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VOL. 113 | NO. 206 | Friday, October 29, 1999

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Mid-America sees improved Mid-America sees improved revenues in third quarter Mid-America Apartment Communities announced that Funds From Operations on a fully diluted basis for the third quarter ended September 30, 1999, were 66 cents per share, one cent above consensus expectations and 9 percent below the same quarter a year earlier as detailed in the company's September 23rd press release. ``Operating performance during the third quarter improved,'' said Eric Bolton, president and chief operating officer. ``Portfolio occupancy averaged 95.3 percent for the quarter, an increase both from the 94.8 percent posted during the second quarter, and the 95.1 percent of the third quarter last year. Primarily as a result of stronger occupancy performance, revenue yield per unit rose 4.1 percent for the quarter versus the same period last year. ``During the quarter, the contribution from new development properties continued as three new properties completed their initial lease up to 90 percent occupancy. Initial leasing at two other properties will begin in the fourth quarter,'' Bolton said. ``As a result of the seasonally strong third quarter, overall new development leasing results improved from trends earlier in the year, with 475 new units leased during the quarter. While the overall contribution from new development properties has significantly improved, we should see normal seasonal slowing of the new development contribution in the coming winter months. We expect to take delivery of 168 new units during the current quarter and an additional 458 units in the coming winter. This will burden FFO/share until they are leased up next spring. ``Overall, our markets continue to be in balance,'' said Bolton. ``The only isolated pockets of weakness are Winston-Salem and Greensboro, N.C.; Greenville, S.C.; and Little Rock, Ark. These markets represent 9 percent of our portfolio. Our asset quality, location advantages, and operating intensity continue evident as our properties continue to outperform market comparables. We also continue to see steady growth from a number of ancillary revenue programs providing cable and telephone services to our residents, contributing 0.9 cent per share for the quarter. We are working on several other programs associated with expanded Internet and e-commerce sales programs, which should continue to increase our capabilities in this rapidly growing area of our business. ``Operating expenses remain under tight control as same store property level operating expenses posted a 0.2 percent increase over the same period last year. Initiatives aimed at sub-metering and billing for resident water usage, preventive maintenance programs and national purchasing contracts all continue to contribute to effective operating expense control. Same store gross operating income (at property level, excludes real estate taxes and property/casualty insurance) posted a 3.7 percent increase over the same period last year. Significant real estate tax expense pressures continue unabated, up 9.6 percent on a same store basis versus the same quarter a year ago. Same store NOI was up 3.0 percent.'' ``We have contracts to sell five properties totaling over $60 million,'' said Simon Wadsworth, executive vice president and chief financial officer. ``Although not assured until closed, we anticipate that $30 million will be available from sales this year and the balance in early stages of next year. $25 million will be exchanged for other properties, and the balance will be used to retire debt and for our share repurchase program. The available balance will be used for our share repurchase program. As previously noted, asset sales can create short term FFO/share dilution until shares are repurchased or replacement properties purchased. We anticipate little dilution this quarter, but some is likely in the first quarter next year. ``We expect to close a $112 million line of variable rate financing with Fannie Mae shortly, which will replace part of our bank line and fund $28 million of maturing term loans. Pricing is at 3-month LIBOR plus 67 basis points. We have renegotiated our line of credit and our forecasts for next year, reflected in consensus, include about 3 cents/share savings of net interest expense as a result of this activity. The second phase of the Blackstone JV, which closed in August, together with the debt financing above will fund our current development pipeline,'' Wadsworth said. ``At the end of the third quarter 17 percent of our debt was variable rate, including 4 percent in tax exempt bonds. We have a sound capital structure in place and the opportunity to improve our coverage as the construction of the development properties is completed.'' George E. Cates, chairman and chief executive officer, added, ``We have increased the underlying intrinsic value of our shares by about 9.5 percent compounded since 1994. Coupled with an average dividend yield of around 8.5 percent each year (and 10.3 percent at present) for a total value delivery of 18 percent compounded per year. We have bought 548,700 shares in the past few weeks at prices far below their intrinsic value and have thus added further to the underlying value of each remaining share. That will continue to be the tactical focus of our share value building strategy for the foreseeable future.'' MAA is a self-administered, self-managed apartment-only real estate investment trust which owns or has ownership interest in 36,114 apartment units throughout the southeastern and midwest U.S. and in Texas, including 1,381 units in the development pipeline.
PROPERTY SALES 36 154 6,546
MORTGAGES 34 94 4,129
BUILDING PERMITS 201 554 15,915
BANKRUPTCIES 43 126 3,396