Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Mid-America Apartment Communities, Inc. (NYSE:MAA)

Q4 2008 Earnings Call Transcript

February 6, 2009 10:15 am ET

Executives

Leslie Wolfgang – Vice President, Director of External Reporting & Corporate Secretary

H. Eric Bolton Jr. – Chairman & Chief Executive Officer

Simon R. C. Wadsworth – Executive VP & Chief Financial Officer

James Andrew Taylor – Executive Vice President & Director of Asset Management

Thomas L. Grimes Jr. – Executive Vice President & Director of Property Management Operations

Albert M. Campbell – Executive Vice President & Director of Financial Planning

Analysts

Michael Salinsky – RBC Capital Markets

Robert Stevenson – Fox Pitt Kelton

Napoleon Overton – Morgan, Keegan & Company, Inc.

Carol Kemple – Hilliard Lyons

Paula Poskon – Robert W. Baird & Co., Inc.

Sheila Mcgrath – Keefe, Bruyette & Woods

Philip Martin – Cantor Fitzgerald

Michael Salinsky – RBC Capital Markets

Richard Anderson – BMO Capital Markets

Cassandra Kimberly – Commercial Appeal

Operator

Good morning, ladies and gentlemen and thank you for participating in the Mid-America Apartment Communities fourth quarter earnings release conference call. The company will first share its prepared comments followed by a question-and-answer session. At this time, we would like to turn the call over to Leslie Wolfgang, Director of External Reporting. Ms. Wolfgang, you may begin.

Leslie Wolfgang

Thank you, [Tyrone], and good morning, everyone. This is Leslie Wolfgang, Director of External Reporting for Mid-America Apartment Communities. With me this morning are Eric Bolton, our CEO; Simon Wadsworth, our CFO; Al Campbell, Treasurer; Tom Grimes, Director of Property Management; and Drew Taylor, Director of Asset Management.

Before we begin, I want to point out that as part of the discussion this morning, company management will make forward-looking statements. Please refer to the Safe Harbor language included in yesterday's press release and our 34 Act filings with the SEC, which describe risk factors that may impact future results. These reports along with a copy of today's prepared comments and an audio copy of this morning's call can be found on our website.

I'll now turn the call over to Eric.

H. Eric Bolton Jr.

Thanks, Leslie and good morning everyone. As reported in yesterday’s earning release, Mid-America ended 2008 on a positive note. Despite a challenging marketing environment, funds from operation in the fourth quarter were $0.01 per share ahead of the midpoint of our guidance.

For calendar year 2008, FFO per share grew by 5% and importantly was only $0.02 per share below the midpoint of our original guidance. This is worth noting given that our original 2008 guidance issued last February did not contemplate the significant deterioration in leasing fundamentals that occurred over the last few months of the year nor did our original guidances, we had raised a $104 million of new equity during the year.

Achieving 5% growth in FFO per share and performing largely in line with our original expectations despite these challenges reflects a number of positive aspects about Mid-America’s strength and stability in portfolio strategy, operating platform, financing strategy, and our approach to deploying capital.

These same strengths are what now enable Mid-America to be well positioned for what will obviously be a more challenging operating environment in 2009. As we consider the forecast for 2009, we believe that consistent with the last downturn for apartment fundamentals, Mid-America will weather the weaker leasing cycle better than most.

There are several aspects to our earnings platform that enable Mid-America to deliver strong financial results during up cycles and to better weather down cycles without putting the balance sheet risk, without writing off significant asset value and without raising real concern about the dividend. We were able to demonstrate some of these strengths in the challenging fourth quarter just ended and believe they will continue to support our performance in 2009.

The first key attribute to our earnings platform is of course our portfolio of strategy. While it's clear that this recession is touching most every employment sector. Mid-America’s diversified market profile also provides the solid diversification across various employment sectors, and avoid significant exposure from job loss from anyone particular industry.

And somewhat unique to Mid-America's strategy among the other multifamily REITs is of course our heavier allocation to secondary markets as demonstrated. During the last downturn, and as demonstrated during the fourth quarter, Mid-America’s secondary market segment held up comparatively well.

Our portfolio having awarded significant concentration in some of the worse single-family housing markets is we believe going to continue to be a net beneficiary of the long-term correction underway in the single family housing market.

We continue to see an overall decline in resident turnover in the fourth quarter, with our largest drop in turnover once again occurring in those move-outs due to home buying. We expect our portfolio strategy focused on the Sunbelt region's higher employment growth and diversified across both primary and more stable secondary markets will demonstrate more resistance to the pressure of the recession and also provide quicker recovery.

With the access to new development capital, very, very limited and expected to be so for some time. The supply side of the equation is not going to be a pressure point in most of our markets for at least the next couple of years.

Taking a look at our markets and expectations for 2009, we expect that we will see our biggest challenges in Atlanta and Jacksonville. While Phoenix will also be a challenge, we of course only have two properties presently in that market. Markets that we believe will continue to hold up comparatively well are Dallas, Houston, Raleigh and a number of our secondary markets such as Jackson, Little Rock, Tallahassee, and Lexington.

On a positive note, we were encouraged with occupancy results in January as same-store physical occupancy increased 70 basis points from year-end, and we ended the month at 94.2%. In addition, to the strength of our portfolio strategy, we are very encouraged by the continued progress and capabilities of our operating platform. We believe the tools and capabilities we have in place particularly in our secondary markets, provide a real competitive advantage.

During 2009, we have a number of additional new initiatives we plan to rollout including a revised platform for billing rent and utilities, a new bulk cable initiative, enhanced web based leasing and prospect followup tools, and improved inventory get ready protocols. We made several changes in our collections platform during 2008 and continue to see strong results.

Despite the deterioration in the economy in Q4, net collection loss in the fourth quarter was only four-tenths of 1%, a record performance for the company. This speaks to both the strength of our screening and collections operation and also the quality of our assets.

Our unit interior and property redevelopment initiative made great progress during 2008 and captured very attractive returns on the capital invested. Given the weaker leasing fundamentals expected in 2009, we are planning to moderate the program this year and are targeting to renovate only about half as many units as we did in 2008. In addition, we will be focussing on executing our lighter or scale down version of the renovations.

The last point I’ll make about our positioning for this part of the cycle, concerns our balance sheet. We believe that Mid-America has one of the strongest balance sheets in the sector. Our leverage is at the lowest point it has been in our 15-year history as a public company.

Our fixed charge coverage ratio has never been stronger. We have already addressed what little refinancing requirements we have over the next couple of years. We have significant balance sheet capacity, and Mid-America has one of the lowest dividend pay out ratios in the apartment REIT sector.

When you combine these strong metrics with the fact that our balance sheet is not burdened with supporting a new development operation and is supported by P&L with a high degree of recurring earnings, we believe Mid-America’s balance sheet is well positioned for this part of the cycle.

We remain confident that there is going to be some terrific buying opportunities over the next couple of years, and are busy underwriting a number of deals. Overall, the bid-ask spreads remain fairly wide at this point, but as the weaker leasing environment continues to play out, we are optimistic that we will see our underwriting generating pricing that sellers or their lenders are more willing to accept.

We have a long track record of disciplined underwriting and capital allocation, it has kept us out of a lot of trouble over the years and it is certainly another aspect of our strategy that puts us in a solid position for this part of the cycle today.

Our 2009 forecast contemplates further weakening in the employment markets and we’ve taken a number of steps to pullback on expenses. In addition, to aggressively manage expenses at the property level, we are projecting a reduction in general and administrative expenses of close to 8.5% as compared to 2008.

Actions include suspending funding of employee stock ownership program in 2009, and suspending the company match on our 401(k) program. In addition, our executive officer staff will forego salary increases this year. And of course, we expect that bonus compensation associated with 2009 performance will be materially below 2008 results.

I’m proud and appreciative of the positive response from Mid-America associates to these actions. As we all work to keep the company strong through this weak part of the economic cycle, and ensure that we are well positioned for the very strong outlook developing for the late next year and into 2011.

We are optimistic about the prospects for our business with the continued trend towards a normalized mix of single family and multifamily housing, and a dramatic curtailment in the expected delivery of new apartment properties for the foreseeable future.

Once the economy stops shedding jobs, we expect the recovery in leasing fundamentals to be quick and strong. The pullback in the capital markets is now clearly pricing a number of REITs at some very compelling values including Mid-America currently trading at an employee cap rate of 8.25%, which implies a value significantly below anyone's definition of replacement costs, while also currently yielding around 8% against one of the stronger dividend payout ratios in the sector, supported by our balance sheet that's in great shape facing no refinancing requirements, and positioned to capture new value growth. We believe Mid-America offers some attractive opportunities.

That’s all I have got Simon.

Simon R. C. Wadsworth

Eric thanks. Good morning everybody. Our fourth quarter FFO per share of $0.92 was $0.01 ahead of the mid-point of our guidance. Performance was driven by three key elements. Despite weakening employment, our operating results were close to our forecast. Our property management and G&A expense was $900,000 below the same quarter a year ago. And our interest expense also below our forecast as rates began to trend down, reflecting an average interest rate of 4.8%, compared to 5.2% for the same quarter a year ago.

In the fourth quarter, the markets were tougher than anyone expected, but we still performed quite well, although our good operating performance was masked by some one-time items and some unusual comparisons. Year-over-year, same-store revenue growth was 0.2%, despite the worse than expected job losses and the tough comparison of the very strong fourth quarter in 2007.

Two markets, Atlanta and to a lesser extent Jacksonville were weak, and dragged down our same-store revenue performance. Absent these two markets, our same-store revenues increased 1.0%. Same-store expenses prior to taxes and insurance increased 1.5% and this included $310,000 expenses attributable to Hurricane Ike. Excluding these Hurricane Ike expenses the increase was only 0.1%.

Including taxes and insurance, total same-store expenses increased 3.6%, but again this was comparing to an unusual fourth quarter 2007 when same-store expenses dropped 1.2% because of favorable real estate taxes. As a result of last year’s fourth quarter tax adjustments, our same-store real estate taxes increased 7.8% this past quarter.

If you normalize the real estate tax increase, and eliminate the hit from Hurricane Ike, our NOI for the quarter goes from a negative 2.1% to a negative 0.7%. So, our reported NOI was not necessarily indicative of our performance in these changing market conditions.

For the full year, our FFO per share was $3.73, almost at the midpoint of our initial guidance for 2008, and 5% above 2007. Although, the markets were tougher than we forecast, we made up for almost all the shortfall in NOI through reduced G&A and interest rates. We also ended the year with less debt than planned since we raised over $100 million from new equity at almost $53 a share net of costs. We continued our investment in projects to deliver long-term value, but carry short-term FFO dilution, such as our modest development program in properties in lease-up.

Together we estimate that our lease-up properties cost us over $0.16 of FFO dilution in 2008. This should drop to approximately $0.07 in 2009. For the full year, AFFO was $2.99 per share comfortably ahead of our $2.46 dividend, and one of the best dividend coverages of the sector, as Eric mentioned.

Excluding the redevelopment program, total property capital expenditures existing properties were $31 million, $753 a unit or $1.05 per share. Revenues in our secondary markets outperformed our primary markets helping to reinforce our views that the secondary markets tend to be pretty stable during a downturn in the economy.

Of our primary markets, our three Texas markets plus Raleigh Durham showed good growth. While as I mentioned above Atlanta was weak as to a lesser extent was Jacksonville.

NOI growth in several markets and notably Houston, Dallas, Jacksonville, Tampa and Savannah was impacted by favorable adjustments to the real estate tax accrual in the fourth quarter of last year of 2007.

Turnover decreased 3.7% for the quarter, compared to the same period a year ago, mainly because of a 20% decline in people leaving us to buy a house, which dropped to 21.6% of move outs from 25.8% in the fourth quarter of 2007.

On a trailing 12-month basis, turnover dropped to 61.3% from 63.5%. Our delinquency for the quarter was still encouragingly low at 0.4% down from 0.5% a year ago. Although, we expect that this will be under pressure in 2009.

We have one of the strongest financial positions of the apartment REITs. We have taken care of the next two years debt maturities. We put in place new loans in the fourth quarter of last year designated to replace our only maturity in 2009, a $39 million bank facility.

Our only 2010 maturity, our $50 million bank credit facility is more than covered by capacity under existing credit arrangements. Although, we do expect to refinance this is in the normal course of business.

At December 31, our debt to gross assets was 50%, down 300 basis points from a year-ago. This compares with 55% for the apartment sector as a whole. Our fixed charge coverage in the fourth quarter was 2.51, well ahead of 2.36 a year ago, and also well ahead of the sector median of 2.30.

As we detail in the press release, at year-end, we had a $183 million of debt capacity available under our Fannie Mae and bank credit facilities, of which $39 million is designated to fund the loan maturity in April. We have a further $30 million of our existing credit facilities available to be collateralized once we need the capacity, which takes our potential availability to $213 million.

In 2009, we have repricing opportunities on a $25 million swap that matures April 1, and $65 million of debt that resets to variable rate on December 1. These are not mortgage maturities, but just a repricing opportunity of in place credit facilities. They are at an average rate of 6.9%, and we anticipate that the new swap rate will be an average of approximately 4.2%, potentially $0.08 of savings on an annualized basis.

The savings in 2009 will only be about $0.01 with the full year impact not being realized until 2010. About 20% of our debt is floating rate, which we find as a natural hedge against changes in the economy. Our Fannie Mae variable rate debt that repriced in January was at 1.26%, down from 4.6% in November, which will obviously help us substantially as the first quarter of 2009 progresses.

To give you an idea of recent Fannie and Freddie pricing, the loans that we put in place in November and December was single asset seven year loans at 65% loan to value. The first loan was fixed at 6.2%. The second was a capped loan floating at 323 basis points over the Freddie reference bill rate, currently costing us 3.4%.

While rates have come down since our November financing, it is quite likely that agency spreads are going to stay wider than they have in the past. Two weeks ago we had talks from the head to multifamily lending for both Fannie Mae and Freddie Mac and they indicated that the agencies and their new regulator are very supportive of their multifamily programs.

Our 2009 forecast detailed in the release takes into account the recession with further job losses taking average unemployment for the year to a range of 8% to 8.5%. The impact of this is partially mitigated by the continuation of the shift-in households back to the rental market, and reduction of resident turnover as well as a relatively more robust employment picture in our Southeastern high growth markets, compared to the national picture.

We have given some color on our 2009 forecast in the press release. We are projecting around a 1% drop in same-store revenues, and approximately a 4% drop in same-store NOI. We have several property revenue and expense saving initiatives that are helping to offset weakness that we would otherwise expect.

Based on the expected revenue shortfalls in local government, we project a 5% increase in real estate tax expense. Because of G&A and interest rate savings, we believe our FFO will be in a range of $3.40 to $3.60 per share.

As we pointed out in the release we also have to absorb impact in 2009 of the implementation of FAS 141R, which requires us to expense transaction cost that were previously capitalized. Based on our current set of assumptions, this non-cash accounting change will cost $0.04 per share of FFO in 2009.

We completed the sale of one property in Greensboro, North Carolina, Woodstream in January. This 25-year old property was sold for $11.5 million at around a 7.7% cap rate. We have two other properties under contract for sale: Riverhills in Grenada, Mississippi, and River Trace in Memphis, with total proceeds estimated in the $19 million range around a 6.25% cap rate. All three properties were listed as held for sale at year-end. We have not forecast additional dispositions in 2009.

In 2009, we expect property capital expenditures to moderate 7% to $30 million or just under $1 a share, with recurring CapEx in the region of $21.5 million, or $0.70. In addition, we project development funding of $6 million down from $25 million in 2008, and $10 million of redevelopment expenditures, about half of 2008’s level.

We anticipate that we’ll invest approximately $75 million in new acquisitions and contribute about $9 million in equity for our share of Fund II, our proposed new joint venture. We assumed that the second joint venture will be structured similarly to Fund I. We will invest a third of the equity in an entity that’s 65% leveraged. Our forecast also assumes that we make $75 million of acquisitions in the second half-year into Fund II. Although, our FFO guidance is not dependent on this as we don’t expect significant earnings accretion in this first year.

We plan to finance our investment program with the $30 million of asset sales and our exciting credit facilities, which we mentioned have plenty of capacity. We forecast leverage increase only by 90 basis points at the end of the year, with debt rising from 50.4% to 51.3% of gross assets.

As reported, our AFFO in 2008 was $2.99 per share and we are forecasting a range of $2.70 to $2.90 per share for 2009. Our dividend pay out ratio in 2008 was 82% of AFFO, one of the lowest in the sector and compares to 90% for the sector median.

In 2009 we’re projecting our payout to rise to 88% at the midpoint of our forecast, still a strong position compared to most of the others. As a point of emphasis, we believe that REITs are structured around the provision of a steady and secured cash dividend. And absent of major deterioration in the apartment or financing markets, we don’t plan any changes to the cash distributions for 2009. Eric?

H. Eric Bolton Jr.

Thanks, Simon. Last week marked the 15-year anniversary of Mid-America’s IPO. It’s worth noting that despite the significant fall off in our stock price over the past year, the annual compounded return delivered to shareholders over that 15-year period is almost 11%. That performance over the same period of time beats the S&P 500 by roughly 500 basis points. It beats the overall REIT index by over 300 basis points and it beats the overall apartment REIT index by over 200 basis points.

Our record of performance and strategy for creating value continues to be centered on disciplined capital allocation practices, maintaining a high quality portfolio of assets, focused on building high quality and recurring earnings, and supporting future growth, and a cash dividend through maintaining a strong balance sheet.

We believe it's just as important to be able to weather downturns effectively as it is to prosper during robust partially real estate and capital market cycle. We are confidant and our ability to perform during this down part of the cycle. And we are excited about the opportunities in front of us.

That’s all we have in the way of prepared comments. So, operator, I’m going to turn it back to you for any questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question is from Michael Salinsky of RBC Capital Markets. Your line is open.

Michael Salinsky – RBC Capital Markets

Good morning guys and Simon thank you for the additional color on GSEs there. In your guidance for 2009, can you break out the impact you expect from the bulk cable and utility reimbursement programs? Just so we can get an apples-to-apples comparison on a year-over-year basis?

James Andrew Taylor

Yeah, Michael, this is Drew. We’ve got really three things in 2009 that are adding value. One of those is bulk cable program as you mentioned, which our one connect bulk cable program, which adds about $500,000 in 2009 and that’s a number net of expenses. We've got an increase in our trash and pest fees that we executed in January. We moved our trash fees from $5 to $8 and our pest fees from $3 to $5 and that’s for all our new leases and renewals that adds about $800,000 in 2009. And then the third primary thing we have going on is a reduction of our screening costs, which are also netted in revenue through the addition of our second screening - present screening company, which is about of a $300,000 effect.

Michael Salinsky – RBC Capital Markets

Okay, that’s helpful. Eric several of your peers have mentioned they think 2010 maybe an equally challenging or even more challenging year. What are you initial thoughts just given the downturn right now and when we come out of that?

H. Eric Bolton Jr.

Well, Mike obviously it depends on what happens with the economy and the employment numbers and I don’t know, I think that last time we went through a downturn it did last for couple of years, and the sector produced two years of negative NOI performance. I think that is likely that 2010 will indeed be another challenging year. I like to believe that by the last half or maybe by Q4 we really are starting to see things turnaround, but I do think that 2010 will likely be a challenging year. The severity evidence is, I could begin to really guess at it right now. Obviously, we have to see what the government does and how they kind of response to lot of the plans and programs being discussed. But I would certainly think that this current downturn is going to be with us for a while.

James Andrew Taylor

Mike I think one of, Eric and I were at the National Multi Housing Council Conference, couple of weeks ago and recently in the sort of third party economists and market trackers that we saw and listened to kind of indicating a second half of 2010 recovery. And that’s probably the best information at this point that’s opened to us.

Michael Salinsky – RBC Capital Markets

Okay. Then third and final in your guidance for 2009, you include $75 million of acquisitions in a new fund. How far long are you on that fund in talking to private equity and various other sponsors, what is the appetite right now for multifamily?

James Andrew Taylor

We are really not underway in any meaningful way on that initiative yet and as mentioned our guidance for 2009 really doesn’t depend on getting that fund done. I very much believe that there are going to be some terrific buying opportunities over the next couple of years in this distressed environment. If this is the kind of stuff that we do, I mean we find these kind of situations and we buy opportunistically and then we operate them back to pull value. I think that there is going to be capital out there, institutional capital that understands that, can appreciate that logic, and I’m confident and optimistic that we will get something done. But, in terms of actually engaging in direct conversations, we’ve not done that yet. We had started to do it late last year and frankly just backed off, and we thought we just let the markets kind of settle out for a while. But I’m hopeful that here within the next 90 days or so that we’re engaged in our process to really get a better feel for just how viable this initiative is. I’m convinced it’s there. I know the opportunity is there and I think that there is capital out there that understands that and more importantly understands what 2011 and beyond looks like for the multifamily industry. It looks incredibly strong. And I think that those who are in a position to both weather the downturn for the next couple of years and take advantage to the opportunities presented have a real opportunity in front of them.

Michael Salinsky – RBC Capital Markets

Thanks guys.

James Andrew Taylor

Thank you.

Operator

Thank you, sir. Our next question is from Rob Stevenson of Fox-Pitt Kelton. Your line is open.

Robert Stevenson – Fox Pitt Kelton

Good morning guys.

H. Eric Bolton Jr.

Hi Rob.

Robert Stevenson – Fox Pitt Kelton

Eric, can you talk a little bit, I mean given your comments about dividend coverage, what’s your thoughts are about the dividend going forward and whether or not we are going to see some token increase? Whether or not you hold it flat to preserve capital in this type of environment? I mean what's the thought at this point from the Board?

H. Eric Bolton Jr.

Well we had a fair amount of conversation about it back in December and obviously felt appropriate at that time to hold it. In general, we've looked at a number of different scenarios. We've put a lot of stress modeling on our payout ratio and so forth. And just took a look at how bad things could get and before we start to have to make those kind of evaluations about the dividend. And, we believe things could get appreciably worse before we really have to start looking at any sort of action on the dividend. We think that the REIT model and a lot of our owners are in the stock believing that we're going to pay a dividend and we think that’s one of our responsibilities and have tried to build an earnings platform, a balance sheet around that responsibility. So, I would tell you that obviously if the economy continues to go through some sort of real downturn and we got into just a catastrophic scenario, we would take a look at everything including the dividend. But at this point we feel pretty good about it. And feel like that at this level we can sustain it just fine. I'm with doubt that in this environment there will be much of an appetite for raising the dividend. But we feel pretty comfortable of what we are doing right now.

Robert Stevenson – Fox Pitt Kelton

What about paying part of it in the stock? Does things have to get worse before you would consider that or just as a course of business and some of the guys are starting to do that, would you do something like that, in the near-term to continuing to preserve additional cash?

H. Eric Bolton Jr.

No. We’ve not had that kind of conversation about paying in dividend and frankly don’t think that that really makes any sense for us at this point. We have got capacity on the balance sheet. We think we’ve got plenty of opportunity to pursue opportunities without having to take action with the dividend to preserve additional capital. I think that broadly speaking there could be situations with certain companies and certain balance sheets, where they run into NOI or net income number where they’ve got to make a dividend payment, in order to keep the REIT status and using stock as a currency may make sense in some cases. But we are not anywhere close to anything like that, and don’t perceive that. But I think as a general rule holding on if you were using your stock as currency at these prices in particular as a means of marshaling or holding cash in order to look for future growth opportunities, I don’t really endorse that model at all.

Robert Stevenson – Fox Pitt Kelton

Okay. And then on the occupancy side I mean, it’s great that you guys were able to fight your way back up 70 basis points in January. Was that pretty much spread across all markets or were there one or two markets where you really saw the big increase?

Thomas L. Grimes Jr.

Rob, we saw generally. This is Tom. By the way, but we saw the occupancy job from December to January was across the board, it weren't really any major recovery in one area or the other.

Robert Stevenson – Fox Pitt Kelton

And that was just better traffic or a combination of better traffic and concessions?

Thomas L. Grimes Jr.

And primarily it was better traffic, Rob. We had a nice uptick its up about 9.6%. So, primarily traffic we were encouraged by that.

Robert Stevenson – Fox Pitt Kelton

Okay. And then lastly Eric and Simon, I mean, you guys were talking about in your guidance assumptions about the homeownership rate continuing to come down and that benefitting apartments. When you think about your markets right now, if the government wants a passing, something substantial here in terms of a tax incentive to buy housing plus does something with an interest rate buy down, whether or not its 2.99% or 3.99% or something alone those lines, which of your markets do you think have, a stable enough employment and people who might be thinking about moving out and buying a home in this type of environment and would be most impacted by that?

Thomas L. Grimes Jr.

Rob, I would guess that you might see some of that pressure if it all plays out as you described in some of the bigger markets like in Atlanta or Dallas or Houston, where you tend to have these bigger, sort of starter home tracks that are out there. And my guess is that’s where if the government did come in and if you will once again artificially create a inducement some sort and starts allowing and putting people in the houses that really can't afford them, then I think that that maybe where the pressure builds much like we've seen over the last several years in some of the bigger markets like Phoenix and Vegas and Dallas and Houston. I think that’s where and some of the obvious down Florida, Tampa and Orlando some of those, but I think that and for us it’s always been an issue over the last several years, the fact that our renters did not have a down payment and frankly did not have the financial wherewithal to be able to afford a mortgage or being put into houses because they do have to come out with a down-payment and they offered all of these teaser rates, where essentially the mortgage payment was artificially low. I don’t think that some of the programs that are being discussed right now are going to actually kind of create that kind of scenario again. So, we are obviously monitoring what some of these programs that the government is talking about doing and I think that the correction back to a more normalized single family home ownership rate may impact the somewhat moderator meted by some of these actions the government is taking, but I think long term, we are still comfortable that the government understands and appreciates a balanced housing policy, balance between single-family and multifamily is a good thing for this country and I’m optimistic that we will continue to work in that direction. I don’t think we can fix it overnight.

Robert Stevenson – Fox-Pitt Kelton

Thanks guys.

H. Eric Bolton Jr.

Thanks Rob.

Operator

Thank you. Our next question is from Nap Overton of Morgan and Keegan. Your line is open.

Napoleon Overton – Morgan, Keegan & Company, Inc.

Yeah. Good morning. Couple of things, one in terms of the Fund II in this environment with significant opportunities expected to develop over the next 12 to 18 months. Would have you contemplated just retaining the upside of that benefit for yourself as opposed to trying to pursue a joint venture with the partner?

H. Eric Bolton Jr.

Well, our plan for our JV initiative is really geared towards targeting investment opportunities that we frankly would prefer to go invest in namely what we are targeting will be turnaround or value add place that we defined as assets being seven years of age or older. We think as a public platform that we do better for long-time public price in the company by keeping our focus up for 100% investments on newer assets and but yet over the years as a company one of our core competencies frankly is locating these opportunities underwriting the upside that’s there and then realizing it through the operations in the CapEx and other things that we’ve been executing on for 15 years. And but we don’t think it will be appropriate to go out and start buying a bunch of older assets that we would own a 100% of them, putting them on the public balance sheet. And of course, as you know, the JV model offers some alternatives in terms of how you approach to use the leverage and fee incomes and things of that nature, which has also created some pretty attractive returns to our shareholder capital. So, we see that initiative is really being a good complement to what we are doing for our own balance sheet and don’t believe there is any conflict issues, but and believe that the JV model is the right way to prosecute those other kind of opportunities I described.

James Andrew Taylor

I think one further point would be, Nap, is that, we like the leverage that we got on the balance sheet, right now and not really anxious to increase it in regard to private equity as a good source of equity particularly where considering where our stock price is trading. So, that adds if you like another arrow in our quiver in terms of our growth of the business.

Napoleon Overton – Morgan, Keegan & Company, Inc.

Okay. And then one another question and that is if substantial opportunities were to develop, you wanted to take advantage of? What are those balance sheet and their capital structure considerations that would be the larger parameters for your capital structure beyond the immediate capacity that you have available under existing credit facilities?

H. Eric Bolton Jr.

Well the challenge of course is that, we do thing it’s a time to maintain modest leverage and your question is a good one, because these opportunities may present itself. Certainly, the opportunities would have to be hugely compelling for us to be willing to let go of any equity at the current pricing and so it’s certainly I think that if this downturn in the economy continues for a considerable time and there are compelling opportunities and our stock prices continues to be really depressed then I think that our frankly the way we will go about it would be to look at further partnering with other capital in order to choose the return sufficiently to give us what we need.

James Andrew Taylor

Yeah. And Nap, I mean there is definitely going to be some of those if you will portfolio opportunities, I mean we’ve already seen some and have looked at a number of them frankly over the last year and have continued to, the kind of numbers that would be required for us to be willing to take that kind of risk on right now, I don’t think that the market is there yet. But I think it maybe headed there. But putting the balance sheet at significant risk right now in order to get a deal done is not really what we do. I mean that’s just not our culture, it’s not the way we operate, and so I think that we would be compelled to look at a big opportunity. I mean, we would certainly pursue it if it were the right fit and the right opportunity and very compelling, but we would as part of that event I think we need to do in order to keep the balance sheet for being put at significant risk. We just don't think that's the right way to go about it.

Napoleon Overton – Morgan, Keegan & Company, Inc.

Okay. Thanks very much.

Operator

Thank you. Our next question is from Carol Kemple of Hilliard Lyons. Your line is open.

Carol Kemple – Hilliard Lyons

Okay. Thank you. Good morning guys.

James Andrew Taylor

Good morning.

H. Eric Bolton Jr.

Hi.

Carol Kemple – Hilliard Lyons

I just had a couple of questions. You talked about the uptick in occupancy in January. Where were those new renters coming from? Were they leaving other apartments or why were they getting the lease?

H. Eric Bolton Jr.

Honestly, off the top of my head, we don’t have the source data for January this quickly at the end of month. So, I mean we've got traffic information. We’ll be reviewing back where the sources of traffic came from, but we don't this early in February we don’t have that analytical data to tell you these people moved out of the house and these folks came with new jobs.

Carol Kemple – Hilliard Lyons

Okay.

H. Eric Bolton Jr.

If that make sense to you?

Carol Kemple – Hilliard Lyons

Yeah. And then just my other question on your G&A and property management expense decline for 2009, do you expect that to be split pretty evenly between the four quarters or more heavily weighted than others?

Albert M. Campbell

I think it will be split fairly evenly. This is Al, Carol.

Carol Kemple – Hilliard Lyons

Okay.

Albert M. Campbell

It will be a little heavier, but in the year just some items with increase the inflation, but fairly even.

Carol Kemple – Hilliard Lyons

Okay. Okay. Great thank you.

Operator

Thank you. Our next question is from Paula Poskon of Robert Baird. Your line is open.

Paula Poskon – Robert W. Baird & Co., Inc.

Thank you and good morning everyone.

H. Eric Bolton Jr.

Good morning.

Thomas L. Grimes Jr.

Good morning, Paula.

Paula Poskon – Robert W. Baird & Co., Inc.

So, in your guidance you've said that you are building your forecast on the assumption that the national unemployment rate will be somewhere between 8% and 8.5%. What do you think the sensitivity is around your guidance if unemployment goes to 10 or above this year?

H. Eric Bolton Jr.

Well I think we took a look at that obviously and I think 8% – 8.5%, if you at the numbers that were released today I think its REIT 7.6%, I think its REITs 8.5% even will be another 1 million to 1.5 million jobs lost throughout the entire economy. And so I think if you took it to 10, that’s another 1 million, 1.5 million as well. So, we to [support docs] will have the 8.5 we talked about in '09, is really an average for the year. So, it would entail maybe getting above 8.5 by the end averaging out. We feel pretty good about that right now.

James Andrew Taylor

Obviously, though trying to take these broad sort of economic metrics, unemployment metrics and applying them to our markets and then applying them to our sub-markets in our neighborhoods and our properties, a lot of different variables go on, but I can tell you that obviously if the economy were to fall off that much weaker, in a while would be, frankly fall off that much more and I can tell you as Al mentioned, we’ve modeled a lot more worst case scenarios in an effort to think about the balance sheet and think about the dividend and we think that we are in a position where we can weather materially worse decline from where we are right now and still, trudge along but why just goes that much more negative frankly. And how much more negative becomes a bit subjective trying to evaluate against our markets, but as I mean we continue to believe that some of these secondary markets will hold up a little better than some in the bigger cities.

Paula Poskon – Robert W. Baird & Co., Inc.

Thanks that’s helpful. When we met at NAREIT, we talked a little bit about the LRO program and what information it kicks out to you and your ability to override that system. How is that its results or its recommendations how has that changed? And are you changing your approach in terms of overriding? What it’s telling you?

James Andrew Taylor

Hey Paula, it's Drew. LRO, I think in a weaker environment like we are in now with higher exposures and lower demand. Certainly, there is going to be some pressure on upfront pricing. And our strategy has been and what LRO does is to work to favor and protect occupancy over rents and that’s what we are seeing and that's sort of what we would expect the system to do.

H. Eric Bolton Jr.

Yeah. I’ll just add it quickly, Paula. This is a side note and because this comes up a lot. Well, LRO, or the Yield Management Systems to be as effective in a downturn as they are in a up part of the cycle and I continue to believe that the system will because we put an LRO believing that it will enable us to manage our revenue results better than we otherwise would be able to simply because we are able to gather more information, more market data, more insight on our own exposure regarding lease expiration. While we gather all those facts quicker, we are able to make a more informed decision and importantly we are able to make that decision faster. And I think the net result is that we generate better revenue results because we are making informed and better decisions, quicker decisions on the ground and that works whether it’s a downturn or whether it’s an upturn.

Paula Poskon – Robert W. Baird & Co., Inc.

Okay. So, just a follow-up on that are you overriding what it’s telling you less than you had been?

H. Eric Bolton Jr.

No, well I don’t think we are overriding more or less. I think we don’t tend to override a lot anyway, but the volume of overriding if you will is not really gone up a lot.

James Andrew Taylor

And Paula that’s usually isolated, I mean we've often said with LRO it's not an excuse to turn off your brain.

Paula Poskon – Robert W. Baird & Co., Inc.

Okay.

James Andrew Taylor

And LRO is going to try to fix things with price and if we know that the problem is, every now and then we make a mistake in on site. If we have made one it doesn’t make sense to fix that problem with price. It makes sense to fix the quality of the market right here or something like that. So, that’s where overrides generally come in is where we know something sort of LRO does in and we don’t want it to fix the problem with price.

Paula Poskon – Robert W. Baird & Co., Inc.

Thank you, that’s helpful. And then could you give us just a little bit more color around your decision to make the accounting change around the transaction expenses and also the resegmentation of your markets from the three tiers to this primary and secondary?

H. Eric Bolton Jr.

Al, I want you to address the accounting question?

Albert M. Campbell

Okay. Well the accounting question is FAS 141R I mean just, we are required to beginning the year to go ahead and record transaction costs in our earnings.

H. Eric Bolton Jr.

We didn’t have a choice.

Albert M. Campbell

We didn’t have a choice.

Paula Poskon – Robert W. Baird & Co., Inc.

Okay. For some reason I thought that there was a voluntary change?

H. Eric Bolton Jr.

No, not to my knowledge

Paula Poskon – Robert W. Baird & Co., Inc.

Okay.

James Andrew Taylor

In fact, January 1 for us. So, that should be as we mentioned about $0.04 per share.

Paula Poskon – Robert W. Baird & Co., Inc.

Right, okay.

James Andrew Taylor

It will happen probably towards the back half of the year obviously with the transactions that we’re talking about it. And I think on the segmentation, I think we just clarified or refined our segmentation in a way we felt better, it looks at the characteristics of our portfolio. And so what you have is in the primary markets, really you have markets that have populations that are a million above and that have investments of public REIT portfolios greater than 1%, and we felt like that was a good indicator of the gross margin.

H. Eric Bolton Jr.

Yeah, I mean quite frankly I think the terms we have had in the past that is sort of three tier definition is adding a level of detailed complexity that really is unnecessary I mean what we find is that its generally the secondary markets regardless of how small they may or may not be generally tend to perform somewhat aligned with each other and the large tier markets tend, so we just really felt that the added complexity was not really adding any value and the segmentation between primary and secondary just generally makes more sense, but then of course in our supplemental we detail out a lot of detail about, markets we have the larger concentrations.

Paula Poskon – Robert W. Baird & Co., Inc.

That’s very helpful. Thanks guys.

H. Eric Bolton Jr.

Thanks Paula.

Operator

Thank you. Our next question is from Sheila Mcgrath of KBW. Your line is open.

Sheila Mcgrath – Keefe, Bruyette & Woods

Good morning. I just was wondering if you could touch on Houston, are you seeing that market negatively impacted by lower energy pricing?

James Andrew Taylor

Not, not yet [Paula] I mean Houston on the revenue side, we are still seeing positive job growth, what we are monitoring a little bit there is just deliveries. Houston absorbed almost 12,000 units in 2008. We expect that number to drop to half so we're encouraged by that. But overall it’s been a positive story excluding obviously on the NOI side the Hurricane Ike charges.

Sheila Mcgrath – Keefe, Bruyette & Woods

And Al, are there other markets that you are concerned about from the supply side like how is Austin looking?

Albert M. Campbell

Austin, I mean you've sort of answered, you stole my answer, Sheila. Yeah, Austin 4,500 units delivered this year, which is a sort of tight spot next year it's 9,500. So, we've got good job growth in Austin to offset it, we feel like we are well positioned there, but we are going to be monitoring the supply in Austin.

H. Eric Bolton Jr.

I mean Austin is clearly one of those markets that's going to get is a little bit an outlier in terms of supply, but fortunately that also is a market that tends to have stronger demand side story, I think it's associated with it. And so we think that that market while certainly will be weaker in '09 versus '08. We don’t see it as being a collapsed scenario there.

Sheila Mcgrath – Keefe, Bruyette & Woods

Okay, great. And last question you did mention that GSEs, but I was just wondering if you could give us little more specifics on your conversations with them, and looking towards their kind of mandate to lower their balance sheet in 2010. What are you or other industry people are thinking about their appetite going forward?

Simon R. C. Wadsworth

Well I will sort of throw one comment and I think the way that I believe that they are planning to address this Sheila is by offering current and new programs that are off their balance sheet, that is where they guarantee or securitize mortgage-backed securities and I think Freddie has got number of initiatives in that regard Fannie has already has some. So, I think that’s how they are planning to deal with it. Certainly, we will be heard from the heads of both of the multi-family programs, where that they are aware of the capacity issues that will present themselves. And they are very committed to multi-family and do plan to address them in this manner. We will be meeting with Freddie and Fannie in the next 30 days, which we do once a year, and we discuss our business strategy with them and their strategy. But from what we heard things are well in hand and pretty positive.

Sheila Mcgrath – Keefe, Bruyette & Woods

Okay, great. Thank you.

Operator

(Operator Instructions). And we have a question from Philip Martin of Cantor Fitzgerald. Your line is open.

Philip Martin – Cantor Fitzgerald

Good morning.

James Andrew Taylor

Hey Philip.

H. Eric Bolton Jr.

Good morning.

Philip Martin – Cantor Fitzgerald

I jumped on 25 minutes late, so if you've answered this I am happy to deal with it offline, but kind of a general question, but, at least from my analysis, your typical property seems to offer a nice blend of very nice amenities to newer products, it’s relatively affordable and it’s in affordable markets. To what extent is that giving you a bit of a competitive advantage in this market, I know job growth drive so much of multi-family demand certainly, but the affordability that the amenity package, the affordable markets, how much of a competitive advantage do you have versus your competition in a market like this. People have to live somewhere and not everybody is going to move back home with mom and dad, I mean I know I would hate to do that personally, but…

Thomas L. Grimes Jr.

Well, I mean I do think that we may in fact have a little bit of an advantage in this cycle, and that as you point out I think we offer a very good value for the renter in that we do provide, I think generally in all the submarkets, in the markets where we compete. We tend to have one of the newer products, we have one of the newer portfolios in the REIT sector, and we and in our region of the country the newer products tends to sell very well. And, we are not in the downtown areas, we don’t have the heavy urban element to our portfolio. We are and frankly in our region of the country we are out where people really want to live, these are good school districts, good retail shopping, good amenities and the crime issues are lot less out in the suburbs, where we tend to have a lot of our assets, and I think that while I think we offer people a good value in this environment. So, we will see, but certainly during the last downturn as we did mention in the call that, the company did pretty well on a relative basis, and I think that may very well play out again this time.

Philip Martin – Cantor Fitzgerald

And again you may have addressed this in the opening remarks, but are you seeing, are tenants I am sure coming to you and looking to negotiate rents et cetera just trying to stay in the property, just because they need to live somewhere, but they don't really want to move and how much of that are you seeing?

Albert M. Campbell

I mean we are seeing some of it, but the overall, we sent our offer out, we followup with it very quickly, we negotiate if needed and if pushed, but really and you can see it, I mean the inverse of our turnover rate is our retention rate. And our turnover rate is down and our retention rate is up. And we’re providing really sort of a better alternative for people than the substitute, for sure which is as you said, you don’t want to move back with your parents and not many folks are interested in buying a house right now.

Philip Martin – Cantor Fitzgerald

Is your portfolio still in all or most of its markets still outperforming in terms of an occupancy standpoint. And then I don't know if you can calculate it or not, but even from an operating margin standpoint?

Albert M. Campbell

We track the best information we have is versus REITs and in that case we are significantly outperforming the REIT index of our, we do a composite of our markets and compare it to our actual occupancy and we’re outperforming that.

Philip Martin – Cantor Fitzgerald

Okay, okay, okay. Thank you very much.

Albert M. Campbell

Thanks.

Operator

Thank you sir. Our next question is from Michael Salinsky of RBC Capital Markets.

Michael Salinsky – RBC Capital Markets

Just sort of a follow-up question real quick. Can you talk about cap rates right now across your markets? I mean, how much your cap rates move in the past 90 days?

James Andrew Taylor

Well, it’s kind of hard to get a real read on that, any sort of definitive way, because frankly the transaction volume is so down right now and nothing has really been trading for the last 90 days. I think that the seller pricing probably is looking still for six maybe even sub-six that mid-six range and the buyers are wanting something well north of that and so you've got this sort of stalemate right now. Having said that we just sold a 25-year-old asset in Greensboro, North Carolina, which is by any definition I think a tertiary market. So, a 25-year-old asset in a tertiary market, sold for a 7, 7 cap rate, we've got two other assets, one here in Memphis, which is one of our older assets and one in Grenada, Mississippi, which is maybe sub-tertiary I don’t know but it’s, we've got those both on a contract at 6, 6 cap rate. So, I think that it’s hard to know exactly how they've moved in a broad sense right now, but, clearly buyers are looking for a better deal and we think that its likely that the cap rates are in general, when the transaction line picks up are going to show, something probably approaching somewhere between 6.5 and 7, maybe a little higher than that. I don’t know. It will vary quite a bit.

Michael Salinsky – RBC Capital Markets

What does the buyer contingent look like right now?

James Andrew Taylor

I’m sorry the buyer contingent?

Michael Salinsky – RBC Capital Markets

Yeah. I mean where is the people that are out there actively bidding on these properties I mean what is the?

James Andrew Taylor

There is a lot of, I mean, some of the private capital buyers that have some of these funds are out there and we that's usually who we’re running into right now as some of the smaller guys, who have got money that they are representing somebody else on, kind of the vulture buyer kind of mindset is sort of out there right now?

H. Eric Bolton Jr.

I think there is still plenty of people out there, Mike because they see what we see and that is that 2011, ‘12 look pretty incredible for the multi-family sector. So, the lot of people that appreciate that, but there is as they are excess there is just big ad spread right now. Everybody is kind of waiting to see what happens. And that’s been going for a while may continue for another three or six months I don’t know we are beginning to see more signs of sort of stress with some of these over leveraged portfolios with mezz debt or bridge debt that’s not being able to be handled and that make cause a bit of a break, we’ll see, but there is still plenty of buys and of course the agencies out there, willing to finance as sensibility underwritten deal. And they are certainly not giving their money away and there is certainly underwriting as they always has done in my view, in an intelligent manner, but it’s, so we, I think the deals will be out there but its maybe just a little while yet.

Michael Salinsky - RBC Capital Markets

Haven’t seen any a shift in focus, I mean is it still primarily on the value added or have you seen a shift back to quality?

H. Eric Bolton Jr.

Well, I think what we are seeing most of the transactions that are clearing right now are taking place at the lower end of the quality scale, kind of the C quality, B quality assets, B- minus assets that's where you're starting to see more transaction volume phase pickup as a result of I mean frankly I think that’s where most of the financing stress is currently the upper end product quality, which is where we are focusing our efforts on we haven't seen that’s where the bid-ask is still pretty heavy and the transaction volume is really just not there.

Michael Salinsky - RBC Capital Markets

Okay. Thank you very much.

H. Eric Bolton Jr.

Thanks Mike.

Operator

Thank your. Our next question is from Rich Anderson. Sir your line is open.

Richard Anderson – BMO Capital Markets

Thanks and good morning. Sorry, I got in the queue earlier, but I think I got blackballed there might have been [because].

H. Eric Bolton Jr.

Yeah. We gave special instruction.

Simon R. C. Wadsworth

We are just glad it's the real, Rich Anderson

Richard Anderson – BMO Capital Markets

Well I got in the queue as [Bruce Springsteen] that might have been the reason. So, now we know that the people are doing their job and filling their job for you, so anyway. Just couple of quick questions the 20% floating rate debt, is that a level you are comfortable with or could you see that may be come down now with rates being where they are, would you consider that?

H. Eric Bolton Jr.

We are Rich it's good, great question and as we move into 2009 forecast, we expect our 80% to move down a little bit, and it will go down maybe come backup as we end the year, trying to take care some of the transaction that come due end of the year. We expect about 78% to 80% average for 2009. We do have to put a point there another 6% cap, which we only have 14% of our debt just totally unhedged. So, we are benefiting from the low floating rate of a whole 20 with the hedge from our 60% that an important point I think.

Richard Anderson – BMO Capital Markets

Okay. And Simon you mentioned the $0.80 annual impact from the reprising of the swap and other factors right, but it's only $0.01 in 2008. Can you explain why it's happening in April?

Simon R. C. Wadsworth

Right. Well there were really two tranches one is a swap that matures April 1. And there is lot more $65 million of REIT prices December 1.

Richard Anderson – BMO Capital Markets

Okay.

Simon R. C. Wadsworth

And that’s the high interest rate while really where we really get juice is on that December 1 maturity?

Richard Anderson – BMO Capital Markets

Okay. I know you have a lot of, you have a line-up of swap expirations in the forward years what is it in 2010 that you have expiring?

H. Eric Bolton Jr.

A $140 million, in swaps Rich, $148 million in total of everything.

Richard Anderson – BMO Capital Markets

140, okay, great. Real quickly Eric you mentioned lower CapEx for 2009 is that a smart thing to do in this environment and potentially incurring some deferred maintenance?

H. Eric Bolton Jr.

Well we are not incurring any deferred maintenance, we've maintained very active CapEx program for 15 years and properties are in terrific shape. And we go through various cycles sometimes where paint jobs and other things tend to be a little higher and the numbers can move around a little bit, but Drew you want to add something to that.

James Andrew Taylor

Yeah. I was just going to say we are planning the same level of recurring CapEx next year that we planned this year is slightly less on the revenue enhancing and I think as Eric mentioned significantly less on the redevelopment.

Richard Anderson – BMO Capital Markets

Okay. On the accounting change FAS 141R is not a new pronouncement, I am curious why didn’t you have these expenses in 2008?

H. Eric Bolton Jr.

The implementation is required for January 1 of this year, Rich.

Richard Anderson – BMO Capital Markets

Of this expense elements to the year?

H. Eric Bolton Jr.

And put the expense the brokerage and accounting cost or the legal cost something in earnings instead of being capitalized into the deal.

Richard Anderson – BMO Capital Markets

Okay. And they will show up in operating expenses I assume?

H. Eric Bolton Jr.

They will, show up, yes they will show up in G&A.

James Andrew Taylor

Probably be in G&A.

Richard Anderson – BMO Capital Markets

G&A, excuse me.

James Andrew Taylor

Yeah.

Richard Anderson – BMO Capital Markets

Okay. And then lastly you are looking to Texas as a couple of good markets for 2009. I mean how long can that hold up when you consider, oil prices and some other factors, I mean does Texas have the fire power to stay at top market for you throughout the year?

James Andrew Taylor

I mean Rich, for ’09 those are the strongest markets that are out there. They are all positive and honestly in terms of job growth for forecast for 2009. Are they going to add 10% new jobs or 4% new jobs absolutely not, but on a relative basis, they will be our strongest markets. And then we will monitor a little bit, we will monitor the new construction there and as I mentioned Austin is up a little, but Houston's number drops in half. So, and I think we'll still continue to see some job growth out there, which compared to the rest of the country these days are pretty darn and good.

Richard Anderson – BMO Capital Markets

Okay, good thanks. I appreciated it. Good call.

James Andrew Taylor

Thanks Rich.

Operator

Thank you. Our final question in the queue is from Cassandra Kimberly of Commercial Appeal. Your line is open.

Cassandra Kimberly – Commercial Appeal

Hi, good morning everyone.

H. Eric Bolton Jr.

Good morning.

James Andrew Taylor

Good morning, Cassandra.

Cassandra Kimberly – Commercial Appeal

Hey, I was hoping that you could speak directly to the Memphis market for a second, how are we faring compared to the other markets that you're in?

James Andrew Taylor

In terms of our portfolio Cassandra to the Memphis market and I think you're relatively familiar with it. Our occupancy and our revenue levels are significantly higher than the market right now.

Cassandra Kimberly – Commercial Appeal

Okay, great. And is this just due to the properties that you all are just maintaining then and being higher quality or what would attribute this to?

James Andrew Taylor

I would certainly credit the asset management, property management teams and how we operate properties. But again your familiarity with Memphis it's our location as well we've picked up submarkets very carefully. We've limited our exposure to the areas in the South of Memphis that has been tougher over the last 10 years and so it's really a combination of Mid-America's sort of people practices and then its location of its product.

Cassandra Kimberly - Commercial Appeal

Great. All right. Wonderful well thank you very much. I appreciate it.

James Andrew Taylor

Thanks Cassandra

H. Eric Bolton Jr.

Thank you.

Cassandra Kimberly - Commercial Appeal

Thank you.

Operator

Thank you, sir. I show no further questions in the queue. Please proceed with any further remarks.

H. Eric Bolton Jr.

No further remarks. Thanks for being on the call. Thanks.

Operator

Ladies and gentlemen thank you for your participation in today's conference. This does conclude the program. You may now disconnect and have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Mid-America Apartment Communities, Inc. Q4 2008 Earnings Call Transcript
This Transcript
All Transcripts