Portions of AvalonBay Communities, Inc.'s Proxy Statement for the 2020 annual meeting of stockholders, a definitive copy of which will be filed with the SEC within 120 days after the year end of the year covered by this Form 10-K, are incorporated by reference herein as portions of Part III of this Form 10-K.

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274 operating apartment communities containing 79,636 apartment homes in 11 states and the District of Columbia, of which 261 communities containing 76,447 apartment homes were consolidated for financial reporting purposes and 13 communities containing 3,189 apartment homes were held by unconsolidated entities in which we hold an ownership interest. One of the consolidated communities containing 422 apartment homes was under redevelopment.

•	A mixed-use project located in New York, NY that contains 172 for-sale residential condominiums and 67,000 square feet of retail space.

•	22 apartment communities under development that are expected to contain an aggregate of 6,960 apartment homes when completed. One of these communities, expected to contain 328 apartment homes, is being developed through a joint venture.

•	Rights to develop an additional 27 communities that, if developed as expected, will contain 9,587 apartment homes.

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•	acquired 12 apartment communities, excluding unconsolidated investments, and in 2019 we purchased our joint venture partner's interest in one operating community, obtaining a 100% ownership in that apartment community;

•	disposed of 20 apartment communities, excluding unconsolidated investments and the five wholly-owned communities we contributed to the NYC Joint Venture (as defined below) during 2018;

•	realized our pro rata share of the gain from the sale of seven communities owned by unconsolidated real estate entities;

•	contributed five wholly-owned operating communities located in New York, NY, to a newly formed joint venture (the "NYC Joint Venture") in 2018, retaining a 20.0% interest in the venture and acting as the managing member of the venture as well as the property manager for the communities; and

•	completed the development of 28 apartment communities and the redevelopment of 24 apartment communities.

•	Bellevue, Washington;

•	Boston, Massachusetts;

•	Denver, Colorado;

•	Fairfield, Connecticut;

•	Irvine, California;

•	Iselin, New Jersey;

•	Los Angeles, California;

•	Melville, New York;

•	New York, New York;

•	San Diego, California;

•	San Francisco, California;

•	San Jose, California; and

•	Virginia Beach, Virginia.

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•	focusing on resident satisfaction;

•	staggering lease terms such that lease expirations are better matched to traffic patterns;

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•	balancing high occupancy with premium pricing and increasing rents as market conditions permit; and

•	employing revenue management software to optimize the pricing and term of leases.

•	we use purchase order controls, acquiring goods and services from pre-approved vendors;

•	we use national negotiated contracts and also purchase supplies in bulk where possible;

•	we bid third-party contracts on a volume basis;

•	we strive to retain residents through high levels of service in order to eliminate the cost of preparing an apartment home for a new resident and to reduce marketing and vacant apartment utility costs;

•	we perform turnover work in-house or hire third parties, generally considering the most cost effective approach as well as expertise needed to perform the work;

•	we undertake preventive maintenance regularly to maximize resident safety and satisfaction, as well as to maximize property and equipment life;

•	we have a customer care center, centralizing and improving the efficiency and consistency in the application of our policies for many of the administrative tasks associated with owning and operating apartment communities;

•	we aggressively pursue real estate tax appeals; and

•	we install high efficiency lighting and water fixtures, cogeneration systems and implement sustainability initiatives in our operating platform.

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•	we may abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in exploring those opportunities;

•	occupancy rates and rents at a community may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities;

•	we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy or other required governmental or third party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities;

•	we may incur costs that exceed our original estimates due to increased material, labor or other costs;

•	we may be unable to complete construction and lease-up of a community on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues;

•	we may be unable to obtain financing with favorable terms, or at all, for the proposed development of a community, which may cause us to delay or abandon an opportunity;

•	we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); and

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we may incur liability if our communities are not constructed and operated in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements. Noncompliance could result in imposition of fines, an award of damages to private litigants and a requirement that we undertake structural modifications to remedy the noncompliance.

•	land and/or property acquisition costs;

•	fees paid to secure air rights and/or tax abatements;

•	construction or reconstruction costs;

•	costs of environmental remediation;

•	real estate taxes;

•	capitalized interest and insurance;

•	loan fees;

•	permits;

•	professional fees;

•	allocated development or redevelopment overhead; and

•	other regulatory fees.

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•	corporate restructurings and/or layoffs, industry slowdowns and other factors that adversely affect the local economy;

•	an oversupply of, or a reduced demand for, apartment homes;

•	a decline in household formation or employment or lack of employment growth;

•	the inability or unwillingness of residents to pay rent increases;

•	rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents sufficiently to offset increases in operating costs; and

•	economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.

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•	an acquired property may fail to perform as we expected in analyzing our investment; and

•	our estimate of the costs of operating, repositioning or redeveloping an acquired property may prove inaccurate.

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•	our subsidiaries that are the general partner or managing member of the ventures are generally liable, under applicable law or the governing agreement of a venture, for the debts and obligations of the respective venture, subject to certain exculpation and indemnification rights pursuant to the terms of the governing agreement;

•	investors in the ventures holding a majority of the equity interests may remove us as the general partner or managing member in certain cases involving cause;

•	while we have broad discretion to manage the ventures, the investors or an advisory committee comprised of representatives of the investors must approve certain matters, and as a result we may be unable to cause the ventures to implement certain decisions that we consider beneficial; and

•	we may be liable and/or our status as a REIT may be jeopardized if either the ventures, or the REIT entities associated with the ventures, fail to comply with various tax or other regulatory matters.

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•	the environmental assessments described above have identified all potential environmental liabilities;

•	no prior owner created any material environmental condition not known to us or the consultants who prepared the assessments;

•	no environmental liabilities have developed since the environmental assessments were prepared;

•	the condition of land or operations in the vicinity of our communities, such as the presence of underground storage tanks, will not affect the environmental condition of our communities;

•	future uses or conditions, including, without limitation, changes in applicable environmental laws and regulations, will not result in the imposition of environmental liability; and

•	no environmental liabilities will arise at communities that we have sold for which we may have liability.

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Established Communities (also known as Same Store Communities) for the year ended December 31, 2019 are consolidated communities in the markets where we have a significant presence (New England, New York/New Jersey, Mid-Atlantic, Pacific Northwest, and Northern and Southern California) and where a comparison of operating results from the prior year to the current year is meaningful, as these communities were owned and had Stabilized Occupancy, as defined below, as of the beginning of the respective prior year. The Established Communities for the year ended December 31, 2019 are communities that are consolidated for financial reporting purposes, had Stabilized Occupancy as of January 1, 2018, are not conducting or planning to conduct substantial redevelopment activities, and are not held for sale or planned for disposition within the fiscal year. A community is considered to have Stabilized Occupancy at the earlier of (i) attainment of 95% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.

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Other Stabilized Communities are all other completed consolidated communities that have Stabilized Occupancy, as of January 1, 2019, or which were acquired during the years ended December 31, 2019 or 2018. Other Stabilized Communities for the year ended December 31, 2019 includes stabilized operating communities in our expansion markets of Denver, Colorado, and Southeast Florida, but excludes communities that are conducting or planning to conduct substantial redevelopment activities within the fiscal year.

•	Lease-Up Communities are consolidated communities where construction has been complete for less than one year and that do not have Stabilized Occupancy.

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Redevelopment Communities are consolidated communities where substantial redevelopment is in progress or is planned to begin during the fiscal year. Redevelopment is considered substantial when capital invested during the reconstruction effort is expected to exceed the lesser of $5,000,000 or 10% of the community's pre-redevelopment cost basis and is expected to have a material impact on the operations of the community, including occupancy levels and future rental rates.

•	Unconsolidated Communities are communities that we have an indirect ownership interest in through our investment interest in an unconsolidated entity. Unconsolidated Communities that are under development are presented as Development Communities.

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(1)	Development Communities includes Avalon Alderwood Mall, expected to contain 328 apartment homes, which is being developed within an unconsolidated joint venture, and excludes The Park Loggia, which contains 172 for-sale residential condominiums and 67,000 square feet of retail space, which was completed in the fourth quarter of 2019.

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(1)

We remove a community from our Established Communities portfolio if we believe that planned activity for a community for the upcoming year will result in that community's expected operations not being comparable to the prior year period. We believe that a community's expected operations will not be comparable to the prior year period when we intend either (i) to undertake a significant capital renovation of the community, such that we would consider the community to be classified as a Redevelopment Community; (ii) to dispose of a community through a sale or other disposition transaction; or (iii) when a significant casualty loss occurs.

(2)	Community was moved from the Established Communities portfolio to the Other Stabilized portfolio as a result of a casualty loss that occurred during the year and impacted operations.

(3)	Includes the five wholly-owned communities contributed to the NYC Joint Venture.

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•	259 operating communities, including 248 with a full fee simple, or absolute, ownership interest and 11 that are on land subject to a land lease. The land leases have various expiration dates from October 2026 to March 2142, and six of the land leases are used to support tax advantaged structures that ultimately allow us to purchase the land upon lease expiration.

•	A general partnership interest and an indirect limited partnership interest in Archstone Multifamily Partners AC LP (the “U.S. Fund”) and Multifamily Partners AC JV LP (the “AC JV”), subsidiaries of which own four and two operating communities, respectively.

•	A membership interest in four limited liability companies, one of which, the NYC Joint Venture, through subsidiaries owns a fee simple interest in three operating communities and a leasehold interest in two additional operating communities, as well as three ventures that each hold a fee simple interest in an operating community, one of which is consolidated for financial reporting purposes.

•	A general partnership interest in one partnership structured as a “DownREIT,” as described more fully below, that owns one community.

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(1)

Projected total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation retail tenants such as tenant improvements and leasing commissions. Projected total capitalized cost for communities identified as having joint venture ownership, either during construction or upon construction completion, represents the total projected joint venture contribution amount unless otherwise noted.

(2)	Initial projected occupancy dates are estimates.  There can be no assurance that we will complete any or all of these proposed developments.

(3)	Estimated stabilization will occur subsequent to January 1, 2020, when Stabilized Operations is defined as the earlier of (i) attainment of 90% or greater physical occupancy or (ii) the one-year anniversary of completion of development.

(4)	Developments containing at least 10,000 square feet of retail space include AVA Hollywood (19,000 square feet) and Avalon Harrison (27,000 square feet).

(5)	We are developing this project within an unconsolidated joint venture that was formed in December 2019, in which we own a 50.0% interest. The information above represents the total cost for the venture.

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(1)	Total capitalized cost is as of December 31, 2019. We generally anticipate incurring additional costs associated with these communities that are customary for new developments.

(2)	Approximate rentable area includes retail space. Developments containing at least 10,000 square feet of retail space include Avalon Belltown Towers (11,000 square feet) and Avalon Saugus (23,000 square feet).

(3)	Excludes the development of The Park Loggia, which contains 172 for-sale residential condominiums and 67,000 square feet of retail space. Development was complete in the fourth quarter of 2019.

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(1)

Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation retail tenants such as tenant improvements and leasing commissions.

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(1)

Projected total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land and related acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, as well as costs incurred for first generation retail tenants such as tenant improvements and leasing commissions, net of projected proceeds for any planned sales of associated outparcels and other real estate.

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(1)	Reflects shares surrendered to the Company in connection with exercise of stock options as payment of exercise price.

(2)	As disclosed in our Form 10-Q for the quarter ended March 31, 2008, represents amounts outstanding under the Company's $500,000,000 Stock Repurchase Program. There is no scheduled expiration date to this program.

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(1)	Amounts do not include unvested restricted shares included in the calculation of Earnings per Share. Please refer to Note 1, “Organization, Basis of Presentation and Significant Accounting Policies—Earnings per Common Share,” of the Consolidated Financial Statements set forth in Item 8 of this report for a discussion of the calculation of Earnings per Share.

(2)	Interest expense, net includes any gain or loss incurred from the extinguishment of debt.

(3)

EBITDA is defined as net income before interest income and expense, income taxes and depreciation and amortization. Under this definition, EBITDA includes gains on sale of assets and gain on sale of partnership interests. Management generally considers EBITDA to be an appropriate supplemental measure to net income of our operating performance because it helps investors to understand our ability to incur and service debt and to make capital expenditures. EBITDA should not be considered as an alternative to net income (as determined in accordance with GAAP), as an indicator of our operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. Our calculation of EBITDA may not be comparable to EBITDA as calculated by other companies.

(4)	Refer to “Reconciliation of Non-GAAP Financial Measures” below.

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(5)	Current Communities consist of all communities other than those which are still under construction and for which a certificate or certificates of occupancy for the entire community have not been received.

•	gains or losses on sales of previously depreciated operating communities;

•	cumulative effect of change in accounting principle;

•	impairment write-downs of depreciable real estate assets;

•	write-downs of investments in affiliates due to a decrease in the value of depreciable real estate assets held by those affiliates;

•	depreciation of real estate assets; and

•	adjustments for unconsolidated partnerships and joint ventures, including those from a change in control.

•	joint venture gains (if not adjusted through FFO), non-core costs, and promoted interests;

•	casualty and impairment losses or gains, net on non-depreciable real estate;

•	business interruption insurance proceeds and the related lost NOI that is covered by the business interruption insurance proceeds;

•	gains or losses from early extinguishment of consolidated borrowings;

•	advocacy contributions;

•	hedge ineffectiveness;

•	severance related costs;

•	abandoned pursuits;

•	for-sale condominium activity, including gains, marketing and administrative costs and imputed carry cost;

•	gains or losses on sales of assets not subject to depreciation;

•	expensed acquisition costs related to business acquisitions that occurred prior to the adoption of ASU 2017-0 as of October 1, 2016;

•	property and casualty insurance proceeds and legal settlements;

•	income taxes; and

•	other non-core items.

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(1)

During 2015, we recognized an impairment on depreciable real estate of $4,195 from the severe winter storms that occurred in our Northeast markets. During 2016, we received insurance proceeds, net of additional costs incurred, of $5,732 related to the winter storms, and recognized $4,195 of this recovery as an offset to the loss recognized in the prior year period. The balance of the net insurance proceeds received in 2016 of $1,537 is recognized as a casualty gain and is included in the reconciliation of FFO to Core FFO.

(2)

Amounts for 2019, 2018, 2017 and 2016 are primarily composed of (i) the write-off of asset management fee intangibles primarily associated with the disposition of communities in the U.S. Fund in 2019, 2018, 2017 and 2016 and the AC JV in 2018 and (ii) our proportionate share of operating results for joint ventures formed with Equity Residential as part of the Archstone Acquisition. Amounts for 2015 are primarily composed of our proportionate share of gains and operating results for joint ventures formed with Equity Residential as part of the Archstone Acquisition.

(3)	Amounts for 2018, 2017 and 2016 are composed of the recognition of our promoted interest in AvalonBay Value Added Fund II, L.P. (“Fund II”). Amount for 2015 is primarily composed of amounts received related to the modification of the joint venture agreement for the entity that owns Avalon at Mission Bay II to eliminate our promoted interest in future distributions.

(4)	Amounts include impairment charges relating to ancillary land parcels.

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(5)

Amount for 2018 includes $554 in legal settlement proceeds relating to construction defects at a community acquired as part of the Archstone Acquisition. Amount for 2017 includes $19,481 for the Maplewood casualty loss, partially offset by $17,143 of property damage insurance proceeds, and $5,438 in legal settlement proceeds relating to construction defects at a community acquired as part of the Archstone Acquisition. Amount for 2016 includes $8,702 in property damage insurance proceeds for the Edgewater casualty loss, and $1,537 in insurance proceeds in excess of the total recognized loss related to severe winter storms in our Northeast markets that occurred in 2015. Amount for 2015 includes $44,142 of Edgewater insurance proceeds received partially offset by $28,604 for the write-off of real estate and related costs.

(6)	The aggregate impact of (i) casualty and impairment (recovery) loss, net on real estate, (ii) impairment loss on real estate and (iii) casualty (gain) loss, net on real estate for 2018 and 2017 are losses of $215 and $6,250, respectively, and for 2016 and 2015 are gains of $3,935 and $10,542, respectively.

(7)	Amount for 2017 is composed of business interruption insurance proceeds resulting from the final insurance settlement of the Maplewood casualty loss. Amount for 2016 is primarily composed of business interruption insurance proceeds resulting from the final insurance settlement of the Edgewater casualty loss.

(8)

Amounts for 2017, 2016 and 2015 primarily relate to lost NOI resulting from the Edgewater casualty loss, for which we received $20,306 in business interruption insurance proceeds in the first quarter of 2016. Amount for 2018, as well as a portion of the amount for 2017, relates to the Maplewood casualty loss, for which we received $3,495 in business interruption insurance proceeds in the third quarter of 2017.

(9)	Represents the imputed carry cost of the for-sale residential condominiums at The Park Loggia. The Company computes this adjustment by multiplying the total capitalized cost of completed and unsold for-sale residential condominiums by the Company's weighted average unsecured debt rate.

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•	Completed the construction of seven apartment communities containing an aggregate of 2,027 apartment homes and 34,000 square feet of retail space, for an aggregate total capitalized cost of $667,000,000.

•	Started the construction of eight apartment communities containing an aggregate of 2,377 apartment homes, which are expected to be completed for an estimated total capitalized cost of $849,000,000, or $794,000,000 when including only our 50.0% interest in one community developed through an unconsolidated joint venture.

•	Completed the redevelopment of nine apartment communities containing an aggregate of 3,276 apartment homes for a total investment of $136,000,000, excluding costs incurred prior to the redevelopment.

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(1)	Historically for years prior to January 1, 2019, we presented charges for uncollectible lease revenue in direct property operating expenses, excluding property taxes. With the adoption of ASU 2016-02, Leases, we are presenting such charges as an adjustment to rental and other income in our consolidated financial statements on a prospective basis as of January 1, 2019.

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(1)

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. Economic occupancy is defined as gross potential revenue less vacancy loss, as a percentage of gross potential revenue. Gross potential revenue is determined by valuing occupied homes at leased rates and vacant homes at market rents.

(2)

The New York State Housing Stability and Tenant Protection Act of 2019, which was signed into law on June 14, 2019, now limits some of the fees we previously charged in New York State (including late fees and new lease application fees), eliminates our ability to raise rents on rent stabilized apartments up to the full legal rent when residents with a preferential rent renew their lease, and implements other changes that are expected to limit our rent increases on rent stabilized apartments and generally increases tenant rights. We expect the impact of the New York State Housing Stability and Tenant Protection Act of 2019 to be immaterial to our Metro New York/New Jersey results of operations.

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•	a prepayment penalty of $8,579,000 and the non-cash write-off of deferred financing costs of $347,000 associated with the early repayment of $250,000,000 principal amount of 6.10% unsecured notes; and

•	the aggregate prepayment penalty of $3,308,000 and the non-cash write-off of deferred financing costs of $5,258,000 on the repayment or refinancing of $244,546,000 principal amount of mortgage notes secured by six wholly-owned operating communities.

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•	development and redevelopment activity in which we are currently engaged;

•	the minimum dividend payments on our common stock required to maintain our REIT qualification under the Code;

•	debt service and principal payments either at maturity or opportunistically before maturity; and

•	normal recurring operating expenses and corporate overhead expenses.

•	investment of $1,052,011,000 in the development and redevelopment of communities;

•	acquisition of five wholly-owned operating communities and our joint venture partner's 45.0% interest in one operating community for $420,517,000; and

•	capital expenditures of $140,892,000 for our operating communities and non-real estate assets.

•	payment of cash dividends in the amount of $839,646,000; and

•	the repayment of mortgage notes payable in the amount of $227,570,000.

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•	proceeds from the issuance of unsecured notes in the amount of $449,804,000;

•	the issuance of common stock in the amount of $409,725,000, including $197,122,000 in settlement of the Forward under CEP V and $196,700,000 through CEP IV and CEP V; and

•	the issuance of a mortgage note payable in the amount of $30,250,000.

•	limitations on the amount of total and secured debt in relation to our overall capital structure;

•	limitations on the amount of our unsecured debt relative to the undepreciated basis of real estate assets that are not encumbered by property-specific financing; and

•	minimum levels of debt service coverage.

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•	In February 2019, we amended and restated the $250,000,000 variable rate unsecured term loan that we originally entered into in February 2017, of which $100,000,000 matures in February 2022 with stated pricing of LIBOR plus 0.90%, which remained the same, and $150,000,000 matures in February 2024 with stated pricing of LIBOR plus 0.85% that decreased from LIBOR plus 1.50%.

•	In April 2019, we repaid $13,363,000 of 2.99% fixed rate debt and $33,854,000 of variable rate debt secured by Avalon Natick at par on its maturity date.

•	In May 2019, we repaid $7,635,000 principal amount of variable rate debt secured by Eaves Mission Viejo at par in advance of its scheduled maturity date. We utilized $3,706,000 of restricted cash held in a principal reserve fund to repay a portion of the outstanding indebtedness.

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•	In May 2019, we repaid $20,800,000 principal amount of variable rate debt secured by AVA Nob Hill at par in advance of its scheduled maturity date. We utilized $10,584,000 of restricted cash held in a principal reserve fund to repay a portion of the outstanding indebtedness.

•	In May 2019, we repaid $38,800,000 principal amount of variable rate debt secured by Avalon Campbell at par in advance of its scheduled maturity date. We utilized $22,622,000 of restricted cash held in a principal reserve fund to repay a portion of the outstanding indebtedness.

•	In May 2019, we repaid $17,600,000 principal amount of variable rate debt secured by Eaves Pacifica at par in advance of its scheduled maturity date. We utilized $10,263,000 of restricted cash held in a principal reserve fund to repay a portion of the outstanding indebtedness.

•	In May 2019, we issued $450,000,000 principal amount of unsecured notes in a public offering under our existing shelf registration statement for net proceeds of approximately $446,877,000. The notes mature in June 2029 and were issued at a 3.30% interest rate. The effective interest rate of the notes is 3.66%, including the impact of an interest rate hedge and offering costs.

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In August 2019, as part of the tax-deferred exchange associated with the disposition of Archstone Lexington and acquisition of Avalon Cerritos, we (i) repaid $21,700,000 principal amount of variable rate debt secured by Archstone Lexington at par in advance of its scheduled maturity date and (ii) entered into a $30,250,000 fixed rate note secured by Avalon Cerritos, with a contractual interest rate of 3.26%, maturing in August 2029. Further discussion of the disposition and acquisition activity can be found in Note 6, "Real Estate Disposition Activities," and Note 5, "Investments in Real Estate Entities," of our Consolidated Financial Statements.

•	In November 2019, we repaid $65,749,000 of 3.38% fixed rate debt secured by Avalon Columbia Pike at par on its maturity date.

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(1)	Rates are given as of December 31, 2019 and include credit enhancement fees, facility fees, trustees’ fees, the impact of interest rate hedges, offering costs, mark to market amortization and other fees.

(2)

Balances outstanding represent total amounts due at maturity, and exclude deferred financing costs and debt discount for the unsecured notes of $41,352 and $44,007 as of December 31, 2019 and 2018, respectively, deferred financing costs and debt discount associated with secured notes of $17,729 and $18,085 as of December 31, 2019 and 2018, respectively, as reflected on our Consolidated Balance Sheets included elsewhere in this report.

(3)	Maturity date reflects the contractual maturity of the underlying bond. There is also an associated earlier credit enhancement maturity date.

(4)	During 2019, we repaid this borrowing at par in advance of its scheduled maturity date.

(5)	Financed by variable rate debt, but interest rate is capped through an interest rate protection agreement.

(6)	In February 2020, we called these borrowings for redemption in advance of their scheduled maturity dates.

(7)	During 2019, we repaid this borrowing at par on its scheduled maturity date.

(8)	In August 2019, as part of the tax-deferred exchange associated with the disposition of Archstone Lexington and acquisition of Avalon Cerritos, we (i) repaid the borrowing secured by Archstone Lexington at par in advance of its scheduled maturity date and (ii) entered into a new borrowing secured by Avalon Cerritos.

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(1)	Represents total capitalized cost as of December 31, 2019.

(2)	We have not guaranteed the debt of unconsolidated investees and bear no responsibility for the repayment.

(3)	Represents weighted average rate on outstanding debt as of December 31, 2019.

(4)	Borrowing on this community is comprised of two mortgage loans.

(5)	Borrowing on this dual-branded community is comprised of a single mortgage loan.

(6)	Borrowing is comprised of a loan made by the equity investors in the venture in proportion to their equity interests.

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(1)	Interest payments on variable rate debt obligations are calculated based on the rate as of December 31, 2019.

(2)	Includes ground leases expiring between October 2026 and March 2142. Amounts do not include any adjustment for purchase options available under the ground leases.

(3)	Aggregate finance lease payments include $25,336 in interest costs.

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•	In the first sentence of the fourth paragraph under “Federal Income Tax Considerations and Consequences of Your Investment - Taxation of Non-U.S. Holders of Debt Securities - Disposition of the Debt Securities,” of the prospectus, the phrase “subject to the discussion below regarding FATCA withholding” is deleted; and

•	The paragraph under “Federal Income Tax Considerations and Consequences of Your Investment - Other Tax Consequences for Avalon Bay, its Stockholders, and Holders of its Debt Securities - Other U.S. Federal Income Tax Withholding and Reporting Requirements; FATCA” of the prospectus is replaced with the following:

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•	our potential development, redevelopment, acquisition or disposition of communities;

•	the timing and cost of completion of apartment communities under construction, reconstruction, development or redevelopment;

•	the timing of lease-up, occupancy and stabilization of apartment communities;

•	the timing and net sales proceeds of condominium sales;

•	the pursuit of land on which we are considering future development;

•	the anticipated operating performance of our communities;

•	cost, yield, revenue, NOI and earnings estimates;

•	the impact of landlord-tenant laws and rent regulations;

•	our declaration or payment of dividends;

•	our joint venture and discretionary fund activities;

•	our policies regarding investments, indebtedness, acquisitions, dispositions, financings and other matters;

•	our qualification as a REIT under the Internal Revenue Code;

•	the real estate markets in Northern and Southern California, Denver, Colorado, and Southeast Florida, and markets in selected states in the Mid-Atlantic, New England, Metro New York/New Jersey and Pacific Northwest regions of the United States and in general;

•	the availability of debt and equity financing;

•	interest rates;

•	general economic conditions including the potential impacts from current economic conditions;

•	trends affecting our financial condition or results of operations; and

•	the impact of outstanding legal proceedings.

•	we may fail to secure development opportunities due to an inability to reach agreements with third parties to obtain land at attractive prices or to obtain desired zoning and other local approvals;

•	we may abandon or defer development opportunities for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses;

•	construction costs of a community may exceed our original estimates;

•	we may not complete construction and lease-up of communities under development or redevelopment on schedule, resulting in increased interest costs and construction costs and a decrease in our expected rental revenues;

•	the timing and net proceeds of condominium sales may not equal our current expectations;

•	occupancy rates and market rents may be adversely affected by competition and local economic and market conditions which are beyond our control;

•	financing may not be available on favorable terms or at all, and our cash flows from operations and access to cost effective capital may be insufficient for the development of our pipeline which could limit our pursuit of opportunities;

•	the impact of new landlord-tenant laws and rent regulations may be greater than we expected;

•	our cash flows may be insufficient to meet required payments of principal and interest, and we may be unable to refinance existing indebtedness or the terms of such refinancing may not be as favorable as the terms of existing indebtedness;

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•	we may be unsuccessful in our management of the U.S. Fund, the AC JV or the REIT vehicles that are used with each respective joint venture;

•	we may be unsuccessful in managing changes in our portfolio composition;

•	laws and regulations implementing rent control or rent stabilization, or otherwise limiting our ability to increase rents, charge fees or evict tenants, may impact our revenue or increase our costs; and

•	our expectations, estimates and assumptions regarding outstanding legal proceedings are subject to change.

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(a)

Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. We continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

(b)

Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2019 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2019.

(c)	Changes in Internal Control Over Financial Reporting. As of January 1, 2019, the Company adopted ASU 2016-02, Leases. The Company implemented internal controls related to the lease accounting process, but there were no significant changes to the internal control over financial reporting due to the adoption of this new standard.

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(1)	Consists of the 2009 Plan.

(2)

Includes 33,392 deferred restricted stock units granted under the 2009 Plan, which, subject to vesting requirements, will convert in the future to common stock on a one-for-one basis. Also includes the maximum number of shares that may be issued upon settlement of outstanding Performance Awards awarded to officers and maturing on December 31, 2019, 2020 and 2021. Does not include 311,437 shares of restricted stock that are outstanding and that are already reflected in the Company's outstanding shares.

(3)	Excludes performance awards and deferred units granted under the 2009 Plan, which, subject to vesting requirements, will convert in the future to common stock on a one-for-one basis.

(4)	Consists of the ESPP.

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+	Management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(a)(3) of Form 10-K.

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•

As described in Note 4, “Equity,” 152,502 shares of common stock were issued as part of the Company's stock based compensation plans, of which 73,072 shares related to the conversion of performance awards to restricted shares, and the remaining 79,430 shares valued at $15,603,000 were issued in connection with new stock grants; 1,838 shares valued at $205,000 were issued in conjunction with the conversion of deferred stock awards; 2,069 shares valued at $418,000 were issued through the Company’s dividend reinvestment plan; 84,710 shares valued at $16,101,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 2,361 restricted shares with an aggregate value of $399,000 previously issued in connection with employee compensation were canceled upon forfeiture.

•	Common stock dividends declared but not paid totaled $214,832,000.

•	The Company recorded an increase of $373,000 in redeemable noncontrolling interest with a corresponding decrease to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.  For further discussion of the nature and valuation of these items, see Note 11, “Fair Value.”

•	The Company recorded an increase in other liabilities of $6,379,000, an increase in prepaid expenses and other assets of $388,000 and a corresponding adjustment to other comprehensive income, and reclassified $6,571,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company’s derivative and hedge accounting activity.

•	The Company recorded $122,276,000 of lease liabilities and offsetting right of use lease assets for its ground and office leases, upon the adoption of ASU 2016-02, Leases, as of January 1, 2019. For further discussion on the adoption of the guidance, see Note 1, "Organization, Basis of Presentation and Significant Accounting Policies."

•

The Company issued 187,010 shares of common stock as part of the Company's stock based compensation plans, of which 88,297 shares related to the conversion of performance awards to restricted shares, and the remaining 98,713 shares valued at $15,950,000 were issued in connection with new stock grants; 2,272 shares valued at $387,000 were issued through the Company’s dividend reinvestment plan; 68,565 shares valued at $10,556,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 4,860 restricted shares with an aggregate value of $717,000 previously issued in connection with employee compensation were canceled upon forfeiture.

•	Common stock dividends declared but not paid totaled $204,191,000.

•	The Company recorded a decrease of $223,000 in redeemable noncontrolling interest with a corresponding increase to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.

•	The Company recorded an increase in other liabilities of $6,366,000, and a corresponding adjustment to other comprehensive income, and reclassified $6,143,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company’s derivative and hedge accounting activity.

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•	In conjunction with the formation of NYTA MF Investors LLC (the "NYC Joint Venture”), the venture assumed $395,939,000 of secured indebtedness as partial consideration for the purchase of the associated operating communities and the Company recorded an investment of $74,159,000 in unconsolidated real estate entities, representing its 20.0% retained interest in the venture.

•

The Company issued 201,824 shares of common stock as part of the Company's stock based compensation plan, of which 128,482 shares related to the conversion of performance awards to restricted shares, and the remaining 73,342 shares valued at $13,171,000 were issued in connection with new stock grants; 3,058 shares valued at $558,000 were issued through the Company’s dividend reinvestment plan; 60,319 shares valued at $10,542,000 were withheld to satisfy employees’ tax withholding and other liabilities; and 3,388 restricted shares with an aggregate value of $588,000 previously issued in connection with employee compensation were canceled upon forfeiture.

•	Common stock dividends declared but not paid totaled $196,094,000.

•	The Company recorded a decrease of $65,000 in redeemable noncontrolling interest with a corresponding increase to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.

•	The Company recorded a decrease in prepaid expenses and other assets of $12,114,000 and an increase in other liabilities of $1,171,000, and a corresponding adjustment to other comprehensive income, and reclassified $7,070,000 of cash flow hedge losses from other comprehensive income to interest expense, net, to record the impact of the Company’s derivative and hedge accounting activity.

•	As discussed in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," the Company recognized a non-cash charge of $16,361,000 to write-off the net book value of the fixed assets destroyed by the fire that occurred in February 2017 at the Company's Avalon Maplewood ("Maplewood") which at the time was under construction and not yet occupied.

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Organization and Basis of Presentation

AvalonBay Communities, Inc. (the “Company,” which term, unless the context otherwise requires, refers to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes under the Internal Revenue Code of 1986 (the “Code”). The Company focuses on the development, redevelopment, acquisition, ownership and operation of multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California.

At December 31, 2019, the Company owned or held a direct or indirect ownership interest in 275 operating apartment communities containing 79,886 apartment homes (unaudited) in 11 states and the District of Columbia, of which two communities containing 665 apartment homes were under redevelopment. In addition, the Company owned or held a direct or indirect ownership interest in 22 communities under development that are expected to contain an aggregate of 6,960 apartment homes (unaudited) when completed, as well as a mixed-use project that contains 172 for-sale residential condominiums and 67,000 square feet of retail space. The Company also owned or held a direct or indirect ownership interest in land or rights to land on which the Company expects to develop an additional 27 communities that, if developed as expected, will contain an estimated 9,587 apartment homes (unaudited).

Capitalized terms used without definition have meanings provided elsewhere in this Form 10-K.

Principles of Consolidation

The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, certain joint venture partnerships, subsidiary partnerships structured as DownREITs and any variable interest entities that qualify for consolidation. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company accounts for joint venture entities and subsidiary partnerships in accordance with the consolidation guidance. The Company evaluates the partnership of each joint venture entity and determines first whether to follow the variable interest entity (“VIE”) or the voting interest entity (“VOE”) model. Once the appropriate consolidation model is identified, the Company then evaluates whether it should consolidate the venture. Under the VIE model, the Company consolidates an investment when it has control to direct the activities of the venture and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the VOE model, the Company consolidates an investment when 1) it controls the investment through ownership of a majority voting interest if the investment is not a limited partnership or 2) it controls the investment through its ability to remove the other partners in the investment, at its discretion, when the investment is a limited partnership.

The Company generally uses the equity method of accounting for its investment in joint ventures, including when the Company holds a noncontrolling limited partner interest in a joint venture. Any investment in excess of the Company's cost basis at acquisition or formation of an equity method venture, will be recorded as a component of the Company's investment in the joint venture and recognized over the life of the underlying fixed assets of the venture as a reduction to its equity in income from the venture. Investments in which the Company has little or no influence are accounted for using the cost method.

Real Estate

Operating real estate assets are stated at cost and consist of land and improvements, buildings and improvements, furniture, fixtures and equipment, and other costs incurred during their development, redevelopment and acquisition. Significant expenditures which improve or extend the life of an existing asset and that will benefit the Company for periods greater than a year, are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

Project costs related to the development, construction and redevelopment of real estate projects (including interest and related loan fees, property taxes and other direct costs) are capitalized as a cost of the project. Indirect project costs that relate to several projects are capitalized and allocated to the projects to which they relate. Indirect costs not clearly related to development, construction and redevelopment activity are expensed as incurred. For development, capitalization (i) begins when the Company has determined that development of the future asset is probable, (ii) can be suspended if there is no current development activity underway, but future development is still probable and (iii) ends when the asset, or a portion of an asset, is delivered and is ready for its intended use, or the Company's intended use changes such that capitalization is no longer appropriate.

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For land parcels improved with operating real estate, for which the Company intends to pursue development, the Company generally manages the current improvements until such time as all tenant obligations have been satisfied or eliminated through negotiation, and construction of new apartment communities is ready to begin. Revenue from incidental operations received from the current improvements on land parcels in excess of any incremental costs are recorded as a reduction of total capitalized costs of the respective Development Right and not as part of net income. Incidental operating costs in excess of incidental operating income are expensed in the period incurred.

For redevelopment efforts, the Company capitalizes costs either (i) in advance of taking homes out of service when significant renovation of the common area has begun until the redevelopment is completed, or (ii) when an apartment home is taken out of service for redevelopment until the redevelopment is completed and the apartment home is available for a new resident. Rental income and operating costs incurred during the initial lease-up or post-redevelopment lease-up period are recognized in earnings as incurred.

The Company assesses acquisitions of operating communities to determine if it meets the definition of a business or if it qualifies as an asset acquisition. The Company generally views acquisitions of individual operating communities as asset acquisitions, and results in the capitalization of acquisition costs, and the allocation of purchase price to the assets acquired and liabilities assumed, based on the relative fair value of the respective assets and liabilities.

The purchase price allocation to tangible assets, such as land and improvements, buildings and improvements, and furniture, fixtures and equipment, and the in-place lease intangible assets, is reflected in real estate assets and depreciated over their estimated useful lives. Any purchase price allocation to intangible assets, other than in-place lease intangibles, is included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets and amortized over the term of the acquired intangible asset. The Company values land based on a market approach, looking to recent sales of similar properties, adjusting for differences due to location, the state of entitlement as well as the shape and size of the parcel. Improvements to land are valued using a replacement cost approach and consider the structures and amenities included for the communities. The approach for improvements applies industry standard replacement costs adjusted for geographic specific considerations and reduced by estimated depreciation. The value for furniture, fixtures and equipment is also determined based on a replacement cost approach, considering costs for both items in the apartment homes as well as common areas and was adjusted for estimated depreciation. The fair value of buildings acquired is estimated using the replacement cost approach, assuming the buildings were vacant at acquisition. The replacement cost approach considers the composition of structures acquired, adjusted for an estimate of depreciation. The estimate of depreciation is made considering industry standard information, depreciation curves for the identified asset classes and estimated useful life of the acquired property. The value of the acquired lease-related intangibles considers the estimated cost of leasing the apartment homes as if the acquired building(s) were vacant, as well as the value of the current leases relative to market-rate leases. The in-place lease value is determined using an average total lease-up time, the number of apartment homes and net revenues generated during the lease-up time. The lease-up period for an apartment community is assumed to be 12 months to achieve stabilized occupancy. Net revenues use market rent considering actual leasing and industry rental rate data. The value of current leases relative to a market-rate lease is based on market rents obtained for market comparables, and considered a market derived discount rate. Given the heterogeneous nature of multifamily real estate, the fair values for the land, debt, real estate assets and in-place leases incorporated significant unobservable inputs and therefore are considered to be Level 3 prices within the fair value hierarchy. Consideration for acquisitions is typically in the form of cash unless otherwise disclosed.

Depreciation is calculated on buildings and related improvements using the straight-line method over their estimated useful lives, which range from seven to 30 years. Furniture, fixtures and equipment are generally depreciated using the straight-line method over their estimated useful lives, which range from three years (primarily computer-related equipment) to seven years.

For-Sale Condominium Inventory

In conjunction with the Company’s election to proceed with the sale of the residential condominiums of The Park Loggia, the Company reclassified the associated real estate to for-sale condominium inventory based on the condominiums' relative fair value to the overall development, as presented on the accompanying Consolidated Balance Sheets. The Company presents for-sale condominium inventory at historical cost and evaluates the condominiums for impairment when potential indicators exist, as further discussed under "Abandoned Pursuit Costs and Impairment of Long-Lived Assets" below.

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Income Taxes

The Company elected to be treated as a REIT for U.S. federal income tax purposes for its tax year ended December 31, 1994 and has not revoked such election. A REIT is a corporate entity which holds real estate interests and can deduct from its federally taxable income qualifying dividends it pays if it meets a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. Therefore, as a REIT, the Company generally will not be subject to corporate level federal income tax on its taxable income if it annually distributes 100% of its taxable income to its stockholders.

The states in which the Company operates have similar tax provisions which recognize the Company as a REIT for state income tax purposes. Management believes that all such conditions for the exemption from income taxes on ordinary income have been or will be met for the periods presented. Accordingly, no provision for federal and state income taxes has been made. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal corporate income taxes at regular corporate rates and may not be able to qualify as a corporate REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income and in certain other instances.

The Company did not incur any charges or receive refunds of excise taxes related to the years ended December 31, 2019, 2018 and 2017.

Taxable income from activities performed through taxable REIT subsidiaries (“TRS”) is subject to federal, state and local income taxes. The Company recognized income tax expense of $13,003,000 in 2019, recorded an income tax benefit of $160,000 in 2018 and recognized income tax expense of $141,000 in 2017, related to its activities through its TRS. The income tax expense in 2019 was primarily due to (i) a net deferred tax liability of $5,782,000 for the GAAP to tax basis differences at the Company's for-sale condominiums, The Park Loggia, and the associated 67,000 square feet of retail space and (ii) expense for current and net deferred tax liabilities of $7,221,000, associated with the disposition of two wholly-owned operating communities, as well as the Company's sustainability initiatives. See Note 6, "Real Estate Disposition Activities" for further discussion of transacted and planned TRS disposition activity. As of December 31, 2019 and 2018, the Company did not have any unrecognized tax benefits. The Company does not believe that there will be any material changes in its unrecognized tax positions over the next 12 months. The Company is subject to examination by the respective taxing authorities for the tax years 2016 through 2018.

On December 22, 2017, H.R. 1, the Tax Cuts and Jobs Act (the “TCJA”), was enacted. The TCJA makes major changes to the Code, including lowering the statutory U.S. federal income tax rate from 35% to 21% effective January 1, 2018, which was considered in determining the Company's current and net deferred tax liabilities.

The following reconciles net income attributable to common stockholders to taxable net income for the years ended December 31, 2019, 2018 and 2017 (unaudited, dollars in thousands):

	2019 Estimate				2018 Actual				2017 Actual
Net income attributable to common stockholders	$	785,974			$	974,525			$	876,921
GAAP gain on sale of communities in excess of tax gain	(108,962		)		(192,722		)		(86,661		)
Depreciation/amortization timing differences on real estate	(5,619		)		(15,590		)		(3,642		)
Amortization of debt/mark to market interest	(594		)		(2,276		)		(18,096		)
Tax compensation expense less than GAAP	4,738				13,126				20,243
Other adjustments	22,637				19,617				(392		)
Taxable net income	$	698,174			$	796,680			$	788,373

The following summarizes the tax components of the Company's common dividends declared for the years ended December 31, 2019, 2018 and 2017 (unaudited):

	2019			2018			2017
Ordinary income	96	%		76	%		75	%
20% capital gain	3	%		11	%		18	%
Unrecaptured §1250 gain	1	%		13	%		7	%

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Deferred Financing Costs

Deferred financing costs include fees and other expenditures necessary to obtain debt financing and are amortized on a straight-line basis, which approximates the effective interest method, over the shorter of the term of the loan or the related credit enhancement facility, if applicable. Unamortized financing costs are charged to earnings when debt is retired before the maturity date. Accumulated amortization of deferred financing costs related to unsecured notes was $25,995,000 and $20,564,000 as of December 31, 2019 and 2018, respectively, and related to mortgage notes payable was $1,784,000 and $2,044,000 as of December 31, 2019 and 2018, respectively. Deferred financing costs, except for costs associated with line-of-credit arrangements, are presented as a direct deduction from the related debt liability. Accumulated amortization of deferred financing costs related to the Company's Credit Facility was $11,815,000 and $10,108,000 as of December 31, 2019 and 2018, respectively, and was included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.

Cash, Cash Equivalents and Cash in Escrow

Cash and cash equivalents include all cash and liquid investments with an original maturity of three months or less from the date acquired. Cash in escrow includes principal reserve funds that are restricted for the repayment of specified secured financing. The majority of the Company's cash, cash equivalents and cash in escrow are held at major commercial banks.

Comprehensive Income

Comprehensive income, as reflected on the Consolidated Statements of Comprehensive Income, is defined as all changes in equity during each period except for those resulting from investments by or distributions to shareholders. Accumulated other comprehensive loss, as reflected on the Consolidated Statements of Equity, reflects the effective portion of the cumulative changes in the fair value of derivatives in qualifying cash flow hedge relationships.

Earnings per Common Share

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share (“EPS”). Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company's earnings per common share are determined as follows (dollars in thousands, except per share data):

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	For the year ended
	12/31/19				12/31/18				12/31/17
Basic and diluted shares outstanding
Weighted average common shares—basic	139,054,191				137,844,755				137,523,771
Weighted average DownREIT units outstanding	7,500				7,500				7,500
Effect of dilutive securities	509,859				436,986				535,415
Weighted average common shares—diluted	139,571,550				138,289,241				138,066,686
Calculation of Earnings per Share—basic
Net income attributable to common stockholders	$	785,974			$	974,525			$	876,921
Net income allocated to unvested restricted shares	(2,063		)		(2,839		)		(2,463		)
Net income attributable to common stockholders, adjusted	$	783,911			$	971,686			$	874,458
Weighted average common shares—basic	139,054,191				137,844,755				137,523,771
Earnings per common share—basic	$	5.64			$	7.05			$	6.36
Calculation of Earnings per Share—diluted
Net income attributable to common stockholders	$	785,974			$	974,525			$	876,921
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations	46				44				42
Adjusted net income attributable to common stockholders	$	786,020			$	974,569			$	876,963
Weighted average common shares—diluted	139,571,550				138,289,241				138,066,686
Earnings per common share—diluted	$	5.63			$	7.05			$	6.35

All options to purchase shares of common stock outstanding as of December 31, 2019, 2018 and 2017 are included in the computation of diluted earnings per share.

Abandoned Pursuit Costs and Impairment of Long-Lived Assets

The Company capitalizes pre-development costs incurred in pursuit of new development opportunities for which the Company currently believes future development is probable (“Development Rights”). Future development of these Development Rights is dependent upon various factors, including zoning and regulatory approval, rental market conditions, construction costs and the availability of capital. Initial pre-development costs incurred for pursuits for which future development is not yet considered probable are expensed as incurred. In addition, if the status of a Development Right changes, making future development by the Company no longer probable, any non-recoverable capitalized pre-development costs are expensed. The Company expensed costs related to development pursuits not yet considered probable for development and the abandonment of Development Rights, as well as costs incurred in pursuing the acquisition or disposition of assets for which such acquisition and disposition activity did not occur, in the amounts of $4,896,000, $4,388,000 and $2,370,000 during the years ended December 31, 2019, 2018 and 2017, respectively. These costs are included in expensed acquisition, development and other pursuit costs, net of recoveries on the accompanying Consolidated Statements of Comprehensive Income. Abandoned pursuit costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.

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The Company evaluates its real estate and other long-lived assets for impairment when potential indicators of impairment exist. Such assets are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property or long-lived asset may not be recoverable, the Company assesses its recoverability by comparing the carrying amount of the property or long-lived asset to its estimated undiscounted future cash flows. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Company recognizes an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property or long-lived asset. Based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2019, 2018 and 2017, the Company did not recognize any impairment losses other than those related to the impairment on land held for investment and casualty gains and losses from property damage as discussed below.

The Company evaluates its for-sale condominium inventory for potential indicators of impairment, considering whether the fair value of the individual for-sale condominium units exceeds the carrying value of those units. For-sale condominium inventory is stated at cost, unless the carrying amount of the inventory is not recoverable when compared to the fair value of each unit. The Company determines the fair value of its for-sale condominium inventory using estimated undiscounted future cash flows. For the year ended December 31, 2019, the Company did not recognize any impairment losses on its for-sale condominium inventory.

The Company assesses its portfolio of land held for both development and investment for impairment if the intent of the Company changes with respect to either the development of, or the expected holding period for, the land. The Company did not recognize any material impairment charges on its investment in land during the year ended December 31, 2019. During the year ended December 31, 2018, the Company recognized an impairment charge of $826,000 related to a land parcel the Company had previously acquired for development and no longer intends to develop. During the year ended December 31, 2017, the Company recognized an impairment charge of $9,350,000 related to a land parcel the Company had acquired for development in 2004 and sold during 2017. These charges were determined as the excess of the Company's carrying basis over the expected sales price for each parcel, and are included in casualty and impairment loss (gain), net on the accompanying Consolidated Statements of Comprehensive Income.

The Company evaluates its unconsolidated investments for other than temporary impairment, considering both the extent and amount by which the carrying value of the investment exceeds the fair value, and the Company’s intent and ability to hold the investment to recover its carrying value. The Company also evaluates its proportionate share of any impairment of assets held by unconsolidated investments. There were no other than temporary impairment losses recognized by any of the Company's investments in unconsolidated real estate entities during the years ended December 31, 2019, 2018 or 2017.

Casualty Gains and Losses

In February 2017, a fire occurred at the Company's Avalon Maplewood, located in Maplewood, NJ, which at the time was under construction and not yet occupied. The Company completed reconstruction of the damaged and destroyed portions of the community as well as the vertical construction of the community in 2018. During the year ended December 31, 2017, the Company recorded a net casualty loss of $2,338,000 for the fire at Maplewood, included in casualty and impairment loss (gain), net on the accompanying Consolidated Statements of Comprehensive Income. During the year ended December 31, 2017, the Company reached a final insurance settlement for the property damage and lost income for the Maplewood casualty loss of $19,696,000, after self-insurance and deductibles, of which the Company recognized $3,495,000 as business interruption insurance proceeds. See Note 7, “Commitments and Contingencies,” for additional discussion of the related casualty loss.

A casualty loss may also result in lost operating income from one or more communities that is covered by the Company’s business interruption insurance policies. The Company recognizes income for amounts received under its business interruption insurance policies as a component of rental and other income in the Consolidated Statements of Comprehensive Income. Revenue is recognized upon resolution of all contingencies related to the receipt, typically upon written confirmation by the insurer or receipt of the actual proceeds. The Company recognized $1,441,000, $26,000 and $3,498,000 (including Maplewood as discussed above) in income related business interruption insurance proceeds for the years ended December 31, 2019, 2018 and 2017, respectively.

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Assets Held for Sale and Discontinued Operations

The Company presents the assets and liabilities of any communities which have been sold, or otherwise qualify as held for sale, separately in the Consolidated Balance Sheets. In addition, the results of operations for those assets that meet the definition of discontinued operations are presented as such in the accompanying Consolidated Statements of Comprehensive Income. Real estate assets held for sale are measured at the lower of the carrying amount or the fair value less the cost to sell. Both the real estate assets and corresponding liabilities are presented separately in the accompanying Consolidated Balance Sheets. Upon the classification of an asset as held for sale, no further depreciation is recorded. Disposals representing a strategic shift in operations (e.g., a disposal of a major geographic area, a major line of business or a major equity method investment) will be presented as discontinued operations, and for those assets qualifying for classification as discontinued operations, the specific components of net income presented as discontinued operations include net operating income, depreciation expense and interest expense, net. For periods prior to the asset qualifying for discontinued operations, the Company reclassifies the results of operations to discontinued operations. In addition, the net gain or loss (including any impairment loss) on the eventual disposal of assets held for sale will be presented as discontinued operations when recognized. A change in presentation for held for sale or discontinued operations has no impact on the Company's financial condition or results of operations. The Company combines the operating, investing and financing portions of cash flows attributable to discontinued operations with the respective cash flows from continuing operations on the accompanying Consolidated Statements of Cash Flows. The Company had one wholly-owned operating community that qualified as held for sale presentation at December 31, 2019.

Redeemable Noncontrolling Interests

Redeemable noncontrolling interests are comprised of potential future obligations of the Company, which allow the investors holding the noncontrolling interest to require the Company to purchase their interest. The Company classifies obligations under the redeemable noncontrolling interests at fair value, with a corresponding offset for changes in the fair value recorded in accumulated earnings less dividends. Reductions in fair value are recorded only to the extent that the Company has previously recorded increases in fair value above the redeemable noncontrolling interest's initial basis. The redeemable noncontrolling interests are presented outside of permanent equity as settlement in shares of the Company's common stock, where permitted, may not be within the Company's control. The nature and valuation of the Company's redeemable noncontrolling interests are discussed further in Note 11, “Fair Value.”

Derivative Instruments and Hedging Activities

The Company enters into interest rate swap and interest rate cap agreements (collectively, "Hedging Derivatives") for interest rate risk management purposes and in conjunction with certain variable rate secured debt to satisfy lender requirements. The Company does not enter into Hedging Derivative transactions for trading or other speculative purposes. The Company assesses the effectiveness of qualifying cash flow and fair value hedges, both at inception and on an on-going basis. Hedge ineffectiveness is reported as a component of interest expense, net. The fair values of Hedging Derivatives that are in an asset position are recorded in prepaid expenses and other assets. The fair value of Hedging Derivatives that are in a liability position are included in accrued expenses and other liabilities. The Company does not present or disclose the fair value of Hedging Derivatives on a net basis. Fair value changes for derivatives that are not in qualifying hedge relationships are reported as a component of interest expense, net.  For the Hedging Derivative positions that the Company has determined qualify as effective cash flow hedges, the Company has recorded the cumulative changes in the fair value of Hedging Derivatives in other comprehensive loss.  Amounts recorded in accumulated other comprehensive loss will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow. The effective portion of the change in fair value of the Hedging Derivatives that the Company has determined qualified as effective fair value hedges is reported as an adjustment to the carrying amount of the corresponding debt being hedged. See Note 11, “Fair Value,” for further discussion of derivative financial instruments.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to amounts in prior years' notes to financial statements to conform to current year presentations as a result of changes in held for sale classification, disposition activity and segment classification.

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Leases

The Company is party to leases as both a lessor and a lessee, primarily as follows:

•	lessor of residential and retail space within its apartment communities; and

•	lessee under (i) ground leases for land underlying current operating or development communities and (ii) office leases for its corporate headquarters and regional offices.

The Company adopted ASU 2016-02, Leases, as of January 1, 2019 using the prospective adoption approach, applying the provisions of the new standard to existing leases as of the date of adoption.

Lessee Considerations

The Company assessed whether a contract is or contains a lease based on whether the contract conveys the right to control the use of an identified asset, including specified portions of larger assets, for a period of time in exchange for consideration. The Company identified leases as contracts in which it has the right to direct the use of the property and obtain all of the economic benefits.

The Company’s leases include both fixed and variable lease payments, which are based on an index or rate such as the consumer price index (CPI) or percentage rents based on total sales. When evaluating what payments to include in the measurement of the lease liability, the Company included lease payments that depend on an index or rate only. Variable lease payments that are not based on an index or rate including changes in CPI, percentage rents based on total sales, fair market value resets and others are not included in the measurement of the lease liability, but will be recognized as variable lease expense in the period in which they are incurred.

For leases that have options to extend the term or terminate the lease early, the Company considered whether these options are reasonably certain to be exercised, taking into account physical improvements, installation or relocation costs, rent during the option periods and the cost of returning the assets to a contractually specified condition. The Company only factored the impact of options into the lease term if the option was considered reasonably certain to be exercised.

The Company determined the discount rate associated with its ground and office leases using the Company’s actual borrowing rates as well as indicative market pricing for longer term rates. The Company determined the discount rates on a lease by lease basis using the incremental borrowing rate and taking into consideration the remaining term of each of the lease agreements.

Lessor Considerations

The Company evaluated leases in which it is the lessor, which are composed of residential and retail leases at its apartment communities. The accounting model for lessors did not significantly change as a result of ASU 2016-02, with the impacts primarily related to the accounting for sales-type and direct financing leases. The Company evaluated its residential and retail leases and determined that they continue to be considered operating leases. For lease agreements that provide for rent concessions and/or scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Company’s residential lease term is generally one year. Some of the Company’s retail leases have fixed-price renewal options, and the lessee may be able to exercise its renewal option at an amount less than the fair value of the rent at such time. The Company only includes renewal options in the lease term, if at the commencement of the lease, it is reasonably certain that the lessee will exercise this option.

Additionally, for the Company’s residential and retail leases, which are comprised of the lease component and common area maintenance as a non-lease component, the Company determined that (i) the leases are operating leases, (ii) the lease component is the predominant component and (iii) that all components of its operating leases share the same timing and pattern of transfer.

The Company changed its presentation of charges for uncollectible lease revenue associated with its residential and retail leasing activity, reflecting those amounts as a component of rental and other income on the accompanying Consolidated Statement of Comprehensive Income for the year ended December 31, 2019. However, in accordance with its prospective adoption of the lease standard, the Company did not adjust the prior year period presentation of charges for uncollectible lease revenue associated with its residential and retail leasing activity as a component of operating expenses, excluding property taxes, on the accompanying Consolidated Statement of Comprehensive Income for the years ended December 31, 2018 and 2017.

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Implementation Considerations and Impact

As discussed above, the Company used the prospective adoption approach for the standard. Additionally, in conjunction with the implementation of the standard, the Company elected to apply certain lessee practical expedients allowed under the standard including:

•	not reassessing (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) the accounting for initial direct costs for any existing leases;

•	not evaluating short term leases;

•	not assessing whether existing land easements are, or contain leases; and

•	making an accounting policy election by class of underlying asset, to not separate non-lease components from lease components and instead to account for each separate lease and non-lease component as a single lease component.

Also in conjunction with the implementation of the standard, the Company elected to apply the following practical expedients for lessors, making an accounting policy election:

•	by class of underlying asset for retail and residential leases, to not separate non-lease components from lease components and instead to account for each separate lease and non-lease component as a single lease component;

•	to exclude costs paid by lessees directly to third parties on behalf of the Company; and

•	to exclude sales taxes and other similar taxes assessed by a government authority and collected by the Company from the lessee.

Upon adoption, the Company recorded lease liabilities and offsetting right of use lease assets for its ground and office leases of $122,276,000. In addition, the Company made certain other reclassifications in the current year period of lease related amounts on its Consolidated Balance Sheet to conform to the presentation under the new standard. The adoption of the standard did not have a material impact on the accompanying Consolidated Statements of Comprehensive Income.

Revenue and Gain Recognition

Under ASU 2014-09, Revenue from Contracts with Customers, revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration that the Company expects to be entitled to for those goods and services. The majority of the Company’s revenue is derived from residential and retail rental income and other lease income, which are accounted for under ASU 2016-02, Leases, discussed above. The Company's revenue streams that are not accounted for under ASU 2016-02 include:

•

Management fees - The Company has investment interests in real estate joint ventures, for which the Company may manage (i) the venture, (ii) the associated operating communities owned by the ventures and/or (iii) the development or redevelopment of those operating communities. For these activities, the Company receives asset management, property management, development and/or redevelopment fee revenue. The performance obligation is the management of the venture, community or other defined task such as the development or redevelopment of the community. While the individual activities that comprise the performance obligation of the management fees can vary day to day, the nature of the overall performance obligation to provide management service is the same and considered by the Company to be a series of services that have the same pattern of transfer to the customer and the same method to measure progress toward satisfaction of the performance obligation. The Company recognizes revenue for fees as earned on a monthly basis.

•	Rental and non-rental related income - The Company recognizes revenue for new rental related income not included as components of a lease, such as reservation and application fees, as well as for non-rental related income, as earned.

•

Gains or losses on sales of real estate - The Company accounts for the sale of real estate assets and any related gain recognition in accordance with the accounting guidance applicable to sales of real estate, which establishes standards for recognition of profit on all real estate sales transactions, other than retail land sales. The Company recognizes the sale, and associated gain or loss from the disposition, provided that the earnings process is complete and the Company does not have significant continuing involvement. A gain or loss is recognized when the criteria for an asset to be derecognized are met, which include when (i) a contract exists and (ii) the buyer obtained control of the nonfinancial asset that was sold. In addition, a gain or loss recognized on the sale of a nonfinancial asset to an unconsolidated entity is recognized at 100%, and not the Company’s proportionate ownership percentage.

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The following table provides details of the Company’s revenue streams disaggregated by the Company’s reportable operating segments, further discussed in Note 8, “Segment Reporting,” for the years ended December 31, 2019, 2018 and 2017. The segments are classified based on the individual community's status at January 1, 2019 for the years ended December 31, 2019 and 2018, and at January 1, 2018 for the year ended December 31, 2017. Segment information for total revenue has been adjusted to exclude the real estate assets that were sold from January 1, 2017 through December 31, 2019, or otherwise qualify as held for sale as of December 31, 2019, as described in Note 6, "Real Estate Disposition Activities." Additionally, as discussed below, the Company changed its presentation of charges for uncollectible lease revenue for the year ended December 31, 2019, including it as an adjustment to revenue and not as a component of operating expenses, as it is presented for prior periods on the accompanying Consolidated Statement of Comprehensive Income. In order to provide comparability between periods presented in the Company's segment reporting, the Company has included charges for uncollectible lease revenue for its segment results as a component of revenue for all periods presented. See Note 8, "Segment Reporting," for further discussion (dollars in thousands):

		Established Communities				Other Stabilized Communities				Development/ Redevelopment Communities				Non- allocated (1)				Total
For the year ended December 31, 2019
Management, development and other fees		$	—			$	—			$	—			$	4,960			$	4,960
Rental and non-rental related income (2)		6,113				1,941				803				—				8,857
Total non-lease revenue (3)		6,113				1,941				803				4,960				13,817
Lease income (4)		1,829,748				295,511				162,668				—				2,287,927
Business interruption insurance proceeds		478				963				—				—				1,441
Total revenue		$	1,836,339			$	298,415			$	163,471			$	4,960			$	2,303,185
For the year ended December 31, 2018
Management, development and other fees		$	—			$	—			$	—			$	3,572			$	3,572
Rental and non-rental related income (2)		4,245				1,732				269				—				6,246
Total non-lease revenue (3)		4,245				1,732				269				3,572				9,818
Lease income (4)		1,778,841				236,852				120,553				—				2,136,246
Business interruption insurance proceeds		26				—				—				—				26
Total revenue		$	1,783,112			$	238,584			$	120,822			$	3,572			$	2,146,090
For the year ended December 31, 2017
Management, development and other fees		$	—			$	—			$	—			$	4,147			$	4,147
Rental and non-rental related income (2)		3,845				1,294				740				—				5,879
Total non-lease revenue (3)		3,845				1,294				740				4,147				10,026
Lease income (4)		1,570,262				173,639				231,031				—				1,974,932
Business interruption insurance proceeds (5)		3				—				3,495				—				3,498
Total revenue		$	1,574,110			$	174,933			$	235,266			$	4,147			$	1,988,456

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(1)	Revenue represents third-party management, asset management and developer fees and miscellaneous income which are not allocated to a reportable segment.

(2)	Amounts include revenue streams related to leasing activities that are not considered components of a lease, including but not limited to, apartment hold fees and application fees, as well as revenue streams not related to leasing activities, including but not limited to, vendor revenue sharing, building advertising, vending and dry cleaning revenue.

(3)	Represents all revenue accounted for under ASC 2014-09.

(4)	Amounts include all revenue streams derived from residential and retail rental income and other lease income, which are accounted for under ASU 2016-02.

(5)	Amount for 2017 is primarily business interruption insurance proceeds related to the Maplewood casualty loss as discussed above in "Casualty Gains and Losses."

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Due to the nature and timing of the Company’s identified revenue streams, there are no material amounts of outstanding or unsatisfied performance obligations as of December 31, 2019.

Recently Issued and Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables and other long term financings including available for sale and held-to-maturity debt securities, and loans. Subsequently, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the standard and should continue to be accounted for in accordance with the leases standard (Topic 842). The new standard will be effective for the Company beginning on January 1, 2020 and the Company does not expect the standard to have a material effect on the Company’s financial position or results of operations.

The Company capitalizes interest during the development and redevelopment of real estate assets. Capitalized interest associated with the Company's development or redevelopment activities totaled $62,823,000, $60,331,000 and $64,420,000 for years ended December 31, 2019, 2018 and 2017, respectively.

The Company's mortgage notes payable, unsecured notes, variable rate unsecured term loans (the “Term Loans”) and Credit Facility, as defined below, as of December 31, 2019 and 2018 are summarized below. The following amounts and discussion do not include the mortgage notes related to the communities classified as held for sale, if any, as of December 31, 2019 and 2018, as shown on the Consolidated Balance Sheets (dollars in thousands) (see Note 6, “Real Estate Disposition Activities”).

	12/31/19				12/31/18
Fixed rate unsecured notes (1)	$	5,850,000			$	5,400,000
Variable rate unsecured notes (1)	300,000				300,000
Term Loans (1)	250,000				250,000
Fixed rate mortgage notes payable—conventional and tax-exempt (2)	479,221				533,215
Variable rate mortgage notes payable—conventional and tax-exempt (2)	476,150				619,140
Total mortgage notes payable and unsecured notes and Term Loans	7,355,371				7,102,355
Credit Facility	—				—
Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility	$	7,355,371			$	7,102,355

_________________________________

(1)	Balances at December 31, 2019 and 2018 exclude $8,610 and $9,879, respectively, of debt discount, and $32,742 and $34,128, respectively, of deferred financing costs, as reflected in unsecured notes, net on the accompanying Consolidated Balance Sheets.

(2)	Balances at December 31, 2019 and 2018 exclude $14,464 and $14,590 of debt discount, respectively, and $3,265 and $3,495, respectively, of deferred financing costs, as reflected in mortgage notes payable, net on the accompanying Consolidated Balance Sheets.

The following debt activity occurred during the year ended December 31, 2019:

•	In February 2019, the Company amended and restated the $250,000,000 variable rate unsecured term loan that it originally entered into in February 2017, of which $100,000,000 matures in February 2022 with stated pricing of LIBOR plus 0.90%, which remained the same, and $150,000,000 matures in February 2024 with stated pricing of LIBOR plus 0.85% that decreased from LIBOR plus 1.50%.

•	In April 2019, the Company repaid $13,363,000 of 2.99% fixed rate debt and $33,854,000 of variable rate debt secured by Avalon Natick at par on its maturity date.

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•	In May 2019, the Company repaid $7,635,000 principal amount of variable rate debt secured by Eaves Mission Viejo at par in advance of its scheduled maturity date. The Company utilized $3,706,000 of restricted cash held in a principal reserve fund to repay a portion of the outstanding indebtedness.

•	In May 2019, the Company repaid $20,800,000 principal amount of variable rate debt secured by AVA Nob Hill at par in advance of its scheduled maturity date. The Company utilized $10,584,000 of restricted cash held in a principal reserve fund to repay a portion of the outstanding indebtedness.

•	In May 2019, the Company repaid $38,800,000 principal amount of variable rate debt secured by Avalon Campbell at par in advance of its scheduled maturity date. The Company utilized $22,622,000 of restricted cash held in a principal reserve fund to repay a portion of the outstanding indebtedness.

•	In May 2019, the Company repaid $17,600,000 principal amount of variable rate debt secured by Eaves Pacifica at par in advance of its scheduled maturity date. The Company utilized $10,263,000 of restricted cash held in a principal reserve fund to repay a portion of the outstanding indebtedness.

•	In May 2019, the Company issued $450,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $446,877,000. The notes mature in June 2029 and were issued at a 3.30% interest rate. The effective interest rate of the notes is 3.66%, including the impact of an interest rate hedge and offering costs.

•

In August 2019, as part of the tax-deferred exchange associated with the disposition of Archstone Lexington and acquisition of Avalon Cerritos, the Company (i) repaid $21,700,000 principal amount of variable rate debt secured by Archstone Lexington at par in advance of its scheduled maturity date and (ii) entered into a $30,250,000 fixed rate note secured by Avalon Cerritos, with a contractual interest rate of 3.26%, maturing in August 2029. See Note 6, "Real Estate Disposition Activities," and Note 5, "Investments in Real Estate Entities," for further discussion of the disposition and acquisition activity.

•	In November 2019, the Company repaid $65,749,000 of 3.38% fixed rate debt secured by Avalon Columbia Pike at par on its maturity date.

In February 2019, the Company entered into a $1,750,000,000 Fifth Amended and Restated Revolving Loan Agreement (the “Credit Facility”) with a syndicate of banks, which replaces its prior $1,500,000,000 credit facility dated as of January 14, 2016. The term of the Credit Facility ends on February 28, 2024.

The Credit Facility bears interest at varying levels based on (i) the London Interbank Offered Rate (“LIBOR”) applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.) and (ii) the rating levels issued for our unsecured notes. The current stated pricing for drawn borrowings is LIBOR plus 0.775% per annum (2.54% at December 31, 2019), assuming a one month borrowing rate. The stated spread over LIBOR can vary from LIBOR plus 0.70% to LIBOR plus 1.45% based upon the rating of the Company's unsecured notes. The Credit Facility also provides a competitive bid option that is available for borrowings of up to 65% of the Credit Facility amount. This option allows banks that are part of the lender consortium to bid to provide the Company loans at a rate that is lower than the stated pricing provided by the unsecured credit facility. The competitive bid option may result in lower pricing than the stated rate if market conditions allow. The annual facility fee for the Credit Facility remained 0.125%, resulting in a fee of $2,188,000 annually based on the $1,750,000,000 facility size and based on the Company's current credit rating.

The Company had no borrowings outstanding under the Credit Facility and had $11,488,000 and $39,810,000 outstanding in letters of credit that reduced the borrowing capacity as of December 31, 2019 and 2018, respectively. In addition, the Company had $24,939,000 outstanding in additional letters of credit as of December 31, 2019.

In the aggregate, secured notes payable mature at various dates from June 2020 through July 2066, and are secured by certain apartment communities (with a net carrying value of $1,592,764,000, excluding communities classified as held for sale, as of December 31, 2019).

The weighted average interest rate of the Company's fixed rate secured notes payable (conventional and tax-exempt) was 3.9% and 3.8% at December 31, 2019 and 2018, respectively. The weighted average interest rate of the Company's variable rate secured notes payable (conventional and tax exempt), the Term Loans and its Credit Facility, including the effect of certain financing related fees, was 3.2% and 3.4% at December 31, 2019 and 2018, respectively.

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Scheduled payments and maturities of secured notes payable and unsecured notes outstanding at December 31, 2019 are as follows (dollars in thousands):

Year		Secured notes payments				Secured notes maturities				Unsecured notes maturities				Stated interest rate of unsecured notes
2020		8,782				118,729				400,000				3.625	%
2021		9,304				27,844				250,000				3.950	%
										300,000				LIBOR + 0.43%
2022		9,918				—				450,000				2.950	%
										100,000				LIBOR + 0.90%
2023		10,739				—				350,000				4.200	%
										250,000				2.850	%
2024		11,577				—				300,000				3.500	%
										150,000				LIBOR + 0.85%
2025		12,508				—				525,000				3.450	%
										300,000				3.500	%
2026		13,545				—				475,000				2.950	%
										300,000				2.900	%
2027		14,980				185,100				400,000				3.350	%
2028		20,607				—				450,000				3.200	%
2029		11,742				66,250				450,000				3.300	%
Thereafter		189,162				244,584				350,000				3.900	%
										300,000				4.150	%
										300,000				4.350	%
		$	312,864			$	642,507			$	6,400,000

The Company's unsecured notes are redeemable at the Company's option, in whole or in part, generally at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present value of the remaining scheduled payments of principal and interest discounted at a rate equal to the yield on U.S. Treasury securities with a comparable maturity plus a spread between 20 and 45 basis points depending on the specific series of unsecured notes, plus accrued and unpaid interest to the redemption date.

The Company is subject to financial covenants contained in the Credit Facility, the Term Loans and the indentures under which the unsecured notes were issued. The principal financial covenants include the following:

•	limitations on the amount of total and secured debt in relation to our overall capital structure;

•	limitations on the amount of our unsecured debt relative to the undepreciated basis of real estate assets that are not encumbered by property-specific financing; and

•	minimum levels of debt service coverage.

The Company was in compliance with these covenants at December 31, 2019.

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

During the year ended December 31, 2019, the Company:

i.	issued 109,804 shares of common stock in connection with stock options exercised;

ii.	issued 2,069 common shares through the Company's dividend reinvestment plan;

iii.	issued 152,502 common shares in connection with restricted stock grants and the conversion of performance awards to restricted shares;

iv.	issued 1,942,502 shares under CEP IV and CEP V, including amounts in settlement of the Forward, as discussed below;

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

vi.	withheld 84,710 common shares to satisfy employees' tax withholding and other liabilities;

vii.	issued 13,894 shares through the Employee Stock Purchase Plan; and

viii.	canceled 2,361 shares of restricted stock upon forfeiture.

Any deferred compensation related to the Company’s stock option, restricted stock and performance award grants during the year ended December 31, 2019 is not reflected on the accompanying Consolidated Balance Sheet as of December 31, 2019, and will not be reflected until recognized as compensation cost.

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

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

On September 25, 2019, the Company entered into a forward contract under CEP V to sell 947,868 shares of common stock (the "Forward"). The sales price was established based on the stock price during intraday trading on September 25, 2019. In December 2019, the Company issued 947,868 shares of common stock at a weighted average sales price of $207.96 per share, for net proceeds of $197,122,000, in settlement of the Forward. The proceeds received by the Company were determined on the date of settlement, with adjustments during the term of the contract for the Company’s dividends as well as for a daily interest factor that varied with changes in the Overnight Bank Funding rate.

In addition to the shares issued in settlement of the Forward, in 2019, the Company sold 755,054 shares at an average sales price of $198.26 per share, for net proceeds of $147,450,000 under CEP IV, and 239,580 shares at an average sales price of $208.70 per share, for net proceeds of $49,250,000 under CEP V. As of December 31, 2019, the Company had $752,878,000 remaining authorized for issuance under CEP V.

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Investments in Unconsolidated Real Estate Entities

The Company accounts for its investments in unconsolidated real estate entities under the equity method of accounting, as discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” under Principles of Consolidation. The significant accounting policies of the Company's unconsolidated real estate entities are consistent with those of the Company in all material respects. Certain of these investments are subject to various buy‑sell provisions or other rights which are customary in real estate joint venture agreements. The Company and its partners in these entities may initiate these provisions to either sell the Company's interest or acquire the joint venture interest from the Company's partner.

The following presents the Company's activities in unconsolidated real estate entities for the years ended December 31, 2019, 2018 and 2017:

Archstone Multifamily Partners AC LP (the “U.S. Fund”)—The Company is the general partner of the U.S. Fund and has a 28.6% combined general partner and limited partner equity interest. The Company acquired its interest in the U.S. Fund as part of the Archstone Acquisition (as defined in Note 5, “Investments in Real Estate Entities,” of the Consolidated Financial Statements in Item 8 in the Company's Form 10-K filed February 22, 2019). During 2019, the U.S. Fund sold Avalon Marina Bay and the adjacent marina, The Harbor at Marina Bay, located in Marina del Rey, CA, containing 205 apartment homes and 229 boat slips for $86,000,000. The Company's proportionate share of the gain in accordance with GAAP was $5,788,000. In conjunction with the disposition of the community, the U.S. Fund repaid $49,800,000 of related secured indebtedness in advance of its scheduled maturity date. The U.S. Fund sold one community in each 2018 and 2017, and the Company's proportionate share of the gains in accordance with GAAP was $8,636,000 and $13,788,000, respectively.

Multifamily Partners AC JV LP (the “AC JV”)—The Company has a 20.0% equity interest in the AC JV, and acquired its interest as part of the Archstone Acquisition. During 2018, the AC JV sold one community, and the Company's proportionate share of the gain in accordance with GAAP was $2,019,000.

Legacy JV—As part of the Archstone Acquisition the Company entered into a limited liability company agreement with Equity Residential, through which it assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements (the “Legacy JV”). The Company has a 40.0% interest in the Legacy JV. During the years ended December 31, 2019, 2018 and 2017, the Legacy JV redeemed certain of the preferred interests and paid accrued dividends, of which the Company's portion was $1,400,000, $1,120,000 and $2,000,000, respectively. At December 31, 2019, the remaining preferred interests had an aggregate liquidation value of $35,542,000, the Company's 40.0% share of which was included in accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets.

Sudbury Development, LLC—During 2015, the Company entered into a joint venture agreement to purchase land and pursue entitlements and pre-development activity for a mixed-use development project in Sudbury, MA, including multifamily apartment homes, retail, senior housing and age-restricted housing. The Company has a 60.0% ownership interest in the venture, which is considered a VIE. During the year ended December 31, 2017, the Company and its venture partner each acquired their respective portion of the real estate held by the venture, with the Company's portion consisting of a parcel of land on which the Company developed an apartment community, acquired for an investment of $19,200,000. The Company and its venture partner retained continuing involvement with the venture to fund the completion of the planned infrastructure and site work, which was substantially complete during 2018.

North Point II JV, LP—During 2016, the Company entered into a joint venture to develop, own, and operate AVA North Point, an apartment community located in Cambridge, MA, which completed construction during 2018 and contains 265 apartment homes. The Company owned a 55.0% interest in the venture, and the venture partner owned the remaining 45.0% interest. During the year ended December 31, 2019, the Company acquired the 45.0% equity interest of AVA North Point that was owned by the venture partner, for a purchase price of $71,280,000. Upon acquisition, the Company consolidated AVA North Point as a wholly-owned operating community.

NYTA MF Investors LLC (“NYC Joint Venture”)—During 2018, the Company contributed five wholly-owned operating communities located in New York, NY to a newly formed joint venture with the intent to own and operate the communities. The Company retained a 20.0% interest in the venture, with the venture partner owning the remaining 80.0% interest, and the partners sharing in returns in accordance with their ownership interests. In conjunction with the formation of the venture in 2018, the Company sold the five communities, containing an aggregate of 1,301 apartment homes and 58,000 square feet of retail space, to the venture for a sales price of $758,900,000. The Company received net cash proceeds of $276,799,000 and the venture assumed

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$395,939,000 of secured indebtedness from the Company. The Company recognized a gain on sale of $179,861,000, including the recognition of the Company's 20.0% retained interest at fair value.

Avalon Alderwood MF Member, LLC—During 2019, the Company entered into a joint venture to develop, own, and operate Avalon Alderwood Mall, an apartment community located in Lynnwood, WA, which is currently under construction and expected to contain 328 apartment homes when complete. The Company has a 50.0% interest in the venture, which is considered a VIE, though the Company was not considered to be the primary beneficiary because it shares control with its third party partner. The Company and its venture partner share decision making authority for all significant aspects of the venture's activities including, but not limited to, changes in the ownership or capital structure, and the capital budget to construct Avalon Alderwood Mall.

AvalonBay Value Added Fund II, L.P. (“Fund II”)—During 2018 the Company held an investment in and received the final distributions for the AvalonBay Value Added Fund II, L.P. (“Fund II”), a private, discretionary real estate investment vehicle formed in 2008. During 2017, Fund II sold its final three communities, and the Company's proportionate share of the gain in accordance with GAAP was $26,322,000, and the Company completed the dissolution of Fund II in 2018. A wholly owned subsidiary of the Company was the general partner of Fund II. The Company had an equity interest of 31.3% in Fund II, and upon achievement of a threshold return the Company had a right to incentive distributions for its promoted interest based on current returns earned by Fund II which represented 40.0% of further Fund II distributions, which was in addition to its proportionate share of the remaining 60.0% of distributions. During the years ended December 31, 2018 and 2017, the Company recognized income of $925,000 and $26,472,000 for its promoted interest, respectively, which was reported as a component of equity in income of unconsolidated real estate entities on the accompanying Consolidated Statements of Comprehensive Income.

The following is a combined summary of the financial position of the entities accounted for using the equity method and presented on the accompanying Consolidated Balance Sheets as of the dates presented (dollars in thousands):

	12/31/19				12/31/18
Assets:
Real estate, net	$	1,204,470			$	1,420,453
Other assets	196,488				47,333
Total assets	$	1,400,958			$	1,467,786
Liabilities and partners' capital:
Mortgage notes payable, net (1)	$	782,257			$	837,311
Other liabilities	157,379				15,627
Partners' capital	461,322				614,848
Total liabilities and partners' capital	$	1,400,958			$	1,467,786

_________________________________

(1)	The Company has not guaranteed the debt, nor does the Company have any obligation to fund this debt should the unconsolidated entity be unable to do so.

The following is a combined summary of the operating results of the entities accounted for using the equity method and presented on the accompanying Consolidated Statements of Comprehensive Income, for the years presented (dollars in thousands):

	For the year ended
	12/31/2019 (1)				12/31/2018 (2)				12/31/17
Rental and other income	$	144,431			$	92,533			$	102,261
Operating and other expenses	(55,732		)		(35,840		)		(40,341		)
Gain on sale of communities	21,748				54,202				136,333
Interest expense, net	(33,896		)		(22,500		)		(27,122		)
Depreciation expense	(58,387		)		(26,706		)		(25,914		)
Net income	$	18,164			$	61,689			$	145,217
Company's share of net income (3)	10,779				17,519				73,120
Amortization of excess investment and other	(2,127		)		(2,249		)		(2,376		)
Equity in income from unconsolidated real estate investments	$	8,652			$	15,270			$	70,744

_________________________________

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(1)	Amounts include results from AVA North Point through the date the Company acquired its venture partner's 45.0% equity interest.

(2)	Amounts include results from the NYC Joint Venture from the date the venture was formed.

(3)	Includes the Company's share of gain on sale of communities and income recognized for its promoted interest.

Investments in Consolidated Real Estate Entities

During the year ended December 31, 2019, the Company acquired five consolidated communities:

•	Avalon Southlands, located in Aurora, CO, which contains 338 apartment homes and was acquired for a purchase price of $91,250,000.

•

Avalon Cerritos, located in Cerritos, CA, which contains 132 apartment homes and was acquired for a purchase price of $60,500,000. The acquisition of Avalon Cerritos was facilitated through a tax-deferred exchange as the replacement property for Archstone Lexington, which was sold during the year ended December 31, 2019, as further discussed in Note 6, "Real Estate Disposition Activities." Archstone Lexington was acquired by the Company as part of the Archstone Acquisition, and was subject to both limitations related to disposal of the community, as well as for there to be a required level of secured financing as a result of the tax structured contribution of the assets to the prior Archstone partnerships. The Company maintained compliance with the tax protection requirements when selling Archstone Lexington by facilitating the sale through the tax-deferred exchange, acquiring and encumbering Avalon Cerritos. See Note 3, "Mortgage Notes Payable, Unsecured Notes and Credit Facility," for further discussion of indebtedness associated with Archstone Lexington and Avalon Cerritos.

•	Portico at Silver Spring Metro, located in Silver Spring, MD, which contains 151 apartment homes and was acquired for a purchase price of $43,450,000.

•	Avalon Bonterra, located in Hialeah, FL, which contains 314 apartment homes and was acquired for a purchase price of $90,000,000.

•	Avalon Toscana, located in Margate, FL, which contains 240 apartment homes and was acquired for a purchase price of $60,250,000.

During the year ended December 31, 2018, the Company acquired four communities, containing an aggregate 1,096 apartment homes, which were acquired for an aggregate purchase price of $334,450,000. During the year ended December 31, 2017, the Company acquired three communities, containing an aggregate 1,062 apartment homes, which were acquired for an aggregate purchase price of $365,750,000.

The Company accounted for these as asset acquisitions and recorded the acquired assets and assumed liabilities, including identifiable intangibles, at their relative fair values based on the purchase price and acquisition costs incurred. The Company used third party pricing or internal models for the values of the land, a valuation model for the values of the buildings, and an internal model to determine the fair values of the remaining real estate assets and in-place leases. Given the heterogeneous nature of multifamily real estate, the fair values for the land, debt, real estate assets and in-place leases incorporated significant unobservable inputs and therefore are considered to be Level 3 prices within the fair value hierarchy.

The following activity took place during the year ended December 31, 2019:

•	The Company sold six wholly-owned operating communities, containing an aggregate of 1,660 apartment homes for an aggregate sales price of $427,600,000 and an aggregate gain in accordance with GAAP of $166,105,000.

•	The Company sold other real estate for an aggregate sales price of $3,680,000, resulting in an aggregate gain in accordance with GAAP of $439,000.

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Details regarding the real estate sales are summarized in the following table (dollars in thousands):

Community Name		Location		Period of sale		Apartment homes			Debt				Gross sales price				Net cash proceeds
Oakwood Arlington		Arlington, VA		Q119		184			$	—			$	70,000			$	68,317
Archstone Toscano (1)		Houston, TX		Q219		474			—				98,000				95,975
AVA Stamford		Stamford, CT		Q319		306			—				105,000				102,485
Archstone Lexington		Flower Mound, TX		Q319		222			21,700				45,100				44,524
Memorial Heights Villages (1)		Houston, TX		Q319		318			—				65,250				63,298
Avalon Orchards		Marlborough, MA		Q319		156			—				44,250				43,448
Other real estate dispositions (2)		multiple		2019		N/A			—				3,680				3,995
Total of 2019 asset sales						1,660			$	21,700			$	431,280			$	422,042
Total of 2018 asset sales						3,099			$	395,939			$	1,378,289			$	883,313
Total of 2017 asset sales						1,624			$	—			$	514,654			$	503,039

_________________________________

(1)	The Company held its investment in, and sold these real estate assets from, a wholly-owned TRS.

(2)	Primarily composed of the sale of two undeveloped land parcels, located in Houston, TX, and Bronxville, NY.

As of December 31, 2019, the Company had one community that qualified as held for sale.

The Park Loggia

As of December 31, 2019, the Company has completed the construction of The Park Loggia, located in New York, NY, which contains 172 for-sale residential condominiums and 67,000 square feet of retail space for a total capitalized cost of $626,000,000. The Company incurred $3,812,000 and $1,044,000 for the years ended December 31, 2019 and 2018, respectively, in marketing and administrative costs associated with The Park Loggia, included in for-sale condominium marketing and administrative costs, on the accompanying Consolidated Statements of Comprehensive Income. As of December 31, 2019, the for-sale residential condominiums have an aggregate carrying value of $457,809,000, presented as for-sale condominium inventory on the accompanying Consolidated Balance Sheets. The Company recognized a net deferred tax liability of $5,782,000 during the year ended December 31, 2019 for the GAAP to tax basis differences of The Park Loggia and the associated 67,000 square feet of retail space. See Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," for further discussion of the income tax associated to The Park Loggia.

Employment Agreements and Arrangements

At December 31, 2019, the Company does not have any employment agreements with executive officers.

The standard restricted stock and option agreements used by the Company in its compensation program provide that upon an employee's termination without cause or the employee's Retirement (as defined in the agreement), all outstanding stock options and restricted shares of stock held by the employee will vest, and the employee will have up to 12 months or until the fifth anniversary of the grant date, if later, or until the option expiration date, if earlier, to exercise any options then held. Under the agreements, Retirement generally means a termination of employment and other business relationships, other than for cause, after attainment of age 50, provided that (i) the employee has worked for the Company for at least 10 years, (ii) the employee's age at Retirement plus years of employment with the Company equals at least 70, (iii) the employee provides at least six months written notice of intent to retire, and (iv) the employee enters into a one year non-compete and employee non-solicitation agreement.

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The Company also has an Officer Severance Program (the “Program”). Under the Program, in the event an officer who is not otherwise covered by a severance arrangement is terminated (other than for cause), or chooses to terminate his or her employment for good reason (as defined), in either case within 18 months following a sale event (as defined) of the Company, such officer will generally receive a cash lump sum payment equal to a multiple of the officer's covered compensation (base salary plus annual cash bonus). The multiple is one time for vice presidents and senior vice presidents, two times for executive vice presidents and three times for the chief executive officer. The officer's restricted stock and options would also vest. Costs related to the Program are deferred and recognized over the requisite service period when considered by management to be probable and estimable.

Legal Contingencies

The Company accounts for recoveries from legal matters as a reduction in the legal and related costs incurred associated with the matter, with recoveries in excess of these costs reported as a gain or, where appropriate, a reduction in the net cost basis of a community to which the suit related. During the years ended December 31, 2019, 2018 and 2017, the Company recognized $6,292,000, $946,000 and $6,118,000 in legal recoveries, respectively. Legal recoveries recognized during the year ended December 31, 2019 include $3,126,000 in proceeds related to a former Development Right and $2,237,000 in proceeds related to a construction defect at a community. Amounts recognized during the years ended December 31, 2018 and 2017 include $554,000 and $5,438,000 respectively, in legal settlement proceeds relating to construction defects at communities acquired as part of the Archstone Acquisition, reported as a component of casualty and impairment loss, net on the accompanying Consolidated Statements of Comprehensive Income.

The Company is involved in various other claims and/or administrative proceedings that arise in the ordinary course of its business. While no assurances can be given, the Company does not currently believe that any of these outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations.

Lease Obligations

The Company owns 11 apartment communities, one community under development and two commercial properties, located on land subject to ground leases expiring between October 2026 and March 2142. The ground leases for 10 of 11 of the apartment communities and the rest of the ground leases, are accounted for as operating leases, with rental expense recognized on a straight-line basis over the lease term. These operating leases have varying rental escalation terms, primarily based on variables determined at future dates such as changes in the Consumer Price Index, and five of these leases have purchase options exercisable through 2095. In addition, the Company is party to 17 leases for its corporate and regional offices with varying terms through 2031, all of which are accounted for as operating leases.

As of December 31, 2019, the Company has total operating lease assets of $103,063,000 and lease obligations of $120,261,000, reported as components of right of use lease assets and lease liabilities, respectively, on the accompanying Consolidated Balance Sheets. The Company incurred costs of $14,371,000, $21,788,000 and $23,431,000 in the years ended December 31, 2019, 2018 and 2017, respectively, related to operating leases.

One apartment community is located on land subject to a ground lease which is accounted for as a finance lease. Under the terms of the lease, the Company has the option to purchase the land during the lease term, which expires in 2046. In addition to the leases described above, the Company is party to two leases for portions of parking garages, one adjacent to an apartment community and one adjacent to a community under development, accounted for as finance leases and subject to the Company's lease accounting policies discussed in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies.” The Company has total finance lease assets of $21,898,000 and lease obligations of $20,207,000, reported as components of right of use lease assets and lease liabilities, respectively, on the accompanying Consolidated Balance Sheets.

During the year ended December 31, 2018, the Company contributed a dual-branded apartment community, Avalon West Chelsea and AVA High Line, located on land subject to a single land lease, to the newly formed NYC Joint Venture. See Note 5, “Investments in Real Estate Entities,” for discussion of the formation of the venture. During the year ended December 31, 2017, the Company acquired the land encumbered by the ground lease for Avalon Morningside Park for $95,000,000, recognizing a non-cash write-off of prepaid rent of $11,153,000 associated with the ground lease termination, reported as a component of (loss) gain on other real estate transactions on the accompanying Consolidated Statements of Comprehensive Income. Also during the year ended December 31, 2017, the Company exercised its purchase option under a capital lease, acquiring the land encumbered by the ground lease for Avalon at Assembly Row and AVA Somerville for $17,285,000.

The following table details the weighted average remaining lease term and discount rates for the Company’s ground and office leases:

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Weighted-average remaining lease term - finance leases	26 years
Weighted-average remaining lease term - operating leases	53 years
Weighted-average discount rate - finance leases	4.63	%
Weighted-average discount rate - operating leases	5.06	%

The following tables details the future minimum lease payments under the Company's current leases and a reconciliation of undiscounted and discounted cash flows for operating and finance leases (dollars in thousands):

	Payments due by period
	2020				2021				2022				2023				2024				Thereafter
Operating Lease Obligations	$	12,050			$	14,055			$	14,003			$	13,473			$	13,320			$	364,284
Finance Lease Obligations	1,077				1,080				1,082				1,084				1,087				40,133
	$	13,127			$	15,135			$	15,085			$	14,557			$	14,407			$	404,417

	Total undiscounted cash flows				Total lease liabilities				Difference between discounted and undiscounted cash flows
Operating Lease Obligations	$	431,185			$	120,261			$	310,924
Finance Lease Obligations	45,543				20,207				25,336
	$	476,728			$	140,468			$	336,260

The Company's reportable operating segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. Annually as of January 1, the Company determines which of its communities fall into each of these categories and generally maintains that classification throughout the year for the purpose of reporting segment operations, unless disposition or redevelopment plans regarding a community change. 

•

Established Communities (also known as Same Store Communities) are consolidated communities where the Company has a significant presence (New England, New York/New Jersey, Mid-Atlantic, Pacific Northwest, and Northern and Southern California) and where a comparison of operating results from the prior year to the current year is meaningful, as these communities were owned and had stabilized occupancy as of the beginning of the prior year. The Established Communities for the year ended December 31, 2019, are communities that are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2018, are not conducting or planning to conduct substantial redevelopment activities and are not held for sale or planned for disposition within the fiscal year. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 95% physical occupancy or (ii) the one year anniversary of completion of development or redevelopment.

•

Other Stabilized Communities includes all other completed consolidated communities that have stabilized occupancy, as defined above, as January 1, 2019, or which were acquired during the years ended December 31, 2019 or 2018. Other Stabilized Communities includes stabilized operating communities in our expansion markets of Denver, Colorado, and Southeast Florida, but excludes communities that are conducting or planning to conduct substantial redevelopment activities within the fiscal year.

•

Development/Redevelopment Communities consists of (i) consolidated communities that are either currently under construction, or were under construction during the fiscal year, which may be partially or fully complete and operating, (ii) consolidated communities where substantial redevelopment is in progress or is planned to begin during the fiscal year and (iii) communities under lease-up that have been complete for less than one year and have not reached stabilized occupancy, as defined above, as of January 1, 2019.

In addition, the Company owns land for future development and has other corporate assets that are not allocated to an operating segment.

The Company's segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing each segment's performance. The Company's chief operating decision maker is comprised of several members of its executive

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management team who use net operating income (“NOI”) as the primary financial measure for Established Communities and Other Stabilized Communities. NOI is defined by the Company as total property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss (gain) on extinguishment of debt, net, general and administrative expense, equity in income of unconsolidated real estate entities, depreciation expense, corporate income tax (benefit) expense, casualty and impairment loss (gain), net, gain on sale of communities, loss (gain) on other real estate transactions, net, for-sale condominium marketing and administrative costs and net operating income from real estate assets sold or held for sale. Although the Company considers NOI a useful measure of a community's or communities' operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities, as determined in accordance with GAAP. NOI excludes a number of income and expense categories as detailed in the reconciliation of NOI to net income.

A reconciliation of NOI to net income for years ended December 31, 2019, 2018 and 2017 is as follows (dollars in thousands):

	For the year ended
	12/31/19				12/31/18				12/31/17
Net income	$	786,103			$	974,175			$	876,660
Indirect operating expenses, net of corporate income	83,008				80,227				68,312
Expensed acquisition, development and other pursuit costs, net of recoveries	4,991				3,265				2,736
Interest expense, net	203,585				220,974				199,661
Loss on extinguishment of debt, net	602				17,492				25,472
General and administrative expense	58,042				60,369				53,695
Equity in income of unconsolidated real estate entities	(8,652		)		(15,270		)		(70,744		)
Depreciation expense	661,578				631,196				584,150
Income tax expense (benefit)	13,003				(160		)		141
Casualty and impairment loss, net	—				215				6,250
Gain on sale of communities	(166,105		)		(374,976		)		(252,599		)
(Gain) loss on other real estate transactions	(439		)		(345		)		10,907
For-sale condominium marketing and administrative costs	3,812				1,044				—
Net operating income from real estate assets sold or held for sale	(12,318		)		(79,372		)		(105,663		)
Net operating income	$	1,627,210			$	1,518,834			$	1,398,978

The following is a summary of NOI from real estate assets sold or held for sale for the periods presented (dollars in thousands):

	For the year ended
	12/31/2019				12/31/2018				12/31/2017
Rental income from real estate assets sold or held for sale	$	21,441			$	124,373			$	170,172
Operating expenses from real estate assets sold or held for sale	(9,123		)		(45,001		)		(64,509		)
Net operating income from real estate assets sold or held for sale	$	12,318			$	79,372			$	105,663

The primary performance measure for communities under development or redevelopment depends on the stage of completion. While under development, management monitors actual construction costs against budgeted costs as well as lease-up pace and rent levels compared to budget.

The following table provides details of the Company's segment information as of the dates specified (dollars in thousands). The segments are classified based on the individual community's status at January 1, 2019 for the years ended December 31, 2019 and 2018 and at January 1, 2018, for the year ended December 31, 2017. Segment information for the years ended December 31, 2019, 2018 and 2017 has been adjusted to exclude the real estate assets that were sold from January 1, 2017 through December 31, 2019, or otherwise qualify as held for sale as of December 31, 2019, as described in Note 6, “Real Estate Disposition Activities.”

In addition to NOI, the Company's CODM considers total revenue in assessing each segment's performance. As discussed in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," the Company changed its presentation of charges

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for uncollectible lease revenue beginning with the year ended December 31, 2019, including it as an adjustment to revenue and not as a component of operating expenses, as it is presented for prior year periods on the accompanying Consolidated Statements of Comprehensive Income. Consistent with how the Company's CODM evaluates total revenue, and to provide comparability between periods presented in the Company's segment reporting, the Company has included charges for uncollectible lease revenue for its segment results as a component of revenue for the year ended December 31, 2018, the comparable period presented in the following table. Total revenue for the year ended December 31, 2018 as presented in the following table includes $14,072,000 of charges for uncollectible lease revenue.

	Total revenue				NOI				Gross real estate (1)
For the year ended December 31, 2019
Established
New England	$	249,301			$	164,977			$	2,065,954
Metro NY/NJ	411,115				291,662				3,545,753
Mid-Atlantic	292,943				207,091				2,685,052
Pacific Northwest	113,021				82,186				990,563
Northern California	363,910				280,216				2,850,491
Southern California	406,049				291,340				3,609,595
Total Established (2)	1,836,339				1,317,472				15,747,408
Other Stabilized	298,415				202,445				3,551,512
Development / Redevelopment	163,471				107,293				3,702,194
Land Held for Future Development	N/A				N/A				—
Non-allocated (3)	4,960				N/A				557,346
Total	$	2,303,185			$	1,627,210			$	23,558,460
For the year ended December 31, 2018
Established
New England	$	241,793			$	159,394			$	2,050,131
Metro NY/NJ	400,422				284,344				3,527,098
Mid-Atlantic	284,381				200,381				2,669,040
Pacific Northwest	108,861				78,313				985,102
Northern California	353,136				272,096				2,832,026
Southern California	394,519				283,795				3,573,953
Total Established (2)	1,783,112				1,278,323				15,637,350
Other Stabilized	238,584				159,745				3,063,669
Development / Redevelopment	120,822				80,766				2,652,967
Land Held for Future Development	N/A				N/A				84,712
Non-allocated (3)	3,572				N/A				504,229
Total	$	2,146,090			$	1,518,834			$	21,942,927
For the year ended December 31, 2017
Established
New England	$	215,133			$	141,342			$	1,845,692
Metro NY/NJ	354,444				251,760				3,071,563
Mid-Atlantic	232,987				161,546				2,216,292
Pacific Northwest	84,313				61,705				724,751
Northern California	357,209				273,940				2,972,311
Southern California	330,024				237,796				2,905,512
Total Established (2)	1,574,110				1,128,089				13,736,121
Other Stabilized	174,933				117,837				2,392,244
Development / Redevelopment (4)	235,266				153,052				4,104,956
Land Held for Future Development	N/A				N/A				68,364
Non-allocated (3)	4,147				N/A				78,864
Total	$	1,988,456			$	1,398,978			$	20,380,549

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(1)	Does not include gross real estate assets held for sale of $48,412 as of December 31, 2019 and gross real estate either sold or classified as held for sale subsequent to December 31, 2018 and 2017 of $334,242 and $1,555,387, respectively.

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(2)	Gross real estate for the Company's Established Communities includes capitalized additions of approximately $128,324, $78,469 and $78,241 in 2019, 2018 and 2017, respectively.

(3)	Revenue represents third-party management, accounting, and developer fees and miscellaneous income which are not allocated to a reportable segment. Gross real estate includes the for-sale residential condominiums at The Park Loggia, as discussed in Note 6, "Real Estate Disposition Activities."

(4)	Total revenue and NOI for the year ended December 31, 2017 includes $3,495 in business interruption insurance proceeds related to the Maplewood casualty loss.

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The Company's Second Amended and Restated 2009 Equity Incentive Plan (the “2009 Plan”) includes an authorization to issue shares of the Company's common stock, par value $0.01 per share. At December 31, 2019, the Company had 7,227,600 shares remaining available to issue under the 2009 Plan, exclusive of shares that may be issued to satisfy currently outstanding awards such as stock options or performance awards. In addition, any awards that were outstanding under the Company's 1994 Stock Option and Incentive Plan (the “1994 Plan”) on May 21, 2009, the date the Company adopted the 2009 Plan, that are subsequently forfeited, canceled, surrendered or terminated (other than by exercise) will become available for awards under the 2009 Plan. The 2009 Plan provides for various types of equity awards to associates, officers, non-employee directors and other key personnel of the Company and its subsidiaries. The types of awards that may be granted under the 2009 Plan include restricted stock, restricted stock units, stock options that qualify as incentive stock options (“ISOs”) under Section 422 of the Code, non-qualified stock options, stock appreciation rights and performance awards, among others. No grants of stock options and other awards will be made after May 15, 2027, and no grants of incentive stock options will be made after February 16, 2027.

Information with respect to stock options granted under the 2009 and 1994 Plans is as follows:

	2009 Plan shares			Weighted average exercise price per share				1994 Plan shares			Weighted average exercise price per share
Options Outstanding, December 31, 2016	177,333			$	124.25			22,541			$	77.91
Exercised	(27,360	)		110.47				(14,763	)		93.35
Granted	—			—				—			—
Forfeited	—			—				—			—
Options Outstanding, December 31, 2017	149,973			$	126.77			7,778			$	48.60
Exercised	(32,756	)		126.24				(7,778	)		48.60
Granted (1)	6,995			161.10				—			—
Forfeited	—			—				—			—
Options Outstanding, December 31, 2018	124,212			$	128.84			—			$	—
Exercised	(109,804	)		129.47				—			—
Granted	—			—				—			—
Forfeited	—			—				—			—
Options Outstanding, December 31, 2019	14,408			$	124.05			—			$	—
Options Exercisable:
December 31, 2017	149,973			$	126.77			7,778			$	48.60
December 31, 2018	117,217			$	126.91			—			$	—
December 31, 2019	14,408			$	124.05			—			$	—

_________________________________

(1)	Options granted during the year ended December 31, 2018 are a result of recipient elections to receive a portion of earned performance awards and time-vesting restricted stock in the form of stock options.

The following summarizes the exercise prices and contractual lives of options outstanding as of December 31, 2019:

2009 Plan Number of Options		Range—Exercise Price					Weighted Average Remaining Contractual Term (in years)
1,218		$70.00	-		$79.99		0.1
2,071		$110.00	-		$119.99		1.1
11,119		$130.00	-		$139.99		2.8
14,408

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Options outstanding and exercisable at December 31, 2019 both had an intrinsic value of $1,234,000. Options exercisable had a weighted average contractual life of 2.4 years. The intrinsic value of options exercised under the 2009 and 1994 Plans during 2019, 2018 and 2017 was $7,970,000, $3,016,000 and $3,592,000, respectively. There were no stock options granted in 2019, 2018 and 2017, other than those elected under the Company's performance award plan discussed below.

The Company has a compensation framework under which share-based compensation granted is composed of annual restricted stock awards for which one third of the award vests annually over a three year period, and multi-year long term incentive performance awards. For annual restricted stock awards, in lieu of time-vesting restricted stock, the recipient may elect to receive up to 25% of the award value in the form of stock options, for which one third of the award vests annually over a three year period. Under the Company's multi-year long term incentive compensation framework, the Company grants a target number of performance awards, with the ultimate award determined by the total shareholder return of the Company's common stock and/or operating performance metrics, measured in each case over a measurement period of up to three years. Performance awards granted in 2017 or earlier are earned in the form of time-vesting restricted stock following the end of the three-year performance period, provided that the predetermined goals have been achieved. Performance awards granted after 2017 are fully vested for the recipient following the measurement period.

For performance awards with performance periods beginning on or after January 1, 2015, after the first year of the performance period, if the employee's employment terminates on account of death, disability, retirement, or termination without cause, the employee shall vest in a pro rata portion of the award (based on the employee's service time during the performance period), with such vested portion to be earned and converted into shares at the end of the performance period based on actual achievement under the performance award. For other terminating events, performance awards are generally forfeited.

Information with respect to performance awards granted is as follows:

		Performance awards			Weighted average grant date fair value per award
Outstanding at December 31, 2016		251,163			$	136.74
Granted (1)		81,708			176.59
Change in awards based on performance (2)		49,323			119.26
Converted to restricted stock		(128,482	)		118.75
Forfeited		(1,942	)		159.39
Outstanding at December 31, 2017		251,770			$	155.25
Granted (3)		100,965			155.31
Change in awards based on performance (2)		5,990			148.79
Converted to restricted stock		(88,477	)		148.79
Forfeited		(3,119	)		160.33
Outstanding at December 31, 2018		267,129			$	157.21
Granted (4)		80,512			200.75
Change in awards based on performance (2)		(16,760	)		142.03
Converted to restricted stock		(73,072	)		142.03
Forfeited		(4,377	)		166.44
Outstanding at December 31, 2019		253,432			$	176.27

_________________________________

(1)	The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 49,374 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 32,334 performance awards.

(2)	Represents the change in the number of performance awards earned based on performance achievement for the performance period.

(3)	The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 62,043 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 38,922 performance awards.

(4)	The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company’s common stock for 47,502 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 33,010 performance awards.

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The Company used a Monte Carlo model to assess the compensation cost associated with the portion of the performance awards granted for which achievement will be determined by using total shareholder return measures. The assumptions used are as follows:

		2019		2018		2017
Dividend yield		3.1%		3.7%		3.2%
Estimated volatility over the life of the plan (1)		13.9% - 18.8%		11.8% - 18.7%		15.3% - 19.7%
Risk free rate		2.46% - 2.57%		1.86% - 2.46%		0.69% - 1.61%
Estimated performance award value based on total shareholder return measure		$204.15		$151.67		$175.86

_________________________________

(1)	Estimated volatility of the life of the plan is using 50% historical volatility and 50% implied volatility.

For the portion of the performance awards granted for which achievement is determined by using financial metrics, the compensation cost was based on a weighted average grant date value of $195.86, $161.10 and $179.07, for the years ended December 31, 2019, 2018 and 2017, respectively, and the Company's estimate of corporate achievement for the financial metrics.

 

Information with respect to restricted stock granted is as follows:

		Restricted stock shares			Restricted stock shares weighted average grant date fair value per share				Restricted stock shares converted from performance awards
Outstanding at December 31, 2016		136,705			$	158.51			176,698
Granted - restricted stock shares		73,342			179.58				128,482
Vested - restricted stock shares		(73,683	)		153.86				(70,595	)
Forfeited		(2,731	)		173.42				(657	)
Outstanding at December 31, 2017		133,633			$	172.33			233,928
Granted - restricted stock shares		98,713			161.58				88,297
Vested - restricted stock shares		(67,832	)		171.22				(112,230	)
Forfeited		(4,103	)		166.40				(757	)
Outstanding at December 31, 2018		160,411			$	166.33			209,238
Granted - restricted stock shares		79,430			196.43				73,072
Vested - restricted stock shares		(89,289	)		168.06				(119,064	)
Forfeited		(2,226	)		174.45				(135	)
Outstanding at December 31, 2019		148,326			$	181.29			163,111

Total employee stock-based compensation cost recognized in income was $24,885,000, $19,707,000 and $17,085,000 for the years ended December 31, 2019, 2018 and 2017, respectively, and total capitalized stock-based compensation cost was $9,396,000, $10,208,000 and $9,474,000 for the years ended December 31, 2019, 2018 and 2017, respectively. At December 31, 2019, there was a total unrecognized compensation cost of $26,002,000 for unvested restricted stock and performance awards, which does not include forfeitures, and is expected to be recognized over a weighted average period of 1.9 years.

As of January 1, 2017, the Company adopted the provisions of ASU 2016-09, electing to account for forfeitures as they occur. Prior to the adoption of ASU 2016-09, the Company was required to estimate the forfeiture of stock options and recognized compensation cost net of the estimated forfeitures. The estimated forfeitures included in compensation cost were adjusted to reflect actual forfeitures at the end of the vesting period. The actual forfeiture rate for the years ended December 31, 2019, 2018 and 2017 was 0.6%, 0.6% and 0.7%, respectively.

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Employee Stock Purchase Plan

In October 1996, the Company adopted the 1996 Non-Qualified Employee Stock Purchase Plan (as amended, the “ESPP”). Initially 1,000,000 shares of common stock were reserved for issuance under this plan. There are currently 654,435 shares remaining available for issuance under the ESPP. Employees of the Company generally are eligible to participate in the ESPP if, as of the last day of the applicable purchase period, they have been employed by the Company for at least one month. Under the ESPP, eligible employees are permitted to acquire shares of the Company's common stock through payroll deductions, subject to maximum purchase limitations, during two purchase periods. The first purchase period begins January 1 and ends June 10, and the second purchase period begins July 1 and ends December 10. The purchase price for common stock purchased under the plan is 85% of the lesser of the fair market value of the Company's common stock on the first day of the applicable purchase period or the last day of the applicable purchase period. The offering dates, purchase dates and duration of purchase periods may be changed if the change is announced prior to the beginning of the affected date or purchase period. The Company issued 13,894, 12,955 and 11,528 shares and recognized compensation expense of $761,000, $436,000 and $418,000 under the ESPP for the years ended December 31, 2019, 2018 and 2017, respectively. The Company accounts for transactions under the ESPP using the fair value method prescribed by accounting guidance applicable to entities that use employee share purchase plans.

Unconsolidated Entities

The Company manages unconsolidated real estate entities for which it receives asset management, property management, development and redevelopment fee revenue. From these entities, the Company earned fees of $4,960,000, $3,572,000 and $4,147,000 in the years ended December 31, 2019, 2018 and 2017, respectively. In addition, the Company had outstanding receivables associated with its property and construction management role of $3,924,000 and $2,519,000 as of December 31, 2019 and 2018, respectively.

Director Compensation

Directors of the Company who are also employees receive no additional compensation for their services as a director. Following each annual meeting of stockholders, non-employee directors receive (i) a number of shares of restricted stock (or deferred stock units) having a value of $160,000 and (ii) a cash payment of $90,000, payable in equal quarterly installments of $22,500. The number of shares of restricted stock (or deferred stock units) is calculated based on the closing price on the day of the award. Non-employee directors may elect to receive all or a portion of cash payments in the form of deferred stock units. Additionally, the Lead Independent Director receives in the aggregate an additional annual fee of $30,000 payable in equal quarterly installments of $7,500, the non-employee director serving as the chairperson of the Audit Committee receives additional cash compensation of $25,000 per year payable in equal quarterly installments of $6,250, the non-employee director serving as the chairperson of the Compensation Committee receives additional cash compensation of $20,000 per year payable in equal quarterly installments of $5,000 and the Nominating and Corporate Governance and Investment and Finance Committee chairpersons receive an additional annual fee of $15,000 payable in equal quarterly installments of $3,750.

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Financial Instruments Carried at Fair Value

Derivative Financial Instruments

The Company uses interest rate swap and interest rate cap agreements to manage its interest rate risk. These instruments are carried at fair value in the Company's financial statements. In adjusting the fair value of its derivative contracts for the effect of counterparty nonperformance risk, the Company has considered the impact of its net position with a given counterparty, as well as any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. The Company minimizes its credit risk on these transactions by dealing with major, creditworthy financial institutions which have an A or better credit rating by the Standard & Poor's Ratings Group. As part of its on-going control procedures, the Company monitors the credit ratings of counterparties and the exposure of the Company to any single entity, thus reducing credit risk concentration. The Company believes the likelihood of realizing losses from counterparty nonperformance is remote. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, such as interest rate, term to maturity and volatility, the credit valuation adjustments associated with its derivatives use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of December 31, 2019, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined it is not significant. As a result, the Company has determined that its derivative valuations are classified in Level 2 of the fair value hierarchy.

The Company recognized a gain of $753,000 for hedge ineffectiveness for the year ended December 31, 2017, included as a component of interest expense, net on the accompanying Consolidated Statements of Comprehensive Income.

The following table summarizes the consolidated derivative positions at December 31, 2019 (dollars in thousands):

		Non-designated Hedges Interest Rate Caps				Cash Flow Hedges Interest Rate Swaps
Notional balance		$	443,827			$	350,000
Weighted average interest rate (1)		3.2		%		N/A
Weighted average swapped/capped interest rate		6.5		%		2.1		%
Earliest maturity date		January 2021				October 2020
Latest maturity date		November 2021				October 2020

_________________________________

(1)	For interest rate caps, represents the weighted average interest rate on the hedged debt.

During 2019, in conjunction with the issuance of the Company's 3.30% notes due 2029 in May 2019, the Company settled $250,000,000 of forward interest rate swap agreements designated as cash flow hedges of the interest rate variability on the forecasted issuance of the unsecured notes, making a payment of $12,309,000. The Company has deferred this amount in accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets, and will recognize the impact as a component of interest expense, net, over the term of the debt of ten years.

In 2019, the Company entered into $350,000,000 of new forward interest rate swap agreements executed to reduce the impact of variability in interest rates on a portion of the Company's expected debt issuance activity in 2020, which were outstanding as of December 31, 2019. For further discussion, see Note 13, "Subsequent Events."

The Company had six derivatives designated as cash flow hedges and five derivatives not designated as hedges at December 31, 2019. Fair value changes for derivatives not in qualifying hedge relationships for the years ended December 31, 2019 and 2018, were not material. During 2019, the Company deferred $11,930,000 of losses for cash flow hedges as a component of other comprehensive income (loss).

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The following table summarizes the deferred losses reclassified from accumulated other comprehensive income as a component of interest expense, net (dollars in thousands):

	For the year ended
	12/31/19				12/31/18				12/31/17
Cash flow hedge losses reclassified to earnings	$	6,571			$	6,143			$	7,070

The Company anticipates reclassifying approximately $6,983,000 of hedging losses from accumulated other comprehensive loss into earnings within the next 12 months to offset the variability of cash flows of the hedged item during this period. The Company did not have any derivatives designated as fair value hedges as of December 31, 2019 and 2018.

Redeemable Noncontrolling Interests

The Company provided redemption options (the “Puts”) that allow joint venture partners of the Company to require the Company to purchase their interests in the investment at a guaranteed minimum amount related to two consolidated ventures. The Puts are payable in cash. The Company determines the fair value of the Puts based on unobservable inputs, applying a guaranteed rate of return to the joint venture partners' net capital contribution balances as of period end. Given the significance of the unobservable inputs, the valuations are classified in Level 3 of the fair value hierarchy.

The Company issued units of limited partnership interest in DownREITs which provide the DownREIT limited partners the ability to present all or some of their units for redemption for cash as determined by the partnership agreement. Under the DownREIT agreements, for each limited partnership unit, the limited partner is entitled to receive cash in the amount equal to the fair value of the Company's common stock on or about the date of redemption. In lieu of cash redemption, the Company may elect to exchange such units for an equal number of shares of the Company's common stock. The limited partnership units in the DownREITs are valued using the market price of the Company's common stock, a Level 1 price under the fair value hierarchy.

Financial Instruments Not Carried at Fair Value

Cash and Cash Equivalents

Cash and cash equivalent balances are held with various financial institutions within accounts designed to preserve principal. The Company monitors credit ratings of these financial institutions and the concentration of cash and cash equivalent balances with any one financial institution and believes the likelihood of realizing material losses related to cash and cash equivalent balances is remote. Cash and cash equivalents are carried at their face amounts, which reasonably approximate their fair values and are Level 1 within the fair value hierarchy.

Other Financial Instruments

Rents and other receivables and prepaids, accounts and construction payable and accrued expenses and other liabilities are carried at their face amounts, which reasonably approximate their fair values.

In conjunction with the development of Avalon Brooklyn Bay, the Company entered into a joint venture agreement to construct a mixed-use building that included for-sale residential condominium units and related common elements, in additional to the Company's rental apartments, in which the Company has a 100% interest. The venture partner has a 100% interest in the for-sale residential condominium units. The Company was responsible for the development and construction of the structure, and provided a loan to the venture partner for the venture partner's share of costs for the for-sale residential condominium units. As of December 31, 2019, the Company has a receivable from the venture partner in the form of a variable rate mortgage note, secured by the remaining for-sale residential condominium units. The balance as of December 31, 2019 was $10,650,000, representing outstanding principal and interest, net of repayments, and as of December 31, 2018, was $12,819,000, representing outstanding principal and interest. These amounts are reported as a component of prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The Company recognizes interest income on the accrual basis.

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The Company values its unsecured notes using quoted market prices, a Level 1 price within the fair value hierarchy. The Company values its notes payable and outstanding amounts under the Credit Facility and Term Loans using a discounted cash flow analysis on the expected cash flows of each instrument. This analysis reflects the contractual terms of the instrument, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The process also considers credit valuation adjustments to appropriately reflect the Company’s nonperformance risk. The Company has concluded that the value of its notes payable and amounts outstanding under its Credit Facility and Term Loans are Level 2 prices as the majority of the inputs used to value its positions fall within Level 2 of the fair value hierarchy.

Financial Instruments Measured/Disclosed at Fair Value on a Recurring Basis

The following table summarizes the classification between the three levels of the fair value hierarchy of the Company's financial instruments measured/disclosed at fair value on a recurring basis (dollars in thousands):

Description	Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	12/31/2019
Cash Flow Hedges
Interest Rate Swaps - Assets	$	388			$	—			$	388			$	—
Interest Rate Swaps - Liabilities	(6,379		)		—				(6,379		)		—
Puts	(206		)		—				—				(206		)
DownREIT units	(1,573		)		(1,573		)		—				—
Indebtedness
Fixed rate unsecured notes	(6,197,771		)		(6,197,771		)		—				—
Secured notes and variable rate unsecured indebtedness	(1,398,147		)		—				(1,398,147		)		—
Total	$	(7,603,688	)		$	(6,199,344	)		$	(1,404,138	)		$	(206	)
	12/31/2018
Non Designated Hedges
Interest Rate Caps	$	2			$	—			$	2			$	—
Cash Flow Hedges
Interest Rate Swaps - Liabilities	(6,366		)		—				(6,366		)		—
Puts	(465		)		—				—				(465		)
DownREIT units	(1,305		)		(1,305		)		—				—
Indebtedness
Fixed rate unsecured notes	(5,268,277		)		(5,268,277		)		—				—
Secured notes and variable rate unsecured indebtedness	(1,505,876		)		—				(1,505,876		)		—
Total	$	(6,782,287	)		$	(5,269,582	)		$	(1,512,240	)		$	(465	)

The following summary represents the unaudited quarterly results of operations for the years ended December 31, 2019 and 2018 (dollars in thousands, except per share data):

	For the three months ended (1)
	3/31/19				6/30/19				9/30/19				12/31/19
Total revenue	$	566,184			$	577,263			$	587,613			$	593,566
Net income	$	170,418			$	168,305			$	279,709			$	167,671
Net income attributable to common stockholders	$	170,366			$	168,281			$	279,677			$	167,650
Net income per common share - basic	$	1.23			$	1.21			$	2.00			$	1.20
Net income per common share - diluted	$	1.23			$	1.21			$	2.00			$	1.20

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	For the three months ended (1)
	3/31/18				6/30/18				9/30/18				12/31/18
Total revenue	$	560,792			$	569,239			$	575,982			$	578,522
Net income	$	141,590			$	254,543			$	192,407			$	385,636
Net income attributable to common stockholders	$	141,643			$	254,662			$	192,486			$	385,734
Net income per common share - basic	$	1.03			$	1.84			$	1.39			$	2.79
Net income per common share - diluted	$	1.03			$	1.84			$	1.39			$	2.79

_________________________________

(1)	Amounts may not equal full year results due to rounding.

The Company has evaluated subsequent events, through the date on which this Form 10-K was filed, the date on which these financial statements were issued, and identified the items below for discussion.

In January 2020, the Company sold Avalon Shelton, a wholly-owned operating community, located in Shelton, CT. Avalon Shelton contains 250 apartment homes, was sold for $64,750,000 and was classified as held for sale as of December 31, 2019.

In January 2020, the Company entered into an agreement to sell an operating community containing 216 apartment homes and net real estate of $28,285,000 as of December 31, 2019, resulting in the community qualifying as held for sale subsequent to December 31, 2019. The Company expects to complete the sale in the second quarter of 2020.

In February 2020, the Company entered into an agreement to sell an operating community containing 109 apartment homes and net real estate of $22,358,000 as of December 31, 2019, resulting in the community qualifying as held for sale subsequent to December 31, 2019. The Company expects to complete the sale in the second quarter of 2020.

In February 2020, the Company priced an underwritten public offering under its existing shelf registration statement for $700,000,000 principal amount of 2.30% unsecured notes due in 2030. The Company anticipates receiving the net proceeds from this borrowing on February 25, 2020.

In conjunction with the pricing of the $700,000,000 principal amount of 2.30% unsecured notes due in 2030, the Company settled $350,000,000 of forward interest rate swap agreements, making a payment of $20,314,000.

In addition, the Company called for redemption of (i) $400,000,000 principal amount of its 3.625% unsecured notes in advance of the October 2020 scheduled maturity and (ii) $250,000,000 principal amount of its 3.95% unsecured notes in advance of the January 2021 scheduled maturity. In conjunction with this redemption, the Company anticipates recognizing a loss on debt extinguishment comprised of approximately $9,300,000 in prepayment penalties and the non-cash write-off of unamortized deferred financing costs.

The Company sold 14 residential condominiums at The Park Loggia, for gross proceeds of approximately $47,000,000. In addition, the Company has contracts outstanding on 41 of the remaining residential condominiums.

As of February 21, 2020, the Company has $87,000,000 outstanding under the Credit Facility.

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
ESTABLISHED COMMUNITIES
NEW ENGLAND
Boston, MA
Avalon at Lexington		Lexington, MA		198			$	2,124			$	12,567			$	11,632			$	2,124			$	24,199			$	26,323			$	15,944			$	10,379			$	10,469			$	—			1994
Avalon Oaks		Wilmington, MA		204			2,129				17,567				6,576				2,129				24,143				26,272				15,767				10,505				11,151				—				1999
Eaves Quincy		Quincy, MA		245			1,743				14,662				11,286				1,743				25,948				27,691				16,378				11,313				11,474				—				1986/1995
Avalon Oaks West		Wilmington, MA		120			3,318				13,465				1,966				3,318				15,431				18,749				9,278				9,471				9,801				—				2002
Avalon at The Pinehills		Plymouth, MA		192			6,876				30,401				2,943				6,876				33,344				40,220				13,652				26,568				26,325				—				2004
Eaves Peabody		Peabody, MA		286			4,645				18,919				14,827				4,645				33,746				38,391				15,913				22,478				23,064				—				1962/2004
Avalon at Bedford Center		Bedford, MA		139			4,258				20,551				4,032				4,258				24,583				28,841				10,988				17,853				17,709				—				2006
Avalon at Chestnut Hill (1)		Chestnut Hill, MA		204			14,572				45,911				12,315				14,572				58,226				72,798				24,277				48,521				50,581				36,995				2007
Avalon at Lexington Hills		Lexington, MA		387			8,691				79,121				13,819				8,691				92,940				101,631				36,077				65,554				63,782				—				2008
Avalon Acton		Acton, MA		380			13,124				48,695				5,356				13,124				54,051				67,175				21,401				45,774				46,845				45,000				2008
Avalon at the Hingham Shipyard		Hingham, MA		235			12,218				41,656				8,646				12,218				50,302				62,520				17,936				44,584				42,083				—				2009
Avalon Sharon		Sharon, MA		156			4,719				25,478				5,255				4,719				30,733				35,452				11,302				24,150				21,932				—				2008
Avalon Northborough		Northborough, MA		382			8,144				52,184				3,450				8,144				55,634				63,778				19,146				44,632				45,986				—				2009
Avalon Cohasset		Cohasset, MA		220			8,802				46,166				1,395				8,802				47,561				56,363				13,259				43,104				44,013				—				2012
Avalon Exeter (2)		Boston, MA		187			—				110,028				348				—				110,376				110,376				21,565				88,811				109,017				—				2014
Avalon Natick		Natick, MA		407			15,645				64,845				421				15,645				65,266				80,911				15,156				65,755				67,787				—				2013
Avalon at Assembly Row		Somerville, MA		195			8,599				52,454				344				8,599				52,798				61,397				10,604				50,793				52,511				—				2015
AVA Somerville		Somerville, MA		250			10,945				56,460				304				10,945				56,764				67,709				10,359				57,350				59,196				—				2015
AVA Back Bay (1)		Boston, MA		271			9,034				36,540				50,996				9,034				87,536				96,570				39,957				56,613				57,206				—				1968/1998
Eaves Burlington		Burlington, MA		203			7,714				32,499				7,093				7,714				39,592				47,306				9,666				37,640				38,996				—				1988/2012
AVA Theater District		Boston, MA		398			17,072				163,633				218				17,072				163,851				180,923				24,989				155,934				161,632				—				2015
Avalon Burlington		Burlington, MA		312			15,600				60,649				16,838				15,600				77,487				93,087				19,085				74,002				76,790				—				1989/2013
Avalon Marlborough		Marlborough, MA		350			15,367				60,397				439				15,367				60,836				76,203				9,783				66,420				68,466				—				2015
Avalon Framingham		Framingham, MA		180			9,315				34,631				12				9,315				34,643				43,958				5,257				38,701				39,966				—				2015
Avalon Quincy		Quincy, MA		395			14,694				79,093				14				14,694				79,107				93,801				8,878				84,923				87,392				—				2017
Avalon Bear Hill		Waltham, MA		324			27,350				94,168				29,301				27,350				123,469				150,819				32,978				117,841				122,303				—				1999/2013
Avalon at Center Place (3)		Providence, RI		225			—				26,816				18,064				—				44,880				44,880				28,368				16,512				16,139				—				1991/1997
Total Boston, MA				7,045			$	246,698			$	1,339,556			$	227,890			$	246,698			$	1,567,446			$	1,814,144			$	477,963			$	1,336,181			$	1,382,616			$	81,995

---

							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
Fairfield, CT
Eaves Stamford		Stamford, CT		238			$	5,956			$	23,993			$	14,469			$	5,956			$	38,462			$	44,418			$	27,080			$	17,338			$	18,056			$	—			1991
Avalon Wilton on River Rd		Wilton, CT		102			2,116				14,664				7,233				2,116				21,897				24,013				13,820				10,193				10,924				—				1997
Avalon Norwalk		Norwalk, CT		311			11,320				62,904				1,291				11,320				64,195				75,515				20,623				54,892				56,950				—				2011
Avalon Wilton on Danbury Rd		Wilton, CT		100			6,604				23,758				208				6,604				23,966				30,570				7,218				23,352				24,125				—				2011
Avalon East Norwalk		Norwalk, CT		240			10,395				36,451				390				10,395				36,841				47,236				8,465				38,771				40,048				—				2013
Avalon Stratford		Stratford, CT		130			2,564				27,232				262				2,564				27,494				30,058				5,281				24,777				25,708				—				2014
Total Fairfield, CT				1,121			$	38,955			$	189,002			$	23,853			$	38,955			$	212,855			$	251,810			$	82,487			$	169,323			$	175,811			$	—
TOTAL NEW ENGLAND				8,166			$	285,653			$	1,528,558			$	251,743			$	285,653			$	1,780,301			$	2,065,954			$	560,450			$	1,505,504			$	1,558,427			$	81,995

METRO NY/NJ
New York City, NY
Avalon Riverview (3)		Long Island City, NY		372			$	—			$	94,061			$	11,395			$	—			$	105,456			$	105,456			$	62,534			$	42,922			$	46,297			$	—			2002
Avalon Riverview North (3)		Long Island City, NY		602			—				165,954				15,435				—				181,389				181,389				72,523				108,866				114,953				—				2008
Avalon Fort Greene		Brooklyn, NY		631			83,038				216,802				3,827				83,038				220,629				303,667				72,696				230,971				237,426				—				2010
AVA DoBro		Brooklyn, NY		500			77,419				207,082				50				77,419				207,132				284,551				25,458				259,093				264,445				—				2017
Avalon Willoughby Square		Brooklyn, NY		326			50,477				135,017				73				50,477				135,090				185,567				16,597				168,970				172,415				—				2017
Avalon Clinton North		New York, NY		339			84,069				105,821				12,364				84,069				118,185				202,254				31,394				170,860				174,710				147,000				2008/2013
Avalon Clinton South		New York, NY		288			71,421				89,851				7,132				71,421				96,983				168,404				26,700				141,704				144,705				121,500				2007/2013
Total New York City, NY				3,058			$	366,424			$	1,014,588			$	50,276			$	366,424			$	1,064,864			$	1,431,288			$	307,902			$	1,123,386			$	1,154,951			$	268,500
New York - Suburban
Avalon Commons		Smithtown, NY		312			$	4,679			$	28,286			$	7,147			$	4,679			$	35,433			$	40,112			$	25,091			$	15,021			$	15,925			$	—			1997
Avalon Green I		Elmsford, NY		105			1,820				10,525				7,827				1,820				18,352				20,172				11,161				9,011				9,509				—				1995
Avalon Towers (1)		Long Beach, NY		109			3,118				11,973				26,594				3,118				38,567				41,685				19,327				22,358				23,586				—				1990/1995
Avalon Bronxville		Bronxville, NY		110			2,889				28,324				8,949				2,889				37,273				40,162				22,483				17,679				18,870				—				1999
Avalon at Glen Cove (3)		Glen Cove, NY		256			7,871				59,969				5,265				7,871				65,234				73,105				34,102				39,003				41,374				—				2004
Avalon Glen Cove North (3)		Glen Cove, NY		111			2,577				37,336				871				2,577				38,207				40,784				16,539				24,245				25,465				—				2007
Avalon White Plains		White Plains, NY		407			15,391				137,353				1,731				15,391				139,084				154,475				50,915				103,560				107,895				—				2009
Avalon Rockville Centre I		Rockville Centre, NY		349			32,212				78,806				6,122				32,212				84,928				117,140				24,402				92,738				92,598				—				2012
Avalon Green II		Elmsford, NY		444			27,765				77,560				2,297				27,765				79,857				107,622				21,415				86,207				87,318				—				2012
Avalon Garden City		Garden City, NY		204			18,205				49,326				796				18,205				50,122				68,327				13,155				55,172				56,869				—				2013
Avalon Ossining		Ossining, NY		168			6,392				30,313				57				6,392				30,370				36,762				6,297				30,465				31,567				—				2014

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
Avalon Huntington Station		Huntington Station, NY		303			$	21,899			$	58,437			$	233			$	21,899			$	58,670			$	80,569			$	11,333			$	69,236			$	71,290			$	—			2014
Avalon Green III		Elmsford, NY		68			4,985				17,300				182				4,985				17,482				22,467				2,483				19,984				20,432				—				2016
Avalon Great Neck		Great Neck, NY		191			14,777				65,642				16				14,777				65,658				80,435				6,433				74,002				76,753				—				2017
Avalon Westbury		Westbury, NY		396			69,620				43,781				12,722				69,620				56,503				126,123				20,491				105,632				107,382				75,865				2006/2013
Total New York - Suburban				3,533			$	234,200			$	734,931			$	80,809			$	234,200			$	815,740			$	1,049,940			$	285,627			$	764,313			$	786,833			$	75,865
New Jersey
Avalon Cove		Jersey City, NJ		504			$	8,760			$	82,422			$	27,056			$	8,760			$	109,478			$	118,238			$	72,692			$	45,546			$	47,406			$	—			1997
Eaves Lawrenceville		Lawrenceville, NJ		632			14,650				60,486				13,106				14,650				73,592				88,242				37,957				50,285				52,498				—				1994
Avalon Princeton Junction		West Windsor, NJ		512			5,585				22,382				24,963				5,585				47,345				52,930				29,310				23,620				22,750				—				1988/1993
Avalon at Edgewater I		Edgewater, NJ		168			5,982				24,389				9,516				5,982				33,905				39,887				18,266				21,621				23,050				—				2002
Avalon Tinton Falls		Tinton Falls, NJ		216			7,939				33,170				746				7,939				33,916				41,855				13,570				28,285				29,341				—				2008
Avalon West Long Branch		West Long Branch, NJ		180			2,721				22,925				406				2,721				23,331				26,052				7,625				18,427				19,160				—				2011
Avalon North Bergen		North Bergen, NJ		164			8,984				30,994				1,090				8,984				32,084				41,068				8,891				32,177				33,278				—				2012
Avalon at Wesmont Station I		Wood-Ridge, NJ		266			14,682				41,635				1,923				14,682				43,558				58,240				11,642				46,598				47,781				—				2012
Avalon Hackensack at Riverside (3)		Hackensack, NJ		226			—				44,619				719				—				45,338				45,338				10,452				34,886				36,006				—				2013
Avalon Somerset		Somerset, NJ		384			18,241				58,338				553				18,241				58,891				77,132				14,191				62,941				64,863				—				2013
Avalon Bloomfield Station (2)		Bloomfield, NJ		224			10,701				36,513				46				10,701				36,559				47,260				5,973				41,287				45,678				—				2015
Avalon at Wesmont Station II		Wood-Ridge, NJ		140			6,502				16,863				131				6,502				16,994				23,496				4,140				19,356				19,879				—				2013
Avalon Bloomingdale		Bloomingdale, NJ		174			3,006				27,801				138				3,006				27,939				30,945				6,168				24,777				25,736				—				2014
Avalon Wharton		Wharton, NJ		247			2,273				48,609				171				2,273				48,780				51,053				8,673				42,380				44,054				—				2015
Avalon Roseland		Roseland, NJ		136			11,288				34,868				49				11,288				34,917				46,205				5,766				40,439				41,676				—				2015
Avalon Princeton		Princeton, NJ		280			26,461				67,989				635				26,461				68,624				95,085				7,667				87,418				90,156				—				2017
Avalon Union		Union, NJ		202			11,695				36,315				53				11,695				36,368				48,063				5,061				43,002				44,294				—				2016
Avalon Hoboken		Hoboken, NJ		217			37,237				90,475				5,724				37,237				96,199				133,436				18,374				115,062				118,205				67,904				2008/2016
Total New Jersey				4,872			$	196,707			$	780,793			$	87,025			$	196,707			$	867,818			$	1,064,525			$	286,418			$	778,107			$	805,811			$	67,904
TOTAL METRO NY/NJ				11,463			$	797,331			$	2,530,312			$	218,110			$	797,331			$	2,748,422			$	3,545,753			$	879,947			$	2,665,806			$	2,747,595			$	412,269

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
MID-ATLANTIC
Washington Metro/Baltimore, MD
Avalon at Foxhall		Washington, D.C.		308			$	6,848			$	27,614			$	17,340			$	6,848			$	44,954			$	51,802			$	33,343			$	18,459			$	19,141			$	—			1982/1994
Avalon at Gallery Place		Washington, D.C.		203			8,800				39,658				3,026				8,800				42,684				51,484				24,196				27,288				28,531				—				2003
AVA H Street		Washington, D.C.		138			7,425				25,282				193				7,425				25,475				32,900				6,724				26,176				27,170				—				2013
Avalon The Albemarle		Washington, D.C.		234			25,140				52,459				8,649				25,140				61,108				86,248				17,555				68,693				70,248				—				1966/2013
Eaves Tunlaw Gardens		Washington, D.C.		166			16,430				22,902				2,501				16,430				25,403				41,833				7,523				34,310				35,177				—				1944/2013
The Statesman		Washington, D.C.		281			38,140				35,352				5,297				38,140				40,649				78,789				12,881				65,908				66,726				—				1961/2013
Eaves Glover Park		Washington, D.C.		120			9,580				26,532				2,580				9,580				29,112				38,692				8,801				29,891				30,940				—				1953/2013
Avalon First and M		Washington, D.C.		469			43,700				153,950				3,915				43,700				157,865				201,565				39,698				161,867				167,252				—				2012/2013
Eaves Washingtonian Center		North Potomac, MD		288			4,047				18,553				4,179				4,047				22,732				26,779				16,297				10,482				10,528				—				1996
Eaves Columbia Town Center		Columbia, MD		392			8,802				35,536				12,716				8,802				48,252				57,054				24,260				32,794				34,223				—				1986/1993
Avalon at Grosvenor Station		Bethesda, MD		497			29,159				52,993				3,879				29,159				56,872				86,031				31,238				54,793				56,205				—				2004
Avalon at Traville		Rockville, MD		520			14,365				55,398				5,509				14,365				60,907				75,272				32,731				42,541				44,001				—				2004
Avalon Hunt Valley		Hunt Valley, MD		332			10,872				62,992				39				10,872				63,031				73,903				6,851				67,052				69,292				—				2017
Avalon Laurel		Laurel, MD		344			10,130				61,685				35				10,130				61,720				71,850				7,413				64,437				66,632				—				2017
Avalon Fairway Hills - Meadows		Columbia, MD		192			2,323				9,297				4,980				2,323				14,277				16,600				10,035				6,565				6,929				—				1987/1996
Avalon Fairway Hills - Woods		Columbia, MD		336			3,958				15,839				8,746				3,958				24,585				28,543				16,827				11,716				11,314				—				1987/1996
Avalon Russett		Laurel, MD		238			10,200				47,524				3,721				10,200				51,245				61,445				14,882				46,563				48,232				32,200				1999/2013
Eaves Fair Lakes		Fairfax, VA		420			6,096				24,400				10,922				6,096				35,322				41,418				23,894				17,524				17,656				—				1989/1996
AVA Ballston		Arlington, VA		344			7,291				29,177				16,649				7,291				45,826				53,117				32,292				20,825				22,152				—				1990
Avalon Tysons Corner		Tysons Corner, VA		558			13,851				43,397				13,665				13,851				57,062				70,913				36,896				34,017				35,481				—				1996
Avalon at Arlington Square		Arlington, VA		842			22,041				90,296				32,150				22,041				122,446				144,487				62,633				81,854				85,846				—				2001
Avalon Park Crest		Tysons Corner, VA		354			13,554				63,526				671				13,554				64,197				77,751				16,698				61,053				63,149				—				2013
Avalon Mosaic		Fairfax, VA		531			33,490				75,801				282				33,490				76,083				109,573				16,113				93,460				96,179				—				2014
Avalon Potomac Yard		Alexandria, VA		323			24,225				81,982				2,896				24,225				84,878				109,103				15,277				93,826				97,127				—				2014/2016
Avalon Clarendon		Arlington, VA		300			22,573				95,355				8,156				22,573				103,511				126,084				16,101				109,983				111,129				—				2002/2016
Avalon Columbia Pike		Arlington, VA		269			18,830				82,427				3,233				18,830				85,660				104,490				12,622				91,868				94,521				—				2009/2016
Avalon Dunn Loring		Vienna, VA		440			29,377				115,467				8,068				29,377				123,535				152,912				17,196				135,716				141,118				—				2012/2017
Eaves Tysons Corner		Vienna, VA		217			16,030				45,420				3,107				16,030				48,527				64,557				15,022				49,535				51,389				—				1980/2013
Avalon Courthouse Place		Arlington, VA		564			56,550				178,032				10,882				56,550				188,914				245,464				50,996				194,468				200,562				—				1999/2013
Avalon Arlington North		Arlington, VA		228			21,600				59,076				225				21,600				59,301				80,901				12,063				68,838				70,891				—				2014
Avalon Reston Landing		Reston, VA		400			26,710				83,084				7,901				26,710				90,985				117,695				27,520				90,175				93,182				—				2000/2013
Avalon Falls Church		Falls Church, VA		384			39,544				66,160				93				39,544				66,253				105,797				10,821				94,976				97,374				—				2016
TOTAL MID-ATLANTIC				11,232			$	601,681			$	1,877,166			$	206,205			$	601,681			$	2,083,371			$	2,685,052			$	677,399			$	2,007,653			$	2,070,297			$	32,200

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
PACIFIC NORTHWEST
Seattle, WA
Avalon Redmond Place (1)		Redmond, WA		222			$	4,558			$	18,368			$	10,882			$	4,558			$	29,250			$	33,808			$	19,657			$	14,151			$	14,904			$	—			1991/1997
Avalon at Bear Creek		Redmond, WA		264			6,786				27,641				5,367				6,786				33,008				39,794				23,740				16,054				17,157				—				1998/1998
Avalon Bellevue		Bellevue, WA		201			6,664				24,119				2,343				6,664				26,462				33,126				17,332				15,794				16,711				—				2001
Avalon RockMeadow		Bothell, WA		206			4,777				19,765				3,531				4,777				23,296				28,073				15,405				12,668				13,342				—				2000/2000
Avalon ParcSquare		Redmond, WA		124			3,789				15,139				3,774				3,789				18,913				22,702				12,178				10,524				10,966				—				2000/2000
AVA Belltown		Seattle, WA		100			5,644				12,733				1,295				5,644				14,028				19,672				8,985				10,687				11,151				—				2001
Avalon Meydenbauer		Bellevue, WA		368			12,697				77,450				3,503				12,697				80,953				93,650				32,110				61,540				62,634				—				2008
Avalon Towers Bellevue (3)		Bellevue, WA		397			—				123,029				1,781				—				124,810				124,810				40,596				84,214				88,063				—				2011
AVA Queen Anne		Seattle, WA		203			12,081				41,618				752				12,081				42,370				54,451				12,078				42,373				43,525				—				2012
AVA Ballard		Seattle, WA		265			16,460				46,926				1,133				16,460				48,059				64,519				12,070				52,449				54,231				—				2013
Avalon Alderwood I		Lynnwood, WA		367			12,294				55,627				13				12,294				55,640				67,934				10,637				57,297				59,340				—				2015
AVA Capitol Hill		Seattle, WA		249			20,613				59,986				710				20,613				60,696				81,309				8,814				72,495				74,790				—				2016
Avalon Esterra Park		Redmond, WA		482			23,177				112,926				1,134				23,177				114,060				137,237				13,426				123,811				127,407				—				2017
Avalon Alderwood II		Redmond, WA		124			5,072				21,418				14				5,072				21,432				26,504				2,618				23,886				24,589				—				2016
Avalon Newcastle Commons I		Newcastle, WA		378			9,623				111,624				696				9,623				112,320				121,943				9,953				111,990				114,975				—				2017
Archstone Redmond Lakeview		Redmond, WA		166			10,250				26,842				3,939				10,250				30,781				41,031				9,762				31,269				32,528				—				1987/2013
TOTAL PACIFIC NORTHWEST				4,116			$	154,485			$	795,211			$	40,867			$	154,485			$	836,078			$	990,563			$	249,361			$	741,202			$	766,313			$	—

NORTHERN CALIFORNIA
San Jose, CA
Avalon Campbell		Campbell, CA		348			$	11,830			$	47,828			$	14,424			$	11,830			$	62,252			$	74,082			$	39,755			$	34,327			$	36,004			$	—			1995
Eaves San Jose		San Jose, CA		440			12,920				53,047				19,360				12,920				72,407				85,327				41,026				44,301				46,388				—				1985/1996
Avalon Silicon Valley		Sunnyvale, CA		710			20,713				99,573				35,209				20,713				134,782				155,495				81,161				74,334				78,904				—				1998
Avalon Mountain View		Mountain View, CA		248			9,755				39,393				11,078				9,755				50,471				60,226				33,848				26,378				27,559				—				1986
Eaves Creekside		Mountain View, CA		296			6,546				26,263				21,499				6,546				47,762				54,308				29,105				25,203				26,680				—				1962/1997
Avalon at Cahill Park		San Jose, CA		218			4,765				47,600				2,741				4,765				50,341				55,106				29,729				25,377				26,811				—				2002
Avalon Towers on the Peninsula (1)		Mountain View, CA		211			9,560				56,136				14,742				9,560				70,878				80,438				36,656				43,782				46,114				—				2002
Avalon Morrison Park		San Jose, CA		250			13,837				64,534				272				13,837				64,806				78,643				13,520				65,123				67,380				—				2014
Avalon Willow Glen		San Jose, CA		412			46,060				81,957				6,627				46,060				88,584				134,644				26,842				107,802				109,662				—				2002/2013
Eaves Mountain View at Middlefield		Mountain View, CA		402			64,070				69,018				11,550				64,070				80,568				144,638				24,005				120,633				118,299				—				1969/2013
Total San Jose, CA				3,535			$	200,056			$	585,349			$	137,502			$	200,056			$	722,851			$	922,907			$	355,647			$	567,260			$	583,801			$	—

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
Oakland - East Bay, CA
Avalon Fremont		Fremont, CA		308			$	10,746			$	43,399			$	7,916			$	10,746			$	51,315			$	62,061			$	37,294			$	24,767			$	26,254			$	—			1992/1994
Eaves Dublin		Dublin, CA		204			5,276				19,642				12,391				5,276				32,033				37,309				20,064				17,245				18,331				—				1989/1997
Eaves Pleasanton		Pleasanton, CA		456			11,610				46,552				22,663				11,610				69,215				80,825				44,516				36,309				37,873				—				1988/1994
Eaves Union City		Union City, CA		208			4,249				16,820				4,153				4,249				20,973				25,222				15,186				10,036				10,239				—				1973/1996
Avalon Union City		Union City, CA		439			14,732				104,024				1,629				14,732				105,653				120,385				37,923				82,462				86,365				—				2009
Avalon Walnut Creek (3)		Walnut Creek, CA		422			—				148,469				5,781				—				154,250				154,250				49,458				104,792				108,425				3,847				2010
Avalon Dublin Station		Dublin, CA		253			7,772				72,142				589				7,772				72,731				80,503				14,903				65,600				68,111				—				2014
Avalon Dublin Station II		Dublin, CA		252			7,762				76,587				(95		)		7,762				76,492				84,254				10,198				74,056				76,646				—				2016
Eaves Walnut Creek (1)		Walnut Creek, CA		510			30,320				82,375				17,257				30,320				99,632				129,952				26,842				103,110				106,654				—				1987/2013
Avalon Walnut Ridge I (1)		Walnut Creek, CA		106			9,860				19,850				5,480				9,860				25,330				35,190				6,766				28,424				29,236				—				2000/2013
Avalon Berkeley		Berkeley, CA		94			4,500				28,615				60				4,500				28,675				33,175				5,571				27,604				28,623				—				2014
Total Oakland - East Bay, CA				3,252			$	106,827			$	658,475			$	77,824			$	106,827			$	736,299			$	843,126			$	268,721			$	574,405			$	596,757			$	3,847
San Francisco, CA
Eaves Daly City		Daly City, CA		195			$	4,230			$	9,659			$	20,711			$	4,230			$	30,370			$	34,600			$	19,937			$	14,663			$	15,718			$	—			1972/1997
AVA Nob Hill		San Francisco, CA		185			5,403				21,567				8,108				5,403				29,675				35,078				19,251				15,827				16,694				—				1990/1995
Eaves San Rafael		San Rafael, CA		254			5,982				16,885				25,658				5,982				42,543				48,525				25,121				23,404				24,472				—				1973/1996
Eaves Foster City		Foster City, CA		288			7,852				31,445				12,858				7,852				44,303				52,155				28,780				23,375				24,620				—				1973/1994
Eaves Pacifica		Pacifica, CA		220			6,125				24,796				4,121				6,125				28,917				35,042				20,812				14,230				14,945				—				1971/1995
Avalon Sunset Towers		San Francisco, CA		243			3,561				21,321				16,447				3,561				37,768				41,329				22,520				18,809				19,981				—				1961/1996
Eaves Diamond Heights		San Francisco, CA		154			4,726				19,130				6,691				4,726				25,821				30,547				17,124				13,423				14,057				—				1972/1994
Avalon at Mission Bay I		San Francisco, CA		250			14,029				78,452				8,817				14,029				87,269				101,298				47,906				53,392				54,203				—				2003
Avalon at Mission Bay III		San Francisco, CA		260			28,687				119,156				717				28,687				119,873				148,560				42,981				105,579				109,469				—				2009
Avalon Ocean Avenue		San Francisco, CA		173			5,544				50,906				2,064				5,544				52,970				58,514				14,405				44,109				45,895				—				2012
AVA 55 Ninth		San Francisco, CA		273			20,267				97,321				853				20,267				98,174				118,441				20,090				98,351				102,006				—				2014
Avalon Hayes Valley		San Francisco, CA		182			12,595				81,228				13				12,595				81,241				93,836				13,731				80,105				83,030				—				2015
Avalon San Bruno I		San Bruno, CA		300			40,780				68,684				6,629				40,780				75,313				116,093				21,467				94,626				97,372				64,450				2004/2013
Avalon San Bruno II		San Bruno, CA		185			23,787				44,934				2,366				23,787				47,300				71,087				12,404				58,683				59,911				28,435				2007/2013
Avalon San Bruno III		San Bruno, CA		187			33,303				62,910				3,140				33,303				66,050				99,353				17,538				81,815				84,113				50,825				2010/2013
Total San Francisco, CA				3,349			$	216,871			$	748,394			$	119,193			$	216,871			$	867,587			$	1,084,458			$	344,067			$	740,391			$	766,486			$	143,710
TOTAL NORTHERN CALIFORNIA				10,136			$	523,754			$	1,992,218			$	334,519			$	523,754			$	2,326,737			$	2,850,491			$	968,435			$	1,882,056			$	1,947,044			$	147,557

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
SOUTHERN CALIFORNIA
Los Angeles, CA
AVA Burbank		Burbank, CA		748			$	22,483			$	28,104			$	50,163			$	22,483			$	78,267			$	100,750			$	46,263			$	54,487			$	56,386			$	—			1961/1997
Avalon Woodland Hills		Woodland Hills, CA		663			23,828				40,372				51,342				23,828				91,714				115,542				51,853				63,689				65,519				—				1989/1997
Eaves Warner Center		Woodland Hills, CA		227			7,045				12,986				11,761				7,045				24,747				31,792				17,535				14,257				13,639				—				1979/1998
Avalon Glendale (3)		Glendale, CA		223			—				42,564				2,668				—				45,232				45,232				25,118				20,114				21,413				—				2003
Avalon Burbank		Burbank, CA		400			14,053				56,827				25,544				14,053				82,371				96,424				43,153				53,271				55,649				—				1988/2002
Avalon Camarillo		Camarillo, CA		249			8,446				40,290				2,483				8,446				42,773				51,219				19,392				31,827				32,091				—				2006
Avalon Wilshire		Los Angeles, CA		123			5,459				41,182				4,407				5,459				45,589				51,048				18,785				32,263				30,889				—				2007
Avalon Encino		Encino, CA		131			12,789				49,073				1,261				12,789				50,334				63,123				19,404				43,719				45,443				—				2008
Avalon Warner Place		Canoga Park, CA		210			7,920				44,845				1,085				7,920				45,930				53,850				18,264				35,586				36,990				—				2008
AVA Little Tokyo		Los Angeles, CA		280			14,734				94,001				1,627				14,734				95,628				110,362				17,701				92,661				96,240				—				2015
Eaves Phillips Ranch		Pomona, CA		501			9,796				41,740				4,049				9,796				45,789				55,585				13,963				41,622				42,409				—				1989/2011
Eaves San Dimas		San Dimas, CA		102			1,916				7,819				1,621				1,916				9,440				11,356				3,054				8,302				8,572				—				1978/2011
Eaves San Dimas Canyon		San Dimas, CA		156			2,953				12,428				1,068				2,953				13,496				16,449				4,236				12,213				12,510				—				1981/2011
AVA Pasadena		Pasadena, CA		84			8,400				11,547				5,664				8,400				17,211				25,611				4,475				21,136				21,650				—				1973/2012
Eaves Cerritos		Artesia, CA		151			8,305				21,195				1,687				8,305				22,882				31,187				6,011				25,176				25,823				—				1973/2012
Avalon Playa Vista		Los Angeles, CA		309			30,900				72,008				6,497				30,900				78,505				109,405				20,207				89,198				88,951				—				2006/2012
Avalon San Dimas		San Dimas, CA		156			9,141				30,726				92				9,141				30,818				39,959				6,044				33,915				34,974				—				2014
Avalon Glendora		Glendora, CA		280			18,311				64,303				468				18,311				64,771				83,082				9,735				73,347				75,932				—				2016
Avalon West Hollywood		West Hollywood, CA		294			35,214				118,341				1,258				35,214				119,599				154,813				11,290				143,523				146,362				—				2017
Avalon Mission Oaks		Camarillo, CA		160			9,600				37,602				1,560				9,600				39,162				48,762				8,623				40,139				41,401				—				2014
Avalon Chino Hills		Chino Hills, CA		331			16,617				80,869				31				16,617				80,900				97,517				7,948				89,569				93,911				—				2017
AVA North Hollywood		North Hollywood, CA		156			18,408				52,280				1,982				18,408				54,262				72,670				7,968				64,702				66,616				—				2015/2016
Avalon Simi Valley		Simi Valley, CA		500			42,020				73,361				5,546				42,020				78,907				120,927				23,115				97,812				100,379				—				2007/2013
AVA Studio City II (1)		Studio City, CA		101			4,626				22,954				7,473				4,626				30,427				35,053				7,512				27,541				28,500				—				1991/2013
Avalon Calabasas		Calabasas, CA		600			42,720				107,642				19,098				42,720				126,740				169,460				38,863				130,597				128,594				—				1988/2013
Avalon Oak Creek		Agoura Hills, CA		336			43,540				79,974				6,724				43,540				86,698				130,238				28,991				101,247				104,704				—				2004/2013
Avalon Santa Monica on Main		Santa Monica, CA		133			32,000				60,770				13,583				32,000				74,353				106,353				19,080				87,273				89,640				—				2007/2013
Avalon Del Mar Station		Pasadena, CA		347			20,560				106,556				4,234				20,560				110,790				131,350				28,307				103,043				106,735				—				2006/2013
Eaves Old Town Pasadena		Pasadena, CA		96			9,110				15,371				7,146				9,110				22,517				31,627				5,897				25,730				26,562				—				1972/2013
Eaves Thousand Oaks		Thousand Oaks, CA		154			13,950				20,211				5,131				13,950				25,342				39,292				8,508				30,784				29,739				—				1992/2013
Eaves Woodland Hills		Woodland Hills, CA		883			68,940				90,549				12,931				68,940				103,480				172,420				34,313				138,107				141,534				111,500				1971/2013
Avalon Thousand Oaks Plaza		Thousand Oaks, CA		148			12,810				22,581				2,609				12,810				25,190				38,000				8,251				29,749				30,731				—				2002/2013
Avalon Pasadena		Pasadena, CA		120			10,240				31,558				6,792				10,240				38,350				48,590				10,028				38,562				39,850				—				2004/2013

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
AVA Studio City I		Studio City, CA		450			$	17,658			$	90,715			$	35,175			$	17,658			$	125,890			$	143,548			$	29,941			$	113,607			$	116,925			$	—			1987/2013
Total Los Angeles, CA				9,802			$	604,492			$	1,723,344			$	304,760			$	604,492			$	2,028,104			$	2,632,596			$	623,828			$	2,008,768			$	2,057,263			$	111,500
Orange County, CA
AVA Newport		Costa Mesa, CA		145			$	1,975			$	3,814			$	9,973			$	1,975			$	13,787			$	15,762			$	7,965			$	7,797			$	8,194			$	—			1956/1996
Eaves Mission Viejo		Mission Viejo, CA		166			2,517				9,257				4,012				2,517				13,269				15,786				9,720				6,066				6,250				—				1984/1996
Eaves South Coast		Costa Mesa, CA		258			4,709				16,063				13,810				4,709				29,873				34,582				18,909				15,673				16,526				—				1973/1996
Eaves Santa Margarita		Rancho Santa Margarita, CA		301			4,607				16,911				11,609				4,607				28,520				33,127				17,920				15,207				15,855				—				1990/1997
Eaves Huntington Beach		Huntington Beach, CA		304			4,871				19,745				11,310				4,871				31,055				35,926				22,269				13,657				14,626				—				1971/1997
Avalon Irvine I		Irvine, CA		279			9,911				67,520				1,882				9,911				69,402				79,313				24,446				54,867				56,970				—				2010
Avalon Irvine II		Irvine, CA		179			4,358				40,905				360				4,358				41,265				45,623				10,227				35,396				36,611				—				2013
Eaves Lake Forest		Lake Forest, CA		225			5,199				21,134				4,127				5,199				25,261				30,460				7,416				23,044				23,402				—				1975/2011
Avalon Baker Ranch		Lake Forest, CA		430			31,689				98,004				57				31,689				98,061				129,750				16,581				113,169				117,107				—				2015
Avalon Irvine III		Irvine, CA		156			11,607				43,973				52				11,607				44,025				55,632				6,051				49,581				51,155				—				2016
Avalon Huntington Beach		Huntington Beach, CA		378			13,055				105,981				447				13,055				106,428				119,483				12,707				106,776				110,582				—				2017
Total Orange County, CA				2,821			$	94,498			$	443,307			$	57,639			$	94,498			$	500,946			$	595,444			$	154,211			$	441,233			$	457,278			$	—
San Diego, CA
AVA Pacific Beach		San Diego, CA		564			$	9,922			$	40,580			$	41,759			$	9,922			$	82,339			$	92,261			$	46,921			$	45,340			$	47,454			$	—			1969/1997
Eaves Mission Ridge		San Diego, CA		200			2,710				10,924				13,343				2,710				24,267				26,977				16,506				10,471				10,565				—				1960/1997
AVA Cortez Hill (3)		San Diego, CA		299			2,768				20,134				24,690				2,768				44,824				47,592				26,580				21,012				21,874				—				1973/1998
Eaves San Marcos (1)		San Marcos, CA		184			3,277				13,385				5,089				3,277				18,474				21,751				4,951				16,800				16,912				—				1988/2011
Eaves Rancho Penasquitos		San Diego, CA		250			6,692				27,143				4,887				6,692				32,030				38,722				9,637				29,085				30,025				—				1986/2011
Avalon Vista		Vista, CA		221			12,689				43,328				260				12,689				43,588				56,277				7,415				48,862				50,349				—				2015
Eaves La Mesa		La Mesa, CA		168			9,490				28,482				3,057				9,490				31,539				41,029				10,149				30,880				32,148				—				1989/2013
Avalon La Jolla Colony (1)		San Diego, CA		180			16,760				27,694				12,492				16,760				40,186				56,946				11,322				45,624				46,859				—				1987/2013
Total San Diego, CA				2,066			$	64,308			$	211,670			$	105,577			$	64,308			$	317,247			$	381,555			$	133,481			$	248,074			$	256,186			$	—
TOTAL SOUTHERN CALIFORNIA				14,689			$	763,298			$	2,378,321			$	467,976			$	763,298			$	2,846,297			$	3,609,595			$	911,520			$	2,698,075			$	2,770,727			$	111,500
TOTAL ESTABLISHED COMMUNITIES				59,802			$	3,126,202			$	11,101,786			$	1,519,420			$	3,126,202			$	12,621,206			$	15,747,408			$	4,247,112			$	11,500,296			$	11,860,403			$	785,521

---

							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
OTHER STABILIZED
Avalon on the Alameda (1)		San Jose, CA		305			$	6,119			$	50,225			$	12,959			$	6,119			$	63,184			$	69,303			$	38,457			$	30,846			$	32,629			$	—			1999
Eaves Fremont		Fremont, CA		235			6,581				26,583				10,626				6,581				37,209				43,790				25,065				18,725				19,632				—				1985/1994
Avalon Dogpatch		San Francisco, CA		326			23,523				179,915				172				23,523				180,087				203,610				13,403				190,207				196,411				—				2018
Avalon Cerritos		Cerritos, CA		132			8,869				51,257				646				8,869				51,903				60,772				1,993				58,779				N/A				30,250				2017/2019
Avalon Studio City		Studio City, CA		276			15,756				78,178				16,766				15,756				94,944				110,700				23,815				86,885				85,686				—				2002/2013
Eaves Los Feliz (1)		Los Angeles, CA		263			18,940				43,661				11,952				18,940				55,613				74,553				14,427				60,126				59,572				41,400				1989/2013
Eaves West Valley		San Jose, CA		873			90,890				132,040				11,081				90,890				143,121				234,011				42,572				191,439				197,477				—				1970/2013
Eaves Seal Beach		Seal Beach, CA		549			46,790				99,999				36,411				46,790				136,410				183,200				31,336				151,864				140,068				—				1971/2013
AVA Toluca Hills (1)		Los Angeles, CA		1,151			86,450				161,256				88,985				86,450				250,241				336,691				57,214				279,477				281,860				—				1973/2013
Avalon Walnut Ridge II (1)		Walnut Creek, CA		360			27,190				57,041				13,722				27,190				70,763				97,953				19,089				78,864				80,666				—				1989/2013
Avalon Denver West		Lakewood, CO		252			8,047				67,394				2,072				8,047				69,466				77,513				8,240				69,273				71,812				—				2016/2017
Avalon Meadows at Castle Rock		Castle Rock, CO		240			8,527				64,054				854				8,527				64,908				73,435				4,169				69,266				72,672				—				2018/2018
Avalon Red Rocks		Littleton, CO		256			4,461				69,717				1,515				4,461				71,232				75,693				5,089				70,604				74,563				—				2018/2018
Avalon Southlands		Aurora, CO		338			5,101				84,970				1,521				5,101				86,491				91,592				4,777				86,815				N/A				—				2018/2019
Avalon New Canaan		New Canaan, CT		104			4,834				22,990				6,368				4,834				29,358				34,192				15,412				18,780				15,876				—				2002
Avalon Darien		Darien, CT		189			6,926				34,558				8,968				6,926				43,526				50,452				21,189				29,263				25,087				—				2004
Avalon Shelton (4)		Shelton, CT		250			7,749				40,366				297				7,749				40,663				48,412				9,485				38,927				40,174				—				2013
AVA Van Ness		Washington, D.C.		269			22,890				58,691				20,196				22,890				78,887				101,777				19,107				82,670				83,096				—				1978/2013
AVA NoMa		Washington, D.C.		438			25,246				114,932				816				25,246				115,748				140,994				12,357				128,637				133,028				—				2018
850 Boca		Boca Raton, FL		370			21,430				114,085				3,830				21,430				117,915				139,345				12,836				126,509				130,932				—				2017/2017
The Alexander & Alexander Lofts		West Palm Beach, FL		290			9,597				90,950				2,951				9,597				93,901				103,498				7,192				96,306				101,387				—				2018/2018
Avalon Bonterra		Hialeah, FL		314			16,655				70,814				2,860				16,655				73,674				90,329				3,395				86,934				N/A				—				2018/2019
Avalon Toscana		Margate, FL		240			9,213				49,688				1,544				9,213				51,232				60,445				228				60,217				N/A				—				2016/2019
Avalon at Newton Highlands (1)		Newton, MA		294			11,039				45,547				17,047				11,039				62,594				73,633				30,717				42,916				45,028				—				2003
Avalon Prudential Center II		Boston, MA		266			8,776				35,496				61,204				8,776				96,700				105,476				39,217				66,259				67,595				—				1968/1998
Avalon North Station		Boston, MA		503			22,796				247,118				778				22,796				247,896				270,692				23,496				247,196				255,638				—				2017
Avalon Easton		Easton, MA		290			3,170				60,838				—				3,170				60,838				64,008				5,348				58,660				60,485				—				2017
AVA Wheaton		Wheaton, MD		319			6,494				69,025				—				6,494				69,025				75,519				6,011				69,508				72,130				—				2018
AVA North Point		Cambridge, MA		265			31,263				81,597				2,655				31,263				84,252				115,515				506				115,009				N/A								2018/2019
Avalon Arundel Crossing (1)		Linthicum Heights, MD		310			12,208				69,386				3,043				12,208				72,429				84,637				6,384				78,253				82,036				—				2018/2018
Portico at Silver Spring Metro		Silver Spring, MD		151			3,471				40,079				805				3,471				40,884				44,355				1,277				43,078				N/A				—				2009/2019
Avalon at Florham Park (1)		Florham Park, NJ		270			6,647				34,906				16,287				6,647				51,193				57,840				27,009				30,831				32,680				—				2001

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
Avalon Maplewood		Maplewood, NJ		235			$	15,179			$	49,558			$	—			$	15,179			$	49,558			$	64,737			$	4,093			$	60,644			$	62,608			$	—			2018
Avalon at Edgewater II		Edgewater, NJ		240			8,605				60,251				—				8,605				60,251				68,856				3,609				65,247				66,093				—				2018
Avalon Mamaroneck (1)		Mamaroneck, NY		229			6,207				40,791				15,652				6,207				56,443				62,650				30,770				31,880				33,232				—				2000
Avalon Melville		Melville, NY		494			9,228				50,063				22,445				9,228				72,508				81,736				40,857				40,879				36,100				—				1997
Avalon Brooklyn Bay		Brooklyn, NY		180			18,280				74,562				262				18,280				74,824				93,104				7,573				85,531				88,907				—				2018
Avalon Rockville Centre II		Rockville Centre, NY		165			7,534				50,984				—				7,534				50,984				58,518				4,510				54,008				56,114				—				2017
Avalon Somers		Somers, NY		152			5,608				40,453				25				5,608				40,478				46,086				3,548				42,538				43,958				—				2018
Avalon Midtown West (1)		New York, NY		550			154,730				180,253				42,710				154,730				222,963				377,693				55,973				321,720				325,479				98,200				1998/2013
Eaves Fairfax City		Fairfax, VA		141			2,152				8,907				5,636				2,152				14,543				16,695				9,152				7,543				7,985				—				1988/1997
Eaves Fairfax Towers		Falls Church, VA		415			17,889				74,727				15,066				17,889				89,793				107,682				24,579				83,103				79,721				—				1978/2011
AVA Ballston Square		Arlington, VA		714			71,640				215,937				37,794				71,640				253,731				325,371				64,753				260,618				258,067				—				1992/2013
TOTAL OTHER STABILIZED				14,203			$	904,700			$	3,293,842			$	498,521			$	904,700			$	3,792,363			$	4,697,063			$	780,229			$	3,916,834			$	3,516,484			$	169,850
LEASE-UP
Avalon at the Hingham Shipyard II		Hingham, MA		190			$	8,998			$	54,782			$	—			$	8,998			$	54,782			$	63,780			$	2,445			$	61,335			$	59,144			$	—			2019
Avalon Sudbury		Sudbury, MA		250			20,240				66,478				34				20,240				66,512				86,752				3,215				83,537				78,642				—				2019
Avalon Saugus		Saugus, MA		280			17,799				70,634				832				17,799				71,466				89,265				1,310				87,955				52,689				—				2019
Avalon Boonton		Boonton, NJ		350			3,592				87,821				—				3,592				87,821				91,413				1,672				89,741				72,902				—				2019
Avalon Piscataway		Piscataway, NJ		360			14,329				75,499				—				14,329				75,499				89,828				2,985				86,843				75,748				—				2019
Avalon Belltown Towers		Seattle, WA		274			24,636				120,392				1,171				24,636				121,563				146,199				1,871				144,328				117,433				—				2019
AVA Esterra Park		Redmond, WA		323			16,405				74,496				—				16,405				74,496				90,901				2,042				88,859				75,752				—				2019
TOTAL LEASE-UP				2,027			$	105,999			$	550,102			$	2,037			$	105,999			$	552,139			$	658,138			$	15,540			$	642,598			$	532,310			$	—

REDEVELOPMENT
Avalon Prudential Center I		Boston, MA		243			$	8,002			$	32,370			$	52,538			$	8,002			$	84,908			$	92,910			$	34,165			$	58,745			$	56,662			$	—			1968/1998
Eaves Redmond Campus		Redmond, WA		422			22,580				88,001				31,023				22,580				119,024				141,604				29,462				112,142				107,142				—				1991/2013
TOTAL REDEVLOPMENT				665			$	30,582			$	120,371			$	83,561			$	30,582			$	203,932			$	234,514			$	63,627			$	170,887			$	163,804			$	—
TOTAL CURRENT COMMUNITIES (5)				76,697			$	4,167,483			$	15,066,101			$	2,103,539			$	4,167,483			$	17,169,640			$	21,337,123			$	5,106,508			$	16,230,615			$	16,073,001			$	955,371

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							2019																																2018				2019
							Initial Cost												Total Cost
Community		City and state		# of homes			Land and improvements				Building / Construction in Progress & Improvements				Costs Subsequent to Acquisition / Construction				Land and improvements				Building / Construction in Progress & Improvements				Total				Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Total Cost, Net of Accumulated Depreciation				Encumbrances				Year of Completion/ Acquisition
DEVELOPMENT (6)
Avalon Public Market		Emeryville, CA		289			$	12,747			$	58,425			$	82,246			$	12,747			$	140,671			$	153,418			$	497			$	152,921			$	114,134			$	—			N/A
AVA Hollywood		Hollywood, CA		695			13,146				39,914				272,691				13,146				312,605				325,751				175				325,576				221,455				—				N/A
Avalon Walnut Creek II (3)		Walnut Creek, CA		200			—				995				85,983				—				86,978				86,978				—				86,978				32,256				—				N/A
Avalon Brea Place		Brea, CA		653			—				181				111,844				—				112,025				112,025				—				112,025				N/A				—				N/A
Avalon Monrovia		Monrovia, CA		154			—				2				15,828				—				15,830				15,830				—				15,830				N/A				—				N/A
AVA RiNo		Denver, CO		246			—				14				18,212				—				18,226				18,226				—				18,226				N/A				—				N/A
Avalon Doral		Doral, FL		350			—				491				82,316				—				82,807				82,807				—				82,807				35,154				—				N/A
Avalon Acton II		Acton, MA		86			—				1				4,473				—				4,474				4,474				—				4,474				N/A				—				N/A
Avalon Norwood		Norwood, MA		198			3,581				21,013				33,323				3,581				54,336				57,917				327				57,590				21,582				—				N/A
Avalon Marlborough II		Marlborough, MA		123			—				—				15,293				—				15,293				15,293				—				15,293				N/A				—				N/A
Avalon Woburn		Woburn, MA		350			—				—				29,689				—				29,689				29,689				—				29,689				N/A				—				N/A
Twinbrook Station		Rockville, MD		238			—				13				30,775				—				30,788				30,788				—				30,788				15,844				—				N/A
Avalon Towson		Towson, MD		371			—				768				85,641				—				86,409				86,409				—				86,409				42,686				—				N/A
Avalon East Harbor		Baltimore, MD		400			—				242				86,125				—				86,367				86,367				—				86,367				28,101				—				N/A
Avalon Foundry Row		Owings Mill, MD		437			—				1				21,479				—				21,480				21,480				—				21,480				N/A				—				N/A
Avalon Teaneck		Teaneck, NJ		248			8,273				40,614				21,969				8,273				62,583				70,856				523				70,333				43,508				—				N/A
Avalon Old Bridge		Old Bridge, NJ		252			—				219				35,244				—				35,463				35,463				—				35,463				11,573				—				N/A
Avalon Yonkers		Yonkers, NY		590			6,042				36,155				123,867				6,042				160,022				166,064				315				165,749				89,206				—				N/A
Avalon Harrison		Harrison, NY		143			—				—				26,158				—				26,158				26,158				—				26,158				5,504				—				N/A
Avalon Newcastle Commons II		Newcastle, WA		293			—				444				43,522				—				43,966				43,966				—				43,966				22,384				—				N/A
Avalon North Creek		Bothell, WA		316			10,436				54,536				15,738				10,436				70,274				80,710				869				79,841				38,058				—				N/A
The Park Loggia Retail (7)		New York, NY		N/A			77,393				75,211				—				77,393				75,211				152,604				1,117				151,487				136,627				—				2019
TOTAL DEVELOPMENT				6,632			$	131,618			$	329,239			$	1,242,416			$	131,618			$	1,571,655			$	1,703,273			$	3,823			$	1,699,450			$	858,072			$	—
Land Held for Development				N/A			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	84,712			$	—
Corporate Overhead				N/A			7,810				11,414				89,443				7,810				100,857				108,667				63,552				45,115				49,015				6,400,000
For-sale condominium inventory (7)		New York, NY		N/A			227,246				230,563				—				227,246				230,563				457,809				—				457,809				409,880				—				2019
2019 Disposed Communities				N/A			—				—				—				—				—				—				—				—				256,250				—
TOTAL				83,329			$	4,534,157			$	15,637,317			$	3,435,398			$	4,534,157			$	19,072,715			$	23,606,872			$	5,173,883			$	18,432,989			$	17,730,930			$	7,355,371		(8)

_________________________________

(1)

This community was under redevelopment for some or all of 2019, with the redevelopment effort primarily focused on the exterior and/or common area, or with the redevelopment effort focused on apartment homes that do not meet the definition of a Redevelopment Community. These redevelopment activities have no expected material impact on community operations, and therefore this community is included in the Established Community portfolio and not classified as a Redevelopment Community.

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(2)

Some or all of the land for this community is subject to a finance land lease. The Company adopted ASU 2016-02, Leases, as of January 1, 2019, using the prospective adoption approach, applying the provisions of the new standard to existing leases as of the date of adoption. Upon adoption, the Company recorded finance lease assets for the ground lease, previously reported as land, now reported as a component of right of use lease assets on the accompanying Consolidated Balance Sheets.

(3)	Some or all of the land for this community is subject to an operating land lease.

(4)	As of December 31, 2019, this community qualified as held for sale.

(5)	Current Communities excludes Unconsolidated Communities.

(6)	Development Communities excludes Avalon Alderwood Mall, which is being developed within an unconsolidated joint venture.

(7)	The Park Loggia is comprised of 172 for-sale residential condominiums and 67,000 square feet of retail space, and was completed in the fourth quarter of 2019.

(8)	Balance outstanding represents total amount due at maturity, and excludes deferred financing costs and debt discount associated with the unsecured and secured notes of $41,352 and $17,729, respectively.

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Amounts include real estate assets held for sale.

Depreciation of AvalonBay Communities, Inc. building, improvements, upgrades and furniture, fixtures and equipment (FF&E) is calculated over the following useful lives, on a straight line basis:

Building—30 years

Improvements, upgrades and FF&E—not to exceed 7 years

The aggregate cost of total real estate for federal income tax purposes was approximately $22,635,619 at December 31, 2019.

The changes in total real estate assets for the years ended December 31, 2019, 2018 and 2017 are as follows:

	For the year ended
	12/31/2019				12/31/2018				12/31/2017
Balance, beginning of period	$	22,342,576			$	21,935,936			$	20,776,626
Acquisitions, construction costs and improvements	1,615,949				1,568,878				1,526,516
Dispositions, including casualty losses and impairment loss on planned dispositions	(351,653		)		(1,162,238		)		(367,206		)
Balance, end of period	$	23,606,872			$	22,342,576			$	21,935,936

The changes in accumulated depreciation for the years ended December 31, 2019, 2018 and 2017, are as follows:

	For the year ended
	12/31/2019				12/31/2018				12/31/2017
Balance, beginning of period	$	4,611,646			$	4,218,379			$	3,743,632
Depreciation, including discontinued operations	661,578				631,196				584,150
Dispositions, including casualty losses	(99,341		)		(237,929		)		(109,403		)
Balance, end of period	$	5,173,883			$	4,611,646			$	4,218,379