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AVALONBAY COMMUNITIES, INC. ANNOUNCES
FOURTH QUARTER AND FULL YEAR 2003 OPERATING RESULTS

(Alexandria, VA) AvalonBay Communities, Inc. (NYSE/PCX: AVB) reported today that Net Income Available to Common Stockholders for the quarter ended December 31, 2003 was $98,108,000, resulting in Earnings per Share (“EPS”) of $1.36 (diluted), compared to $0.91 (diluted) for the comparable period of 2002, a per share increase of 49.5%. For the year ended December 31, 2003, EPS was $3.73 (diluted) compared to $2.23 (diluted) for the comparable period of 2002, a per share increase of 67.3%.

The Company reports Funds from Operations attributable to common stockholders (“FFO”) in accordance with the standards established by NAREIT. FFO for the quarter and year ended December 31, 2003 totaled $58,464,000 and $229,332,000, respectively, or $0.81 and $3.27 per share (diluted). This compares to $0.75 or $3.55 per share (diluted) for the quarter and year ended December 31, 2002, respectively. NAREIT clarified the definition of FFO in 2003 to include impairment losses, and the 2002 amounts above reflect FFO under this clarified definition. For comparative purposes, FFO as originally reported in 2002 was $0.85 and $3.65 per share (diluted) for the quarter and year ended December 31, 2002, respectively.

Operating Results for the Quarter Ended December 31, 2003 Compared to the Prior Year

For the Company, including discontinued operations, total revenue decreased by $3,766,000, or 2.3% to $157,530,000. For Established Communities, rental revenue decreased 3.1%, due to a decline in rental rates of 3.3%, partially offset by an increase in economic occupancy of 0.2% between periods. Total revenue for Established Communities decreased $3,567,000 to $111,391,000 and operating expenses increased $605,000, or 1.7%, to $35,571,000. Accordingly, Net Operating Income (“NOI”) for Established Communities decreased by $4,172,000 or 5.2%, to $75,820,000.

The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities from the fourth quarter of 2002 to the fourth quarter of 2003:

Sequential Operating Results for the Quarter Ended December 31, 2003 Compared to the Quarter Ended September 30, 2003

The following table reflects the sequential percentage changes in rental revenue, operating expenses and NOI for Established Communities from the third quarter to the fourth quarter of 2003:

Operating Results for the Year Ended December 31, 2003 Compared to the Prior Year

For the Company, including discontinued operations, total revenue decreased by $6,590,000, or 1.0% to $633,494,000. For Established Communities, rental revenue decreased 4.3%, comprised of a rental rate decline of 4.5%, partially offset by an increase in economic occupancy of 0.2%. Total revenue for Established Communities decreased $20,525,000 to $450,130,000 and operating expenses increased $7,194,000, or 5.2%, to $144,909,000. Accordingly, NOI for Established Communities decreased by $27,719,000 or 8.3%, to $305,221,000.

The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities from the year ended December 31, 2002 to the year ended December 31, 2003:

Market Rents, as determined by the Company, declined by an average of 1.2% in the fourth quarter of 2003 compared to the same quarter in the prior year. The greatest declines, on a year over year basis, were in San Jose, CA with a decline of 5.6%, Boston, MA with a decline of 4.1% and San Francisco, CA with a decline of 3.6% from the fourth quarter of 2002. Sequentially, as compared to the third quarter of 2003, market rents remained stable for the Established Community portfolio as a whole.

Economic Occupancy was 94.1% during the fourth quarter of 2003, increasing 0.2% as compared to the same quarter last year. Sequentially, from the third quarter to the fourth quarter of 2003, Economic Occupancy increased 0.1%. The largest increases in the fourth quarter 2003 as compared to the third quarter were in Central New Jersey at 3.6%, San Francisco, CA at 1.7% and Northern New Jersey at 1.2%. These increases in Economic Occupancy were partially offset by decreases in Fairfield-New Haven, CT of 2.6% and Long Island, NY of 2.5%.

Cash concessions are recognized on an accrual basis in accordance with Generally Accepted Accounting Principles (“GAAP”) and are amortized over the approximate lease term, which is generally one year. For the fourth quarter of 2003, rental revenue (with concessions on a cash basis) decreased 2.6% as compared to the fourth quarter of 2002 (versus a decrease of 3.1% on a GAAP basis) and remained flat as compared to the third quarter of 2003 (versus a decrease of 0.9% on a GAAP basis).

Concessions granted per move-in for Established Communities averaged $949 during the fourth quarter of 2003, an increase of 38.3% from $686 in the fourth quarter of 2002 and an increase of 8.7% from $873 in the third quarter of 2003.

The Company completed two development communities during the fourth quarter of 2003. Avalon Glendale, located near Los Angeles, CA is a garden-style community containing 223 apartment homes and was completed for a Total Capital Cost of $40,400,000. Avalon at Newton Highlands, located in the greater Boston, MA area, is a mid-rise community containing 294 apartment homes and was completed for a Total Capital Cost of $57,700,000.

During the fourth quarter of 2003, the Company commenced construction of three communities, Avalon Chrystie Place I, located in New York, NY, Avalon at The Pinehills I, located in the Boston, MA area and Avalon Pines I, located in the Long Island, NY area. These communities, when completed, are expected to contain an aggregate of 760 apartment homes for a Total Capital Cost of $218,500,000. The Company expects Avalon Chrystie Place I to be financed under a joint venture structure, with the Company’s portion of the Total Capital Cost projected to be $30,000,000, including community-based tax-exempt debt.

During the fourth quarter, the Company sold three communities, Avalon Crest (located in Fort Lee, New Jersey), Avalon at Fair Lakes and Avalon at Dulles (both located in the greater Washington, DC metro area). These three communities, which contained a total of 821 apartment homes, were sold for an aggregate sales price of $159,025,000. The sale of these communities resulted in a gain as reported in accordance with GAAP of $77,598,000 and an Economic Gain of $62,049,000. The weighted average Initial Year Market Cap Rate related to these communities was 5.8%. In addition, the Company sold a parcel of land located in Oakland, CA for a sales price of $6,700,000, resulting in a GAAP gain of $1,234,000.

In the aggregate, the Company sold twelve communities with 3,634 apartment homes during 2003 for a gross sales price of approximately $453,900,000, including one community in which the Company held a 50% membership interest. The sale of these twelve communities in 2003 resulted in a GAAP gain, including amounts reflected in joint venture income and minority interest, of $183,204,000 and an Economic Gain of $130,591,000. The combined weighted average Initial Year Market Cap Rate for the twelve communities sold during 2003 was 6.3%, the weighted average Unleveraged IRR was 15.0% and the weighted average Economic Gain as a percentage of Total Capital Cost was 41.1%.

As of December 31, 2003, the Company had $51,100,000 outstanding under its $500,000,000 unsecured credit facility and unrestricted cash of approximately $7,196,000. This unrestricted cash, the unsecured credit facility, net proceeds from anticipated asset sales in 2004 and cash retained from operations, will be used to fund development and redevelopment activity and for general corporate purposes.

Leverage, as measured by debt as a percentage of total market capitalization, was 39.9% at December 31, 2003. Unencumbered NOI was approximately 80% for 2003 and Interest Coverage for the fourth quarter of 2003 was 2.7 times.

As noted in the Company’s initial 2004 financial outlook provided on December 18, 2003, the Company expects EPS (diluted) in the range of $0.36 to $0.40 for the first quarter of 2004 and $1.49 to $1.67 for the full year 2004.

The Company expects Projected FFO per share (diluted) in the range of $0.75 to $0.79 for the first quarter of 2004 and $3.13 to $3.31 for the full year 2004.

The Company is scheduled to participate in the Smith Barney 2004 REIT CEO Conference at The Breakers hotel in Palm Beach, FL on March 1-2, 2004. Management is scheduled to give a presentation at this conference on Monday, March 1, 2004 at 3:45 PM Eastern Time (EST). Management’s presentation will be followed by a question and answer session during which management may discuss the Company’s current operating environment; operating trends; current development, disposition and acquisition activity; the Company’s outlook and other business and financial matters affecting the Company. A live, listen-only webcast of the Company’s presentation will be available on the Company’s website at http://www.avalonbay.com/events.

The Company will hold a conference call on January 22, 2004 at 1:00 PM EST to review and answer appropriate questions about these results and projections, the earnings release attachments described below, and related matters. The domestic number to call to participate is 1-877-510-2397. The international number to call to participate is 1-706-634-5877. The domestic number to hear a replay of this call is 1-800-642-1687, and the international number to hear a replay of this call is 1-706-645-9291 — Access Code: 4573066.

A webcast of the conference call will also be available at http://www.avalonbay.com/earnings, and an on-line playback of the webcast will be available for at least 30 days following the call.

The Company produces Earnings Release Attachments (the “Attachments”) that provide detailed information regarding operating, development, redevelopment, disposition and acquisition activity. These Attachments are considered a part of this earnings release and are available in full with this earnings release via the Company’s website and through e-mail distribution. Access to the full earnings release including the Attachments through the Company’s website is available at http://www.avalonbay.com/earnings. If you would like to receive future press releases via e-mail, please register through the Company’s website at http://www.avalonbay.com/Template.cfm?Section=Subscribe. Some items referenced in the earnings release may require the Adobe Acrobat 5.0 Reader. If you do not have the Adobe Acrobat 5.0 Reader, you may download it at the following website address: http://www.adobe.com/products/acrobat/readstep.html.

The following non-GAAP financial measures and other terms, as used in the text of this earnings release, are defined and further explained on Attachment 14, “Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms”:

•

FFO

•

Projected FFO

•

Established Communities

•

NOI

•

Market Rents

•

Economic Occupancy

•

Rental revenue (with concessions on a cash basis)

•

Total Capital Cost

•

Economic Gain

•

Initial Year Market Cap Rate

•

Unleveraged IRR

•

Leverage

•

Unencumbered NOI

•

Interest Coverage

AvalonBay currently owns or holds an ownership interest in 142 apartment communities containing 41,997 apartment homes in ten states and the District of Columbia, of which eleven communities are under construction and two communities are under reconstruction. AvalonBay is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in high barrier-to-entry markets of the United States. More information on AvalonBay may be found on AvalonBay’s website at http://www.avalonbay.com. For additional information, please contact Bryce Blair, Chairman, Chief Executive Officer and President, at (703) 317-4652 or Thomas J. Sargeant, Chief Financial Officer, at (703) 317-4635.

This release, including its attachments, contains 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. You can identify these forward-looking statements by the Company’s use of words such as “expects,” “plans,” “estimates,” “projects,” “intends,” “believes” and similar expressions that do not relate to historical matters. Actual results may differ materially from those expressed or implied by the forward-looking statements as a result of risks and uncertainties, including possible changes in demand for apartment homes, the effects of economic conditions (including interest rates), the impact of competition and competitive pricing, delays in completing developments and lease-ups on schedule, changes in construction costs, the results of financing efforts, the timing and closing of planned dispositions under agreement, the effects of the Company’s accounting policies and other matters detailed in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2002 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements.”

The Company does not undertake a duty to update forward-looking statements, including its expected operating results for the first quarter or full year 2004. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community. The format and extent of future outlooks may be different from the format and extent of the information contained in this release.

Avalon at Newton Highlands is conveniently located in the retail and commercial
corridor along Needham Street in Newton, Massachusetts, and is the first new
apartment community in the City of Newton in over 20 years. The community’s
location, approximately one mile east of Route 128, six miles west of Downtown
Boston and a half-mile from a subway station, provides residents with convenient
commuting to major area employers. Two of the region’s premier shopping malls
along Route 9 are located a quarter-mile from the community.

Avalon at Newton Highlands contains 294 studios, one-, two- and three-bedroom
apartment homes in two, four-story mid-rise buildings. Apartment home features
include fully applianced kitchens, nine-foot ceilings, private patios or balconies, and
full-size washers and dryers. Optional amenities include cherry kitchen cabinets, gas
fireplaces and lofts. Residents also enjoy many community amenities including a
clubhouse, fully equipped fitness center, outdoor heated pool, multi-sport court,
putting green, billiards room and resident lounge.

Avalon at Newton Higlands increases AvalonBay’s presence in the Boston,
Massachussetts region to 15 communities with more than 3,700 apartment homes.


Company Profile
Selected Operating and Other Information		Attachment 1
Detailed Operating Information		Attachment 2
Condensed Consolidated Balance Sheets		Attachment 3

Sub-Market Profile
Quarterly Revenue and Occupancy Changes (Established Communities)		Attachment 4
Sequential Quarterly Revenue and Occupancy Changes (Established Communities)		Attachment 5
Full Year Revenue and Occupancy Changes (Established Communities)		Attachment 6

Development, Redevelopment, Acquisition and Disposition Profile
Capitalized Community and Corporate Expenditures and Expensed Community Maintenance Costs		Attachment 7
Summary of Development, Redevelopment and Presale Activity		Attachment 8
Development Communities		Attachment 9
Redevelopment Communities		Attachment 10
Summary of Development and Redevelopment Community Activity		Attachment 11
Future Development		Attachment 12
Summary of Disposition Activity		Attachment 13

Definitions and Reconciliations
Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms		Attachment 14

The following is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. The projections and estimates contained in the attachments referred to above are forward-looking statements. These forward-looking statements involve risks and uncertainties, and actual results may differ materially from those projected in such statements. Risks associated with the Company’s development, redevelopment, construction, and lease-up activities, which could impact the forward-looking statements made, include: development opportunities may be abandoned; total capital cost of a community may exceed original estimates, possibly making the community uneconomical and/or affecting projected returns; construction and lease-up may not be completed on schedule, resulting in increased debt service and construction costs; and other risks described in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2002.

AvalonBay Communities, Inc.
Selected Operating and Other Information
December 31, 2003
(Dollars in thousands except per share data)
(unaudited)


		Q4		Q4					Full Year		Full Year
		2003		2002		% Change			2003		2002		% Change

Net Income available to common stockholders		$	98,108	$	63,033		55.6	%	$	260,781	$	155,722		67.5	%

Per common share — basic		$	1.39	$	0.92		51.1	%	$	3.80	$	2.26		68.1	%
Per common share — diluted		$	1.36	$	0.91		49.5	%	$	3.73	$	2.23		67.3	%

Funds from Operations (1)		$	58,464	$	52,394		11.6	%	$	229,332	$	251,410		(8.8	%)
	Per common share — diluted	$	0.81	$	0.75		8.0	%	$	3.27	$	3.55		(7.9	%)

Dividends declared — common		$	49,656	$	47,742		4.0	%	$	193,590	$	193,155		0.2	%
	Per common share	$	0.70	$	0.70		0.0	%	$	2.80	$	2.80		0.0	%

Common shares outstanding			70,937,526		68,202,926					70,937,526		68,202,926
Outstanding operating partnership units			632,226		975,751					632,226		975,751

Total outstanding shares and units			71,569,752		69,178,677					71,569,752		69,178,677


Average shares outstanding — basic			70,588,495		68,281,468					68,559,657		68,772,139
Average operating partnership units outstanding			731,553		1,003,370					893,279		988,747
Effect of dilutive securities			907,287		620,572					750,531		913,325

Average shares outstanding — diluted			72,227,335		69,905,410					70,203,467		70,674,211


					% of Total			Average
					Market			Interest			Remaining
Debt Composition			Amount		Cap			Rate (2)			Maturities (3)

Conventional Debt												2004	$	190,206
	Long-term, fixed rate		$	1,879,881		32.1	%					2005	$	154,681
	Variable rate credit facility											2006	$	155,011
		and short term note		87,626		1.5	%					2007	$	301,345

	Subtotal, Conventional			1,967,507		33.6	%		6.6	%		2008	$	205,744


Tax-Exempt Debt
	Long-term, fixed rate			289,147		4.9	%
	Long-term, variable rate			80,879		1.4	%

	Subtotal, Tax-Exempt			370,026		6.3	%		5.7	%

Total Debt			$	2,337,533		39.9	%		6.5	%

⁽¹⁾		2002 is presented to conform to NAREIT’s definition of FFO, as clarified in 2003, and includes as a reduction in FFO impairment losses that were recorded in December 2002.

⁽²⁾		Includes credit enhancement fees, facility fees, trustees’ fees, etc.

⁽³⁾		Excludes amounts under the $500,000,000 variable rate credit facility that, after all extensions, matures in 2005.

AvalonBay Communities, Inc.
Detailed Operating Information
December 31, 2003
(Dollars in thousands except per share data)
(unaudited)


		Q4			Q4						Full Year			Full Year
		2003			2002			% Change			2003			2002			% Change

Revenue:
	Rental and other income	$	155,602		$	149,051			4.4	%	$	608,720		$	587,385			3.6	%
	Management, development and other fees		188			278			(32.4	%)		931			2,145			(56.6	%)

	Total		155,790			149,329			4.3	%		609,651			589,530			3.4	%

Operating expenses:
	Direct property operating expenses, excluding property taxes		36,868			34,382			7.2	%		146,647			130,293			12.6	%
	Property taxes		14,721			13,781			6.8	%		57,555			52,269			10.1	%
	Property management and other indirect operating expenses		8,536			8,054			6.0	%		31,167			30,551			2.0	%

	Total		60,125			56,217			7.0	%		235,369			213,113			10.4	%

Interest income			805			964			(16.5	%)		3,440			3,978			(13.5	%)
Interest expense			(33,085	)		(33,051	)		0.1	%		(134,911	)		(119,666	)		12.7	%
General and administrative expense			(3,098	)		(3,440	)		(9.9	%)		(13,734	)		(13,449	)		2.1	%
Joint venture income, minority interest and venture partner interest in profit-sharing (1)			(321	)		(1,277	)		(74.9	%)		22,848			(1,716	)		N/A
Depreciation expense			(38,964	)		(36,321	)		7.3	%		(151,454	)		(134,939	)		12.2	%
Impairment loss			—			(6,800	)		(100.0	%)		—			(6,800	)		(100.0	%)

Income from continuing operations			21,002			13,187			59.3	%		100,471			103,825			(3.2	%)
Discontinued operations: (2)
	Income from discontinued operations		449			4,762			(90.6	%)		10,064			20,900			(51.8	%)
	Gain on sale of communities		78,832			48,893			61.2	%		160,990			48,893			229.3	%

	Total		79,281			53,655			47.8	%		171,054			69,793			145.1	%

Net income			100,283			66,842			50.0	%		271,525			173,618			56.4	%
Dividends attributable to preferred stock			(2,175	)		(3,809	)		(42.9	%)		(10,744	)		(17,896	)		(40.0	%)

Net income available to common stockholders		$	98,108		$	63,033			55.6	%	$	260,781		$	155,722			67.5	%

Net income per common share- basic		$	1.39		$	0.92			51.1	%	$	3.80		$	2.26			68.1	%

Net income per common share- diluted		$	1.36		$	0.91			49.5	%	$	3.73		$	2.23			67.3	%

(1)		Full Year 2003 includes the Company’s share of the GAAP gain recognized by the Company for the sale of a community in which it held a 50% interest.

(2)		Reflects net income for communities held for sale as of December 31, 2003 and communities sold during the period from January 1, 2002 through December 31, 2003. The following table details income from discontinued operations as of the periods shown:

(3)

NOI for discontinued operations totaled $891 for the three months ended and $13,901 for the year ended December 31, 2003, of which $493 and $13,481, respectively, related to assets sold.

AvalonBay Communities, Inc.
Condensed Consolidated Balance Sheets
December 31, 2003
(Dollars in thousands)
(unaudited)


		December 31,		December 31,
		2003		2002

Net real estate		$	4,431,718	$	4,212,992
Construction in progress (including land)			253,183		271,213
Real estate assets held for sale, net			51,488		301,226

	Total real estate, net		4,736,389		4,785,431

Cash and cash equivalents			7,196		12,911
Cash in escrow			11,825		10,228
Resident security deposits			20,891		21,839
Other assets (1)			133,281		120,426

	Total assets	$	4,909,582	$	4,950,835


Unsecured senior notes		$	1,835,284	$	1,985,342
Unsecured facility			51,100		28,970
Notes payable			451,433		417,186
Liabilities related to assets held for sale			546		45,578
Other liabilities			235,133		240,034

	Total liabilities	$	2,573,496	$	2,717,110

Minority interest			24,752		39,185
Stockholders’ equity			2,311,334		2,194,540

	Total liabilities and stockholders’ equity	$	4,909,582	$	4,950,835

⁽¹⁾

Other assets includes $684 and $1,949 relating to discontinued operations as of December 31, 2003 and December 31, 2002, respectively.

AvalonBay Communities, Inc.
Quarterly Revenue and Occupancy Changes — Established Communities (1)


			Apartment Homes		Average Rental Rates ⁽²⁾							Economic Occupancy									Rental Revenue ($000's)⁽³⁾

					Q4 03		Q4 02		% Change			Q4 03			Q4 02			% Change			Q4 03		Q4 02		% Change

Northeast
	Fairfield-New Haven, CT			2,170	$	1,581	$	1,631		(3.1	%)		88.2	%		89.1	%		(0.9	%)	$	9,076	$	9,457		(4.0	%)
	Boston, MA			1,479		1,608		1,739		(7.5	%)		93.8	%		92.3	%		1.5	%		6,695		7,119		(6.0	%)
	New York, NY			1,234		1,932		1,949		(0.9	%)		93.3	%		94.5	%		(1.2	%)		6,670		6,811		(2.1	%)
	Northern New Jersey			1,043		2,224		2,274		(2.2	%)		91.2	%		91.3	%		(0.1	%)		6,347		6,494		(2.3	%)
	Long Island, NY			915		2,238		2,143		4.4	%		94.7	%		98.8	%		(4.1	%)		5,815		5,799		0.3	%
	Central New Jersey			718		1,395		1,412		(1.2	%)		96.1	%		92.7	%		3.4	%		2,879		2,817		2.2	%

	Northeast Average			7,559		1,794		1,832		(2.1	%)		92.1	%		92.6	%		(0.5	%)		37,482		38,497		(2.6	%)

Mid-Atlantic
	Washington, DC			3,630		1,350		1,388		(2.7	%)		94.8	%		91.6	%		3.2	%		13,931		13,859		0.5	%
	Baltimore, MD			1,054		1,139		1,121		1.6	%		96.2	%		94.6	%		1.6	%		3,466		3,359		3.2	%

	Mid-Atlantic Average			4,684		1,303		1,328		(1.9	%)		95.0	%		92.1	%		2.9	%		17,397		17,218		1.0	%

Midwest
	Chicago, IL			1,296		1,126		1,166		(3.4	%)		90.9	%		89.5	%		1.4	%		3,981		4,063		(2.0	%)

	Midwest Average			1,296		1,126		1,166		(3.4	%)		90.9	%		89.5	%		1.4	%		3,981		4,063		(2.0	%)

Pacific Northwest
	Seattle, WA			2,436		1,000		1,032		(3.1	%)		92.9	%		93.2	%		(0.3	%)		6,787		7,024		(3.4	%)

	Pacific Northwest Average			2,436		1,000		1,032		(3.1	%)		92.9	%		93.2	%		(0.3	%)		6,787		7,024		(3.4	%)

Northern California
	San Jose, CA			4,808		1,384		1,519		(8.9	%)		96.2	%		95.2	%		1.0	%		19,211		20,863		(7.9	%)
	Oakland-East Bay, CA			2,090		1,213		1,274		(4.8	%)		94.7	%		96.2	%		(1.5	%)		7,207		7,695		(6.3	%)
	San Francisco, CA			1,765		1,518		1,593		(4.7	%)		96.2	%		95.4	%		0.8	%		7,733		8,044		(3.9	%)

	Northern California Average			8,663		1,370		1,475		(7.1	%)		95.9	%		95.5	%		0.4	%		34,151		36,602		(6.7	%)

Southern California
	Orange County, CA			1,350		1,216		1,183		2.8	%		96.1	%		97.2	%		(1.1	%)		4,731		4,653		1.7	%
	San Diego, CA			940		1,273		1,247		2.1	%		96.9	%		97.1	%		(0.2	%)		3,479		3,413		1.9	%
	Los Angeles, CA			890		1,329		1,285		3.4	%		93.7	%		98.6	%		(4.9	%)		3,324		3,373		(1.5	%)

	Southern California Average			3,180		1,264		1,229		2.8	%		95.6	%		97.6	%		(2.0	%)		11,534		11,439		0.8	%

		Average/Total Established		27,818	$	1,418	$	1,466		(3.3	%)		94.1	%		93.9	%		0.2	%	$	111,332	$	114,843		(3.1	%)

(1)

Established Communities are communities with stabilized operating expenses as of January 1, 2002 such that a comparison of 2002 to 2003 is meaningful.

(2)

Reflects the effect of concessions amortized over the lease term.

(3)

With concessions reflected on a cash basis, Established Communities rental revenue declined 2.6% between years.

AvalonBay Communities, Inc.
*Sequential Quarterly* Revenue and Occupancy Changes — Established Communities⁽¹⁾


			Apartment Homes		Average Rental Rates ⁽²⁾							Economic Occupancy									Rental Revenue ($000's) ⁽³⁾

					Q4 03		Q3 03		% Change			Q4 03			Q3 03			% Change			Q4 03		Q3 03		% Change

Northeast
	Fairfield-New Haven, CT			2,170	$	1,581	$	1,590		(0.6	%)		88.2	%		90.8	%		(2.6	%)	$	9,076	$	9,386		(3.3	%)
	Boston, MA			1,479		1,608		1,640		(2.0	%)		93.8	%		93.8	%		0.0	%		6,695		6,817		(1.8	%)
	New York, NY			1,234		1,932		1,943		(0.6	%)		93.3	%		93.3	%		0.0	%		6,670		6,710		(0.6	%)
	Northern New Jersey			1,043		2,224		2,267		(1.9	%)		91.2	%		90.0	%		1.2	%		6,347		6,382		(0.5	%)
	Long Island, NY			915		2,238		2,206		1.5	%		94.7	%		97.2	%		(2.5	%)		5,815		5,888		(1.2	%)
	Central New Jersey			718		1,395		1,406		(0.8	%)		96.1	%		92.5	%		3.6	%		2,879		2,794		3.0	%

	Northeast Average			7,559		1,794		1,806		(0.7	%)		92.1	%		92.7	%		(0.6	%)		37,482		37,977		(1.3	%)

Mid-Atlantic
	Washington, DC			3,630		1,350		1,366		(1.2	%)		94.8	%		94.3	%		0.5	%		13,931		14,034		(0.7	%)
	Baltimore, MD			1,054		1,139		1,140		(0.1	%)		96.2	%		96.9	%		(0.7	%)		3,466		3,494		(0.8	%)

	Mid-Atlantic Average			4,684		1,303		1,316		(1.0	%)		95.0	%		94.8	%		0.2	%		17,397		17,528		(0.7	%)

Midwest
	Chicago, IL			1,296		1,126		1,144		(1.6	%)		90.9	%		91.0	%		(0.1	%)		3,981		4,048		(1.7	%)

	Midwest Average			1,296		1,126		1,144		(1.6	%)		90.9	%		91.0	%		(0.1	%)		3,981		4,048		(1.7	%)

Pacific Northwest
	Seattle, WA			2,436		1,000		1,015		(1.5	%)		92.9	%		93.0	%		(0.1	%)		6,787		6,899		(1.6	%)

	Pacific Northwest Average			2,436		1,000		1,015		(1.5	%)		92.9	%		93.0	%		(0.1	%)		6,787		6,899		(1.6	%)

Northern California
	San Jose, CA			4,808		1,384		1,412		(2.0	%)		96.2	%		95.4	%		0.8	%		19,211		19,421		(1.1	%)
	Oakland-East Bay, CA			2,090		1,213		1,230		(1.4	%)		94.7	%		95.3	%		(0.6	%)		7,207		7,349		(1.9	%)
	San Francisco, CA			1,765		1,518		1,530		(0.8	%)		96.2	%		94.5	%		1.7	%		7,733		7,656		1.0	%

	Northern California Average			8,663		1,370		1,392		(1.6	%)		95.9	%		95.2	%		0.7	%		34,151		34,426		(0.8	%)

Southern California
	Orange County, CA			1,350		1,216		1,207		0.7	%		96.1	%		95.6	%		0.5	%		4,731		4,675		1.2	%
	San Diego, CA			940		1,273		1,274		(0.1	%)		96.9	%		96.1	%		0.8	%		3,479		3,452		0.8	%
	Los Angeles, CA			890		1,329		1,317		0.9	%		93.7	%		94.5	%		(0.8	%)		3,324		3,324		0.0	%

	Southern California Average			3,180		1,264		1,258		0.5	%		95.6	%		95.4	%		0.2	%		11,534		11,451		0.7	%

		Average/Total Established		27,818	$	1,418	$	1,432		(1.0	%)		94.1	%		94.0	%		0.1	%	$	111,332	$	112,329		(0.9	%)

(1)

Established Communities are communities with stabilized operating expenses as of January 1, 2002 such that a comparison of 2002 to 2003 is meaningful.

(2)

Reflects the effect of concessions amortized over the lease term.

(3)

With concessions reflected on a cash basis, Established Communities rental revenue remained flat between quarters.

AvalonBay Communities, Inc.
Full Year Revenue and Occupancy Changes — Established Communities ⁽¹⁾


			Apartment Homes		Average Rental Rates ⁽²⁾							Economic Occupancy									Rental Revenue ($000’s) ⁽³⁾

					Full Year 03		Full Year 02		% Change			Full Year 03			Full Year 02			% Change			Full Year 03		Full Year 02		% Change

Northeast
	Fairfield-New Haven, CT			2,170	$	1,597	$	1,644		(2.9	%)		90.5	%		92.5	%		(2.0	%)	$	37,619	$	39,559		(4.9	%)
	Boston, MA			1,479		1,664		1,779		(6.5	%)		92.4	%		92.9	%		(0.5	%)		27,277		29,315		(7.0	%)
	New York, NY			1,234		1,940		1,980		(2.0	%)		94.0	%		92.5	%		1.5	%		26,993		27,136		(0.5	%)
	Northern New Jersey			1,043		2,234		2,453		(8.9	%)		90.6	%		88.5	%		2.1	%		25,330		27,177		(6.8	%)
	Long Island, NY			915		2,195		2,125		3.3	%		97.3	%		98.4	%		(1.1	%)		23,457		22,961		2.2	%
	Central New Jersey			718		1,403		1,446		(3.0	%)		92.2	%		92.3	%		(0.1	%)		11,147		11,504		(3.1	%)

	Northeast Average			7,559		1,808		1,876		(3.6	%)		92.6	%		92.7	%		(0.1	%)		151,823		157,652		(3.7	%)

Mid-Atlantic
	Washington, DC			3,630		1,364		1,407		(3.1	%)		93.5	%		93.2	%		0.3	%		55,557		57,137		(2.8	%)
	Baltimore, MD			1,054		1,136		1,102		3.1	%		95.9	%		95.7	%		0.2	%		13,776		13,339		3.3	%

	Mid-Atlantic Average			4,684		1,313		1,339		(1.9	%)		94.0	%		93.7	%		0.3	%		69,333		70,476		(1.6	%)

Midwest
	Chicago, IL			1,296		1,147		1,191		(3.7	%)		90.5	%		92.3	%		(1.8	%)		16,141		17,082		(5.5	%)

	Midwest Average			1,296		1,147		1,191		(3.7	%)		90.5	%		92.3	%		(1.8	%)		16,141		17,082		(5.5	%)

Pacific Northwest
	Seattle, WA			2,436		1,014		1,069		(5.1	%)		92.2	%		93.5	%		(1.3	%)		27,342		29,224		(6.4	%)

	Pacific Northwest Average			2,436		1,014		1,069		(5.1	%)		92.2	%		93.5	%		(1.3	%)		27,342		29,224		(6.4	%)

Northern California
	San Jose, CA			4,808		1,435		1,601		(10.4	%)		95.4	%		93.7	%		1.7	%		79,006		86,522		(8.7	%)
	Oakland-East Bay, CA			2,090		1,239		1,332		(7.0	%)		95.3	%		94.4	%		0.9	%		29,617		31,541		(6.1	%)
	San Francisco, CA			1,765		1,544		1,646		(6.2	%)		94.9	%		94.8	%		0.1	%		31,041		33,058		(6.1	%)

	Northern California Average			8,663		1,410		1,547		(8.9	%)		95.3	%		94.0	%		1.3	%		139,664		151,121		(7.6	%)

Southern California
	Orange County, CA			1,350		1,207		1,184		1.9	%		95.6	%		95.9	%		(0.3	%)		18,685		18,392		1.6	%
	San Diego, CA			940		1,267		1,236		2.5	%		95.3	%		96.1	%		(0.8	%)		13,629		13,407		1.7	%
	Los Angeles, CA			890		1,319		1,279		3.1	%		95.0	%		95.7	%		(0.7	%)		13,383		13,070		2.4	%

	Southern California Average			3,180		1,256		1,226		2.4	%		95.3	%		95.9	%		(0.6	%)		45,697		44,869		1.8	%

		Average/Total Established		27,818	$	1,437	$	1,505		(4.5	%)		93.8	%		93.6	%		0.2	%	$	450,000	$	470,424		(4.3	%)

(1)

Established Communities are communities with stabilized operating expenses as of January 1, 2002 such that a comparison of 2002 to 2003 is meaningful.

(2)

Reflects the effect of concessions amortized over the lease term.

(3)

With concessions reflected on a cash basis, Established Communities rental revenue declined 4.2% between years.

AvalonBay Communities, Inc.
Capitalized Community and Corporate Expenditures and Expensed Community Maintenance Costs


													Categorization of 2003 Add'l Capitalized Value ⁽⁴⁾

													Acquisitions,
										2003 Add'l			Construction,
				Apartment		Balance at		Balance at		Capitalized			Redevelopment			Revenue		Non-Rev
Current Communities ⁽¹⁾				Homes⁽²⁾		12-31-03⁽³⁾		12-31-02⁽³⁾		Value			& Dispositions			Generating⁽⁵⁾		Generating			Total

Established Communities					27,818	$	2,796,926	$	2,784,587	$	12,339		$	801		$	529	$	11,009		$	12,339

Other Stabilized Communities					5,360		710,606		708,327		2,279			2,224	⁽⁷⁾		—		55			2,279

			Total Stabilized		33,178		3,507,532		3,492,914		14,618			3,025			529		11,064			14,618


Development Communities					6,232		806,961		527,112		279,849			279,849			—		—			279,849

Dispositions					—		—		236,596		(236,596	)		(236,596	)		—		—			(236,596	)

Current Communities Under Redevelopment
	Avalon at Foxhall				308		36,425		29,180		7,245			7,245			—		—			7,245
	Avalon at Prudential Center				781		128,853		126,001		2,852			2,852			—		—			2,852

			Total Redevelopment		1,089		165,278		155,181		10,097			10,097			—		—			10,097


Corporate					—		30,724		28,252		2,472			3,793	⁽⁸⁾		—		(1,321	)⁽⁹⁾		2,472

		Total			40,499	$	4,510,495	$	4,440,055	$	70,440		$	60,168		$	529	$	9,743		$	70,440


							2003 Maintenance Expensed Per Home ⁽⁶⁾

				Non-Rev
				Generating
				Capex			Carpet			Other
Current Communities ⁽¹⁾				Per Home			Replacement			Maintenance			Total

Established Communities				$	396		$	141		$	1,136		$	1,276

Other Stabilized Communities					10			78			1,083			1,161

			Total Stabilized		333			131			1,127			1,258


Development Communities					—			11			436			447

Dispositions					—			89			706			796

Current Communities Under Redevelopment
	Avalon at Foxhall				—			13			1,081			1,094
	Avalon at Prudential Center				—			26			2,562			2,588

			Total Redevelopment		—			22			2,143			2,165


Corporate					—			—			—			—

		Total		$	273	⁽¹⁰⁾	$	109	⁽¹¹⁾	$	1,048	⁽¹¹⁾	$	1,157	⁽¹¹⁾

(1)

For the purpose of this table, Current Communities excludes communities held by unconsolidated real estate joint ventures.

(2)

Apartment homes as of 12/31/03.

(3)

Total gross fixed assets excluding land.

(4)

Policy is to capitalize if the item exceeds $15 and extends the useful life of the asset. Personal property is capitalized if the item is a new addition and it exceeds $2.5.

(5)

Represents expenditures on water saving devices and on submetering equipment.

(6)

Other maintenance includes appliance replacement costs and maintenance payroll costs.

(7)

Relates primarily to additional construction costs on communities completed in 2002.

(8)

Represents the construction of a regional office building in New Canaan, CT, a portion of which has been leased to 3rd parties.

(9)

Represents the retirement of certain corporate assets.

(10)

Total non-revenue generating capitalized costs per home excludes corporate capitalized costs.

(11)

Total 2003 maintenance expensed per home excludes maintenance costs related to Dispositions.

AvalonBay Communities, Inc.
Summary of Development, Redevelopment and Presale Activity as of December 31, 2003


			Number		Number		Total
			of		of		Capital Cost (1)
			Communities		Homes		(millions)

Portfolio Additions:
2003 Annual Completions
	Development			7		1,959	$	372.7
	Redevelopment			—		—		—

	Total Additions			7		1,959	$	372.7

2002 Annual Completions
	Development			10		2,521	$	466.6
	Redevelopment	(2)		2		—		44.2
	Presale Communities	(3)		1		306		69.9

	Total Additions			13		2,827	$	580.7

Pipeline Activity:		(4)
Currently Under Construction
	Development			11		3,493	$	671.9
	Redevelopment	(2)		2		—		34.2

	Subtotal			13		3,493	$	706.1

Planning
	Development Rights			40		10,070	$	2,089.0

	Total Pipeline			53		13,563	$	2,795.1

(1)

See Attachment #14 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

(2)

Represents only cost of redevelopment activity, does not include original acquisition cost or number of apartment homes acquired.

(3)

A presale community is a community which, before or while under construction, the company contracts with an unrelated third party to purchase upon construction completion. In some cases, an additional condition to closing the presale acquisition is that the community has achieved stabilized or some other level of occupancy.

This chart contains forward-looking statements. Please see the paragraph regarding forward-looking statements on the Table of Contents page relating to the Company’s Supplemental Operating and Financial Data charts for the fourth quarter of 2003.


						Total			Schedule									Avg
				# of		Capital												Rent
				Apt		Cost (1)					Initial				Stabilized			Per		% Comp			% Leased			% Occ
				Homes		(millions)			Start		Occupancy		Complete		Ops (1)			Home (1)		(2)			(3)			(4) (5)

																	Inclusive of
																	Concessions
																	See Attachment #14
Under Construction:
	1.	Avalon at Grosvenor Station (6) (7)			497	$	82.3			Q1 2002		Q3 2003		Q4 2004		Q2 2005		$	1,620		53.3	%		39.8	%		35.6	%
			North Bethesda, MD
	2.	Avalon at Glen Cove South			256	$	62.6			Q3 2002		Q1 2004		Q2 2004		Q4 2004		$	2,715		N/A			3.1	%		N/A
			Glen Cove, NY
	3.	Avalon at Steven’s Pond			326	$	55.4			Q3 2002		Q1 2003		Q2 2004		Q4 2004		$	1,645		82.8	%		51.2	%		48.2	%
			Saugus, MA
	4.	Avalon Darien			189	$	43.6			Q4 2002		Q2 2003		Q3 2004		Q1 2005		$	2,270		78.8	%		59.8	%		51.9	%
			Darien, CT
	5.	Avalon at Traville (8)			520	$	71.5			Q4 2002		Q3 2003		Q1 2005		Q3 2005		$	1,500		38.5	%		26.5	%		24.6	%
			North Potomac, MD
	6.	Avalon Run East II			312	$	49.3			Q2 2003		Q3 2004		Q1 2005		Q3 2005		$	1,690		N/A			1.3	%		N/A
			Lawrenceville, NJ
	7.	Avalon at Crane Brook			387	$	56.2			Q3 2003		Q3 2004		Q2 2005		Q4 2005		$	1,590		N/A			N/A			N/A
			Danvers & Peabody, MA
	8.	Avalon Milford I			246	$	32.5			Q3 2003		Q3 2004		Q1 2005		Q3 2005		$	1,420		N/A			N/A			N/A
			Milford, CT
	9.	Avalon Chrystie Place I (9)			361	$	149.9			Q4 2003		Q3 2005		Q4 2005		Q2 2006		$	2,665		N/A			N/A			N/A
			New York, NY
	10.	Avalon at The Pinehills I			101	$	19.9			Q4 2003		Q4 2004		Q1 2005		Q3 2005		$	2,145		N/A			N/A			N/A
			Plymouth, MA
	11.	Avalon Pines I			298	$	48.7			Q4 2003		Q1 2005		Q4 2005		Q2 2006		$	1,940		N/A			N/A			N/A
			Coram, NY

			Subtotal/Weighted Average		3,493	$	671.9											$	1,860

Completed this Quarter:
	1.	Avalon Glendale			223	$	40.4			Q1 2002		Q2 2003		Q4 2003		Q3 2004		$	1,955		100.0	%		62.8	%		60.5	%
			Glendale, CA
	2.	Avalon at Newton Highlands (6)			294	$	57.7			Q2 2002		Q2 2003		Q4 2003		Q4 2004		$	2,150		100.0	%		76.2	%		70.4	%
			Newton, MA

			Subtotal/Weighted Average		517	$	98.1											$	2,065

			Total/Weighted Average		4,010	$	770.0											$	1,885

		Weighted Average Projected NOI as a % of Total Capital Cost (1)					8.4	%	Inclusive of Concessions — See Attachment #14

(1)

See Attachment #14 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

(2)

Includes apartment homes for which construction has been completed and accepted by management as of January 15, 2004.

(3)

Includes apartment homes for which leases have been executed or non-refundable deposits have been paid as of January 16, 2004.

(4)

Physical occupancy based on apartment homes occupied as of January 16, 2004.

(5)

Q4 2003 Net Operating Income/(Deficit) for communities under construction and communities completed during this quarter was $1.4 million (excludes Net Operating Income for communities completed in previous quarters but not yet stabilized). See Attachment #14.

(6)

The community is owned by a DownREIT partnership in which a wholly-owned subsidiary of AvalonBay is the general partner with a majority interest. This community is consolidated for financial reporting purposes.

(7)

For purposes of calculating Projected NOI as a % of Total Capital Cost for this community and its related impact on the Weighted Average calculation, the Company has included in Total Capital Cost $1.9 million, the present value of a projected residual land payment that is a priority distribution upon a sale or refinancing transaction in the future.

(8)

Construction started at Avalon Traville Phase II in Q203. It is combined above with Phase I for reporting purposes.

(9)

The Company expects the community to be financed under a joint venture structure with third-party financing, in which the community will be owned by a limited liability company managed by a wholly-owned subsidiary of AvalonBay. The Company’s portion of the Total Capital Cost of this joint venture is projected to be $30.0 million including community-based tax-exempt debt.

AvalonBay Communities, Inc.
Redevelopment Communities (1) as of December 31, 2003


						Cost (millions)					Schedule											Number of Homes
																				Avg
				# of				Total												Rent				Out of
				Apt		Acquisition		Capital									Restabilized			Per		Completed		Service
				Homes		Cost		Cost (2)(3)			Acquisition		Start		Complete		Ops (3)			Home (3)		to date		@ 12/31/03

																			Inclusive of
																			Concessions
																			See Attachment #14
Under Redevelopment:
	1.	Avalon at Foxhall (4)			308	$	35.7	$	43.8			Q3 1994		Q4 2002		Q2 2004		Q4 2004		$	1,870		291		6
			Washington, DC
	2.	Avalon at Prudential Center (5)			781	$	133.9	$	160.0			Q3 1998		Q4 2000		Q2 2006		Q4 2006		$	2,630		473		28
			Boston, MA

			Total/Weighted Average		1,089	$	169.6	$	203.8											$	2,415		764		34

		Weighted Average Projected NOI as a % of Total Capital Cost (3)							9.4	%	Inclusive of Concessions — See Attachment #14

(1)

Redevelopment Communities are communities acquired for which redevelopment costs are expected to exceed 10% of the original acquisition cost or $5,000,000.

(3)

See Attachment #14— Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

(4)

The Acquisition Cost of $35.7 million is comprised of the initial acquisition cost of $33.8 million plus capital expenditures of $1.9 million that were made following the acquisition and were unrelated to redevelopment costs. This asset was formerly known as 4100 Massachusetts Avenue.

(5)

The Acquisition Cost of $133.9 million is comprised of the initial acquisition cost of $130 million plus capital expenditures of $3.9 million that were made following the acquisition and were unrelated to redevelopment costs. In Q2 2003, the scope of this redevelopment was changed to include a roof replacement and other apartment renovations, increasing the redevelopment budget to $22.2 million from $20.6 million. In Q4 2003, the scope of this redevelopment was extended to include renovations on all remaining apartments, increasing the redevelopment budget to $26.1 million.

AvalonBay Communities, Inc.
Summary of Development and Redevelopment Community Activity (1) as of December 31, 2003


DEVELOPMENT (2)

		Apt Homes		Development		Cost of Homes				Construction in
		Completed &		Community		Completed &		Remaining to		Progress at
		Occupied		Investments (3)		Occupied (4)		Invest (5)		Period End (6)

Total - 2002 Actual			2,479	$	417,564,422	$	469,270,539	$	254,198,266	$	295,107,369

2003 Actual :
	Quarter 1		343	$	47,610,401	$	66,767,096	$	205,448,920	$	304,444,246
	Quarter 2		380		96,480,917		75,410,129		307,768,115		270,813,025
	Quarter 3		633		78,516,195		120,057,691		304,758,336		266,114,151
	Quarter 4		425		81,862,958		73,129,401		325,139,145		240,137,497

Total - 2003 Actual			1,781	$	304,470,471	$	335,364,317

2004 Projected:
	Quarter 1		621	$	102,584,467	$	80,220,482	$	222,554,679	$	263,446,312
	Quarter 2		673		59,378,433		116,789,198		163,176,244		225,977,926
	Quarter 3		589		58,974,171		97,743,230		104,202,073		204,910,337
	Quarter 4		308		48,369,671		47,746,985		55,832,402		192,034,788

Total - 2004 Projected			2,191	$	269,306,742	$	342,499,895


REDEVELOPMENT

		Avg Homes		Redevelopment				Reconstruction in
		Out of		Community		Remaining to		Progress at
		Service		Investments (3)		Invest (5)		Period End (6)

Total - 2002 Actual				$	10,612,174	$	7,655,832	$	17,317,952

2003 Actual :
	Quarter 1		68	$	1,798,678	$	5,857,154	$	10,541,752
	Quarter 2		75		1,535,351		5,738,979		15,074,513
	Quarter 3		83		3,055,001		3,179,103		16,888,849
	Quarter 4		52		1,619,936		5,660,027		13,045,931

Total - 2003 Actual				$	8,008,966

2004 Projected:
	Quarter 1		28	$	1,331,137	$	4,328,890	$	—
	Quarter 2		15		469,195		3,859,695		—
	Quarter 3		15		469,195		3,390,500		—
	Quarter 4		15		469,195		2,921,306		—

Total - 2004 Projected				$	2,738,722

(1)

Data is presented for all Historical and Current Development Communities currently under construction; all Historical and Current Redevelopment Communities under reconstruction; and those communities for which construction or reconstruction is expected to begin within the next 90 days. Does not include data for Presale Communities.

(2)

Projected Periods include data for consolidated joint ventures at 100%. The offset for joint venture partners’ participation is reflected in the minority interest line items of the Financial Statements.

(3)

Represents Total Capital Cost incurred or expected to be incurred during the quarter for (i) Current Development/Redevelopment Communities under construction or reconstruction during the quarter and (ii) those for which construction or reconstruction is expected to begin within the next 90 days.

(4)

Represents Total Capital Cost incurred in all quarters of apartment homes completed and occupied during the quarter. Calculated by dividing Total Capital Cost for each Development Community by number of homes for the community, multiplied by the number of homes completed and occupied during the quarter.

(5)

Represents projected Total Capital Cost remaining to invest on (i) Current Development/Redevelopment Communities under construction or reconstruction during the quarter and (ii) those for which construction or reconstruction is expected to begin within the next 90 days. Remaining to invest for Q403 includes $103.5 million attributed to three anticipated Q104 development starts, one of which is to be subject to a purchase agreement upon completion, and $25.2 million attributed to Avalon Chrystie Place I. The Company’s portion of the Total Capital Cost of this joint venture is projected to be $30.0 million including community-based tax-exempt debt.


DEVELOPMENT RIGHTS

				Estimated		Total
Location of Development Right				Number		Capital Cost (1)
				of Homes		(millions)

	1.	Kirkland, WA	(2)		211	$	50
	2.	Danbury, CT	(2)		234		36
	3.	Orange, CT	(2)		168		22
	4.	Los Angeles, CA	(2)		309		63
	5.	Bedford, MA	(2)		139		21
	6.	Camarillo, CA	(2)		249		43
	7.	San Francisco, CA			313		100
	8.	Plymouth, MA Phase II			69		13
	9.	Stratford, CT			146		23
	10.	Newton, MA			240		60
	11.	Hingham, MA			236		44
	12.	Andover, MA			115		21
	13.	Long Island City, NY Phase II and III			609		162
	14.	Quincy, MA	(2)		148		24
	15.	Milford, CT			284		41
	16.	New York, NY Phase II			205		88
	17.	Los Angeles, CA			123		36
	18.	New Rochelle, NY Phase II and III			588		144
	19.	Greenburgh, NY Phase II			766		120
	20.	Glen Cove, NY	(2)		111		31
	21.	Encino, CA			146		46
	22.	Coram, NY Phase II	(2)		152		26
	23.	Rockville, MD Phase II			196		28
	24.	Wilton, CT			100		24
	25.	Dublin, CA Phase I			304		72
	26.	Sharon, MA			190		31
	27.	Bellevue, WA			368		71
	28.	Seattle, WA	(2)		194		50
	29.	Norwalk, CT			312		63
	30.	Danvers, MA			428		80
	31.	Shrewsbury, MA			300		44
	32.	Cohasset, MA			200		38
	33.	Dublin, CA Phase II			200		47
	34.	College Park, MD			320		44
	35.	Oyster Bay, NY			273		69
	36.	Yaphank, NY			270		41
	37.	New York, NY Phase III			103		46
	38.	West Haven, CT			170		23
	39.	Dublin, CA Phase III			205		49
	40.	Camarillo, CA			376		55

		Total			10,070	$	2,089

(1)

See Attachment #14— Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

AvalonBay Communities, Inc.
Summary of Disposition Activity as of December 31, 2003

Weighted

Accumulated

Weighted Average

Weighted

Number of

Average

Gross Sales

Depreciation

Economic

Initial Year

Average

Communities Sold

Holding Period

Price

GAAP Gain

and Other

Gain (1)

Mkt. Cap Rate (1)

Unleveraged IRR (1)

1998:

9 Communities

170,312,000

25,270,000

23,438,000

1,832,000

7.5

11.8

1999:

16 Communities

316,512,000

47,093,000

27,150,000

19,943,000

8.3

10.0

2000:

8 Communities

160,085,000

40,779,000

6,262,000

34,517,000

7.9

21.3

2001:

7 Communities

241,130,000

62,852,000

21,623,000

41,229,000

8.0

14.0

2002:

1 Community

80,100,000

48,893,000

7,462,000

41,431,000

5.4

22.1

2003:

12 Communities (2)

453,900,000

183,204,000

52,613,000

130,591,000

6.3

15.0

1998 - 2003 Total

5.0

1,422,039,000

408,091,000

138,548,000

269,543,000

7.3

14.4

(1)

See Attachment #14— Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

(2)

2003 GAAP gain, for purposes of this attachment, includes $23,448,000 related to the sale of a community in which the Company held a 50% membership interest and excludes $1,234,000 related to the sale of a land parcel.

AvalonBay Communities, Inc.
Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms

This release, including its attachments, contains certain non-GAAP financial measures and other terms. The definition and calculation of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. The non-GAAP financial measures referred to below should not be considered an alternative to net income as an indication of our performance. In addition, these non-GAAP financial measures do not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered as an alternative measure of liquidity or as indicative of cash available to fund cash needs.

FFO is determined based on a definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). FFO is calculated by the Company as net income or loss computed in accordance with GAAP, adjusted for gains or losses on sales of property, extraordinary gains or losses (as defined by GAAP) and depreciation of real estate assets, including adjustments for unconsolidated partnerships and joint ventures. Effective January 1, 2003, the Company no longer adds back impairment losses when calculating FFO pursuant to NAREIT’s clarified FFO definition. As a result, FFO for both the quarter and the year ended December 31, 2002 have been reduced from amounts previously reported to reflect $6,800,000 or $0.10 per share (diluted) of asset impairment losses recognized in the fourth quarter of 2002. Management generally considers FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses related to dispositions of property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies. A reconciliation of FFO to net income is as follows (dollars in thousands):




	Q4			Q4			Full Year			Full Year
	2003			2002			2003			2002

Net income	$	100,283		$	66,842		$	271,525		$	173,618
Dividends attributable to preferred stock		(2,175	)		(3,809	)		(10,744	)		(17,896	)
Depreciation — real estate assets, including discontinued operations		38,774			37,513			150,706			141,659
Joint venture adjustments		198			355			(22,428	)		1,321
Minority interest, including discontinued operations		216			386			1,263			1,601
Gain on sale of communities		(78,832	)		(48,893	)		(160,990	)		(48,893	)

FFO attributable to common stockholders	$	58,464		$	52,394		$	229,332		$	251,410


Average shares outstanding — diluted		72,227,335			69,905,410			70,203,467			70,674,211

EPS — diluted	$	1.36		$	0.91		$	3.73		$	2.23

FFO per common share — diluted	$	0.81		$	0.75		$	3.27		$	3.55

Projected FFO, as provided within this release in the Company’s outlook for 2004, is calculated on a consistent basis as historical FFO, and is therefore considered to be an appropriate supplemental measure to projected net income of projected operating performance. A reconciliation of the range provided for Projected FFO per share (diluted) for the first quarter and full year 2004 to the range provided for projected EPS (diluted) is as follows:




	Low			High
	range			range

Projected EPS (diluted)- Q1 04	$	0.36		$	0.40
Projected depreciation (real estate related)		0.51			0.56
Projected gain on sale of communities		(0.12	)		(0.17	)

Projected FFO per share (diluted) — Q1 04	$	0.75		$	0.79


Projected EPS (diluted) — Full Year 2004	$	1.49		$	1.67
Projected depreciation (real estate related)		2.16			2.20
Projected gain on sale of communities		(0.52	)		(0.56	)

Projected FFO per share (diluted) — Full Year 2004	$	3.13		$	3.31

Economic Gain is calculated by the Company as the gain on sale in accordance with GAAP, less accumulated depreciation through the date of sale and any other non-cash adjustments that may be required under GAAP accounting. Management generally considers Economic Gain to be an appropriate supplemental measure to gain on sale in accordance with GAAP because it helps investors to understand the relationship between the cash proceeds from a sale and the cash invested in the sold community. The Economic Gain for each of the communities presented is estimated based on their respective final settlement statements. A reconciliation of Economic Gain to gain on sale in accordance with GAAP is presented on Attachment 13.

Initial Year Market Cap Rate is defined by the Company as Projected NOI of a single community for the first 12 months following the date of the buyer’s valuation, less estimates for non-routine allowance of approximately $225 - $300 per apartment home, divided by the gross sales price for the community. For this purpose, management’s projection of stabilized operating expenses for the community includes a management fee of approximately 2.5% — 3.5%. The Initial Year Market Cap Rate, which may be determined in a different manner by others, is a measure frequently used in the real estate industry when determining the appropriate purchase price for a property or estimating the value for the property. Buyers may assign different Initial Year Market Cap Rates to different communities when determining the appropriate value because they (i) may project different rates of change in operating expenses, including capital expenditure estimates and (ii) may project different rates of change in future rental revenue due to different estimates for changes in rent and occupancy levels. The weighted average Initial Year Market Cap Rate is weighted based on the gross sales price of each community.

Established Communities are identified by the Company as communities where a comparison of operating results from the prior year to the current year is meaningful, as these communities were owned and had Stabilized Operations, as defined below, as of the beginning of the prior year. Therefore, for 2003, Established Communities are communities that have Stabilized Operations as of January 1, 2002 and are not conducting or planning to conduct substantial redevelopment activities within the current year. Established Communities do not include communities that are currently held for sale or planned for disposition during the current year.

NOI is defined by the Company as total revenue less direct property operating expenses (including property taxes), and excludes corporate-level property management and other indirect operating expenses, interest income and expense, general and administrative expense, joint venture income, minority interest and venture partner interest in profit-sharing, depreciation expense, gain on sale of communities, impairment losses and income from discontinued operations. The Company considers NOI to be an appropriate supplemental measure to net income of operating performance of a community or communities because it helps both investors and management to understand the core operations of a community or communities prior to the allocation of any corporate-level property management overhead or general and administrative costs. This is more reflective of the operating performance of a community, and allows for an easier comparison of the operating performance of single assets or groups of assets. In addition, because prospective buyers of real estate have different overhead structures, with varying marginal impact to overhead by acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or groups of assets.

A reconciliation of NOI (from continuing operations) to net income, as well as a breakdown of NOI by operating segment, is as follows (dollars in thousands):




			Q4			Q4			Q3			Full Year			Full Year
			2003			2002			2003			2003			2002

Net income			$	100,283		$	66,842		$	57,387		$	271,525		$	173,618
Property management and other indirect operating expenses				8,536			8,054			7,577			31,167			30,551
Interest income				(805	)		(964	)		(852	)		(3,440	)		(3,978	)
Interest expense				33,085			33,051			33,432			134,911			119,666
General and administrative expense				3,098			3,440			3,382			13,734			13,449
Joint venture income, minority interest and venture partner interest in profit-sharing				321			1,277			(23,266	)		(22,848	)		1,716
Depreciation expense				38,964			36,321			37,755			151,454			134,939
Impairment loss				—			6,800			—			—			6,800
Gain on sale of communities				(78,832	)		(48,893	)		(13,575	)		(160,990	)		(48,893	)
Income from discontinued operations				(449	)		(4,762	)		(2,160	)		(10,064	)		(20,900	)

NOI from continuing operations			$	104,201		$	101,166		$	99,680		$	405,449		$	406,968


Established:
	Northeast		$	24,523		$	26,350		$	24,361		$	100,016		$	109,769
	Mid-Atlantic			12,445			12,415			12,160			48,719			50,862
	Midwest			2,180			2,396			2,028			8,553			10,269
	Pacific NW			4,194			4,519			4,125			16,817			18,976
	No. California			24,322			26,124			23,724			99,425			111,039
	So. California			8,156			8,188			7,758			31,691			32,025

		Total Established		75,820			79,992			74,156			305,221			332,940

Other Stabilized				14,128			12,953			14,184			54,889			46,019
Development/Redevelopment				13,692			7,921			11,161			44,142			25,692
Non-Allocated				561			300			179			1,197			2,317

NOI from continuing operations			$	104,201		$	101,166		$	99,680		$	405,449		$	406,968

NOI as reported by the Company does not include the operating results from discontinued operations (i.e., assets sold or held for sale as of December 31, 2003). A reconciliation of NOI for communities sold or held for sale to net income for these communities for the fourth quarter and year-to-date 2003 is as follows (dollars in thousands):

Projected NOI, as used within this release for certain Development and Redevelopment Communities and in calculating the Initial Year Market Cap Rate for dispositions, represents management’s estimate, as of the date of this release, of projected stabilized rental revenue minus projected stabilized operating expenses. For Development and Redevelopment Communities, Projected NOI is calculated based on the first year of Stabilized Operations, as defined below, following the completion of construction. In calculating the Initial Year Market Cap Rate, Projected NOI for dispositions is calculated for the first twelve months following the date of the buyer’s valuation. Projected stabilized rental revenue represents management’s estimate of projected gross potential (based on leased rents for occupied homes and Market Rents, as defined below, for vacant homes) minus projected economic vacancy and adjusted for concessions. Projected stabilized operating expenses do not include interest, income taxes (if any), depreciation or amortization, or any allocation of corporate-level property management overhead or general and administrative costs. The weighted average Projected NOI as a percentage of Total Capital Cost is weighted based on the Total Capital Cost of each community.

In this release the Company has not given a projection of NOI on a company-wide basis. Management believes that Projected NOI of the development and redevelopment communities, on an aggregated weighted average basis, assists investors in understanding management’s estimate of the likely impact on operations of the development and redevelopment communities (before allocation of any corporate-level property management overhead, general and administrative costs or interest expense) when they are complete and achieve stabilized occupancy. Given the different dates and fiscal years at which stabilization is projected for these communities, the projected allocation of corporate-level property management overhead, general and administrative costs and interest expense to communities under development or redevelopment is complex, impractical to develop, and of uncertain meaningfulness. Projected NOI of these communities is not a projection of the Company’s financial performance or cash flow. There can be no assurance that the communities under development or redevelopment will achieve the Projected NOI used in the calculation of weighted average Projected NOI to total capital cost.

Market Rents as reported by the Company are based on the current market rates set by the managers of the Company’s communities based on their experience in renting their communities’ apartments and publicly available market data. Trends in market rents for a region as reported by others could vary. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.

Economic Occupancy is defined as total possible revenue less vacancy loss as a percentage of total possible revenue. Total possible revenue is determined by valuing occupied units at contract rates and vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents. By measuring vacant apartments at their Market Rents, Economic Occupancy takes into account the fact that apartment homes of different sizes and locations within a community have different economic impacts on a community’s gross revenue.

Rental revenue (with concessions on a cash basis) is considered by the Company to be a supplemental measure to rental revenue in conformity with GAAP in helping investors to evaluate the impact of both current and historical concessions on GAAP based rental revenue and to more readily enable comparisons to revenue as reported by other companies. In addition, rental revenue (with concessions on a cash basis) allows an investor to understand the historical trend in cash concessions, which is an indicator of current rental market conditions. A reconciliation of rental revenue from Established Communities in conformity with GAAP to rental revenue (with concessions on a cash basis) is as follows (dollars in thousands):

Total Capital Cost includes all capitalized costs projected to be or actually incurred to develop the respective Development or Redevelopment Community, or Development Right, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, all as determined in accordance with GAAP. With respect to communities where development or redevelopment was completed in a prior or the current period, Total Capital Cost reflects the actual cost incurred, plus any contingency estimate made by management.

Leverage is calculated by the Company as total debt as a percentage of total market capitalization. Total market capitalization represents the aggregate of the market value of the Company’s common stock, the market value of the Company’s operating partnership units outstanding (based on the market value of the Company’s common stock), the liquidation preference of the Company’s preferred stock and the outstanding principal balance of the Company’s debt. Management believes that Leverage can be one useful measure of a real estate operating company’s long term liquidity and balance sheet strength, because it shows an approximate relationship between a company’s total debt and the current total market value of its assets based on the current price at which the company’s common stock trades. Changes in Leverage also can influence changes in per share results. A calculation of Leverage as of December 31, 2003 is as follows (dollars in thousands):

Unencumbered NOI is calculated by the Company as a measure of liquidity and represents NOI generated by real estate assets unencumbered by outstanding secured debt as a percentage of total NOI generated by real estate assets. Unencumbered NOI is used as a measure of protection for unsecured creditors of the Company. In addition, the Company believes that Unencumbered NOI can be one useful measure of an entity’s liquidity and balance sheet strength, and provides rating agencies and investors an additional means of comparing our liquidity to that of other companies. A calculation of Unencumbered NOI for 2003 is as follows (dollars in thousands):

Interest Coverage is calculated by the Company as EBITDA from continuing operations divided by the sum of interest expense and preferred dividends net of interest income. Interest Coverage is presented by the Company because it provides rating agencies and investors an additional means of comparing our liquidity to that of other companies. EBITDA is defined by the Company as net income before interest income and expense, income taxes, depreciation and amortization. Under this definition, which complies with the rules and regulations of the Securities and Exchange Commission, EBITDA includes gains on sale of assets and gain on sale of partnership interests.

A reconciliation of EBITDA and a calculation of Interest Coverage for the fourth quarter of 2003 are as follows (dollars in thousands):




Net income		$	100,283
Interest income			(805	)
Interest expense			33,085
Interest expense (discontinued operations)			66
Depreciation expense			38,964
Depreciation expense (discontinued operations)			376

EBITDA		$	171,969


EBITDA from continuing operations		$	92,246
EBITDA from discontinued operations			79,723

EBITDA		$	171,969


EBITDA from continuing operations		$	92,246

Interest expense			33,085
Interest income			(805	)
Dividends attributable to preferred stock			2,175

	Interest charges		34,455

Interest coverage			2.7

In the calculations of EBITDA above, EBITDA from discontinued operations includes $78,832 in gain on sale of communities.

Non-Revenue Generating Capex represents capital expenditures that will not directly result in revenue earnings or expense savings.

Stabilized/Restabilized Operations is defined as the earlier of (i) attainment of 95% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.

Average Rent per Home, as calculated for certain Development and Redevelopment Communities in lease-up, reflects (i) actual average leased rents for those apartments leased through the end of the quarter net of amortized concessions, (ii) estimated market rents net of comparable concessions for all unleased apartments and (iii) includes actual and estimated other rental revenue. For Development and Redevelopment Communities not yet in lease-up, Average Rent per Home reflects management’s projected rents, including concessions equal to one-half month rent.

Unleveraged IRR on sold communities refers to the internal rate of return calculated by the Company considering the timing and amounts of (i) total revenue during the period owned by the Company and (ii) the gross sales price net of selling costs, offset by (iii) the undepreciated capital cost of the communities at the time of sale and (iv) total direct operating expenses during the period owned by the Company. Each of the items (i), (ii), (iii) and (iv) are calculated in accordance with GAAP.

The calculation of Unleveraged IRR does not include an adjustment for the Company’s general and administrative expense, interest expense, or corporate-level property management and other indirect operating expenses. Therefore, Unleveraged IRR is not a substitute for net income as a measure of our performance. Management believes that the Unleveraged IRR achieved during the period a community is owned by the Company is useful because it is one indication of the gross value created by the Company’s acquisition, development or redevelopment, management and sale of the community, before the impact of indirect expenses and Company overhead. The Unleveraged IRR achieved on the communities as cited in this release should not be viewed as an

indication of the gross value created with respect to other communities owned by the Company, and the Company does not represent that it will achieve similar Unleveraged IRRs upon the disposition of other communities.


		Q4			Q4			Full Year			Full Year
		2003			2002			2003			2002

Rental income		$	1,740		$	11,967		$	23,843		$	50,554
Operating and other expenses			(849	)		(4,358	)		(9,942	)		(17,601	)
Interest expense, net			(66	)		(414	)		(1,106	)		(1,716	)
Minority interest expense			—			(196	)		(389	)		(799	)
Depreciation expense			(376	)		(2,237	)		(2,342	)		(9,538	)

	Income from discontinued operations (3)	$	449		$	4,762		$	10,064		$	20,900




	Q4			Q4			Q3			Full Year			Full Year
	2003			2002			2003			2003			2002

Rental revenue (GAAP basis)	$	111,332		$	114,843		$	112,329		$	450,000		$	470,424
Concessions amortized		3,656			2,188			3,358			12,433			6,356
Concessions granted		(4,163	)		(3,225	)		(4,737	)		(14,817	)		(9,605	)

Rental revenue (cash basis)	$	110,825		$	113,806		$	110,950		$	447,616		$	467,175


% change — GAAP revenue					(3.1%	)		(0.9%	)					(4.3%	)
% change — cash revenue					(2.6%	)		(0.1%	)					(4.2%	)




Total debt	$	2,337,533

Common stock		3,390,814
Preferred stock		100,000
Operating partnership units		30,220
Total debt		2,337,533

Total market capitalization		5,858,567


Debt as % of capitalization		39.9	%


		Rental			Operating						% of
		Revenue			Expenses			NOI			NOI*

Northeast			(2.6	%)		6.2	%		(6.9	%)		38.3	%
Mid-Atlantic			1.0	%		3.1	%		0.2	%		17.2	%
Midwest			(2.0	%)		8.1	%		(9.0	%)		2.1	%
Pacific NW			(3.4	%)		3.5	%		(7.2	%)		5.1	%
No. California			(6.7	%)		(6.3	%)		(6.9	%)		25.9	%
So. California			0.8	%		4.1	%		(0.4	%)		11.4	%

	Total		(3.1	%)		1.7	%		(5.2	%)		100.0	%




NOI for Established Communities		$	305,221
NOI for Other Stabilized Communities			54,889
NOI for Development/Redevelopment Communities			44,142
NOI for discontinued operations			13,901

	Total NOI generated by real estate assets		418,153
NOI on encumbered assets			83,744

	NOI on unencumbered assets		334,409

Unencumbered NOI			80	%


					Non-Rev
	Cap		Cap		Capex
	Interest		Overhead		per Home

Q403	$	5,838	$	4,010	$	81
Q303	$	6,360	$	3,710	$	112
Q203	$	6,305	$	3,291	$	99
Q103	$	6,206	$	3,176	$	41