UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
November 6, 2002
Date of Report (Date of earliest event reported)
MID-AMERICA APARTMENT COMMUNITIES, INC.
(Exact Name of Registrant as Specified in Charter)
TENNESSEE 1-12762 62-1543819
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
6584 POPLAR AVENUE, SUITE 300
MEMPHIS, TENNEESSEE 38138
(Address of principal executive offices)
(901) 682-6600
(Registrant's telephone number, including area code)
(Former name or address, if changed since last report)
ITEM 9. Regulation FD
Investor Presentation
Mid-America Apartment Communities, Inc.
Investor Update
November, 2002
Creating Great Places to Live
Mid-America Apartment Communities
[Map highlights market presence in the following states]
Ohio
Virginia
Kentucky
North Carolina
Tennessee
Arkansas
South Carolina
Georgia
Alabama
Mississippi
Texas
Florida
Solid Diversification In The Stable and Growing Southeast Region
At September 30, 2002
---------------------------------------------------------------------------------------------
Number Portfolio MAA Avg. Rental
of Units Concentration Occupancy Rate Per Unit
---------------------- --------------------- --------------------- ---------------------
Tennessee 7,002 21% 93% $623
Florida 6,484 20% 95% $711
Georgia 6,499 20% 94% $694
Texas 4,312 13% 92% $671
South Carolina 2,276 7% 94% $596
Mississippi 1,673 5% 96% $582
Kentucky 1,548 5% 94% $683
Alabama 952 3% 94% $648
Arkansas 808 2% 97% $610
North Carolina 738 2% 91% $570
Ohio 414 1% 89% $706
Virginia 296 1% 97% $695
---------------------- --------------------- --------------------- ---------------------
Total 33,002 100% 94% $660
Excludes 921 new units in lease-up (all located in TN) 85% leased as of
September 30, 2002.
Southeast and South Central US Focus...
Growth Markets, Lower Volatility
[X] Southeast markets are positioned for long term growth
>> higher job growth and household formations
>> positive immigration trends.
[X] Geographic and market diversity creates stable revenues
>> large metro cities
>> middle tier markets
>> smaller tertiary markets
>> 41 different markets across the southeast, south central US.
[X] Superior locations, moderate priced product serving largest market segment,
generates long term & steady growing value.
Southeast and South Central US Focus...
Growth Markets, Lower Volatility
[X] Strong regional focused operation
>> in-depth market knowledge
>> operating economies
>> "hands on" attention to properties.
[X] Unlike most apartment REITS, no current development exposure...in position
to capture increasing market opportunities.
[X] MAA's earnings projections and results more recession resistant. Since Q4
2001:
>> All apartment REITs adjust 2002 estimates down by 9%
>> MAA adjusts down by 3%.
New Supply Levels Trending Down
Expected Apartment Construction Completions For Major MAA Markets REIS, Inc.
MAA 2001 Units 2002 Units Change 2003 Units to Change
Concentration Delivered Delivered 2002 - 2001 be Delivered 2003 - 2002
------------------ ------------------ ------------------ ------------------ ------------------ -----------------
Memphis 13.5% 3,093 1,461 -52.8% 791 -45.9%
Jacksonville 8.6% 1,347 1,300 -3.5% 2,156 65.8%
Atlanta 6.4% 8,774 7,126 -18.8% 5,071 -28.8%
Dallas 6.2% 4,611 3,990 -13.5% 2,715 -32.0%
Austin 3.8% 7,497 3,914 -47.8% 2,138 -45.4%
Houston 3.0% 4,412 3,701 -16.1% 3,212 -13.2%
Nashville 2.9% 1,039 1,134 9.1% 944 -16.8%
Cincinnati 1.3% 1,920 1,591 -17.1% 1,452 -8.7%
------------------ ------------------ ------------------ ------------------ -----------------
Totals 32,693 24,217 -25.9% 18,479 -23.7%
Forward Supply/Demand Index for the Apartment Sector, Ranking of the Top 54
Largest Markets in the US (per CSFB Apartment Sector Review, October 2002):
#1 Nashville #10 Austin
#2 Memphis #21 Tampa
#3 Raleigh, Cary #44 Jacksonville
#5 Dallas/Ft. Worth #45 Houston
#8 Atlanta #51 Orlando
Strong Property Management Team
[X] 25 years of experience in all phases of the real estate cycle.
[X] Strong emphasis on training, property maintenance and capital improvement
with extensive support & monitoring.
[X] Long record of success in creating value
>> Capital improvements
>> Effective leasing and occupancy management
>> Aggressive utility billing initiatives
>> Ancillary income programs
>> Creative operating efficiencies.
[X] MAA properties consistently outperform market occupancy levels and rent
growth.
High Quality Assets Protect Share Value
[X] Among the newest portfolios of all apartment REITs (~12 years).
[X] $300mm of new communities added in the last 4 years.
[X] Portfolio continuously improved with steady capital infusion.
[X] Sold $110mm of properties over the last 3 years; average age of 20 years at
very attractive prices.
[X] Solid rental product appealing to the largest segment of the renter market.
Conservative Financing Policy
[X] Refinancing of $184 million of debt maturities through 2003 has been
arranged through Fannie Mae:
>> Fannie Mae credit facility increased from $300 million to $550 million
>> Asset underwriting in process
>> The interest rate on 95% of these refinancings has been preset through
forward swaps, locking rates at 0.6% below existing rates.
[X] At June 30th, 87% of debt was fixed rate.
[X] Fixed interest maturities are laddered over 10 years.
Current Situation & Outlook
[X] $2.34/year dividend, 9.6% yield at $24.50.
[X] Tough operating environment expected until latter part of 2003; long-term
very good.
[X] Capacity to purchase improving; very active in the acquisition market.
[X] Remaining very disciplined with capital deployment.
[X] Dividend coverage solid and improving.
Current Market Pricing of MAA Offers
Discount to Underlying Value
Current Stabilized
Current Property Value $1,383,040 $1,383,040
NOI Stabilization Value 69,405
New Development at Cost 103,588 103,588
Cash 21,544 21,544
Other Assets (less goodwill) 34,094 34,094
Value of Below Market Cost Financing 21,555 21,555
Debt and Other Liabilities (827,703) (827,703)
Preferred Stock (173,500) (173,500)
Net Asset Value $ 562,618 $ 632,023
Common Equity Shares/Units 20,690 20,690
Net Asset Value Per Share $ 27.19 $ 30.55
Based on 8.6% cap rate - equal to the average pricing achieved on property sold
over the last 3 years
MAA Sells at a Discount to Value
[X] Free Cash Flow covers dividend by $800 thousand (4 cents/share).
[X] However, Funds Available for Distribution (FAD) short of dividend coverage
by 19 cents/share ($3.8 million).
[X] Active plans in place to increase FFO earnings and strengthen dividend
coverage
>> High quality assets, well maintained and in strong position to
increase earnings as the economy recovers and interest rate
environment changes
>> New development pipeline becoming increasingly fully productive
>> New acquisition initiative with Crow Holdings in place.
Strategy
[X] Operate well what we have...protect value.
[X] Strengthen dividend coverage through earnings growth
>> improve same store market conditions
>> lease-up opportunity from recently completed development.
[X] Execute new acquisition JV initiative
>> provides additional earnings potential
>> platform to recycle capital.
[X] Continue to increase portfolio diversification
>> allocate more capital to vibrant rent growth markets
>> build operating mass in these select markets.
Increased Earnings Potential -
New Development
Reserve at Dexter Lake
Memphis, TN
740 units
Reserve at Dexter Lake
Memphis, TN
740 units
Increased Earnings Potential -
New Development
Grand Reserve
Lexington, KY
370 units
Kenwood Club
Katy, TX
320 units
Acquisition JV With Crow Holdings
[X] $150mm acquisition capacity; $50mm equity
[X] MAA 1/3 equity ($17mm); Crow 2/3 ($33mm)
[X] MAA providing acquisition, asset management, property management and
financing structuring services
>> 4.0% management fee
[X] Pari-passu investment returns until hurdle achieved; 50/50 split thereafter
[X] Joint governance; 50/50 representation
Preston Hills Acquisition
[X] Opportunity
>> New development with troubled lease up; motivated seller.
>> High quality asset located in high growth market and sub-market.
[X] Value Creation
>> Purchased at well below replacement cost.
>> In need of "hands on operations" to provide stronger cash
flows...lease expiration management, expense control.
Successful Record in Acquisition
and Redevelopment
St. Augustine at the Lake
Jacksonville, FL
400 Units
60% increase in value above gross book basis
Kirby Station
Memphis, TN
371 Units
20% increase in value above gross book basis
Strong Common Shareholder Returns
[Column chart graphs the data below]
Annualized 3-Year Returns (at September 30, 2002)
(with dividends reinvested)
MAA Since IPO 11.7%
MAA 15.6%
MS REIT Index 13.7%
DJIA -8.2%
NASDAQ -24.5%
MAA Board of Directors
Insiders currently own 11.5% of MAA
H. Eric Bolton, Jr. Chairman and CEO, Mid-America Apartments
Simon R.C. Wadsworth Executive VP and CFO, Mid-America Apartments
Robert F. Fogelman President, Fogelman Investment Company
John F. Flournoy Chairman and CEO, Flournoy Development Co.
Alan B. Graf, Jr. Executive VP and CFO, FedEx Corporation
John S. Grinalds President, The Citadel
Ralph Horn Chairman, First Tennessee National Corp.
Michael S. Starnes President, M.S. Carriers
George E. Cates Founder, former Chairman of the Board MAA
MAA Investment Features
[X] Attractive, safe current dividend yield - 9.6% at $24.50 share price - with
high return of capital component
[X] Share price backed by solid asset value of $26.00 to $30.00 per share
[X] Over 30% of the common dividend is not currently taxable...return of
capital...generating very attractive after tax return
[X] Growth plan in place to improve growth of FFO, value per share and dividend
coverage
[X] Stable history of 12% annual return to owners since IPO
Mid-America Apartment Communities
[X] Better performance thru the recession...award winning and very well
maintained properties, in diversified markets, catering to moderate priced
rental market.
[X] Experienced management, strong independent Board of Directors.
[X] Conservative strategy
>> No development
>> Sound debt strategy
>> Balance sheet matched to business risk.
[X] Solid dividend return and strengthening coverage; positioned to generate
improved earnings growth.
[X] Current market pricing offers meaningful discount to underlying value.
Mid-America Apartment Communities
www.maac.net
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MID-AMERICA APARTMENT COMMUNITIES, INC.
Date: November 6, 2002 /s/Simon R.C. Wadsworth
Simon R.C. Wadsworth
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)