Attached files

file filename
EX-12.2 - EXHIBIT 12.2 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit122-maalpq32015.htm
EX-32.3 - EXHIBIT 32.3 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit323-maalpq32015.htm
EX-32.1 - EXHIBIT 32.1 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit321-maaq32015.htm
EX-31.2 - EXHIBIT 31.2 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit312-maaq32015.htm
EX-32.2 - EXHIBIT 32.2 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit322-maaq32015.htm
EX-31.1 - EXHIBIT 31.1 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit311-maaq32015.htm
EX-12.1 - EXHIBIT 12.1 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit121-maaq32015.htm
EX-31.4 - EXHIBIT 31.4 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit314-maalpq32015.htm
EX-32.4 - EXHIBIT 32.4 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit324-maalpq32015.htm
EX-31.3 - EXHIBIT 31.3 - MID AMERICA APARTMENT COMMUNITIES INC.exhibit313-maalpq32015.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015
or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 001-12762 (Mid-America Apartment Communities, Inc.)
Commission File Number 333-190028-01 (Mid-America Apartments, L.P.)

MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P.
(Exact name of registrant as specified in its charter)

Tennessee (Mid-America Apartment Communities, Inc.)
62-1543819
Tennessee (Mid-America Apartments, L.P.)
62-1543816
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
 
6584 Poplar Avenue, Memphis, Tennessee, 38138
 
 
(Address of principal executive offices) (Zip Code)
 
 
(901) 682-6600
 
 
(Registrant's telephone number, including area code)
 
 
 
 
 
N/A
 
 
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Mid-America Apartment Communities, Inc.
YES  ý
NO o
Mid-America Apartments, L.P.
YES  ý
NO o
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.
YES  ý
NO o
Mid-America Apartments, L.P.
YES  ý
NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Mid-America Apartment Communities, Inc.
 
 
 
 
 
Large accelerated filer  ý
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 
 
 
(Do not check if a smaller reporting company)
 
Mid-America Apartments, L.P.
 
 
 
 
 
Large accelerated filer o
Accelerated filer o
Non-accelerated filer  ý
Smaller reporting company o
 
 
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Mid-America Apartment Communities, Inc.
YES o
NO  ý
Mid-America Apartments, L.P.
YES o
NO  ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
 
Number of Shares Outstanding at
Class
October 26, 2015
Common Stock, $0.01 par value
75,379,381




MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P.

TABLE OF CONTENTS

 
 
Page
 PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements.
 
Mid-America Apartment Communities, Inc.
 
 
 
Condensed Consolidated Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014 (Unaudited).
4
 
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015 (Unaudited) and 2014 (Unaudited).
5
 
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015 (Unaudited) and 2014 (Unaudited).
6
 
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 (Unaudited) and 2014 (Unaudited).
7
Mid-America Apartments, L.P.
 
 
 
Condensed Consolidated Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014 (Unaudited).
8
 
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015 (Unaudited) and 2014 (Unaudited).
9
 
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015 (Unaudited) and 2014 (Unaudited).
10
 
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 (Unaudited) and 2014 (Unaudited).
11
 
 
 
 
Notes to Condensed Consolidated Financial Statements (Unaudited).
12
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
37
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
51
Item 4.
Controls and Procedures.
51
 
 
 
 PART II – OTHER INFORMATION
Item 1.
Legal Proceedings.
52
Item 1A.
Risk Factors.
52
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
52
Item 3.
Defaults Upon Senior Securities.
53
Item 4.
Mine Safety Disclosures.
53
Item 5.
Other Information.
53
Item 6.
Exhibits.
53
 
Signatures.
54
 
Exhibit Index.
56

1



Explanatory Note

This periodic report on Form 10-Q, or this Report, combines the quarterly reports for the quarter ended September 30, 2015 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 94.7% owned subsidiary, Mid-America Apartments, L.P., are both required to file periodic reports under the Securities Exchange Act of 1934, as amended.

Unless the context otherwise requires, all references in this Report to "MAA" refer only to Mid-America Apartment Communities, Inc., and not to 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, the 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 and "shareholders" means the holders of shares of MAA’s common stock. The limited partnership interests of the Operating Partnership are referred to as "OP Units" and the holders of the OP Units are referred to as "unitholders".

As of September 30, 2015, MAA owned 75,379,381 units (or approximately 94.7%) of the limited partnership interests of the Operating Partnership. 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 periodic reports of MAA and the Operating Partnership, including the notes to the condensed consolidated financial statements, into this Report results in the following benefits:

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 periodic reports.

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. 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 limited 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 our real estate assets. Except for net proceeds from public equity issuances by MAA, which are contributed to the Operating Partnership in exchange for limited partner 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 partnership 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, preferred units, treasury shares, accumulated other comprehensive income and redeemable common units. The Operating Partnership's capital may include common capital and preferred capital of the general partner (MAA), limited partners' preferred capital, limited partners' 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 for conversion 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 common units in the Operating Partnership (other than MAA and its entity affiliates) may require the Operating Partnership to redeem their common units, in which case the Operating Partnership may, at its option, pay the redemption price either in cash (in an amount per common unit equal, in general, to the average closing price of MAA’s common stock on the New York Stock Exchange, or NYSE, over a

2



specified period of time prior to the redemption date) or by delivering one share of our common stock (subject to adjustment under specified circumstances) for each common unit so redeemed.
In order to highlight the material differences between MAA and the Operating Partnership, this Report includes sections that separately present and discuss areas that are materially different between MAA and the Operating Partnership, including:

the consolidated financial statements in Item 1 of this Report;
certain accompanying notes to the financial statements, including Note 2 - Earnings per Common Share of MAA and Note 3 - Earnings per OP Unit of MAALP; and Note 9 - Shareholders' Equity of MAA and Note 10 - Partners' Capital of Mid-America Apartments, L.P.; and
the certifications of the Chief Executive Officer and Chief Financial Officer of MAA included as Exhibits 31 and 32 to this Report.

In the sections that combine disclosure 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.


3




Mid-America Apartment Communities, Inc.
Condensed Consolidated Balance Sheets
September 30, 2015 and December 31, 2014
(Unaudited)
(Dollars in thousands, except share data)
 
September 30, 2015
 
December 31, 2014
Assets:
 
 
 
Real estate assets:
 
 
 
Land
$
913,045

 
$
913,408

Buildings and improvements
6,842,089

 
6,781,210

Furniture, fixtures and equipment
223,759

 
214,742

Development and capital improvements in progress
44,645

 
80,772

 
8,023,538

 
7,990,132

Less accumulated depreciation
(1,410,155
)
 
(1,358,400
)
 
6,613,383

 
6,631,732

 
 
 
 
Undeveloped land
51,779

 
55,997

Corporate properties, net
8,606

 
7,988

Investments in real estate joint ventures
1,807

 
1,791

Real estate assets, net
6,675,575

 
6,697,508

 
 
 
 
Cash and cash equivalents
44,876

 
26,653

Restricted cash
89,321

 
28,181

Deferred financing costs, net
11,901

 
17,812

Other assets
64,061

 
61,119

Goodwill
1,607

 
2,321

Total assets
$
6,887,341

 
$
6,833,594

 
 
 
 
Liabilities and equity:
 

 
 

Liabilities:
 

 
 

Secured notes payable
$
1,373,654

 
$
1,592,116

Unsecured notes payable
2,051,481

 
1,932,399

Accounts payable
10,509

 
8,395

Fair market value of interest rate swaps
17,953

 
13,392

Accrued expenses and other liabilities
243,711

 
219,044

Security deposits
11,446

 
10,526

Total liabilities
3,708,754

 
3,775,872

 
 
 
 
Redeemable stock
7,266

 
5,911

 
 
 
 
Shareholders' equity:
 

 
 

Common stock, $0.01 par value per share, 100,000,000 shares authorized; 75,379,381 and 75,267,675 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively (1)
754

 
752

Additional paid-in capital
3,623,834

 
3,619,270

Accumulated distributions in excess of net income
(614,500
)
 
(729,086
)
Accumulated other comprehensive loss
(6,306
)
 
(412
)
Total MAA shareholders' equity
3,003,782

 
2,890,524

Noncontrolling interest
167,539

 
161,287

Total equity
3,171,321

 
3,051,811

Total liabilities and equity
$
6,887,341

 
$
6,833,594

(1) 
Number of shares issued and outstanding represent total shares of common stock regardless of classification on the consolidated balance sheet. The number of shares classified as redeemable stock on the consolidated balance sheet for September 30, 2015 and December 31, 2014 are 88,745 and 87,818, respectively.

See accompanying notes to condensed consolidated financial statements.

4



Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Operations
Three and nine months ended September 30, 2015 and 2014
(Unaudited)
(Dollars in thousands, except per share data)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Operating revenues:
 
 
 
 
 
 
 
Rental revenues
$
239,670

 
$
226,584

 
$
710,775

 
$
671,695

Other property revenues
22,328

 
22,979

 
68,666

 
67,264

Total property revenues
261,998

 
249,563

 
779,441

 
738,959

Management fee income

 
11

 

 
154

Total operating revenues
261,998

 
249,574

 
779,441

 
739,113

Property operating expenses:
 

 
 

 
 

 
 

Personnel
26,500

 
26,363

 
78,033

 
76,481

Building repairs and maintenance
8,793

 
9,056

 
23,195

 
23,354

Real estate taxes and insurance
31,699

 
31,025

 
97,824

 
93,128

Utilities
23,769

 
23,535

 
67,442

 
66,985

Landscaping
3,900

 
4,068

 
15,032

 
15,557

Other operating
6,938

 
6,835

 
21,577

 
20,903

Depreciation and amortization
73,098

 
70,222

 
220,606

 
229,866

Total property operating expenses
174,697

 
171,104

 
523,709

 
526,274

Acquisition expense
656

 
13

 
2,155

 
971

Property management expenses
7,628

 
7,429

 
23,106

 
24,019

General and administrative expenses
5,879

 
6,511

 
19,103

 
16,065

Merger related expenses

 
331

 

 
3,202

Integration related expenses

 
147

 

 
7,140

Income from continuing operations before non-operating items
73,138

 
64,039

 
211,368

 
161,442

Interest and other non-property (expense) income
(179
)
 
37

 
(359
)
 
1,077

Interest expense
(29,342
)
 
(28,251
)
 
(88,801
)
 
(89,090
)
Loss on debt extinguishment
(5
)
 
(2,586
)
 
(3,384
)
 
(2,586
)
Amortization of deferred financing costs
(887
)
 
(1,000
)
 
(2,710
)
 
(3,485
)
Net casualty (loss) gain after insurance and other settlement proceeds
(5
)
 
(126
)
 
485

 
(431
)
Gain on sale of depreciable real estate assets excluded from discontinued operations
54,621

 
36,032

 
190,031

 
42,254

Gain on sale of non-depreciable real estate assets

 

 
172

 
535

Income before income tax expense
97,341

 
68,145

 
306,802

 
109,716

Income tax expense
(512
)
 
(442
)
 
(1,419
)
 
(1,235
)
Income from continuing operations before joint venture activity
96,829

 
67,703

 
305,383

 
108,481

(Loss) gain from real estate joint ventures
(1
)
 
3,124

 
(5
)
 
6,019

Income from continuing operations
96,828

 
70,827

 
305,378

 
114,500

Discontinued operations:
 

 
 

 
 

 
 

Loss from discontinued operations before (loss) gain on sale

 
(8
)
 

 
(59
)
Net casualty gain after insurance and other settlement proceeds on discontinued operations

 
3

 

 

(Loss) gain on sale of discontinued operations

 
(103
)
 

 
5,378

Consolidated net income
96,828

 
70,719

 
305,378

 
119,819

Net income attributable to noncontrolling interests
5,094

 
3,743

 
16,078

 
6,364

Net income available for MAA common shareholders
$
91,734

 
$
66,976

 
$
289,300

 
$
113,455

 
 
 
 
 
 
 
 
Earnings per common share - basic:
 
 
 

 
 

 
 

Income from continuing operations available for common shareholders
$
1.22

 
$
0.89

 
$
3.84

 
$
1.44

Discontinued property operations

 

 

 
0.07

Net income available for common shareholders
$
1.22

 
$
0.89

 
$
3.84

 
$
1.51

 
 
 
 
 
 
 
 
Earnings per common share - diluted:
 

 
 

 
 

 
 

Income from continuing operations available for common shareholders
$
1.22

 
$
0.89

 
$
3.84

 
$
1.44

Discontinued property operations

 

 

 
0.07

Net income available for common shareholders
$
1.22

 
$
0.89

 
$
3.84

 
$
1.51

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.77

 
$
0.73

 
$
2.31

 
$
2.19

See accompanying notes to condensed consolidated financial statements.

5



Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Comprehensive Income
Three and nine months ended September 30, 2015 and 2014
(Unaudited)
(Dollars in thousands)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Consolidated net income
$
96,828

 
$
70,719

 
$
305,378

 
$
119,819

Other comprehensive income:
 
 
 
 
 
 
 
Unrealized loss from the effective portion of derivative instruments
(9,269
)
 
(696
)
 
(11,812
)
 
(9,096
)
Reclassification adjustment for net losses included in net income for the effective portion of derivative instruments
1,607

 
2,589

 
5,590

 
9,399

Total comprehensive income
89,166

 
72,612

 
299,156

 
120,122

Less: comprehensive income attributable to noncontrolling interests
(4,690
)
 
(3,845
)
 
(15,750
)
 
(6,379
)
Comprehensive income attributable to MAA
$
84,476

 
$
68,767

 
$
283,406

 
$
113,743

 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.



6



Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2015 and 2014
(Unaudited)
(Dollars in thousands)
 
Nine months ended September 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Consolidated net income
$
305,378

 
$
119,819

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Retail revenue accretion
(952
)
 
(17
)
Depreciation and amortization
223,651

 
233,312

Stock compensation expense
4,438

 
3,180

Redeemable stock issued
741

 
690

Amortization of debt premium
(15,465
)
 
(20,121
)
Loss (gain) from investments in real estate joint ventures
6

 
(3,159
)
Loss on debt extinguishment
2,788

 
2,586

Derivative interest credit
(1,567
)
 
(2,543
)
Settlement of forward swaps

 
(3,625
)
Gain on sale of non-depreciable real estate assets
(172
)
 
(535
)
Gain on sale of depreciable real estate assets excluded from discontinued operations
(190,031
)
 
(42,254
)
Gain on sale of discontinued operations

 
(5,378
)
Net casualty (gain) loss and other settlement proceeds
(485
)
 
431

Changes in assets and liabilities:
 

 
 

Restricted cash
(1,533
)
 
(11,262
)
Other assets
5,927

 
(5,016
)
Accounts payable
(1,211
)
 
(1,665
)
Accrued expenses and other
28,877

 
32,209

Security deposits
1,146

 
688

Net cash provided by operating activities
361,536

 
297,340

Cash flows from investing activities:
 

 
 

Purchases of real estate and other assets
(248,668
)
 
(155,679
)
Normal capital improvements
(72,786
)
 
(72,045
)
Construction capital and other improvements
(5,479
)
 
(6,287
)
Renovations to existing real estate assets
(22,470
)
 
(15,484
)
Development
(24,870
)
 
(57,705
)
Distributions from real estate joint ventures
6

 
15,964

Contributions to real estate joint ventures
(29
)
 

Proceeds from disposition of real estate assets
358,017

 
241,691

Funding of escrow for future acquisitions
(59,607
)
 
(5,589
)
Net cash used in investing activities
(75,886
)
 
(55,134
)
Cash flows from financing activities:
 

 
 

Net change in credit lines
8,885

 
(216,184
)
Proceeds from notes payable

 
396,532

Principal payments on notes payable
(92,211
)
 
(258,105
)
Payment of deferred financing costs
(178
)
 
(4,156
)
Repurchase of common stock
(957
)
 
(456
)
Proceeds from issuances of common shares
326

 
728

Exercise of stock options
420

 
11,916

Distributions to noncontrolling interests
(9,676
)
 
(9,227
)
Dividends paid on common shares
(174,036
)
 
(164,298
)
Net cash used in financing activities
(267,427
)
 
(243,250
)
Net increase (decrease) in cash and cash equivalents
18,223

 
(1,044
)
Cash and cash equivalents, beginning of period
26,653

 
89,333

Cash and cash equivalents, end of period
$
44,876

 
$
88,289

 
 
 
 
Supplemental disclosure of cash flow information:
 

 
 

Interest paid
$
97,798

 
$
101,252

Income taxes paid
$
2,095

 
$
1,596

Supplemental disclosure of noncash investing and financing activities:
 

 
 

Conversion of units to shares of common stock
$
236

 
$
992

Accrued construction in progress
$
8,333

 
$
6,539

Interest capitalized
$
1,313

 
$
1,253

Marked-to-market adjustment on derivative instruments
$
(4,632
)
 
$
6,471

Fair value adjustment on debt assumed
$

 
$
2,720

Loan assumption
$

 
$
52,521

See accompanying notes to condensed consolidated financial statements.

7




Mid-America Apartments, L.P.
Condensed Consolidated Balance Sheets
September 30, 2015 and December 31, 2014
(Dollars in thousands, except unit data)
 
September 30, 2015
 
December 31, 2014
Assets:
 
 
 
Real estate assets:
 
 
 
Land
$
913,045

 
$
913,408

Buildings and improvements
6,842,089

 
6,781,210

Furniture, fixtures and equipment
223,759

 
214,742

Development and capital improvements in progress
44,645

 
80,772

 
8,023,538

 
7,990,132

Less accumulated depreciation
(1,410,155
)
 
(1,358,400
)
 
6,613,383

 
6,631,732

 
 
 
 
Undeveloped land
51,779

 
55,997

Corporate properties, net
8,606

 
7,988

Investments in real estate joint ventures
1,807

 
1,791

Real estate assets, net
6,675,575

 
6,697,508

 
 
 
 
Cash and cash equivalents
44,876

 
26,653

Restricted cash
89,321

 
28,181

Deferred financing costs, net
11,901

 
17,812

Other assets
64,061

 
61,119

Goodwill
1,607

 
2,321

Total assets
$
6,887,341

 
$
6,833,594

 
 
 
 
Liabilities and Capital:
 

 
 

Liabilities:
 

 
 

Secured notes payable
$
1,373,654

 
$
1,592,116

Unsecured notes payable
2,051,481

 
1,932,399

Accounts payable
10,509

 
8,395

Fair market value of interest rate swaps
17,953

 
13,392

Accrued expenses and other liabilities
243,711

 
219,044

Security deposits
11,446

 
10,526

Due to general partner
19

 
19

Total liabilities
3,708,773

 
3,775,891

 
 
 
 
Redeemable units
7,266

 
5,911

 
 
 
 
Capital:
 

 
 

General partner: 75,379,381 OP Units outstanding at September 30, 2015 and 75,267,675 OP Units outstanding at December 31, 2014 (1)
3,010,361

 
2,890,858

Limited partners: 4,185,065 OP Units outstanding at September 30, 2015 and 4,191,152 OP Units outstanding at December 31, 2014 (1)
167,539

 
161,310

Accumulated other comprehensive loss
(6,598
)
 
(376
)
Total capital
3,171,302

 
3,051,792

Total liabilities and capital
$
6,887,341

 
$
6,833,594


(1) 
Number of units outstanding represent total OP Units regardless of classification on the consolidated balance sheet. The number of units classified as redeemable units on the consolidated balance sheet at September 30, 2015 and December 31, 2014 are 88,745 and 87,818, respectively.

See accompanying notes to condensed consolidated financial statements.


8



Mid-America Apartments, L.P.
Condensed Consolidated Statements of Operations
Three and nine months ended September 30, 2015 and 2014
(Unaudited)
(Dollars in thousands, except per unit data)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Operating revenues:
 
 
 
 
 
 
 
Rental revenues
$
239,670

 
$
226,584

 
$
710,775

 
$
671,695

Other property revenues
22,328

 
22,979

 
68,666

 
67,264

Total property revenues
261,998

 
249,563

 
779,441

 
738,959

Management fee income

 
11

 

 
154

Total operating revenues
261,998

 
249,574

 
779,441

 
739,113

Property operating expenses:
 
 
 
 
 

 
 

Personnel
26,500

 
26,363

 
78,033

 
76,481

Building repairs and maintenance
8,793

 
9,056

 
23,195

 
23,354

Real estate taxes and insurance
31,699

 
31,025

 
97,824

 
93,128

Utilities
23,769

 
23,535

 
67,442

 
66,985

Landscaping
3,900

 
4,068

 
15,032

 
15,557

Other operating
6,938

 
6,835

 
21,577

 
20,903

Depreciation and amortization
73,098

 
70,222

 
220,606

 
229,866

Total property operating expenses
174,697

 
171,104

 
523,709

 
526,274

Acquisition expense
656

 
13

 
2,155

 
971

Property management expenses
7,628

 
7,429

 
23,106

 
24,019

General and administrative expenses
5,879

 
6,511

 
19,103

 
16,065

Merger related expenses

 
331

 

 
3,202

Integration related expenses

 
147

 

 
7,140

Income from continuing operations before non-operating items
73,138

 
64,039

 
211,368

 
161,442

Interest and other non-property (expense) income
(179
)
 
37

 
(359
)
 
1,077

Interest expense
(29,342
)
 
(28,251
)
 
(88,801
)
 
(89,090
)
Loss on debt extinguishment
(5
)
 
(2,586
)
 
(3,384
)
 
(2,586
)
Amortization of deferred financing costs
(887
)
 
(1,000
)
 
(2,710
)
 
(3,485
)
Net casualty (loss) gain after insurance and other settlement proceeds
(5
)
 
(126
)
 
485

 
(431
)
Gain on sale of depreciable real estate assets excluded from discontinued operations
54,621

 
36,032

 
190,031

 
42,254

Gain on sale of non-depreciable real estate assets

 

 
172

 
535

Income before income tax expense
97,341

 
68,145

 
306,802

 
109,716

Income tax expense
(512
)
 
(442
)
 
(1,419
)
 
(1,235
)
Income from continuing operations before joint venture activity
96,829

 
67,703

 
305,383

 
108,481

(Loss) gain from real estate joint ventures
(1
)
 
3,124

 
(5
)
 
6,019

Income from continuing operations
96,828

 
70,827

 
305,378

 
114,500

Discontinued operations:
 
 
 
 
 

 
 

Loss from discontinued operations before (loss) gain on sale

 
(8
)
 

 
(59
)
Net casualty gain after insurance and other settlement proceeds on discontinued operations

 
3

 

 

(Loss) gain on sale of discontinued operations

 
(103
)
 

 
5,378

Net income available for Mid-America Apartments, L.P. common unitholders
$
96,828

 
$
70,719

 
$
305,378

 
$
119,819

 
 
 
 
 
 
 
 
Earnings per common unit - basic:
 
 
 
 
 

 
 

Income from continuing operations available for common unitholders
$
1.22

 
$
0.89

 
$
3.84

 
$
1.44

Income from discontinued operations available for common unitholders

 

 

 
0.07

Net income available for common unitholders
$
1.22

 
$
0.89

 
$
3.84

 
$
1.51

 
 
 
 
 
 
 
 
Earnings per common unit - diluted:
 
 
 
 
 

 
 

Income from continuing operations available for common unitholders
$
1.22

 
$
0.89

 
$
3.84

 
$
1.44

Income from discontinued operations available for common unitholders

 

 

 
0.07

Net income available for common unitholders
$
1.22

 
$
0.89

 
$
3.84

 
$
1.51

 
 
 
 
 
 
 
 
Distributions declared per common unit
$
0.77

 
$
0.73

 
$
2.31

 
$
2.19


See accompanying notes to condensed consolidated financial statements.

9



Mid-America Apartments, L.P.
Condensed Consolidated Statements of Comprehensive Income
Three and nine months ended September 30, 2015 and 2014
(Unaudited)
(Dollars in thousands)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income available for Mid-America Apartments, L.P. common unitholders
$
96,828

 
$
70,719

 
$
305,378

 
$
119,819

Other comprehensive income:
 
 
 
 
 
 
 
Unrealized loss from the effective portion of derivative instruments
(9,269
)
 
(696
)
 
(11,812
)
 
(9,096
)
Reclassification adjustment for net losses included in net income for the effective portion of derivative instruments
1,607

 
2,589

 
5,590

 
9,399

Comprehensive income attributable to Mid-America Apartments, L.P.
$
89,166

 
$
72,612

 
$
299,156

 
$
120,122

 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.


10



Mid-America Apartments, L.P.
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2015 and 2014
(Unaudited)
(Dollars in thousands)
 
Nine months ended September 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Consolidated net income
$
305,378

 
$
119,819

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Retail revenue accretion
(952
)
 
(17
)
Depreciation and amortization
223,651

 
233,312

Stock compensation expense
4,438

 
3,180

Redeemable units issued
741

 
690

Amortization of debt premium
(15,465
)
 
(20,121
)
Loss (gain) from investments in real estate joint ventures
6

 
(3,159
)
Loss on debt extinguishment
2,788

 
2,586

Derivative interest credit
(1,567
)
 
(2,543
)
Settlement of forward swaps

 
(3,625
)
Gain on sale of non-depreciable real estate assets
(172
)
 
(535
)
Gain on sale of depreciable real estate assets excluded from discontinued operations
(190,031
)
 
(42,254
)
Gain on sale of discontinued operations

 
(5,378
)
Net casualty (gain) loss and other settlement proceeds
(485
)
 
431

Changes in assets and liabilities:
 
 
 
Restricted cash
(1,533
)
 
(11,262
)
Other assets
5,927

 
(5,016
)
Accounts payable
(1,211
)
 
(1,665
)
Accrued expenses and other
28,877

 
32,209

Security deposits
1,146

 
688

Net cash provided by operating activities
361,536

 
297,340

Cash flows from investing activities:
 

 
 

Purchases of real estate and other assets
(248,668
)
 
(155,679
)
Normal capital improvements
(72,786
)
 
(72,045
)
Construction capital and other improvements
(5,479
)
 
(6,287
)
Renovations to existing real estate assets
(22,470
)
 
(15,484
)
Development
(24,870
)
 
(57,705
)
Distributions from real estate joint ventures
6

 
15,964

Contributions to real estate joint ventures
(29
)
 

Proceeds from disposition of real estate assets
358,017

 
241,691

Funding of escrow for future acquisitions
(59,607
)
 
(5,589
)
Net cash used in investing activities
(75,886
)
 
(55,134
)
Cash flows from financing activities:
 

 
 

Net change in credit lines
8,885

 
(216,184
)
Proceeds from notes payable

 
396,532

Principal payments on notes payable
(92,211
)
 
(258,105
)
Payment of deferred financing costs
(178
)
 
(4,156
)
Repurchase of common units
(957
)
 
(456
)
Proceeds from issuances of common units
326

 
728

Exercise of unit options
420

 
11,916

Distributions paid on common units
(183,712
)
 
(173,525
)
Net cash used in financing activities
(267,427
)
 
(243,250
)
Net increase (decrease) in cash and cash equivalents
18,223

 
(1,044
)
Cash and cash equivalents, beginning of period
26,653

 
89,333

Cash and cash equivalents, end of period
$
44,876

 
$
88,289

 
 
 
 
Supplemental disclosure of cash flow information:
 

 
 

Interest paid
$
97,798

 
$
101,252

Income taxes paid
$
2,095

 
$
1,596

Supplemental disclosure of noncash investing and financing activities:
 
 
 
Accrued construction in progress
$
8,333

 
$
6,539

Interest capitalized
$
1,313

 
$
1,253

Marked-to-market adjustment on derivative instruments
$
(4,632
)
 
$
6,471

Fair value adjustment on debt assumed
$

 
$
2,720

Loan assumption
$

 
$
52,521

See accompanying notes to condensed consolidated financial statements.

11



Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.
Notes to Condensed Consolidated Financial Statements
September 30, 2015 and 2014
(Unaudited)

1.           Basis of Presentation and Principles of Consolidation and Significant Accounting Policies

Unless the context otherwise requires, all references to "we," "us," "our," or the "Company" refer collectively to Mid-America Apartment Communities, Inc., together with its consolidated subsidiaries, including the Mid-America Apartments, L.P. Unless the context otherwise requires, all references to "MAA" refer only to Mid-America Apartment Communities, Inc., and not any of its consolidated subsidiaries. Unless the context otherwise requires, the references to the "Operating Partnership" or "MAALP" refer to Mid-America Apartments, L.P. together with its consolidated subsidiaries. "Common stock" refers to the common stock of MAA and "shareholders" means the holders of shares of MAA’s common stock. The limited partnership interests of the Operating Partnership are referred to as "OP Units" and the holders of the OP Units are referred to as "unitholders".

As of September 30, 2015, MAA owned 75,379,381 units (or approximately 94.7%) of the limited partnership interests of the Operating Partnership. 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 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; and
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.

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. 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 limited 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 our 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 our business through the Operating Partnership's operations, direct or indirect incurrence of indebtedness, and issuance of partnership 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, preferred units, treasury shares, accumulated other comprehensive income and redeemable common units. The Operating Partnership's capital may include common capital and preferred capital of the general partner (MAA), limited partners' preferred capital, limited partners' 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. Each redeemable OP Unit may be redeemed by the holder thereof for either cash equal to the fair market value of one share of common stock of MAA at the time of such redemption or, at the option of MAA, one share of common stock of MAA.

As of September 30, 2015, we owned and operated 253 apartment communities comprising 79,024 apartments located in 15 states principally through the Operating Partnership.



12



As of September 30, 2015, we had four development communities under construction totaling 806 units, with 232 units completed. Total expected costs for the development projects are $119.5 million, of which $65.5 million has been incurred through September 30, 2015. We expect to complete construction on the first project by the fourth quarter of 2015, the second project by the first quarter of 2016, the third project by the third quarter of 2016, and the fourth project by the second quarter of 2017. Five of our multifamily properties include retail components with approximately 163,000 square feet of gross leasable area. We also have one wholly owned commercial property, which we acquired through our merger with Colonial Properties Trust, or Colonial, with approximately 196,000 square feet of gross leasable area, excluding tenant owned anchor stores, and one partially owned commercial property with approximately 30,000 square feet of gross leasable area.

Reclassifications

In order to present comparative financial statements, certain reclassifications have been made to prior period numbers. In our Form 10-Q for the three and nine months ended September 30, 2014, we reported approximately $0.3 million and $1.0 million, respectively, in permits and fees and general maintenance costs in the Other operating expense line of our Condensed Consolidated Statement of Operations. These costs have been reclassified to Building repairs and maintenance for the three and nine months ended September 30, 2014, presented in the Condensed Consolidated Statement of Operations included in this Report. In our Form 10-Q for the three and nine months ended September 30, 2014, we also reported approximately $8.6 million and $25.4 million, respectively, primarily for cable TV, trash removal, and telephone costs, in the Other operating expense line of our Condensed Consolidated Statement of Operations. These costs have been reclassified to Utilities for the three and nine months ended September 30, 2014, presented in the Condensed Consolidated Statement of Operations included in this Report. In our Form 10-K for the year ended December 31, 2014, we reported approximately $36.5 million as Assets held for sale, excluded from Real estate assets, net. These assets have been reclassified to Assets held for use within the applicable line items in the Condensed Consolidated Balance Sheet included in this Report. See further discussion on the held for sale reclassification in Note 12 to these condensed consolidated financial statements. These changes have been made in order to provide better insight into our property operating expenses and balance sheet position.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared by our management in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or the SEC. The condensed consolidated financial statements of MAA presented herein include the accounts of MAA, the Operating Partnership, and all other subsidiaries in which MAA has a controlling financial interest. MAA owns approximately 94.7% to 100% of all consolidated subsidiaries. The condensed 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, 100% of all consolidated subsidiaries. In our opinion, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included, and all such adjustments were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation.
 
We invest in entities which may qualify as variable interest entities, or 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. We consolidate all VIEs for which we are the primary beneficiary and use the equity method to account for investments that qualify as VIEs but for which we are not the primary beneficiary. In determining whether we are the primary beneficiary of a VIE, we consider 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.

We use the equity method of accounting for our investments in entities for which we exercise significant influence, but do not have the ability to exercise control. These entities are not variable interest entities. The factors considered in determining that we do not have the ability to exercise control include ownership of voting interests and participatory rights of investors.









13



2.    Earnings per Common Share of MAA

Basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of shares outstanding during the period.  All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis with our 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 they are dilutive to earnings per share. For the three and nine months ended September 30, 2015 and 2014, MAA's basic earnings per share is computed using the two-class method, and our diluted earnings per share is computed using the more dilutive of the treasury stock method or two-class method, as presented below:


14



(dollars and shares in thousands, except per share amounts)
Three months ended September 30,
 
Nine months ended September 30,
 
 
2015
 
2014
 
2015
 
2014
 
Shares Outstanding
 
 
 
 
 
 
 
 
Weighted average common shares - basic
75,189

 
75,058

 
75,167

 
74,937

 
Weighted average partnership units outstanding

(1) 

(1) 

(1) 

(1) 
Effect of dilutive securities

(2) 

(2) 

(2) 

(2) 
Weighted average common shares - diluted
75,189

 
75,058

 
75,167

 
74,937

 
 
 
 
 
 
 
 
 
 
Calculation of Earnings per Share - basic
 
 
 
 
 

 
 

 
Income from continuing operations
$
96,828

 
$
70,827

 
$
305,378

 
$
114,500

 
Income from continuing operations attributable to noncontrolling interests
(5,094
)
 
(3,748
)
 
(16,078
)
 
(6,080
)
 
Income from continuing operations allocated to unvested restricted shares
(221
)
 
(131
)
 
(668
)
 
(212
)
 
Income from continuing operations available for common shareholders, adjusted
$
91,513

 
$
66,948

 
$
288,632

 
$
108,208

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations
$

 
$
(108
)
 
$

 
$
5,319

 
Income from discontinued operations attributable to noncontrolling interest

 
5

 

 
(284
)
 
Income from discontinued operations allocated to unvested restricted shares

 

 

 
(10
)
 
Income from discontinued operations available for common shareholders, adjusted
$

 
$
(103
)
 
$

 
$
5,025

 
 
 
 
 
 
 
 
 
 
Weighted average common shares - basic
75,189

 
75,058

 
75,167

 
74,937

 
Earnings per share - basic
$
1.22

 
$
0.89

 
$
3.84

 
$
1.51

 
 
 
 
 
 
 
 
 
 
Calculation of Earnings per Share - diluted
 
 
 
 
 

 
 

 
Income from continuing operations
$
96,828

 
$
70,827

 
$
305,378

 
$
114,500

 
Income from continuing operations attributable to noncontrolling interests
(5,094
)
(1) 
(3,751
)
(1) 
(16,080
)
(1) 
(6,080
)
(1) 
Income from continuing operations allocated to unvested restricted shares
(221
)
(2) 
(131
)
(2) 
(668
)
(2) 
(212
)
(2) 
Income from continuing operations available for common shareholders, adjusted
$
91,513

 
$
66,945

 
$
288,630

 
$
108,208

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations
$

 
$
(108
)
 
$

 
$
5,319

 
Income from discontinued operations attributable to noncontrolling interest

 
8

(1) 

 
(284
)
(1) 
Income from discontinued operations allocated to unvested restricted shares

 

 

 
(10
)
(2) 
Income from discontinued operations available for common shareholders, adjusted
$

 
$
(100
)
 
$

 
$
5,025

 
 
 
 
 
 
 
 
 
 
Weighted average common shares - diluted
75,189

 
75,058

 
75,167

 
74,937

 
Earnings per share - diluted
$
1.22

 
$
0.89

 
$
3.84

 
$
1.51

 

(1) For both the three and nine months ended September 30, 2015 and 2014, 4.2 million operating partnership units and their related income are not included in the diluted earnings per share calculations as they are not dilutive.

(2) For the three and nine months ended September 30, 2015 and September 30, 2014, 0.2 million and 0.1 million, respectively, potentially dilutive securities and their related income are not included in the diluted earnings per share calculations as they are not dilutive.


15



3.    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 units outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends 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 unit computations for the three and nine months ended September 30, 2015 and 2014 is presented below:

(dollars and units in thousands, except per unit amounts)
Three months ended September 30,
 
Nine months ended September 30,
 
 
2015
 
2014
 
2015
 
2014
 
Units Outstanding
 
 
 
 
 
 
 
 
Weighted average OP Units - basic
79,374

 
79,263

 
79,356

 
79,148

 
Effect of dilutive securities

(1) 

(1) 

(1) 

(1) 
Weighted average OP Units - diluted
79,374

 
79,263

 
79,356

 
79,148

 
 
 
 
 
 
 
 
 
 
Calculation of Earnings per Unit - basic
 
 
 
 
 

 
 

 
Income from continuing operations
$
96,828

 
$
70,827

 
$
305,378

 
$
114,500

 
Income from continuing operations allocated to unvested restricted shares
(221
)
 
(131
)
 
(668
)
 
(212
)
 
Income from continuing operations available for common unitholders, adjusted
$
96,607

 
$
70,696

 
$
304,710

 
$
114,288

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations
$

 
$
(108
)
 
$

 
$
5,319

 
Income from discontinued operations allocated to unvested restricted shares

 

 

 
(10
)
 
Income from discontinued operations available for common unitholders, adjusted
$

 
$
(108
)
 
$

 
$
5,309

 
 
 
 
 
 
 
 
 
 
Weighted average OP Units - basic
79,374

 
79,263

 
79,356

 
79,148

 
Earnings per unit - basic:
$
1.22

 
$
0.89

 
$
3.84

 
$
1.51

 
 
 
 
 
 
 
 
 
 
Calculation of Earnings per Unit - diluted
 
 
 
 
 

 
 

 
Income from continuing operations
$
96,828

 
$
70,827

 
$
305,378

 
$
114,500

 
Income from continuing operations allocated to unvested restricted shares
(221
)
(1) 
(131
)
(1) 
(668
)
(1) 
(212
)
(1) 
Income from continuing operations available for common unitholders, adjusted
$
96,607

 
$
70,696

 
$
304,710

 
$
114,288

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations
$

 
$
(108
)
 
$

 
$
5,319

 
Income from discontinued operations allocated to unvested restricted shares

 

 

 
(10
)
(1) 
Income from discontinued operations available for common unitholders, adjusted
$

 
$
(108
)
 
$

 
$
5,309

 
 
 
 
 
 
 
 
 
 
Weighted average OP Units - diluted
79,374

 
79,263

 
79,356

 
79,148

 
Earnings per unit - diluted:
$
1.22

 
$
0.89

 
$
3.84

 
$
1.51

 

(1) For the three and nine months ended September 30, 2015 and September 30, 2014, 0.2 million and 0.1 million, respectively, potentially dilutive securities and their related income are not included in the diluted earnings per share calculations as they are not dilutive.

16



4.    MAA Equity

Total equity and its components for the nine-month periods ended September 30, 2015 and 2014 were as follows (dollars in thousands, except per share and per unit data):

  
Mid-America Apartment Communities, Inc. Shareholders' Equity
 
 
 
 
 
Common
Stock
Amount
 
Additional
Paid-In
Capital
 
Accumulated
Distributions
in Excess of
Net Income
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interest
 
Total
Equity
EQUITY BALANCE DECEMBER 31, 2014
$
752

 
$
3,619,270

 
$
(729,086
)
 
$
(412
)
 
$
161,287

 
$
3,051,811

Net income
 
 
 
 
289,300

 
 
 
16,078

 
305,378

Other comprehensive loss - derivative instruments (cash flow hedges)
 
 
 
 
 
 
(5,894
)
 
(328
)
 
(6,222
)
Issuance and registration of common shares
2

 
324

 
 
 
 
 
 
 
326

Shares repurchased and retired

 
(957
)
 
 
 
 
 
 
 
(957
)
Exercise of stock options

 
420

 
 
 
 
 
 
 
420

Shares issued in exchange for units

 
236

 
 
 
 
 
(236
)
 

Redeemable stock fair market value adjustment
 
 
 
 
(614
)
 
 
 
 
 
(614
)
Adjustment for noncontrolling interest ownership in operating partnership
 
 
(409
)
 
 
 
 
 
409

 

Amortization of unearned compensation
 
 
4,950

 
 
 
 
 
 
 
4,950

Dividends on common stock ($2.31 per share)
 
 
 
 
(174,100
)
 
 
 

 
(174,100
)
Dividends on noncontrolling interest units ($2.31 per unit)
 
 
 
 
 
 
 
 
(9,671
)
 
(9,671
)
EQUITY BALANCE SEPTEMBER 30, 2015
$
754

 
$
3,623,834

 
$
(614,500
)
 
$
(6,306
)
 
$
167,539

 
$
3,171,321


  
Mid-America Apartment Communities, Inc. Shareholders' Equity
 
 
 
 
 
Common
Stock
Amount
 
Additional
Paid-In
Capital
 
Accumulated
Distributions
in Excess of
Net Income
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interest
 
Total
Equity
EQUITY BALANCE DECEMBER 31, 2013
$
747

 
$
3,599,549

 
$
(653,593
)
 
$
108

 
$
166,726

 
$
3,113,537

Net income


 


 
113,455

 


 
6,364

 
119,819

Other comprehensive income - derivative instruments (cash flow hedges)


 


 


 
288

 
15

 
303

Issuance and registration of common shares
2

 
726