UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

OR

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

For the transition period from ______ to ______

Commission File Number: 1-12762

MID-AMERICA APARTMENT COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)

TENNESSEE  62-1543819 
(State or other jurisdiction of  (I.R.S. Employer 
Incorporation or Organization)  Identification No.) 
 
6584 POPLAR AVENUE, SUITE 300  38138 
MEMPHIS, TENNESSEE  (Zip Code) 
(Address of principal executive offices)   
 
(901) 682-6600 
(Registrant's telephone number, including area code) 
 
Securities registered pursuant to Section 12(b) of the Act: 
 
 Title of each class  Name of each exchange on which registered
 Common Stock, par value $.01 per share  New York Stock Exchange
 Series H Cumulative Redeemable Preferred Stock,  New York Stock Exchange
 Par value $.01 per share  

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [X]Yes [ ]No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. [ ]Yes [X]No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. [X]Yes [ ]No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [X]                  Accelerated filer [ ]
Non-accelerated filer [ ]                      Smaller Reporting Company [ ]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ]Yes [X]No

As of June 30, 2007, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $1,308,104,305, based on the closing sale price as reported on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class  Outstanding at February 8, 2008 
Common Stock, $.01 par value per share  25,775,580 shares 

DOCUMENTS INCORPORATED BY REFERENCE

Document  Parts Into Which Incorporated 
Certain portions of the Proxy Statement for the  Part III 
Annual Meeting of Shareholders to be held May 20,   
2008 to be filed with the Securities and Exchange   
Commission pursuant to Regulation 14A, not later   
than 120 days after the end of the fiscal year   
covered by this Annual Report on Form 10-K.   


MID-AMERICA APARTMENT COMMUNITIES, INC.

TABLE OF CONTENTS
 
 Item      Page 
PART I
 
1.       Business.    3
1A. Risk Factors.    9
1B. Unresolved Staff Comments.    17
2. Properties.    17
3. Legal Proceedings.    21
4. Submission of Matters to Vote of Security Holders.    21
 
PART II
 
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer   
Purchases of Equity Securities.    21
6. Selected Financial Data.    24
7. Management’s Discussion and Analysis of Financial Condition and Results of   
Operations.    25
7A. Quantitative and Qualitative Disclosures About Market Risk.    38
8. Financial Statements and Supplementary Data.    39
9. Changes in and Disagreements With Accountants on Accounting and Financial   
Disclosure.    39
9A. Controls and Procedures.    39
9A(T). Controls and Procedures.    40
9B. Other Information.    40
 
PART III
 
10. Directors, Executive Officers and Corporate Governance.    40
11. Executive Compensation.    40
12. Security Ownership of Certain Beneficial Owners and Management and Related   
Stockholder Matters.    41
13. Certain Relationships and Related Transactions, and Director Independence.    41
14. Principal Accounting Fees and Services.    41
 
PART IV
 
15. Exhibits, Financial Statement Schedules.    41


PART I

ITEM 1. BUSINESS.

Overview of Mid-America

     Founded in 1994, Mid-America Apartment Communities, Inc., or Mid-America, is a Memphis, Tennessee-based self-administered and self-managed umbrella partnership real estate investment trust, or REIT, that focuses on acquiring, owning and operating apartment communities. We, together with our subsidiaries, report as a single business segment. As of December 31, 2007, Mid-America owned 100% of 137 properties representing 40,248 apartment units. Mid-America has from time-to-time participated in various joint ventures. While no apartment communities were held in a joint venture structure as of December 31, 2007, Mid-America had entered into an agreement with a partner to form Mid-America Multifamily Fund I, LLC, or Fund I, with the purpose of acquiring and repositioning apartment communities. Mid-America has a 33.33% ownership interest in Fund I and will receive a management fee, an asset management fee and have the opportunity to earn an incentive fee. Subsequent to year end, Fund I purchased its first community with 310 apartment units.

     Mid-America’s business is conducted principally through Mid-America Apartments, L.P., which we refer to as our operating partnership. Mid-America is the sole general partner of the operating partnership, holding 264,594 common units of partnership interest, or common units, comprising a 1% general partnership interest in the operating partnership as of December 31, 2007. Mid-America’s wholly-owned qualified REIT subsidiary, MAC II of Delaware, Inc. is a limited partner in the operating partnership and, as of December 31, 2007, held 23,770,950 common units, or 89.84% of all outstanding common units.

     Mid-America operated apartment communities in 13 states in 2007, employing 1,170 full time and 83 part time employees at December 31, 2007.

Highlights for the year ended December 31, 2007:

  • Same store net operating income, or NOI, increased 5.8% over the prior year, the third best performance for any year in the history of Mid-America.
     
  • Strong operating results for the year helped to generate a 6.6% increase in FFO per share/unit over the prior year.
     
  • FFO per share/unit performance is a record for Mid-America.
     
  • The common dividend was increased effective with the January 31, 2008, distribution to a new annual rate of $2.46.
     
  • Physical occupancy at December 31, 2007 for the same store portfolio was 94.8%, up 0.6% compared to December 31, 2006 and represents a record for the past 11 years.
     
  • Mid-America completed the renovation and repositioning of 2,075 apartments in 2007 which achieved rent increases averaging 14%.
     
  • Mid-America continues to be in a strong financial position as its fixed charge coverage ratio reached 2.27 for the year, up from 2.15 for 2006.

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Operating Philosophy

     Mid-America’s primary objectives are to protect and grow existing property values, to maintain a stable and increasing cash flow that will fund its dividend through all parts of the real estate investment cycle, and to create new shareholder value by growing Mid-America in a disciplined manner. Mid-America focuses on growing shareholder value by effectively and efficiently operating its existing investments and, when accretive to shareholder value, through new investments.

     Investment Focus. Mid-America’s primary investment focus is on apartment communities in the Sunbelt region of the United States. Between 1994 and 1997, Mid-America grew largely through acquisition and redevelopment of existing communities. Between 1998 and 2002, its concentration was on development of new communities. Since 2003, we have focused on the acquisition of properties that we believe can be repositioned with appropriate use of capital and our operating management skills. We are currently focusing on increasing our investments in properties in larger and faster growing markets within our current geographic area, and intend to do this through acquiring apartment communities with the potential for above average growth. Beginning in 2005, Mid-America began an initiative of upgrading a significant number of our existing apartment communities, as well as a limited program of developing new apartments, principally as expansions of existing communities. We will continue our established process of selling mature assets, and will adapt our investment focus to opportunities and markets. In order to improve our return on investment, we have from time-to-time invested with joint venture partners and anticipate this will be a growing part of our strategy.

     High Quality Assets. Mid-America strives to maintain its assets in excellent condition, believing that continuous maintenance will lead to higher long-run returns on investment. Mid-America believes that being recognized by civic and industry trade organizations for the high quality of our properties, landscaping, and property management will lead to higher rents and profitability and illustrates the high quality of our properties and operations. Mid-America periodically and selectively sells assets to ensure that its portfolio consists primarily of high quality, well-located properties within its market area.

     Diversified Market Focus. We believe the stability of our cash flow is enhanced and it will generate higher risk adjusted cash flow returns, with lower volatility, through our diversified strategy of investments over high growth, growth and income, and stable markets throughout the Sunbelt region of the United States.

     Intensive Property and Asset Management Focus. Mid-America has traditionally emphasized property management, and in the past three years, we have deepened our asset management functions to provide additional support in marketing, training, ancillary income and, most recently, revenue management. At December 31, 2007, Mid-America employed approximately 106 Certified Apartment Managers, a designation established by the National Apartment Association, which provides training for on-site manager professionals.

     Decentralized Operational Structure. Mid-America operates in a decentralized manner. We believe that our decentralized operating structure capitalizes on specific market knowledge, provides greater personal accountability than a centralized structure and is beneficial in the acquisition and redevelopment processes. To support this decentralized operational structure, senior and executive management, along with various asset management functions, are proactively involved in supporting and reviewing property management through extensive reporting processes and frequent on-site visitations. In 2004, Mid-America completed the installation of the property and accounting modules of a new web-based property management system that increased the amount of information shared between senior and executive management and the properties on a real time basis, improving the support provided to on-site property operations.

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In 2005, we made significant improvements to our operating platform and we expect these enhancements will help capture more operating efficiencies, continue to support effective expense control and provide for various expanded revenue management practices. In the second quarter of 2007, we implemented a new “yield management” pricing program that we expect will help our property managers to optimize rental revenues. In the third quarter of 2007, we installed new purchase order and accounts payable software and implemented processes to provide improved controls and management information.

Proactive Balance Sheet and Portfolio Management

     Mid-America focuses on improving the net present value of each share of Mid-America common stock. We routinely evaluate each asset and from time-to-time sell those that no longer fit our strategy. Mid-America makes new investments and issues new equity when management believes it can add to value per share. In the past, Mid-America has sold assets to fund share repurchases when, in management’s view, shareholder value would be enhanced.

Strategies

     Mid-America seeks to increase operating cash flow and earnings per share to maximize shareholder value through a balanced strategy of internal and external growth.

     Operating Growth Strategy. Mid-America's goal is to maximize our return on investment in each apartment community by increasing revenues, tightly controlling operating expenses, maintaining high occupancy levels and reinvesting as appropriate. The steps taken to meet these objectives include:

  • providing management information and improved customer services through technology innovations;
     
  • utilizing systems to enhance property managers’ ability to optimize revenue by adjusting rents in response to local market conditions;
     
  • developing new ancillary income programs aimed at offering new services to residents, including telephone, cable, and internet access, on which Mid-America generates fee and commission income;
     
  • implementing programs to control expenses through investment in cost-saving initiatives, such as the installation of individual apartment unit water and utility meters in certain apartment communities;
     
  • analyzing individual asset productivity performances to identify best practices and improvement areas;
     
  • proactively maintaining the physical condition of each property;
     
  • improving the “curb appeal” of the apartment communities through extensive landscaping and exterior improvements and repositioning apartment communities from time-to-time to maintain market leadership positions;
     
  • compensating employees through performance-based compensation and stock ownership programs;

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  • maintaining a hands-on management style and “flat” organizational structure that emphasizes senior management's continued close contact with the market and employees;
     
  • selling or exchanging underperforming assets;
     
  • repurchasing or issuing shares of common or preferred stock when cost of capital and asset values permit;
     
  • aggressively managing lease expirations to align with peak leasing traffic patterns and to maximize productivity of property staffing; and
     
  • allocating additional capital, including capital for selective interior and exterior improvements, where the investment will generate the highest returns for Mid-America.

     Joint Venture Strategy. One of Mid-America’s strategies is to co-invest with partners in joint venture opportunities from time-to-time to the extent we believe that a joint venture will enable us to obtain a higher return on our investment through management and other fees, which leverage our skills in acquiring, repositioning, redeveloping and managing multifamily investments. In addition, the joint venture investment strategy can provide a platform for creating more capital diversification and lower investment risk for Mid-America.

     Disposition Strategy. Mid-America from time-to-time disposes of mature assets, defined as those apartment communities that no longer meet our investment criteria and long-term strategic objectives. Typically, Mid-America selects assets for disposition that do not meet our present investment criteria including estimated future return on investment, location, market, potential for growth, and capital needs. Mid-America may from time-to-time also dispose of assets for which we receive an offer meeting or exceeding our return on investment criteria even though those assets may not meet the disposition criteria disclosed above.

The following apartment communities were sold during 2007:

        Number     
Property        Location        of Units        Date Sold 
100% Owned Properties:       
     Woodridge  Jackson, MS  192  July 16, 2007 
     Somerset  Jackson, MS  144  July 16, 2007 
     Hickory Farms  Memphis, TN  200  May 3, 2007 
     Gleneagles  Memphis, TN  184  May 3, 2007 
 
Joint Venture Properties       
     Verandas at Timberglen  Dallas, TX  522  January 12, 2007 
    1,242   

     Acquisition Strategy. One of Mid-America’s growth strategies is to acquire and redevelop apartment communities that meet our investment criteria and focus as discussed above. Mid-America has extensive experience and research-based skills in the acquisition and repositioning of multifamily communities. In addition, Mid-America will acquire newly built and developed communities that can be purchased on a favorable pricing basis. Mid-America will continue to evaluate opportunities that arise, and will utilize this strategy to increase the number of apartment communities in strong and growing markets in the Sunbelt region of the United States.

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The following apartment communities were purchased during 2007:

        Number     
Property        Location        of Units        Date Purchased 
100% Owned Properties:       
     Farmington Village  Summerville, SC  280  September 20, 2007 
     Chalet at Fall Creek  Humble, TX  268  July 6, 2007 
     Park Place  Houston, TX  229  May 30, 2007 
     Ranchstone  Houston, TX  220  May 30, 2007 
    997   

     Development Strategy. In 2006, Mid-America began some expansion development projects at existing apartment communities on adjacent land. We do not currently intend to expand into development in a significant way. We prefer to capture accretive new growth through opportunistically acquiring new properties.

Common and Preferred Stock

     Mid-America continuously reviews opportunities for lowering our cost of capital, and increasing net present value per share. Mid-America evaluates opportunities to repurchase stock when we believe that our stock price is below our net present value and accordingly repurchased common stock, funded by asset sales, between 1999 and 2001. Mid-America also looks for opportunities where we can acquire or develop apartment communities, selectively funded or partially funded by stock sales, when the investment return is projected to substantially exceed our cost of capital. Mid-America will also opportunistically seek to lower our cost of capital through refinancing preferred stock as we did in 2003, 2006 and 2007.

     On November 3, 2006, Mid-America entered into a sales agreement with Cantor Fitzgerald & Co. to sell up to 2,000,000 shares of Mid-America’s common stock, from time-to-time in at-the-market offerings or negotiated transactions through a controlled equity offering program. From January through April of 2007, Mid-America sold 323,700 shares of common stock for net proceeds of approximately $18.8 million after underwriting commissions and SEC fees, an average net price of $58.00 per share.

     In October 2007, Mid-America redeemed all of our issued and outstanding 9¼% Series F Cumulative Redeemable Preferred Stock for $11.9 million.

     Mid-America also has a direct stock purchase plan which allows for the optional purchase of common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. We, in our absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. Throughout 2007, we issued a total of 136,483 shares through our direct stock purchase plan at an average 1.5% discount. No waivers were granted during 2007.

Share Repurchase Program

     In 1999, Mid-America’s Board of Directors approved an increase in the number of shares of Mid-America’s common stock authorized to be repurchased to 4 million shares. As of December 31, 2007, Mid-America had repurchased a total of approximately 1.86 million shares (8% of the shares of common stock and common units outstanding as of the beginning of the repurchase program). From time-to-time, we intend to sell assets based on our disposition strategy outlined in this Annual Report and use the proceeds to repurchase shares when we believe that shareholder value is enhanced. Factors affecting this determination include the share price, asset dispositions and pricing, financing agreements and rates of return. No shares were repurchased from 2002 through 2007 under this plan.

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Competition

     All of Mid-America’s apartment communities are located in areas that include other apartment communities. Occupancy and rental rates are affected by the number of competitive apartment communities in a particular area. The owners of competing apartment communities may have greater resources than Mid-America, and the managers of these apartment communities may have more experience than Mid-America’s management. Moreover, single-family rental housing, manufactured housing, condominiums and the new and existing home markets provide housing alternatives to potential residents of apartment communities.

     Apartment communities compete on the basis of monthly rent, discounts, and facilities offered such as apartment size and amenities, and apartment community amenities, including recreational facilities, resident services, and physical property condition. Mid-America makes capital improvements to both our apartment communities and individual apartments on a regular basis in order to maintain a competitive position in each individual market.

Environmental Matters

     As part of the acquisition process, Mid-America obtains environmental studies on all of our apartment communities from various outside environmental engineering firms. The purpose of these studies is to identify potential sources of contamination at the apartment communities and to assess the status of environmental regulatory compliance. These studies generally include historical reviews of the apartment communities, reviews of certain public records, preliminary investigations of the sites and surrounding properties, visual inspection for the presence of asbestos, PCBs and underground storage tanks and the preparation and issuance of written reports. Depending on the results of these studies, more invasive procedures, such as soil sampling or ground water analysis, will be performed to investigate potential sources of contamination. These studies must be satisfactorily completed before Mid-America takes ownership of an acquisition community; however, no assurance can be given that the studies identify all significant environmental problems.

     Under various federal, state and local laws and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on properties. Such laws often impose such liability without regard to whether the owner caused or knew of the presence of hazardous or toxic substances and whether the storage of such substances was in violation of a resident’s lease. Furthermore, the cost of remediation and removal of such substances may be substantial, and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner’s ability to sell such real estate or to borrow using such real estate as collateral.

     Mid-America is aware of environmental concerns specifically relating to potential issues resulting from mold in residential properties and has in place an active management and preventive maintenance program that includes procedures specifically related to mold. Mid-America has established a policy requiring residents to sign a mold addendum to lease. Mid-America has also purchased a $5 million insurance policy that covers remediation and exposure to mold. The current policy expires in 2010 but is renewable at that time. Mid-America, therefore, believes that our exposure to this issue is limited and controlled.

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     The environmental studies received by Mid-America have not revealed any material environmental liabilities. Mid-America is not aware of any existing conditions that would currently be considered an environmental liability. Nevertheless, it is possible that the studies do not reveal all environmental liabilities or that there are material environmental liabilities of which Mid-America is unaware. Moreover, no assurance can be given concerning future laws, ordinances or regulations, or the potential introduction of hazardous or toxic substances by neighboring properties or residents.

     Mid-America believes that our apartment communities are in compliance in all material respects with all applicable federal, state and local ordinances and regulations regarding hazardous or toxic substances and other environmental matters.

Website Access to Registrant’s Reports

     Mid-America files annual and periodic reports with the Securities and Exchange Commission. All filings made by Mid-America with the SEC may be copied or read at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC as Mid-America does. The website is http://www.sec.gov.

     Additionally, a copy of this Annual Report on Form 10-K, along with Mid-America’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to the aforementioned filings, are available on Mid-America’s website free of charge. The filings can be found on the Investor Relations page under SEC Filings. Mid-America’s website also contains our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the committees of the Board of Directors. These items can also be found on the Investor Relations page under Governance Documents. Mid-America’s website address is http://www.maac.net. Reference to Mid-America’s website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this document. All of the aforementioned materials may also be obtained free of charge by contacting the Investor Relations Department at Mid-America Apartment Communities, Inc., 6584 Poplar Avenue, Suite 300, Memphis, TN 38138.

Recent Developments

     Acquisitions. On January 10, 2008, Mid-America purchased the Cascade at Fall Creek apartments, a 246-unit community in Humble, TX.

     On January 17, 2008, Fund I made its first acquisition and purchased the Milstead Village apartments, a 310-unit community located in Kennesaw, GA.

ITEM 1A. RISK FACTORS.

     In addition to the other information contained in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.

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Failure to Generate Sufficient Cash Flows Could Limit our Ability to Pay Distributions to Shareholders

     Mid-America’s ability to generate sufficient cash flow in order to pay common dividends to our shareholders depends on our ability to generate funds from operations in excess of capital expenditure requirements and preferred dividends, and/or to have access to the markets for debt and equity financing. Funds from operations and the value of Mid-America’s apartment communities may be insufficient because of factors which are beyond our control. Such events or conditions could include:

  • competition from other apartment communities;
     
  • overbuilding of new apartment units or oversupply of available apartment units in Mid-America’s markets, which might adversely affect apartment occupancy or rental rates and/or require rent concessions in order to lease apartment units;
     
  • conversion of condominiums and single family houses to rental use;
     
  • increases in operating costs (including real estate taxes and insurance premiums) due to inflation and other factors, which may not be offset by increased rents;
     
  • inability to rent apartments on favorable economic terms;
     
  • changes in governmental regulations and the related costs of compliance;
     
  • changes in tax laws and housing laws including the enactment of rent control laws or other laws regulating multifamily housing;
     
  • an uninsured loss, resulting from a catastrophic storm or act of terrorism;
     
  • changes in interest rate levels and the availability of financing, which could lead renters to purchase homes (if interest rates decrease and home loans are more readily available) or increase Mid-America’s acquisition and operating costs (if interest rates increase and financing is less readily available);
     
  • weakness in the overall economy which lowers job growth and the associated demand for apartment housing; and
     
  • the relative illiquidity of real estate investments.

     At times, Mid-America relies on external funding sources to fully fund the payment of distributions to shareholders and our capital investment program (including our existing property expansion developments). While Mid-America has sufficient liquidity to permit distributions at current rates through additional borrowings if necessary, any significant and sustained deterioration in operations could result in our financial resources being insufficient to pay distributions to shareholders at the current rate, in which event Mid-America would be required to reduce the distribution rate. Any decline in Mid-America’s funds from operations could adversely affect Mid-America’s ability to make distributions to our shareholders or to meet our loan covenants and could have a material adverse effect on Mid-America’s stock price.

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Mid-America’s Financing Could be Impacted by Negative Capital Market Conditions.

     Recently, domestic financial markets have experienced unusual volatility and uncertainty. While this condition has occurred most visibly within the “subprime” mortgage lending sector of the credit market, liquidity has tightened in overall domestic financial markets, including the investment grade debt and equity capital markets. Consequently, there is greater risk that the financial institutions Mid-America does business with could experience disruptions that would negatively affect our current financing program.

Debt Level, Refinancing and Loan Covenant Risk May Adversely Affect Financial Condition and Operating Results and Our Ability to Maintain Our Status as a REIT

     At December 31, 2007, Mid-America had total debt outstanding of $1.3 billion. Payments of principal and interest on borrowings may leave Mid-America with insufficient cash resources to operate the apartment communities or pay distributions that are required to be paid in order for Mid-America to maintain our qualification as a REIT. Mid-America currently intends to limit our total debt to approximately 60% of the undepreciated book value of our assets, although our charter and bylaws do not limit our debt levels. Circumstances may cause Mid-America to exceed that target from time-to-time. As of December 31, 2007, Mid-America’s ratio of debt to undepreciated book value was approximately 54%. Mid-America’s Board of Directors can modify this policy at any time which could allow Mid-America to become more highly leveraged and decrease our ability to make distributions to our shareholders. In addition, Mid-America must repay its debt upon maturity, and the inability to access debt or equity capital at attractive rates could adversely affect Mid-America’s financial condition and/or our funds from operations. Mid-America relies on Federal National Mortgage Association, or FNMA, and Federal Home Loan Mortgage Corporation, or Freddie Mac, which we refer to as the agencies, for the majority of our debt financing and has agreements with the agencies and with other lenders that require us to comply with certain covenants. The breach of any one of these covenants would place Mid-America in default with our lenders and may have serious consequences on the operations of Mid-America.

Variable Interest Rates May Adversely Affect Funds from Operations

     At December 31, 2007, effectively $226 million of Mid-America’s debt bore interest at a variable rate and was not hedged by interest rate swaps or caps. Mid-America may incur additional debt in the future that also bears interest at variable rates. Variable rate debt creates higher debt service requirements if market interest rates increase, which would adversely affect Mid-America’s funds from operations and the amounts available to pay distributions to shareholders. Mid-America’s $1.0 billion secured credit facilities with Prudential Mortgage Capital, credit enhanced by FNMA, are predominately floating rate facilities. Mid-America also has credit facilities with Freddie Mac totaling $300 million which are variable rate facilities. At December 31, 2007, a total of $1.1 billion was outstanding under these facilities. These facilities represent the majority of the variable interest rates Mid-America was exposed to at December 31, 2007. Large portions of the interest rates on these facilities have been hedged by means of a number of interest rate swaps and caps. Upon the termination of these swaps and caps, Mid-America will be exposed to the risks of varying interest rates.

Interest Rate Hedging may be Ineffective

     Mid-America relies on the financial markets to refinance debt maturities, and also is heavily reliant on the creditworthiness of FNMA, which provides credit enhancement for approximately $906 million of Mid-America’s debt. The interest rate market for FNMA Discount Mortgage Backed Securities, or DMBS, which in Mid-America’s experience is highly correlated with three-month LIBOR interest rates, is also an important component of Mid-America’s liquidity and interest rate swap effectiveness.

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Typically, for the credit facility we have with FNMA, the DMBS rate has approximated three-month LIBOR less an average spread of 0.05% - 0.09% over the life of the facility. We also pay a credit enhancement fee, which in the case of FNMA facility, is 0.62%. In September 2007, however, the spread between three-month LIBOR and DMBS increased significantly, and peaked at 0.57% in December before dropping back to 0.27% in February 2008. While we believe that the current market illiquidity is an anomaly and that this spread will return to more historic levels, Mid-America cannot forecast when or if the uncertainty and volatility in the market may change. Continued unusual volatility could cause us to lose hedge accounting treatment for our interest rate swaps, resulting in material changes to our consolidated statements of operations and balance sheets, and potentially cause a breach with one of our debt covenants.

Issuances of Additional Debt or Equity May Adversely Impact Our Financial Condition

     Our capital requirements depend on numerous factors, including the occupancy rates of our apartment communities, dividend payment rates to our shareholders, development and capital expenditures, costs of operations and potential acquisitions. Mid-America cannot accurately predict the timing and amount of our capital requirements. If our capital requirements vary materially from our plans, Mid-America may require additional financing sooner than anticipated. Accordingly, Mid-America could become more leveraged, resulting in increased risk of default on our obligations and in an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future.

Increasing Real Estate Taxes and Insurance Costs May Negatively Impact Financial Condition

     As a result of Mid-America’s substantial real estate holdings, the cost of real estate taxes and insuring its apartment communities is a significant component of expense. Real estate taxes and insurance premiums are subject to significant increases and fluctuations which can be widely outside of the control of Mid-America. If the costs associated with real estate taxes and insurance should rise, Mid-America’s financial condition could be negatively impacted and Mid-America’s ability to pay our dividend could be affected.

Losses from Catastrophes May Exceed Our Insurance Coverage

     Mid-America carries comprehensive liability and property insurance on our communities, and intends to obtain similar coverage for communities we acquire in the future. Some losses, generally of a catastrophic nature, such as losses from floods, hurricanes or earthquakes, are subject to limitations, and thus may be uninsured. Mid-America exercises our discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our investments at a reasonable cost and on suitable terms. If Mid-America suffers a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement value of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed.

12


Property Insurance Limits May be Inadequate and Deductibles May be Excessive in the Event of a Catastrophic Loss or a Series of Major Losses, and May Cause a Breach of a Loan Covenant

     Mid-America has a significant proportion of our assets in areas exposed to windstorms and to the New Madrid earthquake zone. A major wind or earthquake loss, or series of losses, could require that Mid-America pay significant deductibles as well as additional amounts above the per occurrence limit of Mid-America’s insurance for these risks. Mid-America may then be judged to have breached one or more of our loan covenants, and any of the foregoing events could have a material adverse effect on Mid-America’s assets, financial condition, and results of operation.

Mid-America is dependent on Key Personnel

     Our success depends in part on our ability to attract and retain the services of executive officers and other personnel. There is substantial competition for qualified personnel in the real estate industry and the loss of several of our key personnel could have an adverse effect on us.

New Acquisitions May Fail to Perform as Expected and Failure to Integrate Acquired Communities and New Personnel Could Create Inefficiencies

     Mid-America intends to actively acquire and improve multifamily communities for rental operations. Mid-America may underestimate the costs necessary to bring an acquired community up to standards established for our intended market position. Additionally, to grow successfully, Mid-America must be able to apply our experience in managing our existing portfolio of apartment communities to a larger number of properties. Mid-America must also be able to integrate new management and operations personnel as our organization grows in size and complexity. Failures in either area will result in inefficiencies that could adversely affect our overall profitability.

Mid-America May Not Be Able To Sell Communities When Appropriate

     Real estate investments are relatively illiquid and generally cannot be sold quickly. Mid-America may not be able to change our portfolio promptly in response to economic or other conditions. This inability to respond promptly to changes in the performance of our investments could adversely affect our financial condition and ability to make distributions to our security holders.

Environmental Problems are Possible and Can be Costly

     Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at such community. The owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination. These laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamination emanating from that site. All of our communities have been the subject of environmental assessments completed by qualified independent environmental consultant companies. These environmental assessments have not revealed, nor is Mid-America aware of, any environmental liability that our management believes would have a material adverse effect on our business, results of operations, financial condition or liquidity. Over the past several years, there have been an increasing number of lawsuits against owners and managers of multifamily properties alleging personal injury and property damage caused by the presence of mold in residential real estate.

13


Some of these lawsuits have resulted in substantial monetary judgments or settlements. Mid-America cannot be assured that existing environmental assessments of our communities reveal all environmental liabilities, that any prior owner of any of our properties did not create a material environmental condition not known to Mid-America, or that a material environmental condition does not otherwise exist.

Compliance or Failure to Comply with Laws Requiring Access to Our Properties by Disabled Persons Could Result in Substantial Cost

     The Americans with Disabilities Act, the Fair Housing Act of 1988 and other federal, state and local laws generally require that public accommodations be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the government or the award of damages to private litigants. These laws may require Mid-America to modify our existing communities. These laws may also restrict renovations by requiring improved access to such buildings by disabled persons or may require Mid-America to add other structural features that increase our construction costs. Legislation or regulations adopted in the future may impose further burdens or restrictions on Mid-America with respect to improved access by disabled persons. Mid-America cannot ascertain the costs of compliance with these laws, which may be substantial.

Our Ownership Limit Restricts the Transferability of Our Capital Stock

     Our charter limits ownership of our capital stock by any single shareholder to 9.9% of the value of all outstanding shares of our capital stock, both common and preferred. The charter also prohibits anyone from buying shares if the purchase would result in our losing REIT status. This could happen if a share transaction results in fewer than 100 persons owning all of our shares or in five or fewer persons, applying certain broad attribution rules of the Internal Revenue Code of 1986, as amended, or the Code, owning 50% or more of our shares. If you acquire shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs, we:

  • will consider the transfer to be null and void;
     
  • will not reflect the transaction on our books;
     
  • may institute legal action to enjoin the transaction;
     
  • will not pay dividends or other distributions with respect to those shares;
     
  • will not recognize any voting rights for those shares;
     
  • will consider the shares held in trust for our benefit; and
     
  • will either direct you to sell the shares and turn over any profit to us, or we will redeem the shares. If we redeem the shares, you will be paid a price equal to the lesser of:
           (a)       the price you paid for the shares; or
 
(b) the average of the last reported sales prices on the New York Stock Exchange on the ten trading days immediately preceding the date fixed for redemption by our Board of Directors.

14


If you acquire shares in violation of the limits on ownership described above:

  • you may lose your power to dispose of the shares;
     
  • you may not recognize profit from the sale of such shares if the market price of the shares increases; and
     
  • you may be required to recognize a loss from the sale of such shares if the market price decreases.

Provisions of Our Charter and Tennessee Law May Limit the Ability of a Third Party to Acquire Control of Us

     Ownership Limit

     The 9.9% ownership limit discussed above may have the effect of precluding acquisition of control of us by a third party without the consent of our Board of Directors.

     Preferred Stock

     Our charter authorizes our Board of Directors to issue up to 20,000,000 shares of preferred stock. The Board of Directors may establish the preferences and rights of any preferred shares issued. The issuance of preferred stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our shareholders’ best interests. Currently, we have 6,200,000 shares of 8.30% Series H Cumulative Redeemable Preferred Stock issued and outstanding.

     Tennessee Anti-Takeover Statutes

     As a Tennessee corporation, we are subject to various legislative acts, which impose restrictions on and require compliance with procedures designed to protect shareholders against unfair or coercive mergers and acquisitions. These statutes may delay or prevent offers to acquire us and increase the difficulty of consummating any such offers, even if our acquisition would be in our shareholders’ best interests.

Our Investments in Joint Ventures May Involve Risks

     Investments in joint ventures may involve risks which may not otherwise be present in our direct investments such as:

  • the potential inability of our joint venture partner to perform;
     
  • the joint venture partner may have economic or business interests or goals which are inconsistent with or adverse to ours;
     
  • the joint venture partner may take actions contrary to our requests or instructions or contrary to our objectives or policies; and
     
  • the joint venturers may not be able to agree on matters relating to the property they jointly own.

15


Although each joint owner will have a right of first refusal to purchase the other owner’s interest, in the event a sale is desired, the joint owner may not have sufficient resources to exercise such right of first refusal.

Failure to Qualify as a REIT Would Cause Mid-America to be Taxed as a Corporation

     If Mid-America fails to qualify as a REIT for federal income tax purposes, Mid-America will be taxed as a corporation. The Internal Revenue Service may challenge our qualification as a REIT for prior years, and new legislation, regulations, administrative interpretations or court decisions may change the tax laws with respect to qualification as a REIT or the federal tax consequences of such qualification. For any taxable year that Mid-America fails to qualify as a REIT, Mid-America would be subject to federal income tax on our taxable income at corporate rates, plus any applicable alternative minimum tax. In addition, unless entitled to relief under applicable statutory provisions, Mid-America would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. This treatment would reduce our net earnings available for investment or distribution to shareholders because of the additional tax liability for the year or years involved. In addition, distributions would no longer qualify for the dividends paid deduction nor be required to be made in order to preserve REIT status. Mid-America might be required to borrow funds or to liquidate some of our investments to pay any applicable tax resulting from our failure to qualify as a REIT.

Failure to Make Required Distributions Would Subject Mid-America to Income Taxation

     In order to qualify as a REIT, each year Mid-America must distribute to stockholders at least 90% of its REIT taxable income (determined without regard to the dividend paid deduction and by excluding net capital gains). To the extent that Mid-America satisfies the distribution requirement, but distributes less than 100% of taxable income, it will be subject to federal corporate income tax on the undistributed income. In addition, Mid-America will incur a 4% nondeductible excise tax on the amount, if any, by which the distributions in any year are less than the sum of:

  • 85% of ordinary income for that year;
     
  • 95% of capital gain net income for that year; and
     
  • 100% of undistributed taxable income from prior years.

Differences in timing between the recognition of income and the related cash receipts or the effect of required debt amortization payments could require Mid-America to borrow money or sell assets to pay out enough of the taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4% nondeductible excise tax in a particular year.

Complying with REIT Requirements May Cause Mid-America to Forgo Otherwise Attractive Opportunities or Engage in Marginal Investment Opportunities

     To qualify as a REIT for federal income tax purposes, Mid-America must continually satisfy tests concerning, among other things, the sources of income, the nature and diversification of assets, the amounts distributed to shareholders and the ownership of Mid-America’s stock. In order to meet these tests, Mid-America may be required to forgo attractive business or investment opportunities or engage in marginal investment opportunities. Thus, compliance with the REIT requirements may hinder Mid-America’s ability to operate solely on the basis of maximizing profits.

16


ITEM 1B. UNRESOLVED STAFF COMMENTS.

     None.

ITEM 2. PROPERTIES.

     Mid-America seeks to acquire apartment communities located in the Sunbelt region of the United States that are primarily appealing to middle income residents with the potential for above average growth and return on investment. Approximately 73% of Mid-America's apartment units are located in Georgia, Florida, Tennessee and Texas markets. Mid-America's strategic focus is to provide our residents high quality apartment units in attractive community settings, characterized by extensive landscaping and attention to aesthetic detail. We utilize our experience and expertise in maintenance, landscaping, marketing and management to effectively reposition many of the apartment communities we acquire to raise occupancy levels and per unit average rents.

     The following table sets forth certain historical information for the apartment communities we owned at December 31, 2007:


Approximate Average Monthly Average Encumbrances at
Rentable Unit Rent per Occupancy December 31, 2007
Year Area Size Unit at Percent at Mortgage/Bond
Year Management Number (Square (Square December 31,   December 31, Principal Interest Maturity
Property      Location      Completed      Commenced      of Units      Footage)      Footage)      2007      2007      (000's)           Rate           Date     
100% Owned  
       Eagle Ridge Birmingham, AL 1986 1998 200 181,400 907 $ 672.66   95.00 % $ (1) (1)   (1)
       Abbington Place Huntsville, AL 1987 1998 152 162,792 1,071 $ 599.79 94.08 % $ (1)   (1) (1)
       Paddock Club Huntsville Huntsville, AL 1989/98 1997 392 414,736 1,058   $ 694.58 96.68 % $ (1) (1) (1)
       Paddock Club Montgomery Montgomery, AL 1999 1998   208   230,880   1,110 $ 763.75 95.67 % $ (1) (1) (1)
952 989,808 1,040 $ 689.95 95.69 %
       Calais Forest Little Rock, AR 1987 1994 260 195,000 750 $ 627.12 98.08 % $ (1) (1) (1)
       Napa Valley Little Rock, AR 1984 1996 240 183,120 763 $ 625.18 95.42 % $ (1) (1) (1)
       Westside Creek I & II   Little Rock, AR   1984/86   1997 308 320,936 1,042 $ 687.22 96.43 % $ (1) (1) (1)
808 699,056 865 $ 649.45 96.66 %
       Talus Ranch Phoenix, AZ 2006 2006 480 437,280 911 $ 840.76 78.75 % $
480 437,280 911 $ 840.76 78.75 %
       Tiffany Oaks Altamonte Springs, FL 1985 1996 288 234,144 813 $ 794.49 94.79 % $ (1) (1) (1)
       Marsh Oaks Atlantic Beach, FL 1986 1995 120 93,240 777 $ 700.27 90.00 % $ (1) (1) (1)
       Indigo Point Brandon, FL 1989 2000 240 194,640 811 $ 808.13 97.50 % $ (4) (4) (4)
       Paddock Club Brandon Brandon, FL 1997/99 1997 440 516,120 1,173 $ 938.49 95.68 % $ (2) (2) (2)
       Preserve at Coral Square Coral Springs, FL 1996 2004 480 528,480 1,101 $ 1,249.97 96.88 % $ 29,532 4.240% 9/28/2008
       Anatole Daytona Beach, FL 1986 1995 208 149,136 717 $ 752.76 92.31 % $ 7,000 (10)    4.112% (10)    10/15/2032 (10)
       Paddock Club Gainesville Gainesville, FL 1999 1998 264 293,040 1,110 $ 946.96 94.70 % $ (2) (2) (2)
       Cooper's Hawk Jacksonville, FL 1987 1995 208 218,400 1,050 $ 837.54 96.15 % $ (2) (2) (2)
       Hunter's Ridge at Deerwood Jacksonville, FL 1987 1997 336 295,008 878 $ 828.63 92.26 % $ (8) (8) (8)
       Lakeside Jacksonville, FL 1985 1996 416 344,032 827 $ 773.49 93.03 % $ (1) (1) (1)
       Lighthouse at Fleming Island Jacksonville, FL 2003 2003 501 556,110 1,110 $ 937.04 90.02 % $ (1) (1) (1)
       Paddock Club Jacksonville Jacksonville, FL 1989/96 1997 440 475,200 1,080 $ 869.45 94.09 % $ (1) (1) (1)
       Paddock Club Mandarin Jacksonville, FL 1998 1998 288 330,336 1,147 $ 897.00 94.79 % $ (2) (2) (2)
       St. Augustine Jacksonville, FL 1987 1995 400 304,400 761 $ 722.59 91.75 % $ 13,235 (20) (20)    (20)
       Woodbridge at the Lake Jacksonville, FL 1985 1994 188 166,004 883 $ 779.53 94.68 % $ (2) (2) (2)
       Woodhollow Jacksonville, FL 1986 1997 450 342,000 760 $ 750.56 96.00 % $ (1) (1) (1)
       Paddock Club Lakeland Lakeland, FL 1988/90 1997 464 505,296 1,089 $ 780.03 95.26 % $ (1) (1) (1)
       Savannahs at James Landing Melbourne, FL 1990 1995 256 238,592 932 $ 773.41 96.48 % $ (2) (2) (2)
       Paddock Park Ocala Ocala, FL 1986/88 1997 480 485,280 1,011 $ 769.05 90.83 % $ 6,805    (2)(3) (2)(3) (2)(3)
       Paddock Club Panama City Panama City, FL 2000 1998 254 283,972 1,118 $ 928.49 94.09 % $ (2) (2) (2)
       Paddock Club Tallahassee Tallahassee, FL 1990/95 1997 304 329,232 1,083 $ 852.88 96.38 % $ (2) (2) (2)
       Belmere Tampa, FL 1984 1994 210 202,440 964 $ 808.59 92.38 % $ (1) (1) (1)
       Links at Carrollwood Tampa, FL 1980 1998 230 214,820 934 $ 868.94 93.91 % $ (1) (1) (1)
7,465 7,299,922 978 $ 854.42 94.07 %
       High Ridge Athens, GA 1987 1997 160 186,560 1,166 $ 738.60 96.25 % $ (1) (1) (1)
       Bradford Pointe Augusta, GA 1986 1997 192 156,288 814 $ 632.51 92.71 % $ (5) (5) (5)
       Shenandoah Ridge Augusta, GA 1982 1994 272 222,768 819 $ 584.65 91.91 % $ (1) (1) (1)
       Westbury Creek Augusta, GA 1984 1997 120 107,040 892 $ 649.10 90.00 % $ 3,480 (15) (15) 5/15/2033 (15)
       Fountain Lake Brunswick, GA 1983 1997 110 129,800 1,180 $ 814.12 91.82 % $ (5) (5) (5)

17



Approximate Average Monthly Average Encumbrances at
Rentable Unit Rent per Occupancy December 31, 2007
Year Area Size Unit at Percent at Mortgage/Bond
Year Management Number (Square (Square December 31, December 31, Principal Interest Maturity
Property      Location      Completed      Commenced      of Units      Footage)      Footage)      2007      2007      (000's)           Rate           Date     
       Park Walk College Park, GA 1985 1997 124 112,716 909 $ 633.55 100.00 % $ (1)   (1)   (1)
       Whisperwood Columbus, GA 80/82/84/86/98 1997 1,008 1,220,688 1,211 $ 769.88   84.72 % $ (1) (1) (1)
       Willow Creek Columbus, GA 1971/77 1997 285 246,810 866 $ 566.68 95.09 % $ (1) (1) (1)
       Terraces at Fieldstone   Conyers, GA   1999   1998   316   351,076   1,111   $ 801.83 94.62 %   $ (1) (1) (1)
       Prescott Duluth, GA 2001 2004 384 370,176 964 $ 816.46 97.92 % $ (6) (6) (6)
       Lanier Gainesville, GA 1998 2005 344 395,944 1,151 $ 826.09 95.35 % $ 19,577 5.300% 3/1/2014
       Lake Club Gainesville, GA 2001 2005 313 359,950 1,150 $ 771.21 94.25 % $ (6) (6) (6)
       Whispering Pines LaGrange, GA 1982/84 1997 216 223,128 1,033 $ 600.16 97.22 % $ (5) (5) (5)
       Westbury Springs Lilburn, GA 1983 1997 150 137,700 918 $ 685.97 91.33 % $ (1) (1) (1)
       Austin Chase Macon, GA 1996 1997 256 292,864 1,144 $ 734.30 91.80 % $ (8) (8) (8)
       The Vistas Macon, GA 1985 1997 144 153,792 1,068 $ 651.73 100.00 % $ (1) (1) (1)
       Walden Run McDonough, GA 1997 1998 240 271,200 1,130 $ 730.32 90.83 % $ (1) (1) (1)
       Georgetown Grove Savannah, GA 1997 1998 220 239,800 1,090 $ 823.62 97.27 % $
       Oaks at Wilmington Island Savannah, GA 1999 2006 306 300,492 982 $ 859.97 94.12 % $ (7) (7) (7)
       Wildwood Thomasville, GA 1980/84 1997 216 223,128 1,033 $ 609.73 94.44 % $ (1) (1) (1)
       Hidden Lake Union City, GA 1985/87 1997 320 342,400 1,070 $ 676.11 95.63 % $ (1) (1) (1)
       Three Oaks Valdosta, GA 1983/84 1997 240 247,920 1,033 $ 645.05 97.08 % $ (1) (1) (1)
       Huntington Chase Warner Robins, GA 1997 2000 200 218,400 1,092 $ 710.95 96.00 % $ 8,581 6.850% 11/1/2008
       Southland Station Warner Robins, GA 1987/90 1997 304 354,768 1,167 $ 716.11 97.70 % $ (1) (1) (1)
       Terraces at Townelake Woodstock, GA 1999 1998 502 575,794 1,147 $ 777.29 94.22 % $ (1) (1) (1)
6,942 7,441,202 1,072 $ 729.13 93.47 %
       Fairways at Hartland Bowling Green, KY 1996 1997 240 251,280 1,047 $ 680.00 92.08 % $ (1) (1) (1)
       Paddock Club Florence Florence, KY 1994 1997 200 207,000 1,035 $ 735.04 84.00 % $ 9,456 5.875% 1/1/2044
       Grand Reserve Lexington Lexington, KY 2000 1999 370 432,530 1,169 $ 855.91 92.43 % $ (1) (1) (1)
       Lakepointe Lexington, KY 1986 1994 118 90,624 768 $ 623.16 98.31 % $ (1) (1) (1)
       Mansion, The Lexington, KY 1989 1994 184 138,736 754 $ 651.17 94.57 % $ (1) (1) (1)
       Village, The Lexington, KY 1989 1994 252 182,700 725 $ 606.70 97.62 % $ (1) (1) (1)
       Stonemill Village Louisville, KY 1985 1994 384 324,096 844 $ 633.47 96.35 % $ (1) (1) (1)
1,748 1,626,966 931 $ 695.87 93.65 %
       Riverhills Grenada, MS 1972 1985 96 81,984 854 $ 426.32 95.83 % $ (1) (1) (1)
       Crosswinds Jackson, MS 1988/90 1996 360 443,160 1,231 $ 746.24 98.33 % $ (1) (1) (1)
       Pear Orchard Jackson, MS 1985 1994 389 338,430 870 $ 670.12 96.40 % $ (1) (1) (1)
       Reflection Pointe Jackson, MS 1986 1988 296 254,856 861 $ 694.55 97.30 % $ 5,880    (11)    4.022%    (11)    5/15/2031    (11)
       Lakeshore Landing Ridgeland, MS 1974 1994 196 171,108 873 $ 632.14 96.43 % $ (1) (1) (1)
       Savannah Creek Southaven, MS 1989 1996 204 237,048 1,162 $ 716.46 97.06 % $ (1) (1) (1)
       Sutton Place Southaven, MS 1991 1996 253 268,686 1,062 $ 711.46 97.63 % $ (1) (1) (1)
1,794 1,795,272 1,001 $ 683.33 97.16 %
       Hermitage at Beechtree Cary, NC 1988 1997 194 169,750 875 $ 686.12 96.39 % $ (1) (1) (1)
       Waterford Forest Cary, NC 1996 2005 384 344,448 897 $ 693.83 94.79 % $ (6) (6) (6)
       Woodstream Greensboro, NC 1983 1994 304 217,056 714 $ 542.90 94.08 % $ (1) (1) (1)
       Corners, The Winston-Salem, NC 1982 1993 240 173,520 723 $ 579.27 97.08 % $ (2) (2) (2)
       Preserve at Brier Creek Raleigh, NC 2002/07 2006 450 518,850 1,153 $ 1,005.27 80.67 % $ (1) (1) (1)
1,572 1,423,624 906 $ 735.35 91.16 %

18



Approximate Average Monthly Average Encumbrances at
Rentable Unit Rent per Occupancy December 31, 2007
Year Area Size Unit at Percent at Mortgage/Bond
Year Management Number (Square (Square December 31,   December 31, Principal Interest Maturity
Property      Location      Completed      Commenced      of Units      Footage)      Footage)      2007      2007      (000's)           Rate           Date     
       Fairways at Royal Oak Cincinnati, OH 1988 1994 214 214,428 1,002 $ 670.77 93.93 %   $ (1)   (1) (1)
214 214,428 1,002   $ 670.77 93.93 %
       Colony at South Park   Aiken, SC   1989/91   1997 184 174,800   950 $ 759.07   93.48 % $ (1) (1) (1)
       Woodwinds Aiken, SC 1988 1997   144   165,168 1,147 $ 792.33 93.06 % $ (1) (1) (1)
       Tanglewood Anderson, SC 1980 1994 168 146,664 873 $ 592.11 94.64 % $ (1) (1) (1)
       Fairways, The Columbia, SC 1992 1994 240 213,840 891 $ 647.94 95.00 % $ 7,735 (12) 4.104%    (12) 5/15/2031 (12)
       Paddock Club Columbia Columbia, SC 1989/95 1997 336 367,584 1,094 $ 758.10 92.56 % $ (1) (1) (1)
       Highland Ridge Greenville, SC 1984 1995 168 143,976 857 $ 539.83 95.83 % $ (1) (1) (1)
       Howell Commons Greenville, SC 1986/88 1997 348 292,668 841 $ 561.95 93.97 % $ (1) (1) (1)
       Paddock Club Greenville Greenville, SC 1996 1997 208 212,160 1,020 $ 722.05 96.15 % $ (1) (1) (1)
       Park Haywood Greenville, SC 1983 1993 208 156,832 754 $ 546.93 96.63 % $ (1) (1) (1)
       Spring Creek Greenville, SC 1985 1995 208 182,000 875 $ 555.38 96.15 % $ (1) (1) (1)
       Runaway Bay Mt. Pleasant, SC 1988 1995 208 177,840 855 $ 946.64 92.31 % $ 8,365    (9)    4.144% (9)    11/15/2035    (9)
       Park Place Spartanburg, SC 1987 1997 184 195,224 1,061 $ 658.76 96.74 % $ (1) (1) (1)
       Farmington Village Summerville, SC 2007 2007 280 307,440 1,098 $ 898.51 85.71 % $
2,884 2,736,196 949 $ 693.09 93.72 %
       Hamilton Pointe Chattanooga, TN 1989 1992 361 256,671 711 $ 556.28 95.84 % $ (1) (1) (1)
       Hidden Creek Chattanooga, TN 1987 1988 300 259,200 864 $ 578.64 96.67 % $ (1) (1) (1)
       Steeplechase Chattanooga, TN 1986 1991 108 98,604 913 $ 650.96 96.30 % $ (1) (1) (1)
       Windridge Chattanooga, TN 1984 1997 174 238,728 1,372 $ 789.43 98.85 % $ 5,465 (16) (16) 5/15/2033 (16)
       Oaks, The Jackson, TN 1978 1993 100 87,500 875 $ 596.32 90.00 % $ (1) (1) (1)
       Post House Jackson Jackson, TN 1987 1989 150 163,650 1,091 $ 652.07 93.33 % $ 5,095 3.972% 10/15/2032
       Post House North Jackson, TN 1987 1989 144 144,720 1,005 $ 646.32 96.53 % $ 3,375 (13) 4.022% (13) 5/15/2031 (13)
       Bradford Chase Jackson, TN 1987 1994 148 121,360 820 $ 593.08 97.30 % $ (1) (1) (1)
       Woods at Post House Jackson, TN 1997 1995 122 118,950 975 $ 679.46 94.26 % $ 4,871 6.070% 9/1/2035
       Cedar Mill Memphis, TN 1973/86 1982/94 276 297,804 1,079 $ 604.52 94.93 % $ (1) (1) (1)
       Greenbrook Memphis, TN 1974/78/83/86 1988 1,037 939,522 906 $ 619.77 96.14 % $ (4) (4) (4)
       Kirby Station Memphis, TN 1978 1994 371 310,156 836 $ 679.38 95.96 % $ (1) (1) (1)
       Lincoln on the Green Memphis, TN 1988/98 1994 618 535,188 866 $ 715.10 95.95 % $ (1) (1) (1)
       Park Estate Memphis, TN 1974 1977 82 96,924 1,182 $ 997.29 96.34 % $ (4) (4) (4)
       Reserve at Dexter Lake Memphis, TN 1999/01 1998 740 792,540 1,071 $ 814.79 97.30 % $ (5) (5) (5)
       River Trace Memphis, TN 1981/85 1997 440 370,920 843 $ 601.36 91.14 % $ (1) (1) (1)
       Paddock Club Murfreesboro Murfreesboro, TN 1999 1998 240 268,800 1,120 $ 836.76 96.25 % $ (1) (1) (1)
       Brentwood Downs Nashville, TN 1986 1994 286 220,220 770 $ 768.83 98.60 % $ (1) (1) (1)
       Grand View Nashville Nashville, TN 2001 1999 433 479,331 1,107 $ 872.42 96.07 % $ (1) (1) (1)
       Monthaven Park Nashville, TN 1999/01 2004 456 427,728 938 $ 773.22 98.46 % $ 22,120 3.600% 1/11/2008
       Park at Hermitage Nashville, TN 1987 1995 440 392,480 892 $ 650.28 97.50 % $ 6,645 (17) 4.122% (17) 2/15/2034 (17)
7,026 6,620,996 942 $ 696.45 96.14 %
       Northwood Arlington, TX 1980 1998 270 224,100 830 $ 595.03 96.30 % $ (2) (2) (2)
       Balcones Woods Austin, TX 1983 1997 384 313,728 817 $ 729.91 93.75 % $ (2) (2) (2)
       Grand Reserve at Sunset Valley Austin, TX 1996 2004 210 198,240 944 $ 1,002.60 95.71 % $ 10,265 4.240% 9/28/2008
       Silverado Austin, TX 2003 2006 312 303,264 972 $ 811.58 93.91 % $ (7) (7) (7)

19



Approximate Average Monthly Average Encumbrances at
Rentable Unit Rent per Occupancy December 31, 2007
Year Area Size Unit at Percent at Mortgage/Bond
Year Management Number (Square (Square December 31, December 31, Principal Interest Maturity
Property      Location      Completed      Commenced      of Units      Footage)      Footage)      2007      2007      (000's)           Rate           Date     
       Stassney Woods Austin, TX 1985 1995 288 248,832 864   $ 644.25   97.57 %   $ 4,050 (18) 4.122% (18) 10/15/2032 (18)
       Travis Station Austin, TX 1987 1995 304 249,888 822 $ 590.21 95.07 % $ 3,585 (19) 4.122% (19) 2/15/2034 (19)
       Woods, The Austin, TX 1977 1997 278 214,060 770 $ 831.47 97.48 % $ (2) (2) (2)
       Celery Stalk Dallas, TX 1978 1994 410 374,740 914 $ 674.28 95.61 % $ (6) (6) (6)
       Courtyards at Campbell Dallas, TX 1986 1998 232 168,200 725 $ 678.13 96.98 % $ (2) (2) (2)
       Deer Run Dallas, TX 1985 1998 304 206,720 680 $ 633.80 91.78 % $ (2) (2) (2)
       Grand Courtyard Dallas, TX 2000 2006 390 341,250 875 $ 776.28 97.69 % $ (7) (7) (7)
       Lodge at Timberglen Dallas, TX 1983   1994 260   226,200 870 $ 663.53 94.62 % $ (6) (6) (6)
       Watermark Dallas, TX 2002 2004 240 205,200   855 $ 791.00 91.67 % $ (6) (6) (6)
       Legacy Pines   Houston, TX 1999 2003 308 283,360 920 $ 939.20 93.83 % $ (2) (2) (2)
       Park Place (Houston) Houston, TX   1996 2007   229 207,016 904 $ 822.11 95.63 % $
       Ranchstone Houston, TX 1996 2007 220 193,160 878 $ 794.54 95.00 % $ (7) (7) (7)
       Reserve at Woodwind Lakes Houston, TX 1999 2006 328 316,192 964 $ 815.25 95.43 % $ 15,416 5.930% 6/15/2015
       Chalet at Fall Creek Humble, TX 2006 2007 268 260,228 971 $ 949.71 95.15 % $ (7) (7) (7)
       Westborough Crossing Katy, TX 1984 1994 274 197,280 720 $ 622.59 97.08 % $ (6) (6) (6)
       Kenwood Club Katy, TX 2000 1999 320 318,080 994 $ 822.79 95.63 % $ (2) (2) (2)
       Lane at Towne Crossing Mesquite, TX 1983 1994 384 277,632 723 $ 650.75 94.01 % $ (2) (2) (2)
       Highwood Plano, TX 1983 1998 196 156,800 800 $ 754.84 93.37 % $ (4) (4) (4)
       Los Rios Park Plano, TX 2000 2003 498 470,112 944 $ 805.18 92.57 % $ (2) (2) (2)
       Boulder Ridge Roanoke, TX 1999 2005 478 429,244 898 $ 810.34 93.10 % $ (2) (2) (2)
       Cypresswood Court Spring, TX 1984 1994 208 160,576 772 $ 674.98 93.75 % $ (6) (6) (6)
       Villages at Kirkwood Stafford, TX 1996 2004 274 244,682 893 $ 872.94 96.35 % $ 13,242 4.240% 9/28/2008
       Green Tree Place Woodlands, TX 1984 1994 200 152,200 761 $ 701.70 98.50 % $ (6) (6) (6)
8,067 6,940,984 860 $ 756.99 94.97 %
       Township Hampton, VA 1987 1995 296 248,048 838 $ 940.31 92.57 % $ 10,800    (14)    4.112%    (14)    10/15/2032    (14)
296 248,048 838 $ 940.31 92.57 %
 
              Total 100% Owned 40,248 38,473,782 956 $ 746.47 94.38 % 224,575

(1) Encumbered by a $691.8 million FNMA facility, with $675.1 million available and $627.8 million outstanding with a variable interest rate of 5.06% on which there exists in combination with the FNMA facility mentioned in note (2) fourteen interest rate swap agreements totaling $540 million at an average rate of 5.52% at December 31, 2007.
 
(2) Encumbered by a $243.2 million FNMA facility, with $243.2 available and $168.6 million outstanding, $90 million with a fixed rate of 7.49% and $78.6 million of which had a variable interest rate of 5.14% on which there exists interest rate swaps as mentioned in note (1) at December 31, 2007.
  
(3) Phase I of Paddock Park - Ocala is encumbered by $6.8 million in bonds on which there exists a $6.8 million interest rate cap of 6.00% which terminates on October 24, 2012.
 
(4) Encumbered, along with one corporate property, by a term loan with a principal balance of $39.6 million at December 31, 2007, with a maturity of April 1, 2009 and an interest rate of 6.08% on which there is a $25 million interest rate swap agreement with a rate of 4.98%, maturing on March 1, 2009.
 
(5) Encumbered by a credit line with AmSouth Bank, with an outstanding balance of $2.4 million at December 31, 2007.
 
(6) Encumbered by a $100 million Freddie Mac facility, with $96.4 million available and an outstanding balance of $96.4 million and a variable interest rate of 5.03% on which there exists five interest rate swap agreements totaling $83 million at an average rate of 5.41% at December 31, 2007.
 
(7) Encumbered by a $200 million Freddie Mac facility, with $70.7 million available and an outstanding balance of $70.7 million and a variable interest rate of 5.04% on which there exists five interest rate swap agreements totaling $47 million at an average rate of 6.01% at December 31, 2007.
 
(8) Encumbered by a mortgage securing a tax-exempt bond amortizing over 25 years with a principal balance of $11.9 million at December 31, 2007, and an average interest rate of 5.24%.
 
(9) Encumbered by $8.4 million in bonds on which there exists a $8.4 million interest rate swap agreement fixed at 4.73% and maturing on September 15, 2010.
       
(10) Encumbered by $7.0 million in bonds on which there exists a $7.0 million interest rate swap agreement fixed at 4.42% and maturing on October 15, 2012.
 
(11) Encumbered by $5.9 million in bonds on which there exists a $5.9 million interest rate swap agreement fixed at 5.05% and maturing on June 15, 2008.
       
(12)       Encumbered by $7.7 million in bonds on which there exists a $7.7 million interest rate swap agreement fixed at 5.05% and maturing on June 15, 2008.
 
(13) Encumbered by $3.4 million in bonds on which there exists a $3.4 million interest rate swap agreement fixed at 5.05% and maturing on June 15, 2008.
 
(14) Encumbered by $10.8 million in bonds on which there exists a $10.8 million interest rate swap agreement fixed at 4.42% and maturing on October 15, 2012.
 
(15) Encumbered by $3.5 million in bonds $0.5 million having a variable rate of 5.83% and $3.0 million with a variable rate of 4.07% on which there exists a $3.0 million interest rate swap agreement fixed at 3.23% and maturing on May 30, 2008.
 
(16) Encumbered by $5.5 million in bonds $0.5 million having a variable rate of 5.83% and $5.0 million with a variable rate of 4.07% on which there exists a $5.0 million interest rate swap agreement fixed at 3.23% and maturing on May 30, 2008.
 
(17) Encumbered by $6.6 million in bonds on which there exists a $6.6 million interest rate swap agreement fixed at 3.63% and maturing on March 15, 2009. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 5.27% which there exists a $11.7 million and a $6.2 million interest rate cap of 6.00% and 6.50% respectively which terminates on March 1, 2009 and March 15, 2011 respectively.
 
(18) Encumbered by $4.0 million in bonds on which there exists a $4.0 million interest rate cap of 6.00% which terminates on March 15, 2009. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 5.27% which there exists a $11.7 million and a $6.2 million interest rate cap of 6.00% and 6.50% respectively which terminates on March 1, 2009 and March 15, 2011 respectively.
 
(19) Encumbered by $3.6 million in bonds on which there exists a $3.6 million interest rate swap agreement fixed at 3.63% and maturing on March 15, 2009. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 5.27% which there exists a $11.7 million and a $6.2 million interest rate cap of 6.00% and 6.50% respectively which terminates on March 1, 2009 and March 15, 2011 respectively.
 
(20) Encumbered by $13.2 million in bonds on which there exists a $13.2 million interest rate cap of 6.00% and maturing on March 15, 2011. Also encumbered by a $17.9 million FNMA facility maturing on March 1, 2014 with a variable interest rate of 5.27% which there exists a $11.7 million and $6.2 million interest rate cap of 6.00% and 6.50% respectively which terminates on March 1, 2009 and March 1, 2011 respectively.

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ITEM 3. LEGAL PROCEEDINGS.

     Mid-America is not presently subject to any material litigation nor, to Mid-America’s knowledge, is any material litigation threatened against us. Mid-America is presently subject to routine litigation arising in the ordinary course of business, some of which is expected to be covered by liability insurance and none of which is expected to have a material adverse effect on the business, financial condition, liquidity or results of operations of Mid-America.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

     Mid-America’s common stock has been listed and traded on the New York Stock Exchange, or NYSE, under the symbol “MAA” since our initial public offering in February 1994. On February 8, 2008, the reported last sale price of Mid-America’s common stock on the NYSE was $46.44 per share, and there were approximately 1,707 holders of record of the common stock. Mid-America believes we have a significantly larger number of beneficial owners of our common stock. The following table sets forth the quarterly high and low sales prices of our common stock and the dividends declared by Mid-America with respect to the periods indicated.

   Sales Prices        Dividends        Dividends 
       High        Low   Paid   Declared 
2007:          
First Quarter    $60.740     $51.700    $0.605     $0.605 
Second Quarter    $59.620     $50.110    $0.605     $0.605 
Third Quarter    $56.000     $43.150    $0.605     $0.605 
Fourth Quarter    $54.590     $41.750    $0.605     $0.615 

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2006:            
First Quarter        $58.750         $48.130         $0.595            $1.190 (1) 
Second Quarter    $56.400     $49.320     $0.595     $0.595 
Third Quarter    $62.240     $53.910     $0.595     $0.595 
Fourth Quarter    $65.970     $56.000     $0.595     $0.605 

(1)       In the first quarter of 2006, the Board of Directors began declaring the common dividend for the following quarter at their regularly scheduled board meeting. This timing change resulted in two dividend payments being declared in the same quarter.

     Mid-America’s quarterly dividend rate is currently $0.615 per common share. The Board of Directors reviews and declares the dividend rate quarterly. Actual dividends made by Mid-America will be affected by a number of factors, including the gross revenues received from the apartment communities, the operating expenses of Mid-America, the interest expense incurred on borrowings and unanticipated capital expenditures.

     Mid-America expects to make future quarterly distributions to shareholders; however, future distributions by Mid-America will be at the discretion of the Board of Directors and will depend on the actual funds from operations of Mid-America, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as the Board of Directors deems relevant.

     Mid-America has established the Direct Stock Purchase and Distribution Reinvestment Plan, or DRSPP, under which holders of common stock, preferred stock and limited partnership interests in Mid-America Apartments, L.P. can elect to automatically reinvest their distributions in additional shares of common stock. The plan also allows for the optional purchase of common stock of at least $250, but not more than $5,000 in any given month, free of brokerage commissions and charges. Mid-America, in our absolute discretion, may grant waivers to allow for optional cash payments in excess of $5,000. To fulfill our obligations under the DRSPP, Mid-America may either issue additional shares of common stock or repurchase common stock in the open market. Mid-America may elect to sell shares under the DRSPP at up to a 5% discount.

     In 2005, Mid-America issued a total of 803,251 shares through our DRSPP and offered an average discount of 1.5% for optional cash purchases. In 2006, Mid-America issued a total of 1,356,015 shares through our DRSPP and offered an average discount of 1.5% for optional cash purchases. In 2007, Mid-America issued a total of 136,483 shares through our DRSPP and offered an average discount of 1.5% for optional cash purchases.

     The following table provides information with respect to compensation plans under which our equity securities are authorized for issuance as of December 31, 2007.

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                        Number of Securities
  Number of Securities     Remaining Available for
  to be Issued upon   Weighted Average Future Issuance under
  Exercise of Outstanding   Exercise Price of Equity Compensation Plans
  Options, Warrants   Outstanding Options (excluding securities
  and Rights   Warrants and Rights reflected in column (a))
    (a)(1)   (b)(1)   (c)(2)
Equity compensation       
     plans approved     
     by security holders  110,526   $ 23.52 469,373
 
Equity compensation     
     plans not approved     
     by security holders  N/A     N/A N/A
 
Total  110,526   $ 23.52 469,373

(1)       Columns (a) and (b) above do not include 85,141 shares of restricted stock that are subject to vesting requirements which were issued through Mid-America’s Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan, 74,106 shares of restricted stock that are subject to vesting requirements which were issued through Mid-America’s 2004 Stock Plan, or 59,855 shares of common stock which have been purchased by employees through the Employee Stock Purchase Plan. See Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 2 for more information on these plans.
  
(2) Column (c) above includes 379,228 shares available to be issued under Mid-America’s 2004 Stock Plan and 90,145 shares available to be issued under Mid-America’s Employee Stock Purchase Plan. See Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 2 for more information on these plans.

     Mid-America has not granted any stock options since 2002.

     The following graph compares the cumulative total returns of the shareholders of Mid-America since December 30, 2000 with the S&P 500 Index and the Equity REIT Total Return Index prepared by the National Association of Real Estate Investment Trusts, or NAREIT. The graph assumes that the base share price for Mid-America’s common stock and each index is $100 and that all dividends are reinvested. The performance graph is not necessarily indicative of future investment performance.

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         Dec ' 02         Dec ' 03         Dec ' 04         Dec ' 05         Dec ' 06         Dec ' 07 
Mid-America     $100.00     $149.73     $196.22     $244.31     $301.13     $234.86 
S&P 500     $100.00     $128.68     $142.69     $149.70     $173.34     $182.87 
NAREIT Equity     $100.00     $137.13     $180.44     $202.38     $273.34     $230.45 

ITEM 6. SELECTED FINANCIAL DATA.

     The following table sets forth selected financial data on a historical basis for Mid-America. This data should be read in conjunction with the consolidated financial statements and notes thereto and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.

MID-AMERICA APARTMENT COMMUNITIES, INC.
SELECTED FINANCIAL DATA
(Dollars in thousands except per share data)

   Year Ended December 31, 
   2007        2006        2005        2004        2003
Operating Data:                 
     Total operating revenues  $  352,957   $  323,662     $  293,786   $  263,847   $  232,717  
     Expenses:               
          Property operating expenses  145,006   135,124   123,965     112,548   97,764  
          Depreciation  86,173   78,861     73,917     67,542   56,978  
          Property management and general and administrative expenses    28,726     23,001      20,862     18,363     14,945  
Income from continuing operations before non-operating items  93,052   86,676     75,042     65,394   63,030  
Interest and other non-property income  196   673     498     641   886  
Interest expense  (64,452 )  (63,119 )    (58,142 )    (50,364 )  (44,525 ) 
(Loss) gain on debt extinguishment  (123 )  (551 )    (407 )    1,095   111  
Amortization of deferred financing costs  (2,407 )  (2,036 )    (2,011 )    (1,753 )  (2,050 ) 
Minority interest in operating partnership income  (3,510 )  (1,590 )    (1,571 )    (2,264 )  (1,360 ) 
(Loss) gain from investments in unconsolidated entities  (58 )  (114 )    65     (287 )  (949 ) 
Incentive fees from unconsolidated entity  1,019       1,723        
Net gains on insurance and other settlement proceeds  589   84     749     2,683   2,860  
Gains on sale of non-depreciable assets  534   50     334        
Gain on disposition within unconsolidated entities    5,388         3,034     3,249      
Income from continuing operations  30,228   20,073     19,314     18,394   18,003  
Discontinued operations:               
     Income from discontinued operations before asset impairment,               
          settlement proceeds and gain on sale  554   872     698     653   202  
     Asset impairment of discontinued operations        (243 )    (200 )   
     Net (loss) gain on insurance and other settlement proceeds of               
          discontinued operations        (25 )    526   82  
     Gains on sale of discontinued operations    9,164              5,825     1,919  
Net income  39,946   20,945     19,744     25,198   20,206  
Preferred dividend distributions  13,688   13,962     14,329     14,825   15,419  
Premiums and original issuance costs associated with the redemption               
     of preferred stock    589                  5,987  
Net income (loss) available for common shareholders  $ 25,669   $ 6,983   $ 5,415   $  10,373   $ (1,200 ) 
 
Per Share Data:               
Weighted average shares outstanding (in thousands):               
     Basic  25,296   23,474     21,405     20,317   18,374  
     Effect of dilutive stock options    166     224      202     335      
     Diluted    25,462     23,698     21,607     20,652     18,374  
 
Net income (loss) available for common shareholders  $ 25,669   $ 6,983   $  5,415   $  10,373   $ (1,200 ) 
Discontinued property operations    (9,718 )    (872 )     (430 )     (6,804 )    (2,203 ) 
Income (loss) from continuing operations available for common shareholders  $ 15,951   $ 6,111   $  4,985   $  3,569   $ (3,403 ) 
 
Earnings per share - basic:               
     Income (loss) from continuing operations available for common shareholders  $ 0.63   $ 0.26   $  0.23   $  0.18   $ (0.19 ) 
     Discontinued property operations    0.38     0.04     0.02      0.33     0.12  
     Net income (loss) available for common shareholders  $ 1.01   $ 0.30   $  0.25   $  0.51   $ (0.07 ) 
 
Earnings per share - diluted:               
     Income (loss) from continuing operations available for common shareholders  $ 0.63   $ 0.26   $  0.23   $  0.17   $ (0.19 ) 
     Discontinued property operations    0.38     0.03      0.02     0.33     0.12  
     Net income (loss) available for common shareholders  $ 1.01   $ 0.29   $  0.25   $  0.50   $ (0.07 ) 
 
Balance Sheet Data:               
     Real estate owned, at cost  $ 2,343,130   $ 2,218,532     $  1,987,853     $  1,862,850   $ 1,695,111  
     Real estate assets, net  $ 1,720,553   $ 1,669,539     $  1,510,289     $  1,459,952   $ 1,351,849  
     Total assets  $ 1,783,822   $ 1,746,646     $  1,580,125     $  1,522,525   $ 1,406,666  
     Total debt  $ 1,264,620   $ 1,196,349     $  1,140,046     $  1,083,473   $ 951,941  
     Minority interest  $ 28,868   $ 32,600   $ 29,798   $  31,376   $ 32,019  
     Shareholders' equity and redeemable stock  $ 403,530   $ 449,066     $ 362,526   $  347,325   $ 351,294  
 
Other Data (at end of period):               
     Market capitalization (shares and units)(1)  $ 1,358,100   $ 1,745,674     $  1,358,725     $  1,145,183   $ 939,581  
     Ratio of total debt to total capitalization (2)  48.2 % 40.7 %   45.6 %   48.6 % 50.3 %
     Number of properties, including joint venture ownership interest(3)  137   138     132     132   127  
     Number of apartment units, including joint venture ownership interest(3)  40,248   40,293     38,227     37,904   35,734  
____________________
 
(1)       Market capitalization includes all series of preferred shares (value based on $25 per share liquidation preference) and common shares, regardless of classification on balance sheet, as well as partnership units (value based on common stock equivalency).
 
(2) Total capitalization is market capitalization plus total debt.
 
(3) Property and apartment unit totals have not been adjusted to exclude properties held for sale.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS

     This and other sections of this Annual Report on Form 10-K contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These statements include, but are not limited to, statements about anticipated market conditions, expected growth rates of revenues and expenses, planned asset dispositions, disposition pricing, planned acquisitions, developments and renovations, property financings, expected interest rates, joint venture activity and planned capital expenditures. Although Mid-America believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report on Form 10-K will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by Mid-America or any other person that the objectives and plans of Mid-America will be achieved.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The following discussion and analysis of financial condition and results of operations are based upon Mid-America’s consolidated financial statements, and the notes thereto, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires Mid-America to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis, Mid-America evaluates our estimates and assumptions based upon historical experience and various other factors and circumstances. Mid-America believes that our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates and assumptions.

25


     Mid-America believes that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require the most subjective judgments, form the basis of accounting policies deemed to be most critical. These critical accounting policies include revenue recognition, capitalization of expenditures and depreciation of assets, impairment of long-lived assets, including goodwill, and fair value of derivative financial instruments.

     Revenue recognition

     Mid-America leases multifamily residential apartments under operating leases primarily with terms of one year or less. Rental revenues are recognized using a method that represents a straight-line basis over the term of the lease and other revenues are recorded when earned.

     We record all gains and losses on sales of real estate in accordance with Statement No. 66, Accounting for Sales of Real Estate.

     Capitalization of expenditures and depreciation of assets

     Mid-America carries real estate assets at depreciated cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, which range from 8 to 40 years for land improvements and buildings, 5 years for furniture, fixtures, and equipment, 3 to 5 years for computers and software, and 1 year for acquired leases, all of which are subjective determinations. Repairs and maintenance costs are expensed as incurred while significant improvements, renovations, and replacements are capitalized. The cost to complete any deferred repairs and maintenance at properties acquired by Mid-America in order to elevate the condition of the property to Mid-America’s standards are capitalized as incurred.

     Impairment of long-lived assets, including goodwill

     Mid-America accounts for long-lived assets in accordance with the provisions of Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or Statement 144, and evaluates its goodwill for impairment under Statement No. 142, Goodwill and Other Intangible Assets, or Statement 142. Mid-America evaluates goodwill for impairment on an annual basis in Mid-America’s fiscal fourth quarter, or sooner if a goodwill impairment indicator is identified. Mid-America periodically evaluates long-lived assets, including investments in real estate and goodwill, for indicators that would suggest that the carrying amount of the assets may not be recoverable. The judgments regarding the existence of such indicators are based on factors such as operating performance, market conditions, and legal factors.

     In accordance with Statement 144, long-lived assets, such as real estate assets, equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

26


     Goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination is made at the reporting unit level and consists of two steps. First, Mid-America determines the fair value of a reporting unit and compares it to its carrying amount. In the apartment industry, the primary method used for determining fair value is to divide annual operating cash flows by an appropriate capitalization rate. Mid-America determines the appropriate capitalization rate by reviewing the prevailing rates in a property’s market or submarket. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with Statement No. 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

     Fair value of derivative financial instruments

     Mid-America utilizes certain derivative financial instruments, primarily interest rate swaps and caps, during the normal course of business to manage, or hedge, the interest rate risk associated with Mid-America’s variable rate debt or as hedges in anticipation of future debt transactions to manage well-defined interest rate risk associated with the transaction. The valuation of the derivative financial instruments under Statement No. 133 Accounting for Derivative Instruments and Hedging Activities, as amended, requires Mid-America to make estimates and judgments that affect the fair value of the instruments.

     In order for a derivative contract to be designated as a hedging instrument, the relationship between the hedging instrument and the hedged item must be highly effective. While Mid-America’s calculation of hedge effectiveness contains some subjective determinations, the historical correlation of the cash flows of the hedging instruments and the underlying hedged item are measured by Mid-America before entering into the hedging relationship and have been found to be highly correlated.

     Mid-America measures ineffectiveness using the change in the variable cash flows method at the inception of the hedge and for each reporting period thereafter, through the term of the hedging instruments. Any amounts determined to be ineffective are recorded in earnings. The change in fair value of the interest rate swaps and caps designated as cash flow hedges are recorded to accumulated other comprehensive income in the statement of shareholders’ equity.

OVERVIEW OF THE YEAR ENDED DECEMBER 31, 2007

     Mid-America’s results for 2007 were positively influenced by both improved operating performance from communities held throughout both the current and prior period, or same store, and the positive impact from acquisitions in recent years. Implementation of new operating platform systems is helping us to optimize the balance between increased occupancy and rental rates.

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     Mid-America has grown externally during the past three years by following its acquisition strategy to invest in large and mid-sized growing markets in the Sunbelt region of the United States. Mid-America acquired three properties in 2005 and six properties in 2006, for which we benefited from full years of revenues in 2007. Mid-America also acquired an additional four communities during 2007. Offsetting some of this increased revenue stream is one property disposition in 2005 and dispositions of four properties during 2007.

     The following is a discussion of the consolidated financial condition and results of operations of Mid-America for the years ended December 31, 2007, 2006, and 2005. This discussion should be read in conjunction with all of the consolidated financial statements included in this Annual Report on Form 10-K.

     As of December 31, 2007, the total number of apartment units Mid-America owned or had an ownership interest in was 40,248 in 137 communities, compared to 40,293 apartment units in 138 communities at December 31, 2006, and 38,227 apartment units in 132 communities at December 31, 2005. For communities owned 100% by Mid-America, the average monthly rental per apartment unit, excluding units in lease-up, increased to $743 at December 31, 2007 from $726 at December 31, 2006, and $695 at December 31, 2005. For these same units, overall occupancy at December 31, 2007, 2006, and 2005 was 94.7%, 94.2%, and 94.6%, respectively.

RESULTS OF OPERATIONS

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2007, TO THE YEAR ENDED DECEMBER 31, 2006

     Property revenues for the year ended December 31, 2007, increased by approximately $29.5 million from the year ended December 31, 2006, due to (i) an $11.5 million increase in property revenues from the six properties acquired in 2006, or the 2006 acquisitions, (ii) a $4.8 million increase in property revenues from the four properties acquired in 2007, or the 2007 acquisitions, (iii) a $0.8 million increase in property revenues from our development communities, and (iv) a $12.4 million increase in property revenues from the properties held throughout both periods. The increase in property revenues from properties held throughout both periods was generated primarily by Mid-America’s same store portfolio and was driven by an average 2.5% increase in average rent per unit in 2007 over 2006.

     Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other property related costs. Property operating expenses for the year ended December 31, 2007, increased by approximately $9.9 million from the year ended December 31, 2006, due primarily to increases of property operating expenses of (i) $5.0 million from the 2006 acquisitions, (ii) $2.1 million from the 2007 acquisitions, (iii) $0.3 million from our development communities, and (iv) $2.5 million from the properties held throughout both periods. The increase in property operating expenses from the properties held throughout both periods consisted primarily of Mid-America’s same store portfolio and represented an average 2.9% increase over prior year expenses.

     Depreciation expense increased by approximately $7.3 million primarily due to the increases of depreciation expense of (i) $3.3 million from the 2006 acquisitions, (ii) $1.2 million from the 2007 acquisitions, (iii) $0.3 million from our development communities, (iv) $0.7 million from the amortization of the fair market value of leases of acquired communities, and (v) $1.8 million from fixed asset additions at communities held throughout both periods.

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     Property management expenses increased by approximately $4.8 million from the year ended December 31, 2006, to the year ended December 31, 2007, partially due to increased incentive compensation as a result of improved property performance, increased franchise and excise taxes due to state tax law changes, and implementation expenses associated with improved operating systems. General and administrative expenses increased by approximately $0.9 million over this same period also partially related to increased incentive compensation due to improved performance.

     Interest expense increased approximately $1.3 million in 2007 from 2006 due primarily to the approximate $42.4 million increase in the average debt outstanding from 2006 due to acquisitions and our development and redevelopment programs. The impact from the increase in the average debt outstanding was partially offset by a decrease in the average annual borrowing costs from 5.5% for 2006 to 5.4% in 2007.

     For the year ended December 31, 2007, Mid-America recorded total gains of approximately $5.4 million from the sale of a community owned by a joint venture of Mid-America. The sale of this community resulted in an additional incentive fee being paid to Mid-America of approximately $1.0 million in 2007. In 2007, Mid-America also benefited from a $9.2 million gain resulting from the sale of four communities owned directly by Mid-America. Mid-America had no dispositions in 2006.

     For the year ended December 31, 2007, Mid-America recorded net gains on insurance and other settlement proceeds and gains on sale of land totaling $1.1 million. For the year ended December 31, 2006, Mid-America recorded gains of $0.1 million for these same items.

     Primarily as a result of the foregoing, net income increased by approximately $19.0 million in 2007 over 2006.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2006, TO THE YEAR ENDED DECEMBER 31, 2005

     Property revenues for the year ended December 31, 2006, increased by approximately $30.0 million from the year ended December 31, 2005, due to (i) a $9.5 million increase in property revenues from the 2006 acquisitions, (ii) a $5.3 million increase in property revenues from the three properties acquired in 2005, or the 2005 acquisitions, and (iii) a $15.2 million increase in property revenues from the properties held throughout both periods. The increase in property revenues from properties held throughout both periods was generated primarily by Mid-America’s same store portfolio and was driven by an average 3.1% increase in average rent per unit in 2006 over 2005.

     Property operating expenses include costs for property personnel, building repairs and maintenance, real estate taxes and insurance, utilities, landscaping and other property related costs. Property operating expenses for the year ended December 31, 2006, increased by approximately $11.2 million from the year ended December 31, 2005, due primarily to increases of property operating expenses of (i) $4.6 million from the 2006 acquisitions, (ii) $2.1 million from the 2005 acquisitions, and (iii) $4.5 million from the properties held throughout both periods. The increase in property operating expenses from the properties held throughout both periods consisted primarily of Mid-America’s same store portfolio and was driven by an increase in property insurance reflecting the increase in premiums effective July 1, 2006. The same store property operating expense increase also reflects increased utility rates as Mid-America experienced an increase in electricity, natural gas and water and sewer prices.

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     Depreciation expense increased by approximately $4.9 million primarily due to the increases of depreciation expense of (i) $2.7 million from the 2006 acquisitions, (ii) $1.2 million from the 2005 acquisitions, and (iii) $2.0 million from fixed asset additions at the communities held throughout both periods. These increases were partially offset by a decrease in depreciation expense of $1.0 million from the expiration of the amortization of fair market value of leases of acquired communities.

     Property management expenses increased by approximately $2.0 million from the year ended December 31, 2005, to the year ended December 31, 2006, partially due to increased incentive compensation as a result of improved property performance and increased franchise and excise taxes due to state tax law changes. General and administrative expenses increased by approximately $0.2 million over this same period also partially related to increased incentive compensation due to improved performance.

     Interest expense increased approximately $5.0 million in 2006 from 2005 due primarily to the approximate $49.7 million increase in the average debt outstanding from 2005 due to acquisitions and our development and redevelopment programs. Interest expense was also impacted by an increase in the average annual borrowing costs from 5.2% in 2005 to 5.5% in 2006.

     For the year ended December 31, 2005, Mid-America recorded total gains of approximately $3.0 million from the sale of two communities owned by a joint venture of Mid-America. The sales of these communities resulted in an additional incentive fee being paid to Mid-America of approximately $1.7 million in 2005. Mid-America had no dispositions in 2006.

     For the year ended December 31, 2006, Mid-America recorded net gains on insurance and other settlement proceeds and gains on sale of land totaling $0.1 million. For the year ended December 31, 2005, Mid-America recorded gains of $1.1 million for these same items.

     Primarily as a result of the foregoing, net income increased by approximately $1.2 million in 2006 over 2005.

FUNDS FROM OPERATIONS

     Funds from operations, or FFO, represents net income (computed in accordance with U.S. generally accepted accounting principles, or GAAP) excluding extraordinary items, minority interest in operating partnership income, gains on disposition of real estate assets, plus depreciation of real estate, and adjustments for joint ventures to reflect FFO on the same basis. This definition of FFO is in accordance with the NAREIT definition. Disposition of real estate assets includes sales of discontinued operations as well as proceeds received from insurance and other settlements from property damage.

     In response to the Securities and Exchange Commission’s Staff Policy Statement relating to EITF Topic D-42 concerning the calculation of earnings per share for the redemption of preferred stock, Mid-America has included the amount charged to retire preferred stock in excess of carrying values in our FFO calculation.

     Mid-America's policy is to expense the cost of interior painting, vinyl flooring, and blinds as incurred for stabilized properties. During the stabilization period for acquisition properties, these items are capitalized as part of the total repositioning program of newly acquired properties, and, thus are not deducted in calculating FFO.

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     FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, as an indicator of operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of liquidity. Mid-America believes that FFO is helpful to investors in understanding Mid-America's operating performance in that such calculation excludes depreciation expense on real estate assets. Mid-America believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. Mid-America’s calculation of FFO may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs.

     The following table is a reconciliation of FFO to net income for the years ended December 31, 2007, 2006, and 2005 (dollars and shares in thousands):

  Years ended December 31,
  2007      2006      2005
Net income $ 39,946   $ 20,945     $ 19,744  
Depreciation of real estate assets 84,916   77,521   72,571  
Net gain on insurance and other settlement proceeds (589 ) (84 ) (749 )
Gain on disposition within unconsolidated entities (5,388 )   (3,034 )
Net loss on insurance and other settlement proceeds      
     of discontinued operations     25  
Depreciation of real estate assets of discontinued operations 133   687   1,133  
Gain on sale of discontinued operations (9,164 )    
Depreciation of real estate assets of unconsolidated entities 15   500   482  
Preferred dividend distribution (13,688 ) (13,962 ) (14,329 )
Minority interest in operating partnership income 3,510   1,590   1,571  
Premiums and original issuance costs associated with      
     the redemption of preferred stock   (589 )        
Funds from operations $ 99,102   $ 87,197   $ 77,414  
 
Weighted average shares and units:      
     Basic 27,777   25,979   24,025  
     Diluted 27,943   26,204   24,227  

     FFO increases for both 2007 over 2006, and 2006 over 2005 were principally the result of improved community operations from Mid-America’s same store portfolio and the addition of communities from the 2005 acquisitions, 2006 acquisitions and 2007 acquisitions as previously reviewed in the net income discussion above.

TRENDS

     In 2007, rental demand for apartments continued to improve throughout most of Mid-America’s markets. Both our High Growth and our Growth and Income markets reported same-store revenue growth for the year averaging over 5% and NOI growth averaging 6.9%. Exceptional performers were markets in Texas and Tennessee. Following several years of rapid growth, markets in Florida did not perform as well.

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     The following chart shows performance by some of the larger markets in each of Mid-America’s same-store portfolio groups, averaged for the year:

  Revenue(1)      NOI(1)
Total High Growth   4.9 %     7.2 %  
Dallas 7.0 % 15.2 %
Atlanta 4.2 % 3.6 %
Houston 7.5 % 14.4 %
Nashville 6.1 % 9.8 %
Greenville 4.7 % 7.6 %
Tampa 0.8 % 0.3 %
 
Total Growth and Income 5.0 % 5.7 %
Memphis 8.1 % 11.9 %
Jacksonville 0.7 % -0.3 %
Austin 7.7 % 15.3 %
Jackson, MS 5.2 % 5.7 %
Chattanooga 5.5 % 7.9 %
Augusta 6.2 % 7.3 %
 
Total Stable 3.5 % 3.7 %
Columbus, GA -0.9 % -4.3 %
Lexington, KY 7.5 % 9.8 %
 
Total Same Store 4.6 % 5.8 %

(1) Revenues and NOI by market and market group are presented before the impact of straight-line adjustments. The total same store results include the revenue adjustments.

     Job formation, which is the primary driver of demand by apartment residents, continued to be strong in most of our markets. On the supply side, new apartment construction continued to be limited, as in most markets, rents have yet to rise sufficiently to offset the rapid run-up of costs of new construction over the last five years. Competition from condominiums reverting back to being rental units, or new condominiums being converted to rental, was not a major factor in most of our markets because most of our markets and submarkets have not been primary areas for condominium development. We have found the same to be true for rental competition from single family homes: we have avoided committing a lot of capital to markets where most of the excessive inflation in house prices has occurred. We are seeing rental competition from condominiums and single family houses in only a few submarkets.

     The primary reason that our residents leave us is to buy a house, but we have seen the number drop over the past six months from approximately 28% of move-outs to approximately 26%. Analysts point out that homeownership increased from 65% to almost 69% of households over the past ten years, driven primarily by the availability of new mortgage products, many requiring no down-payment and minimal credit reporting. With a reversion of mortgage underwriting back to more traditional standards, it is possible that a long-term correction will occur, and that home ownership may return to more sustainable levels. This could be quite significant for the apartment business, and we believe, if this occurs, it could benefit us for several years.

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     While it seems possible that we will face slower economic growth as a result of reduced liquidity in the economy, we think that the supply of new apartments is not excessive, and that positive absorption of apartments will occur for most of our markets for the next two or three years. Should the economy fall into recession, the limited new supply of apartments and the more controlled competition from single family housing should ameliorate the impact.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash flow provided by operating activities increased by approximately $17.0 million to $117.9 million for 2007, compared to $100.9 million for 2006, mainly related to the growth of Mid-America through acquisitions and improved operating results in 2007. Net cash flow provided by operating activities increased by approximately $2.1 million to $100.9 million for 2006 compared to $98.8 million for 2005 mainly related to the growth of Mid-America through acquisitions and improved operating results in 2006.

     Net cash used in investing activities decreased by approximately $131.5 million from $239.6 million in 2006 to $108.1 million in 2007. Net cash used in investing activities increased by approximately $133.2 million from $106.4 million in 2005 to $239.6 million in 2006. The change in net cash used in investing activities resulted mainly from the varying levels of acquisition activity. A total of approximately $88.6 million was invested in 2007 to acquire properties, this compares to approximately $195.0 million in 2006, and $105.6 million in 2005. Mid-America began limited development activities in 2006, which used net cash of approximately $10.9 million in 2006 and $14.6 million in 2007. Mid-America also expanded our renovation activities using net cash of approximately $0.4 million in 2005, $6.1 million in 2006 and $11.3 million in 2007. Finally, Mid-America’s net cash used in investing activities was influenced by different levels of dispositions across the three years. In 2007, Mid-America received $29.3 million from real estate dispositions, compared to $2.1 million in 2006 and $9.7 million in 2005.

     Net cash provided by financing activities decreased approximately $128.3 million to $1.9 million in 2007 from $130.1 million in 2006. Net cash provided by financing activities increased approximately $117.6 million to $130.1 million in 2006 from $12.5 million in 2005. Net cash provided by financing activities was mainly impacted by proceeds from issuances of common shares and units. Proceeds from issuances of common shares and units increased in 2006 to approximately $151.9 million primarily due to Mid-America’s raising of funds through stock issuances from our direct stock purchase plan, a controlled equity plan and an overnight offering. During 2005 and 2007, Mid-America was not as active in raising funds through these equity plans. Net cash provided by financing activities in 2007 was also impacted by the redemption of our 9¼% Series F Cumulative Redeemable Preferred Stock, or Series F, for $11.9 million.

     The weighted average interest rate at December 31, 2007, for the $1.3 billion of debt outstanding was 5.4% compared to 5.6% on $1.2 billion of debt outstanding at December 31, 2006. Mid-America utilizes both conventional and tax exempt debt to help finance our activities. Borrowings are made through individual property mortgages and secured credit facilities. Mid-America utilizes fixed rate borrowings, interest rate swaps and interest rate caps to manage our current and future interest rate risk. More details on Mid-America’s borrowings are disclosed in the schedule found later in this section.

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     At December 31, 2007, Mid-America had secured credit facilities relationships with Prudential Mortgage Capital which are credit enhanced by the Federal National Mortgage Association, or FNMA, Federal Home Loan Mortgage Corporation, or Freddie MAC, and a group of banks led by Regions Financial Corporation. Together, these credit facilities provided a total borrowing capacity of $1.4 billion at December 31, 2007, with an availability to borrow of $1.2 billion. At December 31, 2007, Mid-America had total borrowings outstanding under these credit facilities of $1.1 billion.

     Approximately 72% of Mid-America’s outstanding obligations at December 31, 2007, were borrowed through facilities with/or credit enhanced by FNMA, which we call the FNMA Facilities. The FNMA Facilities have a combined line limit of $1.0 billion, most of which was available to borrow at December 31, 2007. Various traunches of the facilities mature from 2008 through 2014. The FNMA Facilities provide for both fixed and variable rate borrowings. The interest rate on the majority of the variable portion renews every 90 days and is based on the FNMA Discount Mortgage Backed Security, or DMBS, rate on the date of renewal, which has typically approximated three-month LIBOR less an average spread of 0.05% - 0.09% over the life of the FNMA facilities, plus a credit enhancement fee of 0.62% to 0.795%. Recently, however, the spread between three-month LIBOR and DMBS has increased up to 0.57%. While we feel the current liquidity market is an anomaly and believe that this spread will return to more historic levels, Mid-America cannot forecast when or if the uncertainty and volatility in the market may change.

     Each of Mid-America’s secured credit facilities is subject to various covenants and conditions on usage, and are subject to periodic re-evaluation of collateral. If Mid-America were to fail to satisfy a condition to borrowing, the available credit under one or more of the facilities could not be drawn, which could adversely affect Mid-America’s liquidity. In the event of a reduction in real estate values the amount of available credit could be reduced. Moreover, if Mid-America were to fail to make a payment or violate a covenant under a credit facility, after applicable cure periods one or more of our lenders could declare a default, accelerate the due date for repayment of all amounts outstanding and/or foreclose on properties securing such facilities. Any such event could have a material adverse effect on Mid-America.

     On May 26, 2005, Mid-America gave the required one year notice to redeem all of the issued and outstanding shares of its 8 5/8% Series G Cumulative Redeemable Preferred Stock, or Series G, on May 26, 2006, for the total redemption price of $10 million. As a result, in accordance with Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, Mid-America classified the Series G as a liability within notes payable as of May 26, 2005, on the accompanying consolidated financial statements. On May 26, 2006, Mid-America redeemed all of the issued and outstanding shares of Series G.

     On October 16, 2007, Mid-America redeemed all of the issued and outstanding shares of Series F for the total redemption price of $11.9 million.

     As of December 31, 2007, Mid-America had interest rate swaps in effect totaling a notional amount of approximately $756 million. To date, these swaps have proven to be highly effective hedges. Mid-America had also entered into two forward swaps as of December 31, 2007, with a total combined notional amount of $50 million. Mid-America had interest rate cap agreements totaling a notional amount of approximately $47 million in effect as of December 31, 2007.

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     Summary details of the debt outstanding at December 31, 2007 follows in the table below (dollars in thousands):

               Outstanding            
        Balance/ Average Average Average
  Line Line Notional Interest Rate Contract
       Limit      Availability      Amount      Rate      Maturity      Maturity
COMBINED DEBT                    
Fixed Rate or Swapped              
     Conventional       $ 918,060 5.6 % 12/8/2011 12/8/2011
     Tax Exempt         73,205 4.5 % 3/8/2013 3/8/2013
          Subtotal Fixed Rate or Swapped       991,265 5.5 % 1/11/2012 1/11/2012
Variable Rate              
     Conventional       221,474 5.1 % 2/29/2008 12/16/2012
     Tax Exempt       4,760 4.4 % 12/31/2007 6/1/2028
     Conventional - Capped       17,936 5.3 % 11/13/2009 11/13/2009
     Tax Exempt - Capped         29,185 4.1 % 3/26/2011 3/26/2011
          Subtotal Variable Rate         273,355 5.0 % 2/23/2008 6/8/2013
Total Combined Debt Outstanding     $ 1,264,620 5.4 % 3/10/2011 5/1/2012
 
UNDERLYING DEBT              
Individual Property Mortgages/Bonds            
     Conventional Fixed Rate       $ 133,059 4.8 % 9/11/2013 9/11/2013
     Tax Exempt Fixed Rate       11,875 5.2 % 12/1/2028 12/1/2028
     Tax Exempt Variable Rate       4,760 4.4 % 12/31/2007 6/1/2028
FNMA Credit Facilities              
     Tax Free Borrowings $ 90,515 $ 90,515 90,515 4.1 % 1/15/2008 3/1/2014
     Conventional Borrowings              
           Fixed Rate Borrowings   90,000 90,000 90,000 7.5 % 7/1/2009 7/1/2009
           Variable Rate Borrowings   863,914   847,234   725,318 5.1 % 2/29/2008 6/20/2013
Subtotal FNMA Facilities   1,044,429   1,027,749   905,833 5.2 % 4/13/2008 2/21/2013
Freddie Mac Credit Facilities   300,000 167,129 167,129 5.0 % 3/1/2008 9/24/2012
Regions Credit Facility   50,000 42,794 2,404 6.6 % 1/31/2008 5/24/2008
Regions Bank         39,560 6.1 % 2/29/2008 4/1/2009
Total Underlying Debt Outstanding     $ 1,264,620 5.2 % 1/9/2009 3/21/2013
 
HEDGING INSTRUMENTS              
Interest Rate Swaps              
     LIBOR indexed       $ 695,000 5.5 % 11/11/2011  
     Forward LIBOR indexed       50,000 5.1 % 11/30/2012  
     BMA indexed         61,330 4.4 % 2/20/2010  
Total Interest Rate Swaps       $ 806,330 5.4 % 10/18/2011  
 
Interest Rate Caps              
     LIBOR indexed       $ 17,936 6.2 % 11/13/2009  
     BMA indexed         29,185 6.0 % 3/26/2011  
Total Interest Rate Caps       $ 47,121 6.1 % 9/17/2010  

     During 2007, Mid-America offered an average 1.5% discount through our DRSPP and issued approximately 120,000 shares of common stock through the direct stock purchase feature of this plan, generating approximately $6 million in proceeds. During 2006, Mid-America offered an average 1.5% discount through our DRSPP and issued approximately 1,340,000 shares of common stock through the direct stock purchase feature of this plan, generating approximately $77 million in proceeds. During 2005, Mid-America offered an average 1.5% discount through our DRSPP and issued approximately 784,000 shares of common stock through the direct stock purchase feature of this plan, generating approximately $32 million in proceeds.

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     In May 2006, Mid-America sold 1,150,000 shares of common stock through a public offering generating net proceeds of approximately $59.5 million.

     During the first two quarters of 2007, Mid-America sold 323,700 shares of common stock through our continuous equity offering program generating approximately $18.8 million in net proceeds. In December 2006, Mid-America sold 194,000 shares of common stock through this same program generating approximately $11.4 million in net proceeds.

     Mid-America believes that it has adequate resources to fund its current operations and annual refurbishment of our communities through our cash flow and credit facilities. Mid-America is relying on the efficient operation of the financial markets to finance debt maturities, and also is heavily reliant on the creditworthiness of FNMA, which provides credit enhancement for approximately $906 million of Mid-America’s debt. The interest rate market for FNMA DMBS, which in Mid-America’s experience is highly correlated with three-month LIBOR interest rates, is also an important component of Mid-America’s liquidity and interest rate swap effectiveness. In the event that the FNMA DMBS market becomes less efficient, or the credit of FNMA becomes impaired, Mid-America would seek alternative sources of debt financing.

     For the year ended December 31, 2007, Mid-America’s net cash provided by operating activities was in excess of covering improvements to existing real estate assets (excluding renovations), distributions to unitholders, and dividends paid on common and preferred shares by approximately $4.1 million. This compares to a shortfall in 2006 of approximately $4.5 million and excess coverage in 2005 of approximately $3.1 million. While Mid-America has sufficient liquidity to permit distributions at current rates, from time-to-time Mid-America may utilize additional borrowings to cover shortfalls if necessary. Any significant deterioration in operations could result in Mid-America’s financial resources to be insufficient to pay distributions to shareholders at the current rate, in which event Mid-America would be required to reduce the distribution rate.

     The following table reflects Mid-America’s total contractual cash obligations which consist of our long-term debt and operating leases as of December 31, 2007 (dollars in 000’s):

    Payments Due by Period
Contractual Obligations        2008      2009      2010      2011      2012      Thereafter      Total
Long-Term Debt (1)  $ 112,790 $ 106,292 $ 121,828 $ 216,962 $ 42,036 $ 664,712 $ 1,264,620
Operating Lease   9   7   7   6   5     34
     Total  $ 112,799 $ 106,299 $ 121,835 $ 216,968 $ 42,041 $ 664,712 $ 1,264,654

(1)       Represents principal payments.

OFF-BALANCE SHEET ARRANGEMENTS

     At December 31, 2007, and 2006, Mid-America did not have any relationships with unconsolidated entities or financial partnerships established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Mid-America’s two joint ventures with Crow Holdings (one terminated in 2005 and one in 2007) were established to acquire approximately $200 million of multifamily properties and to enhance Mid-America’s return on investment through the generation of fee income. Mid-America Multifamily Fund I, LLC, was established to acquire $500 million of apartment communities with redevelopment upside offering value creation opportunity through capital improvements, operating enhancements and restructuring in-place financing. In addition, Mid-America does not engage in trading activities involving non-exchange traded contracts. As such, Mid-America is not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.

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Mid-America does not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with Mid-America or our related parties other than what is disclosed in Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 14.

     Mid-America’s investments in our real estate joint ventures are unconsolidated and are recorded on the equity method as Mid-America does not have a controlling interest.

INSURANCE

     Mid-America renegotiated our insurance programs effective July 1, 2007. Management believes that the property and casualty insurance program in place provides appropriate insurance coverage for financial protection against insurable risks such that any insurable loss experienced would not have a significant impact on Mid-America’s liquidity, financial position or results of operation. Management expects to obtain a reduction in annual policy premiums of approximately $1.5 million from the renegotiated programs when compared to the higher rates experienced after the July 1, 2006 renewal.

INFLATION

     Substantially all of the resident leases at the apartment communities allow, at the time of renewal, for adjustments in the rent payable there under, and thus may enable Mid-America to seek rent increases. Almost all leases are for one year or less. The short-term nature of these leases generally serves to reduce the risk to Mid-America of the adverse effects of inflation.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 2006, the Financial Accounting Standards Board, or FASB, issued Interpretation No. 48 “Accounting for Uncertainty in Income Taxes”, or FIN 48. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. Mid-America adopted FIN 48 effective January 1, 2007. FIN 48 prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken in tax returns. Mid-America has identified and examined our tax positions, including our status as a real estate investment trust, for all open tax years through December 31, 2006, and concluded that the full benefit of each tax position taken should be recognized in the financial statements. There are no significant changes in unrecognized tax benefits that are reasonably likely to occur within the twelve months following the adoption date.

     FIN 48 requires that an enterprise must calculate interest and penalties related to unrecognized tax benefits. The decision regarding where to classify interest and penalties on the income statement is an accounting policy decision that should be consistently applied. Interest and penalties calculated on any future uncertain tax positions will be presented as a component of income tax expense. No interest and penalties are accrued under FIN 48 on our balance sheet as of December 31, 2007.

     Mid-America’s tax years that remain subject to examination for U.S. federal purposes range from 2003 through 2006. Our tax years that remain open for state examination vary but range from 2002 through 2006.

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     In September 2006, the FASB issued Statement No. 157 Fair Value Measurements, or Statement 157. Statement 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Statement 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. FASB Staff Position No. FAS 157-2 Effective Date of FASB Statement 157, or FSP 157-2, delays the effective date of Statement 157 for nonfinancial assets and nonfinancial liabilities except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. For these items, the effective date will be for fiscal years beginning after November 15, 2008. Mid-America does not believe the adoption of Statement 157 will have a material impact on our consolidated financial condition or results of operations taken as a whole.

     On December 4, 2007, the FASB issued Statement No. 141 (Revised 2007), Business Combinations, or Statement 141R. Statement 141R will significantly change the accounting for business combinations. Under Statement 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. Statement 141R will change the accounting treatment for certain specific items, including acquisition costs which will generally be expensed as incurred. This will have a material impact on the way Mid-America accounts for property acquisitions and therefore will have a material impact on Mid-America’s financial statements. Statement 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

     On December 4, 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51, or Statement 160. Statement 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. Statement 160 clarifies that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. This will impact the financial statement presentation of Mid-America by requiring the minority interests in the operating partnership to be presented as a non-controlling interest as a component of equity. Statement 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Mid-America's primary market risk exposure is to changes in interest rates obtainable on our secured and unsecured borrowings. At December 31, 2007, 48% of Mid-America's total capitalization consisted of borrowings. Mid-America's interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve this objective, Mid-America manages its exposure to fluctuations in market interest rates for borrowings through the use of fixed rate debt instruments and interest rate swaps and caps which mitigate our interest rate risk on a related financial instrument and effectively fix the interest rate on a portion of our variable debt or on future refinancings. Mid-America uses our best efforts to ladder fixed rate maturities thereby limiting our exposure to interest rate changes in any one year. Mid-America does not enter into derivative instruments for trading purposes. Approximately 82% of Mid-America's outstanding debt was subject to fixed or capped rates after considering related derivative instruments with a weighted average of 5.5% at December 31, 2007. Mid-America regularly reviews interest rate exposure on outstanding borrowings in an effort to minimize the risk of interest rate fluctuations.

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     The table below provides information about Mid-America's financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For Mid-America’s interest rate swaps and caps, the table presents the notional amount of the swaps and caps and the years in which they expire. Weighted average variable rates are based on rates in effect at the reporting date (dollars in 000's).

              Total   Fair
     2008    2009    2010    2011    2012    Thereafter    Total    Value
Long-term Debt                                                  
     Fixed Rate (1)  $ 108,739   $ 65,000   $   $   $   $ 61,195   $ 234,934   $ 221,378  
          Average interest rate 4.93 % 7.71 % 0.00 % 0.00 % 0.00 % 5.60 % 5.87 %    
     Variable Rate (1)  $ 2,404   $ 39,560   $ 120,000   $ 215,033   $ 40,000   $ 612,689   $ 1,029,686   $ 1,029,686  
          Average interest rate 6.57 % 6.08 % 5.06 % 5.07 % 5.06 % 4.91 % 5.02 %    
 
Interest Rate Swaps                  
     Variable to Fixed $ 74,935   $ 35,230   $ 148,365   $ 133,000   $ 167,800   $ 247,000   $ 806,330   $ (15,987 )
          Average Pay Rate 4.70 % 3.60 % 4.92 % 4.57 % 4.23 % 4.81 % 4.61 %    
Interest Rate Cap                  
     Variable to Fixed $   $ 15,770   $ 5,095   $ 19,451   $ 6,805   $  —   $ 47,121   $ 11  
          Average Pay Rate 0.00 % 6.00 % 6.00 % 6.16 % 6.00 % 0.00 % 6.07 %    

(1)       Excluding the effect of interest rate swap and cap agreements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The Reports of Independent Registered Public Accounting Firm, Consolidated Financial Statements and Selected Quarterly Financial Information are set forth on pages F-1 to F-39 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

     None.

ITEM 9A. CONTROLS AND PROCEDURES.

Management’s Evaluation of Disclosure Controls and Procedures

     The management of Mid-America, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to Mid-America management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of December 31, 2007, (the end of the period covered by this Annual Report on Form 10-K).

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Management’s Report on Internal Control Over Financial Reporting

     Management’s report on our internal control over financial reporting is presented on page F-1 of this Annual Report on Form 10-K. The reports of Ernst & Young LLP relating to the consolidated financial statements, notes to the consolidated financial statements and the effectiveness of internal control over financial reporting are presented on pages F-2 to F-4 of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

     As of the period ended December 31, 2007, there were no significant changes in Mid-America’s internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, Mid-America’s internal control over financial reporting.

ITEM 9A(T). CONTROLS AND PROCEDURES.

     Not applicable.

ITEM 9B. OTHER INFORMATION

     None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

     The information contained in Mid-America’s 2007 Proxy Statement in the sections entitled “Information About The Board of Directors and Its Committees”, “Proposal 1 - Election of Directors”, “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance,” is incorporated herein by reference in response to this item.

     Our Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors and employees, which can be found on Mid-America’s website at http://www.maac.net, on the Investor Relations page under Governance Documents. Mid-America will provide a copy of this document to any person, without charge, upon request, by writing to the Investor Relations Department at Mid-America Apartment Communities, Inc., 6584 Poplar Avenue, Suite 300, Memphis, TN 38138. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics by posting such information on our website at the address and the locations specified above.

ITEM 11. EXECUTIVE COMPENSATION.

     The information contained in Mid-America’s 2007 Proxy Statement in the section entitled “Executive Compensation”, “Compensation Committee Interlocks and Insider Participation” and “Compensation Discussion and Analysis” is incorporated herein by reference in response to this item.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

     The information contained in Mid-America’s 2007 Proxy Statement in the sections entitled “Security Ownership of Management” and “Security Ownership of Certain Beneficial Owners,” is incorporated herein by reference in response to this item.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

     The information contained in Mid-America’s 2007 Proxy Statement in the sections entitled “Certain Relationships and Related Transactions” and “Information About The Board of Directors and Its Committees” is incorporated herein by reference in response to this item.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

     The information contained in Mid-America’s 2007 Proxy Statement in the section entitled “Proposal 2 - Ratification of Independent Registered Public Accounting Firm,” is incorporated herein by reference in response to this item.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)     The following documents are filed as part of this Annual Report on Form 10-K:

1.      Management’s Report on Internal Controls Over Financial Reporting  F   1
  Reports of Independent Registered Public Accounting Firm  F   2
  Consolidated Balance Sheets as of December 31, 2007, and 2006  F   5
  Consolidated Statements of Operations for the years ended       
         December 31, 2007, 2006, and 2005  F   6
  Consolidated Statements of Shareholders’ Equity for the years ended      
         December 31, 2007, 2006, and 2005  F   7
  Consolidated Statements of Cash Flows for the years ended       
         December 31, 2007, 2006, and 2005  F   8
  Notes to Consolidated Financial Statements for the years ended
       December 31, 2007, 2006, and 2005  F   9
 
2. Financial Statement Schedule required to be filed by Item 8 and Paragraph (b) of this Item 15:       
  Schedule III - Real Estate Investments and Accumulated Depreciation as of December 31, 2007  F   36 
 
3. The exhibits required by Item 601 of Regulation S-K, except as otherwise noted, have been filed with previous reports by the registrant and are herein incorporated by reference.      

 Exhibit

     
 Number   Exhibit Description
3.1 Amended and Restated Charter of Mid-America Apartment Communities, Inc. dated as of January 10, 1994, as filed with the Tennessee Secretary of State on January 25, 1994 (Filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
 
3.2 Articles of Amendment to the Charter of Mid-America Apartment Communities, Inc. dated as of January 28, 1994, as filed with the Tennessee Secretary of State on January 28, 1994 (Filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference).

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   3.3         Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Preferred Stock dated as of October 9, 1996, as filed with the Tennessee Secretary of State on October 10, 1996 (Filed as Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996 and incorporated herein by reference).
 
3.4 Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter dated November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997 (Filed as Exhibit 3.6 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).
 
3.5 Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of November 17, 1997, as filed with the Tennessee Secretary of State on November 18, 1997 (Filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997 and incorporated herein by reference).
 
3.6 Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of June 25, 1998, as filed with the Tennessee Secretary of State on June 30, 1998 (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on June 26, 1998 and incorporated herein by reference).
 
3.7 Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of A Series of Shares of Preferred Stock dated as of December 24, 1998, as filed with the Tennessee Secretary of State on December 30, 1998 (Filed as Exhibit 3.7 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
 
3.8 Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of October 11, 2002, as filed with the Tennessee Secretary of State on October 14, 2002 (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002 and incorporated herein by reference).
 
3.9 Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of October 28, 2002, as filed with the Tennessee Secretary of State on October 28, 2002 (Filed as Exhibit 3.9 to the Registrant’s Registration Statement on Form S-3/A (File Number 333- 112469) and incorporated herein by reference).
 
3.10 Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter Designating and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock dated as of August 7, 2003, as filed with the Tennessee Secretary of State on August 7, 2003 (Filed as Exhibit 3.10 to the Registrant’s Registration Statement on Form S-3/A (File Number 333- 112469) and incorporated herein by reference).
 
3.11 Amended and Restated Bylaws of Mid-America Apartment Communities, Inc. (Filed as an Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 29, 2007 and incorporated herein by reference).
 
4.1       Form of Common Share Certificate (Filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference).

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  4.2         Form of 9.5% Series A Cumulative Preferred Stock Certificate (Filed as Exhibit 2 to the Registrant’s Registration Statement on Form 8-A filed with the Commission on October 11, 1996 and incorporated herein by reference).
 
4.3 Form of 8 7/8% Series B Cumulative Preferred Stock Certificate (Filed as Exhibit 4.3 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on November 19, 1997 and incorporated herein by reference).
 
4.4 Form of 9 3/8% Series C Cumulative Preferred Stock Certificate (Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on June 26, 1998 and incorporated herein by reference).
 
4.5 Form of 9.5% Series E Cumulative Preferred Stock Certificate (Filed as Exhibit 4.5 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
 
4.6 Form of 9 ¼% Series F Cumulative Preferred Stock Certificate (Filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A/A filed with the Commission on October 11, 2002 and incorporated herein by reference).
 
4.7 Form of 8.30% Series G Cumulative Preferred Stock Certificate (Filed as Exhibit 4.7 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
 
4.8 Form of 8.30% Series H Cumulative Preferred Stock Certificate (Filed as Exhibit 4.8 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
  
10.1 Second Amended and Restated Agreement of Limited Partnership of Mid-America Apartments, L.P., a Tennessee limited partnership (Filed as Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by reference).
 
10.2† Employment Agreement between the Registrant and H. Eric Bolton, Jr. (Filed as Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated herein by reference).
 
10.3† Employment Agreement between the Registrant and Simon R.C. Wadsworth (Filed as Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated herein by reference).
 
10.4† Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan (Filed as Exhibit A to the Registrant’s Proxy Statement filed on April 24, 2002 and incorporated herein by reference).
 
10.5 AmSouth Revolving Credit Agreement (Amended and Restated) dated July 17, 2003 (Filed as Exhibit 10.10 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
   
10.6 First Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated May 19, 2004 (Filed as Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.7 Second Amendment to Amended and Restated Revolving Credit Agreement (AmSouth) dated May 23, 2005.
 
10.8

Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 30, 2004.

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  10.9         First Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 31, 2004 (Filed as Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.10 Second Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated April 30, 2004 (Filed as Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.11 Third Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated August 3, 2004 (Filed as Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.12 Fourth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated August 31, 2004 (Filed as Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.13 Fifth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated October 1, 2004 (Filed as Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.14 Sixth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 1, 2004 (Filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.15 Seventh Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 15, 2004 (Filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.16 Eighth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated March 31, 2005.
 
10.17 Ninth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated September 23, 2005.
 
10.18 Tenth Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated December 16, 2005.
 
10.19 Eleventh Amendment to Second Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., dated February 22, 2006.

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  10.20         Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P., dated March 30, 2004.
 
10.21 First Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated March 31, 2004.
 
10.22 Second Amendment to the Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid- America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated as of August 3, 2004 (Filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.23 Third Amendment to the Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid- America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated as of December 1, 2004 (Filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.24 Fourth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid- America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated March 31, 2005.
 
10.25 Fifth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated September 23, 2005.
 
10.26 Sixth Amendment to Third Amended and Restated Master Credit Facility Agreement by and among Prudential Multifamily Mortgage, Inc., Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Mid-America Apartments of Texas, L.P. dated February 22, 2006.
 
10.27 Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways- Columbia, L.P. dated June 1, 2001 (Filed as Exhibit 10.17 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
 
10.28 Amendment No. 1 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated December 24, 2002 (Filed as Exhibit 10.18 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
 
10.29 Amendment No. 2 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. dated May 30, 2003 (Filed as Exhibit 10.19 to the Registrant’s Registration Statement on Form S-3/A (File Number 333-112469) and incorporated herein by reference).
 
10.30 Amendment No. 3 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated March 2, 2004.
 
10.31 Amendment No. 4 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated November 17, 2005.

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  10.32        Amendment No. 5 to Master Reimbursement Agreement by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. dated February 23, 2006.
 
10.33 Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004, (Sunset Valley Apartments, Texas) (Filed as Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.34 Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004 (Village Apartments, Texas) (Filed as Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.35 Consent, Modification, Assumption of Indemnity Obligations and Release Agreement dated November 4, 2004, (Coral Springs Apartments, Florida) (Filed as Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.36 Credit Agreement dated September 28, 1998 by and among Jefferson Village, L.P., Jefferson at Sunset Valley, L.P. and JPI Coral Springs, L.P. (Filed as Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
 
10.37 Credit Agreement by and among Mid-America Apartment Communities, Inc., Mid-America Apartments L.P. and Mid- America Apartments of Texas, L.P. and Financial Federal Savings Bank dated June 29, 2004 (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and incorporated herein by reference).
 
10.38 Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated March 2, 2004.
 
10.39 Amendment No. 1 to Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated November 17, 2005.
 
10.40 Amendment No. 2 to Master Credit Facility Agreement by and among Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc., Mid-America Apartments of Texas, L.P. and Prudential Multifamily Mortgage, Inc. dated February 23, 2006.
 
10.41† Mid-America Apartment Communities Non-Qualified Deferred Compensation Retirement Plan as Amended Effective January 1, 2005 (Filed as Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 and incorporated herein by reference).
  
10.42† Mid-America Apartment Communities 2005 Key Management Restricted Stock Plan (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 20, 2005 and incorporated herein by reference).
 
10.43† 2007 Executive Annual Bonus Program (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 23, 2007 and incorporated herein by reference).
 
10.44† Form of Restricted Stock Agreement (Filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 11, 2005 and incorporated herein by reference).
 
10.45†

Amendment for the Non-Qualified Deferred Compensation Plan for Outside Directors (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 24, 2006 and incorporated herein by reference).


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  10.46          Limited Liability Company Agreement of Mid-America Multifamily Fund I, dated May 9, 2007 (Filed as Exhibit 10 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated herein by reference).
 
11 Statement re: computation of per share earnings (included within the Form 10-K).
 
14 Code of Ethics (Filed as Exhibit 14.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference).
 
21 List of Subsidiaries
 
23.1 Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP
 
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

  Management contract or compensatory plan or arrangement. 
 
(b)  Exhibits: 
  See Item 15(a)(3) above. 
 
(c)  Financial Statement Schedule: 
  See Item 15(a)(2) above. 

47


SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  MID-AMERICA APARTMENT COMMUNITIES, INC. 
 
Date: February 26, 2008  /s/ H. Eric Bolton, Jr.
  H. Eric Bolton, Jr.
  Chairman of the Board of Directors,
  President and Chief Executive Officer 
  (Principal Executive Officer) 
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.
 
Date: February 26, 2008  /s/ H. Eric Bolton, Jr. 
  H. Eric Bolton, Jr. 
  Chairman of the Board of Directors, 
  President and Chief Executive Officer 
  (Principal Executive Officer) 
 
Date: February 26, 2008  /s/ Simon R.C. Wadsworth 
  Simon R.C. Wadsworth 
  Executive Vice President and Chief Financial Officer 
  (Principal Financial and Accounting Officer) 
 
Date: February 26, 2008  /s/ George E. Cates 
  George E. Cates 
  Director 
 
Date: February 26, 2008  /s/ Alan B. Graf, Jr. 
  Alan B. Graf, Jr. 
  Director 
 
Date: February 26, 2008  /s/ John S. Grinalds 
  John S. Grinalds 
  Director 
 
Date: February 26, 2008  /s/ Ralph Horn 
  Ralph Horn 
  Director 
 
Date: February 26, 2008  /s/ Mary E. McCormick 
  Mary E. McCormick 
  Director 

48


Management’s Report on Internal Control Over Financial Reporting

     Management of Mid-America is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended.

     Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Mid-America’s consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

     Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Mid-America; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Mid-America are being made only in accordance with appropriate authorizations of management and directors of Mid-America; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Mid-America’s assets that could have a material effect on the consolidated financial statements.

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

     Management conducted an assessment of Mid-America’s internal control over financial reporting as of December 31, 2007 using the framework specified in Internal Control - Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment, management has concluded that Mid-America’s internal control over financial reporting was effective as of December 31, 2007.

     The effectiveness of Mid-America’s internal control over financial reporting as of December 31, 2007, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is presented in this Annual Report.

F-1


Report of Independent Registered Public Accounting Firm

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

     We have audited the accompanying consolidated balance sheets of Mid-America Apartment Communities, Inc. as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2007. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Mid-America Apartment Communities, Inc. at December 31, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2008 expressed an unqualified opinion thereon.

  /s/ Ernst & Young LLP 
 
 
Memphis, Tennessee   
February 26, 2008   

F-2


Report of Independent Registered Public Accounting Firm

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

     We have audited Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Mid-America Apartment Communities, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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

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

     In our opinion, Mid-America Apartment Communities, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the COSO criteria.

F-3


     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Mid-America Apartment Communities, Inc. as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007, of Mid-America Apartment Communities, Inc. and our report dated February 26, 2008, expressed an unqualified opinion thereon.

  /s/ Ernst & Young LLP 
 
 
Memphis, Tennessee   
February 26, 2008   

F-4


Mid-America Apartment Communities, Inc.
Consolidated Balance Sheets
December 31, 2007 and 2006
(Dollars in thousands, except per share data)

  December 31, 2007       December 31, 2006
Assets:             
Real estate assets:         
     Land  $  214,743   $  206,635  
     Buildings and improvements    2,044,380     1,921,462  
     Furniture, fixtures and equipment    55,602     51,374  
     Capital improvements in progress    12,886     20,689  
    2,327,611     2,200,160  
     Less accumulated depreciation    (616,364 )    (543,802 ) 
    1,711,247     1,656,358  
     Land held for future development    2,360     2,360  
     Commercial properties, net    6,778     7,103  
     Investments in and advances to real estate joint ventures    168     3,718  
          Real estate assets, net    1,720,553     1,669,539  
Cash and cash equivalents    17,192     5,545  
Restricted cash    3,724     4,145  
Deferred financing costs, net    15,219     16,033  
Other assets    23,028     38,865  
Goodwill    4,106     4,472  
Assets held for sale        8,047  
          Total assets  $  1,783,822   $  1,746,646  
Liabilities and Shareholders' Equity:         
Liabilities:         
     Notes payable  $  1,264,620   $  1,196,349  
     Accounts payable    1,099     2,773  
     Accrued expenses and other liabilities    77,252     57,919  
     Security deposits    8,453     7,670  
     Liabilities associated with assets held for sale        269  
          Total liabilities    1,351,424     1,264,980  
Minority interest    28,868     32,600  
Redeemable stock    2,574     3,418  
Shareholders' equity:         
     Preferred stock, $0.01 par value per share, 20,000,000 shares authorized,         
     $166,863 or $25 per share liquidation preference;         
          9 1/4% Series F Cumulative Redeemable Preferred Stock,         
               3,000,000 shares authorized, 0 and 474,500 shares         
               issued and outstanding at December 31, 2007,         
               and December 31, 2006, respectively        5  
          8.30% Series H Cumulative Redeemable Preferred Stock, 6,200,000         
               shares authorized, 6,200,000 shares issued and outstanding    62     62  
     Common stock, $0.01 par value per share, 50,000,000 shares authorized;         
          25,718,880 and 25,093,156 shares issued and outstanding at         
          December 31, 2007, and December 31, 2006, respectively (1)    257     251  
     Additional paid-in capital    832,511     814,006  
     Accumulated distributions in excess of net income    (414,966 )    (379,573 ) 
     Accumulated other comprehensive income    (16,908 )    10,897  
          Total shareholders' equity    400,956     445,648  
          Total liabilities and shareholders' equity  $  1,783,822   $  1,746,646  
 
 See accompanying notes to condensed consolidated financial statements.

(1)       Number of shares issued and outstanding represent total shares of common stock regardless of classification on the consolidated balance sheet. The number of shares classified as redeemable stock on the consolidated balance sheet for December 31, 2007, and 2006, are 64,233 and 59,717, respectively.

F-5


Mid-America Apartment Communities, Inc.
Consolidated Statements of Operations
Years ended December 31, 2007, 2006, and 2005
(Dollars in thousands, except per share data)

   2007         2006        2005
Operating revenues:               
     Rental revenues  $  337,149   $  309,327   $  281,420  
     Other property revenues    15,774      14,125      12,041  
     Total property revenues  352,923     323,452     293,461  
     Management fee income    34     210      325  
     Total operating revenues    352,957     323,662     293,786  
Property operating expenses:           
     Personnel  42,437     39,677     36,500  
     Building repairs and maintenance  13,270     11,943     10,886  
     Real estate taxes and insurance  43,353     40,589     37,070  
     Utilities  20,346     19,471     17,469  
     Landscaping  9,265     8,565     7,805  
     Other operating  16,335     14,879     14,235  
     Depreciation    86,173      78,861      73,917  
     Total property operating expenses  231,179     213,985     197,882  
Property management expenses  17,918     13,124     11,137  
General and administrative expenses    10,808      9,877      9,725  
Income from continuing operations before non-operating items  93,052     86,676     75,042  
Interest and other non-property income  196     673     498  
Interest expense  (64,452 )    (63,119 )    (58,142 ) 
Loss on debt extinguishment  (123 )    (551 )    (407 ) 
Amortization of deferred financing costs  (2,407 )    (2,036 )    (2,011 ) 
Minority interest in operating partnership income  (3,510 )    (1,590 )    (1,571 ) 
(Loss) gain from investments in real estate joint ventures  (58 )    (114 )    65  
Incentive fees from real estate joint ventures  1,019         1,723  
Net gains on insurance and other settlement proceeds  589     84     749  
Gains on sale of non-depreciable assets  534     50     334  
Gains on dispositions within real estate joint ventures    5,388           3,034  
Income from continuing operations  30,228     20,073     19,314  
Discontinued operations:           
     Income from discontinued operations before           
          asset impairment, settlement proceeds and gain on sale  554     872     698  
     Asset impairment on discontinued operations          (243 ) 
     Net loss on insurance and other settlement proceeds on           
          discontinued operations          (25 ) 
     Gains on sale of discontinued operations    9,164            
Net income  39,946     20,945     19,744  
Preferred dividend distributions  13,688     13,962     14,329  
Premiums and original issuance costs associated with the           
     redemption of preferred stock    589           
Net income available for common shareholders  $ 25,669   $  6,983   $  5,415  
 
Weighted average shares outstanding (in thousands):           
     Basic  25,296     23,474     21,405  
     Effect of dilutive stock options    166     224     202  
     Diluted    25,462     23,698     21,607  
 
Net income available for common shareholders  $  25,669   $  6,983   $  5,415  
Discontinued property operations    (9,718 )    (872 )    (430 ) 
Income from continuing operations available for common shareholders  $  15,951   $  6,111   $  4,985  
 
Earnings per share - basic:           
     Income from continuing operations           
          available for common shareholders  $ 0.63   $  0.26   $  0.23  
     Discontinued property operations    0.38      0.04     0.02  
     Net income available for common shareholders  $ 1.01   $  0.30   $  0.25  
 
Earnings per share - diluted:           
     Income from continuing operations           
          available for common shareholders  $ 0.63   $  0.26   $  0.23  
     Discontinued property operations    0.38     0.03     0.02  
     Net income available for common shareholders  $ 1.01   $  0.29   $  0.25  
 
Dividends declared per common share(1) $ 2.430   $  2.985   $  2.350  
____________________
 
(1)       Beginning in 2006, at their regularly scheduled meetings, the Board of Directors began routinely declaring dividends for payment in the following quarter. This can result in dividends declared during the year being different from dividends paid during the year. Mid-America paid dividends of $2.42, $2.38 and $2.35 in 2007, 2006 and 2005, respectively

See accompanying notes to condensed consolidated financial statements.

F-6


Mid-America Apartment Communities, Inc.
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 2007, 2006, and 2005
(Dollars and Shares in Thousands)

              Accumulated Accumulated    
          Additional   Distributions Other    
  Preferred Stock Common Stock Paid-In   in Excess of Comprehensive    
     Shares     Amount      Shares    Amount    Capital    Other     Net Income     Income (Loss)    Total
BALANCE DECEMBER 31, 2004       6,675     $    67      20,812 $ 209   $ 633,316     $ (3,252 )     $    (270,124 )     $    (14,737 )     $    345,479  
Comprehensive income:                          
     Net income             19,744         19,744  
     Other comprehensive income -                            
          derivative instruments (cash flow hedges)               21,865     21,865  
     Comprehensive income                       41,609  
Issuance and registration of common shares     792 8 32,774               32,782  
Exercise of stock options         240 2 5,613               5,615  
Stock issued to employee stock ownership plan     16 700               700  
Restricted shares issued to officers and directors (Note 2, Note 12)     23 939   (939 )            
Amortization of LESOP provision employee advances (Note 12)         360             360  
Shares issued in exchange for units     112 1 1,254               1,255  
Adjust redeemable stock to fair market value           (372 )       (372 )
Adjustment for Minority Interest Ownership in                        
     operating partnership     (4,277 )             (4,277 )
Amortization of unearned compensation       1,409             1,409  
Cash dividends on common stock ($2.35 per share)           (50,285 )       (50,285 )
Dividends on preferred stock                     (14,329 )       (14,329 )
BALANCE DECEMBER 31, 2005  6,675   67   21,995 220 670,319   (2,422 )   (315,366 )   7,128     359,946  
Comprehensive income:                        
     Net income           20,945         20,945  
     Other comprehensive income -                        
          derivative instruments (cash flow hedges)               3,769     3,769  
     Comprehensive income                       24,714  
Issuance and registration of common shares     2,730 29 147,731               147,760  
Exercise of stock options     183 2 4,631               4,633  
Stock issued to employee stock ownership plan     14 774               774  
Restricted shares issued to officers and directors (Note 2, Note 12)     80                
Adjustment of Unearned Compensation     (2,213 ) 2,422             209  
Amortization of LESOP provision employee advances (Note 12)     341               341  
Shares issued in exchange for units     31 384               384  
Adjust redeemable stock to fair market value           (469 )       (469 )
Adjustment for Minority Interest Ownership in                        
     operating partnership     (9,006 )             (9,006 )
Amortization of unearned compensation     1,045               1,045  
Dividends on common stock ($2.99 per share) (1)            (70,721 )       (70,721 )
Dividends on preferred stock                      (13,962 )         (13,962 )
BALANCE DECEMBER 31, 2006  6,675   67   25,033 251 814,006   0     (379,573 )   10,897     445,648  
Comprehensive income:                        
     Net income           39,946         39,946  
     Other comprehensive income -                        
          derivative instruments (cash flow hedges)               (27,805 )   (27,805 )
     Comprehensive income                       12,141  
Issuance and registration of common shares     459 5 25,258               25,263  
Exercise of stock options     81 2,040               2,040  
Stock issued to employee stock ownership plan     17 876               876  
Shares issued in exchange for units     65 1 762               763  
Adjust redeemable stock to fair market value           830         830  
Adjustment for Minority Interest Ownership in  </