AMENDMENT NO. 5 TO MASTER REIMBURSEMENT AGREEMENT

EXHIBIT 10.32

AMENDMENT NO. 5 TO MASTER REIMBURSEMENT AGREEMENT

THIS AMENDMENT NO. 5 TO MASTER REIMBURSEMENT AGREEMENT (this “Amendment No. 5” ) amends that certain Master Reimbursement Agreement made and entered into as of June 1, 2001, by and among Fannie Mae, Mid-America Apartments, L.P. and Fairways-Columbia, L.P. (as amended, the “Master Reimbursement Agreement” ) and is made and entered into as of February 23, 2006 by and among Fannie Mae, Mid-America Apartments, L.P., Mid-America Apartment Communities, Inc. and Mid-America Apartments of Texas, L.P. (individually and collectively, “Borrower” ). All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Master Reimbursement Agreement.

RECITALS

WHEREAS, the Borrower has requested and Fannie Mae has agreed to add an Additional Mortgaged Property to the Collateral Pool;

WHEREAS, Fannie Mae and Borrower desire to amend the Master Reimbursement Agreement to add certain provisions and to add the following Additional Mortgaged Property to the Collateral Pool: St. Augustine Apartments located in the City of Jacksonville, Duval County, Florida (the “2006 Additional Mortgaged Property” );

WHEREAS, Prudential Multifamily Mortgage, Inc., a Delaware corporation (the “Lender” ) has agreed to make one or more additional loans to Borrower pursuant to and subject to the terms and conditions of that certain Master Credit Facility Agreement dated as of March 2, 2004 between Borrower and Lender, as assigned by the Lender to Fannie Mae pursuant to the Assignment of Master Credit Facility Agreement and Other Loan Documents dated as of March 2, 2004, and as amended by Amendment No. 1 to Master Credit Facility Agreement dated as of November 17, 2005 (as so amended, the “Credit Agreement” ) among Borrower, Lender and Fannie Mae.

WHEREAS, the obligations of Borrower to Fannie Mae under the Credit Agreement and the related Loan Documents, the Master Reimbursement Agreement and the Reimbursement Security Documents are cross-defaulted and cross-collateralized;

WHEREAS, Fannie Mae and Borrower intend these Recitals to be a material part of this Amendment No. 5.

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the mutual covenants and agreements set forth herein, and other good and valuable consideration, all of which each party agrees constitutes sufficient consideration received at and before the execution hereof, the parties agree as follows:

AGREEMENTS

1.          Section 1.2 is hereby amended by adding the following defined terms:

“2006 Additional Mortgaged Property” means St. Augustine Apartments located in the City of Jacksonville, Duval County, Florida.

2.          Section 1.2 is hereby amended by deleting the definition of “Commitment” in its entirety and replacing such definition with the following definition:

“Commitment” means the aggregate original principal amount of the Bonds. The sum of the Commitment under this Agreement and the “DMBS Loan Commitment” under the Credit Agreement shall not exceed $109,451,000.

3.          Section 1.2 is hereby amended by deleting the definition of “Underwriting Rate” in its entirety and replacing such definition with the following definition:

“Underwriting Rate” means 6.9861% for the Mortgaged Property known as Fairways Apartments, 6.9861% for the Mortgaged Property known as Post House North Apartments, 6.9861% for the Mortgaged Property known as Reflection Pointe Apartments, 6.258% for each of the Four Additional Mortgaged Properties, 6.22% for the Mortgaged Property known as Westbury Creek Apartment, 6.1746% for the Mortgaged Property known as Windridge Apartments, 6.13772% for the Mortgaged Property known as The Park at Hermitage, 6.29552% for the Mortgaged Property known as Travis Station Apartments, 6.26444% for the Mortgaged Property known as Stassney Woods Apartments, 6.185% for the Mortgaged Property known as Runaway Bay Apartments and 6.446% for the Mortgaged Property known as St. Augustine Apartments.

4.          Section 2.2 (Affirmative Covenants) is hereby amended by adding new Sections 2.2(29) and 2.2(30) to read as follows:

2.2(29). Existing Amenities and Leasing Office. The Borrower agrees to maintain and keep on the site of the 2006 Additional Mortgaged Property the leasing office and all amenities currently used in the operation of the Property.

2.2(30). Zoning Compliance. The Borrower will cause the 2006 Additional Mortgage Property and the Adjacent Property (as defined in Section 2.4(16) below) to remain in compliance in all material respects with local zoning laws and regulations.

5.          Section 2.4 (Negative Covenants) is hereby amended by adding a new Section 2.4(16) to read as follows:

2.4(16). Adjacent Property . The parties acknowledge that Mid-America Apartment Communities, Inc. (“MAAC”) owns certain land adjacent to the 2006 Additional Mortgaged Property, as more particularly described on Annex II hereto (the

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“ Adjacent Property ”), and that MAAC is considering constructing additional multifamily residential housing facilities on the Adjacent Property. None of the Adjacent Property nor the additional housing facilities to be constructed thereon will be financed by the Bonds issued to finance the 2006 Additional Mortgaged Property, and the Adjacent Property is not currently a part of the Collateral Pool. The Borrower agrees that:

(a)        For so long as the 2006 Additional Mortgaged Property is part of the Collateral Pool, the Borrower shall not sell or otherwise transfer all or any part of the Adjacent Property to a third party unless (i) the Borrower gives Fannie Mae at least sixty (60) days’ prior written notice of any proposed transfer and (ii) on or prior to the date of any such transfer, the Borrower, if Fannie Mae so directs in writing in its sole and absolute discretion, effects a release of the 2006 Additional Mortgage Property from the Collateral Pool established under this Agreement and the Credit Agreement, including by payment of the Release Price and any associated prepayment premiums, termination fees and all other amounts due under the related Note, the Facility Note and the other Borrower Documents in connection therewith.

(b)        During construction of improvements to the Adjacent Property, the Borrower will not impede access to or undermine the value of the 2006 Additional Mortgaged Property.

(c)        If a default occurs and is continuing under any indebtedness secured by the Adjacent Property (other than indebtedness in favor of Fannie Mae), the Borrower shall give Fannie Mae prompt written notice thereof and, if Fannie Mae so directs in writing in its sole and absolute discretion, Borrower shall effect a release of the 2006 Additional Mortgaged Property from the Collateral Pool established under this Agreement and the Credit Agreement within 30 days of receipt of Fannie Mae’s written direction, including by payment of the Release Price and any associated prepayment premiums, termination fees and all other amounts due under the related Note, the Facility Note and the other Borrower Documents in connection therewith.

6.          The additional provision added to Section 3.13(1) pursuant to Amendment No. 1 is hereby amended by deleting such provision in its entirety and replacing it with the following:

“Notwithstanding that the obligations under each Note and Bond Mortgage relating to the Four Additional Mortgaged Properties, the Two Additional Properties, the 2004 Additional Mortgaged Properties, the 2005 Additional Mortgaged Property and the 2006 Additional Mortgaged Property are not generally personal obligations of the Borrower and notwithstanding that Fannie Mae is a holder of such Notes, each Borrower agrees and acknowledges that the intent of the parties to this Agreement is that each Borrower is and shall remain, except as provided in Section 3.13(2), jointly and severally personally liable to Fannie Mae for the payment and performance of all Obligations

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throughout the term of this Agreement. Consequently, in the event that Fannie Mae becomes the sole holder of such Notes and Bond Mortgages, by its rights of subrogation or otherwise, any amounts owing to Fannie Mae under such Notes or Bond Mortgages shall be joint and several personal obligations of each Borrower. In addition, it is the intent of the parties that the non-recourse liability of the Borrowers under such Notes shall not in any manner or under any circumstances be interpreted or understood to contradict, undermine, negate or nullify that each Borrower is and shall remain, except as provided in Section 3.13(2), jointly and severally personally liable to Fannie Mae for the payment and performance of all Obligations throughout the term of this Agreement.”

7.          Section 8.1 (Events of Default) is hereby amended by adding a new Section 8.1(q) to read as follows:

“(q)       the failure by the Borrower to perform or observe any covenant set forth in Section 2.4(16).”

8.          Schedules 2, 3, 4, 5 and 9 are hereby amended and restated in their entirety as set forth in Annex 1 attached hereto.

9.          By execution and delivery of this Amendment No. 5 by Fannie Mae, Fannie Mae hereby consents to the addition of the 2006 Additional Mortgaged Property to the Fannie Mae Credit Facility as an Additional Mortgaged Property effective as of February 23, 2006 (the “Effective Date ”).

10.        In connection with the addition of the 2006 Additional Mortgaged Property to the Fannie Mae Credit Facility as an Additional Mortgaged Property, Borrower and Fannie Mae acknowledge and agree as follows in relation to such Additional Mortgaged Property:

(a)        The Facility Fee shall be as follows:

(b)        Standby Fee shall be 15 basis points on any unused capacity of the Fannie Mae Credit Facility and/or the Fannie Mae Credit Facility expansion capacity.

(c)        Substitution Fee shall be 75 basis points.

(d)        Collateral Addition Fee shall be 75 basis points.

(e)        Release Fee shall be $15,000 per Collateral Release Property.

(f)        The Strike Rate shall be 6% for the Tax-Exempt Bonds.

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(g)        The Hedge Rate shall be 6% for the Tax-Exempt Bonds.

(h)        The Underwriting Rate shall be 6.446% for the Mortgaged Property known as St. Augustine Apartment.

11.        Fannie Mae hereby waives the requirement of Section 17(a)(5) of the Reimbursement Mortgage and the Conventional Mortgage relating to the Mortgaged Property known as St. Augustine Apartments that Borrower enter into a written contract for management of such Mortgaged Property, provided however, that

(a)        In the event that the Borrower should ever elect to employ an affiliate or third party management company for the management of the Mortgaged Property, the Borrower agrees that (i) the management company and the management agreement to be executed therewith are subject to the prior written approval of Fannie Mae, which approval may be granted or denied in Fannie Mae’s sole and absolute discretion and (ii) any such approved management company shall not receive a management fee greater than 4% of gross collected rents from the Mortgaged Property;

(b)        In the event that the Borrower should ever elect to contract with an affiliate or third party management company for the management of the Mortgaged Property, the Borrower agrees to execute (and to cause any such management company to execute) in favor of Fannie Mae an “Assignment of Management Agreement” on a form approved by Fannie Mae; and

(c)        Borrower acknowledges that Fannie Mae reserves the right, under the Loan Documents, to require independent, professional third party management of the Mortgaged Property if inadequate or at any time after the occurrence of an Event of Default. At any time after an Event of Default shall have occurred, Fannie Mae shall have the right either (i) to direct the Borrower to contract with a third party management company approved by Fannie Mae for the management of the Mortgaged Property or (ii) to assume responsibility for the management of the Mortgaged Property, directly or through its designee. Promptly upon Fannie Mae’s written request after the occurrence of an Event of Default, Borrower shall turn over to Fannie Mae all books and records relating to the Mortgaged Property (copies of which may be retained by Borrower, at Borrower's expense), together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Fannie Mae may reasonably require. Borrower shall cooperate with Fannie Mae in the transfer of management responsibilities to Fannie Mae or its designee.

12.        This Amendment No. 5 shall be construed, interpreted and enforced in accordance with, and the rights and remedies of the parties hereto shall be governed pursuant to, the provisions of Section 9.3 of the Master Reimbursement Agreement (entitled “Governing Law; Choice of Law; Consent to Jurisdiction; Waivers of Jury Trial”), which provisions are hereby incorporated into this Amendment No. 4 by this reference to the fullest extent as if the text of such provisions were set forth in their entirety herein.

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13.        Except as herein expressly modified or amended, all terms and covenants, and provisions of the Master Reimbursement Agreement are hereby ratified and confirmed by the Borrower and Fannie Mae and remain in full force and effect.

14.        The Borrower represents and warrants to Fannie Mae as follows:

(a)        The 2006 Additional Mortgage Property and the Adjacent Property comply in all material respects with local zoning laws and regulations.

(b)        All representations and warranties set forth in the Master Reimbursement Agreement are true and correct as of February 23, 2006.

(c)        There exists no Event of Default or Potential Event of Default as described in the Master Reimbursement Agreement as of February 23, 2006.

15.        This Amendment No. 5 may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to be signed, sealed, and delivered by their duly authorized representatives as of the date first above written.

MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENT COMMUNITIES, INC. , a Tennessee corporation

By: __________________________

Al Campbell

Senior Vice President and Treasurer

MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership

By: __________________________

John A. Good

Assistant Secretary

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FANNIE MAE

Name:

Title:

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ANNEX 1

(See attached schedules)

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SCHEDULE 2

BONDS, ISSUERS AND MORTGAGED PROPERTIES