MAA.9.30.2013 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 September 30, 2013
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: 001-12762

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.
þ Yes  ¨ 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
November 4, 2013
Common Stock, $0.01 par value
74,776,229



MID-AMERICA APARTMENT COMMUNITIES, INC. (MAA)

TABLE OF CONTENTS

 
 
Page
 
PART I – FINANCIAL INFORMATION
 
Item 1.
Financial Statements.
 

 
Condensed Consolidated Balance Sheets as of September 30, 2013 (Unaudited) and December 31, 2012 (Unaudited).
2

 
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2013 (Unaudited) and 2012 (Unaudited).
3

 
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 (Unaudited) and 2012 (Unaudited).
4

 
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 (Unaudited) and 2012 (Unaudited).
5

 
Notes to Condensed Consolidated Financial Statements (Unaudited).
6

Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
25

Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
37

Item 4.
Controls and Procedures.
37

 
 
 
 
PART II – OTHER INFORMATION
 
Item 1.
Legal Proceedings.
38

Item 1A.
Risk Factors.
38

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
49

Item 3.
Defaults Upon Senior Securities.
49

Item 4.
Mine Safety Disclosures.
49

Item 5.
Other Information.
49

Item 6.
Exhibits.
50

 
Signatures.
51


1


MAA
Condensed Consolidated Balance Sheets
September 30, 2013 and December 31, 2012
(Unaudited)
(Dollars in thousands, except share data)
 
September 30, 2013
 
December 31, 2012
Assets:
 
 
 
Real estate assets:
 
 
 
Land
$
394,848

 
$
386,670

Buildings and improvements
3,247,874

 
3,170,413

Furniture, fixtures and equipment
102,013

 
98,044

Development and capital improvements in progress
31,595

 
52,455

 
3,776,330

 
3,707,582

Less accumulated depreciation
(1,068,873
)
 
(1,027,618
)
 
2,707,457

 
2,679,964

 
 
 
 
Land held for future development
5,450

 
1,205

Commercial properties, net
7,664

 
8,065

Investments in real estate joint ventures
3,237

 
4,837

Real estate assets, net
2,723,808

 
2,694,071

 
 
 
 
Cash and cash equivalents
181,105

 
9,075

Restricted cash
58,579

 
808

Deferred financing costs, net
13,629

 
13,842

Other assets
47,030

 
29,166

Goodwill
4,106

 
4,106

Total assets
$
3,028,257

 
$
2,751,068

 
 
 
 
Liabilities and Shareholders' Equity:
 

 
 

Liabilities:
 

 
 

Secured notes payable
$
1,050,202

 
$
1,190,848

Unsecured notes payable
810,000

 
483,000

Accounts payable
6,963

 
4,586

Fair market value of interest rate swaps
9,858

 
21,423

Accrued expenses and other liabilities
109,282

 
94,719

Security deposits
6,892

 
6,669

Total liabilities
1,993,197

 
1,801,245

 
 
 
 
Redeemable stock
5,039

 
4,713

 
 
 
 
Shareholders' equity:
 

 
 

Common stock, $0.01 par value per share, 100,000,000 shares authorized; 42,744,978 and 42,316,398 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively (1)
427

 
422

Additional paid-in capital
1,562,211

 
1,542,999

Accumulated distributions in excess of net income
(567,662
)
 
(603,315
)
Accumulated other comprehensive losses
(4,599
)
 
(26,054
)
Total MAA shareholders' equity
990,377

 
914,052

Noncontrolling interest
39,644

 
31,058

Total equity
1,030,021

 
945,110

Total liabilities and equity
$
3,028,257

 
$
2,751,068

(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 September 30, 2013 and December 31, 2012 are 80,626 and 72,786, respectively.
See accompanying notes to condensed consolidated financial statements.

2


MAA
Condensed Consolidated Statements of Operations
Three and nine months ended September 30, 2013 and 2012
(Unaudited)
(Dollars in thousands, except per share data)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2013
 
2012
 
2013
 
2012
Operating revenues:
 
 
 
 
 
 
 
Rental revenues
$
125,522

 
$
113,015

 
$
366,191

 
$
323,223

Other property revenues
10,772

 
9,966

 
31,596

 
29,084

Total property revenues
136,294

 
122,981

 
397,787

 
352,307

Management fee income
146

 
209

 
465

 
687

Total operating revenues
136,440

 
123,190

 
398,252

 
352,994

Property operating expenses:
 

 
 

 
 

 
 

Personnel
15,085

 
14,156

 
43,791

 
40,966

Building repairs and maintenance
4,595

 
4,292

 
11,661

 
11,543

Real estate taxes and insurance
16,811

 
14,167

 
48,395

 
41,085

Utilities
7,580

 
7,381

 
21,108

 
19,678

Landscaping
2,922

 
2,640

 
8,677

 
7,864

Other operating
9,160

 
8,653

 
26,758

 
24,928

Depreciation and amortization
33,000

 
30,979

 
97,883

 
89,701

Total property operating expenses
89,153

 
82,268

 
258,273

 
235,765

Acquisition expense
—

 
1,343

 
499

 
1,574

Property management expenses
5,193

 
5,460

 
15,970

 
16,484

General and administrative expenses
3,976

 
3,527

 
10,604

 
10,436

Merger related expenses
5,561

 
—

 
11,298

 
—

Integration related expenses
35

 
—

 
35

 
—

Income from continuing operations before non-operating items
32,522

 
30,592

 
101,573

 
88,735

Interest and other non-property income
16

 
89

 
86

 
343

Interest expense
(14,941
)
 
(14,530
)
 
(45,715
)
 
(42,428
)
(Loss) gain on debt extinguishment/modification
(218
)
 
—

 
(387
)
 
5

Amortization of deferred financing costs
(820
)
 
(971
)
 
(2,427
)
 
(2,611
)
Net casualty (loss) gain after insurance and other settlement proceeds
—

 
(22
)
 
455

 
(24
)
Gain on sale of non-depreciable assets
—

 
48

 
—

 
45

Income from continuing operations before gain (loss) from real estate joint ventures
16,559

 
15,206

 
53,585

 
44,065

Gain (loss) from real estate joint ventures
60

 
(72
)
 
161

 
(170
)
Income from continuing operations
16,619

 
15,134

 
53,746

 
43,895

Discontinued operations:
 

 
 

 
 

 
 

Income from discontinued operations before gain on sale
650

 
753

 
3,439

 
4,206

Net casualty (loss) gain after insurance and other settlement proceeds on discontinued operations
(1
)
 
99

 
(5
)
 
43

Gain on sale of discontinued operations
28,788

 
16,092

 
71,909

 
38,474

Consolidated net income
46,056

 
32,078

 
129,089

 
86,618

Net income attributable to noncontrolling interests
1,772

 
1,212

 
4,536

 
3,702

Net income available for MAA common shareholders
$
44,284

 
$
30,866

 
$
124,553

 
$
82,916

 
 
 
 
 
 
 
 
Earnings per common share - basic:
 

 
 

 
 

 
 

Income from continuing operations available for common shareholders
$
0.38

 
$
0.35

 
$
1.22

 
$
1.03

Discontinued property operations
0.66

 
0.39

 
1.70

 
1.01

Net income available for common shareholders
$
1.04

 
$
0.74

 
$
2.92

 
$
2.04

 
 
 
 
 
 
 
 
Earnings per share - diluted:
 

 
 

 
 

 
 

Income from continuing operations available for common shareholders
$
0.38

 
$
0.35

 
$
1.21

 
$
1.03

Discontinued property operations
0.66

 
0.39

 
1.70

 
1.00

Net income available for common shareholders
$
1.04

 
$
0.74

 
$
2.91

 
$
2.03

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.6950

 
$
0.6600

 
$
2.0850

 
$
1.9800

See accompanying notes to condensed consolidated financial statements.

3


MAA
Condensed Consolidated Statements of Comprehensive Income
Three and nine months ended September 30, 2013 and 2012
(Unaudited)
(Dollars in thousands)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2013
 
2012
 
2013
 
2012
Consolidated net income
$
46,056

 
$
32,078

 
$
129,089

 
$
86,618

Other comprehensive income:
 
 
 
 
 
 
 
Unrealized (losses) gains from the effective portion of derivative instruments
(1,826
)
 
(2,903
)
 
10,096

 
(8,197
)
Reclassification adjustment for losses included in net income for the effective portion of derivative instruments
3,621

 
4,815

 
12,098

 
15,308

Total comprehensive income
47,851

 
33,990

 
151,283

 
93,729

Less: comprehensive income attributable to noncontrolling interests
(1,830
)
 
(2,700
)
 
(5,275
)
 
(5,432
)
Comprehensive income attributable to MAA
$
46,021

 
$
31,290

 
$
146,008

 
$
88,297

 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.



4


MAA
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2013 and 2012
(Unaudited)
(Dollars in thousands)
 
Nine months ended September 30,
 
2013
 
2012
Cash flows from operating activities:
 
 
 
Consolidated net income
$
129,089

 
$
86,618

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Retail revenue accretion
(29
)
 
—

Depreciation and amortization
102,158

 
97,691

Stock compensation expense
1,729

 
1,730

Redeemable stock issued
535

 
428

Amortization of debt premium
(948
)
 
(541
)
(Gain) loss from investments in real estate joint ventures
(161
)
 
170

Loss on debt extinguishment
387

 
322

Derivative interest expense
827

 
590

Gain on sale of non-depreciable assets
—

 
(45
)
Gain on sale of discontinued operations
(71,909
)
 
(38,474
)
Net casualty gain and other settlement proceeds
(450
)
 
(19
)
Changes in assets and liabilities:
 

 
 

Restricted cash
(391
)
 
63

Other assets
(7,611
)
 
(4,569
)
Accounts payable
2,377

 
3,572

Accrued expenses and other
12,951

 
10,040

Security deposits
223

 
445

Net cash provided by operating activities
168,777

 
158,021

Cash flows from investing activities:
 

 
 

Purchases of real estate and other assets
(89,866
)
 
(314,909
)
Normal capital improvements
(35,412
)
 
(36,989
)
Construction capital and other improvements
(3,873
)

(2,561
)
Renovations to existing real estate assets
(8,616
)
 
(11,070
)
Development
(26,129
)
 
(54,242
)
Distributions from real estate joint ventures
8,311

 
11,880

Contributions to real estate joint ventures
(183
)
 
(204
)
Proceeds from disposition of real estate assets
118,783

 
97,113

Funding of escrow for exchange acquisitions
(57,380
)
 
—

Net cash used in investing activities
(94,365
)
 
(310,982
)
Cash flows from financing activities:
 

 
 

Net change in credit lines
177,000

 
(235,064
)
Proceeds from notes payable
—

 
271,000

Principal payments on notes payable
(8,695
)
 
(11,760
)
Payment of deferred financing costs
(2,655
)
 
(3,577
)
Repurchase of common stock
(682
)
 
(1,863
)
Proceeds from issuances of common shares
25,038

 
173,960

Distributions to noncontrolling interests
(3,574
)
 
(3,775
)
Dividends paid on common shares
(88,814
)
 
(79,855
)
Net cash provided by financing activities
97,618

 
109,066

Net increase (decrease) in cash and cash equivalents
172,030

 
(43,895
)
Cash and cash equivalents, beginning of period
9,075

 
57,317

Cash and cash equivalents, end of period
$
181,105

 
$
13,422

 
 
 
 
Supplemental disclosure of cash flow information:
 

 
 

Interest paid
$
48,534

 
$
47,735

Supplemental disclosure of noncash investing and financing activities:
 

 
 

Conversion of units to shares of common stock
$
550

 
$
2,672

Accrued construction in progress
$
4,190

 
$
6,392

Interest capitalized
$
1,118

 
$
1,844

Marked-to-market adjustment on derivative instruments
$
21,367

 
$
6,521

Fair value adjustment on debt assumed
$
704

 
$
2,578

Debt assumed
$
18,293

 
$
30,290

See accompanying notes to condensed consolidated financial statements.

5


MAA
Notes to Condensed Consolidated Financial Statements
September 30, 2013 and 2012
(Unaudited)


1.           Consolidation and Basis of Presentation and Significant Accounting Policies

Consolidation and Basis of Presentation

Mid-America Apartment Communities, Inc., or we, our, us, 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 September 30, 2013, we owned or owned interests in a total of 160 multifamily apartment communities comprising 48,343 apartments located in 13 states including four communities comprising 1,156 apartments owned through our joint venture, Mid-America Multifamily Fund II, LLC. We also had two development communities under construction totaling 564 units as of September 30, 2013. A total of 174 units for the development projects were completed as of September 30, 2013, and therefore have been included in the totals above. Total expected costs for the development projects are $74.0 million, of which $43.1 million has been incurred through September 30, 2013. We expect to complete construction on one of the projects by the fourth quarter of 2013 and the other by the fourth quarter of 2014. Four of our properties include retail components with approximately 107,000 square feet of gross leasable area.

Effective October 1, 2013, pursuant to the Agreement and Plan of Merger, dated as of June 3, 2013, an indirect, wholly-owned subsidiary of Mid-America Apartments, L.P., or the Operating Partnership, or MAALP, merged with and into Colonial Realty Limited Partnership, or Colonial LP, a Delaware limited partnership, with Colonial LP surviving the merger, which is referred to as the partnership merger. Immediately following the partnership merger, Colonial Properties Trust, or Colonial, an Alabama real estate investment trust, merged with and into MAA, with MAA surviving the merger, which is referred to as the parent merger. The partnership merger and parent merger are collectively referred to as the "Merger" in the Quarterly Report on Form 10-Q. The combined company will operate under the name "MAA" and will be run by our existing management team. For additional details, see Item 1. Financial Statements – Notes to Consolidated Financial Statements, Note 11. All other footnotes contained in this Form 10-Q have been prepared as of September 30, 2013.

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, 2012 annual consolidated financial statements. The consolidated financial statements presented herein include the accounts of MAA, the Operating Partnership and all other subsidiaries in which MAA has a controlling financial interest. MAA owns approximately 96% to 100% of all consolidated subsidiaries. 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 nine-month periods ended September 30, 2013 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 22, 2013. 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.

MAA invests in entities which may qualify as variable interest entities, or VIE. A VIE is a legal entity in which the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack the power to direct the activities of a legal entity as well as the obligation to absorb its expected losses or the right to receive its expected residual returns. MAA consolidates all VIEs for which it is the primary beneficiary and uses the equity method to account for investments that qualify as VIEs but for which we are not the primary beneficiary. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including but not limited to, those activities that most significantly impact the VIE's economic
performance and which party controls such activities.

MAA uses the equity method of accounting for its investments in entities for which we exercise significant influence, but do not have the ability to exercise control. These entities are not variable interest entities. The factors considered in determining

6


that MAA does not have the ability to exercise control include ownership of voting interests and participatory rights of investors.

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 nine-month periods ended September 30, 2013 and 2012, 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:

7


(dollars and shares in thousands, except per share amounts)
Three months ended September 30,
 
Nine months ended September 30,
 
2013
 
2012
 
2013
 
2012
Shares Outstanding
 
 
 
 
 
 
 
Weighted average common shares - basic
42,702

 
41,405

 
42,584

 
40,634

Weighted average partnership units outstanding
—

(1) 
1,781

 
1,709

 
1,859

Effect of unvested shares assumed
—

(1) 
35

 
53

 
74

Weighted average common shares - diluted
42,702

 
43,221

 
44,346

 
42,567

 
 
 
 
 
 
 
 
Calculation of Earnings per Share - basic
 

 
 

 
 

 
 

Income from continuing operations
$
16,619

 
$
15,134

 
$
53,746

 
$
43,895

Income from continuing operations attributable to noncontrolling interests
(645
)
 
(466
)
 
(1,535
)
 
(1,731
)
Income from continuing operations allocated to unvested restricted shares
(14
)
 
(12
)
 
(47
)
 
(39
)
Income from continuing operations available for common shareholders, adjusted
$
15,960

 
$
14,656

 
$
52,164

 
$
42,125

 
 
 
 
 
 
 
 
Income from discontinued operations
$
29,437

 
$
16,944

 
$
75,343

 
$
42,723

Income from discontinued operations attributable to noncontrolling interest
(1,127
)
 
(746
)
 
(3,001
)
 
(1,971
)
Income from discontinued operations allocated to unvested restricted shares
(24
)
 
(13
)
 
(66
)
 
(38
)
Income from discontinued operations available for common shareholders, adjusted
$
28,286

 
$
16,185

 
$
72,276

 
$
40,714

 
 
 
 
 
 
 
 
Weighted average common shares - basic
42,702

 
41,405

 
42,584

 
40,634

Earnings per share - basic
$
1.04

 
$
0.74

 
$
2.92

 
$
2.04

 
 
 
 
 
 
 
 
Calculation of Earnings per Share - diluted
 

 
 

 
 

 
 

Income from continuing operations
$
16,619

 
$
15,134

 
$
53,746

 
$
43,895

Income from continuing operations attributable to noncontrolling interests
(645
)
(1) 
—

 
—

 
—

Income from continuing operations allocated to unvested restricted shares
(14
)
(1) 
—

 
—

 
—

Income from continuing operations available for common shareholders, adjusted
$
15,960

 
$
15,134

 
$
53,746

 
$
43,895

 
 
 
 
 
 
 
 
Income from discontinued operations
$
29,437

 
$
16,944

 
$
75,343

 
$
42,723

Income from discontinued operations attributable to noncontrolling interest
(1,127
)
(1) 
—

 
—

 
—

Income from discontinued operations allocated to unvested restricted shares
(23
)
(1) 
—

 
—

 
—

Income from discontinued operations available for common shareholders, adjusted
$
28,287

 
$
16,944

 
$
75,343

 
$
42,723

 
 
 
 
 
 
 
 
Weighted average common shares - diluted
42,702

 
43,221

 
44,346

 
42,567

Earnings per share - diluted
$
1.04

 
$
0.74

 
$
2.91

 
$
2.03


(1) Operating partnership units, unvested shares assumed, and the related income with each are not included in dilutive earnings per share calculations as they were not dilutive.




8


2.           Segment Information
As of September 30, 2013, we owned or had an ownership interest in 160 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 1% 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 identified for disposition. 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. Properties in development or lease-up will be added to the same store portfolio on the first day of the calendar year after they have been owned and stabilized for at least a full 12 months. Communities are considered stabilized after achieving 90% occupancy for 90 days. Communities that have been identified for disposition are excluded from our same store portfolio. 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.

9


Revenues and NOI for each reportable segment for the three- and nine-month periods ended September 30, 2013 and 2012 were as follows (dollars in thousands):
 
Three months ended September 30,
 
Nine months ended September 30,
 
2013
 
2012
 
2013
 
2012
Revenues
 
 
 
 
 
 
 
Large Market Same Store
$
64,823

 
$
61,707

 
$
191,246

 
$
181,446

Secondary Market Same Store
52,344

 
50,904

 
155,650

 
150,869

Non-Same Store and Other
19,127

 
10,370

 
50,891

 
19,992

Total property revenues
136,294

 
122,981

 
397,787

 
352,307

Management fee income
146

 
209

 
465

 
687

Total operating revenues
$
136,440

 
$
123,190

 
$
398,252

 
$
352,994

 
 
 
 
 
 
 
 
NOI
 

 
 

 
 

 
 

Large Market Same Store
$
38,159

 
$
35,700

 
$
113,707

 
$
105,675

Secondary Market Same Store
30,349

 
29,816

 
92,547

 
89,109

Non-Same Store and Other
12,470

 
9,015

 
36,798

 
22,657

Total NOI
80,978

 
74,531

 
243,052

 
217,441

Discontinued operations NOI included above
(837
)
 
(2,839
)
 
(5,655
)
 
(11,198
)
Management fee income
146

 
209

 
465

 
687

Depreciation and amortization
(33,000
)
 
(30,979
)
 
(97,883
)
 
(89,701
)
Acquisition expense
—

 
(1,343
)
 
(499
)
 
(1,574
)
Property management expense
(5,193
)
 
(5,460
)
 
(15,970
)
 
(16,484
)
General and administrative expense
(3,976
)
 
(3,527
)
 
(10,604
)
 
(10,436
)
Merger related expenses
(5,561
)
 
—

 
(11,298
)
 
—

Integration Costs
(35
)
 
—

 
(35
)
 
—

Interest and other non-property income
16

 
89

 
86

 
343

Interest expense
(14,941
)
 
(14,530
)
 
(45,715
)
 
(42,428
)
(Loss) gain on debt extinguishment
(218
)
 
—

 
(387
)
 
5

Amortization of deferred financing costs
(820
)
 
(971
)
 
(2,427
)
 
(2,611
)
Net casualty (loss) gain after insurance and other settlement proceeds
—

 
(22
)
 
455

 
(24
)
Gain on sale of non-depreciable assets
—

 
48

 
—

 
45

Gain (loss) from real estate joint ventures
60

 
(72
)
 
161

 
(170
)
Discontinued operations
29,437

 
16,944

 
75,343

 
42,723

Net income attributable to noncontrolling interests
(1,772
)
 
(1,212
)
 
(4,536
)
 
(3,702
)
Net income attributable to MAA
$
44,284

 
$
30,866

 
$
124,553

 
$
82,916


Assets for each reportable segment as of September 30, 2013 and December 31, 2012, were as follows (dollars in thousands):
 
September 30, 2013
 
December 31, 2012
Assets
 
 
 
Large Market Same Store
$
1,265,355

 
$
1,108,827

Secondary Market Same Store
806,170

 
654,315

Non-Same Store and Other
674,432

 
949,398

Corporate assets
282,300

 
38,528

Total assets
$
3,028,257

 
$
2,751,068







10


3.          Equity

Total equity and its components for the nine-month periods ended September 30, 2013, and 2012 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, 2012
$
422

 
$
1,542,999

 
$
(603,315
)
 
$
(26,054
)
 
$
31,058

 
$
945,110

Net income
 
 
 
 
124,553

 
 
 
4,536

 
129,089

Other comprehensive income - derivative instruments (cash flow hedges)
 
 
 
 
 
 
21,455

 
739

 
22,194

Issuance and registration of common shares
4

 
25,034

 
 
 
 
 
 
 
25,038

Shares repurchased and retired
—

 
(682
)
 
 
 
 
 
 
 
(682
)
Shares issued in exchange for units
1

 
549

 
 
 
 
 
(550
)
 
—

Redeemable stock fair market value
 
 
 
 
209

 
 
 
 
 
209

Adjustment for noncontrolling interest ownership in operating partnership
 
 
(7,418
)
 
 
 
 
 
7,418

 
—

Amortization of unearned compensation
 
 
1,729

 
 
 
 
 
 
 
1,729

Dividends on common stock ($2.0850 per share)
 
 
 
 
(89,109
)
 
 
 
—

 
(89,109
)
Dividends on noncontrolling interest units ($2.0850 per unit)
 
 
 
 
 
 
 
 
(3,557
)
 
(3,557
)
EQUITY BALANCE SEPTEMBER 30, 2013
$
427

 
$
1,562,211

 
$
(567,662
)
 
$
(4,599
)
 
$
39,644

 
$
1,030,021



  
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


 


 
82,916

 


 
3,702

 
86,618

Other comprehensive income - derivative instruments (cash flow hedges)


 


 


 
5,381

 
1,730

 
7,111

Issuance and registration of common shares
28

 
173,934

 


 


 


 
173,962

Shares repurchased and retired
—

 
(1,863
)
 


 


 


 
(1,863
)
Shares issued in exchange for units
2

 
2,670

 


 


 
(2,672
)
 
—

Redeemable stock fair market value


 


 
(168
)
 


 


 
(168
)
Adjustment for noncontrolling interest ownership in operating partnership


 
(4,812
)
 


 


 
4,812

 
—

Correction of classification of equity accounts
 
 
(27,032
)
 
24,871

 
 
 
2,161

 
—

Amortization of unearned compensation


 
1,730

 


 


 


 
1,730

Dividends on common stock ($1.9800 per share)


 


 
(81,813
)
 


 
—

 
(81,813
)
Dividends on noncontrolling interest units ($1.9800 per unit)


 


 


 


 
(3,667
)
 
(3,667
)
EQUITY BALANCE SEPTEMBER 30, 2012
$
419

 
$
1,520,250

 
$
(596,027
)
 
$
(30,467
)
 
$
31,197

 
$
925,372


4.           Real Estate Acquisitions

On May 1, 2013, we purchased Greenwood Forest, a 316-unit apartment community located in Greenwood Forest (Houston), Texas. This property was previously a part of Mid-America Multifamily Fund I, LLC.

On May 21, 2013, we purchased Station Square at Cosner's Corner, a 260-unit apartment community located in Fredericksburg, Virginia. As part of this purchase, we also acquired land for future development.

We did not acquire any additional properties during the three months ended September 30, 2013.

11


5.           Discontinued Operations

The eight properties that we sold during the nine months ended September 30, 2013 as well as the nine properties sold by us during 2012 have been classified as discontinued operations in the Consolidated Statement of Operations.

The following table lists the communities classified as discontinued operations for the nine months ended September 30, 2013:

Community
Number of Units
Date Sold
Location
Operating Segment
Woodbridge at the Lake
188
May 15, 2013
Jacksonville, Florida
Large market same store
Savannahs at James Landing
256
June 13, 2013
Melbourne, Florida
Secondary market same store
High Ridge
160
June 13, 2013
Athens, Georgia
Secondary market same store
TPC Jacksonville
440
June 20, 2013
Jacksonville, Florida
Large market same store
Marsh Oaks
120
August 15, 2013
Jacksonville, Florida
Large market same store
Three Oaks
240
September 11, 2013
Valdosta, Georgia
Secondary market same store
Wildwood
216
September 11, 2013
Thomasville, Georgia
Secondary market same store
Shenandoah Ridge
272
September 30, 2013
Augusta, Georgia
Secondary market same store

During the three months ended June 30, 2013, we reported the 113-unit Fountain Lake apartment community as held for sale in the Condensed Consolidated Balance Sheet and in discontinued operations in our Condensed Consolidated Statement of Operations. As of September 30, 2013, we are no longer actively marketing this community and as a result Fountain Lake was classified as held for use and therefore is not included in the discontinued operation line in the Consolidated Statement of Operations as of September 30, 2013. Fountain Lake is valued at its carrying amount before it was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the asset been continuously classified as held for use, on the Condensed Consolidated Balance Sheet.

The following is a summary of income from continuing and discontinued operations attributable to MAA and noncontrolling interest for the three- and nine-month periods ended September 30, 2013 and 2012 (dollars in thousands):

 
Three months ended September 30,
 
Nine months ended September 30,
 
2013
 
2012
 
2013
 
2012
Income from continuing operations:
 
 
 
 
 
 
 
Attributable to MAA
$
15,974

 
$
14,668

 
$
52,211

 
$
42,164

Attributable to noncontrolling interest
645

 
466

 
1,535

 
1,731

Income from continuing operations
$
16,619

 
$
15,134

 
$
53,746

 
$
43,895

 
 
 
 
 
 
 
 
Income from discontinued operations:
 

 
 

 
 

 
 

Attributable to MAA
$
28,310

 
$
16,198

 
$
72,342

 
$
40,752

Attributable to noncontrolling interest
1,127

 
746

 
3,001

 
1,971

Income from discontinued operations
$
29,437

 
$
16,944

 
$
75,343

 
$
42,723














12


The following is a summary of discontinued operations for the three- and nine-month periods ended September 30, 2013 and 2012 (dollars in thousands):


Three months ended September 30,

Nine months ended September 30,
 
2013

2012

2013

2012
Revenues
 

 

 

 
Rental revenues
$
1,386


$
5,108


$
9,084


$
19,659

Other revenues
119


449


709


1,834

Total revenues
1,505


5,557


9,793


21,493

Expenses
 


 


 


 

Property operating expenses
680


3,073


4,147


10,702

Depreciation and amortization
110


1,421


1,856


5,401

Interest expense
65


310


351


1,184

Total expense
855


4,804


6,354


17,287

Income from discontinued operations before gain on sale
650


753


3,439


4,206

Net (loss) gain on insurance and other settlement proceeds on discontinued operations
(1
)

99


(5
)

43

Gain on sale of discontinued operations
28,788


16,092


71,909


38,474

Income from discontinued operations
$
29,437


$
16,944


$
75,343


$
42,723


6.           Share and Unit Information

On September 30, 2013, 42,744,978 shares of common stock of MAA and 1,701,955 partnership units in the Operating Partnership were issued and outstanding, representing a total of 44,446,933 shares and units. At September 30, 2012, 41,925,288 shares of common stock of MAA and 1,774,547 partnership units in the Operating Partnership were outstanding, representing a total of 43,699,835 shares and units. There were no outstanding options as of September 30, 2013 or September 30, 2012.

On August 26, 2010, we and our Operating Partnership entered into sales agreements with Cantor Fitzgerald & Co., Raymond James & Associates, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated to sell up to a combined total of 6,000,000 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. We terminated this ATM program, and on February 25, 2013, we and our Operating Partnership entered into sales agreements with J.P. Morgan Securities LLC, BMO Capital Markets Corp., KeyBanc Capital Markets Inc. and UBS Securities LLC to sell up to 4,500,000 shares of our common stock with materially the same terms as our previous sales agreements.

During the three months ended September 30, 2013, we did not issue any shares through our ATM programs. During the nine-month period ended September 30, 2013, we issued 365,011 shares through our ATM programs for net proceeds of $24.8 million and gross proceeds of $25.1 million. During the three- and nine-month periods ended September 30, 2012, we issued 812,911 shares through our ATM programs for net proceeds of $53.7 million. The gross proceeds for these issuances were $54.5 million. We have 4,134,989 shares remaining under our ATM program as of September 30, 2013.

On March 2, 2012, we closed on an underwritten public offering of 1,955,000 shares of common stock. UBS Investment Bank and Jefferies & 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. We had no such offerings during the three- and nine-month periods ended September 30, 2013.

During the three- and nine-month periods ended September 30, 2013, we issued 435 shares and 764 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 approximately $28,000 and $50,000. During the three- and nine-month periods ended September 30, 2012, we issued 122 shares and 451 shares of common stock through the optional cash purchase feature of our DRSPP resulting in gross proceeds of approximately $8,000 and $30,000.


13


During the nine months ended September 30, 2013, 4,805 shares of our 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 nine months ended September 30, 2012, 15,565 shares were acquired for these purposes.

7.           Notes Payable

On September 30, 2013 and December 31, 2012, we had total indebtedness of approximately $1.86 billion and $1.67 billion, respectively. Our indebtedness as of September 30, 2013 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, our Operating Partnership entered into a $150 million unsecured term loan agreement with a syndicate of banks led by KeyBank 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. In July 2012, we received an investment grade rating (Baa2) from Moody's rating service, which caused the variable rate to reset monthly at LIBOR plus a spread of 1.10% to 2.05% based on an investment grade ratings grid. As of September 30, 2013, the full amount was outstanding under this agreement.

On August 31, 2012, our Operating Partnership issued $175 million of Senior Unsecured Notes to be funded at three separate times. The notes were offered in a private placement with four tranches: $18 million at 3.15% maturing on November 30, 2017; $20 million at 3.61% maturing on November 30, 2019; $117 million at 4.17% maturing on November 30, 2022; and $20 million at 4.33% maturing on November 30, 2024. As of September 30, 2013, the full amount of the notes has been funded and is included in our balance sheet.

On June 14, 2013, our Operating Partnership entered into a $250 million term loan agreement with JPMorgan at a rate of LIBOR plus a spread of 1.30% on any outstanding borrowings. This agreement matures on June 14, 2014, although borrowings are only allowed to be drawn upon up until 60 days subsequent to the closing of the Merger. We had no borrowings under this agreement at September 30, 2013.

On August 7, 2013, our Operating Partnership entered into a $500 million unsecured revolving credit facility agreement with KeyBank National Association and thirteen other banks. This agreement amends our Operating Partnership's previous unsecured credit facility with KeyBank. Interest is paid using an investment grade pricing grid using LIBOR plus a spread of 0.90% to 1.70%. As of September 30, 2013, we had $350 million borrowed under this facility.

As of September 30, 2013, approximately 35% 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 Federal Home Loan Mortgage Corporation, or Freddie Mac.

We utilize interest rate swaps and interest rate caps to help manage our current and future interest rate risk and entered into 18 interest rate swaps and 12 interest rate caps as of September 30, 2013, representing notional amounts totaling $559.0 million and $224.6 million, respectively. We also held 11 non-designated interest rate caps with notional amounts totaling $63.8 million as of September 30, 2013.



















14


The following table summarizes our outstanding debt structure as of September 30, 2013 (dollars in thousands):

 
Borrowed
Balance
 
Effective
Rate
 
Contract
Maturity
Fixed Rate Secured Debt
 
 
 
 
 
Individual property mortgages
$
382,817

 
4.7
%
 
3/29/2019
FNMA conventional credit facilities
50,000

 
4.7
%
 
3/31/2017
Credit facility balances with:
 

 
 

 
 
LIBOR-based interest rate swaps
259,000

 
5.3
%
 
7/20/2014
Total fixed rate secured debt
$
691,817

 
4.9
%
 
5/4/2017
Variable Rate Secured Debt (1)
 

 
 

 
 
FNMA conventional credit facilities
$
189,721

 
0.7
%
 
12/2/2016
FNMA tax-free credit facilities
89,217

 
0.9
%
 
7/23/2031
Freddie Mac credit facilities
64,247

 
0.7
%
 
7/1/2014
Freddie Mac mortgage
15,200

 
3.6
%
 
1/1/2016
Total variable rate secured debt
$
358,385

 
0.9
%
 
2/3/2020
Total Secured Debt
$
1,050,202

 
3.5
%
 
4/12/2018
 
 
 
 
 
 
Unsecured Debt
 

 
 

 
 
Variable rate credit facility
$
350,000

 
1.3
%
 
8/7/2017
Term loan fixed with swaps
150,000

 
2.4
%
 
3/1/2017
Fixed rate senior private placement bonds
310,000

 
4.5
%
 
7/27/2021
Total Unsecured Debt
$
810,000

 
2.7
%
 
1/14/2019
 
 
 
 
 
 
Total Outstanding Debt
$
1,860,202

 
3.2
%
 
8/11/2018

(1) Includes capped balances.

8.           Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

We are exposed to certain risks 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, related cash flows and other factors.

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 nine months ended September 30, 2013 and 2012, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt and forecasted issuances of fixed-rate

15


debt.  The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three months ended September 30, 2013 and 2012, we recorded ineffectiveness of $1,000 (increase to interest expense) and $7,000 (increase to interest expense), respectively, and during the nine months ended September 30, 2013 and 2012, we recorded ineffectiveness of $26,000 (decrease to interest expense) and $40,000 (increase to interest expense), respectively, mainly attributable to a mismatch in the underlying indices of the derivatives and the hedged interest payments made on our variable-rate debt.

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 or fixed-rate debt. During the next 12 months, we estimate that an additional $8.9 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 September 30, 2013, we had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative
 
Number of Instruments
 
Notional
Interest Rate Caps
 
12
 
$
224,631,000

  Interest Rate Swaps (1)
 
18
 
$
559,000,000


(1) Includes three forward rate swaps totaling $150 million where the debt has not yet been issued. These swaps are not included in our debt discussion in MD&A or footnote 7.

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 $5,000 for the three months ended September 30, 2013 and a loss of $8,000 for the nine months ended September 30, 2013. We recorded a loss of $25,000 and $58,000 for the three and nine months ended September 30, 2012.

As of September 30, 2013, we had the following outstanding interest rate derivatives that were not designated as hedges:
Interest Rate Derivative
 
Number of Instruments
 
Notional
Interest rate caps
 
11
 
$
63,820,000






















16


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 September 30, 2013 and December 31, 2012, respectively.

Fair Values of Derivative Instruments on the Consolidated Balance Sheet as of September 30, 2013 and
December 31, 2012 (dollars in thousands)

 
 
Asset Derivatives
 
Liability Derivatives
 
 
 
 
September 30, 2013
 
December 31, 2012
 
 
 
September 30, 2013
 
December 31, 2012
Derivatives designated as hedging instruments
 
Balance Sheet Location
 
Fair Value
 
Fair Value
 
Balance Sheet Location
 
Fair Value
 
Fair Value
Interest rate contracts
 
Other assets
 
$
10,681

 
$
245

 
Fair market value of interest rate swaps
 
$
9,858

 
$
21,423

 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivatives designated as hedging instruments
 
 
 
$
10,681

 
$
245

 
 
 
$
9,858

 
$
21,423

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
Other assets
 
$
57

 
$
43

 
 
 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivatives not designated as hedging instruments
 
 
 
$
57

 
$
43

 
 
 
$
—

 
$
—





















17


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 nine months ended September 30, 2013 and 2012, respectively.

Effect of Derivative Instruments on the Consolidated Statements of Operations for the
Three and nine months ended September 30, 2013 and 2012 (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 September 30,
 
2013
 
2012
 
 
 
2013
 
2012
 
 
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
(1,826
)
 
$
(2,903
)
 
Interest expense
 
$
(3,621
)
 
$
(4,815
)
 
Interest expense
 
$
(1
)
 
$
(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivatives in cash flow hedging relationships
 
$
(1,826
)
 
$
(2,903
)
 
 
 
$
(3,621
)
 
$
(4,815
)
 
 
 
$
(1
)
 
$
(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30,
 
 

 
 

 
 
 
 

 
 

 
 
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
10,096

 
$
(8,197
)
 
Interest expense
 
$
(12,098
)
 
$
(15,308
)
 
Interest expense
 
$
26

 
$
(40
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivatives in cash flow hedging relationships
 
$
10,096

 
$
(8,197
)
 
 
 
$
(12,098
)
 
$
(15,308
)
 
 
 
$
26

 
$
(40
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives Not Designated as Hedging Instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30,
 
 
 
 
 
 
 
 
 
 
 
Location of Gain or (Loss) Recognized in Income
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
(5
)
 
$
(25
)