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•

As described in Note 4, "Equity," 161,229 shares of common stock were issued as part of the Company's stock-based compensation plans, of which 96,317 shares related to the conversion of performance awards to restricted shares, and the remaining 64,912 shares valued at $14,640,000 were issued in connection with new stock grants; 529 shares valued at $112,000 were issued through the Company's dividend reinvestment plan; 70,351 shares valued at $14,346,000 were withheld to satisfy employees' tax withholding and other liabilities; and 3,931 restricted shares with an aggregate value of $660,000 previously issued in connection with employee compensation were canceled upon forfeiture.

•	Common stock dividends declared but not paid totaled $224,079,000.

•	The Company recorded a decrease of $471,000 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. For further discussion of the nature and valuation of these items, see Note 11, "Fair Value."

•

The Company recorded an increase to accrued expenses and other liabilities of $3,302,000, an increase in prepaid expenses and other assets of $22,000 and a corresponding adjustment to accumulated other comprehensive loss, and reclassified $1,949,000 of cash flow hedge losses from other comprehensive income (loss) to interest expense, net, to record the impact of the Company's derivative and hedge accounting activity.

•	The Company recorded $46,875,000 of lease liabilities and offsetting right of use lease assets related to the execution of two new office leases.

•

The Company issued 148,004 shares of common stock 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 74,932 shares valued at $14,666,000 were issued in connection with new stock grants; 602 shares valued at $108,000 were issued through the Company's dividend reinvestment plan; 75,195 shares valued at $14,206,000 were withheld to satisfy employees' tax withholding and other liabilities; and 616 restricted shares with an aggregate value of $102,000 previously issued in connection with employee compensation were canceled upon forfeiture.

•	Common stock dividends declared but not paid totaled $212,166,000.

•	The Company recorded an increase of $224,000 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.

•	The Company recorded an increase to other liabilities of $7,231,000, and a corresponding adjustment to accumulated other comprehensive loss, and reclassified $1,468,000 of cash flow hedge losses from other comprehensive income (loss) to interest expense, net, to record the impact of the Company's derivative and hedge accounting activity.

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•	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.

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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 in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in the Company's expansion markets in Southeast Florida and Denver, Colorado (the "Expansion Markets").

At March 31, 2020, the Company owned or held a direct or indirect ownership interest in 277 operating apartment communities containing 80,398 apartment homes in 11 states and the District of Columbia. In addition, the Company owned or held a direct or indirect ownership interest in 19 communities under development that are expected to contain an aggregate of 6,198 apartment homes when completed, as well as The Park Loggia, which contains 172 for-sale residential condominiums, of which 36 have been sold as of March 31, 2020, and 67,000 square feet of retail space, of which 64% has been leased as of March 31, 2020. 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 28 communities that, if developed as expected, will contain an estimated 9,720 apartment homes.

The interim unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements required by GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company's 2019 Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the operating results for the full year. Management believes the disclosures are adequate to ensure the information presented is not misleading.  In the opinion of management, all adjustments and eliminations, consisting only of normal, recurring adjustments necessary for a fair presentation of the financial statements for the interim periods, have been included.

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

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 three months ended
	3/31/2020				3/31/2019
Basic and diluted shares outstanding
Weighted average common shares - basic	140,376,996				138,331,248
Weighted average DownREIT units outstanding	7,500				7,500
Effect of dilutive securities	393,377				493,453
Weighted average common shares - diluted	140,777,873				138,832,201
Calculation of Earnings per Share - basic
Net income attributable to common stockholders	$	167,971			$	170,366
Net income allocated to unvested restricted shares	(427		)		(501		)
Net income attributable to common stockholders, adjusted	$	167,544			$	169,865
Weighted average common shares - basic	140,376,996				138,331,248
Earnings per common share - basic	$	1.19			$	1.23
Calculation of Earnings per Share - diluted
Net income attributable to common stockholders	$	167,971			$	170,366
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships, including discontinued operations	12				11
Adjusted net income attributable to common stockholders	$	167,983			$	170,377
Weighted average common shares - diluted	140,777,873				138,832,201
Earnings per common share - diluted	$	1.19			$	1.23

 

All options to purchase shares of common stock outstanding as of March 31, 2020 and 2019 are included in the computation of diluted earnings per share.

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.

Legal and Other Contingencies

The Company is involved in various 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.

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Acquisitions of Investments in Real Estate

The Company accounts for acquisitions of investments in real estate in accordance with the authoritative guidance for the initial measurement, which first requires that the Company determine if the real estate investment is the acquisition of an asset or a business combination. Under either model, the Company must identify and determine the fair value of any assets acquired, liabilities assumed and any noncontrolling interest in the acquiree. Typical assets acquired and liabilities assumed include land, building, furniture, fixtures and equipment, debt and identified intangible assets and liabilities, consisting of the value of above or below market leases and in-place leases. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes various sources, including its own analysis of recently acquired and existing comparable properties in its portfolio and other market data. Consideration for acquisitions is typically in the form of cash unless otherwise disclosed. For a business combination, the Company records the assets acquired and liabilities assumed based on the fair value of each respective item. For an asset acquisition, the allocation of the purchase price is based on the relative fair value of the net assets. The Company expenses all applicable acquisition costs for a business combination and capitalizes all applicable acquisition costs for an asset acquisition. The Company expects that acquisitions of individual operating communities will generally be viewed as asset acquisitions.

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.

For-Sale Condominium Inventory

The Company presents for-sale condominium inventory at historical cost and evaluates the condominiums for impairment when potential indicators exist, as further discussed in Note 6, "Real Estate Disposition Activities." 

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.

Lessee Considerations

The Company assesses 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’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. Lease payments included in the lease liability include only payments that depend on an index or rate. For leases that have options to extend the term or terminate the lease early, the Company only factored the impact of such 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 on a lease by lease basis using the Company’s actual borrowing rates as well as indicative market pricing for longer term rates and taking into consideration the remaining term of each of the lease agreements.

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Lessor Considerations

The Company evaluates leases in which it is the lessor, which are composed of residential and retail leases at its apartment communities, and determined these leases to be 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, which, for residential leases, 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.

Revenue and Gain Recognition

Revenue from contracts with customers 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 ASC 842, Leases, discussed above. The Company's revenue streams that are not accounted for under ASC 842 include (i) management fees, (ii) rental and non-rental related income and (iii) gains or losses on the sale of real estate.

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 three months ended March 31, 2020 and 2019. Segment information for total revenue has been adjusted to exclude the real estate assets that were sold from January 1, 2019 through March 31, 2020, or otherwise qualify as held for sale as of March 31, 2020, as described in Note 6, "Real Estate Disposition Activities" (dollars in thousands):

		For the three months ended
		Established Communities				Other Stabilized Communities				Development/ Redevelopment Communities (1)				Non- allocated (2)				Total
For the period ended March 31, 2020
Management, development and other fees		$	—			$	—			$	—			$	1,007			$	1,007
Rental and non-rental related income (3)		1,609				476				232				—				2,317
Total non-lease revenue (4)		1,609				476				232				1,007				3,324
Lease income (5)		546,347				35,015				15,541				—				596,903
Business interruption insurance proceeds		—				—				—				—				—
Total revenue		$	547,956			$	35,491			$	15,773			$	1,007			$	600,227
For the period ended March 31, 2019
Management, development and other fees		$	—			$	—			$	—			$	1,139			$	1,139
Rental and non-rental related income (3)		1,833				481				16				—				2,330
Total non-lease revenue (4)		1,833				481				16				1,139				3,469
Lease income (5)		529,824				21,546				533				—				551,903
Business interruption insurance proceeds		172				—				—				—				172
Total revenue		$	531,829			$	22,027			$	549			$	1,139			$	555,544

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(1)	The Company had no Redevelopment Communities for the three months ended March 31, 2020 and 2019.

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

(3)	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.

(4)	Represents all revenue accounted for under ASU 2014-09.

(5)	Amounts include all revenue streams derived from residential and retail rental income and other lease income, which are accounted for under ASC 842.

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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 March 31, 2020.

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 (i) trade and other receivables, (ii) other long term financings including available for sale and held-to-maturity debt securities and (iii) 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 was adopted on January 1, 2020 and does not 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 $11,498,000 and $17,589,000 for the three months ended March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019 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 March 31, 2020 and December 31, 2019, as shown in the accompanying Condensed Consolidated Balance Sheets (dollars in thousands) (see Note 6, "Real Estate Disposition Activities").

	3/31/2020				12/31/2019
Fixed rate unsecured notes (1)	$	5,900,000			$	5,850,000
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)	478,738				479,221
Variable rate mortgage notes payable - conventional and tax-exempt (2)	476,150				476,150
Total mortgage notes payable and unsecured notes and Term Loans	7,404,888				7,355,371
Credit Facility	750,000				—
Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility	$	8,154,888			$	7,355,371

_____________________________________

(1)	Balances at March 31, 2020 and December 31, 2019 exclude $8,880 and $8,610, respectively, of debt discount, and $36,688 and $32,742, respectively, of deferred financing costs, as reflected in unsecured notes, net on the accompanying Condensed Consolidated Balance Sheets.

(2)	Balances at March 31, 2020 and December 31, 2019 exclude $14,671 and $14,464, respectively, of debt discount, and $3,192 and $3,265, respectively, of deferred financing costs, as reflected in mortgage notes payable, net on the accompanying Condensed Consolidated Balance Sheets.

The following debt activity occurred during the three months ended March 31, 2020:

•	In February 2020, the Company issued $700,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $694,701,000. The notes mature in March 2030 and were issued at a 2.30% interest rate.

•	In February 2020, the Company refinanced the secured borrowing for Avalon San Bruno III. The secured borrowing had a fixed interest rate of 3.08% and was refinanced for a principal balance of $51,000,000, with a fixed interest rate of 2.38% and maturity date of March 2027.

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•

In March 2020, the Company repaid (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 these repayments, the Company recognized a loss on debt extinguishment of $9,170,000 for prepayment penalties and the non-cash write-off of unamortized deferred financing costs.

At March 31, 2020, the Company had a $1,750,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the “Credit Facility”) which matures in February 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 (1.77% at March 31, 2020), assuming a one month borrowing rate. The annual facility fee is 0.125% (or approximately $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 $750,000,000 outstanding under the Credit Facility as of March 31, 2020 and no borrowings outstanding as of December 31, 2019. The Company had $5,032,000 and $11,488,000 outstanding in letters of credit that reduced the borrowing capacity as of March 31, 2020 and December 31, 2019, respectively. In addition, the Company had $29,867,000 outstanding in additional letters of credit on a separate facility unrelated to the Credit Facility as of March 31, 2020.

In the aggregate, secured notes payable mature at various dates from December 2020 through July 2066, and are secured by certain apartment communities (with a net carrying value of $1,584,911,000, excluding communities classified as held for sale, as of March 31, 2020).

The weighted average interest rate of the Company's fixed rate secured notes payable (conventional and tax-exempt) was 3.8% and 3.9% at March 31, 2020 and December 31, 2019, respectively. The weighted average interest rate of the Company's variable rate secured notes payable (conventional and tax-exempt) including the effect of certain financing related fees, was 3.4% and 3.2% at March 31, 2020 and December 31, 2019, respectively.

Scheduled payments and maturities of secured notes payable and unsecured notes outstanding at March 31, 2020 are as follows (dollars in thousands):

Year		Secured notes payments				Secured notes maturities				Unsecured notes maturities				Stated interest rate of unsecured notes
2020		$	8,124			$	67,904			$	—			N/A
2021		9,304				27,844				—				N/A
										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				236,100				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				700,000				2.300	%
										350,000				3.900	%
										300,000				4.150	%
										300,000				4.350	%
		$	312,206			$	642,682			$	6,450,000

 

The Company was in compliance at March 31, 2020 with customary financial covenants under the Credit Facility, the Term Loans and the Company's fixed rate unsecured notes.

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The following summarizes the changes in equity for the three months ended March 31, 2020 (dollars in thousands):

	Common stock				Additional paid-in capital				Accumulated earnings less dividends				Accumulated other comprehensive loss				Total AvalonBay stockholder's equity				Noncontrolling interests				Total equity
Balance at December 31, 2019	$	1,406			$	10,736,733			$	282,913			$	(31,503	)		$	10,989,549			$	649			$	10,990,198
Net income attributable to common stockholders	—				—				167,971				—				167,971				—				167,971
Loss on cash flow hedges, net	—				—				—				(17,603		)		(17,603		)		—				(17,603		)
Cash flow hedge losses reclassified to earnings	—				—				—				1,949				1,949				—				1,949
Change in redemption value of redeemable noncontrolling interest	—				—				471				—				471				—				471
Noncontrolling interests income allocation	—				—				—				—				—				(35		)		(35		)
Dividends declared to common stockholders ($1.59 per share)	—				—				(224,083		)		—				(224,083		)		—				(224,083		)
Issuance of common stock, net of withholdings	1				(12,492		)		(1,616		)		—				(14,107		)		—				(14,107		)
Amortization of deferred compensation	—				7,781				—				—				7,781				—				7,781
Balance at March 31, 2020	$	1,407			$	10,732,022			$	225,656			$	(47,157	)		$	10,911,928			$	614			$	10,912,542

The following summarizes the changes in equity for the three months ended March 31, 2019 (dollars in thousands):

	Common stock				Additional paid-in capital				Accumulated earnings less dividends				Accumulated other comprehensive loss				Total equity
Balance at December 31, 2018	$	1,385			$	10,306,588			$	350,777			$	(26,144	)		$	10,632,606
Net income attributable to common stockholders	—				—				170,366				—				170,366
Loss on cash flow hedges, net	—				—				—				(7,231		)		(7,231		)
Cash flow hedge losses reclassified to earnings	—				—				—				1,468				1,468
Change in redemption value of redeemable noncontrolling interest	—				—				(224		)		—				(224		)
Dividends declared to common stockholders ($1.52 per share)	—				—				(212,166		)		—				(212,166		)
Issuance of common stock, net of withholdings	9				143,202				(1,892		)		—				141,319
Amortization of deferred compensation	—				7,861				—				—				7,861
Balance at March 31, 2019	$	1,394			$	10,457,651			$	306,861			$	(31,907	)		$	10,733,999

As of March 31, 2020 and December 31, 2019, 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 three months ended March 31, 2020, the Company:

i.	issued 1,902 shares of common stock in connection with stock options exercised;

ii.	issued 529 common shares through the Company's dividend reinvestment plan;

iii.	issued 161,229 common shares in connection with restricted stock grants and the conversion of performance awards to restricted shares;

iv.	withheld 70,351 common shares to satisfy employees' tax withholding and other liabilities; and

v.	canceled 3,931 common shares of restricted stock upon forfeiture.

Any deferred compensation related to the Company's stock option, restricted stock and performance award grants during the three months ended March 31, 2020 is not reflected on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2020, and will not be reflected until recognized as compensation cost.

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In May 2019, the Company commenced a fifth 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 the three months ended March 31, 2020, the Company had no sales under the program. As of March 31, 2020, the Company had $752,878,000 remaining authorized for issuance under this program.

Investments in Unconsolidated Real Estate Entities

As of March 31, 2020, the Company had investments in seven unconsolidated real estate entities with ownership interest percentages ranging from 20.0% to 50.0%, excluding joint ventures formed with Equity Residential as part of the Archstone acquisition. The Company accounts for its investments in unconsolidated real estate entities under the equity method of accounting. The significant accounting policies of the Company's unconsolidated real estate entities are consistent with those of the Company in all material respects.

The following is a combined summary of the financial position of the entities accounted for using the equity method discussed above as of the dates presented (dollars in thousands):

	3/31/2020				12/31/2019
	(unaudited)
Assets:
Real estate, net	$	1,205,970			$	1,204,470
Other assets	199,312				196,488
Total assets	$	1,405,282			$	1,400,958
Liabilities and partners' capital:
Mortgage notes payable, net (1)	$	781,234			$	782,257
Other liabilities	158,988				157,379
Partners' capital	465,060				461,322
Total liabilities and partners' capital	$	1,405,282			$	1,400,958

 

_________________________________

(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 discussed above for the periods presented (dollars in thousands):

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	For the three months ended
	3/31/2020				3/31/2019
	(unaudited)
Rental and other income	$	33,072			$	35,255
Operating and other expenses	(12,181		)		(14,204		)
Interest expense, net	(8,056		)		(8,554		)
Depreciation expense	(8,689		)		(21,696		)
Net income (loss)	$	4,146			$	(9,199	)
Company's share of net income (loss)	$	1,705			$	(528	)
Amortization of excess investment and other	(530		)		(532		)
Equity in income (loss) from unconsolidated real estate investments	$	1,175			$	(1,060	)

Expensed Transaction, Development and Other Pursuit Costs

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 $3,334,000 and $622,000 for the three months ended March 31, 2020 and 2019, respectively. These costs are included in expensed transaction, development and other pursuit costs, net of recoveries on the accompanying Condensed 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.

Casualty and Impairment of Long-Lived Assets

In the Company's evaluation of its real estate portfolio for impairment, as discussed below, it considered the impact of the COVID-19 pandemic and did not identify any indicators of impairment as a result.

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, the Company did not recognize any impairment losses for the three months ended March 31, 2020 and 2019.

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 condo