Mid-America results in line with forecast

Mid-America Apartment Communities Inc. reported funds from operations, the generally accepted measure of operating performance for real estate investment trusts, of $14.2 million or 69 cents per share for the quarter ended Sept. 30.

This is in line with the company's estimate for the quarter and a slight decline from the 70 cents per share reported for the same quarter of last year. Net income available for common shareholders for the third quarter was a net loss available for common shareholders of $231,000, or negative 1 cent per share.

This compares to net income available for common shareholders of $9.1 million or 52 cents per share for the comparable quarter of a year ago, when the company recorded a gain of $9.9 million from the sale of two apartment properties.

Highlights for the third quarter were:

         Same store occupancy at quarter end of 93.8 percent was down slightly from the occupancy of 94.4 percent as of the end of the third quarter last year.

         Despite the tough operating environment, the balance sheet continues to strengthen as coverage ratios show steady improvement and dividend coverage remains sound.

         The company closed on the purchase of Preston Hills, a new 464-unit community in Atlanta, which is expected to become the initial investment in the company's acquisition joint venture with Crow Holdings.

         During October, the company concluded a successful refinancing of its Series E 9.5 percent Preferred Stock.

Eric Bolton, chairman and chief executive officer, said the leasing environment remains very competitive.

Historically low mortgage rate pricing, coupled with continued slow job growth, dampen demand levels for multifamily housing. We are, however, encouraged to see that new construction starts are slowing and remain comfortable that market conditions for apartment housing have bottomed out in most of our markets. Same store leasing concessions improved 6.8 percent in the third quarter as compared to the proceeding second quarter of 2002, he said.

While we believe the leasing and revenue environment will now remain weak until well into 2003, we do not believe that overall performance from our portfolio will deteriorate from current performance levels.

Bolton said he anticipates FFO for the fourth quarter of 69 cents to 70 cents per share, and $2.75 to $2.76 for the full year 2002.

For 2003, we now forecast FFO in a range of $2.76 to $2.82, down slightly from an earlier estimate of $2.82 to $2.85. This change reflects the continued pressure on occupancy and a forecast that assumes market conditions will remain weak until the latter part of next year. The pace of acquisitions in our joint venture with Crow Holdings is a key variable which may help us achieve the upper end of next year's FFO forecast. Our current forecast for 2003 assumes that no additional acquisitions are made, he said.

The long-term outlook for the multifamily housing market remains strong, particularly in the Southeast, he said.

By diversifying our investments over large, middle and small tier markets throughout this solid growth region, we are able to deliver a more consistent and steady performance. Furthermore, at an average age of only 12 years, our portfolio of properties is in great shape and well positioned to not only compete in this environment, but produce strong long-term results as the economy begins to strengthen."