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VOL. 110 | NO. 194 | Monday, October 7, 1996

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lj 10/5 cates Ready to rent Sales, acquisitions, expansions contribute to MAAs performance By LAURIE JOHNSON The Daily News Mid-America Apartment Communities has marked another period of high performance, posting second quarter gains in revenues, occupancy rates and funds from operations, company officials said. "We have another good story to tell performance of the company as a whole improved for the quarter, benefiting from the large investment weve made over the past two years in repositioning our acquired properties," said George E. Cates, chief executive officer of MAA. Funds from operations increased to 66 cents per share, an increase of 16 percent from second quarter 1995s 57 cents per share. Comparing the second quarter of 1996 to the same quarter a year earlier on a "same-store" basis (for the same 13,258 units owned for the entire second quarters of 1995 and 1996), revenues increased by 3.6 percent, expenses by 3.3 percent and net operating income by 3.7 percent. Occupancy rates for the Memphis-based apartment real estate investment trust averaged 94.4 percent for the quarter vs. 93.7 percent for the comparable 1995 quarter, a figure in line with company expectations, according to MAA reports. "Through our aggressive management of seasonal factors, we targeted our lease expirations to peak during our supply of available units at the start of our prime leasing season, which is typically during the summer months," said Eric Bolton Jr., chief operating officer. The self-administered and managed apartment-only REIT, which is traded publicly on the New York Stock Exchange under the symbol MAA, operates 19,226 units in 13 Southeastern states. Because growth may become more difficult as the real estate cycle matures, MAAs 20 years of hands-on management experience is expected to serve the company well in the future, Cates said. During 1996, company emphasis has been on promoting internal growth by investing in training programs for its employees. Regarding external growth, the company is committed to increasing funds from operations per share while simultaneously growing in size, said Simon Wadsworth, chief financial officer of MAA. "Were now at an economically efficient size and are looking for and seeking external growth opportunities." During the second quarter, MAA completed the sale of two apartment complexes, Laguna Point in Mesa, Ariz., and Park at 58 in Chattanooga, Tenn., for a total of $17.2 million, a transaction that resulted in a capital gain of $1.9 million for the company. The properties, which the company acquired through its merger with America First, were sold because neither of them properly fit in with MAAs operation, according to company reports. Revenues from the sale were used toward the $32.1 million purchase in July of three apartment complexes for a total of 816 units in Mississippi: Crosswinds in Jackson and Savannah Creek and Sutton Place in Southaven. Additional funds for the purchase came from MAAs line of credit, which was increased from $40 million to $65 million. "These are our first properties in the DeSoto County area," Wadsworth said. "Strong demand and growth in the Southaven-Horn Lake area are the reasons we decided to expand into that area." The company also plans to spend $1 million to upgrade the properties, which are all 98 percent occupied. Also during the second quarter, the company made the decision to add 234 units to its 384-unit Lincoln on the Green apartment community, located adjacent to the Southwind golf course in Memphis. "We like to develop when we see exceptional return on investment, and we feel this is the case with Lincoln on the Green, which is a top performing community," Wadsworth said. "It helps the economic end in that we already own the land, but our driving consideration is the lower operating cost we will be afforded by building on an existing structure." Construction on the expansion project, which is valued at $13.2 million, started last week. The project is expected to be complete by late 1997, although some apartments will be ready for occupation by April. MAA highlights during the third quarter, which will end Oct. 30, include an additional stock offering and the purchase of a 240-unit apartment complex in Little Rock, Ark. Last week, the company announced a public offering of 1.2 million shares of Series A Cumulative Preferred stock. Proceeds from the preferred stock, which will have a liquidation preference of $25 per share, will be used to fund acquisitions and to reduce the companys outstanding indebtedness under its $65 million line of credit. "We have a lot of attractive investment opportunities, such as the recent acquisition of Napa Valley Apartments, and thus the offering will be accretive to shareholder value." Last week, MAA purchased the Napa Valley Apartment Community for $9.5 million. The acquisition of the 10-year-old complex, which is currently 92 percent occupied, brings the total number of apartment units owned by the company in Little Rock to 706.
PROPERTY SALES 36 154 6,546
MORTGAGES 34 94 4,129
BUILDING PERMITS 201 554 15,915
BANKRUPTCIES 43 126 3,396