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

Thank you, Devon, and good morning, everyone. This is Leslie Wolfgang, Director of External Reporting for Mid-America Apartment Communities. With me are Eric Bolton, our CEO; Simon Wadsworth, our CFO; Al Campbell, Treasurer; Tom Grimes, Director of Property Management; and Drew Taylor, Director of Asset Management. Before we begin, I want to point out that as part of the discussion this morning, company management will make forward-looking statements. Please refer to the Safe Harbor language included in yesterday's press release and our 34-X filings with the SEC which describe risk factors that may impact future results. These reports along with a copy of today's prepared comments and an audio copy of this morning's call can be found on our website. I'll now turn the call over to Eric.

Thanks, Leslie. Mid-America's strong 13% growth in FFO during the second quarter was a result of solid operating performance and favorable financing costs. The quarter's FFO performance of $0.95 per share is the best result we have ever posted for a second quarter in our company's history. Mid-America's steady performance and growth in FFO is the result of several attributes that cause us to feel comfortable that performance will continue to hold up well despite pressure from a weak employment market. Let me recap a few reasons why we remain comfortable with our positive outlook for 2008 and are optimistic about leasing fundamentals long-term. First, as the economy regains footing, the Sunbelt region is going to capture strong growth in new jobs and household formations. Over the long haul, we believe the Sunbelt markets will outperform other new regions in creating demand for apartment housing. In addition, our strategy of allocating a portion of Mid-America's portfolio to more stable income markets within this high growth region provides a level of protection to broad economic slowdowns that will help insulate our NOI performance from severe strain during weak parts of the economic cycle. And of course Mid-America's lack of portfolio concentration in markets most pressured by vacant condos and single-family housing, also, goes a long way in ensuring that portfolio will hold up better than most during the current cycle. Secondly, the strength of our operating platform will help to ensure that Mid-America's portfolio continues to generate solid performance. We're confident that our yield management system implemented last year, recent changes in programs for collecting delinquent rent and upgrades made at the start of the year to our inventory management programs were all combined to deliver results that outperform market norms. As an example you'll note that same-store physical occupancy at…

Thanks, Eric. Second quarter FFO per share of $0.95 was at the midpoint of our guidance, 13% increase over the second quarter of last year. We reported a $0.01 per share gain of the sale of excess land in the second quarter last year. And without this the growth in FFO per share was 14%. The strong growth was driven by solid operating results and the continuation of the favorable interest rate environment. As you remember, we anticipated at the beginning of the second quarter raising $50 million of new common equity for all of 2008. We had already raised $15 million of this in the first quarter. And then in the second quarter, we not only raised the $35 million balance, but nearly another $30 million on top for year-to-date total of almost $80 million. The FFO dilution from this additional equity was about $0.01 per share in the second quarter. We'll discuss our equity needs with the Board later this month, but our current plan is to raise an additional $20 million in the second half of the year. Assuming this occurs, we will have FFO dilution for the second half of the year from the $50 million of additional equity of just over $0.02 a share. So while we were able to meet the midpoint of our second quarter guidance despite the $0.01 dilution from the incremental equity, we need to modify our full year guidance by $0.03 to take account of the incremental shares. The primary reason we sold equity this year, is that we believe we are entering a time when we will be able to make some attractive acquisitions such as the two properties under contract that Eric mentioned. Our objective is to grow net present value per share and after a long spell…

Thanks, Simon. Our strategy for Mid-America is framed around a goal delivering high risk-adjusted return to shareholders. We believe that goal is best accomplished with a structure focused on deploying capital in the high growth Sunbelt region where demand-side variables tend to not only weather economic downturns better but a region that will capture more robust job growth during periods of economic expansion. Long-term, the fundamentals that drive demand for apartment housing look very good. New development continues to be challenged in this environment and the threat of oversupply is not on the horizon as far as we can see. We believe Mid-America is in a terrific position. Our portfolio of high-quality properties strategically diversified across a high growth region with a very strong operating platform and experienced team in place, a material level of lease-up and new development properties to come on line over the next couple of years and a balance sheet that is very well positioned to support additional growth and move forward opportunistically puts the company in a strong position. Devon, that's all we have in the way of prepared comments and turn it over to you for any questions.

(Operator Instructions). Our first question comes from Michael Salinsky from RBC.

Good morning, guys. Just given what you are seeing with the moderation right now and job growth across your markets and your experience in the Southeast markets, Eric, what is your gut feeling when conditions begin to improve? When do we start to pull out of this?

Mike, from our perspective, I think it is going to be late spring, summer of next year. I think mid-year next year, we start to see things pull out a little bit. We don't have the pressure from any sort of supply issues. I think it really is just the economy needs to get some traction and we need to get job growth back to where it was. Interestingly, the variable that obviously we look at that really I think is the one that is concerning us right now is traffic. And, I am going to turn it over to Tom. I'll let Tom to give you a little perspective on where we are seeing the traffic issues and why we think that things are going to get back on track mid-year next year. Tom?

All right, thanks Eric, and Mike, good morning. 70% of our traffic drop is really just tied to three areas which are Florida, Columbus, Georgia and Atlanta. And just sort of picking them off one by one, Florida, in general, no new press there. I will tell you Jacksonville has weakened a little bit materially with weakness in the financial sector hitting a little bit. They have had some job layoffs that sort of picked up around the second quarter, and they have got a little bit of new supply, but when you drop 7,000 jobs, any new supply isn't that helpful. In Columbus, we have seen a fallback on traffic, but that is sort of a pleasant story. Columbus has tightened up. We're advertising less, driving less traffic. It is holding up pretty well. And Atlanta is another place where job growth, if you just look at it, 70 basis point increases in job growth doesn't seem that bad, but it has moderated, its growth rate is cutting about in half. So it is still significantly over the national average, but we have seen some slowdown there a bit. The July numbers are encouraging. They have bounced back a bit, but I don't think we want to rally behind July and say job growth is back. Just our traffic picked up a little bit more along the lines of what we would expect.

Okay. As a follow-up to that, Houston was a little softer than what had anticipated on sequential revenue bases. Was there any driver behind that one?

No, Houston and Dallas and Austin have all been just incredibly strong. We're just really dealing with a trade-off as we adjust on some renovates a bit and shouldn't be any major problem there. We are ramping up our renovate that creates a little bit more vacancy loss for a short period and then it rolls. We are still feeling good about Houston.

Okay. Secondly, just in looking at the acquisition environment, I think you mentioned some additional opportunities there. Are you seeing more distressed sellers in the market? Are you seeing portfolios? Can you kind of shed some light on this? What opportunities you are seeing out there and also where pricing is right now relative to maybe six to 12 months ago?

Mike, this is Eric. Where we are seeing the best opportunities right now are really in three areas. We continue to find struggling lease-up, new development projects that are facing construction financing takeout requirements that are creating some pressure for the developers and they are becoming increasingly motivated to talk to us about pricing that makes sense to us. We are also seeing some pressure in some of these markets that are pretty soft from the overhanging of vacant condo and single-family homes such as Phoenix. We also are seeing some opportunities on some stabilized assets where they are facing some refinancing issues. Of course in a more stabilized asset area, the competition for buying those deals is still pretty fierce given that Fannie and Freddie will finance that whereas they won't finance the new development. So, overall, we are seeing the fairly new properties where you have got less than a stabilized situation where Fannie and Fred won't provide financing. That's where we are seeing the best buying opportunities at the moment. And in reference to our portfolio transactions, frankly, we are not really seeing a whole lot that we saw some earlier this year and looked at a number of deals that were pretty good-sized. And the kind of pricing that we were willing to talk to folks about, they weren't willing to talk to us about it at that point. I think that if fundamentals do continue to show some sluggishness and I think that if revenue growth does tend to moderate over the second half of this year, early next year as we think it will. I think some of these portfolios may start to come back around and pricing that makes sense to us. And frankly, I think that it's kind of hard to opine what sort of cap rate change has taken place. I would say that kind of gaze that we are seeing most people refer to is about a 50 basis point sort of shift up in cap rates. That sounds as reasonable to us as anything else I can point to. It's really kind of almost a case-by-case situation.

And then, finally, the 6.5 cap rate you are looking for on the dispositions here in the second half of the year that's a little bit better than you have been anticipating on the prior calls. Is that related to mix? What's the driver behind that essentially?

I think frankly Mike a couple of properties are older properties and we are sort of selling here on a per unit basis, which kind of acts sort of a bit of a floor up price really, and I would agree that sort of more generally you would expect the properties that we are selling to be we have a few of them in the sort of six and a half to seven range rather than the six and a half range.

Thanks, guys.

Thanks, Mike.

Our next question comes from the line of Paula Poskon from Robert W. Baird.

Thank you and good morning.

Good morning.

Simon, can you just refresh my memory of what is the magnitude of the eclipse of the increase in the real estate tax over the insurance savings?

Al, do you want to talk about that?

Yeah, I think the real estate tax as Simon mentioned was about 1% change, and I think that when you compare that to the change in insurance, I believe it's about $100,000 to $150,000 difference in that net offset if that is what you are asking.

Yes. That is exactly what I am asking, thanks. And then in terms of your plans to raise additional equity, will that again be through the controlled equity offering, if I look at the prospectus correctly, it looks like you are almost at the limit of the share count that was provided for in the agreement.

That is exactly right, Paula. We did reach the limit of that, and we filed a new one on around the beginning of July so that we do have another authorization about another 1.350 million shares. So we are good to go, and we would plan to use the controlled equity offering, if we go ahead with that additional $20 million, which is in our forecast.

Okay. And then lastly, could you just talk a little bit about the appetite that you are seeing of Fannie, Freddie to in fact increase their financing sourcing?

Well, what we have been seeing and I will let Al chime in, because he has been dealing with them on a pretty daily basis on sort of price quotes and things. They still seem very active, and they have been very committed to the sector. We have had price quotes from them very recently. Al, what kind of pricing are you seeing for our sort of Fund 1 kind of.

Well, we are seeing depending on specifics of the property and the terms of those deals, we are seeing anywhere from 200 to 230 spread and across the yield curve that means a different total end rate and that's what we are seeing. All the facts that you are saying and we are seeing point to the factor they are definitely still committed to multifamily and have the capacity, they are certainly saying they are. And we are seeing the evidence to support that at this point.

Great, thanks very much, guys.

Thanks.

Our next question comes from Nap Overton from Morgan Keegan.

Good morning.

Hi, Nap.

Just a couple of things. Several of my questions have already been answered. You mentioned that you wouldn't want to call an improvement in leasing traffic in July and end to the weakness that you were thinking you were seeing in May and June. What would it take for you to be convinced that things were getting better?

Job growth to rebound I think, Nap. This is Tom. Nap, that's sort of the thing. It's been fairly isolated in terms of where the traffic is up, but we really just need to see job growth come back. Supplies and check, or six straight quarters of increased occupancy, either will make us feel better. I think, Nap, we were sort of a little bit surprised when we saw the weakness in traffic at the end of May and in June. And say July has recovered. I would want to see personally another month or two of recovery, yeah, to be convinced that we are back to where we originally thought we would be.

You are certainly not the only business seeing weakness in May and June.

No.

And then secondly, Simon, you mentioned in the press release you are negotiating expansion and expansion to the Freddie Mac credit agreement to fund 2009 growth plans. Would you care to share with us kind of a range of the volume or the size of that expansion that you might be thinking about to fund your 2009 growth plans?

Nap, I think, I can give you some color, and it's Al. I think we are probably talking something in the $200 million range at this point. But I tell you given the funding requirements for remainder of this year, and going into next year, we have plenty of capacity and really are talking about putting that place mid to late next year just to continue our growth strategies at that point in time. We have plenty of capacity in our current facilities right, now certainly not this year's commitments and most if not all of next year's commitment.

I was just trying to back into how much acquisition volume you were planning.

That's why I was being a little.

Yeah. We are still planning that. But I think in our general sense, sort of our base case, if you like, on our balance sheet is still kind of in the $150 million, $200 million range this year and our base case next year is about $150 million. But I think that could get stepped up if we see what we think is going to happen, happened. And, of course, as Eric mentioned for our joint-venture, we call Fund 1, you know, we are finding it harder to make those deals happen just because there is a lot of investors who are attracted to this asset class and stabilized profits for the reasons that Eric mentioned. So we think that's a little tougher, but roughly we think our continued guidance, $150 million on our own account, $150 million in Fund 1 in a kind of a steady state basis is roughly where we are trending. There maybe a few opportunities in late this year, early next year that we may jump on.

Okay. And then, would you care to comment on the character of the three additional acquisitions that you have under contract? Are those repositioning? Are they lease-ups? Are they stabilized? Would you care to comment on what the characteristics of those are?

The other two that we are looking at, they are under contract right now, one has a repositioning component to it. The other is a busted condominium project. And we are still not closed on those. Probably shouldn't talk a lot more about either one of them, but both are opportunities that we feel very excited about and hopefully will get them closed.

Okay.

The one we just closed on that The Edge at Lyon's Gate in Phoenix is pretty well brand-new property, on 85% leased.

That just finished last year. It's a terrific asset in a great area so we are really excited about what it is going to do. As we continue to look for ways to carefully expand in the Phoenix area.

And the dollar amount of that investment for that property was--?

$30,000 million roughly for that and the one we just first finished in the quarter.

So it's about $110 a unit, is that about right in Phoenix?

Yeah.

Okay. And then, just one last thing. How have you dealt we're talking about this six months ago and nine months ago? How have you dealt with qualifying credits for leasing for people coming into the renters market from having difficulties in the housing market? How have you determined to deal with that?

Hey, Matt, this is Drew. Really we haven't made any changes to the way we deal with mortgage defaults and our qualification process. What we have seen is really a very small percentage of our applicant pool have mortgage defaults on their credit records. So we really haven't done anything any differently. Our collection results continue to be good, and we really just haven't felt a need to make any change there.

Frankly, I think a lot of people that default on mortgages become renters of homes. I think a lot of it recycles within that sector.

And it's a thorny issue. Typically those folks have other problems with their credit and they are generally not going to qualify.

Okay. Thank you very much.

Thanks.

Thanks, Matt

Our next question comes from the line of Craig Kucera from BB&T Capital Markets. Craig Kucera - BB&T Capital Markets: Yes. Hi, good morning.

Good morning. Craig Kucera - BB&T Capital Markets: I just had a thought. You know on the legislation that passed this week that is going to effectively eliminate down payment assistance programs in October, I wanted to know if you had any opinion on how that impact your business, particularly as it relates to move outs and is any of that affecting your guidance maybe in regard to lower turnover assumptions or higher stickiness of your occupancy?

I do think that the single biggest issue for us and for turnover is you know people buying a house, the two things that we have been battling is the fact that people could do it without a down payment and they have to have good credit. That is not going to change. We do think it is likely that our turnover will continue to benefit from the tougher mortgage financing environment. You know, how much lower our turnover will go is really hard to predict. Frankly, we think that kind of where we are right now in terms of the turnover is probably we are assuming more or less we are going to hang at this level. The thing that really caused us to feel, some need to moderate our expectation a little bit was really just the leasing traffic and the job market concerns. That is obviously offset a little bit by this tougher mortgage financing environment to some degree, but it is not enough.

I think it means, as we have made and accommodated in other conference calls and investor presentations, I think for the long haul when you look at '09, '10 and '11, I think it's going be very good particularly for us. The primary factor is for somebody who leaves us is being able to get a down payment and bypassing that is a huge detriment to us. We feel very good about the long-term impact of what's going on. Craig Kucera - BB&T Capital Markets: Great. I just want to follow up. I know that the yield on the Series H is like an 8.3%. It is trading at $0.95 on the dollar, something like that. Are you willing to talk at all about sort of the acquisition cap rates or yields that you are looking at relative to that and sort of your thought process as it relates to capital structures?

Sure. What we look at really is, what we think our long-term costs of equity is, and when we look at it, we use a dividend discount model and we look at our current yield plus long-term growth rate which we pegged right now at about 5.5%. So we are looking at our cost of equity in the 10% range or so with a hurdle rate about 20% above that and then you couple that with a cost of debt which new debt would be sort of 5.5% and 5.75% range right now. Put that together on a 50-50 basis to get a blended cost of what we think our cost of capital is and we compare that really to the preferred. So it is a little bit below our preferred cost. Now we are underwriting our new acquisitions to roughly today. This is a return, an IRR on equity in the sort of 12% to 12.5% range. So all in all, we think that's if you like the right way for us to go. We do think we have probably got maybe a little bit too much preferred on the balance sheet right now, but we are kind of reluctant to take it out because we would be giving up a free call option which we have got effectively now on the preferred and these are uncertain times in the capital markets and we think we are going into a window where we could really accrete MPV per share by making some really good, attractive acquisitions. So we are kind of reluctant to lose any firepower at the present time. That is the way we look at it really, Craig. Craig Kucera - BB&T Capital Markets: Okay. Thanks a lot.

Next, we have a follow-up from Michael Salinsky from RBC

Good morning. Well, back on again actually. Just a couple of follow-up questions here. You revised your guidance assumptions for the investment funds here in the second half of the year from 150 previously to a range of 100 to 150. Is that related to asset mix what you are seeing in pricing or a pull back or any changes in the acquisition to manage your management joint venture partner. What was the driver behind that?

Mike, it's really just a function of the competitiveness of the market and trying to buy deals. Our JV partner remains every bit as committed as they were at the start. It really as just we think that the ability to get a couple more deals done this year is what we are hoping to. But it's a very competitive market out there, trying to buy these deals right now. That's what really caused us to pullback a little bit?

Okay. And you also raised your real estate tax assumptions for the second of the year here. What were the regions that were responsible for that?

It is really, Mike, Texas has a lot to do with it. And then, Georgia is the other state that's been pretty tough, some counties in Georgia. But as is always, Texas is always a wildcard, and Texas and Georgia are the two areas giving us most problems.

Are there any states coming in better than what you anticipated?

Yeah. As a matter of fact, Tennessee did, and that was very nice. And I think in Memphis, as a matter of fact. And we have had a little bit of pickup in North Carolina too that has helped us, but not enough to offset the current pressure in Texas and Georgia. Now, I will say that until we get through the third quarter, we are dealing with a kind of a really volatile sort of tax situation. As we have said in the past, 1% of our real estate taxes is about a $0.01 a share. Just over $0.01 a share, so it's not just a killer issue, but until we get through the third quarter things will still stay a little murky. I am optimistic that we may do a little better than the 5.5 now, but I could change my view tomorrow what if we get more e-mails in from our various consultants out there that are fighting these reappraisals for us.

And then finally just a theoretical question, you have acquired a lot of newer properties in the market over the last couple of years here. You also have a steady stream of properties you have owned for quite some time, maybe B or B+ in the market, and what are you seeing among the traffic trends at the As, the higher end properties versus maybe some of the lower end properties that you have across the portfolio?

Mike, it splits more by market. There is more correlation to market trends than they are to class trends at this point. So, not a huge difference between the two.

So you haven't seen any trading down from the A to Bs as job growth slows or anything like that?

Not that the point, like I said it tends to be, if Jacksonville slow, it will slow across all classes. If Houston is strong, it is strong across all.

Great, thanks.

And our final question comes from Rich Anderson from BMO Capital Markets.

Good morning, guys.

Hi, Rich.

Sorry, I am a little bit lagging, I got in a little bit late on the call, but I do have a big-picture question for you. You are seeing some slowdown in your internal growth prospects. But what do you think of your overall portfolio and your markets, what sort of the long-term average is in terms of your ability to grow from internal sources. Do you think you are there now or do you still think you are above that average?

Rich, I will tell that you I think what we think is going to happen as this economy starts to regain some footing that it's likely that our internal growth rate is better frankly than where it is right now, because we do believe that given a recovering economy and recovering job performance, without the supply side pressure because we are not seeing that right now and we are not going to see it for a while. I think we are going to enjoy a couple of years or so, where just the macro dynamics are such that we are going to see some pretty good performance. And you throw on top of that all the renovation work that we have been executing on for the last couple of years and the higher rent growth prospects that we are going to get out of that. I think on top of sort of these market dynamics, you have got that variable at play. So it kind of goes back to the point I made in my prepared comments. We feel pretty dam good about where the portfolio is right now. We think we are heading into starting really next year into 2010. We are going to be in a really good window. And we like the position of portfolio.

Yeah, and I can recall our conversation and you alluded to this also in the call already, but in terms of real estate taxes, do you think you now have now captured whatever increase you might see this year, or is there a possibility somehow that could still trend up on you during the second part of the year?

Rich, I think we have captured it. Nothing is for certain, but I am probably 80% sure that we have captured it at this point.

Isn't there like a July 1st sort of.

It really September 30th.

September 30th?

Yeah. And it's really a third quarter thing, but I am feeling pretty good about where that will be. We're failure crew, we're maybe just marginally over a crew, but it's going to be very module on that as it does change daily. One other comment I will just make, Rich, and that is going back to your first point and this is something I have sort of harp on a bit, but during the last 10 years, we lost $5 million people out of rental pool, 5 million households out of the rental pool. And with this what's going on in the economy. Those 5 million households I truly believe are going to come back to the rental pool over the next five years, or 10 years and I think that bodes very good for the business that we are in along with the eco boomers that people talk about. So I think we are very well-positioned and particularly in the markets that we are. So I think we've got a good two tore three years ahead of us.

Okay, sounds good. Thank you.

I would like to turn the conference over to our moderator for a wrap up.

Okay, we really don't have any other comments. We appreciate you being on the call this morning. And obviously if you got any other follow-up questions, give us a call. Thank you.

Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.