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

FORM 10-Q

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

For the quarterly period ended September 30, 2017March 31, 2019
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 NumberNumber: 001-12762 (Mid-America Apartment Communities, Inc.)
Commission File NumberNumber: 333-190028-01 (Mid-America Apartments, L.P.)
MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P.
(Exact name of registrant as specified in its charter)
Tennessee (Mid-America Apartment Communities, Inc.)62-1543819
Tennessee (Mid-America Apartments, L.P.)62-1543816
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 65846815 Poplar Avenue, Memphis, Tennessee,Ave., Suite 500, Germantown, TN 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) 
Securities registered pursuant to Section 12(b) of the Act:

  
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per share (Mid-America Apartment Communities, Inc.)


MAA



New York Stock Exchange



8.50% Series I Cumulative Redeemable Preferred Stock, $.01 par value per share (Mid-America Apartment Communities, Inc.)MAA^INew York Stock Exchange
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.
Mid-America Apartment Communities, Inc.
YES  ý
NO o
Mid-America Apartments, L.P.
YES  ý
NO o
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).
Mid-America Apartment Communities, Inc.
YES  ý
NO o
Mid-America Apartments, L.P.
YES  ý
NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Mid-America Apartment Communities, Inc.    
Large accelerated filer  ý
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o
 (Do not check if a smaller reporting company) 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Mid-America Apartments, L.P.    
Large accelerated filer o
Accelerated filer o
Non-accelerated filer  ý
Smaller reporting company o
Emerging growth company o
 (Do not check if a smaller reporting company) 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Mid-America Apartment Communities, Inc.
YES o
NO  ý
Mid-America Apartments, L.P.
YES o
NO  ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Mid-America Apartment Communities, Inc.Number of Shares Outstanding at
ClassOctober 23, 2017April 29, 2019
Common Stock, $0.01 par value113,627,014113,995,608


MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P.

TABLE OF CONTENTS

  Page
 PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements.
4
 
Mid-America Apartment Communities, Inc. 
 
 
Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2019 and December 31, 2016.2018.
4
 
Condensed Consolidated Statements of Operations for the Three and Nine months ended September 30, 2017March 31, 2019 and 2016.2018.
5
 
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine months ended September 30, 2017March 31, 2019 and 2016.2018.
6
 
Condensed Consolidated Statements of Cash Flows for the NineThree months ended September 30, 2017March 31, 2019 and 2016.2018.
7
Mid-America Apartments, L.P. 
 
 
Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2019 and December 31, 2016.2018.
8
 
Condensed Consolidated Statements of Operations for the Three and Nine months ended September 30, 2017March 31, 2019 and 2016.2018.
9
 
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine months ended September 30, 2017March 31, 2019 and 2016.2018.
10
 
Condensed Consolidated Statements of Cash Flows for the NineThree months ended September 30, 2017March 31, 2019 and 2016.2018.
11
 
 
Notes to Condensed Consolidated Financial Statements.
12
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
3327
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
4736
Item 4.
Controls and Procedures.
4836
   
 PART II – OTHER INFORMATION
Item 1.
Legal Proceedings.
4937
Item 1A.
Risk Factors.
4937
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
4938
Item 3.
Defaults Upon Senior Securities.
4938
Item 4.
Mine Safety Disclosures.
4938
Item 5.
Other Information.
4938
Item 6.
Exhibits.
5039
 
Signatures.
5140


Explanatory Note

This periodic report combines the Quarterly Reports on Form 10-Q or this Report, combines the quarterly reports for the quarter ended September 30, 2017March 31, 2019 of Mid-America Apartment Communities, Inc., a Tennessee corporation, and Mid-America Apartments, L.P., a Tennessee limited partnership, of which Mid-America Apartment Communities, Inc. is itsthe sole general partner. Mid-America Apartment Communities, Inc. and its 96.4%96.5% owned subsidiary, Mid-America Apartments, L.P., are both required to file periodicquarterly reports under the Securities Exchange Act of 1934, as amended.

Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to "MAA" refer only to Mid-America Apartment Communities, Inc., and not to any of its consolidated subsidiaries. Unless the context otherwise requires, all references in this Reportreport to "we," "us," "our," or the "Company" refer collectively to Mid-America Apartment Communities, Inc., together with its consolidated subsidiaries, including Mid-America Apartments, L.P. Unless the context otherwise requires, all references in this Reportreport to the "Operating Partnership" or "MAALP" refer to Mid-America Apartments, L.P., together with its consolidated subsidiaries. "Common stock" refers to the common stock of MAA, "preferred stock" refers to the preferred stock of MAA and "shareholders" meansrefers to the holders of shares of MAA’s common stock.stock or preferred stock, as applicable. The common units of limited partnership interest in the Operating Partnership are referred to as "OP Units" and the holders of the OP Units are referred to as "common unitholders".

As of September 30, 2017March 31, 2019, MAA owned 113,627,014113,916,208 OP Units (or 96.4%(96.5% of the total number of OP Units). MAA conducts substantially all of its business and holds substantially all of its assets, directly or indirectly, through the Operating Partnership, and by virtue of its ownership of the OP Units and being the Operating Partnership's sole general partner, MAA has the ability to control all of the day-to-day operations of the Operating Partnership.

We believe combining the periodic reports of MAA and the Operating Partnership, including the notes to the condensed consolidated financial statements, into this Reportreport results in the following benefits:

enhances investors' understanding of MAA and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this Reportreport applies to both MAA and the Operating Partnership; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

MAA is a multifamily focused, self-administered and self-managed real estate investment trust, or REIT.
Management operates MAA and the Operating Partnership as one business. The management of the Company is comprised of individuals who are officers of MAA and employees of the Operating Partnership. We believe it is important to understand the few differences between MAA and the Operating Partnership in the context of how MAA and the Operating Partnership operate as a consolidated company. MAA and the Operating Partnership are structured as an "umbrellaumbrella partnership REIT," or UPREIT. MAA's interest in the Operating Partnership entitles MAA to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to MAA's percentage interest therein and entitles MAA to vote on substantially all matters requiring a vote of the partners. MAA's only material asset is its ownership of limited partnership interests in the Operating Partnership;Partnership (other than cash held by MAA from time to time); therefore, MAA does not conduct business itself, other thanMAA's primary function is acting as the sole general partner of the Operating Partnership, issuing public equity from time-to-timetime to time and guaranteeing certain debt of the Operating Partnership. The Operating Partnership holds, directly or indirectly, all of ourthe real estate assets. Except for net proceeds from public equity issuances by MAA, which are contributed to the Operating Partnership in exchange for limited partnership interests, the Operating Partnership generates the capital required by the Company's business through the Operating Partnership's operations, direct or indirect incurrence of indebtedness and issuance of partnership units.OP Units.

The presentation of MAA's shareholders' equity and the Operating Partnership's capital isare the principal areaareas of difference between the consolidated financial statements of MAA and those of the Operating Partnership. MAA's shareholders' equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative distributions, noncontrolling interests, preferred units,interest, treasury shares, accumulated other comprehensive income and redeemable common units.stock. The Operating Partnership's capital may include common capital and preferred capital of the general partner (MAA), limited partners' common capital and preferred capital, limited partners' noncontrolling interests,interest, accumulated other comprehensive income and redeemable common units. Redeemable common units represent the number of outstanding limited partnership units as of the date of the applicable balance sheet, valued at the greater of the closing market price of MAA's common stock or the aggregate value of the individual partners' capital balances. Holders of OP Units (other than MAA and its entity affiliates)subsidiaries) may require the Operating Partnership to redeem their OP Units from time to time, in which case the Operating Partnership may, at its option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA’s common stock on the New York Stock Exchange, or NYSE, over a specified


period prior to the redemption date) or by delivering one share of MAA's common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.



In order to highlight the material differences between MAA and the Operating Partnership, this combined Quarterly Report on Form 10-Q includes sections that separately present and discuss areas that are materially different between MAA and the Operating Partnership, including:

the Condensed Consolidated Financial Statementscondensed consolidated financial statements in Item 1 of this Report;Quarterly Report on Form 10-Q;
certain accompanying notes to the Condensed Consolidated Financial Statements,condensed consolidated financial statements, including Note 32 - Earnings per Common Share of MAA and Note 43 - Earnings per OP Unit of MAALP; Note 54 - MAA Equity and Note 65 - MAALP Capital; and Note 108 - Shareholders' Equity of MAA and Note 119 - Partners' Capital of MAALP;
the controls and procedures in Item 4 of this Quarterly Report on Form 10-Q; and
the certifications of the Chief Executive Officer and Chief Financial Officer of MAA included as Exhibits 31 and 32 to this Report.Quarterly Report on Form 10-Q.

In the sections that combine disclosuredisclosures for MAA and the Operating Partnership, this Reportreport refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership (directly or indirectly through one of its subsidiaries) is generally the entity that enters into contracts, holds assets and issues debt, management believes this presentation is appropriate for the reasons set forth above and because the business is one enterprise, and we operate the business through the Operating Partnership. MAA, the Operating Partnership and its subsidiaries operate as one consolidated business, but MAA, the Operating Partnership and each of its subsidiaries are separate, distinct legal entities.



PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements.

Mid-America Apartment Communities, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except share and per share data)
September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
Assets:   
Assets   
Real estate assets:      
Land$1,828,637
 $1,816,008
$1,878,209
 $1,868,828
Buildings and improvements10,801,863
 10,523,762
Furniture, fixtures and equipment339,039
 298,204
Buildings and improvements and other11,730,705
 11,670,216
Development and capital improvements in progress156,938
 231,224
57,396
 59,506
13,126,477
 12,869,198
13,666,310
 13,598,550
Less accumulated depreciation(1,967,481) (1,656,071)
11,158,996
 11,213,127
Less: Accumulated depreciation(2,668,708) (2,549,287)
   10,997,602
 11,049,263
Undeveloped land57,285
 71,464
58,257
 58,257
Corporate properties, net12,367
 12,778
Investments in real estate joint ventures45,096
 44,493
Assets held for sale5,315
 —
Investment in real estate joint venture44,138
 44,181
Real estate assets, net11,279,059
 11,341,862
11,099,997
 11,151,701
      
Cash and cash equivalents47,851
 33,536
44,623
 34,259
Restricted cash80,253
 88,264
14,764
 17,414
Deferred financing costs, net3,906
 5,065
Other assets120,493
 134,525
144,378
 120,407
Goodwill1,239
 1,239
   
Total assets$11,532,801
 $11,604,491
$11,303,762
 $11,323,781
      
Liabilities and equity: 
  
Liabilities and equity 
  
Liabilities: 
  
 
  
Unsecured notes payable$3,382,861
 $3,180,624
$3,886,236
 $4,053,302
Secured notes payable1,109,973
 1,319,088
661,862
 475,026
Accounts payable17,275
 11,970
Fair market value of interest rate swaps2,602
 7,562
Accrued expenses and other liabilities439,662
 414,244
419,320
 413,850
Security deposits18,998
 18,829
Total liabilities4,971,371
 4,952,317
4,967,418
 4,942,178
      
Redeemable common stock10,804
 10,073
11,045
 9,414
      
Shareholders' equity: 
  
 
  
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized; 8.50% Series I Cumulative Redeemable Shares, liquidation preference $50 per share, 867,846 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
9
 9
Common stock, $0.01 par value per share, 145,000,000 shares authorized; 113,627,014 and 113,518,212 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively(1)
1,134
 1,133
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized; 8.50% Series I Cumulative Redeemable Shares, liquidation preference $50 per share, 867,846 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively.
9
 9
Common stock, $0.01 par value per share, 145,000,000 shares authorized; 113,916,208 and 113,844,267 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively (1)
1,137
 1,136
Additional paid-in capital7,117,829
 7,109,012
7,141,544
 7,138,170
Accumulated distributions in excess of net income(802,835) (707,479)(1,037,268) (989,263)
Accumulated other comprehensive income790
 1,144
Accumulated other comprehensive loss(3,300) (212)
Total MAA shareholders' equity6,316,927
 6,403,819
6,102,122
 6,149,840
Noncontrolling interests - operating partnership units231,393
 235,976
Noncontrolling interests - Operating Partnership units218,011
 220,043
Total Company's shareholders' equity6,548,320
 6,639,795
6,320,133
 6,369,883
Noncontrolling interests - consolidated real estate entity2,306
 2,306
Noncontrolling interests - consolidated real estate entities5,166
 2,306
Total equity6,550,626
 6,642,101
6,325,299
 6,372,189
Total liabilities and equity$11,532,801
 $11,604,491
$11,303,762
 $11,323,781
(1) 
Number of shares issued and outstanding representsrepresent total shares of common stock regardless of classification on the condensed consolidated balance sheets.Condensed Consolidated Balance Sheets. The number of shares classified as redeemable common stock on the condensed consolidated balance sheets at September 30, 2017Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 20162018 are 101,081101,025 and 103,578,98,371, respectively.
See accompanying notes to condensed consolidated financial statements.


Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share data)
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
Operating revenues:       
Rental revenues$357,619
 $254,161
 $1,064,628
 $749,153
Other property revenues26,931
 22,737
 81,621
 68,997
Total operating revenues384,550
 276,898
 1,146,249
 818,150
Property operating expenses: 
  
  
  
Personnel35,640
 27,236
 103,655
 78,290
Building repairs and maintenance12,663
 9,377
 34,287
 23,156
Real estate taxes and insurance52,597
 34,282
 160,733
 104,182
Utilities30,175
 24,690
 84,599
 69,070
Landscaping4,809
 4,021
 18,376
 15,016
Other operating13,295
 7,040
 34,771
 20,768
Depreciation and amortization117,928
 76,959
 374,285
 227,829
Total property operating expenses267,107
 183,605
 810,706
 538,311
Acquisition expenses—
 1,033
 —
 2,167
Property management expenses10,281
 7,908
 32,007
 25,221
General and administrative expenses8,361
 6,661
 30,735
 20,257
Merger related expenses128
 3,901
 3,977
 3,901
Integration related expenses4,002
 —
 10,521
 —
Income from continuing operations before non-operating items94,671
 73,790
 258,303
 228,293
Interest and other non-property income4,303
 64
 7,632
 159
Interest expense(39,940) (32,168) (115,005) (96,418)
Gain on debt extinguishment828
 —
 3,168
 3
Net casualty gain (loss) after insurance and other settlement proceeds564
 (75) 233
 738
Gain on sale of depreciable real estate assets58,844
 47,749
 59,045
 48,572
(Loss) gain on sale of non-depreciable real estate assets(6) —
 42
 2,170
Income before income tax expense119,264
 89,360
 213,418
 183,517
Income tax expense(641) (454) (1,910) (1,200)
Income from continuing operations before joint venture activity118,623
 88,906
 211,508
 182,317
Gain from real estate joint ventures335
 —
 1,021
 27
Net income118,958
 88,906
 212,529
 182,344
Net income attributable to noncontrolling interests4,249
 4,627
 7,600
 9,508
Net income available for shareholders114,709
 84,279
 204,929
 172,836
Dividends to MAA Series I preferred shareholders922
 —
 2,766
 —
Net income available for MAA common shareholders$113,787
 $84,279
 $202,163
 $172,836
        
Earnings per common share - basic:   
  
  
Net income available for common shareholders$1.00
 $1.12
 $1.78
 $2.29
        
Earnings per common share - diluted: 
  
  
  
Net income available for common shareholders$1.00
 $1.12
 $1.78
 $2.29
        
Dividends declared per common share$0.87
 $0.82
 $2.61
 $2.46
 Three months ended March 31,
 2019 2018
Revenues:   
Rental and other property revenues$401,178
 $386,017
Expenses: 
  
Operating expense, excluding real estate taxes and insurance89,793
 89,148
Real estate taxes and insurance59,584
 55,256
Depreciation and amortization122,789
 120,744
Total property operating expenses272,166
 265,148
Property management expenses13,842
 12,880
General and administrative expenses13,153
 10,132
Merger and integration related expenses—
 3,799
Interest expense45,700
 40,905
Loss on sale of depreciable real estate assets13
 —
Gain on sale of non-depreciable real estate assets(8,963) (150)
Other non-operating (income) expense(935) 2,341
Income before income tax expense66,202
 50,962
Income tax expense(641) (640)
Income from continuing operations before real estate joint venture activity65,561
 50,322
Income from real estate joint venture397
 498
Net income65,958
 50,820
Net income attributable to noncontrolling interests2,298
 1,801
Net income available for shareholders63,660
 49,019
Dividends to MAA Series I preferred shareholders922
 922
Net income available for MAA common shareholders$62,738
 $48,097
    
Earnings per common share - basic:   
Net income available for MAA common shareholders$0.55
 $0.42
    
Earnings per common share - diluted: 
  
Net income available for MAA common shareholders$0.55
 $0.42

See accompanying notes to condensed consolidated financial statements.


Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(Dollars in thousands)
Three months ended September 30, Nine months ended September 30,Three months ended March 31,
2017 2016 2017 20162019 2018
Net income$118,958
 $88,906
 $212,529
 $182,344
$65,958
 $50,820
Other comprehensive income:          
Unrealized gain (loss) from the effective portion of derivative instruments90
 1,179
 (1,252) (3,840)
Reclassification adjustment for net (gains) losses included in net income for the effective portion of derivative instruments(33) 1,042
 884
 3,359
Unrealized (loss) gain from derivative instruments(2,456) 832
Adjustment for net gains reclassified into net income from derivative instruments(745) (193)
Total comprehensive income119,015
 91,127
 212,161
 181,863
62,757
 51,459
Less: comprehensive income attributable to noncontrolling interests(4,251) (4,743) (7,586) (9,483)
Less: Comprehensive income attributable to noncontrolling interests(2,185) (1,830)
Comprehensive income attributable to MAA$114,764
 $86,384
 $204,575
 $172,380
$60,572
 $49,629
          
          
See accompanying notes to condensed consolidated financial statements.





Mid-America Apartment Communities, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Nine months ended September 30,Three months ended March 31,
2017 20162019 2018
Cash flows from operating activities:      
Net income$212,529
 $182,344
$65,958
 $50,820
Adjustments to reconcile net income to net cash provided by operating activities: 
  
 
  
Retail revenue accretion(292) (130)
Depreciation and amortization374,947
 228,073
123,082
 121,361
Loss on sale of depreciable real estate assets13
 —
Gain on sale of non-depreciable real estate assets(8,963) (150)
Stock compensation expense8,431
 5,977
4,785
 4,024
Redeemable stock expense489
 412
Amortization of debt premium and debt issuance costs(8,035) (7,546)1,747
 (1,569)
Gain from investments in real estate joint ventures(1,021) (27)
Gain on debt extinguishment(4,753) —
Derivative interest credit(9,298) (1,883)
Settlement of forward swaps(1,547) —
Gain on sale of non-depreciable real estate assets(42) (2,170)
Gain on sale of depreciable real estate assets(59,045) (48,572)
Net casualty gain and other settlement proceeds(233) (738)
Changes in assets and liabilities: 
  
Restricted cash(2,580) (4,955)
Other assets(6,264) (501)
Accounts payable5,305
 3,158
Accrued expenses and other44,353
 35,183
Security deposits164
 597
Net change in operating accounts and other(31,944) (21,782)
Net cash provided by operating activities553,108
 389,222
154,678
 152,704
   
Cash flows from investing activities: 
  
 
  
Purchases of real estate and other assets(63,774) (262,268)(13,595) —
Normal capital improvements(82,030) (65,351)
Construction capital and other improvements(7,171) (5,569)
Renovations to existing real estate assets(36,692) (29,554)
Development(142,530) (42,611)
Capital improvements, development and other(53,214) (51,775)
Distributions from real estate joint ventures—
 1,823
43
 —
Contributions to joint ventures(750) —
Contributions to affiliates—
 (750)
Proceeds from disposition of real estate assets90,040
 187,425
13,882
 5,860
Return of escrow for future acquisitions10,591
 —
Net cash used in investing activities(232,316) (216,105)(52,884) (46,665)
   
Cash flows from financing activities: 
  
 
  
Net change in credit lines(240,000) 130,000
Proceeds from lines of credit145,000
 150,000
Repayments of lines of credit(610,000) (110,000)
Proceeds from notes payable597,480
 —
490,435
 —
Principal payments on notes payable(345,053) (114,753)(1,847) (41,042)
Payment of deferred financing costs(5,355) (141)(4,705) —
Repurchase of common stock(4,782) (1,811)
Proceeds from issuances of common shares1,007
 (216)
Exercise of stock options432
 —
Distributions to noncontrolling interests(10,999) (10,234)(3,947) (3,865)
Dividends paid on common shares(296,441) (185,704)(109,324) (104,876)
Dividends paid on preferred shares(2,766) —
(922) (922)
Net change in other financing activities1,230
 (2,091)
Net cash used in financing activities(306,477) (182,859)(94,080) (112,796)
Net increase (decrease) in cash and cash equivalents14,315
 (9,742)
Cash and cash equivalents, beginning of period33,536
 37,559
Cash and cash equivalents, end of period$47,851
 $27,817
   
Net increase (decrease) in cash, cash equivalents and restricted cash7,714
 (6,757)
Cash, cash equivalents and restricted cash, beginning of period51,673
 88,867
Cash, cash equivalents and restricted cash, end of period$59,387
 $82,110
   
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:
Reconciliation of cash, cash equivalents and restricted cash:   
Cash and cash equivalents$44,623
 $59,706
Restricted cash14,764
 22,404
Total cash, cash equivalents and restricted cash$59,387
 $82,110
      
Supplemental disclosure of cash flow information: 
  
 
  
Interest paid$123,735
 $96,271
$18,322
 $24,889
Income taxes paid$2,256
 $1,571
59
 2,522
   
Supplemental disclosure of noncash investing and financing activities: 
  
 
  
Conversion of OP Units to shares of common stock$1,133
 $780
$336
 $2,780
Accrued construction in progress$15,787
 $8,742
15,155
 14,640
Interest capitalized$5,884
 $1,095
388
 795
Mark-to-market adjustment on derivative instruments$12,035
 $1,402
3,633
 (1,363)
See accompanying notes to condensed consolidated financial statements.



Mid-America Apartments, L.P.
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except unit data)
 September 30, 2017 December 31, 2016
Assets:   
Real estate assets:   
Land$1,828,637
 $1,816,008
Buildings and improvements10,801,863
 10,523,762
Furniture, fixtures and equipment339,039
 298,204
Development and capital improvements in progress156,938
 231,224
 13,126,477
 12,869,198
Less accumulated depreciation(1,967,481) (1,656,071)
 11,158,996
 11,213,127
    
Undeveloped land57,285
 71,464
Corporate properties, net12,367
 12,778
Investments in real estate joint ventures45,096
 44,493
Assets held for sale5,315
 —
Real estate assets, net11,279,059
 11,341,862
    
Cash and cash equivalents47,851
 33,536
Restricted cash80,253
 88,264
Deferred financing costs, net3,906
 5,065
Other assets120,493
 134,525
Goodwill1,239
 1,239
Total assets$11,532,801
 $11,604,491
    
Liabilities and Capital: 
  
Liabilities: 
  
Unsecured notes payable$3,382,861
 $3,180,624
Secured notes payable1,109,973
 1,319,088
Accounts payable17,275
 11,970
Fair market value of interest rate swaps2,602
 7,562
Accrued expenses and other liabilities439,662
 414,244
Security deposits18,998
 18,829
Due to general partner19
 19
Total liabilities4,971,390
 4,952,336
    
Redeemable common units10,804
 10,073
    
Operating Partnership Capital: 
  
Preferred Units: 867,846 Preferred Units outstanding at September 30, 2017 and at December 31, 201666,840
 64,833
Common Units:   
General partner: 113,627,014 OP Units outstanding at September 30, 2017 and 113,518,212 OP Units outstanding at December 31, 2016 (1)
6,249,190
 6,337,721
Limited partners: 4,200,032 OP Units outstanding at September 30, 2017 and 4,220,403 OP Units outstanding at December 31, 2016 (1)
231,393
 235,976
Accumulated other comprehensive income878
 1,246
Total operating partners' capital6,548,301
 6,639,776
Noncontrolling interests - consolidated real estate entity2,306
 2,306
Total capital6,550,607
 6,642,082
Total liabilities and capital$11,532,801
 $11,604,491
 March 31, 2019 December 31, 2018
Assets   
Real estate assets:   
Land$1,878,209
 $1,868,828
Buildings and improvements and other11,730,705
 11,670,216
Development and capital improvements in progress57,396
 59,506
 13,666,310
 13,598,550
Less: Accumulated depreciation(2,668,708) (2,549,287)
 10,997,602
 11,049,263
Undeveloped land58,257
 58,257
Investment in real estate joint venture44,138
 44,181
Real estate assets, net11,099,997
 11,151,701
    
Cash and cash equivalents44,623
 34,259
Restricted cash14,764
 17,414
Other assets144,378
 120,407
Total assets$11,303,762
 $11,323,781
    
Liabilities and capital 
  
Liabilities: 
  
Unsecured notes payable$3,886,236
 $4,053,302
Secured notes payable661,862
 475,026
Accrued expenses and other liabilities419,320
 413,850
Due to general partner19
 19
Total liabilities4,967,437
 4,942,197
    
Redeemable common units11,045
 9,414
    
Operating Partnership capital: 
  
Preferred units, 867,846 preferred units outstanding as of March 31, 2019 and December 31, 2018, respectively66,840
 66,840
Common units:   
General partner, 113,916,208 and 113,844,267 OP Units outstanding as of March 31, 2019 and December 31, 2018, respectively (1)
6,038,625
 6,083,142
Limited partners, 4,105,171 and 4,111,301 OP Units outstanding as of March 31, 2019 and December 31, 2018, respectively (1)
218,011
 220,043
Accumulated other comprehensive loss(3,362) (161)
Total operating partners' capital6,320,114
 6,369,864
Noncontrolling interests - consolidated real estate entities5,166
 2,306
Total capital6,325,280
 6,372,170
Total liabilities and capital$11,303,762
 $11,323,781
(1) 
Number of units outstanding representsrepresent total OP Units regardless of classification on the condensed consolidated balance sheets.Condensed Consolidated Balance Sheets. The number of OP Unitsunits classified as redeemable common units on the condensed consolidated balance sheets at September 30, 2017Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 20162018 are 101,081101,025 and 103,578,98,371, respectively.
See accompanying notes to condensed consolidated financial statements.


Mid-America Apartments, L.P.
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per unit data)
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
Operating revenues:       
Rental revenues$357,619
 $254,161
 $1,064,628
 $749,153
Other property revenues26,931
 22,737
 81,621
 68,997
Total operating revenues384,550
 276,898
 1,146,249
 818,150
Property operating expenses: 
  
  
  
Personnel35,640
 27,236
 103,655
 78,290
Building repairs and maintenance12,663
 9,377
 34,287
 23,156
Real estate taxes and insurance52,597
 34,282
 160,733
 104,182
Utilities30,175
 24,690
 84,599
 69,070
Landscaping4,809
 4,021
 18,376
 15,016
Other operating13,295
 7,040
 34,771
 20,768
Depreciation and amortization117,928
 76,959
 374,285
 227,829
Total property operating expenses267,107
 183,605
 810,706
 538,311
Acquisition expenses—
 1,033
 —
 2,167
Property management expenses10,281
 7,908
 32,007
 25,221
General and administrative expenses8,361
 6,661
 30,735
 20,257
Merger related expenses128
 3,901
 3,977
 3,901
Integration related expenses4,002
 —
 10,521
 —
Income from continuing operations before non-operating items94,671
 73,790
 258,303
 228,293
Interest and other non-property income4,303
 64
 7,632
 159
Interest expense(39,940) (32,168) (115,005) (96,418)
Gain on debt extinguishment828
 —
 3,168
 3
Net casualty gain (loss) after insurance and other settlement proceeds564
 (75) 233
 738
Gain on sale of depreciable real estate assets58,844
 47,749
 59,045
 48,572
(Loss) gain on sale of non-depreciable real estate assets(6) —
 42
 2,170
Income before income tax expense119,264
 89,360
 213,418
 183,517
Income tax expense(641) (454) (1,910) (1,200)
Income from continuing operations before joint venture activity118,623
 88,906
 211,508
 182,317
Gain from real estate joint ventures335
 —
 1,021
 27
Net income118,958
 88,906
 212,529
 182,344
Dividends to preferred unitholders922
 —
 2,766
 —
Net income available for Mid-America Apartments, L.P. common unitholders$118,036
 $88,906
 $209,763
 $182,344
        
Earnings per common unit - basic:     
  
Net income available for common unitholders$1.00
 $1.12
 $1.78
 $2.29
        
Earnings per common unit - diluted:     
  
Net income available for common unitholders$1.00
 $1.12
 $1.78
 $2.29
        
Distributions declared per common unit$0.87
 $0.82
 $2.61
 $2.46
 Three months ended March 31,
 2019 2018
Revenues:   
Rental and other property revenues$401,178
 $386,017
Expenses: 
  
Operating expense, excluding real estate taxes and insurance89,793
 89,148
Real estate taxes and insurance59,584
 55,256
Depreciation and amortization122,789
 120,744
Total property operating expenses272,166
 265,148
Property management expenses13,842
 12,880
General and administrative expenses13,153
 10,132
Merger and integration related expenses—
 3,799
Interest expense45,700
 40,905
Loss on sale of depreciable real estate assets13
 —
Gain on sale of non-depreciable real estate assets(8,963) (150)
Other non-operating (income) expense(935) 2,341
Income before income tax expense66,202
 50,962
Income tax expense(641) (640)
Income from continuing operations before real estate joint venture activity65,561
 50,322
Income from real estate joint venture397
 498
Net income65,958
 50,820
Dividends to preferred unitholders922
 922
Net income available for MAALP common unitholders$65,036
 $49,898
    
Earnings per common unit - basic:   
Net income available for MAALP common unitholders$0.55
 $0.42
    
Earnings per common unit - diluted:   
Net income available for MAALP common unitholders$0.55
 $0.42

See accompanying notes to condensed consolidated financial statements.


Mid-America Apartments, L.P.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(Dollars in thousands)
Three months ended September 30, Nine months ended September 30,Three months ended March 31,
2017 2016 2017 20162019 2018
Net income$118,958
 $88,906
 $212,529
 $182,344
$65,958
 $50,820
Other comprehensive income:          
Unrealized gain (loss) from the effective portion of derivative instruments90
 1,179
 (1,252) (3,840)
Reclassification adjustment for net (gains) losses included in net income for the effective portion of derivative instruments(33) 1,042
 884
 3,359
Comprehensive income attributable to Mid-America Apartments, L.P.$119,015
 $91,127
 $212,161
 $181,863
Unrealized (loss) gain from derivative instruments(2,456) 832
Adjustment for net gains reclassified into net income from derivative instruments

(745) (193)
Comprehensive income attributable to MAALP$62,757
 $51,459
          
          
See accompanying notes to condensed consolidated financial statements.



Mid-America Apartments, L.P.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Nine months ended September 30,Three months ended March 31,
2017 20162019 2018
Cash flows from operating activities:      
Net income$212,529
 $182,344
$65,958
 $50,820
Adjustments to reconcile net income to net cash provided by operating activities: 
  
 
  
Retail revenue accretion(292) (130)
Depreciation and amortization374,947
 228,073
123,082
 121,361
Loss on sale of depreciable real estate assets13
 —
Gain on sale of non-depreciable real estate assets(8,963) (150)
Stock compensation expense8,431
 5,977
4,785
 4,024
Redeemable units expense489
 412
Amortization of debt premium and debt issuance costs(8,035) (7,546)1,747
 (1,569)
Gain from investments in real estate joint ventures(1,021) (27)
Gain on debt extinguishment(4,753) —
Derivative interest credit(9,298) (1,883)
Settlement of forward swaps(1,547) —
Gain on sale of non-depreciable real estate assets(42) (2,170)
Gain on sale of depreciable real estate assets(59,045) (48,572)
Net casualty gain and other settlement proceeds(233) (738)
Changes in assets and liabilities:   
Restricted cash(2,580) (4,955)
Other assets(6,264) (501)
Accounts payable5,305
 3,158
Accrued expenses and other44,353
 35,183
Security deposits164
 597
Net change in operating accounts and other(31,944) (21,782)
Net cash provided by operating activities553,108
 389,222
154,678
 152,704
   
Cash flows from investing activities: 
  
 
  
Purchases of real estate and other assets(63,774) (262,268)(13,595) —
Normal capital improvements(82,030) (65,351)
Construction capital and other improvements(7,171) (5,569)
Renovations to existing real estate assets(36,692) (29,554)
Development(142,530) (42,611)
Capital improvements, development and other(53,214) (51,775)
Distributions from real estate joint ventures—
 1,823
43
 —
Contributions to joint ventures(750) —
Contributions to affiliates—
 (750)
Proceeds from disposition of real estate assets90,040
 187,425
13,882
 5,860
Return of escrow for future acquisitions10,591
 —
Net cash used in investing activities(232,316) (216,105)(52,884) (46,665)
   
Cash flows from financing activities: 
  
 
  
Net change in credit lines(240,000) 130,000
Proceeds from lines of credit145,000
 150,000
Repayments of lines of credit(610,000) (110,000)
Proceeds from notes payable597,480
 —
490,435
 —
Principal payments on notes payable(345,053) (114,753)(1,847) (41,042)
Payment of deferred financing costs(5,355) (141)(4,705) —
Repurchase of common units(4,782) (1,811)
Proceeds from issuances of common units1,007
 (216)
Exercise of unit options432
 —
Distributions paid on common units(307,440) (195,938)(113,271) (108,741)
Distributions paid on preferred units(2,766) —
(922) (922)
Net change in other financing activities1,230
 (2,091)
Net cash used in financing activities(306,477) (182,859)(94,080) (112,796)
Net increase (decrease) in cash and cash equivalents14,315
 (9,742)
Cash and cash equivalents, beginning of period33,536
 37,559
Cash and cash equivalents, end of period$47,851
 $27,817
   
Net increase (decrease) in cash, cash equivalents and restricted cash7,714
 (6,757)
Cash, cash equivalents and restricted cash, beginning of period51,673
 88,867
Cash, cash equivalents and restricted cash, end of period$59,387
 $82,110
   
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:
Reconciliation of cash, cash equivalents and restricted cash:   
Cash and cash equivalents$44,623
 $59,706
Restricted cash14,764
 22,404
Total cash, cash equivalents and restricted cash$59,387
 $82,110
      
Supplemental disclosure of cash flow information: 
  
 
  
Interest paid$123,735
 $96,271
$18,322
 $24,889
Income taxes paid$2,256
 $1,571
59
 2,522
   
Supplemental disclosure of noncash investing and financing activities:      
Accrued construction in progress$15,787
 $8,742
$15,155
 $14,640
Interest capitalized$5,884
 $1,095
388
 795
Mark-to-market adjustment on derivative instruments$12,035
 $1,402
3,633
 (1,363)

See accompanying notes to condensed consolidated financial statements.


Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.
Notes to Condensed Consolidated Financial Statements
September 30, 2017 and 2016
(Unaudited)

1.           Basis of Presentation and Principles of Consolidation and Significant Accounting Policies

Unless the context otherwise requires, all references to "we," "us," "our," or the "Company" refer collectively to Mid-America Apartment Communities, Inc., together with its consolidated subsidiaries, including Mid-America Apartments, L.P. Unless the context otherwise requires, all references to "MAA" refer only to Mid-America Apartment Communities, Inc., and not any of its consolidated subsidiaries. Unless the context otherwise requires, allthe references to the "Operating Partnership" or "MAALP" refer to Mid-America Apartments, L.P., together with its consolidated subsidiaries. "Common stock" refers to the common stock of MAA and, unless the context otherwise requires, "shareholders" meansrefers to the holders of shares of MAA’s common stock. The common units of limited partnership interests in the Operating Partnership are referred to as "OP Units," and the holders of the OP Units are referred to as "common unitholders".

As of September 30, 2017,March 31, 2019, MAA owned 113,627,014113,916,208 OP Units (or 96.4%96.5% of the total number of OP Units). MAA conducts substantially all of its business and holds substantially all of its assets, directly or indirectly, through the Operating Partnership, and by virtue of its ownership of the OP Units and being the Operating Partnership's sole general partner, MAA has the ability to control all of the day-to-day operations of the Operating Partnership.

We believeManagement believes combining the notes to the condensed consolidated financial statements of MAA and MAALPthe Operating Partnership results in the following benefits:

enhances a readers' understanding of MAA and the Operating Partnership by enabling the reader to view the business as a whole in the same manner that management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both MAA and the Operating Partnership; and
creates time and cost efficiencies through the preparation of one combined reportset of notes instead of two separate reportssets.

MAA is a multifamily focused, self-administered and self-managed real estate investment trust, or REIT. Management operates MAA and the Operating Partnership as one business. The management of the Company is comprised of individuals who are officers of MAA and employees of the Operating Partnership. We believeManagement believes it is important to understand the few differences between MAA and the Operating Partnership in the context of how MAA and the Operating Partnership operate as a consolidated company. MAA and the Operating Partnership are structured as an "umbrellaumbrella partnership REIT," or UPREIT. MAA's interest in the Operating Partnership entitles MAA to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to MAA's percentage interest therein and entitles MAA to vote on substantially all matters requiring a vote of the partners. MAA's only material asset is its ownership of limited partnerpartnership interests in the Operating Partnership;Partnership (other than cash held by MAA from time to time); therefore, MAA does not conduct business itself, other thanMAA's primary function is acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. The Operating Partnership holds, directly or indirectly, all of ourthe Company's real estate assets. Except for net proceeds from public equity issuances by MAA, which are contributed to the Operating Partnership in exchange for OP Units,limited partnership interests, the Operating Partnership generates the capital required by ourthe business through the Operating Partnership's operations, direct or indirect incurrence of indebtedness and issuance of OP units.Units.

The presentationpresentations of MAA's shareholders' equity and the Operating Partnership's capital isare the principal areaareas of difference between the condensed consolidated financial statements of MAA and those of the Operating Partnership. MAA's shareholders' equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative distributions, noncontrolling interests, preferred units,interest, treasury shares, accumulated other comprehensive income and redeemable common units.stock. The Operating Partnership's capital may include common capital and preferred capital of the general partner (MAA), limited partners' common capital and preferred capital, limited partners' noncontrolling interests,interest, accumulated other comprehensive income and redeemable common units. Redeemable common units represent the number of outstanding OP Units as of the date of the applicable balance sheet, valued at the greater of the closing market price of MAA's common stock or the aggregate value of the individual partners' capital balances. Holders of OP Units (other than MAA and its corporate affiliates)subsidiaries) may require the Operating Partnership to redeem their OP Units from time to time, in which case the Operating Partnership may, at its option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA's common stock on the New York Stock Exchange, or NYSE, over a specified period prior to the redemption date) or by delivering one share of MAA's common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.





Organization of Mid-America Apartment Communities, Inc.

On December 1, 2016, MAA completed a merger with Post Properties, Inc., or Post Properties. Pursuant toThe Company owns, operates, acquires and selectively develops apartment communities primarily located in the AgreementSoutheast, Southwest and Plan of Merger, or the Merger Agreement, Post Properties merged with and into MAA, with MAA continuing as the surviving corporation, or the Parent Merger, and Post Apartment Homes, L.P, or Post LP, merged with and into MAALP, with MAALP continuing as the surviving entity, or the Partnership Merger. We refer to the Parent Merger, together with the Partnership Merger, as the Merger in this Report. Under the termsMid-Atlantic regions of the Merger Agreement, each share of Post Properties common stock was converted into the right to receive 0.71 of a newly issued share of MAA common stock, including the right, if any, to receive cash in lieu of fractional shares of MAA common stock. In addition, each limited partner interest in Post LP designated as a "Class A Unit" automatically converted into the right to receive 0.71 of a newly issued partnership unit of MAALP. Also, each share of Post Properties' 8 1/2% Series A Cumulative Redeemable Preferred Stock, which we refer to as the Post Properties Series A preferred stock, was automatically converted into the right to receive one newly issued share of MAA's 8.50% Series I Cumulative Redeemable Preferred Stock, $0.01 par value per share, which we refer to as MAA Series I preferred stock. Each newly issued share of MAA Series I preferred stock has substantially the same rights, preferences, privileges, and voting powers as those of the Post Properties Series A preferred stock.
United States.  As of September 30, 2017, weMarch 31, 2019, the Company owned and operated 302303 apartment communities comprising99,612 apartment units located in 17 states, through the Operating Partnership. As of September 30, 2017, we also owned a 35.0%Partnership and its subsidiaries and had an ownership interest in one apartment community through an unconsolidated real estate joint venture and a 32.0% interest in an unconsolidated limited partnership.venture. As of September 30, 2017, weMarch 31, 2019, the Company had five development communities under construction totaling1,434 1,090 apartment units. Total expected costs for thethese five development projects are $305.0$230.5 million, of which $235.3$59.5 million hashad been incurred through September 30, 2017. We expectMarch 31, 2019. The Company expects to complete construction on two projects bydevelopments in the fourth quartersecond half of 2017,2019, one project bydevelopment in the first quarterhalf of 2018,2020, one project bydevelopment in the third quartersecond half of 2018,2020 and one project bydevelopment in the fourth quarterfirst half of 2018. Twenty-nine2021. Thirty of our multifamily propertiesthe Company's apartment communities include retail components with approximately 600,000615,000 square feet of gross leasable area. Wespace. The Company also havehas four wholly-owned commercial properties which we acquired through the Merger, with approximately 232,000260,000 square feet of combined gross leasable area. The Company’s apartment communities and commercial properties are located across 17 states and the District of Columbia.

Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statementscondensed consolidated financial statements have been prepared by ourthe Company's management in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or the SEC. The Condensed Consolidated Financial Statementscondensed consolidated financial statements of MAA presented herein include the accounts of MAA, the Operating Partnership and all other subsidiaries in which MAA has a controlling financial interest. MAA owns, directly or indirectly, approximately 92.5%80% to 100% of all consolidated subsidiaries, including the Operating Partnership. The Condensed Consolidated Financial Statementscondensed consolidated financial statements of MAALP presented herein include the accounts of MAALP and all other subsidiaries in which MAALP has a controlling financial interest. MAALP owns, directly or indirectly, 92.5%80% to 100% of all consolidated subsidiaries. In ourmanagement's opinion, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statementscondensed 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.
 
We investThe Company invests in entities which may qualify as variable interest entities, or VIEs, and MAALP is considered a 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. MAALP is classified as a VIE, since the limited partners lack substantive kick-out rights and substantive participating rights. We consolidateThe Company consolidates all VIEs for which we areit is the primary beneficiary and useuses the equity method to account for investments that qualify as VIEs but for which we areit is not the primary beneficiary. In determining whether we arethe Company is the primary beneficiary of a VIE, we considermanagement considers both 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.

We use The Company uses the equity method of accounting for ourits investments in entities for which we exercisethe Company exercises significant influence, but dodoes not have the ability to exercise control. The factors considered in determining that we do not havewhether the Company has the ability to exercise control include ownership of voting interests and participatory rights of investors (see "Investment"Investments in Unconsolidated Real Estate Joint Ventures"Affiliates" below).

Changes in Presentation

In an effort to simplify the Company's presentation of cash flows from financing activities within the condensed consolidated statements of cash flows, the Company combined "Repurchase of common stock"; "Debt prepayment and extinguishment costs"; "Proceeds from issuances of common shares"; and "Exercise of stock options" into one line, "Net change in other financing activities" within the cash flows from financing activities section. No presentation changes were made to the cash flows from operating or investing activities sections of the condensed consolidated statements of cash flows. Prior year amounts have been changed to conform to the Company's current year presentation. These changes in presentation had no effect on the Company's ending cash, cash equivalents and restricted cash balances and did not impact the classification of cash flows between operating, investing and financing activities.
Noncontrolling Interests

At September 30, 2017,As of March 31, 2019, the Company had two types of noncontrolling interests with respect to its consolidated subsidiaries, (1) noncontrolling interests related to the common unitholders of theits Operating Partnership (see Note 11)below) and (2) noncontrolling interestsinterest related to its consolidated real estate entities (see "Investment in Consolidated Real Estate Joint Ventures"Entities" below). The noncontrolling interests in the accompanying condensed consolidated financial statements relating to the limited partnership interests in the Operating Partnership are owned by the holders of the Class A OP Units. MAA is the sole general partner of the


InvestmentOperating Partnership and holds all of the outstanding Class B OP Units. Net income (after allocations to preferred ownership interests) is allocated to MAA and the noncontrolling interests based on their respective ownership percentages of the Operating Partnership. Issuance of additional Class A OP Units or Class B OP Units changes the ownership percentage of both the noncontrolling interests and MAA. The issuance of Class B OP Units generally occurs when MAA issues common stock and the issuance proceeds are contributed to the Operating Partnership in exchange for Class B OP Units equal to the number of shares of MAA's common stock issued. At each reporting period, the allocation between total MAA shareholders’ equity and noncontrolling interests is adjusted to account for the change in the respective percentage ownership of the underlying equity of the Operating Partnership. MAA’s Board of Directors established economic rights in respect to each Class A OP Unit that were equivalent to the economic rights in respect to each share of MAA common stock. See Note 9 for additional details.

Investments in Unconsolidated Joint VenturesAffiliates

Immediately prior to the effective date of the Merger, Post Properties together with other institutional investors,Through its investment in a limited liability company, or the Apartment LLC, ownedthe Company together with an institutional investor indirectly owns one apartment community, Post Massachusetts Avenue, located in Washington, D.C.  Post Properties hadThe Company owned a 35.0% equity interest in thisthe unconsolidated real estate joint venture which we retained immediately following the effectiveness of the Merger and as of September 30, 2017. We provideMarch 31, 2019 and provides property and asset management services to the Apartment LLC for which we earnit earns fees.

This The joint venture was determined to be a VIE, but we arethe Company is not designated as a primary beneficiary. As a result, we accountthe Company accounts for ourits investment in the Apartment LLC using the equity method of accounting as we arethe Company is able to exert significant influence over the joint venture but dodoes not have a controlling interest in this joint venture.  At September 30, 2017, ourinterest.  As of March 31, 2019, the Company's investment in the Apartment LLC totaled $45.1$44.1 million.  

DuringIn September 2017, MAA entered intoa subsidiary of the Operating Partnership invested in a limited partnership, together with a general partner and other limited partners to form Real Estate Technology Ventures, L.P. MAA's equity interest inAs of March 31, 2019, the Operating Partnership indirectly owned 20.7% of the limited partnership. The limited partnership is 32.0%, which is considered more than minor. This joint venture was determined to be a VIE, but we arethe Company is not designated as a primary beneficiary. Therefore, we accountAs a result, the Company accounts for ourits investment in the limited partnership using the equity method of accounting as we are able to exert significant influence over the partnership but do not have a controlling interest in this joint venture. At September 30, 2017, ourinvestment is considered more than minor. As of March 31, 2019, the Company's investment in the limited partnership totaled $0.8$3.7 million and we areis included in "Other assets" in the accompanying Condensed Consolidated Balance Sheet. As of March 31, 2019, the Company was committed to make additional capital contributions totaling $14.2$13.6 million overif and when called by the next five years from the dategeneral partner of the initial capital contribution.limited partnership and until September 2022.

InvestmentInvestments in Consolidated Real Estate Joint VenturesEntities

In 2015, Post Properties entered intoThe Company owns a joint venture arrangement with92.5% equity interest in a consolidated real estate entity that developed, constructed and operates a 359-unit apartment community in Denver, Colorado. The owner of the remaining 7.5% equity interest, a private real estate company, to develop, construct and operate a 358-unit apartment community in Denver, Colorado. At September 30, 2017, we owned a 92.5% equity interest in the consolidated joint venture. In 2015, this joint venture acquired the land site and initiated the development of the apartment community. The venture partner willwas generally be responsible for the development and construction of the community, and wewhich was completed during the year ended December 31, 2018. The Company will continue to operate and manage the community upon its completion. This joint venturecommunity. The entity was determined to be a VIE with usthe Company designated as the primary beneficiary.  As a result, the accounts of the joint ventureentity are consolidated by us. At September 30, 2017, ourthe Company.  As of March 31, 2019, the consolidated assets and liabilities included buildings and equity included construction in progressimprovements and other, net of $60.3 million,accumulated depreciation of $69.8 million; land of $14.5 million, and accounts payable$14.9 million; and accrued expenses and other liabilities of $6.2$1.0 million.

Assets Held for Sale

During September 2017, one land parcel was classified as held for sale.the first quarter of 2019, the Company acquired an 80.0% equity interest in a consolidated real estate entity that will develop, construct and operate an apartment community in Phoenix, Arizona. The criteria for classifyingjoint venture acquired the land parcel as held for sale were met during June; however,site and initiated development of the sale is not expected to close untilapartment community in the fourthfirst quarter of 2017.2019. The owner of the remaining 20.0% equity interest, a private real estate company, is responsible for the development and construction of the community, and the Company will operate and manage the community upon its completion. The entity was determined to be a VIE with the Company designated as the primary beneficiary. As a result, the accounts of the entity are consolidated by the Company. As of March 31, 2019, the consolidated assets and liabilities associatedincluded development and capital improvements in process of $4.7 million; land of $9.4 million; and accrued expenses and other liabilities of $0.7 million.

Fair Value Measurements

The Company applies the guidance in Accounting Standards Codification, or ASC, Topic 820, Fair Value Measurements and Disclosures, to the valuation of real estate assets recorded at fair value, if any; to its impairment valuation analysis of real estate assets; to its disclosure of the fair value of financial instruments, principally indebtedness; and to its derivative financial instruments.  Fair value disclosures required under ASC Topic 820 are summarized in Note 7 utilizing the following hierarchy:

Level 1 - Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
Level 3 - Unobservable inputs for the assets or liability.


Leases

In 2016, the Financial Accounting Standard Board, or FASB, issued Accounting Standard Update, or ASU, 2016-02, Leases (Topic 842), which established new principles, presentation and disclosure requirements for lease accounting for both the lessee and lessor. On January 1, 2019, management adopted ASU 2016-02 using the modified retrospective transition approach with an effective date as of the adoption date and elected certain practical expedients allowed by the new standard. Under the new standard, lessors are required to account for leases in a similar manner as previous lease accounting guidance but aligned with the land parcel werenewly adopted revenue recognition standard. Lessees are required to record most leases on the balance sheet and recognize lease expense in the income statement in a manner similar to previous practice. The new standard requires a lessee to recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for all leases with terms of more than twelve months. Expenses related to leases determined to be operating leases are recognized on a straight-line basis, while expenses related to leases determined to be financing leases are recognized based on an effective interest method in which interest and amortization are presented as held for saleseparately in the income statement.

Comparative periods presented in this Quarterly Report on Form 10-Q continue to apply guidance in ASC Topic 840, Leases, and have not been recast as the Company adopted the new standard using the modified retrospective transition approach effective as of January 1, 2019. The adoption of the new lease standard has not resulted in a significant change in the accounting for the Company’s rental revenues as the Company's residential, retail and commercial leases, where it is the lessor, will continue to be accounted for as operating leases. Management has elected available practical expedients that provide lessors an option not to separate lease and non-lease components when certain criteria are met, and instead, allow for those components to be accounted for as a single lease component. Thus, beginning with the effective date of the adoption of the new standard, January 1, 2019, rental revenues and non-lease reimbursable property revenues meet the criteria to be aggregated into a single lease component and are reported in the line item, "Rental revenues", as presented in the disaggregation of the Company's revenues in Note 11.

The Company is the lessee under certain ground, office, equipment and other operating leases. Based on its election of the package of practical expedients provided in ASU 2016-02, the Company did not reassess the classification of existing leases with its adoption of ASC Topic 842. The Company’s existing leases as of January 1, 2019 will continue to be accounted for as operating leases; however, if contracts are modified subsequent to the adoption of ASC Topic 842, the Company will be required to reassess the contracts using guidance provided under ASC Topic 842. The Company recognized total right-of-use assets of $54.3 million within "Other assets" and related lease obligations of $33.6 million within "Accrued expenses and other liabilities" on its Condensed Consolidated Balance Sheets.Sheets for leases in effect as of January 1, 2019. As most leases do not provide a readily determinable implicit rate to discount future minimum lease payments to present value, management estimated the Company's incremental borrowing rate based on information available as of the date of adoption and based on the remaining lease terms as of the date of initial application. Operating leases recognized upon adoption have a weighted-average remaining lease term of approximately 33 years and a weighted-average discount rate of approximately 4.4%. Lease expense for the three months ended March 31, 2019, recognized under ASC Topic 842, continued to be immaterial for the Company and was recognized in a similar manner as compared to the three months ended March 31, 2018. Cash paid for amounts included in the measurement of operating lease liabilities during the three months ended March 31, 2019 was also immaterial.
Revenue Recognition

The Company primarily leases multifamily residential apartments under operating leases generally due on a monthly basis with terms of approximately one year or less, which are recorded as operating leases. Rental revenues are recognized in accordance with ASC Topic 842 using a method that represents a straight-line basis over the term of the lease. In addition, in circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of rental revenues on a straight-line basis over the reasonably assured lease term. Rental revenues represent approximately 93% of the Company's total revenues and include gross market rent less adjustments for concessions, vacancy loss and bad debt. Approximately 6% of the Company's total revenues represents reimbursable property revenues from its tenants for utility reimbursements, which are generally recognized and due on a monthly basis as tenants obtain control of the service over the term of the lease. The remaining 1% of the Company's total revenues represents other non-lease revenues primarily driven by nonrefundable fees and commissions.

With the adoption of ASC Topic 842, rental revenues and non-lease reimbursable property revenues meet the criteria to be aggregated into a single lease component and to be reported in a single line, while non-lease reimbursable property revenues recognized prior to January 1, 2019 will continue to be reported as non-lease revenues and recognized in accordance with ASC Topic 606, Revenue Recognition. The guidance requires that revenue recognized outside of the scope of ASC Topic 842 is


recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services.

2.    Business Combination

On December 1, 2016, we completed the Merger. As part of the Merger, we acquired 61 wholly-owned apartment communities comprising 24,138 apartment units, including 269 apartment units in one community held in an unconsolidated entity, and 2,262  apartment units in six communities that were under development at the Merger date. Post Properties had operations in ten markets across the United States. In addition to the apartment communities, we also acquired four commercial properties, totaling approximately 232,000 square feet of combined gross leasable area. The consolidated net assets and results of operations of Post Properties are included in our Consolidated Financial Statements from the closing date, December 1, 2016, going forward.

The total purchase price of approximately $4.0 billion was determined based on the number of shares of Post Properties' common stock, the number of shares of Post Properties’ Series A preferred stock, and shares of Post LP's Class A Units of limited partnership interest outstanding as of December 1, 2016, in addition to cash consideration provided by the Operating Partnership immediately prior to the Merger to pay off a $300.0 million Post LP unsecured term loan and a $162.0 million Post LP line of credit, both outstanding from Wells Fargo. In all cases in which MAA’s common stock price was a determining factor in arriving at final consideration for the Merger, the stock price used to determine the purchase price was the opening price of MAA’s common stock on December 1, 2016 ($91.41 per share). At the date of acquisition, the MAA Series I preferred stock consideration was valued at $77.00 per share, which included a $14.24 per share bifurcated call option (See Notes 8 & 9). The total purchase price also included $2.0 million of other consideration, a majority of which related to assumed stock compensation plans. As a result of the Merger, we issued approximately 38.0 million shares of MAA common stock,


approximately 80,000 OP Units, and 867,846 newly issued shares of MAA Series I preferred stock.

The Merger has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification, or ASC, 805, Business Combinations, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair values.

For larger, portfolio style acquisitions, like the Merger, management engages a third party valuation specialist to assist with the fair value assessment, which includes an allocation of the purchase price. Similar to management's methods, the third party uses cash flow analysis as well as an income approach and a market approach to determine the fair value of assets acquired. The third party uses stabilized net operating income, or NOI, and market specific capitalization and discount rates. Management reviews the inputs used by the third party specialist as well as the allocation of the purchase price provided by the third party to ensure reasonableness and that the procedures are performed in accordance with management's policy. The allocation of the purchase price is based on management’s assessment, which may differ as more information becomes available. Subsequent adjustments made to the purchase price allocation, if any, are made within the allocation period, which typically does not exceed one year.

The allocation of the purchase price described above requires a significant amount of judgment and represents management's best estimate of the fair value as of the acquisition date. The following preliminary purchase price allocation for the Merger reflects updates primarily to an adjustment to litigation reserves offset by increased derivative asset values on the preferred share bifurcated call option (included in "Other assets") and real estate asset values from our December 31, 2016 estimates. Such preliminary purchase price allocation was based on our valuation as well as estimates and assumptions of the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed.

The purchase price was allocated as follows (in thousands):
Land$875,294
Buildings and improvements3,397,342
Furniture, fixtures and equipment81,243
Development and capital improvements in progress183,881
Undeveloped land24,200
Commercial properties, net3,610
Investment in real estate joint venture44,435
Lease intangible assets53,192
Cash and cash equivalents34,292
Restricted cash3,608
Deferred costs and other assets, excluding lease intangible assets41,803
Total assets acquired4,742,900
  
Notes payable(595,609)
Fair market value of interest rate swaps(2,118)
Lease intangible liabilities(1,661)
Accounts payable, accrued expenses, and other liabilities(132,613)
Total liabilities assumed, including debt(732,001)
  
Noncontrolling interests - consolidated real estate entity(2,306)
  
Total purchase price$4,008,593

The purchase price accounting reflected in the accompanying financial statements is based upon estimates and assumptions that are subject to change within the measurement period, pursuant to ASC 805. See Note 12 for loss contingencies identified, measured, and included in "Accounts payable, accrued expenses, and other liabilities" in the allocation above. We have preliminarily completed our valuation procedures. Adjustments may still occur as the valuation and revised preliminary purchase allocation is finalized in areas such as real estate related assets and liabilities, equity investments, litigation reserves, debt and debt related instruments, and certain other acquired assets and liabilities assumed. We will complete our purchase price allocation during the fourth quarter of 2017.



We incurred Merger and integration related expenses of $14.5 million for the nine months ended September 30, 2017. These amounts were expensed as incurred and are included in the Condensed Consolidated Statements of Operations in the items titled "Merger related expenses", primarily consisting of severance and professional costs, and "Integration related expenses", primarily consisting of temporary systems, staffing, and facilities costs.

3.    Earnings per Common Share of MAA

Basic earnings per share is computed using the two-class method by dividing net income available forto MAA common shareholders by the weighted average number of common 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.  OP Units are included in dilutive earnings per share calculations when theythe units are dilutive to earnings per share. For the three and nine months ended September 30, 2017March 31, 2019 and 20162018, MAA's basic earnings per share was computed using the two-class method, and MAA's diluted earnings per share was computed using the more dilutive of the treasury stock method orand the two-class method, respectively, as presented below:below (dollars and shares in thousands, except per share amounts):
(dollars and shares in thousands, except per share amounts)Three months ended September 30, Nine months ended September 30, 
2017 2016 2017 2016 Three months ended March 31,
Shares Outstanding        
Weighted average common shares - basic113,434
 75,302
 113,392
 75,276
 
Weighted average partnership units outstanding—
(1) 
—
(1) 
—
(1) 
4,156
 
Effect of dilutive securities219
 —
(2) 
270
 246
 
Weighted average common shares - diluted113,653
 75,302
 113,662
 79,678
 
        2019 2018
Calculation of Earnings per Share - basic     
  
 
Calculation of Earnings per Common Share - basic   
Net income$118,958
 $88,906
 $212,529
 $182,344
 $65,958
 $50,820
Net income attributable to noncontrolling interests(4,249) (4,627) (7,600) (9,508) (2,298) (1,801)
Unvested restricted stock (allocation of earnings)(181) (254) (337) (485) (87) (79)
Preferred dividends(922) —
 (2,766) —
 (922) (922)
Net income available for common shareholders, adjusted$113,606
 $84,025
 $201,826
 $172,351
 $62,651
 $48,018
           
Weighted average common shares - basic113,434
 75,302
 113,392
 75,276
 113,726
 113,507
Earnings per share - basic$1.00
 $1.12
 $1.78
 $2.29
 
Earnings per common share - basic$0.55
 $0.42
           
Calculation of Earnings per Share - diluted     
  
 
Calculation of Earnings per Common Share - diluted   
Net income$118,958
 $88,906
 $212,529
 $182,344
 $65,958
 $50,820
Net income attributable to noncontrolling interests(4,249)
(1) 
(4,628)
(1) 
(7,600)
(1) 
—
 
Unvested restricted stock (allocation of earnings)—
 (254)
(2) 
—
 —
 
Net income attributable to noncontrolling interests (1)
(2,298) (1,801)
Unvested restricted stock (allocation of earnings) (2)
—
 (79)
Preferred dividends(922) —
 (2,766) —
 (922) (922)
Net income available for common shareholders, adjusted$113,787
 $84,024
 $202,163
 $182,344
 $62,738
 $48,018
           
Weighted average common shares - basic113,726
 113,507
Effect of dilutive securities (2)
207
 —
Weighted average common shares - diluted113,653
 75,302
 113,662
 79,678
 113,933
 113,507
Earnings per share - diluted$1.00
 $1.12
 $1.78
 $2.29
 
Earnings per common share - diluted$0.55
 $0.42

(1) For both the three and nine months ended September 30, 2017 and the three months ended September 30, 2016,March 31, 2019 and March 31, 2018, 4.1 million OP Units and 4.2 million OP Units, respectively, and their related income are not included in the diluted earnings per share calculations as they are not dilutive.
(2) For the three months ended September 30, 2016,March 31, 2018, 0.2 million potentially dilutive securities and their related income are not included in the diluted earnings per share calculationscalculation as they are not dilutive.



4.3.    Earnings per OP Unit of MAALP

Basic earnings per OP Unitcommon unit is computed using the two-class method by dividing net income available for common unitholders by the weighted average number of OP Units outstanding during the period. All outstanding unvested restricted unit awards contain rights to non-forfeitable distributions and participate in undistributed earnings with common unitholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per OPcommon unit. Diluted earnings per OP Unitcommon unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units. A reconciliation ofBoth the numeratorsunvested restricted unit awards and denominators ofother potentially dilutive common units, and the basic andrelated impact to earnings, are considered when calculating earnings per common unit on a diluted basis with diluted earnings per OP Unit computations forcommon unit being the more dilutive of the treasury stock or two-class methods.  For the three and nine months ended September 30, 2017March 31, 2019 and 2016 is2018, MAA's diluted earnings per common unit was computed using the treasury stock method and the two-class method, respectively, as presented below:below (dollars and units in thousands, except per unit amounts):

(dollars and units in thousands, except per unit amounts)Three months ended September 30, Nine months ended September 30, 
2017 2016 2017 2016 Three months ended March 31,
Units Outstanding        
Weighted average common units - basic117,643
 79,449
 117,607
 79,432
 
Effect of dilutive securities219
 —
(1) 
270
 246
 
Weighted average common units - diluted117,862
 79,449
 117,877
 79,678
 
        2019 2018
Calculation of Earnings per Unit - basic     
  
 
Calculation of Earnings per Common Unit - basic   
Net income$118,958
 $88,906
 $212,529
 $182,344
 $65,958
 $50,820
Unvested restricted stock (allocation of earnings)(181) (254) (337) (484) (87) (79)
Preferred unit distributions(922) —
 (2,766) —
 (922) (922)
Net income available for common unitholders, adjusted$117,855
 $88,652
 $209,426
 $181,860
 $64,949
 $49,819
           
Weighted average common units - basic117,643
 79,449
 117,607
 79,432
 117,837
 117,689
Earnings per common unit - basic$1.00
 $1.12
 $1.78
 $2.29
 $0.55
 $0.42
           
Calculation of Earnings per Unit - diluted     
  
 
Calculation of Earnings per Common Unit - diluted   
Net income$118,958
 $88,906
 $212,529
 $182,344
 $65,958
 $50,820
Unvested restricted stock (allocation of earnings)—
 (254)
(1) 
—
 —
 
Unvested restricted stock (allocation of earnings) (1)
—
 (79)
Preferred unit distributions(922) —
 (2,766) —
 (922) (922)
Net income available for common unitholders, adjusted$118,036
 $88,652
 $209,763
 $182,344
 $65,036
 $49,819
           
Weighted average common units - basic117,837
 117,689
Effect of dilutive securities (1)
207
 —
Weighted average common units - diluted117,862
 79,449
 117,877
 79,678
 118,044
 117,689
Earnings per common unit - diluted$1.00
 $1.12
 $1.78
 $2.29
 $0.55
 $0.42

(1) For the three months ended September 30, 2016,March 31, 2018, 0.2 million potentially dilutive securities and their related income are not included in the diluted earnings per share calculationscalculation as they are not dilutive.



5.4.    MAA Equity

Changes in total equity and its components for the nine-month periodsthree months ended September 30, 2017March 31, 2019 and 20162018 were as follows (dollars in thousands, except per share and per unit data)thousands):

  Mid-America Apartment Communities, Inc. Shareholders' Equity      
 Preferred Stock Amount 
Common
Stock
Amount
 
Additional
Paid-In
Capital
 
Accumulated
Distributions
in Excess of
Net Income
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interest Operating Partnership
 Noncontrolling Interest - Consolidated Real Estate Entity 
Total
Equity
EQUITY BALANCE DECEMBER 31, 2016$9
 $1,133
 $7,109,012
 $(707,479) $1,144
 $235,976
 $2,306
 $6,642,101
Net income attributable to controlling interest—
 —
 —
 204,929
 —
 7,600
 —
 212,529
Other comprehensive income - derivative instruments (cash flow hedges)—
 —
 —
 —
 (354) (14) —
 (368)
Issuance and registration of common shares—
 1
 153
 —
 —
 —
 —
 154
Issuance and registration of preferred shares—
 —
 2,007
 —
 —
 —
 —
 2,007
Shares repurchased and retired—
 —
 (4,782) —
 —
 —
 —
 (4,782)
Exercise of stock options—
 —
 218
 —
 —
 —
 —
 218
Shares issued in exchange for common units—
 —
 1,133
 —
 —
 (1,133) —
 —
Shares issued in exchange for redeemable stock—
 —
 1,482
 —
 —
 —
 —
 1,482
Redeemable stock fair market value adjustment—
 —
 —
 (870) —
 —
 —
 (870)
Adjustment for noncontrolling interest ownership in operating partnership—
 —
 54
 —
 —
 (54) —
 —
Amortization of unearned compensation—
 —
 8,552
 (114) —
 —
 —
 8,438
Dividends on preferred stock—
 —
 —
 (2,766) —
 —
 —
 (2,766)
Dividends on common stock ($2.61 per share)—
 —
 —
 (296,535) —
 —
 —
 (296,535)
Dividends on noncontrolling interest units ($2.61 per unit)—
 —
 —
 —
 —
 (10,982) —
 (10,982)
EQUITY BALANCE SEPTEMBER 30, 2017$9
 $1,134
 $7,117,829
 $(802,835) $790
 $231,393
 $2,306
 $6,550,626
  Mid-America Apartment Communities, Inc. Shareholders' Equity      
 Preferred Stock Common Stock Additional Paid-In Capital Accumulated Distributions in Excess of Net Income 
Accumulated
Other
Comprehensive
Income
 
Noncontrolling
Interests - Operating Partnership
 Noncontrolling Interests - Consolidated Real Estate Entities 
Total
Equity
EQUITY BALANCE DECEMBER 31, 2018$9
 $1,136
 $7,138,170
 $(989,263) $(212) $220,043
 $2,306
 $6,372,189
Net income—
 —
 —
 63,660
 —
 2,298
 —
 65,958
Other comprehensive income - derivative instruments—
 —
 —
 —
 (3,088) (113) —
 (3,201)
Issuance and registration of common shares—
 1
 1,128
 —
 —
 —
 —
 1,129
Shares repurchased and retired—
 —
 (3,023) —
 —
 —
 —
 (3,023)
Exercise of stock options—
 —
 208
 —
 —
 —
 —
 208
Shares issued in exchange for common units—
 —
 336
 —
 —
 (336) —
 —
Redeemable stock fair market value adjustment—
 —
 —
 (1,351) —
 —
 —
 (1,351)
Adjustment for noncontrolling interests in Operating Partnership—
 —
 (60) —
 —
 60
 —
 —
Amortization of unearned compensation—
 —
 4,785
 —
 —
 —
 —
 4,785
Dividends on preferred stock—
 —
 —
 (922) —
 —
 —
 (922)
Dividends on common stock ($0.9600 per share)—
 —
 —
 (109,392) —
 —
 —
 (109,392)
Dividends on noncontrolling interests units ($0.9600 per unit)—
 —
 —
 —
 —
 (3,941) —
 (3,941)
Contribution from noncontrolling interest—
 —
 —
 —
 —
 —
 2,860
 2,860
EQUITY BALANCE MARCH 31, 2019$9
 $1,137
 $7,141,544
 $(1,037,268) $(3,300) $218,011
 $5,166
 $6,325,299

  Mid-America Apartment Communities, Inc. Shareholders' Equity      
 Preferred Stock Amount 
Common
Stock
Amount
 
Additional
Paid-In
Capital
 
Accumulated
Distributions
in Excess of
Net Income
 
Accumulated
Other
Comprehensive
Income (Loss)
 Noncontrolling
Interest Operating Partnership		 Noncontrolling Interest - Consolidated Real Estate Entity 
Total
Equity
EQUITY BALANCE DECEMBER 31, 2015$—
 $753
 $3,627,074
 $(634,141) $(1,589) $165,726
 $—
 $3,157,823
Net income attributable to controlling interest—
 —
 —
 172,836
 —
 9,508
 —
 182,344
Other comprehensive loss - derivative instruments (cash flow hedges)—
 —
 —
 —
 (456) (25) —
 (481)
Issuance and registration of common shares—
 1
 (739) —
 —
 —
 —
 (738)
Shares repurchased and retired—
 —
 (1,811) —
 —
 —
 —
 (1,811)
Shares issued in exchange for common units—
 —
 780
 —
 —
 (780) —
 —
Shares issued in exchange for redeemable stock—
 —
 122
 —
 —
 —
 —
 122
Redeemable stock fair market value adjustment—
 —
 —
 (296) —
 —
 —
 (296)
Adjustment for noncontrolling interest ownership in operating partnership—
 —
 (38) —
 —
 38
 —
 —
Amortization of unearned compensation—
 —
 6,625
 —
 —
 —
 ��
 6,625
Dividends on common stock ($2.46 per share)—
 —
 —
 (185,789) —
 —
 —
 (185,789)
Dividends on noncontrolling interest units ($2.46 per unit)—
 —
 —
 —
 —
 (10,217) —
 (10,217)
EQUITY BALANCE SEPTEMBER 30, 2016$—
 $754
 $3,632,013
 $(647,390) $(2,045) $164,250
 $—
 $3,147,582
  Mid-America Apartment Communities, Inc. Shareholders' Equity      
 Preferred Stock 
Common
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Distributions
in Excess of
Net Income
 
Accumulated
Other
Comprehensive
Income 
 Noncontrolling
Interests - Operating Partnership		 Noncontrolling Interests - Consolidated Real Estate Entities 
Total
Equity
EQUITY BALANCE DECEMBER 31, 2017$9
 $1,134
 $7,121,112
 $(784,500) $2,157
 $231,676
 $2,306
 $6,573,894
Net income—
 —
 —
 49,019
 —
 1,801
 —
 50,820
Other comprehensive loss - derivative instruments—
 —
 —
 —
 610
 29
 —
 639
Issuance and registration of common shares—
 1
 104
 —
 —
 —
 —
 105
Shares repurchased and retired—
 —
 (2,912) —
 —
 —
 —
 (2,912)
Exercise of stock options—
 —
 625
 —
 —
 —
   625
Shares issued in exchange for common units—
 —
 2,780
 —
 —
 (2,780) —
 —
Shares issued in exchange for redeemable stock—
 

 1,915
 —
 —
 —
 —
 1,915
Redeemable stock fair market value adjustment—
 —
 —
 965
 —
 —
 —
 965
Adjustment for noncontrolling interests in Operating Partnership—
 —
 92
 —
 —
 (92) —
 —
Cumulative adjustment due to adoption of ASU 2017-12    —
 (233) 233
 —
   —
Amortization of unearned compensation—
 —
 4,024
 —
 —
 —
 —
 4,024
Dividends on preferred stock—
 —
 —
 (922) —
 —
 —
 (922)
Dividends on common stock ($0.9225 per share)—
 —
 —
 (104,971) —
 —
 —
 (104,971)
Dividends on noncontrolling interests units ($0.9225 per unit)—
 —
 —
 —
 —
 (3,819) —
 (3,819)
EQUITY BALANCE MARCH 31, 2018$9
 $1,135
 $7,127,740
 $(840,642) $3,000
 $226,815
 $2,306
 $6,520,363



6.5.    MAALP Capital

Changes in total capital and its components for the nine-month periodsthree months ended September 30, 2017March 31, 2019 and 20162018 were as follows (dollars in thousands, except per unit data)thousands):
 Mid-America Apartments, L.P. Unitholders' Capital    
 Limited Partner General Partner Preferred Units Accumulated
Other
Comprehensive
Income		 Noncontrolling Interests- Consolidated Real Estate Entities Total Partnership Capital
CAPITAL BALANCE DECEMBER 31, 2018$220,043
 $6,083,142
 $66,840
 $(161) $2,306
 $6,372,170
Net income2,298
 62,738
 922
 —
 —
 65,958
Other comprehensive income - derivative instruments—
 —
 —
 (3,201) —
 (3,201)
Issuance of units—
 1,129
 —
 —
 —
 1,129
Units repurchased and retired—
 (3,023) —
 —
 —
 (3,023)
Exercise of unit options—
 208
 —
 —
 —
 208
General partner units issued in exchange for limited partner units(336) 336
 —
 —
 —
 —
Redeemable units fair market value adjustment—
 (1,351) —
 —
 —
 (1,351)
Adjustment for limited partners' capital at redemption value(53) 53
 —
 —
 —
 —
Amortization of unearned compensation—
 4,785
 —
 —
 —
 4,785
Distributions to preferred unitholders—
 —
 (922) —
 —
 (922)
Distributions to common unitholders ($0.9600 per unit)(3,941) (109,392) —
 —
 —
 (113,333)
Contribution from noncontrolling interest—
 —
 —
 —
 2,860
 2,860
CAPITAL BALANCE MARCH 31, 2019$218,011
 $6,038,625
 $66,840
 $(3,362) $5,166
 $6,325,280

 Mid-America Apartments, L.P. Unitholders' Capital    
 Limited Partner General Partner Preferred Units Accumulated
Other
Comprehensive
Income (Loss)		 Noncontrolling Interest - Consolidated Real Estate Entity Total Partnership Capital
CAPITAL BALANCE DECEMBER 31, 2016$235,976
 $6,337,721
 $64,833
 $1,246
 $2,306
 $6,642,082
Net income attributable to controlling interest7,600
 202,163
 2,766
 —
 —
 212,529
Other comprehensive income - derivative instruments (cash flow hedges)—
 —
 —
 (368) —
 (368)
Issuance of units—
 154
 2,007
 —
 —
 2,161
Units repurchased and retired—
 (4,782) —
 —
 —
 (4,782)
Exercise of unit options—
 218
 —
 —
 —
 218
General partner units issued in exchange for limited partner units(1,133) 1,133
 —
 —
 —
 —
Units issued in exchange for redeemable units—
 1,482
 —
 —
 —
 1,482
Redeemable units fair market value adjustment—
 (870) —
 —
 —
 (870)
Adjustment for limited partners' capital at redemption value(68) 68
 —
 —
 —
 —
Amortization of unearned compensation—
 8,438
 —
 —
 —
 8,438
Distributions to preferred unitholders—
 —
 (2,766) —
 —
 (2,766)
Distributions ($2.61 per unit)(10,982) (296,535) —
 —
 —
 (307,517)
CAPITAL BALANCE SEPTEMBER 30, 2017$231,393
 $6,249,190
 $66,840
 $878
 $2,306
 $6,550,607

Mid-America Apartments, L.P. Unitholders' Capital    Mid-America Apartments, L.P. Unitholders' Capital    
Limited Partner General Partner Preferred Units Accumulated
Other
Comprehensive
Income (Loss)		 Noncontrolling Interest - Consolidated Real Estate Entity Total Partnership CapitalLimited Partner General Partner Preferred Units Accumulated
Other
Comprehensive
Income		 Noncontrolling Interests - Consolidated Real Estate Entities Total Partnership Capital
CAPITAL BALANCE DECEMBER 31, 2015$165,726
 $2,993,696
 $—
 $(1,618) $—
 $3,157,804
Net income attributable to controlling interest9,508
 172,836
 —
 —
 —
 182,344
Other comprehensive loss - derivative instruments (cash flow hedges)—
 —
 —
 (481) —
 (481)
CAPITAL BALANCE DECEMBER 31, 2017$231,676
 $6,270,758
 $66,840
 $2,295
 $2,306
 $6,573,875
Net income1,801
 48,097
 922
 —
 —
 50,820
Other comprehensive income - derivative instruments—
 —
 —
 639
 —
 639
Issuance of units—
 (738) —
 —
 —
 (738)—
 105
 —
 —
 —
 105
Units repurchased and retired—
 (1,811) —
 —
 —
 (1,811)—
 (2,912) —
 —
 —
 (2,912)
Exercise of unit options—
 625
 —
 —
 —
 625
General partner units issued in exchange for limited partner units(780) 780
 —
 —
 —
 —
(2,780) 2,780
 —
 —
 —
 —
Units issued in exchange for redeemable units—
 122
 —
 —
 —
 122
—
 1,915
 —
 —
 —
 1,915
Redeemable units fair market value adjustment—
 (296) —
 —
 —
 (296)—
 965
 —
 —
 —
 965
Adjustment for limited partners' capital at redemption value13
 (13) —
 —
 —
 —
(63) 63
 —
 —
 —
 —
Cumulative adjustment due to adoption of ASU 2017-12—
 (233) —
 233
 —
 —
Amortization of unearned compensation—
 6,625
 —
 —
 —
 6,625
—
 4,024
 —
 —
 —
 4,024
Distributions ($2.46 per unit)(10,217) (185,789) —
 —
 —
 (196,006)
CAPITAL BALANCE SEPTEMBER 30, 2016$164,250
 $2,985,412
 $—
 $(2,099) $—
 $3,147,563
Distributions to preferred unitholders—
 —
 (922) —
 —
 (922)
Distributions to common unitholders ($0.9225 per unit)(3,819) (104,971) —
 —
 —
 (108,790)
CAPITAL BALANCE MARCH 31, 2018$226,815
 $6,221,216
 $66,840
 $3,167
 $2,306
 $6,520,344



7.6.           Borrowings

The weighted average effective interest rate at September 30, 2017 and Decemberfollowing table summarizes the Company's outstanding debt as of March 31, 2016 for the $4.5 billion of debt outstanding was 3.5% at both balance sheet dates. Our debt consists of an unsecured revolving credit facility, unsecured term loans, senior unsecured notes, a secured credit facility with the Federal National Mortgage Association, or the Fannie Mae Facility, and secured property mortgages. We utilize fixed rate borrowings, interest rate swaps, and interest rate caps to manage our current and future interest rate risk.2019 (dollars in thousands):

At September 30, 2017, we had $2.8 billion of senior unsecured notes and unsecured term loans fixed at an average interest rate of 3.8%, $300.0 million of variable rate unsecured term loans with an average interest rate of 2.2%, and a $1.0 billion unsecured variable rate revolving credit facility with an average interest rate of 2.1% with $250.0 million borrowed at September 30, 2017. Additionally, we had $110.0 million of secured variable rate debt outstanding at an average interest rate of 1.7% and $50.0 million of capped secured variable rate debt at an average interest rate of 1.7%. The interest rate on all other secured debt, totaling $950.0 million, was hedged or fixed at an average interest rate of 4.0%.
 Balance Weighted Average Effective Rate Weighted Average Contract Maturity
Unsecured debt 
  
  
Variable rate revolving credit facility$75,000
 3.4% 4/15/2020
Fixed rate senior notes2,942,000
 4.0% 11/26/2025
Term loans fixed with swaps300,000
 2.3% 3/1/2022
Variable rate term loans600,000
 3.4% 1/22/2020
Debt issuance costs, discounts and fair market value adjustments(30,764)    
Total unsecured debt$3,886,236
 3.8%  
Fixed rate secured debt     
Individual property mortgages$665,588
 4.5% 5/2/2036
Debt issuance costs and fair market value adjustments(3,726)    
Total secured debt$661,862
 4.5%  
Total outstanding debt$4,548,098
 3.9%  

Unsecured Revolving Credit Facility

We maintainMAALP maintains a $1.0 billion unsecured revolving credit facility with a syndicate of banks led by KeyBank National Association, or the KeyBankCredit Facility. The KeyBankCredit Facility includes an expansion option up to $1.5 billion. The KeyBankCredit Facility bears an interest rate of Thethe London Interbank Offered Rate, or LIBOR, plus a spread of 0.85% to 1.55% based on an investment grade pricing grid and, is currently bearingas of March 31, 2019, the interest at 2.14%rate was 3.40%. The KeyBankCredit Facility expires in April 2020 with an option to extend for an additional six months. At September 30, 2017, weAs of March 31, 2019, MAALP had $250.0$75.0 million actually borrowedoutstanding under this facility, andthe Credit Facility with another approximately $2.5 million of the facilityadditional capacity used to support outstanding letters of credit.

Senior Unsecured Notes

As ofMarch 31, 2019, MAALP had approximately $2.7 billion in principal amount of publicly issued senior unsecured notes and $242.0 million of privately placed senior unsecured notes. The senior unsecured notes had maturities at issuance ranging from seven to twelve years, with an average of 6.7 years remaining until maturity as of March 31, 2019.

In March 2019, MAALP publicly issued $300.0 million in aggregate principal amount of senior unsecured notes, maturing March 2029 with an interest rate of 3.950% per annum, or the 2029 Notes. The purchase price paid by the initial purchasers was 99.720% of the principal amount. The 2029 Notes are general unsecured senior obligations of MAALP and rank equally in right of payment with all other senior unsecured indebtedness of MAALP. Interest on the 2029 Notes is payable on March 15 and September 15 of each year, beginning on September 15, 2019. The net proceeds of the offering, after deducting the original issue discount, underwriting commissions and expenses of approximately $2.8 million, were $297.2 million. The 2029 Notes have been reflected net of discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of March 31, 2019. In connection with the issuance of the 2029 Notes, MAALP cash settled $300.0 million in forward interest rate swap agreements, entered into during the second half of 2018 to effectively lock the interest rate on the planned transaction, resulting in an effective interest rate of 4.24% over the ten year life of the 2029 Notes.

Unsecured Term Loans

We also maintainThe Company maintains four term loans with a syndicate of banks, one led by KeyBank National Association, or KeyBank, two by Wells Fargo Bank, N.A., or Wells Fargo, and one by U.S. Bank National Association, or U.S. Bank, respectively.Bank. The KeyBank term loan has a balance of $150.0 million, matures in 2021, and has a variable interest rate of LIBOR plus a spread of 0.90% to 1.75% based on ourthe Company's credit ratings. TheBoth Wells Fargo term loans have balances of $250.0 million and $300.0 million, respectively, mature in 20182022 and 2022,2019, respectively, and have variable interest rates of LIBOR plus spreads of 0.90% to 1.90%%1.75% and 0.90%0.75% to 1.75%%1.65%, respectively, based on ourthe Company's credit ratings. The interest rate of the Wells Fargo term loan due in 2022 is fixed at 2.32% with a forward swap through the swap's maturity date, January 2020. The Wells Fargo term loan due in 2019 was entered into by the Company in December 2018. The U.S. Bank term loan has a balance of $150.0 million, matures in 2020, and has a variable interest rate of LIBOR plus a spread of 0.90% to 1.90% based on ourthe Company's credit ratings.

Senior Unsecured Notes

As ofSeptember 30, 2017, we had approximately $2.0 billion (face value) of publicly issued notes and $310 million of private placement notes. These senior unsecured notes had maturities at issuance ranging from five to twelve years, averaging 7.1 years remaining until maturity as of September 30, 2017.

On May 9, 2017, the Operating Partnership publicly issued $600.0 million in aggregate principal amount of notes, maturing on June 1, 2027 with an interest rate of 3.60% per annum, or the 2027 Notes. The purchase price paid by the initial purchasers was 99.58% of the principal amount. The 2027 Notes are general unsecured senior obligations of the Operating Partnership and rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership. Interest on the 2027 Notes is payable on June 1 and December 1 of each year, beginning on December 1, 2017. The net proceeds from the offering, after deducting the original issue discount of approximately $2.5 million and underwriting commissions and expenses of approximately $3.9 million, were approximately $593.6 million. The 2027 Notes have been reflected net of discount and debt issuance costs in the Condensed Consolidated Balance Sheet. In connection with the issuance of the 2027 Notes, we cash settled $300.0 million in forward interest rate swap agreements, entered into during the first two quarters in the year to effectively lock the interest rate on the planned transaction, which produced an effective interest rate of 3.68% over the ten year life of the 2027 Notes.

On July 17, 2017, we paid off $150.0 million of senior unsecured notes assumed as part of the Merger. The notes were scheduled for maturity in October 2017.

Secured Credit Facility

We maintain a $160.0 million secured credit facility with Prudential Mortgage Capital, which is credit enhanced by the Fannie Mae Facility. The Fannie Mae Facility has maturities from 2017 through 2018. Borrowings under the Fannie Mae Facility


totaled $160.0 million at September 30, 2017, all of which was variable rate at an average interest rate of 1.7%. The available borrowing capacity at September 30, 2017 was $160.0 million.

Secured Property Mortgages

At September 30, 2017, weAs of March 31, 2019, the Company had $933.3$665.6 million of fixed rate conventional property mortgages with ana weighted average


interest rate of 4.0%4.5% and ana weighted average maturity in 2019. On February 7, 2017, we paid off2036, which includes a $15.8$191.3 million mortgage with a fixed rate of 4.43% associated with the Grand Cypressseven apartment community.communities entered into in February 2019. The mortgage wasis scheduled for maturityto mature in August 2017. On May 31, 2017, we paid off a $156.4 million mortgage associated with the following apartment communities: CG at Edgewater, CG at Madison, CG at Seven Oaks, CG at Town Park, CG at Barrett Creek, CG at River Oaks, and CG at Huntersville. The mortgage was scheduled for maturity in June 2019. On September 11, 2017, we paid off a $13.9 million mortgage associated with the Venue at Stonebridge Ranch. The loan was scheduled for maturity in December 2017.

In addition to these payoffs, we paid $9.0 million associated with property mortgage principal amortizations during the nine months ended September 30, 2017.February 2049.

Guarantees

As of March 31, 2019, MAA fully and unconditionally guarantees the following debt incurred by the Operating Partnership:

$160.0 million of the Fannie Mae Facility, of which $160.0 million has been borrowed as of September 30, 2017; and
$310.0guaranteed $242.0 million of the privately placed senior unsecured notes.

Total Outstanding Debt

The following table summarizes our indebtedness at September 30, 2017 (dollars in thousands):
 
Borrowed
Balance
 
Effective
Rate
 
Average Contract
Maturity
Fixed Rate Secured Debt     
Individual property mortgages$933,256
 4.0% 9/11/2019
      
Variable Rate Secured Debt (1)
 
  
  
Fannie Mae Facility160,000
 1.7% 6/1/2018
      
Fair market value adjustments and debt issuance costs16,717
    
Total Secured Debt1,109,973
 3.6% 7/3/2019
      
Unsecured Debt 
  
  
Variable rate revolving credit facility250,000
 2.1% 4/15/2020
Variable rate term loans300,000
 2.2% 8/29/2020
Term loans fixed with swaps550,000
 3.0% 4/17/2018
Fixed rate senior notes2,310,000
 4.0% 10/24/2024
Fair market value adjustments, debt issuance costs and discounts(27,139)    
Total Unsecured Debt3,382,861
 3.5% 1/18/2023
      
Total Outstanding Debt$4,492,834
 3.5% 2/13/2022

(1) Includes capped balances.notes issued by MAALP.

8.           Derivatives7.           Financial Instruments 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 these objectives, 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, 2017 and 2016, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt and forecasted issuances of fixed-rate debt.  The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings and is mainly attributable to a mismatch in the underlying indices of the derivatives and the hedged interest payments made on our variable-rate debt and due to the designation of acquired interest rate swaps with a non-zero fair valueFinancial Instruments Not Carried at inception.

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 twelve months, we estimate that an additional $80,500 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 receipts.

As of September 30, 2017, 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 Amount
Interest Rate Caps 2 $50,000,000
  Interest Rate Swaps 10 $550,000,000

The fair value of our interest rate derivatives designated as hedging instruments at September 30, 2017 included $2.0 million of asset derivatives reported in Other assets and $2.6 million of liability derivatives reported in the Fair market value of interest rate swaps in the Condensed Consolidated Balance Sheet. The fair value of our interest rate derivatives designated as hedging instruments at December 31, 2016 included $2.4 million of asset derivatives reported in "Other assets" and $7.6 million of liability derivatives reported in "Fair market value of interest rate swaps" in the Condensed Consolidated Balance Sheet.

Bifurcated Embedded Derivatives

Additionally, as a result of the Merger (see Note 2), on December 1, 2016, we issued 867,846 shares of MAA Series I preferred stock as consideration. These shares are redeemable, at our option, on and after October 1, 2026, at the redemption price per share of $50 (see Note 10).

This redemption feature embedded in the MAA Series I preferred stock was evaluated in accordance with ASC 815, Derivatives and Hedging, and we determined that we were required to bifurcate the value associated with this feature from its host instrument, the perpetual preferred shares, and account for it as a freestanding derivative on the balance sheet at fair value as a result of the call option.

Thus, the redemption feature embedded in the MAA Series I preferred stock is reported as a derivative asset in "Other assets" on the accompanying Condensed Consolidated Balance Sheets and is adjusted to its fair value at each reporting date, with a corresponding non-cash adjustment to Other non-property income or expense. The embedded derivative for these preferred shares was initially recorded at a fair value of  $10.8 million at the date of the Merger and as of December 31, 2016 and then subsequently adjusted to fair value of $18.2 million at September 30, 2017. This $7.4 million year-to-date increase includes a


purchase price allocation adjustment of $1.6 million related to the Merger opening balance sheet date, which was recorded in the first quarter of 2017 , as well as $5.8 million of year-to-date mark to market adjustments of non-cash income recorded to reflect the change in fair value of the derivative asset in the nine months ended September 30, 2017.
Tabular Disclosure of the Effect of Derivative Instruments on the Condensed Consolidated Statements of Operations

The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 (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 Interest Expense 
(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 Interest Expense (Ineffective
Portion and Amount
Excluded from
Effectiveness  Testing)
Three months ended September 30, 2017 2016  2017 2016  2017 2016
                 
Interest rate contracts $90
 $1,179
 Interest Expense $33
 $(1,042) Interest Expense $(3) $96
                 
Nine months ended September 30,  
  
    
  
    
  
                 
Interest rate contracts $(1,252) $(3,840) Interest Expense $(884) $(3,359) Interest Expense $(17) $(67)
                 
Derivatives Not Designated as Hedging Instruments           Location of Gain Recognized in Income on Derivative Amount of Gain Recognized in Income on Derivative
Three months ended September 30,            2017 2016
                 
Preferred stock embedded derivative           Interest and other non-property income $4,107
 $—
                 
Nine months ended September 30,  
  
    
  
    
  
                 
Preferred stock embedded derivative           Interest and other non-property income $5,827
 $—

Credit-Risk-Related Contingent Features

As of September 30, 2017, derivatives that were in a net liability position and subject to credit-risk-related contingent features had a termination value of $2.8 million, which included accrued interest but excluded any adjustment for nonperformance risk. These derivatives had a fair value, gross of asset positions, of $2.6 million at September 30, 2017.

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 our default on the indebtedness. As of September 30, 2017, 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 the termination value of $2.8 million.

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 Condensed Consolidated Balance Sheets. We did not have any asset or liability derivative balances that were offsetting that would have resulted in reported net derivative balances differing from the recorded gross amount of derivative assets of $2.0 million and $2.4 million (excluding the preferred stock embedded derivative) as of September 30, 2017 and December 31, 2016, respectively, or gross recorded derivative liabilities of $2.6 million and $7.6 million as of September 30, 2017 and December 31, 2016, respectively.





Other Comprehensive Income

MAA's other comprehensive income consists entirely of gains and losses attributable to the effective portion of our cash flow hedges. The chart below shows the change in the balance for the nine months ended September 30, 2017 and 2016 (dollars in thousands):
Changes in Accumulated Other Comprehensive Income (Loss) by Component
  Affected Line Item in the Condensed Consolidated Statements Of Operations Gains and Losses on Cash Flow Hedges
For the nine months ended September 30,  2017 2016
Beginning balance   $1,144
 $(1,589)
Other comprehensive income (loss) before reclassifications   (1,252) (3,840)
Amounts reclassified from accumulated other comprehensive income (interest rate contracts) Interest expense 884
 3,359
Net current-period other comprehensive loss attributable to noncontrolling interests   14
 25
Net current-period other comprehensive loss attributable to MAA   (354) (456)
Ending balance   $790
 $(2,045)

See also discussions in Note 9 to the Condensed Consolidated Financial Statements.

9.           Fair Value Disclosure of Financial Instruments

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

We apply Financial Accounting Standard 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 September 30, 2017as of March 31, 2019 and December 31, 2016,2018, totaled $3.23$3.6 billion and $3.00$3.1 billion, respectively, and had estimated fair values of $3.41$3.7 billion and $3.13$3.1 billion (excluding prepayment penalties), respectively, as of September 30, 2017March 31, 2019 and December 31, 2016.2018, respectively. The carrying values of variable rate notes payable (excluding the effectimpact of interest rate swap and cap agreements) at September 30, 2017as of March 31, 2019 and December 31, 2016,2018, totaled $1.3$1.0 billion and $1.5$1.1 billion, respectively, and had estimated fair values of $1.3$1.0 billion and $1.5$1.1 billion (excluding prepayment penalties), respectively, as of September 30, 2017March 31, 2019 and December 31, 2016. 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.2018, respectively. The fair values of fixed rate 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 rate debt are determined using the stated variable rate plus the current market credit spread. OurThe variable rates reset every 30 to 90 days, and we concludemanagement concluded 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.

Financial Instruments CarriedMeasured at Fair Value on a Recurring Basis

Currently, we useAs of March 31, 2019, the Company had four outstanding interest rate derivatives with a total notional balance of $300.0 million that were designated as cash flow hedges of interest rate risk. The Company uses interest rate swaps to add stability to interest expense and to manage, or hedge, its exposure to interest rate caps (options)to manage our interestmovements associated with its variable raterisk. The valuation debt or as hedges in anticipation 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.future debt transactions. 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 valuesvalue 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 usedderivative contracts designated as hedging instruments recorded in "Other assets" in the calculationaccompanying Condensed Consolidated Balance Sheets was $2.5 million and $3.7 million as of projected receipts on the cap are based on an expectationMarch 31, 2019 and December 31, 2018, respectively. The fair value of future interest rates derived from observable market interest rate curvesderivative contract liabilities recorded in "Accrued expenses and volatilities.other liabilities" in the accompanying Condensed Consolidated Balance Sheet was $5.3 million as of December 31, 2018. There were no interest rate derivative contract liabilities as of March 31, 2019.

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

The derivative asset related to the redemption feature embedded in the MAA Series I preferred stock issued in connection with Merger is valued using widely accepted valuation techniques, including a discounted cash flow analysis in which the perpetual value of the preferred shares is compared to the value withof the preferred shares assuming the call option givingis exercised, with the value of the bifurcated call option as the difference between the two values. This analysis reflects the contractual terms of the redeemable preferred shares, which are redeemable at the Company's option beginning on October 1, 2026 reflectingand at the redemption price of $50 per share $50, as the price at which the preferred stock is redeemable.(see Note 8). The analysis uses observable market-based inputs, including discount rates based on trading data available on the preferred shares, to interpolate ancoupon yields on preferred stock issuances from REITs with similar credit ratings as called valueMAA and adjusted based treasury rates to determine the presentfair value of cash flows for the called value and the perpetual value in addition to market data available on the preferred shares to interpolate an as called value and discount rate and again adjusted from there to determine the perpetual discount rate using the applicable treasury rates.bifurcated call option.

We have

The redemption feature embedded in the MAA Series I preferred stock is reported as a derivative asset in "Other assets" in the accompanying Condensed Consolidated Balance Sheets and is adjusted to its fair value at each reporting date, with a corresponding non-cash adjustment to "Other non-operating (expense) income" in the accompanying Condensed Consolidated Statements of Operations. As a result of adjustments of non-cash expense recorded to reflect the change in fair value of the derivative asset during the three months ended March 31, 2019, the fair value of the embedded derivative decreased to $18.1 million as of March 31, 2019 as compared to $18.6 million as of December 31, 2018.

The Company has determined that the majority of the inputs used to value ourits outstanding debt and derivatives, including its embedded derivative, fall within Level 2 of the fair value hierarchy, and as a result, the fair value valuation of its debt and all of ourits derivatives held as of September 30, 2017March 31, 2019 and December 31, 20162018 were classified as Level 2 in the fair value hierarchy. The Company's derivative financial instruments and their related gains and losses are reported in "Net change in operating accounts and other" in the accompanying Condensed Consolidated Statements of Cash Flows.


Cash Flow Hedges of Interest Rate Risk


The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in "Accumulated other comprehensive loss" and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. As long as a hedging instrument is designated and the results of the effectiveness testing support that the instrument qualifies for hedge accounting treatment, there is no periodic measurement or recognition of ineffectiveness. Rather, the full impact of hedge gains and losses will be recognized in the period in which hedged transactions impact earnings, regardless of whether or not economic mismatches exist in the hedging relationship. Amounts reported in "Accumulated other comprehensive loss" related to derivatives designated as qualifying cash flow hedges will be reclassified to interest expense as interest payments are made on the Company's variable rate or fixed rate debt. During the next twelve months, the Company estimates that an additional $1.6 million will be reclassified to earnings as a decrease to "Interest expense", which primarily represents the difference between the fixed interest rate swap payments and the projected variable interest rate swap receipts.












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

The tables below present our assetsthe effect of the Company's derivative financial instruments on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and liabilities measured at fair2018 (dollars in thousands):
Derivatives in Cash Flow Hedging Relationships (Loss) Gain Recognized in OCI on Derivative Location of Gain Reclassified from Accumulated OCL into Income 
Gain Reclassified from Accumulated OCL into Interest Expense(1)
Three months ended March 31, 2019 2018  2019 2018
Interest rate contracts $(2,456) $832
 Interest Expense $745
 $193
(1)
See the Condensed Consolidated Statements of Comprehensive Income for changes in accumulated other comprehensive loss as these changes are presented net of the allocation to noncontrolling interests.

Derivatives Not Designated as Hedging Instruments Location of Loss Recognized in Income on Derivative Loss Recognized in Earnings on Derivative
For the three months ended March 31,  2019 2018
Preferred stock embedded derivative Other non-operating (income) expense $(524) $(2,644)

Credit-Risk-Related Contingent Features

Certain of the Company's derivative contracts contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness. As of March 31, 2019, the Company had not breached the provisions of these agreements. If the provisions had been breached, the Company could have been required to settle its obligations under the agreements although there was no termination value on a recurring basisliability as of September 30, 2017March 31, 2019. Although the Company's derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both the Company and December 31, 2016, aggregated byits counterparties under certain situations, the levelCompany does not net its derivative fair values or any existing rights or obligations to cash collateral in the fair value hierarchy within which those measurements fall.Condensed Consolidated Balance Sheets.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2017
(dollars in thousands)
 Balance Sheet Location 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 September 30, 2017
   
Assets   
  
  
  
Interest rate derivative contractsOther assets $—
 $2,043
 $—
 $2,043
Preferred stock embedded derivativeOther assets —
 18,190
 —
 18,190
Total  $—
 $20,233
 $—
 $20,233
Liabilities   
  
  
  
Interest derivative rate contractsFair market value of interest rate swaps $—
 $2,602
 $—
 $2,602


Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2016
(dollars in thousands)
 Balance Sheet Location 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 December 31, 2016
   
Assets   
  
  
  
Interest rate derivative contractsOther assets $—
 $2,364
 $—
 $2,364
Preferred stock embedded derivativeOther assets —
 10,783
 —
 10,783
Total  $—
 $13,147
 $—
 $13,147
Liabilities   
  
  
  
Interest derivative rate contractsFair market value of interest rate swaps $—
 $7,562
 $—
 $7,562

The fair value estimates presented herein are based on information available to management as of September 30, 2017 and December 31, 2016.  These estimates are not necessarily indicative of the amounts we could ultimately realize.  See also discussions in Note 8 to the Condensed Consolidated Financial Statements.

10.8.           Shareholders' Equity of MAA

On September 30, 2017, 113,627,014As of March 31, 2019, 113,916,208 shares of common stock of MAA and 4,200,0324,105,171 OP Units in the Operating Partnership (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 117,827,046 common118,021,379 shares and units. At September 30, 2016, 75,542,583As of March 31, 2018, 113,745,207 shares of common stock of MAA and 4,143,2034,141,780 OP Units in(excluding the Operating Partnership (excluding OP Units held by MAA) were issued and outstanding, representing a total of 79,685,786 common117,886,987 shares and units. There were 108,438 optionsOptions to acquirepurchase 87,788 shares of MAAMAA's common stock were outstanding as of September 30, 2017, asMarch 31, 2019, compared to 39,08495,838 outstanding options as of September 30, 2016.

March 31, 2018. During the ninethree months ended September 30, 2017, 47,956March 31, 2019 and 2018, MAA issued 2,827 shares of MAA 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, 2016, 19,727and 12,600 shares, were acquired for that purpose. During the nine months ended September 30, 2017, we issued 10,340 sharesrespectively, related to the exercise of stock options. These exercises resulted in proceeds of $0.4 million. During the nine months ended September 30, 2016, there were no stock options exercised.



$0.2 million and $0.6 million, respectively.

Preferred Stock

As of September 30, 2017,March 31, 2019, MAA had one outstanding series of cumulative redeemable preferred stock, which has the following characteristics:
Description Outstanding Shares 
Liquidation Preference(1)
 Optional Redemption Date 
Redemption Price (2)
 Stated Dividend Yield Dividend Rate Outstanding Shares 
Liquidation Preference(1)
 Optional Redemption Date 
Redemption Price (2)
 Stated Dividend Yield Approximate Dividend Rate
 (per share) (per share) (per share) (per share)
Series I 867,846 $50.00 10/1/2026 $50.00 8.50% $4.25 867,846 $50.00 10/1/2026 $50.00 8.50% $4.25
(1) The total liquidation preference for the outstanding preferred stock is $43.4 million.
(2) The redemption price is the price at which the preferred stock is redeemable, at MAA's option, for cash.

11.9.    Partners' Capital of MAALP

Operating Partnership Units

InterestsCommon units of limited partnership interests in MAALP are represented by OP Units. As of September 30, 2017,March 31, 2019, there were 117,827,046118,021,379 OP Units outstanding, 113,627,014113,916,208, or 96.4%96.5%, of which represent Class B OP Units (common units issued to or held by MAALP's general partner or any of its subsidiaries), which were owned by MAA, MAALP's general partner. The remaining 4,200,0324,105,171 OP Units were Class A OP Units owned by non-affiliated limited partners, or Class A Limited Partners.limited partners. As of September 30, 2016,March 31, 2018, there were 79,685,786117,886,987 OP Units outstanding, 75,542,583113,745,207, or 94.8%96.5%, of which were owned by MAA and 4,143,2034,141,780 of which were owned by the Class A Limited Partners.limited partners.

MAA, as the sole general partner of MAALP, has full, complete and exclusive discretion to manage and control the business of the Operating PartnershipMAALP subject to the restrictions specifically contained within the Operating Partnership'sMAALP's agreement of limited partnership, or the Partnership Agreement. Unless otherwise stated in the Partnership Agreement, this power includes, but is not limited to, acquiring, leasing, or disposing of any real property; constructing buildings and making other improvements to properties owned; borrowing money, modifying or extinguishing current borrowings, issuing evidence of indebtedness, and securing such indebtedness by mortgage, deed of trust, pledge or other lien on the Operating Partnership'sMAALP's assets; and distribution of Operating PartnershipMAALP's cash or other assets in accordance with the Partnership Agreement. MAA can generally, at its sole discretion, issue and redeem OP Units and determine the consideration to be received or the redemption price to be paid, as applicable. MAAThe general partner may delegate these and other powers granted if MAA, the general partner remains in supervision of the designee.

Under the Partnership Agreement, the Operating PartnershipMAALP may issue Class A OP Units and Class B OP Units. Class A OP Units may only be held by limited partners who are not affiliated with MAA, in its capacity as general partner of the Operating Partnership,any OP Units other than Class B OP Units, while Class B OP Units may only beare those issued to or held by MAA, in its capacity asMAALP's general partner or any of the Operating Partnership, and as of September 30, 2017, a total of 4,200,032 Class A Units in the Operating Partnership were held by limited partners unaffiliated with MAA, while a total of 113,627,014 Class B Units were held by MAA.its subsidiaries. In general, the limited partners do not have the power to participate in the management or control of the Operating Partnership'sMAALP's business except in limited circumstances including changes in the general partner and protective rights if the general partner acts outside of the provisions provided in the Partnership Agreement. The transferability of Class A OP Units is also limited by the Partnership Agreement.

Net income (after allocations to preferred ownership interests) is allocated to the general partner and limited partners based on their respective ownership percentages of the Operating Partnership.MAALP. Issuance or redemption of additional Class A OP Units or Class B OP Units changes the relative ownership percentage of the partners. The issuance of Class B OP Units generally occurs when MAA issues common stock and the proceeds from that issuance are contributed to the Operating PartnershipMAALP in exchange for the issuance to MAA of a number of OP Units equal to the number of shares of common stock issued. Likewise, if MAA repurchases or redeems outstanding shares of common stock, the Operating PartnershipMAALP generally redeems an equal number of Class B OP Units with similar terms held by MAA for a redemption price equal to the purchase price of those shares of common stock. At each reporting period, the allocation between general partner capital and limited partner capital is adjusted to account for the change in the respective percentage ownership of the underlying capital of the Operating Partnership.MAALP. Holders of the Class A OP Units may require MAA to redeem their Class A OP Units, in which case MAA may, at its option, pay the redemption price either in cash (in an amount per Class A OP Unit equal, in general, to the average closing price of MAA's common stock on the NYSE over a specified period prior to the


redemption date) or by delivering one share of MAA common stock (subject to adjustment under specified circumstances) for each Class A OP Unit so redeemed.

At September 30, 2017,March 31, 2019, a total of 4,200,0324,105,171 Class A OP Units were outstanding and redeemable for 4,200,0324,105,171 shares of MAA common stock, with an approximate value of $448.9$448.8 million, based on the closing price of MAA’s common stock on the NYSE on SeptemberMarch 29, 2017,2019 of $106.88$109.33 per share. At September 30, 2016,March 31, 2018, a total of 4,143,2034,141,780 Class A OP Units were outstanding and


redeemable for 4,143,2034,141,780 shares of MAA common stock, with an approximate value of $389.4$377.9 million, based on the closing price of MAA’s common stock on the NYSE on September 30, 2016March 29, 2018 of $93.99$91.24 per share.

The Operating Partnership MAALP pays the same per unit distributiondistributions in respect to the OP Units as the per share dividenddividends MAA pays in respect to its common stock.

As of March 31, 2019, MAALP had one outstanding series of cumulative redeemable preferred units, or the MAALP Series I Preferred Units.  The MAALP Series I Preferred Units have the same characteristics as the MAA Series I preferred stock described in Note 8.  As of March 31, 2019, 867,846 units of the MAALP Series I Preferred Units were outstanding. 

12.     10.     Commitments and Contingencies

Leases

The Company's leases include a ground lease expiring in 2074 related to one of its apartment communities and an office lease expiring in 2028 related to its corporate headquarters. Both leases contain stated rent increases that generally compensate for the impact of inflation.  The Company also has other immaterial office and equipment operating leases.  

The table below reconciles undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease obligations recorded on the Condensed Consolidated Balance Sheet as of March 31, 2019 (in thousands):
 Operating Leases
2019$2,054
20202,744
20212,771
20222,767
20232,761
Thereafter68,516
Total minimum lease payments81,613
Net present value adjustments(48,056)
Operating lease obligations$33,557

Legal Proceedings

In September 2010,June 2016, plaintiffs Cathi Cleven and Tara Cleven, on behalf of a purported class of plaintiffs, filed a complaint against MAA and the United States Department of Justice, or DOJ, filed suit against Post Properties (and by virtue of the Merger, MAA)Operating Partnership in the United States District Court for the Western District of Columbia allegingTexas, Austin Division. In January 2017, Areli Arellano and Joe L. Martinez joined the lawsuit as additional plaintiffs. The lawsuit alleges that certain ofthe Company (but not Post Properties’ apartments violated accessibility requirementsProperties) charged late fees at its Texas properties that violate Section 92.019 of the Fair Housing Act,Texas Property Code, or FHA, and the Americans with Disabilities Act of 1990, or ADA. The DOJ is seeking,Section 92.019, which provides that a landlord may not charge a tenant a late fee for failing to pay rent unless, among other things, an injunction against MAA, requiring MAAthe fee is a reasonable estimate of uncertain damages to retrofit the propertieslandlord that are incapable of precise calculation and comply with FHA and ADA standards in future design and construction, as well asresult from the late payment of rent. The plaintiffs are seeking monetary damages and civil penalties. No trial date has been set.attorneys' fees and costs. In September 2018, the District Court certified a class proposed by the plaintiffs. Additionally, in September 2018, the District Court denied the Company’s motion for summary judgment and granted the plaintiffs’ motion for partial summary judgment. Because the District Court certified a class prior to granting the plaintiffs’ motion for partial summary judgment, the District Court’s ruling applies to the entire class. In October 2018, the Fifth Circuit Court of Appeals accepted the Company’s petition to review the District Court’s order granting class certification. The Company also intends to appeal the District Court’s order granting plaintiff's motion for summary judgment to the Fifth Circuit Court of Appeals if permission to appeal is granted. The Company will continue to vigorously defend the action and pursue such appeals. Management estimates that the Company's maximum exposure in the lawsuit, given the class certification and summary judgment ruling, is $54.6 million, which includes both potential damages and attorneys' fees but excludes any prejudgment interest that may be awarded.

WeIn April 2017, plaintiff Nathaniel Brown, on behalf of a purported class of plaintiffs, filed a complaint against the Operating Partnership, as the successor by merger to Post Properties' primary operating partnership, and MAA in the United States District Court for the Western District of Texas, Austin Division. The lawsuit alleges that Post Properties, Inc. (and, following


the Post Properties merger in December 2016, the Operating Partnership) charged late fees at its Texas properties that violate Section 92.019. The plaintiffs are seeking monetary damages and attorney's fees and costs. In September 2018, the District Court certified a class proposed by the plaintiff.  Additionally, in September 2018, the District Court denied the Company’s motion for summary judgment and granted the plaintiff’s motion for partial summary judgment. Because the District Court certified a class prior to granting the plaintiff’s motion for partial summary judgment, the District Court’s ruling applies to the entire class. In October 2018, the Fifth Circuit Court of Appeals accepted the Company's petition to review the District Court's order granting class certification. The Company also intends to appeal the District Court’s order granting plaintiff’s motion for summary judgment to the Fifth Circuit Court of Appeals if permission to appeal is granted. The Company will continue to vigorously defend the action and pursue such appeals. Management estimates that the Company's maximum exposure in the lawsuit, given the class certification and summary judgment ruling, is $8.4 million, which includes both potential damages and attorneys' fees but excludes any prejudgment interest that may be awarded.

The Company is subject to various other legal proceedings and claims that arise in the ordinary course of ourits business operations. Matters which arise out of allegations of bodily injury, property damage and employment practices are generally covered by insurance. While the resolution of these other matters cannot be predicted with certainty, management does not currently believes,believe that such matters, either individually or in the aggregate, the final outcome of such matters will not have any additionala material adverse effect on ourthe Company's financial position,condition, results of operations or cash flows.flows in the event of a negative outcome.

Loss Contingencies

The outcomes of the claims, disputes and legal proceedings described or referenced above are subject to significant uncertainty. We recordThe Company records an accrual for loss contingencies when a loss is probable and the amount of the loss can be reasonably estimated. We reviewThe Company also accrues an estimate of defense costs expected to be incurred in connection with legal matters. Management reviews these accruals quarterly and makemakes revisions based on changes in facts and circumstances. When a loss contingency is not both probable and reasonably estimable, we domanagement does not accrue the loss. However, if the loss (or an additional loss in excess of the accrual) is at least a reasonable possibility and material, then we disclosemanagement discloses a reasonable estimate of the possible loss, or range of loss, if such reasonable estimate can be made. If wethe Company cannot make a reasonable estimate of the possible loss, or range of loss, then a statement to that effect is disclosed.

The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or range of loss is reasonably estimable, often involves a series of complex judgments about future events. Among the factors that we considerconsidered in this assessment, including with respect to the matters disclosed in this Note, are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if reasonably estimable), the progress of the matter, existing law and precedent, the opinions or views of legal counsel and other advisers, ourmanagement's experience in similar matters, the facts available to usmanagement at the time of assessment, and how we intendthe Company intends to respond, or havehas responded, to the proceeding or claim. OurManagement's assessment of these factors may change over time as individual proceedings or claims progress. For matters where we aremanagement is not currently able to reasonably estimate a range of reasonably possible loss, the factors that have contributed to this determination include the following: (i) the damages sought are indeterminate; (ii) the proceedings are in the early stages; (iii) the matters involve novel or unsettled legal theories or a large or uncertain number of actual or potential cases or parties; and/or (iv) discussions with the parties in matters that are ultimately expected ultimately to be resolved through negotiation and settlement have not reached the point where we believemanagement believes a reasonable estimate of loss, or range of loss, can be made. In such instances, we believeThe Company believes that there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss or business impact, if any.

As of September 30, 2017March 31, 2019 and December 31, 2016,2018, the Company's accrual for loss contingencies relating to unresolved legal matters was $35.1$8.8 million and $42.1$8.7 million in the aggregate, respectively.


The loss contingencies are presented in "Accrued expenses and other liabilities" in the accompanying Condensed Consolidated Balance Sheets.

13.
11.           Segment Information

As of September 30, 2017, weMarch 31, 2019, the Company owned or had ownership interest inand operated 303 multifamily apartment communities in 17 different states and the District of Columbia from which weit derived all significant sources of earnings and operating cash flows. Senior managementThe Company views each consolidated apartment community as an operating segment. The Company's chief operating decision maker, which is the Company’s Chief Executive Officer, evaluates performance and determines resource allocations of each of ourthe apartment communities on a Large Market Same Store, Secondary Market Same Store and Non-Same Store and Other basis, as well as an individual apartment community basis. This is consistent with the aggregation criteria under GAAP as each of ourthe apartment communities generally has similar economic characteristics, facilities, services, and tenants. The following arereflects the threetwo reportable operating segments for MAA and the Operating Partnership:Company:

Large market same store
Same Store communities are generally communities in markets with a population of at least 1 million and at least 1% ofthat the total public multifamily REIT units that we haveCompany has owned and have been stabilized for at least a full 12


months.
Secondary market same store communities are generally communities in markets with populations of more than 1 million but less than 1% of the total public multifamily REIT units or markets with populations of less than 1 million that we have ownedNon-Same Store and have been stabilized for at least a full 12 months.
Non-same store communities and otherOther includes recent acquisitions, communities in development or lease-up, communities that have been identified for disposition and communities that have undergoneincurred a significant casualty loss. Also included in non-same store communitiesNon-Same Store and Other are non-multifamily activities.

On the first day of each calendar year, we determinethe Company determines the composition of our same store operatingits Same Store and Non-Same Store and Other reportable segments for that year as well as adjustadjusts the previous year, which allows usthe Company to evaluate full period-over-period operating comparisons.  Properties in development or lease-up will beare added to the same storeSame Store portfolio on the first day of the calendar year after they haveit has 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 storethe Same Store portfolio.

We utilizeThe chief operating decision maker utilizes net operating income, or NOI, in evaluating the performance of theits operating 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 believeManagement believes that NOI is a helpful tool in evaluating the operating performance of ourthe segments because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance.

All properties acquired from Post Properties have been placed in our Non-Same Store and Other operating segment, as the properties are recent acquisitions and have not been owned and stabilized for at least 12 months as of the first day of the current calendar year.

























Revenues and NOI for each reportable segment for the three-three months ended March 31, 2019 and nine- month periods ended September 30, 2017 and 20162018 were as follows (dollars in(in thousands):
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
Revenues:       
Large Market Same Store$169,105
 $165,046
 $503,076
 $487,725
Secondary Market Same Store87,895
 85,822
 261,272
 254,685
Non-Same Store and Other127,550
 26,030
 381,901
 75,740
Total operating revenues$384,550
 $276,898
 $1,146,249
 $818,150
        
NOI: 
  
  
  
Large Market Same Store$104,574
 $101,595
 $313,419
 $302,230
Secondary Market Same Store53,836
 53,124
 162,617
 159,263
Non-Same Store and Other76,961
 15,533
 233,792
 46,175
Total NOI235,371
 170,252
 709,828
 507,668
Depreciation and amortization(117,928) (76,959) (374,285) (227,829)
Acquisition expenses—
 (1,033) —
 (2,167)
Property management expenses(10,281) (7,908) (32,007) (25,221)
General and administrative expenses(8,361) (6,661) (30,735) (20,257)
Merger related expenses(128) (3,901) (3,977) (3,901)
Integration costs(4,002) —
 (10,521) —
Interest and other non-property income4,303
 64
 7,632
 159
Interest expense(39,940) (32,168) (115,005) (96,418)
Gain on debt extinguishment/modification828
 —
 3,168
 3
Gain on sale of depreciable real estate assets58,844
 47,749
 59,045
 48,572
Net casualty gain (loss) after insurance and other settlement proceeds564
 (75) 233
 738
Income tax expense(641) (454) (1,910) (1,200)
(Loss) gain on sale of non-depreciable real estate assets(6) —
 42
 2,170
Gain from real estate joint ventures335
 —
 1,021
 27
Net income attributable to noncontrolling interests(4,249) (4,627) (7,600) (9,508)
Preferred Dividends(922) —
 (2,766) —
Net income available for MAA common shareholders$113,787
 $84,279
 $202,163
 $172,836
 Three months ended March 31,
 2019 2018
Revenues:   
Same Store   
Rental revenues$372,441
 $341,095
Reimbursable property revenues (1)
—
 23,002
Other property revenues3,099
 2,874
Total Same Store revenues$375,540
 $366,971
Non-Same Store and Other   
Rental revenues$25,499
 $17,945
Reimbursable property revenues (1)
—
 685
Other property revenues139
 416
Total Non-Same Store and Other revenues
$25,638
 $19,046
Total rental and other property revenues$401,178
 $386,017
    
Net Operating Income: 
  
Same Store NOI$237,439
 $231,655
Non-Same Store and Other NOI14,362
 9,958
Total NOI251,801
 241,613
Depreciation and amortization(122,789) (120,744)
Property management expenses(13,842) (12,880)
General and administrative expenses(13,153) (10,132)
Merger and integration expenses—
 (3,799)
Interest expense(45,700) (40,905)
Loss on sale of depreciable real estate assets(13) —
Gain on sale of non-depreciable real estate assets8,963
 150
Other non-operating income (expense)935
 (2,341)
Income tax expense(641) (640)
Income from real estate joint venture397
 498
Net income attributable to noncontrolling interests(2,298) (1,801)
Dividends to MAA Series I preferred shareholders(922) (922)
Net income available for MAA common shareholders$62,738
 $48,097
(1)As a result of the adoption of ASC Topic 842 referenced in Note 1, for the three months ended March 31, 2019, Same Store and Non-Same Store reimbursable property revenues of $23.0 million and $0.8 million, respectively, are reflected as rental revenues.



Assets for each reportable segment as of September 30, 2017March 31, 2019 and December 31, 20162018 were as follows (dollars in(in thousands):

September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
Assets:      
Large Market Same Store$4,038,127
 $4,126,885
Secondary Market Same Store1,731,050
 1,768,183
Same Store$9,935,157
 $9,991,538
Non-Same Store and Other5,527,583
 5,479,780
1,178,083
 1,163,083
Corporate assets236,041
 229,643
190,522
 169,160
Total assets$11,532,801
 $11,604,491
$11,303,762
 $11,323,781




14.12.           Real Estate Acquisitions and Dispositions

The following chart shows ourtable reflects the Company's acquisition activity for the ninethree months ended September 30, 2017:

March 31, 2019:
Community
Multifamily Acquisition (1)
 Market Units Date Acquired
Charlotte atNovel Midtown Nashville, TNPhoenix, AZ 279345 March 16, 2017February 2019
(1) This pre-purchase multifamily community development is being developed through a joint venture with a local developer. The Company holds an 80% interest in the joint venture.

The following chart shows ourtable reflects the Company's disposition activity for the ninethree months ended September 30, 2017:

March 31, 2019:
CommunityLand Disposition Market Units or Acres Date Sold
Lakewood Ranch - OutparcelTampa, FL12 acresApril 7, 2017
Post AlexanderPeachtree Road - Outparcel Atlanta, GA 1 acre June 12, 2017February 2019
Paddock Club Lakeland Lakeland, FL 464 July 13, 2017
Paddock Club Lakeland - OutparcelCommercial Disposition Lakeland, FLMarket 9 acresSq Ft July 13, 2017Date Sold
Paddock Club MontgomeryPoplar Avenue Office Montgomery, ALMemphis, TN 20842,000 July 20, 2017
Northwood PlaceFort Worth, TX270July 20, 2017
Town Park Lot 12Orlando, FL1 acreAugust 7, 2017March 2019

15.           Recent Accounting Pronouncements13.           Subsequent Events

The following table provides a brief descriptionOn April 5, 2019, the Company acquired approximately two acres of recent accounting pronouncements that could have a material effect on our financial statements:
StandardDescriptionDate of AdoptionEffect on the Financial Statements or Other Significant Matters
ASU 2014-09,  Revenue from Contracts with Customers
This ASU establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services as outlined in a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. Income from lease contracts is specifically excluded from this ASU.

This ASU is effective for annual reporting periods beginning after December 15, 2017, as a result of a deferral of the effective date arising from the issuance of ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date. Early adoption is permitted.

The amendments may be applied using the full retrospective transition method or by using the modified retrospective transition method with a cumulative effect recognized as of the date of initial application. We will adopt ASU 2014-09 effective January 1, 2018, using the modified retrospective approach. The majority of our revenue is derived from real estate lease contracts, which falls under ASU 2016-02, Leases. Our analysis on non-lease related revenues, which comprise approximately 10% of consolidated revenues, indicates the adoption of this ASU will not have a material impact on our consolidated financial statements and internal accounting policies.
ASU 2016-02,  Leases
This ASU amends existing accounting standards for lease accounting and establishes the principles for lease accounting for both the lessee and lessor. The amendment requires an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendment also requires certain quantitative and qualitative disclosures about leasing arrangements.

This ASU is effective for annual reporting periods beginning after December 15, 2018; however, early adoption is permitted.
The standard must be adopted using a modified retrospective transition and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are currently evaluating the impact this standard may have on our consolidated financial statements and related disclosures upon adoption.

ASU 2016-09,  Improvements to Employee Share-Based Payment Accounting
This ASU amends existing accounting standards for certain aspects of share-based payments to employees. The new guidance will require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur.This ASU is effective for annual reporting periods beginning after December 15, 2016. We adopted this guidance effective January 1, 2017.We adopted this standard effective January 1, 2017, using the modified retrospective transition method, with a cumulative-effect adjustment to retained earnings, and there was no material effect on our consolidated financial position or results of operations taken as a whole.
development land located in the Orlando, Florida market.



StandardDescriptionDate of AdoptionEffect on the Financial Statements or Other Significant Matters
ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)
This ASU clarifies how several specific cash receipts and cash payments are to be presented and classified on the statement of cash flows, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration made after a business combination, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of predominance principle.This ASU is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted.Each amendment in this standard must be applied prospectively, retrospectively, or as of the beginning of the earliest comparative period presented in the year of adoption, depending on the type of amendment. We expect to adopt ASU 2016-15 as of January 1, 2018. We have determined that three of the eight transactions in the update are relevant to MAA and its cash flows, including: 1) debt prepayment or debt extinguishment costs, 2) proceeds from the settlement of insurance claims and 3) distributions received from equity method investees. We performed an analysis and determined that only the change in classification of debt prepayment or debt extinguishment costs, which we currently report in operating activities, will have a material impact on the statement of cash flows. Upon adoption in Q1 2018, $1.6 million of cash outflows for debt prepayment or extinguishment costs currently reported in net cash provided by operating activities for the nine months ended September 30, 2017, will be re-classified to and reported in net cash used in financing activities.
ASU 2016-18, Statement of Cash Flows (Topic 230):Restricted Cash (A Consensus of the FASB Emerging Issues Task Force)
This ASU requires restricted cash to be presented with cash and cash equivalents when reconciling the beginning and ending amounts in the statements of cash flows.This ASU is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted.The update should be applied retrospectively to each period presented. We expect to adopt ASU 2016-18 as of January 1, 2018. We currently report the change in restricted cash within the operating and investing activities in our consolidated statement of cash flows. Upon adoption in Q1 2018, cash and cash equivalents reported in our consolidated statements of cash flows for the nine months ended September 30, 2017 will increase by approximately $80.3 million to reflect the restricted cash balances. Additionally, net cash used in investing activities will decrease by $10.6 million for the nine months ended September 30, 2017.
ASU 2017-01, Clarifying the Definition of a Business (Topic 805)
This ASU clarifies the definition of a business and provides further guidance for evaluating whether a transaction will be accounted for as an acquisition of an asset or a business.This ASU is effective for interim and annual periods beginning after December 15, 2017. We early adopted this standard effective January 1, 2017.We adopted this standard as of January 1, 2017 and the adoption did not require any additional disclosures. We believe most of our future acquisitions of operating properties will qualify as asset acquisitions and most future transaction costs associated with these acquisitions will be capitalized. Through the third quarter of 2017, acquisition costs totaling $0.6 million related to our acquisition of Charlotte at Midtown were capitalized and allocated to the assets acquired based on the relative fair market value of those underlying assets.
ASU 2017-12, Derivatives and Hedging (Topic 815)

This ASU clarifies hedge accounting requirements, improves disclosure of hedging arrangements, and better aligns risk management activities and financial reporting for hedging relationships.This ASU is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted.The standard should be adopted using a modified retrospective approach. We are currently evaluating the impact this standard may have on our consolidated financial statements and related disclosures upon adoption.



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

The following discussion analyzes the financial condition and results of operations of both MAA and the Operating Partnership, of which MAA is the sole general partner and in which MAA owned a 96.4% limited partner96.5% interest as of September 30, 2017.March 31, 2019. MAA conducts substantially all of its business through the Operating Partnership and the Operating Partnership’sits various subsidiaries.

The following This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes appearingcondensed consolidated financial statements included elsewhere in this Report.  Historical resultsQuarterly Report on Form 10-Q.

MAA, an S&P 500 company, is a multifamily focused, self-administered and trends that might appearself-managed real estate investment trust, or REIT. We own, operate, acquire and selectively develop apartment communities primarily located in the following discussionSoutheast, Southwest and Mid-Atlantic regions of the United States.  As of March 31, 2019, we owned and operated 303 apartment communities through the Operating Partnership and its subsidiaries, we had an ownership interest in one apartment community through an unconsolidated real estate joint venture, and we had five development communities under construction. In addition, as of March 31, 2019, we owned four commercial properties, and 30 of our apartment communities included retail components. Our apartment communities and commercial properties are located across 17 states and the District of Columbia.

We report in two segments, Same Store communities and Non-Same Store and Other. Our Same Store segment represents those communities that have been owned and stabilized for at least 12 months as of the first day of the calendar year. Our Non-Same Store and Other segment includes recently acquired communities, communities being developed or in lease-up, communities undergoing extensive renovations, communities identified for disposition, and communities that have incurred a significant casualty loss. Also included in our Non-Same Store and Other segment are non-multifamily activities. Additional information regarding the Condensed Consolidated Financial Statements should not be interpreted as being indicativecomposition of future operations.our segments is included in Note 11 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Risk
Risks Associated with Forward Looking Statements

We consider this and other sections of this Quarterly Report on Form 10-Q to contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections,


intentions or other items related to the future. Such forward-looking statements may include, without limitation, statements concerning forecasted operating performance and results, property acquisitions and dispositions, joint venture activity, development and renovation activity as well as other capital expenditures, capital raising activities, rent and expense growth, occupancy, financing activities, and interest rate and other economic expectations, as well as statements about the anticipated benefits from the Merger.expectations. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, as described below, which may cause theour actual results, performance or achievements to be materially different from the results of operations, financial conditions or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such forward-looking statements included in this Quarterly Report on Form 10-Q may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.

The following factors, among others, could cause our futureactual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements:
 
inability to generate sufficient cash flows due to market conditions, changes in supply and/or demand, competition, uninsured losses, changes in tax and housing laws, or other factors;
exposure, as a multifamily-focusedmultifamily focused REIT to risks inherent in investments in a single industry and sector;
adverse changes in real estate markets, including, but not limited to, the extent of future demand for multifamily units in our significant markets, barriers of entry into new markets which we may seek to enter in the future, limitations on our ability to increase rental rates, competition, our ability to identify and consummate attractive acquisitions or development projects on favorable terms, our ability to consummate any planned dispositions in a timely manner on acceptable terms, and our ability to reinvest sale proceeds in a manner that generates favorable returns;
failure of new acquisitions to achieve anticipated results or be efficiently integrated;
failure of development communities to be completed, if at all, within budget and on a timely basis, or to lease-up as anticipated;anticipated or to achieve anticipated results;
unexpected capital needs;
changes in operating costs, including real estate taxes, utilities and insurance costs;
losses from catastrophes in excess of our insurance coverage;
ability to obtain financing at favorable rates, if at all, and refinance existing debt as it matures;
level and volatility of interest or capitalization rates or capital market conditions;
loss of hedge accounting treatment for interest rate swaps or interest rate caps;swaps;
the continuation of the good credit of our interest rate swap and cap providers;
price volatility, dislocations and liquidity disruptions in the financial markets and the resulting impact on financing;
the effect of any rating agency actions on the cost and availability of new debt financing;
the effect of the phase-out of the London Interbank Offered Rate, or LIBOR, as a variable rate debt benchmark by the end of 2021 and the transition to a different benchmark interest rate could have adverse effects on our interest expense and our cash flow for general corporate requirements;
significant decline in market value of real estate serving as collateral for mortgage obligations;
significant change in the mortgage financing market that would cause single-family housing, either as an owned or rental product, to become a more significant competitive product;
our ability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax purposes, the ability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal


income tax purposes, the ability of our taxable REIT subsidiaries to maintain their status as such for federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;
inability to attract and retain qualified personnel;
cyber liability or potential liability for breaches of our privacy or information security systems;
potential liability for environmental contamination;
adverse legislative or regulatory tax changes;
litigation and legal proceedings relating to various issues, which, among other things, could result in a class action lawsuit;
compliance costs associated with laws requiring access for disabled persons;
risks associated with the Merger, including the integration of MAA's and Post Properties' businesses and achieving expected revenue synergies and/or cost savings as a result of the Merger;
risks associated with unexpected costs or unexpected liabilities that may arise from the Merger; and
other risks identified in this Quarterly Report on Form 10-Q and, from time to time, in other reports we file with the Securities and Exchange Commission, or the SEC, or in other documents that we publicly disseminate.
    
New factors may also emerge from time to time that could have a material adverse effect on our business. Except as
otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements contained in this Quarterly


Report on Form 10-Q to reflect events, circumstances or changes in expectations after the date on which this Report is filed.

Critical Accounting Policies and Estimates

Please refer to our AnnualQuarterly Report on Form 10-K for the year ended December 31, 2016 that we filed with the SEC on February 24, 2017 for discussions of our critical accounting policies. During the nine months ended September 30, 2017, there were no material changes to these policies.10-Q is filed.

Overview of the Three Months Ended March 31, 2019September 30, 2017

As noted earlier, on December 1, 2016, we consummated the Merger and acquired all of Post Properties' consolidated net assets. The consolidated net assets and results of operations of Post Properties are included in our Condensed Consolidated Financial Statements of this Report from the closing date, December 1, 2016, going forward. All properties acquired from Post Properties have been placed in our Non-Same Store and Other operating segment, as the properties are recent acquisitions and have not been owned and stabilized for at least 12 months.

For the three months ended September 30, 2017,March 31, 2019, net income available for MAA common shareholders was $113.8$62.7 million compared to $84.3$48.1 million for the three months ended September 30, 2016.March 31, 2018. Results for the three months ended September 30, 2017March 31, 2019 included $58.8 million of gains related to the sale of real estate assets, $4.1 million of merger and integration costs related to the Merger as well as $38.8 million of additional depreciation and amortization expense. Results for the quarter ended September 30, 2016 included $47.7$9.0 million of gains related to the sale of real estate assets and $3.9$0.5 million of merger costs. These increasesexpense related to net expense were partially offsetthe fair value adjustment of the embedded derivative related to the MAA Series I preferred stock. Results for the quarter ended March 31, 2018 included $2.6 million of income related to the adjustment of the embedded derivative. Revenues for the three months ended March 31, 2019 increased 3.9% compared to the three months ended March 31, 2018, primarily driven by increasesa 2.3% increase in revenues primarily resulting from the Merger, as we experiencedour Same Store segment and a 390.0%34.6% increase in our Non-Same Store and Other segment. We also experiencedProperty operating expenses, excluding depreciation and amortization, for the three months ended March 31, 2019 increased 3.4% compared to the three months ended March 31, 2018, due to a 2.5%2.1% increase in our Large Market Same Store segment revenues and a 2.4% increase in our Secondary Market Same Store segment revenue. The increases in expense were driven by the above mentioned factors and increased property operating expenses primarily in our Non-Same Store and Other segment from the properties we acquired in the Merger resulting in a 381.9%24.1% increase in our Non-Same Store and Other segment. We also experienced a 1.7% increase in our Large Market Same Store segment expenses and a 4.2% increase in our Secondary Market Same Store segment expenses.

The drivers of these increases are discussed below in the "Results of Operations" section.Our same store portfolio represents those communities that have been held and have been stabilized for at least 12 months. Communities excluded from the same store portfolio include recent acquisitions, such as the communities acquired as result of the Merger, communities being developed or in lease-up, communities undergoing extensive renovations, and communities identified for disposition. Additional information regarding the composition of our operating segments is included in Note 13 to the Condensed Consolidated Financial Statements included in this Report.









Trends

The following table showsDuring the three months ended March 31, 2019, demand for apartments continued to be relatively strong, as it was during the three months ended March 31, 2018. Average daily physical occupancy for our multifamily real estate assets as of September 30, 2017 and 2016:

 September 30, 2017 September 30, 2016
Properties(1)
303 251
Units(1)
99,881 79,170
Development units1,434 550
Average effective rent per unit for the three months ended, excluding lease-up and development$1,180 $1,058
Physical occupancy, excluding lease-up and development96.4% 96.6%
(1) Includes property/units owned by a nonconsolidated joint venture.

Average effective rent per unit is equal toSame Store segment was 95.9% for the three months ended March 31, 2019, down from the 96.2% average of gross rent amounts afterdaily physical occupancy for the effect of leasing concessions for occupied units plus prevalent market rates asked for unoccupied units, divided by the total number of units. Leasing concessions represent discounts to the current market rate. We believethree months ended March 31, 2018. Importantly, average effective rent per unit for the Same Store portfolio continued to increase, up 3.1% for the three months ended March 31, 2019 as compared to the three months ended March 31, 2018.
An important part of our portfolio strategy is to maintain diversity of markets, submarkets, product types and price points in the Southeast, Southwest and Mid-Atlantic regions of the United States. This diversity tends to mitigate exposure to economic issues in any one geographic market or area. We believe that a well-balanced portfolio, including inner loop, suburban and downtown/central business district locations, with various monthly rent price points, will perform well in “up” cycles as well as weather “down” cycles better. Through our investment in 38 defined metropolitan statistical areas, we are diversified across markets, urban and suburban submarkets, and a variety of monthly rent pricing points.
Though overall demand continues to be strong, the current elevated supply levels are impacting rent growth for our portfolio, particularly for apartment communities located in urban submarkets. Properties in suburban submarkets have been impacted somewhat less by supply, primarily because less new development has occurred in those submarkets. Multifamily permitting is typically a leading indicator of future supply levels. While multifamily permitting across our markets was down in 2017 as compared to 2016, multifamily permitting across our markets in 2018 was up as compared to 2017. It is difficult to project supply levels based on this data because not all permitted projects are ultimately built. However, given the current supply level and the 2018 permitting data, we believe it is possible that supply in some of our markets could remain elevated over the next couple of years.
Demand for our apartments is primarily driven by general economic conditions in our markets. In particular, job growth relative to new supply is a helpful measurementcritical factor in evaluating average pricing. It doesour ability to maintain occupancy and increase rents. To the extent that economic conditions continue to support increased job growth, we believe that we may be able to maintain solid occupancy and more effectively increase rents. We also believe that more disciplined credit terms for residential mortgages should continue to favor rental demand at existing multifamily apartment communities. Furthermore, rental competition from single family homes has not represent actualhistorically been a major competitive factor impacting our portfolio. We have seen significant rental revenues collected per unit. See discussioncompetition from single family homes in only a few of same store average rent per unitour submarkets. For the three months ended March 31, 2019, total move outs attributable to single family home rentals for our combined portfolio represented less than 6% of total move outs, down slightly from the three months ended March 31, 2018. Long term, we expect demographic trends (including the growth of prime age groups for rentals and occupancy comparisonsimmigration and population movement to the Southeast, Southwest and Mid-Atlantic regions) will continue to support apartment rental demand in the "Trends" section below.our markets.

In additionRising interest rates may have a significant impact on our business and results of operations. As of March 31, 2019, we had approximately $4.5 billion of debt, of which 15% had variable rate interest and 85% had fixed or hedged interest rates. To the extent interest rates rise, our net interest expense on variable rate debt will increase as potentially will our net interest expense on any debt refinancing. Given the short-term nature of our leases, to the multi-family assets detailedextent interest rates rise due to general economic growth, we would expect increases in interest expense to be somewhat offset by positive leasing trends.

Our focus is on maintaining strong physical occupancy while increasing pricing where possible through our revenue


management system. As noted above, twenty-nineaverage daily physical occupancy for the three months ended March 31, 2019 slightly decreased to 95.9%. As we move into the typically busy spring and summer leasing season, we believe that the current level of physical occupancy and continued strong job growth in our multifamily properties also include retail components with approximately 600,000 square feetmarkets positions us well for the remainder of gross leasable area. We also owned four commercial properties totaling approximately 232,000 square feet of combined gross leasable space at September 30, 2017.

2019 and sets us up to achieve improved pricing growth over what was achieved in the same period in 2018.
Results of Operations

Comparison of the three months ended September 30, 2017March 31, 2019 to the three months ended September 30, 2016March 31, 2018

For the three months ended March 31, 2019, we achieved net income available for MAA common shareholders of $62.7 million, a 30.4% increase compared to the three months ended March 31, 2018, and total revenue growth of $15.2 million, representing a 3.9% increase in property revenues compared to the three months ended March 31, 2018. The following discussion describes the primary drivers of the increase in net income available for MAA common shareholders for the three months ended March 31, 2019 as compared to the three months ended March 31, 2018.

Property Revenues

The following table showsreflects our property revenues by segment for the three months ended September 30, 2017March 31, 2019 and September 30, 2016March 31, 2018 (dollars in thousands):

 Three months ended September 30,    
 2017 2016 Increase Percentage Increase
Large Market Same Store$169,105
 $165,046
 $4,059
 2.5%
Secondary Market Same Store87,895
 85,822
 2,073
 2.4%
Same Store Portfolio257,000
 250,868
 6,132
 2.4%
Non-Same Store and Other127,550
 26,030
 101,520
 390.0%
Total$384,550
 $276,898
 $107,652
 38.9%
 Three months ended March 31,    
 2019 2018 Increase Percentage Increase
Same Store$375,540
 $366,971
 $8,569
 2.3%
Non-Same Store and Other25,638
 19,046
 6,592
 34.6%
Total$401,178
 $386,017
 $15,161
 3.9%

The increasesincrease in property revenues from our Large Market Same Store and Secondary Marketsegment as compared to the three months ended March 31, 2018 was the primary driver in total property revenue growth. The Same Store segments aresegment generated a 2.3% increase in revenues for the three months ended March 31, 2019, primarily a result of increased average effective rent per unit growth of 2.8% for both segments year over year, respectively.3.1% offset by a slight decrease in occupancy as compared to the three months ended March 31, 2018. The increase in property revenues from our Non-Same Store and Other segment isfor the three months ended March 31, 2019 as compared to three months ended March 31, 2018 was primarily the result of the Merger, as we classified the properties we acquired as non-same store. See the discussioncontinued lease-up of our segment classification methodology in Note 13 to the Condensed Consolidated Financial Statements included in this Report.











recent development communities.

Property Operating Expenses

Property operating expenses include costs primarily consisting offor property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and landscaping.other operating expenses. The following table showsreflects our property operating expenses by segment for the three months ended September 30, 2017March 31, 2019 and September 30, 2016March 31, 2018 (dollars in thousands):

 Three months ended September 30,    
 2017 2016 Increase Percentage Increase
Large Market Same Store$64,531
 $63,451
 $1,080
 1.7%
Secondary Market Same Store34,059
 32,698
 1,361
 4.2%
Same Store Portfolio98,590
 96,149
 2,441
 2.5%
Non-Same Store and Other50,589
 10,497
 40,092
 381.9%
Total$149,179
 $106,646
 $42,533
 39.9%
 Three months ended March 31,    
 2019 2018 Increase Percentage Increase
Same Store$138,101
 $135,316
 $2,785
 2.1%
Non-Same Store and Other11,276
 9,088
 2,188
 24.1%
Total$149,377
 $144,404
 $4,973
 3.4%

The increase in property operating expenses from our Large Market Same Store segment isfor the three months ended March 31, 2019 as compared to the three months ended March 31, 2018 was primarily a result ofdriven by increases in real estate taxes of $0.5 million and hurricane related expenses resulting from Hurricanes Harvey and Irma of $1.4 million. These were offset by decreases in insurancetax expense of $0.5 million, and building repairs and maintenance expense of $0.3$3.0 million. The increase in property operating expenses from our Secondary Market SameNon-Same Store and Other segment isfor the three months ended March 31, 2019 as compared to the three months ended March 31, 2018 was primarily athe result of increases in real estate taxestax expense of $0.5 million, hurricane related expenses of $0.6$1.1 million and personnel expenseexpenses of $0.2 million. The increase$1.4 million primarily due to the recent completion of apartment communities previously in property expenses from our Non-Same Store and Other segment is primarily the result of the Merger and $0.3 million of hurricane related expenses.development pipeline.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended September 30, 2017March 31, 2019 was approximately $117.9$122.8 million, an increase of $41.0$2.0 million fromcompared to the three months ended September 30, 2016.March 31, 2018. The increase inwas primarily driven by the recognition of depreciation expense associated with our capital asset spend subsequent to March 31, 2018 and amortization expense is primarily duethrough March 31, 2019. The capital asset spend was related to additional depreciation of $37.9 million resulting from properties acquired from the Merger, in addition to asset additionsour development and redevelopment activities made in the normal course of business.business through March 31, 2019.

Acquisition Expense

During the three months ended September 30, 2017, no significant acquisition expense was recorded. A decrease of approximately $1.0 million from the three months ended September 30, 2016 was due to the adoption of ASU 2017-01, Clarifying the Definition of a Business (Topic 805), during the first quarter of 2017. Based on the adoption of this guidance, acquisition costs related to properties acquired are now capitalized.

Property ManagementOther Income and Expenses

Property management expenses for the three months ended September 30, 2017March 31, 2019 were approximately $10.3$13.8 million, an increase of $2.4$1.0 million fromas compared to the three months ended September 30, 2016. ThisMarch 31, 2018. The increase iswas primarily due to the growthincreases in our portfolio as a result of the Merger.

General and Administrative Expenses

personnel costs. General and administrative expenses for the three months ended September 30, 2017March 31, 2019 were approximately $8.4$13.2 million, an increase of $1.7$3.0 million fromas compared to the three months ended September 30, 2016. This increase isMarch 31, 2018, primarily driven by our growth as a result of the Merger, as well as,due to increases in legal expenses quarter over quarter.

Merger and Integration Related Expenses

Mergerpersonnel costs. No merger and integration related expenses for the acquisition of Post Properties forwere incurred during the three months ended September 30, 2017 were primarily comprisedMarch 31, 2019, which represented a decrease of approximately $0.1$3.8 million legal costs and $4.0 million of systems and professional costs. Such current year expenses were approximately $0.2 million more than the merger and integration related expenses for the then pending acquisition of Post Properties foras compared to the three months ended September 30, 2016.




Interest and Other Non-Property Income

Interest and other non-property income for the three months ended September 30, 2017 was approximately $4.3 million, an increaseMarch 31, 2018, primarily due to completion of approximately $4.2 million from the three months ended September 30, 2016. This increase is primarily driven by $4.1 million of quarter-to-date mark-to-market adjustments of the bifurcated embedded derivativeintegration activities related to the MAA Series I preferred stock issued as a resultmerger with Post Properties by the end of the Merger.
Interest Expense2018.

Interest expense for the three months ended September 30, 2017March 31, 2019 was approximately $39.9$45.7 million, an increase of $7.8$4.8 million fromas compared to the three months ended September 30, 2016.March 31, 2018. The increase was primarily due to increased borrowing as we assumed several loans as a resultdriven by an increase of the Merger, including a secured loan with a face value of $186.0 million and two unsecured loans with face values of $150.0 million and $250.0 million. Additionally, we entered into a new $300.0 million term loan on the closing date of the Merger. Duringapproximately 18 basis points in our effective interest rate during the three months ended June 30, 2017, we issued a public bond with a face value of $600.0 million, bearing interest at 3.60% per annum. Such increases were offset by a slight decreaseMarch 31, 2019 compared to the same period in interest expense as during July 2017 we paid off the $150.0 million unsecured loan assumed as part of the Merger; the note was scheduled for maturity in October 2017.prior year.

Gain on Debt Extinguishment

We recorded a gain on debt extinguishmentsale of $0.8 millionnon-depreciable assets for the three months ended September 30, 2017. We did not record a gain or loss forMarch 31, 2019 was $9.0 million, an increase of $8.8 million as compared to the three months ended September 30, 2016. The current period gain on debt extinguishment resulted fromMarch 31, 2018. Although quarterly land disposition volume decreased year-over-year, the payoffs of a US Bank term loan with a face value of $150.0 million and a mortgage associated with the Venue at Stonebridge Ranch with a face value of $14.0 million during three months ended September 30, 2017. There was approximately $0.8 million and $0.1 million on the term loan and mortgage, respectively, of unamortized debt adjustments remaining as of the payoff dates. These fair market values were recognized as a gain on debt extinguishment during the three months ended September 30, 2017.

Net Casualty Gain (Loss) After Insurance and Other Settlement Proceeds

During the three months ended September 30, 2017, we recorded a net casualty gain after insurance proceeds of $0.6 million. This increase of $0.6 million from the three months ended September 30, 2016 was due to the receipt of insurance proceeds for a previous casualty loss of $1.3 million, offset by a casualty loss of $0.7 million from damage caused by Hurricane Irma.

Gain on Sale of Depreciable Real Estate Assets

We recorded a gain on sale of depreciable real estate assets of $58.8 million for the three months ended September 30, 2017, an increase of approximately $11.1 million from the three months ended September 30, 2016. Although disposition activity decreased from the three months ended September 30, 2016, gain on sale of depreciablenon-depreciable assets increased primarily due to the nature of the real estate assets sold.

Net Income Attributable to Noncontrolling Interests

NetOther non-operating income attributable to noncontrolling interests for the three months ended September 30, 2017March 31, 2019 was approximately $4.2 million, a decrease of $0.4 million from the three months ended September 30, 2016. This decrease is primarily due to the dilutive impact of the Merger to minority interest. As a result, our ownership percentage has increased from 94.8% to 96.4% year over year.

Preferred Dividends Distributed

As a result of the Merger, for the three months ended September 30, 2017 we recorded a dividend distribution to holders of MAA Series I preferred stock of $0.9 million. As there were no shares of MAA Series I preferred stock issued and outstanding during the three months ended September 30, 2016, we did not record a preferred dividend distribution in that quarter.






Net Income Available for MAA Common Shareholders

Primarily as a result of the foregoing, net income available for MAA common shareholders increased by approximately $29.5 million for the three months ended September 30, 2017 from the three months ended September 30, 2016.

Comparison of the nine months ended September 30, 2017 to the nine months ended September 30, 2016

Property Revenues

The following table shows our property revenues by segment for the nine months ended September 30, 2017 and September 30, 2016 (dollars in thousands):

 Nine months ended September 30,    
 2017 2016 Increase Percentage Increase
Large Market Same Store$503,076
 $487,725
 $15,351
 3.1%
Secondary Market Same Store261,272
 254,685
 6,587
 2.6%
Same Store Portfolio764,348
 742,410
 21,938
 3.0%
Non-Same Store and Other381,901
 75,740
 306,161
 404.2%
Total$1,146,249
 $818,150
 $328,099
 40.1%

The increases in property revenues from our Large Market Same Store and Secondary Market Same Store segments are primarily a result of increased average effective rent per unit of 3.3% and 2.8%, respectively, as compared to the six months ended June 30, 2016. The increase in property revenues from our Non-Same Store and Other portfolio is primarily the result of the Merger, as we classified the properties we acquired as non-same store. See the discussion of our segment classification methodology in Note 13 to the Condensed Consolidated Financial Statements included in this Report.

Property Operating Expenses

Property operating expenses include costs primarily consisting of property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, and landscaping. The following table shows our property operating expenses by segment for the nine months ended September 30, 2017 and September 30, 2016 (dollars in thousands):

 Nine months ended September 30,    
 2017 2016 Increase Percentage Increase
Large Market Same Store$189,657
 $185,495
 $4,162
 2.2%
Secondary Market Same Store98,655
 95,422
 3,233
 3.4%
Same Store Portfolio288,312
 280,917
 7,395
 2.6%
Non-Same Store and Other148,109
 29,565
 118,544
 401.0%
Total$436,421
 $310,482
 $125,939
 40.6%

The increase in property operating expenses from our Large Market Same Store segment is primarily a result of increases in real estate taxes of $3.4 million, utilities expense of $0.5 million, personnel expense of $0.8 million, other operating expense of $0.4 million, and landscaping expense of $0.2 million. These were offset by a decrease in insurance expense of $1.0 million. The increase in property operating expenses from our Secondary Market Same Store Segment is primarily a result of increases in real estate taxes of $1.3 million, utilities expense of $0.4 million, personnel expense of $1.0 million, other operating expense of $0.7 million, and landscaping expense of $0.1 million. These were offset by a decrease in insurance expense of $0.2 million. The increase in property expenses from our Non-Same Store and Other segment is primarily the result of the Merger.

Depreciation and Amortization

Depreciation and amortization expense for the nine months ended September 30, 2017 was approximately $374.3 million, an increase of $146.5 million from the nine months ended September 30, 2016. The increase in depreciation and


amortization expense is primarily due to depreciation of $111.0 million and amortization expenses of $27.7 million resulting from the Merger, in addition to asset additions made in the normal course of business.

Acquisition Expense

During the nine months ended September 30, 2017, no significant acquisition expense was recorded. A decrease of approximately $2.2 million from the nine months ended September 30, 2016 was due to the adoption of ASU 2017-01, Clarifying the Definition of a Business (Topic 805), during the first quarter of 2017. Based on the adoption of this guidance, acquisition costs related to properties acquired are now capitalized.

Property Management Expenses

Property management expenses for the nine months ended September 30, 2017 were approximately $32.0 million, an increase $6.8 million of from the nine months ended September 30, 2016. This increase is primarily due to the growth in our portfolio as a result of the Merger.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2017 were approximately $30.7 million, an increase of $10.5 million from the nine months ended September 30, 2016. This increase is primarily driven by increases in other corporate general and administrative expenses and legal expenses as a result of the Merger.

Merger and Integration Related Expenses

Merger and integration related expenses for the acquisition of Post Properties, were primarily comprised of approximately $4.0 million legal costs and $10.5 million of systems and professional costs for the nine months ended September 30, 2017. Merger and integration related expenses for the nine months ended September 30, 2016 were approximately $10.6 million less than the Merger and integration related expenses for the nine months ended September 30, 2017 due to the Merger not being complete until December 1, 2016.

Interest and Other Non-property Income

Interest and other non-property income for the nine months ended September 30, 2017 was approximately $7.6 million, an increase of approximately $7.5$3.3 million as compared to the three months ended March 31, 2018. The increase was primarily due to the recognition of $0.5 million of expense from the nine months ended September 30, 2016. This increase is primarily driven by $5.8 millionfair value adjustment of year-to-date mark-to-market adjustments of the bifurcated embedded derivative related to the MAA Series I preferred stock issued as a result of the Merger.

Interest Expense

Interest expense for the nine months ended September 30, 2017 was approximately $115.0 million an increase of $18.6 million from the nine months ended September 30, 2016. The increase was due to increased borrowing as we assumed several loans as a result of the Merger, including a secured loan with a face value of $186.0 million and two unsecured loans with face values of $150.0 million and $250.0 million. Additionally, we entered into a new $300.0 million term loan on the closing date of the Merger. Duringduring the three months ended June 30, 2017, we issued a public bond with a face valueMarch 31, 2019, as compared to the recognition of $600.0$2.6 million bearing interest at 3.60% per annum. The remainderof expense from the adjustment of the increase was mainly due to interest related toembedded derivative during the newly issued bond. Such increases were offset by a slight decrease in interest expense as a result of our July 2017 payoff of a $150.0 million of unsecured notes assumed as part of the Merger; the notes were scheduled for maturity in October 2017.

Gain on Debt Extinguishment

We recorded a gain on debt extinguishment of $3.2 million for the ninethree months ended September 30, 2017, an increase of approximately $3.2 million from the nine months ended September 30, 2016. This increase was primarily the result of a $4.8 million gain due to the write-offs of the mark-to-market debt adjustments related to the payoffs of the secured mortgages with Fannie Mae and the US Bank Term Loan, partially offset by a cash prepayment penalty of $1.6 million.

Gain on Sale of Depreciable Real Estate Assets

During the nine months ended September 30, 2017, we recorded a gain on the sale of depreciable real estate assets of $59.0 million, an increase of $10.5 million from the nine months ended September 30, 2016. Although disposition activity


decreased from the nine months ended September 30, 2016, gain on sale of depreciable assets increased primarily due to the nature of the real estate assets sold.

Gain on Sale of Non-depreciable Real Estate Assets

During the nine months ended September 30, 2017, no significant gain on sale of non-depreciable real estate assets was recorded. This decrease of approximately $2.1 million from the nine months ended September 30, 2016 was due to a decrease in disposition activity during the nine months ended September 30, 2017.

Gain from Real Estate Joint Ventures

During the nine months ended September 30, 2017, we recorded a gain from real estate joint ventures of $1.0 million. We did not record a significant gain from real estate joint ventures for the nine months ended September 30, 2016. The increase of $1.0 million is due to income attributable to our ownership interest in the Post Mass Avenue joint venture acquired with the Merger.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests for the nine months ended September 30, 2017 was approximately $7.6 million, a decrease of $1.9 million from the nine months ended September 30, 2016. This decrease is primarily due to the dilutive impact of the Merger to minority interest. As a result, our ownership percentage has increased from 94.8% to 96.4% year over year.

Preferred Dividends Distributed

As a result of the Merger, for the nine months ended September 30, 2017 we recorded a dividend distribution to holders of MAA Series I preferred stock of $2.8 million. As there were no shares of MAA Series I preferred stock issued and outstanding during the nine months ended September 30, 2016, we did not record a preferred dividend distribution in that period.

Net Income Available for MAA Common Shareholders

Primarily as a result of the foregoing, net income available for MAA common shareholders increased by approximately $29.3 million for the nine months ended September 30, 2017 from the nine months ended September 30, 2016.March 31, 2018.

Funds from Operations

Funds from operations, or FFO, a non-GAAP financial measure, representsrepresent net income available for MAA common shareholders (computed(calculated in accordance with the United States generally accepted accounting principles, or GAAP) excluding extraordinary items, asset impairment, gains or losses on disposition of real estate assets,operating properties and asset impairment, plus net income available to noncontrolling interests, depreciation and amortization of real estate assets, net income attributable to noncontrolling interests, and adjustments for joint ventures to reflect FFO on the same basis.ventures. Because noncontrolling interest is added back, FFO, when used in this document,Quarterly Report on Form 10-Q, represents FFO attributable to the Company.

FFO should not be considered as an alternative to net income or any other GAAP measurement, of performance, as an indicator of operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of liquidity. Management believes that FFO is helpful to investors in understanding our operating performance primarily because its calculation excludes depreciation and amortization expense on real estate assets. We believe that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. While our calculation of FFO is in accordance with the National Association of Real Estate Investment Trusts',Trust, or NAREIT's,NAREIT, definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs.










The following table ispresents a reconciliation of FFO to net income available for MAA common shareholders to FFO for the
three and nine months ended September 30, 2017March 31, 2019 and September 30, 20162018, as we believe net income available for MAA common shareholders is the most directly comparable GAAP measure (dollars in thousands): 

Three months ended September 30, Nine months ended September 30,Three months ended March 31,
2017 2016 2017 20162019 2018
Net income available for MAA common shareholders$113,787
 $84,279
 $202,163
 $172,836
$62,738
 $48,097
Depreciation and amortization of real estate assets116,882
 76,105
 371,194
 225,328
121,210
 119,566
Gain on sale of depreciable real estate assets(58,844) (47,749) (59,045) (48,572)
Loss on disposition within unconsolidated entities—
 —
 —
 98
Depreciation and amortization of real estate assets of real estate joint ventures148
 —
 449
 11
Loss on sale of depreciable real estate assets13
 —
Depreciation and amortization of real estate assets of real estate joint venture145
 145
Net income attributable to noncontrolling interests4,249
 4,627
 7,600
 9,508
2,298
 1,801
Funds from operations attributable to the Company$176,222
 $117,262
 $522,361
 $359,209
$186,404
 $169,609

FFO for the three months ended September 30, 2017 increased approximately $59.0March 31, 2019 was $186.4 million, froman increase of $16.8 million as compared to the three months ended September 30, 2016March 31, 2018, primarily as a result of the increaseincreases in total property revenues of approximately $107.7$15.2 million, which wasgain on sale of non-depreciable assets of $8.8 million, and other non-operating income of $3.3 million, in addition to a decrease in merger and


integration expenses of $3.8 million. The increases to FFO were offset by the increases in interest expense of $4.8 million, property operating expenses, excluding depreciation and amortization, of $42.5 million, property management expenses of $2.4$5.0 million, and general and administrative expenses of $1.7$3.0 million.

FFO for the nine months ended September 30, 2017 increased approximately $163.2 million from the nine months ended September 30, 2016 primarily as a result of the increase in total property revenues of approximately $328.1 million, which was offset by the increases in property operating expenses, excluding depreciation and amortization, of $125.9 million, property management expenses of $6.8 million, general and administrative expenses of $10.5 million, and merger and integration related expenses of $10.6 million. The majority of the remaining variance was attributable to an an increase in interest expense of $18.6 million, offset by an increase in interest and other non-property income of $7.5 million.

Trends

During the three months ended September 30, 2017, demand for apartments continued to be strong, as it was during the three months ended September 30, 2016. Physical occupancy for our same store portfolio (which excludes properties acquired through the Merger) ended September 30, 2017 at a strong 96.5% and average daily physical occupancy for our same store portfolio was 96.2% for the quarter. Our same store average effective rent per unit continued to grow, up 2.8% in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.
An important part of our portfolio strategy is to maintain a diversity of markets, submarkets, product types and price points across the Southeast and Southwest regions of the United States. This diversity tends to mitigate exposure to economic issues in any one geographic market or area. We believe that a well-balanced portfolio, including inner loop, suburban, and downtown/central business district locations and various monthly rent price points will perform well in “up” cycles as well as weather “down” cycles better. Through our investment in 39 defined Metropolitan Statistical Areas, or MSAs, we are diversified across markets, urban and suburban submarkets, and a variety of monthly rent pricing points.
The current supply level as a result of elevated permitting activity in 2015 and 2016 is impacting our total portfolio from a demand standpoint, particularly properties located in urban submarkets, the majority of which were acquired in the Merger. Our same store portfolio has been impacted somewhat less, primarily due to being in submarkets that have experienced lower supply relative to other submarkets in a given MSA. Encouragingly, according to U.S. Census Bureau data, as of August 2017 year to date, multifamily permitting across our markets was down 2% as compared to August 2016 year to date. This activity should result in relatively lower supply in our markets in the future as compared to the current environment. In addition, we believe the lack of new apartments in the past few years and the demand from new households will help keep supply and demand essentially in balance in most markets. Also, we believe that more disciplined credit terms for residential mortgages should continue to favor rental demand at existing multifamily properties. Furthermore, rental competition from single family homes has not been a major competitive factor impacting our portfolio. For the three months ended September 30, 2017, total move outs attributable to single family home rentals for our combined portfolio was just over 6% of total move outs, in line with the three months ended September 30, 2016. We have seen significant rental competition from single family homes in only a few of our submarkets. Long term, we expect demographic trends (including the growth of prime age groups


for rentals and immigration and population movement to the Southeast and Southwest) will continue to support apartment rental demand for our markets.

Our focus is on maintaining strong physical occupancy while increasing pricing where possible through our revenue management system. As noted above, physical occupancy for our same store portfolio for the period ended September 30, 2017 was strong, and the average for the three months ended September 30, 2017 was sustained above 96%. As we move into the typically slower leasing season of the fall and winter, the current level of physical occupancy puts us in a good position to maintain solid pricing growth in the fourth quarter of 2017.
As a result of the Merger, we continue to combine best practices across the entire portfolio that we believe will ultimately enable us to capture more revenues and reduce expenses. Likewise, we believe our scale as a result of the Merger will help achieve efficiencies and create additional buying power that will benefit our properties acquired as part of the Merger as well as our properties that were owned prior to the Merger.

Liquidity and Capital Resources

Our cash flows from operating, investing and financing activities, as well as general economic and market conditions, are the principal factors affecting our liquidity and capital resources. The significant changes in cash due to operating, investing and financing activities for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 are as follows:

Operating Activities

Net cash flow provided by operating activities increased to $553.1was $154.7 million for the ninethree months ended September 30, 2017March 31, 2019 as compared to $389.2$152.7 million for the ninethree months ended September 30, 2016. This changeMarch 31, 2018. The increase in operating cash flows was a result of various items relating toprimarily driven by our operating performance, including higher revenues as discussed above.partially offset by the timing of cash payments.

Investing Activities

Net cash used in investing activities duringwas $52.9 million for the ninethree months ended September 30, 2017 was $232.3 millionMarch 31, 2019 as compared to net cash used in investing activities during$46.7 million for the ninethree months ended September 30, 2016 of $216.1 million.March 31, 2018. The primary drivers of thisthe change were as follows:

follows (dollars in thousands):
 Primary drivers of cash (outflow) inflow during the nine months ended September 30,    
 2017 2016 Increase (Decrease) in Net Cash Percentage Increase (Decrease) in Net Cash
Purchases of real estate and other assets$(63,774) $(262,268) $198,494
 75.7 %
Normal capital improvements(82,030) (65,351) (16,679) (25.5)%
Construction capital and other improvements(7,171) (5,569) (1,602) (28.8)%
Renovations to existing real estate assets(36,692) (29,554) (7,138) (24.2)%
Development(142,530) (42,611) (99,919) (234.5)%
Proceeds from disposition of real estate assets90,040
 187,425
 (97,385) (52.0)%
Return of escrow for future acquisitions10,591
 —
 10,591
 100.0 %
 Primary drivers of cash (outflow) inflow (Decrease) Increase in Net Cash
 during the three months ended March 31, 
 2019 2018 
Purchases of real estate and other assets$(13,595) $—
 $(13,595)
Capital improvements, development and other(53,214) (51,775) (1,439)
Proceeds from disposition of real estate assets13,882
 5,860
 8,022

The decreaseincrease in cash outflows for purchases of real estate and other assets resulted fromwas primarily driven by the acquisition of one apartment community duringactivity for the ninethree months ended September 30, 2017,March 31, 2019 as compared to the acquisition of four apartment communities during the ninethree months ended September 30, 2016. The decrease in proceeds from the disposition of real estate assets resulted from the sale of three apartment communities and four land parcels during the nine months ended September 30, 2017, compared to the sale of seven apartment communities, one commercial property, and three land parcels during the nine months ended September 30, 2016.March 31, 2018. The increase in cash outflows for normal capital improvements, construction capitaldevelopment and other improvements, renovationswas driven by increased recurring and revenue enhancing capital spend during the three months ended March 31, 2019 as compared to existingthe three months ended March 31, 2018. The increase in cash inflows related to proceeds from disposition of real estate assets and developmentwas primarily due to the nature of the real estate assets sold during the three months ended March 31, 2019 as compared to prior year primarily resulted from the property portfolio increase as a result of the Merger and the increase in our development pipeline as a result of the Merger. The increase in cash


inflows from the return of escrow for future acquisitions was a result of funding for three 1031(b) transactions offset by the release of three 1031(b) transactions that never occurred during the nine months ended September 30, 2017; there was no net 1031(b) transaction activity during the nine months ended September 30, 2016.March 31, 2018.

Financing Activities

Net cash used in financing activities increased to $306.5was $94.1 million for the ninethree months ended September 30, 2017March 31, 2019 as compared to $182.9$112.8 million for the ninethree months ended September 30, 2016.March 31, 2018. The primary drivers of thisthe change were as follows:

follows (dollars in thousands):
Primary drivers of cash (outflow) inflow (Decrease) Increase in Net Cash
Primary drivers of cash (outflow) inflow during the nine months ended September 30,    during the three months ended March 31, 
2017 2016 (Decrease) Increase in Net Cash Percentage (Decrease) Increase in Net Cash2019 2018 
Net change in credit lines$(240,000) $130,000
 $(370,000) (284.6)%$(465,000) $40,000
 $(505,000)
Proceeds from notes payable597,480
 —
 597,480
 100.0 %490,435
 —
 490,435
Principal payments on notes payable(345,053) (114,753) (230,300) (200.7)%(1,847) (41,042) 39,195
Dividends paid on common shares(296,441) (185,704) (110,737) (59.6)%(109,324) (104,876) (4,448)

The decreaseincrease in cash outflows related to the net change in credit lines resulted from the decrease in net borrowings of $240.0$465.0 million on the KeyBank Facilityour unsecured revolving credit facility during the ninethree months ended September 30, 2017,March 31, 2019, as compared to the increase in net borrowings of $130.0$40.0 million on the KeyBank Facilityunsecured revolving credit facility during the ninethree months ended September 30, 2016.March 31, 2018. The increase in cash inflows from proceeds from notes payable duringprimarily resulted from the nine months ended September 30, 2017 relates to the May 2017 issuance of $300.0 million of senior unsecured notes discussed in Note 7; there wasand $191.3 million of secured property mortgages during the three months ended March 31, 2019; no debtsenior unsecured notes or secured property mortgages were issued during the ninethree months ended September 30, 2016.March 31, 2018. The increasedecrease in cash outflows from principal payments on notes payable primarily resulted from paying off approximately $186.1the retirement of $38.3 million of secured property mortgages and $150.0 million of unsecured public bonds during the ninethree months ended September 30, 2017 compared to paying off approximately $68.1 million of 2006 unsecured public bonds, $33.6 million of secured property mortgages, and $7.1 million of unsecuredMarch 31, 2018; there were no notes payable retirements during the ninethree months ended September 30, 2016.March 31, 2019. The increase in cash outflows from dividends paid on common shares primarily resulted


from the increased number of common shares outstanding resulting from the Merger and the increase in the dividend rate to $2.61$0.9600 per share during the ninethree months ended September 30, 2017March 31, 2019, as compared to the dividend rate of $2.46$0.9225 per share during the ninethree months ended September 30, 2016.March 31, 2018.

Net cash provided by operating activities (computed in accordance with GAAP) was in excess of our funding of normal capital improvements to existing real estate assets, distributions to common unitholders and dividends paid on common shares for both the nine months ended September 30, 2017 and 2016. While we had sufficient liquidity to permit common share distributions at current rates through additional borrowings, if necessary, any significant deterioration in operations could result in our financial resources being insufficient to pay distributions to common shareholders at the current rate, in which event we would be required to reduce the distribution rate.

We believe that we have adequate resources to fund our current operations, annual refurbishment of our properties, and incremental investment in new properties. To the extent additional capital resources are required or deemed desirable, we may, from time to time, issue equity or debt securities.

Equity

As of September 30, 2017,March 31, 2019, MAA owned 113,627,014113,916,208 OP Units, comprising a 96.4%96.5% limited partnership interest in the Operating Partnership,MAALP, while the remaining 4,200,0324,105,171 outstanding OP Units were held by third party limited partners of the Operating Partnership.MAALP other than MAA and its subsidiaries. Holders of OP Units (other than MAA and its corporate affiliates)subsidiaries) may require us to redeem their OP Units from time to time, in which case MAA may, at its option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA's common stock on the NYSE over a specified period prior to the redemption date) or by delivering one share of MAA's common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed. In addition, MAA has registered under the Securities Act the 4,200,0324,105,171 shares of its common stock that, as of September 30, 2017,March 31, 2019, were issuable upon redemption of OP Units, so thatin order for those shares canto be sold freely in the public markets.


For more information regarding our equity capital resources, see Note 108 and Note 119 to the Condensed Consolidated Financial Statementscondensed consolidated financial statements included elsewhere in this Report.Quarterly Report on Form 10-Q.

Debt

The following schedule outlinesreflects our variable and fixed rate debt, including the impact of interest rate swaps, and caps, outstanding as of September 30, 2017March 31, 2019 (dollars in thousands):
 
Principal
Balance
 
Average
Years to
Rate
Maturity
 
Effective
Rate
SECURED DEBT 
  
  
Conventional - Fixed Rate or Swapped$933,256
 1.9
 4.0%
Conventional - Variable Rate - Capped (1)
50,000
 0.5
 1.7%
Total Fixed or Hedged Rate Maturity983,256
 1.9
 3.8%
Conventional - Variable Rate110,000
 0.1
 1.7%
Fair Market Value Adjustments and Debt Issuance Costs16,717
 

  
Total Secured Indebtedness1,109,973
 1.7
 3.6%
UNSECURED DEBT 
    
Fixed Rate or Swapped2,860,000
 5.7
 3.8%
Variable Rate550,000
 0.1
 2.2%
Fair Market Value Adjustments, Debt Issuance Costs and Discounts(27,139) 

  
Total Unsecured Indebtedness3,382,861
 4.6
 3.5%
TOTAL DEBT$4,492,834
 4.1
 3.5%
TOTAL FIXED OR HEDGED DEBT$3,833,603
 4.8
 3.7%
 
Principal
Balance
 Average Years to Rate Maturity 
Effective
Rate
Unsecured debt 
    
Fixed rate or swapped$3,242,000
 6.1
 3.9%
Variable rate675,000
 0.1
 3.4%
Debt issuance costs, discounts, and fair market value adjustments(30,764)    
Total unsecured rate maturity$3,886,236
 5.1
 3.8%
Secured debt 
  
  
Conventional - fixed rate$665,588
 17.1
 4.5%
Debt issuance costs and fair market value adjustments(3,726) 

  
Total secured rate maturity$661,862
 17.1
 4.5%
Total debt$4,548,098
 6.9
 3.9%
Total fixed or hedged debt$3,873,679
 8.0
 4.0%

(1)
The effective rate represents the average rate on the underlying variable debt unless the cap rates are reached, which average 4.5% of LIBOR for conventional caps.

As of September 30, 2017,March 31, 2019, we had entered into interest rate swaps totaling a notional amount of $550.0$300.0 million related to issued debt. To date, thesewe believe the interest rate swaps have proven to be highly effective hedges. We had also entered into interest rate cap agreements totaling a notional amount of $50.0 million as of September 30, 2017.

The following schedule outlinespresents the contractual maturity dates of our outstanding debt, net of fair market value adjustments, debt issuance costs and discounts, as of September 30, 2017March 31, 2019 (dollars in thousands):

Amount BorrowedUnsecured Revolving Credit Facility Public Bonds Other Unsecured Secured Total
Credit Facilities        
Key Bank Unsecured Public Bonds Other Unsecured Secured Total
2017$—
 $—
 $17,996
 $80,000
 $97,996
2018—
 —
 300,364
 166,980
 467,344
2019—
 —
 19,963
 563,034
 582,997
$—
 $—
 $319,787
 $13,391
 $333,178
2020250,000
 —
 149,747
 164,022
 563,769
75,000
 —
 149,910
 158,058
 382,968
2021—
 —
 222,040
 125,164
 347,204
—
 —
 222,344
 122,353
 344,697
2022—
 248,616
 416,144
 —
 664,760
2023—
 346,992
 12,219
 —
 359,211
Thereafter—
 1,974,885
 447,866
 10,773
 2,433,524
—
 2,075,281
 19,943
 368,060
 2,463,284
Total$250,000
 $1,974,885
 $1,157,976
 $1,109,973
 $4,492,834
$75,000
 $2,670,889
 $1,140,347
 $661,862
 $4,548,098










The following schedule outlinesreflects the interest rate maturities of our outstanding fixed or hedged debt, net of fair market value adjustments, debt issuance costs and discounts, as of September 30, 2017March 31, 2019 (dollars in thousands):

 Fixed Rate Debt Interest Rate Swaps Total Fixed Rate Balances Contract Rate Interest Rate Caps Total Fixed or Hedged  Fixed Rate Debt Interest Rate Swaps Total Fixed Rate Balances Effective Rate
 
2017 $17,996
 $—
 $17,996
 3.2% $25,000
 $42,996
 
2018 136,942
 250,402
 387,344
 3.7% 25,000
 412,344
 
2019 582,996
 —
 582,996
 5.9% —
 582,996
  $33,380
 $—
 $33,380
 3.7%
2020 164,022
 299,097
 463,119
 3.7% —
 463,119
  158,058
 299,404
 457,462
 3.0%
2021 197,721
 —
 197,721
 5.2% —
 197,721
  194,987
 —
 194,987
 5.2%
2022 365,355
 —
 365,355
 3.6%
2023 359,211
 —
 359,211
 4.2%
Thereafter 2,134,427
 —
 2,134,427
 3.9% —
 2,134,427
  2,463,284
 —
 2,463,284
 4.1%
Total $3,234,104
 $549,499
 $3,783,603
 4.2% $50,000
 $3,833,603
  $3,574,275
 $299,404
 $3,873,679
 4.0%

Unsecured Revolving Credit Facility

OnIn October 15, 2015, the Operating Partnership entered into a $750.0 millionan unsecured revolving credit facility agreement with a syndicate of banks led by KeyBank National Association, or KeyBank, and fifteen other banks, which we refer to as the KeyBankCredit Facility. This credit facility replaced the Operating Partnership's previous unsecured credit facility with KeyBank. The interest rate is determined using an investment grade pricing grid using LIBOR plus a spread of 0.85% to 1.55%. OnIn December 1, 2016, the Operating Partnership amended the KeyBankCredit Facility by increasing the borrowing capacity from $750.0 million to $1.0 billion. As of September 30, 2017,March 31, 2019, we had $250.0$75.0 million borrowed under the KeyBankCredit Facility, bearing interest at a rate of one month LIBOR plus 0.90%. The KeyBankCredit Facility serves as our primary source of short termshort-term liquidity and has an accordion feature that we may use to expand its capacity to $1.5 billion. This facilityThe Credit Facility matures onin April 15, 2020, with an option to extend for an additional six months.

Senior Unsecured Notes

We have issued both public and private senior unsecured notes. As of March 31, 2019, we had approximately $2.7 billion (face value) of publicly issued senior unsecured notes and $242.0 million of senior unsecured notes issued in two private placements. In October 2013, we publicly issued $350.0 million of senior unsecured notes due October 2023 with a coupon of 4.30%, paid semi-annually on April 15 and October 15. In June 2014, we publicly issued $400.0 million of senior unsecured notes due June 2024 with a coupon of 3.75%, paid semi-annually on June 15 and December 15. In November 2015, we publicly issued $400.0 million of senior unsecured notes due November 2025 with a coupon of 4.00%, paid semi-annually on May 15 and November 15. As a result of the merger with Post Properties in December 2016, we assumed $250.0 million of senior unsecured notes due December 2022 with a coupon of 3.38%, paid semi-annually on June 1 and December 1. In May 2017, we publicly issued $600.0 million of senior unsecured notes due June 2027 with a coupon of 3.60%, paid semi-annually on June 1 and December 1. In May 2018, we publicly issued $400.0 million of senior unsecured notes due June 2028 with a coupon of 4.20%, paid semi-annually on June 15 and December 15. In March 2019, we publicly issued $300.0 million of senior unsecured notes due March 2029 with a coupon of 3.950%, paid semi-annually on March 15 and September 15. The proceeds from the senior unsecured notes issued in March 2019 were used to pay down outstanding amounts under the Credit Facility. As of March 31, 2019, all of these amounts remained outstanding.

In July 2011, we issued $135.0 million of senior unsecured notes. The notes were offered and sold in a private placement with three maturity tranches: $50.0 million at 4.7% maturing in July 2018; $72.8 million at 5.4% maturing in July 2021; and $12.3 million at 5.6% maturing in July 2023. The $50.0 million tranche was paid off on its maturity date. In August 2012, we issued $175.0 million of senior unsecured notes. The notes were offered and sold in a private placement with four tranches: $18.0 million at 3.15% maturing in November 2017; $20.0 million at 3.61% maturing in November 2019; $117.0 million at 4.17% maturing in November 2022; and $20.0 million at 4.33% maturing in November 2024. The $18.0 million tranche was paid off on its maturity date. The remaining tranches were outstanding as of March 31, 2019.

Unsecured Term Loans

In addition to the KeyBank facility,Credit Facility and senior unsecured notes, we maintain four unsecured term loans. We had total borrowings of $850.0$900.0 million outstanding under these term loan agreements at September 30, 2017,as of March 31, 2019, comprised of:     

A $250.0$300.0 million term loan with Wells Fargo, N.A., or Wells Fargo, that bears interest at a rate of LIBOR plus a spread of 0.75% to 1.65% based on the credit ratings of our unsecured debt. We entered into the six month term loan in December


2018, and the loan matures in June 2019, with an option to extend for an additional six months. As of March 31, 2019, this loan was bearing interest at a rate of one month LIBOR plus 0.90%.

A $150.0 million term loan with U.S. Bank National Association, or U.S. Bank, that bears interest at a rate of LIBOR plus a spread of 0.90% to 1.90% based on the credit ratings of our unsecured debt. The loan matures on August 1, 2018.in March 2020. As of September 30, 2017,March 31, 2019, this loan was bearing interest at a rate of LIBOR plus 0.98%.

A $150.0 million term loan with U.S. Bank that bears interest at a rate of LIBOR plus a spread of 0.90% to 1.90% based on the credit ratings of our unsecured debt The loan matures on March 1, 2020. As of September 30, 2017, this loan was bearing interest at a rate ofone month LIBOR plus 0.98%.

A $150.0 million term loan with KeyBank that bears interest at a rate of LIBOR plus a spread of 0.90% to 1.75% based on the credit ratings of our unsecured debt. The loan matures on March 1,in February 2021. As of September 30, 2017,March 31, 2019, this loan was bearing interest at a rate of one month LIBOR plus 0.95%.

A $300.0 million term loan with Wells Fargo, N.A., or Wells Fargo, that bears interest at a rate of LIBOR plus a spread of 0.90% to 1.75% based on the credit ratings of our unsecured debt. The loan matures onin March 1, 2022. As of September 30, 2017,March 31, 2019, this loan was bearing interest at a rate of one month LIBOR plus 0.95%.

Senior Unsecured Notes

We have also issued both public and private unsecured notes. As of September 30, 2017, we had approximately $2.0 billion (face value) of publicly issued notes and $310.0 million of unsecured notes issued in two private placements. In October 2013, we publicly issued $350.0 million of senior unsecured notes due 2023 with a coupon of 4.30%, paid semi-annually on April 15 and October 15. In June 2014, we publicly issued $400.0 million of senior unsecured notes due 2024 with a coupon of 3.75%, paid semi-annually on June 15 and December 15. In November 2015, we publicly issued $400.0 million of senior unsecured notes due 2025 with a coupon of 4.00%, paid semi-annually on May 15 and November 15. As a result of the Merger in December 2016, we assumed two series of publicly traded senior notes totaling $400.0 million. One series of senior notes assumed as a result of the Merger has a face value of $250.0 million, is due 2022, and has a coupon of 3.38% paid semiannually on June 1 and December 1. The other series of senior notes assumed as a result of the Merger had a face value of


$150.0 million and was due in October 2017, but was paid off in July 2017. In May 2017, we publicly issued $600.0 million of senior unsecured notes due June 1, 2027 with a coupon of 3.60%, paid semi-annually on June 1 and December 1. The proceeds from the notes issued in May 2017 were used to pay down outstanding amounts of the Unsecured Revolving Credit Facility. As of September 30, 2017, all of these amounts, with the exception of the series of senior notes assumed in the Merger with a face value of $150.0 million that was paid off in July 2017, remained outstanding.

On July 29, 2011, we issued $135.0 million of senior unsecured notes. The notes were offered in a private placement with three maturity tranches: $50.0 million at 4.7% maturing on July 29, 2018, $72.8 million at 5.4% maturing on July 29, 2021; and $12.3 million at 5.6% maturing on July 29, 2023; all of which were outstanding at September 30, 2017.

On August 31, 2012, we issued $175.0 million of senior unsecured notes. The notes were offered in a private placement with four maturity tranches: $18.0 million at 3.15% maturing on November 30, 2017; $20.0 million at 3.61% maturing on November 30, 2019; $117.0 million at 4.17% maturing on November 30, 2022; and $20.0 million at 4.33% maturing on November 30, 2024; all of which were outstanding at September 30, 2017.

Secured Credit Facility

Approximately 3.6% of our outstanding obligations at September 30, 2017 were borrowed through a credit facility credit enhanced by Fannie Mae, also referred to as the Fannie Mae Facility. The Fannie Mae Facility has a combined line limit of $160.0 million, of which $160.0 million was collateralized, available to borrow, and borrowed at September 30, 2017. Various Fannie Mae rate tranches of the Fannie Mae Facility mature from 2017 through 2018.

Secured Property Mortgages

We also maintain secured property mortgages with the Federal National Mortgage Association,  the Federal Home Loan Mortgage Corporation,Fannie Mae, Freddie Mac and various life insurance companies. These mortgages are usually fixed rate and can range from five to 1030 years in maturity. As of September 30, 2017,March 31, 2019, we had $933$665.6 million of secured property mortgages. In February 2019, we issued $191.3 million in secured property mortgages with a fixed rate of 4.43%.

For more information regarding our debt capital resources, see Note 76 to the Condensed Consolidated Financial Statementscondensed consolidated financial statements included elsewhere in this Report.Quarterly Report on Form 10-Q.

Contractual Obligations

The following table reflects our total contractual cash obligations which consist of our long-term debt, development fees and operating leases as of September 30, 2017 (dollars in thousands):
Contractual
Obligations (1)
 2017 2018 2019 2020 2021 Thereafter Total
Long-Term Debt Obligations (2)
 $100,804
 $476,626
 $570,127
 $558,284
 $342,903
 $2,454,512
 $4,503,256
Fixed Rate or  
  
  
  
  
  
  
Swapped Interest (3)
 67,084
 142,704
 109,231
 97,804
 89,454
 270,524
 776,801
Purchase Obligations (4)
 578
 542
 —
 —
 —
 —
 1,120
Operating Lease Obligations (5)
 293
 839
 689
 708
 718
 63,521
 66,768
Total $168,759
 $620,711
 $680,047
 $656,796
 $433,075
 $2,788,557
 $5,347,945

(1) Fixed rate and swapped interest are shown in this table. The average interest rates of variable rate debt are shown in preceding tables.
(2) Represents principal payments gross of discounts, debt issuance costs and fair market value of debt assumed.
(3) Swapped interest is subject to the ineffective portion of cash flow hedges as described in Note 8 to the Condensed Consolidated Financial Statements included in this Report. 
(4) Represents development fees.
(5) Primarily comprised of a ground lease underlying one apartment community we own.

We have a commitment, which is not reflected in the table above, to make additional capital contributions to a limited partnership where we hold an equity interest that may be called in the future by the general partner at any time after giving appropriate notice. At September 30, 2017, we have committed to make additional capital contributions totaling $14.2 million that are subject to being called by the general partner.



Off-Balance Sheet Arrangements

As of September 30, 2017,March 31, 2019 and 2018, we had a 35.0% ownership interest in the Apartment LLC joint venture,a limited liability company, which consists ofowns one apartment community comprised of 269 apartment units, located in Washington, D.C. We also had a 32.0%20.7% ownership interest in Real Estate Technology Ventures, L.P.a limited partnership as of March 31, 2019. Our investmentsinterests in these joint venturesinvestments are unconsolidated and are recorded using the equity method for the investments in whichas we do not have a controlling interest.

At September 30, 2017As of March 31, 2019 and 2016,2018, we did not have any relationships, including those with unconsolidated entities or financial partnerships, for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties other than those disclosed in Note 1413 to the Consolidated Financial Statementsconsolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016,2018, filed with the SEC on February 24, 2017.21, 2019.

Insurance

We renegotiatedcarry comprehensive general liability coverage on our apartment communities, with limits of liability we believe are customary within the multifamily apartment industry, to insure against liability claims and related defense costs. We also maintain insurance against the risk of direct physical damage to reimburse us on a replacement cost basis for costs incurred to repair or rebuild any property, including loss of rental income during the reconstruction period.

We will renegotiate our insurance programs effective July 1, 2017.2019. We believe that ourthe current property and casualty insurance program in place provides appropriate insurance coverage for financial protection against insurable risks such that any insurable loss experienced that can be reasonably anticipated would not have a significant impact on our liquidity, financial position or results of operations.

Inflation

Our resident leases at theour apartment communities allow, at the time of renewal, for adjustments in the rent payable thereunder, and thus may enable us to seek rent increases. Almost allThe majority of our leases are for one year or less. The short-term nature of these leases generally serves to reduce our risk to adverse effects of inflation.

Impact of Recently Issued Accounting Standards

Note 15Critical Accounting Policies and Estimates

Please refer to our Annual Report on Form 10-K for the Condensed Consolidated Financial Statements included in this Report provides a brief descriptionyear ended December 31, 2018, filed with the SEC on February 21, 2019 for discussions of our critical accounting policies. During the three months ended March 31, 2019, there were no material changes to these policies. For more information on recent accounting pronouncements that could have a material effectimpact on our condensed consolidated financial statements.statements see Note 1 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. Our primary market risk exposure is to changes in interest rates on our borrowings. At September 30, 2017, 26.3%As of March 31, 2019, 26.1% of our total market capitalization consisted of borrowings. Our interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve this objective, we manage our exposure to fluctuations in market interest rates for borrowings through the use of fixed rate debt instruments and interest rate swaps, and caps, which mitigate our interest rate risk on a related financial instrument and effectively fix or cap the interest rate on a portion of our variable debt or on future refinancings. We use our best efforts to have our debt instruments mature across multiple years, which we believe limits our exposure to interest rate changes in any one year. We do not enter into derivative instruments for trading or other speculative purposes. At September 30, 2017,As of March 31, 2019, approximately 85.3%85.2% of our outstanding debt was subject to fixed or capped rates after considering related derivative instruments. We regularly review interest rate exposure on outstanding borrowings in an effort to minimize the risk of interest rate fluctuations.

There have been no material changes in our market risk as disclosed in theour Annual Report on Form 10-K for the year ended December 31, 20162018, filed with the SEC on February 24, 2017.21, 2019.



Item 4.   Controls and Procedures.

Mid-America Apartment Communities, Inc.

Management’s(a) Evaluation of Disclosure Controls and Procedures

MAA is required to maintain disclosure controls and procedures, within the meaning of Exchange Act Rules 13a-15 and 15d-15.  MAA's management, with the participation of MAA'sMAA’s Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of MAA's disclosure controls and procedures as of September 30, 2017 pursuant to Exchange Act Rule 13a-15.March 31, 2019. Based on that evaluation, MAA's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of September 30, 2017March 31, 2019 to ensure that information required to be disclosed by MAA in its Exchange Act filings is accurately recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to MAA's management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

There was no change to MAA's internal control over financial reporting, as that term is defined in Rule 13a-15(f) underwithin the meaning of Exchange Act Rules 13a-15 and 15d-15, that occurred during the quarter ended September 30, 2017March 31, 2019 that has materially affected, or is reasonably likely to materially affect, MAA's internal control over financial reporting.

Mid-America Apartments, L.P.

Management’s(a) Evaluation of Disclosure Controls and Procedures

The Operating Partnership is required to maintain disclosure controls and procedures, within the meaning of Exchange Act Rules 13a-15 and 15d-15. Management of the Operating Partnership, with the participation of the Chief Executive Officer and Chief Financial Officer of MAA, as the general partner of the Operating Partnership, carried out an evaluation of the effectiveness of the Operating Partnership’sPartnership's disclosure controls and procedures as of September 30, 2017 pursuant to Exchange Act Rule 15d-15.March 31, 2019. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of MAA, as the general partner of the Operating Partnership, concluded that the disclosure controls and procedures were effective as of September 30, 2017March 31, 2019 to ensure that information required to be disclosed by the Operating Partnership in its Exchange Act filings is accurately recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of MAA, as the general partner of the Operating Partnership, as appropriate to allow timely decisions regarding required disclosure.


(b) Changes in Internal Control over Financial Reporting

There was no change to the Operating Partnership’s internal control over financial reporting, as that term is defined in Rule 15d-15(f) underwithin the meaning of Exchange Act Rules 13a-15 and 15d-15, that occurred during the quarter ended September 30, 2017March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.


PART II – OTHER INFORMATION

Item 1.      Legal Proceedings.

In September 2010,June 2016, plaintiffs Cathi Cleven and Tara Cleven, on behalf of a purported class of plaintiffs, filed a complaint against MAA and the United States Department of Justice, orOperating Partnership in the DOJ, filed suit against Post Properties (and by virtue of the Merger, MAA) in United States District Court for the Western District of Columbia allegingTexas, Austin Division. In January 2017, Areli Arellano and Joe L. Martinez joined the lawsuit as additional plaintiffs. The lawsuit alleges that certain of MAA’s apartments violated accessibility requirementswe (but not Post Properties) charged late fees at our Texas properties that violate Section 92.019 of the Fair Housing Act,Texas Property Code, or the FHA, and the Americans with Disabilities Act of 1990, or the ADA. The DOJ is seeking,Section 92.019, which provides that a landlord may not charge a tenant a late fee for failing to pay rent unless, among other things, an injunction against MAA, requiring MAAthe fee is a reasonable estimate of uncertain damages to retrofit the propertieslandlord that are incapable of precise calculation and comply with FHA and ADA standards in future design and construction, as well asresult from the late payment of rent. The plaintiffs are seeking monetary damages and civil penalties. No trial date has been set.attorneys' fees and costs. In September 2018, the District Court certified a class proposed by the plaintiffs.  Additionally, in September 2018, the District Court denied our motion for summary judgment and granted the plaintiffs’ motion for partial summary judgment. Because the District Court certified a class prior to granting the plaintiffs’ motion for partial summary judgment, the District Court’s ruling applies to the entire class. In October 2018, the Fifth Circuit Court of Appeals accepted our petition to review the District Court’s order granting class certification. We intend to appeal the District Court’s order granting plaintiff’s motion for summary judgment to the Fifth Circuit Court of Appeals if permission to appeal is granted. We will continue to vigorously defend the action and pursue such appeals. 

In April 2017, plaintiff Nathaniel Brown, on behalf of a purported class of plaintiffs, filed a complaint against the Operating Partnership, as the successor by merger to Post Properties' primary operating partnership, and MAA in the United States District Court for the Western District of Texas, Austin Division. The lawsuit alleges that Post Properties, Inc. (and, following the Post Properties merger in December 2016, the Operating Partnership) charged late fees at its Texas properties that violate Section 92.019. The plaintiffs are seeking monetary damages and attorneys' fees and costs. In September 2018, the District Court certified a class proposed by the plaintiff. Additionally, in September 2018, the District Court denied our motion for summary judgment and granted the plaintiff’s motion for partial summary judgment. Because the District Court certified a class prior to granting the plaintiff’s motion for partial summary judgment, the District Court’s ruling applies to the entire class. In October 2018, the Fifth Circuit Court of Appeals accepted our petition to review the District Court's order granting class certification. We intend to appeal the District Court’s order granting plaintiff’s motion for summary judgment to the Fifth Circuit Court of Appeals if permission to appeal is granted. We will continue to vigorously defend the action and pursue such appeals. 

In addition, we are subject to various other legal proceedings and claims that arisearising in the ordinary course of our business operations. Matters which arise out of allegations of bodily injury, property damage, and employment practices are generally covered by insurance. While the resolutionno assurances can be given, we do not currently believe that any of these matters cannot be predicted with certainty, we currently believe the final outcome of suchother outstanding matters will not have a material adverse effect on our financial position,condition, results of operations or cash flows.

For more information regarding our legal proceedings, see Note 12 toflows in the Condensed Consolidated Financial Statements included in this Report.event of a negative outcome.

Item 1A.   Risk Factors.

There have been no material changes to the risk factors that were discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 20162018, filed with the SEC on February 24, 2017.21, 2019.


Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.
 
The following chart shows repurchases of shares for the three-month period ended September 30, 2017:
MAA Purchases of Equity Securities

The following table reflects repurchases of shares of MAA's common stock during the three months ended March 31, 2019:
Period
Total Number
of Shares (or Units)
Purchased
Average
Price Paid
per Share (or Unit)
Total
Number of
Shares (or Units)Purchased
as Part of Publicly Announced Plans
or Programs
Maximum
Number of
Shares (or Units)That
May Yet be
Purchased Under
the Plans or
Programs (1)
July 1, 2017 - July 31, 2017—
$—
—
4,000,000
August 1, 2017 - August 31, 2017—
$—
—
4,000,000
September 1, 2017 - September 30, 2017—
$—
—
4,000,000
Total—
$—
—
4,000,000
Period
Total Number of Shares Purchased(1)
 
Average Price Paid per Share(2)
 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs(3)
January 1, 2019 - January 31, 201910,671
 $95.01
 —
 4,000,000
February 1, 2019 - February 28, 2019—
 $—
 —
 4,000,000
March 1, 2019 - March 31, 201918,582
 $107.28
 —
 4,000,000
Total29,253
   —
 4,000,000
(1)
The shares reflected in this column are shares of common stock surrendered by employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted shares under the Second Amended and Restated 2013 Stock Incentive Plan.
(2)The price per share is based on the closing price of MAA's common stock as of the date of determination of the statutory minimum for federal and state tax obligations.
(3)This column reflects the number of shares of MAA's common stock that wereare available for purchase under the 4,000,0004.0 million share repurchase program authorized by MAA's Board of Directors in December 2015.

Item 3.  Defaults Upon Senior Securities.

Not Applicable.applicable.

Item 4.  Mine Safety Disclosures.

Not Applicable.applicable.

Item 5.  Other Information.

Not Applicable.applicable.



Item 6.         Exhibits.

(a)The following exhibits are filed as part of this Report.
(a)The following exhibits are filed as part of this report.
Exhibit
Number
 
 
Exhibit Description
2.1 
Agreement and Plan of Merger dated August 15, 2016, by and among Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P., Post Properties, Inc., Post GP Holdings, Inc., and Post Apartment Homes, L.P. (filed, dated as of August 15, 2016 (Filed as Exhibit 2.1 to the Registrant'sRegistrant’s Current Report on Form 8-K filed on August 15, 2016 and incorporated herein by reference).
11.14.1 
Statement re Computation of Per Share Earnings for MAAIndenture, dated May 9, 2017, by and between Mid-America Apartments, L.P. and U.S. Bank National Association (filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K on May 9, 2017 and incorporated herein by reference).

11.24.2 
Statement re ComputationThird Supplemental Indenture, dated as of Per Unit Earnings for MAALPMarch 7, 2019, by and between Mid-America Apartments, L.P. and U.S. Bank National Association (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on March 7, 2019 and incorporated herein by reference).
12.1
Statements re Computation of Consolidated Ratio of Earnings to Fixed charges for MAA
12.2
Statements re Computation of Consolidated Ratio of Earnings to Fixed charges for MAALP
31.1 
MAA Certification of Chief Executive Officer of MAA Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 
MAA Certification of Chief Financial Officer of MAA Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3 
MAALP Certification of Chief Executive Officer of MAA, in its capacity as general partner of MAALP, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4 
MAALP Certification of Chief Financial Officer of MAA, in its capacity as general partner of MAALP, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 
MAA Certification of Chief Executive Officer of MAA Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 
MAA Certification of Chief Financial Officer of MAA Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3 
MAALP Certification of Chief Executive Officer of MAA, in its capacity as general partner of MAALP, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.4 
MAALP Certification of Chief Financial Officer of MAA, in its capacity as general partner of MAALP, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101  The following financial information from Mid-America Apartment Communities, Inc.’s (MAA) and Mid-America Apartments, L.P.'s (MAALP)Quarterly Report on Form 10-Q for the period ended September 30, 2017,March 31, 2019, filed with the SEC on October 26, 2017,May 2, 2019, formatted in ExtensibleXBRL (eXtensible Business Reporting Language (XBRL)Language): (i) the Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2019 (Unaudited) and December 31, 2016 (Unaudited);2018; (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017March 31, 2019 (Unaudited) and 20162018 (Unaudited); (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2019 (Unaudited) and 20162018 (Unaudited); (iv) the Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2019 (Unaudited) and 20162018 (Unaudited); and (v) Notes to Condensed Consolidated Financial Statements (Unaudited).




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Reportreport to be signed on its behalf by the undersigned thereunto duly authorized.

  MID-AMERICA APARTMENT COMMUNITIES, INC.
   
Date:October 26, 2017May 2, 2019By:/s/ A. Clay Holder
  A. Clay Holder
  Senior Vice President and Chief Accounting Officer
   (Duly Authorized Officer)















































SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Reportreport to be signed on its behalf by the undersigned thereunto duly authorized.

  MID-AMERICA APARTMENTS, L.P.
 By:Mid-America Apartment Communities, Inc., its general partner
   
Date:October 26, 2017May 2, 2019By:/s/ A. Clay Holder
  A. Clay Holder
  Senior Vice President and Chief Accounting Officer
   (Duly Authorized Officer)












































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