Mid-America marks higher first quarter earnings Mid-America posts higher first quarter earnings Mid-America Apartment Communities Inc. announced funds from operations for the first quarter as 71 cents per share, 6.2 percent above the fourth quarter 1999 and 2.6 percent below the comparable first quarter 1999. ``These earnings are in line with our expectations. We also believe that this will finish negative quarterly comparisons with 1999, as new development properties are becoming increasingly productive,'' said George E. Cates, chairman and chief executive officer. Highlights for the quarter include: Solid operating results. Occupancy (excluding lease-up units) was 95.4 percent on March 31, 1.3 percent above a year earlier. Same store occupancy was 95.4 percent, 1.2 percent ahead of last year. Operating margin improved once again (to 63 percent), based on a 4.6 percent increase in same store net operating income. New development performance was ahead of plan for the quarter, adding $4.5 million of NOI, $2.5 million above the same development properties' contribution a year earlier. New financing terms were negotiated to improve balance sheet flexibility, facilitate share repurchases, and reduce borrowing costs, and are expected to take effect by the end of the second quarter. Dividend coverage improved during the quarter as a consequence of the share repurchase program, reductions in capital spending, and solid earnings. The contribution from new development properties continued to accelerate, with good results at most development communities, Cates said. Two developments stabilized in the quarter: Paddock Club in Panama City Beach, Fla., at 96 percent occupancy and Paddock Club in Murfreesboro, Tenn., at 92 percent occupancy. The overall net operating income contribution from new development pipeline units was above plan for the quarter. Leasing of units is on plan for Reserve at Dexter Lake in Memphis and Grand Reserve in Lexington, Ky., and would have been even higher except for delays in the delivery of over 100 units, mostly in Nashville, Tenn., and Katy, Texas. New development continues to meet forecasted investment returns. For the 1,904 newly developed units recently stabilized, the average rental rate is $792 per month. ``We continued to outperform market occupancy in our southeastern and Texas markets. That relatively strong performance is a sound achievement for areas which continue to be influenced by isolated excess new development,'' said H. Eric Bolton, Jr., president and chief operating officer. ``Actual revenue yield per unit rose 7.1 percent from a year earlier for all properties. Comparing 28,273 same store units to the first quarter last year, revenues increased 3.4 percent, led by a 1.2 percent occupancy gain." Offsetting these gains somewhat was growth in resident turnover (67 percent for the last 12 months) as record home buying continued unabated. Income from ancillary services grew 75 percent over the same prior year quarter. "We begin implementing our new Internet service program during the second quarter, which is expected to generate ongoing ancillary income," Bolton said. He said solid market areas for the company included Memphis, Jacksonville and Atlanta. Bolton added that despite growing concerns about Houston and Dallas, Mid-America posted good performance in each along with particularly strong gains in Austin. Isolated pockets of market weakness during the quarter included Huntsville, Ala., and the south Jacksonville, Fla., sub-market. Simon R C Wadsworth, executive vice president and chief financial officer said the Memphis-based company completed the sale April 20 of three Memphis properties with 1,053 apartments, McKellar Woods Village, Winchester Square Townhouses, and Clearbrook Village for a total price, net of costs, of $29.4 million. ``These three properties were on average 26 years old, in neighborhoods where further opportunity for acceptable rent growth is waning," he said. "We recorded a net gain of $6.3 million, of which $2.8 million will be deferred through a like-kind exchange for two properties with a total purchase price of $23 million. "The first exchange property, Indigo Point located in Brandon, Fla., has 240 apartments and was completed in 1989; the second property, Huntington Chase, in Warner Robins, Ga., has 200 apartments and was completed in 1997. "While we expect the exchange to cost us about 2 cents/share of FFO this year (included in our forecasts) the sales are a positive move for the value of our shares and portfolio quality. $6 million of cash will be realized from the transaction and will be used to continue our share repurchase program and to complete our development pipeline."