
$ 269,016
77,422
45,808
43,413
Second
$ 272,236
78,215
47,630
45,144
Third
$ 276,898
74,823
88,906
84,279
Fourth
$ 307,198
44,618
42,058
39,079
$
$
0.58
0.58
$
0.60
0.60
$
1.12
1.12
0.44
0.44
F-41
17.
SELECTED QUARTERLY FINANCIAL INFORMATION OF MAALP (UNAUDITED)
The following table reflects MAALP's selected quarterly financial information for the year ended December 31, 2017 (dollars in
thousands, except per unit data):
Year Ended December 31, 2017
First
Second
Third
Fourth
Rental and other property revenues
Income before non-operating items
Net income
Net income available for MAALP common unitholders
Per unit:
Earnings per common unit - basic
Earnings per common unit - diluted
$ 378,908 $ 382,791 $ 384,550 $ 382,738
96,473
128,007
127,085
94,671
118,958
118,036
77,656
43,416
42,494
85,976
50,155
49,233
$
0.36 $
0.36
0.42 $
0.42
1.00 $
1.00
1.08
1.08
The following table reflects MAALP's selected quarterly financial information for the year ended December 31, 2016 (dollars in
thousands, except per unit data):
Year Ended December 31, 2016
First
Second
Third
Fourth
Rental and other property revenues
Income before non-operating items
Net income
Net income available for MAALP common unitholders
Per unit:
Earnings per common unit - basic
Earnings per common unit - diluted
18.
SUBSEQUENT EVENTS
Financing
$ 269,016 $ 272,236 $ 276,898 $ 307,198
44,618
42,058
41,751
74,823
88,906
88,906
78,215
47,630
47,630
77,422
45,808
45,808
$
0.61 $
0.61
0.60 $
0.60
1.12 $
1.12
0.45
0.45
On February 1, 2018, the Company retired a $38.5 million mortgage associated with Highlands of West Village. The mortgage
was scheduled to mature in May 2018.
F-42
Mid-America Apartment Communities, Inc.
Mid-America Apartments, L.P.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017
(Dollars in thousands)
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
$
Property
Birchall at Ross Bridge
Colonial Grand at Riverchase Trails
Colonial Village at Trussville
Eagle Ridge
Colonial Grand at Traditions
Colonial Grand at Edgewater
Colonial Promenade at Huntsville
Paddock Club at Providence
Colonial Grand at Madison
Cypress Village
Colonial Grand at Liberty Park
Edge at Lyon's Gate
Residences at Fountainhead
Sky View Ranch
Talus Ranch
Colonial Grand at Inverness Commons
Colonial Grand at Scottsdale
Colonial Grand at OldTown Scottsdale
SkySong
Calais Forest
Napa Valley
Palisades at Chenal Valley
Ridge at Chenal Valley
Westside Creek
Tiffany Oaks
Indigo Point
Location
Birmingham, AL
Birmingham, AL
Birmingham, AL
Birmingham, AL
Gulf Shores,AL
Huntsville, AL
Huntsville, AL
Huntsville, AL
Madison, AL
Orange Beach, AL
Vestavia Hills, AL
Phoenix, AZ
Phoenix, AZ
Gilbert, AZ
Phoenix, AZ
Mesa, AZ
Scottsdale, AZ
Scottsdale, AZ
Scottsdale, AZ
Little Rock, AR
Little Rock, AR
Little Rock, AR
Little Rock, AR
Little Rock, AR
Altamonte Springs, FL
Brandon, FL
Encumbrances
—
—
—
—
—
—
—
—
—
—
16,404
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— (1)
Land
Buildings
and Fixtures
28,842 $
22,079
31,813
7,667
25,162
38,673
—
10,152
28,934
12,238
30,977
27,182
56,705
14,577
47,701
26,255
20,273
51,627
55,748
9,244
8,642
25,234
—
11,463
9,219
10,500
2,640 $
3,761
3,402
851
3,211
4,943
2,000
909
3,601
1,290
3,922
7,901
12,212
2,668
12,741
4,219
3,612
7,820
—
1,026
960
2,560
2,626
1,271
1,024
1,167
Land
Buildings
and Fixtures
1,254 $
3,261
2,284
3,896
2,106
4,291
2
13,817
1,413
1,588
4,564
2,355
797
2,179
2,758
1,409
1,934
4,414
1,176
7,741
5,361
3,395
27,537
8,285
5,389
3,514
— $
—
—
—
—
—
—
830
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F-43
Land
Buildings
and Fixtures
30,096 $
25,340
34,097
11,563
27,268
42,964
2
23,969
30,347
13,826
35,541
29,537
57,502
16,756
50,459
27,664
22,207
56,041
56,924
16,985
14,003
28,629
27,537
19,748
14,608
14,014
2,640 $
3,761
3,402
851
3,211
4,943
2,000
1,739
3,601
1,290
3,922
7,901
12,212
2,668
12,741
4,219
3,612
7,820
—
1,026
960
2,560
2,626
1,271
1,024
1,167
Total
Accumulated
Depreciation
Net
Date of
Construction
Life used to
compute
depreciation
in latest
income
statement (4)
32,736 $
29,101
37,499
12,414
30,479
47,907
2,002
25,708
33,948
15,116
39,463
37,438
69,714
19,424
63,200
31,883
25,819
63,861
56,924
18,011
14,963
31,189
30,163
21,019
15,632
15,181
(6,688) $
(5,289)
(6,552)
(7,362)
(5,623)
(7,608)
(1)
(13,490)
(5,973)
(2,472)
(6,857)
(9,643)
(2,683)
(5,147)
(19,329)
(5,232)
(4,217)
(10,256)
(3,827)
(11,422)
(9,166)
(6,366)
(3,935)
(12,205)
(9,658)
(8,515)
26,048
23,812
30,947
5,052
24,856
40,299
2,001
12,218
27,975
12,644
32,606
27,795
67,031
14,277
43,871
26,651
21,602
53,605
53,097
6,589
5,797
24,823
26,228
8,814
5,974
6,666
2009
2010
1996/97
1986
2007
1990
2017
1993
2000
2008
2000
2007
2015
2007
2005
2002
1999
1994/95
2014
1987
1984
2006
2012
1984/86
1985
1989
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Property
Location
Paddock Club Brandon
Colonial Grand at Lakewood Ranch
The Preserve at Coral Square
Paddock Club Gainesville
The Retreat at Magnolia Park
Colonial Grand at Heathrow
220 Riverside
Atlantic Crossing
Colonial Grand at Randall Lakes II
Cooper's Hawk
Hunter's Ridge at Deerwood
Lakeside
Lighthouse at Fleming Island
Paddock Club Mandarin
St. Augustine
St. Augustine II
Tattersall at Tapestry Park
Woodhollow
Colonial Grand at Town Park
Colonial Grand at Town Park Reserve
Colonial Grand at Lake Mary
Retreat at Lake Nona
Colonial Grand at Heather Glen
Colonial Grand at Randal Lakes
Post Lake at Baldwin Park
Post Lakeside
Post Parkside
Park Crest at Innisbrook
The Club at Panama Beach
Colonial Village at Twin Lakes
Paddock Club Tallahassee
Brandon, FL
Bradenton, FL
Coral Springs, FL
Gainesville, FL
Gainesville, FL
Heathrow, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Lake Mary, FL
Lake Mary, FL
Lake Mary, FL
Orlando, FL
Orlando, FL
Orlando, FL
Orlando, FL
Orlando, FL
Orlando, FL
Palm Harbor, FL
Panama City, FL
Sanford, FL
Tallahassee, FL
Encumbrances
—
—
—
—
—
20,310
—
—
—
—
—
—
— (1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
27,159
—
23,246
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
2,896
2,980
9,600
1,800
2,040
4,101
2,500
4,000
3,200
854
1,533
1,430
4,047
1,411
2,857
—
6,417
1,686
5,742
3,481
6,346
7,880
4,662
5,659
18,101
7,046
5,669
6,900
898
3,091
530
Buildings
and Fixtures
26,111
40,230
40,004
15,879
16,338
35,684
38,416
19,495
—
7,500
13,835
12,883
35,052
14,967
6,475
—
36,069
15,179
56,562
10,311
41,539
41,175
56,988
50,553
144,200
52,585
49,754
26,613
14,276
47,793
4,805
Buildings
and Fixtures
6,192
3,072
9,175
4,689
745
2,667
2,753
1,546
36,696
3,494
5,369
8,093
5,170
2,924
19,684
2
1,056
8,795
3,455
353
23,107
3,708
4,428
10,643
496
166
665
2,229
3,952
1,777
14,458
Land
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(8)
—
—
—
—
—
—
—
—
—
—
(5)
—
950
F-44
Land
2,896
2,980
9,600
1,800
2,040
4,101
2,500
4,000
3,200
854
1,533
1,430
4,047
1,411
2,857
—
6,417
1,678
5,742
3,481
6,346
7,880
4,662
5,659
18,101
7,046
5,669
6,900
893
3,091
1,480
Buildings
and Fixtures
32,303
43,302
49,179
20,568
17,083
38,351
41,169
21,041
36,696
10,994
19,204
20,976
40,222
17,891
26,159
2
37,125
23,974
60,017
10,664
64,646
44,883
61,416
61,196
144,696
52,751
50,419
28,842
18,228
49,570
19,263
Total
Accumulated
Depreciation
35,199
46,282
58,779
22,368
19,123
42,452
43,669
25,041
39,896
11,848
20,737
22,406
44,269
19,302
29,016
2
43,542
25,652
65,759
14,145
70,992
52,763
66,078
66,855
162,797
59,797
56,088
35,742
19,121
52,661
20,743
(19,400)
(7,910)
(22,555)
(9,467)
(3,920)
(7,306)
(2,388)
(5,022)
(982)
(7,952)
(12,455)
(14,894)
(19,570)
(8,887)
(12,327)
(1)
(8,354)
(16,277)
(11,755)
(2,132)
(9,528)
(8,533)
(11,119)
(6,052)
(6,212)
(2,097)
(2,187)
(9,123)
(9,868)
(9,338)
(12,330)
Net
15,799
38,372
36,224
12,901
15,203
35,146
41,281
20,019
38,914
3,896
8,282
7,512
24,699
10,415
16,689
1
35,188
9,375
54,004
12,013
61,464
44,230
54,959
60,803
156,585
57,700
53,901
26,619
9,253
43,323
8,413
Life used to
compute
depreciation
in latest
income
statement (4)
Date of
Construction
1998
1999
1996
1999
2009
1997
2015
2008
2017
1987
1987
1985
2003
1998
1987
2008
2009
1986
2005
2004
2012
2006
2000
2013
2011
2013
1999
2000
2000
2005
1992
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Property
Location
Verandas at Southwood
Belmere
Links at Carrollwood
Post Bay at Rocky Point
Post Harbour Place
Post Hyde Park
Post Rocky Point
Post Soho Square
Village Oaks
Colonial Grand at Hampton Preserve
Colonial Grand at Seven Oaks
Colonial Grand at Windermere
Allure at Brookwood
Allure in Buckhead Village Residential
The High Rise at Post Alexander
Post Alexander
Post Briarcliff
Post Brookhaven
Post Chastain
Post Crossing
Post Gardens
Post Glen
Post Midtown
Post Parkside
Post Peachtree Hills
Post Riverside
Post Spring
Post Stratford
Sanctuary at Oglethorpe
Prescott
Colonial Grand at Berkeley Lake
Tallahassee, FL
Tampa, FL
Tampa, FL
Tampa, FL
Tampa, FL
Tampa, FL
Tampa, FL
Tampa, FL
Tampa, FL
Tampa, FL
Wesley Chapel, FL
Windermere, FL
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Duluth, GA
Duluth, GA
Encumbrances
—
—
—
—
—
42,050
—
—
—
—
—
—
—
—
—
—
54,386
—
—
24,418
—
25,370
—
—
—
—
—
—
—
— (2)
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
3,600
852
817
4,541
16,296
16,891
35,260
5,190
2,738
6,233
3,051
2,711
11,168
8,633
8,435
15,440
24,645
29,048
30,223
15,799
17,907
13,878
7,000
11,025
11,974
23,765
18,596
—
6,875
3,840
1,960
Buildings
and Fixtures
25,914
7,667
7,355
28,381
116,193
95,259
153,102
56,296
19,055
69,535
42,768
36,710
52,758
19,844
92,294
73,278
114,921
106,463
82,964
48,054
56,093
51,079
44,000
34,277
55,264
89,369
57,819
30,051
31,441
24,011
15,707
Buildings
and Fixtures
731
6,725
5,168
366
2,031
975
2,994
96
2,334
1,264
1,879
1,023
4,313
5,931
157
887
1,142
1,519
578
812
894
889
39,542
282
168
1,785
974
1,071
3,089
3,801
1,690
Land
—
—
110
—
—
—
—
—
153
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F-45
Land
3,600
852
927
4,541
16,296
16,891
35,260
5,190
2,891
6,233
3,051
2,711
11,168
8,633
8,435
15,440
24,645
29,048
30,223
15,799
17,907
13,878
7,000
11,025
11,974
23,765
18,596
—
6,875
3,840
1,960
Buildings
and Fixtures
26,645
14,392
12,523
28,747
118,224
96,234
156,096
56,392
21,389
70,799
44,647
37,733
57,071
25,775
92,451
74,165
116,063
107,982
83,542
48,866
56,987
51,968
83,542
34,559
55,432
91,154
58,793
31,122
34,530
27,812
17,397
Total
Accumulated
Depreciation
30,245
15,244
13,450
33,288
134,520
113,125
191,356
61,582
24,280
77,032
47,698
40,444
68,239
34,408
100,886
89,605
140,708
137,030
113,765
64,665
74,894
65,846
90,542
45,584
67,406
114,919
77,389
31,122
41,405
31,652
19,357
(3,219)
(9,850)
(7,945)
(1,197)
(5,209)
(4,263)
(6,618)
(2,224)
(6,969)
(12,363)
(7,910)
(6,520)
(11,027)
(5,890)
(5,333)
(2,495)
(4,774)
(4,724)
(3,428)
(2,075)
(2,525)
(2,167)
(1,008)
(1,359)
(2,252)
(4,224)
(2,652)
(1,374)
(11,742)
(12,505)
(3,853)
Net
27,026
5,394
5,505
32,091
129,311
108,862
184,738
59,358
17,311
64,669
39,788
33,924
57,212
28,518
95,553
87,110
135,934
132,306
110,337
62,590
72,369
63,679
89,534
44,225
65,154
110,695
74,737
29,748
29,663
19,147
15,504
Date of
Construction
2003
1984
1980
1997
1997
1994
1994-1996
2012
2005
2012
2004
2009
2008
2002
2015
2006
1996
1989-1992
1990
1995
1996
1996
2017
1999
1992-1994/2009
1996
1999
1999
1994
2001
1998
Life used to
compute
depreciation
in latest
income
statement (4)
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Property
Location
Colonial Grand at River Oaks
Colonial Grand at River Plantation
Colonial Grand at McDaniel Farm
Colonial Grand at Pleasant Hill
Colonial Grand at Mount Vernon
Lake Lanier Club I
Lake Lanier Club II
Colonial Grand at Shiloh
Millstead Village
Colonial Grand at Barrett Creek
Colonial Grand at Godley Station
Colonial Grand at Godley Lake
Avala at Savannah Quarters
Georgetown Grove
Colonial Grand at Hammocks
Colonial Village at Greentree
Colonial Village at Huntington
Colonial Village at Marsh Cove
Oaks at Wilmington Island
Highlands of West Village I
Highlands of West Village II
Haven at Praire Trace
Grand Reserve at Pinnacle
Lakepointe
Mansion, The
Village, The
Stonemill Village
Crosswinds
Pear Orchard
Reflection Pointe
Lakeshore Landing
Duluth, GA
Duluth, GA
Duluth, GA
Duluth, GA
Dunwoody, GA
Gainesville, GA
Gainesville, GA
Kennesaw, GA
LaGrange, GA
Marietta, GA
Pooler, GA
Pooler, GA
Savannah, GA
Savannah, GA
Savannah, GA
Savannah, GA
Savannah, GA
Savannah, GA
Savannah, GA
Smyrna, GA
Smyrna, GA
Overland Park, KS
Lexington, KY
Lexington, KY
Lexington, KY
Lexington, KY
Louisville, KY
Jackson, MS
Jackson, MS
Jackson, MS
Ridgeland, MS
Encumbrances
—
—
—
—
15,430
—
— (2)
29,518
—
—
10,151
—
—
—
—
—
—
—
—
38,390
—
—
—
—
—
—
—
—
—
—
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
4,360
2,059
3,985
6,753
6,861
3,560
3,150
4,864
3,100
5,661
1,800
1,750
1,500
1,288
2,441
1,710
2,521
5,231
2,910
9,052
5,358
3,500
2,024
411
694
900
1,169
1,535
1,351
710
676
Buildings
and Fixtures
13,579
19,158
32,206
32,202
23,748
22,611
18,383
45,893
29,240
26,186
35,454
30,893
24,862
11,579
36,863
10,494
8,223
8,555
25,315
43,395
30,338
40,614
31,525
3,699
6,242
8,097
10,518
13,826
12,168
8,770
6,284
Buildings
and Fixtures
1,647
1,789
3,419
3,538
2,898
5,243
2,369
3,323
793
2,565
2,764
1,030
1,854
3,332
3,623
1,268
905
902
4,169
6,354
75
1,037
5,178
2,523
3,619
4,625
9,404
5,097
8,521
8,575
3,232
Land
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(46)
—
—
—
—
—
—
—
—
—
—
138
—
F-46
Land
4,360
2,059
3,985
6,753
6,861
3,560
3,150
4,864
3,100
5,661
1,800
1,750
1,500
1,288
2,441
1,710
2,521
5,231
2,864
9,052
5,358
3,500
2,024
411
694
900
1,169
1,535
1,351
848
676
Buildings
and Fixtures
15,226
20,947
35,625
35,740
26,646
27,854
20,752
49,216
30,033
28,751
38,218
31,923
26,716
14,911
40,486
11,762
9,128
9,457
29,484
49,749
30,413
41,651
36,703
6,222
9,861
12,722
19,922
18,923
20,689
17,345
9,516
Total
Accumulated
Depreciation
Net
Date of
Construction
Life used to
compute
depreciation
in latest
income
statement (4)
19,586
23,006
39,610
42,493
33,507
31,414
23,902
54,080
33,133
34,412
40,018
33,673
28,216
16,199
42,927
13,472
11,649
14,688
32,348
58,801
35,771
45,151
38,727
6,633
10,555
13,622
21,091
20,458
22,040
18,193
10,192
(4,196)
(4,601)
(7,730)
(7,468)
(4,792)
(12,146)
(9,008)
(9,697)
(5,314)
(6,365)
(6,821)
(6,025)
(5,954)
(9,397)
(7,210)
(2,729)
(1,867)
(2,289)
(11,378)
(5,779)
(3,263)
(2,682)
(17,027)
(4,483)
(7,114)
(9,221)
(13,816)
(12,940)
(14,664)
(11,865)
(4,628)
15,390
18,405
31,880
35,025
28,715
19,268
14,894
44,383
27,819
28,047
33,197
27,648
22,262
6,802
35,717
10,743
9,782
12,399
20,970
53,022
32,508
42,469
21,700
2,150
3,441
4,401
7,275
7,518
7,376
6,328
5,564
1992
1994
1997
1996
1997
1998
2001
2002
1998
1999
2001
2008
2009
1997
1997
1984
1986
1983
1999
2006
2012
2015
2000
1986
1989
1989
1985
1989
1985
1986
1974
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Property
Location
Market Station
Residences at Burlington Creek
The Denton
The Denton II
Colonial Grand at Desert Vista
Colonial Grand at Palm Vista
Colonial Village at Beaver Creek
Hermitage at Beechtree
Waterford Forest
1225 South Church I
Colonial Grand at Ayrsley
Colonial Grand at Beverly Crest
Colonial Grand at Legacy Park
Colonial Grand at Mallard Creek
Colonial Grand at Mallard Lake
Colonial Grand at University Center
Colonial Reserve at South End
Colonial Village at Chancellor Park
Colonial Village at South Tryon
Colonial Village at Timber Crest
Enclave
Post Ballantyne
Post Gateway Place
Post Park at Phillips Place
Post South End
Post Uptown Place
Colonial Grand at Cornelius
Colonial Grand at Patterson Place
Colonial Village at Deerfield
Colonial Grand at Research Park
Colonial Grand at Huntersville
Kansas City, MO
Kansas City, MO
Kansas City, MO
Kansas City, MO
North Las Vegas, NV
North Las Vegas, NV
Apex, NC
Cary, NC
Cary, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Charlotte, NC
Cornelius, NC
Durham, NC
Durham, NC
Durham, NC
Huntersville, NC
Encumbrances
—
—
—
—
—
—
—
— (1)
— (2)
—
—
16,462
—
14,520
19,942
—
—
—
—
—
—
—
—
—
—
—
—
13,343
—
—
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
5,814
4,000
750
770
4,091
4,909
7,491
900
4,000
9,612
2,481
3,161
2,891
4,591
3,250
1,620
4,628
5,311
2,260
2,901
1,461
16,216
17,528
20,869
18,835
10,888
4,571
2,590
3,271
4,201
4,251
Buildings
and Fixtures
46,241
42,144
8,795
—
29,826
25,643
34,863
8,099
20,250
22,342
52,119
24,004
28,272
27,713
31,389
17,499
44,282
28,016
19,489
17,192
18,984
44,817
57,444
65,517
58,795
30,078
29,151
27,126
15,609
37,682
31,948
Buildings
and Fixtures
1,934
767
339
23,932
1,276
2,308
1,496
4,798
3,518
28,236
13,417
2,515
1,944
1,407
3,208
638
11,365
3,594
1,623
2,073
935
998
1,487
1,524
815
779
1,128
2,318
1,193
1,951
1,931
Land
5,814
4,000
750
770
4,091
4,909
7,491
900
4,000
9,612
2,481
3,161
2,891
4,591
3,250
1,620
4,628
5,311
2,260
2,901
1,461
16,216
17,528
20,869
18,835
10,888
4,571
2,590
3,271
4,201
4,251
Buildings
and Fixtures
48,175
42,911
9,134
23,932
31,102
27,951
36,359
12,897
23,768
50,578
65,536
26,519
30,216
29,120
34,597
18,137
55,647
31,610
21,112
19,265
19,919
45,815
58,931
67,041
59,610
30,857
30,279
29,444
16,802
39,633
33,879
Land
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F-47
Total
Accumulated
Depreciation
Net
Date of
Construction
Life used to
compute
depreciation
in latest
income
statement (4)
53,989
46,911
9,884
24,702
35,193
32,860
43,850
13,797
27,768
60,190
68,017
29,680
33,107
33,711
37,847
19,757
60,275
36,921
23,372
22,166
21,380
62,031
76,459
87,910
78,445
41,745
34,850
32,034
20,073
43,834
38,130
(8,671)
(3,348)
(465)
(112)
(6,026)
(5,614)
(6,608)
(8,071)
(10,446)
(7,567)
(10,937)
(4,865)
(5,735)
(5,561)
(6,630)
(3,229)
(5,287)
(5,693)
(3,961)
(3,350)
(3,169)
(1,879)
(2,609)
(2,840)
(2,298)
(1,318)
(5,908)
(5,415)
(3,766)
(7,551)
(6,387)
45,318
43,563
9,419
24,590
29,167
27,246
37,242
5,726
17,322
52,623
57,080
24,815
27,372
28,150
31,217
16,528
54,988
31,228
19,411
18,816
18,211
60,152
73,850
85,070
76,147
40,427
28,942
26,619
16,307
36,283
31,743
2010
2013/14
2014
2017
2009
2007
2007
1988
1996
2010
2008
1996
2001
2005
1998
2005
2013
1999
2002
2000
2008
2004
2000
1996
2009
2000
2009
1997
1985
2002
2008
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Property
Location
Colonial Village at Matthews
Colonial Grand at Matthews Commons
Colonial Grand at Arringdon
Colonial Grand at Brier Creek
Colonial Grand at Brier Falls
Colonial Grand at Crabtree Valley
Hue
Colonial Grand at Trinity Commons
Post Parkside at Wade
Post Parkside at Wade II
Preserve at Brier Creek
Providence at Brier Creek
Tanglewood
Colonial Grand at Cypress Cove
Colonial Village at Hampton Pointe
Colonial Grand at Quarterdeck
Colonial Village at Westchase
River's Walk
River's Walk II
1201 Midtown
Fairways, The
Paddock Club Columbia
Colonial Village at Windsor Place
Highland Ridge
Howell Commons
Paddock Club Greenville
Park Haywood
Spring Creek
Innovation Apartment Homes
Runaway Bay
Colonial Grand at Commerce Park
Matthews, NC
Matthews, NC
Morrisville, NC
Raleigh, NC
Raleigh, NC
Raleigh, NC
Raleigh, NC
Raleigh, NC
Raleigh, NC
Raleigh, NC
Raleigh, NC
Raleigh, NC
Anderson, SC
Charleston, SC
Charleston, SC
Charleston, SC
Charleston, SC
Charleston, SC
Charleston, SC
Charleston, SC
Columbia, SC
Columbia, SC
Goose Creek, SC
Greenville, SC
Greenville, SC
Greenville, SC
Greenville, SC
Greenville, SC
Greenville, SC
Mt. Pleasant, SC
North Charleston, SC
Encumbrances
—
—
22,153
28,856
—
12,219
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
3,071
3,690
6,401
7,372
6,572
2,241
3,690
5,232
7,196
9,450
5,850
4,695
427
3,610
3,971
920
4,571
5,200
3,631
11,929
910
1,840
1,321
482
1,304
1,200
325
597
4,437
1,085
2,780
Buildings
and Fixtures
21,830
28,536
31,134
50,202
48,910
18,434
29,910
45,138
51,972
46,316
21,980
29,007
3,853
28,645
22,790
24,097
20,091
28,682
10,748
57,885
8,207
16,560
14,163
4,337
11,740
10,800
2,925
5,374
52,026
7,269
33,966
Buildings
and Fixtures
4,142
1,917
2,313
1,931
1,428
1,381
2,324
2,447
207
1,485
24,756
1,684
3,119
1,875
4,148
5,458
2,714
487
958
470
3,396
4,623
2,437
2,720
3,554
2,003
4,513
3,034
998
6,362
1,596
Land
—
—
—
—
—
—
—
—
—
587
(19)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
35
(14)
—
12
—
F-48
Land
3,071
3,690
6,401
7,372
6,572
2,241
3,690
5,232
7,196
10,037
5,831
4,695
427
3,610
3,971
920
4,571
5,200
3,631
11,929
910
1,840
1,321
482
1,304
1,200
360
583
4,437
1,097
2,780
Buildings
and Fixtures
25,972
30,453
33,447
52,133
50,338
19,815
32,234
47,585
52,179
47,801
46,736
30,691
6,972
30,520
26,938
29,555
22,805
29,169
11,706
58,355
11,603
21,183
16,600
7,057
15,294
12,803
7,438
8,408
53,024
13,631
35,562
Total
Accumulated
Depreciation
Net
Date of
Construction
Life used to
compute
depreciation
in latest
income
statement (4)
29,043
34,143
39,848
59,505
56,910
22,056
35,924
52,817
59,375
57,838
52,567
35,386
7,399
34,130
30,909
30,475
27,376
34,369
15,337
70,284
12,513
23,023
17,921
7,539
16,598
14,003
7,798
8,991
57,461
14,728
38,342
(5,473)
(5,634)
(6,286)
(9,311)
(8,905)
(3,451)
(6,690)
(9,293)
(2,136)
(2,927)
(16,187)
(10,093)
(5,131)
(5,807)
(5,047)
(5,278)
(4,917)
(3,074)
(409)
(1,841)
(8,360)
(13,619)
(3,543)
(4,598)
(10,353)
(8,381)
(5,403)
(5,861)
(2,272)
(8,793)
(6,498)
23,570
28,509
33,562
50,194
48,005
18,605
29,234
43,524
57,239
54,911
36,380
25,293
2,268
28,323
25,862
25,197
22,459
31,295
14,928
68,443
4,153
9,404
14,378
2,941
6,245
5,622
2,395
3,130
55,189
5,935
31,844
2008
2008
2003
2010
2008
1997
2009
2000/02
2011
2017
2004
2007
1980
2001
1986
1987
1985
2013
2016
2015
1992
1991
1985
1984
1987
1996
1983
1985
2015
1988
2008
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Property
535 Brookwood
Park Place
Farmington Village
Colonial Village at Waters Edge
Hamilton Pointe
Hidden Creek
Steeplechase
Windridge
Kirby Station
Lincoln on the Green
Park Estate
Reserve at Dexter Lake
Paddock Club Murfreesboro
Acklen West End
Aventura at Indian Lake Village
Avondale at Kennesaw
Brentwood Downs
Charlotte at Midtown
Colonial Grand at Bellevue
Colonial Grand at Bellevue (Phase II)
Grand View Nashville
Monthaven Park
Park at Hermitage
Venue at Cool Springs
Verandas at Sam Ridley
Balcones Woods
Colonial Grand at Canyon Creek
Colonial Grand at Canyon Ranch
Colonial Grand at Double Creek
Colonial Grand at Onion Creek
Grand Reserve at Sunset Valley
Location
Simpsonville, SC
Spartanburg, SC
Summerville, SC
Summerville, SC
Chattanooga, TN
Chattanooga, TN
Chattanooga, TN
Chattanooga, TN
Memphis, TN
Memphis, TN
Memphis, TN
Memphis, TN
Murfreesboro, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Nashville, TN
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Encumbrances
12,317
Land
1,216
Buildings
and Fixtures
18,666
Land
—
Buildings
and Fixtures
1,392
Land
1,216
Buildings
and Fixtures
20,058
Total
21,274
—
—
—
—
—
—
—
—
—
—
—
—
—
—
16,974
—
—
20,500
—
—
—
—
—
20,891
—
13,662
—
—
—
—
723
2,800
2,103
1,131
972
217
817
1,148
1,498
178
1,260
915
12,761
4,950
3,456
1,193
7,898
8,622
8,656
2,963
2,736
1,524
6,670
3,350
1,598
3,621
3,778
3,131
4,902
3,150
6,504
26,295
9,187
10,632
8,954
1,957
7,416
10,337
20,483
1,141
—
—
—
—
—
—
—
—
—
—
3,114
2,058
3,408
4,637
5,524
3,208
4,049
10,379
15,626
4,850
723
2,800
2,103
1,131
972
217
817
1,148
1,498
178
16,043
2,147
39,943
3,407
14,774
58,906
28,053
22,443
10,739
54,480
34,229
29,967
33,673
28,902
14,800
—
28,308
14,398
32,137
20,201
29,375
33,010
11,393
3,313
915
22
12,761
1,436
2,314
6,436
485
2,437
79
7,363
5,528
8,876
51,315
1,835
8,967
1,521
1,860
628
1,471
3,466
4,950
3,456
1,191
7,898
8,622
8,654
2,963
2,736
1,524
6,670
3,350
1,598
3,621
3,778
3,131
4,902
3,150
—
—
—
—
(2)
—
—
(2)
—
—
—
—
—
—
—
—
—
—
—
F-49
9,618
28,353
12,595
15,269
14,478
5,165
11,465
20,716
36,109
5,991
55,986
18,087
58,928
29,489
24,757
17,175
54,965
36,666
30,046
41,036
34,430
23,676
51,315
30,143
23,365
33,658
22,061
30,003
34,481
14,859
10,341
31,153
14,698
16,400
15,450
5,382
12,282
21,864
37,607
6,169
59,393
19,002
71,689
34,439
28,213
18,366
62,863
45,288
38,700
43,999
37,166
25,200
57,985
33,493
24,963
37,279
25,839
33,134
39,383
18,009
Net
16,010
3,958
21,324
11,672
9,015
9,584
1,823
4,724
8,353
12,582
1,468
33,875
9,922
71,689
27,879
21,683
6,815
61,689
38,005
36,651
25,463
20,919
8,692
50,777
25,660
9,524
30,849
21,186
27,329
32,698
11,279
Date of
Construction
2008
1987
2007
1985
1989
1987
1986
1984
1978
1992
1974
2000
1999
2015
2010
2008
1986
2016
1996
2015
2001
2000
1987
2012
2009
1983
2008
2003
2013
2009
1996
Life used to
compute
depreciation
in latest
income
statement (4)
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Accumulated
Depreciation
(5,264)
(6,383)
(9,829)
(3,026)
(7,385)
(5,866)
(3,559)
(7,558)
(13,511)
(25,025)
(4,701)
(25,518)
(9,080)
—
(6,560)
(6,530)
(11,551)
(1,174)
(7,283)
(2,049)
(18,536)
(16,247)
(16,508)
(7,208)
(7,833)
(15,439)
(6,430)
(4,653)
(5,805)
(6,685)
(6,730)
Property
Location
Colonial Village at Quarry Oaks
Colonial Grand at Wells Branch
Legacy at Western Oaks
Post Barton Creek
Post Park Mesa
Post South Lamar
Post South Lamar II
Post West Austin
Silverado
Stassney Woods
Travis Station
Woods, The
Colonial Village at Shoal Creek
Colonial Village at Willow Creek
Colonial Grand at Hebron
Colonial Grand at Silverado
Colonial Grand at Silverado Reserve
Grand Cypress
Courtyards at Campbell
Deer Run
Grand Courtyard
Legends at Lowe's Farm
Colonial Reserve at Medical District
Post Abbey
Post Addison Circle
Post Cole's Corner
Post Eastside
Post Gallery
Post Heights
Post Katy Trail
Post Legacy
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Austin, TX
Bedford, TX
Bedford, TX
Carrollton, TX
Cedar Park, TX
Cedar Park, TX
Cypress, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Encumbrances
30,417
—
—
—
—
—
—
—
—
—
—
—
18,662
22,424
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
4,621
3,094
9,100
8,683
4,653
11,542
9,000
7,805
2,900
1,621
2,281
1,405
4,982
3,109
4,231
3,282
3,951
3,881
988
1,252
2,730
5,016
4,050
2,711
12,308
13,030
7,134
4,391
26,245
10,333
6,575
Buildings
and Fixtures
34,461
32,283
49,339
21,497
19,828
41,293
32,800
48,843
24,009
7,501
6,169
12,769
27,377
33,488
42,237
24,935
31,705
24,267
8,893
11,271
22,240
41,091
33,779
4,369
189,419
14,383
58,095
7,910
37,922
32,456
55,277
Buildings
and Fixtures
5,455
1,355
(172)
608
316
380
19,352
772
3,732
8,181
7,563
8,148
2,916
6,321
1,050
1,118
1,489
1,115
3,664
4,789
3,054
2,186
1,831
61
2,234
607
271
351
356
430
996
Land
—
294
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F-50
Land
4,621
3,388
9,100
8,683
4,653
11,542
9,000
7,805
2,900
1,621
2,281
1,405
4,982
3,109
4,231
3,282
3,951
3,881
988
1,252
2,730
5,016
4,050
2,711
12,308
13,030
7,134
4,391
26,245
10,333
6,575
Buildings
and Fixtures
39,916
33,638
49,167
22,105
20,144
41,673
52,152
49,615
27,741
15,682
13,732
20,917
30,293
39,809
43,287
26,053
33,194
25,382
12,557
16,060
25,294
43,277
35,610
4,430
191,653
14,990
58,366
8,261
38,278
32,886
56,273
Total
Accumulated
Depreciation
44,537
37,026
58,267
30,788
24,797
53,215
61,152
57,420
30,641
17,303
16,013
22,322
35,275
42,918
47,518
29,335
37,145
29,263
13,545
17,312
28,024
48,293
39,660
7,141
203,961
28,020
65,500
12,652
64,523
43,219
62,848
(8,254)
(6,078)
(9,860)
(1,043)
(845)
(2,190)
(632)
(2,516)
(11,160)
(9,736)
(8,652)
(9,518)
(6,180)
(7,830)
(7,470)
(4,926)
(6,140)
(3,587)
(8,061)
(10,211)
(10,396)
(9,655)
(5,855)
(194)
(8,081)
(714)
(2,721)
(431)
(1,753)
(1,280)
(2,316)
Life used to
compute
depreciation
in latest
income
statement (4)
Date of
Construction
1996
2008
2001
1998
1992
2011
2017
2009
2003
1985
1987
1977
1996
1996
2011
2005
2005
2008
1986
1985
2000
2008
2007
1996
1998-2000
1998
2008
1999
1998-
1999/2009
2010
2000
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Net
36,283
30,948
48,407
29,745
23,952
51,025
60,520
54,904
19,481
7,567
7,361
12,804
29,095
35,088
40,048
24,409
31,005
25,676
5,484
7,101
17,628
38,638
33,805
6,947
195,880
27,306
62,779
12,221
62,770
41,939
60,532
Property
Location
Post Meridian
Post Sierra at Frisco Bridges
Post Square
Post Uptown Village
Post Vineyard
Post Vintage
Post Worthington
Watermark
Colonial Grand at Bear Creek
Colonial Grand at Fairview
La Valencia at Starwood
Colonial Reserve at Frisco Bridges
Colonial Village at Grapevine
Greenwood Forest
Legacy Pines
Park Place (Houston)
Post Midtown Square
Post 510
Post Afton Oaks
Ranchstone
Reserve at Woodwind Lakes
Retreat at Vintage Park
Yale at 6th
Cascade at Fall Creek
Bella Casita
Remington Hills
Colonial Reserve at Las Colinas
Colonial Grand at Valley Ranch
Colonial Village at Oakbend
Times Square at Craig Ranch
Venue at Stonebridge Ranch
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Euless, TX
Fairview, TX
Frisco, TX
Frisco, TX
Grapevine, TX
Houston, TX
Houston, TX
Houston, TX
Houston, TX
Houston, TX
Houston, TX
Houston, TX
Houston, TX
Houston, TX
Houston, TX
Humble, TX
Irving, TX
Irving, TX
Irving, TX
Irving, TX
Lewisville, TX
McKinney, TX
McKinney, TX
Encumbrances
—
—
—
—
—
—
—
— (2)
22,568
—
—
—
—
—
— (2)
—
—
—
—
—
—
—
—
—
— (2)
—
—
23,246
—
—
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
8,780
6,777
13,178
34,974
7,966
13,621
13,713
960
6,453
2,171
3,240
1,968
2,351
3,465
2,157
2,061
19,038
7,227
11,503
1,480
1,968
8,211
13,107
5,985
2,521
4,390
3,902
5,072
5,598
1,130
4,034
Buildings
and Fixtures
13,654
32,553
24,048
33,213
7,471
8,608
43,268
14,438
30,048
35,077
26,069
34,018
29,757
23,482
19,066
15,830
89,570
33,366
65,469
14,807
19,928
40,352
62,764
40,011
26,432
21,822
40,691
37,397
28,616
28,058
19,528
Buildings
and Fixtures
104
254
515
2,017
345
276
440
2,735
2,426
734
1,505
1,159
4,665
271
3,625
3,126
706
182
3,371
2,437
3,545
704
774
2,249
2,228
10,259
1,389
10,559
3,400
3,946
892
Land
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(15)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F-51
Land
8,780
6,777
13,178
34,974
7,966
13,621
13,713
960
6,453
2,171
3,240
1,968
2,351
3,465
2,142
2,061
19,038
7,227
11,503
1,480
1,968
8,211
13,107
5,985
2,521
4,390
3,902
5,072
5,598
1,130
4,034
Buildings
and Fixtures
13,758
32,807
24,563
35,230
7,816
8,884
43,708
17,173
32,474
35,811
27,574
35,177
34,422
23,753
22,691
18,956
90,276
33,548
68,840
17,244
23,473
41,056
63,538
42,260
28,660
32,081
42,080
47,956
32,016
32,004
20,420
Total
Accumulated
Depreciation
22,538
39,584
37,741
70,204
15,782
22,505
57,421
18,133
38,927
37,982
30,814
37,145
36,773
27,218
24,833
21,017
109,314
40,775
80,343
18,724
25,441
49,267
76,645
48,245
31,181
36,471
45,982
53,028
37,614
33,134
24,454
(657)
(1,692)
(1,005)
(1,543)
(332)
(414)
(1,841)
(7,909)
(6,868)
(6,128)
(7,080)
(5,929)
(6,590)
(3,996)
(11,275)
(7,396)
(4,086)
(1,632)
(3,332)
(6,546)
(9,338)
(3,295)
(2,447)
(15,069)
(7,073)
(5,714)
(7,052)
(9,148)
(6,326)
(8,610)
(2,929)
Life used to
compute
depreciation
in latest
income
statement (4)
Date of
Construction
1991
2009
1996
1995-2000
1996
1993
1993/2008
2002
1998
2012
2009
2013
1985/1986
1994
1999
1996
1999/2013
2014
2017
1996
1999
2014
2015
2007
2007
1984
2006
1997
1997
2009
2000
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Net
21,881
37,892
36,736
68,661
15,450
22,091
55,580
10,224
32,059
31,854
23,734
31,216
30,183
23,222
13,558
13,621
105,228
39,143
77,011
12,178
16,103
45,972
74,198
33,176
24,108
30,757
38,930
43,880
31,288
24,524
21,525
Property
Location
Cityscape at Market Center
Cityscape at Market Center II
Highwood
Los Rios Park
Boulder Ridge
Copper Ridge
Colonial Grand at Ashton Oaks
Colonial Grand at Round Rock
Colonial Village at Sierra Vista
Alamo Ranch
Bulverde Oaks
Haven at Blanco
Stone Ranch at Westover Hills
Cypresswood Court
Villages at Kirkwood
Green Tree Place
Stonefield Commons
Adalay Bay
Colonial Village at Greenbrier
Seasons at Celebrate Virginia I
Station Square at Cosner's Corner
Station Square at Cosner's Corner II
Apartments at Cobblestone Square
Colonial Village at Hampton Glen
Colonial Village at West End
Township
Colonial Village at Waterford
Ashley Park
Colonial Village at Chase Gayton
Hamptons at Hunton Park
Retreat at West Creek
Plano, TX
Plano, TX
Plano, TX
Plano, TX
Roanoke, TX
Roanoke, TX
Round Rock, TX
Round Rock, TX
Round Rock, TX
San Antonio, TX
San Antonio, TX
San Antonio, TX
San Antonio, TX
Spring, TX
Stafford, TX
Woodlands, TX
Charlottesville, VA
Chesapeake, VA
Fredericksburg, VA
Fredericksburg, VA
Fredericksburg, VA
Fredericksburg, VA
Fredericksburg, VA
Glen Allen, VA
Glen Allen, VA
Hampton, VA
Midlothian, VA
Richmond, VA
Richmond, VA
Richmond, VA
Richmond, VA
Encumbrances
—
—
—
—
—
—
—
23,752
11,594
—
—
—
17,874
— (2)
—
— (2)
—
—
—
—
—
—
—
—
11,425
—
—
—
—
—
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
8,626
8,268
864
3,273
3,382
4,166
5,511
4,691
2,561
2,380
4,257
5,450
4,000
576
1,918
539
11,044
5,280
4,842
14,490
8,580
4,245
10,990
4,851
4,661
1,509
6,733
4,761
6,021
4,930
7,112
Buildings
and Fixtures
60,407
50,298
7,783
28,823
26,930
—
36,241
45,379
16,488
26,982
36,759
45,958
24,992
5,190
15,846
4,850
36,689
31,341
21,677
32,083
35,700
15,378
48,696
21,678
18,908
8,189
29,221
13,365
29,004
35,598
36,136
Buildings
and Fixtures
912
712
3,424
6,093
6,074
21,641
1,875
1,970
3,158
2,496
1,067
2,652
2,487
3,305
2,857
3,435
539
2,835
1,334
39,037
669
238
2,034
2,102
2,488
8,077
3,304
1,627
2,902
3,573
1,206
Land
8,626
8,268
864
3,273
3,382
4,166
5,511
4,691
2,561
2,380
4,257
5,450
4,000
576
1,918
539
11,044
5,280
4,842
14,490
8,580
4,245
10,990
4,851
4,661
1,509
6,733
4,761
6,021
4,930
7,112
Buildings
and Fixtures
61,319
51,010
11,207
34,916
33,004
21,641
38,116
47,349
19,646
29,478
37,826
48,610
27,479
8,495
18,703
8,285
37,228
34,176
23,011
71,120
36,369
15,616
50,730
23,780
21,396
16,266
32,525
14,992
31,906
39,171
37,342
Land
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F-52
Total
Accumulated
Depreciation
Net
Date of
Construction
Life used to
compute
depreciation
in latest
income
statement (4)
69,945
59,278
12,071
38,189
36,386
25,807
43,627
52,040
22,207
31,858
42,083
54,060
31,479
9,071
20,621
8,824
48,272
39,456
27,853
85,610
44,949
19,861
61,720
28,631
26,057
17,775
39,258
19,753
37,927
44,101
44,454
(5,746)
(2,779)
(7,131)
(16,711)
(14,140)
(5,222)
(7,149)
(8,687)
(3,973)
(7,349)
(3,193)
(9,271)
(7,802)
(5,839)
(8,500)
(5,787)
(3,479)
(7,059)
(4,043)
(11,022)
(4,370)
(724)
(3,467)
(4,448)
(3,874)
(10,055)
(6,355)
(3,292)
(6,098)
(9,201)
(2,534)
64,199
56,499
4,940
21,478
22,246
20,585
36,478
43,353
18,234
24,509
38,890
44,789
23,677
3,232
12,121
3,037
44,793
32,397
23,810
74,588
40,579
19,137
58,253
24,183
22,183
7,720
32,903
16,461
31,829
34,900
41,920
2013
2015
1983
2000
1999
2009
2009
1997
1999
2009
2014
2010
2009
1984
1996
1984
2013
2002
1980
2011
2013
2016
2012
1986
1987
1987
1989
1988
1984
2003
2015
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Property
Location
Retreat at West Creek II
Radius
Post Carlyle Square
Post Corners at Trinity Centre
Post Fallsgrove
Post Park
Post Pentagon Row
Post Tysons Corner
Total Residential Properties
Allure at Buckhead
Highlands of West Village
The Denton
1225 South Church
Bella Casita at Las Colinas
Times Square at Craig Ranch
Post Rocky Point
Post Training Facility
Post Riverside Office
Post Riverside Retail
Post Harbour Place
Post Soho Square Retail
Post Parkside Atlanta Retail
Post Uptown Place Retail
Post Uptown Leasing Center
Post Park Maryland Retail
Post South End Retail
Post Gateway Place Retail
Post Parkside at Wade Retail
Post Parkside Orlando Retail
Post Carlyle Square Retail
Richmond, VA
Newport News, VA
Washington D.C.
Washington D.C.
Washington D.C.
Washington D.C.
Washington D.C.
Washington D.C.
Atlanta, GA
Smyrna, GA
Kansas City, MO
Charlotte, NC
Irving, TX
McKinney, TX
Tampa, FL
Atlanta, GA
Atlanta, GA
Atlanta, GA
Tampa, FL
Tampa, FL
Atlanta, GA
Charlotte, NC
Charlotte, NC
Washington DC, MD
Charlotte, NC
Charlotte, NC
Raleigh, NC
Orlando, FL
Washington DC, VA
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Encumbrances
—
—
Land
3,000
5,040
Buildings
and Fixtures
—
36,481
Land
—
—
Buildings
and Fixtures
12,082
1,696
Land
3,000
5,040
Buildings
and Fixtures
12,082
38,177
15,082
43,217
Total
Accumulated
Depreciation
Net
Date of
Construction
Life used to
compute
depreciation
in latest
income
statement (4)
—
29,728
154,309
36,946
7,664
70,012
—
—
—
—
17,524
58,896
5,355
79,842
30,452
125,091
30,776
82,021
—
—
—
—
—
—
556
922
659
366
29,728
154,865
184,593
7,664
70,934
78,598
17,524
59,555
77,079
5,355
80,208
85,563
1,182
30,452
126,273
156,725
819
30,776
82,840
113,616
757,579
—
1,764,973
867
9,805,837
5,145
1,258,299
1,770,118
11,064,136
12,834,254
3,465
—
54
867
3,519
4,386
908
1,045
3,408
—
—
—
(2)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,500
700
43
46
253
34
1,092
9,680
889
386
268
426
319
1,290
25
470
318
317
742
1,048
8,446
4,439
199
186
1,310
51
968
22,108
2,340
4,315
4,033
1,089
1,144
1,488
137
1,289
1,430
4,552
11,924
7,930
21
245
126
1,933
270
3
3,539
29
121
3
3
3
75
3
120
3
63
224
5
—
9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F-53
9,491
4,460
444
312
3,243
321
971
12,899
5,160
496
358
3,496
355
2,063
25,647
35,327
2,369
4,436
4,036
1,092
1,147
1,563
140
1,409
1,433
4,615
3,258
4,822
4,304
1,518
1,466
2,853
165
1,879
1,751
4,932
12,148
12,890
700
52
46
253
34
1,092
9,680
889
386
268
426
319
1,290
25
470
318
317
742
1,048
7,935
8,983
(254)
(2,473)
(6,333)
(2,875)
(2,528)
(4,293)
(5,352)
(3,427)
(2,044,805)
(663)
(1,044)
(266)
(104)
(76)
(480)
(22)
(86)
(1,457)
(171)
(206)
(236)
(51)
(63)
(55)
(5)
(75)
(87)
(270)
(578)
(354)
14,828
40,744
2017
2012
178,260
2006/2013
75,723
74,551
81,270
151,373
110,189
10,789,449
3,723
11,855
4,894
392
282
3,016
333
1,977
33,870
3,087
4,616
4,068
1,467
1,403
2,798
160
1,804
1,664
4,662
12,312
8,629
1996
2003
2010
2001
1990
2012
2012
2014
2010
2007
2009
1994-1996
1999
1996
1996
1997
2012
1999
1998
1998
2007
2009
2000
2011
1999
2006/2016
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
Property
Location
Post Coles Corner Retail
Post Square Retail
Post Worthington Retail
Post Heights Retail
Post Eastside Retail
Post Addison Circle Retail
Post Addison Circle Office
Post Sierra Frisco Br Retail
Post Katy Trail Retail
Post Midtown Square Retail
Rise Condo Devel LP Retail
Post Legacy Retail
Post South Lamar Retail
Total Commercial Properties
Post River North
Post Centennial Park
1201 Midtown II
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Dallas, TX
Houston, TX
Houston, TX
Dallas, TX
Austin, TX
Denver, CO
Atlanta, GA
Charleston, SC
Total Active Development Properties
Total Properties
Total Land Held for Future Developments
Corporate Properties
Total Other
Total
Accumulated
Depreciation
Net
Date of
Construction
Life used to
compute
depreciation
in latest
income
statement (4)
Encumbrances
—
—
—
—
—
—
—
—
—
—
—
—
—
Initial Cost
Costs Capitalized
subsequent to Acquisition Gross Amount carried at
December 31, 2017 (3)
Land
347
1,581
108
1,066
682
448
1,395
779
465
1,327
—
150
421
Buildings
and Fixtures
716
5,982
495
3,314
10,645
21,386
4,280
6,593
4,883
16,005
2,280
3,334
3,072
Land
—
—
—
—
—
—
—
—
—
—
—
—
—
Buildings
and Fixtures
17
42
18
2
15
577
284
218
5
43
3
10
13
Land
347
1,581
108
1,066
682
448
1,395
779
465
1,327
—
150
421
Buildings
and Fixtures
733
6,024
513
3,316
10,660
21,963
4,564
6,811
4,888
16,048
2,283
3,344
3,085
1,080
7,605
621
4,382
11,342
22,411
5,959
7,590
5,353
17,375
2,283
3,494
3,506
—
—
—
—
—
30,482
165,828
917
9,135
31,399
174,963
206,362
14,500
13,650
6,750
28,900
10,950
5,874
34,900
45,724
—
—
—
—
37,795
14,500
42,756
13,650
1,580
6,750
66,695
53,706
7,454
81,195
67,356
14,204
82,131
34,900
127,855
162,755
757,579
1,830,355
10,017,389
6,062
1,349,565
1,836,417
11,366,954
13,203,371
(42)
(314)
(19)
(174)
(507)
(1,271)
(326)
(340)
(206)
(702)
(115)
(152)
(157)
(10,674)
(176)
—
—
1,038
7,291
602
4,208
10,835
21,140
5,633
7,250
5,147
16,673
2,168
3,342
3,349
195,688
81,019
67,356
14,204
1998
1996
1993/2008
1997
2008
1998-2000
1998-2000
2009
2010
1999/2013
1999/2013
2000
2011
N/A
N/A
N/A
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
1 - 40
N/A
N/A
N/A
(176)
162,579
(2,055,655)
11,147,716
—
—
57,285
—
57,285
—
—
—
—
—
—
—
57,285
—
57,285
—
57,285
31,383
—
31,383
31,383
31,383
57,285
31,383
88,668
(19,416)
(19,416)
11,967
69,252
N/A
Various
N/A
1-40
Total Real Estate Assets, net of Joint Ventures
$
757,579
$ 1,887,640
$ 10,017,389
$
$
6,062
$ 1,893,702
$ 11,398,337
$ 13,292,039
$
1,380,948
(2,075,071 ) $ 11,216,968
(1) Encumbered by $80.0 million Fannie Mae facility, with $80.0 million available and outstanding with a variable interest rate of 1.8% on which there exists one interest rate cap for
$25 million at a rate of 4.50% at December 31, 2017.
(2) Encumbered by a $125.2 million loan with a fixed interest rate of 5.08% which matures on June 10, 2021.
(3) The aggregate cost for federal income tax purposes was approximately $10.8 billion at December 31, 2017. The aggregate cost for book purposes exceeds the total gross amount
of real estate assets for federal income tax purposes, principally due to purchase accounting adjustments recorded under accounting principles generally accepted in the United
States of America.
(4) Depreciation is on a straight-line basis over the estimated useful asset life which ranges from 8 to 40 years for land improvements and buildings, 5 years for furniture, fixtures and
equipment, and 6 months for fair market value of residential leases.
F-54
Mid-America Apartment Communities, Inc.
Mid-America Apartments, L.P.
Schedule III
Real Estate Investments and Accumulated Depreciation
A summary of activity for real estate investments and accumulated depreciation is as follows (dollars in thousands):
Real estate investments:
Balance at beginning of year
Acquisitions (1)
Less: FMV of leases included in acquisitions
Improvement and development
Assets held for sale
Disposition of real estate assets (2)
Balance at end of year
Accumulated depreciation:
Balance at beginning of year
Depreciation
Assets held for sale
Disposition of real estate assets (2)
Balance at end of year
Year Ended December 31,
2016
2017
2015
12,972,170 $
127,710
(1,488 )
322,829
(5,321 )
(123,861 )
13,292,039 $
8,215,768 $
4,961,140
(51,588)
202,614
—
(355,764)
12,972,170 $
8,069,395
316,151
(4,438)
165,000
—
(330,340)
8,215,768
1,674,801 $
463,590
—
(63,320 )
2,075,071 $
1,499,213 $
314,076
—
(138,488)
1,674,801 $
1,373,678
289,177
—
(163,642)
1,499,213
$
$
$
$
(1) Includes non-cash activity related to acquisitions.
(2) Includes assets sold, casualty losses, and removal of certain fully depreciated assets.
See accompanying reports of independent registered public accounting firm.
F-55
EXHIBIT 4.1
Mid-America Apartment Communities, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
2017
Year ended December 31,
2015
2016
2014
EXHIBIT 12.1
2013
Earnings
Net income
Equity in (income) loss of unconsolidated entities
Income tax expense
Net income before equity in (income) loss of unconsolidated
entities and income tax expense
Add:
Distribution of income from investments in unconsolidated
entities
Fixed charges, less preferred distribution requirement of
consolidated subsidiaries
Deduct:
Capitalized interest
Total earnings (A)
Fixed charges and preferred dividends
Interest expense
Capitalized interest
Total fixed charges (B)
Preferred dividends, including redemption costs
Total fixed charges and preferred dividends (C)
$
$
$
$
$
340,536 $
(1,370)
2,619
224,402 $
(241)
1,699
350,745 $
2
1,673
150,946 $
(6,009)
2,050
37,692
(338)
893
341,785
225,860
352,420
146,987
38,247
907
1,999
6
15,964
9,768
161,989
132,020
123,999
125,675
81,067
7,238
497,443 $
2,073
357,806 $
1,655
474,770 $
1,722
286,904 $
2,089
126,993
154,751 $
7,238
161,989 $
3,688
165,677 $
129,947 $
2,073
132,020 $
307
132,327 $
122,344 $
1,655
123,999 $
—
123,999 $
123,953 $
1,722
125,675 $
—
125,675 $
Ratio of Earnings to Fixed Charges (A/B)
Ratio of Earnings to Fixed Charges and Preferred Dividends
(A/C)
3.1 x
3.0 x
2.7 x
2.7 x
3.8 x
3.8 x
2.3 x
2.3 x
78,978
2,089
81,067
—
81,067
1.6 x
1.6 x
Mid-America Apartments, L.P.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
2017
Year ended December 31,
2015
2016
2014
EXHIBIT 12.2
2013
Earnings
Net income
Equity in (income) loss of unconsolidated entities
Income tax expense
Net income before equity in (income) loss of unconsolidated
entities and income tax expense
Add:
Distribution of income from investments in unconsolidated
entities
Fixed charges, less preferred distribution requirement of
consolidated subsidiaries
Deduct:
Capitalized interest
Total earnings (A)
Fixed charges and preferred dividends
Interest expense
Capitalized interest
Total fixed charges (B)
Preferred dividends, including redemption costs
Total fixed charges and preferred dividends (C)
$
$
$
$
$
340,536 $
(1,370)
2,619
224,402 $
(241)
1,699
350,745 $
2
1,673
150,946 $
(6,009)
2,050
37,692
(338)
893
341,785
225,860
352,420
146,987
38,247
907
1,999
6
15,964
9,768
161,989
132,020
123,999
125,675
81,067
7,238
497,443 $
2,073
357,806 $
1,655
474,770 $
1,722
286,904 $
2,089
126,993
154,751 $
7,238
161,989 $
3,688
165,677 $
129,947 $
2,073
132,020 $
307
132,327 $
122,344 $
1,655
123,999 $
—
123,999 $
123,953 $
1,722
125,675 $
—
125,675 $
Ratio of Earnings to Fixed Charges (A/B)
Ratio of Earnings to Fixed Charges and Preferred Dividends
(A/C)
3.1 x
3.0 x
2.7 x
2.7 x
3.8 x
3.8 x
2.3 x
2.3 x
78,978
2,089
81,067
—
81,067
1.6 x
1.6 x
EXHIBIT 21.1
List of Subsidiaries of Mid-America Apartment Communities, Inc.
Alabama
CPSI, LLC
Colonial/DPL JV, LLC
CPSI-UCO Spanish Oaks, LLC
CPSI-UCO, LLC
Forty Seven Canal Place, LLC
Highway 31 Alabaster Two, LLC
Highway 31 Alabaster, LLC
Six Hundred Building Partners
Walkers Chapel Road, LLC
Delaware
1499 Massachusetts Avenue, Inc.
1499 Massachusetts Holding, LLC
1755 Central Park Road Condominiums, LLC
Bham Lending, LLC
Brighton Apartments, LLC
Capri at Hunters Creek Condominium, LLC
CMF 15 Portfolio, LLC
CMS/Colonial Multifamily Canyon Creek JV, LP
Colonial Commercial Contracting, LLC
Colonial Construction Services, LLC
Colonial Office Holdings LLC
Colonial Multifamily Canyon Creek GP, LLC
CP D'Iberville JV, LLC
CP Nord du Lac JV, LLC
CPSI James Island, LLC
CPSI Mizner, LLC
CPSI St. Andrews LLC
CRLP Bellevue, LLC
CRLP CPSI Nord du Lac Membership, LLC
CRLP Frisco Bridges LLC
CRLP Huntsville TIC Investor I LLC
CRLP Huntsville TIC Investor II LLC
CRLP Huntsville TIC Investor III LLC
CRLP Twin Lakes, LLC
CRLP Valley Ranch, LLC
Heathrow 4, LLC
MAA Arkansas REIT, LLC
MAA BRIK, LLC
MAA Highlands, LLC
MAA Holdings, LLC
MAA Holdings II, LLC
MAA TANC, LLC
Montecito James Island, LLC
Montecito Mizner, LLC
Montecito St. Andrews, LLC
P/C First Avenue, LLC
Post Biltmore, LLC
Post Carlyle II, LLC
Post Paseo Colorado, LLC
Stone Ranch at Westover Hills, LLC
The Azur at Metrowest, LLC
Georgia
3630 South Tower Residential, LLC
98 San Jac Holdings, LLC
Carlyle Condominium Development, LLC
Clyde Lane Condominium Development, LLC
Cumberland Lake, LLC
Merritt at Godley Station, LLC
ML James Island Apartments, L.P.
PAH Lender, LLC
Park Land Development, LLC
PBP Apartments, LLC
PF Apartments, LLC
PL Conservation, LLC
Post 1499 Massachusetts, LLC
Post Alexander II, LLC
Post Asset Management, Inc.
Post Briarcliff, LLC
Post Carlyle, LLC
Post Centennial Park, LLC
Post Corners, LLC
Post Crossing, LLC
Post Denver Investor, LLC
Post Galleria, LLC
Post Glen, LLC
Post Hyde Park, LLC
Post Midtown Atlanta, LLC
Post Midtown Square GP, LLC
Post Midtown Square, L.P.
Post Park, LLC
Post Park Development, LLC
Post Parkside at Wade II GP, LLC
Post Parkside at Wade II, L.P.
Post Services, LLC
Post South End GP, LLC
Post South End, L.P.
Post South Lamar II, LLC
Post Toscana, LLC
Post Wade Tract M-2, L.P.
Post-Amerus Rice Lofts, L.P.
Regents Park, LLC
Rise Condominium Development, LLC
Rocky Point Management, LLC
Spring Land, LLC
North Carolina
Midtown Redevelopment Partners, LLC
Tennessee
Mid-America Apartments, L.P.
Texas
Akard-McKinney Investment Company, LLC
MAA of Copper Ridge, Inc.
Post Rice Lofts, LLC
Rice Lofts, L.P.
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statements (Form S-3 Nos. 33-96852, 333-82526, 333-190028, 333-191243 and 333-208398) of
Mid-America Apartment Communities, Inc.,
(2) Registration Statement (Form S-3 No. 333-202905) pertaining to the Dividend and Distribution Reinvestment
and Share Purchase Plan of Mid-America Apartment Communities, Inc.,
(3) Registration Statement (Form S-8 No. 333-123945) pertaining to the Non-Qualified Deferred Compensation
Plan for Outside Company Directors of Mid-America Apartment Communities, Inc.,
(4) Registration Statement (Form S-8 No. 333-115834) pertaining to the Fourth Amended and Restated 1994
Restricted Stock and Stock Option Plan and the 2004 Stock Plan of Mid-America Apartment Communities,
Inc.,
(5) Registration Statement (Form S-8 No. 33-91416) pertaining to the 1994 Employee Stock Purchase Plan of
Mid-America Apartment Communities, Inc.,
(6) Registration Statement (Form S-8 No. 333-191541) pertaining to the Mid-America Apartment Communities,
Inc. 2013 Stock Incentive Plan, Colonial Properties Trust 2008 Omnibus Incentive Plan and Colonial
Properties Trust Third Amended and Restated Shares Option and Restricted Shares Plan,
(7) Registration Statement (Form S-8 No. 333-196250) pertaining to the Amended and Restated Mid-America
Apartment Communities, Inc. 2013 Stock Incentive Plan, and
(8) Registration Statement (Form S-8 No. 333-214993) pertaining to the Amended and Restated Post Properties,
Inc. 2003 Incentive Stock Plan.
of our reports dated February 22, 2018, with respect to the consolidated financial statements and schedule of Mid-
America Apartment Communities, Inc., and the effectiveness of internal control over financial reporting of Mid-
America Apartment Communities, Inc. included in this Annual Report (Form 10-K) of Mid-America Apartment
Communities, Inc. for the year ended December 31, 2017.
/s/ Ernst & Young LLP
Memphis, Tennessee
February 22, 2018
EXHIBIT 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements (Form S-3 No. 333-191243-01 and 333-
208398-01) of Mid-America Apartments, L.P. and in the related Prospectus of our report dated February 22, 2018,
with respect to the consolidated financial statements and schedule of Mid-America Apartments, L.P. included in this
Annual Report (Form 10-K) for the year ended December 31, 2017.
/s/ Ernst & Young LLP
Memphis, Tennessee
February 22, 2018
CERTIFICATION
EXHIBIT 31.1
I, H. Eric Bolton, Jr., certify that:
1.
I have reviewed this Annual Report on Form 10-K of Mid-America Apartment Communities, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
4.
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 22, 2018
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chief Executive Officer
CERTIFICATION
EXHIBIT 31.2
I, Albert M. Campbell, III, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Mid-America Apartment Communities, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
4.
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 22, 2018
/s/ Albert M. Campbell, III
Albert M. Campbell, III
Chief Financial Officer
CERTIFICATION
EXHIBIT 31.3
I, H. Eric Bolton, Jr., certify that:
1.
I have reviewed this Annual Report on Form 10-K of Mid-America Apartments, L.P.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
4.
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 22, 2018
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chief Executive Officer of Mid-America Apartment
Communities, Inc., general partner of Mid-America
Apartments, L.P.
CERTIFICATION
EXHIBIT 31.4
I, Albert M. Campbell, III, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Mid-America Apartments, L.P.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
4.
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 22, 2018
/s/ Albert M. Campbell, III
Albert M. Campbell, III
Chief Financial Officer of Mid-America Apartment
Communities, Inc., general partner of Mid-America
Apartments, L.P.
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-K for the
period ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H.
Eric Bolton, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant
to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chief Executive Officer
February 22, 2018
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Mid-America Apartment Communities, Inc. (the “Company”) on Form 10-K for the
period ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
Albert M. Campbell, III, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §
1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Albert M. Campbell, III
Albert M. Campbell, III
Chief Financial Officer
February 22, 2018
EXHIBIT 32.3
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Mid-America Apartments, L.P. (the “Operating Partnership”) on Form 10-K for the
period ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H.
Eric Bolton, Jr., President and Chief Executive Officer of Mid-America Apartment Communities, Inc., general partner of the
Operating Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002,
that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Operating Partnership.
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
Chief Executive Officer of Mid-America Apartment
Communities, Inc., general partner of Mid-America
Apartments, L.P.
February 22, 2018
EXHIBIT 32.4
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Mid-America Apartments, L.P. (the “Operating Partnership”) on Form 10-K for the
period ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
Albert M. Campbell, III, Executive Vice President and Chief Financial Officer of Mid-America Apartment Communities, Inc.,
general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-
Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Operating Partnership.
/s/ Albert M. Campbell, III
Albert M. Campbell, III
Chief Financial Officer of Mid-America Apartment
Communities, Inc., general partner of Mid-America
Apartments, L.P.
February 22, 2018
B O A R D O F D I R E C T O R S
H. Eric Bolton, Jr.
Chairman of the Board of Directors
and Chief Executive Officer, MAA
Committee: Real Estate Investment
(Chairman)
Russell R. French
Special Limited Partner,
Moseley & Co. VI, LLC;
Class B Partner,
Moseley & Co. VII, LLC and
Moseley & Co. SBIC, LLC
Committee: Audit
Alan B. Graf, Jr.
Executive Vice President
and Chief Financial Officer,
FedEx Corporation
Committee: Audit (Chairman)
Lead Independent Director
Toni Jennings
Chairman of the Board of Directors,
Jack Jennings & Sons, Inc.;
Past Lieutenant Governor and
Senate President of the State of Florida
Committees: Compensation;
Nominating and Corporate Governance
James K. Lowder
Chairman of the Board of Directors,
The Colonial Company
Committees: Compensation;
Nominating and Corporate Governance
Thomas H. Lowder
Past Chairman of the Board of Trustees
and Chief Executive Officer,
Colonial Properties Trust
Committee: Real Estate Investment
Monica McGurk
Past Chief Growth Officer,
Tyson Foods, Inc.
Committees: Compensation;
Nominating and Corporate Governance
Claude B. Nielsen
Chairman of the Board of Directors
and past Chief Executive Officer,
Coca-Cola Bottling Company United, Inc.
Committees: Compensation;
Nominating and Corporate Governance
(Chairman)
Philip W. Norwood
Principal, Haviland Capital, LLC;
Past President and Chief Executive Officer,
Faison Enterprises, Inc.
Committees: Compensation (Chairman);
Nominating and Corporate Governance;
Real Estate Investment
W. Reid Sanders
President, Sanders Properties, LLC
and Sanders Investments, LLC
Committees: Audit;
Real Estate Investment
Gary Shorb
Executive Director, Urban Child Institute;
Past President and Chief Executive Officer,
Methodist Le Bonheur Healthcare
Committee: Audit
David P. Stockert
Past Chief Executive Officer and President,
Post Properties, Inc.
Committee: Real Estate Investment
S H A R E H O L D E R I N F O R M A T I O N
Corporate Headquarters
MAA
6815 Poplar Avenue, Suite 500
Germantown, TN 38138
901-682-6600
www.maac.com
Independent Registered Public
Accounting Firm
Ernst & Young LLP, Memphis, TN
Annual Meeting Of Shareholders
MAA will hold its 2018 Annual Meeting of
Shareholders on Tuesday, May 22, 2018 at
11:00 a.m. CDT at its corporate headquarters
located in Germantown, TN.
Stock Listing
MAA’s stock is listed on the New York Stock
Exchange (NYSE). MAA’s common stock is
traded under the stock symbol MAA.
SEC Filings
MAA’s filings with the Securities and
Exchange Commission are filed under the
registrant names of Mid-America Apartment
Communities, Inc. and
Mid-America Apartments, L.P.
Transfer Agent And Registrar
Broadridge Corporate Issuer
Solutions, Inc.
Call: 877-206-4722
Email: shareholder@broadridge.com,
or Visit:
www.shareholder.broadridge.com/maa/
Registered shareholders who have
questions about their accounts or who
wish to change ownership or address of
stock; report lost, stolen or destroyed
certificates; sign up for direct deposit
of dividends; or enroll in our dividend
reinvestment plan or direct stock
purchase program should contact
Broadridge Corporate Issuer Solutions,
Inc. at the shareholder service number
or email address listed above, or access
their account at the website listed above.
Beneficial owners who own shares held in
“street name” should contact their broker
or bank for all questions. Limited partners
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, 2017, as filed with the Securities
and Exchange Commission (SEC), will
be sent without charge upon written
request. Please address requests to
MAA’s corporate headquarters, attention
Investor Relations, or email your request
to investor.relations@maac.com. Other
MAA SEC filings as well as corporate
governance documents are also 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.
6815 Poplar Avenue, Suite 500
Germantown, TN 38138
www.maac.com
COVER: ATLANTA , GA