Item 16. Form 10-K Summary.

250K characters. Original on sec.gov · Markdown

Item 16. Form 10-K Summary.

None.

SIGNAT****URES

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:February 14, 2023/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr. Chairman of the Board of Directors Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

MID-AMERICA APARTMENT COMMUNITIES, INC.
Date:February 14, 2023/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr. Chairman of the Board of Directors Chief Executive Officer (Principal Executive Officer)
Date:February 14, 2023/s/ Albert M. Campbell, III
Albert M. Campbell, III Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Date:February 14, 2023/s/ A. Clay Holder
A. Clay Holder Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
Date:February 14, 2023/s/ Alan B. Graf, Jr.
Alan B. Graf, Jr. Director
Date:February 14, 2023/s/ Edith Kelly-Green
Edith Kelly-Green Director
Date:February 14, 2023/s/ Toni Jennings
Toni Jennings Director
Date:February 14, 2023/s/ James K. Lowder
James K. Lowder Director
Date:February 14, 2023/s/ Thomas H. Lowder
Thomas H. Lowder Director
Date:February 14, 2023/s/ Claude B. Nielsen
Claude B. Nielsen Director
Date:February 14, 2023/s/ Philip W. Norwood
Philip W. Norwood Director
Date:February 14, 2023/s/ W. Reid Sanders
W. Reid Sanders Director
Date:February 14, 2023/s/ Gary Shorb
Gary Shorb Director
Date:February 14, 2023/s/ David P. Stockert
David P. Stockert Director

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 APARTMENTS, L.P.
a Tennessee Limited Partnership
By: Mid-America Apartment Communities, Inc., its general partner
Date:February 14, 2023/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr. Chairman of the Board of Directors Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant as an officer or director of Mid-America Apartment Communities, Inc., in its capacity as the general partner of the registrant and on the dates indicated.

MID-AMERICA APARTMENTS, L.P.
a Tennessee Limited Partnership
By: Mid-America Apartment Communities, Inc., its general partner
Date:February 14, 2023/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr. Chairman of the Board of Directors Chief Executive Officer (Principal Executive Officer)
Date:February 14, 2023/s/ Albert M. Campbell, III
Albert M. Campbell, III Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Date:February 14, 2023/s/ A. Clay Holder
A. Clay Holder Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
Date:February 14, 2023/s/ Alan B. Graf, Jr.
Alan B. Graf, Jr. Director
Date:February 14, 2023/s/ Edith Kelly-Green
Edith Kelly-Green Director
Date:February 14, 2023/s/ Toni Jennings
Toni Jennings Director
Date:February 14, 2023/s/ James K. Lowder
James K. Lowder Director
Date:February 14, 2023/s/ Thomas H. Lowder
Thomas H. Lowder Director
Date:February 14, 2023/s/ Claude B. Nielsen
Claude B. Nielsen Director
Date:February 14, 2023/s/ Philip W. Norwood
Philip W. Norwood Director
Date:February 14, 2023/s/ W. Reid Sanders
W. Reid Sanders Director
Date:February 14, 2023/s/ Gary Shorb
Gary Shorb Director
Date:February 14, 2023/s/ David P. Stockert
David P. Stockert Director

Report of Independent Regist****ered Public Accounting Firm

To the Shareholders and the Board of Directors of Mid-America Apartment Communities, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Mid-America Apartment Communities, Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 14, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Embedded Derivative
Description of the MatterAs disclosed in Notes 6 and 8 to the consolidated financial statements, the Series I Preferred Stock shares (“preferred shares”) include a redemption feature which represents an embedded call option exercisable at the Company’s option beginning on October 1, 2026 at the redemption price of $50 per share. The embedded call option has been bifurcated as a separate asset and is valued at fair value each reporting period with changes in its fair value reported in earnings. At each reporting date, management performs an analysis which compares the perpetual value of the preferred shares to the value of the preferred shares assuming the call option is exercised, with the value of the bifurcated call option as the difference between the two values. At December 31, 2022, the fair value of the Company’s embedded derivative asset was $13.4 million. Auditing the Company’s valuation of this bifurcated embedded derivative was challenging as the Company uses a complex valuation methodology that incorporates various inputs, including trading data available on the preferred shares, treasury rates and estimated coupon yields on preferred stock instruments from REITs with similar credit ratings, and includes significant assumptions about economic and market conditions with uncertain future outcomes.
How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the risks of material misstatement relating to the valuation of the bifurcated embedded derivative asset. For example, we tested controls over management’s review of the valuation model and the underlying inputs and assumptions noted above. To test the valuation of the embedded derivative asset, our audit procedures included, among others, assessing the methodology used in the valuation model and testing the significant assumptions discussed above. For example, we evaluated management’s assumptions by comparing the coupon rate that was used to discount future dividend payments from the preferred stock to observable market data. We also assessed the completeness and accuracy of the underlying data used by the Company in its valuation. In addition, we involved our valuation specialists to assist in our evaluation of the methodology used by the Company and the underlying inputs and assumptions noted above.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2005.

Memphis, Tennessee

February 14, 2023

F-1

Report of Independent Registered Public Accounting Firm

To the Partners of Mid-America Apartments, L.P.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Mid-America Apartments, L.P. (the Operating Partnership) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in capital, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Embedded Derivative
Description of the MatterAs disclosed in Notes 6 and 9 to the consolidated financial statements, the MAALP Series I Preferred Units (“preferred units”) have the same characteristics as the MAA Series I Preferred Stock shares (“preferred shares”), and thus include a redemption feature which represents an embedded call option exercisable at the Operating Partnership’s option beginning on October 1, 2026 at the redemption price of $50 per unit. The embedded call option has been bifurcated as a separate asset and is valued at fair value each reporting period with changes in its fair value reported in earnings. At each reporting date, management performs an analysis which compares the perpetual value of the preferred units to the value of the preferred units assuming the call option is exercised, with the value of the bifurcated call option as the difference between the two values. At December 31, 2022, the fair value of the Operating Partnership’s embedded derivative asset was $13.4 million. Auditing the Operating Partnership’s valuation of this bifurcated embedded derivative was challenging as the Operating Partnership uses a complex valuation methodology that incorporates various inputs, including trading data available on the respective MAA preferred shares, treasury rates and estimated coupon yields on preferred stock instruments from REITs with similar credit ratings, and includes significant assumptions about economic and market conditions with uncertain future outcomes.
How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design and tested the operating effectiveness of the Operating Partnership’s controls over the risks of material misstatement relating to the valuation of the bifurcated embedded derivative asset. For example, we tested controls over management’s review of the valuation model and the underlying inputs and assumptions noted above. To test the valuation of the embedded derivative asset, our audit procedures included, among others, assessing the methodology used in the valuation model and testing the significant assumptions discussed above. For example, we evaluated management’s assumptions by comparing the coupon rate that was used to discount future dividend payments from the preferred units to observable market data. We also assessed the completeness and accuracy of the underlying data used by the Operating Partnership in its valuation. In addition, we involved our valuation specialists to assist in our evaluation of the methodology used by the Operating Partnership and the underlying inputs and assumptions noted above.

/s/ Ernst & Young LLP

We have served as the Operating Partnership’s auditor since 2012.

Memphis, Tennessee

February 14, 2023

F-2

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Mid-America Apartment Communities, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Mid-America Apartment Communities, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 14, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Memphis, Tennessee

February 14, 2023

F-3

Mid-America Apartment Communities, Inc.

Consolidated B****alance Sheets

December 31, 2022 and 2021

(Dollars in thousands, except per share data)

December 31, 2022December 31, 2021
Assets
Real estate assets:
Land$2,008,364$1,977,813
Buildings and improvements and other12,841,94712,454,439
Development and capital improvements in progress332,035247,970
15,182,34614,680,222
Less: Accumulated depreciation(4,302,747)(3,848,161)
10,879,59910,832,061
Undeveloped land64,31224,015
Investment in real estate joint venture42,29042,827
Real estate assets, net10,986,20110,898,903
Cash and cash equivalents38,65954,302
Restricted cash22,41276,296
Other assets193,893255,681
Total assets$11,241,165$11,285,182
Liabilities and equity
Liabilities:
Unsecured notes payable$4,050,910$4,151,375
Secured notes payable363,993365,315
Accrued expenses and other liabilities615,843584,400
Total liabilities5,030,7465,101,090
Redeemable common stock20,67130,185
Shareholders’ equity:
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized;8.50% Series I Cumulative Redeemable Shares, liquidation preference $50.00per share, 867,846 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively99
Common stock, $0.01 par value per share, 145,000,000 shares authorized;115,480,336 and 115,336,876 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively (1)1,1521,151
Additional paid-in capital7,202,8347,230,956
Accumulated distributions in excess of net income(1,188,854)(1,255,807)
Accumulated other comprehensive loss(10,052)(11,132)
Total MAA shareholders’ equity6,005,0895,965,177
Noncontrolling interests - OP Units163,595165,116
Total Company’s shareholders’ equity6,168,6846,130,293
Noncontrolling interests - consolidated real estate entities21,06423,614
Total equity6,189,7486,153,907
Total liabilities and equity$11,241,165$11,285,182

(1)

Number of shares issued and outstanding represents total shares of common stock regardless of classification on the Consolidated Balance Sheets. The number of shares classified as redeemable common stock on the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021 are 136,429 and 131,559, respectively.

See accompanying notes to consolidated financial statements.

F-4

Mid-America Apartment Communities, Inc.

Consolidated Statem****ents of Operations

Years ended December 31, 2022, 2021 and 2020

(Dollars in thousands, except per share data)

202220212020
Revenues:
Rental and other property revenues$2,019,866$1,778,082$1,677,984
Expenses:
Operating expenses, excluding real estate taxes and insurance435,108404,288387,966
Real estate taxes and insurance288,586266,877252,505
Depreciation and amortization542,998533,433510,842
Total property operating expenses1,266,6921,204,5981,151,313
Property management expenses65,46355,73252,300
General and administrative expenses58,83352,88446,858
Interest expense154,747156,881167,562
Gain on sale of depreciable real estate assets(214,762)(220,428)(9)
Gain on sale of non-depreciable real estate assets(809)(811)(1,024)
Other non-operating expense (income)42,713(33,902)(4,857)
Income before income tax benefit (expense)646,989563,128265,841
Income tax benefit (expense)6,208(13,637)(3,327)
Income from continuing operations before real estate joint venture activity653,197549,491262,514
Income from real estate joint venture1,5791,2111,501
Net income654,776550,702264,015
Net income attributable to noncontrolling interests17,34016,9119,053
Net income available for shareholders637,436533,791254,962
Dividends to MAA Series I preferred shareholders3,6883,6883,688
Net income available for MAA common shareholders$633,748$530,103$251,274
Earnings per common share - basic:
Net income available for MAA common shareholders$5.49$4.62$2.20
Earnings per common share - diluted:
Net income available for MAA common shareholders$5.48$4.61$2.19

See accompanying notes to consolidated financial statements.

F-5

Mid-America Apartment Communities, Inc.

Consolidated Statements of Comprehensive Income

Years ended December 31, 2022, 2021 and 2020

(Dollars in thousands)

202220212020
Net income$654,776$550,702$264,015
Other comprehensive income:
Adjustment for net losses reclassified to net income from derivative instruments1,1141,1141,088
Total comprehensive income655,890551,816265,103
Less: Comprehensive income attributable to noncontrolling interests(17,374)(17,029)(9,091)
Comprehensive income attributable to MAA$638,516$534,787$256,012

See accompanying notes to consolidated financial statements.

F-6

Mid-America Apartment Communities, Inc.

Consolidated Stat****ements of Equity

Years ended December 31, 2022, 2021 and 2020

(Dollars and shares in thousands)

Mid-America Apartment Communities, Inc. ShareholdersNoncontrolling
Preferred StockCommon StockAdditionalAccumulated DistributionsAccumulated OtherNoncontrolling Interests -Interests - ConsolidatedRedeemable
SharesAmountSharesAmountPaid-In Capitalin Excess of Net IncomeComprehensive LossOperating PartnershipReal Estate EntitiesTotal EquityCommon Stock
EQUITY BALANCE DECEMBER 31, 2019868$9114,139$1,140$7,166,073$(1,085,479)$(13,178)$214,647$6,247$6,289,459$14,131
Net income—————254,962—9,053—264,015—
Other comprehensive income - derivative instruments——————1,05038—1,088—
Issuance and registration of common shares——1571(209)————(208)1,629
Shares repurchased and retired——(55)—(5,657)————(5,657)—
Exercise of stock options——1—71————71—
Shares issued in exchange for common units——10—502——(502)———
Redeemable stock fair market value adjustment—————363———363(363)
Adjustment for noncontrolling interests in Operating Partnership————(25)——25———
Amortization of unearned compensation————16,038————16,038—
Dividends on preferred stock—————(3,688)———(3,688)—
Dividends on common stock ($4.0250 per share)—————(460,340)———(460,340)—
Dividends on noncontrolling interests units ($4.0250 per unit)———————(16,334)—(16,334)—
Contributions from noncontrolling interest————————3,6013,601—
EQUITY BALANCE DECEMBER 31, 2020868$9114,252$1,141$7,176,793$(1,294,182)$(12,128)$206,927$9,848$6,088,408$15,397
Net income—————533,791—16,911—550,702—
Other comprehensive income - derivative instruments——————996118—1,114—
Issuance and registration of common shares——1472(431)————(429)1,657
Shares repurchased and retired——(64)—(9,043)————(9,043)—
Exercise of stock options——19—1,478————1,478—
Shares issued in exchange for common units——851843,284——(43,292)———
Redeemable stock fair market value adjustment—————(13,131)———(13,131)13,131
Adjustment for noncontrolling interests in Operating Partnership————723——(723)———
Amortization of unearned compensation————18,152————18,152—
Dividends on preferred stock—————(3,688)———(3,688)—
Dividends on common stock ($4.1625 per share)—————(478,597)———(478,597)—
Dividends on noncontrolling interests units ($4.1625 per unit)———————(14,825)—(14,825)—
Contributions from noncontrolling interest————————13,76613,766—
EQUITY BALANCE DECEMBER 31, 2021868$9115,205$1,151$7,230,956$(1,255,807)$(11,132)$165,116$23,614$6,153,907$30,185
Net income (loss)—————637,436—17,633(293)654,776—
Other comprehensive income - derivative instruments——————1,08034—1,114—
Issuance and registration of common shares——1691(124)————(123)1,687
Shares repurchased and retired——(71)—(14,043)————(14,043)—
Exercise of stock options————28————28—
Shares issued in exchange for common units——41—2,118——(2,118)———
Shares reclassified to liabilities——————————(2,148)
Redeemable stock fair market value adjustment—————9,053———9,053(9,053)
Adjustment for noncontrolling interests in Operating Partnership————1,199——(1,199)———
Amortization of unearned compensation————20,143————20,143—
Dividends on preferred stock—————(3,688)———(3,688)—
Dividends on common stock ($4.9875 per share)—————(575,848)———(575,848)—
Dividends on noncontrolling interests units ($4.9875 per unit)———————(15,871)—(15,871)—
Acquisition of noncontrolling interest————(37,443)———(5,627)(43,070)—
Contributions from noncontrolling interest————————3,3703,370—
EQUITY BALANCE DECEMBER 31, 2022868$9115,344$1,152$7,202,834$(1,188,854)$(10,052)$163,595$21,064$6,189,748$20,671

See accompanying notes to consolidated financial statements.

F-7

Mid-America Apartment Communities, Inc.

Consolidated Statem****ents of Cash Flows

Years ended December 31, 2022, 2021 and 2020

**(**Dollars in thousands)

202220212020
Cash flows from operating activities:
Net income$654,776$550,702$264,015
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization544,004534,415511,678
Gain on sale of depreciable real estate assets(214,762)(220,428)(9)
Gain on sale of non-depreciable real estate assets(809)(811)(1,024)
Loss (gain) on embedded derivative in preferred shares21,1074,560(2,562)
Stock compensation expense18,79816,66514,329
Amortization of debt issuance costs, discounts and premiums6,0645,6524,960
Loss (gain) on investments45,357(51,713)(5,608)
Net change in operating accounts and other operating activities(16,056)55,92538,170
Net cash provided by operating activities1,058,479894,967823,949
Cash flows from investing activities:
Purchases of real estate and other assets(271,428)(46,028)(56,965)
Capital improvements and other(296,176)(279,635)(225,506)
Development costs(172,124)(231,642)(201,435)
Distributions from real estate joint venture538497349
Contributions to affiliates(13,849)(4,669)(5,349)
Proceeds from real estate asset dispositions320,491293,0712,618
Proceeds from insurance recoveries27,31214,8201,557
Net cash used in investing activities(405,236)(253,586)(484,731)
Cash flows from financing activities:
Proceeds from revolving credit facility——255,000
Repayments of revolving credit facility——(255,000)
Net proceeds from (payments of) commercial paper20,000(172,000)102,000
Proceeds from notes payable—594,423447,593
Principal payments on notes payable(126,401)(467,153)(441,108)
Payment of deferred financing costs(5,516)(5,940)(4,217)
Distributions to noncontrolling interests(14,927)(15,497)(16,243)
Dividends paid on common shares(539,605)(470,401)(457,355)
Dividends paid on preferred shares(3,688)(3,688)(3,688)
Acquisition of noncontrolling interests(43,070)——
Net change in other financing activities(9,563)(6,142)(1,126)
Net cash used in financing activities(722,770)(546,398)(374,144)
Net (decrease) increase in cash, cash equivalents and restricted cash(69,527)94,983(34,926)
Cash, cash equivalents and restricted cash, beginning of period130,59835,61570,541
Cash, cash equivalents and restricted cash, end of period$61,071$130,598$35,615
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Consolidated Balance Sheets:
Reconciliation of cash, cash equivalents and restricted cash at period end:
Cash and cash equivalents$38,659$54,302$25,198
Restricted cash22,41276,29610,417
Total cash, cash equivalents and restricted cash$61,071$130,598$35,615
Supplemental information:
Interest paid$157,497$158,630$165,098
Income taxes paid3,4902,5432,549
Non-cash transactions:
Conversion of OP Units to shares of common stock$2,118$43,292$502
Accrued construction in progress16,48415,12319,625
Interest capitalized8,7289,7206,912

See accompanying notes to consolidated financial statements.

F-8

Mid-America Apartments, L.P.

Consolidated B****alance Sheets

December 31, 2022 and 2021

(Dollars in thousands)

December 31, 2022December 31, 2021
Assets
Real estate assets:
Land$2,008,364$1,977,813
Buildings and improvements and other12,841,94712,454,439
Development and capital improvements in progress332,035247,970
15,182,34614,680,222
Less: Accumulated depreciation(4,302,747)(3,848,161)
10,879,59910,832,061
Undeveloped land64,31224,015
Investment in real estate joint venture42,29042,827
Real estate assets, net10,986,20110,898,903
Cash and cash equivalents38,65954,302
Restricted cash22,41276,296
Other assets193,893255,681
Total assets$11,241,165$11,285,182
Liabilities and capital
Liabilities:
Unsecured notes payable$4,050,910$4,151,375
Secured notes payable363,993365,315
Accrued expenses and other liabilities615,843584,400
Due to general partner1919
Total liabilities5,030,7655,101,109
Redeemable common units20,67130,185
Operating Partnership capital:
Preferred units, 867,846 preferred units outstanding as of December 31, 2022 and December 31, 2021, respectively66,84066,840
General partner, 115,480,336 and 115,336,876 OP Units outstanding as of December 31, 2022 and December 31, 2021, respectively (1)5,948,4985,909,700
Limited partners, 3,164,933 and 3,206,118 OP Units outstanding as of December 31, 2022 and December 31, 2021, respectively (1)163,595165,116
Accumulated other comprehensive loss(10,268)(11,382)
Total operating partners’ capital6,168,6656,130,274
Noncontrolling interests - consolidated real estate entities21,06423,614
Total equity6,189,7296,153,888
Total liabilities and equity$11,241,165$11,285,182

(1)

Number of units outstanding represents total OP Units regardless of classification on the Consolidated Balance Sheets. The number of units classified as redeemable common units on the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021 are 136,429 and 131,559, respectively.

See accompanying notes to consolidated financial statements.

F-9

Mid-America Apartments, L.P.

Consolidated Statem****ents of Operations

Years ended December 31, 2022, 2021 and 2020

(Dollars in thousands, except per unit data)

202220212020
Revenues:
Rental and other property revenues$2,019,866$1,778,082$1,677,984
Expenses:
Operating expenses, excluding real estate taxes and insurance435,108404,288387,966
Real estate taxes and insurance288,586266,877252,505
Depreciation and amortization542,998533,433510,842
Total property operating expenses1,266,6921,204,5981,151,313
Property management expenses65,46355,73252,300
General and administrative expenses58,83352,88446,858
Interest expense154,747156,881167,562
Gain on sale of depreciable real estate assets(214,762)(220,428)(9)
Gain on sale of non-depreciable real estate assets(809)(811)(1,024)
Other non-operating expense (income)42,713(33,902)(4,857)
Income before income tax benefit (expense)646,989563,128265,841
Income tax benefit (expense)6,208(13,637)(3,327)
Income from continuing operations before real estate joint venture activity653,197549,491262,514
Income from real estate joint venture1,5791,2111,501
Net income654,776550,702264,015
Net loss attributable to noncontrolling interests(293)——
Net income available for MAALP unitholders655,069550,702264,015
Distributions to MAALP preferred unitholders3,6883,6883,688
Net income available for MAALP common unitholders$651,381$547,014$260,327
Earnings per common unit - basic:
Net income available for MAALP common unitholders$5.49$4.62$2.20
Earnings per common unit - diluted:
Net income available for MAALP common unitholders$5.48$4.61$2.20

See accompanying notes to consolidated financial statements.

F-10

Mid-America Apartments, L.P.

Consolidated Statements of Comprehensive Income

Years ended December 31, 2022, 2021 and 2020

(Dollars in thousands)

202220212020
Net income$654,776$550,702$264,015
Other comprehensive income:
Adjustment for net losses reclassified to net income from derivative instruments1,1141,1141,088
Total comprehensive income655,890551,816265,103
Add: Comprehensive loss attributable to noncontrolling interests293——
Comprehensive income attributable to MAALP$656,183$551,816$265,103

See accompanying notes to consolidated financial statements.

F-11

Mid-America Apartments, L.P.

Consolidated Statements of Changes in Capital

Years ended December 31, 2022, 2021 and 2020

(Dollars in thousands)

Mid-America Apartments, L.P. UnitholdersNoncontrolling
Limited PartnerGeneral PartnerPreferred UnitsAccumulated Other Comprehensive LossInterests - Consolidated Real Estate EntitiesTotal Partnership CapitalRedeemable Common Units
CAPITAL BALANCE DECEMBER 31, 2019$214,647$6,015,290$66,840$(13,584)$6,247$6,289,440$14,131
Net income9,053251,2743,688——264,015—
Other comprehensive loss - derivative instruments———1,088—1,088—
Issuance of units—(208)———(208)1,629
Units repurchased and retired—(5,657)———(5,657)—
Exercise of unit options—71———71—
General partner units issued in exchange for limited partner units(502)502—————
Redeemable units fair market value adjustment—363———363(363)
Adjustment for limited partners’ capital at redemption value63(63)—————
Amortization of unearned compensation—16,038———16,038—
Distributions to preferred unitholders——(3,688)——(3,688)—
Distributions to common unitholders ($4.0250 per unit)(16,334)(460,340)———(476,674)—
Contribution from noncontrolling interest————3,6013,601—
CAPITAL BALANCE DECEMBER 31, 2020$206,927$5,817,270$66,840$(12,496)$9,848$6,088,389$15,397
Net income16,911530,1033,688——550,702—
Other comprehensive income - derivative instruments———1,114—1,114—
Issuance of units—(429)———(429)1,657
Units repurchased and retired—(9,043)———(9,043)—
Exercise of unit options—1,478———1,478—
General partner units issued in exchange for limited partner units(43,292)43,292—————
Redeemable units fair market value adjustment—(13,131)———(13,131)13,131
Adjustment for limited partners’ capital at redemption value(605)605—————
Amortization of unearned compensation—18,152———18,152—
Distributions to preferred unitholders——(3,688)——(3,688)—
Distributions to common unitholders ($4.1625 per unit)(14,825)(478,597)———(493,422)—
Contribution from noncontrolling interest————13,76613,766—
CAPITAL BALANCE DECEMBER 31, 2021$165,116$5,909,700$66,840$(11,382)$23,614$6,153,888$30,185
Net income (loss)17,633633,7483,688—(293)654,776—
Other comprehensive income - derivative instruments———1,114—1,114—
Issuance of units—(123)———(123)1,687
Units repurchased and retired—(14,043)———(14,043)—
Exercise of unit options—28———28—
General partner units issued in exchange for limited partner units(2,118)2,118—————
Shares reclassified to liabilities——————(2,148)
Redeemable units fair market value adjustment—9,053———9,053(9,053)
Adjustment for limited partners’ capital at redemption value(1,165)1,165—————
Amortization of unearned compensation—20,143———20,143—
Distributions to preferred unitholders——(3,688)——(3,688)—
Distributions to common unitholders ($4.9875 per unit)(15,871)(575,848)———(591,719)—
Acquisition of noncontrolling interest—(37,443)——(5,627)(43,070)—
Contribution from noncontrolling interest————3,3703,370—
CAPITAL BALANCE DECEMBER 31, 2022$163,595$5,948,498$66,840$(10,268)$21,064$6,189,729$20,671

See accompanying notes to consolidated financial statements.

F-12

Mid-America Apartments, L.P.

Consolidated Statem****ents of Cash Flows

Years ended December 31, 2022, 2021 and 2020

(Dollars in thousands)

202220212020
Cash flows from operating activities:
Net income$654,776$550,702$264,015
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization544,004534,415511,678
Gain on sale of depreciable real estate assets(214,762)(220,428)(9)
Gain on sale of non-depreciable real estate assets(809)(811)(1,024)
Loss (gain) on embedded derivative in preferred shares21,1074,560(2,562)
Stock compensation expense18,79816,66514,329
Amortization of debt issuance costs, discounts and premiums6,0645,6524,960
Loss (gain) on investments45,357(51,713)(5,608)
Net change in operating accounts and other operating activities(16,056)55,92538,170
Net cash provided by operating activities1,058,479894,967823,949
Cash flows from investing activities:
Purchases of real estate and other assets(271,428)(46,028)(56,965)
Capital improvements and other(296,176)(279,635)(225,506)
Development costs(172,124)(231,642)(201,435)
Distributions from real estate joint venture538497349
Contributions to affiliates(13,849)(4,669)(5,349)
Proceeds from real estate asset dispositions320,491293,0712,618
Proceeds from insurance recoveries27,31214,8201,557
Net cash used in investing activities(405,236)(253,586)(484,731)
Cash flows from financing activities:
Proceeds from revolving credit facility——255,000
Repayments of revolving credit facility——(255,000)
Net proceeds from (payments of) commercial paper20,000(172,000)102,000
Proceeds from notes payable—594,423447,593
Principal payments on notes payable(126,401)(467,153)(441,108)
Payment of deferred financing costs(5,516)(5,940)(4,217)
Distributions paid on common units(554,532)(485,898)(473,598)
Distributions paid on preferred units(3,688)(3,688)(3,688)
Acquisition of noncontrolling interests(43,070)——
Net change in other financing activities(9,563)(6,142)(1,126)
Net cash used in financing activities(722,770)(546,398)(374,144)
Net (decrease) increase in cash, cash equivalents and restricted cash(69,527)94,983(34,926)
Cash, cash equivalents and restricted cash, beginning of period130,59835,61570,541
Cash, cash equivalents and restricted cash, end of period$61,071$130,598$35,615
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Consolidated Balance Sheets:
Reconciliation of cash, cash equivalents and restricted cash at period end:
Cash and cash equivalents$38,659$54,302$25,198
Restricted cash22,41276,29610,417
Total cash, cash equivalents and restricted cash$61,071$130,598$35,615
Supplemental information:
Interest paid$157,497$158,630$165,098
Income taxes paid3,4902,5432,549
Non-cash transactions:
Accrued construction in progress$16,484$15,123$19,625
Interest capitalized8,7289,7206,912

See accompanying notes to consolidated financial statements.

F-13

Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.

Notes to Consolidated Financial Statements

Years ended December 31, 2022, 2021 and 2020

1.

Organization and Summary of Significant Accounting Policies

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

As of December 31, 2022, MAA owned 115,480,336 OP Units (or 97.3% of the total number of OP Units). MAA conducts substantially all of its business and holds substantially all of its assets, directly or indirectly, through the Operating Partnership, and by virtue of its ownership of the OP Units and being the Operating Partnership’s sole general partner, MAA has the ability to control all of the day-to-day operations of the Operating Partnership.

Management believes combining the notes to the consolidated financial statements of MAA and the Operating Partnership results in the following benefits:

enhances a readers’ understanding of MAA and the Operating Partnership by enabling the reader to view the business as a whole in the same manner that management views and operates the business;

eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both MAA and the Operating Partnership; and

creates time and cost efficiencies through the preparation of one combined set of notes instead of two separate sets.

MAA, an S&P 500 company, is a multifamily-focused, self-administered and self-managed real estate investment trust, or REIT. Management operates MAA and the Operating Partnership as one business. The management of the Company is comprised of individuals who are officers of MAA and employees of the Operating Partnership. Management believes it is important to understand the few differences between MAA and the Operating Partnership in the context of how MAA and the Operating Partnership operate as a consolidated company. MAA and the Operating Partnership are structured as an umbrella partnership REIT, or UPREIT. MAA’s interest in the Operating Partnership entitles MAA to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to MAA’s percentage interest therein and entitles MAA to vote on substantially all matters requiring a vote of the partners. MAA’s only material asset is its ownership of limited partnership interests in the Operating Partnership (other than cash held by MAA from time to time); therefore, MAA’s primary function is acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership from time to time. The Operating Partnership holds, directly or indirectly, all of the Company’s real estate assets. Except for net proceeds from public equity issuances by MAA, which are contributed to the Operating Partnership in exchange for limited partnership interests, the Operating Partnership generates the capital required by the business through the Operating Partnership’s operations, direct or indirect incurrence of indebtedness and issuance of OP Units.

The presentations of MAA’s shareholders’ equity and the Operating Partnership’s capital are the principal areas of difference between the consolidated financial statements of MAA and those of the Operating Partnership. MAA’s shareholders’ equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative distributions, noncontrolling interests, treasury shares, accumulated other comprehensive income or loss and redeemable common stock. The Operating Partnership’s capital may include common capital and preferred capital of the general partner (MAA), limited partners’ common capital and preferred capital, noncontrolling interests, accumulated other comprehensive income or loss and redeemable common units. Holders of OP Units (other than MAA) may require the Operating Partnership to redeem their OP Units from time to time, in which case the Operating Partnership may, at its option, pay the redemption price either in cash (in an amount per OP Unit equal, in general, to the average closing price of MAA’s common stock on the New York Stock Exchange, or NYSE, over a specified period prior to the redemption date) or by delivering one share of MAA’s common stock (subject to adjustment under specified circumstances) for each OP Unit so redeemed.

F-14

Organization of Mid-America Apartment Communities, Inc.

The Company owns, operates, acquires and selectively develops apartment communities primarily located in the Southeast, Southwest and Mid-Atlantic regions of the U.S. As of December 31, 2022, the Company owned and operated 290 apartment communities (which does not include development communities under construction) through the Operating Partnership and its subsidiaries and had an ownership interest in one apartment community through an unconsolidated real estate joint venture. As of December 31, 2022, the Company also had six development communities under construction, totaling 2,310 apartment units once complete. Total expected costs for the six development projects are $728.7 million, of which $291.7 million had been incurred through December 31, 2022. The Company expects to complete two of these developments in 2023, two in 2024 and two in 2025. As of December 31, 2022, 34 of the Company’s apartment communities included retail components. The Company’s apartment communities, including development communities under construction, were located across 16 states and the District of Columbia as of December 31, 2022.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared by the Company’s management in accordance with U.S. generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or the SEC. The consolidated financial statements of MAA presented herein include the accounts of MAA, the Operating Partnership and all other subsidiaries in which MAA has a controlling financial interest. MAA owns, directly or indirectly, approximately 80% to 100% of all consolidated subsidiaries, including the Operating Partnership. In management’s opinion, all adjustments necessary for a fair presentation of the consolidated financial statements have been included, and all such adjustments were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company invests in entities that may qualify as variable interest entities, or VIEs, and MAALP is considered a VIE. A VIE is a legal entity in which the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack the power to direct the activities of a legal entity as well as the obligation to absorb its expected losses or the right to receive its expected residual returns. MAALP is classified as a VIE because the limited partners lack substantive kick-out rights and substantive participating rights. The Company consolidates all VIEs for which it is the primary beneficiary and uses the equity method to account for investments that qualify as VIEs but for which it is not the primary beneficiary. In determining whether the Company is the primary beneficiary of a VIE, management considers both qualitative and quantitative factors, including, but not limited to, those activities that most significantly impact the VIE’s economic performance and which party controls such activities. The Company uses the equity method of accounting for its investments in entities for which the Company exercises significant influence but does not have the ability to exercise control. The factors considered in determining whether the Company has the ability to exercise significant influence or control include ownership of voting interests and participatory rights of investors (see “Investments in Unconsolidated Affiliates” below).

Noncontrolling Interests

As of December 31, 2022, the Company had two types of noncontrolling interests with respect to its consolidated subsidiaries: (1) noncontrolling interests related to the common unitholders of its Operating Partnership; and (2) noncontrolling interests related to its consolidated real estate entities. The noncontrolling interests relating to the limited partnership interests in the Operating Partnership are owned by the holders of the Class A OP Units. MAA is the sole general partner of the Operating Partnership and holds all of the outstanding Class B OP Units. Net income (after allocations to preferred ownership interests) is allocated to MAA and the noncontrolling interests based on their respective ownership percentages of the Operating Partnership. Issuance of additional Class A OP Units or Class B OP Units changes the ownership percentage of both the noncontrolling interests and MAA. The issuance of Class B OP Units generally occurs when MAA issues common stock and the issuance proceeds are contributed to the Operating Partnership in exchange for Class B OP Units equal to the number of shares of MAA’s common stock issued. At each reporting period, the allocation between total MAA shareholders’ equity and noncontrolling interests is adjusted to account for the change in the respective percentage ownership of the underlying equity of the Operating Partnership. MAA’s Board of Directors established economic rights in respect to each Class A OP Unit that were equivalent to the economic rights in respect to each share of MAA common stock. See Note 9 for additional details.

The noncontrolling interests relating to the Company’s five consolidated real estate entities are owned by private real estate companies that are generally responsible for the development, construction and lease-up of the apartment communities that are owned through the consolidated real estate entities with a noncontrolling interest. The entities were determined to be VIE’s with the Company designated as the primary beneficiary. As a result, the accounts of the entities are consolidated by the Company. As of December 31, 2022, the consolidated assets of the Company’s consolidated real estate entities with a noncontrolling interest were $279.6 million, and consolidated liabilities were $14.5 million. As of December 31, 2021, the consolidated assets of the Company’s consolidated real estate entities with a noncontrolling interest were $252.8 million, and consolidated liabilities were $15.9 million. During the year ended December 31, 2022, the Company paid $43.1 million to acquire the noncontrolling interest of one consolidated real estate entity.

F-15

Real Estate Assets and Depreciation and Amortization

Real estate assets are carried at depreciated cost and consist of land, buildings and improvements and other, and development and capital improvements in progress (see “Development Costs” below). Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and recurring capital replacements are capitalized and depreciated over their estimated useful lives. Recurring capital replacements typically include scheduled carpet replacement, new roofs, HVAC units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. In addition to these costs, the Company also capitalizes salary costs directly identifiable with renovation work. These expenditures extend the useful life of the property and increase the property’s fair market value. The cost of interior painting and blinds are typically expensed as incurred.

Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, which range from three to 40 years. The line item “Buildings and improvements and other” in the Consolidated Balance Sheets includes land improvements and buildings, which have a useful life ranging from five to 40 years, as well as furniture, fixtures and equipment, which have a useful life of three to five years.

Development Costs

Development projects and the related carrying costs, including interest, property taxes, insurance and allocated direct development salary costs during the construction period, are capitalized and reported in the accompanying Consolidated Balance Sheets as “Development and capital improvements in progress” during the construction period. Interest is capitalized in accordance with accounting standards governing the capitalization of interest. Upon completion and certification for occupancy of individual buildings or floors within a development, amounts representing the completed portion of total estimated development costs for the project are transferred to “Buildings and improvements and other” as real estate held for investment. Capitalization of interest, property taxes, insurance and allocated direct development salary costs cease upon the transfer. The assets are depreciated over their estimated useful lives. Total capitalized costs (including capitalized interest, property taxes, insurance and salaries) during the years ended December 31, 2022, 2021 and 2020 were $14.4 million, $16.6 million and $12.7 million, respectively. Certain costs associated with the lease-up of development projects, including cost of model units, furnishings and signs, are capitalized and amortized over their respective estimated useful lives. All other costs relating to renting development projects are expensed as incurred.

Acquisition of Real Estate Assets

In accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, most acquisitions of operating properties qualify as an asset acquisition. Accordingly, the cost of the real estate acquired, including acquisition costs, is allocated to the acquired tangible assets, consisting of land, buildings and improvements and other, and identified intangible assets, consisting of the value of in-place leases and other contracts, on a relative fair value basis. Acquisition costs include appraisal fees, title fees, broker fees and other legal costs to acquire the property.

The purchase price of an acquired property is allocated based on the relative fair value of the individual components as a proportion of the total assets acquired. The Company allocates the cost of the tangible assets of an acquired property by valuing the building as if it were vacant, based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a building using methods similar to those used by independent appraisers. These methods include using stabilized net operating income, or NOI, and market specific capitalization and discount rates. The Company allocates the cost of land based on its relative fair value if acquired with a multifamily community or records the value based on the purchase price paid if acquired separately. In allocating the cost of identified intangible assets of an acquired property, the in-place leases are valued based on current rent rates and time and cost to lease a unit. Management concluded that the residential leases acquired in connection with each of its property acquisitions approximate at-market rates since the residential lease terms generally do not extend beyond one year.

For residential leases, the fair value of the in-place leases and resident relationships is amortized over the remaining term of the resident leases. For retail and commercial leases, the fair value of in-place leases and tenant relationships is amortized over the remaining term of the leases. The net amount of these lease intangibles included in “Other assets” were negligible as of December 31, 2022 and 2021.

Impairment of Long-lived Assets

The Company accounts for long-lived assets in accordance with the provisions of accounting standards for the impairment or disposal of long-lived assets. Management periodically evaluates long-lived assets, including investments in real estate, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions and legal factors. Long-lived assets, such as real estate assets, equipment and purchased intangibles subject to amortization, are 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 estimated future undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the Consolidated Balance Sheets, are reported at the lower of the carrying amount or fair value less costs

F-16

to sell and are no longer depreciated. The assets and liabilities of a disposed group or a property classified as held for sale are presented separately in the appropriate asset and liability sections of the Consolidated Balance Sheets.

Undeveloped Land

Undeveloped land includes sites intended for future multifamily developments and sites for future commercial development, which are carried at the lower of cost or fair value in accordance with GAAP. Any costs incurred prior to commencement of pre-development activities are expensed as incurred.

Cash and Cash Equivalents

Investments in money market accounts and certificates of deposit with original maturities of three months or less are considered to be cash equivalents.

Restricted Cash

Restricted cash consists of security deposits required to be held separately, escrow deposits held by lenders for property taxes, insurance, debt service and replacement reserves, and cash held for exchanges under Section 1031(b) of the Internal Revenue Code of 1986, as amended, or the Code. Section 1031(b) exchanges are presented within “Cash, cash equivalents and restricted cash” in the accompanying Consolidated Statements of Cash Flows.

Investments in Unconsolidated Affiliates

The Company uses the equity method to account for its investments in a real estate joint venture and five technology-focused limited partnerships that each qualify as a VIE. Management determined the Company is not the primary beneficiary in any of these investments but does have the ability to exert significant influence over the operations and financial policies of the real estate joint venture and considers its investments in the limited partnerships to be more than minor. The Company’s investment in the real estate joint venture was $42.3 million and $42.8 million as of December 31, 2022 and 2021, respectively.

The Company accounts for its investments in the technology-focused limited partnerships on a three month lag due to the timing the limited partnerships’ financial information is made available to the Company. As of December 31, 2022 and 2021, the Company’s investments in the limited partnerships were $36.7 million and $79.4 million, respectively, and are included in “Other assets” in the accompanying Consolidated Balance Sheets, with any related gains and losses, including unrealized gains and losses, recognized in “Other non-operating expense (income)” in the accompanying Consolidated Statements of Operations. The decrease in the Company’s investments in the limited partnerships was driven by the recognition of unrealized losses, which were primarily a result of a decrease in the valuation of an underlying investment that recently became publicly traded and the distribution of publicly traded marketable securities. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $35.4 million of expense, $51.7 million of income and $5.6 million of income, respectively, from its investments in the limited partnerships. As of December 31, 2022, the Company was committed to make additional capital contributions totaling $45.2 million if and when called by the general partners of the limited partnerships.

Other Assets

Other assets consist primarily of receivables, the value of derivative contracts, right-of-use lease assets, investments in technology-focused limited partnerships, marketable equity securities, deferred rental concessions, deferred financing costs relating to the revolving credit facility and commercial paper program and other prepaid expenses. Also included in other assets are the fair market value of in-place leases and resident relationships, net of accumulated amortization.

Marketable Equity Securities

During the year ended December 31, 2022, two of the technology-focused limited partnerships that are accounted for as investments in unconsolidated affiliates distributed publicly traded marketable equity securities to the Company and the other limited partners. The Company’s investment in marketable equity securities is measured at fair value based on the quoted share price of the securities and is included in “Other assets” in the accompanying Consolidated Balance Sheets, with any related gains and losses, including unrealized gains and losses, recognized in “Other non-operating expense (income)” in the accompanying Consolidated Statements of Operations. As of December 31, 2022, the Company’s investment in the marketable equity securities was $8.0 million. During the year ended December 31, 2022, the Company recognized $10.0 million of expense from its investment in marketable equity securities.

F-17

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of accrued dividends payable, accrued real estate taxes, unearned income, right-of-use lease liabilities, accrued payroll, security deposits, accrued interest payable, general liability and workers compensation insurance, accrued construction in progress, net deferred tax liability (see Note 7), accrued loss contingencies (see Note 11), accounts payable and other accrued expenses. The following table reflects a detail of the Company’s “Accrued expenses and other liabilities” balances as of December 31, 2022 and 2021 (dollars in thousands):

December 31, 2022December 31, 2021
Accrued dividends payable$166,103$128,916
Accrued real estate taxes135,510144,326
Unearned income65,12959,937
Right-of-use lease liabilities28,67130,251
Accrued payroll27,66727,092
Security deposits26,53324,660
Accrued interest payable25,13226,331
General liability and workers compensation insurance22,62423,851
Accrued construction in progress16,48415,123
Accounts payable, accrued expenses and other101,990103,913
Total$615,843$584,400

Loss Contingencies

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

The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or range of loss is reasonably estimable, often involves a series of complex judgments about future events. Among the factors considered in this assessment, are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if reasonably estimable), the progress of the matter, existing law and precedent, the opinions or views of legal counsel and other advisers, management’s experience in similar matters, the facts available to management at the time of assessment, and how the Company intends to respond, or has responded, to the proceeding or claim. Management’s assessment of these factors may change over time as individual proceedings or claims progress. For matters where management is not currently able to reasonably estimate a range of reasonably possible loss, the factors that have contributed to this determination include the following: (i) the damages sought are indeterminate; (ii) the proceedings are in the early stages; (iii) the matters involve novel or unsettled legal theories or a large or uncertain number of actual or potential cases or parties; and/or (iv) discussions with the parties in matters that are ultimately expected to be resolved through negotiation and settlement have not reached the point where management believes a reasonable estimate of loss, or range of loss, can be made. The Company believes that there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss or business impact, if any. See Note 11 for additional disclosures regarding loss contingencies.

Equity Forward Sale Agreements

MAA has entered into, and in the future may enter into, forward sale agreements for the sale and issuance of shares of its common stock, either through an underwritten public offering or through MAA’s at-the-market share offering program, or ATM program. When MAA enters into a forward sale agreement, the contract requires MAA to sell its shares to a counterparty at a predetermined price at a future date, which price is subject to adjustment during the term of the contract for MAA’s anticipated dividends as well as for a daily interest factor that varies with changes in the federal funds rate. MAA generally has the ability to determine the dates and method of settlement (i.e., gross physical settlement, net share settlement or cash settlement), subject to certain conditions and the right of the counterparty to accelerate settlement under certain circumstances. The Company accounts for the shares of MAA’s common stock reserved for issuance upon settlement as equity in accordance with ASC Topic 815-40, Contracts in Entity’s Own Equity, which permits equity classification when a contract is considered indexed to its own stock and the contract requires or permits the issuing entity to settle the contract in shares (either physically or net in shares).

The guidance in ASC Topic 815-40 establishes a two-step process for evaluating whether an equity-linked financial instrument is considered indexed to its own stock by evaluating the instrument’s contingent exercise provisions and the instrument’s settlement provisions. In evaluating the forward sale agreements MAA has entered into, management concluded that (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market of MAA’s common stock price; and (ii) none of the settlement provisions preclude the agreements from being indexed to MAA’s common stock.

F-18

Before the issuance of shares of MAA’s common stock, upon physical or net share settlement of the forward sale agreements, MAA expects the shares issuable upon settlement of the forward sale agreements will be reflected in its diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of common stock that would be issued upon full physical settlement of the forward sale agreements over the number of shares of common stock that could be purchased by MAA in the open market (based on the average market price during the period) using the proceeds to be received upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). When MAA physically or net share settles a forward sale agreement, the delivery of shares of common stock would result in an increase in the number of weighted average common shares outstanding and dilution to basic earnings per share. See Note 8 for additional disclosures regarding equity forward sale agreements.

Revenue Recognition

The Company primarily leases multifamily residential apartments to residents under operating leases generally due on a monthly basis with terms of approximately one year or less. Rental revenues are recognized in accordance with ASC Topic 842, Leases, using a method that represents a straight-line basis over the term of the lease. In addition, in circumstances where a lease incentive is provided to residents, the incentive is recognized as a reduction of rental revenues on a straight-line basis over the reasonably assured lease term. Rental revenues represent approximately 94% of the Company’s total revenues and include gross rents charged less adjustments for concessions and bad debt. Approximately 5% of the Company’s total revenues represent non-lease reimbursable property revenues from its residents for utility reimbursements, which are generally recognized and due on a monthly basis as residents obtain control of the service over the term of the lease. The remaining 1% of the Company’s total revenues represents other non-lease property revenues primarily driven by nonrefundable fees and commissions which are recognized when earned.

In accordance with ASC Topic 842, rental revenues and non-lease reimbursable property revenues meet the criteria to be aggregated into a single lease component and are reported on a combined basis in the line item “Rental revenues,” as presented in the disaggregation of the Company’s revenues in Note 13. Other non-lease property revenues are accounted for in accordance with ASC Topic 606, Revenue from Contracts with Customers, which requires revenue recognized outside of the scope of ASC Topic 842 to be recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. Other non-lease property revenues are reported in the line item “Other property revenues”, as presented in the disaggregation of the Company’s revenues in Note 13.

Rental Costs

Costs associated with rental activities are expensed as incurred and include advertising expenses, which were $24.4 million, $23.9 million and $23.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Leases

The Company is the lessee under certain ground, office, equipment and other operational leases, all of which are accounted for as operating leases in accordance with ASC Topic 842. The Company recognizes a right-of-use asset for the right to use the underlying asset for all leases where the Company is the lessee with terms of more than twelve months, and a related lease liability for the obligation to make lease payments. Expenses related to leases determined to be operating leases are recognized on a straight-line basis. As of December 31, 2022 and 2021, right-of-use assets recorded within “Other assets” totaled $44.6 million and $47.0 million, respectively, and related lease liabilities recorded within “Accrued expenses and other liabilities” totaled $28.7 million and $30.3 million, respectively, in the Consolidated Balance Sheets. Lease expense recognized for the years ended December 31, 2022, 2021 and 2020 was immaterial to the Company. Cash paid for amounts included in the measurement of operating lease liabilities during the years ended December 31, 2022 and 2021 was also immaterial. See Note 11 for additional disclosures regarding leases.

Income Taxes

MAA has elected to be taxed as a REIT under the Code and intends to continue to operate in such a manner. The current and continuing qualification as a REIT depends on MAA’s ability to meet the various requirements imposed by the Code, which are related to organizational structure, distribution levels, diversity of stock ownership and certain requirements with respect to the nature and diversity of MAA’s assets and sources of MAA’s gross income. As long as MAA qualifies for taxation as a REIT, it will generally not be subject to U.S. federal corporate income tax on its taxable income that is currently distributed to shareholders. This treatment substantially eliminates the “double taxation” (i.e., income taxation at both the corporate and shareholder levels) that generally results from an investment in a corporation. Even if MAA qualifies as a REIT, MAA may be subject to U.S. federal income and excise taxes in certain situations, such as if MAA fails to distribute timely all of its taxable income with respect to a taxable year. MAA also will be required to pay a 100% tax on any net income on non-arm’s length transactions between MAA and one of its taxable REIT subsidiaries, or TRSs. Furthermore, MAA and its shareholders may be subject to state or local taxation in various state or local jurisdictions, including those in which MAA transacts business or its shareholders reside, and the applicable state and local tax laws may not conform to the U.S. federal income tax treatment. Any taxes imposed on MAA would reduce its operating cash flows and net income.

F-19

The Company has elected TRS status for certain of its corporate subsidiaries. As a result, the TRSs incur both federal and state income taxes on any taxable income after consideration of any net operating losses. The TRSs use the liability method of accounting for income taxes. Deferred income tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment date. A valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax assets will not be realized.

The Company recognizes liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement. See Note 7 for additional disclosures regarding income taxes.

Fair Value Measurements

The Company applies the guidance in ASC Topic 820, Fair Value Measurements and Disclosures, to the valuation of real estate assets recorded at fair value, to its impairment valuation analysis of real estate assets and to its valuation and disclosure of the fair value of financial instruments, which primarily consists of marketable equity securities, indebtedness and derivative instruments. Fair value disclosures required under ASC Topic 820 as well as the Company’s derivative accounting policies are summarized in Note 6 utilizing the following hierarchy:

Level 1 - Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the assets or liability.

Use of Estimates

Management 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 amounts of revenues and expenses to prepare these financial statements and notes in conformity with GAAP. Actual results could differ from those estimates.

F-20

2.

Earnings per Common Share of MAA

Basic earnings per share is computed using the two-class method by dividing net income available to MAA common shareholders by the weighted average number of common shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share. Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis with diluted earnings per share being the more dilutive of the treasury stock or two-class methods. OP Units are included in dilutive earnings per share calculations when the units are dilutive to earnings per share.

For the years ended December 31, 2022, 2021 and 2020, MAA’s diluted earnings per share was computed using the treasury stock method as presented below (dollars and shares in thousands, except per share amounts):

Calculation of Earnings per common share - basic202220212020
Net income$654,776$550,702$264,015
Net income attributable to noncontrolling interests(17,340)(16,911)(9,053)
Unvested restricted shares (allocation of earnings)(438)(539)(338)
Dividends to MAA Series I preferred shareholders(3,688)(3,688)(3,688)
Net income available for MAA common shareholders, adjusted$633,310$529,564$250,936
Weighted average common shares - basic115,344114,717114,188
Earnings per common share - basic$5.49$4.62$2.20
Calculation of Earnings per common share - diluted
Net income$654,776$550,702$264,015
Net income attributable to noncontrolling interests (1)(17,340)(16,911)(9,053)
Dividends to MAA Series I preferred shareholders(3,688)(3,688)(3,688)
Net income available for MAA common shareholders, adjusted$633,748$530,103$251,274
Weighted average common shares - basic115,344114,717114,188
Effect of dilutive securities239322312
Weighted average common shares - diluted115,583115,039114,500
Earnings per common share - diluted$5.48$4.61$2.19

(1)

For the years ended December 31, 2022, 2021 and 2020, 3.2 million, 3.7 million and 4.1 million OP Units and their related income are not included in the diluted earnings per share calculations as they are not dilutive.

F-21

3.

Earnings per OP Unit of MAALP

Basic earnings per common unit is computed using the two-class method by dividing net income available for common unitholders by the weighted average number of OP Units outstanding during the period. All outstanding unvested restricted unit awards contain rights to non-forfeitable distributions and participate in undistributed earnings with common unitholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per common unit. Diluted earnings per common unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units. Both the unvested restricted unit awards and other potentially dilutive common units, and the related impact to earnings, are considered when calculating earnings per common unit on a diluted basis with diluted earnings per common unit being the more dilutive of the treasury stock or two-class methods.

For the years ended December 31, 2022, 2021 and 2020, MAALP’s diluted earnings per common unit was computed using the treasury stock method as presented below (dollars and units in thousands, except per unit amounts):

Calculation of Earnings per common unit - basic202220212020
Net income$654,776$550,702$264,015
Net loss attributable to noncontrolling interests293——
Unvested restricted units (allocation of earnings)(438)(539)(338)
Distributions to MAALP preferred unitholders(3,688)(3,688)(3,688)
Net income available for MAALP common unitholders, adjusted$650,943$546,475$259,989
Weighted average common units - basic118,538118,400118,248
Earnings per common unit - basic$5.49$4.62$2.20
Calculation of Earnings per common unit - diluted
Net income$654,776$550,702$264,015
Net loss attributable to noncontrolling interests293——
Distributions to MAALP preferred unitholders(3,688)(3,688)(3,688)
Net income available for MAALP common unitholders, adjusted$651,381$547,014$260,327
Weighted average common units - basic118,538118,400118,248
Effect of dilutive securities239322312
Weighted average common units - diluted118,777118,722118,560
Earnings per common unit - diluted$5.48$4.61$2.20

4.

Stock-Based Compensation

Overview

MAA accounts for its stock-based employee compensation plans in accordance with accounting standards governing stock-based compensation. These standards require an entity to measure the cost of employee services received in exchange for an award of an equity instrument based on the award’s fair value on the grant date and recognize the cost over the period during which the employee is required to provide service in exchange for the award, which is generally the vesting period. Any liability awards issued are remeasured at each reporting period.

MAA’s stock compensation plans consist of a number of incentives provided to attract and retain independent directors, executive officers and key employees. Incentives are currently granted under the Second Amended and Restated 2013 Stock Incentive Plan, or the Stock Plan, which was approved at the 2018 annual meeting of MAA shareholders. The Stock Plan allows for the grant of restricted stock and stock options up to 2,000,000 shares. MAA believes that such awards better align the interests of its employees with those of its shareholders.

Compensation expense is generally recognized for service based restricted stock awards using the straight-line method over the vesting period of the shares regardless of cliff or ratable vesting distinctions. Compensation expense for market and performance based restricted stock awards is generally recognized using the accelerated amortization method with each vesting tranche valued as a separate award, with a separate vesting date, consistent with the estimated value of the award at each period end. Additionally, compensation expense is adjusted for actual forfeitures for all awards in the period that the award was forfeited. Compensation expense for stock options is generally recognized on a straight-line basis over the requisite service period. MAA presents stock compensation expense in the Consolidated Statements of Operations in “General and administrative expenses”.

F-22

Total compensation expense under the Stock Plan was $20.1 million, $18.2 million and $16.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Of these amounts, total compensation expense capitalized was $1.3 million, $1.5 million and $1.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, the total unrecognized compensation expense was $12.1 million. This cost is expected to be recognized over the remaining weighted average period of 0.8 years. Total cash paid for the settlement of plan shares totaled $14.0 million, $9.0 million and $5.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Information concerning grants under the Stock Plan is provided below.

Restricted Stock

In general, restricted stock is earned based on either a service condition, market condition, performance condition or a combination thereof and generally vests ratably over a period from the grant date up to 5 years. Service based awards are earned when the employee remains employed over the requisite service period and are valued on the grant date based upon the market price of MAA common stock on the date of grant. Market based awards are earned when MAA reaches a specified stock price or specified return on the stock price (price appreciation plus dividends) and are valued on the grant date using a Monte Carlo simulation. Performance based awards are earned when MAA reaches certain operational goals, such as funds available for distribution targets, and are valued based upon the market price of MAA common stock on the date of grant as well as the probability of reaching the stated targets. MAA remeasures the fair value of the performance based awards each balance sheet date with adjustments made on a cumulative basis until the award is settled and the final compensation is known. The weighted average grant date fair value per share of restricted stock awards granted during the years ended December 31, 2022, 2021 and 2020, was $144.77, $88.22 and $100.53, respectively.

The following is a summary of the key assumptions used in the valuation calculations for market based awards granted during the years ended December 31, 2022, 2021 and 2020:

202220212020
Risk free rate1.010%0.161%1.603%
Dividend yield2.024%3.341%3.070%
Volatility25.84%28.04%17.02%
Requisite service period3 years3 years3 years

The risk free rate was based on a zero coupon risk-free rate. The dividend yield was based on the closing stock price of MAA stock on the date of grant. Volatility for MAA was obtained by using a blend of both historical and implied volatility calculations. Historical volatility was based on the standard deviation of daily total continuous returns, and implied volatility was based on the trailing month average of daily implied volatilities interpolating between the volatilities implied by stock call option contracts that were closest to the terms shown and closest to the money. The requisite service period is based on the criteria for the separate restricted stock awards according to the related vesting schedule.

A summary of the status of the nonvested restricted shares as of December 31, 2022, and the changes for the year ended December 31, 2022, is presented below:

Nonvested SharesSharesWeighted Average Grant-Date Fair Value
Nonvested as of January 1, 2022161,896$115.70
Issued160,63891.21
Vested(195,526)82.04
Forfeited(1,243)130.46
Nonvested as of December 31, 2022125,765$136.60

The total fair value of shares vested during the years ended December 31, 2022, 2021 and 2020 was $16.0 million, $15.8 million and $13.9 million, respectively.

Stock Options

Options to purchase 463 shares of MAA's common stock were outstanding as of December 31, 2022. No stock options were granted or expired during the years ended December 31, 2022, 2021 and 2020. There were 350 options, 19,032 options and 918 options exercised during the years ended December 31, 2022, 2021 and 2020, respectively. These exercises resulted in net proceeds that were negligible during the years ended December 31, 2022 and 2020 and $1.5 million for the year ended December 31, 2021.

F-23

5.

Borrowings

The following table summarizes the Company’s outstanding debt as of December 31, 2022 and December 31, 2021 (dollars in thousands):

As of December 31, 2022
Unsecured debtDecember 31, 2022December 31, 2021Weighted Average Effective RateWeighted Average Contract Maturity
Variable rate commercial paper program$20,000$—4.7%1/3/2023
Fixed rate senior notes$4,050,000$4,175,0003.4%5/14/2029
Debt issuance costs, discounts, premiums and fair market value adjustments(19,090)(23,625)
Total unsecured debt$4,050,910$4,151,3753.4%
Secured debt
Fixed rate property mortgages$367,154$368,5554.4%10/27/2048
Debt issuance costs(3,161)(3,240)
Total secured debt$363,993$365,3154.4%
Total outstanding debt$4,414,903$4,516,6903.4%

Unsecured Revolving Credit Facility

In July 2022, MAALP amended its unsecured revolving credit facility, increasing its borrowing capacity to $1.25 billion with an option to expand to $2.0 billion. The revolving credit facility bears interest at an adjusted Secured Overnight Financing Rate plus a spread of 0.70% to 1.40% based on an investment grade pricing grid. The revolving credit facility has a maturity date in October 2026 with an option to extend for two additional six-month periods. As of December 31, 2022, there was no outstanding balance under the revolving credit facility, while $4.3 million of capacity was used to support outstanding letters of credit.

Unsecured Commercial Paper

MAALP has established an unsecured commercial paper program whereby MAALP may issue unsecured commercial paper notes with varying maturities not to exceed 397 days. In September 2022, MAALP amended its commercial paper program to increase the maximum aggregate principal amount of notes that may be outstanding from time to time under the program from $500.0 million to $625.0 million. As of December 31, 2022, MAALP had $20.0 million outstanding under the commercial paper program. For the year ended December 31, 2022, the average daily borrowings outstanding under the commercial paper program were $34.9 million.

Unsecured Senior Notes

As of December 31, 2022, MAALP had $4.1 billion of publicly issued unsecured senior notes outstanding. The unsecured senior notes had maturities at issuance ranging from 5 to 30 years, with a weighted average maturity in 2029.

In September 2022, MAALP retired the remaining $125.0 million portion of its publicly issued unsecured senior notes due in December 2022.

In July 2021, MAALP retired a $72.8 million tranche of privately placed unsecured senior notes at maturity.

In August 2021, MAALP publicly issued $300 million in aggregate principal amount of unsecured senior notes maturing in 2026 with interest payable semi-annually and a coupon rate of 1.100% per annum, or the 2026 Notes. MAALP also publicly issued $300 million in aggregate principal amount of unsecured senior notes maturing 2051 with interest payable semi-annually in arrears and a coupon rate of 2.875% per annum, or the 2051 Notes. Both the 2026 Notes and 2051 Notes are general unsecured senior obligations of MAALP and rank equally in right of payment with all other unsecured senior indebtedness of MAALP. The combined net proceeds of the offerings were $590.0 million, after deducting the combined original issue discounts and underwriting commissions totaling $10.0 million.

In September 2021, MAALP retired $149.3 million of privately placed unsecured senior notes and $125.0 million of publicly issued unsecured senior notes. MAALP incurred $13.4 million in prepayment penalties and write-offs of unamortized costs resulting from the debt retirements during the year ended December 31, 2021. These costs are included in “Other non-operating expense (income)” in the accompanying Consolidated Statements of Operations.

Secured Property Mortgages

As of December 31, 2022, MAALP had $367.2 million of fixed rate conventional property mortgages with a weighted average maturity in 2048.

In February 2021, MAALP retired a $118.6 million mortgage associated with eight apartment communities.

F-24

Schedule of Maturities

The following table includes scheduled principal repayments of MAALP’s outstanding borrowings as of December 31, 2022, as well as the amortization of debt issuance costs, discounts, premiums and fair market value adjustments (in thousands):

MaturitiesAmortizationTotal
2023$370,000$(491)$369,509
2024400,000(1,158)398,842
2025403,861(2,110)401,751
2026300,000(2,798)297,202
2027600,000(3,452)596,548
Thereafter2,363,293(12,242)2,351,051
Total$4,437,154$**(**22,251)$4,414,903

6.

Financial Instruments and Derivatives

Financial Instruments Not Carried at Fair Value

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

Fixed rate notes payable as of December 31, 2022 and 2021 totaled $4.4 billion and $4.5 billion, respectively, and had estimated fair values of $3.9 billion and $4.8 billion (excluding prepayment penalties) as of December 31, 2022 and 2021, respectively. The fair values of fixed rate debt are determined by using the present value of future cash outflows discounted with the applicable current market rate plus a credit spread. The carrying value of variable rate debt as of December 31, 2022 totaled $20.0 million and had an estimated fair value of $20.0 million as of December 31, 2022. As of December 31, 2021, the Company had no variable rate debt outstanding. The fair value of variable rate debt is determined using the stated variable rate plus the current market credit spread. The variable rates reset at various maturities typically less than 30 days, and management concluded these rates reasonably estimate current market rates.

Financial Instruments Measured at Fair Value on a Recurring Basis

As of December 31, 2022, the Company had one outstanding series of cumulative redeemable preferred stock, which is referred to as the MAA Series I preferred stock (see Note 8). The Company has recognized a derivative asset related to the redemption feature embedded in the MAA Series I preferred stock. The derivative asset is valued using widely accepted valuation techniques, including a discounted cash flow analysis in which the perpetual value of the preferred shares is compared to the value of the preferred shares assuming the call option is exercised, with the value of the bifurcated call option as the difference between the two values. The analysis reflects the contractual terms of the redeemable preferred shares, which are redeemable at the Company’s option beginning on October 1, 2026 at the redemption price of $50.00 per share. The Company uses various inputs in the analysis, including trading data available on the preferred shares, estimated coupon yields on preferred stock instruments from REITs with similar credit ratings as MAA and treasury rates to estimate the fair value of the bifurcated call option.

The redemption feature embedded in the MAA Series I preferred stock is reported as a derivative asset in “Other assets” in the accompanying Consolidated Balance Sheets and is adjusted to its fair value at each reporting date, with a corresponding non-cash adjustment to “Other non-operating expense (income)” in the accompanying Consolidated Statements of Operations. As of December 31, 2022 and 2021, the fair value of the embedded derivative was $13.4 million and $34.5 million, respectively.

The Company has determined the majority of the inputs used to value its outstanding debt and its embedded derivative fall within Level 2 of the fair value hierarchy, and as a result, the fair value valuations of its debt and embedded derivative held as of December 31, 2022 and 2021 were classified as Level 2 in the fair value hierarchy. The fair value of the Company’s marketable equity securities discussed in Note 1 is based on quoted market prices and are classified as Level 1 in the fair value hierarchy.

Terminated Cash Flow Hedges of Interest

As of December 31, 2022, the Company had $10.1 million recorded in “Accumulated other comprehensive loss”, or AOCL, related to realized losses associated with terminated interest rate swaps that were designated as cash flow hedging instruments prior to their termination. The realized losses associated with the terminated interest rate swaps are reclassified to interest expense as interest payments are made on the Company’s debt and will continue to be reclassified to interest expense until the debt’s maturity. During the next twelve months, the Company estimates an additional $1.3 million will be reclassified to earnings as an increase to “Interest expense.”

F-25

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

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020, respectively (dollars in thousands):

Derivatives in Cash FlowLocation of Loss ReclassifiedNet Loss Reclassified from AOCL into Interest Expense
Hedging Relationshipsfrom AOCL into Income202220212020
Terminated interest rate swapsInterest expense$(1,114)$(1,114)$(1,088)
Derivatives Not DesignatedLocation of (Loss) Gain Recognized(Loss) Gain Recognized in Earnings on Derivative
as Hedging Instrumentsin Earnings on Derivative202220212020
Preferred stock embedded derivativeOther non-operating expense (income)$(21,107)$(4,560)$2,562

7.

Income Taxes

Due to the structure of MAA as a REIT and the nature of the operations of its operating properties, no provision for federal income taxes has been made at the MAA level. In addition, as MAALP is structured as a limited partnership, and its partners recognize their proportionate share of income or loss in their tax returns, no provision for federal income taxes has been made at the MAALP level. Historically, the Company has incurred certain state and local income, excise and franchise taxes.

Taxable REIT Subsidiaries

A TRS is an entity that is subject to federal, state and any applicable local corporate income tax without the benefit of the dividends paid deduction applicable to REITs. The Company’s TRSs generated taxable loss of $45.2 million for the year ended December 31, 2022 and taxable income of $51.8 million and $5.8 million for the years ended December 31, 2021 and 2020 and income tax benefit of $9.5 million for the year ended December 31, 2022 and income tax expense of $10.9 million and $0.8 million for the years ended December 31, 2021 and 2020. One of the Company’s TRSs generally provides the Company with services (property management services to a real estate joint venture and other services) for which the Company reimburses the TRS. In addition, one of the Company’s TRSs owns the investments in the technology-focused limited partnerships and marketable securities that generate investment income and losses. The investment income or loss is recognized for tax purposes at the time of sale or exchange of the investment.

In addition to the TRSs income tax provision, income tax expense primarily relates to the Texas-based margin tax for all Texas apartment communities. Income tax benefit for the Company for the year ended December 31, 2022 was $6.2 million and income tax expense for the years ended December 31, 2021 and 2020 was $13.6 million and $3.3 million, respectively, and is presented in “Income tax benefit (expense)” in the accompanying Consolidated Statements of Operations.

As of December 31, 2022 and 2021, the components of the Company’s TRSs deferred income tax assets and liabilities were as follows (dollars in thousands):

December 31, 2022December 31, 2021
Deferred tax asset:
Other$—$328
Deferred tax liability:
Unrealized gain from limited partnerships$1,122$12,946
Unrealized gain from marketable securities & other1,700246
Total deferred tax liability$2,822$13,192
Net deferred tax liability$2,822$12,864

The net deferred tax liability balances are reflected in “Accrued expenses and other liabilities” in the accompanying Consolidated Balance Sheets for the years ended December 31, 2022 and 2021. The TRSs have no reserve for uncertain tax positions for the years ended December 31, 2022 and 2021, and management does not believe there will be any material changes in the TRSs unrecognized tax positions over the next 12 months. If necessary, the TRSs accrue interest and penalties on unrecognized tax benefits as a component of income tax expense.

Net Operating Loss Carryforwards

As of December 31, 2022, the Company held federal net operating loss, or NOL, carryforwards of $54.2 million for income tax purposes that expire in the years 2023 to 2032. Utilization of any NOL carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 of the Code and similar state provisions. The annual limitations may result in the expiration of NOL carryforwards prior to utilization. The Company may use these NOLs to offset all or a portion of the taxable income generated at the REIT level. Tax years 2019 through 2022 are subject to examination by the Internal Revenue Service. No tax examination is currently in process.

F-26

Taxable Composition of Distributions

For income tax purposes, dividends paid to holders of common stock generally consist of ordinary income, return of capital, capital gains, qualified dividends and un-recaptured Section 1250 gains, or a combination thereof. For the years ended December 31, 2022, 2021 and 2020, dividends per share held for the entire year were estimated to be taxable as follows:

202220212020
AmountPercentageAmountPercentageAmountPercentage
Ordinary income$4.4495.03%$2.4359.18%$4.0099.98%
Capital gains0.234.78%1.3633.15%0.000.02%
Un-recaptured Section 1250 gains0.010.19%0.317.67%0.000.00%
Total$4.68100%$4.10100%$4.00100%

The Company designated the per share amounts above as capital gain dividends in accordance with the requirements of the Code. The difference between net income available to common shareholders for financial reporting purposes and taxable income before dividend deductions relates primarily to temporary differences such as depreciation and amortization and taxable gains on sold properties.

8.

Shareholders’ Equity of MAA

As of December 31, 2022, 115,480,336 shares of common stock of MAA and 3,164,933 OP Units (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 118,645,269 common shares and units. As of December 31, 2021, 115,336,876 shares of common stock of MAA and 3,206,118 OP Units (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 118,542,994 common shares and units.

Preferred Stock

As of December 31, 2022, MAA had one outstanding series of cumulative redeemable preferred stock which has the following characteristics:

DescriptionOutstanding SharesLiquidation Preference (1)Optional Redemption DateRedemption Price (2)Stated Dividend YieldApproximate Dividend Rate
MAA Series I867,846$50.0010/1/2026$50.008.50%$4.25

(1)

The total liquidation preference for the outstanding preferred stock is $43.4 million.

(2)

The redemption price is the price at which the preferred stock is redeemable, at MAA’s option, for cash.

See Note 6 for details of the valuation of the derivative asset related to the redemption feature embedded in the MAA Series I preferred stock.

Direct Stock Purchase and Distribution Reinvestment Plan

MAA has a Dividend and Distribution Reinvestment and Share Purchase Plan, or DRSPP, pursuant to which MAA’s common shareholders have the ability to reinvest all or part of their distributions from MAA into shares of MAA’s common stock and holders of Class A OP Units have the ability to reinvest all or part of their distributions from the Operating Partnership into MAA’s common stock. The DRSPP also provides the opportunity to make optional cash investments in MAA’s common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. MAA, in its absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill its obligations under the DRSPP, MAA may either issue additional shares of common stock or repurchase common stock in the open market. MAA currently has registered with the SEC the offer and sale of up to 1,906,762 shares of common stock pursuant to the DRSPP. MAA may elect to sell shares under the DRSPP at up to a 5% discount. Shares of MAA’s common stock totaling 6,547 in 2022, 6,301 in 2021 and 8,259 in 2020 were acquired by participants under the DRSPP. MAA did not offer a discount for optional cash purchases in 2022, 2021 or 2020.

Equity Forward Sale Agreements

In August 2021, MAA entered into two 18-month forward sale agreements with respect to a total of 1.1 million shares of its common stock at an initial forward sale price of $190.56 per share, which price is net of issuance costs. Under the forward sale agreements, the forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor equal to a specified daily rate less a spread and will be decreased based on amounts related to dividends on MAA’s common stock during the term of the forward sale agreements. MAA has the ability to determine the dates and method of settlement (i.e., gross physical settlement, net share settlement or cash settlement), subject to certain conditions and the right of the counterparty to accelerate settlement under certain circumstances, provided that settlement under each forward sale agreement must occur prior to the settlement date. No shares had been settled under the forward sale agreements as of December 31, 2022. The impact of the forward sale agreements was not dilutive to the Company’s diluted earnings per share for the years ended December 31, 2022 and 2021.

F-27

In January 2023, MAA settled its two forward sale agreements with respect to a total of 1.1 million shares at a forward price per share of $185.23, which is inclusive of adjustments made to reflect the then-current federal funds rate, the amount of dividends paid to holders of MAA common stock and commissions paid to sales agents, for net proceeds of $203.7 million.

At-the-Market Share Offering Program

In November 2021, the Company entered into an equity distribution agreement to establish a new ATM program, replacing MAA’s previous ATM program and allowing MAA to sell shares of its common stock from time to time to or through its sales agents into the existing market at current market prices, and to enter into separate forward sales agreements to or through its forward purchasers. Under its current ATM program, MAA has the authority to issue up to an aggregate of 4.0 million shares of its common stock, at such times to be determined by MAA. MAA has no obligation to issue shares through the ATM program.

During the years ended December 31, 2022, 2021 and 2020 MAA did not sell any shares of common stock under its ATM program. As of December 31, 2022, 4.0 million shares remained issuable under the current ATM program.

9.

Partners’ Capital of MAALP

Common units of limited partnership interests in MAALP are represented by OP Units. As of December 31, 2022, there were 118,645,269 OP Units outstanding, 115,480,336, or 97.3%, of which represent Class B OP Units (common units issued to or held by MAALP’s general partner or any of its subsidiaries), which were owned by MAA, MAALP’s general partner. The remaining 3,164,933 OP Units were Class A OP Units owned by Class A limited partners. As of December 31, 2021, there were 118,542,994 OP Units outstanding, 115,336,876, or 97.3%, of which were owned by MAA and 3,206,118 of which were owned by the Class A limited partners.

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

Under the Partnership Agreement, MAALP may issue Class A OP Units and Class B OP Units. Class A OP Units are any OP Units other than Class B OP Units, while Class B OP Units are those issued to or held by MAALP’s general partner or any of its subsidiaries. In general, the limited partners do not have the power to participate in the management or control of MAALP’s business except in limited circumstances, including changes in the general partner and protective rights if the general partner acts outside of the provisions provided in the Partnership Agreement. The transferability of Class A OP Units is also limited by the Partnership Agreement.

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

As of December 31, 2022, a total of 3,164,933 Class A OP Units were outstanding and redeemable for 3,164,933 shares of MAA common stock, with an approximate value of $496.9 million, based on the closing price of MAA’s common stock on December 31, 2022 of $156.99 per share. As of December 31, 2021, a total of 3,206,118 Class A OP Units were outstanding and redeemable for 3,206,118 shares of MAA common stock, with an approximate value of $735.6 million, based on the closing price of MAA’s common stock on December 31, 2021 of $229.44 per share. MAALP pays the same per unit distributions in respect to the OP Units as the per share dividends MAA pays in respect to its common stock.

As of December 31, 2022, MAALP had one outstanding series of cumulative redeemable preferred units, or the MAALP Series I preferred units. The MAALP Series I preferred units have the same characteristics as the MAA Series I preferred stock described in Note 8. As of December 31, 2022, 867,846 units of the MAALP Series I preferred units were outstanding and owned by MAA. See Note 6 for details of the valuation of the derivative asset related to the redemption feature embedded in the MAALP Series I preferred units.

F-28

10.

Employee Benefit Plans

The following provides details of the employee benefit plans not previously discussed in Note 4.

401(k) Savings Plans

MAA’s 401(k) Savings Plan, or 401(k) Plan, is a defined contribution plan that satisfies the requirements of Section 401(a) and 401(k) of the Code. MAA’s Board of Directors has the discretion to approve matching contributions to the 401(k) Plan. MAA recognized expense from the 401(k) Plan of $4.4 million, $4.1 million and $3.9 million, for the years ended December 31, 2022, 2021 and 2020, respectively.

Non-Qualified Executive Deferred Compensation Retirement Plan

MAA has adopted the MAA Non-Qualified Executive Deferred Compensation Retirement Plan Amended and Restated effective January 1, 2016, or the Deferred Compensation Plan, for certain executive employees. Under the terms of the Deferred Compensation Plan, employees may elect to defer a percentage of their compensation and bonus, and MAA may, but is not obligated to, match a portion of the employees’ salary deferral. MAA recognized expense on its match to the Deferred Compensation Plan for the years ended December 31, 2022, 2021 and 2020 of $0.5 million, $0.1 million and $0.4 million, respectively.

Non-Qualified Deferred Compensation Plan for Outside Company Directors

MAA has adopted the Non-Qualified Deferred Compensation Plan for Outside Company Directors as Amended effective November 30, 2010, or the Directors Deferred Compensation Plan, which allows non-employee directors to defer their director fees by having the fees held by MAA as shares of MAA’s common stock. Directors can also choose to have their annual restricted stock grants issued into the Directors Deferred Compensation Plan. Amounts deferred through the Directors Deferred Compensation Plan are distributed to the directors in two annual installments beginning in the first 90 days of the year following the director’s departure from the board. Participating directors may choose to have the amount issued to them in shares of MAA’s common stock or paid to them as cash at the market value of MAA’s common stock as of the end of the year the director ceases to serve on the board.

For the years ended December 31, 2022, 2021 and 2020, directors deferred 6,122 shares, 6,944 shares and 10,593 shares of common stock, respectively, with weighted-average grant date fair values of $174.76, $164.23 and $111.19, respectively, into the Directors Deferred Compensation Plan. The shares of common stock held in the Directors Deferred Compensation Plan are classified outside of permanent equity in redeemable stock with changes in the redemption amount recorded immediately to retained earnings because the directors have redemption rights not solely within the control of MAA. Additionally, any shares that become mandatorily redeemable because a departed director has elected to receive a cash payout are recorded as a liability. As of December 31, 2022, $0.7 million of mandatorily redeemable shares were recorded as a liability and classified in “Accrued expenses and other liabilities” in the Consolidated Balance Sheets. As of December 31, 2021, there was no liability related to mandatorily redeemable shares.

Employee Stock Ownership Plan

MAA’s Employee Stock Ownership Plan, or ESOP, is a non-contributory stock bonus plan that satisfies the requirements of Section 401(a) of the Code. On December 31, 2010, the ESOP was frozen by amendment, whereby effective January 1, 2011, no additional employees became eligible for the plan, no additional contributions were made to the ESOP, and all participants with an account balance under the ESOP became 100% vested. The Company did not contribute to the ESOP during 2022, 2021 or 2020. As of December 31, 2022, the ESOP held 123,687 shares with a fair value of $19.4 million.

11.

Commitments and Contingencies

Leases

The Company’s operating leases include a ground lease expiring in 2074 related to one of its apartment communities and an office lease expiring in 2028 related to its corporate headquarters. Both leases contain stated rent increases that generally compensate for the impact of inflation. The Company also has other commitments related to negligible office and equipment operating leases. As of December 31, 2022, the Company’s operating leases had a weighted average remaining lease term of approximately 33 years and a weighted average discount rate of approximately 4.5%.

F-29

The table below reconciles undiscounted cash flows for each of the first five years and total of the remaining years to the right-of-use lease liabilities recorded on the Consolidated Balance Sheets as of December 31, 2022 (in thousands):

Operating Leases
2023$2,885
20242,862
20252,872
20262,920
20272,969
Thereafter57,024
Total minimum lease payments71,532
Net present value adjustments(42,861)
Right-of-use lease liabilities$28,671

Legal Proceedings

In October 2022, six plaintiffs individually and on behalf of a purported class of plaintiffs, filed a complaint against RealPage, Inc., Greystar Real Estate Partners, LLC, Lincoln Property Co., FPI Management, Inc., MAA, Avenue5 Residential, LLC, Equity Residential, Essex Property Trust, Inc., Thrive Communities Management, LLC and Security Properties, Inc. in the United States District Court for the Southern District of California. The lawsuit alleges that RealPage and lessors of multifamily residential real estate conspired to artificially inflate the prices of multifamily residential real estate above competitive levels. The plaintiffs are seeking monetary damages and attorneys’ fees and costs and injunctive relief. We believe the lawsuit is without merit and will vigorously defend the action. The Company is unable to predict the outcome of this lawsuit given its early stage. While we do not believe that this matter will have a material adverse effect on our financial condition, we cannot give assurance that this matter will not have a material effect on our results of operations.

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

As of December 31, 2022 and 2021, the Company’s accrual for loss contingencies relating to unresolved legal matters, including the cost to defend, was $10.0 million and $5.2 million in the aggregate, respectively. The loss contingencies are presented in “Accrued expenses and other liabilities” in the accompanying Consolidated Balance Sheets.

12.

Related Party Transactions

The cash management of the Company is managed by the Operating Partnership. In general, cash receipts are remitted to the Operating Partnership and all cash disbursements are funded by the Operating Partnership. As a result of these transactions, the Operating Partnership had a negligible payable to MAA, its general partner, as of December 31, 2022 and 2021 that is eliminated in the preparation of MAA’s consolidated financial statements. The Partnership Agreement does not require the due to/due from balance to be settled in cash until liquidation of the Operating Partnership, and therefore, there is no regular settlement schedule for such amounts.

13.

Segment Information

As of December 31, 2022, the Company owned and operated 290 multifamily apartment communities (which does not include development communities under construction) in 15 different states from which it derived all significant sources of earnings and operating cash flows. The Company views each consolidated apartment community as an operating segment. The Company’s chief operating decision maker, which is the Company’s Chief Executive Officer, evaluates performance and determines resource allocations of each of the apartment communities on a Same Store and Non-Same Store and Other basis, as well as an individual apartment community basis. The Company has aggregated its operating segments into two reportable segments as management believes the apartment communities in each reportable segment generally have similar economic characteristics, facilities, services and residents.

The following reflects the two reportable segments for the Company:

Same Store includes communities that the Company has owned and have been stabilized for at least a full 12 months as of the first day of the calendar year.

Non-Same Store and Other includes recently acquired communities, communities being developed or in lease-up, communities that have been disposed of or identified for disposition, communities that have experienced a significant casualty loss and stabilized communities that do not meet the requirements to be Same Store communities. Also included in Non-Same Store and Other are non-multifamily activities and storm related expenses related to hurricanes.

F-30

On the first day of each calendar year, the Company determines the composition of its Same Store and Non-Same Store and Other reportable segments for that year as well as adjusts the previous year, which allows the Company to evaluate full period-over-period operating comparisons. Communities previously in development or lease-up are added to the Same Store segment on the first day of the calendar year after the community has been owned and stabilized for at least a full 12 months. Communities are considered stabilized when achieving 90% average physical occupancy for 90 days.

The chief operating decision maker utilizes NOI in evaluating the performance of the operating segments. Total NOI represents total property revenues less total property operating expenses, excluding depreciation and amortization, for all properties held during the period regardless of their status as held for sale. Management believes that NOI is a helpful tool in evaluating the operating performance of the segments because it measures the core operations of property performance by excluding corporate level expenses and other items not directly related to property operating performance.

Revenues and NOI for each reportable segment for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands):

202220212020
Revenues:
Same Store
Rental revenues$1,912,626$1,683,380$1,601,812
Other property revenues12,08311,85411,557
Total Same Store revenues1,924,7091,695,2341,613,369
Non-Same Store and Other
Rental revenues93,51281,82264,401
Other property revenues1,6451,026214
Total Non-Same Store and Other revenues95,15782,84864,615
Total rental and other property revenues$2,019,866$1,778,082$1,677,984
Net Operating Income:
Same Store NOI$1,242,695$1,061,572$1,001,919
Non-Same Store and Other NOI53,47745,34535,594
Total NOI1,296,1721,106,9171,037,513
Depreciation and amortization(542,998)(533,433)(510,842)
Property management expenses(65,463)(55,732)(52,300)
General and administrative expenses(58,833)(52,884)(46,858)
Interest expense(154,747)(156,881)(167,562)
Gain on sale of depreciable real estate assets214,762220,4289
Gain on sale of non-depreciable real estate assets8098111,024
Other non-operating (expense) income(42,713)33,9024,857
Income tax benefit (expense)6,208(13,637)(3,327)
Income from real estate joint venture1,5791,2111,501
Net income attributable to noncontrolling interests(17,340)(16,911)(9,053)
Dividends to MAA Series I preferred shareholders(3,688)(3,688)(3,688)
Net income available for MAA common shareholders$633,748$530,103$251,274

Assets for each reportable segment as of December 31, 2022 and 2021 were as follows (in thousands):

December 31, 2022December 31, 2021
Assets:
Same Store$9,692,674$9,907,740
Non-Same Store and Other1,375,9361,106,039
Corporate172,555271,403
Total assets$11,241,165$11,285,182

F-31

14.

Real Estate Acquisitions and Dispositions

During the year ended December 31, 2022, the Company acquired a 196-unit multifamily apartment community located in the Tampa, Florida market for approximately $73 million, a 344-unit multifamily apartment community located in the Charlotte, North Carolina market for approximately $140 million. The following table reflects the Company’s acquisition activity for the year ended December 31, 2022:

Multifamily AcquisitionsMarketUnitsDate Acquired
MAA Hampton Preserve IITampa, FL196July 2022
MAA LoSoCharlotte, NC344September 2022

During the year ended December 31, 2022, the Company acquired five land parcels for future development for approximately $59 million.

Land AcquisitionsMarketAcresDate Acquired
MAA Florida Street StationDenver, CO4March 2022
MAA Packing DistrictOrlando, FL4May 2022
MAA PanoramaDenver, CO6July 2022
MAA NixieRaleigh, NC6November 2022
Alta 10th (1)Charlotte, NC3December 2022

(1)

Represents a pre-purchase multifamily development. Approximately $10 million has been funded as of December 31, 2022, primarily related to land, with development expected to begin in the second half of 2023. MAA owns 95% of the joint venture that owns this property.

During the year ended December 31, 2022, the Company closed on two dispositions in the Fort Worth, Texas market, one disposition in Maryland and one disposition in the Austin, Texas market. The Company received combined gross proceeds of approximately $325 million and recognized a combined gain on the sale of depreciable real estate assets of approximately $215 million. The following table reflects the Company’s disposition activity for the year ended December 31, 2022:

Multifamily DispositionsMarketUnitsDate Sold
MAA Deer RunFort Worth, TX304June 2022
MAA OakbendFort Worth, TX426June 2022
Post Park MarylandMaryland, MD396October 2022
Stassney WoodsAustin, TX288December 2022

During the year ended December 31, 2022, the Company closed on the disposition of two land parcels in the Huntsville, Alabama market for combined gross proceeds of approximately $1 million, resulting in the recognition of a negligible gain on the sale of non-depreciable real estate assets.

Land DispositionsMarketAcresDate Sold
Colonial PromenadeHuntsville, AL2April 2022
Colonial PromenadeHuntsville, AL3August 2022

F-32

Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.

Schedule III — Real Estate a****nd Accumulated Depreciation

December 31, 2022

(Dollars in thousands)

Initial CostCosts Capitalized Subsequent to AcquisitionGross Amount carried as of December 31, 2022
PropertyLocationEncumbrancesLandBuildings and FixturesLandBuildings and FixturesLandBuildings and FixturesTotal (3)Accumulated Depreciation (4)NetDate of ConstructionDate Acquired
Birchall at Ross BridgeBirmingham, AL$—$2,641$28,842$—$3,920$2,641$32,762$35,403$(12,558)$22,84520092011
Colonial Grand at Riverchase TrailsBirmingham, AL—3,76222,079—7,1343,76229,21332,975(12,345)20,63020102013
Colonial Village at TrussvilleBirmingham, AL—3,40331,813—6,2053,40338,01841,421(14,803)26,6181996/972013
Eagle RidgeBirmingham, AL—8527,667—5,03085212,69713,549(9,456)4,09319861998
Colonial Grand at TraditionsGulf Shores, AL—3,21225,162—6,4453,21231,60734,819(12,678)22,14120072013
Colonial Grand at EdgewaterHuntsville, AL—4,94438,673—8,8504,94447,52352,467(17,136)35,33119902013
Paddock Club at ProvidenceHuntsville, AL—1,74010,152—17,1921,74027,34429,084(17,406)11,67819931997
Colonial Grand at MadisonMadison, AL—3,60228,934—3,6243,60232,55836,160(13,057)23,10320002013
Cypress VillageOrange Beach, AL—1,29012,238—3,3171,29015,55516,845(5,800)11,04520082013
Colonial Grand at Liberty ParkVestavia Hills, AL—3,92230,977—8,5853,92239,56243,484(16,136)27,34820002013
MAA Sky ViewGilbert, AZ—2,66814,577—3,0992,66817,67620,344(8,433)11,91120072009
MAA City GateMesa, AZ—4,21926,255—4,8794,21931,13435,353(11,675)23,67820022013
MAA Lyon's GatePhoenix, AZ—7,90127,182—4,3997,90131,58139,482(15,332)24,15020072008
MAA FountainheadPhoenix, AZ—(1)12,21256,705—3,21712,21259,92272,134(12,011)60,12320152016
MAA FoothillsPhoenix, AZ—12,74147,701—6,07012,74153,77166,512(29,123)37,38920052006
MAA Midtown PhoenixPhoenix, AZ—9,001——74,2399,00174,23983,240(6,550)76,69020212019
MAA Old Town ScottsdaleScottsdale, AZ—7,82051,627—8,8957,82060,52268,342(22,364)45,9781994/952013
MAA CamelbackScottsdale, AZ—3,61220,273—4,9363,61225,20928,821(9,323)19,49819992013
SkySongScottsdale, AZ——55,748—4,551—60,29960,299(12,397)47,90220142015
MAA River NorthDenver, CO—14,50028,900—41,37714,50070,27784,777(12,658)72,11920182016
MAA PromenadeDenver, CO—24,11181,317—22,69824,111104,015128,126(15,137)112,9892017/192018
MAA WestglennDenver, CO—8,077——74,7518,07774,75182,828(5,127)77,70120212018
MAA Tiffany OaksAltamonte Springs, FL—1,0249,219—6,3101,02415,52916,553(11,907)4,64619851996
MAA Lakewood RanchBradenton, FL—2,98040,230—8,2242,98048,45451,434(17,807)33,62719992013
MAA Indigo PointBrandon, FL—1,16710,500—5,0001,16715,50016,667(10,795)5,87219892000
MAA BrandonBrandon, FL—2,89626,111—9,2722,89635,38338,279(24,967)13,31219981997
MAA Coral SpringsCoral Springs, FL—9,60040,004—15,5899,60055,59365,193(32,102)33,09119962004
Paddock Club GainesvilleGainesville, FL—1,80015,879—5,7161,80021,59523,395(12,753)10,64219991998
Retreat at Magnolia ParkeGainesville, FL—2,04016,338—1,6102,04017,94819,988(7,236)12,75220092011
MAA HeathrowHeathrow, FL—4,10135,684—6,1314,10141,81545,916(16,572)29,34419972013
220 RiversideJacksonville, FL—2,38135,514—9,3812,38144,89547,276(8,637)38,63920152012
Atlantic CrossingJacksonville, FL—4,00019,495—3,4034,00022,89826,898(9,074)17,82420082011
Coopers HawkJacksonville, FL—8547,500—4,84385412,34313,197(9,551)3,64619871995
Hunters Ridge DeerwoodJacksonville, FL—1,53313,835—6,2821,53320,11721,650(14,982)6,66819871997
LakesideJacksonville, FL—1,43012,883—9,0661,43021,94923,379(17,272)6,10719851996
Lighthouse at Fleming IslandJacksonville, FL—4,04735,052—6,7154,04741,76745,814(25,649)20,16520032003
Paddock Club MandarinJacksonville, FL—1,41114,967—4,4431,41119,41020,821(11,264)9,55719981998
MAA Mandarin LakesJacksonville, FL—2,8576,475—21,7252,85728,20031,057(14,456)16,6011987/ 20081995
Tattersall at Tapestry ParkJacksonville, FL—6,41736,069—3,1186,41739,18745,604(15,105)30,49920092011
WoodhollowJacksonville, FL—1,67815,179—9,5381,67824,71726,395(19,523)6,87219861997
MAA Lake MaryLake Mary, FL—(2)6,34641,539—26,0236,34667,56273,908(21,284)52,62420122013
MAA Town ParkLake Mary, FL—5,74256,562—8,1425,74264,70470,446(26,705)43,74120052013
MAA Town Park ReserveLake Mary, FL—3,48110,311—8923,48111,20314,684(4,629)10,05520042013
MAA Heather GlenOrlando, FL—4,66256,988—9,2764,66266,26470,926(25,362)45,56420002013
MAA Randal LakesOrlando, FL—8,85950,553—50,0768,859100,629109,488(20,243)89,2452014/172013
MAA RobinsonOrlando, FL—6,003——91,5436,00391,54397,546(6,738)90,80820212018
MAA Baldwin ParkOrlando, FL—18,101144,200—5,80018,101150,000168,101(37,061)131,04020112016
MAA CrosswaterOrlando, FL—7,04652,585—2,5867,04655,17162,217(12,200)50,01720132016
MAA ParksideOrlando, FL—5,66949,754—9,8635,66959,61765,286(14,009)51,27719992016
MAA Lake NonaOrlando, FL—7,88041,175—7,7307,88048,90556,785(18,079)38,70620062012
Sand LakeOrlando, FL—7,635——55,9987,63555,99863,633(4,379)59,25420212019
MAA Palm HarborPalm Harbor, FL—6,90026,613—5,0936,90031,70638,606(15,294)23,31220002009
Club at Panama BeachPanama City, FL—89314,276—5,64489319,92020,813(12,213)8,60020001998
MAA Twin LakesSanford, FL—3,09147,793—5,1903,09152,98356,074(20,242)35,83220052013
Paddock Club TallahasseeTallahassee, FL—1,4804,805—15,0141,48019,81921,299(15,133)6,16619921997
Verandas at SouthwoodTallahassee, FL—3,60025,914—2,7383,60028,65232,252(8,651)23,60120032011
MAA BelmereTampa, FL—8527,667—8,18585215,85216,704(11,564)5,14019841994
MAA Hampton PreserveTampa, FL—6,23369,535—5,1266,23374,66180,894(26,641)54,25320122013
MAA Hampton Preserve IITampa, FL—10,79661,863—22610,79662,08972,885(1,000)71,88520212022
MAA CarrollwoodTampa, FL—9277,355—6,96992714,32415,251(10,363)4,88819801998
MAA Bay ViewTampa, FL—4,54128,381—2,8174,54131,19835,739(7,670)28,06919972016
MAA Harbour IslandTampa, FL—16,296116,193—18,06816,296134,261150,557(33,930)116,62719972016
MAA Hyde ParkTampa, FL—16,89195,259—11,62616,891106,885123,776(26,730)97,04619942016
MAA Rocky PointTampa, FL—35,260153,102—19,61935,260172,721207,981(43,106)164,8751994-19962016
MAA SoHo SquareTampa, FL—(1)5,19056,296—1,5375,19057,83363,023(12,649)50,37420122016
MAA Tampa OaksTampa, FL—2,89119,055—4,0562,89123,11126,002(10,868)15,13420052008
MAA Seven OaksWesley Chapel, FL—3,05142,768—3,9903,05146,75849,809(17,816)31,99320042013
MAA WindermereWindermere, FL—(1)2,71136,710—3,6152,71140,32543,036(14,247)28,78920092013

F-33

Initial CostCosts Capitalized Subsequent to AcquisitionGross Amount carried as of December 31, 2022
PropertyLocationEncumbrancesLandBuildings and FixturesLandBuildings and FixturesLandBuildings and FixturesTotal (3)Accumulated Depreciation (4)NetDate of ConstructionDate Acquired
MAA BriarcliffAtlanta, GA—24,614114,921—8,96924,614123,890148,504(29,370)119,13419962016
MAA BrookhavenAtlanta, GA—29,048106,463—12,42729,048118,890147,938(30,415)117,5231989-19922016
MAA BrookwoodAtlanta, GA—(2)11,16852,758—7,63111,16860,38971,557(21,806)49,75120082012
MAA BuckheadAtlanta, GA—8,63319,844—11,4808,63331,32439,957(12,048)27,90920022012
MAA Centennial ParkAtlanta, GA—13,65010,950—62,85913,65073,80987,459(10,838)76,62120182016
MAA ChastainAtlanta, GA—30,22382,964—5,47630,22388,440118,663(21,115)97,54819902016
MAA DunwoodyAtlanta, GA—15,79948,054—6,40215,79954,45670,255(13,357)56,89819952016
MAA GardensAtlanta, GA—17,90756,093—10,24217,90766,33584,242(16,456)67,78619962016
MAA GlenAtlanta, GA—13,87851,079—8,19613,87859,27573,153(14,489)58,66419962016
MAA LenoxAtlanta, GA—23,876165,572—5,63423,876171,206195,082(44,660)150,4222006/152016
MAA MidtownAtlanta, GA—7,00044,000—41,5077,00085,50792,507(12,839)79,66820172016
MAA OglethorpeAtlanta, GA—6,85631,441—8,1646,85639,60546,461(18,083)28,37819942008
MAA Peachtree HillsAtlanta, GA—11,97455,264—2,27911,97457,54369,517(13,196)56,3211992-1994/20092016
MAA Piedmont ParkAtlanta, GA—11,02534,277—5,96611,02540,24351,268(8,828)42,44019992016
MAA RiversideAtlanta, GA—23,76589,369—11,74323,765101,112124,877(27,479)97,39819962016
MAA SpringAtlanta, GA—18,59657,819—7,85218,59665,67184,267(17,444)66,82319992016
MAA StratfordAtlanta, GA——30,051—6,853—36,90436,904(9,729)27,17519992016
MAA Berkeley LakeDuluth, GA—1,96015,707—3,7311,96019,43821,398(8,764)12,63419982013
MAA McDaniel FarmDuluth, GA—3,98532,206—7,5013,98539,70743,692(17,379)26,31319972013
MAA Pleasant HillDuluth, GA—6,75332,202—9,0226,75341,22447,977(17,127)30,85019962013
MAA PrescottDuluth, GA—3,84024,011—7,0243,84031,03534,875(18,307)16,56820012004
MAA River OaksDuluth, GA—4,34913,579—4,5064,34918,08522,434(9,518)12,91619922013
MAA River PlaceDuluth, GA—2,05919,158—5,0422,05924,20026,259(10,317)15,94219942013
MAA Mount VernonDunwoody, GA—6,86123,748—5,0546,86128,80235,663(11,152)24,51119972013
MAA Lake LanierGainesville, GA—6,71040,994—12,6876,71053,68160,391(31,221)29,1701998/ 20012005
MAA ShilohKennesaw, GA—4,86445,893—9,0284,86454,92159,785(22,042)37,74320022013
MAA MilsteadLaGrange, GA—3,10029,240—4,2863,10033,52636,626(11,569)25,05719982008
MAA Barrett CreekMarietta, GA—5,66126,186—4,6465,66130,83236,493(14,059)22,43419992013
Colonial Grand at Godley LakePooler, GA—1,75030,893—3,0301,75033,92335,673(13,044)22,62920082013
Colonial Grand at Godley StationPooler, GA3,8611,80035,454—5,7451,80041,19942,999(15,627)27,37220012013
Avala at Savannah QuartersSavannah, GA—1,50024,862—3,2641,50028,12629,626(11,019)18,60720092011
Colonial Grand at HammocksSavannah, GA—2,44136,863—8,3672,44145,23047,671(17,115)30,55619972013
Colonial Village at HuntingtonSavannah, GA—2,5218,223—2,9322,52111,15513,676(4,504)9,17219862013
Georgetown GroveSavannah, GA—1,28811,579—4,4131,28815,99217,280(12,034)5,24619971998
Oaks at Wilmington IslandSavannah, GA—2,86425,315—6,5682,86431,88334,747(17,249)17,49819992006
MAA West VillageSmyrna, GA—14,41073,733—11,84814,41085,58199,991(25,375)74,6162006/122014
Ranch at Prairie TraceOverland Park, KS—3,50040,614—3,1633,50043,77747,277(8,829)38,44820152015
MAA PinnacleLexington, KY—2,02431,525—8,0792,02439,60441,628(23,148)18,48020001998
MAA LakepointeLexington, KY—4113,699—2,8814116,5806,991(5,341)1,65019861994
MAA MansionLexington, KY—6946,242—4,38569410,62711,321(8,512)2,80919891994
MAA VillageLexington, KY—9008,097—5,15590013,25214,152(10,806)3,34619891994
Stonemill VillageLouisville, KY—1,16910,518—10,9351,16921,45322,622(16,841)5,78119851994
Market StationKansas City, MO—5,81446,241—5,0635,81451,30457,118(17,838)39,28020102012
The DentonKansas City, MO—5,52050,939—29,5635,52080,50286,022(15,043)70,9792013/14/172015
MAA Beaver CreekApex, NC—7,49134,863—4,3207,49139,18346,674(14,556)32,11820072013
MAA HermitageCary, NC—9008,099—5,90490014,00314,903(10,466)4,43719881997
MAA 900 WaterfordCary, NC—4,00020,250—5,4824,00025,73229,732(14,535)15,19719962005
MAA 1225Charlotte, NC—9,61222,342—32,7539,61255,09564,707(16,535)48,17220102010
MAA AyrsleyCharlotte, NC—2,48152,119—17,8212,48169,94072,421(24,224)48,19720082013
MAA BallantyneCharlotte, NC—16,21644,817—5,62816,21650,44566,661(12,287)54,37420042016
MAA Beverly CrestCharlotte, NC—3,16124,004—5,6523,16129,65632,817(11,025)21,79219962013
MAA Chancellor ParkCharlotte, NC—5,31128,016—6,9425,31134,95840,269(13,590)26,67919992013
MAA City GrandCharlotte, NC—1,62017,499—1,9961,62019,49521,115(7,031)14,08420052013
MAA EnclaveCharlotte, NC—1,46118,984—2,4821,46121,46622,927(7,402)15,52520082013
MAA GatewayCharlotte, NC—17,52857,444—14,00817,52871,45288,980(17,261)71,71920002016
MAA Legacy ParkCharlotte, NC—2,89128,272—4,7032,89132,97535,866(12,704)23,16220012013
MAA LoSoCharlotte, NC—14,600108,076—16,51414,600124,590139,190(1,168)138,02220212022
MAA Prosperity CreekCharlotte, NC—4,59127,713—3,6604,59131,37335,964(12,399)23,56520052013
MAA ReserveCharlotte, NC—4,62844,282—14,3064,62858,58863,216(13,174)50,04220132013
MAA South LineCharlotte, NC—18,83558,795—5,72018,83564,51583,350(14,284)69,06620092016
MAA South ParkCharlotte, NC—20,86965,517—9,98120,86975,49896,367(18,620)77,74719962016
MAA South TryonCharlotte, NC—2,26019,489—3,6252,26023,11425,374(9,038)16,33620022013
MAA University LakeCharlotte, NC—3,25031,389—6,7463,25038,13541,385(15,244)26,14119982013
MAA UptownCharlotte, NC—10,88830,078—7,75010,88837,82848,716(8,716)40,00020002016
MAA CorneliusCornelius, NC—4,57129,151—2,7004,57131,85136,422(13,018)23,40420092013
MAA PattersonDurham, NC—2,59027,126—4,9612,59032,08734,677(12,277)22,40019972013
MAA Research ParkDurham, NC—4,20137,682—6,5284,20144,21048,411(16,977)31,43420022013
MAA Duke ForestDurham, NC—3,27115,609—3,0803,27118,68921,960(8,246)13,71419852013
MAA HuntersvilleHuntersville, NC—4,25131,948—4,7074,25136,65540,906(14,644)26,26220082013
MAA Fifty-OneMatthews, NC—3,07121,830—7,0673,07128,89731,968(12,757)19,21120082013
MAA Matthews CommonsMatthews, NC—3,69028,536—3,3213,69031,85735,547(12,493)23,05420082013
MAA ArringdonMorrisville, NC—6,40131,134—6,1146,40137,24843,649(14,224)29,42520032013
MAA BrierdaleRaleigh, NC—7,37250,202—4,4507,37254,65262,024(20,473)41,55120102013
MAA Brier FallsRaleigh, NC—6,57248,910—4,1076,57253,01759,589(19,323)40,26620082013
MAA CrabtreeRaleigh, NC—2,24118,434—3,9532,24122,38724,628(8,013)16,61519972013

F-34

Initial CostCosts Capitalized Subsequent to AcquisitionGross Amount carried as of December 31, 2022
PropertyLocationEncumbrancesLandBuildings and FixturesLandBuildings and FixturesLandBuildings and FixturesTotal (3)Accumulated Depreciation (4)NetDate of ConstructionDate Acquired
MAA TrinityRaleigh, NC—5,23245,138—6,4905,23251,62856,860(20,635)36,2252000/022013
MAA HueRaleigh, NC—3,69029,910—3,1693,69033,07936,769(10,946)25,82320092010
MAA Wade ParkRaleigh, NC—19,43498,288—28,98919,434127,277146,711(32,932)113,7792011/17/192016
MAA PreserveRaleigh, NC—5,83121,980—28,4205,83150,40056,231(24,502)31,72920042006
MAA ProvidenceRaleigh, NC—4,69529,007—3,5484,69532,55537,250(15,711)21,53920072008
Colonial Grand at Desert VistaNorth Las Vegas, NV—4,09129,826—3,3024,09133,12837,219(12,851)24,36820092013
Colonial Grand at Palm VistaNorth Las Vegas, NV—4,90925,643—6,2594,90931,90236,811(12,919)23,89220072013
TanglewoodAnderson, SC—4273,853—2,9734276,8267,253(5,864)1,38919801994
1201 MidtownCharleston, SC—18,67963,759—18,16418,67981,923100,602(13,880)86,7222015/182016
Colonial Grand at Cypress CoveCharleston, SC—3,61028,645—6,1273,61034,77238,382(12,877)25,50520012013
Colonial Village at Hampton PointeCharleston, SC—3,97122,790—9,0853,97131,87535,846(12,322)23,52419862013
Colonial Village at WestchaseCharleston, SC—4,57120,091—6,4834,57126,57431,145(11,364)19,78119852013
Quarterdeck at James IslandCharleston, SC—92024,097—8,05992032,15633,076(12,227)20,84919872013
River's WalkCharleston, SC—8,83139,430—3,6278,83143,05751,888(9,365)42,5232013/162013
Paddock Club ColumbiaColumbia, SC—1,84016,560—7,3351,84023,89525,735(17,424)8,31119911997
FairwaysColumbia, SC—9108,207—3,43991011,64612,556(9,802)2,75419921994
Colonial Village at Windsor PlaceGoose Creek, SC—1,32114,163—5,0801,32119,24320,564(8,266)12,29819852013
Highland RidgeGreenville, SC—4824,337—3,1154827,4527,934(5,538)2,39619841995
Howell CommonsGreenville, SC—1,30411,740—5,0791,30416,81918,123(13,062)5,06119871997
InnovationGreenville, SC—4,43752,026—2,9984,43755,02459,461(11,962)47,49920152016
Paddock Club GreenvilleGreenville, SC—1,20010,800—3,7761,20014,57615,776(10,897)4,87919961997
Park HaywoodGreenville, SC—3602,925—5,3153608,2408,600(6,487)2,11319831993
Spring CreekGreenville, SC—5835,374—3,3965838,7709,353(6,834)2,51919851995
The GreeneGreenville, SC—5,42766,546—1,3905,42767,93673,363(6,062)67,30120192019
Runaway BayMt. Pleasant, SC—1,0967,269—7,6571,09614,92616,022(11,415)4,60719881995
Colonial Grand at Commerce ParkNorth Charleston, SC—2,78033,966—5,9902,78039,95642,736(14,740)27,99620082013
535 BrookwoodSimpsonville, SC—1,21618,666—2,6091,21621,27522,491(9,172)13,31920082010
Park PlaceSpartanburg, SC—7236,504—2,6727239,1769,899(7,319)2,58019871997
Colonial Village at Waters EdgeSummerville, SC—2,1039,187—5,4072,10314,59416,697(7,193)9,50419852013
Farmington VillageSummerville, SC—2,80026,295—3,7962,80030,09132,891(15,548)17,34320072007
Hamilton PointeChattanooga, TN—1,13110,632—7,8741,13118,50619,637(10,094)9,54319891992
Hidden CreekChattanooga, TN—9728,954—7,38097216,33417,306(8,909)8,39719871988
SteeplechaseChattanooga, TN—2171,957—4,8612176,8187,035(4,336)2,69919861991
WindridgeChattanooga, TN—8177,416—5,40381712,81913,636(9,350)4,28619841997
Kirby StationMemphis, TN—1,14810,337—10,9751,14821,31222,460(16,485)5,97519781994
Lincoln on the GreenMemphis, TN—1,49820,483—19,2571,49839,74041,238(30,300)10,93819921994
Park EstateMemphis, TN—1781,141—3,9221785,0635,241(3,790)1,45119741977
Reserve at Dexter LakeMemphis, TN—3,40716,043—49,1273,40765,17068,577(34,654)33,92320001998
MAA MurfreesboroMurfreesboro, TN—91514,774—5,01591519,78920,704(11,825)8,87919991998
MAA AcklenNashville, TN—12,76158,906—2,58012,76161,48674,247(11,433)62,81420152017
MAA Indian LakeNashville, TN—4,95028,053—3,5764,95031,62936,579(12,092)24,48720102011
MAA Kennesaw FarmsNashville, TN—3,45622,443—5,3833,45627,82631,282(11,570)19,71220082010
MAA BrentwoodNashville, TN—1,19110,739—9,6331,19120,37221,563(15,116)6,44719861994
MAA Charlotte AveNashville, TN—7,89854,480—2,7827,89857,26265,160(9,597)55,56320162017
MAA BellevueNashville, TN—17,19364,196—8,28817,19372,48489,677(22,880)66,7971996/ 20152013
MAA Nashville WestNashville, TN—2,96333,673—11,0312,96344,70447,667(24,992)22,67520011998
MAA Monthaven ParkNashville, TN—2,73628,902—8,2942,73637,19639,932(22,630)17,30220002004
MAA ParkNashville, TN—1,52414,800—9,5741,52424,37425,898(19,128)6,77019871995
MAA Cool SpringsNashville, TN—6,670——54,3916,67054,39161,061(14,953)46,10820122010
MAA Sam RidleyNashville, TN—3,35028,308—5,4793,35033,78737,137(14,112)23,02520092010
MAA Balcones WoodsAustin, TX—1,59814,398—11,7621,59826,16027,758(17,296)10,46219831997
MAA Canyon CreekAustin, TX—3,62132,137—3,7343,62135,87139,492(13,724)25,76820082013
MAA Canyon PointeAustin, TX—3,77820,201—4,5503,77824,75128,529(10,202)18,32720032013
MAA Double CreekAustin, TX—3,13129,375—2,2483,13131,62334,754(12,240)22,51420132013
MAA Onion CreekAustin, TX—4,90233,010—4,1784,90237,18842,090(14,725)27,36520092013
MAA Wells BranchAustin, TX—(1)3,72232,283—4,0403,72236,32340,045(13,258)26,78720082013
MAA Quarry OaksAustin, TX—4,62134,461—13,4844,62147,94552,566(18,074)34,49219962013
MAA Sunset ValleyAustin, TX—3,15011,393—6,0293,15017,42220,572(9,644)10,92819962004
MAA Western OaksAustin, TX—(2)9,10049,339—4,8279,10054,16663,266(19,917)43,34920012009
MAA Barton CreekAustin, TX—8,68321,497—4,8758,68326,37235,055(6,606)28,44919982016
MAA Park MesaAustin, TX—4,65319,828—2,5344,65322,36227,015(5,285)21,73019922016
MAA South LamarAustin, TX—20,54274,093—28,79420,542102,887123,429(22,265)101,1642011/172016
MAA West AustinAustin, TX—(1)7,80548,843—3,4507,80552,29360,098(15,096)45,00220092016
MAA Brushy CreekAustin, TX—2,90024,009—6,4892,90030,49833,398(16,710)16,68820032006
MAA East AustinAustin, TX—2,2816,169—15,4442,28121,61323,894(10,641)13,25319871995
MAA Barton SkywayAustin, TX—1,40512,769—13,7501,40526,51927,924(14,611)13,31319771997
MAA Windmill HillAustin, TX—5,006——55,1145,00655,11460,120(1,399)58,721N/A2020
MAA Shoal CreekBedford, TX—4,98227,377—6,1454,98233,52238,504(13,546)24,95819962013
MAA Willow CreekBedford, TX—3,10933,488—11,0423,10944,53047,639(18,055)29,58419962013
MAA HebronCarrollton, TX—4,23142,237—2,8144,23145,05149,282(16,154)33,12820112013
MAA Cedar parkCedar Park, TX—7,23256,640—7,0427,23263,68270,914(23,982)46,93220052013
Grand CypressCypress, TX—3,88124,267—4,7493,88129,01632,897(8,275)24,62220082013
MAA Medical DistrictDallas, TX—4,05033,779—4,6004,05038,37942,429(12,937)29,49220072013
MAA Highlands NorthDallas, TX—9888,893—4,96398813,85614,844(9,966)4,87819861998

F-35

Initial CostCosts Capitalized Subsequent to AcquisitionGross Amount carried as of December 31, 2022
PropertyLocationEncumbrancesLandBuildings and FixturesLandBuildings and FixturesLandBuildings and FixturesTotal (3)Accumulated Depreciation (4)NetDate of ConstructionDate Acquired
MAA Grand CourtyardsDallas, TX—2,73022,240—6,7492,73028,98931,719(15,308)16,41120002006
MAA Lowes FarmDallas, TX—5,01641,091—4,3175,01645,40850,424(17,601)32,82320082011
MAA Frisco BridgesDallas, TX—14,84566,571—65,13214,845131,703146,548(30,454)116,0942009/13/212013
MAA McKinney AvenueDallas, TX—34,76540,127—11,68234,76551,80986,574(13,282)73,2921993/962016
MAA WorthingtonDallas, TX—13,71343,268—10,19213,71353,46067,173(12,008)55,1651993/ 20082016
MAA AbbeyDallas, TX—2,7114,369—8472,7115,2167,927(1,295)6,63219962016
MAA Addison CircleDallas, TX—12,308189,419—27,84612,308217,265229,573(52,494)177,0791998-20002016
MAA North HallDallas, TX—13,03014,383—4,13913,03018,52231,552(5,369)26,18319982016
MAA EastsideDallas, TX—7,13458,095—5,4127,13463,50770,641(16,258)54,38320082016
MAA GalleryDallas, TX—4,3917,910—2,0394,3919,94914,340(2,853)11,48719992016
MAA HeightsDallas, TX—26,24537,922—5,11426,24543,03669,281(10,931)58,3501998-1999/ 20092016
MAA Katy TrailDallas, TX—10,33332,456—2,33210,33334,78845,121(7,862)37,25920102016
MAA LegacyDallas, TX—(1)6,57555,277—6,9346,57562,21168,786(15,059)53,72720002016
MAA MeridianDallas, TX—8,78013,654—1,4688,78015,12223,902(3,952)19,95019912016
MAA Uptown VillageDallas, TX—34,97433,213—9,73534,97442,94877,922(11,545)66,3771995-20002016
MAA WatermarkDallas, TX—96014,438—4,46296018,90019,860(10,962)8,89820022004
MAA Bear CreekEuless, TX—6,45330,048—6,3396,45336,38742,840(14,850)27,99019982013
MAA FairviewFairview, TX—2,17135,077—2,6412,17137,71839,889(13,092)26,79720122013
MAA StarwoodFrisco, TX—3,24026,069—3,2253,24029,29432,534(12,334)20,20020092010
MAA GrapevineGrapevine, TX—2,35129,757—9,6612,35139,41841,769(14,886)26,8831985/862013
Greenwood ForestHouston, TX—3,46523,482—2,7563,46526,23829,703(8,844)20,85919942013
Legacy PinesHouston, TX—2,14219,066—5,1752,14224,24126,383(15,171)11,21219992003
Park Place HoustonHouston, TX—2,06115,830—4,7872,06120,61722,678(10,569)12,10919962007
Post 510Houston, TX—7,22633,366—2,1777,22635,54342,769(9,253)33,51620142016
Post at Afton OaksHouston, TX—11,50365,469—4,77611,50370,24581,748(20,468)61,28020172016
Post Midtown SquareHouston, TX—19,03889,570—9,28819,03898,858117,896(24,750)93,1461999/ 20132016
RanchstoneHouston, TX—1,48014,807—4,5091,48019,31620,796(9,867)10,92919962007
Reserve at Woodwind LakesHouston, TX—1,96819,928—6,2881,96826,21628,184(13,867)14,31719992006
Retreat at Vintage ParkHouston, TX—(1)8,21140,352—2,9428,21143,29451,505(9,325)42,18020142014
Yale at 6thHouston, TX—(2)13,10762,764—3,28013,10766,04479,151(12,234)66,91720152016
MAA Park PointHouston, TX—9,031——45,8619,03145,86154,892(2,937)51,955N/A2018
Cascade at Fall CreekHumble, TX—5,98540,011—5,8805,98545,89151,876(22,501)29,37520072007
MAA Bella CasitaIrving, TX—2,52126,432—5,8552,52132,28734,808(12,729)22,07920072010
MAA Valley RanchIrving, TX—5,07237,397—15,7995,07253,19658,268(22,764)35,50419972013
MAA Las ColinasIrving, TX—(2)3,90240,691—4,2593,90244,95048,852(15,209)33,64320062013
MAA Remington HillsIrving, TX—4,39021,822—15,9764,39037,79842,188(14,291)27,89719842013
MAA Times SquareMcKinney, TX—1,13028,058—6,5751,13034,63335,763(14,936)20,82720092010
MAA Stonebridge RanchMcKinney, TX—4,03419,528—4,2954,03423,82327,857(7,450)20,40720002013
MAA Market CenterPlano, TX—16,894110,705—6,83516,894117,540134,434(24,535)109,8992013/152014
MAA HighwoodPlano, TX—8647,783—3,97186411,75412,618(8,695)3,92319831998
MAA Los RiosPlano, TX—3,27328,823—8,2383,27337,06140,334(23,072)17,26220002003
MAA Boulder RidgeRoanoke, TX—3,38226,930—9,1263,38236,05639,438(20,076)19,36219992005
MAA Copper RidgeRoanoke, TX—4,166——48,9574,16648,95753,123(12,245)40,8782009/202008
MAA Ashton OaksRound Rock, TX—5,51136,241—4,3845,51140,62546,136(15,472)30,66420092013
MAA Round RockRound Rock, TX—4,69145,379—4,6044,69149,98354,674(18,627)36,04719972013
MAA Sierra VistaRound Rock, TX—2,56116,488—5,5292,56122,01724,578(9,252)15,32619992013
Alamo RanchSan Antonio, TX—2,38026,982—4,6012,38031,58333,963(12,997)20,96620092011
Bulverde OaksSan Antonio, TX—4,25736,759—3,2354,25739,99444,251(8,876)35,37520142014
Haven at BlancoSan Antonio, TX—5,41145,958—5,5655,41151,52356,934(18,624)38,31020102012
Stone Ranch at Westover HillsSan Antonio, TX—4,00024,992—4,4824,00029,47433,474(13,243)20,23120092009
Cypresswood CourtSpring, TX—5765,190—5,63457610,82411,400(6,988)4,41219841994
Villages at KirkwoodStafford, TX—1,91815,846—4,9851,91820,83122,749(11,852)10,89719962004
Green Tree PlaceWoodlands, TX—5394,850—4,7355399,58510,124(7,054)3,07019841994
Stonefield CommonsCharlottesville, VA—11,04436,689—2,27511,04438,96450,008(8,998)41,01020132014
Adalay BayChesapeake, VA—5,28031,341—4,7165,28036,05741,337(13,941)27,39620022012
Apartments at Cobblestone SquareFredericksburg, VA—10,99048,696—4,48310,99053,17964,169(13,532)50,63720122016
Colonial Village at GreenbrierFredericksburg, VA—4,84221,677—4,2474,84225,92430,766(9,146)21,62019802013
Seasons at Celebrate VirginiaFredericksburg, VA—14,49032,083—42,10814,49074,19188,681(22,523)66,15820112011
Station Square at Cosner's CornerFredericksburg, VA—12,82551,078—3,22912,82554,30767,132(12,486)54,6462013/162013
Colonial Village at Hampton GlenGlen Allen, VA—4,85121,678—4,5974,85126,27531,126(10,260)20,86619862013
Colonial Village at West EndGlen Allen, VA—4,66118,908—3,6674,66122,57527,236(8,778)18,45819872013
Township in Hampton WoodsHampton, VA—1,5098,189—9,0951,50917,28418,793(12,605)6,18819871995
Colonial Village at WaterfordMidlothian, VA—6,73329,221—6,7816,73336,00242,735(14,448)28,28719892013
RadiusNewport News, VA—5,04036,481—5,8035,04042,28447,324(9,230)38,09420122015
Ashley ParkRichmond, VA—4,76113,365—4,0584,76117,42322,184(7,484)14,70019882013
Colonial Village at Chase GaytonRichmond, VA—6,02129,004—5,7246,02134,72840,749(13,537)27,21219842013
Hamptons at Hunton ParkRichmond, VA—4,93035,598—7,2494,93042,84747,777(16,853)30,92420032011
Retreat at West CreekRichmond, VA—10,11236,136—15,84310,11251,97962,091(10,159)51,9322015/172015
Post Carlyle SquareWashington D.C.—29,728154,309—5,82929,728160,138189,866(37,099)152,7672006/132016
Post Corners at Trinity CenterWashington D.C.—7,66470,012—3,9557,66473,96781,631(17,218)64,41319962016

F-36

Initial CostCosts Capitalized Subsequent to AcquisitionGross Amount carried as of December 31, 2022
PropertyLocationEncumbrancesLandBuildings and FixturesLandBuildings and FixturesLandBuildings and FixturesTotal (3)Accumulated Depreciation (4)NetDate of ConstructionDate Acquired
Post FallsgroveWashington D.C.—17,52458,896—5,72117,52464,61782,141(15,716)66,42520032016
MAA National LandingWashington D.C.—30,452125,091—17,71630,452142,807173,259(34,180)139,07920012016
Post Tysons CornerWashington D.C.—30,77682,021—10,58430,77692,605123,381(21,184)102,19719902016
Total Residential Properties3,8611,874,5239,907,359—2,784,3361,874,52312,691,69514,566,218**(**4,226,114)10,340,104
220 Riverside RetailJacksonville, FL—1192,902—9231193,8253,944(436)3,50820152019
MAA Parkside RetailOrlando, FL—74211,924—1,34574213,26914,011(3,157)10,85419992016
MAA Robinson RetailOrlando, FL——563—166—729729(22)70720212018
MAA Harbour Island RetailTampa, FL—3864,315—3543864,6695,055(1,062)3,99319972016
MAA Rocky Point RetailTampa, FL—3451—40634457491(253)2381994-19962016
MAA SoHo Square RetailTampa, FL—(1)2684,033—502684,0834,351(1,334)3,01720122016
MAA Buckhead RetailAtlanta, GA—8673,465—1,0048674,4695,336(1,420)3,91620122012
MAA Piedmont Park RetailAtlanta, GA—4261,089—224261,1111,537(273)1,26419992016
MAA Riverside OfficeAtlanta, GA—9,68022,108—11,7259,68033,83343,513(9,232)34,28119962016
MAA Riverside RetailAtlanta, GA—8892,340—2,6378894,9775,866(1,125)4,74119962016
Post Training FacilityAtlanta, GA—1,092968—331,0921,0012,093(485)1,60819992016
MAA West Village RetailSmyrna, GA—3,4088,446—1,7043,40810,15013,558(2,865)10,69320122014
The Denton RetailKansas City, MO—7004,439—7957005,2345,934(1,230)4,70420142015
MAA 1225 RetailCharlotte, NC—52199—24952448500(192)30820102010
MAA Gateway RetailCharlotte, NC—3181,430—813181,5111,829(371)1,45820002016
MAA South Line RetailCharlotte, NC—4701,289—2874701,5762,046(375)1,67120092016
MAA Uptown RetailCharlotte, NC—3191,144—253191,1691,488(278)1,21019982016
MAA Leasing CenterCharlotte, NC—1,2901,488—1731,2901,6612,951(405)2,54619982016
MAA Hue RetailRaleigh, NC——2,129—100—2,2292,229(330)1,89920102018
MAA Wade Park RetailRaleigh, NC—3174,552—1023174,6544,971(1,445)3,52620112016
The Greene RetailGreenville, SC——————————20192019
MAA South Lamar RetailAustin, TX—4213,072—6734213,7454,166(836)3,33020112016
MAA Frisco Bridges RetailDallas, TX—7796,593—6877797,2808,059(1,959)6,10020092016
MAA McKinney Avenue RetailDallas, TX—1,5815,982—4491,5816,4318,012(1,461)6,55119962016
MAA Worthington RetailDallas, TX—108495—4221089171,025(206)8191993/ 20082016
MAA Addison Circle OfficeDallas, TX—1,3954,280—1,4801,3955,7607,155(1,713)5,4421998-20002016
MAA Addison Circle RetailDallas, TX—44821,386—2,56144823,94724,395(6,181)18,2141998-20002016
MAA North Hall RetailDallas, TX—347716—843478001,147(237)91019982016
MAA Eastside RetailDallas, TX—68210,645—67768211,32212,004(2,669)9,33520082016
MAA Heights RetailDallas, TX—1,0653,314—6731,0653,9875,052(907)4,14519972016
MAA Katy Trail RetailDallas, TX—4654,883—994654,9825,447(1,118)4,32920102016
MAA Legacy RetailDallas, TX—(1)1503,334—4461503,7803,930(846)3,08420002016
Post Midtown Square RetailHouston, TX—1,32216,005—5331,32216,53817,860(3,879)13,9811999/ 20132016
Rise Condo Devel LP RetailHouston, TX——2,280—67—2,3472,347(558)1,7891999/ 20132016
MAA Bella Casita RetailIrving, TX—46186—20246388434(151)28320072010
MAA Times Square RetailMcKinney, TX—2531,310—4,8042536,1146,367(1,475)4,89220092010
Post Carlyle Square RetailWashington D.C.—1,0487,930—1201,0488,0509,098(1,902)7,1962006/162016
Total Retail / Commercial Properties—31,487171,285—36,15831,487207,443238,930**(**52,388)186,542
Novel Val VistaPhoenix, AZ—7,285——52,3637,28552,36359,648—59,648N/A2020
Novel West MidtownAtlanta, GA—7,000——65,5367,00065,53672,536—72,536N/A2021
Novel DaybreakSalt Lake City, UT—7,025——67,1707,02567,17074,195—74,195N/A2021
MAA Milepost 35Denver, CO—12,572——32,60412,57232,60445,176—45,176N/A2022
MAA NixieRaleigh, NC—8,897——4,5488,8974,54813,445—13,445N/A2022
MAA BreakwaterTampa, FL—23,514——9,72323,5149,72333,237—33,237N/A2022
Total Active Development Properties—66,293——231,94466,293231,944298,237—298,237
Total Properties3,8611,972,30310,078,644—3,052,4381,972,30313,131,08215,103,385**(**4,278,502)10,824,883
Total Land Held for Future Developments—64,312———64,312—64,312—64,312N/AVarious
Total Properties in Predevelopment—36,061——6,20536,0616,20542,266—42,266N/AVarious
Corporate Properties——36,695———36,69536,695(24,245)12,450VariousVarious
Total Other—100,37336,695—6,205100,37342,900143,273**(**24,245)119,028
Total Real Estate Assets, net of Real Estate Joint Venture$3,861$2,072,676$10,115,339$—$3,058,643$2,072,676$13,173,982$15,246,658$**(**4,302,747)$10,943,911

(1)

Encumbered by a $191.3 million secured property mortgage, with a fixed interest rate of 4.43%, which matures on February 10, 2049.

(2)

Encumbered by a $172.0 million secured property mortgage, with a fixed interest rate of 4.44%, which matures on January 10, 2049.

(3)

The aggregate cost for federal income tax purposes was approximately $12.2 billion (unaudited) as of December 31, 2022. The aggregate cost for book purposes exceeds the total gross amount of real estate assets for federal income tax purposes, principally due to purchase accounting adjustments recorded under accounting principles generally accepted in the United States of America.

(4)

Depreciation is recognized on a straight-line basis over the estimated useful asset life, which ranges from five to 40 years for land improvements and buildings, three to five years for furniture, fixtures and equipment and approximately six months for the fair market value of in-place residential leases.

F-37

Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P.

Schedu****le III — Real Estate and Accumulated Depreciation

Years ended December 31, 2022, 2021 and 2020

The following table summarizes the Company’s changes in real estate investments and accumulated depreciation for the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):

202220212020
Real estate investments:
Balance at beginning of year$14,704,237$14,338,895$13,898,707
Acquisitions (1)272,34244,08656,327
Less: fair market value of leases included in acquisitions(1,505)——
Improvement and development469,661506,775437,268
Disposition of real estate assets (2)(198,077)(185,519)(53,407)
Balance at end of year$15,246,658$14,704,237$14,338,895
Accumulated depreciation:
Balance at beginning of year$3,848,161$3,415,105$2,955,253
Depreciation540,708531,848508,746
Disposition of real estate assets (2)(86,122)(98,792)(48,894)
Balance at end of year$4,302,747$3,848,161$3,415,105

(1)

Includes non-cash activity related to acquisitions.

(2)

Includes assets sold, casualty losses, and removal of certain fully depreciated assets.

See accompanying reports of independent registered public accounting firm.

F-38

Previous: Item 15. Exhibits and Financial Statement Schedules.