Edgar Filing: MID AMERICA APARTMENT COMMUNITIES INC

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2016

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

For the transition period from ______ to ______

Commission File Number 001-12762 (Mid-America Apartment Communities, Inc.)

Commission File Number 333-190028-01 (Mid-America Apartments, L.P.)

MID-AMERICA APARTMENT COMMUNITIES, INC.

MID-AMERICA APARTMENTS, L.P.

(Exact name of registrant as specified in its charter)



Tennessee (Mid-America Apartment Communities, Inc.)	62-1543819
Tennessee (Mid-America Apartments, L.P.)	62-1543816
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



	6584 Poplar Avenue, Memphis, Tennessee, 38138
	(Address of principal executive offices) (Zip Code)



	(901) 682-6600
	(Registrant's telephone number, including area code)

	N/A
	(Former name, former address and former fiscal year, if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Mid-America Apartment Communities, Inc.	YES ý	NO o
Mid-America Apartments, L.P.	YES ý	NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Mid-America Apartment Communities, Inc.	YES ý	NO o
Mid-America Apartments, L.P.	YES ý	NO o



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Mid-America Apartment Communities, Inc.
	Large accelerated filer ý	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
			(Do not check if a smaller reporting company)
Mid-America Apartments, L.P.
	Large accelerated filer o	Accelerated filer o	Non-accelerated filer ý	Smaller reporting company o
			(Do not check if a smaller reporting company)



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Mid-America Apartment Communities, Inc.	YES o	NO ý
Mid-America Apartments, L.P.	YES o	NO ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:



	Number of Shares Outstanding at
Class	July 25, 2016
Common Stock, $0.01 par value	75,534,086

MID-AMERICA APARTMENT COMMUNITIES, INC.

MID-AMERICA APARTMENTS, L.P.

TABLE OF CONTENTS



		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.
Mid-America Apartment Communities, Inc.
	Condensed Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015 (Unaudited).	4
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 (Unaudited) and 2015 (Unaudited).	5
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 (Unaudited) and 2015 (Unaudited).	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 (Unaudited) and 2015 (Unaudited).	7
Mid-America Apartments, L.P.
	Condensed Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015 (Unaudited).	8
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 (Unaudited) and 2015 (Unaudited).	9
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 (Unaudited) and 2015 (Unaudited).	10
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 (Unaudited) and 2015 (Unaudited).	11

	Notes to Condensed Consolidated Financial Statements (Unaudited).	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	41
Item 4.	Controls and Procedures.	41

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	42
Item 1A.	Risk Factors.	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	42
Item 3.	Defaults Upon Senior Securities.	42
Item 4.	Mine Safety Disclosures.	42
Item 5.	Other Information.	43
Item 6.	Exhibits.	43
	Signatures.	44
	Exhibit Index.	46

Explanatory Note

This periodic report on Form 10-Q, or this Report, combines the quarterly reports for the quarter ended June 30, 2016 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 its sole general partner. Mid-America Apartment Communities, Inc. and its 94.8% owned subsidiary, Mid-America Apartments, L.P., are both required to file periodic reports under the Securities Exchange Act of 1934, as amended.

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

As of June 30, 2016, MAA owned 75,524,086 units (or approximately 94.8%) of the limited partnership interests of the Operating Partnership. MAA conducts substantially all of its business and holds substantially all of its assets through the Operating Partnership, and by virtue of its ownership of the OP Units and being the Operating Partnership's sole general partner, MAA has the ability to control all of the day-to-day operations of the Operating Partnership.

We believe combining the periodic reports of MAA and the Operating Partnership, including the notes to the condensed consolidated financial statements, into this Report results in the following benefits:


•	enhances investors' understanding of MAA and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;


•	eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this Report applies to both MAA and the Operating Partnership; and


•	creates time and cost efficiencies through the preparation of one combined Report instead of two separate 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 partners. MAA's only material asset is its ownership of limited partnership interests in the Operating Partnership; therefore, MAA does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time-to-time and guaranteeing certain debt of the Operating Partnership. The Operating Partnership holds, directly or indirectly, all of our real estate assets. Except for net proceeds from public equity issuances by MAA, which are contributed to the Operating Partnership in exchange for OP Units, the Operating Partnership generates the capital required by the Company's business through the Operating Partnership's operations, direct or indirect incurrence of indebtedness and issuance of OP Units.

The presentation of MAA's shareholders' equity and the Operating Partnership's capital are the principal areas of difference between the consolidated financial statements of MAA and those of the Operating Partnership. MAA's shareholders' equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative distributions, noncontrolling interest, preferred units, treasury shares, accumulated other comprehensive income and redeemable common units. The Operating Partnership's capital may include common capital and preferred capital of the general partner (MAA), limited partners' preferred capital, limited partners' noncontrolling interest, accumulated other comprehensive income and redeemable common units. Redeemable common units represent the number of outstanding OP Units as of the date of the applicable balance sheet, valued for conversion at the greater of the closing market price of MAA's common stock or the aggregate value of the individual partners' capital balances. Holders of OP Units (other than MAA and its entity affiliates) may require us to redeem their OP Units, from time to time, in which case we may, at our option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA’s common stock on the New York Stock Exchange, or NYSE, over a specified period prior to the redemption date) or by delivering one share of our common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.

In order to highlight the material differences between MAA and the Operating Partnership, this Report includes sections that separately present and discuss areas that are materially different between MAA and the Operating Partnership, including:


•	the consolidated financial statements in Item 1 of this Report;


•	certain accompanying notes to the financial statements, including Note 2 - Earnings per Common Share of MAA and Note 3 - Earnings per OP Unit of MAALP; Note 4 - MAA Equity and Note 5 - MAALP Capital; and Note 9 - Shareholders' Equity of MAA and Note 10 - Partners' Capital of MAALP; and


•	the certifications of the Chief Executive Officer and Chief Financial Officer of MAA included as Exhibits 31 and 32 to this Report.

In the sections that combine disclosure for MAA and the Operating Partnership, this Report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership (directly or indirectly through one of its subsidiaries) is generally the entity that enters into contracts, holds assets and issues debt, management believes this presentation is appropriate for the reasons set forth above and because the business is one enterprise, and we operate the business through the Operating Partnership.

Mid-America Apartment Communities, Inc.

Condensed Consolidated Balance Sheets

June 30, 2016 and December 31, 2015

(Unaudited)

(Dollars in thousands, except share data)



	June 30, 2016			December 31, 2015
Assets:
Real estate assets:
Land	$	943,179		$	926,532
Buildings and improvements	7,096,432			6,939,288
Furniture, fixtures and equipment	245,607			228,157
Development and capital improvements in progress	53,509			44,355
	8,338,727			8,138,332
Less accumulated depreciation	(1,628,891		)	(1,482,368		)
	6,709,836			6,655,964

Undeveloped land	40,514			51,779
Corporate properties, net	9,390			8,812
Investments in real estate joint ventures	50			1,811
Real estate assets, net	6,759,790			6,718,366

Cash and cash equivalents	26,279			37,559
Restricted cash	25,131			26,082
Deferred financing costs, net	4,587			5,232
Other assets	51,987			58,935
Goodwill	1,607			1,607
Total assets	$	6,869,381		$	6,847,781

Liabilities and equity:
Liabilities:
Unsecured notes payable	$	2,246,227		$	2,141,332
Secured notes payable	1,243,198			1,286,236
Accounts payable	7,464			5,922
Fair market value of interest rate swaps	11,760			10,358
Accrued expenses and other liabilities	218,658			226,237
Security deposits	12,386			11,623
Total liabilities	3,739,693			3,681,708

Redeemable stock	10,369			8,250

Shareholders' equity:
Common stock, $0.01 par value per share, 100,000,000 shares authorized; 75,524,086 and 75,408,571 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively ⁽¹⁾	754			753
Additional paid-in capital	3,630,094			3,627,074
Accumulated distributions in excess of net income	(670,954		)	(634,141		)
Accumulated other comprehensive loss	(4,150		)	(1,589		)
Total MAA shareholders' equity	2,955,744			2,992,097
Noncontrolling interest	163,575			165,726
Total equity	3,119,319			3,157,823
Total liabilities and equity	$	6,869,381		$	6,847,781


⁽¹⁾	Number of shares issued and outstanding represent total shares of common stock regardless of classification on the condensed consolidated balance sheet. The number of shares classified as redeemable stock on the condensed consolidated balance sheet at June 30, 2016 and December 31, 2015 are 98,142 and 90,844, respectively.

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartment Communities, Inc.

Condensed Consolidated Statements of Operations

Three and six months ended June 30, 2016 and 2015

(Unaudited)

(Dollars in thousands, except per share data)



	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Operating revenues:
Rental revenues	$	249,326		$	236,165		$	494,991		$	471,106
Other property revenues	22,910			22,726			46,261			46,337
Total operating revenues	272,236			258,891			541,252			517,443
Property operating expenses:
Personnel	25,858			25,872			51,055			51,533
Building repairs and maintenance	7,680			7,778			13,779			14,403
Real estate taxes and insurance	34,729			32,805			69,900			66,126
Utilities	22,244			21,596			44,380			43,673
Landscaping	5,673			5,687			10,994			11,132
Other operating	6,771			7,118			13,728			14,638
Depreciation and amortization	75,742			74,396			150,870			147,508
Total property operating expenses	178,697			175,252			354,706			349,013
Acquisition expense	421			1,159			1,134			1,499
Property management expenses	8,310			6,986			17,313			15,478
General and administrative expenses	7,014			6,657			13,596			13,224
Income from continuing operations before non-operating items	77,794			68,837			154,503			138,229
Interest and other non-property income (expense)	62			29			94			(180		)
Interest expense	(32,039		)	(30,433		)	(64,250		)	(61,281		)
(Loss) gain on debt extinguishment	—			(3		)	3			(3,379		)
Net casualty gain after insurance and other settlement proceeds	1,760			510			813			490
Gain on sale of depreciable real estate assets	68			105,182			823			135,410
Gain on sale of non-depreciable real estate assets	543			172			2,170			172
Income before income tax expense	48,188			144,294			94,156			209,461
Income tax expense	(457		)	(398		)	(745		)	(907		)
Income from continuing operations before joint venture activity	47,731			143,896			93,411			208,554
(Loss) gain from real estate joint ventures	(101		)	(23		)	27			(4		)
Consolidated net income	47,630			143,873			93,438			208,550
Net income attributable to noncontrolling interests	2,486			7,574			4,881			10,984
Net income available for MAA common shareholders	$	45,144		$	136,299		$	88,557		$	197,566

Earnings per common share - basic:
Net income available for common shareholders	$	0.60		$	1.81		$	1.17		$	2.62

Earnings per common share - diluted:
Net income available for common shareholders	$	0.60		$	1.81		$	1.17		$	2.62

Dividends declared per common share	$	0.82		$	0.77		$	1.64		$	1.54

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartment Communities, Inc.

Condensed Consolidated Statements of Comprehensive Income

Three and six months ended June 30, 2016 and 2015

(Unaudited)

(Dollars in thousands)



	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Consolidated net income	$	47,630		$	143,873		$	93,438		$	208,550
Other comprehensive income:
Unrealized (loss) gain from the effective portion of derivative instruments	(1,314		)	1,804			(5,019		)	(2,543		)
Reclassification adjustment for net losses included in net income for the effective portion of derivative instruments	1,131			1,791			2,317			3,983
Total comprehensive income	47,447			147,468			90,736			209,990
Less: comprehensive income attributable to noncontrolling interests	(2,477		)	(7,764		)	(4,740		)	(11,060		)
Comprehensive income attributable to MAA	$	44,970		$	139,704		$	85,996		$	198,930


See accompanying notes to condensed consolidated financial statements.

Mid-America Apartment Communities, Inc.

Condensed Consolidated Statements of Cash Flows

Six months ended June 30, 2016 and 2015

(Unaudited)

(Dollars in thousands)



	Six months ended June 30,
	2016			2015
Cash flows from operating activities:
Consolidated net income	$	93,438		$	208,550
Adjustments to reconcile net income to net cash provided by operating activities:
Retail revenue accretion	(110		)	(820		)
Depreciation and amortization	151,114			147,765
Stock compensation expense	3,958			2,763
Redeemable stock expense	282			560
Amortization of debt premium and debt issuance costs	(5,096		)	(8,517		)
(Gain) loss from investments in real estate joint ventures	(27		)	6
Loss on debt extinguishment	—			2,785
Derivative interest credit	(1,295		)	(1,021		)
Gain on sale of non-depreciable real estate assets	(2,170		)	(172		)
Gain on sale of depreciable real estate assets	(823		)	(135,410		)
Net casualty gain and other settlement proceeds	(813		)	(490		)
Changes in assets and liabilities:
Restricted cash	951			1,720
Other assets	4,130			8,562
Accounts payable	1,542			344
Accrued expenses and other	(7,567		)	(1,204		)
Security deposits	702			1,109
Net cash provided by operating activities	238,216			226,530
Cash flows from investing activities:
Purchases of real estate and other assets	(130,597		)	(161,892		)
Normal capital improvements	(44,417		)	(48,099		)
Construction capital and other improvements	(3,288		)	(3,873		)
Renovations to existing real estate assets	(17,719		)	(12,747		)
Development	(29,156		)	(14,420		)
Distributions from real estate joint ventures	1,793			6
Contributions to real estate joint ventures	—			(30		)
Proceeds from disposition of real estate assets	38,001			238,849
Funding of escrow for future acquisitions	—			(26,945		)
Net cash used in investing activities	(185,383		)	(29,151		)
Cash flows from financing activities:
Net change in credit lines	105,000			(16,115		)
Principal payments on notes payable	(37,261		)	(55,199		)
Payment of deferred financing costs	(141		)	(178		)
Repurchase of common stock	(1,742		)	(945		)
Proceeds from issuances of common shares	628			184
Exercise of stock options	—			420
Distributions to noncontrolling interests	(6,823		)	(6,443		)
Dividends paid on common shares	(123,774		)	(115,726		)
Net cash used in financing activities	(64,113		)	(194,002		)
Net (decrease) increase in cash and cash equivalents	(11,280		)	3,377
Cash and cash equivalents, beginning of period	37,559			26,653
Cash and cash equivalents, end of period	$	26,279		$	30,030

Supplemental disclosure of cash flow information:
Interest paid	$	71,092		$	71,596
Income taxes paid	$	1,544		$	2,051
Supplemental disclosure of noncash investing and financing activities:
Conversion of units to shares of common stock	$	158		$	184
Accrued construction in progress	$	10,781		$	11,165
Interest capitalized	$	708		$	964
Marked-to-market adjustment on derivative instruments	$	(1,407	)	$	2,484

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartments, L.P.

Condensed Consolidated Balance Sheets

June 30, 2016 and December 31, 2015

(Unaudited)

(Dollars in thousands, except unit data)



	June 30, 2016			December 31, 2015
Assets:
Real estate assets:
Land	$	943,179		$	926,532
Buildings and improvements	7,096,432			6,939,288
Furniture, fixtures and equipment	245,607			228,157
Development and capital improvements in progress	53,509			44,355
	8,338,727			8,138,332
Less accumulated depreciation	(1,628,891		)	(1,482,368		)
	6,709,836			6,655,964

Undeveloped land	40,514			51,779
Corporate properties, net	9,390			8,812
Investments in real estate joint ventures	50			1,811
Real estate assets, net	6,759,790			6,718,366

Cash and cash equivalents	26,279			37,559
Restricted cash	25,131			26,082
Deferred financing costs, net	4,587			5,232
Other assets	51,987			58,935
Goodwill	1,607			1,607
Total assets	$	6,869,381		$	6,847,781

Liabilities and Capital:
Liabilities:
Unsecured notes payable	$	2,246,227		$	2,141,332
Secured notes payable	1,243,198			1,286,236
Accounts payable	7,464			5,922
Fair market value of interest rate swaps	11,760			10,358
Accrued expenses and other liabilities	218,658			226,237
Security deposits	12,386			11,623
Due to general partner	19			19
Total liabilities	3,739,712			3,681,727

Redeemable units	10,369			8,250

Capital:
General partner: 75,524,086 OP Units outstanding at June 30, 2016 and 75,408,571 OP Units outstanding at December 31, 2015 ⁽¹⁾	2,960,045			2,993,696
Limited partners: 4,159,003 OP Units outstanding at June 30, 2016 and 4,162,996 OP Units outstanding at December 31, 2015 ⁽¹⁾	163,575			165,726
Accumulated other comprehensive loss	(4,320		)	(1,618		)
Total capital	3,119,300			3,157,804
Total liabilities and capital	$	6,869,381		$	6,847,781


⁽¹⁾	Number of units outstanding represents total OP Units regardless of classification on the condensed consolidated balance sheet. The number of units classified as redeemable units on the condensed consolidated balance sheet at June 30, 2016 and December 31, 2015 are 98,142 and 90,844, respectively.

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartments, L.P.

Condensed Consolidated Statements of Operations

Three and six months ended June 30, 2016 and 2015

(Unaudited)

(Dollars in thousands, except per unit data)



	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Operating revenues:
Rental revenues	$	249,326		$	236,165		$	494,991		$	471,106
Other property revenues	22,910			22,726			46,261			46,337
Total operating revenues	272,236			258,891			541,252			517,443
Property operating expenses:
Personnel	25,858			25,872			51,055			51,533
Building repairs and maintenance	7,680			7,778			13,779			14,403
Real estate taxes and insurance	34,729			32,805			69,900			66,126
Utilities	22,244			21,596			44,380			43,673
Landscaping	5,673			5,687			10,994			11,132
Other operating	6,771			7,118			13,728			14,638
Depreciation and amortization	75,742			74,396			150,870			147,508
Total property operating expenses	178,697			175,252			354,706			349,013
Acquisition expense	421			1,159			1,134			1,499
Property management expenses	8,310			6,986			17,313			15,478
General and administrative expenses	7,014			6,657			13,596			13,224
Income from continuing operations before non-operating items	77,794			68,837			154,503			138,229
Interest and other non-property income (expense)	62			29			94			(180		)
Interest expense	(32,039		)	(30,433		)	(64,250		)	(61,281		)
(Loss) gain on debt extinguishment	—			(3		)	3			(3,379		)
Net casualty gain after insurance and other settlement proceeds	1,760			510			813			490
Gain on sale of depreciable real estate assets	68			105,182			823			135,410
Gain on sale of non-depreciable real estate assets	543			172			2,170			172
Income before income tax expense	48,188			144,294			94,156			209,461
Income tax expense	(457		)	(398		)	(745		)	(907		)
Income from continuing operations before joint venture activity	47,731			143,896			93,411			208,554
(Loss) gain from real estate joint ventures	(101		)	(23		)	27			(4		)
Net income available for Mid-America Apartments, L.P. common unitholders	$	47,630		$	143,873		$	93,438		$	208,550

Earnings per common unit - basic:
Net income available for common unitholders	$	0.60		$	1.81		$	1.17		$	2.62

Earnings per common unit - diluted:
Net income available for common unitholders	$	0.60		$	1.81		$	1.17		$	2.62

Distributions declared per common unit	$	0.82		$	0.77		$	1.64		$	1.54

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartments, L.P.

Condensed Consolidated Statements of Comprehensive Income

Three and six months ended June 30, 2016 and 2015

(Unaudited)

(Dollars in thousands)



	Three months ended June 30,					Six months ended June 30,
	2016			2015		2016			2015
Net income available for Mid-America Apartments, L.P. common unitholders	$	47,630		$	143,873	$	93,438		$	208,550
Other comprehensive income:
Unrealized (loss) gain from the effective portion of derivative instruments	(1,314		)	1,804		(5,019		)	(2,543		)
Reclassification adjustment for net losses included in net income for the effective portion of derivative instruments	1,131			1,791		2,317			3,983
Comprehensive income attributable to Mid-America Apartments, L.P.	$	47,447		$	147,468	$	90,736		$	209,990


See accompanying notes to condensed consolidated financial statements.

Mid-America Apartments, L.P.

Condensed Consolidated Statements of Cash Flows

Six months ended June 30, 2016 and 2015

(Unaudited)

(Dollars in thousands)



	Six months ended June 30,
	2016			2015
Cash flows from operating activities:
Consolidated net income	$	93,438		$	208,550
Adjustments to reconcile net income to net cash provided by operating activities:
Retail revenue accretion	(110		)	(820		)
Depreciation and amortization	151,114			147,765
Stock compensation expense	3,958			2,763
Redeemable units expense	282			560
Amortization of debt premium and debt issuance costs	(5,096		)	(8,517		)
(Gain) loss from investments in real estate joint ventures	(27		)	6
Loss on debt extinguishment	—			2,785
Derivative interest credit	(1,295		)	(1,021		)
Gain on sale of non-depreciable real estate assets	(2,170		)	(172		)
Gain on sale of depreciable real estate assets	(823		)	(135,410		)
Net casualty gain and other settlement proceeds	(813		)	(490		)
Changes in assets and liabilities:
Restricted cash	951			1,720
Other assets	4,130			8,562
Accounts payable	1,542			344
Accrued expenses and other	(7,567		)	(1,204		)
Security deposits	702			1,109
Net cash provided by operating activities	238,216			226,530
Cash flows from investing activities:
Purchases of real estate and other assets	(130,597		)	(161,892		)
Normal capital improvements	(44,417		)	(48,099		)
Construction capital and other improvements	(3,288		)	(3,873		)
Renovations to existing real estate assets	(17,719		)	(12,747		)
Development	(29,156		)	(14,420		)
Distributions from real estate joint ventures	1,793			6
Contributions to real estate joint ventures	—			(30		)
Proceeds from disposition of real estate assets	38,001			238,849
Funding of escrow for future acquisitions	—			(26,945		)
Net cash used in investing activities	(185,383		)	(29,151		)
Cash flows from financing activities:
Net change in credit lines	105,000			(16,115		)
Principal payments on notes payable	(37,261		)	(55,199		)
Payment of deferred financing costs	(141		)	(178		)
Repurchase of common units	(1,742		)	(945		)
Proceeds from issuances of common units	628			184
Exercise of unit options	—			420
Distributions paid on common units	(130,597		)	(122,169		)
Net cash used in financing activities	(64,113		)	(194,002		)
Net (decrease) increase in cash and cash equivalents	(11,280		)	3,377
Cash and cash equivalents, beginning of period	37,559			26,653
Cash and cash equivalents, end of period	$	26,279		$	30,030

Supplemental disclosure of cash flow information:
Interest paid	$	71,092		$	71,596
Income taxes paid	$	1,544		$	2,051
Supplemental disclosure of noncash investing and financing activities:
Accrued construction in progress	$	10,781		$	11,165
Interest capitalized	$	708		$	964
Marked-to-market adjustment on derivative instruments	$	(1,407	)	$	2,484

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.

Notes to Condensed Consolidated Financial Statements

June 30, 2016 and 2015

(Unaudited)

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

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

We believe combining the notes to the condensed consolidated financial statements of MAA and MAALP results in the following benefits:


•	enhances a readers' understanding of MAA and the Operating Partnership by enabling the reader to view the business as a whole in the same manner that management views and operates the business; and


•	eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both MAA and the Operating Partnership.

Management operates MAA and the Operating Partnership as one business. The management of the Company is comprised of individuals who are officers of MAA and employees of the Operating Partnership. We believe it is important to understand the few differences between MAA and the Operating Partnership in the context of how MAA and the Operating Partnership operate as a consolidated company. MAA and the Operating Partnership are structured as an "umbrella partnership REIT," or UPREIT. MAA's interest in the Operating Partnership entitles MAA to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to MAA's percentage interest therein, and entitles MAA to vote on substantially all matters requiring a vote of the partners. MAA's only material asset is its ownership of limited partner interests in the Operating Partnership; therefore, MAA does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time, and guaranteeing certain debt of the Operating Partnership. The Operating Partnership holds, directly or indirectly, all of our real estate assets. Except for net proceeds from public equity issuances by MAA, which are contributed to the Operating Partnership in exchange for OP Units, the Operating Partnership generates the capital required by our business through the Operating Partnership's operations, direct or indirect incurrence of indebtedness, and issuance of OP units.

The presentation of MAA's shareholders' equity and the Operating Partnership's capital are the principal areas of difference between the condensed consolidated financial statements of MAA and those of the Operating Partnership. MAA's shareholders' equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative distributions, noncontrolling interest, preferred units, treasury shares, accumulated other comprehensive income and redeemable common units. The Operating Partnership's capital may include common capital and preferred capital of the general partner (MAA), limited partners' preferred capital, limited partners' noncontrolling interest, accumulated other comprehensive income and redeemable common units. Redeemable common units represent the number of outstanding OP Units as of the date of the applicable balance sheet, valued at the greater of the closing market price of MAA's common stock or the aggregate value of the individual partners' capital balances. Holders of OP Units (other than MAA and its corporate affiliates) may require us to redeem their OP Units from time to time, in which case we may, at our option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA's common stock on the New York Stock Exchange over a specified period prior to the redemption date) or by delivering one share of our common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.

As of June 30, 2016, we owned and operated 256 apartment communities comprising 80,300 apartments located in 15 states principally through the Operating Partnership.

As of June 30, 2016, we had four development communities under construction totaling 628 units. Total expected costs for the development projects are $96.9 million, of which $49.4 million has been incurred through June 30, 2016. We expect to complete construction on one project by the third quarter of 2016, two projects by the second quarter of 2017, and one project by the fourth quarter of 2017. Six of our multifamily properties include retail components with approximately 194,000 square feet of gross leasable area.

Reclassifications

In order to present comparative financial statements, certain reclassifications have been made to prior period numbers. As disclosed in our Annual Report on Form 10-K, for the year ended December 31, 2015, we early adopted Accounting Standards Update ("ASU") 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a reduction of the related debt liability rather than an asset. As a result of this adoption and to improve comparability, we reclassified certain costs from "Amortization of deferred financing costs" to "Interest Expense." Thus, the $0.9 million and $1.8 million of "Amortization of deferred financing costs" previously reported in our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015, respectively, have been reclassified to "Interest expense" for the three months and six months ended June 30, 2015 in the Condensed Consolidated Statement of Operations included in this Report. As a result of this income statement reclassification, $1.8 million of amortization of deferred financing costs for the six months ended June 30, 2015, initially reported in the "Depreciation and amortization" line of the Condensed Consolidated Statements of Cash Flows in the 2015 Form 10-Q for the six months ended June 30, 2015, have been reclassified to "Amortization of debt premium and debt issuance costs," presented in the Condensed Consolidated Statements of Cash Flows included in this Report.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared by our management in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or the SEC. The condensed consolidated financial statements of MAA presented herein include the accounts of MAA, the Operating Partnership, and all other subsidiaries in which MAA has a controlling financial interest. MAA owns approximately 95% to 100% of all consolidated subsidiaries. The condensed consolidated financial statements of MAALP presented herein include the accounts of MAALP and all other subsidiaries in which MAALP has a controlling financial interest. MAALP owns, directly or indirectly, 100% of all consolidated subsidiaries. In our opinion, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included, and all such adjustments were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation.

We invest in entities which may qualify as variable interest entities, or VIEs. A VIE is a legal entity in which the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack the power to direct the activities of a legal entity as well as the obligation to absorb its expected losses or the right to receive its expected residual returns. We consolidate all VIEs for which we are the primary beneficiary and use the equity method to account for investments that qualify as VIEs but for which we are not the primary beneficiary. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including but not limited to, those activities that most significantly impact the VIE's economic performance and which party controls such activities.

Effective January 1, 2016, we have has adopted ASU 2015-02, Consolidation: Topic 810, which resulted in the Operating Partnership now being classified as a VIE, since the limited partners of both entities lack substantive kick-out rights and substantive participating rights. The adoption of the new standard did not result in the consolidation of entities not previously consolidated or the de-consolidation of any entities previously consolidated. We are the primary beneficiary of, and continues to consolidate, both entities, and there was no material effect on our financial position or results of operations as a result of this adoption. See Footnote 14, Recent Accounting Pronouncements, for further details on the adoption of this standard.

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

2. Earnings per Common Share of MAA

Basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis with our diluted earnings per share being the more dilutive of the treasury stock or two-class methods. OP Units are included in dilutive earnings per share calculations when they are dilutive to earnings per share. For the three and six months ended June 30, 2016 and 2015, MAA's basic earnings per share was computed using the two-class method, and MAA's diluted earnings per share was computed using the more dilutive of the treasury stock method or two-class method, as presented below:



(dollars and shares in thousands, except per share amounts)	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016				2015
Shares Outstanding
Weighted average common shares - basic	75,277				75,168				75,263				75,157
Weighted average partnership units outstanding	—			⁽¹⁾	—			⁽¹⁾	—			⁽¹⁾	—			⁽¹⁾
Effect of dilutive securities	—			⁽²⁾	—			⁽²⁾	239				—			⁽²⁾
Weighted average common shares - diluted	75,277				75,168				75,502				75,157

Calculation of Earnings per Share - basic
Income from continuing operations	$	47,630			$	143,873			$	93,438			$	208,550
Income from continuing operations attributable to noncontrolling interests	(2,486		)		(7,574		)		(4,881		)		(10,984		)
Income from continuing operations allocated to unvested restricted shares	(134		)		(337		)		(237		)		(446		)
Income from continuing operations available for common shareholders, adjusted	$	45,010			$	135,962			$	88,320			$	197,120

Weighted average common shares - basic	75,277				75,168				75,263				75,157
Earnings per share - basic	$	0.60			$	1.81			$	1.17			$	2.62

Calculation of Earnings per Share - diluted
Income from continuing operations	$	47,630			$	143,873			$	93,438			$	208,550
Income from continuing operations attributable to noncontrolling interests	(2,486		)	⁽¹⁾	(7,574		)	⁽¹⁾	(4,881		)	⁽¹⁾	(10,987		)	⁽¹⁾
Income from continuing operations allocated to unvested restricted shares	(134		)	⁽²⁾	(337		)	⁽²⁾	—				(446		)	⁽²⁾
Income from continuing operations available for common shareholders, adjusted	$	45,010			$	135,962			$	88,557			$	197,117

Weighted average common shares - diluted	75,277				75,168				75,502				75,157
Earnings per share - diluted	$	0.60			$	1.81			$	1.17			$	2.62

⁽¹⁾ For both the three and six months ended June 30, 2016 and 2015, 4.2 million operating partnership units and their related income are not included in the diluted earnings per share calculations as they are not dilutive.

⁽²⁾ For the three months ended June 30, 2016 and for both the three and six months ended June 30, 2015, 0.2 million potentially dilutive securities and their related income are not included in the diluted earnings per share calculations as they are not dilutive.

3. Earnings per OP Unit of MAALP

Basic earnings per OP Unit is computed by dividing net income available for common unitholders by the weighted average number of OP Units outstanding during the period. All outstanding unvested restricted unit awards contain rights to non-forfeitable distributions and participate in undistributed earnings with common unitholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per OP unit. Diluted earnings per OP Unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units. A reconciliation of the numerators and denominators of the basic and diluted earnings per unit computations for the three and six months ended June 30, 2016 and 2015 is presented below:



(dollars and units in thousands, except per unit amounts)	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016			2015
Units Outstanding
Weighted average OP Units - basic	79,436				79,356				79,424			79,346
Effect of dilutive securities	—			⁽¹⁾	—			⁽¹⁾	239			—			⁽¹⁾
Weighted average OP Units - diluted	79,436				79,356				79,663			79,346

Calculation of Earnings per Unit - basic
Income from continuing operations	$	47,630			$	143,873			$	93,438		$	208,550
Income from continuing operations allocated to unvested restricted common units	(134		)		(337		)		(237		)	(446		)
Income from continuing operations available for common unitholders, adjusted	$	47,496			$	143,536			$	93,201		$	208,104

Weighted average OP Units - basic	79,436				79,356				79,424			79,346
Earnings per unit - basic	$	0.60			$	1.81			$	1.17		$	2.62

Calculation of Earnings per Unit - diluted
Income from continuing operations	$	47,630			$	143,873			$	93,438		$	208,550
Income from continuing operations allocated to unvested restricted common units	(134		)	⁽¹⁾	(337		)	⁽¹⁾	—			(446		)	⁽¹⁾
Income from continuing operations available for common unitholders, adjusted	$	47,496			$	143,536			$	93,438		$	208,104

Weighted average OP Units - diluted	79,436				79,356				79,663			79,346
Earnings per OP Unit - diluted	$	0.60			$	1.81			$	1.17		$	2.62

⁽¹⁾ For the three months ended June 30, 2016 and for both the three and six months ended June 30, 2015, 0.2 million potentially dilutive securities and their related income are not included in the diluted earnings per unit calculations as they are not dilutive.

4. MAA Equity

Total equity and its components for the six-month periods ended June 30, 2016 and 2015 were as follows (dollars in thousands, except per share and per unit data):



	Mid-America Apartment Communities, Inc. Shareholders' Equity
	Common Stock Amount		Additional Paid-In Capital			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total Equity
EQUITY BALANCE DECEMBER 31, 2015	$	753	$	3,627,074		$	(634,141	)	$	(1,589	)	$	165,726		$	3,157,823
Net income	—		—			88,557			—			4,881			93,438
Other comprehensive loss - derivative instruments (cash flow hedges)	—		—			—			(2,561		)	(141		)	(2,702		)
Issuance and registration of common shares	1		185			—			—			—			186
Shares repurchased and retired	—		(1,742		)	—			—			—			(1,742		)
Shares issued in exchange for OP Units	—		158			—			—			(158		)	—
Shares issued in exchange from redeemable stock	—		123			—			—			—			123
Redeemable stock fair market value adjustment	—		—			(1,518		)	—			—			(1,518		)
Adjustment for noncontrolling interest ownership in operating partnership	—		(87		)	—			—			87			—
Amortization of unearned compensation	—		4,383			—			—			—			4,383
Dividends on common stock ($1.64 per share)	—		—			(123,852		)	—			—			(123,852		)
Dividends on noncontrolling interest OP Units ($1.64 per OP Unit)	—		—			—			—			(6,820		)	(6,820		)
EQUITY BALANCE JUNE 30, 2016	$	754	$	3,630,094		$	(670,954	)	$	(4,150	)	$	163,575		$	3,119,319



	Mid-America Apartment Communities, Inc. Shareholders' Equity
	Common Stock Amount		Additional Paid-In Capital			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total Equity
EQUITY BALANCE DECEMBER 31, 2014	$	752	$	3,619,270		$	(729,086	)	$	(412	)	$	161,287		$	3,051,811
Net income	—		—			197,566			—			10,984			208,550
Other comprehensive income - derivative instruments (cash flow hedges)	—		—			—			1,364			76			1,440
Issuance and registration of common shares	2		182			—			—			—			184
Shares repurchased and retired	—		(945		)	—			—			—			(945		)
Exercise of stock options	—		420						—			—			420
Shares issued in exchange for OP Units	—		184			—			—			(184		)	—
Redeemable stock fair market value adjustment	—		—			173			—			—			173
Adjustment for noncontrolling interest ownership in operating partnership	—		45			—			—			(45		)	—
Amortization of unearned compensation	—		3,167			—			—			—			3,167
Dividends on common stock ($1.54 per share)	—		—			(116,066		)	—			—			(116,066		)
Dividends on noncontrolling interest OP Units ($1.54 per OP Unit)	—		—			—			—			(6,449		)	(6,449		)
EQUITY BALANCE JUNE 30, 2015	$	754	$	3,622,323		$	(647,413	)	$	952		$	165,669		$	3,142,285

5. MAALP Capital

Total capital and its components for the six-month periods ended June 30, 2016 and 2015 were as follows (dollars in thousands, except per unit data):



	Mid-America Apartments, L.P. Unitholders
	Limited Partner			General Partner			Accumulated Other Comprehensive Income (Loss)			Total Partnership Capital
CAPITAL BALANCE DECEMBER 31, 2015	$	165,726		$	2,993,696		$	(1,618	)	$	3,157,804
Net income	4,881			88,557			—			93,438
Other comprehensive loss - derivative instruments (cash flow hedges)	—			—			(2,702		)	(2,702		)
Issuance of OP Units	—			186			—			186
OP Units repurchased and retired	—			(1,742		)	—			(1,742		)
General partner OP Units issued in exchange for limited partner units	(158		)	158			—			—
OP Units issued in exchange for redeemable units	—			123			—			123
Redeemable OP Units fair market value adjustment	—			(1,518		)	—			(1,518		)
Adjustment for limited partners' capital at redemption value	(54		)	54			—			—
Amortization of unearned compensation	—			4,383			—			4,383
Distributions ($1.64 per OP Unit)	(6,820		)	(123,852		)	—			(130,672		)
CAPITAL BALANCE JUNE 30, 2016	$	163,575		$	2,960,045		$	(4,320	)	$	3,119,300



	Mid-America Apartments, L.P. Unitholders
	Limited Partner			General Partner			Accumulated Other Comprehensive Income (Loss)			Total Partnership Capital
CAPITAL BALANCE DECEMBER 31, 2014	$	161,310		$	2,890,858		$	(376	)	$	3,051,792
Net income	10,984			197,566			—			208,550
Other comprehensive income - derivative instruments (cash flow hedges)	—			—			1,440			1,440
Issuance of OP Units	—			184			—			184
OP Units repurchased and retired	—			(945		)	—			(945		)
Exercise of OP Unit options				420			—			420
General partner OP Units issued in exchange for limited partner units	(184		)	184			—			—
Redeemable OP Units fair market value adjustment	—			173			—			173
Adjustment for limited partners' capital at redemption value	(45		)	45			—			—
Amortization of unearned compensation	—			3,167			—			3,167
Distributions ($1.54 per OP Unit)	(6,449		)	(116,066		)	—			(122,515		)
CAPITAL BALANCE JUNE 30, 2015	$	165,616		$	2,975,586		$	1,064		$	3,142,266

6. Borrowings

The weighted average interest rate at June 30, 2016 for the $3.49 billion of debt outstanding was 3.7%, compared to the weighted average interest rate of 3.7% on $3.43 billion of debt outstanding at December 31, 2015. Our debt consists of an unsecured credit facility, unsecured term loans, senior unsecured notes, a secured credit facility with Fannie Mae, and secured property mortgages. We utilize fixed rate borrowings, interest rate swaps, and interest rate caps to manage our current and future interest rate risk. More details on our borrowings can be found in the schedules presented later in this section.

At June 30, 2016, we had $2.1 billion of senior unsecured notes and term loans fixed at an average interest rate of 3.9% and a $750 million variable rate credit facility with an average interest rate of 1.5% with $180.0 million borrowed at June 30, 2016. Additionally, we had $115.0 million of conventional, secured variable rate debt outstanding at an average interest rate of 1.1% and $75.0 million of capped conventional, secured variable rate debt at an average interest rate of 1.1%. The interest rate on all other secured debt, totaling $1.0 billion, was hedged or fixed at an average interest rate of 4.0%.

Unsecured Credit Facility

We maintain a $750.0 million unsecured credit facility with a syndicate of banks led by KeyBank National Association, or the KeyBank Facility. The KeyBank Facility includes an expansion option up to $1.5 billion. The KeyBank Facility bears an interest rate of LIBOR plus a spread of 0.85% to 1.55% based on an investment grade pricing grid and is currently bearing interest at an all-in rate of 1.47%. The KeyBank Facility expires in April 2020 with an option to extend for an additional six months. At June 30, 2016, we had $180.0 million actually borrowed under this facility, and another approximately $2.8 million used to support letters of credit.

Unsecured Term Loans

We also maintain three term loans with a syndicate of banks, led by KeyBank National Association, Wells Fargo Bank, N.A., and U.S. Bank National Association, respectively. The KeyBank term loan has a balance of $150.0 million, matures in 2021, and has a variable interest rate of LIBOR plus a spread of 0.90% to 1.75% based on our credit ratings. The Wells Fargo term loan has a balance of $250.0 million and matures in 2018. The US Bank term loan has a balance of $150.0 million and matures in 2020. Both the Wells Fargo and US Bank term loans have variable interest rates of LIBOR plus a spread of 0.90% to 1.90% based on our credit ratings.

Senior Unsecured Notes

As of June 30, 2016, we have approximately $1.2 billion of publicly issued notes and $310.0 million of private placement notes. These senior unsecured notes have maturities ranging from five to 12 years, averaging 7.2 years remaining until maturity as of June 30, 2016.

Secured Credit Facility

We maintain a $240.0 million secured credit facility with Prudential Mortgage Capital, which is credit enhanced by Fannie Mae, or the Fannie Mae Facility. The Fannie Mae Facility provides for both fixed and variable rate borrowings and has Fannie Mae rate tranches with maturities from 2016 through 2018. The interest rate on the majority of the variable portion renews every 90 days and is based on the Fannie Mae discount mortgage backed security rate on the date of renewal, which, for us, has historically approximated three-month LIBOR less an average of 0.17% over the life of the Fannie Mae Facility, plus a fee of 0.62%. Borrowings under the Fannie Mae Facility totaled $240.0 million at June 30, 2016, consisting of $50.0 million under a fixed portion at a rate of 4.7%, and the remaining $190.0 million under the variable rate portion of the facility at an average rate of 1.1%. The available borrowing capacity at June 30, 2016, was $240.0 million.

Secured Property Mortgages

At June 30, 2016, we had $1.0 billion of fixed rate conventional property mortgages with an average interest rate of 4.0% and an average maturity in 2019.

On February 1, 2016, we paid off a $13.4 million mortgage associated with the Colonial Village at Matthews apartment community. The loan was scheduled for maturity in March 2016.

On March 1, 2016, we paid off a $20.2 million mortgage associated with the Verandas at Southwood apartment community. The payoff was a scheduled maturity of the loan.

In addition to these payoffs, we have paid $3.6 million associated with property mortgage principal amortizations.

Guarantees

MAA fully and unconditionally guarantees the following debt incurred by the Operating Partnership:


•	$240.0 million of the Fannie Mae Facility, of which $240.0 million has been borrowed as of June 30, 2016; and


•	$310.0 million of senior unsecured notes, all of which has been borrowed as of June 30, 2016.

Total Outstanding Debt

The following table summarizes our indebtedness at June 30, 2016, (dollars in thousands):



	Borrowed Balance			Effective Rate		Average Contract Maturity
Fixed Rate Secured Debt
Individual property mortgages	$	975,330		4.0	%	8/22/2019
Fannie Mae conventional credit facility	50,000			4.7	%	3/31/2017
Total fixed rate secured debt	$	1,025,330		4.0	%	7/11/2019

Variable Rate Secured Debt ⁽¹⁾
Fannie Mae conventional credit facility	190,000			1.1	%	8/26/2017
Total variable rate secured debt	$	190,000		1.1	%	8/26/2017

Fair market value adjustments and debt issuance costs	27,868
Total Secured Debt	$	1,243,198		3.6	%	3/26/2019

Unsecured Debt
Variable rate credit facility	$	180,000		1.5	%	4/15/2020
Term loan fixed with swaps	550,000			3.1	%	11/10/2017
Fixed rate bonds	1,535,246			4.2	%	9/16/2023
Fair market value adjustments, debt issuance costs and discounts	(19,019		)
Total Unsecured Debt	$	2,246,227		3.7	%	1/10/2022

Total Outstanding Debt	$	3,489,