Equity

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Equity

Equity

The following summarizes the changes in equity for the nine months ended September 30, 2019 (dollars in thousands):

	Common stock		Additional paid-in capital			Accumulated earnings less dividends			Accumulated other comprehensive loss			Total AvalonBay stockholder's equity			Noncontrolling interests		Total equity
Balance at December 31, 2018	$	1,385	$	10,306,588		$	350,777		$	(26,144	)	$	10,632,606		$	—	$	10,632,606
Net income attributable to common stockholders	—		—			170,366			—			170,366			—		170,366
Loss on cash flow hedges, net	—		—			—			(7,231		)	(7,231		)	—		(7,231		)
Cash flow hedge losses reclassified to earnings	—		—			—			1,468			1,468			—		1,468
Change in redemption value of redeemable noncontrolling interest	—		—			(224		)	—			(224		)	—		(224		)
Dividends declared to common stockholders ($1.52 per share)	—		—			(212,166		)	—			(212,166		)	—		(212,166		)
Issuance of common stock, net of withholdings	9		143,202			(1,892		)	—			141,319			—		141,319
Amortization of deferred compensation	—		7,861			—			—			7,861			—		7,861
Balance at March 31, 2019	$	1,394	$	10,457,651		$	306,861		$	(31,907	)	$	10,733,999		$	—	$	10,733,999
Net income attributable to common stockholders	—		—			168,281			—			168,281			—		168,281
Loss on cash flow hedges, net	—		—			—			(2,888		)	(2,888		)	—		(2,888		)
Cash flow hedge losses reclassified to earnings	—		—			—			1,611			1,611			—		1,611
Change in redemption value of redeemable noncontrolling interest	—		—			(45		)	—			(45		)	—		(45		)
Noncontrolling interest contribution	—		—			—			—			—			530		530
Dividends declared to common stockholders ($1.52 per share)	—		—			(212,549		)	—			(212,549		)	—		(212,549		)
Issuance of common stock, net of withholdings	3		50,803			—			—			50,806			—		50,806
Amortization of deferred compensation	—		10,785			—			—			10,785			—		10,785
Balance at June 30, 2019	$	1,397	$	10,519,239		$	262,548		$	(33,184	)	$	10,750,000		$	530	$	10,750,530
Net income attributable to common stockholders	—		—			279,677			—			279,677			—		279,677
Loss on cash flow hedges, net	—		—			—			(13,644		)	(13,644		)	—		(13,644		)
Cash flow hedge losses reclassified to earnings	—		—			—			1,746			1,746			—		1,746
Change in redemption value of redeemable noncontrolling interest	—		—			(113		)	—			(113		)	—		(113		)
Noncontrolling interest contribution	—		—			—			—			—			118		118
Dividends declared to common stockholders ($1.52 per share)	—		—			(212,526		)	—			(212,526		)	—		(212,526		)
Issuance of common stock, net of withholdings	—		(454		)	(263		)	—			(717		)	—		(717		)
Amortization of deferred compensation	—		10,002			—			—			10,002			—		10,002
Balance at September 30, 2019	$	1,397	$	10,528,787		$	329,323		$	(45,082	)	$	10,814,425		$	648	$	10,815,073

The following summarizes the changes in equity for the nine months ended September 30, 2018 (dollars in thousands):

	Common stock		Additional paid-in capital			Accumulated earnings less dividends			Accumulated other comprehensive loss			Total equity
Balance at December 31, 2017	$	1,381	$	10,235,475		$	188,609		$	(37,419	)	$	10,388,046
Net income attributable to common stockholders	—		—			141,643			—			141,643
Gain on cash flow hedges, net	—		—			—			11,501			11,501
Cash flow hedge losses reclassified to earnings	—		—			—			1,756			1,756
Change in redemption value of redeemable noncontrolling interest	—		—			(63		)	—			(63		)
Dividends declared to common stockholders ($1.47 per share)	—		—			(203,166		)	—			(203,166		)
Issuance of common stock, net of withholdings	1		(12,286		)	1,143			—			(11,142		)
Amortization of deferred compensation	—		6,549			—			—			6,549
Balance at March 31, 2018	$	1,382	$	10,229,738		$	128,166		$	(24,162	)	$	10,335,124
Net income attributable to common stockholders	—		—			254,662			—			254,662
Cash flow hedge losses reclassified to earnings	—		—			—			1,455			1,455
Change in redemption value of redeemable noncontrolling interest	—		—			(291		)	—			(291		)
Dividends declared to common stockholders ($1.47 per share)	—		—			(203,472		)	—			(203,472		)
Issuance of common stock, net of withholdings	—		627			1			—			628
Amortization of deferred compensation	—		10,082			—			—			10,082
Balance at June 30, 2018	$	1,382	$	10,240,447		$	179,066		$	(22,707	)	$	10,398,188
Net income attributable to common stockholders	—		—			192,486			—			192,486
Cash flow hedge losses reclassified to earnings	—		—			—			1,466			1,466
Change in redemption value of redeemable noncontrolling interest	—		—			(272		)	—			(272		)
Dividends declared to common stockholders ($1.47 per share)	—		—			(203,334		)	—			(203,334		)
Issuance of common stock, net of withholdings	—		442			—			—			442
Amortization of deferred compensation	—		8,422			—			—			8,422
Balance at September 30, 2018	$	1,382	$	10,249,311		$	167,946		$	(21,241	)	$	10,397,398

As of September 30, 2019 and December 31, 2018, the Company's charter had authorized for issuance a total of 280,000,000 shares of common stock and 50,000,000 shares of preferred stock.

During the nine months ended September 30, 2019, the Company:

i. issued 81,626 shares of common stock in connection with stock options exercised;

ii. issued 1,594 common shares through the Company's dividend reinvestment plan;

iii. issued 150,359 common shares in connection with restricted stock grants and the conversion of performance awards to restricted shares;

iv. issued 994,634 shares under CEP IV and CEP V, as discussed below;

v. issued 1,838 common shares in conjunction with the conversion of deferred stock awards;

vi. withheld 83,602 common shares to satisfy employees' tax withholding and other liabilities;

vii. issued 7,156 common shares through the Employee Stock Purchase Plan; and

viii. canceled 1,730 common shares of restricted stock upon forfeiture.

Any deferred compensation related to the Company's stock option, restricted stock and performance award grants during the nine months ended September 30, 2019 is not reflected on the accompanying Condensed Consolidated Balance Sheets as of September 30, 2019, and will not be reflected until recognized as compensation cost.

In December 2015, the Company commenced a fourth continuous equity program ("CEP IV") under which the Company was able to sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of its common stock from time to time. In conjunction with CEP IV, the Company engaged sales agents who received compensation up to 2.0% of the gross sales price for shares sold.

In May 2019, the Company replaced CEP IV with a new continuous equity program ("CEP V") under which the Company may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of its common stock from time to time. Actual sales will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company's common stock and determinations by the Company of the appropriate sources of funding for the Company. In conjunction with CEP V, the Company engaged sales agents who will receive compensation of up to 1.5% of the gross sales price for shares sold. The Company expects that, if entered into, it will physically settle each forward sale agreement on one or more dates specified by the Company on or prior to the maturity date of that particular forward sale agreement, in which case the Company will expect to receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward agreement multiplied by the relevant forward sale price. However, the Company may also elect to cash settle or net share settle a forward sale agreement. In connection with each forward sale agreement, the Company will pay the relevant forward seller, in the form of a reduced initial forward sale price, a commission of up to 1.5% of the sales prices of all borrowed shares of common stock sold. As of September 30, 2019, there was an outstanding forward sales agreement, as discussed below.

During the nine months ended September 30, 2019, the Company sold 755,054 shares at an average sales price of $198.26 per share, for net proceeds of $147,450,000 under CEP IV, and 239,580 shares at an average sales price of $208.70 per share, for net proceeds of $49,250,000 under CEP V. As of September 30, 2019 and before considering the impact of the Forward discussed below, the Company had $950,000,000 remaining authorized for issuance under CEP V.

On September 25, 2019, the Company entered into a forward contract under CEP V to sell 947,868 shares of common stock for approximate proceeds of $198,000,000, net of offering fees and discounts (the "Forward"). The sales price was established based on the stock price during intraday trading on September 25, 2019. The proceeds received by the Company will be determined on the date or dates of settlement, with adjustments during the term of the contract for the Company’s dividends as well as for a daily interest factor that varies with changes in the Overnight Bank Funding rate. The Company generally has the ability to determine the date(s) and method of settlement, subject to certain conditions and the right of the forward counterparty to accelerate settlement under certain circumstances. Settlement may be (i) physical sale of shares of our common stock for cash, (ii) net cash settlement, whereby the Company will either pay or receive the difference between the forward contract price and the weighted average market price for its common stock at the time of settlement, or (iii) net share settlement, whereby the Company will either receive or issue shares of its common stock, with the number of shares issued or received determined by the difference between the forward contract price and the weighted average market price for its common stock at the time of settlement. The forward contract price and the weighted average market price would in both cases be determined under the applicable terms of the forward contract. Under either of the net settlement provisions, the Company will pay to the counterparty either cash or shares of its common stock when the weighted average market price of its common stock at the time of settlement exceeds the forward contract price, and will receive either cash or issue shares of its common stock to the extent that the weighted average market price of its common stock at the time of settlement is less than the price under the forward contract. Settlement of the forward contract will occur on one or more dates not later than September 25, 2020.