Edgar Filing: MID AMERICA APARTMENT COMMUNITIES INC

Interest Rate Derivative

Number of Instruments

Interest Rate Caps

Interest Rate Swaps

MAA.2012.6.30-10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2012

¨ 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 “large accelerated filer,” “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 at
Class	July 30, 2012
Common Stock, $0.01 par value	41,103,516

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, 2012 (Unaudited) and December 31, 2011 (Unaudited)	2
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2012 (Unaudited) and 2011 (Unaudited).	3
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2012 (unaudited) and 2011 (unaudited).	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012 (Unaudited) and 2011 (Unaudited).	5
	Notes to Condensed Consolidated Financial Statements (Unaudited).	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	31
Item 4.	Controls and Procedures.	31

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	32
Item 1A.	Risk Factors.	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	41
Item 3.	Defaults Upon Senior Securities.	41
Item 4.	Mine Safety Disclosures.	41
Item 5.	Other Information.	41
Item 6.	Exhibits.	42
	Signatures	43

MAA

Condensed Consolidated Balance Sheets

June 30, 2012 and December 31, 2011

(Unaudited)

(Dollars in thousands, except share data)



	June 30, 2012			December 31, 2011
Assets:
Real estate assets:
Land	$	358,429		$	333,846
Buildings and improvements	2,966,313			2,879,289
Furniture, fixtures and equipment	94,975			92,170
Development and capital improvements in progress	75,552			53,790
	3,495,269			3,359,095
Less accumulated depreciation	(990,936		)	(961,724		)
	2,504,333			2,397,371

Land held for future development	1,306			1,306
Commercial properties, net	7,865			8,125
Investments in real estate joint ventures	6,202			17,006
Real estate assets, net	2,519,706			2,423,808

Cash and cash equivalents	22,341			57,317
Restricted cash	1,038			1,362
Deferred financing costs, net	14,859			14,680
Other assets	28,542			29,195
Goodwill	4,106			4,106
Assets held for sale	8,496			—
Total assets	$	2,599,088		$	2,530,468

Liabilities and Shareholders' Equity:
Liabilities:
Secured notes payable	$	1,226,421		$	1,514,755
Unsecured notes payable	363,000			135,000
Accounts payable	5,582			2,091
Fair market value of interest rate swaps	27,648			33,095
Accrued expenses and other liabilities	89,941			91,718
Security deposits	6,586			6,310
Liabilities associated with assets held for sale	9,250			—
Total liabilities	1,728,428			1,782,969

Redeemable stock	4,697			4,037

Shareholders' equity:
Common stock, $0.01 par value per share, 100,000,000 shares authorized; 41,101,427 and 38,959,338 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively ⁽¹⁾	410			389
Additional paid-in capital	1,494,172			1,375,623
Accumulated distributions in excess of net income	(624,304		)	(621,833		)
Accumulated other comprehensive losses	(30,891		)	(35,848		)
Total MAA shareholders' equity	839,387			718,331
Noncontrolling interest	26,576			25,131
Total equity	865,963			743,462
Total liabilities and equity	$	2,599,088		$	2,530,468


⁽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, 2012 and December 31, 2011 are 68,837 and 65,771, respectively.

See accompanying notes to consolidated financial statements.

MAA

Condensed Consolidated Statements of Operations

Three and six months ended June 30, 2012 and 2011

(Unaudited)

(Dollars in thousands, except per share data)



	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Operating revenues:
Rental revenues	$	113,783		$	97,996		$	222,111		$	192,517
Other property revenues	9,930			8,942			19,506			17,761
Total property revenues	123,713			106,938			241,617			210,278
Management fee income	209			263			478			486
Total operating revenues	123,922			107,201			242,095			210,764
Property operating expenses:
Personnel	14,322			13,134			28,634			25,783
Building repairs and maintenance	4,014			3,619			7,864			6,798
Real estate taxes and insurance	14,420			12,182			28,151			24,214
Utilities	6,933			6,148			13,162			12,031
Landscaping	2,760			2,634			5,639			5,238
Other operating	8,459			8,005			16,630			15,319
Depreciation and amortization	31,549			27,280			61,821			54,140
Total property operating expenses	82,457			73,002			161,901			143,523
Acquisition expenses	865			1,520			231			1,739
Property management expenses	5,570			5,194			11,024			10,338
General and administrative expenses	3,462			5,439			6,909			10,049
Income from continuing operations before non-operating items	31,568			22,046			62,030			45,115
Interest and other non-property income	112			114			254			459
Interest expense	(14,270		)	(13,945		)	(28,486		)	(27,704		)
(Loss) gain on debt extinguishment	(15		)	(48		)	5			(48		)
Amortization of deferred financing costs	(869		)	(707		)	(1,640		)	(1,422		)
Net casualty gain (loss) after insurance and other settlement proceeds	2			(265		)	(2		)	(406		)
(Loss) gain on sale of non-depreciable assets	(3		)	22			(3		)	16
Income from continuing operations before loss from real estate joint ventures	16,525			7,217			32,158			16,010
Loss from real estate joint ventures	(67		)	(178		)	(98		)	(423		)
Income from continuing operations	16,458			7,039			32,060			15,587
Discontinued operations:
Income from discontinued operations before gain on sale	63			641			154			1,255
Asset impairment on discontinued operations	—			—			(71		)	—
Net casualty loss after insurance and other settlement proceeds on discontinued operations	(2		)	—			(56		)	(7		)
Gain on sale of discontinued operations	12,953			—			22,453			—
Consolidated net income	29,472			7,680			54,540			16,835
Net income attributable to noncontrolling interests	1,312			252			2,490			563
Net income attributable to MAA	28,160			7,428			52,050			16,272
Net income available for common shareholders	$	28,160		$	7,428		$	52,050		$	16,272

Earnings per common share - basic:
Income from continuing operations available for common shareholders	$	0.37		$	0.18		$	0.73		$	0.41
Discontinued property operations	0.32			0.02			0.56			0.04
Net income available for common shareholders	$	0.69		$	0.20		$	1.29		$	0.45

Earnings per share - diluted:
Income from continuing operations available for common shareholders	$	0.37		$	0.18		$	0.73		$	0.41
Discontinued property operations	0.32			0.02			0.56			0.03
Net income available for common shareholders	$	0.69		$	0.20		$	1.29		$	0.44

Dividends declared per common share	$	0.6600		$	0.6275		$	1.3200		$	1.2550

See accompanying notes to consolidated financial statements.

MAA

Condensed Consolidated Statements of Comprehensive Income

Three and Six months ended June 30, 2012 and 2011



	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Consolidated net income	$	29,472		$	7,680		$	54,540		$	16,835
Other comprehensive income:
Unrealized losses from the effective portion of derivative instruments	(3,991		)	(8,026		)	(5,293		)	(8,203		)
Reclassification adjustment for losses included in net income for the effective portion of derivative instruments	4,944			7,374			10,492			15,012
Total comprehensive income	30,425			7,028			59,739			23,644
Less: comprehensive income attributable to noncontrolling interests	(1,354		)	(229		)	(2,732		)	(793		)
Comprehensive income attributable to MAA	$	29,071		$	6,799		$	57,007		$	22,851

See accompanying notes to consolidated financial statements.

MAA

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2012 and 2011

(Unaudited)

(Dollars in thousands)



	Six months ended June 30,
	2012			2011
Cash flows from operating activities:
Consolidated net income	$	54,540		$	16,835
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	64,341			57,318
Stock compensation expense	1,231			1,686
Redeemable stock issued	285			293
Amortization of debt premium	(316		)	(180		)
Loss from investments in real estate joint ventures	98			423
(Gain) loss on debt extinguishment	(5		)	48
Derivative interest expense	358			222
Loss on sale of non-depreciable assets	3			6
Gain on sale of discontinued operations	(22,453		)	—
Net casualty loss and other settlement proceeds	58			406
Changes in assets and liabilities:
Restricted cash	102			(113		)
Other assets	(63		)	1,943
Accounts payable	3,498			1,012
Accrued expenses and other	(1,118		)	3,714
Security deposits	305			(62		)
Net cash provided by operating activities	100,864			83,551
Cash flows from investing activities:
Purchases of real estate and other assets	(96,906		)	(185,901		)
Normal capital improvements	(26,380		)	(22,798		)
Construction capital and other improvements	(2,304		)	(2,983		)
Renovations to existing real estate assets	(6,896		)	(6,005		)
Development	(42,592		)	(8,658		)
Distributions from real estate joint ventures	10,779			828
Contributions to real estate joint ventures	(73		)	(1,373		)
Proceeds from disposition of real estate assets	51,133			320
Net cash used in investing activities	(113,239		)	(226,570		)
Cash flows from financing activities:
Net change in credit lines	(232,064		)	(12,817		)
Proceeds from notes payable	150,000			150,350
Principal payments on notes payable	(1,757		)	(101,612		)
Payment of deferred financing costs	(1,997		)	(1,700		)
Repurchase of common stock	(1,640		)	(2,260		)
Proceeds from issuances of common shares	120,148			125,737
Distributions to noncontrolling interests	(2,559		)	(2,719		)
Dividends paid on common shares	(52,732		)	(45,064		)
Net cash (used in) provided by financing activities	(22,601		)	109,915
Net decrease in cash and cash equivalents	(34,976		)	(33,104		)
Cash and cash equivalents, beginning of period	57,317			45,942
Cash and cash equivalents, end of period	$	22,341		$	12,838

Supplemental disclosure of cash flow information:
Interest paid	$	30,441		$	28,034
Supplemental disclosure of noncash investing and financing activities:
Conversion of units to shares of common stock	$	2,516		$	2,878
Accrued construction in progress	$	6,818		$	6,775
Interest capitalized	$	1,289		$	459
Marked-to-market adjustment on derivative instruments	$	4,841		$	6,587
Reclassification of redeemable stock to liabilities	$	—		$	151
Fair value adjustment on debt assumed	$	2,578		$	—
Debt assumed	$	30,290		$	—

See accompanying notes to consolidated financial statements.

MAA

Notes to Condensed Consolidated Financial Statements

June 30, 2012 and 2011

(Unaudited)

1. Consolidation and Basis of Presentation and Significant Accounting Policies

Consolidation and Basis of Presentation

Mid-America Apartment Communities, Inc., or we, or MAA, 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, 2012, we owned or owned interests in a total of 168 multifamily apartment communities comprising 49,002 apartments located in 13 states, including two communities comprising 626 apartments owned through our joint venture, Mid-America Multifamily Fund I, LLC, and four communities comprising 1,156 apartments owned through our joint venture, Mid-America Multifamily Fund II, LLC. In addition, we also had three development communities and a second phase to an existing community under construction totaling 1,220 units as of June 30, 2012. A total of 405 units for the development projects were completed as of June 30, 2012, and therefore have been included in the totals above. Total expected costs for the development projects are $143.6 million, of which $97.1 million has been incurred to date. We expect to complete construction on three of the projects by the fourth quarter 2012, with the last project being completed by the fourth quarter 2013. Four of our properties include retail components with approximately 104,000 square feet of gross leasable area.

The accompanying unaudited condensed consolidated financial statements have been prepared by our management in accordance with United States generally accepted accounting principles, or GAAP, for interim financial information and applicable rules and regulations of the Securities and Exchange Commission, or the SEC, and our accounting policies as set forth in our December 31, 2011 annual consolidated financial statements. The accompanying unaudited condensed consolidated financial statements include our accounts and those of our 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 except for an approximately $655,000 out of period adjustment related to the capitalization of land acquisition costs recorded during the first quarter of 2012. 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, 2012 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 24, 2012.

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.

Earnings per Common Share

Basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two class method of computing basic earnings per share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis with our diluted earnings per share being the more dilutive of the treasury stock or two class methods. Operating partnership units are included in dilutive earnings per share calculations when they are dilutive to earnings per share. For the three and six month periods ended June 30, 2012 and 2011, our basic earnings per share is computed using the two class method and our diluted earnings per share is computed using the more dilutive of the treasury stock method or two class method as follows:



(dollars and shares in thousands, except per share amounts)	Three months ended June 30,							Six months ended June 30,
	2012				2011			2012					2011
Shares Outstanding
Weighted average common shares - basic	40,983				36,836			40,243					36,274
Weighted average partnership units outstanding	—			⁽¹⁾	1,982			—			₍₁₎		2,041
Effect of dilutive securities	45				105			84					105
Weighted average common shares - diluted	41,028				38,923			40,327					38,420

Calculation of Earnings per Share - basic
Net income available for common shareholders	$	28,160			$	7,428		$	52,050				$	16,272
Net income allocated to unvested restricted shares	(25		)		(2		)	(54		)			(11		)
Net income available for common shareholders, adjusted	$	28,135			$	7,426		$	51,996				$	16,261

Weighted average common shares - basic	40,983				36,836			40,243					36,274
Earnings per share - basic	$	0.69			$	0.20		$	1.29				$	0.45

Calculation of Earnings per Share - diluted
Net income available for common shareholders	$	28,160			$	7,428		$	52,050				$	16,272
Net income attributable to noncontrolling interests	—			⁽¹⁾	252			—			⁽¹	⁾	563
Adjusted net income available for common shareholders	$	28,160			$	7,680		$	52,050				$	16,835

Weighted average common shares - diluted	41,028				38,923			40,327					38,420
Earnings per share - diluted	$	0.69			$	0.20		$	1.29				$	0.44

⁽¹⁾ Operating partnership units are not included in dilutive earnings per share calculations for the three or six months ended June 30, 2012, as they were not dilutive.

2. Segment Information

As of June 30, 2012, we owned or had an ownership interest in 168 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 market same store communities are generally communities:


◦	in markets with a population of at least one million and at least 1% of the total public multifamily REIT units; and


◦	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 market same store communities are generally communities:


◦	in markets with populations of more than one million but less than one percent of the total public multifamily REIT units or in markets with a population of less than one million; and


◦	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 and other includes recent acquisitions, communities in development or lease-up and communities that have been classified as held for sale. Also included in non same store communities are non multifamily activities which represent less than 1% of our portfolio

On the first day of each calendar year, we determine the composition of our same store operating segments for that year as well as adjusting the previous year, which allows us to evaluate full period-over-period operating comparisons. We utilize net operating income, or NOI, in evaluating the performance of the segments. Total NOI represents total property revenues less total property operating expenses, excluding depreciation and amortization, 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.

Revenues and NOI for each reportable segment for the three and six month periods ended June 30, 2012 and 2011, were as follows (dollars in thousands):



	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Revenues
Large Market Same Store	$	56,133		$	53,014		$	111,140		$	105,284
Secondary Market Same Store	47,955			46,510			95,455			92,366
Non-Same Store and Other	19,625			7,414			35,022			12,628
Total property revenues	123,713			106,938			241,617			210,278
Management fee income	209			263			478			486
Total operating revenues	$	123,922		$	107,201		$	242,095		$	210,764

NOI
Large Market Same Store	$	32,748		$	30,401		$	64,846		$	60,677
Secondary Market Same Store	28,224			26,829			56,007			53,881
Non-Same Store and Other	12,423			5,736			22,058			9,923
Total NOI	73,395			62,966			142,911			124,481
Discontinued operations NOI included above	(590		)	(1,750		)	(1,374		)	(3,586		)
Management fee income	209			263			478			486
Depreciation and amortization	(31,549		)	(27,280		)	(61,821		)	(54,140		)
Acquisition credit (expense)	(865		)	(1,520		)	(231		)	(1,739		)
Property management expense	(5,570		)	(5,194		)	(11,024		)	(10,338		)
General and administrative expense	(3,462		)	(5,439		)	(6,909		)	(10,049		)
Interest and other non-property income	112			114			254			459
Interest expense	(14,270		)	(13,945		)	(28,486		)	(27,704		)
Gain on debt extinguishment	(15		)	(48		)	5			(48		)
Amortization of deferred financing costs	(869		)	(707		)	(1,640		)	(1,422		)
Net casualty loss and other settlement proceeds	2			(265		)	(2		)	(406		)
Loss on sale of non-depreciable assets	(3		)	22			(3		)	16
Loss from real estate joint ventures	(67		)	(178		)	(98		)	(423		)
Discontinued operations	13,014			641			22,480			1,248
Net income attributable to noncontrolling interests	(1,312		)	(252		)	(2,490		)	(563		)
Net income attributable to MAA	$	28,160		$	7,428		$	52,050		$	16,272

Assets for each reportable segment as of June 30, 2012 and December 31, 2011, were as follows (dollars in thousands):



	June 30, 2012		December 31, 2011
Assets
Large Market Same Store	$	1,125,282	$	1,017,015
Secondary Market Same Store	664,165		668,109
Non-Same Store and Other	755,800		760,132
Corporate assets	53,841		85,212
Total assets	$	2,599,088	$	2,530,468

3. Equity

Total equity and its components for the six month periods ended June 30, 2012, and 2011, were as follows (dollars in thousands, except per share and per unit data):



	Mid-America Apartment Communities, Inc. Shareholders
	Common Stock Amount		Additional Paid-In Capital			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total Equity
EQUITY BALANCE DECEMBER 31, 2011	$	389	$	1,375,623		$	(621,833	)	$	(35,848	)	$	25,131		$	743,462
Net income						52,050						2,490			54,540
Other comprehensive income - derivative instruments (cash flow hedges)									4,957			242			5,199
Issuance and registration of common shares	20		120,130												120,150
Shares repurchased and retired	—		(1,640		)										(1,640		)
Shares issued in exchange for units	1		2,515									(2,516		)	—
Redeemable stock fair market value						(375		)							(375		)
Adjustment for noncontrolling interest ownership in operating partnership			(3,687		)							3,687			—
Amortization of unearned compensation			1,231												1,231
Dividends on common stock ($0.6600 per share)						(54,146		)							(54,146		)
Dividends on noncontrolling interest units ($0.6600 per unit)												(2,458		)	(2,458		)
EQUITY BALANCE JUNE 30, 2012	$	410	$	1,494,172		$	(624,304	)	$	(30,891	)	$	26,576		$	865,963



	Mid-America Apartment Communities, Inc. Shareholders
	Common Stock Amount		Additional Paid-In Capital			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total Equity
EQUITY BALANCE DECEMBER 31, 2010	$	348	$	1,142,023		$	(575,021	)	$	(48,847	)	$	22,125		$	540,628
Net income						16,272						563			16,835
Other comprehensive income - derivative instruments (cash flow hedges)									6,579			230			6,809
Issuance and registration of common shares	21		125,679												125,700
Shares repurchased and retired	—		(2,260		)										(2,260		)
Exercise of stock options	—		38												38
Shares issued in exchange for units	2		2,876									(2,878		)	—
Redeemable stock fair market value						(235		)							(235		)
Adjustment for noncontrolling interest ownership in operating partnership			(5,189		)							5,189			—
Amortization of unearned compensation			1,686												1,686
Dividends on common stock ($0.6275 per share)						(46,332		)							(46,332		)
Dividends on noncontrolling interest units ($0.6275 per unit)												(2,569		)	(2,569		)
EQUITY BALANCE JUNE 30, 2011	$	371	$	1,264,853		$	(605,316	)	$	(42,268	)	$	22,660		$	640,300

4. Real Estate Acquisitions

On April 2, 2012, we purchased Adalay Bay, a 240 unit apartment community located in Chesapeake, Virginia.

On April 5, 2012, we purchased Legacy at Western Oaks, a 479 unit apartment community located in Austin, Texas. This property was purchased directly from one of our joint ventures, Mid-America Multifamily Fund II, LLC.

On May 10, 2012, we purchased Allure in Buckhead Village, a 230 unit apartment community with approximately 23,000 square feet of retail space located in Atlanta, Georgia.

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, and in accordance with accounting standards governing the disposal of long lived assets, the 320-unit Kenwood Club apartments in Katy (Houston), Texas, the 276-unit Cedar Mill apartments in Memphis, Tennessee, the 410-unit Celery Stalk apartments in Dallas, Texas, and the 200-unit TPC Florence apartments in Florence (Louisville), Kentucky are presented as discontinued operations in the accompanying condensed consolidated financial statements. These first three properties were sold on January 12, 2012, February 9, 2012, and June 7, 2012 respectively, and resulted in a gain of approximately $22.5 million, which is included in discontinued operations. TPC Florence is considered held for sale since earnest money was received and was non-refundable as of June 8, 2012.

The following is a summary of discontinued operations for the three and six month periods ended June 30, 2012 and 2011, (dollars in thousands):



	Three months ended June 30,					Six months ended June 30,
	2012			2011		2012			2011
Revenues
Rental revenues	$	1,069		$	3,376	$	2,651		$	6,740
Other revenues	123			411		304			825
Total revenues	1,192			3,787		2,955			7,565
Expenses
Property operating expenses	623			2,070		1,637			4,119
Depreciation and amortization	373			873		879			1,754
Interest expense	133			203		285			437
Total expense	1,129			3,146		2,801			6,310
Income from discontinued operations before gain on sale	63			641		154			1,255
Asset impairment on discontinued operations	—			—		(71		)	—
Net loss on insurance and other settlement proceeds on discontinued operations	(2		)	—		(56		)	(7		)
Gain on sale of discontinued operations	12,953			—		22,453			—
Income from discontinued operations	$	13,014		$	641	$	22,480		$	1,248

6. Share and Unit Information

On June 30, 2012, 41,101,427 common shares and 1,784,208 operating partnership units were issued and outstanding, representing a total of 42,885,635 shares and units. At June 30, 2011, 37,142,477 common shares and 1,951,819 operating partnership units were outstanding, representing a total of 39,094,296 shares and units. Additionally, we had outstanding options for the purchase of 14,457 shares of common stock at June 30, 2011. There were no outstanding options at June 30, 2012.

On July 3, 2008, we entered into a sales agreement with Cantor Fitzgerald & Co. to sell up to 1,350,000 shares of our common stock, from time to time in at-the-market offerings or negotiated transactions through a controlled equity offering program, or ATM. On November 5, 2009, we entered into another sales agreement with Cantor Fitzgerald & Co. with materially the same terms for an additional 4,000,000 shares. On August 26, 2010, we entered into sales agreements with Cantor Fitzgerald & Co., Raymond James & Associates, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated with materially the same terms as our previous ATM agreements for a combined total of 6,000,000 shares of our common stock.

During the three and six month periods ended June 30, 2011, we issued 528,674 and 1,522,473 shares of common stock, respectively, through our ATM programs for net proceeds of $34.1 million and $95.3 million. The gross proceeds for these issuances were $34.6 million and $96.8 million respectively. During the three and six month periods ended June 30, 2012, we did not issue any shares through our ATM programs. We have 1,733,526 shares remaining under our ATM program.

On March 2, 2012, we closed on an underwritten public offering of 1,955,000 shares of common stock. UBS Investment Bank and Jeffries & Company, Inc. acted as joint bookrunning managers. We received net proceeds of approximately $120 million after underwriter discounts. The gross proceeds for this offering were approximately $124.1 million.

During the three and six month periods ended June 30, 2012, we issued 209 shares and 329 shares of common stock through the optional cash purchase feature of our Dividend and Distribution Reinvestment and Share Purchase Program, or DRSPP. The issuances resulted in gross proceeds of $14,000 and $22,000. During the three and six month periods ended June 30, 2011, we issued 151 shares and 495,387 shares of common stock through the optional cash purchase feature of our DRSPP resulting in gross proceeds of approximately $10,000 and $30.0 million.

During the six months ended June 30, 2012, 15,565 shares of MAA’s common stock were acquired from employees to satisfy minimum tax withholding obligations that arose upon vesting of restricted stock granted pursuant to approved plans. During the six months ended June 30, 2011, 25,082 shares were acquired for these purposes.

7. Notes Payable

On June 30, 2012 and December 31, 2011, we had total indebtedness of approximately $1.59 billion and $1.65 billion, respectively. Our indebtedness as of June 30, 2012 consisted of both conventional and tax exempt debt. Borrowings were made through individual property mortgages as well as company-wide credit facilities. We utilize both secured and unsecured debt.

On March 1, 2012, we entered into a $150 million unsecured term loan agreement with a syndicate of banks led by Key Bank and J.P. Morgan with a variable rate resetting monthly at LIBOR plus a spread of 1.40% to 2.15% based on a leveraged based pricing grid and a maturity date of March 1, 2017. As of June 30, 2012 the full amount was outstanding under this agreement. Upon reaching an investment grade rating from either Moody's or Standard & Poor's, the variable rate will reset monthly at LIBOR plus a spread of 1.10% to 2.05% based on an investment grade ratings grid.

As of June 30, 2012, approximately 53% 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, and Financial Federal, which are credit enhanced by Freddie Mac.

We utilize interest rate swaps and interest rate caps to help manage our current and future interest rate risk and entered into 23 interest rate swaps and 18 interest rate caps as of June 30, 2012, representing notional amounts totaling $601.8 million and $256.4 million, respectively. We also held 3 non-designated interest rate caps with notional amounts totaling $14.3 million as of June 30, 2012.

The following table summarizes our outstanding debt structure as of June 30, 2012 (dollars in thousands):



	Borrowed Balance ⁽²⁾		Effective Rate		Contract Maturity
Fixed Rate Secured Debt
Individual property mortgages	$	374,738	4.8	%	8/26/2019
FNMA conventional credit facilities	50,000		4.7	%	3/31/2017
Credit facility balances with:
LIBOR-based interest rate swaps	434,000		5.2	%	1/1/2014
SIFMA-based interest rate swaps	17,800		4.4	%	10/15/2012
Total fixed rate secured debt	$	876,538	5.0	%	7/29/2016
Variable Rate Secured Debt ⁽¹⁾
FNMA conventional credit facilities	$	197,721	0.8	%	3/18/2016
FNMA tax-free credit facilities	72,715		1.0	%	7/23/2031
Freddie Mac credit facilities	64,247		0.8	%	7/1/2014
Freddie Mac mortgage	15,200		3.6	%	12/10/2015
Total variable rate secured debt	$	349,883	1.0	%	1/27/2019
Total Secured Debt	$	1,226,421	3.9	%	4/15/2017

Unsecured Debt
Variable rate credit facility	$	78,000	1.7	%	11/1/2015
Term loan fixed with swaps	150,000		2.7	%	3/1/2017
Fixed rate senior private placement bonds	135,000		5.1	%	8/23/2020
Total Unsecured Debt	$	363,000	3.4	%	3/4/2018

Total Outstanding Debt	$	1,589,421	3.8	%	6/28/2017

⁽¹⁾ Includes capped balances.

⁽²⁾Excludes borrowings on properties categorized as Assets Held for Sale on the Consolidated Balance Sheet. As of June 30, 2012 held for sale properties include a $9.1 million mortgage with a fixed interest rate of 5.9% maturing on January 1, 2044.

8. Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

We are exposed to certain risk arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future contractual and forecasted cash amounts, principally related to our borrowings, the value of which are determined by changing interest rates.

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we use interest rate swaps and interest rate caps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a

counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up front premium.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three and six months ended June 30, 2012 and 2011, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three months ended June 30, 2012 and 2011, we recorded ineffectiveness of $23,000 and $101,000, respectively, and during the six months ended June 30, 2012 and 2011, we recorded ineffectiveness of $33,000 and $96,000, respectively, as an increase to interest expense attributable to a mismatch in the underlying indices of the derivatives and the hedged interest payments made on our variable-rate debt.

During the six months ended June 30, 2012, we also had six interest rate caps with a total notional amount of $31.7 million, where only the changes in intrinsic value are recorded in accumulated other comprehensive income. Changes in fair value of these interest rate caps due to changes in time value (e.g. volatility, passage of time, etc.) are excluded from effectiveness testing and are recognized directly in earnings. During the three months ended June 30, 2012 and 2011, we recorded a loss of less than $1,000 and $3,000, respectively, and during the six months ended June 30, 2012 and 2011, we recorded a loss of less than $1,000 and a loss of $6,000, respectively, due to changes in the time value of these interest rate caps.

Amounts reported in accumulated other comprehensive income related to derivatives designated as qualifying cash flow hedges will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next twelve months, we estimate that an additional $17.3 million will be reclassified to earnings as an increase to interest expense, which primarily represents the difference between our fixed interest rate swap payments and the projected variable interest rate swap payments.

As of June 30, 2012, we had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Non-designated Hedges

Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of FASB ASC 815, Derivatives and Hedging. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and resulted in a loss of $9,000 for the three months ended June 30, 2012 and a loss of $33,000 for the six months ended June 30, 2012. We did not have any derivatives not designated as hedges for the three and six months ended June 30, 2011.

As of June 30, 2012, we had the following outstanding interest rate derivatives that were not designated as hedges:

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of our derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of June 30, 2012 and December 31, 2011, respectively:

Fair Values of Derivative Instruments on the Consolidated Balance Sheet as of June 30, 2012 and December 31, 2011 (dollars in thousands)



	Asset Derivatives					Liability Derivatives
		June 30, 2012		December 31, 2011			June 30, 2012		December 31, 2011
Derivatives designated as hedging instruments	Balance Sheet Location	Fair Value		Fair Value		Balance Sheet Location	Fair Value		Fair Value
Interest rate contracts	Other assets	$	402	$	975	Fair market value of interest rate swaps	$	27,648	$	33,095

Total derivatives designated as hedging instruments		$	402	$	975		$	27,648	$	33,095

Derivatives not designated as hedging instruments

Interest rate contracts	Other assets	$	10	$	43		$	—	$	—

Total derivatives not designated as hedging instruments		$	10	$	43		$	—	$	—

Tabular Disclosure of the Effect of Derivative Instruments on the Statements of Operations

The table below presents the effect of our derivative financial instruments on the Consolidated Statements of Operations for the three and six months ended June 30, 2012 and 2011, respectively.

Effect of Derivative Instruments on the Consolidated Statements of Operations for the

Three and Six Months Ended June 30, 2012 and 2011 (dollars in thousands)



Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Three months ended June 30,	2012			2011				2012			2011				2012			2011

Interest rate contracts	$	(3,991	)	$	(8,026	)	Interest expense	$	(4,944	)	$	(7,374	)	Interest expense	$	(23	)	$	(104	)

Total derivatives in cash flow hedging relationships	$	(3,991	)	$	(8,026	)		$	(4,944	)	$	(7,374	)		$	(23	)	$	(104	)



Six months ended June 30,

Interest rate contracts	$	(5,293	)	$	(8,203	)	Interest expense	$	(10,492	)	$	(15,012	)	Interest expense	$	(33	)	$	(102	)

Total derivatives in cash flow hedging relationships	$	(5,293	)	$	(8,203	)		$	(10,492	)	$	(15,012	)		$	(33	)	$	(102	)

Derivatives Not Designated as Hedging Instruments
Three months ended June 30,							Location of Gain or (Loss) Recognized in Income	2012			2011

Interest rate products							Interest expense	$	(9	)	$	—

Total								$	(9	)	$	—

Six months ended June 30,

Interest rate products							Interest expense	$	(33	)	$	—

Total								$	(33	)	$	—

Credit-risk-related Contingent Features

As of June 30, 2012, derivatives that were in a net liability position and subject to credit-risk-related contingent features had a termination value of $30.2 million, which includes accrued interest but excludes any adjustment for nonperformance risk. These derivatives had a fair value, gross of asset positions, of $27.6 million at June 30, 2012.

Certain of our derivative contracts contain a provision where if we default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. As of June 30, 2012, we had not breached the provisions of these agreements. If we had breached these provisions, we could have been required to settle our obligations under the agreements at their termination value of $15.2 million.

Certain of our derivative contracts contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness. As of June 30, 2012, we had not breached the provisions of these agreements. If we had breached theses provisions, we could have been required to settle our obligations under the agreements at the termination value of $2.2 million.

Certain of our derivative contracts are credit enhanced by either FNMA or Freddie Mac. These derivative contracts require that our credit enhancing party maintain credit ratings above a certain level. If our credit support providers were downgraded below Baa1 by Moody’s or BBB+ by Standard & Poor’s, or S&P, we may be required to either post 100 percent collateral or settle the obligations at their termination value of $28.0 million as of June 30, 2012. Both FNMA and Freddie Mac are currently rated Aaa by Moody’s and AA+ by S&P, and therefore, the provisions of this agreement have not been breached and no collateral has been posted related to these agreements as of June 30, 2012.

Although our derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the Consolidated Balance Sheet.

See also discussions in Item 1. Financial Statements – Notes to Consolidated Financial Statements, Note 9.

9. Fair Value Disclosure of Financial Instruments

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses and other liabilities and security deposits are carried at amounts that reasonably approximate their fair value due to their short term nature.

On January 1, 2008, we adopted Financial Accounting Standards Board, or FASB, ASC 820 Fair Value Measurements and Disclosures, or ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Fixed rate notes payable at June 30, 2012 and December 31, 2011, totaled $569 million and $538 million, respectively, and had estimated fair values of $613 million and $560 million (excluding prepayment penalties), respectively, as of June 30, 2012 and December 31, 2011. The carrying value of variable rate notes payable (excluding the effect of interest rate swap and cap agreements) at June 30, 2012 and December 31, 2011, totaled $1,030 million and $1,112 million, respectively, and had estimated fair values of $983 million and $1,053 million (excluding prepayment penalties), respectively, as of June 30, 2012 and December 31, 2011. The valuation of our debt is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each debt instrument. This analysis reflects the contractual terms of the debt, and uses observable market-based inputs, including interest rate curves and credit spreads. The fair values of fixed debt are determined by using the present value of future cash outflows discounted with the applicable current market rate plus a credit spread. The fair values of variable debt are determined using the stated variable rate plus the current market credit spread. Our variable rates reset every 30 to 90 days and we conclude that these rates reasonably estimate current market rates. We have determined that inputs used to value our debt fall within Level 2 of the fair value hierarchy and therefore our fair market valuation of debt is considered Level 2 in the fair value hierarchy.

Currently, we use interest rate swaps and interest rate caps (options) to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

To comply with the provisions of ASC 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. In conjunction with the FASB's fair value measurement guidance, we made an accounting policy election to measure the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

We have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, and as a result, all of our derivatives held as of June 30, 2012 and December 31, 2011 were classified as Level 2 of the fair value hierarchy.

The table below presents our assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2012

(dollars in thousands)



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance At
			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		June 30, 2012
Assets
Derivative financial instruments	$	—	$	412	$	—	$	412
Liabilities
Derivative financial instruments	$	—	$	27,648	$	—	$	27,648

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2011

(dollars in thousands)



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance At
			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2011
Assets
Derivative financial instruments	$	—	$	1,018	$	—	$	1,018
Liabilities
Derivative financial instruments	$	—	$	33,095	$	—	$	33,095

The fair value estimates presented herein are based on information available to management as of June 30, 2012 and December 31, 2011. These estimates are not necessarily indicative of the amounts we could ultimately realize. See also discussions in Item 1. Financial Statements – Notes to Consolidated Financial Statements, Note 8.

10. Recent Accounting Pronouncements

Impact of Recently Issued Accounting Standards

In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This ASU allows an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 is applied retrospectively. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We adopted ASU 2011-05 during the reporting period ended December 31, 2011, and this changed the presentation of our financial statements but not our consolidated financial condition or results of operations taken as a whole.

In November 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This ASU supersedes certain paragraphs in ASU 2011-05 addressing reclassification adjustments out of accumulated other comprehensive income. The effective dates and changes to our presentation are the same as noted in ASU 2011-05 above.

In May 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments change the wording, mainly for clarification, used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the Board does not intend for the amendments in this update to result in a change in the application of the requirements in Topic 820. The amendments in this ASU are to be applied prospectively. The amendments are effective during interim and annual periods beginning after December 15, 2011. We have adopted ASU 2011-04 for the interim and annual periods of fiscal year 2012. The adoption of ASU 2011-04 has not had a material impact on our consolidated financial condition or results of operations taken as a whole.

11. Subsequent Events

Real Estate Acquisitions

On July 23, 2012, we closed on the purchase of Allure at Brookwood, a 349 unit community located in Atlanta, Georgia.

Real Estate Dispositions

On July 25, 2012, we closed on the sale of the 150 unit Westbury Springs apartment community located in Lilburn, (Atlanta) Georgia.

On July 25, 2012, we closed on the sale of the 320 unit Hidden Lake apartment community located in Union City, (Atlanta) Georgia.

On July 26, 2012, we closed on the sale of the 124 unit Park Walk apartment community located in College Park, (Atlanta) Georgia.

On August 1, 2012, we closed on the sale of the 200 unit TPC Florence apartment community located in Florence, (Louisville) Kentucky.

Financing Activity

On July 26, 2012, we expanded our Key Bank line of credit from $250 million to $325 million.

On July 8, 2012, we paid off the balance of $9.1 million on the mortgage for TPC at Florence.

On July 17, 2012, we received an investment grade rating (Baa2) from Moody's rating service. This new rating, combined with the existing BBB rating from Fitch Ratings, allows the Company's unsecured credit facility and unsecured term loan to revert to a “built-in” investment grade pricing option, effectively reducing costs of outstanding borrowings between 30bps and 40bps below the pricing in effect at the end of the first quarter.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes appearing elsewhere in this report.