-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JvHM91/YKH4USfQqdjLrPAPY+7stLIf6/xVt5ApxaPOPk9e97EAJVVCYvb10XFPB Fh9dfabiKuWIn40/HMyepQ== 0000950133-06-002027.txt : 20060426 0000950133-06-002027.hdr.sgml : 20060426 20060426111228 ACCESSION NUMBER: 0000950133-06-002027 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060425 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060426 DATE AS OF CHANGE: 20060426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVALONBAY COMMUNITIES INC CENTRAL INDEX KEY: 0000915912 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 770404318 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12672 FILM NUMBER: 06780016 BUSINESS ADDRESS: STREET 1: 2900 EISENHOWER AVENUE STREET 2: SUITE 300 CITY: ALEXANDRIA STATE: VA ZIP: 22314 BUSINESS PHONE: 7033296300 MAIL ADDRESS: STREET 1: 2900 EISENHOWER AVENUE STREET 2: STE 300 CITY: ALEXANDRIA STATE: VA ZIP: 22314 FORMER COMPANY: FORMER CONFORMED NAME: AVALON BAY COMMUNITIES INC DATE OF NAME CHANGE: 19980618 FORMER COMPANY: FORMER CONFORMED NAME: BAY APARTMENT COMMUNITIES INC DATE OF NAME CHANGE: 19931208 8-K 1 w20170e8vk.htm FORM 8-K e8vk
 

 
 
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): April 25, 2006
AVALONBAY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
 
Commission file number 1-12672
     
Maryland   77-0404318
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
2900 Eisenhower Avenue, Suite 300
Alexandria, Virginia 22314
(Address of principal executive offices) (Zip code)
(703) 329-6300
(Registrant’s telephone number, including area code)
(Former name, 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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o 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 Condition.
On April 25, 2006, AvalonBay Communities, Inc. issued a press release announcing its financial results for the first quarter 2006. That release referred to certain attachments with supplemental information that were available on the Company’s website. The full text of the press release, including the supplemental information and attachments referred to within the release, are furnished as Exhibit 99.1 and Exhibit 99.2 hereto.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
99.1   Press Release of AvalonBay Communities, Inc. dated April 25, 2006, including Attachments.
 
99.2   Supplemental discussion of first quarter 2006 operating results (the “Full Release”) dated April 25, 2006, including Attachments.
[Remainder of page left blank intentionally]

 


 

SIGNATURE
     Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be filed on its behalf by the undersigned hereunto duly authorized.
             
 
      AVALONBAY COMMUNITIES, INC.    
 
           
Dated: April 25, 2006
  By:    /s/ Thomas J. Sargeant    
 
     
 
   
 
      Thomas J. Sargeant    
 
      Chief Financial Officer    

 


 

Exhibit Index
99.1   Press Release of AvalonBay Communities, Inc. dated April 25, 2006, including Attachments.
 
99.2   Supplemental discussion of first quarter 2006 operating results (the “Full Release”) dated April 25, 2006, including Attachments.

 

EX-99.1 2 w20170exv99w1.htm EXHIBIT 99.1 exv99w1
 

     
(AVALONBAY COMMUNITIES INC. LOGO)
Exhibit 99.1
         
Contact:
  Thomas J. Sargeant   Gary Tiedemann
 
  Chief Financial Officer   Director of Investor Relations
 
  AvalonBay Communities, Inc.   AvalonBay Communities, Inc.
 
  703-317-4635   703-317-4704
For Immediate Release
AVALONBAY COMMUNITIES INC. ANNOUNCES
FIRST QUARTER 2006 OPERATING RESULTS
(Alexandria, VA) AvalonBay Communities, Inc. (NYSE: AVB) reported today that Net Income Available to Common Stockholders for the quarter ended March 31, 2006 was $111,902,000. This resulted in Earnings per Share — diluted (“EPS”) of $1.49 for the quarter ended March 31, 2006, compared to $0.92 for the comparable period of 2005, a per share increase of 62.0%. This increase is primarily attributable to the timing and volume of gains on the sale of assets in the quarter ended March 31, 2006 as compared to the same period of 2005, coupled with growth in income from existing and newly developed communities.
Funds from Operations attributable to common stockholders — diluted (“FFO”) for the quarter ended March 31, 2006 was $86,844,000, or $1.15 per share compared to $71,249,000, or $0.96 per share for the comparable period of 2005, a per share increase of 19.8%. FFO per share for the quarter ended March 31, 2006 includes $0.17 per share related to the sale of a land parcel. FFO per share for the quarter ended March 31, 2005 includes several non-routine items totaling $0.07 per share. Adjusting for these non-routine items in both periods, FFO per share increased 10.1%, driven primarily by improved community operating results and contributions from newly developed communities.
Commenting on the Company’s results, Bryce Blair, Chairman and CEO said, “We enjoyed double-digit FFO growth, which was driven by 7.5% NOI growth. This was our strongest operating performance in five years and underscores the increasing value of our operating portfolio and of our communities under development and in planning.”
Operating Results for the Quarter Ended March 31, 2006 Compared to the Quarter Ended March 31, 2005
For the Company, including discontinued operations, total revenue increased by $6,787,000, or 4.0% to $176,789,000. For Established Communities, rental revenue increased 6.1%, comprised of an increase in Average Rental Rates of 5.0% and an increase in Economic Occupancy of 1.1%. As a result, total revenue for Established Communities increased $7,802,000 to $135,487,000. Operating expenses for Established Communities increased $1,177,000 or 2.9% to $41,897,000. Accordingly, Net Operating Income (“NOI”) for Established Communities increased by $6,625,000 or 7.6%, to $93,590,000.
The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities from the first quarter of 2005 to the first quarter of 2006:
 
1Q 06 Compared to 1Q 05
 
                                 
    Rental   Operating           % of
    Revenue   Expenses   NOI   NOI (1)
Northeast
    4.4 %     5.8 %     3.8 %     41.6 %
Mid-Atlantic
    8.4 %     (0.6 %)     12.2 %     17.8 %
Midwest
    0.7 %     2.8 %     (0.7 %)     2.1 %
Pacific NW
    7.8 %     7.8 %     7.7 %     4.5 %
No. California
    6.8 %     1.1 %     9.4 %     22.9 %
So. California
    6.6 %     (0.5 %)     9.7 %     11.1 %
 
                               
Total
    6.1 %     2.9 %     7.6 %     100.0 %
 
                               
 
(1)   Total represents each region’s % of total NOI from the Company, including discontinued operations.
Cash concessions are recognized in accordance with Generally Accepted Accounting Principles (“GAAP”) and are amortized over the approximate lease term, which is generally one year. The following table reflects the percentage changes in GAAP rental revenue and Rental Revenue with Concessions on a Cash Basis for our Established Communities:
 
Copyright© 2006 AvalonBay Communities, Inc. All Rights Reserved

 


 

 
         
    1Q 06 vs 1Q 05
GAAP Rental Revenue
    6.1 %
 
Rental Revenue with Concessions on a Cash Basis
    6.5 %
 
Development and Redevelopment Activity
The Company completed development of Avalon at Bedford Center during the first quarter of 2006 for a Total Capital Cost of $25,300,000. Avalon at Bedford Center is a garden-style and townhome community containing 139 apartment homes and is located in the Boston, MA area.
In addition, the Company commenced construction of two communities during the first quarter of 2006: Avalon on the Sound II, a high-rise community located in the New York, NY area, and Avalon Meydenbauer, a mid-rise community located in the Seattle, WA area. These two communities are expected to contain an aggregate of 956 apartment homes when completed for a Total Capital Cost of $268,500,000.
The Company commenced redevelopment of two communities during the first quarter of 2006: 200 Arlington Place, located in the Chicago, IL area, and Avalon Walk, a two-phase community located in the Fairfield-New Haven, CT area. These communities contain an aggregate of 1,173 apartment homes. The expected Total Capital Cost to redevelop these communities is $18,700,000, excluding costs incurred prior to the start of redevelopment.
Disposition Activity
During the first quarter of 2006, the Company sold two communities, Avalon Estates, located in the Boston, MA area, and Avalon Cupertino, located in San Jose, CA. These two communities, which contained a total of 473 apartment homes, were sold for an aggregate sales price of $122,550,000. The sale of these two communities resulted in a gain as reported in accordance with GAAP of $65,419,000 and an Economic Gain of $51,469,000.
In April 2006, the Company sold Avalon Corners, located in the Fairfield-New Haven, CT area. This community contained 195 apartment homes and was sold for a price of $60,200,000. This resulted in a GAAP gain of approximately $31,900,000 and an Economic Gain of approximately $26,800,000.
The weighted average Initial Year Market Cap Rate related to these three communities was 4.4%, and the Unleveraged IRR over an approximate eight year weighted average holding period was 16.6%. The buyers of these three assets intend to continue to operate these communities as rental apartments.
In addition, the Company sold a parcel of land located in the Northern NJ area during the first quarter of 2006, for a sales price of $15,000,000. This land parcel was purchased in 1997 in connection with the development of the Tower at Avalon Cove, which was sold in December 2005. The sale of this land parcel resulted in a GAAP gain and an Economic Gain of $13,166,000.
Investment Activity
During the first quarter of 2006, AvalonBay Value Added Fund, L.P. (the “Fund”), the private, discretionary investment vehicle in which the Company holds an equity interest of approximately 15%, acquired one community, Aurora at Yerba Buena for $66,000,000. Aurora at Yerba Buena is a mixed-use community located in San Francisco, CA, containing 160 apartment homes and 32,000 square feet of fully leased retail space. The Company’s pro rata share of the capital invested in this acquisition is approximately $10,000,000.
In addition, the Company transferred the assets of Avalon at Juanita Village, a 211 apartment-home community located in the Seattle, WA area, to a joint venture entity. The Company completed construction of Avalon at Juanita Village at the end of 2005 for a Total Capital Cost of $45,300,000. The Company was reimbursed for the Total Capital Cost upon transfer of the assets to the joint venture. The Company does not hold an equity interest in the joint venture, but retained a promoted residual interest in the profits of the entity.
Financing, Liquidity and Balance Sheet Statistics
As of March 31, 2006, the Company had no outstanding balance under its $500,000,000 unsecured credit facility. Leverage, calculated as total debt as a percentage of Total Market Capitalization, was 21.8% at March 31, 2006. Unencumbered NOI for the year ended March 31, 2006 was approximately 85% and Interest Coverage for the first quarter of 2006 was 3.3 times.
The Company currently has an effective shelf registration statement on file with the Securities and Exchange Commission. During the first quarter of 2006, the Company increased its debt and equity capacity under its shelf registration statement to $750,000,000.
Second Quarter and Full Year Outlook
The Company expects EPS in the range of $1.36 to $1.40 for the second quarter of 2006. The Company expects EPS in the range of $3.79 to $3.93 for the full year 2006.
 
Copyright© 2006 AvalonBay Communities, Inc. All Rights Reserved

 


 

The Company expects Projected FFO per share in the range of $0.97 to $1.01 for the second quarter of 2006. The sale of the land parcel in the first quarter of 2006 was not included in the full year 2006 Projected FFO range provided on January 24, 2006. The Company is increasing its outlook for Projected FFO per share to a range of $4.18 to $4.32 for the full year 2006. This revised outlook reflects the gain on the sale of land during the first quarter 2006, as well as better than expected operating results in the first quarter of 2006.
Second Quarter 2006 Conference Schedule
Management is scheduled to present and conduct a question and answer session at the REITWeek 2006: NAREIT Investor Forum on June 6 — 8, 2006, which may include reference to the Company’s operating environment and trends; development, redevelopment, disposition and acquisition activity; the Company’s outlook and other business and financial matters affecting the Company. Details on how to access a webcast and/or related materials will be available at http://www.avalonbay.com/events on June 1, 2006.
Other Matters
The Company will hold a conference call on April 26, 2006 at 1:00 PM EDT to review and answer questions about its first quarter results, the Attachments (described below) and related matters. To participate on the call, dial 1-877-510-2397 domestically and 1-706-634-5877 internationally. To hear a replay of the call, which will be available from April 26, 2006 at 4:00 PM EDT until May 3, 2006 at 11:59 PM EDT, dial 1-800-642-1687 domestically and 1-706-645-9291 internationally, and use Access Code: 6627245.
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 at http://www.avalonbay.com/earnings and through e-mail distribution. To receive future press releases via e-mail, please send a request to IR@avalonbay.com. Some items referenced in the earnings release may require the Adobe Acrobat Reader. If you do not have the Adobe Acrobat Reader, you may download it at http://www.adobe.com/products/acrobat/readstep2.html.
About AvalonBay Communities, Inc.
As of March 31, 2006, the Company owned or held an ownership interest in 158 apartment communities containing 46,117 apartment homes in ten states and the District of Columbia, of which 16 communities were under construction and four communities were under reconstruction. The Company 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 may be found on the Company’s website at http://www.avalonbay.com . For additional information, please contact Thomas J. Sargeant, Chief Financial Officer, at 1-703-317-4635 or Gary Tiedemann, Director of Investor Relations at 1-703-317-4704.
Forward-Looking Statements
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, which include the following: changes in local employment conditions, demand for apartment homes, supply of competitive housing products, and other economic conditions may result in lower than expected occupancy and/or rental rates and adversely affect the profitability of our communities; increases in costs of materials, labor or other expenses may result in communities that we develop or redevelop failing to achieve expected profitability; delays in completing development, redevelopment and/or lease-up may result in increased financing and construction costs, and may delay and/or reduce the profitability of a community; debt and/or equity financing for development, redevelopment or acquisitions of communities may not be available on favorable terms; we may be unable to obtain, or experience delays in obtaining, necessary governmental permits and authorizations; or we may abandon development or redevelopment opportunities for which we have already incurred costs. Additional discussions of risks and uncertainties appear in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 under the headings “Risk Factors” and “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 second quarter and full year 2006. 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.
 
Copyright© 2006 AvalonBay Communities, Inc. All Rights Reserved

 


 

Definitions and Reconciliations
Non-GAAP financial measures and other capitalized terms, as used in the text of this earnings release, are defined and further explained on Attachment 12, “Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.” Attachment 12 is included in the full earnings release available on the Company’s website at http://www.avalonbay.com/earnings. This wire distribution includes only definitions and reconciliations of the following Non-GAAP financial measures:
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 previously depreciated operating communities, extraordinary gains or losses (as defined by GAAP), cumulative effect of a change in accounting principle and depreciation of real estate assets, including adjustments for unconsolidated partnerships and joint ventures. Management generally considers FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses related to dispositions of previously depreciated operating communities 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):
 
                 
    Q1     Q1  
    2006     2005  
Net income
  $ 114,077     $ 69,610  
Dividends attributable to preferred stock
    (2,175 )     (2,175 )
Depreciation — real estate assets, including discontinued operations and joint venture adjustments
    40,262       40,950  
Minority interest, including discontinued operations
    99       477  
Gain on sale of previously depreciated real estate assets
    (65,419 )     (37,613 )
 
           
FFO attributable to common stockholders
  $ 86,844     $ 71,249  
 
           
 
               
Average shares outstanding — diluted
    75,290,124       74,258,296  
EPS — diluted
  $ 1.49     $ 0.92  
 
           
 
               
FFO per common share — diluted
  $ 1.15     $ 0.96  
 
           
 
NOI is defined by the Company as total property revenue less direct property operating expenses (including property taxes), and excludes corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management, net interest expense, general and administrative expense, joint venture income, minority interest, depreciation expense, gain on sale of real estate assets 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 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):
 
                 
    Q1     Q1  
    2006     2005  
Net income
  $ 114,077     $ 69,610  
Property management and other indirect operating expenses
    8,631     7,129
Corporate — level other income
    (1,196 )     (548 )
Investments and investment management
    1,471       992  
Interest expense, net
    28,664     32,118
General and administrative expense
    6,283     7,159
Joint venture income, minority interest
    (95 )     (6,070 )
Depreciation expense
    39,619     38,874
Gain on sale of real estate assets
    (78,585 )     (37,613 )
Income from discontinued operations
    (1,770 )     (4,605 )
 
           
NOI from continuing operations
  $ 117,099     $ 107,046  
 
           
 
               
Established:
           
Northeast
  $ 33,073   $ 31,871
Mid-Atlantic
    18,490     16,481
Midwest
    1,666     1,677
Pacific NW
    5,167       4,795  
No. California
    24,995       22,840  
So. California
    10,199     9,301
 
           
Total Established
    93,590       86,965  
 
           
Other Stabilized
    14,287     12,395
Development/Redevelopment
    9,222     7,686
 
           
NOI from continuing operations
  $ 117,099   $ 107,046
 
           
 
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 March 31, 2006). A reconciliation of NOI from communities sold or held for sale to net income for these communities is as follows (dollars in thousands):
 
                 
    Q1     Q1  
    2006     2005  
Income from discontinued operations
  $ 1,770     $ 4,605  
Interest expense, net
          4  
Depreciation expense
    298       2,232  
 
           
NOI from discontinued operations
  $ 2,068     $ 6,841  
 
           
 
               
NOI from assets sold
  $ 296     $ 5,258  
NOI from assets held for sale
    1,772       1,583  
 
           
NOI from discontinued operations
  $ 2,068     $ 6,841  
 
           
 
 
Copyright© 2006 AvalonBay Communities, Inc. All Rights Reserved

 


 

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. 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):
 
                 
    Q1     Q1  
    2006     2005  
Rental revenue (GAAP basis)
  $ 135,412     $ 127,619  
Concessions amortized
    4,015       5,489  
Concessions granted
    (1,776 )     (3,907 )
 
           
 
               
Rental revenue (with concessions on a cash basis)
  $ 137,651     $ 129,201  
 
           
 
               
% change — GAAP revenue
            6.1 %
 
               
% change — cash revenue
            6.5 %
 
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 for the quarter ended March 31, 2006 to gain on sale in accordance with GAAP is presented on Attachment 11. For the disposition of Avalon Corners, which occurred subsequent to March 31, 2006, the Economic Gain of approximately $26,800,000 represents a GAAP gain of approximately $31,900,000 less accumulated depreciation of $5,100,000.
Projected FFO, as provided within this release in the Company’s outlook, 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 second quarter and full year 2006 to the range provided for projected EPS (diluted) is as follows:
 
                 
    Low     High  
    range     range  
Projected EPS (diluted) — Q2 06
  $ 1.36     $ 1.40  
Projected depreciation (real estate related)
    0.53       0.57  
Projected gain on sale of operating communities
    (0.92 )     (0.96 )
 
           
Projected FFO per share (diluted) — Q2 06
  $ 0.97     $ 1.01  
 
           
 
               
Projected EPS (diluted) — Full Year 2006
  $ 3.79     $ 3.93  
Projected depreciation (real estate related)
    2.17       2.21  
Projected gain on sale of operating communities
    (1.78 )     (1.82 )
 
           
Projected FFO per share (diluted) — Full Year 2006
  $ 4.18     $ 4.32  
 
           
 
Interest Coverage is calculated by the Company as EBITDA from continuing operations, excluding land gains, divided by the sum of interest expense, net, and preferred dividends. 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.
A reconciliation of EBITDA and a calculation of Interest Coverage for the first quarter of 2006 are as follows (dollars in thousands):
 
         
Net income
  $ 114,077  
Interest expense, net
    28,664  
Depreciation expense
    39,619  
Depreciation expense (discontinued operations)
    298  
 
     
 
       
EBITDA
  $ 182,658  
 
     
 
       
EBITDA from continuing operations
  $ 115,171  
EBITDA from discontinued operations
    67,487  
 
     
 
       
EBITDA
  $ 182,658  
 
     
 
       
EBITDA from continuing operations
  $ 115,171  
Land gains
    (13,166 )
 
     
EBITDA from continuing operations, excluding land gains
  $ 102,005  
 
     
 
       
Interest expense, net
    28,664  
Dividends attributable to preferred stock
    2,175  
 
     
Interest charges
    30,839  
 
     
 
       
Interest coverage
    3.3  
 
     
 
In the calculations of EBITDA above, EBITDA from discontinued operations includes $65,419 in gain on sale of communities.
 
Copyright© 2006 AvalonBay Communities, Inc. All Rights Reserved

 

EX-99.2 3 w20170exv99w2.htm EXHIBIT 99.2 exv99w2
 

AvalonBay Communities, Inc.
Exhibit 99.2
For Immediate News Release
April 25, 2006
AVALONBAY COMMUNITIES INC. ANNOUNCES
FIRST QUARTER 2006 OPERATING RESULTS
(Alexandria, VA) AvalonBay Communities, Inc. (NYSE: AVB) reported today that Net Income Available to Common Stockholders for the quarter ended March 31, 2006 was $111,902,000. This resulted in Earnings per Share — diluted (“EPS”) of $1.49 for the quarter ended March 31, 2006, compared to $0.92 for the comparable period of 2005, a per share increase of 62.0%. This increase is primarily attributable to the timing and volume of gains on the sale of assets in the quarter ended March 31, 2006 as compared to the same period of 2005, coupled with growth in income from existing and newly developed communities.
Funds from Operations attributable to common stockholders — diluted (“FFO”) for the quarter ended March 31, 2006 was $86,844,000, or $1.15 per share compared to $71,249,000, or $0.96 per share for the comparable period of 2005, a per share increase of 19.8%. FFO per share for the quarter ended March 31, 2006 includes $0.17 per share related to the sale of a land parcel. FFO per share for the quarter ended March 31, 2005 includes several non-routine items totaling $0.07 per share. Adjusting for these non-routine items in both periods, FFO per share increased 10.1%, driven primarily by improved community operating results and contributions from newly developed communities.
Commenting on the Company’s results, Bryce Blair, Chairman and CEO said, “We enjoyed double-digit FFO growth, which was driven by 7.5% NOI growth. This was our strongest operating performance in five years and underscores the increasing value of our operating portfolio and of our communities under development and in planning.”
Operating Results for the Quarter Ended March 31, 2006 Compared to the Quarter Ended March 31, 2005
For the Company, including discontinued operations, total revenue increased by $6,787,000, or 4.0% to $176,789,000. For Established Communities, rental revenue increased 6.1%, comprised of an increase in Average Rental Rates of 5.0% and an increase in Economic Occupancy of 1.1%. As a result, total revenue for Established Communities increased $7,802,000 to $135,487,000. Operating expenses for Established Communities increased $1,177,000 or 2.9% to $41,897,000. Accordingly, Net Operating Income (“NOI”) for Established Communities increased by $6,625,000 or 7.6%, to $93,590,000.
The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities from the first quarter of 2005 to the first quarter of 2006:
 
1Q 06 Compared to 1Q 05
 
                                 
    Rental   Operating           % of
    Revenue   Expenses   NOI   NOI (1)
Northeast
    4.4 %     5.8 %     3.8 %     41.6 %
Mid-Atlantic
    8.4 %     (0.6 %)     12.2 %     17.8 %
Midwest
    0.7 %     2.8 %     (0.7 %)     2.1 %
Pacific NW
    7.8 %     7.8 %     7.7 %     4.5 %
No. California
    6.8 %     1.1 %     9.4 %     22.9 %
So. California
    6.6 %     (0.5 %)     9.7 %     11.1 %
 
                               
Total
    6.1 %     2.9 %     7.6 %     100.0 %
 
                               
 
(1)   Total represents each region’s % of total NOI from the Company, including discontinued operations.
Cash concessions are recognized in accordance with Generally Accepted Accounting Principles (“GAAP”) and are amortized over the approximate lease term, which is generally one year. The following table reflects the percentage changes in GAAP rental revenue and Rental Revenue with Concessions on a Cash Basis for our Established Communities:
 
         
    1Q 06 vs 1Q 05
GAAP Rental Revenue
    6.1 %
 
       
Rental Revenue with Concessions on a Cash Basis
    6.5 %
 
 
Copyright© 2006 AvalonBay Communities, Inc. All Rights Reserved

 


 

Development and Redevelopment Activity
The Company completed development of Avalon at Bedford Center during the first quarter of 2006 for a Total Capital Cost of $25,300,000. Avalon at Bedford Center is a garden-style and townhome community containing 139 apartment homes and is located in the Boston, MA area.
In addition, the Company commenced construction of two communities during the first quarter of 2006: Avalon on the Sound II, a high-rise community located in the New York, NY area, and Avalon Meydenbauer, a mid-rise community located in the Seattle, WA area. These two communities are expected to contain an aggregate of 956 apartment homes when completed for a Total Capital Cost of $268,500,000.
The Company commenced redevelopment of two communities during the first quarter of 2006: 200 Arlington Place, located in the Chicago, IL area, and Avalon Walk, a two-phase community located in the Fairfield-New Haven, CT area. These communities contain an aggregate of 1,173 apartment homes. The expected Total Capital Cost to redevelop these communities is $18,700,000, excluding costs incurred prior to the start of redevelopment.
Disposition Activity
During the first quarter of 2006, the Company sold two communities, Avalon Estates, located in the Boston, MA area, and Avalon Cupertino, located in San Jose, CA. These two communities, which contained a total of 473 apartment homes, were sold for an aggregate sales price of $122,550,000. The sale of these two communities resulted in a gain as reported in accordance with GAAP of $65,419,000 and an Economic Gain of $51,469,000.
In April 2006, the Company sold Avalon Corners, located in the Fairfield-New Haven, CT area. This community contained 195 apartment homes and was sold for a price of $60,200,000. This resulted in a GAAP gain of approximately $31,900,000 and an Economic Gain of approximately $26,800,000.
The weighted average Initial Year Market Cap Rate related to these three communities was 4.4%, and the Unleveraged IRR over an approximate eight year weighted average holding period was 16.6%. The buyers of these three assets intend to continue to operate these communities as rental apartments.
In addition, the Company sold a parcel of land located in the Northern NJ area during the first quarter of 2006, for a sales price of $15,000,000. This land parcel was purchased in 1997 in connection with the development of the Tower at Avalon Cove, which was sold in December 2005. The sale of this land parcel resulted in a GAAP gain and an Economic Gain of $13,166,000.
Investment Activity
During the first quarter of 2006, AvalonBay Value Added Fund, L.P. (the “Fund”), the private, discretionary investment vehicle in which the Company holds an equity interest of approximately 15%, acquired one community, Aurora at Yerba Buena for $66,000,000. Aurora at Yerba Buena is a mixed-use community located in San Francisco, CA, containing 160 apartment homes and 32,000 square feet of fully leased retail space. The Company’s pro rata share of the capital invested in this acquisition is approximately $10,000,000.
In addition, the Company transferred the assets of Avalon at Juanita Village, a 211 apartment-home community located in the Seattle, WA area, to a joint venture entity. The Company completed construction of Avalon at Juanita Village at the end of 2005 for a Total Capital Cost of $45,300,000. The Company was reimbursed for the Total Capital Cost upon transfer of the assets to the joint venture. The Company does not hold an equity interest in the joint venture, but retained a promoted residual interest in the profits of the entity.
Financing, Liquidity and Balance Sheet Statistics
As of March 31, 2006, the Company had no outstanding balance under its $500,000,000 unsecured credit facility. Leverage, calculated as total debt as a percentage of Total Market Capitalization, was 21.8% at March 31, 2006. Unencumbered NOI for the year ended March 31, 2006 was approximately 85% and Interest Coverage for the first quarter of 2006 was 3.3 times.
The Company currently has an effective shelf registration statement on file with the Securities and Exchange Commission. During the first quarter of 2006, the Company increased its debt and equity capacity under its shelf registration statement to $750,000,000.
Second Quarter and Full Year Outlook
The Company expects EPS in the range of $1.36 to $1.40 for the second quarter of 2006. The Company expects EPS in the range of $3.79 to $3.93 for the full year 2006.
The Company expects Projected FFO per share in the range of $0.97 to $1.01 for the second quarter of 2006. The sale of the land parcel in the first quarter of 2006 was not included in the full year 2006 Projected FFO range provided on January 24, 2006. The Company is increasing its outlook for Projected FFO per share to a range of $4.18 to $4.32 for the full year 2006. This revised outlook reflects the gain on the sale of land during the first quarter 2006, as well as better than expected operating results in the first quarter of 2006.
 
Copyright© 2006 AvalonBay Communities, Inc. All Rights Reserved

 


 

Second Quarter 2006 Conference Schedule
Management is scheduled to present and conduct a question and answer session at the REITWeek 2006: NAREIT Investor Forum on June 6 — 8, 2006, which may include reference to the Company’s operating environment and trends; development, redevelopment, disposition and acquisition activity; the Company’s outlook and other business and financial matters affecting the Company. Details on how to access a webcast and/or related materials will be available at http://www.avalonbay.com/events on June 1, 2006.
Other Matters
The Company will hold a conference call on April 26, 2006 at 1:00 PM EDT to review and answer questions about its first quarter results, the Attachments (described below) and related matters. To participate on the call, dial 1-877-510-2397 domestically and 1-706-634-5877 internationally. To hear a replay of the call, which will be available from April 26, 2006 at 4:00 PM EDT until May 3, 2006 at 11:59 PM EDT, dial 1-800-642-1687 domestically and 1-706-645-9291 internationally, and use Access Code: 6627245.
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 at http://www.avalonbay.com/earnings and through e-mail distribution. To receive future press releases via e-mail, please send a request to IR@avalonbay.com. Some items referenced in the earnings release may require the Adobe Acrobat Reader. If you do not have the Adobe Acrobat Reader, you may download it at http://www.adobe.com/products/acrobat/readstep2.html.
About AvalonBay Communities, Inc.
As of March 31, 2006, the Company owned or held an ownership interest in 158 apartment communities containing 46,117 apartment homes in ten states and the District of Columbia, of which 16 communities were under construction and four communities were under reconstruction. The Company 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 may be found on the Company’s website at http://www.avalonbay.com. For additional information, please contact Thomas J. Sargeant, Chief Financial Officer, at 1-703-317-4635 or Gary Tiedemann, Director of Investor Relations at 1-703-317-4704.
Forward-Looking Statements
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, which include the following: changes in local employment conditions, demand for apartment homes, supply of competitive housing products, and other economic conditions may result in lower than expected occupancy and/or rental rates and adversely affect the profitability of our communities; increases in costs of materials, labor or other expenses may result in communities that we develop or redevelop failing to achieve expected profitability; delays in completing development, redevelopment and/or lease-up may result in increased financing and construction costs, and may delay and/or reduce the profitability of a community; debt and/or equity financing for development, redevelopment or acquisitions of communities may not be available on favorable terms; we may be unable to obtain, or experience delays in obtaining, necessary governmental permits and authorizations; or we may abandon development or redevelopment opportunities for which we have already incurred costs. Additional discussions of risks and uncertainties appear in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 under the headings “Risk Factors” and “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 second quarter and full year 2006. 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.
Definitions and Reconciliations
Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and further explained on Attachment 12, “Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.” Attachment 12 is included in the full earnings release available at the Company’s website at http://www.avalonbay.com/earnings.
 
Copyright© 2006 AvalonBay Communities, Inc. All Rights Reserved

 


 

 
(AVALON BAY COMMUNITIES, INC. LOGO)
FIRST QUARTER 2006
Supplemental Operating and Financial Data
(PICTURE)
The Company commenced construction on Avalon Meydenbauer, located in Bellevue, Washington. Avalon Meydenbauer will be a mid-rise community with five floors of residential space over two floors of retail. The retail space will be anchored by a 55,000 square foot Safeway and will include 17,000 square feet of additional retail. The community will have underground, structured parking that can be utilized by residents and retail shoppers.
Avalon Meydenbauer’s in-fill location in downtown Bellevue near Interstate 405 and state highway 520 is conveniently located and provides easy access to job centers in Seattle and Redmond. Avalon Meydenbauer will expand the Company’s presence in this market and will complement Avalon Bellevue, a 202 apartment-home community also owned by the Company.
Avalon Meydenbauer will have 368 homes and is expected to be completed in the third quarter of 2008 for a Total Capital Cost of $84.3 million.
 

 


 

 
FIRST QUARTER 2006
Supplemental Operating and Financial Data
Table of Contents
     
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
 
   
Development, Redevelopment, Acquisition and Disposition Profile
   
Summary of Development and Redevelopment Activity
  Attachment 5
Development Communities
  Attachment 6
Redevelopment Communities
  Attachment 7
Summary of Development and Redevelopment Community Activity
  Attachment 8
Future Development
  Attachment 9
Unconsolidated Real Estate Investments
  Attachment 10
Summary of Disposition Activity
  Attachment 11
 
   
Definitions and Reconciliations
   
Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms
  Attachment 12
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 following attachments are forward-looking statements that 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 are discussed in the paragraph titled “Forward-Looking Statements” in the release to which these attachments relate. In particular, 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 for the fiscal year ended December 31, 2005.
 

 


 

 
Attachment 1
AvalonBay Communities, Inc.
Selected Operating and Other Information
March 31, 2006

(Dollars in thousands except per share data)
(unaudited)

SELECTED OPERATING INFORMATION
                                 
    Q1     Q1              
    2006     2005     $ Change     % Change  
Net Income available to common stockholders
  $ 111,902     $ 67,435     $ 44,467       65.9 %
 
                               
Per common share — basic
  $ 1.52     $ 0.93     $ 0.59       63.4 %
Per common share — diluted
  $ 1.49     $ 0.92     $ 0.57       62.0 %
 
                               
Funds from Operations
  $ 86,844     $ 71,249     $ 15,595       21.9 %
Per common share — diluted
  $ 1.15     $ 0.96     $ 0.19       19.8 %
 
                               
Dividends declared — common
  $ 57,986     $ 51,748     $ 6,238       12.1 %
Per common share
  $ 0.78     $ 0.71     $ 0.07       9.9 %
 
                               
Common shares outstanding
    74,340,561       72,884,022       1,456,539       2.0 %
Outstanding operating partnership units
    152,766       480,260       (327,494 )     (68.2 %)
 
                       
Total outstanding shares and units
    74,493,327       73,364,282       1,129,045       1.5 %
 
                       
 
                               
Average shares outstanding — basic
    73,808,643       72,496,413       1,312,230       1.8 %
Average operating partnership units outstanding
    237,575       497,968       (260,393 )     (52.3 %)
Effect of dilutive securities
    1,243,906       1,263,915       (20,009 )     (1.6 %)
 
                       
Average shares outstanding — diluted
    75,290,124       74,258,296       1,031,828       1.4 %
 
                       

DEBT COMPOSITION AND MATURITIES
                                         
            % of Total     Average        
            Market     Interest     Remaining  
Debt Composition   Amount     Cap     Rate (1)     Maturities (2)  
     
Conventional Debt
                            2006     $ 155,441  
Long-term, fixed rate
  $ 1,850,101       17.6 %             2007     $ 304,438  
Long-term, variable rate
    79,355       0.7 %             2008     $ 207,511  
Variable rate credit facility and short term notes
    37,697       0.4 %             2009     $ 229,925  
                      2010     $ 233,260  
 
                             
Subtotal, Conventional
    1,967,153       18.7 %     6.6 %                
 
                             
 
                                       
Tax-Exempt Debt
                                       
Long-term, fixed rate
    193,764       1.8 %                        
Long-term, variable rate
    139,269       1.3 %                        
 
                             
Subtotal, Tax-Exempt
    333,033       3.1 %     5.7 %                
 
                             
 
                                       
Total Debt
  $ 2,300,186       21.8 %     6.4 %                
 
                             
 
     
(1)   Includes credit enhancement fees, facility fees, trustees’ fees, etc.
     
(2)   Excludes amounts under the $500,000 variable rate credit facility that, after all extensions, matures in 2008.

CAPITALIZED COSTS
                         
                    Non-Rev
    Cap   Cap   Capex
    Interest   Overhead   per Home
     
Q106
  $ 8,364     $ 5,559     $ 38  
Q405
  $ 7,067     $ 5,477     $ 77  
Q305
  $ 6,519     $ 4,842     $ 155  
Q205
  $ 6,036     $ 4,321     $ 214  
Q105
  $ 5,662     $ 5,981     $ 25  

COMMUNITY INFORMATION
                 
            Apartment
    Communities   Homes
     
Current Communities
    142       41,238  
Development Communities
    16       4,879  
Development Rights
    48       12,117  
 

 


 

 
Attachment 2
AvalonBay Communities, Inc.
Detailed Operating Information
March 31, 2006

(Dollars in thousands except per share data)
(unaudited)
                         
    Q1     Q1        
    2006     2005     % Change  
Revenue:
                       
Rental and other income
  $ 172,600     $ 159,545       8.2 %
Management, development and other fees
    1,207       434       178.1 %
 
                 
Total
    173,807       159,979       8.6 %
 
                 
 
                       
Operating expenses:
                       
Direct property operating expenses, excluding property taxes
    38,748       36,468       6.3 %
Property taxes
    16,764       15,917       5.3 %
Property management and other indirect operating expenses
    8,631       7,129       21.1 %
Investments and investment management (1)
    1,471       992       48.3 %
 
                 
Total
    65,614       60,506       8.4 %
 
                 
 
                       
Interest expense, net
    (28,664 )     (32,118 )     (10.8 %)
General and administrative expense (2)
    (6,283 )     (7,159 )     (12.2 %)
Joint venture income, minority interest (3)
    95       6,070       (98.4 %)
Depreciation expense
    (39,619 )     (38,874 )     1.9 %
Gain on sale of land
    13,166             n/a
 
                 
 
Income from continuing operations
    46,888       27,392       71.2 %
 
Discontinued operations: (4)
                       
Income from discontinued operations
    1,770       4,605       (61.6 %)
Gain on sale of communities
    65,419       37,613       73.9 %
 
                 
Total discontinued operations
    67,189       42,218       59.1 %
 
                 
 
Net income
    114,077       69,610       63.9 %
Dividends attributable to preferred stock
    (2,175 )     (2,175 )      
 
                 
Net income available to common stockholders
  $ 111,902     $ 67,435       65.9 %
 
                 
Net income per common share — basic
  $ 1.52     $ 0.93       63.4 %
 
                 
Net income per common share — diluted
  $ 1.49     $ 0.92       62.0 %
 
                 
 
(1)   Reflects costs incurred related to investment acquisition, investment management and abandoned pursuits.
 
(2)   Amount for the three months ended March 31, 2005 includes separation costs in the amount of $2,100 due to the departure of a senior executive.
 
(3)   Amount for the three months ended March 31, 2005 includes $6,252 related to gain on the sale of Rent.com to eBay.
 
(4)   Reflects net income for communities held for sale as of March 31, 2006 and communities sold during the period from January 1, 2005 through March 31, 2006. The following table details income from discontinued operations as of the periods shown:
                 
    Q1     Q1  
    2006     2005  
Rental income
  $ 2,982     $ 10,023  
Operating and other expenses
    (914 )     (3,182 )
Interest expense, net
          (4 )
Depreciation expense
    (298 )     (2,232 )
 
           
Income from discontinued operations (5)
  $ 1,770     $ 4,605  
 
           
 
(5)   NOI for discontinued operations totaled $2,068 for the three months ended March 31, 2006, of which $296 related to assets sold.
 

 


 

 
Attachment 3
AvalonBay Communities, Inc.
Condensed Consolidated Balance Sheets

(Dollars in thousands)
(unaudited)
                 
    March 31,     December 31,  
    2006     2005  
Real estate
  $ 5,238,578     $ 5,242,483  
Less accumulated depreciation
    (964,001 )     (925,107 )
 
           
Net operating real estate
    4,274,577       4,317,376  
 
               
Construction in progress, including land
    393,809       317,823  
Land held for development
    185,204       179,739  
Operating real estate assets held for sale, net
    74,986       130,850  
 
           
 
               
Total real estate, net
    4,928,576       4,945,788  
 
               
Cash and cash equivalents
    55,901       6,138  
Cash in escrow
    29,734       48,266  
Resident security deposits
    26,618       26,290  
Other assets (1)
    128,623       138,578  
 
           
 
               
Total assets
  $ 5,169,452     $ 5,165,060  
 
           
 
               
Unsecured senior notes
  $ 1,805,198     $ 1,809,182  
Unsecured facility
          66,800  
Notes payable
    494,186       490,582  
Resident security deposits
    36,333       35,382  
Liabilities related to assets held for sale
    1,854       2,439  
Other liabilities
    201,835       199,548  
 
           
 
               
Total liabilities
  $ 2,539,406     $ 2,603,933  
 
           
 
Minority interest
    5,511       19,464  
 
               
Stockholders’ equity
    2,624,535       2,541,663  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 5,169,452     $ 5,165,060  
 
           
 
(1)   Other assets includes $558 and $570 relating to discontinued operations as of March 31, 2006 and December 31, 2005, respectively.
 

 


 

 
Attachment 4
AvalonBay Communities, Inc.
Quarterly Revenue and Occupancy Changes — Established Communities (1)
March 31, 2006
                                                                                 
    Apartment                    
    Homes     Average Rental Rates (2)     Economic Occupancy     Rental Revenue ($000’s) (3)  
            Q1 06     Q1 05     % Change     Q1 06     Q1 05     % Change     Q1 06     Q1 05     % Change  
Northeast
                                                                               
Boston, MA
    2,471     $ 1,639     $ 1,602       2.3 %     95.3 %     95.3 %     0.0 %   $ 11,584     $ 11,326       2.3 %
Fairfield-New Haven, CT
    1,998       1,958       1,881       4.1 %     96.0 %     95.5 %     0.5 %     11,268       10,770       4.6 %
New York, NY
    1,606       2,172       2,107       3.1 %     97.0 %     95.6 %     1.4 %     10,149       9,711       4.5 %
Northern New Jersey
    1,182       2,406       2,199       9.4 %     96.5 %     96.8 %     (0.3 %)     8,236       7,549       9.1 %
Long Island, NY
    915       2,322       2,246       3.4 %     96.1 %     96.4 %     (0.3 %)     6,127       5,945       3.1 %
Central New Jersey
    502       1,625       1,598       1.7 %     94.4 %     94.3 %     0.1 %     2,309       2,268       1.8 %
 
                                                           
Northeast Average
    8,674       1,987       1,910       4.0 %     96.1 %     95.7 %     0.4 %     49,673       47,569       4.4 %
 
                                                           
 
                                                                               
Mid-Atlantic
                                                                               
Washington, DC
    5,115       1,563       1,469       6.4 %     96.5 %     94.3 %     2.2 %     23,140       21,317       8.6 %
Baltimore, MD
    718       1,161       1,126       3.1 %     98.2 %     94.7 %     3.5 %     2,457       2,304       6.6 %
 
                                                           
Mid-Atlantic Average
    5,833       1,513       1,428       6.0 %     96.7 %     94.3 %     2.4 %     25,597       23,621       8.4 %
 
                                                           
 
                                                                               
Midwest
                                                                               
Chicago, IL
    887       1,095       1,080       1.4 %     93.9 %     94.6 %     (0.7 %)     2,736       2,718       0.7 %
 
                                                           
Midwest Average
    887       1,095       1,080       1.4 %     93.9 %     94.6 %     (0.7 %)     2,736       2,718       0.7 %
 
                                                           
 
                                                                               
Pacific Northwest
                                                                               
Seattle, WA
    2,500       1,090       1,021       6.8 %     96.2 %     95.2 %     1.0 %     7,864       7,296       7.8 %
 
                                                           
Pacific Northwest Average
    2,500       1,090       1,021       6.8 %     96.2 %     95.2 %     1.0 %     7,864       7,296       7.8 %
 
                                                           
 
                                                                               
Northern California
                                                                               
San Jose, CA
    4,464       1,487       1,425       4.4 %     97.2 %     95.6 %     1.6 %     19,358       18,265       6.0 %
San Francisco, CA
    2,015       1,776       1,651       7.6 %     96.9 %     94.9 %     2.0 %     10,399       9,487       9.6 %
Oakland-East Bay, CA
    1,647       1,202       1,165       3.2 %     97.3 %     96.0 %     1.3 %     5,779       5,530       4.5 %
 
                                                           
Northern California Average
    8,126       1,501       1,427       5.2 %     97.1 %     95.5 %     1.6 %     35,536       33,282       6.8 %
 
                                                           
 
                                                                           
 
                                                                               
Southern California
                                                                               
Los Angeles, CA
    1,198       1,530       1,410       8.5 %     95.8 %     96.2 %     (0.4 %)     5,266       4,870       8.1 %
Orange County, CA
    1,174       1,340       1,255       6.8 %     96.6 %     96.4 %     0.2 %     4,558       4,261       7.0 %
San Diego, CA
    1,058       1,371       1,329       3.2 %     96.1 %     94.8 %     1.3 %     4,182       4,002       4.5 %
 
                                                           
Southern California Average
    3,430       1,416       1,332       6.3 %     96.1 %     95.8 %     0.3 %     14,006       13,133       6.6 %
 
                                                           
Average/Total Established
    29,450     $ 1,590     $ 1,515       5.0 %     96.4 %     95.3 %     1.1 %   $ 135,412     $ 127,619       6.1 %
 
                                                           
 
(1)   Established Communities are communities with stabilized operating expenses as of January 1, 2005 such that a comparison of 2005 to 2006 is meaningful.
 
(2)   Reflects the effect of concessions amortized over the average lease term.
 
(3)   With concessions reflected on a cash basis, rental revenue from Established Communities increased 6.5% between years.
 

 


 

 
Attachment 5
AvalonBay Communities, Inc.
Summary of Development and Redevelopment Activity as of March 31, 2006
                                 
            Number     Number     Total  
            of     of     Capital Cost (1)  
            Communities     Homes     (millions)  
Portfolio Additions:
                               
2006 Annual Completions
    (2 )                        
Development
            4       849     $ 169.1  
Redevelopment
    (3 )     2             10.4  
 
                         
Total Additions
            6       849     $ 179.5  
 
                         
 
                               
2005 Annual Completions
                               
Development
            7       1,971     $ 408.2  
Redevelopment
            3             31.0  
 
                         
Total Additions
            10       1,971     $ 439.2  
 
                         
 
                               
Pipeline Activity:
    (2 )                        
 
                               
Currently Under Construction
                               
Development
            16       4,879     $ 1,268.4  
Redevelopment
    (3 )     4             29.1  
 
                         
Subtotal
            20       4,879     $ 1,297.5  
 
                         
 
                               
Planning
                               
Development Rights
            48       12,117     $ 2,859.0  
 
                         
Total Pipeline
            68       16,996     $ 4,156.5  
 
                         
 
(1)   See Attachment #12 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(2)   Information represents projections and estimates.
 
(3)   Represents only cost of redevelopment activity, does not include original acquisition cost or
number of apartment homes acquired.
 
    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 for the first quarter of 2006.
 

 


 

 
Attachment 6
AvalonBay Communities, Inc.
Development Communities as of March 31, 2006
                                                                                                 
    Percentage             Total             Schedule             Avg                        
    Ownership     # of     Capital                                     Rent                     % Occ  
    Upon     Apt     Cost (1)             Initial             Stabilized     Per     % Comp     % Leased     Physical     Economic  
    Completion     Homes     (millions)     Start     Occupancy     Complete     Ops (1)     Home (1)     (2)     (3)     (4)     (1) (5)  
                                                            Inclusive of                                  
                                                            Concessions                                  
                                                            See Attachment #12                                  
Under Construction:
                                                                                               
1. Avalon Del Rey (6)
    30 %     309     $ 70.0       Q2 2004       Q1 2006       Q3 2006       Q1 2007     $ 1,965       44.7 %     45.6 %     27.2 %     2.3 %
Los Angeles, CA
                                                                                               
2. Avalon Camarillo
    100 %     249       47.2       Q2 2004       Q1 2006       Q2 2006       Q4 2006       1,600       37.3 %     39.0 %     25.3 %     9.1 %
Camarillo, CA
                                                                                               
3. Avalon Wilshire
    100 %     123       46.6       Q1 2005       Q4 2006       Q1 2007       Q3 2007       2,520       N/A       N/A       N/A       N/A  
Los Angeles, CA
                                                                                               
4. Avalon at Mission Bay North II (7)
    25 %     313       118.0       Q1 2005       Q4 2006       Q2 2007       Q4 2007       2,580       N/A       N/A       N/A       N/A  
San Francisco, CA
                                                                                               
5. Avalon Pines II
    100 %     152       26.6       Q2 2005       Q1 2006       Q3 2006       Q1 2007       1,910       56.6 %     55.9 %     40.1 %     27.0 %
Coram, NY
                                                                                               
6. Avalon Chestnut Hill
    100 %     204       60.6       Q2 2005       Q4 2006       Q1 2007       Q3 2007       2,735       N/A       N/A       N/A       N/A  
Chestnut Hill, MA
                                                                                               
7. Avalon at Decoverly II
    100 %     196       30.5       Q3 2005       Q3 2006       Q2 2007       Q4 2007       1,450       N/A       N/A       N/A       N/A  
Rockville, MD
                                                                                               
8. Avalon Lyndhurst
    100 %     328       78.8       Q3 2005       Q4 2006       Q2 2007       Q4 2007       2,260       N/A       N/A       N/A       N/A  
Lyndhurst, NJ
                                                                                               
9. Avalon Shrewsbury
    100 %     251       36.1       Q3 2005       Q4 2006       Q2 2007       Q4 2007       1,420       N/A       N/A       N/A       N/A  
Shrewsbury, MA
                                                                                               
10. Avalon Riverview North
    100 %     602       175.6       Q3 2005       Q3 2007       Q3 2008       Q1 2009       2,695       N/A       N/A       N/A       N/A  
New York, NY
                                                                                               
11. Avalon Chrystie Place II
    100 %     206       100.8       Q4 2005       Q1 2007       Q3 2007       Q1 2008       3,420       N/A       N/A       N/A       N/A  
New York, NY
                                                                                               
12. Avalon at Glen Cove North
    100 %     111       42.4       Q4 2005       Q2 2007       Q3 2007       Q1 2008       2,300       N/A       N/A       N/A       N/A  
Glen Cove, NY
                                                                                               
13. Avalon Danvers
    100 %     433       84.8       Q4 2005       Q1 2007       Q2 2008       Q4 2008       1,660       N/A       N/A       N/A       N/A  
Danvers, MA
                                                                                               
14. Avalon Woburn
    100 %     446       81.9       Q4 2005       Q1 2007       Q1 2008       Q3 2008       1,640       N/A       N/A       N/A       N/A  
Woburn, MA
                                                                                               
15. Avalon on the Sound II
    100 %     588       184.2       Q1 2006       Q3 2007       Q3 2008       Q1 2009       2,420       N/A       N/A       N/A       N/A  
New Rochelle, NY
                                                                                               
16. Avalon Meydenbauer
    100 %     368       84.3       Q1 2006       Q4 2007       Q3 2008       Q1 2009       1,625       N/A       N/A       N/A       N/A  
Bellevue, WA
                                                                                               
 
                                                                                         
Subtotal/Weighted Average
            4,879     $ 1,268.4                                     $ 2,135                                  
 
                                                                                         
Completed this Quarter:
                                                                                               
1. Avalon at Bedford Center
    100 %     139       25.3       Q4 2004       Q3 2005       Q1 2006       Q3 2006       1,780       100.0 %     98.6 %     91.4 %     55.5 %
Bedford, MA
                                                                                               
Subtotal/Weighted Average
            139     $ 25.3                                                                          
 
                                                                                           
Total/Weighted Average
            5,018     $ 1,293.7                                     $ 2,125                                  
 
                                                                                         
Weighted Average Projected NOI as a % of Total Capital Cost (1) (8)                     7.1 %   Inclusive of Concessions — See Attachment #12                                        

                         
Non-Stabilized Development Communities: (9)                   % Economic  
                    Occ  
                    (1) (5)  
Prior Quarter Completions:
                       
Avalon Chrystie Place I, New York, NY
    361     $ 149.0          
Avalon Danbury, Danbury, CT
    234       35.6          
 
                   
 
                       
Total
    595     $ 184.6       95.2 %
 
                 

                     
Asset Cost Basis, Non-Stabilized Development                   Source
 
Capital Cost, Prior Quarter Completions
          $ 65.4     Att. 6 (less JV partner share)
Capital Cost, Current Completions
            25.3     Att. 6
Capital Cost, Under Construction
            1,179.9     Att. 6 (less JV partner share)
Less: Remaining to Invest, Under Construction
                   
Total Remaining to Invest
    952.4             Att. 8
Capital Cost, Projected Q2 2006 Starts
    (172.0 )           Att. 8, Footnote 5
 
                   
 
            ( 780.4 )    
 
                   
Total Asset Cost Basis, Non-Stabilized Development   $ 490.2      
 
                   


Q1 2006 Net Operating Income/(Deficit) for communities under construction and non-stabilized
development communities was $1.1 million. See Attachment #12.
 
(1)   See Attachment #12 — 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 April 21, 2006.
 
(3)   Includes apartment homes for which leases have been executed or non-refundable deposits have been paid as of April 21, 2006.
 
(4)   Physical occupancy based on apartment homes occupied as of April 21, 2006.
 
(5)   Represents Economic Occupancy for the first quarter of 2006.
 
(6)   The community is currently owned by a wholly-owned subsidiary of the Company, will be financed, in part or in whole, by a construction loan, and is subject to a joint venture agreement that allows for a joint venture partner to be admitted upon construction completion.
 
(7)   The community is being developed under a joint venture structure and is expected to be financed in part by a construction loan. The Company’s portion of the Total Capital Cost of this joint venture is projected to be $29.5 million including community-based debt.
 
(8)   The Weighted Average calculation is based on the Company’s pro rata share of the Total Capital Cost for each community.
 
(9)   Represents Development Communities completed in the current quarter and prior quarters that had not achieved Stabilized Operations for the entire current quarter. Estimates are based on the Company pro rata share of the Total Capital Coast for each Community.
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 for the first quarter of 2006.
 

 


 

 
Attachment 7
AvalonBay Communities, Inc.
Redevelopment Communities as of March 31, 2006
                                                                                         
                    Cost (millions)     Schedule     Avg     Number of Homes  
            # of     Pre-     Total                                     Rent             Out of  
    Percentage     Apt     Redevelopment     Capital     Acquisition /                     Restabilized     Per     Completed     Service @  
    Ownership     Homes     Capital Cost     Cost (1)(2)     Completion     Start     Complete     Ops (2)     Home (2)     to date     3/31/06  
                                                                    Inclusive of                  
                                                                    Concessions                  
                                                                    See Attachment #12                  
Under Redevelopment:
                                                                                       
Stabilized Portfolio (3)
                                                                                       
1. Avalon at Fairway Hills III (4)
    100 %     336     $ 23.3     $ 29.5     Q3 1996       Q4 2004       Q2 2006     Q3 2006     $ 1,345       336        
Columbia, MD
                                                                                       
2. 200 Arlington Place
    100 %     409       50.2       57.1     Q4 2000       Q1 2006       Q2 2007     Q4 2007       1,320       3        
Arlington Heights, IL
                                                                                       
3. Avalon Walk I and II (5)
    100 %     764       59.4       71.2     Q3 1992       Q1 2006       Q4 2007     Q2 2008       1,340       71       12  
Hamden, CT
                                  Q3 1994                                                  
 
                                                                                       
 
                                                                           
Subtotal
            1,509     $ 132.9     $ 157.8                                     $ 1,335       410       12  
 
                                                                           
 
                                                                                       
Acquisitions (3)
                                                                                       
1. Avalon Columbia (6)
    15 %     170       25.5       29.7     Q4 2004       Q2 2005       Q2 2006     Q4 2006       1,400       143       8  
 
                                                                           
Columbia, MD
                                                                                       
 
                                                                                       
Total/Weighted Average
            1,679     $ 158.4     $ 187.5                                     $ 1,345       553       20  
 
                                                                           
Weighted Average Projected NOI as a % of Total Capital Cost (2)                             10.0 %   Inclusive of Concessions — See Attachment #12                
 
(1)   Inclusive of acquisition cost.
 
(2)   See Attachment #12 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(3)   Stabilized Portfolio Redevelopment Communities have been held for one year or more and have achieved Stabilized Operations before beginning redevelopment.
Acquisition redevelopments are those communities that begin redevelopment within one year of acquisition.
 
(4)   This is one of two communities that previously comprised Avalon at Fairway Hills II. In connection with the beginning of its renovation, this community will now be reported separately as Phase III.
 
(5)   This community was developed by a predecessor of the Company. Phase I was completed in Q3 1992 and Phase II was completed in Q3 1994.
 
(6)   This community was acquired in Q4 2004 and was transferred to a subsidiary of the Company’s Investment Management Fund (the “IM Fund”) in Q1 2005, reducing the Company’s indirect equity interest in the community to 15%. This community was formerly known as Hobbits Grove.
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 for the first quarter of 2006.
 

 


 

 
Attachment 8
AvalonBay Communities, Inc.
Summary of Development and Redevelopment Community Activity (1) as of March 31, 2006


($ in Thousands)

DEVELOPMENT (2)
                                         
    Apt Homes     Total Capital     Cost of Homes             Construction in  
    Completed &     Cost Invested     Completed &     Remaining to     Progress at  
    Occupied     During Period (3)     Occupied (4)     Invest (5)     Period End (6)  
Total — 2004 Actual
    2,181     $ 302,184     $ 368,301     $ 287,812     $ 266,548  
 
                                 
 
                                       
2005 Actual:
                                       
Quarter 1
    259     $ 60,827     $ 42,234     $ 286,946     $ 294,379  
Quarter 2
    473       72,327       75,121       588,802       315,720  
Quarter 3
    510       96,202       66,050       734,543       295,545  
Quarter 4
    238       118,483       35,641       881,012       377,320  
 
                                 
Total — 2005 Actual
    1,480     $ 347,839     $ 219,046                  
 
                                 
 
                                       
2006 Projected:
                                       
Quarter 1 (Actual)
    267     $ 113,125     $ 47,014     $ 952,410     $ 468,401  
Quarter 2 (Projected)
    291       176,570       58,599       775,840       550,105  
Quarter 3 (Projected)
    472       145,209       91,948       630,631       573,282  
Quarter 4 (Projected)
    473       130,381       89,551       500,250       547,992  
 
                                 
Total — 2006 Projected
    1,503     $ 565,285     $ 287,112                  
 
                                 

REDEVELOPMENT
                                 
            Total Capital             Reconstruction in  
    Avg Homes     Cost Invested     Remaining to     Progress at  
    Out of Service     During Period (3)     Invest (5)     Period End (6)  
Total — 2004 Actual
          $ 3,544     $ 15,710     $ 2,140  
 
                             
 
                               
2005 Actual:
                               
Quarter 1
    80     $ 2,878     $ 9,938     $ 5,963  
Quarter 2
    98       2,536       7,301       14,236  
Quarter 3
    110       1,890       17,350       15,172  
Quarter 4
    52       1,668       13,456       7,877  
 
                             
Total — 2005 Actual
          $ 8,972                  
 
                             
 
                               
2006 Projected:
                               
Quarter 1 (Actual)
    32     $ 3,433     $ 18,443     $ 8,502  
Quarter 2 (Projected)
    44       4,060       14,383       15,022  
Quarter 3 (Projected)
    75       3,134       11,249       16,023  
Quarter 4 (Projected)
    75       3,104       8,145       17,087  
 
                             
Total — 2006 Projected
          $ 13,731                  
 
                             
 
(1)   Data is presented for all communities currently under construction or reconstruction and those communities for which construction or reconstruction is expected to begin within the next 90 days.
 
(2)   Projected periods include data for consolidated joint ventures at 100%. The offset for joint venture partners’ participation is reflected as minority interest.
 
(3)   Represents Total Capital Cost incurred or expected to be incurred during the quarter, year or in total. See Attachment #12 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(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 communities currently under construction or reconstruction and those for which construction or reconstruction is expected to begin within the next 90 days. Remaining to invest for Q1 2006 includes $172.0 million attributed to two anticipated Q2 2006 development starts and $1.5 million related to two anticipated Q2 2006 redevelopment starts. Remaining to Invest also includes $10.0 million attributed to Avalon at Mission Bay North II. The Company’s portion of the Total Capital Cost of this joint venture is projected to be $29.5 million including community-based construction debt.
 
(6)   Represents period end balance of construction or reconstruction costs. Amount for Q1 2006 includes $83.1 million related to one unconsolidated joint venture and one unconsolidated investment in the IM Fund, and is reflected in other assets for financial reporting purposes.
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 for the first quarter of 2006.
 

 


 

 
Attachment 9
AvalonBay Communities, Inc.
Future Development as of March 31, 2006

DEVELOPMENT RIGHTS
                                 
                    Estimated   Total
                    Number   Capital Cost (1)
  Location of Development Right           of Homes   (millions)
  1.    
Dublin, CA Phase I
    (2 )     305       86  
  2.    
Lexington, MA
            387       86  
  3.    
New York, NY Phase III
    (2 )     96       56  
  4.    
Encino, CA
    (2 )     131       51  
  5.    
Canoga Park, CA
    (2 )     210       47  
  6.    
Acton, MA
            380       71  
  7.    
Hingham, MA
            235       44  
  8.    
White Plains, NY
            393       146  
  9.    
New York, NY
            299       121  
  10.    
Norwalk, CT
            314       63  
  11.    
Wilton, CT
    (2 )     100       24  
  12.    
Quincy, MA
    (2 )     146       24  
  13.    
Northborough, MA
            350       60  
  14.    
Tinton Falls, NJ
            216       41  
  15.    
Oyster Bay, NY
            273       69  
  16.    
Sharon, MA
            156       26  
  17.    
Plymouth, MA Phase II
            81       17  
  18.    
Cohasset, MA
    (2 )     200       38  
  19.    
Kirkland, WA Phase II
    (2 )     173       48  
  20.    
Milford, CT
    (2 )     284       45  
  21.    
Greenburgh, NY Phase II
            444       112  
  22.    
Irvine, CA
            280       76  
  23.    
Shelton, CT II
            171       34  
  24.    
Andover, MA
    (2 )     115       21  
  25.    
Brooklyn, NY
            397       186  
  26.    
West Haven, CT
            170       23  
  27.    
Union City, CA Phase I
    (2 )     272       74  
  28.    
Union City, CA Phase II
    (2 )     166       46  
  29.    
Hackensack, NJ
            210       47  
  30.    
West Long Branch, NJ
    (3 )     216       36  
  31.    
Plainview, NY
            220       47  
  32.    
Gaithersburg, MD
            254       41  
  33.    
Highland Park, NJ
            285       67  
  34.    
Pleasant Hill, CA
    (3 )     449       153  
  35.    
Saddle Brook, NJ
            300       55  
  36.    
Shelton, CT
            302       49  
  37.    
Wanaque, NJ
            200       33  
  38.    
Wheaton, MD
    (2 )     320       56  
  39.    
Dublin, CA Phase II
            200       52  
  40.    
Dublin, CA Phase III
            205       53  
  41.    
San Francisco, CA
            152       40  
  42.    
Camarillo, CA
            376       55  
  43.    
Stratford, CT
    (2 )     146       23  
  44.    
Alexandria, VA
    (2 )     282       56  
  45.    
Yaphank, NY
    (2 )     344       57  
  46.    
Tysons Corner, VA
    (2 )     439       101  
  47.    
Camarillo, CA II
            233       57  
  48.    
Rockville, MD
    (2 )     240       46  
       
 
                       
       
 
                       
       
Total
            12,117     $ 2,859  
       
 
                       
 
(1)   See Attachment #12 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(2)   Company owns land, but construction has not yet begun.
 
(3)   These development rights are subject to a joint venture arrangement.
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 for the first quarter of 2006.
 

 


 

 
Attachment 10
AvalonBay Communities, Inc.
Unconsolidated Real Estate Investments (1) as of March 31, 2006
                                                                                 
                                    AVB                                     AVB’s  
                    # of     Total     Book     Outstanding Debt     Economic  
        Unconsolidated   Percentage     Apt     Capital     Value                     Interest     Maturity     Share  
        Joint Ventures   Ownership     Homes     Cost (2)     Investment(3)     Amount     Type     Rate     Date     of Debt  
AvalonBay Value Added Fund, LP                                                                        
       
 
                                                                       
  1.    
Avalon at Redondo Beach
    N/A       105     $ 24,363       N/A     $ 16,765     Fixed     4.84 %   Oct 2011   $ 2,540  
       
Los Angeles, CA
                                                                       
  2.    
Avalon Lakeside
    N/A       204       18,026       N/A       7,923     Fixed     6.90 %   Feb 2028 (4)     1,200  
       
Chicago, IL
                                                                       
  3.    
Avalon Columbia
    N/A       170       28,521       N/A       16,575     Fixed     5.25 %   Apr 2012     2,511  
       
Baltimore, MD
                                                                       
  4.    
Ravenswood at the Park Seattle, WA
    N/A       400       49,671       N/A       31,500     Fixed     4.96 %   Jul 2012     4,772  
       
 
                                                                       
  5.    
Avalon at Poplar Creek
    N/A       196       25,138       N/A       16,500     Fixed     4.83 %   Oct 2012     2,500  
       
Chicago, IL
                                                                       
  6.    
Fuller Martel
    N/A       82       17,913       N/A       11,500     Fixed     5.41 %   Feb 2014     1,742  
       
Los Angeles, CA
                                                                       
  7.    
Civic Center Place (5)
    N/A       192       37,878       N/A       23,806     Fixed     5.29 %   Aug 2013     3,607  
       
Norwalk, CA
                                                                       
  8.    
Paseo Park
    N/A       134       19,719       N/A             N/A       N/A       N/A        
       
Fremont, CA
                                                                       
  9.    
Aurora at Yerba Buena
    N/A       160       66,111       N/A             N/A       N/A       N/A        
       
San Francisco, CA
                                                                       
       
Fund corporate debt (6)
    N/A       N/A       N/A       N/A       91,600     Variable     5.56 %   Jan 2008     13,877  
       
 
                                                           
   
 
    15.2 %     1,643     $ 287,340     $ 48,601     $ 216,169                             $ 32,749  
       
 
                                                           
       
 
                                                                       
Other Operating Joint Ventures                                                                        
  1.    
Avalon Run
    (7 )     426     $ 28,767     $ 1,496     $       N/A       N/A       N/A     $  
       
Lawrenceville, NJ
                                                                       
  2.    
Avalon Grove
    (8 )     402       51,619       8,470             N/A       N/A       N/A        
       
Stamford, CT
                                                                       
  3.    
Avalon Bedford
    25.0 %     368       60,112       12,819       37,200     Fixed     5.24 %   Nov 2010     9,300  
       
Stamford, CT
                                                                       
       
 
                                                             
   
 
            1,196     $ 141,498     $ 22,785     $ 37,200                             $ 9,300  
       
 
                                                             
 
Other Development Joint Ventures                                                                        
  1.    
Avalon Chrystie Place I
    20.0 %     361     $ 128,795     $ 29,426     $ 117,000     Variable     3.21 %   Feb 2009   $ 23,400  
       
New York, NY
                                                                       
  2.    
Avalon at Mission Bay North II
    25.0 %     313       80,795       16,946       44,405     Variable     6.32 %   Sep 2008 (9)     11,101  
       
San Francisco, CA
                                                                       
       
 
                                                             
   
 
            674     $ 209,590     $ 46,372     $ 161,405                             $ 34,501  
       
 
                                                             
   
 
            3,513     $ 638,428     $ 117,758     $ 414,774                             $ 76,550  
       
 
                                                             
 
(1)   Schedule does not include one community (Avalon Del Rey) that is being developed under a joint venture arrangement, but is currently wholly-owned and therefore consolidated for financial reporting purposes.
 
(2)   See Attachment #12 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(3)   These unconsolidated real estate investments are accounted for under the equity method of accounting. AVB Book Value Investment represents the Company’s recorded equity investment plus the Company’s pro rata share of outstanding debt.
 
(4)   Debt can be prepaid after February 2008 without penalty.
 
(5)   This community’s debt is a combination of two separate fixed rate loans which both mature in August 2013. The first loan totals $18,154 at a 5.04% interest rate and was assumed by the Company in the purchase of this community. The second loan was procured in connection with the acquisition in the amount of $5,652 at a 6.08% interest rate. The rate listed in the table above represents a blended interest rate.
 
(6)   Amounts are outstanding under the Fund’s unsecured credit facility. The interest rate is a blended average of the outstanding balance.
 
(7)   After the venture makes certain distributions to the third-party partner, the Company will generally be entitled to receive 40% of all operating cash flow distributions and 49% of all residual cash flow following a sale.
 
(8)   After the venture makes certain distributions to the third-party partner, the Company generally receives 50% of all further distributions.
 
(9)   The maturity date as reflected on this attachment may be extended to September 2010 upon exercise of two one-year extension options.
 

 


 

 
Attachment 11
AvalonBay Communities, Inc.
Summary of Disposition Activity as of March 31, 2006

(Dollars in thousands)
                                                         
    Weighted                     Accumulated             Weighted Average        
Number of   Average     Gross Sales             Depreciation     Economic     Initial Year     Weighted Average  
Communities Sold   Holding Period (1)     Price     GAAP Gain     and Other     Gain (2)     Mkt. Cap Rate (1)(2)     Unleveraged IRR (1)(2)  
1998:
9 Communities
          $ 170,312     $ 25,270     $ 23,438     $ 1,832       8.1 %     16.2 %
 
                                               
 
                                                       
1999:
16 Communities
          $ 317,712     $ 47,093     $ 27,150     $ 19,943       8.3 %     12.1 %
 
                                               
 
                                                       
2000:
8 Communities
          $ 160,085     $ 40,779     $ 6,262     $ 34,517       7.9 %     15.3 %
 
                                               
 
                                                       
2001:
7 Communities
          $ 241,130     $ 62,852     $ 21,623     $ 41,229       8.0 %     14.3 %
 
                                               
 
                                                       
2002:
1 Community
          $ 80,100     $ 48,893     $ 7,462     $ 41,431       5.4 %     20.1 %
 
                                               
 
                                                       
2003:
12 Communities, 1 Land Parcel(3)
          $ 460,600     $ 184,438     $ 52,613     $ 131,825       6.3 %     15.3 %
 
                                               
 
                                                       
2004:
5 Communities, 1 Land Parcel
          $ 250,977     $ 122,425     $ 19,320     $ 103,105       4.8 %     16.8 %
 
                                               
 
                                                       
2005:
7 Communities, 1 Office Building, 3 Land Parcels(4)
          $ 382,720     $ 199,766     $ 14,929     $ 184,838       3.8 %     18.0 %
 
                                               
 
                                                       
2006:
2 Communities, 1 Land Parcel
          $ 137,550     $ 78,585     $ 13,950     $ 64,635       4.4 %     16.5 %
 
                                               
 
                                                       
1998 — 2006 Total
    6.1     $ 2,201,186     $ 810,101     $ 186,747     $ 623,355       6.3 %     15.6 %
 
                                               
 
(1)   For purposes of this attachment, land sales and the disposition of an office building are not included in the calculation of Weighted Average Holding Period, Weighted Average Initial Year Market Cap Rate, or Weighted Average Unleveraged IRR.
 
(2)   See Attachment #12 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(3)   2003 GAAP gain, for purposes of this attachment, includes $23,448 related to the sale of a community in which the Company held a 50% membership interest.
 
(4)   2005 GAAP gain includes the recovery of an impairment loss in the amount of $3,000 recorded in 2002 related to one of the land parcels sold in 2005. This loss was recorded to reflect the land at fair value based on its entitlement status at the time it was determined planned for disposition.
 

 


 

Attachment 12
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 previously depreciated operating communities, extraordinary gains or losses (as defined by GAAP), cumulative effect of a change in accounting principle and depreciation of real estate assets, including adjustments for unconsolidated partnerships and joint ventures. Management generally considers FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses related to dispositions of previously depreciated operating communities 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):
 
                 
    Q1     Q1  
    2006     2005  
Net income
  $ 114,077     $ 69,610  
Dividends attributable to preferred stock
    (2,175 )     (2,175 )
Depreciation — real estate assets, including discontinued operations and joint venture adjustments
    40,262       40,950  
Minority interest, including discontinued operations
    99       477  
Gain on sale of previously depreciated real estate assets
    (65,419 )     (37,613 )
 
           
FFO attributable to common stockholders
  $ 86,844     $ 71,249  
 
           
 
               
Average shares outstanding — diluted
    75,290,124       74,258,296  
 
               
EPS — diluted
  $ 1.49     $ 0.92  
 
           
FFO per common share — diluted
  $ 1.15     $ 0.96  
 
           
 
Projected FFO, as provided within this release in the Company’s outlook, 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 second quarter and full year 2006 to the range provided for projected EPS (diluted) is as follows:
 
                 
    Low     High  
    range     range  
Projected EPS (diluted) — Q2 06
  $ 1.36     $ 1.40  
Projected depreciation (real estate related)
    0.53       0.57  
Projected gain on sale of operating communities
    (0.92 )     (0.96 )
 
           
Projected FFO per share (diluted) — Q2 06
  $ 0.97     $ 1.01  
 
           
 
               
Projected EPS (diluted) — Full Year 2006
  $ 3.79     $ 3.93  
Projected depreciation (real estate related)
    2.17       2.21  
Projected gain on sale of operating communities
    (1.78 )     (1.82 )
 
           
Projected FFO per share (diluted) — Full Year 2006
  $ 4.18     $ 4.32  
 
           
 

 


 

Attachment 12 (continued)
NOI is defined by the Company as total property revenue less direct property operating expenses (including property taxes), and excludes corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management, net interest expense, general and administrative expense, joint venture income, minority interest, depreciation expense, gain on sale of real estate assets 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 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):
 
                 
    Q1     Q1  
    2006     2005  
Net income
  $ 114,077     $ 69,610  
Property management and other indirect operating expenses
    8,631       7,129  
Corporate-level other income
    (1,196 )     (548 )
Investments and investment management
    1,471       992  
Interest expense, net
    28,664       32,118  
General and administrative expense
    6,283       7,159  
Joint venture income, minority interest
    (95 )     (6,070 )
Depreciation expense
    39,619       38,874  
Gain on sale of real estate assets
    (78,585 )     (37,613 )
Income from discontinued operations
    (1,770 )     (4,605 )
 
           
NOI from continuing operations
  $ 117,099     $ 107,046  
 
           
 
               
Established:
               
Northeast
  $ 33,073     $ 31,871  
Mid-Atlantic
    18,490       16,481  
Midwest
    1,666       1,677  
Pacific NW
    5,167       4,795  
No. California
    24,995       22,840  
So. California
    10,199       9,301  
 
           
Total Established
    93,590       86,965  
 
           
Other Stabilized
    14,287       12,395  
Development/Redevelopment
    9,222       7,686  
 
           
NOI from continuing operations
  $ 117,099     $ 107,046  
 
           
 
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 March 31, 2006). A reconciliation of NOI from communities sold or held for sale to net income for these communities is as follows (dollars in thousands):
 
                 
    Q1     Q1  
    2006     2005  
Income from discontinued operations
  $ 1,770     $ 4,605  
Interest expense, net
          4  
Depreciation expense
    298       2,232  
 
           
NOI from discontinued operations
  $ 2,068     $ 6,841  
 
           
 
               
NOI from assets sold
  $ 296     $ 5,258  
NOI from assets held for sale
    1,772       1,583  
 
           
NOI from discontinued operations
  $ 2,068     $ 6,841  
 
           
 

 


 

Attachment 12 (continued)
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 (or as of the date of the buyer’s valuation in the case of dispositions), 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 Company’s share of the Total Capital Cost of each community, based on its percentage ownership.
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.
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. 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):
 
                 
    Q1     Q1  
    2006     2005  
Rental revenue (GAAP basis)
  $ 135,412     $ 127,619  
Concessions amortized
    4,015       5,489  
Concessions granted
    (1,776 )     (3,907 )
 
           
Rental revenue (with concessions on a cash basis)
  $ 137,651     $ 129,201  
 
           
 
               
% change — GAAP revenue
            6.1 %
 
               
% change — cash revenue
            6.5 %
 
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 for the quarter ended March 31, 2006 to gain on sale in accordance with GAAP is presented on Attachment 11. For the disposition of Avalon Corners, which occurred subsequent to March 31, 2006, the Economic Gain of approximately $26,800,000 represents a GAAP gain of approximately $31,900,000 less accumulated depreciation of $5,100,000.
Interest Coverage is calculated by the Company as EBITDA from continuing operations, excluding land gains, divided by the sum of interest expense, net, and preferred dividends. 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.

 


 

Attachment 12 (continued)
A reconciliation of EBITDA and a calculation of Interest Coverage for the first quarter of 2006 are as follows (dollars in thousands):
 
         
Net income
  $ 114,077  
Interest expense, net
    28,664  
Depreciation expense
    39,619  
Depreciation expense (discontinued operations)
    298  
 
     
 
       
EBITDA
  $ 182,658  
 
     
 
       
EBITDA from continuing operations
  $ 115,171  
EBITDA from discontinued operations
    67,487  
 
     
 
       
EBITDA
  $ 182,658  
 
     
 
       
EBITDA from continuing operations
  $ 115,171  
Land gains
    (13,166 )
 
     
EBITDA from continuing operations, excluding land gains
  $ 102,005  
 
     
 
       
Interest expense, net
    28,664  
Dividends attributable to preferred stock
    2,175  
 
     
Interest charges
    30,839  
 
     
 
       
Interest coverage
    3.3  
 
     
 
In the calculations of EBITDA above, EBITDA from discontinued operations includes $65,419 in gain on sale of communities.
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. For Redevelopment Communities, Total Capital Cost excludes costs incurred prior to the start of redevelopment when indicated. 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. Total Capital Cost for communities identified as having joint venture ownership, either during construction or upon construction completion, represents the total projected joint venture contribution amount. For joint ventures not in construction, Total Capital Cost is equal to gross real estate value.
Initial Year Market Cap Rate is defined by the Company as Projected NOI of a single community for the first 12 months of operations (assuming no repositioning), less estimates for non-routine allowance of approximately $200 — $300 per apartment home, divided by the gross sales price for the community. The gross sales price is adjusted for transaction costs and deferred maintenance in determining the Initial Year Market Cap Rate for acquisitions. Projected NOI, as referred to above, represents management’s estimate of projected rental revenue minus projected operating expenses before interest, income taxes (if any), depreciation, amortization and extraordinary items. For this purpose, management’s projection of operating expenses for the community includes a management fee of 3.0% — 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 and 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 (for dispositions) and on the expected total investment in each community (for acquisitions).
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

 


 

Attachment 12 (continued)
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. The weighted average Unleveraged IRR for sold communities is weighted based on all cash flows over the holding period for each respective community, including net sales proceeds.
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 March 31, 2006 is as follows (dollars in thousands):
 
         
Total debt
  $ 2,300,186  
 
     
Common stock
    8,110,555  
Preferred stock
    100,000  
Operating partnership units
    16,667  
Total debt
    2,300,186  
 
     
Total market capitalization
    10,527,408  
 
     
 
       
Debt as % of capitalization
    21.8 %
 
     
 
Because Leverage changes with fluctuations in the Company’s stock price, which occurs regularly, the Company’s Leverage may change even when the Company’s earnings, interest and debt levels remain stable. Investors should also note that the net realizable value of the Company’s assets in liquidation is not easily determinable and may differ substantially from the Company’s Total Market Capitalization.
Unencumbered NOI as calculated by the Company represents NOI generated by real estate assets unencumbered by outstanding secured debt as a percentage of total NOI generated by real estate assets. The Company believes that current and prospective unsecured creditors of the Company view Unencumbered NOI as one indication of the borrowing capacity of the Company. Therefore, when reviewed together with the Company’s Interest Coverage, EBITDA and cash flow from operations, the Company believes that investors and creditors view Unencumbered NOI as a useful supplemental measure for determining the financial flexibility of an entity. A calculation of Unencumbered NOI for the quarter ended March 31, 2006 is as follows (dollars in thousands):
 
         
NOI for Established Communities
  $ 93,590  
NOI for Other Stabilized Communities
    14,287  
NOI for Development/Redevelopment Communities
    9,222  
NOI for discontinued operations
    2,068  
 
     
Total NOI generated by real estate assets
    119,167  
NOI on encumbered assets
    17,845  
 
     
NOI on unencumbered assets
    101,322  
 
     
 
       
Unencumbered NOI
    85.0 %
 
     
 
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 2006, Established Communities are consolidated communities that have Stabilized Operations as of January 1, 2005 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.

 


 

Attachment 12 (continued)
Average Rental Rates are calculated by the Company as rental revenue in accordance with GAAP, divided by the weighted average number of occupied apartment homes.
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.
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.
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 estimated stabilized 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.

 

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