Item 1. Financial Statements.

Mid-America Apartment Communities, Inc.

Condensed Consolida****ted Balance Sheets

(Unaudited)

(Dollars in thousands, except per share data)

		March 31, 2024				December 31, 2023
Assets
Real estate assets:
Land		$	2,031,406			$	2,031,403
Buildings and improvements and other			13,623,207				13,515,949
Development and capital improvements in progress			380,087				385,405
			16,034,700				15,932,757
Less: Accumulated depreciation			(5,006,226	)			(4,864,690	)
			11,028,474				11,068,067
Undeveloped land			73,861				73,861
Investment in real estate joint venture			41,877				41,977
Real estate assets, net			11,144,212				11,183,905
Cash and cash equivalents			54,601				41,314
Restricted cash			13,475				13,777
Other assets			258,444				245,507
Total assets		$	11,470,732			$	11,484,503
Liabilities and equity
Liabilities:
Unsecured notes payable		$	4,264,290			$	4,180,084
Secured notes payable			360,173				360,141
Accrued expenses and other liabilities			569,790				645,156
Total liabilities			5,194,253				5,185,381
Redeemable common stock			19,089				19,167
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 March 31, 2024 and December 31, 2023, respectively			9				9
Common stock, $0.01 par value per share, 145,000,000 shares authorized;116,728,052 and 116,694,124 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively (1)			1,168				1,168
Additional paid-in capital			7,406,189				7,399,921
Accumulated distributions in excess of net income			(1,326,654	)			(1,298,263	)
Accumulated other comprehensive loss			(8,263	)			(8,764	)
Total MAA shareholders’ equity			6,072,449				6,094,071
Noncontrolling interests - OP Units			161,909				163,128
Total Company’s shareholders’ equity			6,234,358				6,257,199
Noncontrolling interests - consolidated real estate entities			23,032				22,756
Total equity			6,257,390				6,279,955
Total liabilities and equity		$	11,470,732			$	11,484,503

(1)

Number of shares issued and outstanding represents total shares of common stock regardless of classification on the Condensed Consolidated Balance Sheets. The number of shares classified as redeemable common stock on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 are 145,073 and 142,546, respectively.

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartment Communities, Inc.

Condensed Consolidated S****tatements of Operations

(Unaudited)

(Dollars in thousands, except per share data)

		Three months ended March 31,
		2024				2023
Revenues:
Rental and other property revenues		$	543,622			$	529,033
Expenses:
Operating expenses, excluding real estate taxes and insurance			118,199				108,604
Real estate taxes and insurance			79,603				74,199
Depreciation and amortization			143,020				138,501
Total property operating expenses			340,822				321,304
Property management expenses			19,995				17,928
General and administrative expenses			17,045				15,923
Interest expense			40,361				37,281
Loss (gain) on sale of depreciable real estate assets			2				(15	)
Gain on sale of non-depreciable real estate assets			—				(54	)
Other non-operating income			(23,526	)			(3,467	)
Income before income tax expense			148,923				140,133
Income tax expense			(1,795	)			(944	)
Income from continuing operations before real estate joint venture activity			147,128				139,189
Income from real estate joint venture			482				385
Net income			147,610				139,574
Net income attributable to noncontrolling interests			3,861				3,664
Net income available for shareholders			143,749				135,910
Dividends to MAA Series I preferred shareholders			922				922
Net income available for MAA common shareholders		$	142,827			$	134,988
Earnings per common share - basic:
Net income available for MAA common shareholders		$	1.22			$	1.16
Earnings per common share - diluted:
Net income available for MAA common shareholders		$	1.22			$	1.16

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartment Communities, Inc.

Condensed Consolidated Statem****ents of Comprehensive Income

(Unaudited)

(Dollars in thousands)

		Three months ended March 31,
		2024				2023
Net income		$	147,610			$	139,574
Other comprehensive income:
Adjustment for net losses reclassified to net income from derivative instruments			517				278
Total comprehensive income			148,127				139,852
Less: Comprehensive income attributable to noncontrolling interests			(3,877	)			(3,681	)
Comprehensive income attributable to MAA		$	144,250			$	136,171

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartment Communities, Inc.

Condensed Consolidated S****tatements of Cash Flows

(Unaudited)

(Dollars in thousands)

		Three months ended March 31,
Cash flows from operating activities:		2024				2023
Net income		$	147,610			$	139,574
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			143,258				138,758
Loss (gain) on sale of depreciable real estate assets			2				(15	)
Gain on sale of non-depreciable real estate assets			—				(54	)
Gain on embedded derivative in preferred shares			(13,092	)			(4,435	)
Stock compensation expense			5,869				5,578
Amortization of debt issuance costs, discounts and premiums			1,529				1,517
(Gain) loss on investments			(5,172	)			1,024
Net change in operating accounts and other operating activities			(79,747	)			(63,637	)
Net cash provided by operating activities			200,257				218,310
Cash flows from investing activities:
Purchases of real estate and other assets			(20	)			(12,450	)
Capital improvements and other			(52,101	)			(75,622	)
Development costs			(45,512	)			(52,851	)
Distributions from real estate joint venture			100				—
Contributions to affiliates			(750	)			(1,250	)
Proceeds from real estate asset dispositions			—				3,024
Net proceeds from insurance recoveries			5,271				764
Net cash used in investing activities			(93,012	)			(138,385	)
Cash flows from financing activities:
Net payments of commercial paper			(260,000	)			(20,000	)
Proceeds from notes payable			346,567				—
Principal payments on notes payable			—				(362	)
Payment of deferred financing costs			(3,450	)			—
Distributions to noncontrolling interests			(4,621	)			(4,429	)
Dividends paid on common shares			(171,570	)			(161,683	)
Dividends paid on preferred shares			(922	)			(922	)
Proceeds from issuances of common shares			303				204,077
Net change in other financing activities			(567	)			(1,660	)
Net cash (used in) provided by financing activities			(94,260	)			15,021
Net increase in cash, cash equivalents and restricted cash			12,985				94,946
Cash, cash equivalents and restricted cash, beginning of period			55,091				61,071
Cash, cash equivalents and restricted cash, end of period		$	68,076			$	156,017

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:

Reconciliation of cash, cash equivalents and restricted cash at period end:
Cash and cash equivalents		$	54,601			$	142,411
Restricted cash			13,475				13,606
Total cash, cash equivalents and restricted cash		$	68,076			$	156,017
Supplemental information:
Interest paid		$	32,785			$	29,516
Income taxes paid			—				25
Non-cash transactions:
Distributions on common shares/units declared and accrued		$	176,195			$	167,659
Accrued construction in progress			28,643				31,492
Interest capitalized			3,416				2,746
Conversion of OP Units to shares of common stock			594				479

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartments, L.P.

Condensed Consolida****ted Balance Sheets

(Unaudited)

(Dollars in thousands)

		March 31, 2024				December 31, 2023
Assets
Real estate assets:
Land		$	2,031,406			$	2,031,403
Buildings and improvements and other			13,623,207				13,515,949
Development and capital improvements in progress			380,087				385,405
			16,034,700				15,932,757
Less: Accumulated depreciation			(5,006,226	)			(4,864,690	)
			11,028,474				11,068,067
Undeveloped land			73,861				73,861
Investment in real estate joint venture			41,877				41,977
Real estate assets, net			11,144,212				11,183,905
Cash and cash equivalents			54,601				41,314
Restricted cash			13,475				13,777
Other assets			258,444				245,507
Total assets		$	11,470,732			$	11,484,503
Liabilities and capital
Liabilities:
Unsecured notes payable		$	4,264,290			$	4,180,084
Secured notes payable			360,173				360,141
Accrued expenses and other liabilities			569,790				645,156
Due to general partner			19				19
Total liabilities			5,194,272				5,185,400
Redeemable common units			19,089				19,167
Operating Partnership capital:
Preferred units, 8.50% Series I Cumulative Redeemable Units, 867,846 preferred units outstanding as of March 31, 2024 and December 31, 2023, respectively			66,840				66,840
General partner, 116,728,052 and 116,694,124 OP Units outstanding as of March 31, 2024 and December 31, 2023, respectively (1)			6,014,015				6,036,154
Limited partners, 3,132,552 and 3,143,972 OP Units outstanding as of March 31, 2024 and December 31, 2023, respectively (1)			161,909				163,128
Accumulated other comprehensive loss			(8,425	)			(8,942	)
Total operating partners’ capital			6,234,339				6,257,180
Noncontrolling interests - consolidated real estate entities			23,032				22,756
Total equity			6,257,371				6,279,936
Total liabilities and equity		$	11,470,732			$	11,484,503

(1) Number of units outstanding represents total OP Units regardless of classification on the Condensed Consolidated Balance Sheets. The number of units classified as redeemable common units on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 are 145,073 and 142,546, respectively.

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartments, L.P.

Condensed Consolidated S****tatements of Operations

(Unaudited)

(Dollars in thousands, except per unit data)

		Three months ended March 31,
		2024				2023
Revenues:
Rental and other property revenues		$	543,622			$	529,033
Expenses:
Operating expenses, excluding real estate taxes and insurance			118,199				108,604
Real estate taxes and insurance			79,603				74,199
Depreciation and amortization			143,020				138,501
Total property operating expenses			340,822				321,304
Property management expenses			19,995				17,928
General and administrative expenses			17,045				15,923
Interest expense			40,361				37,281
Loss (gain) on sale of depreciable real estate assets			2				(15	)
Gain on sale of non-depreciable real estate assets			—				(54	)
Other non-operating income			(23,526	)			(3,467	)
Income before income tax expense			148,923				140,133
Income tax expense			(1,795	)			(944	)
Income from continuing operations before real estate joint venture activity			147,128				139,189
Income from real estate joint venture			482				385
Net income			147,610				139,574
Distributions to MAALP Series I preferred unitholders			922				922
Net income available for MAALP common unitholders		$	146,688			$	138,652
Earnings per common unit - basic:
Net income available for MAALP common unitholders		$	1.22			$	1.16
Earnings per common unit - diluted:
Net income available for MAALP common unitholders		$	1.22			$	1.16

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartments, L.P.

Condensed Consolidated Statem****ents of Comprehensive Income

(Unaudited)

(Dollars in thousands)

		Three months ended March 31,
		2024				2023
Net income		$	147,610			$	139,574
Other comprehensive income:
Adjustment for net losses reclassified to net income from derivative instruments			517				278
Comprehensive income attributable to MAALP		$	148,127			$	139,852

See accompanying notes to condensed consolidated financial statements.

Mid-America Apartments, L.P.

Condensed Consolidated S****tatements of Cash Flows

(Unaudited)

(Dollars in thousands)

		Three months ended March 31,
Cash flows from operating activities:		2024				2023
Net income		$	147,610			$	139,574
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			143,258				138,758
Loss (gain) on sale of depreciable real estate assets			2				(15	)
Gain on sale of non-depreciable real estate assets			—				(54	)
Gain on embedded derivative in preferred shares			(13,092	)			(4,435	)
Stock compensation expense			5,869				5,578
Amortization of debt issuance costs, discounts and premiums			1,529				1,517
(Gain) loss on investments			(5,172	)			1,024
Net change in operating accounts and other operating activities			(79,747	)			(63,637	)
Net cash provided by operating activities			200,257				218,310
Cash flows from investing activities:
Purchases of real estate and other assets			(20	)			(12,450	)
Capital improvements and other			(52,101	)			(75,622	)
Development costs			(45,512	)			(52,851	)
Distributions from real estate joint venture			100				—
Contributions to affiliates			(750	)			(1,250	)
Proceeds from real estate asset dispositions			—				3,024
Net proceeds from insurance recoveries			5,271				764
Net cash used in investing activities			(93,012	)			(138,385	)
Cash flows from financing activities:
Net payments of commercial paper			(260,000	)			(20,000	)
Proceeds from notes payable			346,567				—
Principal payments on notes payable			—				(362	)
Payment of deferred financing costs			(3,450	)			—
Distributions paid on common units			(176,191	)			(166,112	)
Distributions paid on preferred units			(922	)			(922	)
Proceeds from issuances of common units			303				204,077
Net change in other financing activities			(567	)			(1,660	)
Net cash (used in) provided by financing activities			(94,260	)			15,021
Net increase in cash, cash equivalents and restricted cash			12,985				94,946
Cash, cash equivalents and restricted cash, beginning of period			55,091				61,071
Cash, cash equivalents and restricted cash, end of period		$	68,076			$	156,017

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:

Reconciliation of cash, cash equivalents and restricted cash at period end:
Cash and cash equivalents		$	54,601			$	142,411
Restricted cash			13,475				13,606
Total cash, cash equivalents and restricted cash		$	68,076			$	156,017
Supplemental information:
Interest paid		$	32,785			$	29,516
Income taxes paid			—				25
Non-cash transactions:
Distributions on common units declared and accrued		$	176,195			$	167,659
Accrued construction in progress			28,643				31,492
Interest capitalized			3,416				2,746

See accompanying notes to condensed consolidated financial statements.

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

Notes to Condensed Consoli****dated Financial Statements

(Unaudited)

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 March 31, 2024, MAA owned 116,728,052 OP Units (or 97.4% 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 condensed 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 condensed consolidated financial statements of MAA and those of the Operating Partnership. MAA’s shareholders’ equity may include shares of preferred stock, shares of common stock, additional paid-in capital, cumulative earnings, cumulative distributions, noncontrolling interests, 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.

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 March 31, 2024, 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 March 31, 2024, the Company also had five development communities under construction, totaling 1,970 apartment units once complete, and development costs of $445.6 million had been incurred through March 31, 2024. The Company expects to complete three developments in 2024 and two developments in 2025. As of March 31, 2024, 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 March 31, 2024.

Basis of Presentation and Principles of Consolidation

The accompanying condensed 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 condensed 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 condensed consolidated financial statements have been included, and all such adjustments were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation.

The 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. 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. MAALP is classified as a VIE because the limited partners lack substantive kick-out rights and substantive participating rights, and the Company has concluded it is the primary beneficiary of MAALP. 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 March 31, 2024, 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 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 March 31, 2024, the consolidated assets of the Company’s consolidated real estate entities with a noncontrolling interest were $303.1 million, and consolidated liabilities were $9.6 million, net of eliminations. As of December 31, 2023, the consolidated assets of the Company’s consolidated real estate entities with a noncontrolling interest were $265.1 million, and consolidated liabilities were $12.9 million, net of eliminations.

Investments in Unconsolidated Affiliates

The Company uses the equity method to account for its investments in a real estate joint venture and six 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 $41.9 million and $42.0 million as of March 31, 2024 and December 31, 2023, respectively, and is included in “Investment in real estate joint venture” in the accompanying Condensed Consolidated Balance Sheets.

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 March 31, 2024 and December 31, 2023, the Company’s investments in the limited partnerships were $55.1 million and $46.5 million, respectively, and are included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets with any related earnings, including unrealized gains and losses on the underlying investments of the limited partnerships which are recorded at the estimated fair value, recognized in “Other non-operating income” in the accompanying Condensed Consolidated Statements of Operations. During the three months ended March 31, 2024 and 2023, the Company recognized $8.1 million of income and $0.1 million of expense, respectively, from its investments in the limited partnerships. As of March 31, 2024, the Company was committed to make additional capital contributions totaling $32.8 million if and when called by the general partners of the limited partnerships.

Marketable Equity Securities

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. During the three months ended March 31, 2024, the Company did not receive any marketable equity securities. During the three months ended March 31, 2023, the Company received marketable equity securities totaling $7.7 million, which are noncash investing activities. 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 Condensed Consolidated Balance Sheets, with any related gains and losses, including unrealized gains and losses, recognized in “Other non-operating income” in the accompanying Condensed Consolidated Statements of Operations. As of March 31, 2024 and December 31, 2023, the Company’s investment in the marketable equity securities was $15.6 million and $18.6 million, respectively. During the three months ended March 31, 2024 and 2023, the Company recognized $3.0 million and $0.9 million of expense, respectively, from its investment in marketable equity securities.

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 Accounting Standards Codification (“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 11. 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 11.

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 12 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 March 31, 2024 and December 31, 2023, right-of-use assets recorded within “Other assets” totaled $41.9 million and $42.5 million, respectively, and related lease liabilities recorded within “Accrued expenses and other liabilities” totaled $26.9 million and $27.3 million, respectively, in the Condensed Consolidated Balance Sheets. Lease expense recognized for the three months ended March 31, 2024 and 2023 was immaterial to the Company. Cash paid for amounts included in the measurement of operating lease liabilities during the three months ended March 31, 2024 and 2023 was also immaterial. See Note 10 for additional disclosures regarding leases.

Fair Value Measurements

The Company applies the guidance in ASC Topic 820, Fair Value Measurements and Disclosures, to the valuation of acquired 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 7 utilizing the following hierarchy:

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

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

Level 3 - Unobservable inputs for the assets or liability.

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 three months ended March 31, 2024 and 2023, 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):

		Three months ended March 31,
		2024				2023
Calculation of Earnings per common share - basic
Net income		$	147,610			$	139,574
Net income attributable to noncontrolling interests			(3,861	)			(3,664	)
Unvested restricted shares (allocation of earnings)			(62	)			(60	)
Dividends to MAA Series I preferred shareholders			(922	)			(922	)
Net income available for MAA common shareholders, adjusted		$	142,765			$	134,928
Weighted average common shares - basic			116,668				116,182
Earnings per common share - basic		$	1.22			$	1.16
Calculation of Earnings per common share - diluted
Net income		$	147,610			$	139,574
Net income attributable to noncontrolling interests (1)			(3,861	)			(3,664	)
Dividends to MAA Series I preferred shareholders			(922	)			(922	)
Net income available for MAA common shareholders, adjusted		$	142,827			$	134,988
Weighted average common shares - basic			116,668				116,182
Effect of dilutive securities			112				220
Weighted average common shares - diluted			116,780				116,402
Earnings per common share - diluted		$	1.22			$	1.16

(1)

For the three months ended March 31, 2024 and 2023, 3.1 million OP Units and 3.2 million OP Units, respectively, and their related income are not included in the diluted earnings per share calculations as they are not dilutive.

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 three months ended March 31, 2024 and 2023, 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):

		Three months ended March 31,
		2024				2023
Calculation of Earnings per common unit - basic
Net income		$	147,610			$	139,574
Unvested restricted units (allocation of earnings)			(62	)			(60	)
Distributions to MAALP Series I preferred unitholders			(922	)			(922	)
Net income available for MAALP common unitholders, adjusted		$	146,626			$	138,592
Weighted average common units - basic			119,806				119,340
Earnings per common unit - basic		$	1.22			$	1.16
Calculation of Earnings per common unit - diluted
Net income		$	147,610			$	139,574
Distributions to MAALP Series I preferred unitholders			(922	)			(922	)
Net income available for MAALP common unitholders, adjusted		$	146,688			$	138,652
Weighted average common units - basic			119,806				119,340
Effect of dilutive securities			112				220
Weighted average common units - diluted			119,918				119,560
Earnings per common unit - diluted		$	1.22			$	1.16

4. MAA Equity

Changes in MAA’s total equity and its components for the three months ended March 31, 2024 and 2023 were as follows (dollars in thousands):

		Mid-America Apartment Communities, Inc. Shareholders’ Equity
		Preferred Stock				Common Stock				Additional Paid-In Capital				Accumulated Distributions in Excess of Net Income				Accumulated Other Comprehensive Loss				Noncontrolling Interests - Operating Partnership				Noncontrolling Interests - Consolidated Real Estate Entities				Total Equity
EQUITY BALANCE DECEMBER 31, 2023		$	9			$	1,168			$	7,399,921			$	(1,298,263	)		$	(8,764	)		$	163,128			$	22,756			$	6,279,955
Net income			—				—				—				143,749				—				3,861				—				147,610
Other comprehensive income - derivative instruments			—				—				—				—				501				16				—				517
Issuance and registration of common shares			—				—				93				—				—				—				—				93
Shares repurchased and retired			—				—				(842	)			—				—				—				—				(842	)
Shares issued in exchange for common units			—				—				594				—				—				(594	)			—				—
Redeemable stock fair market value adjustment			—				—				—				402				—				—				—				402
Adjustment for noncontrolling interests in Operating Partnership			—				—				(102	)			—				—				102				—				—
Amortization of unearned compensation			—				—				6,525				—				—				—				—				6,525
Dividends on preferred stock			—				—				—				(922	)			—				—				—				(922	)
Dividends on common stock ($1.4700 per share)			—				—				—				(171,620	)			—				—				—				(171,620	)
Distributions on noncontrolling interests units ($1.4700 per share)			—				—				—				—				—				(4,604	)			—				(4,604	)
Contribution from noncontrolling interest			—				—				—				—				—				—				276				276
EQUITY BALANCE MARCH 31, 2024		$	9			$	1,168			$	7,406,189			$	(1,326,654	)		$	(8,263	)		$	161,909			$	23,032			$	6,257,390

		Mid-America Apartment Communities, Inc. Shareholders’ Equity
		Preferred Stock				Common Stock				Additional Paid-In Capital				Accumulated Distributions in Excess of Net Income				Accumulated Other Comprehensive Loss				Noncontrolling Interests - Operating Partnership				Noncontrolling Interests - Consolidated Real Estate Entities				Total Equity
EQUITY BALANCE DECEMBER 31, 2022		$	9			$	1,152			$	7,202,834			$	(1,188,854	)		$	(10,052	)		$	163,595			$	21,064			$	6,189,748
Net income			—				—				—				135,910				—				3,664				—				139,574
Other comprehensive income - derivative instruments			—				—				—				—				261				17				—				278
Issuance and registration of common shares			—				11				203,886				—				—				—				—				203,897
Shares repurchased and retired			—				—				(1,920	)			—				—				—				—				(1,920	)
Shares issued in exchange for common units			—				—				479				—				—				(479	)			—				—
Shares issued in exchange for redeemable stock			—				4				577				—				—				—				—				581
Redeemable stock fair market value adjustment			—				—				—				793				—				—				—				793
Adjustment for noncontrolling interests in Operating Partnership			—				—				(3,928	)			—				—				3,928				—				—
Amortization of unearned compensation			—				—				6,379				—				—				—				—				6,379
Dividends on preferred stock			—				—				—				(922	)			—				—				—				(922	)
Dividends on common stock ($1.4000 per share)			—				—				—				(163,252	)			—				—				—				(163,252	)
Distributions on noncontrolling interests units ($1.4000 per share)			—				—				—				—				—				(4,416	)			—				(4,416	)
Contribution from noncontrolling interest			—				—				—				—				—				—				256				256
EQUITY BALANCE MARCH 31, 2023		$	9			$	1,167			$	7,408,307			$	(1,216,325	)		$	(9,791	)		$	166,309			$	21,320			$	6,370,996

5. MAALP Capital

Changes in MAALP’s total capital and its components for the three months ended March 31, 2024 and 2023 were as follows (dollars in thousands):

		Mid-America Apartments, L.P. Unitholders’ Capital
		General Partner				Limited Partners				Preferred Units				Accumulated Other Comprehensive Loss				Noncontrolling Interests - Consolidated Real Estate Entities				Total Partnership Capital
CAPITAL BALANCE DECEMBER 31, 2023		$	6,036,154			$	163,128			$	66,840			$	(8,942	)		$	22,756			$	6,279,936
Net income			142,827				3,861				922				—				—				147,610
Other comprehensive income - derivative instruments			—				—				—				517				—				517
Issuance of units			93				—				—				—				—				93
Units repurchased and retired			(842	)			—				—				—				—				(842	)
General partner units issued in exchange for limited partner units			594				(594	)			—				—				—				—
Redeemable units fair market value adjustment			402				—				—				—				—				402
Adjustment for limited partners’ capital at redemption value			(118	)			118				—				—				—				—
Amortization of unearned compensation			6,525				—				—				—				—				6,525
Distributions to preferred unitholders			—				—				(922	)			—				—				(922	)
Distributions to common unitholders ($1.4700 per unit)			(171,620	)			(4,604	)			—				—				—				(176,224	)
Contribution from noncontrolling interest			—				—				—				—				276				276
CAPITAL BALANCE MARCH 31, 2024		$	6,014,015			$	161,909			$	66,840			$	(8,425	)		$	23,032			$	6,257,371

		Mid-America Apartments, L.P. Unitholders’ Capital
		General Partner				Limited Partners				Preferred Units				Accumulated Other Comprehensive Loss				Noncontrolling Interests - Consolidated Real Estate Entities				Total Partnership Capital
CAPITAL BALANCE DECEMBER 31, 2022		$	5,948,498			$	163,595			$	66,840			$	(10,268	)		$	21,064			$	6,189,729
Net income			134,988				3,664				922				—				—				139,574
Other comprehensive income - derivative instruments			—				—				—				278				—				278
Issuance of units			203,897				—				—				—				—				203,897
Units repurchased and retired			(1,920	)			—				—				—				—				(1,920	)
General partner units issued in exchange for limited partner units			479				(479	)			—				—				—				—
Units issued in exchange for redeemable stock			581				—				—				—				—				581
Redeemable units fair market value adjustment			793				—				—				—				—				793
Adjustment for limited partners’ capital at redemption value			(3,945	)			3,945				—				—				—				—
Amortization of unearned compensation			6,379				—				—				—				—				6,379
Distributions to preferred unitholders			—				—				(922	)			—				—				(922	)
Distributions to common unitholders ($1.4000 per unit)			(163,252	)			(4,416	)			—				—				—				(167,668	)
Contribution from noncontrolling interest			—				—				—				—				256				256
CAPITAL BALANCE MARCH 31, 2023		$	6,126,498			$	166,309			$	66,840			$	(9,990	)		$	21,320			$	6,370,977

6. Borrowings

The following table summarizes the Company’s outstanding debt as of March 31, 2024 (dollars in thousands):

		Balance				Weighted Average Effective Rate				Weighted Average Contract Maturity
Unsecured debt
Fixed rate senior notes		$	4,050,000				3.4	%		4/8/2030
Variable rate commercial paper program			235,000				5.6	%		4/6/2024
Debt issuance costs, discounts and premiums			(20,710	)
Total unsecured debt		$	4,264,290				3.6	%
Secured debt
Fixed rate property mortgages		$	363,293				4.4	%		1/26/2049
Debt issuance costs			(3,120	)
Total secured debt		$	360,173				4.4	%
Total outstanding debt		$	4,624,463				3.6	%

Unsecured Revolving Credit Facility

MAALP has entered into an unsecured revolving credit facility, with a borrowing capacity of $1.25 billion and 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 March 31, 2024, there was no outstanding balance under the revolving credit facility, while $4.5 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 up to a maximum aggregate principal amount outstanding of $625.0 million. As of March 31, 2024, MAALP had $235.0 million of borrowings outstanding under the commercial paper program. For the three months ended March 31, 2024, the average daily borrowings outstanding under the commercial paper program were $235.7 million.

Unsecured Senior Notes

As of March 31, 2024, 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 2030.

In January 2024, MAALP publicly issued $350.0 million in aggregate principal amount of unsecured senior notes due March 2034 with a coupon rate of 5.000% per annum and at an issue price of 99.019%. Interest is payable semi-annually in arrears on March 15 and September 15 of each year, commencing September 15, 2024. The proceeds from the sale of the notes were used to repay borrowings on the commercial paper program. The notes have an effective interest rate of 5.123%.

Secured Property Mortgages

As of March 31, 2024, MAALP had $363.3 million of fixed rate conventional property mortgages with a weighted average maturity in 2049.

Upcoming Debt Obligations

As of March 31, 2024, MAALP’s debt obligations over the next 12 months consist of approximately $635 million of principal obligations, including $400.0 million of unsecured senior notes due June 2024 and $235.0 million of commercial paper borrowings due April 2024.

7. 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 March 31, 2024 and December 31, 2023 totaled $4.4 billion and $4.0 billion, respectively, and had estimated fair values of $4.0 billion and $3.7 billion (excluding prepayment penalties) as of March 31, 2024 and December 31, 2023, 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 values of variable rate debt as of March 31, 2024 and December 31, 2023 totaled $235.0 million and $495.0 million, respectively, and the variable rate debt had estimated fair values of $235.0 million and $495.0 million as of March 31, 2024 and December 31, 2023, respectively. The fair values 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 March 31, 2024, 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 Condensed Consolidated Balance Sheets and is adjusted to its fair value at each reporting date, with a corresponding non-cash adjustment to “Other non-operating income” in the accompanying Condensed Consolidated Statements of Operations. As of March 31, 2024 and December 31, 2023, the fair value of the embedded derivative was $45.0 million and $31.9 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 March 31, 2024 and December 31, 2023 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 March 31, 2024, the Company had $8.4 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 12 months, the Company estimates an additional $1.8 million will be reclassified to earnings as an increase to “Interest expense.”

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

The tables below present the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (dollars in thousands):

				Net Loss Reclassified from AOCL into Interest Expense
		Location of Loss Reclassified		Three months ended March 31,
Derivatives in Cash Flow Hedging Relationships		from AOCL into Income		2024				2023
Terminated interest rate swaps		Interest expense		$	(517	)		$	(278	)

				Gain Recognized in Earnings on Derivative
		Location of Gain Recognized		Three months ended March 31,
Derivative Not Designated as Hedging Instrument		in Earnings on Derivative		2024				2023
Preferred stock embedded derivative		Other non-operating income		$	13,092			$	4,435

8. Shareholders’ Equity of MAA

As of March 31, 2024, 116,728,052 shares of common stock of MAA and 3,132,552 OP Units (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 119,860,604 common shares and units. As of March 31, 2023, 116,600,756 shares of common stock of MAA and 3,155,699 OP Units (excluding the OP Units held by MAA) were issued and outstanding, representing a total of 119,756,455 common shares and units.

Preferred Stock

As of March 31, 2024, MAA had one outstanding series of cumulative redeemable preferred stock, which has the following characteristics:

Description		Outstanding Shares				Liquidation Preference**(1)**				Optional Redemption Date		Redemption Price**(2)**				Stated Dividend Yield				Approximate Dividend Rate
MAA Series I			867,846			$	50.00			10/1/2026		$	50.00				8.50	%		$	4.25

(1)

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

(2)

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

See Note 7 for details of the valuation of the derivative asset related to the redemption feature embedded in the MAA Series I preferred stock.

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 is net of issuance costs. Under the forward sale agreements, the forward sale price was subject to adjustment on a daily basis based on a floating interest rate factor equal to a specified daily rate less a spread and was decreased based on amounts related to dividends on MAA’s common stock during the term of the forward sale agreements. 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

The Company has entered into an equity distribution agreement to establish an at-the-market, or ATM, share offering program, which allows 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 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 three months ended March 31, 2024 and 2023, MAA did not sell any shares of common stock under its ATM program. As of March 31, 2024, 4.0 million shares remained issuable under the ATM program.

9. Partners’ Capital of MAALP

Common units of limited partnership interests in MAALP are represented by OP Units. As of March 31, 2024, there were 119,860,604 OP Units outstanding, 116,728,052, or 97.4%, 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 3,132,552 OP Units were Class A OP Units owned by Class A limited partners. As of March 31, 2023, there were 119,756,455 OP Units outstanding, 116,600,756, or 97.4%, of which were owned by MAA and 3,155,699 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.

In January 2023, MAA settled its two forward sale agreements with respect to a total of 1.1 million shares for net proceeds of $203.7 million. MAA contributed the proceeds to MAALP in exchange for the issuance of 1.1 million Class B OP Units.

As of March 31, 2024, a total of 3,132,552 Class A OP Units were outstanding and redeemable for 3,132,552 shares of MAA common stock, with an approximate value of $412.2 million, based on the closing price of MAA’s common stock on March 31, 2024 of $131.58 per share. As of March 31, 2023, a total of 3,155,699 Class A OP Units were outstanding and redeemable for 3,155,699 shares of MAA common stock, with an approximate value of $476.6 million, based on the closing price of MAA’s common stock on March 31, 2023 of $151.04 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 March 31, 2024, MAALP had one outstanding series of cumulative redeemable preferred units, or the MAALP Series I preferred units. The MAALP Series I preferred units have the same characteristics as the MAA Series I preferred stock described in Note 8. As of March 31, 2024, 867,846 units of the MAALP Series I preferred units were outstanding and owned by MAA. See Note 7 for details of the valuation of the derivative asset related to the redemption feature embedded in the MAALP Series I preferred units.

10. 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 are generally intended to compensate for the impact of inflation. The Company also has other commitments related to negligible office and equipment operating leases. As of March 31, 2024, the Company’s operating leases had a weighted average remaining lease term of approximately 34 years and a weighted average discount rate of approximately 4.5%.

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 Condensed Consolidated Balance Sheets as of March 31, 2024 (in thousands):

		Operating Leases
2024		$	2,212
2025			2,919
2026			2,968
2027			3,003
2028			1,583
Thereafter			55,605
Total minimum lease payments			68,290
Net present value adjustments			(41,355	)
Right-of-use lease liabilities		$	26,935

Legal Proceedings

In late 2022 and early 2023, 28 putative class action lawsuits were filed against RealPage, Inc., along with over 50 of the largest owners and operators of apartment communities in the country, including the Company (the “RealPage Litigation”), alleging that RealPage and lessors of multifamily residential real estate conspired to artificially inflate the prices of multifamily residential real estate above competitive levels through the use of RealPage’s revenue management software. The plaintiffs are seeking monetary damages and attorneys’ fees and costs and injunctive relief. The Company believes the RealPage Litigation is without merit as it pertains to the Company and plans to vigorously defend the RealPage Litigation. On April 10, 2023, the Joint Panel on Multidistrict Litigation issued an order centralizing the cases in the Middle District of Tennessee for coordinated or consolidated pretrial proceedings. The Company is unable to predict the outcome of the RealPage Litigation given its early stage. While the Company does not believe that the RealPage Litigation will have a material adverse effect on its financial condition, the Company cannot give assurance that the RealPage Litigation will not have a material effect on its 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 March 31, 2024 and December 31, 2023, the Company’s accrual for loss contingencies relating to unresolved legal matters, including the cost to defend, was $7.5 million and $7.6 million in the aggregate, respectively. The loss contingencies are presented in “Accrued expenses and other liabilities” in the accompanying Condensed Consolidated Balance Sheets.

11. Segment Information

As of March 31, 2024, 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 and winter storms.

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 net operating income, or 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 three months ended March 31, 2024 and 2023 were as follows (in thousands):

		Three months ended March 31,
		2024				2023
Revenues:
Same Store
Rental revenues		$	516,945			$	509,600
Other property revenues			2,684				2,831
Total Same Store revenues			519,629				512,431
Non-Same Store and Other
Rental revenues			22,872				16,493
Other property revenues			1,121				109
Total Non-Same Store and Other revenues			23,993				16,602
Total rental and other property revenues		$	543,622			$	529,033
Net Operating Income:
Same Store NOI		$	334,583			$	336,929
Non-Same Store and Other NOI			11,237				9,301
Total NOI			345,820				346,230
Depreciation and amortization			(143,020	)			(138,501	)
Property management expenses			(19,995	)			(17,928	)
General and administrative expenses			(17,045	)			(15,923	)
Interest expense			(40,361	)			(37,281	)
(Loss) gain on sale of depreciable real estate assets			(2	)			15
Gain on sale of non-depreciable real estate assets			—				54
Other non-operating income			23,526				3,467
Income tax expense			(1,795	)			(944	)
Income from real estate joint venture			482				385
Net income attributable to noncontrolling interests			(3,861	)			(3,664	)
Dividends to MAA Series I preferred shareholders			(922	)			(922	)
Net income available for MAA common shareholders		$	142,827			$	134,988

Assets for each reportable segment as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

		March 31, 2024				December 31, 2023
Assets:
Same Store		$	9,812,519			$	9,893,858
Non-Same Store and Other			1,434,438				1,391,777
Corporate			223,775				198,868
Total assets		$	11,470,732			$	11,484,503

12. Real Estate Acquisitions and Dispositions

During the three months ended March 31, 2024, the Company did not acquire or dispose of any multifamily apartment communities or land parcels.

During the three months ended March 31, 2023, the Company acquired a six-acre land parcel in the Orlando, Florida market for approximately $12 million. During the three months ended March 31, 2023, the Company closed on the disposition of 21 acres of land in the Gulf Shores, Alabama market for gross proceeds of approximately $3 million, resulting in the recognition of a negligible gain on the sale of non-depreciable real estate assets.