8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 1, 2016

Preferred Apartment Communities, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland	001-34995	27-1712193
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3284 Northside Parkway NW, Suite 150, Atlanta, Georgia	30327
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code:  (770) 818-4100

_____________________

(Former name or former address, if changed since last report)

_____________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02    Results of Operations and Financial Conditions.

On August 1, 2016, the Company announced its financial results for second quarter 2016. A copy of the Company's earnings press release is furnished as Exhibit 99.1 to this report on Form 8-K. A copy of the Company's Supplemental Financial Data for second quarter 2016 is furnished as Exhibit 99.2 to this report on Form 8-K.

This information, including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section. This information, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any of those filings.

Item 9.01    Financial Statements and Exhibits.

(d)    Exhibits.

99.1	Press Release issued August 1, 2016
99.2	Preferred Apartment Communities, Inc.'s Supplemental Financial Data for the period ended June 30, 2016

1

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PREFERRED APARTMENT COMMUNITIES, INC.

(Registrant)

Date: August 1, 2016	By:	/s/ Jeffrey R. Sprain
		Jeffrey R. Sprain
		Senior Vice President, General Counsel and Secretary

EX-99.1

Preferred Apartment Communities, Inc. Reports Results for Second Quarter 2016

Atlanta, GA, August 1, 2016

Preferred Apartment Communities, Inc. (NYSE: APTS) ("we", "our", the "Company" or "Preferred Apartment Communities") today reported results for the quarter ended June 30, 2016. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of Common Stock and Class A Units of the Company's operating partnership ("Class A OP Units") outstanding.

"We are pleased with our second quarter 2016 results and especially pleased with the quality of the assets we continue to add to our portfolio" said John A. Williams, Preferred Apartment Communities' Chairman and Chief Executive Officer. Williams added, "We believe our portfolio growth leaves us well positioned to meet or exceed our goals for 2016."

Second Quarter 2016

The Company reported net loss attributable to common stockholders under U.S. generally accepted accounting principles, or GAAP, for second quarter 2016 of $(9,239,588), or approximately $(0.40) per share, compared to net loss attributable to common stockholders for second quarter 2015 of $(3,679,421), or approximately $(0.17) per share. The increase in the second quarter net loss was primarily driven by additional depreciation and amortization expense of approximately $10.0 million and additional real estate taxes of approximately $3.2 million, both resulting from the growth of the Company described in more detail below. Second quarter net loss was also increased by additional (a) acquisition costs of approximately $1.0 million; (b) insurance, professional and other expenses of approximately $0.3 million related to the extension of the management agreement; and (c) general and administrative costs of approximately $0.7 million.

The Company reported Normalized Funds From Operations Attributable to Common Stockholders and Unitholders, or NFFO, for second quarter 2016 of $7,593,567, or $0.31 per share, compared with NFFO for second quarter 2015 of $6,027,898 or $0.27 per share. This represents an increase of approximately 26.0% in NFFOand an increase of approximately 14.8% in NFFO per share. The second quarter NFFO increase was primarily driven by the growth of the Company as described in more detail below. NFFO is calculated by beginning with Funds From Operations Attributable to Common Stockholders and Unitholders, or FFO, as defined by the National Association of Real Estate Investment Trusts, or NAREIT, and making certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the Company’s ongoing operating performance.

The Company reported Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders, or AFFO, for second quarter 2016 of $7,399,071, or $0.31 per share, compared with AFFO for second quarter 2015 of $6,652,938, or $0.30 per share. This represents an increase of approximately 11.2% in AFFO and a 3.3% increase in AFFO per share. As with NFFO, the second quarter AFFO increase was primarily driven by the growth of the Company as described in more detail below, offset by higher amortization costs from acquisitions and increased capital expenditures and leasing costs. AFFO is calculated by beginning with NFFO and adjusting for certain items that the Company believes by their nature are not comparable from period to period or tend to obscure the Company's actual operating performance. The items adjusted are discussed below in more detail.

The Company reported FFO for second quarter 2016 of $4,330,394, or $0.18 per share, compared with FFO of $4,213,904 for second quarter 2015, or $0.19 per share. This represents an increase of approximately 2.8% in FFO and a (5.3)% decrease in FFO per share. As with NFFO and AFFO, the second quarter FFO increase was primarily driven by the growth of the Company as described in more detail below, offset by the additional acquisition costs, insurance, professional and other expenses, and general and administrative costs described above. In addition, FFO per share was negatively affected by additional weighted average shares of Common Stock and Class A OP Units outstanding for the second quarter. For second quarter 2016, there were 24,212,009 basic weighted average shares of Common Stock and Class A OP Units outstanding, compared to 22,496,023 basic weighted average shares of Common Stock and Class A OP Units outstanding for second

quarter 2015, an increase of approximately 7.6%. At June 30, 2016, the Company had outstanding: (1) 23,723,168 shares of Common Stock, including 30,990 shares of restricted Common Stock, and (2) 886,168 Class A OP Units.

NFFO, AFFO and FFO are all calculated after deductions for all preferred stock dividends. A reconciliation of net income (loss) attributable to common stockholders to NFFO, AFFO and FFO is included in the Supplemental Financial Data Report attached to this press release on the Company's website and is available using the following link: http://investors.pacapts.com/download/2Q16_Earnings_and_Supplemental_Data.pdf.

The Company reported total revenues for second quarter 2016 of $45,853,944, compared to total revenues for second quarter 2015 of $24,088,827, an increase of approximately $21.8 million, or approximately 90.4%.

The increases in NFFO, AFFO and revenue were primarily due to the growth of the Company which included: (1) a full quarter of operating results from the twelve multifamily communities and the five grocery-anchored retail shopping centers acquired in last three quarters of 2015 and the first quarter of 2016, which included additional rental revenue and additional operational expenses; (2) a full quarter of income from additional real estate loans that were originated in last three quarters of 2015 and first quarter of 2016; (3) a partial quarter of income from additional real estate loans that were originated in second quarter 2016 and (4) a partial quarter of operating results from two multifamily communities and seven grocery-anchored retail shopping centers acquired in second quarter 2016, whereas second quarter 2015 operating results did not reflect the effects of the these new investments. However, the increases in second quarter 2016 were partially offset by the payoff of four of our real estate loans in connection with our acquisition of the underlying projects in second quarter 2015 and first quarter 2016.

Multifamily Same Store Financial Data

The Company presents same store operating results for the Company’s multifamily communities that have been owned for at least 15 full months, enabling comparisons of the current reporting period to the prior year comparative period. The Company excludes the same store operating results of properties for which construction of adjacent phases have commenced (the Company holds a real estate loan partially supporting a third phase of the Summit Crossing multifamily community, which is excluded as well). For the periods presented, same store operating results consist of the operating results of our Stone Rise, Lake Cameron, Ashford Park, McNeil Ranch Enclave at Vista Ridge, Stoneridge Farms at Hunt Club, Vineyards, Avenues at Cypress, and Avenues at Northpointe multifamily communities. For the Company's same store communities, rental revenues increased 4.2%, total revenues increased 4.7% and operating expenses increased 5.8% (primarily driven by a 16.5% increase in property taxes) during second quarter 2016, all compared to second quarter 2015, resulting in a 3.7% increase in Same Store NOI. Same Store NOI is a supplemental non-GAAP financial measure. A reconciliation of Same Store NOI to net income (loss) is included in the Supplemental Financial Data Report, which is attached to this press release on the Company's website and is available using the following link: http://investors.pacapts.com/download/2Q16_Earnings_and_Supplemental_Data.pdf.

Total Assets and Leverage

As of June 30, 2016, the Company's total assets, on a GAAP basis, were approximately $1.8 billion compared to approximately $0.9 million as of June 30, 2015, an increase of approximately $0.85 billion, or approximately 93.3%. This growth was driven almost entirely by the acquisitions and new loans described above.

At June 30, 2016, the Company's leverage as measured by the ratio of its debt to the undepreciated book value of its total assets was approximately 56.9%.

Capital Markets Activities

The Company's registration statement on Form S-3 (Registration No. 333-183355) (the "Follow-On Registration Statement"), was declared effective by the Securities and Exchange Commission (the "SEC") on October 11, 2013. This registration

statement allows us to offer up to a maximum of 900,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock and one Warrant to purchase up to 20 shares of Common Stock (the "Follow-On Offering"). The price per Unit is $1,000. The Series A Redeemable Preferred Stock ranks senior to the Company's Common Stock with respect to payment of dividends and distribution of amounts upon liquidation, dissolution and winding up. The Units are being offered by International Assets Advisory, LLC, the dealer manager for the Follow-On Offering, on a "reasonable best efforts" basis. The Follow-On Offering commenced sales on January 1, 2014, immediately following the December 31, 2013 expiration of the earlier registration statement on Form S-11, as amended (File No. 333-176604), related to the Company's offering of up to 150,000 Units (the "Primary Series A Offering"). The Follow-On Offering will terminate on October 11, 2016, as the Company exercised its one-year extension option, unless earlier terminated by us. The Company intends to invest substantially all the net proceeds of the Follow-On Offering in connection with the acquisition of multifamily communities, other real estate-related investments (including the acquisition of retail shopping centers) and general working capital purposes. During second quarter 2016, we issued and sold 101,569 Units resulting in gross proceeds of approximately $101 million. In addition, during second quarter 2016, we issued 616,800 shares of common stock pursuant to the exercise of warrants issued in these two offerings, resulting in aggregate gross proceeds of approximately $6.4 million. On June 9, 2015, the Company filed a registration statement on Form S-3 (Registration No. 333-211924) (the "Third Series A Registration Statement"). This registration statement, once effective, will allow us to offer up to a maximum of 2,000,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock and one Warrant to purchase up to 20 shares of Common Stock (the "Third Series A Offering"). In addition, because the Company filed the Third Series A Registration Statement, the Company may extend the Follow-On Offering until the earlier of the effective date of the Third Series A Registration Statement or 180 days after October 11, 2016 pursuant to SEC Rule 415(a)(5) and (a)(6).

On July 18, 2016, the Company filed a prospectus for its registration statement on Form S-3 (Registration No. 333-211178) to issue and sell up to $150 million of Common Stock from time to time in an "at the market" offering (the "ATM Offering") through JonesTrading Institutional Services LLC, FBR Capital Markets & Co, and Canaccord Genuity Inc, as its sales agents. The Company intends to use any proceeds from the ATM Offering to repay outstanding amounts under theoperating partnership's $70.0 million revolving credit facility and its $35.0 million term loan facility and for other general corporate purposes, including making investments in accordance with the Company's investment objectives.

Dividends

Quarterly Dividends on Common Stock and Class A OP Units

On May 5, 2016, the Company declared a quarterly dividend on its Common Stock of $0.2025 per share for second quarter 2016. This represents a 12.5% increase in our common stock dividend from our second quarter 2015 common stock dividend of $0.18 per share, and an annualized dividend growth rate of 10.9% since June 30, 2011, the first quarter end following our initial public offering in April 2011. The second quarter dividend was paid on July 15, 2016 to all stockholders of record on June 15, 2016. In conjunction with the Common Stock dividend, the Company's operating partnership declared a distribution on its Class A OP Units of $0.2025 per unit for second quarter 2015, which was paid on or around July 15, 2016 to all Class A OP Unit holders of record as of June 15, 2016.

Monthly Dividends on Series A Redeemable Preferred Stock

The Company declared and paid monthly dividends of $5.00 per share on its Series A Redeemable Preferred Stock, which totaled approximately $9.4 million for the three-month period ended June 30, 2016 and represents a 6% annual yield.

Multifamily Physical and Average Economic Occupancy

For the three-month period ended June 30, 2016, the Company's multifamily average occupancy was 94.7%. The Company defines "multifamily average occupancy" as market rent reduced by vacancy losses, expressed as a percentage. All our multifamily properties are included in this calculation except for properties which are not yet stabilized, which we define as properties having first achieved 93% physical occupancy (Citilakes was not yet stabilized at the beginning of the second quarter), properties which are owned for less than the entire reporting period (Avalon Park), and properties which a

re undergoing significant capital projects or are adding additional phases (Summit Crossing, Stone Creek, Sandstone Creek and Baldwin Park).

Retail Occupancy

As of June 30, 2016, our retail portfolio was 94.4% leased. We define percent leased as the percentage of gross leasable area that is leased, including lease agreements that have been fully executed which have not yet commenced.

2016 Guidance:    

The Company does not provide guidance on net income (loss) per share. The Company is actively adding properties and real estate loans to its real estate portfolio and the specific timing of the closing of acquisitions is difficult to predict. Such activity by nature can cause material variation in reported acquisition costs, depreciation and amortization expense and interest revenue. Since net income (loss) per share is calculated net of acquisition costs and depreciation and amortization expense, net income (loss) results can fluctuate widely. For this reason, the Company is unable to reasonably forecast this measure.

The Company currently projects NFFO to be in the range of $1.25 - $1.29 per share for the full year 2016.

The Company currently projects total revenues to be in the range of $180 million - $205 million for the full year 2016.

Conference Call and Supplemental Data

Preferred Apartment Communities will hold its quarterly conference call on Tuesday, August 2, 2016 at 11:00 a.m. Eastern Time to discuss its second quarter 2016 results. To participate in the conference call, please dial in to the following:

Live Conference Call Details

Domestic Dial-in Number: (800) 860-2442

International Dial-in Number: (412) 858-4600

Company: Preferred Apartment Communities, Inc.

Date: Tuesday, August 2, 2016

Time: 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)

The live broadcast of Preferred Apartment Communities' second quarter conference call will be available online, on a listen-only basis, at the company's website, www.pacapts.com, under "Investors" and then click on the "Upcoming Events" link. A replay of the call will be archived on Preferred Apartment Communities' website under Investors/Audio Archive.

Preferred Apartment Communities also produces a Supplemental Financial Data package that provides additional information regarding the Company's overall financial position. This Supplemental Financial Data is considered an integral part of, and is attached to, this earnings release and is also available on the Company's website at http://investors.pacapts.com/download/2Q16_Earnings_and_Supplemental_Data.pdf, or by contacting Leonard A. Silverstein in Investor Relations at (770) 818-4100.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures in this press release. The non-GAAP financial measures include FFO, NFFO, AFFO and Same Store NOI. The definitions of these non-GAAP financial measures are summarized below. The Company believes that these measures are helpful to investors in measuring financial performance and comparing such performance to other REITs.

Funds From Operations Attributable to Common Stockholders and Unitholders ("FFO")

Analysts, managers and investors have, since the first real estate investment trusts were created, made certain adjustments to reported net income amounts under U.S. GAAP in order to better assess these vehicles’ liquidity and cash flows. FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 White Paper on Funds From Operations, which was most recently revised in 2012, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how Net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. The NAREIT definition of FFO (and the one reported by the Company) is:

Net income/loss:

• excluding impairment charges on and gains/losses from sales of depreciable property;

• plus depreciation and amortization of real estate assets and deferred leasing costs; and

• after adjustments for the Company's proportionate share of unconsolidated partnerships and joint ventures.

Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing the Company’s reported FFO results to those of other companies. The Company’s FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. The Company believes FFO is useful to investors as a supplemental gauge of our operating and cash-generating results. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Normalized Funds From Operations Attributable to Common Stockholders and Unitholders ("NFFO")

Normalized FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the Company’s ongoing operating performance. For example, since the Company is acquiring properties on a regular basis, it incurred substantial costs related to such acquisitions, which are required under GAAP to be recognized as expenses when they are incurred. The Company adds back any such acquisition and pursuit costs, including costs incurred in connection with obtaining short term debt financing for acquisitions and beginning January 1, 2016, amortization of loan coordination fees, to FFO in its calculation of NFFO since such costs are not representative of our fund generating results on an ongoing basis. The Company also adds back costs incurred related to the extension of our management agreement with our Manager, realized losses on debt extinguishment and any non-cash dividends in this calculation. NFFO figures reported by us may not be comparable to those NFFO figures reported by other companies.

We utilize NFFO as a measure of the operating performance of our portfolio of real estate assets. We believe NFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other real estate companies that are not as involved in ongoing acquisition activities. NFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders ("AFFO")

AFFO makes further adjustments to NFFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. The Company calculates AFFO as:

NFFO, plus:

• non-cash equity compensation to directors and executives;

• amortization of loan closing costs, excluding costs incurred in connection with obtaining short term financing related to acquisitions;

• depreciation and amortization of non-real estate assets;

• net loan fees received; and

• deferred interest income received;

less:

• non-cash loan interest income;

• cash paid for pursuit costs on abandoned acquisitions;

• cash paid for loan closing costs;

• amortization of acquired real estate intangible liabilities; and

• normally-recurring capital expenditures and capitalized retail direct leasing costs.

AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other real estate companies. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Same Store Net Operating Income

The Company uses same store net operating income as an operational metric for properties the Company has owned for at least 15 full months, enabling comparisons of those properties’ operating results between the current reporting period and the prior year comparative period. The Company defines net operating income as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. The Company believes that net operating income is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. Net operating income is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for its closest GAAP-compliant measure, net income/loss.

About Preferred Apartment Communities, Inc.

Preferred Apartment Communities, Inc. is a Maryland corporation formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States. As part of our business strategy, we may enter into forward purchase contracts or purchase options for to-be-built multifamily communities and we may make real estate related loans, provide deposit arrangements, or provide performance assurances, as may be necessary or appropriate, in connection with the development of multifamily communities and other properties. As a secondary strategy, we may acquire or originate senior mortgage loans, subordinate loans or mezzanine debt secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily related assets and invest not more than 20% of our assets, subject to any temporary increase unanimously approved by our board of directors, in other real estate related investments such as grocery-anchored shopping centers, senior mortgage loans, subordinate loans or mezzanine debt secured by interests in grocery-anchored shopping centers, membership or partnership interests in grocery-anchored shopping centers and other grocery-anchored shopping center related assets as determined by our manager as appropriate for us. At June 30, 2016, the Company was the approximate 96.4% owner of Preferred Apartment Communities Operating Partnership, L.P., or the Operating Partnership. Preferred Apartment Communities, Inc. has elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with its tax year ended December 31, 2011.

Forward-Looking Statements

This press release may contain 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. As a general matter, forward-looking statements reflect our current expectations and projections relating to our financial condition, results of operations, plans, guidance, goals, objectives, future performance and business. These statements may be identified by the use of forward-looking terminology such as "may," "will," "expects," "should," "plans," "estimates," "anticipates," "projects," "intends," "believes," "goals," "outlook" and similar expressions.

The forward-looking statements contained in this press release and in our Supplemental Financial Data are based upon our historical performance, current plans, estimates, expectations and other factors we believe are appropriate under the circumstances. The inclusion of this forward-looking information is inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: our business and investment strategy; our projected operating results; our guidance and goals; estimates relating to our ability to make distributions to our stockholders in the future; availability of qualified personnel; local and national market conditions and trends in our industry; demand for and lease-up of apartment homes, supply of competitive housing product, and other economic conditions; availability of debt and/or equity financing and availability on favorable terms; changes in our asset values; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; and economic trends and economic recoveries.

Additional discussions of risks, uncertainties and certain other important information appear in our publicly available filings made and to be made with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which we intend to file later this month, and our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 14, 2016 and our Quarterly Report on Form 10-Q filed with the SEC on May 9, 2016, all under the headings "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations." All information in this release is as of August 1, 2016. The Company does not undertake a duty to update forward-looking statements, including its projected operating results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community.

Additional Information

The SEC has declared effective the registration statement (including prospectus) filed by the Company for each of the offerings to which this communication may relate. Before you invest, you should read the final prospectus, and any prospectus supplements, forming a part of the registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering to which this communication may relate. In particular, you should carefully read the risk factors described in the final prospectus and in any related prospectus supplement and in the documents incorporated by reference in the final prospectus and any related prospectus supplement to which this communication may relate. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Company or its dealer manager, International Assets Advisory, LLC, with respect to the Follow-On Offering, and JonesTrading Institutional Services LLC, with respect to the ATM Offering, will arrange to send you a prospectus if you request it by calling Leonard A. Silverstein at (770) 818-4100, 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.

The final prospectus for the Follow-On Offering, dated October 11, 2013, can be accessed through the following link:

http://www.sec.gov/Archives/edgar/data/1481832/000148183213000128/a424b3prospectus900m.htm

The ATM Offering prospectus, dated July 18 2016, including a base prospectus, dated May 17, 2016, can be accessed through the following link:

https://www.sec.gov/Archives/edgar/data/1481832/000148183216000152/atmprospectus.htm

SOURCE: Preferred Apartment Communities, Inc.

Preferred Apartment Communities, Inc.

Leonard A. Silverstein 770-818-4147

President and Chief Operating Officer

Email: lsilverstein@pacapts.com

EX-99.2

Table of Contents

Company Profile	2
Financial Summary of the Second Quarter 2016	3
2016 Guidance	3
Highlights of the Second Quarter 2016 and Subsequent Events	3
Consolidated Statements of Operations	6
Reconciliation of Funds From Operations Attributable to Common Stockholders and Unitholders, Normalized Funds From Operations Attributable to Common Stockholders and Unitholders, and Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders to Net Loss Attributable to Common Stockholders	7
Notes to Reconciliation of Funds From Operations Attributable to Common Stockholders and Unitholders, Normalized Funds From Operations Attributable to Common Stockholders and Unitholders, and Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders to Net Loss Attributable to Common Stockholders	8
Consolidated Balance Sheets	9
Consolidated Statements of Cash Flows	10
Real Estate Loan Portfolio	11
Multifamily Communities	12
Capital Expenditures	12
Retail Portfolio	14
Multifamily Same Store Financial Data	15
Definitions of Non-GAAP Measures	16

Cover photo: Village at Baldwin Park, Orlando, Florida

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 1

Preferred Apartment Communities, Inc.

Preferred Apartment Communities, Inc. (NYSE: APTS), or the Company, is a Maryland corporation formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States.As part of our business strategy, we may enter into forward purchase contracts or purchase options for to-be-built multifamily communities and we may make real estate related loans, provide deposit arrangements, or provide performance assurances, as may be necessary or appropriate, in connection with the construction of multifamily communities and other properties. As a secondary strategy, we also may acquire or originate senior mortgage loans, subordinate loans or mezzanine debt secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily related assets and invest not more than 20% of our assets, subject to any temporary increase unanimously approved by our board of directors, in other real estate related investments, such as grocery-anchored shopping centers, senior mortgage loans, subordinate loans or mezzanine debt secured by interests in grocery-anchored shopping centers, membership or partnership interests in grocery-anchored shopping centers and other grocery-anchored shopping center related assets as determined by Preferred Apartment Advisors, LLC, or our Manager, as appropriate for us. At June 30, 2016, the Company was the approximate 96.4% owner of Preferred Apartment Communities Operating Partnership, L.P., or the Operating Partnership. We elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with our tax year ended December 31, 2011.

Forward-Looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Estimates of future earnings, guidance, goals and performance are, by definition, and certain other statements in this Supplemental Financial Data Report may constitute, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy.

Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Supplemental Financial Data Report.

We refer you to the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the twelve months ended December 31, 2015 that was filed with the Securities and Exchange Commission, or SEC, on March 14, 2016, which discusses various factors that could adversely affect our financial results. Such risk factors and information may have been updated or supplemented by our Form 10-Q and Form 8-K filings and other documents filed after March 14, 2016 and from time to time with the SEC.

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 2

Financial Summary of the Second Quarter 2016

(See Definitions of Non-GAAP Measures on page 15)

	Three months ended:						Change inc (dec):
	6/30/2016			6/30/2015			Amount			Percentage
Revenues	$	45,853,944		$	24,088,827		$	21,765,117		90.4	%
Net loss attributable to common stockholders	$	(9,239,588	)	$	(3,679,421	)	$	(5,560,167	)	151.1	%
Net loss per share of Common Stock	$	(0.40	)	$	(0.17	)	$	(0.23	)	135.3	%
FFO	$	4,330,394		$	4,213,904		$	116,490		2.8	%
FFO per share (1)	$	0.18		$	0.19		$	(0.01	)	(5.3	)%
Acquisition costs and other adjustments	3,263,173			1,813,994			$	1,449,179		79.9	%
NFFO	$	7,593,567		$	6,027,898		$	1,565,669		26.0	%
NFFO per share (1)	$	0.31		$	0.27		$	0.04		14.8	%
AFFO (plus preferred dividends)	16,843,353			10,743,495			$	6,099,858		56.8	%
Preferred dividends	(9,444,282		)	(4,090,557		)
AFFO	$	7,399,071		$	6,652,938		$	746,133		11.2	%
AFFO per share (1)	$	0.31		$	0.30		$	0.01		3.3	%
Dividends per share of Common Stock	$	0.2025		$	0.18		$	0.0225		12.5	%
Cash flow from operations	$	19,469,645		$	10,562,240		$	8,907,405		84.3	%
Total assets	$	1,757,008,533		$	909,057,804		$	847,950,729		93.3	%
Weighted average shares of Common Stock
and Units outstanding	24,212,009			22,496,023

(1)“Per share” refers to per weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliation of Funds From Operations Attributable to Common Stockholders and Unitholders, Normalized Funds From Operations Attributable to Common Stockholders and Unitholders, and Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders to Net Loss Attributable to Common Stockholders and Definitions of Non-GAAP Measures on pages 6 and 15.

2016 Guidance:

Net income (loss) per share - We are actively adding properties and real estate loans to our real estate portfolio and the specific timing of the closing of acquisitions is difficult to predict. Such activity by nature can cause material variation in our reported acquisition costs, depreciation and amortization expense, and interest revenue. Since net income (loss) per share is calculated net of acquisition costs and depreciation and amortization expense, our net income (loss) results can fluctuate widely. For this reason, we are unable to reasonably forecast this measure.

NFFO - We currently project NFFO to be in the range of $1.25 - $1.29 per share⁽¹⁾ for the full year 2016.

Revenue- We currently project total revenues to be in the range of $180 million - $205 million for the full year 2016.

Highlights of the Second Quarter 2016 and Subsequent Events

• Normalized Funds From Operations Attributable to Common Stockholders and Unitholders, or NFFO, was $7,593,567, or $0.31 per share for the second quarter 2016, an increase of 14.8% on a per share basis from our NFFO result of $6,027,898, or $0.27 per share for the second quarter 2015. NFFO was $14,606,141, or $0.61 per share for the six months ended June 30, 2016, an increase of 22.0% on a per share basis from our NFFO result of $11,230,001, or $0.50 per share for the 2015 period.

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 3

• Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders, or AFFO, was $7,399,071, or $0.31 per share for the second quarter 2016, an increase of 3.3% on a per share basis from our AFFO result of $6,652,938, or $0.30 per share for the second quarter 2015. AFFO was $16,334,938 , or $0.68 per share for the six months ended June 30, 2016, an increase of 30.8% on a per share basis from our AFFO result of $11,593,284, or $0.52 per share for the 2015 period. AFFO is calculated after deductions for all preferred dividends.

• Net loss attributable to common stockholders was $9,239,588, or $0.40 per share of Common Stock for the second quarter 2016, versus $3,679,421, or $0.17 per share of Common Stock for the second quarter 2015, and a net loss of $20,423,703, or $0.88 per share of Common Stock for the six months ended June 30, 2016, versus a net loss of $7,614,411, or $0.35 per share of Common Stock for the six months ended June 30, 2015. These results are reflective of non-cash depreciation and amortization expense of $17,969,975 and $7,927,849 for the respective second quarter periods and $33,316,701 and $15,873,277 for the respective six month periods.

• As of June 30, 2016, our total assets were approximately $1.8 billion, an increase of approximately $0.85 billion, or 93.3% compared to our total assets of approximately $0.9 billion at June 30, 2015.

• Total revenues for the second quarter 2016 were approximately $45.9 million, an increase of approximately $21.8 million, or 90.4%, compared to approximately $24.1 million for the second quarter 2015.

• Cash flow from operations for the second quarter 2016 was approximately $19.5 million, an increase of approximately $8.9 million, or 84.3%, compared to approximately $10.6 million for the second quarter 2015.

• Our Common Stock dividend of $0.2025 per share for the second quarter 2016 represents a growth rate of 12.5% from our second quarter 2015 dividend of $0.18 per share and a growth rate of approximately 10.9% on an annualized basis since June 30, 2011, the first quarter end following our initial public offering in April 2011.

• At June 30, 2016, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 56.9%.

• For the second quarter 2016, our average occupancy was 94.7%. As of June 30, 2016, our retail portfolio was 94.4% leased.

• For the second quarter 2016, our NFFO payout ratio to our Common Stockholders and Unitholders was approximately 65.2% and our AFFO payout ratio to Common Stockholders and Unitholders was approximately 66.9%. ⁽²⁾ 

• For the second quarter 2016, our NFFO payout ratio (before the deduction of preferred dividends) to our Series A Preferred Stockholders was approximately 55.4% and our AFFO payout ratio (before the deduction of preferred dividends) to our Series A Preferred Stockholders was approximately 56.1%. ⁽²⁾ 

• On May 19, 2016, we sold Trail Creek Apartments, a 300-unit multifamily community in Hampton, Virginia, and collected net proceeds from the sale of approximately $10.5 million and realized a gain on the sale of approximately $4.3 million.

• On April 19, 2016, we closed on a real estate investment loan of up to approximately $9.4 million in support of a proposed second phase of a 140-unit, 556-bed student housing project adjacent to the campus of Texas Tech University in Lubbock, Texas. The loan pays current monthly interest of 8.5% per annum and accrues deferred interest of 5.0% per annum. We also received a purchase option to acquire the property upon stabilization.

• During the second quarter 2016, we acquired a 219-unit, 679-bed student housing community located in Tallahassee, Florida and a 487-unit multifamily community located in Orlando, Florida, We also acquired seven grocery-anchored shopping centers located in South Carolina, Georgia, Alabama and Tennessee, comprising approximately 607,000 aggregate square feet of gross leasable area.

• With the closing of the acquisitions and sale referenced above, as of June 30, 2016 we owned 22 multifamily communities consisting of an aggregate of 7,487 units, one 219-unit student housing community and 22 grocery-anchored shopping centers comprising an aggregate of approximately 1,960,000 square feet of gross leasable area. Upon completion of all the projects partially financed by our real estate loan portfolio and if we were to acquire all the underlying properties, we would own 20

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 4

additional multifamily communities, comprising an aggregate of 4,839 units, including eight student housing communities comprising an aggregate of 5,374 beds, and one retail shopping center comprising approximately 212,800 square feet of gross leasable area. We evaluate each project individually and we can make no assurance that we will acquire any of the underlying properties.

• On July 1, 2016, we converted approximately $12.5 million of the principal amount due on our City Vista real estate loan investment into a 96% equity ownership interest in a joint venture that owns the underlying 272-unit apartment community in Pittsburgh, Pennsylvania.

• On July 15, 2016, we acquired a grocery-anchored shopping center comprising 301,711 square feet of gross leasable area located in the Atlanta, Georgia market.

• On July 14, 2016, our earnest money deposit of $20.0 million on the purchase of eight grocery-anchored shopping centers comprising an aggregate of approximately 1.1 million square feet of gross leasable area became nonrefundable. The aggregate purchase price of the centers is approximately $209.1 million. We expect to close seven of the eight shopping centers in August 2016. The remaining shopping center is expected to close in late third quarter or fourth quarter 2016, if the seller does not exercise its right to exclude this property from the transaction.

⁽¹⁾ “Per share” refers to per weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliation of Funds From Operations Attributable to Common Stockholders and Unitholders, Normalized Funds From Operations Attributable to Common Stockholders and Unitholders, and Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders to Net Loss Attributable to Common Stockholders and Definitions of Non-GAAP Measures on pages 6 and 15.

⁽²⁾ We calculate the NFFO and AFFO payout ratios to Common Stockholders and Unitholders as the ratio of Common Stock dividends and distributions to Unitholders to NFFO or AFFO, respectively. We calculate the NFFO and AFFO payout ratios to Series A Preferred Stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and NFFO or AFFO, respectively. See Definitions of Non-GAAP Measures on page 15.

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 5

Preferred Apartment Communities, Inc.
Consolidated Statements of Operations
(Unaudited)
	Three months ended June 30,
	2016			2015
Revenues:
Rental revenues	$	30,966,738		$	14,720,482
Other property revenues	4,308,360			2,157,800
Interest income on loans and notes receivable	6,847,724			5,582,871
Interest income from related parties	3,731,122			1,627,674
Total revenues	45,853,944			24,088,827
Operating expenses:
Property operating and maintenance	4,356,923			2,545,578
Property salary and benefits reimbursement to related party	2,516,605			1,308,832
Property management fees	1,356,409			655,139
Real estate taxes	5,494,608			2,327,472
General and administrative	1,191,520			463,298
Equity compensation to directors and executives	618,867			577,543
Depreciation and amortization	17,969,975			7,927,849
Acquisition and pursuit costs	2,490,566			669,342
Acquisition fees to related parties	274,176			1,098,471
Asset management fees to related party	2,958,991			1,570,956
Insurance, professional fees, and other expenses	1,571,514			644,202
Total operating expenses	40,800,154			19,788,682
Contingent asset management and general and administrative expense fees	(451,684		)	(809,159		)
Net operating expenses	40,348,470			18,979,523
Operating income	5,505,474			5,109,304
Interest expense	9,559,501			4,688,468
(Loss) income before gain on sale of real estate	(4,054,027		)	420,836
Gain on sale of real estate, net of disposition expenses	4,271,506			—
Net income	217,479			420,836
Consolidated net income attributable to non-controlling interests	(7,961		)	(4,276		)
Net income attributable to the Company	209,518			416,560
Dividends declared to Series A preferred stockholders	(9,444,282		)	(4,090,557		)
Earnings attributable to unvested restricted stock	(4,824		)	(5,424		)
Net loss attributable to common stockholders	$	(9,239,588	)	$	(3,679,421	)
Net loss per share of Common Stock available to common stockholders,
basic and diluted	$	(0.40	)	$	(0.17	)
Dividends per share declared on Common Stock	$	0.2025		$	0.18
Weighted average number of shares of Common Stock outstanding,
basic and diluted	23,325,663			22,215,663

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 6

Reconciliation of Funds From Operations Attributable to Common Stockholders and Unitholders,
Normalized Funds From Operations Attributable to Common Stockholders and Unitholders, and
Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders
to Net Loss Attributable to Common Stockholders (A)
		Three months ended:
		06/30/2016			06/30/2015
Net loss attributable to common stockholders (See note 1)		$	(9,239,588	)	$	(3,679,421	)
Add:	Loss attributable to non-controlling interests (See note 2)	7,961			4,276
	Depreciation of real estate assets	12,639,224			6,132,444
	Amortization of acquired real estate intangible assets and deferred leasing costs	5,194,303			1,756,605
Less:	Gain on sale of real estate	(4,271,506		)	—
Funds from operations attributable to common stockholders and Unitholders		4,330,394			4,213,904
Add:	Acquisition and pursuit costs	2,764,742			1,767,813
	Loan cost amortization on acquisition term note (See note 3)	32,974			46,181
	Amortization of loan coordination fees paid to the Manager (See note 4)	155,683			—
	Costs incurred from extension of management agreement with the Manager (See note 5)	309,774			—
Normalized funds from operations attributable to common stockholders and Unitholders		$	7,593,567		$	6,027,898
	Non-cash equity compensation to directors and executives	618,867			577,543
	Amortization of loan closing costs (See note 6)	513,455			307,114
	Depreciation/amortization of non-real estate assets	136,448			38,800
	Net loan fees received (See note 7)	422,857			349,643
	Deferred interest income received (See note 8)	2,667,051			1,926,880
Less:	Non-cash loan interest income (See note 7)	(3,268,168		)	(2,046,750		)
	Cash paid for loan closing costs	(9,042		)	—
	Amortization of acquired real estate intangible liabilities (See note 9)	(577,437		)	(184,541		)
	Normally recurring capital expenditures and leasing costs (See note 10)	(698,527		)	(343,649		)
Adjusted funds from operations attributable to common stockholders and Unitholders		$	7,399,071		$	6,652,938
Common Stock dividends and distributions to Unitholders declared:
	Common Stock dividends	$	4,772,587		$	4,012,322
	Distributions to Unitholders (See note 2)	179,449			50,465
	Total	$	4,952,036		$	4,062,787
Common Stock dividends and Unitholder distributions per share		$	0.2025		$	0.18
FFO per weighted average basic share of Common Stock and Unit outstanding		$	0.18		$	0.19
NFFO per weighted average basic share of Common Stock and Unit outstanding		$	0.31		$	0.27
AFFO per weighted average basic share of Common Stock and Unit outstanding		$	0.31		$	0.30
Weighted average shares of Common Stock and Units outstanding: (A)
	Basic:
	Common Stock	23,325,663			22,215,663
	Class A Units	886,346			280,360
	Common Stock and Class A Units	24,212,009			22,496,023
	Diluted Common Stock and Class A Units (B)	25,461,338			22,961,379
Actual shares of Common Stock outstanding, including 30,990 and 30,133 unvested shares
of restricted Common Stock at June 30, 2016 and 2015, respectively		23,723,168			22,307,057
Actual Class A Units outstanding		886,168			280,360
	Total	24,609,336			22,587,417
(A) Units and Unitholders refer to Class A Units in our Operating Partnership, or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 3.66% weighted average non-controlling interest in the Operating Partnership for the three-month period ended June 30, 2016.
(B) Since our NFFO and AFFO results are positive for the periods reflected above, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders.

See Notes to Reconciliation of Funds From Operations Attributable to Common Stockholders and Unitholders, Normalized Funds From Operations Attributable to Common Stockholders and Unitholders, and Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders to Net Loss Attributable to Common Stockholders on page 8.

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 7

Notes to Reconciliation of Funds From OperationsAttributable to Common Stockholders and Unitholders, Normalized Funds From OperationsAttributable to Common Stockholders and Unitholders, and Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders to Net Loss Attributable to Common Stockholders

1) Rental and other property revenues and expenses for the three-month period ended June 30, 2016 include activity for the multifamily community, student housing project, and seven grocery-anchored shopping centers acquired during the second quarter 2016 only from their respective dates of acquisition. In addition, the 2016 period includes a full quarter of activity for the seven multifamily communities and five grocery-anchored shopping centers acquired during the third and fourth quarters of 2015 and the first quarter 2016. Rental and other property revenues and expenses for the three-month period ended June 30, 2015 include activity for the Aster at Lely and Venue at Lakewood Ranch multifamily communities only from their respective dates of acquisition during the second quarter 2015.

2) Non-controlling interests in our Operating Partnership consisted of a total of 886,168 Class A Units as of June 30, 2016. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with theseller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 3.66% and 1.25% for the three-month periods ended June 30, 2016 and 2015, respectively.

3) We incurred loan closing costs for the acquisition of the Village at Baldwin Park multifamily community during the first quarter 2016 on our $35 million acquisition term loan facility with Key Bank National Association, or 2016 Term Loan. These costs were deferred and are being amortized over the life of the 2016 Term Loan. We also incurred loan closing costs for the acquisition of the Avenues at Northpointe and Avenues at Cypress multifamily communities in 2015 on our $32 million acquisition term loan facility with Key Bank National Association, or 2015 Term Loan. These costs were deferred and were amortized over the life of the 2015 Term Loan until it was repaid in full on May 12, 2015. Since the amortization expense of these deferred costs is similar in character to acquisition costs, they are therefore an additive adjustment in the calculation of NFFO.

4) We pay loan coordination fees to Preferred Apartment Advisors, LLC, our Manager, related to obtaining mortgage financing for acquired properties. These loan coordination fees are amortized over the lives of the respective mortgage loans, and this non-cash amortization expense is an addition to FFO in the calculation of NFFO.

5) We incurred legal costs pertaining to the extension of our management agreement with our Manager. The three-year extension was effective as of June 3, 2016. Such costs are an additive adjustment to FFO in our calculation of NFFO.

6) We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired multifamily communities and retail assets, and also for occasional amendments to our $70 million revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to NFFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At June 30, 2016, aggregate unamortized loan costs were approximately $14.1 million, which will be amortized over a weighted average remaining loan life of approximately 5.5 years.

7) We receive loan fees in conjunction with the origination of certain real estate loans. These fees are then recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. The total fees received in excess of amortization income, after the payment of acquisition fees to our Manager are additive adjustments in the calculation of AFFO. Correspondingly, the non-cash income recognized under the effective interest method is a deduction in the calculation of AFFO. We also accrue over the lives of certain loans additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold to a third party. This non-cash income is deducted from NFFO in the calculation of AFFO.

8) The Company records deferred interest revenue on certain of its real estate loans. These adjustments reflect the receipt during the periods presented of interest income which was earned and accrued prior to those periods presented on various real estate loans.

9) This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with the Company’s acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for retail assets. At June 30, 2016, the balance of unamortized below-market lease intangibles was approximately $9.7 million, which will be recognized over a weighted average remaining lease period of approximately 8.1 years.

10) We deduct from NFFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures, which totaled $1,525,336 and $549,489 for the three-month periods ended June 30, 2016 and 2015, respectively. This adjustment also deducts from NFFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers.

See Definitions of Non-GAAP Measures beginning on page 16.

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 8

Preferred Apartment Communities, Inc.
Consolidated Balance Sheets
(Unaudited)
	June 30, 2016			December 31, 2015
Assets
Real estate
Land	$	206,706,147		$	141,729,264
Building and improvements	1,079,949,148			733,417,442
Tenant improvements	7,443,986			5,781,199
Furniture, fixtures, and equipment	112,147,819			86,092,408
Construction in progress	1,696,177			609,400
Gross real estate	1,407,943,277			967,629,713
Less: accumulated depreciation	(71,760,464		)	(48,155,874		)
Net real estate	1,336,182,813			919,473,839
Property held for sale	—			33,817,081
Real estate loans, net of deferred fee income	181,287,965			180,688,293
Real estate loans to related party, net	97,769,345			57,313,465
Total real estate and real estate loans, net	1,615,240,123			1,191,292,678
Cash and cash equivalents	5,717,111			2,439,605
Restricted cash	23,146,020			12,539,440
Notes receivable	16,929,381			18,489,247
Note receivable and revolving line of credit due from related party	24,010,987			19,454,486
Accrued interest receivable on real estate loans	13,751,480			14,294,648
Acquired intangible assets, net of amortization	27,532,024			19,381,473
Deferred loan costs, net of amortization	419,668			488,770
Deferred offering costs	4,699,537			5,834,304
Tenant receivables and other assets	25,562,202			11,314,382
Total assets	$	1,757,008,533		$	1,295,529,033
Liabilities and equity
Liabilities
Mortgage notes payable, principal amount	$	957,087,042		$	668,836,291
Less: deferred loan costs, net of amortization	(13,588,680		)	(8,099,517		)
Mortgage notes payable, net of deferred loan costs	943,498,362			660,736,774
Mortgage note held for sale	—			28,109,000
Revolving line of credit	28,500,000			34,500,000
Term note payable	41,000,000			—
Less: deferred loan costs, net of amortization	(55,456		)	—
Term note payable, net of deferred loan costs	40,944,544			—
Real estate loan participation obligation	13,997,758			13,544,160
Accounts payable and accrued expenses	18,548,928			12,644,818
Accrued interest payable	2,633,222			1,803,389
Dividends and partnership distributions payable	8,272,974			6,647,507
Acquired below market lease intangibles, net of amortization	9,734,618			9,253,450
Security deposits and other liabilities	3,956,465			2,836,145
Total liabilities	1,070,086,871			770,075,243
Commitments and contingencies
Equity
Stockholder's equity
Series A Redeemable Preferred Stock, $0.01 par value per share; 1,050,000
shares authorized; 688,788 and 486,182 shares issued; 683,545 and 482,964
shares outstanding at June 30, 2016 and December 31, 2015, respectively	6,835			4,830
Common Stock, $0.01 par value per share; 400,066,666 shares authorized;
23,692,178 and 22,761,551 shares issued and outstanding at
June 30, 2016 and December 31, 2015, respectively	236,922			227,616
Additional paid-in capital	702,363,652			536,450,877
Accumulated deficit	(16,789,931		)	(13,698,520		)
Total stockholders' equity	685,817,478			522,984,803
Non-controlling interest	1,104,184			2,468,987
Total equity	686,921,662			525,453,790
Total liabilities and equity	$	1,757,008,533		$	1,295,529,033

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 9

Preferred Apartment Communities, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
	Six months ended June 30,
	2016			2015
Operating activities:
Net loss	$	(3,172,011	)	$	(344,093	)
Reconciliation of net (loss) income to net cash provided by operating activities:
Depreciation expense	23,973,536			11,507,799
Amortization expense	9,343,165			4,365,478
Amortization of above and below market leases	(593,455		)	(341,328		)
Deferred fee income amortization	(492,490		)	(367,406		)
Deferred loan cost amortization	1,393,318			700,833
Decrease (increase) in accrued interest income on real estate loans	543,167			(896,557		)
Equity compensation to executives, directors and consultants	1,256,296			1,167,851
Gain on sale of real estate	(4,271,506		)	—
Other	(1,067		)	(9,872		)
Changes in operating assets and liabilities:
(Increase) decrease in tenant receivables and other assets	433,419			9,405
(Decrease) increase in accounts payable and accrued expenses	3,374,618			2,136,764
Increase in accrued interest payable	883,490			50,145
Increase in prepaid rents	(44,077		)	275,169
Increase in security deposits and other liabilities	233,357			44,055
Net cash provided by operating activities	32,859,760			18,298,243
Investing activities:
Investment in real estate loans	(75,603,964		)	(46,515,765		)
Repayments of real estate loans	27,695,229			18,772,024
Notes receivable issued	(8,051,980		)	(3,044,871		)
Notes receivable repaid	9,615,213			9,897,319
Note receivable issued to and draws on line of credit by related party	(18,653,990		)	(8,413,133		)
Repayments of line of credit by related party	13,842,681			5,198,392
Acquisition fees received on real estate loans	2,249,137			1,138,713
Acquisition fees paid on real estate loans	(1,124,226		)	(569,356		)
Acquisition fees paid to real estate loan participants	—			(24,665		)
Acquisition of properties	(404,186,508		)	(199,211,216		)
Disposition of properties, net	10,606,386			—
Additions to real estate assets - improvements	(4,000,551		)	(1,656,383		)
Proceeds from sale of fixed assets	10,000			—
Deposits paid on acquisitions	(11,194,950		)	(1,288,375		)
Decrease in restricted cash	(4,291,485		)	(1,855,932		)
Net cash used in investing activities	(463,089,008		)	(227,573,248		)
Financing activities:
Proceeds from mortgage notes payable	249,840,000			137,688,000
Payment for mortgage debt	(4,692,524		)	(1,433,487		)
Payments for deposits and other mortgage loan costs	(9,616,676		)	(1,987,114		)
Proceeds from real estate loan participants	135,398			3,712,031
Proceeds from lines of credit	195,500,000			71,900,000
Payments on lines of credit	(201,500,000		)	(96,400,000		)
Proceeds from term loan	46,000,000			32,000,000
Repayment of the term loan	(5,000,000		)	(32,000,000		)
Proceeds from sales of Units, net of offering costs and redemptions	180,446,649			108,573,262
Proceeds from sales of Common Stock	—			5,381,848
Proceeds from exercises of warrants	9,380,346			796,751
Common stock dividends paid	(8,750,488		)	(7,548,190		)
Preferred stock dividends paid	(16,284,348		)	(6,684,424		)
Distributions to non-controlling interests	(170,630		)	(74,440		)
Payments for deferred offering costs	(1,780,973		)	(893,960		)
Net cash provided by financing activities	433,506,754			213,030,277
Net decrease in cash and cash equivalents	3,277,506			3,755,272
Cash and cash equivalents, beginning of period	2,439,605			3,113,270
Cash and cash equivalents, end of period	$	5,717,111		$	6,868,542

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 10

Real Estate Loans

				Total units upon	Loan balance at June 30,			Total loan		Purchase option window		Purchase option price
Project/Property		(1)	Location	completion	2016 (2)			commitments		Begin	End
City Vista		(1)	Pittsburgh, PA	272	$	16,107,735		$	16,107,735	2/1/2017	5/31/2017	$	43,560,271
Haven West		(3)	Atlanta, GA	160	6,784,167			6,940,795		8/1/2016	1/31/2017	$	26,138,466
Haven 12		(4)	Starkville, MS	152	5,815,849			6,116,384		9/1/2016	11/30/2016	(5)
Founders' Village		(6)	Williamsburg, VA	247	9,866,000			10,346,000		2/1/2017	5/31/2017	$	44,266,000
Encore			Atlanta, GA	340	10,958,200			10,958,200		1/8/2018	5/8/2018	(5)
Encore Capital			Atlanta, GA	—	6,383,817			9,758,200		N/A	N/A	N/A
Palisades		(6)	Northern VA	304	16,070,000			17,270,000		3/1/2017	7/31/2017	(5)
Fusion			Irvine, CA	280	47,360,071			59,052,583		1/1/2018	4/1/2018	(5)
Green Park		(6)	Atlanta, GA	310	12,897,784			13,464,372		11/1/2017	2/28/2018	(5)
Stadium Village		(6,7)	Atlanta, GA	198	13,329,868			13,424,995		9/1/2016	11/30/2016	(5)
Summit Crossing III			Atlanta, GA	172	7,246,400			7,246,400		8/1/2017	11/30/2017	(5)
Overture			Tampa, FL	180	5,864,252			6,920,000		1/1/2018	5/1/2018	(5)
Aldridge at Town Village			Atlanta, GA	300	10,204,627			10,975,000		11/1/2017	2/28/2018	(5)
18 Nineteen		(8)	Lubbock, TX	217	15,152,992			15,598,352		10/1/2017	12/31/2017	(5)
Haven South		(9)	Waco, TX	250	14,847,703			15,455,668		10/1/2017	12/31/2017	(5)
Haven46		(10)	Tampa, FL	158	4,496,251			9,819,662		11/1/2018	1/31/2019	(5)
Bishop Street		(11)	Atlanta, GA	232	10,062,472			12,693,457		10/1/2018	12/31/2018	(5)
Dawson Marketplace		(12)	Atlanta, GA	—	12,079,361			12,857,005		12/16/2017	12/15/2018	(13)
Hidden River			Tampa, FL	300	2,156,448			4,734,960		9/1/2018	12/31/2018	(5)
Hidden River Capital			Tampa, FL	—	4,430,206			5,380,000		N/A	N/A	N/A
CityPark II			Charlotte, NC	200	1,095,924			3,364,800		5/1/2018	8/31/2018	(5)
CityPark II Capital			Charlotte, NC	—	3,184,746			3,916,000		N/A	N/A	N/A
Crescent Avenue		(14)	Atlanta, GA	—	6,000,000			6,000,000		N/A	N/A	N/A
Haven Northgate		(15)	College Station, TX	427	35,441,421			64,678,549		10/1/2018	12/31/2018	(5)
Lubbock II		(16)	Lubbock, TX	140	2,787,616			9,357,171		11/1/2018	1/31/2019	(5)
				4,839	280,623,910			$	352,436,288
Unamortized loan origination fees					(1,566,600		)
Carrying amount					$	279,057,310
(1	)	All loans pertain to developments of multifamily communities, except as otherwise indicated. On July 1, 2016, we converted approximately $12.5 million of the principal amount due on the City Vista loan into a 96% equity ownership interest in a joint venture that owns the underlying multifamily community
(2	)	Loan balances presented are principal amounts due.
(3	)	Real estate loan in support of a completed 160-unit, 568-bed student housing community adjacent to the campus of the University of West Georgia. On August 1, 2016, we terminated the purchase option on the community.
(4	)	Real estate loan in support of a completed 152-unit, 536-bed student housing community adjacent to the campus of Mississippi State University.
(5	)	The purchase price is to be calculated based upon market cap rates at the time of exercise of the purchase option, with discounts ranging from between 20 and 60 basis points, depending on the loan.
(6	)	Loan balance includes 25% loan participation by an unrelated third party syndicate of lenders.
(7	)	Real estate loan in support of a completed 198-unit, 792-bed student housing community adjacent to the campus of Kennesaw State University in Atlanta, Georgia.
(8	)	Real estate loan of up to approximately $15.6 million in support of a planned 217-unit, 732-bed student housing community adjacent to the campus of Texas Tech University.
(9	)	Real estate loan in support of a planned 250-unit, 840-bed student housing community adjacent to the campus of Baylor University.
(10	)	On March 29, 2016, our bridge loan was converted to a real estate loan in support of a planned 158-unit, 542-bed student housing community adjacent to the campus of the University of South Florida.
(11	)	On February 18, 2016, our bridge loan was converted to a real estate loan in support of a planned multifamily community in Atlanta, Georgia.
(12	)	Real estate loan in support of a planned approximate 200,000 square foot retail center in the Atlanta, Georgia market.
(13	)	Includes 10 purchase options to acquire a tract and 14 outlots with a purchase price at a 20 basis point discount to market.
(14	)	Bridge loan in support of a proposed multi-use property in Atlanta, Georgia.
(15	)	Senior loan in support of a planned 427-unit, 808-bed student housing community adjacent to the campus of Texas A&M University.
(16	)	Real estate loan of up to approximately $9.4 million in support of a planned 140-unit, 556-bed second phase student housing community adjacent to the campus of Texas Tech University.

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 11

Multifamily Communities

				Three months ended June 30, 2016
Property	Location	Number of units	Average unit size (sq. ft.)	Average occupancy		Average rent per unit
Ashford Park	Atlanta, GA	408	1,008	96.9	%	$	1,173
Lake Cameron	Raleigh, NC	328	940	96.8	%	$	908
McNeil Ranch	Austin, TX	192	1,071	95.1	%	$	1,234
Stone Rise	Philadelphia, PA	216	1,079	94.9	%	$	1,447
Enclave at Vista Ridge	Dallas, TX	300	1,079	95.9	%	$	1,137
Stoneridge Farms	Nashville, TN	364	1,153	95.7	%	$	1,011
Vineyards	Houston, TX	369	1,122	94.0	%	$	1,143
Avenues at Cypress	Houston, TX	240	1,166	92.3	%	$	1,374
Avenues at Northpointe	Houston, TX	280	1,154	92.5	%	$	1,378
Total/Avg PAC Same Store		2,697		94.9	%
Summit Crossing	Atlanta, GA	485	1,053	—	%	$	1,188
Sandstone Creek	Kansas City, KS	364	1,135	—	%	$	1,004
Aster at Lely Resort	Naples, FL	308	979	94.5	%	$	1,336
CityPark View	Charlotte, NC	284	948	93.3	%	$	1,052
Venue at Lakewood Ranch	Sarasota, FL	237	1,001	94.7	%	$	1,581
Avenues at Creekside	San Antonio, TX	395	974	92.6	%	$	1,151
Citi Lakes	Orlando, FL	346	984	—	%	$	1,348
Lenox Portfolio	Nashville, TN	474	886	96.2	%	$	1,132
Stone Creek	Houston, TX	246	852	—	%	$	1,004
Overton Rise	Atlanta, GA	294	1,018	94.8	%	$	1,461
Baldwin Park	Orlando, FL	528	1,069	—	%	$	1,437
Crosstown Walk	Tampa, FL	342	980	94.1	%	$	1,213
Avalon Park	Orlando, FL	487	1,394	—	%	$	—
Total/Avg PAC Non-Same Store		4,790
North by Northwest	Tallahassee, FL	219	1,137	N/A		$	—
Total All PAC units		7,706		94.7	%

For the three-month period ended June 30, 2016, our average occupancy was 94.7%. We define average occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in this calculation except for properties which are not yet stabilized, which we define as properties having first achieved 93% physical occupancy (Citi Lakes was not yet stabilized at the beginning of the Second quarter), properties which are owned for less than the entire reporting period (Avalon Park), and properties which are undergoing significant capital projects or are adding additional phases (Summit Crossing, Stone Creek, Sandstone Creek and Baldwin Park).

Capital Expenditures

We regularly incur capital expenditures related to our owned properties. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property’s value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents or retail tenants in

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 12

its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding.

For the three-month period ended June 30, 2016, our capital expenditures were as follows:

	Nonrecurring capital expenditures						Recurring capital expenditures
	Budgeted at acquisition		Other		Total				Total
Multifamily communities:
Summit Crossing	$	—	$	68,647	$	68,647	$	26,068	$	94,715
Trail Creek	—		13,798		13,798		20,799		34,597
Stone Rise	—		9,866		9,866		33,236		43,102
Ashford Park	—		150,857		150,857		61,022		211,879
McNeil Ranch	—		5,326		5,326		18,596		23,922
Lake Cameron	—		913		913		33,559		34,472
Stoneridge	—		27,720		27,720		46,459		74,179
Vineyards	—		44,383		44,383		40,452		84,835
Enclave	—		13,251		13,251		34,558		47,809
Sandstone	—		44,793		44,793		55,449		100,242
Cypress	—		7,500		7,500		9,518		17,018
Northpointe	—		37,666		37,666		15,794		53,460
Lakewood Ranch	—		2,101		2,101		4,093		6,194
Aster at Lely	—		11,642		11,642		12,079		23,721
CityPark View	—		—		—		2,020		2,020
Mansions at Creekside	77,916		7,373		85,289		37,188		122,477
Citilakes	82,117		14,922		97,039		5,155		102,194
Stone Creek	67,353		3,675		71,028		10,247		81,275
Lenox Portfolio	7,046		—		7,046		27,169		34,215
Village at Baldwin Park	422,296		3,649		425,945		72,745		498,690
Crosstown Walk	—		—		—		15,049		15,049
Overton Rise	45,540		—		45,540		10,479		56,019
Avalon Park	10,500		—		10,500		10,956		21,456
	712,768		468,082		1,180,850		602,690		1,783,540
Retail:
Woodstock Crossing	—		200		200		—		200
Parkway Town Centre	—		—		—		9,781		9,781
Barclay Crossing	—		—		—		5,156		5,156
Deltona Landings	—		—		—		1,921		1,921
Kingwood Glen	—		36,288		36,288		8,820		45,108
Parkway Centre	—		—		—		513		513
Powder Springs	—		—		—		39,271		39,271
Sweetgrass Corner	—		—		—		1,256		1,256
Independence Square	302,365		—		302,365		120		302,485
Royal Lakes Marketplace	—		—		—		3,774		3,774
Summit Point	—		5,633		5,633		—		5,633
Wade Green Village	—		—		—		6,864		6,864
East Gate Shopping Center	—		—		—		2,336		2,336
Fairview Market	—		—		—		2,800		2,800
Fury's Ferry	—		—		—		13,225		13,225
	302,365		42,121		344,486		95,837		440,323
Total	$	1,015,133	$	510,203	$	1,525,336	$	698,527	$	2,223,863

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 13

Retail Portfolio

Our retail portfolio consists of the following properties:

Property name	Location	Year built	GLA (1)	Percent leased		Anchor tenant
Woodstock Crossing	Atlanta, GA	1994	66,122	92.6	%	Kroger
Powder Springs	Atlanta, GA	1999	77,853	92.8	%	Publix
Royal Lakes Marketplace	Atlanta, GA	2008	119,493	84.4	%	Kroger
Summit Point	Atlanta, GA	2004	111,970	80.4	%	Publix
Wade Green Village	Atlanta, GA	1993	74,978	89.7	%	Publix
East Gate Shopping Center	Augusta, GA	1995	75,716	89.5	%	Publix
Fury's Ferry	Augusta, GA	1996	70,458	91.0	%	Publix
Parkway Centre	Columbus, GA	1999	53,088	97.4	%	Publix
Spring Hill Plaza	Nashville, TN	2005	61,570	100.0	%	Publix
Parkway Town Centre	Nashville, TN	2005	65,587	95.4	%	Publix
Salem Cove	Nashville, TN	2010	62,356	96.1	%	Publix
The Market at Victory Village	Nashville, TN	2007	71,300	98.5	%	Publix
The Overlook at Hamilton Place	Chattanooga, TN	1992	213,095	98.6	%	The Fresh Market
Sweetgrass Corner	Charleston, SC	1999	89,124	96.2	%	Bi-Lo
Anderson Central	Greenville Spartanburg, SC	1999	223,211	97.1	%	Walmart
Fairview Market	Greenville Spartanburg, SC	1998	53,888	100.0	%	Publix
Rosewood Shopping Center	Columbia, SC	2002	36,887	90.2	%	Publix
Barclay Crossing	Tampa, FL	1998	54,958	100.0	%	Publix
Deltona Landings	Orlando, FL	1999	59,966	95.5	%	Publix
Kingwood Glen	Houston, TX	1998	103,397	100.0	%	Kroger
Independence Square	Dallas, TX	1977	140,218	92.9	%	Tom Thumb
Southgate Village	Birmingham, AL	1988	75,092	100.0	%	Publix
			1,960,327	94.4	%

⁽¹⁾Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants.

As of June 30, 2016, our retail portfolio was 94.4% leased. We define percent leased as the percentage of gross leasable area that is leased, including lease agreements that have been fully executed which have not yet commenced.

Details regarding lease expirations (assuming no exercise of tenant renewal options) within our retail assets as of June 30, 2016 were:

	Total retail portfolio
	Number of leases	Leased GLA	Percent of leased GLA
Month to month	5	7,269	0.4	%
2016	24	43,687	2.4	%
2017	62	119,833	6.5	%
2018	55	175,187	9.5	%
2019	41	464,943	25.1	%
2020	41	259,312	14.0	%
2021	35	123,169	6.7	%
2022	5	36,701	2.0	%
2023	4	13,300	0.7	%
2024	11	224,945	12.2	%
2025	6	139,141	7.5	%
2026+	7	242,801	13.0	%
	296	1,850,288	100.0	%

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 14

Multifamily Same Store Financial Data

The following chart presents same store operating results for the Company’s multifamily communities that have been owned for at least 15 full months, enabling comparisons of the current reporting period to the prior year comparative period. The Company excludes the same store operating results of properties for which construction of adjacent phases have commenced (the Company holds a real estate loan partially supporting a third phase of the Summit Crossing multifamily community, which is excluded as well). For the periods presented, same store operating results consist of the operating results of our Stone Rise, Lake Cameron, Ashford Park, McNeil Ranch, Enclave at Vista Ridge, Stoneridge Farms at Hunt Club, Vineyards, Avenues at Cypress, and Avenues at Northpointe multifamily communities. Same store net operating income is a non-GAAP measure that is most directly comparable to net income, with a reconciliation following below.

Same Store Net Operating Income
Stone Rise, Ashford Park, McNeil Ranch, Lake Cameron, Enclave at Vista Ridge, Stoneridge Farms at Hunt Club, Vineyards, Avenues at Cypress, and Avenues at Northpointe Multifamily Communities
	Three months ended:
	6/30/2016		6/30/15		$ inc / dec			% inc
Revenues:
Rental revenues	$	9,053,428	$	8,691,224	$	362,204		4.2	%
Other property revenues	1,142,056		1,046,075		95,981			9.2	%
Total revenues	10,195,484		9,737,299		458,185			4.7	%
Operating expenses:
Property operating and maintenance	1,565,458		1,566,861		(1,403		)	(0.1	)%
Payroll	895,391		916,968		(21,577		)	(2.4	)%
Property management fees	400,921		387,263		13,658			3.5	%
Real estate taxes	1,782,032		1,530,017		252,015			16.5	%
Other	390,932		359,156		31,776			8.8	%
Total operating expenses	5,034,734		4,760,265		274,469			5.8	%
Same store net operating income	$	5,160,750	$	4,977,034	$	183,716		3.7	%

Reconciliation of Same Store Net Operating Income (NOI) to Net Income
	Three months ended:
	6/30/2016			6/30/2015
Same store net operating income	$	5,160,750		$	4,977,034
Add:
Non-same-store property revenues	25,079,615			7,140,983
Less:
Non-same-store property operating expenses	10,085,168			2,682,221
Property net operating income	20,155,197			9,435,796
Add:
Interest revenue on notes receivable	6,847,724			5,582,871
Interest revenue on related party notes receivable	3,731,122			1,627,674
Less:
Equity stock compensation	618,867			577,543
Depreciation and amortization	17,969,975			7,927,849
Interest expense	9,559,501			4,688,468
Acquisition costs	2,490,566			669,342
Acquisition costs to related party	274,176			1,098,471
Management fees	2,958,991			1,570,956
Other corporate expenses	1,367,678			502,035
Gain on sale of real estate	4,271,506			—
Contingent asset management and general and administrative expense fees	(451,684		)	(809,159		)
Net income	$	217,479		$	420,836

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 15

Definitions of Non-GAAP Measures

Funds From Operations Attributable to Common Stockholders and Unitholders (FFO)

Analysts, managers and investors have, since the first real estate investment trusts were created, made certain adjustments to reported net income amounts under U.S. GAAP in order to better assess these vehicles’ liquidity and cash flows. FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 White Paper on Funds From Operations, which was most recently revised in 2012, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how Net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. The NAREIT definition of FFO (and the one reported by the Company) is:

Net income/loss:

• excluding impairment charges on and gains/losses from sales of depreciable property;

• plus depreciation and amortization of real estate assets and deferred leasing costs; and

• after adjustments for the Company's proportionate share of unconsolidated partnerships and joint ventures.

Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing the Company’s reported FFO results to those of other companies. The Company’s FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. The Company believes FFO is useful to investors as a supplemental gauge of our operating and cash-generating results. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Normalized Funds From Operations Attributable to Common Stockholders and Unitholders (NFFO)

Normalized FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the Company’s ongoing operating performance. For example, since the Company is acquiring properties on a regular basis, it incurred substantial costs related to such acquisitions, which are required under GAAP to be recognized as expenses when they are incurred. The Company adds back any such acquisition and pursuit costs, including costs incurred in connection with obtaining short term debt financing for acquisitions and beginning January 1, 2016, amortization of loan coordination fees, to FFO in its calculation of NFFO since such costs are not representative of our fund generating results on an ongoing basis. The Company also adds back costs incurred related to the extension of our management agreement with our Manager, realized losses on debt extinguishment and any non-cash dividends in this calculation. NFFO figures reported by us may not be comparable to those NFFO figures reported by other companies.

We utilize NFFO as a measure of the operating performance of our portfolio of real estate assets. We believe NFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other real estate companies that are not as involved in ongoing acquisition activities. NFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders (AFFO)

AFFO makes further adjustments to NFFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. The Company calculates AFFO as:

NFFO, plus:

• non-cash equity compensation to directors and executives;

SECOND QUARTER 2016 - SUPPLEMENTAL FINANCIAL DATA | 16

• amortization of loan closing costs, excluding costs incurred in connection with obtaining short term financing related to acquisitions;

• depreciation and amortization of non-real estate assets;

• net loan fees received; and

• deferred interest income received;

less:

• non-cash loan interest income;

• cash paid for pursuit costs on abandoned acquisitions;

• cash paid for loan closing costs;

• amortization of acquired real estate intangible liabilities; and

• normally-recurring capital expenditures and capitalized retail direct leasing costs.

AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other real estate companies. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Same Store Net Operating Income (NOI)

The Company uses same store net operating income as an operational metric for properties the Company has owned for at least 15 full months, enabling comparisons of those properties’ operating results between the current reporting period and the prior year comparative period. The Company defines net operating income as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. The Company believes that net operating income is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. Net operating income is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for its closest GAAP-compliant measure, net income/loss.

Additional Information

The SEC has declared effective the registration statement (including prospectus) filed by the Company for each of the offerings to which this communication may relate. Before you invest, you should read the final prospectus, and any prospectus supplements, forming a part of the registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering to which this communication may relate. In particular, you should carefully read the risk factors described in the final prospectus and in any related prospectus supplement and in the documents incorporated by reference in the final prospectus and any related prospectus supplement to which this communication may relate. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively the Company or its dealer manager, International Assets Advisory, LLC (with respect to the offering of up to a maximum of 900,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock and one Warrant to purchase up to 20 shares of our Common Stock, or the Follow-On Offering), or its sales agents, JonesTrading Institutional Services LLC, FBR Capital Markets & Co., and Canaccord Genuity Inc. (with respect to the issuance and offering of up to $150 million of its Common Stock from time to time in an “at the market” offering, or the ATM Offering), will arrange to send you the prospectus if you request it by calling Leonard A. Silverstein at (770) 818-4100, or writing to 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.

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The final prospectus for the Follow-On Offering, dated October 11, 2013, can be accessed through the following link: http://www.sec.gov/Archives/edgar/data/1481832/000148183213000128/a424b3prospectus900m.htm

The prospectus and base prospectus for the ATM Offering, dated July 18, 2016 and May 17, 2016, respectively, can be accessed through the following link:

https://www.sec.gov/Archives/edgar/data/1481832/000148183216000152/atmprospectus.htm

For further information:             

Leonard A. Silverstein, President and Chief Operating Officer

Preferred Apartment Communities, Inc.

lsilverstein@pacapts.com

+1-770-818-4147

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