10-K405 1 a2043423z10-k405.txt 10-K405 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 COMMISSION FILE NUMBER: 1-12762 ------------------------ MID-AMERICA APARTMENT COMMUNITIES, INC. (Exact Name of Registrant as Specified in Charter) TENNESSEE 62-1543819 (State of Incorporation) (I.R.S. Employer Identification Number) 6584 POPLAR AVENUE, SUITE 340 MEMPHIS, TENNESSEE 38138 (Address of principal executive offices) (901) 682-6600 Registrant's telephone number, including area code Securities registered pursuant to Section 12 (b) of the Act:

NAME OF EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ------------------- Common Stock, par value $.01 per share New York Stock Exchange Series A Cumulative Preferred Stock, par value $.01 per share New York Stock Exchange Series B Cumulative Preferred Stock, par value $.01 per share New York Stock Exchange Series C Cumulative Redeemable Preferred Stock, par value $.01 per share New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT: None ------------------------ 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. Yes /X/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-K or any amendment to this Form 10-K. /X/ The aggregate market value of the voting stock held by non-affiliates of the Registrant, (based on the closing price of such stock ($22.35 per share), as reported on the New York Stock Exchange, on March 15, 2001) was approximately $343,000,000 (for purposes of this calculation, directors and executive officers are treated as affiliates). The number of shares outstanding of the Registrant's Common Stock as of March 15, 2001, was 17,461,677 shares, of which approximately 2,109,790 were held by affiliates. The Registrant's definitive proxy statement in connection with the 2001 Annual Meeting of Shareholders (to be filed pursuant to Regulation 14A) is incorporated by reference into Part III of this Annual Report on Form 10-K. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- MID-AMERICA APARTMENT COMMUNITIES, INC. TABLE OF CONTENTS

ITEM PAGE --------------------- -------- PART I 1. Business.................................................... 3 2. Properties.................................................. 6 3. Legal Proceedings........................................... 12 4. Submission of Matters to a Vote of Security Holders......... 12 PART II Market for Registrant's Common Equity and Related 5. Stockholder Matters....................................... 12 6. Selected Financial Data..................................... 13 Management's Discussion and Analysis of Financial Condition 7. and Results of Operations................................. 15 Quantitative and Qualitative Disclosures About Market 7A. Risk...................................................... 21 8. Financial Statements and Supplementary Data................. 22 Changes in and Disagreements with Accountants on Accounting 9. and Financial Disclosure.................................. 22 PART III 10. Directors and Executive Officers of the Registrant.......... 23 11. Executive Compensation...................................... 23 Security Ownership of Certain Beneficial Owners and 12. Management................................................ 23 13. Certain Relationships and Related Transactions.............. 23 PART IV Exhibits, Financial Statement Schedule and Reports on Form 14. 8-K....................................................... 23

2 PART I ITEM 1. BUSINESS THE COMPANY Founded in 1994, Mid-America Apartment Communities, Inc. (the "Company") is a Memphis, Tennessee-based self-administered and self-managed umbrella partnership ("UPREIT") real estate investment trust ("REIT"). Between 1994 and December 31, 2000, the Company increased the number of properties of which it is the sole owner from 22 to 114 properties with 30,819 apartment units,, representing an increase of 25,239 apartment units. The Company is also a participant in a joint venture (the "Joint Venture") with Blackstone Real Estate Acquisitions, LLC ("Blackstone"). The Joint Venture owned 10 properties, representing 2,793 apartment units at December 31, 2000. The Company retains a 33.33% ownership interest in the Joint Venture and has an agreement to manage the operations of the communities for a fee of 4% of revenues. The Company's business is conducted principally through Mid-America Apartments, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership, holding, 181,208 Common Units or a 1% general partnership interest in the Operating Partnership as of December 31, 2000. The Company's wholly-owned qualified REIT subsidiary, MAC II of Delaware, Inc., a Delaware corporation, is a limited partner in the Operating Partnership and, as of December 31, 2000, held 14,944,629 Common Units, or 82.75% of all outstanding Common Units. The Company employed 1,004 full time and 118 part time employees at December 31, 2000. OPERATING PHILOSOPHY INVESTMENT FOCUS. Depending on opportunities and the real estate cycle, Company management uses its real estate skills and experience to invest profitably. Between 1994 and 1997, the Company focused on the acquisition and redevelopment of existing apartments. Between 1998 and 2000, its concentration was on development of new apartments. In 1999, the Company established and sold assets to a joint venture. During 2000, the Company sold assets and repurchased its common shares. Management will continue to adapt its investment focus to opportunities and markets. HIGH QUALITY ASSETS. The Company maintains its assets in excellent condition, believing that continuous maintenance will lead to higher long-run returns on investment. It believes that being recognized by third parties for its quality of properties, landscaping, and property management will lead to higher rents and profitability. The Company sells assets selectively in order to ensure that its portfolio consists only of high quality well-located assets within its market area. DIVISERSIFIED MARKET FOCUS. The Company focuses on owning, operating, developing, constructing and acquiring apartment communities (the "Communities") throughout the southeast and Texas. INTENSIVE MANAGEMENT FOCUS. The Company strongly emphasizes on-site property management. Particular attention is paid to opportunities to increase rents, raise average occupancy rates, and control costs, with property managers and regional management being given the responsibility for monitoring market trends and the discretion to react to such trends. The Company, as part of its intense management focus, has established regional training facilities to produce highly trained property managers, leasing consultants and service technicians who work on-site at each of the Communities. DECENTRALIZED OPERATIONAL STRUCTURE. The Company's operational structure is organized on a decentralized basis. Management believes that its decentralized operating structure capitalizes on specific market knowledge, increases personal accountability relative to a centralized structure and is beneficial in the acquisition, redevelopment and development process. 3 PROACTIVE ASSET MANAGEMENT The Company focuses on maximizing the return on assets and adding to the intrinsic underlying value of each share, and routinely reviews each asset based on its determined value and sells those which no longer fit its investment criteria. The Company constantly evaluates the effectiveness of its capital allocations and makes adjustments to its strategy, including investing in acquisitions and new development, debt retirement, and repurchases of Company shares. STRATEGIES The Company seeks to increase operating cash flow and earnings per share to maximize shareholder value through a balanced strategy of internal and external growth. OPERATING GROWTH STRATEGY. Management's goal is to maximize the Company's return on investment in each Community by increasing rental rates and reducing operating expenses while maintaining high occupancy levels. The Company seeks higher net rental revenues by enhancing and maintaining the competitiveness of the Communities and manages expenses through its system of detailed management reporting and accountability in order to achieve increases in operating cash flow. The steps taken to meet these objectives include: - empowering the Company's property managers to adjust rents in response to local market conditions and to concentrate resident turnover in peak rental demand months; - offering new services to residents, including telephone, cable, and internet access on which it generates fee and commission income; - implementing programs to control expenses through investment in cost-saving initiatives, such as the installation of individual apartment unit water and utility meters in certain Communities; - improving the "curb appeal" of the Communities through extensive landscaping and exterior improvements and repositioning Communities from time to time to maintain market leadership positions; - compensating employees through performance-based compensation and stock ownership programs; - maintaining a hands-on management style and "flat" organizational structure that emphasizes senior management's continued close contact with the market and employees; and - selling or exchanging underperforming assets and repurchasing common shares when cost of capital and asset values permit. DEVELOPMENT STRATEGY. In late 1997, the Company's emphasis shifted from acquisitions to development because of the higher quality assets and higher long term investment returns generated by development. In 2001, the Company will complete a four-year $300 million construction program of high quality apartments in multiple markets. This represents the completion of the development pipeline initiated in 1997. In 1999, management decided to exit the construction and development business upon completion of the Company's existing development pipeline after determining that market conditions were changing, making it unlikely that future proposed projects would meet its profitability targets. In 2000, the Company completed the following development projects, consisting of a total of 934 apartment units which are currently in various stages of lease-up: - 320 unit Kenwood Club in Katy, Texas - 370 unit Grand Reserve Lexington in Lexington, Kentucky - 244 unit Reserve at Dexter Lake Phase II in Memphis, Tennessee 4 At December 31, 2000, the Company had two uncompleted development properties with a total of 677 apartment units in various stages of lease-up, development, construction, and pre-development, all scheduled to be completed in 2001, and leased throughout 2001 and 2002. The Company anticipates an additional capital investment in this development pipeline of approximately $17 million in 2001. These projects are expected to be funded by the Company's outstanding lines of credit ("Credit Lines"), selective property dispositions and possible joint venture transactions. ACQUISITION STRATEGY. One of the Company's strategies is to acquire and redevelop apartment communities that meet its investment criteria and long-term strategic objectives. During 2000, the Company acquired two properties, the 200-unit Huntington Chase in Warner Robins, Georgia and the 240-unit Indigo Point in Brandon, Florida. These properties were acquired to complete a tax-free exchange transaction related to two properties sold during the year as part of the Company's disposition strategy, discussed below. JOINT VENTURE STRATEGY. One of the Company's strategies is to sell or to contribute apartment communities to a joint venture when a favorable return can be achieved and to co-invest with joint venture partners in additional redevelopment opportunities. The Company is actively seeking attractively priced opportunities in which it and joint venture partners can invest in, and established a joint venture in 1999 with Blackstone. DISPOSITION STRATEGY. The Company is committed to the selective disposition of non-strategic assets, defined as those apartment communities that no longer meet its investment criteria and long-term strategic objectives. Typically, the Company selects assets for disposition that do not meet its present investment criteria including future return on investment, location, market, potential for growth, and capital needs. The following apartment communities, containing an aggregate of 1,902 apartment units, were sold or exchanged during 2000:

NUMBER GROSS PROPERTY LOCATION OF UNITS DATE PROCEEDS -------- --------------- -------- ----------------- ----------- Pine Trails.................. Clinton, MS 120 February 11, 2000 $ 2,815,000 MacArthur Ridge.............. Irving, TX 248 February 25, 2000 12,075,000 Clearbrook Village........... Memphis, TN 176 April 19, 2000 8,093,000 Winchester Square............ Memphis, TN 253 April 19, 2000 8,815,000 McKellar Woods............... Memphis, TN 624 April 19, 2000 14,536,000 Whispering Oaks.............. Little Rock, AR 207 August 17, 2000 6,200,000 Riverwind.................... Columbus, GA 44 October 13, 2000 900,000 2000 Wynnton................. Columbus, GA 72 October 13, 2000 2,050,000 Hollybrook................... Dalton, GA 158 November 17, 2000 5,600,000 ----- ----------- Total........................ 1,902 $61,084,000 ===== ===========

SHARE REPURCHASE PROGRAM In 1999, the Company's Board of Directors approved an increase in the number of shares authorized to be repurchased to 4 million common shares, of which the Company repurchased approximately 1.7 million common shares (8% of the common shares and Common Units outstanding) as of December 31, 2000. From time to time the Company intends to sell assets based on its disposition strategy outlined in this Annual Report and use the proceeds to repurchase shares when it believes that shareholder value is enhanced. Factors affecting this determination include the share price, asset dispositions and pricing, financing agreements and rates of return of alternative investments. 5 COMPETITION All of the Company's Communities are located in areas that include other apartment communities. Occupancy and rental rates are affected by the number of competitive apartment communities in a particular area. The Company's properties compete with numerous other multifamily properties, the owners of which may have greater resources than the Company and whose management may have more experience than the Company's management. Moreover, single-family rental housing, manufactured housing, condominiums and the new and existing home markets provide housing alternatives to potential residents of apartment communities. RECENT DEVELOPMENTS In January 2001, the Company raised its quarterly distribution to common shareholders from $.58 per share to $.585 per share, effective with its distribution paid on January 31, 2001. In January 2001, the Company entered into an interest rate swap agreement with a notional amount of $25 million, the effect of which was to lock the interest rate on $25 million of the FNMA Credit Facility at approximately 6.2%. The swap agreement expires December 1, 2005. ITEM 2. PROPERTIES The Company seeks to acquire and develop apartment communities appealing to middle and upper income residents in mid-size cities in the southeastern United States and Texas. Approximately 70% of the Company's apartment units are located in Georgia, Florida, Tennessee and Texas markets. The Company's strategic focus is to provide its residents high quality apartment units in attractive community settings, characterized by extensive landscaping and attention to aesthetic detail. The Company utilizes its experience and expertise in maintenance, landscaping, marketing and management to effectively "reposition" many of the apartment communities it acquires to raise occupancy levels and per unit average rentals. The following table sets forth certain historical information for the communities the Company owned or maintained an ownership interest in, including the 10 properties containing 2,793 apartment units owned by the Joint Venture, at December 31, 2000: 6

APPROXI- MATE AVERAGE YEAR RENTABLE UNIT YEAR MANAGEMENT NUMBER AREA SIZE PROPERTY LOCATION COMPLETED COMMENCED OF UNITS (SQUARE FT.) (SQUARE FT.) ----------------------------------- --------------------- ------------- ------------ -------- ------------ ------------ COMPLETED AND OWNED: Eagle Ridge Birmingham, AL 1986 1998 200 181,400 907 Abbington Place Huntsville, AL 1987 1998 152 162,792 1,071 Paddock Club--Huntsville I Huntsville, AL 1989 1997 200 211,600 1,058 Paddock Club--Huntsville II Huntsville, AL 1998 1998 192 212,736 1,108 Paddock Club Montgomery I & II Montgomery, AL 1999 1998 208 230,880 1,110 ------ ---------- ----- 952 999,408 1,050 ------ ---------- ----- Calais Forest Little Rock, AR 1987 1994 260 195,000 750 Napa Valley Little Rock, AR 1984 1996 240 183,120 763 Westside Creek I Little Rock, AR 1984 1997 142 147,964 1,042 Westside Creek II Little Rock, AR 1986 1997 166 172,972 1,042 ------ ---------- ----- 808 699,056 865 ------ ---------- ----- Tiffany Oaks Altamonte Springs, FL 1985 1996 288 234,144 813 Marsh Oaks Atlantic Beach, FL 1986 1995 120 93,240 777 Indigo Point Brandon, FL 1989 2000 240 194,640 811 Paddock Club--Brandon I & II Brandon, FL 1997/99 1997 440 516,120 1,173 Anatole Daytona Beach, FL 1986 1995 208 149,136 717 Paddock Club--Gainsville Gainsville, FL 1999 1998 264 293,040 1,110 Cooper's Hawk Jacksonville, FL 1987 1995 208 218,400 1,050 Hunter's Ridge at Deerwood Jacksonville, FL 1987 1997 336 295,008 878 Lakeside Jacksonville, FL 1985 1996 416 344,032 827 Paddock Club--Jacksonville I, II& III Jacksonville, FL 1989/96 1997 440 475,200 1,080 Paddock Club--Mandarin Jacksonville, FL 1998 1998 288 330,336 1,147 St. Augustine Jacksonville, FL 1987 1995 400 304,400 761 Woodbridge at the Lake Jacksonville, FL 1985 1994 188 166,004 883 Woodhollow Jacksonville, FL 1986 1997 450 342,000 760 Paddock Club--Lakeland Lakeland, FL 1988/90 1997 464 505,296 1,089 Savannahs at James Landing Melbourne, FL 1990 1995 256 238,592 932 Paddock Park--Ocala I Ocala, FL 1986 1997 200 202,200 1,011 Paddock Park--Ocala II Ocala, FL 1988 1997 280 283,080 1,011 Paddock Club--Panama City Panama City, FL 2000 1998 254 283,972 1,118 Paddock Club--Tallahassee I Tallahassee, FL 1990 1997 192 207,936 1,083 Paddock Club--Tallahassee II Tallahassee, FL 1995 1997 112 121,296 1,083 Belmere Tampa, FL 1984 1994 210 202,440 964 Links at Carrollwood Tampa, FL 1980 1998 230 214,820 934 ------ ---------- ----- 6,484 6,215,332 959 ------ ---------- -----

ENCUMBRANCES AT AVERAGE AVERAGE DECEMBER 31, 2000 RENT PER OCCUPANCY --------------------------------- UNIT AT % AT MORTGAGE DECEMBER 31, DECEMBER 31, PRINCIPAL INTEREST MATURITY PROPERTY 2000 2000 (000'S) RATE DATE ----------------------------------- ------------ ------------ --------- -------- ---------- COMPLETED AND OWNED: Eagle Ridge $608 96.50% $ 6,292 8.250% 7/1/2028 Abbington Place $572 91.45% $ --(1) (1) (1) Paddock Club--Huntsville I $607 95.00% $ --(2) (2) (2) Paddock Club--Huntsville II $679 96.35% $ --(2) (2) (2) Paddock Club Montgomery I & II $719 87.98% $ --(1) (1) (1) ---- ------ -------- $641 93.49% $ 6,292 ---- ------ -------- Calais Forest $574 96.54% $ --(1) (1) (1) Napa Valley $558 94.58% $ --(3) (3) (3) Westside Creek I $644 91.55% $ --(3) (3) (3) Westside Creek II $608 92.77% $ 4,828 8.760% 10/1/2006 ---- ------ -------- $588 94.31% $ 4,828 ---- ------ -------- Tiffany Oaks $625 97.57% $ --(3) (3) (3) Marsh Oaks $585 98.33% $ --(3) (3) (3) Indigo Point $657 97.50% $ --(4) (4) (4) Paddock Club--Brandon I & II $812 96.59% $ --(1) (1) (1) Anatole $606 95.19% $ 7,000(5) 5.690%(5) 12/1/2027(5) Paddock Club--Gainsville $803 97.73% $ --(5) (5) (5) Cooper's Hawk $683 98.08% $ --(6) (6) (6) Hunter's Ridge at Deerwood $634 96.43% $ --(7) (7) (7) Lakeside $617 97.36% $ --(3) (3) (3) Paddock Club--Jacksonville I, II& III $747 90.23% $ --(8) (8) (8) Paddock Club--Mandarin $781 93.06% $ --(1) (1) (1) St. Augustine $578 94.00% $ --(6) (6) (6) Woodbridge at the Lake $640 96.28% $ --(1) (1) (1) Woodhollow $614 96.44% $ 9,579 7.500% 9/1/2002 Paddock Club--Lakeland $683 91.16% $ --(8) (8) (8) Savannahs at James Landing $621 96.48% $ --(6) (6) (6) Paddock Park--Ocala I $641 86.50% $ 6,805 7.500% 10/1/2008 Paddock Park--Ocala II $690 91.43% $ --(1) (1) (1) Paddock Club--Panama City $775 80.31% $ --(5) (5) (5) Paddock Club--Tallahassee I $721 94.79% $ --(1) (1) (1) Paddock Club--Tallahassee II $718 94.64% $ 4,671 8.500% 4/1/2036 Belmere $680 95.71% $ --(3) (3) (3) Links at Carrollwood $691 94.35% $ 5,607 8.750% 2/1/2003 ---- ------ -------- $680 94.26% $ 33,662 ---- ------ --------

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APPROXI- MATE AVERAGE YEAR RENTABLE UNIT YEAR MANAGEMENT NUMBER AREA SIZE PROPERTY LOCATION COMPLETED COMMENCED OF UNITS (SQUARE FT.) (SQUARE FT.) ----------------------------------- --------------------- ------------- ------------ -------- ------------ ------------ High Ridge Athens, GA 1987 1997 160 186,560 1,166 Bradford Pointe Augusta, GA 1986 1997 192 156,288 814 Shenandoah Ridge Augusta, GA 1975/84 1994 272 222,768 819 Westbury Creek Augusta, GA 1984 1997 120 107,040 892 Fountain Lake Brunswick, GA 1983 1997 110 129,800 1,180 Park Walk College Park, GA 1985 1997 124 112,716 909 Whisperwood Spa and Club Columbus, GA 1980/86/88/98 1997 1,008 1,220,688 1,211 Willow Creek Columbus, GA 1968/78 1997 285 246,810 866 Terraces at Fieldstone Conyers, GA 1999 1998 316 351,076 1,111 Whispering Pines I LaGrange, GA 1982 1997 120 123,960 1,033 Whispering Pines II LaGrange, GA 1984 1997 96 99,168 1,033 Westbury Springs Lilburn, GA 1983 1997 150 137,700 918 Austin Chase Macon, GA 1996 1997 256 292,864 1,144 The Vistas Macon, GA 1985 1997 144 153,792 1,068 Georgetown Grove Savannah, GA 1997 1998 220 239,800 1,090 Island Retreat St. Simons Island, GA 1978 1998 112 129,584 1,157 Wildwood I Thomasville, GA 1980 1997 120 123,960 1,033 Wildwood II Thomasville, GA 1984 1997 96 99,168 1,033 Hidden Lake I Union City, GA 1985 1997 160 171,200 1,070 Hidden Lake II Union City, GA 1987 1997 160 171,200 1,070 Three Oaks I Valdosta, GA 1983 1997 120 123,960 1,033 Three Oaks II Valdosta, GA 1984 1997 120 123,960 1,033 Huntington Chase Warner Robins, GA 1997 2000 200 218,400 1,092 Southland Station I Warner Robins, GA 1987 1997 160 186,720 1,167 Southland Station II Warner Robins, GA 1990 1997 144 168,048 1,167 Terraces at Towne Lake Woodstock, GA 1998 1997 264 286,968 1,087 Terraces at Towne Lake II Woodstock, GA 1999 1998 238 272,986 1,147 ------ ---------- ----- 5,467 5,857,184 1,071 ------ ---------- ----- Fairways at Hartland Bowling Green, KY 1996 1997 240 251,280 1,047 Paddock Club Florence Florence, KY 1994 1997 200 207,000 1,035 Lakepointe Lexington, KY 1986 1994 118 90,624 768 Mansion, The Lexington, KY 1989 1994 184 138,736 754 Village, The Lexington, KY 1987 1994 252 182,700 725 Stonemill Village Louisville, KY 1985 1994 384 324,096 844 ------ ---------- ----- 1,378 1,194,436 867 ------ ---------- -----

ENCUMBRANCES AT AVERAGE AVERAGE DECEMBER 31, 2000 RENT PER OCCUPANCY --------------------------------- UNIT AT % AT MORTGAGE DECEMBER 31, DECEMBER 31, PRINCIPAL INTEREST MATURITY PROPERTY 2000 2000 (000'S) RATE DATE ----------------------------------- ------------ ------------ --------- -------- ---------- High Ridge $779 93.13% $ --(3) (3) (3) Bradford Pointe $565 94.27% $ 4,760(5) 5.790%(5) 6/1/2028(5) Shenandoah Ridge $500 90.07% $ --(3) (3) (3) Westbury Creek $574 99.17% $ 3,072 7.594% 11/1/2024 Fountain Lake $704 88.18% $ 2,887 7.750% 4/1/2024 Park Walk $673 98.39% $ 3,291 6.370% 11/1/2025 Whisperwood Spa and Club $666 91.96% $ --(1) (1) (1) Willow Creek $517 96.84% $ --(3) (3) (3) Terraces at Fieldstone $829 94.62% $ --(1) (1) (1) Whispering Pines I $584 92.50% $ 2,662 7.750% 1/1/2023 Whispering Pines II $589 89.58% $ 2,435 6.150% 12/1/2024 Westbury Springs $708 97.33% $ 4,119 7.500% 7/1/2023 Austin Chase $681 99.22% $ --(7) (7) (7) The Vistas $608 97.22% $ 3,952 6.230% 3/1/2028 Georgetown Grove $730 98.64% $ 10,411 7.750% 7/1/2037 Island Retreat $722 91.96% $ 3,318 7.215% 3/1/2003 Wildwood I $500 97.50% $ 1,991 7.500% 12/1/2020 Wildwood II $536 94.79% $ 1,952 6.573% 7/1/2024 Hidden Lake I $694 95.00% $ 4,385 6.340% 12/1/2026 Hidden Lake II $672 95.63% $ --(3) (3) (3) Three Oaks I $532 92.50% $ 2,750 7.500% 2/1/2022 Three Oaks II $557 93.33% $ 2,834 6.259% 7/1/2024 Huntington Chase $695 95.50% $ 9,504 6.850% 11/1/2008 Southland Station I $662 99.38% $ --(3) (3) (3) Southland Station II $675 97.92% $ --(1) (1) (1) Terraces at Towne Lake $845 94.70% $ 15,067 8.250% 1/1/2037 Terraces at Towne Lake II $852 94.12% $ --(1) (1) (1) ---- ------ -------- $667 94.62% $ 79,390 ---- ------ -------- Fairways at Hartland $609 92.50% $ --(1) (1) (1) Paddock Club Florence $751 92.00% $ 9,563 7.250% 2/1/2036 Lakepointe $582 99.15% $ --(3) (3) (3) Mansion, The $586 95.11% $ --(1) (1) (1) Village, The $611 91.27% $ --(3) (3) (3) Stonemill Village $599 97.66% $ --(2) (2) (2) ---- ------ -------- $622 94.56% $ 9,563 ---- ------ --------

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APPROXI- MATE AVERAGE YEAR RENTABLE UNIT YEAR MANAGEMENT NUMBER AREA SIZE PROPERTY LOCATION COMPLETED COMMENCED OF UNITS (SQUARE FT.) (SQUARE FT.) ----------------------------------- --------------------- ------------- ------------ -------- ------------ ------------ Canyon Creek St. Louis, MO 1983 1994 320 312,320 976 ------ ---------- ----- Riverhills Grenada, MS 1972 1985 96 81,984 854 Advantages, The Jackson, MS 1984 1991 252 199,080 790 Crosswinds Jackson, MS 1988/89 1996 360 443,160 1,231 Pear Orchard Jackson, MS 1985 1994 389 338,430 870 Reflection Pointe Jackson, MS 1986 1988 296 254,856 861 Somerset Jackson, MS 1980 1995 144 126,864 881 Woodridge Jackson, MS 1987 1988 192 175,104 912 ------ ---------- ----- 1,729 1,619,478 937 ------ ---------- ----- Hermitage at Beechtree Cary, NC 1988 1997 194 169,750 875 Corners, The Winston-Salem, NC 1982 1993 240 173,520 723 ------ ---------- ----- 434 343,270 791 ------ ---------- ----- Fairways at Royal Oak Cincinnati, OH 1988 1994 214 214,428 1,002 ------ ---------- ----- Woodwinds Aiken, SC 1988 1997 144 165,168 1,147 Tanglewood Anderson, SC 1980 1994 168 140,784 838 Paddock Club--Columbia Columbia, SC 1989/95 1997 336 367,584 1,094 The Fairways Columbia, SC 1992 1994 240 213,840 891 Highland Ridge Greenville, SC 1984 1995 168 143,976 857 Howell Commons Greenville, SC 1986/88 1997 348 292,668 841 Paddock Club--Greenville Greenville, SC 1996 1997 208 212,160 1,020 Park Haywood Greenville, SC 1983 1993 208 156,832 754 Spring Creek Greenville, SC 1985 1995 208 182,000 875 Runaway Bay Mt. Pleasant, SC 1988 1995 208 177,840 855 Park Place Spartanburg, SC 1987 1997 184 195,224 1,061 ------ ---------- ----- 2,420 2,248,076 929 ------ ---------- ----- Steeplechase Chattanooga, TN 1986 1991 108 98,604 913 Windridge Chattanooga, TN 1984 1997 174 238,728 1,372 Oaks, The Jackson, TN 1978 1993 100 87,500 875 Post House Jackson Jackson, TN 1987 1989 150 163,650 1,091 Post House North Jackson, TN 1987 1989 144 144,720 1,005 Williamsburg Village Jackson, TN 1987 1994 148 121,360 820

ENCUMBRANCES AT AVERAGE AVERAGE DECEMBER 31, 2000 RENT PER OCCUPANCY --------------------------------- UNIT AT % AT MORTGAGE DECEMBER 31, DECEMBER 31, PRINCIPAL INTEREST MATURITY PROPERTY 2000 2000 (000'S) RATE DATE ----------------------------------- ------------ ------------ --------- -------- ---------- Canyon Creek $577 94.69% $ --(2) (2) (2) ---- ------ -------- Riverhills $402 90.63% $ -- Advantages, The $487 95.24% $ --(2) (2) (2) Crosswinds $626 93.06% $ --(3) (3) (3) Pear Orchard $589 85.86% $ --(3) (3) (3) Reflection Pointe $594 88.51% $ 5,882(5) 5.940%(5) 12/1/2027(5) Somerset $527 96.53% $ --(3) (3) (3) Woodridge $542 94.79% $ 4,615 6.500% 10/1/2027 ---- ------ -------- $562 91.32% $ 10,497 ---- ------ -------- Hermitage at Beechtree $705 96.91% $ --(3) (3) (3) Corners, The $574 96.25% $ 3,954 7.850% 6/15/2003 ---- ------ -------- $632 96.54% $ 3,954 ---- ------ -------- Fairways at Royal Oak $652 91.59% $ --(3) (3) (3) ---- ------ -------- Woodwinds $633 96.53% $ 3,428 8.840% 6/1/2005 Tanglewood $546 95.24% $ 2,316 7.600% 11/15/2002 Paddock Club--Columbia $698 90.48% $ --(1) (1) (1) The Fairways $631 93.33% $ 7,523 8.500% 3/1/2033 Highland Ridge $526 89.29% $ --(9) (9) (9) Howell Commons $537 99.43% $ --(3) (3) (3) Paddock Club--Greenville $717 89.42% $ --(2) (2) (2) Park Haywood $570 95.67% $ --(3) (3) (3) Spring Creek $549 90.87% $ --(9) (9) (9) Runaway Bay $722 98.56% $ --(9) (9) (9) Park Place $630 97.83% $ --(3) (3) (3) ---- ------ -------- $617 94.30% $ 13,267 ---- ------ -------- Steeplechase $589 96.30% $ --(3) (3) (3) Windridge $686 95.40% $ 5,299 6.314% 12/1/2024 Oaks, The $540 98.00% $ --(2) (2) (2) Post House Jackson $617 93.33% $ 5,002 8.170% 10/1/2027 Post House North $632 94.44% $ 3,375 5.980% 9/1/2025 Williamsburg Village $556 95.95% $ --(3) (3) (3)

9

APPROXI- MATE AVERAGE YEAR RENTABLE UNIT YEAR MANAGEMENT NUMBER AREA SIZE PROPERTY LOCATION COMPLETED COMMENCED OF UNITS (SQUARE FT.) (SQUARE FT.) ----------------------------------- --------------------- ------------- ------------ -------- ------------ ------------ Woods at Post House Jackson, TN 1997 1995 122 118,950 975 Crossings Memphis, TN 1973 1991 80 90,000 1,125 Eastview Memphis, TN 1973 1984 432 356,400 825 Gleneagles Memphis, TN 1975 1990 184 189,520 1,030 Greenbrook Memphis, TN 1980 1988 1,031 934,086 906 Hickory Farm Memphis, TN 1985 1994 200 150,200 751 Kirby Station Memphis, TN 1978 1994 371 310,156 836 Lincoln on the Green Memphis, TN 1988/98 1994 618 535,188 866 Park Estate Memphis, TN 1974 1977 82 96,924 1,182 Reserve at Dexter Lake I Memphis, TN 1999 1998 252 262,332 1,041 River Trace I Memphis, TN 1981 1997 244 205,692 843 River Trace II Memphis, TN 1985 1997 196 165,228 843 Savannah Creek Memphis, TN 1989 1996 204 237,048 1,162 Sutton Place Memphis, TN 1991 1996 253 268,686 1,062 Paddock Club--Murfreesboro Murfreesboro, TN 1999 1998 240 268,800 1,120 Brentwood Downs Nashville, TN 1986 1994 286 220,220 770 Park at Hermitage Nashville, TN 1987 1995 440 392,480 892 ------ ---------- ----- 6,059 5,656,472 934 ------ ---------- ----- Balcones Woods Austin, TX 1983 1997 384 313,728 817 Stassney Woods Austin, TX 1985 1995 288 248,832 864 Travis Station Austin, TX 1987 1995 304 249,888 822 Celery Stalk Dallas, TX 1978 1994 410 374,740 914 Courtyards at Campbell Dallas, TX 1986 1998 232 168,200 725 Deer Run Dallas, TX 1985 1998 304 206,720 680 Lodge at Timberglen Dallas, TX 1983 1994 260 226,200 870 Westborough Crossing Katy, TX 1984 1994 274 197,280 720 Highwood Plano, TX 1983 1998 196 156,800 800 Cypresswood Court Spring, TX 1984 1994 208 160,576 772 Green Tree Place Woodlands, TX 1984 1994 200 152,200 761 ------ ---------- ----- 3,060 2,455,164 802 ------ ---------- ----- Township Hampton, VA 1987 1995 296 248,048 838 ------ ---------- ----- TOTAL COMPLETED AND OWNED PROPER- TIES 29,621 28,062,672 947 ------ ---------- -----

ENCUMBRANCES AT AVERAGE AVERAGE DECEMBER 31, 2000 RENT PER OCCUPANCY --------------------------------- UNIT AT % AT MORTGAGE DECEMBER 31, DECEMBER 31, PRINCIPAL INTEREST MATURITY PROPERTY 2000 2000 (000'S) RATE DATE ----------------------------------- ------------ ------------ --------- -------- ---------- Woods at Post House $659 97.54% $ 5,223 7.250% 9/1/2035 Crossings $715 95.00% $ --(2) (2) (2) Eastview $543 92.36% $ 11,593 7.320% 4/1/2009 Gleneagles $603 97.28% $ --(2) (2) (2) Greenbrook $574 91.17% $ --(4) (4) (4) Hickory Farm $566 93.00% $ --(2) (2) (2) Kirby Station $607 94.88% $ --(3) (3) (3) Lincoln on the Green $686 91.75% $ --(8) (8) (8) Park Estate $786 90.24% $ --(4) (4) (4) Reserve at Dexter Lake I $795 79.76% $ --(5) (5) (5) River Trace I $546 96.31% $ 5,544 7.500% 2/1/2022 River Trace II $586 94.39% $ 5,498 6.380% 2/1/2026 Savannah Creek $644 97.55% $ --(3) (3) (3) Sutton Place $628 93.68% $ --(3) (3) (3) Paddock Club--Murfreesboro $792 92.50% $ --(1) (1) (1) Brentwood Downs $680 97.90% $ --(1) (1) (1) Park at Hermitage $615 92.95% $ 7,540 5.790% 2/1/2019 ---- ------ -------- $627 93.18% $ 49,074 ---- ------ -------- Balcones Woods $743 98.44% $ 8,396 7.630% 11/1/2003 Stassney Woods $634 100.00% $ 4,470 6.600% 4/1/2019 Travis Station $602 97.70% $ 3,955 6.600% 4/1/2019 Celery Stalk $676 92.44% $ 8,460 9.006% 12/1/2004 Courtyards at Campbell $668 97.41% $ --(1) (1) (1) Deer Run $625 93.75% $ --(1) (1) (1) Lodge at Timberglen $657 96.15% $ 4,740 9.006% 12/1/2004 Westborough Crossing $539 97.08% $ 3,958 9.006% 12/1/2004 Highwood $687 97.45% $ --(4) (4) (4) Cypresswood Court $562 98.56% $ 3,330 9.006% 12/1/2004 Green Tree Place $615 95.50% $ 3,180 9.006% 12/1/2004 ---- ------ -------- $642 96.60% $ 40,489 ---- ------ -------- Township $649 95.27% $ 10,800(5) 5.780%(5) 2/1/2028(5) ---- ------ -------- TOTAL COMPLETED AND OWNED PROPER- TIES $642 94.20% $261,816 ---- ------ --------

10

APPROXI- MATE AVERAGE YEAR RENTABLE UNIT YEAR MANAGEMENT NUMBER AREA SIZE PROPERTY LOCATION COMPLETED COMMENCED OF UNITS (SQUARE FT.) (SQUARE FT.) ----------------------------------- --------------------- ------------- ------------ -------- ------------ ------------ JOINT VENTURE PROPERTIES: Colony at South Park Aiken, SC 1989/91 1997 184 174,800 950 Lane at Towne Crossing Mesquite, TX 1983 1994 384 277,632 723 Northwood Arlington, TX 1980 1998 270 224,100 830 Walden Run McDonough, GA 1997 1998 240 271,200 1,130 Woods, The Austin, TX 1977 1997 278 214,060 770 Woodstream Greensboro, NC 1983 1994 304 217,056 714 Cedar Mill Memphis, TN 1973/86 1982/94 276 297,804 1,079 Hamilton Pointe Chattanooga, TN 1989 1992 361 256,671 711 Hidden Creek Chattanooga, TN 1987 1988 300 259,200 864 Lakeshore Landing Ridgeland, MS 1974 1994 196 171,108 873 ------ ---------- ----- TOTAL JOINT VENTURE PROPERTIES 2,793 2,363,631 846 ------ ---------- ----- DEVELOPMENT PROPERTIES: Kenwood Club Katy, TX 2000 1999 320 318,080 994 Reserve at Dexter Lake Phase II Memphis, TN 2000 1999 244 257,176 1,054 Grand Reserve Lexington Lexington, KY 2000 1999 370 432,530 1,169 Grand View Nashville Nashville, TN N/A 1999 264 292,248 1,107 ------ ---------- ----- TOTAL DEVELOPMENT PROPERTIES 1,198 1,300,034 1,085 ------ ---------- ----- TOTAL PROPERTIES 33,612 31,726,337 944 ====== ========== =====

ENCUMBRANCES AT AVERAGE AVERAGE DECEMBER 31, 2000 RENT PER OCCUPANCY --------------------------------- UNIT AT % AT MORTGAGE DECEMBER 31, DECEMBER 31, PRINCIPAL INTEREST MATURITY PROPERTY 2000 2000 (000'S) RATE DATE ----------------------------------- ------------ ------------ --------- -------- ---------- JOINT VENTURE PROPERTIES: Colony at South Park $607 98.91% N/A Lane at Towne Crossing $568 95.57% N/A Northwood $560 97.41% N/A Walden Run $751 95.42% N/A Woods, The $753 99.64% N/A Woodstream $572 98.36% N/A Cedar Mill $595 95.29% N/A Hamilton Pointe $495 95.84% N/A Hidden Creek $502 92.33% N/A Lakeshore Landing $551 93.37% N/A ---- ------ -------- TOTAL JOINT VENTURE PROPERTIES $589 96.17% $ -- ---- ------ -------- DEVELOPMENT PROPERTIES: Kenwood Club $795 78.44% $ --(5) (5) (5) Reserve at Dexter Lake Phase II $852 81.15% $ --(5) (5) (5) Grand Reserve Lexington $938 53.24% $ --(5) (5) (5) Grand View Nashville $933 63.64% $ --(5) (5) (5) ---- ------ -------- TOTAL DEVELOPMENT PROPERTIES $881 67.95% $ -- ---- ------ -------- TOTAL PROPERTIES $646 93.43% $261,816 ==== ====== ========

------------------------------ (1) Encumbered by the FNMA Credit Line, with an outstanding balance of $83.1 million with a variable interest rate of 7.218%, $65 million with a fixed rate of 7.712% and two interest rate swap agreements both for $25 million at 7.383% and 7.360% at December 31, 2000. (2) Encumbered by a $39.6 million mortgage with a maturity of July 1, 2001 and an interest rate of 8.650% (3) Encumbered by a $142 million loan with a maturity of March 3, 2003 and an average interest rate of 6.376% (4) Encumbered, along with one corporate property, by a $35.8 million mortgage with a maturity of April 1, 2005 and an interest rate of 7.000% (5) Encumbered by the AmSouth Credit Line, with an outstanding balance of $7.4 million with a variable interest rate of 8.750% at December 31, 2000. (6) Encumbered by a $15.7 million mortgage securing a tax-exempt bond amortizing over 25 years with an average interest rate of 5.750% (7) Encumbered by a $13.7 million mortgage securing a tax-exempt bond amortizing over 25 years with an average interest rate of 5.281% (8) Encumbered by a $47.5 million mortgage with a maturity of December 15, 2004 and an interest rate of 7.040% (9) Encumbered by a $9.6 million mortgage securing a tax-exempt bond amortizing over 25 years with an average interest rate of 6.090% 11 ITEM 3. LEGAL PROCEEDINGS The Company is not presently subject to any material litigation nor, to the Company's knowledge, is any material litigation threatened against the Company, other than routine litigation arising in the ordinary course of business, some of which is expected to be covered by liability insurance and none of which is expected to have a material adverse effect on the business, financial condition, liquidity or results of operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock has been listed and traded on the New York Stock Exchange ("NYSE") under the symbol "MAA" since its initial public offering in February 1994. On March 15, 2001, the reported last sale price of the Company's common stock on the NYSE was $22.35 per share, and there were approximately 1,500 holders of record of the common stock. The Company estimates there are approximately 13,500 beneficial owners of its common stock. The following table sets forth the quarterly high and low sales prices of the Company's common stock as reported on the NYSE and the distributions declared by the Company with respect to the periods indicated.

SALES PRICES ------------------- DIVIDENDS HIGH LOW DECLARED -------- -------- --------- 1999: First Quarter.................................... $24.125 $20.875 $.575 Second Quarter................................... $25.000 $21.188 $.575 Third Quarter.................................... $23.125 $21.000 $.575 Fourth Quarter................................... $23.063 $21.438 $.575 2000: First Quarter.................................... $23.375 $22.000 $ .58 Second Quarter................................... $24.500 $22.375 $ .58 Third Quarter.................................... $24.875 $23.000 $ .58 Fourth Quarter................................... $23.875 $21.250 $ .58

The Company's annual distribution rate for 2001 with respect to its common stock is expected to be $2.34 per share. The actual distributions made by the Company will be affected by a number of factors, including the gross revenues received from the Communities, the operating expenses of the Company, the interest expense incurred on borrowings and unanticipated capital expenditures. The Company pays a preferential regular distribution on the Series A, Series B, Series C and Series E Preferred Stock at annual rates of $2.375, $2.21875, $2.34375 and $2.375 per share, respectively. No distribution may be made on the Company's common stock unless all accrued distributions have been made with respect to each series of preferred stock. No assurance can be given that the Company will be able to maintain its distribution rate on its common stock or make required distributions with respect to the Series A, Series B, Series C, and Series E Preferred Stock. Future distributions by the Company will be at the discretion of the Board of Directors and will depend on the actual funds available for distribution of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as the Board of Directors deems relevant. 12 The Company had a Dividend Reinvestment and Stock Purchase Plan (the "DRSPP") under which holders of common stock (and Series A, Series B, Series C and Series E Preferred Stock) could elect automatically to reinvest their distributions in additional shares of common stock and/or to make optional purchases of common stock free of brokerage commissions and charges. Shares purchased directly from the Company pursuant to the DRSPP were purchased at up to a 3% discount from their fair market value at the Company's discretion. To fulfill its obligations under the DRSPP, the Company may either issue additional shares of common stock or repurchase common stock in the open market. In 1999, the Company implemented the Direct Stock Purchase and Distribution Reinvestment Plan (the "DSPDRP"), which has terms substantially similar to the above DRSPP, except for certain additional benefits relating to purchase of the Company's Common Stock. This plan replaced the DRSPP, whose participants were automatically enrolled in the new plan. ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected financial data on an historical basis for the Company. This data should be read in conjunction with the consolidated financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Annual Report on Form 10-K. 13 MID-AMERICA APARTMENT COMMUNITIES, INC. SELECTED FINANCIAL DATA (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31, ------------------------------------------------------------ 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- -------- OPERATING DATA: Total revenues........................................ $ 224,640 $ 226,322 $ 215,543 $ 139,116 $111,882 Expenses: Property expenses................................... 83,446 84,885 79,917 52,404 42,570 Depreciation and amortization....................... 51,844 49,903 46,021 27,737 21,443 General and administrative.......................... 14,826 14,479 11,960 6,602 6,154 Interest............................................ 50,736 48,302 45,704 28,943 25,766 Amortization of deferred financing costs............ 2,758 2,854 2,348 888 661 Gain on dispositions, net............................... 11,587 10,237 408 -- 2,185 ---------- ---------- ---------- ---------- -------- Income before minority interest in operating partnership income and extraordinary items........................ 32,617 36,136 30,001 22,542 17,473 Minority interest in operating partnership income....... (2,626) (2,497) (2,254) (2,693) (3,213) Extraordinary items--loss on early extinguishment of debt.................................................. (204) (67) (990) (8,622) -- ---------- ---------- ---------- ---------- -------- Net income.............................................. 29,787 33,572 26,757 11,227 14,260 Preferred dividends..................................... 16,114 16,114 11,430 5,252 990 ---------- ---------- ---------- ---------- -------- Net income available for common shareholders............ $ 13,673 $ 17,458 $ 15,327 $ 5,975 $ 13,270 ========== ========== ========== ========== ======== PER SHARE DATA: Basic and diluted: Before extraordinary items.......................... $ 0.79 $ 0.93 $ 0.87 $ 1.05 $ 1.21 Extraordinary items................................. (0.01) -- (0.05) (0.62) -- ---------- ---------- ---------- ---------- -------- Net income available per common share............... $ 0.78 $ 0.93 $ 0.82 $ 0.43 $ 1.21 ========== ========== ========== ========== ======== Dividends declared.................................... $ 2.325 $ 2.305 $ 2.225 $ 2.155 $ 2.065 BALANCE SHEET DATA: Real estate owned, at cost............................ $1,430,378 $1,396,743 $1,434,733 $1,211,693 $641,893 Real estate owned, net................................ $1,244,475 $1,248,051 $1,315,368 $1,134,704 $592,335 Total assets.......................................... $1,303,771 $1,298,823 $1,366,427 $1,193,870 $611,199 Total debt............................................ $ 781,089 $ 744,238 $ 753,427 $ 632,213 $315,239 Minority interest..................................... $ 51,383 $ 56,060 $ 61,441 $ 62,865 $ 39,238 Shareholders' equity.................................. $ 433,993 $ 463,884 $ 517,299 $ 461,300 $241,384 Weighted average common shares (000's): Basic............................................... 17,544 18,784 18,725 13,892 10,938 Diluted............................................. 17,597 18,808 18,770 13,955 10,983 OTHER DATA (AT END OF PERIOD): Market capitalization (shares and units).............. $ 634,903 $ 639,095 $ 670,123 $ 710,175 $436,739 Ratio of total debt to total capitalization(1)........ 55.2% 53.8% 52.9% 47.1% 41.9% Number of properties, including ownership interest.... 124 129 129 116 73 Number of apartment units, including ownership interest............................................ 33,612 33,901 33,831 30,579 19,280

------------------------------ (1) Total capitalization is total debt and market capitalization of preferred shares, common shares and partnership units. 14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following is a discussion of the consolidated financial condition and results of operations of the Company for the years ended December 31, 2000, 1999, and 1998. This discussion should be read in conjunction with all of the consolidated financial statements included in this Annual Report on Form 10-K. As of December 31, 2000, the total number of apartment units the Company owned or had an ownership interest in, including the 10 properties containing 2,793 apartment units owned by the Joint Venture was 33,612 in 124 Communities, compared to the 33,901 units in 129 Communities owned at December 31, 1999 and 33,831 in 129 Communities owned at December 31, 1998. For fully-owned properties, the average monthly rental per apartment unit, excluding units in lease-up, increased to $642 at December 31, 2000 from $610 at December 31, 1999 and $597 at December 31, 1998. For these same units, overall occupancy at December 31, 2000, 1999 and 1998 was 94.2%, 94.6% and 94.1%, respectively. FUNDS FROM OPERATIONS Funds from operations ("FFO") represents net income (computed in accordance with Generally Accepted Accounting Principles, or "GAAP") excluding extraordinary items, minority interest in Operating Partnership income, gain or loss on disposition of real estate assets, plus depreciation and amortization related to real estate, and adjustments for the Joint Venture to reflect FFO on the same basis. This definition of FFO is in accordance with the National Association of Real Estate Investment Trust's ("NAREIT") recommended definition, which was modified during 1999. The Company adopted this definition effective January 1, 2000, and has reflected this clarification for all periods presented in the accompanying consolidated financial statements. The Company's policy is to expense the cost of interior painting, vinyl flooring, and blinds as incurred for stabilized properties. During the stabilization period for acquisition properties, these items are capitalized because they are necessary for the continued use of the property, and, thus, are not deducted in calculating FFO. 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. The Company believes that FFO is helpful in understanding the Company's results of operations in that such calculation reflects the Company's ability to support interest payments and general operating expenses before the impact of certain activities such as changes in other assets and accounts payable. The Company's calculation of FFO may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs. FFO for all periods presented has been adjusted to conform with NAREIT's clarified definition discussed above. FFO decreased during 2000 by approximately $2,258,000 to $57,456,000 versus $59,714,000 in 1999 due to asset dispositions, investment in new development and additional interest expense incurred to fund share repurchases. Over the last two years, the Company has sold a total of 5,833 units under its disposition strategy, discussed earlier in this Annual Report, and reallocated the majority of the proceeds from those sales to the reduction of debt, the share repurchase program and the completion of the development pipeline, all uses which management believes have increased remaining shareholder 15 value. For the three years ended December 31, 2000, 1999 and 1998, FFO is calculated as follows (dollars in thousands):

YEARS ENDED DECEMBER 31, ------------------------------ 2000 1999 1998 -------- -------- -------- Net income available for common shareholders................ $ 13,673 $ 17,458 $15,327 Depreciation and amortization............................... 51,330 49,188 45,776 Adjustment for joint venture depreciation................... 1,210 741 -- Minority interest........................................... 2,626 2,497 2,254 Gain on dispositions, net................................... (11,587) (10,237) (408) Extraordinary items--loss on early extinguishment of debt... 204 67 990 -------- -------- ------- Funds from operations....................................... $ 57,456 $ 59,714 $63,939 ======== ======== ======= Weighted average shares and units: Basic..................................................... 20,498 21,794 21,717 Diluted................................................... 20,551 21,817 21,764

RESULTS OF OPERATIONS COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO THE YEAR ENDED DECEMBER 31, 1999 During 2000 the Company completed development of 1,173 total apartment units in 2 new communities and 4 existing communities, sold 9 communities containing 1,902 total units and purchased 2 communities containing 440 units. Property revenues for 2000 decreased by approximately $1,682,000 due primarily to decreases of (i) $6,710,000 due to the sale of 10 properties to the BRE/MAAC Associates, L.L.C. joint venture ("Joint Venture") in 1999, (ii) $5,241,000 from the sale of the Hidden Oaks, Sailwinds at Lake Magdalene and Regency Club apartments ("1999 Dispositions") in 1999, and (iii) $6,913,000 from the sale or exchange of the Pine Trails, MacArthur Ridge, Clearbrook Village, Winchester Square, McKellar Woods, Whispering Oaks, Riverwind, 2000 Wynnton and Hollybrook apartments ("2000 Dispositions") in 2000. These decreases were partially offset by increases of (i) $8,993,000 from the development communities, (ii) $2,441,000 from the purchase of the Huntington Chase and Indigo Point apartments ("2000 Acquisitions") in 2000, and (iii) $5,748,000 from the communities owned throughout both periods. Property revenues in 2000 included approximately $787,000 of ancillary income from an agreement made with an internet service provider. This agreement was terminated early in 2001. The Company is currently seeking an agreement with an alternative service provider; however, in 2001, the income from this ancillary product line is expected to be substantially less than that earned in 2000. Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other property related costs. As a percentage of total property revenues, property operating expenses decreased from 37.9% in 1999 to 37.5% in 2000. The majority of the decrease is due to utility expenses that dropped from 4.1% of property revenues in 1999 to 3.4% in 2000 as the Company continued to see savings from its program to submeter units for water usage. Property operating expenses for 2000 decreased by approximately $1,439,000 due primarily to decreases of (i) $2,755,000 from the sale of 10 properties to the Joint Venture in 1999, (ii) $2,578,000 from the 1999 Dispositions, and (iii) $3,018,000 from the 2000 Dispositions. These decreases were partially offset by increases of (i) $3,502,000 due to the development communities, (ii) $992,000 due to the 2000 Acquisitions, and (iii) $2,418,000 due to the communities owned throughout both periods. Depreciation and amortization expense increased by approximately $1,941,000 primarily due to (i) $494,000 from the 2000 Acquisitions, (ii) $3,538,000 from the development communities, and 16 (iii) $2,355,000 from the communities owned throughout both periods. These increases were partially offset by decreases of (i) $1,623,000 due to the sale of 10 properties to the Joint Venture in 1999, (ii) $1,426,000 due to the 1999 Dispositions, and (iii) $1,397,000 due to the 2000 Dispositions. Amortization of costs in excess of fair value of net assets ("goodwill") acquired was $312,000 and $849,000, for 2000 and 1999, respectively, which is included in depreciation and amortization in the accompanying consolidated statements of operations. The decrease is primarily related to reduction of goodwill originally recorded in connection with the Flournoy Development Company ("Flournoy") acquisition, a large portion of which was written-off in June 1999 when the development and construction assets were sold back to the former Flournoy principals. Amortization of deferred financing costs was $2,758,000 and $2,854,000 for 2000 and 1999, respectively. General and administrative expense increased 2.4% or $347,000 as compared to the prior year. The most significant items contributing to the increase were health insurance costs, which increased $126,000 due to recent increasing premiums and claims experience, and airplane costs, which increased $230,000 due to unusually high repair and maintenance experienced during the current year coupled with other travel costs while the repairs were being made. Management remains focused on maintaining the efficiency of the support functions, and based on current plans expects general and administrative costs to sustain inflationary level increases over the next year. Interest expense increased approximately $2,434,000 due primarily to increased average borrowings related to the funding of the development pipeline and the higher short term interest rate environment experienced during the early quarters of 2000, which increased the cost of the Company's variable rate debt. As the interest rate environment improved near the end of 2000, the Company locked the rate on 86% of all outstanding debt versus 76% at December 31, 1999. The Company's average borrowing cost at December 31, 2000 was 7.14% as compared to 7.06% on December 31, 1999. The average maturity on the Company's debt was 10.9 years at December 31, 2000. For the year ended December 31, 2000, the Company recorded a net gain on disposition of assets totaling $11,587,000 primarily related to the disposition of the nine properties during the year of which two were non-taxable exchanges. In 2000, the Company recorded an extraordinary loss of approximately $204,000, net of minority interest, from the early extinguishment of debt related to the property dispositions during the year. As a result of the foregoing, income before minority interest and extraordinary items for the year ended December 31, 2000 decreased by $3,519,000 over 1999 COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO THE YEAR ENDED DECEMBER 31, 1998 During 1999 the Company sold 10 apartment communities containing 2,793 apartment units to the Joint Venture and retained a 33.33% ownership interest and continued to manage the units for a fee of 4% of revenue. The Company also completed development of 1,277 total apartment units in 7 new communities and 2 existing communities and sold three communities containing 1,138 units. Total property revenues for 1999 increased by $11,375,000 due primarily to increases of (i) $6,424,000 from the 8 communities acquired in 1998 and owned throughout 1999, (ii) $12,113,000 from the development communities, and (iii) $4,587,000 from the communities owned throughout both periods. These increases were partially offset by decreases of (i) $9,687,000 due to the sale of 10 properties to the Joint Venture in 1999, and (ii) $2,062,000 from the sales of Redford Park apartments in 1998 and the Hidden Oaks, Sailwinds at Lake Magdalene and Regency Club apartments in 1999. Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other property related costs. As a percentage of property revenues, property operating expenses increased from 37.6% in 1998 to 37.9% in 1999. The 17 majority of the increase is related to increased real estate taxes. Reappraisals in some of the Company's markets, coupled with changes in tax rates in Shelby County, Tennessee, and the annexation of three of the Company's properties in the City of Memphis were the principal causes of the increase. Certain other expenses contributed to the increase in operating expenses, including initial lease-up costs for the development properties, and expenses associated with certain fires and wind damage occurring during the year. Personnel costs remained flat as a percentage of rental revenues from 1998 to 1999. In 1999 building repairs and maintenance costs decreased to 4.6% of rental revenues as compared to 4.8% in 1998 primarily as a result of the Company's significant investment of capital for the last two years to reposition 7,600 units acquired in the 1997 FDC acquisition. Also in 1999, utilities costs decreased to 4.1% of rental revenue as compared to 4.5% for the same period in 1998 mainly due to continued savings from the Company's program to submeter units for water usage. Property operating expenses for 1999 increased by $4,968,000 due primarily to (i) $2,637,000 from the 8 communities acquired in 1998 and owned throughout 1999, (ii) $4,290,000 from the development communities completed during 1998 and 1999 and (iii) $2,530,000 from the communities owned throughout both periods. These increases were partially offset by decreases of (i) $3,609,000 due to the sale of 10 properties to the Joint Venture in 1999 and (ii) $880,000 from the sale of Redford Park Apartments in 1998 and the sale of Hidden Oaks Apartments, Sailwinds at Lake Magdalene Apartments and Regency Club Apartments in 1999. Depreciation and amortization expense increased by $3,882,000 primarily due to (i) $1,448,000 from the 8 communities acquired in 1998 and owned throughout 1999, (ii) $2,232,000 from the development communities completed during 1998 and 1999, and (iii) $1,661,000 from the communities owned throughout both periods. These increases were partially offset by decreases of (i) $1,793,000 due to the sale of 10 properties to the Joint Venture in 1999, and (ii) $291,000 from the sale of Redford Park Apartments in 1998 and the sale of Hidden Oaks Apartments, Sailwinds at Lake Magdalene Apartments and Regency Club Apartments in 1999. Amortization of costs in excess of fair value of net assets acquired was $849,000 and $1,474,000, for 1999 and 1998, respectively, which is included in depreciation and amortization in the accompanying consolidated statements of operations. The decrease is due to the write off of goodwill in connection with the sale of FDC during 1999. Amortization of deferred financing costs was $2,854,000 and $2,348,000 for 1999 and 1998, respectively. The majority of the increase is due to additional financing costs related to the restructuring of the AmSouth Credit Line and the addition of the new FNMA Credit Line. General and administrative expense increased by $2,519,000 mainly due to (i) approximately $800,000 in additional property level and support management bonuses related primarily to improved property level performance at certain properties as compared to the prior year, (ii) approximately $700,000 in additional training costs related to the Company's recent investment in regional training centers, (iii) approximately $450,000 in additional administrative costs related to recent systems initiatives and staffing changes to support the Company's portfolio growth, (iv) approximately $250,000 from increased franchise and excise taxes related to recent legislative changes in the state of Tennessee, and (v) approximately $240,000 in increased employee insurance costs. Interest expense increased $2,598,000 due primarily increased debt related to the 10 property acquisitions in 1998 and additional credit line funding to complete the new development properties. The Company reduced its average borrowing cost to 7.06% at December 31, 1999 as compared to 7.11% on December 31, 1998. The average maturity on the Company's debt was 10.7 years and 10.9 years at December 31, 1999 and 1998, respectively. 18 For the year ended December 31, 1999, the Company recorded a net gain on disposition of assets totaling $10,237,000 comprised of the following transactions:

GAIN (LOSS) ----------- Gain on sale of ten communities sold to Joint Venture, net of deferred gain of $4,581,000........................ $ 9,264,000 Gain on sale of three communities........................... 5,004,000 Loss on sale of FDC......................................... (4,031,000) ----------- $10,237,000 ===========

The Company recorded an extraordinary loss of $67,000, net of minority interest, for 1999 related to the early extinguishment of the mortgage for Eastview Apartments. As a result of the foregoing, income before minority interest and extraordinary items for the year ended December 31, 1999 increased $6,135,000 over the same period a year earlier. LIQUIDITY AND CAPITAL RESOURCES During 2000, the Company invested $53,389,000 in the development pipeline, reduced from the $71,563,000 during 1999. The Company expects to fund an additional $17,000,000 during 2001 to complete the entire $300,000,000 pipeline began in 1997. The following table summarizes the Company's remaining communities in various stages of lease-up, construction, development, and pre-development as of December 31, 2000 (Dollars in 000's):

ANTICIPATED ANTICIPATED ANTICIPATED TOTAL BUDGETED COSTS TO FINISH INITIAL STABIL- LOCATION UNITS COST DATE DATE OCCUPANCY IZATION ------------- -------- --------- -------- ----------- ----------- ----------- COMPLETED COMMUNITIES IN LEASE-UP: Grand Reserve Lexington............... Lexington, KY 370 $33,355 $32,500 2Q 2000 4Q 1999 3Q 2001 Reserve at Dexter Lake II............. Memphis, TN 244 16,743 16,536 4Q 2000 1Q 2000 2Q 2001 Kenwood Club.......................... Katy, TX 320 18,243 18,243 2Q 2000 1Q 2000 2Q 2001 --- ------- ------- TOTAL COMPLETED COMMUNITIES......... 934 $68,341 $67,279 === ======= ======= DEVELOPMENT COMMUNITIES IN LEASE-UP: Grande View........................... Nashville, TN 433 $36,217 $33,465 1Q 2001 2Q 2000 1Q 2002 --- ------- ------- 433 36,217 33,465 --- ------- ------- UNDER CONSTRUCTION Reserve at Dexter Lake III............ Memphis, TN 244 16,869 3,206 4Q 2001 2Q 2001 3Q 2002 --- ------- ------- 244 16,869 3,206 --- ------- ------- TOTAL DEVELOPMENT COMMUNITIES......... 677 $53,086 $36,671 === ======= =======

Capital improvements to existing properties totaled $17,469,000 for the year ended December 31, 2000, as compared to $34,377,000 for 1999. The 1999 expenditures included significant costs for repositioning 1999 acquisitions and remaining cost for the properties acquired in connection with the Flournoy acquisition. 19 Actual capital expenditures for property improvements during 2000 are summarized below:

(IN 000'S) Recurring capital at stabilized properties.................. $12,697 Revenue enhancing projects at stabilized properties......... 3,973 Capital improvements to pre-stabilized properties........... 164 Corporate overhead capital improvements..................... 635 ------- $17,469 =======

Net cash used in financing activities decreased from $107,209,000 during the year ended December 31, 1999 to $42,199,000 during 2000. During 2000, the Company borrowed an additional funding of $27,048,000 under its Credit Facilities and notes payable combined, mainly used to fund the development pipeline and share repurchases. Also during 2000, the Company used a net of $3,356,000 to repurchase common shares, and distributed a total of $63,201,000 to Common Unitholders, common shareholders, and preferred shareholders. As of December 31, 2000, the Company had a $295,000,000 secured credit facility with FNMA (the "FNMA Facility") which matures in 2009. The FNMA Facility provides for both fixed and variable rate borrowings. The interest rate on the variable portion renews every 90 days and is based on the FNMA mortgage backed security rate on the date of renewal, which has historically approximated 3 month LIBOR less a spread ranging from .05%-.10%, plus a fee of .67% based on the outstanding borrowings. Borrowings under the FNMA Facility totaled $198,070,000 at December 31, 2000, consisting of $65,000,000 under the fixed portion at a rate of 7.712% and the remaining $133,070,000 under the variable rate portion of the facility. The proceeds from draws under the FNMA Facility were primarily used to pay down other credit lines and fund development. Additionally, the Company maintains an $85,000,000 secured credit facility with a group of banks led by AmSouth Bank, and a $10,000,000 unsecured credit facility with Compass Bank. As of December 31, 2000, the Company had $7,432,000 and $10,000,000 outstanding under these credit facilities, respectively. The two secured credit facilities are subject to borrowing base calculations that effectively reduce the maximum amount that may be borrowed. The total amount that could be borrowed under the Credit Lines at December 31, 2000 was approximately $268,500,000. At December 31, 2000, the Company had outstanding three interest rate swap agreements, totaling $75 million to lock the interest rate on a portion of the Company's variable rate debt. At December 31, 2000, the Company had $75.5 million (after considering the interest rate swaps) of conventional floating rate debt at an average interest rate of 7.218% and an additional $32 million of tax-free variable rate debt at an average rate of 5.812%; all other debt was fixed rate term debt at an average interest rate of 7.19%. The weighted average interest rate and weighted average maturity at December 31, 2000 for the $781.1 million of total notes payable were 7.14% and 10.9 years, respectively. The Company believes that cash provided by operations is adequate and anticipates that it will continue to be adequate in both the short and long-term to meet operating requirements (including recurring capital expenditures at the Communities) and payment of distributions by the Company in accordance with REIT requirements under the Code. The Company expects to meet its long term liquidity requirements, such as scheduled mortgage debt maturities, property developments and acquisitions, expansions and non-recurring capital expenditures, through long and medium-term collateralized and uncollateralized fixed rate borrowings, issuance of debt or additional equity securities in the Company, potential joint venture transactions and the Credit Lines. 20 INSURANCE In the opinion of management, property and casualty insurance is in place which provides adequate coverage to provide financial protection against normal insurable risks such that it believes that any loss experienced would not have a significant impact on the Company's liquidity, financial position, or results of operations. INFLATION Substantially all of the resident leases at the Communities allow, at the time of renewal, for adjustments in the rent payable thereunder, and thus may enable the Company to seek rent increases. The substantial majority of these leases are for one year or less. The short-term nature of these leases generally serves to reduce the risk to the Company of the adverse effects of inflation. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). SFAS 133 was later amended by SFAS No. 137 and SFAS No. 138. SFAS 133, as amended, requires recognition of the fair value of all derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), on the balance sheet and establishes new accounting rules for hedging activities. The Company adopted FAS 133, as amended, on January 1, 2001. The adoption did not impact its results of operations, cash flows or financial position. RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS The Management's Discussion and Analysis of Financial Condition and Results of Operations contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These statements include, but are not limited to, the plans and objectives of management for future operations, including plans and objectives relating to capital expenditures, rehabilitation costs on the apartment communities, future development, anticipated growth rates of revenues and expenses, and anticipated share repurchases. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report on Form 10-K will 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 the Company or any other person that the objectives and plans of the Company will be achieved. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary market risk exposure is to changes in interest rates obtainable on its secured and unsecured borrowings. At December 31, 2000, 55% of the Company's total capitalization consisted of borrowings. The Company's interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower its overall borrowing costs. To achieve this objective, the Company manages its exposure to fluctuations in market interest rates for its borrowings through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable with such arrangements and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks to mitigate its interest rate risk on a related financial instrument or to effectively lock the interest rate on a portion of its variable debt. The Company does not enter into derivative or interest rate transactions for trading purposes. Approximately 86% of the Company's outstanding debt was subject to fixed rates with a weighted average of 7.2% at December 31, 2000. The Company regularly reviews interest rate exposure on 21 its outstanding borrowings in an effort to minimize the risk of interest rate fluctuations. The Company does not have any other material market-sensitive financial instruments. The table below provides information about the Company's financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. Weighted average variable rates are based on rates in effect at the reporting date (Dollars in 000's).

TOTAL FAIR 2001 2002 2003 2004 2005 THEREAFTER TOTAL VALUE -------- -------- -------- -------- -------- ---------- -------- -------- Long-term Debt Fixed Rate............................ $44,236 $16,111 $166,294 $75,536 $40,492 $256,101 $598,770 $605,125 Average interest rate................. 8.46% 7.33% 6.57% 7.64% 7.11% 7.22% 7.18% Variable Rate*........................ $10,000 $ 7,432 $ -- $ -- $ -- $164,887 $182,319 $182,319 Average interest rate................. 7.88% 8.75% 0.00% 0.00% 0.00% 6.95% 7.07% Interest Rate Swaps Variable to Fixed..................... $ -- $ -- $ 25,000 $ -- $25,000 $ 25,000 $ 75,000 $ (2,200) Average pay rate.................... 7.17% 7.38% 7.36% 7.30%

------------------------------ * Excluding the effect of interest rate swap agreements. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Independent Auditors' Report, Consolidated Financial Statements and Selected Quarterly Financial Information are set forth on pages F-1 to F-28 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no disagreements with the Company's independent accountants on any matter of accounting principles or practices or financial statement disclosure. 22 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Incorporated by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission. ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Annual Report on Form 10-K: 1. Independent Auditors' Report................................ F-1 Consolidated Balance Sheets as of December 31, 2000 and 1999...................................................... F-2 Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998.......................... F-3 Consolidated Statements of Shareholders' Equity for the years ended December 31, 2000, 1999 and 1998.............. F-4 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998.......................... F-5 Notes to Consolidated Financial Statements for the years ended December 31, 2000, 1999 and 1998.................... F-6 2. Financial Statement Schedule required to be filed by Item 8 and Paragraph (d) of this Item 14: Schedule III--Real Estate Investments and Accumulated Depreciation as of December 31, 2000...................... F-28 3. The exhibits required by Item 601 of Regulation S-K, except as otherwise noted, have been filed with previous reports by the registrant and are herein incorporated by reference.

EXHIBIT NUMBERS EXHIBIT DESCRIPTION --------------------- ------------------- 3.1+ Amended and Restated Charter of Mid-America Apartment Communities, Inc. dated as of January 10, 1994, as filed with the Tennessee Secretary of State on January 25, 1994 3.2****** Articles of Amendment to the Charter of Mid-America Apartment Communities, Inc. dated as of January 28, 1994, as filed with the Tennessee Secretary of State on January 28, 1994 3.3** Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of A Series of Preferred Stock dated as of October 9, 1996, as filed with the Tennessee Secretary of State on October 10, 1996

23

EXHIBIT NUMBERS EXHIBIT DESCRIPTION --------------------- ------------------- 3.4+ Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter dated November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997 3.5*** Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of A Series of Preferred Stock dated as of November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997 3.6+ Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter dated December 15, 1997, as filed with the Tennessee Secretary of State on December 31, 1997 3.7+ Bylaws of Mid-America Apartment Communities, Inc. 3.8++ Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter dated June 25, 1998, as filed with the Tennessee Secretary of State on June 30, 1998 3.9++++ Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter dated December , 1998, as filed with the Tennessee Secretary of State on December 28, 1998 4.1+ Form of Common Share Certificate 4.2**** Form of 9.5% Series A Cumulative Preferred Stock Certificate 4.3***** Form of 8 7/8% Series B Cumulative Preferred Stock Certificate 4.4+++ Form of 9.375% Series C Cumulative Preferred Stock Certificate 4.5++++ Form of 9.5% Series E Cumulative Preferred Stock Certificate 4.6++++ Shareholders' Rights Plan dated March 1, 1999 10.1+ Second Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P., a Tennessee limited partnership 10.2+++++ Employment Agreement between the Registrant and George E. Cates dated December , 1999 10.3+++++ Employment Agreement between the Registrant and H. Eric Bolton dated December , 1999 10.4+++++ Employment Agreement between the Registrant and Simon R.C. Wadsworth dated December , 1999 10.5# Third Amended and Restated 1994 Restricted Stock and Stock Option Plan 10.6++++ Revolving Credit Agreement between the Registrant and AmSouth Bank dated March 16, 1998 10.7+++++ Sixth Amendment to Revolving Credit Agreement between the Registrant and AmSouth Bank dated November 12, 1999 10.8 Seventh Amendment to Revolving Credit Agreement between the Registrant and AmSouth Bank dated July 21, 2000 10.9+++++ Master Credit Facility Agreement between the Registrant and WMF Washington Mortgage Corp. dated November 10, 1999 10.10+ Note Purchase Agreement of the Operating Partnership and the Registrant and Prudential Insurance Company of America 10.11+ Amendment 1 to Note Purchase Agreement of the Operating Partnership and the Registrant and Prudential Insurance Company of America

24

EXHIBIT NUMBERS EXHIBIT DESCRIPTION --------------------- ------------------- 11.1 Statement re: computation of per share earnings (included within the Form 10-K) 12.1 Statement re: computation of ratios (definition of ratios used are disclosed as footnotes on the related table(s) within the Form 10-K) 21.1 List of Subsidiaries 23.1 Consent of KPMG LLP

------------------------ ** Filed as Exhibit 1 to the Registrant's Registration Statement on Form 8-A filed with the Commission on October 11, 1996 *** Filed as Exhibit 4.1 to the Registrant's Registration Statement on Form 8-A filed with the Commission on November 19, 1997 **** Filed as Exhibit 3 to the Registrant's Registration Statement on Form 8-A filed with the Commission on October 11, 1996 ***** Filed as Exhibit 4.3 to the Registrant's Registration Statement on Form 8-A filed with the Commission on November 19, 1997 ****** Filed as an exhibit to the 1996 Annual Report of the Registrant on Form 10-K for the year ended December 31, 1996 + Filed as an exhibit to the 1997 Annual Report of the Registrant on Form 10-K for the year ended December 31, 1997 ++ Filed as Exhibit 4.3 to the Registrant's Registration Statement on Form 8-A filed with the Commission on June 25, 1998 +++ Filed as Exhibit 4.2 to the Registrant's Registration Statement on Form 8-A filed with the Commission on June 25, 1998 ++++ Filed as an exhibit to the 1998 Annual Report of the Registrant on Form 10-K for the year ended December 31, 1998 +++++ Filed as an exhibit to the 1999 Annual Report of the Registrant on Form 10-K for the year ended December 31, 1999 # Filed as an exhibit to the Registrant's Proxy Statement for the 2000 Annual Meeting of Shareholders (b) Reports on Form 8-K The following reports were filed on Form 8-K by the registrant during the fourth quarter of 2000:

FORM EVENTS REPORTED DATE OF REPORT --------------------- --------------- -------------- 8-K Announcement of conference call to discuss third quarter 2000 results........................................... 10/12/00 8-K Response to peer announcement related to current market conditions............................................. 10/26/00 8-K Third quarter 2000 conference call transcript with third quarter 2000 earnings release and supplemental data.... 11/03/00

(c) Exhibits: See Item 14(a)(3) above. (d) Financial Statement Schedules: See Item 14(a)(2) above. 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MID-AMERICA APARTMENT COMMUNITIES, INC. Date: March 27, 2001 /s/ GEORGE E. CATES ----------------------------------------- George E. Cates CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated. Date: March 27, 2001 /s/ GEORGE E. CATES ------------------------------------------------ George E. Cates Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: March 27, 2001 /s/ SIMON R.C. WADSWORTH ------------------------------------------------ Simon R.C. Wadsworth Executive Vice President (Principal Financial and Accounting Officer) Date: March 27, 2001 /s/ H. ERIC BOLTON ------------------------------------------------ H. Eric Bolton President and Chief Operating Officer Date: March 27, 2001 /s/ JOHN F. FLOURNOY ------------------------------------------------ John F. Flournoy Director Date: March 27, 2001 /s/ ROBERT F. FOGELMAN ------------------------------------------------ Robert F. Fogelman Director Date: March 27, 2001 /s/ JOHN S. GRINALDS ------------------------------------------------ John S. Grinalds Director Date: March 27, 2001 /s/ O. MASON HAWKINS ------------------------------------------------ O. Mason Hawkins Director Date: March 27, 2001 /s/ RALPH HORN ------------------------------------------------ Ralph Horn Director Date: March 27, 2001 /s/ MICHAEL S. STARNES ------------------------------------------------ Michael S. Starnes Director 26 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Mid-America Apartment Communities, Inc. We have audited the accompanying consolidated balance sheets of Mid-America Apartment Communities, Inc. and subsidiaries (the "Company") as of December 31, 2000 and 1999 and the related consolidated statements of operations, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2000. In connection with our audits of the consolidated financial statements, we have also audited the accompanying financial statement Schedule III: Real Estate and Accumulated Depreciation. These financial statements and the financial statement schedule are the responsibility of the management of the Company. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects the financial position of the Company as of December 31, 2000 and 1999, and the results of the their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule when considered in relationship to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Memphis, Tennessee February 23, 2001 F-1 MID-AMERICA APARTMENT COMMUNITIES, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2000 AND 1999 (DOLLARS IN THOUSANDS)

2000 1999 ---------- ---------- ASSETS: REAL ESTATE ASSETS: Land...................................................... $ 124,867 $ 119,823 Buildings and improvements................................ 1,231,603 1,172,780 Furniture, fixtures and equipment......................... 29,094 28,238 Construction in progress.................................. 28,523 58,840 ---------- ---------- 1,414,087 1,379,681 Less accumulated depreciation............................. (183,652) (146,611) ---------- ---------- 1,230,435 1,233,070 Land held for future development.......................... 1,366 1,710 Commercial properties, net................................ 5,044 5,217 Investment in and advances to real estate joint venture... 7,630 8,054 ---------- ---------- REAL ESTATE ASSETS, NET................................. 1,244,475 1,248,051 Cash and cash equivalents................................... 16,095 14,092 Restricted cash............................................. 17,472 12,537 Deferred financing costs, net............................... 9,700 10,272 Other assets................................................ 16,029 13,871 ---------- ---------- TOTAL ASSETS............................................ $1,303,771 $1,298,823 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY: LIABILITIES: Notes payable............................................. $ 781,089 $ 744,238 Accounts payable.......................................... 1,740 2,122 Accrued expenses and other liabilities.................... 26,589 23,199 Security deposits......................................... 4,611 4,739 Deferred gain on disposition of properties................ 4,366 4,581 ---------- ---------- TOTAL LIABILITIES AND DEFERRED GAIN..................... 818,395 778,879 MINORITY INTEREST........................................... 51,383 56,060 SHAREHOLDERS' EQUITY: Preferred stock, $.01 par value, 20,000,000 shares authorized, $173,470,750 or $25 per share liquidation preference: 2,000,000 shares at 9.5% Series A Cumulative............ 20 20 1,938,830 shares at 8.875% Series B Cumulative.......... 19 19 2,000,000 shares at 9.375% Series C Cumulative.......... 20 20 1,000,000 shares at 9.5% Series E Cumulative............ 10 10 Common stock, $.01 par value authorized 50,000,000 shares; issued 17,506,968 and 17,971,960 shares at December 31, 2000 and 1999, respectively............................. 175 180 Additional paid-in capital................................ 551,809 562,547 Other..................................................... (1,171) (1,053) Accumulated distributions in excess of net income......... (116,889) (89,869) Treasury stock at cost, 355,900 shares at December 31, 1999.................................................... -- (7,990) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY.............................. 433,993 463,884 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............. $1,303,771 $1,298,823 ========== ==========

See accompanying notes to consolidated financial statements. F-2 MID-AMERICA APARTMENT COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

2000 1999 1998 -------- -------- -------- Revenues: Rental revenues........................................... $219,039 $221,342 $210,256 Other property revenues................................... 3,493 2,872 2,583 -------- -------- -------- Total property revenues................................... 222,532 224,214 212,839 Interest and other income................................. 1,526 1,388 863 Management and development income, net.................... 739 751 1,841 Equity in loss of real estate joint venture............... (157) (31) -- -------- -------- -------- Total revenues............................................ 224,640 226,322 215,543 -------- -------- -------- Expenses: Property operating expenses: Personnel............................................... 24,268 25,239 24,053 Building repairs and maintenance........................ 9,701 10,107 10,030 Real estate taxes and insurance......................... 25,021 24,561 22,459 Utilities............................................... 7,635 9,119 9,376 Landscaping............................................. 6,027 5,634 5,009 Other operating......................................... 10,794 10,225 8,990 Depreciation and amortization........................... 51,844 49,903 46,021 -------- -------- -------- 135,290 134,788 125,938 General and administrative................................ 14,826 14,479 11,960 Interest expense.......................................... 50,736 48,302 45,704 Amortization of deferred financing costs.................. 2,758 2,854 2,348 -------- -------- -------- Total expenses............................................ 203,610 200,423 185,950 -------- -------- -------- Income before gain on dispositions, minority interest in operating partnership income and extraordinary items...... 21,030 25,899 29,593 -------- -------- -------- Gain on dispositions, net................................... 11,587 10,237 408 -------- -------- -------- Income before minority interest in operating partnership income and extraordinary items............................ 32,617 36,136 30,001 Minority interest in operating partnership income........... 2,626 2,497 2,254 -------- -------- -------- Income before extraordinary items........................... 29,991 33,639 27,747 -------- -------- -------- Extraordinary items--loss on early extinguishment of debt... (204) (67) (990) -------- -------- -------- Net income.................................................. 29,787 33,572 26,757 Dividends on preferred shares............................... 16,114 16,114 11,430 -------- -------- -------- Net income available for common shareholders................ $ 13,673 $ 17,458 $ 15,327 ======== ======== ======== Net income available per common share: Basic (in thousands): Average common shares outstanding......................... 17,544 18,784 18,725 ======== ======== ======== Basic earnings per share: Net income available per common share before extraordinary items................................................... $ 0.79 $ 0.93 $ 0.87 Extraordinary items....................................... (0.01) -- (0.05) -------- -------- -------- Net income available per common share..................... $ 0.78 $ 0.93 $ 0.82 ======== ======== ======== Diluted (in thousands): Average common shares outstanding......................... 17,544 18,784 18,725 Effect of dilutive stock options.......................... 53 24 45 -------- -------- -------- Average dilutive common shares outstanding................ 17,597 18,808 18,770 ======== ======== ======== Diluted earnings per share: Net income available per common share before extraordinary items................................................... $ 0.79 $ 0.93 $ 0.87 Extraordinary items....................................... (0.01) -- (0.05) -------- -------- -------- Net income available per common share..................... $ 0.78 $ 0.93 $ 0.82 ======== ======== ========

See accompanying notes to consolidated financial statements. F-3 MID-AMERICA APARTMENT COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (DOLLARS AND SHARES IN THOUSANDS)

ACCUMULATED PREFERRED STOCK COMMON STOCK ADDITIONAL DISTRIBUTIONS -------------------- ------------------- PAID-IN IN EXCESS OF SHARES AMOUNT SHARES AMOUNT CAPITAL OTHER NET INCOME --------- -------- -------- -------- ---------- -------- ------------- BALANCE DECEMBER 31, 1997................ 3,939 $39 18,479 $185 $500,492 $(1,045) $ (38,371) Issuance of common shares................ -- -- 308 4 7,953 -- -- Issuance of Series C preferred shares.... 2,000 20 -- -- 48,060 -- -- Issuance of Series E preferred shares.... 1,000 10 -- -- 24,735 -- -- Exercise of stock options................ -- -- 5 -- 129 -- -- Notes receivable issued for units (Note 9)..................................... -- -- -- -- -- (1,458) -- Amortization of LESOP Provision employee advances (Note 9)...................... -- -- -- -- -- 145 -- Shares issued in exchange for units...... -- -- 86 -- 1,785 -- -- Amortization of unearned compensation.... -- -- -- -- -- 121 -- Dividends on common stock ($2.20 per share)................................. -- -- -- -- -- -- (40,832) Dividends on preferred stock............. -- -- -- -- -- -- (11,430) Net income............................... -- -- -- -- -- -- 26,757 ----- --- ------ ---- -------- ------- --------- BALANCE DECEMBER 31, 1998................ 6,939 69 18,878 189 583,154 (2,237) (63,876) Repurchase of common shares (Note 8)..... -- -- (1,118) (11) (25,072) -- -- Issuance of common shares................ -- -- 154 2 3,516 -- -- Exercise of stock options................ -- -- -- -- 27 -- -- Notes receivable issued for shares (Note 9)..................................... -- -- 9 -- -- (100) -- Payments received on notes receivable (Note 9)............................... -- -- -- -- -- 343 -- Amortization of LESOP Provision employee advances (Note 9)...................... -- -- -- -- -- 447 -- Shares issued in exchange for units...... -- -- 49 -- 922 -- -- Amortization of unearned compensation.... -- -- -- -- -- 494 -- Dividends on common stock ($2.30 per share)................................. -- -- -- -- -- -- (43,451) Dividends on preferred stock............. -- -- -- -- -- -- (16,114) Net income............................... -- -- -- -- -- -- 33,572 ----- --- ------ ---- -------- ------- --------- BALANCE DECEMBER 31, 1999................ 6,939 69 17,972 180 562,547 (1,053) (89,869) Retire treasury stock.................... -- -- (356) (4) (7,986) -- -- Repurchase of common shares (Note 8)..... -- -- (259) (3) (6,087) -- -- Issuance of common shares................ -- -- 60 1 1,371 -- -- Exercise of stock options................ -- -- 1 -- 22 -- -- Restricted shares issued to officers and directors (Note 9)..................... -- -- 16 -- 359 (359) -- Notes receivable issued for shares (Note 9)..................................... -- -- 53 1 1,218 (206) -- Amortization of LESOP Provision employee advances (Note 9)...................... -- -- -- -- -- 327 -- Shares issued in exchange for units...... -- -- 20 -- 365 -- -- Amortization of unearned compensation.... -- -- -- -- -- 120 -- Dividends on common stock ($2.32 per share)................................. -- -- -- -- -- -- (40,693) Dividends on preferred stock............. -- -- -- -- -- -- (16,114) Net income............................... -- -- -- -- -- -- 29,787 ----- --- ------ ---- -------- ------- --------- BALANCE DECEMBER 31, 2000................ 6,939 $69 17,507 $175 $551,809 $(1,171) $(116,889) ===== === ====== ==== ======== ======= =========

TREASURY STOCK TOTAL -------- -------- BALANCE DECEMBER 31, 1997................ $ -- $461,300 Issuance of common shares................ -- 7,957 Issuance of Series C preferred shares.... -- 48,080 Issuance of Series E preferred shares.... -- 24,745 Exercise of stock options................ -- 129 Notes receivable issued for units (Note 9)..................................... -- (1,458) Amortization of LESOP Provision employee advances (Note 9)...................... -- 145 Shares issued in exchange for units...... -- 1,785 Amortization of unearned compensation.... -- 121 Dividends on common stock ($2.20 per share)................................. -- (40,832) Dividends on preferred stock............. -- (11,430) Net income............................... -- 26,757 ------ -------- BALANCE DECEMBER 31, 1998................ -- 517,299 Repurchase of common shares (Note 8)..... (7,990) (33,073) Issuance of common shares................ -- 3,518 Exercise of stock options................ -- 27 Notes receivable issued for shares (Note 9)..................................... -- (100) Payments received on notes receivable (Note 9)............................... -- 343 Amortization of LESOP Provision employee advances (Note 9)...................... -- 447 Shares issued in exchange for units...... -- 922 Amortization of unearned compensation.... -- 494 Dividends on common stock ($2.30 per share)................................. -- (43,451) Dividends on preferred stock............. -- (16,114) Net income............................... -- 33,572 ------ -------- BALANCE DECEMBER 31, 1999................ (7,990) 463,884 Retire treasury stock.................... 7,990 -- Repurchase of common shares (Note 8)..... -- (6,090) Issuance of common shares................ -- 1,372 Exercise of stock options................ -- 22 Restricted shares issued to officers and directors (Note 9)..................... -- -- Notes receivable issued for shares (Note 9)..................................... -- 1,013 Amortization of LESOP Provision employee advances (Note 9)...................... -- 327 Shares issued in exchange for units...... -- 365 Amortization of unearned compensation.... -- 120 Dividends on common stock ($2.32 per share)................................. -- (40,693) Dividends on preferred stock............. -- (16,114) Net income............................... -- 29,787 ------ -------- BALANCE DECEMBER 31, 2000................ $ -- $433,993 ====== ========

See accompanying notes to consolidated financial statements. F-4 MID-AMERICA APARTMENT COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (DOLLARS IN THOUSANDS)

2000 1999 1998 -------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income................................................ $29,787 $ 33,572 $ 26,757 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................... 54,602 52,757 48,369 Amortization of unearned stock compensation............. 120 494 121 Equity in loss of real estate joint venture............. 157 31 -- Minority interest in operating partnership income....... 2,626 2,497 2,254 Extraordinary items..................................... 204 67 990 Gain on dispositions, net............................... (11,587) (10,237) (408) Changes in assets and liabilities: Restricted cash....................................... (4,935) (3,300) 4,115 Other assets.......................................... (2,475) (4,591) 1,044 Accounts payable...................................... (382) (4,459) 786 Accrued expenses and other liabilities................ 3,175 8,325 (4,031) Security deposits..................................... (128) (178) 408 ------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES............... 71,164 74,978 80,405 ------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of real estate assets........................... (14,799) -- (63,732) Improvements to properties................................ (17,469) (34,377) (32,336) Construction of units in progress and future development............................................. (53,389) (71,563) (107,963) Proceeds from disposition of real estate assets........... 58,428 134,977 5,424 Proceeds from sale of development and construction assets.................................................. -- 18,134 -- Proceeds from (advances to) real estate joint venture..... 267 (8,085) -- ------- --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES....... (26,962) 39,086 (198,607) ------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in credit lines................................ (32,393) 56,389 71,789 Proceeds from notes payable............................... 75,000 11,760 232,799 Principal payments on notes payable....................... (15,559) (75,989) (210,571) Payment of deferred financing costs....................... (2,186) (3,420) (7,097) Repurchase of common stock................................ (6,090) (33,073) -- Proceeds from issuances of common shares and units........ 2,734 3,549 9,586 Proceeds from issuance of preferred shares................ -- -- 72,825 Redemption of unitholder interests........................ -- -- (150) Distributions to unitholders.............................. (6,898) (6,860) (6,285) Dividends paid on common shares........................... (40,693) (43,451) (40,832) Dividends paid on preferred shares........................ (16,114) (16,114) (11,430) ------- --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES....... (42,199) (107,209) 110,634 ------- --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...... 2,003 6,855 (7,568) ------- --------- --------- Cash and cash equivalents, beginning of period.............. 14,092 7,237 14,805 ------- --------- --------- Cash and cash equivalents, end of period.................... $16,095 $ 14,092 $ 7,237 ======= ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid............................................. $50,277 $ 49,375 $ 45,607 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Assumption of debt related to property acquisitions....... $ 9,559 $ -- $ 26,231 Conversion of units for common shares..................... $ 365 $ 922 $ 1,785 Issuance of units related to property acquisitions........ $ -- $ -- $ 1,911 Issuance of advances in exchange for common shares and units................................................... $ 238 $ 100 $ 1,458 Interest capitalized...................................... $ 3,730 $ 3,967 $ 4,265

See accompanying notes to consolidated financial statements. F-5 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND FORMATION OF THE COMPANY Mid-America Apartment Communities, Inc. ("Mid-America") is a self-administrated and self-managed real estate investment trust which owns, develops, constructs, acquires and operates multifamily apartment communities mainly in the southeastern United States, and in Texas. The company owns and operates 114 apartment communities principally through its majority owned subsidiary, Mid-America Apartments, L.P. (the "Operating Partnership") and its subsidiary, Mid-America Capital Partners, L.P. ("MACP"). MACP is a special purpose entity established in 1997 to issue first mortgage bonds. The Company also owns a 33.33% interest in a real estate joint venture which owns 10 apartment communities, for which the Company provides management services. From the period November 1997 through June 1999, the company conducted third party property management, construction and development activities through its service corporation, Flournoy Development Corporation. BASIS OF PRESENTATION The consolidated financial statements presented herein include the accounts of Mid-America, the Operating Partnership, MACP, and all other subsidiaries ("the Company"). The Company owns 51% to 100% of all consolidated subsidiaries. The Company uses the equity method of accounting for its investments in 20 to 50 percent-owned entities. All significant intercompany accounts and transactions have been eliminated in consolidation. MINORITY INTEREST Minority interest in the accompanying consolidated financial statements relates to the ownership interest in the Operating Partnership by the holders of Class A Common Units of the Operating Partnership ("Operating Partnership Units"). Mid-America is the sole general partner of the Operating Partnership. Net income is allocated to the minority interest based on their respective ownership percentage of the Operating Partnership. Issuance of additional common shares or Operating Partnership Units changes the ownership of both the minority interest and Mid-America. Such transactions and the proceeds therefrom are treated as capital transactions and result in an allocation between shareholders' equity and minority interest to account for the change in the respective percentage ownership of the underlying equity of the Operating Partnership. The Company's Board of Directors established economic rights in respect to each Operating Partnership Unit that were equivalent to the economic rights in respect to each share of common stock. The holder of each unit may redeem their units in exchange for one share of common stock or cash, at the option of the Company. The Operating Partnership has followed the policy of paying the same per unit distribution in respect to the units as the per share distribution in respect to the common stock. Operating Partnership net income for 2000, 1999 and 1998 was allocated approximately 16.3%, 15.6% and 15.6%, respectively, to holders of Operating Partnership Units and 83.7%, 84.4% and 84.4%, respectively, to Mid-America. USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported F-6 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) amounts of revenues and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates. REVENUE RECOGNITION The Company leases multifamily residential apartments under operating leases with terms of one year or less. Rental and other revenues are recorded when earned. RENTAL COSTS Costs associated with rental activities are expensed as incurred. Certain costs associated with the lease-up of development projects, including cost of model units, their furnishings, signs, and "grand openings" are capitalized and amortized over their estimated useful lives. All other costs relating to renting development projects are expensed as incurred. CASH AND CASH EQUIVALENTS The Company considers cash, investments in money market accounts and certificates of deposit with original maturities of three months or less to be cash equivalents. RESTRICTED CASH Restricted cash consists of escrow deposits held by lenders for property taxes, insurance, debt service and replacement reserves. REAL ESTATE ASSETS AND DEPRECIATION Real estate assets are carried at depreciated cost. Repairs and maintenance costs are expensed as incurred while significant improvements, renovations, and replacements are capitalized. The cost of interior painting, vinyl flooring and blinds are expensed as incurred. In conjunction with acquisitions of properties, the Company's policy is to provide in its acquisition budgets adequate funds to complete any deferred maintenance items to bring the properties to the required standard, including the cost of replacement appliances, carpet, interior painting, vinyl flooring and blinds. These costs are capitalized. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which range from 8 to 40 years for land improvements and buildings and 5 years for furniture, fixtures and equipment. The Company records all gains and losses on real estate in accordance with SFAS No. 66. The total gain for the period ended December 31, 2000, 1999 and 1998 was approximately $11,587,000, $10,237,000 and $408,000, respectively. F-7 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Development projects and the related carrying costs, including interest, property taxes, insurance and allocated development overhead during the construction period, are capitalized and reported in the accompanying balance sheet as "construction in progress" during the construction period. Upon completion and certification for occupancy of individual units within a development, amounts representing the completed unit's portion of total estimated development costs for the project are transferred to land, buildings, and furniture, fixtures and equipment as real estate held for investment. Capitalization of interest, property taxes, insurance and allocated development overhead costs ceases upon the transfer, and the assets are depreciated over their estimated useful lives. Total interest capitalized during 2000, 1999 and 1998 was $3,730,000, $3,967,000 and $4,265,000, respectively. LAND HELD FOR FUTURE DEVELOPMENT Real estate held for future development consists primarily of sites intended for future multifamily developments. INVESTMENT IN AND ADVANCES TO REAL ESTATE JOINT VENTURE The Company's investment in an unconsolidated real estate joint venture is recorded on the equity method as the Company does not have a controlling interest in the joint venture. The portion of the gain realized upon the Company's sale of apartment communities to the joint venture was deferred in proportion to the Company's ownership interest in the joint venture. The deferred gain will be amortized over 20 years, which approximates the useful life of the joint venture's real estate assets. DEFERRED COSTS AND OTHER INTANGIBLES Deferred financing costs are amortized over the terms of the related debt using a method which approximates the interest method. Cost in excess of fair value of net assets acquired is amortized using the straight-line method over 30 years. DERIVATIVE FINANCIAL INSTRUMENTS The Company has only limited involvement with derivative financial instruments and does not use them for trading purposes. The Company utilizes derivative financial instruments as hedges in anticipation of future debt transactions to manage well-defined interest rate risk or as protection to hedge the interest F-8 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) rate risk of the Company's variable rate debt by locking the effective rate on portions of the outstanding lines of credit. For interest rate swaps, the differential to be paid or received is accrued and recognized in interest expense and may change as interest rates change. If a swap is terminated prior to maturity, the gain or loss is recognized over the remaining original life of the swap if the item hedged remains outstanding, or immediately, if the item hedged does not remain outstanding. If the swap is not terminated prior to maturity, but the underlying hedged item is no longer outstanding, the interest rate swap is marked to market and any unrealized gain or loss is recognized immediately. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). SFAS 133 was later amended by SFAS No. 137 and SFAS No. 138. SFAS 133, as amended, requires recognition of the fair value of all derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), on the balance sheet and establishes new accounting rules for hedging activities. The Company adopted FAS 133, as amended, on January 1, 2001. The adoption did not impact the Company's results of operations, cash flows or financial position. RECLASSIFICATION Certain prior year amounts have been reclassified to conform with 2000 presentation. The reclassifications had no effect on net income available for common shareholders. 2. SALE OF DEVELOPMENT, CONSTRUCTION AND FEE MANAGEMENT BUSINESSES On June 30, 1999, the Company sold its development, construction and fee management businesses back to the principals of Flournoy Development Company ("Flournoy"). The Company received net proceeds of $18.1 million for these assets and recorded a net loss of approximately $4.0 million, relating mainly to the write-off of goodwill related to the original purchase transaction. In the transaction, Flournoy reacquired the development businesses, related fixed assets including single family development, land and property held for sale, and the fee management business of 5,131 tax credit apartment units. The Company has contracted with Flournoy to complete the remaining portion of its development pipeline which was estimated to be approximately $17 million at December 31, 2000. 3. REAL ESTATE JOINT VENTURE The Company currently owns a 33.3% interest in a joint venture (the "Joint Venture") with Blackstone Real Estate Acquisitions, LLC ("Blackstone") which was formed in 1999 when the Company sold 10 apartment communities containing 2,793 apartment units to the Joint Venture for $97.9 million. The Company made an initial investment and advances to the Joint Venture totaling approximately $8 million and manages the communities for a fee of 4% of revenues. The Company recognized a gain of approximately $9.0 million and deferred gains for the Company's retained interest of approximately $4.8 million. The Joint Venture had a total of $106 million of undepreciated gross assets and $88 million of liabilities at December 31, 2000. F-9 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 4. BORROWINGS The Company maintains an $85 million securitized credit facility with a group of banks led by AmSouth Bank (the "Amsouth Credit Line"). The Amsouth Credit Line bears an interest rate of LIBOR plus a spread ranging from 1.35% to 1.75% (1.35% at December 31, 2000) based on certain quarterly coverage calculations established by the agreement. This credit line expires in May 2002 and is subject to certain borrowing base calculations that effectively reduce the amount that may be borrowed. At December 31, 2000, the Company had $7.4 million outstanding on the AmSouth Credit Line and had another $31.8 million available to be borrowed under the agreement. The Company also maintains a $295 million secured credit facility with FNMA (the "FNMA Facility") which matures in 2009. The FNMA Facility provides for both fixed and variable rate borrowings. The interest rate on the variable portion renews every 90 days and is based on the FNMA mortgage backed security rate on the date of renewal, which has historically approximated three month LIBOR less a spread ranging from .05%-.10%, plus a fee of .67%. Borrowings under the FNMA Facility totaled $198.1 million at December 31, 2000, consisting of $65 million under the fixed portion at a rate of 7.712% and the remaining $133.1 million under the variable rate portion of the facility. During 2000, the Company entered into two interest rate swap agreements, totaling $50 million to lock the interest rate on a portion of the variable rate borrowings outstanding under the FNMA Facility at approximately 7.4%. The FNMA Facility is subject to certain borrowing base calculations that effectively reduce the amount that may be borrowed. The total amount available under these calculations was outstanding as of December 31, 2000. The Company also had outstanding at December 31, 2000 a $10 million unsecured short-term note payable with Compass Bank, which matures in May 2001. At December 31, 2000, the Company had $75.5 million (after considering the interest rate swaps) variable rate debt outstanding at an average interest rate of 7.2% and an additional $32 million of tax-free variable rate debt outstanding at an average rate of 5.812%; all other debt was fixed at an average interest rate of 7.19%. During 2000, the Company paid off a portion of its note payable to Prudential Mortgage, which is secured by several properties. The payment was related to the disposition of one of the properties securing the note, and the Company incurred a prepayment penalty of approximately $204,000, net of minority interest, related to the early extinguishment of the mortgage which is included in "Extraordinary items--loss on early extinguishment of debt" in the accompanying financial statements. The Company had approximately $565.6 million and $570.8 million at December 31, 2000 and 1999, respectively, outstanding under various mortgage notes and bonds payable secured by real estate assets. The Company had outstanding $142 million aggregate principal amount of 6.376% Bonds due 2003 (the "Bonds"). The Bonds are secured by a first priority deed of trust, security agreement and assignment of rents and leases in respect of 26 mortgaged properties, with a net book value of $201 million at December 31, 2000. During 1999, the Company paid certain borrowings prior to maturity and incurred prepayment costs of $67,000, net of minority interest, related to the early extinguishment. During 1998, the Company refinanced certain notes payable and refunded certain bonds incurring prepayment costs totaling $990,000, net of minority interest, related to the early extinguishment. For 1999 and 1998, these costs are included in "Extraordinary items--loss on early extinguishment of debt" in the accompanying financial statements. F-10 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 4. BORROWINGS (CONTINUED) As of December 31, 2000, the Company estimated that the weighted average interest rate on the Company's debt was 7.14% with an average maturity of 10.9 years. The following table summarizes the Company's indebtedness at December 31, 2000.

ACTUAL AVERAGE INTEREST INTEREST RATES RATE MATURITY 2000 1999 -------------- ---------------- --------- -------- -------- Fixed Rate: Taxable............................ 6.376-9.006% 7.369% 2001-2037 $504.3 $442.6 Tax-exempt......................... 5.281-7.594% 6.162% 2008-2028 94.5 96.3 Interest rate swaps................ 7.170-7.383% 7.300% 2003-2006 75.0 25.0 ------ ------ $673.8 $563.9 ------ ------ Variable Rate: Taxable............................ 7.218% 7.218% 2009 $ 75.5 $148.4 Tax-exempt......................... 5.690-5.980% 5.812% 2025-2028 31.8 31.9 ------ ------ $107.3 $180.3 ------ ------ $781.1 $744.2 ====== ======

Scheduled principal repayments on the borrowings at December 31, 2000 are as follows (dollars in thousands):

YEAR AMORTIZATION BALLOON PAYMENTS TOTAL ---- ------------ ---------------- -------- 2001................................... $ 4,694 $ 49,544 $ 54,238 2002................................... 4,721 18,822 23,543 2003................................... 4,473 161,821 166,294 2004................................... 4,368 71,168 75,536 2005................................... 4,193 36,299 40,492 Thereafter............................. 168,716 252,270 420,986 -------- -------- -------- $191,165 $589,924 $781,089 ======== ======== ========

The Company's indebtedness includes various restrictive financial covenants. The Company believes that it was in compliance with these covenants as of December 31, 2000. 5. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS Cash and cash equivalents, restricted cash, accounts payable, accrued expenses and other liabilities and security deposits are carried at amounts which reasonably approximate their fair value due to their short term nature. Fixed rate notes payable at December 31, 2000 and 1999 total $673.8 million and $563.9 million, respectively, and have an estimated fair value of $678.71 million and $541.5 million (excluding prepayment penalties) based upon interest rates available for the issuance of debt with similar terms and remaining maturities as of December 31, 2000 and 1999. The carrying value of variable rate notes payable at December 31, 2000 and 1999 total $107.3 million and $180.3 million, respectively, which reasonably F-11 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 5. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS (CONTINUED) approximates their fair value because the related variable interest rates available for the issuance of debt with similar terms and remaining maturities reasonably approximate market rates. The Company has three interest rate swap agreements for $25 million notional amount each which were outstanding as of December 31, 2000. The Company estimates that at December 31, 2000, the combined fair market value of all the interest rate swaps outstanding was $(2.2) million. The fair value estimates presented herein are based on information available to management as of December 31, 2000 and 1999. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and current estimates of fair value may differ significantly from the amounts presented herein. 6. COMMITMENTS AND CONTINGENCIES The Company is not presently subject to any material litigation nor, to the Company's knowledge, is any material litigation threatened against the Company, other than routine litigation arising in the ordinary course of business, some of which is expected to be covered by liability insurance and none of which is expected to have a material adverse effect on the consolidated financial statements of the Company. The Company had total expenses related to operating leases for the years ended December 31, 2000, 1999, and 1998 of $407,000, $256,000, and $138,000, respectively. The Company's commitments for the next five years under operating lease agreements outstanding at December 31, 2000 are as follows:

YEAR ---- 2001........................................................ $ 587,971 2002........................................................ 587,971 2003........................................................ 587,971 2004........................................................ 342,919 2005........................................................ 257,189 ---------- Total....................................................... $2,364,021 ==========

7. INCOME TAXES No provision for federal income taxes has been made in the accompanying consolidated financial statements. The Company has made an election to be taxed as a Real Estate Investment Trust ("REIT") under Sections 856 through 860 of the Code. As a REIT, the Company generally is not subject to Federal income tax to the extent it distributes 95% (through December 31, 1999 and 90% thereafter) of its REIT taxable income to its shareholders and meets certain other tests relating to the number of shareholders, types of assets and allocable income. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to the Federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Even though the Company qualifies for taxation as a REIT, the Company may be subject to certain Federal, state and local taxes on its income and property and to Federal income and excise tax on its undistributed income. F-12 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 7. INCOME TAXES (CONTINUED) Earnings and profits, which determine the taxability of dividends to shareholders, differ from net income reported for financial reporting purposes primarily because of differences in depreciable lives, bases of certain assets and liabilities and in the timing of recognition of earnings upon disposition of properties. For federal income tax purposes, the following summarizes the taxability of cash distributions paid on the common shares in 1999 and 1998 and the estimated taxability for 2000:

2000 1999 1998 -------- -------- -------- Per common share Ordinary income...................................... $1.31 $1.40 $1.28 Capital gains........................................ .25 .18 -- Return of capital.................................... .76 .72 .92 ----- ----- ----- Total................................................ $2.32 $2.30 $2.20 ===== ===== =====

8. SHAREHOLDERS' EQUITY SERIES A PREFERRED STOCK Series A Cumulative Preferred Stock ("Series A Preferred Stock") has a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.375 per share, payable monthly. The Company issued has outstanding 2,000,000 Series A Preferred shares for which it received net proceeds of $47.8 million. On and after November 1, 2001, the Series A Preferred shares will be redeemable for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation preference plus dividends accrued and unpaid to the redemption date. SERIES B PREFERRED STOCK Series B Cumulative Preferred Stock ("Series B Preferred Stock") has a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.21875 per share, payable monthly. The Company issued has outstanding 1,938,830 Series B Preferred shares for which it received net proceeds of $46.6 million. On and after December 1, 2002, the Series B Preferred shares will be redeemable for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation preference plus dividends accrued and unpaid to the redemption date. SERIES C PREFERRED STOCK Series C Cumulative Redeemable Preferred Stock ("Series C Preferred Stock") has a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.34375 per share, payable quarterly. The Company has outstanding 2,000,000 Series C Preferred shares for which it received net proceeds of $48.1 million. On and after June 30, 2003, the Series C Preferred shares will be redeemable for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation preference plus dividends accrued and unpaid to the redemption date. F-13 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 8. SHAREHOLDERS' EQUITY (CONTINUED) SERIES D PREFERRED STOCK--SHAREHOLDERS RIGHTS PLAN During December 1998, the Board of Directors authorized a Shareholders Rights Plan (the "Rights Plan"). In implementing the Rights Plan, the Board declared a distribution of one right for each of the Company's outstanding common shares which would become exercisable only if a person or group (the "Acquiring Person") becomes the beneficial owner of 10% or more of the common shares or announces a tender or exchange offer that would result in ownership of 10% of the Company's common shares. The rights will trade with the Company's common stock until exercisable. Each holder of a right, other than the Acquiring Person, is in that event entitled to purchase one common share of the Company for each right at one half of the then current price. SERIES E PREFERRED STOCK Series E Cumulative Preferred Stock ("Series E Preferred Stock") has a $25.00 per share liquidation preference and a preferential cumulative annual distribution of $2.375 per share, payable monthly. The Company has outstanding 1,000,000 Series E Preferred shares issued in a direct placement with a private investor. The Company received net proceeds of $24.7 million. In December 2003, the securities may be required by the purchaser to be redeemed by the Company in cash or common stock, at the Company's option, at the then market price. The Series E Preferred Stock is equal in rank with the Company's other series of Preferred Stock with respect to the payment of dividends and amounts upon liquidation, dissolution or winding up. DIRECT STOCK PURCHASE AND DISTRIBUTION REINVESTMENT PLAN In January 1999 the Company adopted the DSPDRP pursuant to which the Company's shareholders have the ability to reinvest all or part of distributions from Mid-America common stock, preferred stock or limited partnership interests in Mid-America Apartments, L.P. Also, the plan provides the opportunity for shareholders to buy additional shares through an optional cash investment. This plan replaced the Company's previous Dividend Reinvestment and Stock Purchase Plan (the "DRSPP"). The Company has registered with the Securities and Exchange Commission the offer and sale of up to 1,600,000 shares of common stock pursuant to the DSPDRP and DRSPP. Additional shares will be purchased at the market price on the "Investment Date" each month, which shall in no case be later than ten business days following the distribution payment date. Common stock shares totaling 25,242, in 2000, 111,637 in 1999, and 62,175 in 1998 were acquired by shareholders. STOCK REPURCHASE PLAN In 1999, the Company's Board of Directors approved a stock repurchase plan to acquire up to a total of 4.0 million shares of the Company's common shares. Through December 31, 2000, the Company has repurchased and retired approximately 1.7 million shares of common stock for a cost of approximately $39 million at an average price per common share of $22.56. EARNINGS PER SHARE The computation of basic earnings per share is based on the weighted average number of common shares outstanding. The computation of diluted earnings per share is based on the weighted average F-14 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 8. SHAREHOLDERS' EQUITY (CONTINUED) number of common shares outstanding plus the shares resulting from the assumed exercise of all dilutive outstanding options using the treasury stock method. The Series E Preferred Shares, which may be convertible five years from the date of issuance, are not included in the calculation because the assumed conversion would be anti-dilutive. A reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the years ended December 31, 2000, 1999 and 1998 is presented on the Consolidated Statements of Operations. 9. EMPLOYEE BENEFIT PLANS 401(K) SAVINGS PLAN The Mid-America Apartment Communities, Inc. 401(k) Savings Plan is a defined contribution plan that satisfies the requirements of Section 401(a) and 401(k) of the Code. The Company may, but is not obligated to, make a matching contribution of $.50 for each $1.00 contributed, up to 6% of the participant's compensation. The Company's contribution to this plan was $216,000, $204,200 and $318,200 in 2000, 1999 and 1998, respectively. NON-QUALIFIED DEFERRED COMPENSATION PLAN The Company has adopted a non-qualified deferred compensation plan for key employees who are not qualified for participation in the Company's 401(k) Savings Plan. Under the terms of the plan, employees may elect to defer a percentage of their compensation and the Company matches a portion of their salary deferral. The plan is designed so that the employees' investment earnings under the non-qualified plan should be the same as the earning assets in the Company's 401(k) Savings Plan. The Company's match to this plan in 2000, 1999 and 1998 was $27,800, $17,300 and $19,100, respectively. EMPLOYEE STOCK PURCHASE PLAN The Mid-America Apartment Communities, Inc. Employee Stock Purchase Plan (the "ESPP") provides a means for employees to purchase common stock of the Company. The Board has authorized the issuance of 150,000 shares for the plan. The ESPP is administered by the Compensation Committee who may annually grant options to employees to purchase annually up to an aggregate of 15,000 shares of common stock at a price equal to 85% of the market price of the common stock. During 2000, 1999 and 1998, the ESPP purchased 4,326, 6,721 and 5,242 shares, respectively. EMPLOYEE STOCK OWNERSHIP PLAN The Mid-America Apartment Communities, Inc. Employee Stock Ownership Plan (the "ESOP") is a non-contributory stock bonus plan that satisfies the requirements of Section 401(a) of the Internal Revenue Code. Each employee of the Company is eligible to participate in the ESOP after attaining the age of 21 years and completing one year of service with the Company. Participants' ESOP accounts will be 100% vested after five years of continuous service, with no vesting prior to that time. The Company contributed 22,500 shares of common stock to the ESOP upon conclusion of the Initial Offering. During 2000, 1999 and 1998, the Company contributed $600,400, $640,100 and $448,300, respectively, to the ESOP which purchased an additional 25,967, 28,233 and 17,156 shares, respectively. F-15 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 9. EMPLOYEE BENEFIT PLANS (CONTINUED) STOCK OPTION PLAN The Company has adopted the 1994 Restricted Stock and Stock Option Plan (the "Plan") to provide incentives to attract and retain independent directors, executive officers and key employees. The Plan provides for the grant of options to purchase a specified number of shares of common stock ("Options") or grants of restricted shares of common stock ("Restricted Stock"). The Plan also allows the Company to grant options to purchase Operating Partnership Units at the price of the common stock on the New York Stock Exchange on the day prior to issuance of the units (the "LESOP Provision"). The Plan authorizes the issuance of 2,000,000 common shares or options to acquire shares which vest over five years. Under the terms of the Plan, the Company can advance directors, executive officers, and key employees a portion of the cost of the common stock or units. The employee advances mature five years from date of issuance and accrue interest, payable in arrears, at a rate established at the date of issuance. The Company has also entered into supplemental bonus agreements with the employees which are intended to fund the payment of a portion of the advances over a five year period. Under the terms of the supplemental bonus agreements, the Company will pay bonuses to these employees equal to 3% of the original note balance on each anniversary date of the advance, limited to 15% of the aggregate purchase price of the shares and units. The advances become due and payable and the bonus agreement will terminate if the employees voluntarily terminate their employment with the Company. The Company also agreed to pay a bonus to certain executive officers in an amount equal to the debt service on the advances for as long as they remain employed by the Company. As of December 31, 2000, the Company had advances outstanding relating to the Plan totaling $1,171,000, which is presented as a reduction to shareholders' equity in the accompanying consolidated balance sheets. Advances to executive officers totaled $840,000 at interest rates ranging from 5.59%-6.49% and maturing at various dates from 2002 to 2005. Advances to key employees totaled $331,000 at interest rates ranging from 7.5%-9.0% maturing at various dates from 2002 to 2005. Additionally in 2000, the Company issued 5,450 restricted stock shares to current independent directors at a price of $22.1875 per share. These shares will vest in one year. The Company also issued 10,750 restricted stock shares to executive officers at a price of $22.1875. These shares will vest 10% each over the next ten years. The executive officers have the option to accelerate the vesting in lieu of bonuses. F-16 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 9. EMPLOYEE BENEFIT PLANS (CONTINUED) A summary of changes in Options to acquire shares of the Company's common stock and Operating Partnership Units, including grants and exercises pursuant to the LESOP provision, for the three years ended December 31, 2000 is as follows:

WEIGHTED AVERAGE OPTIONS EXERCISE PRICE --------- ---------------- Outstanding at December 31, 1997................... 523,500 $25.40 Granted.......................................... 663,250 28.78 Exercised........................................ (338,581) 28.28 Forfeited........................................ (52,850) 27.81 --------- Outstanding at December 31, 1998................... 795,319 26.87 Granted.......................................... 371,750 22.25 Forfeited........................................ (243,800) 25.86 --------- Outstanding at December 31, 1999................... 923,269 25.35 Granted.......................................... 401,000 22.29 Exercised........................................ (54,350) 22.93 Forfeited........................................ (70,325) 24.78 --------- Outstanding at December 31, 2000................... 1,199,594 24.47 ========= Options exercisable: December 31, 1998................................ 208,769 $23.19 December 31, 1999................................ 285,694 23.34 December 31, 2000................................ 381,744 24.25

Exercise prices for options outstanding as of December 31, 2000 ranged from $19.75 to $29.50. The weighted average remaining contractual life of those options is 7.0 years. The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation", which requires either the (i) fair value of employee stock-based compensation plans be recorded as a component of compensation expense in the statement of operations as of the date of grant of awards related to such plans, or (ii) impact of such fair value on net income and earnings per share be disclosed on a pro forma basis in a footnote to financial statements for awards granted after December 15, 1994, if the accounting for such awards continues to be in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," ("APB 25"). The Company will continue such accounting under the provisions of APB 25. If the fair value method of accounting allowed under SFAS No. 123 had been used by the Company, the pro forma net income available to common shareholders would have been $13,494,000, $17,254,000, $14,681,000 for 2000, 1999 and 1998, respectively. The pro forma diluted net income available per common share would have been $0.77, $0.92 and $0.78 for 2000, 1999 and 1998, respectively. The calculation was prepared using the Black-Scholes option pricing model using the following factors: 1) risk free interest rate of 5.28% and 6.38% for 2000 and 1999, respectively, 2) expected life of 7.0 years and 7.3 years for 2000 and 1999, respectively, 3) expected volatility of 14.05% and 19.14% for 2000 and 1999, respectively, and 4) expected dividends of 10.16% for both 2000 and 1999. The weighted average fair value of all options granted during the year is $8,938,000 at a weighted average option price of $22.29 per share. F-17 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 10. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Company has only limited involvement with derivative financial instruments and does not use them for trading purposes. The Company occasionally utilizes derivative financial instruments as hedges in anticipation of future debt transactions to manage well-defined interest rate risk or as protection to hedge the interest rate risk of the Company's variable rate debt by locking the effective rate on portions of the outstanding lines of credit. During 2000, the Company entered two interest rate swap agreements, each with a notional amount of $25 million, to effectively lock the interest rate on $50 million of the FNMA Credit Facility at approximately 7.4%. The swap agreements expire in September of 2005 and 2006. In 1998, the Company entered an interest rate swap agreement which expires on August 15, 2003 that effectively locks the interest rate the Company pays on a portion of its AmSouth Credit Line. As of December 31, 2000, $25 million notional amount was outstanding on this agreement with a fixed interest rate paid by the Company of 7.17%. 11. RELATED PARTY TRANSACTIONS Pursuant to a management contract with the Joint Venture, the Company manages the operations of the 10 Joint Venture apartment communities for a fee of 4% of the revenues of the Joint Venture. The Company received approximately $737,000 and $453,000 as management fees from the Joint Venture in 2000 and 1999, respectively. As described in Note 2, the Company sold its development, construction and management fee business in June 1999 to a director of the Company. The director was a former principle of Flournoy, which was acquired by the Company in November 1997. The Company has contracted with Flournoy to complete the remaining portion of its development pipeline, which is expected to be accomplished during 2001. 12. SEGMENT INFORMATION At December 31, 2000, the Company owned or had an ownership interest in 124 multifamily apartment communities, including the 10 apartment communities owned by the Joint Venture, in 13 different states from which it derives all significant sources of earnings and operating cash flows. The Company's operational structure is organized on a decentralized basis, with individual property managers having overall responsibility and authority regarding the operations of their respective properties. Each property manager individually monitors local and area trends in rental rates, occupancy percentages, and operating costs. Property managers are given the on-site responsibility and discretion to react to such trends in the best interest of the Company. The Company's chief operating decision maker evaluates the performance of each individual property based on its contribution to net operating income in order to ensure that the individual property continues to meet the Company's return criteria and long term investment goals. The Company defines each of its multifamily communities as an individual operating segment. It has also determined that all of its communities have similar economic characteristics and also meet the other criteria which permit the communities to be aggregated into one reportable segment, which is acquisition, development, and operation of the multifamily communities owned. The revenues, net operating income, assets and real estate investment capital expenditures for the aggregated multifamily segment are summarized as follows for the years ended as of December 31, 2000, F-18 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 12. SEGMENT INFORMATION (CONTINUED) 1999 and 1998 (in 000's): For purposes of this disclosure, multifamily revenues, net operating income and real estate assets include amounts related to the 10 properties owned by the unconsolidated Joint Venture.

2000 1999 1998 ---------- ---------- -------- Multifamily rental revenues................................ $ 237,330 $ 233,442 $210,591 Other multifamily revenues................................. 3,670 2,116 2,248 ---------- ---------- -------- Segment revenues......................................... 241,000 235,558 212,839 Reconciling items to consolidated revenues: Joint Venture revenues................................... (18,468) (11,344) -- Management and development income, net................... 739 751 1,841 Equity in loss of real estate joint venture.............. (157) (31) -- Interest income and other revenues....................... 1,526 1,388 863 ---------- ---------- -------- Total revenues......................................... $ 224,640 $ 226,322 $215,543 ========== ========== ======== Multifamily net operating income........................... 149,288 145,874 132,922 Reconciling items to net income: Joint Venture net operating income....................... (10,202) (6,545) -- Management and development income, net................... 739 751 1,841 Equity in loss of real estate joint venture.............. (157) (31) -- Interest income and other revenues....................... 1,526 1,388 863 Depreciation and amortization............................ (51,844) (49,903) (46,021) General and administrative expenses...................... (14,826) (14,479) (11,960) Interest expense......................................... (50,736) (48,302) (45,704) Amortization of deferred financing costs................. (2,758) (2,854) (2,348) Gain on dispositions, net................................ 11,587 10,237 408 Extraordinary items--loss on early extinguishment of debt................................................... (204) (67) (990) Minority interest in operating partnership income........ (2,626) (2,497) (2,254) Dividends on preferred shares............................ (16,114) (16,114) (11,430) ---------- ---------- -------- Net income available for common shareholders........... $ 13,673 $ 17,458 $ 15,327 ========== ========== ========

2000 1999 ---------- ---------- ASSETS: Multifamily real estate assets............................. $1,516,096 $1,480,232 Accumulated depreciation--multifamily assets............... (189,516) (148,839) ---------- ---------- 1,326,580 1,331,393 Reconciling items to total assets: Joint Venture multifamily real estate assets, net........ 96,145 98,323 Land held for future development......................... 1,366 1,710 Commercial properties, net............................... 5,044 5,217 Investment in and advances to real estate joint venture................................................ 7,630 8,054 Cash and restricted cash................................. 33,567 26,629 Other assets............................................. 25,729 24,143 ---------- ---------- Total Assets........................................... $1,303,771 $1,298,823 ========== ==========

F-19 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 12. SEGMENT INFORMATION (CONTINUED)

2000 1999 1998 -------- -------- -------- Multifamily expenditures for property improvements, acquisitions and construction............................. $96,674 $107,508 $204,031 Less reconciling items: Joint Venture property improvements....................... (1,458) (1,568) -- ------- -------- -------- Total expenditures for property improvements, acquisitions and construction......................... $95,216 $105,940 $204,031 ======= ======== ========

13. SUBSEQUENT EVENTS DECLARATION OF DIVIDEND The Company declared a 2000 fourth quarter common stock dividend of $0.585 per share in January 2001 to be paid January 31, 2001 to holders of record on January 24, 2001. INTEREST RATE SWAP AGREEMENT In January 2001, the Company entered into an interest rate swap agreement with a notional amount of $25 million, the effect of which was to lock the interest rate on $25 million of the FNMA Credit Facility at approximately 6.2%. The swap agreement expires December 1, 2005. F-20 MID-AMERICA APARTMENT COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 14. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) MID-AMERICA APARTMENT COMMUNITIES, INC. QUARTERLY FINANCIAL DATA (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31, 2000 ----------------------------------------- FIRST SECOND THIRD FOURTH -------- -------- -------- -------- Total revenues.......................................... $55,408 $55,601 $56,937 $56,694 Income before minority interest in operating partnership income and extraordinary item......................... $ 7,912 $12,195 $ 5,964 $ 6,546 Minority interest in operating partnership income....... $ 540 $ 1,403 $ 337 $ 346 Extraordinary item, net of minority interest............ $ (56) $ (148) $ -- $ -- Net income available for common shareholders............ $ 3,286 $ 6,615 $ 1,599 $ 2,173 Per share: Basic and diluted per share: Net income available per common shares.................. Before extraordinary item............................. $ 0.19 $ 0.38 $ 0.09 $ 0.13 Extraordinary item.................................... -- (0.01) -- -- ------- ------- ------- ------- Net income available per common share................. $ 0.19 $ 0.37 $ 0.09 $ 0.13 ======= ======= ======= ======= Dividend declared....................................... $ 0.580 $ 0.580 $ 0.580 $ 0.585

YEAR ENDED DECEMBER 31, 1999 ----------------------------------------- FIRST SECOND THIRD FOURTH -------- -------- -------- -------- Total revenues.......................................... $57,089 $56,362 $56,983 $55,888 Income before minority interest in operating partnership income and extraordinary item......................... $ 7,512 $ 2,275 $11,445 $14,904 Minority interest in operating partnership income (loss)................................................ $ 1,196 $ (414) $ 917 $ 798 Extraordinary item, net of minority interest............ $ (67) $ -- $ -- $ -- Net income (loss) available for common shareholders..... $ 6,920 $(1,340) $ 6,500 $ 5,378 Per share: Basic and diluted per share: Net income available per common shares Before extraordinary item............................. $ 0.37 $ (0.07) $ 0.34 $ 0.29 Extraordinary item.................................... -- -- -- -- ------- ------- ------- ------- Net income available per common share................. $ 0.37 $ (0.07) $ 0.34 $ 0.29 ======= ======= ======= ======= Dividend declared....................................... $ 0.575 $ 0.575 $ 0.575 $ 0.580

F-21 MID-AMERICA APARTMENT COMMUNITIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)

COST CAPITALIZED SUBSEQUENT TO INITIAL COST ACQUISITION --------------------- --------------------- BUILDINGS BUILDINGS AND AND PROPERTY LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES ---------------------- --------------------- ------------- -------- ---------- -------- ---------- COMPLETED PROPERTIES Eagle Ridge Birmingham, AL $ 6,292 $ 851 $ 7,667 $ -- $ 698 Abbington Place Huntsville, AL --(1) 524 4,724 -- 780 Paddock Club-- Huntsville, AL --(2) 830 7,470 -- 811 Huntsville I Paddock Club-- Huntsville, AL --(2) 909 10,152 -- 72 Huntsville II Paddock Club Montgomery, AL --(1) 965 13,190 -- 359 Montgomery I & II Calais Forest Little Rock, AR --(1) 1,026 9,244 -- 1,549 Napa Valley Little Rock, AR --(3) 960 8,642 -- 803 Westside Creek I Little Rock, AR --(3) 616 5,559 -- 614 Westside Creek II Little Rock, AR 4,828 654 5,904 -- 285 Tiffany Oaks Altamonte Springs, FL --(3) 1,024 9,219 -- 1,279 Marsh Oaks Atlantic Beach, FL --(3) 244 2,829 -- 718 Indigo Point Brandon, FL --(4) 1,167 10,500 -- 571 Paddock Club--Brandon Brandon, FL --(1) 2,896 26,111 -- 192 I & II Anatole Daytona Beach, FL 7,000(5) 1,227 5,879 -- 755 Paddock Club-- Gainsville, FL --(5) 1,800 15,879 -- 17 Gainsville Cooper's Hawk Jacksonville, FL --(6) 854 7,500 -- 973 Hunter's Ridge at Jacksonville, FL --(7) 1,533 13,835 -- 610 Deerwood Lakeside Jacksonville, FL --(3) 1,431 12,883 289 2,772 Paddock Club-- Jacksonville, FL --(8) 2,294 20,750 (2) 532 Jacksonville I, II & III Paddock Club-- Jacksonville, FL --(1) 1,410 14,967 -- 180 Mandarin St. Augustine Jacksonville, FL --(6) 2,858 6,475 (1) 2,367 Woodbridge at the Lake Jacksonville, FL --(1) 645 5,804 -- 1,438 Woodhollow Jacksonville, FL 9,579 1,686 15,179 -- 1,916

GROSS AMOUNT CARRIED AT DECEMBER 31, LIFE USED 2000(11) TO COMPUTE ------------------------- DEPRECIATION BUILDINGS IN LATEST AND ACCUMULATED DATE OF INCOME PROPERTY LAND FIXTURES TOTAL DEPRECIATION NET CONSTRUCTION STATEMENT(10) ---------------------- ------------ ---------- ---------- ------------ ---------- ------------- ------------- COMPLETED PROPERTIES Eagle Ridge $ 851 $ 8,365 $ 9,216 $ (803) $ 8,413 1986 5-40 Abbington Place 524 5,504 6,028 (599) 5,429 1987 5-40 Paddock Club-- 830 8,281 9,111 (887) 8,224 1989 5-40 Huntsville I Paddock Club-- 909 10,224 11,133 (691) 10,442 1998 5-40 Huntsville II Paddock Club 965 13,549 14,514 (747) 13,767 1999 5-40 Montgomery I & II Calais Forest 1,026 10,793 11,819 (2,490) 9,329 1987 5-40 Napa Valley 960 9,445 10,405 (1,472) 8,933 1984 5-40 Westside Creek I 616 6,173 6,789 (857) 5,932 1984 5-40 Westside Creek II 654 6,189 6,843 (743) 6,100 1986 5-40 Tiffany Oaks 1,024 10,498 11,522 (1,572) 9,950 1985 5-40 Marsh Oaks 244 3,547 3,791 (814) 2,977 1986 5-40 Indigo Point 1,167 11,071 12,238 (248) 11,990 1989 5-40 Paddock Club--Brandon 2,896 26,303 29,199 (2,470) 26,729 1997/99 5-40 I & II Anatole 1,227 6,634 7,861 (1,435) 6,426 1986 5-40 Paddock Club-- 1,800 15,896 17,696 (849) 16,847 1999 5-40 Gainsville Cooper's Hawk 854 8,473 9,327 (1,833) 7,494 1987 5-40 Hunter's Ridge at 1,533 14,445 15,978 (1,274) 14,704 1987 5-40 Deerwood Lakeside 1,720 15,655 17,375 (3,193) 14,182 1985 5-40 Paddock Club-- 2,292 21,282 23,574 (2,185) 21,389 1989/96 5-40 Jacksonville I, II & III Paddock Club-- 1,410 15,147 16,557 (1,036) 15,521 1998 5-40 Mandarin St. Augustine 2,857 8,842 11,699 (2,254) 9,445 1987 5-40 Woodbridge at the Lake 645 7,242 7,887 (1,649) 6,238 1985 5-40 Woodhollow 1,686 17,095 18,781 (2,503) 16,278 1986 5-40

F-22 MID-AMERICA APARTMENT COMMUNITIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED) DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)

COST CAPITALIZED SUBSEQUENT TO INITIAL COST ACQUISITION --------------------- --------------------- BUILDINGS BUILDINGS AND AND PROPERTY LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES ---------------------- --------------------- ------------- -------- ---------- -------- ---------- Paddock Club-- Lakeland, FL --(8) 2,254 20,452 -- 1,376 Lakeland Savannahs at James Melbourne, FL --(6) 582 7,868 -- 1,756 Landing Paddock Park--Ocala I Ocala, FL 6,805 901 8,177 -- 994 Paddock Park-- Ocala, FL --(1) 1,383 12,547 -- 549 Ocala II Paddock Club--Panama Panama City, FL --(5) 898 14,276 -- 29 City Paddock Club-- Tallahassee, FL --(1) 950 8,550 -- 319 Tallahassee I Paddock Club-- Tallahassee, FL 4,671 530 4,805 -- 145 Tallahassee II Belmere Tampa, FL --(3) 851 7,667 1 1,847 Links at Carrollwood Tampa, FL 5,607 817 7,355 110 2,271 High Ridge Athens, GA --(3) 884 7,958 -- 401 Bradford Pointe Augusta, GA 4,760(5) 772 6,949 -- 633 Shenandoah Ridge Augusta, GA --(3) 650 5,850 8 2,028 Westbury Creek Augusta, GA 3,072 400 3,626 -- 450 Fountain Lake Brunswick, GA 2,887 502 4,551 -- 870 Park Walk College Park, GA 3,291 536 4,859 -- 306 Whisperwood Spa and Columbus, GA --(1) 4,290 42,722 (4) 2,898 Club Willow Creek Columbus, GA --(3) 614 5,523 -- 869 Terraces at Fieldstone Conyers, GA --(1) 1,284 15,819 -- 24 Whispering Pines I LaGrange, GA 2,662 454 4,116 -- 423 Whispering Pines II LaGrange, GA 2,435 370 3,354 -- 277 Westbury Springs Lilburn, GA 4,119 665 6,038 -- 532 Austin Chase Macon, GA --(7) 1,409 12,687 -- (360) The Vistas Macon, GA 3,952 595 5,403 -- 494 Georgetown Grove Savannah, GA 10,411 1,288 11,579 -- 274 Island Retreat St. Simons Island, GA 3,318 510 4,594 -- 529

GROSS AMOUNT CARRIED AT DECEMBER 31, LIFE USED 2000(11) TO COMPUTE ------------------------- DEPRECIATION BUILDINGS IN LATEST AND ACCUMULATED DATE OF INCOME PROPERTY LAND FIXTURES TOTAL DEPRECIATION NET CONSTRUCTION STATEMENT(10) ---------------------- ------------ ---------- ---------- ------------ ---------- ------------- ------------- Paddock Club-- 2,254 21,828 24,082 (2,435) 21,647 1988/90 5-40 Lakeland Savannahs at James 582 9,624 10,206 (1,983) 8,223 1990 5-40 Landing Paddock Park--Ocala I 901 9,171 10,072 (1,035) 9,037 1986 5-40 Paddock Park-- 1,383 13,096 14,479 (1,497) 12,982 1988 5-40 Ocala II Paddock Club--Panama 898 14,305 15,203 (1,247) 13,956 2000 5-40 City Paddock Club-- 950 8,869 9,819 (1,000) 8,819 1990 5-40 Tallahassee I Paddock Club-- 530 4,950 5,480 (554) 4,926 1995 5-40 Tallahassee II Belmere 852 9,514 10,366 (2,133) 8,233 1984 5-40 Links at Carrollwood 927 9,626 10,553 (987) 9,566 1980 5-40 High Ridge 884 8,359 9,243 (930) 8,313 1987 5-40 Bradford Pointe 772 7,582 8,354 (841) 7,513 1986 5-40 Shenandoah Ridge 658 7,878 8,536 (1,984) 6,552 1975/84 5-40 Westbury Creek 400 4,076 4,476 (481) 3,995 1984 5-40 Fountain Lake 502 5,421 5,923 (664) 5,259 1983 5-40 Park Walk 536 5,165 5,701 (592) 5,109 1985 5-40 Whisperwood Spa and 4,286 45,620 49,906 (4,746) 45,160 1980/86/88/98 5-40 Club Willow Creek 614 6,392 7,006 (755) 6,251 1968/78 5-40 Terraces at Fieldstone 1,284 15,843 17,127 (931) 16,196 1999 5-40 Whispering Pines I 454 4,539 4,993 (523) 4,470 1982 5-40 Whispering Pines II 370 3,631 4,001 (424) 3,577 1984 5-40 Westbury Springs 665 6,570 7,235 (727) 6,508 1983 5-40 Austin Chase 1,409 12,327 13,736 (941) 12,795 1996 5-40 The Vistas 595 5,897 6,492 (664) 5,828 1985 5-40 Georgetown Grove 1,288 11,853 13,141 (1,096) 12,045 1997 5-40 Island Retreat 510 5,123 5,633 (392) 5,241 1978 5-40

F-23 MID-AMERICA APARTMENT COMMUNITIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)

COST CAPITALIZED SUBSEQUENT TO INITIAL COST ACQUISITION --------------------- --------------------- BUILDINGS BUILDINGS AND AND PROPERTY LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES ---------------------- --------------------- ------------- -------- ---------- -------- ---------- Wildwood I Thomasville, GA 1,991 438 3,971 -- 311 Wildwood II Thomasville, GA 1,952 372 3,372 -- 186 Hidden Lake I Union City, GA 4,385 675 6,128 -- 641 Hidden Lake II Union City, GA --(3) 621 5,587 -- 243 Three Oaks I Valdosta, GA 2,750 462 4,188 -- 544 Three Oaks II Valdosta, GA 2,834 460 4,170 -- 260 Huntington Chase Warner Robins, GA 9,504 1,160 10,437 -- 189 Southland Station I Warner Robins, GA --(3) 777 6,992 -- 639 Southland Station II Warner Robins, GA --(1) 693 6,292 -- 290 Terraces at Towne Lake Woodstock, GA 15,067 1,689 15,321 -- 156 Terraces at Towne Woodstock, GA --(1) 1,331 11,918 -- 8 Lake II Fairways at Hartland Bowling Green, KY --(1) 1,038 9,342 -- 1,071 Paddock Club Florence Florence, KY 9,563 1,209 10,969 -- 419 Lakepointe Lexington, KY --(3) 411 3,699 -- 723 Mansion, The Lexington, KY --(1) 694 6,242 -- 1,101 Village, The Lexington, KY --(3) 900 8,097 -- 1,192 Stonemill Village Louisville, KY --(2) 1,169 10,518 -- 1,917 Canyon Creek St. Louis, MO --(2) 880 7,923 245 2,282 Riverhills Grenada, MS -- 153 2,092 -- 496 Advantages, The Jackson, MS --(2) 422 3,727 -- 1,123 Crosswinds Jackson, MS --(3) 1,535 13,826 -- 1,348 Pear Orchard Jackson, MS --(3) 1,352 12,168 (1) 1,682 Reflection Pointe Jackson, MS 5,882(5) 710 8,770 140 2,668 Somerset Jackson, MS --(3) 477 4,294 -- 779 Woodridge Jackson, MS 4,615 471 5,522 -- 577 Hermitage at Beechtree Cary, NC --(3) 900 8,099 -- 954 Corners, The Winston-Salem. NC 3,954 685 6,165 -- 732 Fairways at Royal Oak Cincinnati, OH --(3) 814 7,335 -- 1,050 Woodwinds Aiken, SC 3,428 503 4,540 -- 501 Tanglewood Anderson, SC 2,316 427 3,853 -- 884

GROSS AMOUNT CARRIED AT DECEMBER 31, LIFE USED 2000(11) TO COMPUTE ------------------------- DEPRECIATION BUILDINGS IN LATEST AND ACCUMULATED DATE OF INCOME PROPERTY LAND FIXTURES TOTAL DEPRECIATION NET CONSTRUCTION STATEMENT(10) ---------------------- ------------ ---------- ---------- ------------ ---------- ------------- ------------- Wildwood I 438 4,282 4,720 (486) 4,234 1980 5-40 Wildwood II 372 3,558 3,930 (410) 3,520 1984 5-40 Hidden Lake I 675 6,769 7,444 (742) 6,702 1985 5-40 Hidden Lake II 621 5,830 6,451 (656) 5,795 1987 5-40 Three Oaks I 462 4,732 5,194 (576) 4,618 1983 5-40 Three Oaks II 460 4,430 4,890 (478) 4,412 1984 5-40 Huntington Chase 1,160 10,626 11,786 (246) 11,540 1997 5-40 Southland Station I 777 7,631 8,408 (898) 7,510 1987 5-40 Southland Station II 693 6,582 7,275 (747) 6,528 1990 5-40 Terraces at Towne Lake 1,689 15,477 17,166 (1,675) 15,491 1998 5-40 Terraces at Towne 1,331 11,926 13,257 (670) 12,587 1999 5-40 Lake II Fairways at Hartland 1,038 10,413 11,451 (1,374) 10,077 1996 5-40 Paddock Club Florence 1,209 11,388 12,597 (1,265) 11,332 1994 5-40 Lakepointe 411 4,422 4,833 (1,051) 3,782 1986 5-40 Mansion, The 694 7,343 8,037 (1,628) 6,409 1989 5-40 Village, The 900 9,289 10,189 (2,207) 7,982 1987 5-40 Stonemill Village 1,169 12,435 13,604 (3,024) 10,580 1985 5-40 Canyon Creek 1,125 10,205 11,330 (2,442) 8,888 1983 5-40 Riverhills 153 2,588 2,741 (835) 1,906 1972 5-40 Advantages, The 422 4,850 5,272 (1,640) 3,632 1984 5-40 Crosswinds 1,535 15,174 16,709 (2,554) 14,155 1988/89 5-40 Pear Orchard 1,351 13,850 15,201 (3,342) 11,859 1985 5-40 Reflection Pointe 850 11,438 12,288 (2,493) 9,795 1986 5-40 Somerset 477 5,073 5,550 (1,182) 4,368 1980 5-40 Woodridge 471 6,099 6,570 (1,355) 5,215 1987 5-40 Hermitage at Beechtree 900 9,053 9,953 (1,073) 8,880 1988 5-40 Corners, The 685 6,897 7,582 (1,725) 5,857 1982 5-40 Fairways at Royal Oak 814 8,385 9,199 (1,898) 7,301 1988 5-40 Woodwinds 503 5,041 5,544 (608) 4,936 1988 5-40 Tanglewood 427 4,737 5,164 (1,072) 4,092 1980 5-40

F-24 MID-AMERICA APARTMENT COMMUNITIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)

COST CAPITALIZED SUBSEQUENT TO INITIAL COST ACQUISITION --------------------- --------------------- BUILDINGS BUILDINGS AND AND PROPERTY LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES ---------------------- --------------------- ------------- -------- ---------- -------- ---------- Paddock Club-- Columbia, SC --(1) 1,840 16,560 -- 715 Columbia The Fairways Columbia, SC 7,523 910 8,207 -- 560 Highland Ridge Greenville, SC --(9) 482 4,337 -- 512 Howell Commons Greenville, SC --(3) 1,304 11,740 -- 767 Paddock Club-- Greenville, SC --(2) 1,200 10,800 -- 347 Greenville Park Haywood Greenville, SC --(3) 325 2,925 35 2,744 Spring Creek Greenville, SC --(9) 597 5,374 -- 715 Runaway Bay Mt. Pleasant, SC --(9) 1,085 7,269 -- 917 Park Place Spartanburg, SC --(3) 723 6,504 -- 860 Steeplechase Chattanooga, TN --(3) 217 1,957 -- 1,424 Windridge Chattanooga, TN 5,299 817 7,416 -- 489 Oaks, The Jackson, TN --(2) 177 1,594 -- 763 Post House Jackson Jackson, TN 5,002 443 5,078 -- 889 Post House North Jackson, TN 3,375 381 4,299 (57) 1,011 Williamsburg Village Jackson, TN --(3) 523 4,711 -- 584 Woods at Post House Jackson, TN 5,223 240 6,839 -- 711 Crossings Memphis, TN --(2) 554 2,216 -- 729 Eastview Memphis, TN 11,593 700 9,646 -- 1,850 Gleneagles Memphis, TN --(2) 443 3,983 -- 2,050 Greenbrook Memphis, TN --(4) 2,100 24,468 25 10,069 Hickory Farm Memphis, TN --(2) 580 5,220 (19) 756 Kirby Station Memphis, TN --(3) 1,148 10,337 -- 2,491 Lincoln on the Green Memphis, TN --(8) 1,498 20,483 -- 8,300 Park Estate Memphis, TN --(4) 178 1,141 -- 1,161 Reserve at Dexter Memphis, TN --(5) 1,260 16,043 -- 22 Lake I River Trace I Memphis, TN 5,544 881 7,996 -- 847 River Trace II Memphis, TN 5,498 741 6,727 -- 323

GROSS AMOUNT CARRIED AT DECEMBER 31, LIFE USED 2000(11) TO COMPUTE ------------------------- DEPRECIATION BUILDINGS IN LATEST AND ACCUMULATED DATE OF INCOME PROPERTY LAND FIXTURES TOTAL DEPRECIATION NET CONSTRUCTION STATEMENT(10) ---------------------- ------------ ---------- ---------- ------------ ---------- ------------- ------------- Paddock Club-- 1,840 17,275 19,115 (1,872) 17,243 1989/95 5-40 Columbia The Fairways 910 8,767 9,677 (1,959) 7,718 1992 5-40 Highland Ridge 482 4,849 5,331 (935) 4,396 1984 5-40 Howell Commons 1,304 12,507 13,811 (1,801) 12,010 1986/88 5-40 Paddock Club-- 1,200 11,147 12,347 (1,224) 11,123 1996 5-40 Greenville Park Haywood 360 5,669 6,029 (1,227) 4,802 1983 5-40 Spring Creek 597 6,089 6,686 (1,180) 5,506 1985 5-40 Runaway Bay 1,085 8,186 9,271 (1,708) 7,563 1988 5-40 Park Place 723 7,364 8,087 (869) 7,218 1987 5-40 Steeplechase 217 3,381 3,598 (967) 2,631 1986 5-40 Windridge 817 7,905 8,722 (871) 7,851 1984 5-40 Oaks, The 177 2,357 2,534 (639) 1,895 1978 5-40 Post House Jackson 443 5,967 6,410 (1,344) 5,066 1987 5-40 Post House North 324 5,310 5,634 (1,148) 4,486 1987 5-40 Williamsburg Village 523 5,295 5,818 (1,231) 4,587 1987 5-40 Woods at Post House 240 7,550 7,790 (2,230) 5,560 1997 5-40 Crossings 554 2,945 3,499 (989) 2,510 1973 5-40 Eastview 700 11,496 12,196 (3,387) 8,809 1973 5-40 Gleneagles 443 6,033 6,476 (2,385) 4,091 1975 5-40 Greenbrook 2,125 34,537 36,662 (8,310) 28,352 1980 5-40 Hickory Farm 561 5,976 6,537 (1,464) 5,073 1985 5-40 Kirby Station 1,148 12,828 13,976 (2,993) 10,983 1978 5-40 Lincoln on the Green 1,498 28,783 30,281 (5,181) 25,100 1988/98 5-40 Park Estate 178 2,302 2,480 (1,084) 1,396 1974 5-40 Reserve at Dexter 1,260 16,065 17,325 (643) 16,682 1999 5-40 Lake I River Trace I 881 8,843 9,724 (1,039) 8,685 1981 5-40 River Trace II 741 7,050 7,791 (814) 6,977 1985 5-40

F-25 MID-AMERICA APARTMENT COMMUNITIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)

COST CAPITALIZED SUBSEQUENT TO INITIAL COST ACQUISITION --------------------- --------------------- BUILDINGS BUILDINGS AND AND PROPERTY LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES ---------------------- --------------------- ------------- -------- ---------- -------- ---------- Savannah Creek Memphis, TN --(3) 778 7,013 -- 807 Sutton Place Memphis, TN --(3) 894 8,053 -- 1,087 Paddock Club-- Murfreesboro, TN --(1) 915 14,774 -- 28 Murfreesboro Brentwood Downs Nashville, TN --(1) 1,193 10,739 -- 897 Park at Hermitage Nashville, TN 7,540 1,524 14,800 -- 1,880 Balcones Woods Austin, TX 8,396 1,598 14,398 -- 1,819 Stassney Woods Austin, TX 4,470 1,621 7,501 -- 1,766 Travis Station Austin, TX 3,955 2,282 6,169 (1) 1,302 Celery Stalk Dallas, TX 8,460 1,463 13,165 (1) 2,488 Courtyards at Campbell Dallas, TX --(1) 988 8,893 -- 861 Deer Run Dallas, TX --(1) 1,252 11,271 -- 1,280 Lodge at Timberglen Dallas, TX 4,740 825 7,422 (1) 1,994 Westborough Crossing Katy, TX 3,958 677 6,091 (1) 1,050 Highwood Plano, TX --(4) 864 7,783 -- 842 Cypresswood Court Spring, TX 3,330 577 5,190 (1) 1,124 Green Tree Place Woodlands, TX 3,180 539 4,850 -- 942 Township Hampton, VA 10,800(5) 1,509 8,189 -- 811 -------- -------- ---------- ---- ---------- TOTAL COMPLETED PROPERTIES $261,816 $117,067 $1,063,415 $764 $ 128,775 -------- -------- ---------- ---- ---------- CONSTRUCTION OF UNITS IN LEASE-UP Kenwood Club Katy, TX $ --(5) $ 1,002 $ 16,496 $ -- $ -- Reserve at Dexter Lake Memphis, TN --(5) 1,027 14,792 -- -- Phase II Grand Reserve Lexington, KY --(5) 2,024 33,681 -- 100 Lexington Grand View Nashville Nashville, TN --(5) 1,731 30,669 -- 100 -------- -------- ---------- ---- ---------- TOTAL CONSTRUCTION OF UNITS IN LEASE-UP $ -- $ 5,784 $ 95,638 $ -- $ 200 -------- -------- ---------- ---- ----------

GROSS AMOUNT CARRIED AT DECEMBER 31, LIFE USED 2000(11) TO COMPUTE ------------------------- DEPRECIATION BUILDINGS IN LATEST AND ACCUMULATED DATE OF INCOME PROPERTY LAND FIXTURES TOTAL DEPRECIATION NET CONSTRUCTION STATEMENT(10) ---------------------- ------------ ---------- ---------- ------------ ---------- ------------- ------------- Savannah Creek 778 7,820 8,598 (1,300) 7,298 1989 5-40 Sutton Place 894 9,140 10,034 (1,553) 8,481 1991 5-40 Paddock Club-- 915 14,802 15,717 (650) 15,067 1999 5-40 Murfreesboro Brentwood Downs 1,193 11,636 12,829 (2,771) 10,058 1986 5-40 Park at Hermitage 1,524 16,680 18,204 (3,477) 14,727 1987 5-40 Balcones Woods 1,598 16,217 17,815 (2,355) 15,460 1983 5-40 Stassney Woods 1,621 9,267 10,888 (1,941) 8,947 1985 5-40 Travis Station 2,281 7,471 9,752 (1,555) 8,197 1987 5-40 Celery Stalk 1,462 15,653 17,115 (3,677) 13,438 1978 5-40 Courtyards at Campbell 988 9,754 10,742 (843) 9,899 1986 5-40 Deer Run 1,252 12,551 13,803 (1,111) 12,692 1985 5-40 Lodge at Timberglen 824 9,416 10,240 (2,284) 7,956 1983 5-40 Westborough Crossing 676 7,141 7,817 (1,661) 6,156 1984 5-40 Highwood 864 8,625 9,489 (774) 8,715 1983 5-40 Cypresswood Court 576 6,314 6,890 (1,452) 5,438 1984 5-40 Green Tree Place 539 5,792 6,331 (1,349) 4,982 1984 5-40 Township 1,509 9,000 10,509 (1,724) 8,785 1987 5-40 -------- ---------- ---------- --------- ---------- TOTAL COMPLETED PROPERTIES $117,831 $1,192,190 $1,310,021 $(182,489) $1,127,532 -------- ---------- ---------- --------- ---------- CONSTRUCTION OF UNITS IN LEASE-UP Kenwood Club $ 1,002 $ 16,496 $ 17,498 $ (363) 17,135 2000 5-40 Reserve at Dexter Lake 1,027 14,792 15,819 (168) 15,651 2000 5-40 Phase II Grand Reserve 2,024 33,781 35,805 (553) 35,252 2000 5-40 Lexington Grand View Nashville 1,731 30,769 32,500 (79) 32,421 N/A 5-40 -------- ---------- ---------- --------- ---------- TOTAL CONSTRUCTION OF UNITS IN LEASE-UP $ 5,784 $ 95,838 $ 101,622 $ (1,163) $ 100,459 -------- ---------- ---------- --------- ----------

F-26 MID-AMERICA APARTMENT COMMUNITIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)

COST CAPITALIZED SUBSEQUENT TO INITIAL COST ACQUISITION --------------------- --------------------- BUILDINGS BUILDINGS AND AND PROPERTY LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES ---------------------- --------------------- ------------- -------- ---------- -------- ---------- CONSTRUCTION OF UNITS IN PROCESS Reserve at Dexter Lake Katy, TX $ --(5) $ 1,252 $ 1,192 $ -- $ -- Phase III -------- -------- ---------- ---- ---------- TOTAL CONSTRUCTION OF UNITS IN PROCESS $ -- $ 1,252 $ 1,192 $ -- $ -- -------- -------- ---------- ---- ---------- TOTAL PROPERTIES $261,816 $124,103 $1,160,245 $764 $ 128,975 -------- -------- ---------- ---- ---------- LAND HELD FOR FUTURE VARIOUS $ -- $ 1,366 $ -- $ -- DEVELOPMENTS COMMERCIAL PROPERTIES VARIOUS 300 2,769 -- 4,226 -------- -------- ---------- ---- ---------- TOTAL OTHER $ -- $ 300 $ 4,135 $ -- $ 4,226 -------- -------- ---------- ---- ---------- TOTAL REAL ESTATE ASSETS $261,816 $124,403 $1,164,380 $764 $ 133,201 ======== ======== ========== ==== ==========

GROSS AMOUNT CARRIED AT DECEMBER 31, LIFE USED 2000(11) TO COMPUTE ------------------------- DEPRECIATION BUILDINGS IN LATEST AND ACCUMULATED DATE OF INCOME PROPERTY LAND FIXTURES TOTAL DEPRECIATION NET CONSTRUCTION STATEMENT(10) ---------------------- ------------ ---------- ---------- ------------ ---------- ------------- ------------- CONSTRUCTION OF UNITS IN PROCESS Reserve at Dexter Lake $ 1,252 $ 1,192 $ 2,444 $ -- $ 2,444 -- N/A Phase III -------- ---------- ---------- --------- ---------- TOTAL CONSTRUCTION OF UNITS IN PROCESS $ 1,252 $ 1,192 $ 2,444 $ -- $ 2,444 -------- ---------- ---------- --------- ---------- TOTAL PROPERTIES $124,867 $1,289,220 $1,414,087 $(183,652) $1,230,435 -------- ---------- ---------- --------- ---------- LAND HELD FOR FUTURE $ -- $ 1,366 $ 1,366 $ -- $ 1,366 N/A N/A DEVELOPMENTS COMMERCIAL PROPERTIES 300 6,995 7,295 (2,251) 5,044 Various 5-40 -------- ---------- ---------- --------- ---------- TOTAL OTHER $ 300 $ 8,361 $ 8,661 $ (2,251) $ 6,410 -------- ---------- ---------- --------- ---------- TOTAL REAL ESTATE ASSETS $125,167 $1,297,581 $1,422,748 $(185,903) $1,236,845 ======== ========== ========== ========= ==========

------------------------------ (1) Encumbered by the FNMA Credit Line, with an outstanding balance of $83.1 million with a variable interest rate of 7.218%, $65 million with a fixed rate of 7.712% and two interest rate swap agreements both for $25 million at 7.383% and 7.360% at December 31, 2000. (2) Encumbered by a $39.6 million mortgage with a maturity of July 1, 2001 and an interest rate of 8.650% (3) Encumbered by a $142 million bond with a maturity of March 3, 2003 and an average interest rate of 6.376% (4) Encumbered, along with one corporate property, by a $35.8 million mortgage with a maturity of April 1, 2005 and an interest rate of 7.000% (5) Encumbered by the AmSouth Credit Line, with an outstanding balance of $7.4 million with a variable interest rate of 8.750% at December 31, 2000. (6) Encumbered by a $15.7 million mortgage securing a tax-exempt bond amortizing over 25 years with an average interest rate of 5.750% (7) Encumbered by a $13.7 million mortgage securing a tax-exempt bond amortizing over 25 years with an average interest rate of 5.281% (8) Encumbered by a $47.5 million mortgage with a maturity of December 15, 2004 and an interest rate of 7.040% (9) Encumbered by a $9.6 million mortgage securing a tax-exempt bond amortizing over 25 years with an average interest rate of 6.090% (10) Depreciation is on a straight line basis over the estimated useful asset life which ranges from 8 to 40 years for land improvements and buildings and 5 years for furniture , fixtures and equipment. (11) The aggregate cost for Federal income tax purposes was approximately $1,416 million at December 31, 2000. The total gross amount of real estate assets for GAAP purposes exceeds the aggregate cost for Federal income tax purposes, principally due to purchase accounting adjustments recorded under accounting principles generally accepted in the United States of America. F-27 MID-AMERICA APARTMENT COMMUNITIES, INC. SCHEDULE III REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION A summary of activity for real estate investments and accumulated depreciation is as follows:

YEAR ENDED DECEMBER 31, ------------------------------------ 2000 1999 1998 ---------- ---------- ---------- DOLLARS IN THOUSANDS Real estate investments: Balance at beginning of year........................... $1,396,743 $1,434,733 $1,211,693 Acquisitions........................................... 24,358 -- 91,895 Improvements and development........................... 70,858 105,940 136,933 Disposition of real estate assets...................... (61,157) (152,015) (5,788) Investment in and advances to real estate joint venture.............................................. (424) 8,085 -- ---------- ---------- ---------- Balance at end of year............................... $1,430,378 $1,396,743 $1,434,733 ========== ========== ========== Accumulated depreciation: Balance at beginning of year........................... $ 146,611 $ 117,773 $ 76,989 Depreciation........................................... 50,985 48,687 41,556 Disposition of real estate assets...................... (13,944) (19,849) (772) ---------- ---------- ---------- Balance at end of year............................... $ 183,652 $ 146,611 $ 117,773 ========== ========== ==========

The Company's consolidated balance sheet at December 31, 2000 includes accumulated depreciation of $2,251 in the caption "Commercial properties, net". See accompanying independent auditors' report. F-28