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Section 1: 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2010

or

¨ 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: 1-12762

MID-AMERICA APARTMENT COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)

TENNESSEE
 
62-1543819
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
   

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.
þYes  ¨ No

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).
þ Yes  ¨ No

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 “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large accelerated filer þ
Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes  þ No

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
Class
 
at July 21, 2010
Common Stock, $0.01 par value
 
32,798,079
 
 
 

 

MID-AMERICA APARTMENT COMMUNITIES, INC.

TABLE OF CONTENTS

   
Page
 
PART I – FINANCIAL INFORMATION
 
Item 1.
Financial Statements.
 
 
Condensed Consolidated Balance Sheets as of June 30, 2010 (Unaudited) and December 31, 2009
2
 
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2010 (Unaudited) and 2009 (Unaudited).
3
 
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2010 (Unaudited) and 2009 (Unaudited).
4
 
Notes to Condensed Consolidated Financial Statements (Unaudited).
5
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
16
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
28
Item 4.
Controls and Procedures.
28
Item 4T.
Controls and Procedures.
28
     
 
PART II – OTHER INFORMATION
 
Item 1.
Legal Proceedings.
29
Item 1A.
Risk Factors.
29
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
37
Item 3.
Defaults Upon Senior Securities.
37
Item 4.
(Removed and Reserved).
37
Item 5.
Other Information.
37
Item 6.
Exhibits.
37
 
Signatures
38
 
 
 

 

MID-AMERICA APARTMENT COMMUNITIES, INC.
Condensed Consolidated  Balance  Sheets
June 30, 2010 (Unaudited) and December 31, 2009
(Dollars in thousands, except per share data)

   
June 30, 2010
   
December 31, 2009
 
Assets:
           
Real estate assets:
           
Land
  $ 258,394     $ 255,425  
Buildings and improvements
    2,410,202       2,364,918  
Furniture, fixtures and equipment
    78,577       73,975  
Capital improvements in progress
    4,256       10,517  
      2,751,429       2,704,835  
Less accumulated depreciation
    (836,933 )     (788,260 )
      1,914,496       1,916,575  
Land held for future development
    1,306       1,306  
Commercial properties, net
    8,157       8,721  
Investments in real estate joint ventures
    12,385       8,619  
Real estate assets, net
    1,936,344       1,935,221  
Cash and cash equivalents
    25,245       13,819  
Restricted cash
    730       561  
Deferred financing costs, net
    13,658       13,369  
Other assets
    17,961       19,731  
Goodwill
    4,106       4,106  
Assets held for sale
    -       19  
Total assets
  $ 1,998,044     $ 1,986,826  
Liabilities and Shareholders' Equity:
               
Liabilities:
               
Notes payable
  $ 1,363,195     $ 1,399,596  
Accounts payable
    1,483       1,702  
Fair market value of interest rate swaps
    56,862       51,160  
Accrued expenses and other liabilities
    67,608       69,528  
Security deposits
    8,092       8,789  
Liabilities associated with assets held for sale
    -       23  
Total liabilities
    1,497,240       1,530,798  
Redeemable stock
    2,900       2,802  
Shareholders' equity:
               
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized, $25 per share liquidation preference; 8.30% Series H Cumulative Redeemable Preferred Stock, 6,200,000 shares authorized, 3,099,999 and 6,200,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively
    31       62  
Common stock, $0.01 par value per share, 50,000,000 shares authorized; 32,299,493 and 29,095,251 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively (1)
    322       290  
Additional paid-in capital
    1,074,147       988,642  
Accumulated distributions in excess of net income
    (541,725 )     (510,993 )
Accumulated other comprehensive income
    (56,836 )     (47,435 )
Total Mid-America Apartment Communities, Inc. shareholders' equity
    475,939       430,566  
Noncontrolling interest
    21,965       22,660  
Total Equity
    497,904       453,226  
Total liabilities and equity
  $ 1,998,044     $ 1,986,826  

(1) 
Number of shares issued and outstanding represent total shares of common stock regardless of classification on the consolidated balance sheet.The number of shares classified as redeemable stock on the consolidated balance sheet for June 30, 2010 and December 31, 2009 are 56,336 and 58,038, respectively.

See accompanying notes to consolidated financial statements.

 
2

 

MID-AMERICA APARTMENT COMMUNITIES, INC.
Condensed Consolidated Statements of Operations
Three and six months ended June 30, 2010 and 2009
(Dollars in thousands, except per share data)

   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Operating revenues:
                       
Rental revenues
  $ 91,049     $ 89,593     $ 181,357     $ 178,791  
Other property revenues
    7,697       4,906       14,717       9,308  
Total property revenues
    98,746       94,499       196,074       188,099  
Management fee income
    155       63       291       127  
Total operating revenues
    98,901       94,562       196,365       188,226  
Property operating expenses:
                               
Personnel
    12,717       11,962       25,075       23,326  
Building repairs and maintenance
    3,661       3,287       6,988       6,099  
Real estate taxes and insurance
    11,321       11,059       23,219       23,043  
Utilities
    5,671       5,231       11,270       10,739  
Landscaping
    2,518       2,490       5,033       4,794  
Other operating
    6,764       4,893       12,618       9,216  
Depreciation
    24,943       23,818       50,023       47,403  
Total property operating expenses
    67,595       62,740       134,226       124,620  
Acquisition expenses
    486       107       462       109  
Property management expenses
    4,479       4,503       8,756       8,744  
General and administrative expenses
    3,110       2,686       5,921       5,143  
Income from continuing operations before non-operating items
    23,231       24,526       47,000       49,610  
Interest and other non-property income
    86       68       401       148  
Interest expense
    (13,993 )     (14,472 )     (27,884 )     (28,701 )
Loss on debt extinguishment
    -       (141 )     -       (138 )
Amortization of deferred financing costs
    (648 )     (588 )     (1,243 )     (1,194 )
Asset impairment
    (1,590 )     -       (1,590 )     -  
Net casualty gain (loss) and other settlement proceeds
    102       -       629       (144 )
Income from continuing operations before  loss from real estate joint ventures
    7,188       9,393       17,313       19,581  
Loss from real estate joint ventures
    (298 )     (156 )     (574 )     (352 )
Income from continuing operations
    6,890       9,237       16,739       19,229  
Discontinued operations:
                               
Income from discontinued operations before (loss) gain on sale
    -       326       -       747  
(Loss) gain on sale of discontinued operations
    (2 )     1,155       (2 )     2,587  
Consolidated net income
    6,888       10,718       16,737       22,563  
Net income attributable to noncontrolling interests
    228       570       665       1,276  
Net income attributable to Mid-America Apartment Communities, Inc.
    6,660       10,148       16,072       21,287  
Preferred dividend distributions
    2,704       3,217       5,920       6,433  
Premiums and original issuance costs associated with the  redemption of preferred stock
    2,573       -       2,573       -  
Net income available for common shareholders
  $ 1,383     $ 6,931     $ 7,579     $ 14,854  
                                 
Weighted average shares outstanding (in thousands):
                               
Basic
    30,628       28,105       29,883       28,095  
Effect of dilutive securities
    108       79       84       80  
Diluted
    30,736       28,184       29,967       28,175  
                                 
Net income available for common shareholders
  $ 1,383     $ 6,931     $ 7,579     $ 14,854  
Discontinued property operations
    2       (1,481 )     2       (3,334 )
Income from continuing operations available for common shareholders
  $ 1,385     $ 5,450     $ 7,581     $ 11,520  
                                 
Earnings per share - basic:
                               
Income from continuing operations  available for common shareholders
  $ 0.04     $ 0.20     $ 0.25     $ 0.41  
Discontinued property operations
    -       0.05       -       0.12  
Net income available for common shareholders
  $ 0.04     $ 0.25     $ 0.25     $ 0.53  
                                 
Earnings per share - diluted:
                               
Income from continuing operations  available for common shareholders
  $ 0.04     $ 0.20     $ 0.25     $ 0.41  
Discontinued property operations
    -       0.05       -       0.12  
Net income available for common shareholders
  $ 0.04     $ 0.25     $ 0.25     $ 0.53  
                                 
Dividends declared per common share
  $ 0.615     $ 0.615     $ 1.230     $ 1.230  

See accompanying notes to consolidated financial statements.


 
3

 


Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2010 and 2009
(Dollars in thousands)

   
2010
   
2009
 
Cash flows from operating activities:
           
Consolidated net income
  $ 16,737     $ 22,563  
Adjustments to reconcile net income to net cash provided by operating activities:
               
                 
Depreciation and amortization of deferred financing costs
    51,266       48,597  
Stock compensation expense
    1,131       623  
Redeemable stock issued
    213       167  
Amortization of debt premium
    (180 )     (180 )
Loss from investments in real estate joint ventures
    574       352  
Loss on debt extinguishment
    -       138  
Derivative interest expense
    300       616  
Loss (gain) on sale of discontinued operations
    2       (2,587 )
Asset impairment
    1,590       -  
Net casualty (gains) loss and other settlement proceeds
    (629 )     144  
Changes in assets and liabilities:
               
Restricted cash
    (169 )     (212 )
Other assets
    1,447       3,522  
Accounts payable
    (234 )     703  
Accrued expenses and other
    (4,436 )     (693 )
Security deposits
    (696 )     181  
Net cash provided by operating activities
    66,916       73,934  
Cash flows from investing activities:
               
Purchases of real estate and other assets
    (69,718 )     (17,729 )
Improvements to existing real estate assets
    (22,595 )     (21,707 )
Renovations to existing real estate assets
    (2,858 )     (4,249 )
Development
    -       (3,910 )
Distributions from real estate joint ventures
    1,481       95  
Contributions to real estate joint ventures
    (6,006 )     (195 )
Proceeds from disposition of real estate assets
    48,074       14,745  
Net cash used in investing activities
    (51,622 )     (32,950 )
Cash flows from financing activities:
               
Net change in credit lines
    (55,000 )     44,831  
Proceeds from notes payable
    19,500       -  
Principal payments on notes payable
    (721 )     (44,059 )
Payment of deferred financing costs
    (5,731 )     (941 )
Repurchase of common stock
    (813 )     (669 )
Proceeds from issuances of common shares and units
    161,999       596  
Distributions to noncontrolling interests
    (2,927 )     (3,112 )
Dividends paid on common shares
    (36,198 )     (34,543 )
Dividends paid on preferred shares
    (6,467 )     (6,433 )
Redemption of preferred stock
    (77,510 )     -  
Net cash used in financing activities
    (3,868 )     (44,330 )
Net increase (decrease) in cash and cash equivalents
    11,426       (3,346 )
Cash and cash equivalents, beginning of period
    13,819       9,426  
Cash and cash equivalents, end of period
  $ 25,245     $ 6,080  
                 
Supplemental disclosure of cash flow information:
               
Interest paid
  $ 28,458     $ 27,132  
Supplemental disclosure of noncash investing and financing activities:
               
Conversion of units to common shares
  $ 1,190     $ -  
Accrued construction in progress
  $ 2,139     $ 4,528  
Interest capitalized
  $ -     $ 109  
Marked-to-market adjustment on derivative instruments
  $ (10,063 )   $ 23,361  
Reclass of redeemable stock to liabilities
  $ 269     $ -  

See accompanying notes to consolidated financial statements.

4

 
Mid-America Apartment Communities, Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2010 (Unaudited) and 2009 (Unaudited)

1.           Consolidation and Basis of Presentation

Mid-America Apartment Communities, Inc., or Mid-America, is a self-administered real estate investment trust, or REIT, that owns, acquires, renovates, develops and manages apartment communities in the Sunbelt region of the United States. As of June 30, 2010, we owned or owned interests in a total of 150 multifamily apartment communities comprising 44,462 apartments located in 13 states, including two communities comprising 626 apartments owned through our joint venture, Mid-America Multifamily Fund I, LLC, and two communities comprising 773 apartments owned through our joint venture, Mid-America Multifamily Fund II, LLC.

The accompanying unaudited condensed consolidated financial statements have been prepared by our management in accordance with U.S. generally accepted accounting principles for interim financial information and applicable rules and regulations of the Securities and Exchange Commission, or the SEC, and our accounting policies in effect as of December 31, 2009 as set forth in our annual consolidated financial statements, as of such date. The accompanying unaudited condensed consolidated financial statements include the accounts of Mid-America Apartment Communities, Inc. and its subsidiaries, including Mid-America Apartments, L.P. 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. The results of operations for the three and six month periods ended June 30, 2010 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 25, 2010.

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates.

2.           Segment Information

As of June 30, 2010, we owned or had an ownership interest in 150 multifamily apartment communities in 13 different states from which we derived all significant sources of earnings and operating cash flows. Senior management evaluates performance and determines resource allocations by reviewing apartment communities individually and in the following reportable operating segments:

 
·
Large same store communities are generally communities in markets with a population of at least 1 million that we have owned and have been stabilized for at least a full 12 months and have not been classified as held for sale.

 
·
Secondary same store communities are generally communities in markets with populations of less than 1 million that we have owned and have been stabilized for at least a full 12 months and have not been classified as held for sale.

 
·
Non same store communities include recent acquisitions, communities in development or lease-up and communities that have been classified as held for sale.

On the first day of each calendar year we determine the composition of our operating segments for that year which allows us to evaluate full period-over-period operating comparisons. We utilize net operating income, or NOI, in evaluating the performance. Total NOI represents total property revenues less total property operating expenses, excluding depreciation, for all properties held during the period regardless of their status as held for sale. We believe NOI is a helpful tool in evaluating the operating performance of our segments because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.

5

 
Revenues, NOI, and assets for each reportable segment for the three and six month periods ended June 30, 2010 and 2009, were as follows (dollars in thousands):

   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Revenues
                       
Large Same Store
  $ 44,914     $ 45,214     $ 89,332     $ 90,410  
Secondary Same Store
    43,617       42,694       86,567       85,009  
Non-Same Store
    10,215       6,591       20,175       12,680  
Total property revenues
    98,746       94,499       196,074       188,099  
Management fee income
    155       63       291       127  
Total operating revenues
  $ 98,901     $ 94,562     $ 196,365     $ 188,226  
                                 
NOI
                               
Large Same Store
  $ 25,455     $ 26,632     $ 50,433     $ 53,273  
Secondary Same Store
    24,911       25,129       49,949       50,292  
Non-Same Store
    5,728       4,159       11,489       8,106  
Total NOI
    56,094       55,920       111,871       111,671  
Discontinued operations NOI included above
    -       (343 )     -       (789 )
Management fee income
    155       63       291       127  
Depreciation
    (24,943 )     (23,818 )     (50,023 )     (47,403 )
Acquisition expense
    (486 )     (107 )     (462 )     (109 )
Property management expense
    (4,479 )     (4,503 )     (8,756 )     (8,744 )
General and administrative expense
    (3,110 )     (2,686 )     (5,921 )     (5,143 )
Interest and other non-property income
    86       68       401       148  
Interest expense
    (13,993 )     (14,472 )     (27,884 )     (28,701 )
Gain (loss) on debt extinguishment
    -       (141 )     -       (138 )
Amortization of deferred financing costs
    (648 )     (588 )     (1,243 )     (1,194 )
Asset impairment
    (1,590 )     -       (1,590 )     -  
Net casualty gains (loss) and other settlement proceeds
    102       -       629       (144 )
Loss from real estate joint ventures
    (298 )     (156 )     (574 )     (352 )
Discontinued operations
    (2 )     1,481       (2 )     3,334  
Nest income attributable to noncontrolling interests
    (228 )     (570 )     (665 )     (1,276 )
Net income attributable to
                               
Mid-America Apartment Communities, Inc.
  $ 6,660     $ 10,148     $ 16,072     $ 21,287  

   
June 30,
   
December 31,
 
   
2010
   
2009
 
Assets
           
Large Same Store
  $ 920,984     $ 934,182  
Secondary Same Store
    661,380       672,692  
Non-Same Store
    358,397       336,683  
Corporate assets
    57,283       43,269  
Total assets
  $ 1,998,044     $ 1,986,826  

 
6

 

3.           Comprehensive Income and Equity

Total comprehensive income, equity and their components for the six month periods ended June 30, 2010, and 2009, were as follows (dollars in thousands, except per share and per unit data):

             
Mid-America Apartment Communities, Inc. Shareholders
     
                               
Accumulated
   
Accumulated
       
                         
Additional
   
Distributions
   
Other
       
       
Comprehensive
 
Preferred
   
Common
   
Paid-In
   
in Excess of
   
Comprehensive
   
Noncontrolling
 
   
Total
 
Income
 
Stock
   
Stock
   
Capital
   
Net Income
   
Income (Loss)
   
Interest
 
EQUITY AT DECEMBER 31, 2009
  $ 453,226         $ 62     $ 290     $ 988,642     $ (510,993 )   $ (47,435 )   $ 22,660  
Equity Activity Excluding Comprehensive Income:
                                                           
Issuance and registration of common shares
    161,963                   32       161,931                          
Shares repurchased and retired
    (813 )                         (813 )                        
Exercise of stock options
    33                           33                          
Shares issued in exchange for units
    -                           1,190                       (1,190 )
Redeemable stock fair market value
    (154 )                                 (154 )                
Adjustment for Noncontrolling Interest Ownership in operating partnership
    -                           (3,053 )                     3,053  
Amortization of unearned compensation
    1,123                           1,123                          
Dividends on common stock ($0.615 per share)
    (38,157 )                                 (38,157 )                
Dividends on noncontrolling interest units ($0.615 per unit)
    (2,861 )                                                 (2,861 )
Redemption of preferred stock
    (77,510 )         (31 )             (74,906 )     (2,573 )                
Dividends on preferred stock
    (5,920 )                                 (5,920 )                
Comprehensive income:
                                                           
Net income
    16,737  
$
16,737                             16,072               665  
Other comprehensive income -  derivative instruments (cash flow hedges)
    (9,763 )   (9,763 )                                   (9,401 )     (362 )
Comprehensive income
    6,974  
$
6,974                                                
                                                             
EQUITY BALANCE JUNE 30, 2010
  $ 497,904         $ 31     $ 322     $ 1,074,147     $ (541,725 )   $ (56,836 )   $ 21,965  
 
             
Mid-America Apartment Communities, Inc. Shareholders
     
                               
Accumulated
   
Accumulated
       
                         
Additional
   
Distributions
   
Other
       
       
Comprehensive
 
Preferred
   
Common
   
Paid-In
   
in Excess of
   
Comprehensive
   
Noncontrolling
 
   
Total
 
Income
 
Stock
   
Stock
   
Capital
   
Net Income
   
Income (Loss)
   
Interest
 
EQUITY AT DECEMBER 31, 2008
  $ 442,617         $ 62     $ 282     $ 954,127     $ (464,617 )   $ (72,885 )   $ 25,648  
Equity Activity Excluding Comprehensive Income:
                                                           
Issuance and registration of common shares
    553                           553                          
Shares repurchased and retired
    (669 )                         (669 )                        
Exercise of stock options
    45                           45                          
Shares issued in exchange for units
    -                           -       -       -       -  
Redeemable stock fair market value
    (3 )                                 (3 )                
Adjustment for Noncontrolling Interest Ownership in operating partnership
    -                           571                       (571 )
Amortization of unearned compensation
    640                           640                          
Dividends on common stock ($0.615 per share)
    (34,546 )                                 (34,546 )             -  
Dividends on noncontrolling interest units ($0.615 per unit)
    (3,112 )                                                 (3,112 )
Dividends on preferred stock
    (6,433 )                                 (6,433 )                
Comprehensive income:
                                                           
Net income
    22,563  
$
22,563
                            21,287               1,276  
Other comprehensive income -  derivative instruments (cash flow hedges)
    23,977    
23,977
                                    22,667       1,310  
Comprehensive income
    46,540  
$
46,540
                                               
EQUITY BALANCE JUNE 30, 2009
  $ 445,632        
$
62    
$
282     $ 955,267     $ (484,312 )   $ (50,218 )   $ 24,551  
 
The marked-to-market adjustment on derivative instruments is based upon the change of interest rates available for derivative instruments with similar terms and remaining maturities existing at each balance sheet date.

 
7

 

4.           Real Estate Acquisitions

On April 30, 2010, we purchased the Grand Cypress apartments, a 312-unit community located in the Houston, Texas metropolitan statistical area, or MSA.

On August 27, 2008, we purchased 215 units of the 234-unit Village Oaks apartments located in the Tampa, Florida MSA. The remaining 19 units had previously been sold as condominiums and we intend to acquire these units if they become available, and operate them as apartment rentals with the rest of the community. During the remainder of 2008 and during 2009, we acquired 11 of the remaining 19 units. On both February 18, 2010 and June 4, 2010, we acquired one additional unit.

On June 24, 2010, we purchased the 535 Brookwood apartments, a 256-unit community located in the Greenville, South Carolina MSA.

On June 29, 2010, we purchased the Avondale at Kennesaw Farms apartments, a 288-unit community located in the Nashville, Tennessee MSA.

5.           Discontinued Operations

As part of our portfolio strategy to selectively dispose of mature assets that no longer meet our investment criteria and long-term strategic objectives, in July 2008, we entered into marketing contracts to list the 440-unit River Trace apartments in Memphis, Tennessee, the 96-unit Riverhills apartments in Grenada, Mississippi, and the 304-unit Woodstream apartments in Greensboro, North Carolina. All of these apartments were subsequently sold during 2009. In accordance with accounting standards governing the disposal of long lived assets, all of these communities are considered discontinued operations in the accompanying condensed consolidated financial statements.

The following is a summary of discontinued operations for the three and six month periods ended June 30, 2010 and 2009, (dollars in thousands):

   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Revenues
                       
Rental revenues
  $ -     $ 783     $ -     $ 1,752  
Other revenues
    -       16       -       53  
Total revenues
    -       799       -       1,805  
Expenses
                               
Property operating expenses
    -       456       -       1,016  
Depreciation
    -       -       -       -  
Interest expense
    -       17       -       42  
Total expense
    -       473       -       1,058  
Income from discontinued operations before gain on sale
    -       326       -       747  
Gain on sale of discontinued operations
    -       1,155       -       2,587  
Income from discontinued operations
  $ -     $ 1,481     $ -     $ 3,334  
 
6.           Share and Unit Information

On June 30, 2010, 32,299,493 common shares and 2,198,090 operating partnership units were outstanding, representing a total of 34,497,583 shares and units. Additionally, we had outstanding options for the purchase of 21,577 shares of common stock at June 30, 2010, of which 10,274 were anti-dilutive. At June 30, 2009, 28,224,270 common shares and 2,403,515 operating partnership units were outstanding, representing a total of 30,627,785 shares and units. Additionally, Mid-America had outstanding options for the purchase of 23,507 shares of common stock at June 30, 2009, of which 16,713 were anti-dilutive.

 
8

 

During the three months ended June 30, 2010, we issued 2,503,600 shares of common stock through our at-the-market, or ATM, program for net proceeds of $131.6 million.

On June 2, 2010, we redeemed 3,100,001 shares of the 6,200,000 issued and outstanding shares of our 8.30% Series H Cumulative Redeemable Preferred Stock, or Series H. The Series H shares being redeemed were redeemed for a $25 per share redemption price plus any accrued and unpaid dividends through and including June 2, 2010. The redemption was funded by proceeds raised through our ATM program.

On July 6, 2010, we announced our plans to redeem the remaining 3,099,999 shares of the issued and outstanding Series H. The shares will be redeemed on August 5, 2010 for a $25 per share redemption price plus any accrued and unpaid dividends through and including August 5, 2010. The redemption will be funded by proceeds through our ATM program.

7.           Notes Payable

On June 30, 2010, we had total indebtedness of $1.36 billion, compared to $1.40 billion as of December 31, 2009. Our indebtedness as of June 30, 2010 consisted of both conventional and tax exempt debt. Borrowings were made through individual property mortgages as well as company-wide secured credit facilities.

As of June 30, 2010, approximately 92% of our outstanding debt was borrowed through secured credit facility relationships with Prudential Mortgage Capital, which are credit enhanced by the Federal National Mortgage Association, or FNMA, Financial Federal, which are credit enhanced by the Federal Home Loan Mortgage Corporation, or Freddie Mac, and a $50 million bank facility with a syndicate of banks.

We utilize interest rate swaps and interest rate caps to help manage our current and future interest rate risk and entered into 32 interest rate swaps and 20 interest rate caps as of June 30, 2010, representing notional amounts of $793 thousand and $262 thousand, respectively.

The following table summarizes our debt structure as of June 30, 2010 (dollars in thousands):

   
Borrowed
   
Effective
   
Contract
   
Balance
   
Rate
   
Maturity
Fixed Rate Debt
               
Individual property mortgages
  $ 88,845       5.8 %  
5/14/2020
Tax-exempt
    11,070       5.3 %  
12/1/2028
FNMA conventional credit facilities
    50,000       4.7 %  
3/31/2017
Credit facility balances managed with interest rate swaps
                   
LIBOR-based interest rate swaps
    767,000       5.3 %  
1/2/2013
BMA-based interest rate swaps
    26,165       4.5 %  
2/17/2012
Total fixed rate debt
    943,080       5.3 %  
2/1/2014
                     
Variable Rate Debt