MAA.12.31.2014-10K
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UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, DC 20549 |
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FORM 10-K |
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R | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 |
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ |
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Commission File Number 001-12762 (Mid-America Apartment Communities, Inc.) |
Commission File Number 333-190028-01 (Mid-America Apartments, L.P.) |
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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) | | | (IRS Employer Identification Number) |
| | 6584 Poplar Avenue, Memphis, Tennessee, 38138 | |
| | (Address of principal executive offices) (Zip Code) | |
| | Registrant's telephone number, including area code: (901) 682-6600 | |
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Securities registered pursuant to Section 12(b) of the Act: | | | |
Title of each class | | Name of each exchange on which registered |
Common Stock, par value $.01 per share (Mid-America Apartment Communities, Inc.) | | New York Stock Exchange |
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Securities registered pursuant to Section 12(g) of the Act: None. |
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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. | YES R | No o |
Mid-America Apartments, L.P. | YES o | No R |
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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. | YES o | No R |
Mid-America Apartments, L.P. | YES o | No R |
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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 R | No o |
Mid-America Apartments, L.P. | YES R | No o |
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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 R | No o |
Mid-America Apartments, L.P. | YES R | No o |
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. o |
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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 the definitions of “large |
accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. |
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Mid-America Apartment Communities, Inc. | | |
| Large accelerated filer R | 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 R | Smaller reporting company o |
| | (Do not check if a smaller reporting company) |
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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 R |
Mid-America Apartments, L.P. | YES o | No R |
The aggregate market value of the 52,140,362 shares of the registrant's common stock held by non-affiliates of Mid-America Apartment Communities, Inc. was approximately $3,808,853,427 based on the closing price of $73.05 as reported on the New York Stock Exchange on June 30, 2014. 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, 2015 there were 75,297,357 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 19, 2015 are incorporated by reference into Part III of this report. We expect to file our proxy statement within 120 days after December 31, 2014.
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MID-AMERICA APARTMENT COMMUNITIES, INC. MID-AMERICA APARTMENTS, L.P. |
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TABLE OF CONTENTS |
Item | | Page |
| PART I | |
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1. | Business. | 5 |
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1A. | Risk Factors. | 13 |
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1B. | Unresolved Staff Comments. | 23 |
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2. | Properties. | 23 |
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3. | Legal Proceedings. | 34 |
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4. | Mine Safety Disclosures. | 34 |
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| PART II | |
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5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | 35 |
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6. | Selected Financial Data. | 38 |
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7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 41 |
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7A. | Quantitative and Qualitative Disclosures About Market Risk. | 56 |
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8. | Financial Statements and Supplementary Data. | 57 |
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9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. | 57 |
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9A. | Controls and Procedures. | 57 |
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9B. | Other Information. | 58 |
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| PART III | |
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10. | Directors, Executive Officers and Corporate Governance. | 59 |
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11. | Executive Compensation. | 59 |
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12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | 59 |
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13. | Certain Relationships and Related Transactions, and Director Independence. | 59 |
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14. | Principal Accounting Fees and Services. | 59 |
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| PART IV | |
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15. | Exhibits, Financial Statement Schedules. | 60 |
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Explanatory Note
This report combines the annual reports on Form 10-K for the year ended December 31, 2014 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. Unless the context otherwise requires, all references in this report to “MAA” refers 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 the 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”. This combined Form 10-K is being filed separately by MAA and MAALP.
As of December 31, 2014, MAA owned 75,267,675 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 annual reports on Form 10-K of MAA and the Operating Partnership, including the notes to the consolidated financial statements, into this single report results in the following benefits:
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• | 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; |
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• | 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 |
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• | creates time and cost efficiencies through the preparation of one combined report instead of two separate 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 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. Each redeemable 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.
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:
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• | the selected financial data in Item 6 of this Report; |
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• | the consolidated financial statements in Item 8 of this report; |
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• | certain accompanying notes to the financial statements, including Note 3 - Earnings per Common Share of MAA and Note 4 - Earnings per OP Unit of MAALP; Note 10 - Shareholders' Equity of MAA and Note 11 - Partners' Capital of MAALP; and Note 19 - Selected Quarterly Financial Information of MAA (Unaudited) and Note 20 - Selected Quarterly Financial Information of MAALP (Unaudited); |
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• | the controls and procedures in Item 9A of this report; and |
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• | 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.
PART I
Risks Associated with Forward Looking Statements
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 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 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. 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 the 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. Such factors include, among other things, unanticipated adverse business developments affecting us, or our properties, adverse changes in the real estate markets and general and local economies and business conditions. 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:
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• | 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; |
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• | exposure, as a multifamily focused REIT, to risks inherent in investments in a single industry; |
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• | 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; |
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• | failure of new acquisitions to achieve anticipated results or be efficiently integrated; |
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• | failure of development communities to be completed, if at all, within budget and on a timely basis or to lease-up as anticipated; |
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• | unexpected capital needs; |
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• | changes in operating costs, including real estate taxes, utilities and insurance costs; |
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• | losses from catastrophes in excess of our insurance coverage; |
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• | ability to obtain financing at favorable rates, if at all, and refinance existing debt as it matures; |
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• | level and volatility of interest or capitalization rates or capital market conditions; |
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• | loss of hedge accounting treatment for interest rate swaps or interest rate caps; |
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• | the continuation of the good credit of our interest rate swap and cap providers; |
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• | price volatility, dislocations and liquidity disruptions in the financial markets and the resulting impact on financing; |
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• | the effect of any rating agency actions on the cost and availability of new debt financing; |
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• | significant decline in market value of real estate serving as collateral for mortgage obligations; |
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• | 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; |
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• | 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; |
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• | inability to attract and retain qualified personnel; |
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• | potential liability for environmental contamination; |
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• | adverse legislative or regulatory tax changes; |
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• | litigation and compliance costs associated with laws requiring access for disabled persons; and |
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• | other risks identified in this annual report on Form 10-K 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. |
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 Report is filed.
ITEM 1. BUSINESS
Overview
MAA is a multifamily focused, self-administered and self-managed REIT. We own, operate, acquire and selectively develop apartment communities primarily located in the Southeast and Southwest regions of the United States. Our activities include full or partial ownership and operation of 268 multi-family properties and 3 commercial properties as of December 31, 2014, located in Alabama, Arizona, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Missouri, Nevada, North Carolina, South Carolina, Tennessee, Texas and Virginia.
As of December 31, 2014, we owned or maintained a partial ownership in the following properties:
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Multifamily: | | | | | | |
| Consolidated Properties | Units | Unconsolidated Properties | Units | Total Properties | Total Units |
| 268 | 82,316 | — | — |
| 268 | 82,316 |
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Commercial: | | | | | | |
| Consolidated Properties | Sq. Ft. (1) | Unconsolidated Properties | Sq. Ft. | Total Properties | Total Sq. Ft. |
| 2 | 263,271 | 1 | 29,971 |
| 3 | 293,242 |
(1) Excludes space owned by anchor tenants as well as commercial space located at multifamily communities.
Our business is conducted principally through the Operating Partnership. We are the sole general partner of the Operating Partnership, holding 75,267,675 OP units, comprising a 94.7% partnership interest in the Operating Partnership as of December 31, 2014.
MAA was formed in Tennessee in 1993. Our corporate offices are located at 6584 Poplar Avenue, Memphis, Tennessee 38138 and our telephone number is (901) 682-6600. As of December 31, 2014, we had 2,033 full-time employees and 57 part-time employees.
Merger of MAA and Colonial
On October 1, 2013, MAA completed its previously announced merger with Colonial Properties Trust, or Colonial. Pursuant to the merger agreement, Martha Merger Sub, LP, or OP Merger Sub, a wholly-owned indirect subsidiary of the Operating Partnership, merged with and into Colonial Realty Limited Partnership, which we refer to as Colonial LP, with Colonial LP being the surviving entity of the merger and becoming a wholly-owned indirect subsidiary of our Operating Partnership, which is referred to as the partnership merger. The partnership merger was part of the transactions contemplated by the agreement and plan of merger entered into on June 3, 2013 among MAA, the Operating Partnership, OP Merger Sub, Colonial, and Colonial LP pursuant to which MAA and Colonial combined through a merger of Colonial with and into MAA, with MAA surviving the merger, which is referred to as the parent merger. We refer 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 common share of beneficial interest in Colonial, or Colonial common share, was converted into the right to receive 0.36 of a newly issued share of MAA common stock. In addition, each limited partner interest in Colonial LP designated as a “Class A Unit” and a “Partnership Unit” under the limited partnership agreement of Colonial LP, which we refer to in this Report as Colonial LP units, issued and outstanding immediately prior to the effectiveness of the partnership merger was converted into common units in our Operating Partnership at the 0.36 conversion rate.
The net assets and results of operations of Colonial are included in our consolidated financial statements from the closing date, October 1, 2013 going forward.
Reporting Segments
As of December 31, 2014, we owned or had an ownership interest in 268 multifamily apartment communities located in 14 states from which we derived all significant sources of earnings and operating cash flows. Additionally, we owned three commercial properties in two states. Senior management evaluates performance and determines resource allocations by reviewing apartment communities individually and in the following reportable operating segments:
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• | 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 that have been stabilized for at least a full 12 months and have not been classified as held for sale. Communities are considered stabilized after achieving and maintaining at least 90% occupancy for 90 days. |
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• | 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 that have been stabilized for at least a full 12 months and have not been classified as held for sale. Communities are considered stabilized after achieving and maintaining at least 90% occupancy for 90 days. |
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• | 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 which represent less than 1% of our portfolio. |
On the first day of each calendar year, we determine the composition of our same store operating segments for that year, which allows us to evaluate full period-over-period operating comparisons. For financial reporting purposes for the twelve months ended December 31, 2014, the operating results of the Colonial assets that we acquired in the Merger are within the "non-same store communities and other" reporting segment. For full year operating results, the legacy Colonial assets will not be eligible to be included in same store segments until January 1, 2015. During 2014, we added 14 communities to our same store portfolio and moved 13 communities to our non-same store and other segment excluding legacy Colonial properties. For quarterly reporting purposes, we moved the legacy Colonial portfolio consisting of 97 properties into the same store portfolio during the fourth quarter of 2014 in order to show comparative results in the fourth quarter.
A summary of segment operating results for 2014, 2013 and 2012 is included in Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements, Note 16. Additionally, segment operating performance for such years is discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in this Annual Report on Form 10-K.
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 dividend 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:
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• | effectively and efficiently operate our existing properties with an intense property and asset management focus and a decentralized structure; |
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• | manage real estate cycles by taking an opportunistic approach to buying, selling, renovating and developing apartment communities; |
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• | diversify investment capital across both large and secondary markets to achieve a growing and less volatile operating performance; and |
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• | actively manage our capital structure to help enhance predictability of earnings to fund our dividends and distributions. |
2014 Highlights
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• | Core Funds From Operations, or Core FFO, which excludes merger and integration costs related to the merger Colonial, as well as certain other non-routine items, for the year was $4.99 per diluted share and unit. |
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• | Completed an unsecured public bond offering through the Operating Partnership. The Operating Partnership issued $400 million of ten year senior unsecured notes at a coupon rate of 3.75% and an issuance price of 98.873%. |
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• | Acquired eight multifamily communities, totaling 2,698 units, during the year and sold eight multifamily communities, totaling 3,063 units. |
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• | Sold or acquired full ownership of each of our multifamily joint venture properties, with the exception of one multifamily joint venture which owns only undeveloped land. |
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• | Completed the construction of three development communities during the year, and had two communities, containing a total of 514 units, remaining under construction at the end of the year. |
Operations Strategy
Our goal is to generate our return on investment collectively and in each apartment community by increasing revenues, controlling operating expenses, maintaining high occupancy levels and reinvesting as appropriate. The steps taken to meet these objectives include:
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• | providing management information and improved customer services through technology innovations; |
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• | utilizing systems to enhance property managers’ ability to optimize revenue by adjusting rental rates in response to local market conditions and individual unit amenities; |
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• | developing new ancillary income programs aimed at offering new services to residents, on which we generate revenue; |
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• | implementing programs to control expenses through investment in cost-saving initiatives; |
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• | analyzing individual asset productivity performances to identify best practices and improvement areas; |
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• | proactively maintaining the physical condition of each property through ongoing capital investments; |
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• | 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; |
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• | aggressively managing lease expirations to align with peak leasing traffic patterns and to maximize productivity of property staffing; |
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• | allocating additional capital, including capital for selective interior and exterior improvements; |
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• | compensating employees through performance-based compensation and stock ownership programs; and |
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• | 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 and executive management, along with various asset management functions, are proactively involved in supporting and reviewing property management through extensive reporting processes and frequent on-site visitations. To maximize the amount of information shared between senior and executive 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, 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.
Advances in technologies continue to drive operating efficiencies in our business and help us to better meet the changing needs of our residents. Since its launch in October 2012, our residents have been utilizing our web-based resident internet portal on our website. Our residents have the ability to conduct business with us 24 hours a day, 7 days a week. In February 2013, we completed the roll out of online leasing renewals throughout our portfolio. As a result of transforming our operations through technology, resident’s satisfaction improved, and our operating teams have become more efficient. Web-based technologies have also resulted in declining marketing and advertising costs, improved cash management, and better pricing management of our available apartments.
In 2014, the MAA website, www.maac.com, exceeded 3.6 million site visitors, which translates into a 38% year-over-year increase. We attribute this increase to the Merger, as well as core web enhancements made throughout the year, including improved site reporting capabilities, refreshed property and regional content, and extensive search engine optimization efforts. In addition, we continue to see strong mobile penetration, totaling 25% of all site visitors in 2014.
Acquisition Strategy
One of our growth strategies is to acquire apartment communities that are located in large or secondary markets primarily throughout the Southeast and Southwest regions of the United States. Acquisitions, along with dispositions as discussed below, help us achieve our desired product mix, geographic diversification and rebalance our portfolio. Portfolio
growth allows for maximizing the efficiency of the existing overhead structure. We have extensive experience in the acquisition of multifamily communities. We will continue to evaluate opportunities that arise, and will utilize this strategy to increase the number of apartment communities in strong and growing markets.
The following apartment communities were acquired by us during the year ended December 31, 2014:
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Property | | Location | | Number of Units | | Date Purchased |
Grand Cypress (1) | | Houston, Texas | | 312 |
| | January 15, 2014 |
Venue at Stonebridge Ranch (1) | | Dallas, Texas | | 250 |
| | January 31, 2014 |
Stonefield Commons | | Charlottesville, Virginia | | 251 |
| | June 2, 2014 |
Cityscape at Market Center | | Dallas, Texas | | 454 |
| | June 12, 2014 |
Verandas at Southwood (1) | | Tallahassee, Florida | | 300 |
| | July 23, 2014 |
Highlands of West Village | | Smyrna, Georgia | | 480 |
| | October 30, 2014 |
Bulverde Oaks | | San Antonio, Texas | | 328 |
| | October 31, 2014 |
Retreat at Vintage Park | | Houston, Texas | | 323 |
| | November 24, 2014 |
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(1) Acquired from Mid-America Multifamily Fund II, LLC, a joint venture fund in which MAA owned a one-third interest.
Disposition Strategy
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 develop, redevelop and acquire additional apartment communities and to 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. When we decide to sell a community, we generally solicit competing bids from unrelated parties for these individual assets and consider 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, 2014, we disposed of eight multifamily properties totaling 3,063 units and two commercial properties totaling 606,000 square feet.
Development Strategy
As another part of our growth strategy, we invest in a limited number of development projects. Typically our agreements are structured to minimize the construction and development risk by contracting with unrelated parties to do the work through a fixed price contract. Cost overruns are covered by the developer or shared on a pre-determined contractual basis. 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 serve as the developer. While we seek opportunistic new development investments offering attractive long-term investment returns, we do not currently intend to expand into development in a significant way. We expect our investment in new development will remain a smaller component of overall growth as compared to growth through acquiring existing properties. During the year ended December 31, 2014, we incurred $70.8 million in development costs.
The following multifamily projects were under development as of December 31, 2014 (dollars in thousands):
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Project: | Location | Total Units | Units Completed | Cost to Date | Budgeted Cost | Estimated Cost Per Unit | Expected Completion |
220 Riverside | Jacksonville, Florida | 294 |
| — |
| $ | 33,237 |
| $ | 42,300 |
| $ | 144 |
| 2nd Quarter 2015 |
Colonial Grand at Bellevue II | Nashville, Tennessee | 220 |
| 48 |
| $ | 27,605 |
| $ | 30,800 |
| $ | 140 |
| 1st Quarter 2015 |
Redevelopment Strategy
In 2005 we began an initiative of upgrading a significant number of our existing apartment communities in key markets across our portfolio. We focus on both interior unit upgrades and exterior amenities above and beyond routine capital upkeep in markets that we believe continue to have the ability to support additional rent growth. As a result of the Merger, significant additional redevelopment opportunities exist and we expect redevelopment to continue to be an important part of our strategy. During the year ended December 31, 2014, we renovated 4,549 units and exterior amenities for a total of $21.1 million. We believe that the rents received on these renovated units were approximately 9.3% above the normal market rate for similar but non-renovated units.
Capital Structure Strategy
We use a combination of debt and equity sources to fund our business strategy, focused on producing a low cost and flexible capital structure. We focus on improving the net present value of our assets by generating cash flows from our portfolio of investments 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. We maintain a capital structure that we believe allows us to proactively source potential investment opportunities in the marketplace. We have structured our debt maturity schedule to avoid significant exposure in any given year and to be able to opportunistically access both secured and unsecured debt markets when appropriate. We also believe that we have significant access to the equity capital markets.
At December 31, 2014, 37.3% of our total capitalization consisted of borrowings, including 16.9% under our secured borrowings and 20.4% under our unsecured credit facilities or unsecured senior notes. We currently intend to target our total debt to a range of approximately 40% to 45% 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 also issue new equity to maintain our debt within the target range. Covenants in our credit facilities limit our net-debt (total debt less cash on hand) to undepreciated book value to 60%. As of December 31, 2014, our ratio of net-debt to undepreciated book value was approximately 42.6%.
We continuously review opportunities for lowering our cost of capital and increasing net present value per share. We plan to broaden our capital sources to include additional unsecured debt in order to take advantage of lower cost of capital in the public bond market. We 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 may also opportunistically seek to lower our cost of capital through issuing, refinancing, or redeeming preferred shares.
On November 19, 2013, we entered into distribution agreements with J.P. Morgan Securities, LLC, BMO Capital Markets Corp., KeyBanc Capital Markets Inc. and UBS Securities LLC to sell up to 4,500,000 shares of our 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, 2014, there were 4,134,989 shares remaining under the ATM program.
The following are the issuances of common stock which have been made through these types of ATM agreements through December 31, 2014:
|
| | | | | | | | | | | | | | | | | | | |
| | Number of Shares Sold | | Net Proceeds | | Net Average Sales Price | | Gross Proceeds | | Gross Average Sales Price |
2006 | | 194,000 |
| | $ | 11,481,292 |
| | $ | 59.18 |
| | $ | 11,705,010 |
| | $ | 60.34 |
|
2007 | | 323,700 |
| | $ | 18,773,485 |
| | $ | 58.00 |
| | $ | 19,203,481 |
| | $ | 59.32 |
|
2008 | | 1,955,300 |
| | $ | 103,588,759 |
| | $ | 52.98 |
| | $ | 105,554,860 |
| | $ | 53.98 |
|
2009 | | 763,000 |
| | $ | 32,774,757 |
| | $ | 42.96 |
| | $ | 33,283,213 |
| | $ | 43.62 |
|
2010 | | 5,077,201 |
| | $ | 274,576,677 |
| | $ | 54.08 |
| | $ | 278,468,323 |
| | $ | 54.85 |
|
2011 | | 3,303,273 |
| | $ | 204,534,677 |
| | $ | 61.92 |
| | $ | 207,650,656 |
| | $ | 62.86 |
|
2012 | | 1,155,511 |
| | $ | 75,863,040 |
| | $ | 65.65 |
| | $ | 77,019,121 |
| | $ | 66.65 |
|
2013 | | 365,011 |
| | $ | 24,753,492 |
| | $ | 67.82 |
| | $ | 25,067,009 |
| | $ | 68.67 |
|
2014 | | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
Total | | 13,136,996 |
| | $ | 746,346,179 |
| | $ | 56.81 |
| | $ | 757,951,673 |
| | $ | 57.70 |
|
We also have a dividend and distribution reinvestment stock purchase plan, or DRSPP, which allows for the optional cash purchase of common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. We, in our absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. During the year ended December 31, 2014, we issued a total of 1,720 shares through the optional cash purchase feature of the DRSPP, resulting in net proceeds of $121,834.
Share Repurchase Program
In 1999, our Board of Directors approved an increase in the number of shares of our common stock authorized to be repurchased to 4 million shares. As of December 31, 2014, we had repurchased a total of approximately 1.9 million shares (8% of the shares of common stock and common units outstanding as of the beginning of the repurchase program). From time-to-time, we intend to repurchase shares when we believe that shareholder value would be enhanced. Factors affecting this determination include, among others, the share price and expected rates of return. No shares were repurchased from 2002 through 2014 under this plan.
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.
We believe that, in general, we are well-positioned to compete effectively for residents and investments. We believe our competitive advantages include:
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• | a fully integrated organization with property management, development, redevelopment, acquisition, marketing, sales and financing expertise; |
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• | scalable operating and support systems, which include automated systems to meet the changing electronic needs of our residents; |
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• | access to a wide variety of debt and equity capital sources; |
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• | geographic diversification with a presence in 49 markets across the country; and |
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• | 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 management, improve expense control, increase resident retention efforts and align employee incentive plans with our bottom line 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 apartments on a regular basis in order to maintain a competitive position in each individual market.
Environmental Matters
As part of the normal acquisition process, we generally obtain environmental studies on our apartment communities 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 community; 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. 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.
We believe that our properties are in compliance in all material respects with all applicable federal, state and local ordinances and regulations regarding hazardous or toxic substances and other environmental matters.
Website Access to Our Reports
Both MAA and the Operating Partnership file annual and periodic reports with the SEC. All filings made by MAA and the Operating Partnership with the SEC may be copied or read at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC as we do. The website is http://www.sec.gov.
Additionally, a copy of this Annual Report on Form 10-K, along with our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to the aforementioned filings, are available on our website free of charge. The filings can be found on the "For Investors" page under "SEC Filings and Reports". Our website also contains our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the committees of the Board of Directors. These items can be found on the "For Investors" page under "Corporate Overview and Governance Documents". Our website address is http://www.maac.com. 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 document. All of the aforementioned materials may also be obtained free of charge by contacting our Legal Department, 6584 Poplar Avenue, Memphis, TN 38138.
Tax Matters
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 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 2014, MAA paid total distributions of $2.92 per share of common stock to its shareholders, which was above the 90% REIT distribution requirement.
Inflation
We believe that the direct effects of inflation on our operations have been immaterial. While the impact of inflation primarily impacts our results through wage pressures, property taxes, utilities and material costs, substantially all of our leases are for a term of one year or less, which generally enables us to compensate for any inflationary effects by increasing rents on our apartments. Although an escalation in energy and food costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this has had a material impact on our results for the year ended December 31, 2014.
Insurance
We carry comprehensive general liability coverage on our communities, with limits of liability customary within the multi-family apartment industry, to insure against liability claims and related defense costs. We are also insured, with limits of liability customary within the multi-family apartment industry, against the risk of direct physical damage in amounts necessary 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.
Recent Developments
Acquisitions
On January 15, 2015, we closed on the purchase of the 298-unit Residences at Burlington Creek apartment community located in Kansas City, Missouri.
Financings
On January 30, 2015, we paid off the $15.2 million remaining principal balance of the mortgage on the Farmington Village apartment community.
On February 17, 2015, we paid off the $91.1 million remaining principal balance on the tax free portion of the Fannie Mae credit facility. As part of this pay-off, we incurred debt extinguishment costs of approximately $0.4 million, primarily related to legal costs and early termination fees.
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 impair our business operations. If any of these risks occur, our business prospects, results of operations or financial condition could suffer, the market price of our common stock and the trading price of our debt securities could decline and you could lose all or part of your investment in our common stock or debt securities.
RISKS RELATED TO OUR REAL ESTATE INVESTMENTS AND OUR OPERATIONS
Continued economic weakness following the economic recession that the U.S. economy most recently experienced may materially and adversely affect our financial condition and results of operations.
The U.S. economy continues to experience some weakness following a severe recession, including relatively high levels of unemployment and weak consumer spending. In addition, while the Federal Reserve took policy actions to promote market liquidity and encourage economic growth following the recession, such actions are now being curtailed as signs of improvement in the economy have emerged, and the impact of these monetary policy actions on the economy is uncertain. If the economic recovery slows or stalls, or if the economy experiences another recession, 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. We are also exposed to risks relating to the housing market recovery that has accompanied the economic recovery, to the extent that when demand for single family homes increases, demand for apartments may decline, which could adversely affect our cash flow, financial condition and results of operations.
Failure to generate sufficient cash flows could limit our ability to make payments on our debt and to pay distributions to shareholders and unitholders.
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 financing. Funds from operations and the value of our apartment communities may be insufficient because of factors that are beyond our control. Such events or conditions could include:
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• | competition from other apartment communities; |
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• | 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; |
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• | conversion of condominiums and single family houses to rental use or the sale of excess for-sale condominiums and single family homes; |
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• | weakness in the overall economy which lowers job growth and the associated demand for apartment housing; |
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• | 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; |
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• | inability to initially, or subsequently after lease terminations, rent apartments on favorable economic terms; |
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• | failure of development communities to be completed, if at all, within budget and on a timely basis or to lease up as anticipated; |
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• | changes in governmental regulations and the related costs of compliance; |
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• | 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; |
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• | withdrawal of government support of apartment financing through its financial backing of the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation; |
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• | an uninsured loss, including those resulting from a catastrophic storm, earthquake, or act of terrorism; |
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• | 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 |
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• | 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 pay distributions to shareholders 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 to our shareholders 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.
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.
Approximately 36.7% of our portfolio is centered in our top five markets: Atlanta, Georgia; Charlotte, North Carolina; Austin, Texas; Raleigh/Durham, North Carolina; and Dallas, Texas. 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 aforementioned general economic conditions, job growth and unemployment in any of these markets deteriorate or any of these areas experiences natural disasters, the value of the portfolio, our results of operations and our ability to make distributions to our shareholders and pay amounts due on our debt could be materially adversely affected.
Substantial competition among apartment communities and real estate companies may adversely affect our rental revenues and development and acquisition opportunities.
There are numerous other apartment communities and real estate companies, many of which 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 the rents charged, 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 distributions to our shareholders and pay amounts due on our debt.
We may be unable to retain key employees.
Our success will depend in part upon the ability to retain our key employees. There is substantial competition for qualified personnel in the real estate industry and the loss of any of our key personnel could have an adverse effect us.
Breaches of our privacy or information security systems could materially adversely affect our business, results of operations, financial conditions and/or reputation.
The protection of customer and employee data and our network systems are critically important to us. Our business requires us to use and store personally identifiable information of our customers and employees, which may include names, addresses, phone numbers, email addresses, contact preferences, tax identification numbers, and payment account information. The collection and use of personally identifiable information is governed by federal and state laws and regulations, which continue to evolve and may be inconsistent from one jurisdiction to another.
We devote significant resources to protect our customer and employee data and our network systems. However, the security measures put in place by us cannot provide absolute security and there can be no assurance that we will not suffer a data security incident in the future, that unauthorized parties will not gain access to sensitive data stored on the Company’s 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. Our information technology infrastructure could be compromised as a result of third-party security breaches, employee error, malfeasance, faulty password management, or other irregularity, and result in persons obtaining unauthorized access to company data or accounts. Further, privacy and information incidents have generally increased in recent years due to the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. In the future, the Company may be required to expend additional resources to continue to enhance the Company’s information security measures and/or to investigate and remediate any information security vulnerabilities.
Any privacy and information incident could compromise our network systems, and the information stored by us could be accessed, misused, publicly disclosed, corrupted, lost, or stolen resulting in fraud or other harm. Moreover, if a data security incident or breach affects our systems or results in the unauthorized release of personally identifiable information, we could be
materially damaged and we may be exposed to a risk of loss or litigation and possible liability, which could result in a material adverse effect on our business, results of operations, financial condition and/or reputation.
We may not realize the anticipated benefits of past or future acquisitions, and the failure to integrate acquired communities and new personnel successfully could create inefficiencies.
We have selectively acquired in the past, and if presented with attractive opportunities we intend to selectively acquire in the future, apartment communities that meet our investment criteria. Our acquisition activities and their success are subject to the following risks:
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• | we may be unable to obtain financing for acquisitions on favorable terms or at all; |
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• | 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; |
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• | 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; |
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• | we may incur significant costs and divert management attention in connection with the evaluation and negotiation of potential acquisitions, including potential acquisitions that we are subsequently unable to complete; |
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• | 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; and |
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• | 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. |
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:
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• | 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; and |
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• | federal tax laws limit our ability to profit on the sale of communities that we have owned for less than two years, and this limitation may prevent us from selling communities when market conditions are favorable. |
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 remediate properly, hazardous or toxic substances 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 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 property we seek to acquire, 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 communities will reveal:
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• | all or the full extent of potential environmental liabilities; |
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• | that any prior owner or operator of a property did not create any material environmental condition unknown to us; |
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• | that a material environmental condition does not otherwise exist as to any one or more of such communities; or |
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• | that environmental matters will not have a material adverse effect on us and our ability to make distributions to our shareholders 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 communities previously sold by our predecessors or by us.
There have been a number of lawsuits against owners and managers 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 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, health concerns, or allegations thereof, arise.
Losses from catastrophes may exceed our insurance coverage.
We carry comprehensive liability and property insurance on our communities and intend to obtain similar coverage for 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.
Increasing real estate taxes, utilities and insurance costs 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 costs 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 should rise, our financial condition could be negatively impacted, and our ability to pay our dividends and distributions could be 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, the Fair Housing Act of 1988 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 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, 2014, we had two development communities under construction totaling 514 units. We have completed 48 units for the development projects as of December 31, 2014. Our development and construction activities are subject to the following risks:
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• | 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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• | yields may be less than anticipated as a result of delays in completing projects, costs that exceed budget and/or higher than expected concessions for lease up and lower rents than pro forma; |
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• | 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; |
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• | 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; |
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• | we may be unable to complete construction and lease-up of a 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; |
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• | occupancy rates and rents at a newly developed community may fluctuate depending on a number of factors, including market and economic conditions, preventing us from meeting our profitability goals for that community; and |
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• | when we sell to third parties 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. |
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, 2014, the amount of our total debt was approximately $3.52 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:
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• | 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; |
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• | we may be subject to prepayment penalties if we elect to repay our indebtedness prior to the stated maturity date; |
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• | debt service obligations will reduce funds available for distribution to our shareholders and funds available for acquisitions, development and redevelopment; |
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• | we may be more vulnerable to economic and industry downturns than our competitors that have less debt; |
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• | we may be limited in our ability to respond to changing business and economic conditions; and |
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• | 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. |
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.
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 indebtedness on our communities, 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 were unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of our 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 to our shareholders 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.
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 to our shareholders 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 our shares of 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.
We may incur additional debt in the future.
We currently fund the acquisition and development of multifamily 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. Our organizational documents do not contain any limitation on the amount of indebtedness that we may incur. 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, which could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt and in an increased risk of default on our obligations.
The restrictive terms of certain of our indebtedness may cause acceleration of debt payments.
At December 31, 2014, we had outstanding borrowings of approximately $3.52 billion. Our indebtedness contains financial covenants as to minimum net worth, interest coverage ratios, maximum secured debt, and total debt to capital, among others. 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 us and our ability to make distributions to our shareholders and pay amounts due on our debt.
A change in United States government policy with regard to Fannie Mae and Freddie Mac could impact our financial condition.
Fannie Mae and Freddie Mac are a major source of financing for multifamily real estate in the United States. We utilize loan programs sponsored by these entities as one source of capital to finance our growth and our operations. On February 11, 2011, the Obama Administration released a report to Congress which included options, among others, to gradually shrink and eventually shut down Fannie Mae and Freddie Mac. We do not know when or if Fannie Mae or Freddie Mac will restrict their support of lending to the multifamily industry or to us in particular. As of December 31, 2014, 12% of our outstanding debt was borrowed through credit facilities provided by or credit-enhanced by Fannie Mae with agency rate-based maturities ranging from 2015 through 2018. In 2014, we decreased the indebtedness outstanding on our Fannie Mae and Freddie Mac credit facilities from $651.8 million on December 31, 2013 to $436.9 million, including paying off all outstanding amounts on the Freddie Mac credit facilities, as of December 31, 2014 and added $395.8 million of unsecured senior notes. A decision by the U.S. government to eliminate or downscale Fannie Mae or Freddie Mac or to reduce government support for multifamily housing more generally may adversely affect interest rates, capital availability, development of multifamily communities and the value of multifamily residential real estate and, as a result, may adversely affect us and our growth and operations.
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 distributions to our shareholders and pay amounts due on our debt.
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
included their assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow 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.
Issuances of additional debt or equity may adversely impact our financial condition.
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. Accordingly, we could become more leveraged, resulting in increased risk of default on our obligations and in an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future. 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 you acquire shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs, MAA:
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• | will consider the transfer to be null and void; |
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• | will not reflect the transaction on its books; |
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• | may institute legal action to enjoin the transaction; |
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• | will not pay dividends or other distributions with respect to those shares; |
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• | will not recognize any voting rights for those shares; |
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• | will consider the shares held in trust for its benefit; and |
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• | will either direct you to sell the shares and turn over any profit to MAA, or MAA will redeem the shares. If MAA redeems the shares, you will be paid a price equal to the lesser of: |
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◦ | the principal price paid for the shares by the holder, |
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◦ | a price per share equal to the market price (as determined in the manner set forth in its charter) of the applicable capital stock, |
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◦ | 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 |
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◦ | the maximum price allowed under 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 you acquire shares in violation of the limits on ownership described above:
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• | you may lose your power to dispose of the shares; |
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• | you may not recognize profit from the sale of such shares if the market price of the shares increases; and |
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• | you may be required to recognize a loss from the sale of such shares if the market price decreases. |
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. The Board of Directors may establish the preferences and rights of any 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, 2014, no shares of preferred stock were issued and outstanding.
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 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 shares 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 are listed on The New York Stock Exchange, or 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.
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 stock.
The stock markets, including NYSE, on which MAA lists its common stock, have 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:
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• | our financial condition and operating performance and the performance of other similar companies; |
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• | actual or anticipated differences in our quarterly and annual operating results; |
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• | changes in our revenues or earnings estimates or recommendations by securities analysts; |
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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; |
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• | inability to access the capital markets; |
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• | strategic decisions by us or our competitors, such as acquisitions, dispositions, spin-offs, joint ventures, strategic investments or changes in business strategy; |
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• | 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; |
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• | the reputation of REITs generally and the reputation of REITs with portfolios similar to ours; |
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• | the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies); |
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• | 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; |
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• | the passage of legislation or other regulatory developments that adversely affect us or our industry; |
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• | speculation in the press or investment community; |
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• | actions by institutional shareholders or hedge funds; |
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• | changes in accounting principles; |
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• | general market conditions, including factors unrelated to our performance. |
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 of our unitholders and all shareholders of MAA.
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 94.7% 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 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 or to service our 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, it will be subject to federal income tax on its taxable income at regular corporate rates (subject to any applicable alternative minimum tax). In addition, unless MAA is entitled to relief under applicable statutory provisions, it would be ineligible to make an election for treatment as a REIT for the four taxable years following the year in which MAA 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. Furthermore, MAA would no longer be required to make distributions to its shareholders. Thus, MAA’s failure to qualify as a REIT could also impair its ability to expand its business and raise capital, and would adversely affect the value of its common 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. However, MAA cannot assure you that it is qualified as a REIT, or that MAA will remain qualified in the future. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code for which 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 this qualification.
Even if MAA qualifies as a REIT, we will be subject to certain federal, state and local taxes on our income and property and on taxable income that MAA does not 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 will be subject to federal income tax at regular corporate rates on the income of those subsidiaries.
We may incur adverse tax consequences if Colonial failed to qualify as a REIT for U.S. federal income tax purposes; and if that occurs, it may have a material adverse effect on our consolidated results of operations and financial condition.
Prior to the Merger, Colonial operated in a manner intended to allow it to qualify as a REIT for U.S. federal income tax purposes under the Code. As discussed in Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on September 16, 2013, qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations and Colonial’s qualification as a REIT prior to the Merger was generally subject to the same requirements, risks and uncertainties as described in such Exhibit 99.1. Moreover, the complexity of these provisions and of the applicable Treasury Regulations that have been promulgated under the Code is greater in the case of a REIT that holds its assets through a partnership (such as we do and Colonial did prior to the Merger). The determination of various factual matters and circumstances not entirely within a REIT’s control may affect its ability to qualify as a REIT.
If Colonial is determined to have lost its REIT status at any time prior to the Merger, MAA will face serious tax consequences and material tax liabilities. Because MAA owns no material assets other than its ownership interest in the Operating Partnership, the Operating Partnership and its subsidiaries would likely be required to provide cash to MAA to satisfy any such tax liabilities, which would substantially reduce the Operating Partnership’s available cash, including cash
available to pay its indebtedness or make distributions to its limited partners or MAA's shareholders because, among other things:
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• | MAA would be required to pay U.S. federal income tax on Colonial’s prior net income at regular corporate rates for the years it did not qualify for taxation as a REIT (and, for such years, Colonial would not be allowed a deduction for dividends paid to its former shareholders in computing its taxable income); |
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• | Colonial could be subject to the federal alternative minimum tax and possibly increased state and local taxes for such periods; and |
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• | Unless Colonial is entitled to relief under applicable statutory provisions, neither it nor any “successor” company could elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified. |
MAA is liable for any taxes payable by Colonial for any periods prior to the Merger. In addition, if Colonial failed to qualify as a REIT but we nonetheless qualified as a REIT, in the event of a taxable disposition of a former Colonial asset during the ten years following the Merger we would be subject to corporate tax with respect to any built-in gain inherent in such asset as of the date of the Merger. In addition, under the “investment company” rules under Section 368 of the Code, if both MAA and Colonial were “investment companies” under such rules, the failure of either Colonial or us to have qualified as a REIT could cause the Merger to be taxable to us and our shareholders. As a result of all these factors, Colonial’s failure to have qualified as a REIT could jeopardize our qualification as a REIT and require our Operating Partnership to provide material amounts of cash to us to satisfy our additional tax liabilities and therefore have a material adverse effect on our financial condition, results of operations, business and prospects and our ability to make payments on our indebtedness or distributions to our shareholders.
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 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.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
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 Sunbelt region of the United States that are primarily appealing to middle income residents with the potential for above average growth and return on investment. Approximately 67% 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 extensive landscaping and attention to aesthetic detail. We utilize our experience and expertise in maintenance, landscaping, marketing and management to effectively reposition many of the apartment communities we acquire to raise occupancy levels and per unit average rents.
The following table sets forth certain historical information for the apartment communities we owned at December 31, 2014:
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| | | | | | | | Approx-imate Rentable Area (Square Footage) | | Aver-age Unit Size (Square Foot-age) | | Monthly Average Rent per Unit at December 31, 2014 (1) | | Average Occupancy Percent at December 31, 2014 (2) | | Monthly Effective Rent per Unit at December 31, 2014 (3) |
| | | | | | | | | | | |
Property | Location | Year Complete | Year Manage-ment Commenced | Report-able Seg-ment | | Number of Units | | | | | |
| | | | | | |
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| | |
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Birchall at Ross Bridge | Birmingham, AL | 2009 | 2011 | (5) | | 240 |
| | 283,680 |
| | 1,182 |
| | $ | 1,194.01 |
| | 95.83 | % | | $ | 1,130.84 |
|
CG at Riverchase Trails | Birmingham, AL | 1996 | 2013 | (6) | | 346 |
| | 328,008 |
| | 948 |
| | $ | 839.54 |
| | 95.38 | % | | $ | 829.91 |
|
CV at Trussville | Birmingham, AL | 1996 | 2013 | (6) | | 376 |
| | 410,216 |
| | 1,091 |
| | $ | 826.94 |
| | 93.62 | % | | $ | 806.65 |
|
Eagle Ridge | Birmingham, AL | 1986 | 1998 | (5) | | 200 |
| | 181,600 |
| | 908 |
| | $ | 787.66 |
| | 95.50 | % | | $ | 787.61 |
|
CG at Traditions | Gulf Shores, AL | 2008 | 2013 | (6) | | 324 |
| | 321,732 |
| | 993 |
| | $ | 766.13 |
| | 93.52 | % | | $ | 751.43 |
|
Abbington Place | Huntsville, AL | 1987 | 1998 | (5) | | 152 |
| | 162,792 |
| | 1,071 |
| | $ | 641.61 |
| | 96.05 | % | | $ | 635.06 |
|
CG at Edgewater | Huntsville, AL | 1990/99 | 2013 | (6) | | 500 |
| | 543,000 |
| | 1,086 |
| | $ | 738.29 |
| | 95.40 | % | | $ | 723.02 |
|
TPC at Providence | Huntsville, AL | 1989/98 | 1997 | (5) | | 392 |
| | 441,000 |
| | 1,125 |
| | $ | 751.54 |
| | 93.11 | % | | $ | 738.69 |
|
CG at Madison | Madison, AL | 1999 | 2013 | (6) | | 336 |
| | 354,480 |
| | 1,055 |
| | $ | 800.29 |
| | 96.43 | % | | $ | 789.91 |
|
TPC Montgomery | Montgomery, AL | 1999 | 1998 | (5) | | 208 |
| | 246,272 |
| | 1,184 |
| | $ | 813.36 |
| | 94.71 | % | | $ | 809.74 |
|
Cypress Village | Orange Beach, AL | 2008 | 2013 | (6) | | 96 |
| | 206,016 |
| | 2,146 |
| | $ | 1,455.90 |
| | 95.83 | % | | $ | 1,429.06 |
|
CG at Liberty Park | Vestavia Hills, AL | 2000 | 2013 | (6) | | 300 |
| | 338,700 |
| | 1,129 |
| | $ | 1,108.87 |
| | 92.33 | % | | $ | 1,065.37 |
|
Subtotal Alabama | | | | 3,470 |
| | 3,817,496 |
| | 1,100 |
| | $ | 854.61 |
| | 94.64 | % | | $ | 836.05 |
|
Sky View Ranch | Gilbert, AZ | 2007 | 2009 | (4) | | 232 |
| | 225,272 |
| | 971 |
| | $ | 904.91 |
| | 96.55 | % | | $ | 887.01 |
|
CG at Inverness Commons | Mesa, AZ | 2002 | 2013 | (6) | | 300 |
| | 306,000 |
| | 1,020 |
| | $ | 857.72 |
| | 95.00 | % | | $ | 842.09 |
|
Edge at Lyon's Gate | Phoenix, AZ | 2007 | 2008 | (4) | | 312 |
| | 299,208 |
| | 959 |
| | $ | 893.72 |
| | 94.87 | % | | $ | 884.81 |
|
Talus Ranch at Sonoran Foothills | Phoenix, AZ | 2005 | 2006 | (4) | | 480 |
| | 437,280 |
| | 911 |
| | $ | 775.80 |
| | 95.42 | % | | $ | 769.21 |
|
CG at Scottsdale | Scottsdale, AZ | 1999 | 2013 | (6) | | 180 |
| | 201,600 |
| | 1,120 |
| | $ | 1,092.31 |
| | 98.89 | % | | $ | 1,090.61 |
|
CG at OldTown Scottsdale South | Scottsdale, AZ | 1995 | 2013 | (6) | | 472 |
| | 470,584 |
| | 997 |
| | $ | 1,017.14 |
| | 95.34 | % | | $ | 1,007.99 |
|
Subtotal Arizona | | | | 1,976 |
| | 1,939,944 |
| | 982 |
| | $ | 908.49 |
| | 95.70 | % | | $ | 898.67 |
|
Calais Forest | Little Rock, AR | 1987 | 1994 | (5) | | 260 |
| | 195,000 |
| | 750 |
| | $ | 734.10 |
| | 95.38 | % | | $ | 708.32 |
|
Napa Valley Apartments | Little Rock, AR | 1984 | 1996 | (5) | | 240 |
| | 183,120 |
| | 763 |
| | $ | 685.47 |
| | 95.00 | % | | $ | 682.00 |
|
Palisades at Chenal Valley | Little Rock, AR | 2006 | 2011 | (5) | | 248 |
| | 319,672 |
| | 1,289 |
| | $ | 1,150.35 |
| | 91.53 | % | | $ | 1,114.45 |
|
Ridge at Chenal Valley | Little Rock, AR | 2012 | 2011 | (6) | | 312 |
| | 340,080 |
| | 1,090 |
| | $ | 1,067.50 |
| | 93.91 | % | | $ | 1,056.88 |
|
Westside Creek | Little Rock, AR | 1984/86 | 1997 | (5) | | 308 |
| | 304,612 |
| | 989 |
| | $ | 793.49 |
| | 95.45 | % | | $ | 782.38 |
|
Subtotal Arkansas | | | | 1,368 |
| | 1,342,484 |
| | 981 |
| | $ | 890.44 |
| | 94.30 | % | | $ | 873.50 |
|
Tiffany Oaks | Altamonte Springs, FL | 1985 | 1996 | (4) | | 288 |
| | 232,704 |
| | 808 |
| | $ | 848.47 |
| | 97.92 | % | | $ | 847.92 |
|
Indigo Point | Brandon, FL | 1989 | 2000 | (4) | | 240 |
| | 194,640 |
| | 811 |
| | $ | 886.80 |
| | 97.92 | % | | $ | 883.04 |
|
TPC Brandon | Brandon, FL | 1998 | 1997 | (4) | | 440 |
| | 528,440 |
| | 1,201 |
| | $ | 1,022.19 |
| | 94.55 | % | | $ | 1,011.90 |
|
CG at Lakewood Ranch | Bradenton, FL | 1999 | 2013 | (6) | | 288 |
| | 301,536 |
| | 1,047 |
| | $ | 1,266.94 |
| | 99.31 | % | | $ | 1,259.89 |
|
Preserve at Coral Square | Coral Springs, FL | 1996 | 2004 | (4) | | 480 |
| | 570,720 |
| | 1,189 |
| | $ | 1,488.31 |
| | 95.21 | % | | $ | 1,478.11 |
|
Anatole | Daytona Beach, FL | 1986 | 1995 | (5) | | 208 |
| | 150,384 |
| | 723 |
| | $ | 837.24 |
| | 99.52 | % | | $ | 831.33 |
|
TPC Gainesville | Gainesville, FL | 1999 | 1998 | (5) | | 264 |
| | 326,304 |
| | 1,236 |
| | $ | 960.44 |
| | 95.08 | % | | $ | 949.43 |
|
The Retreat at Magnolia Parke | Gainesville, FL | 2009 | 2011 | (5) | | 204 |
| | 206,244 |
| | 1,011 |
| | $ | 1,019.34 |
| | 95.59 | % | | $ | 1,002.78 |
|
CG at Heathrow | Heathrow, FL | 1997 | 2013 | (6) | | 312 |
| | 353,184 |
| | 1,132 |
| | $ | 1,071.95 |
| | 99.68 | % | | $ | 1,069.40 |
|
Atlantic Crossing | Jacksonville, FL | 2008 | 2011 | (5) | | 200 |
| | 248,200 |
| | 1,241 |
| | $ | 1,231.24 |
| | 95.50 | % | | $ | 1,228.74 |
|
Coopers Hawk | Jacksonville, FL | 1987 | 1995 | (5) | | 208 |
| | 218,400 |
| | 1,050 |
| | $ | 899.20 |
| | 95.19 | % | | $ | 894.62 |
|
Hunters Ridge Deerwood | Jacksonville, FL | 1987 | 1997 | (5) | | 336 |
| | 295,008 |
| | 878 |
| | $ | 860.04 |
| | 95.24 | % | | $ | 848.76 |
|
Lakeside Apartments | Jacksonville, FL | 1985 | 1996 | (5) | | 416 |
| | 346,112 |
| | 832 |
| | $ | 774.34 |
| | 98.80 | % | | $ | 771.88 |
|
Lighthouse at Fleming Island | Jacksonville, FL | 2003 | 2003 | (5) | | 501 |
| | 556,110 |
| | 1,110 |
| | $ | 999.72 |
| | 95.41 | % | | $ | 996.16 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Approx-imate Rentable Area (Square Footage) | | Aver-age Unit Size (Square Foot-age) | | Monthly Average Rent per Unit at December 31, 2014 (1) | | Average Occupancy Percent at December 31, 2014 (2) | | Monthly Effective Rent per Unit at December 31, 2014 (3) |
| | | | | | | | | | | |
Property | Location | Year Complete | Year Manage-ment Commenced | Report-able Seg-ment | | Number of Units | | | | | |
TPC Mandarin | Jacksonville, FL | 1998 | 1998 | (5) | | 288 |
| | 334,656 |
| | 1,162 |
| | $ | 969.98 |
| | 96.53 | % | | $ | 960.36 |
|
St. Augustine at the Lake I | Jacksonville, FL | 1987 | 1995 | (5) | | 400 |
| | 319,600 |
| | 799 |
| | $ | 778.68 |
| | 99.00 | % | | $ | 778.27 |
|
St. Augustine at the Lake II | Jacksonville, FL | 2008 | 1995 | (5) | | 124 |
| | 118,544 |
| | 956 |
| | $ | 1,004.84 |
| | 99.19 | % | | $ | 1,004.84 |
|
Tattersall at Tapestry Park | Jacksonville, FL | 2009 | 2011 | (5) | | 279 |
| | 307,458 |
| | 1,102 |
| | $ | 1,226.67 |
| | 96.06 | % | | $ | 1,198.86 |
|
Woodhollow | Jacksonville, FL | 1986 | 1997 | (5) | | 450 |
| | 379,350 |
| | 843 |
| | $ | 805.44 |
| | 96.22 | % | | $ | 803.71 |
|
TPC Lakeland | Lakeland, FL | 1988/90 | 1997 | (5) | | 464 |
| | 502,048 |
| | 1,082 |
| | $ | 800.03 |
| | 95.47 | % | | $ | 791.55 |
|
CG at Town Park | Lake Mary, FL | 2002 | 2013 | (6) | | 456 |
| | 535,344 |
| | 1,174 |
| | $ | 1,105.96 |
| | 96.49 | % | | $ | 1,097.95 |
|
CG at TownPark Reserve | Lake Mary, FL | 2004 | 2013 | (6) | | 80 |
| | 77,440 |
| | 968 |
| | $ | 1,235.16 |
| | 96.25 | % | | $ | 1,223.96 |
|
CG at Lake Mary | Lake Mary, FL | 2012 | 2013 | (6) | | 232 |
| | 236,640 |
| | 1,020 |
| | $ | 1,181.45 |
| | 98.28 | % | | $ | 1,170.10 |
|
CG at Lake Mary II | Lake Mary, FL | 2013 | 2013 | (6) | | 108 |
| | 111,780 |
| | 1,035 |
| | $ | 1,239.58 |
| | 94.44 | % | | $ | 1,227.71 |
|
CG at Lake Mary III | Lake Mary, FL | 2014 | 2013 | (6) | | 132 |
| | 139,920 |
| | 1,060 |
| | $ | 1,220.27 |
| | 99.24 | % | | $ | 1,203.92 |
|
Paddock Park | Ocala, FL | 1986/88 | 1997 | (5) | | 480 |
| | 493,440 |
| | 1,028 |
| | $ | 752.02 |
| | 96.46 | % | | $ | 750.35 |
|
Retreat at Lake Nona | Orlando, FL | 2006 | 2012 | (4) | | 394 |
| | 421,186 |
| | 1,069 |
| | $ | 1,088.55 |
| | 95.69 | % | | $ | 1,087.79 |
|
CG at Heather Glen | Orlando, FL | 2000 | 2013 | (6) | | 448 |
| | 523,264 |
| | 1,168 |
| | $ | 1,171.88 |
| | 95.98 | % | | $ | 1,168.59 |
|
CG at Randal Lakes | Orlando, FL | 2014 | 2013 | (6) | | 462 |
| | 435,666 |
| | 943 |
| | $ | 1,154.93 |
| | 95.67 | % | | $ | 1,133.83 |
|
Park Crest at Innisbrook | Palm Harbor, FL | 2000 | 2009 | (4) | | 432 |
| | 461,808 |
| | 1,069 |
| | $ | 1,056.98 |
| | 96.76 | % | | $ | 1,047.28 |
|
The Club at Panama Beach | Panama City, FL | 2000 | 1998 | (5) | | 254 |
| | 283,718 |
| | 1,117 |
| | $ | 1,065.29 |
| | 95.28 | % | | $ | 1,048.36 |
|
CV at Twin Lakes | Sanford, FL | 2005 | 2013 | (6) | | 460 |
| | 417,680 |
| | 908 |
| | $ | 909.65 |
| | 97.39 | % | | $ | 907.62 |
|
TPC Tallahassee | Tallahassee, FL | 1992 | 1997 | (5) | | 304 |
| | 329,536 |
| | 1,084 |
| | $ | 899.86 |
| | 96.38 | % | | $ | 894.73 |
|
Verandas at Southwood | Tallahassee, FL | 2003 | 2011 | (6) | | 300 |
| | 341,700 |
| | 1,139 |
| | $ | 1,054.13 |
| | 94.00 | % | | $ | 1,039.03 |
|
Belmere | Tampa, FL | 1984 | 1994 | (4) | | 210 |
| | 202,440 |
| | 964 |
| | $ | 903.29 |
| | 96.19 | % | | $ | 901.08 |
|
Links at Carrollwood | Tampa, FL | 1980 | 1998 | (4) | | 230 |
| | 213,210 |
| | 927 |
| | $ | 958.48 |
| | 98.26 | % | | $ | 955.87 |
|
Village Oaks | Tampa, FL | 2005 | 2008 | (6) | | 234 |
| | 279,864 |
| | 1,196 |
| | $ | 1,115.03 |
| | 98.72 | % | | $ | 1,114.61 |
|
CG at Hampton Preserve | Tampa, FL | 2012 | 2013 | (6) | | 486 |
| | 515,160 |
| | 1,060 |
| | $ | 1,101.82 |
| | 96.71 | % | | $ | 1,097.54 |
|
CG at Seven Oaks | Wesley Chapel, FL | 2004 | 2013 | (6) | | 318 |
| | 301,782 |
| | 949 |
| | $ | 1,003.57 |
| | 94.03 | % | | $ | 991.38 |
|
CG at Windermere | Windermere, FL | 2009 | 2013 | (6) | | 280 |
| | 283,920 |
| | 1,014 |
| | $ | 1,204.60 |
| | 98.57 | % | | $ | 1,204.15 |
|
Subtotal Florida | | | | 12,690 |
| | 13,095,140 |
| | 1,032 |
| | $ | 1,017.49 |
| | 96.58 | % | | $ | 1,010.40 |
|
Allure at Brookwood | Atlanta, GA | 2008 | 2012 | (4) | | 349 |
| | 344,463 |
| | 987 |
| | $ | 1,379.88 |
| | 92.55 | % | | $ | 1,311.03 |
|
Allure in Buckhead Village | Atlanta, GA | 2002 | 2012 | (4) | | 228 |
| | 223,212 |
| | 979 |
| | $ | 1,345.11 |
| | 95.18 | % | | $ | 1,320.75 |
|
Sanctuary at Oglethorpe | Atlanta, GA | 1994 | 2008 | (4) | | 250 |
| | 287,500 |
| | 1,150 |
| | $ | 1,577.79 |
| | 96.40 | % | | $ | 1,553.93 |
|
Bradford Pointe | Augusta, GA | 1986 | 1997 | (5) | | 192 |
| | 156,288 |
| | 814 |
| | $ | 753.66 |
| | 97.92 | % | | $ | 752.07 |
|
Westbury Creek | Augusta, GA | 1984 | 1997 | (5) | | 120 |
| | 107,160 |
| | 893 |
| | $ | 680.96 |
| | 94.17 | % | | $ | 680.96 |
|
Fountain Lake | Brunswick, GA | 1983 | 1997 | (5) | | 113 |
| | 128,820 |
| | 1,140 |
| | $ | 805.85 |
| | 93.81 | % | | $ | 805.85 |
|
Whisperwood | Columbus, GA | 1986 | 1997 | (5) | | 1,008 |
| | 1,188,432 |
| | 1,179 |
| | $ | 802.15 |
| | 95.83 | % | | $ | 780.56 |
|
Terraces at Fieldstone | Conyers, GA | 1999 | 1998 | (4) | | 316 |
| | 375,092 |
| | 1,187 |
| | $ | 892.41 |
| | 94.62 | % | | $ | 858.78 |
|
Prescott | Duluth, GA | 2001 | 2004 | (4) | | 384 |
| | 411,648 |
| | 1,072 |
| | $ | 909.40 |
| | 95.31 | % | | $ | 907.58 |
|
CG at Berkeley Lake | Duluth, GA | 1998 | 2013 | (6) | | 180 |
| | 244,260 |
| | 1,357 |
| | $ | 1,096.01 |
| | 95.56 | % | | $ | 1,082.84 |
|
CG at River Oaks | Duluth, GA | 1992 | 2013 | (6) | | 216 |
| | 276,264 |
| | 1,279 |
| | $ | 1,018.98 |
| | 98.61 | % | | $ | 1,011.85 |
|
CG at River Plantation | Duluth, GA | 1994 | 2013 | (6) | | 232 |
| | 310,416 |
| | 1,338 |
| | $ | 1,023.56 |
| | 96.98 | % | | $ | 1,005.45 |
|
CG at McDaniel Farm | Duluth, GA | 1997 | 2013 | (6) | | 425 |
| | 450,925 |
| | 1,061 |
| | $ | 920.41 |
| | 96.24 | % | | $ | 916.64 |
|
CG at Pleasant Hill | Duluth, GA | 1996 | 2013 | (6) | | 502 |
| | 502,000 |
| | 1,000 |
| | $ | 836.40 |
| | 95.02 | % | | $ | 831.15 |
|
CG at Mount Vernon | Dunwoody, GA | 1997 | 2013 | (6) | | 213 |
| | 257,091 |
| | 1,207 |
| | $ | 1,261.84 |
| | 95.77 | % | | $ | 1,255.88 |
|
Lake Lanier Club I | Gainesville, GA | 1998 | 2005 | (4) | | 344 |
| | 396,288 |
| | 1,152 |
| | $ | 941.34 |
| | 95.64 | % | | $ | 924.57 |
|
Lake Lanier Club II | Gainesville, GA | 2001 | 2005 | (4) | | 313 |
| | 359,950 |
| | 1,150 |
| | $ | 867.33 |
| | 97.12 | % | | $ | 855.51 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Approx-imate Rentable Area (Square Footage) | | Aver-age Unit Size (Square Foot-age) | | Monthly Average Rent per Unit at December 31, 2014 (1) | | Average Occupancy Percent at December 31, 2014 (2) | | Monthly Effective Rent per Unit at December 31, 2014 (3) |
| | | | | | | | | | | |
Property | Location | Year Complete | Year Manage-ment Commenced | Report-able Seg-ment | | Number of Units | | | | | |
CG at Shiloh | Kennesaw, GA | 2002 | 2013 | (6) | | 498 |
| | 533,358 |
| | 1,071 |
| | $ | 905.51 |
| | 95.78 | % | | $ | 901.80 |
|
Milstead Village | Kennesaw, GA | 1998 | 2008 | (6) | | 310 |
| | 356,190 |
| | 1,149 |
| | $ | 1,007.78 |
| | 97.10 | % | | $ | 1,000.52 |
|
Austin Chase | Macon, GA | 1996 | 1997 | (5) | | 256 |
| | 293,120 |
| | 1,145 |
| | $ | 805.71 |
| | 95.70 | % | | $ | 794.60 |
|
Vistas | Macon, GA | 1985 | 1997 | (5) | | 144 |
| | 153,792 |
| | 1,068 |
| | $ | 682.56 |
| | 98.61 | % | | $ | 653.92 |
|
CG at Barrett Creek | Marietta, GA | 1999 | 2013 | (6) | | 332 |
| | 310,088 |
| | 934 |
| | $ | 890.63 |
| | 98.19 | % | | $ | 888.10 |
|
CG at Godley Station | Pooler, GA | 2005 | 2013 | (6) | | 312 |
| | 337,272 |
| | 1,081 |
| | $ | 985.04 |
| | 93.27 | % | | $ | 977.69 |
|
CG at Godley Lake | Pooler, GA | 2008 | 2013 | (6) | | 288 |
| | 269,568 |
| | 936 |
| | $ | 940.51 |
| | 96.18 | % | | $ | 936.00 |
|
Avala at Savannah Quarters | Savannah, GA | 2009 | 2011 | (5) | | 256 |
| | 278,016 |
| | 1,086 |
| | $ | 1,002.92 |
| | 96.09 | % | | $ | 999.60 |
|
Georgetown Grove | Savannah, GA | 1997 | 1998 | (5) | | 220 |
| | 239,800 |
| | 1,090 |
| | $ | 960.91 |
| | 94.55 | % | | $ | 956.37 |
|
CG at Hammocks | Savannah, GA | 1997 | 2013 | (6) | | 308 |
| | 323,708 |
| | 1,051 |
| | $ | 1,105.97 |
| | 96.10 | % | | $ | 1,101.09 |
|
CV at Greentree | Savannah, GA | 1984 | 2013 | (6) | | 194 |
| | 165,288 |
| | 852 |
| | $ | 758.98 |
| | 94.33 | % | | $ | 748.06 |
|
CV at Huntington | Savannah, GA | 1986 | 2013 | (6) | | 147 |
| | 121,128 |
| | 824 |
| | $ | 846.00 |
| | 99.32 | % | | $ | 843.57 |
|
CV at Marsh Cove | Savannah, GA | 1983 | 2013 | (6) | | 188 |
| | 197,212 |
| | 1,049 |
| | $ | 852.20 |
| | 93.09 | % | | $ | 844.02 |
|
The Oaks at Wilmington Island | Savannah, GA | 1999 | 2006 | (5) | | 306 |
| | 333,846 |
| | 1,091 |
| | $ | 1,041.93 |
| | 96.41 | % | | $ | 1,036.37 |
|
Highlands of West Village I | Smyrna, GA | 2006 | 2014 | (6) | | 292 |
| | 368,504 |
| | 1,262 |
| | $ | 1,414.79 |
| | 92.81 | % | | $ | 1,388.31 |
|
Highlands of West Village II | Smyrna, GA | 2012 | 2014 | (6) | | 188 |
| | 188,000 |
| | 1,000 |
| | $ | 1,420.55 |
| | 89.36 | % | | $ | 1,401.44 |
|
Huntington Chase | Warner Robins, GA | 1997 | 2000 | (5) | | 200 |
| | 221,400 |
| | 1,107 |
| | $ | 804.68 |
| | 98.00 | % | | $ | 771.97 |
|
Southland Station | Warner Robins, GA | 1988 | 1997 | (5) | | 304 |
| | 355,984 |
| | 1,171 |
| | $ | 732.60 |
| | 95.39 | % | | $ | 713.71 |
|
Terraces at Towne Lake | Woodstock, GA | 1999 | 1998 | (4) | | 502 |
| | 568,264 |
| | 1,132 |
| | $ | 850.38 |
| | 94.02 | % | | $ | 839.85 |
|
Subtotal Georgia | | | | 10,630 |
| | 11,634,347 |
| | 1,094 |
| | $ | 965.37 |
| | 95.55 | % | | $ | 951.68 |
|
Fairways at Hartland | Bowling Green, KY | 1996 | 1997 | (5) | | 240 |
| | 251,040 |
| | 1,046 |
| | $ | 812.65 |
| | 96.67 | % | | $ | 808.79 |
|
Grand Reserve at Pinnacle | Lexington, KY | 2000 | 1999 | (5) | | 370 |
| | 432,900 |
| | 1,170 |
| | $ | 990.99 |
| | 94.59 | % | | $ | 970.37 |
|
Lakepointe | Lexington, KY | 1986 | 1994 | (5) | | 118 |
| | 90,742 |
| | 769 |
| | $ | 695.97 |
| | 98.31 | % | | $ | 695.97 |
|
The Mansion | Lexington, KY | 1989 | 1994 | (5) | | 184 |
| | 138,736 |
| | 754 |
| | $ | 707.26 |
| | 96.74 | % | | $ | 704.54 |
|
The Village | Lexington, KY | 1989 | 1994 | (5) | | 252 |
| | 182,700 |
| | 725 |
| | $ | 698.30 |
| | 96.03 | % | | $ | 688.27 |
|
Stonemill Village | Louisville, KY | 1985 | 1994 | (5) | | 384 |
| | 324,864 |
| | 846 |
| | $ | 768.28 |
| | 94.79 | % | | $ | 762.63 |
|
Subtotal Kentucky | | | | 1,548 |
| | 1,420,982 |
| | 918 |
| | $ | 804.23 |
| | 95.74 | % | | $ | 795.35 |
|
Crosswinds | Jackson, MS | 1989 | 1996 | (5) | | 360 |
| | 443,160 |
| | 1,231 |
| | $ | 856.86 |
| | 94.17 | % | | $ | 847.46 |
|
Pear Orchard | Jackson, MS | 1985 | 1994 | (5) | | 389 |
| | 337,263 |
| | 867 |
| | |