October 29, 2020 - EX-99.2 - 8-K: Current report filing

Exhibit 99.2

For Immediate News Release

October 28, 2020

AVALONBAY COMMUNITIES, INC. ANNOUNCES

THIRD QUARTER 2020 OPERATING RESULTS

(Arlington, VA) AvalonBay Communities, Inc. (NYSE: AVB) (the “Company”) reported today that Net Income Attributable to Common Stockholders for the three months ended September 30, 2020 was $147,703,000. This resulted in a decrease in Earnings per Share – diluted (“EPS”) for the three months ended September 30, 2020 of 47.5% to $1.05 from $2.00 for the prior year period, primarily attributable to a decrease in gain on sale of real estate, an increase in depreciation expense and other items as detailed in the table below.

Funds from Operations attributable to common stockholders - diluted (“FFO”) per share for the three months ended September 30, 2020 decreased 9.8% to $2.03 from $2.25 for the prior year period. Core FFO per share (as defined in this release) for the three months ended September 30, 2020 decreased 12.0% to $2.06 from $2.34 for the prior year period.

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the three months ended September 30, 2020 to its results for the prior year period:



Q3 2020 Results Compared to Q3 2019
	Per Share (1)
	EPS		FFO		Core FFO
Q3 2019 per share reported results	$	2.00	$	2.25	$	2.34
Established Community NOI (2)	(0.27)		(0.27)		(0.27)
Development and Other Stabilized Community NOI	0.05		0.05		0.05
Capital markets and transaction activity	(0.02)		(0.02)		(0.02)
Joint venture income	(0.02)		(0.02)		(0.02)
Overhead and other	(0.04)		(0.04)		(0.02)
Income taxes	0.08		0.08		—
Gain on sale of real estate and depreciation expense	(0.73)		—		—
Q3 2020 per share reported results	$	1.05	$	2.03	$	2.06

(1) For additional detail on reconciling items between EPS, FFO and Core FFO, see Attachment 13, table 3.
(2) Established Community uncollectible residential and commercial lease revenue increased $0.09 over the prior year period.

For the nine months ended September 30, 2020, EPS decreased 21.9% to $3.46 from $4.43 for the prior year period, FFO per share decreased 4.1% to $6.52 from $6.80 for the prior year period, and Core FFO per share decreased 3.5% to $6.67 from $6.91 for the prior year period.

The following table compares the Company’s actual results for EPS, FFO per share and Core FFO per share for the nine months ended September 30, 2020 to its results for the prior year period:



YTD 2020 Results
Comparison to YTD 2019

	Per Share (1)
	EPS		FFO		Core FFO

YTD 2019 per share reported results	$	4.43	$	6.80	$	6.91
Established Community NOI (2)	(0.29)		(0.29)		(0.29)
Development and Other Stabilized Community NOI	0.24		0.24		0.24
Capital markets and transaction activity	(0.15)		(0.19)		(0.13)
Joint venture income	(0.04)		(0.04)		(0.04)
Overhead and other	(0.09)		(0.09)		(0.02)
Income taxes	0.09		0.09		—
Gain on sale of real estate and depreciation expense	(0.73)		—		—
YTD 2020 per share reported results	$	3.46	$	6.52	$	6.67

(1) For additional detail on reconciling items between EPS, FFO and Core FFO, see Attachment 13, table 3.
(2) Established Community uncollectible residential and commercial lease revenue increased $0.20 over the prior year period.

Established Communities Operating Results for the Three Months Ended September 30, 2020 Compared to the Prior Year Period

For Established Communities, total revenue decreased $33,180,000, or 6.1%, to $508,558,000. Residential and commercial uncollectible lease revenue contributed $12,474,000 of this decrease, comprised of $11,225,000 for residential and $1,249,000 for commercial. Operating expenses for Established Communities increased $5,532,000, or 3.5%, to $165,616,000. NOI for Established Communities decreased $38,712,000, or 10.1%, to $342,942,000.

Rental revenue for Established Communities decreased 6.1%, as detailed in the following table:



Established Communities Change in Rental Revenue
Q3 2020 Compared to Q3 2019
Residential rental revenue
Lease rates	(0.1)	%
Concessions and other discounts	(0.9)	%
Economic occupancy	(2.7)	%
Other rental revenue	—	%
Uncollectible lease revenue	(2.1)	%
Total residential rental revenue	(5.8)	%
Commercial rental revenue (1)	(0.3)	%
Total Established Communities change in rental revenue	(6.1)	%

(1) Consists primarily of the impact of uncollectible commercial lease revenue.

The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities for the three months ended September 30, 2020 compared to the three months ended September 30, 2019:



Q3 2020 Compared to Q3 2019
	Rental Revenue (1)		Opex (2)		NOI		% of NOI (3)
New England	(4.7)	%	4.7	%	(9.5)	%	14.7	%
Metro NY/NJ	(6.2)	%	0.2	%	(9.0)	%	22.4	%
Mid-Atlantic	(5.4)	%	5.5	%	(10.0)	%	15.3	%
Pacific NW	(5.0)	%	8.1	%	(10.2)	%	6.4	%
No. California	(7.7)	%	4.3	%	(11.8)	%	19.8	%
So. California	(6.3)	%	2.9	%	(10.4)	%	19.7	%
Expansion Mkts	(3.3)	%	2.1	%	(7.5)	%	1.7	%
Total	(6.1)	%	3.5	%	(10.1)	%	100.0	%

(1) See Attachment 4, Quarterly Rental Revenue and Occupancy Changes, for additional detail.
(2) See Attachment 7, Operating Expenses ("Opex"), for discussion of variances.
(3) Represents % of total NOI for Q3 2020, including amounts related to communities that have been sold or that are classified as held for sale.

Established Communities Operating Results for the Nine Months Ended September 30, 2020 Compared to the Prior Year Period

For Established Communities, total revenue decreased $33,190,000, or 2.1%, to $1,572,701,000. Residential and commercial uncollectible lease revenue contributed $27,655,000 of this decrease, comprised of $22,845,000 for residential and $4,810,000 for commercial. Operating expenses for Established Communities increased $8,681,000, or 1.9%, to $474,799,000. NOI for Established Communities decreased $41,871,000, or 3.7%, to $1,097,902,000.

Rental revenue for Established Communities decreased 2.0%, as detailed in the following table:



Established Communities Change in Rental Revenue
YTD 2020 Compared to YTD 2019
Residential rental revenue
Lease rates	1.5	%
Concessions and other discounts	(0.4)	%
Economic occupancy	(1.2)	%
Other rental revenue	(0.2)	%
Uncollectible lease revenue	(1.4)	%
Total residential rental revenue	(1.7)	%
Commercial rental revenue (1)	(0.3)	%
Total Established Communities change in rental revenue	(2.0)	%

(1) Consists primarily of the impact of uncollectible commercial lease revenue.

The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019:



YTD 2020 Compared to YTD 2019
	Rental Revenue (1)		Opex (2)		NOI		% of NOI (3)
New England	(0.3)	%	3.0	%	(2.0)	%	14.4	%
Metro NY/NJ	(3.2)	%	0.8	%	(5.0)	%	22.0	%
Mid-Atlantic	(1.4)	%	1.1	%	(2.5)	%	15.5	%
Pacific NW	(1.3)	%	6.0	%	(4.0)	%	6.3	%
No. California	(2.0)	%	2.1	%	(3.3)	%	20.2	%
So. California	(2.8)	%	1.7	%	(4.7)	%	19.8	%
Expansion Mkts	(1.0)	%	(0.1)	%	(1.7)	%	1.8	%
Total	(2.0)	%	1.9	%	(3.7)	%	100.0	%

(1) See Attachment 6, YTD Rental Revenue and Occupancy Changes, for additional detail.
(2) See Attachment 7, Operating Expenses ("Opex"), for discussion of variances.
(3) Represents % of total NOI for YTD 2020, including amounts related to communities that have been sold or that are classified as held for sale.

COVID-19 Operational Update

Established Communities Collections Update

The following table provides an update for residential revenue collections for Established Communities for the three months ended September 30, 2020. Collected residential revenue represents the portion of apartment base rent charged to residents and other rentable items, including parking and storage rent, along with pet and other fees in accordance with residential leases, that has been collected ("Collected Residential Revenue"), and excludes transactional and other fees.



Established Communities Collections (1)
	Collected Residential Revenue
	At quarter end (2)	At October 27, 2020 (3)(4)
Q2 2020	95.5%	97.7%
Q3 2020	95.2%	96.1%

(1) Excludes commercial revenue, which was 1.4% of the Company's 2019 Established Communities' total revenue. The Company collected 56.5% and 66.5% of billed commercial revenue for Q2 2020 as of June 30, 2020 and for Q3 2020 as of September 30, 2020, respectively.
(2) The Collected Residential Revenue percentage as of June 30, 2020 for Q2 2020 and September 30, 2020 for Q3 2020, respectively.
(3) The percentage of Collected Residential Revenue as of October 27, 2020.
(4) Collected Residential Revenue for October 2020 as of October 27, 2020 was 92.4%, which is 94.7% of the AVB Residential Benchmark.

For further discussion of collection rates and limitations on use of this data, see Attachment 13.

The ongoing impact from COVID-19 on the Company's consolidated results of operations will be affected by the duration and severity of the pandemic, and how quickly and to what extent normal economic and operating conditions resume. Because those factors are beyond the Company's control and knowledge, the adverse future impact of the pandemic on the Company's results of operations cannot be reasonably estimated, and could be material. In addition, the Company's historical results, including results for the three and nine months ended September 30, 2020 and information through October 28, 2020, may not be indicative of results for future periods. Due to the uncertainty from the ongoing impact of COVID-19, the Company had previously withdrawn and is not providing full year 2020 guidance.

Development Activity

Consolidated Development Communities and Development Rights

During the three months ended September 30, 2020, the Company completed the development of Avalon Public Market, located in Emeryville, CA. Avalon Public Market contains 289 apartment homes and was constructed for a Total Capital Cost of $175,000,000.

During the nine months ended September 30, 2020, the Company completed the development of four communities containing an aggregate of 1,051 apartment homes for an aggregate Total Capital Cost of $392,000,000.

At September 30, 2020, the Company had 17 consolidated Development Communities under construction that in the aggregate are expected to contain 5,581 apartment homes and 64,000 square feet of commercial space. Estimated Total Capital Cost at completion for these Development Communities is $2,115,000,000. As of September 30, 2020, the Company has an estimated remaining Total Capital Cost of $551,000,000 to invest over the next several years on the 17 Development Communities under construction and recently completed Development Communities.

The projected Total Capital Cost of Development Rights at September 30, 2020 decreased to $3.9 billion from $4.2 billion at June 30, 2020.

Unconsolidated Development Communities

During the three months ended September 30, 2020, the Company, through an unconsolidated joint venture in which it holds a 25.0% interest, started the construction of AVA Arts District, located in Los Angeles, CA. AVA Arts District is expected to contain 475 apartment homes and 56,000 square feet of commercial space and to be developed for an estimated Total Capital Cost of $276,000,000 to the venture, approximately 60% of which will be funded by a variable rate construction loan. At September 30, 2020, the Company's expected remaining equity investment in the venture for the development of AVA Arts District was $12,800,000.

At September 30, 2020, including AVA Arts District, the Company had two Unconsolidated Development Communities under construction that in the aggregate are expected to contain 803 apartment homes and 56,000 square feet of commercial space. Estimated Total Capital Cost at completion for these Unconsolidated Development Communities is $386,000,000, with an estimated remaining equity investment of the Company of $48,600,000 after expected loan proceeds as of September 30, 2020. See Attachment 11, Unconsolidated Real Estate Investments, for further discussion.

Disposition Activity

Consolidated Apartment Communities

During the three months ended September 30, 2020, the Company sold Avalon Towers, a wholly-owned operating community, located in Long Beach, NY. Avalon Towers contains 109 apartment homes and was sold for $54,000,000, resulting in a gain in accordance with GAAP of $31,603,000 and an Economic Gain of $13,577,000.

During the nine months ended September 30, 2020, the Company sold three wholly-owned operating communities containing an aggregate of 575 apartment homes. These assets were sold for $183,650,000 and a weighted average Initial Market Cap Rate of 4.9%, resulting in a gain in accordance with GAAP of $91,313,000 and an Economic Gain of $50,232,000.

During the three and nine months ended September 30, 2020, the Company sold seven and 59 of the 172 residential condominiums at The Park Loggia, located in New York, NY, for gross proceeds of $15,699,000 and $182,512,000, respectively. At September 30, 2020, 64% of the 67,000 square feet of commercial space has been leased. In addition, subsequent to quarter end and through the date of this release, the Company sold six residential condominiums for gross proceeds of $23,246,000.

Unconsolidated Real Estate Investments

U.S. Fund

During the three months ended September 30, 2020, Multifamily Partners AC LP (the "U.S. Fund"), a private discretionary real estate investment vehicle in which the Company holds an equity interest of 28.6%, sold Avalon at Venice on Rose containing 70 apartment homes and 9,000 square feet of commercial space, for a sales price of $65,000,000.

Liquidity and Capital Markets

At September 30, 2020, the Company did not have any borrowings outstanding under its $1,750,000,000 unsecured credit facility, and had $182,400,000 in unrestricted cash and cash in escrow.

The Company’s annualized Net Debt-to-Core EBITDAre (as defined in this release) for the third quarter of 2020 was 5.4 times and Unencumbered NOI (as defined in this release) was 94%.

During the three months ended September 30, 2020, the Company repaid $67,904,000 principal amount of 4.18% fixed rate debt secured by Avalon Hoboken at par in advance of its December 2020 maturity date.

During the nine months ended September 30, 2020, in addition to the debt repayment discussed above, the Company had the following debt activity:

•In public offerings under its existing shelf registration statement, the Company issued (i) $700,000,000 principal amount of unsecured notes for net proceeds of $694,701,000, maturing in March 2030 and with a 2.30% coupon and an effective interest rate of 2.68%, including the impact of an interest rate hedge and offering costs and (ii) $600,000,000 principal amount of unsecured notes for net proceeds of $593,430,000, maturing in January 2031 with a 2.45% coupon and an effective interest rate of 2.65%, including the impact of an interest rate hedge and offering costs.

•The Company borrowed $51,000,000 under a mortgage note with a maturity date of March 2027 and a contractual interest rate of 2.38%, in conjunction with the refinancing of $50,616,000 of secured indebtedness that had a contractual interest rate of 3.08%.

•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 composed of prepayment penalties and the non-cash write-off of unamortized deferred financing costs.

•The Company repaid $300,000,000 principal amount of its variable rate unsecured notes at par in advance of the January 2021 scheduled maturity.

Stock Repurchase Program

In July 2020, the Company’s Board of Directors approved a new stock repurchase program under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000. This authority may be exercised from time to time in the Company’s discretion and in such amounts as market conditions warrant. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The stock repurchase program does not have an expiration date and may be suspended or terminated at any time without prior notice. The Company intends that funds used for the stock repurchase program will be matched over time with the proceeds from sales of existing apartment communities and in some cases with newly issued debt, but initially may be funded from existing cash balances, retained cash flow and/or the Company's line of credit.

Under this program, through the date of this release, the Company repurchased 1,131,919 shares of common stock at an average price of $150.11 per share. Of these amounts, 912,733 shares of common stock at an average price of $150.58 per share were repurchased during the three months ended September 30, 2020.

Other Matters

The Company will hold a conference call on October 29, 2020 at 1:00 PM ET to review and answer questions about this release, its third quarter 2020 results, the Attachments (described below) and related matters. To participate on the call, dial 888-204-4368 and use conference id: 1933937.

To hear a replay of the call, which will be available from October 29, 2020 at 6:00 PM ET to November 5, 2020 at 6:00 PM ET, dial 888-203-1112 and use conference id: 1933937. A webcast of the conference call will also be available at http://www.avalonbay.com/earnings, and an on-line playback of the webcast will be available for at least seven days following the call.

The Company produces Earnings Release Attachments (the "Attachments") that provide detailed information regarding operating, development, redevelopment,

disposition and acquisition activity. These Attachments are considered a part of this earnings release and are available in full with this earnings release via the Company's website at http://www.avalonbay.com/earnings. To receive future press releases via e-mail, please submit a request through http://investors.avalonbay.com/email_notification.

In addition to the Attachments, the Company is providing a teleconference presentation that will be available on the Company's website at http://www.avalonbay.com/earnings subsequent to this release and before the market opens on October 29, 2020.

About AvalonBay Communities, Inc.

As of September 30, 2020, the Company owned or held a direct or indirect ownership interest in 294 apartment communities containing 86,676 apartment homes in 11 states and the District of Columbia, of which 19 communities were under development and one community was under redevelopment. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas 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 consisting of Southeast Florida and Denver, Colorado (the "Expansion Markets"). More information may be found on the Company’s website at http://www.avalonbay.com. For additional information, please contact Jason Reilley, Vice President of Investor Relations, at 703-317-4681.

Forward-Looking Statements

This release, including its Attachments, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which you can identify by the Company’s use of words such as “expects,” “plans,” “estimates,” “anticipates,” “projects,” “intends,” “believes,” “outlook” and similar expressions that do not relate to historical matters, are based on the Company’s expectations, forecasts and assumptions at the time of this release, which may not be realized and involve risks and uncertainties that cannot be predicted accurately or that might not be anticipated. These could cause actual results to differ materially from those expressed or implied by the forward-looking statements. Risks and uncertainties that might cause such differences include those related to the COVID-19 pandemic, about which there are many uncertainties, including (i) the duration and severity of the

pandemic and (ii) the effect on the multifamily industry and the general economy of measures taken by businesses and the government to prevent the spread of the novel coronavirus and relieve economic distress of consumers, such as governmental limitations on the ability of multifamily owners to evict residents who are delinquent in the payment of their rent. Due to this uncertainty we are not able at this time to estimate the effect of these factors on our business, but the adverse impact of the pandemic on our business, results of operations, cash flows and financial condition could be material. In addition, the effects of the pandemic are likely to heighten the following risks, which we routinely face in our business: we may abandon development or redevelopment opportunities for which we have already incurred costs; adverse capital and credit market conditions may affect our access to various sources of capital and/or cost of capital, which may affect our business activities, earnings and common stock price, among other things; changes in local employment conditions, demand for apartment homes, supply of competitive housing products, landlord-tenant laws, including the adoption of new rent control regulations, and other economic or regulatory conditions may result in lower than expected occupancy and/or rental rates and adversely affect the profitability of our communities; delays in completing development, redevelopment and/or lease-up may result in increased financing and construction costs and may delay and/or reduce the profitability of a community; debt and/or equity financing for development, redevelopment or acquisitions of communities may not be available or may not be available on favorable terms; we may be unable to obtain, or experience delays in obtaining, necessary governmental permits and authorizations; expenses may result in communities that we develop or redevelop failing to achieve expected profitability; our assumptions concerning risks relating to our lack of control of joint ventures and our abilities to successfully dispose of certain assets may not be realized; our assumptions and expectations in our financial outlook may prove to be too optimistic; and the timing and net proceeds of condominium sales may not equal our current expectations. Additional discussions of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements (and which risks may also be heightened because of the COVID-19 pandemic) appear in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 under the heading “Risk Factors” and under the heading “Management’s Discussion and Analysis of Financial 2019 and Results of Operations - Forward-Looking Statements” and in subsequent quarterly reports on Form 10-Q.

The Company does not undertake a duty to update forward-looking statements. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community. The format and extent of future outlooks may be different from the format and extent of the information contained in this release.

Definitions and Reconciliations

Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined, reconciled and further explained on Attachment 13, Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms. Attachment 13 is included in the full earnings release available at the Company’s website at http://www.avalonbay.com/earnings.

THIRD QUARTER 2020

Supplemental Operating and Financial Data

Table of Contents


Company Profile
Condensed Consolidated Operating Information...........................................................................................................						Attachment 1
Condensed Consolidated Balance Sheets....................................................................................................................						Attachment 2
Sequential Operating Information by Business Segment..............................................................................................						Attachment 3

Market Profile - Established Communities
Quarterly Rental Revenue and Occupancy Changes....................................................................................................						Attachment 4
Sequential Quarterly Rental Revenue and Occupancy Changes..................................................................................						Attachment 5
Year to Date Rental Revenue and Occupancy Changes...............................................................................................						Attachment 6
Operating Expenses ("Opex")........................................................................................................................................						Attachment 7

Development, Joint Venture and Debt Profile
Expensed Community Maintenance Costs and Capitalized Community Expenditures.................................................						Attachment 8
Development Communities............................................................................................................................................						Attachment 9
Future Development......................................................................................................................................................						Attachment 10
Unconsolidated Real Estate Investments......................................................................................................................						Attachment 11
Debt Structure and Select Debt Metrics.........................................................................................................................						Attachment 12





Definitions and Reconciliations
Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms...................................................						Attachment 13

The following is a "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The projections and estimates contained in the following attachments, including but not limited to Attachments 9, 10, 11 and 13 and contain forward-looking statements that involve risks and uncertainties, and actual results may differ materially from those projected in such statements. Risks associated with the Company's development, redevelopment, construction, and lease-up activities which could impact the forward-looking statements are discussed in the paragraph titled "Forward-Looking Statements" in the release that accompanies, and should be read in conjunction with, these attachments. These and other risks are also described in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and the Company's Quarterly Reports on Form 10-Q for subsequent quarters, and could cause actual results to differ materially from such projections and estimates.

Attachment 1

AvalonBay Communities, Inc.

Condensed Consolidated Operating Information

September 30, 2020

(Dollars in thousands except per share data)

(unaudited)


	Q3		Q3				YTD		YTD
	2020		2019		% Change		2020		2019		% Change
Revenue:
Rental and other income	$	566,387	$	586,382	(3.4)	%	$	1,742,509	$	1,727,576	0.9	%
Management, development and other fees	1,017		1,231		(17.4)	%	2,950		3,484		(15.3)	%
Total	567,404		587,613		(3.4)	%	1,745,459		1,731,060		0.8	%
Operating expenses:
Direct property operating expenses, excluding property taxes	119,064		112,003		6.3	%	333,998		323,368		3.3	%
Property taxes	68,934		64,374		7.1	%	202,973		187,890		8.0	%
Property management and other indirect operating expenses	24,845		21,442		15.9	%	72,993		66,457		9.8	%
Total operating expenses	212,843		197,819		7.6	%	609,964		577,715		5.6	%

Interest expense, net	(53,249)		(51,493)		3.4	%	(162,562)		(149,395)		8.8	%
Gain (loss) on extinguishment of debt, net	105		(93)		N/A		(9,333)		(602)		1,450.3	%
General and administrative expense (1)	(13,985)		(12,769)		9.5	%	(46,878)		(45,440)		3.2	%
Joint venture income	5,083		1,643		209.4	%	6,770		780		767.9	%
Expensed transaction, development and other pursuit costs, net of recoveries	(567)		(175)		224.0	%	(4,289)		(2,562)		67.4	%
Depreciation expense	(175,348)		(165,463)		6.0	%	(529,508)		(490,213)		8.0	%
Gain on sale of communities	31,607		130,484		(75.8)	%	91,338		165,849		(44.9)	%
Gain on other real estate transactions	129		73		76.7	%	328		374		(12.3)	%
Gain on for-sale condominiums, net of marketing and administrative costs (2)	(646)		(1,108)		(41.7)	%	4,162		(2,526)		N/A
Income before income taxes	147,690		290,893		(49.2)	%	485,523		629,610		(22.9)	%

Income tax benefit (expense) (3)	27		(11,184)		N/A		1,069		(11,178)		N/A
Net income	147,717		279,709		(47.2)	%	486,592		618,432		(21.3)	%

Net income attributable to noncontrolling interests	(14)		(32)		(56.3)	%	(90)		(108)		(16.7)	%
Net income attributable to common stockholders	$	147,703	$	279,677	(47.2)	%	$	486,502	$	618,324	(21.3)	%

Net income attributable to common stockholders per common share - basic	$	1.05	$	2.00	(47.5)	%	$	3.46	$	4.44	(22.1)	%
Net income attributable to common stockholders per common share - diluted	$	1.05	$	2.00	(47.5)	%	$	3.46	$	4.43	(21.9)	%

FFO (3)	$	285,456	$	314,877	(9.3)	%	$	917,534	$	947,758	(3.2)	%
Per common share - diluted	$	2.03	$	2.25	(9.8)	%	$	6.52	$	6.80	(4.1)	%

Core FFO (3)	$	289,814	$	326,903	(11.3)	%	$	938,830	$	963,301	(2.5)	%
Per common share - diluted	$	2.06	$	2.34	(12.0)	%	$	6.67	$	6.91	(3.5)	%

Dividends declared - common	$	222,691	$	212,526	4.8	%	$	670,939	$	637,241	5.3	%
Per common share	$	1.59	$	1.52	4.6	%	$	4.77	$	4.56	4.6	%

Average shares and participating securities outstanding - basic	140,597,502		139,691,534		0.6	%	140,701,463		139,304,905		1.0	%
Average shares outstanding - diluted	140,603,722		139,852,674		0.5	%	140,702,803		139,438,064		0.9	%
Total outstanding common shares and operating partnership units	139,836,185		139,667,799		0.1	%	139,836,185		139,667,799		0.1	%


(1)			Amounts include severance related costs and legal settlement proceeds as detailed in Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms, table 3.
(2)			Amounts for the three and nine months ended September 30, 2020 include gains on for-sale condominiums in addition to marketing and administrative costs. For additional detail, see Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms, table 3.
(3)			For additional detail, see Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms, table 3.

Attachment 2

AvalonBay Communities, Inc.

Condensed Consolidated Balance Sheets

September 30, 2020

(Dollars in thousands)

(unaudited)



	September 30		December 31,
	2020		2019

Real estate	$	22,399,495	$	21,796,900
Less accumulated depreciation	(5,644,219)		(5,164,398)

Net operating real estate	16,755,276		16,632,502
Construction in progress, including land	1,200,502		1,303,751
Land held for development	43,494		—
For-sale condominium inventory (1)	298,429		457,809
Real estate assets held for sale, net	—		38,927

Total real estate, net	18,297,701		18,432,989

Cash and cash equivalents	87,530		39,687
Cash in escrow	94,870		87,927
Resident security deposits	31,949		34,224
Investments in unconsolidated real estate entities	194,317		165,806
Other assets (2)	438,244		360,418

Total assets	$	19,144,611	$	19,121,051

Unsecured notes, net	$	6,700,250	$	6,358,648
Unsecured credit facility	—		—
Notes payable, net	863,396		937,642
Resident security deposits	57,683		61,752
Other liabilities	850,447		769,559
Total liabilities	8,471,776		8,127,601

Redeemable noncontrolling interests	2,593		3,252
Equity	10,670,242		10,990,198

Total liabilities and equity	$	19,144,611	$	19,121,051



(1)			Consists of the aggregate carrying value of the unsold for-sale residential condominiums of The Park Loggia.
(2)			Includes residential and commercial rent receivables, net of reserves, of $19,458,000 and $11,594,000 at September 30, 2020 and December 31, 2019, respectively. Of this amount at September 30, 2020, the Company had receivables under payment plans, net of reserves, of $4,848,000.

Attachment 3

AvalonBay Communities, Inc.

Sequential Operating Information by Business Segment (1)

September 30, 2020

(Dollars in thousands, except per home data)

(unaudited)


	Total	Quarter Ended			Quarter Ended			Quarter Ended			Quarter Ended
	Apartment	September			June			March			December
	Homes	30, 2020			30, 2020			31, 2020			31, 2019
RENTAL REVENUE (2)
Established	69,477	$	508,163		$	519,336		$	543,827		$	541,777
Other Stabilized (3)	5,397	34,463			34,481			35,114			32,164
Development/Redevelopment	7,880	21,271			18,954			18,084			12,953
Total Consolidated Communities	82,754	$	563,897		$	572,771		$	597,025		$	586,894

OPERATING EXPENSE
Established		$	165,616		$	154,083		$	155,101		$	152,292
Other Stabilized (3)		12,255			11,565			11,988			9,938
Development/Redevelopment		9,398			7,317			7,060			5,150
Total Consolidated Communities		$	187,269		$	172,965		$	174,149		$	167,380

NOI (4)
Established		$	342,942		$	365,792		$	389,168		$	390,093
Other Stabilized (3)		22,834			23,108			23,496			22,724
Development/Redevelopment		11,902			11,676			11,048			7,804
Total Consolidated Communities		$	377,678		$	400,576		$	423,712		$	420,621

AVERAGE REVENUE PER OCCUPIED HOME (5)
Established		$	2,620		$	2,628		$	2,708		$	2,707
Other Stabilized (3)		$	2,264		$	2,268		$	2,286		$	2,280

ECONOMIC OCCUPANCY (5)
Established		93.1		%	94.8		%	96.4		%	96.0		%
Other Stabilized (3)		93.7		%	93.6		%	94.6		%	94.5		%

ESTABLISHED COMMUNITIES TURNOVER (6)
Current year period / Prior year period		69.7% / 65.4%			53.8% / 56.4%			39.6% / 41.4%			40.5% / 42.4%
Current year period YTD / Prior year period YTD		54.4% / 54.5%									51.0% / 52.1%


(1)			Includes consolidated communities and excludes amounts related to communities that have been sold or that are classified as held for sale.
(2)			Rental revenue excludes non-qualified REIT income and business interruption insurance proceeds.
(3)			Results for these communities for quarters prior to January 1, 2020 may reflect community operations prior to stabilization, including periods of lease-up, such that occupancy levels are below what would be considered stabilized.
(4)			See Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
(5)			For per home rent projections and Economic Occupancy for Development Communities currently under construction, see Attachment 9 - Development Communities.
(6)			Turnover represents the annualized number of units turned over during the period, divided by the total number of apartment homes for Established Communities for the respective reporting period.



ESTABLISHED COMMUNITIES LIKE-TERM RENT CHANGE
	Q3 2020
	Like-Term Lease Rent Change (4)	Like-Term Effective Rent Change (4)
New England	(1.0)%	(2.8)%
Metro NY/NJ	(2.7)%	(6.0)%
Mid-Atlantic	(1.9)%	(3.3)%
Pacific NW	(3.0)%	(5.0)%
No. California	(7.4)%	(12.3)%
So. California	(2.7)%	(3.9)%
Expansion Markets	(1.0)%	(1.9)%
Total	(3.3)%	(5.8)%

Attachment 4

AvalonBay Communities, Inc.

Quarterly Rental Revenue and Occupancy Changes - Established Communities (1)

September 30, 2020

(unaudited)


	Apartment Homes	Average Rental Rates (2)						Economic Occupancy						Rental Revenue ($000s)
																					% change excl. commercial (3)
		Q3 20		Q3 19		% Change		Q3 20		Q3 19		% Change		Q3 20		Q3 19		% Change
New England
Boston, MA	8,641	$	2,821	$	2,878	(2.0)	%	92.5	%	95.9	%	(3.4)	%	$	67,616	$	71,464	(5.4)	%			(5.3)	%
Fairfield, CT	1,414	2,546		2,607		(2.3)	%	96.9	%	94.9	%	2.0	%	10,464		10,498		(0.3)	%			(0.1)	%
New England	10,055	2,782		2,838		(2.0)	%	93.0	%	95.7	%	(2.7)	%	78,080		81,962		(4.7)	%			(4.6)	%

Metro NY/NJ
New York City, NY	3,788	3,731		3,806		(2.0)	%	89.2	%	96.1	%	(6.9)	%	37,842		41,561		(8.9)	%			(9.0)	%
New York - Suburban	3,970	3,055		3,210		(4.8)	%	95.1	%	95.8	%	(0.7)	%	34,619		36,632		(5.5)	%			(5.5)	%
New Jersey	5,401	2,593		2,674		(3.0)	%	95.1	%	96.0	%	(0.9)	%	39,964		41,601		(3.9)	%			(3.9)	%
Metro NY/NJ	13,159	3,059		3,162		(3.3)	%	93.1	%	96.0	%	(2.9)	%	112,425		119,794		(6.2)	%			(6.1)	%

Mid-Atlantic
Washington Metro	11,932	2,317		2,347		(1.3)	%	91.5	%	96.1	%	(4.6)	%	75,862		80,645		(5.9)	%			(5.7)	%
Baltimore, MD	1,562	1,801		1,774		1.5	%	96.0	%	97.4	%	(1.4)	%	8,100		8,089		0.1	%			0.1	%
Mid-Atlantic	13,494	2,257		2,281		(1.1)	%	91.9	%	96.2	%	(4.3)	%	83,962		88,734		(5.4)	%			(5.1)	%

Pacific Northwest	4,116	2,329		2,404		(3.1)	%	94.0	%	95.9	%	(1.9)	%	27,046		28,481		(5.0)	%			(4.2)	%

Northern California
San Jose, CA	3,840	3,143		3,216		(2.3)	%	92.1	%	96.1	%	(4.0)	%	33,338		35,596		(6.3)	%			(6.2)	%
Oakland-East Bay, CA	3,847	2,534		2,621		(3.3)	%	94.7	%	96.0	%	(1.3)	%	27,706		29,035		(4.6)	%			(4.4)	%
San Francisco, CA	3,675	3,501		3,635		(3.7)	%	88.3	%	96.0	%	(7.7)	%	34,068		38,461		(11.4)	%			(11.7)	%
Northern California	11,362	3,052		3,150		(3.1)	%	91.4	%	96.0	%	(4.6)	%	95,112		103,092		(7.7)	%			(7.7)	%

Southern California
Los Angeles, CA	11,492	2,302		2,492		(7.6)	%	95.1	%	95.3	%	(0.2)	%	75,483		81,885		(7.8)	%			(6.9)	%
Orange County, CA	2,821	2,186		2,235		(2.2)	%	95.3	%	95.3	%	0.0	%	17,625		18,023		(2.2)	%			(2.2)	%
San Diego, CA	2,066	2,154		2,209		(2.5)	%	95.9	%	96.0	%	(0.1)	%	12,797		13,145		(2.6)	%			(2.7)	%
Southern California	16,379	2,264		2,412		(6.1)	%	95.2	%	95.4	%	(0.2)	%	105,905		113,053		(6.3)	%			(5.6)	%

Expansion Markets	912	2,206		2,268		(2.7)	%	93.3	%	93.9	%	(0.6)	%	5,633		5,826		(3.3)	%			(3.4)	%

Total Established	69,477	$	2,620	$	2,711	(3.4)	%	93.1	%	95.8	%	(2.7)	%	$	508,163	$	540,942	(6.1)	%	(4)		(5.8)	%

(1) Established Communities are communities with Stabilized Operations as of January 1, 2019 such that a comparison of Q3 2019 to Q3 2020 is meaningful.

(2) Reflects the effect of residential concessions amortized over the average lease term.

(3) Represents the change in rental revenue if the Company were to exclude rental revenue from commercial activities.

(4) With residential concessions reflected on a cash basis, rental revenue from Established Communities decreased 7.9% from Q3 2019 to Q3 2020. See Attachment 13, table 8, for additional detail and a reconciliation.

Attachment 5

AvalonBay Communities, Inc.

Sequential Quarterly Rental Revenue and Occupancy Changes - Established Communities (1)

September 30, 2020

(unaudited)


	Apartment Homes	Average Rental Rates (2)						Economic Occupancy						Rental Revenue ($000s)
																				% change excl. commercial (3)
		Q3 20		Q2 20		% Change		Q3 20		Q2 20		% Change		Q3 20		Q2 20		% Change
New England
Boston, MA	8,641	$	2,821	$	2,849	(1.0)	%	92.5	%	94.2	%	(1.7)	%	$	67,616	$	69,488	(2.7)	%		(2.7)	%
Fairfield, CT	1,414	2,546		2,522		1.0	%	96.9	%	96.4	%	0.5	%	10,464		10,314		1.5	%		1.3	%
New England	10,055	2,782		2,801		(0.7)	%	93.0	%	94.5	%	(1.5)	%	78,080		79,802		(2.2)	%		(2.2)	%

Metro NY/NJ
New York City, NY	3,788	3,731		3,632		2.7	%	89.2	%	93.5	%	(4.3)	%	37,842		38,443		(1.6)	%		(4.8)	%
New York - Suburban	3,970	3,055		3,028		0.9	%	95.1	%	95.4	%	(0.3)	%	34,619		34,401		0.6	%		0.6	%
New Jersey	5,401	2,593		2,564		1.1	%	95.1	%	95.4	%	(0.3)	%	39,964		39,630		0.8	%		0.8	%
Metro NY/NJ	13,159	3,059		3,010		1.6	%	93.1	%	94.7	%	(1.6)	%	112,425		112,474		0.0	%		(1.2)	%

Mid-Atlantic
Washington Metro	11,932	2,317		2,298		0.8	%	91.5	%	94.5	%	(3.0)	%	75,862		77,602		(2.2)	%		(2.6)	%
Baltimore, MD	1,562	1,801		1,776		1.4	%	96.0	%	95.7	%	0.3	%	8,100		7,963		1.7	%		1.7	%
Mid-Atlantic	13,494	2,257		2,234		1.0	%	91.9	%	94.6	%	(2.7)	%	83,962		85,565		(1.9)	%		(2.2)	%

Pacific Northwest	4,116	2,329		2,338		(0.4)	%	94.0	%	95.5	%	(1.5)	%	27,046		27,570		(1.9)	%		(2.3)	%

Northern California
San Jose, CA	3,840	3,143		3,187		(1.4)	%	92.1	%	95.6	%	(3.5)	%	33,338		35,041		(4.9)	%		(5.0)	%
Oakland-East Bay, CA	3,847	2,534		2,563		(1.1)	%	94.7	%	95.9	%	(1.2)	%	27,706		28,352		(2.3)	%		(2.7)	%
San Francisco, CA	3,675	3,501		3,630		(3.6)	%	88.3	%	94.4	%	(6.1)	%	34,068		37,722		(9.7)	%		(9.6)	%
Northern California	11,362	3,052		3,115		(2.0)	%	91.4	%	95.2	%	(3.8)	%	95,112		101,115		(5.9)	%		(6.0)	%

Southern California
Los Angeles, CA	11,492	2,302		2,335		(1.4)	%	95.1	%	94.7	%	0.4	%	75,483		76,223		(1.0)	%		(1.5)	%
Orange County, CA	2,821	2,186		2,207		(1.0)	%	95.3	%	95.6	%	(0.3)	%	17,625		17,851		(1.3)	%		(1.2)	%
San Diego, CA	2,066	2,154		2,189		(1.6)	%	95.9	%	94.9	%	1.0	%	12,797		12,879		(0.6)	%		(0.7)	%
Southern California	16,379	2,264		2,295		(1.4)	%	95.2	%	94.8	%	0.4	%	105,905		106,953		(1.0)	%		(1.4)	%

Expansion Markets	912	2,206		2,308		(4.4)	%	93.3	%	92.7	%	0.6	%	5,633		5,857		(3.8)	%		(4.0)	%

Total Established	69,477	$	2,620	$	2,632	(0.5)	%	93.1	%	94.8	%	(1.7)	%	$	508,163	$	519,336	(2.2)	%		(2.6)	%

(1) Established Communities are communities with Stabilized Operations as of January 1, 2019.

(2) Reflects the effect of residential concessions amortized over the average lease term.

(3) Represents the change in rental revenue if the Company were to exclude rental revenue from commercial activities.

Attachment 6

AvalonBay Communities, Inc.

Year to Date Rental Revenue and Occupancy Changes - Established Communities (1)

September 30, 2020

(unaudited)


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

		Year to Date 2020		Year to Date 2019		% Change		Year to Date 2020		Year to Date 2019		% Change		Year to Date 2020		Year to Date 2019		% Change			% change excl. commercial (3)
New England
Boston, MA	8,641	$	2,850	$	2,821	1.0	%	94.0	%	95.3	%	(1.3)	%	$	208,290	$	208,980	(0.3)	%			(0.2)	%
Fairfield, CT	1,414	2,550		2,574		(0.9)	%	96.5	%	95.7	%	0.8	%	31,333		31,351		(0.1)	%			0.2	%
New England	10,055	2,808		2,785		0.8	%	94.3	%	95.4	%	(1.1)	%	239,623		240,331		(0.3)	%			(0.2)	%

Metro NY/NJ
New York City, NY	3,788	3,728		3,776		(1.3)	%	92.9	%	95.8	%	(2.9)	%	118,067		123,217		(4.2)	%			(3.0)	%
New York - Suburban	3,970	3,084		3,174		(2.8)	%	95.4	%	95.9	%	(0.5)	%	105,163		108,752		(3.3)	%			(3.3)	%
New Jersey	5,401	2,598		2,634		(1.4)	%	95.8	%	96.5	%	(0.7)	%	120,961		123,505		(2.1)	%			(2.0)	%
Metro NY/NJ	13,159	3,070		3,125		(1.8)	%	94.7	%	96.1	%	(1.4)	%	344,191		355,474		(3.2)	%			(2.7)	%

Mid-Atlantic
Washington Metro	11,932	2,322		2,310		0.5	%	94.1	%	96.2	%	(2.1)	%	234,667		238,519		(1.6)	%			(1.3)	%
Baltimore, MD	1,562	1,791		1,754		2.1	%	96.0	%	96.9	%	(0.9)	%	24,163		23,889		1.1	%			1.2	%
Mid-Atlantic	13,494	2,260		2,248		0.5	%	94.3	%	96.2	%	(1.9)	%	258,830		262,408		(1.4)	%			(1.1)	%

Pacific Northwest	4,116	2,351		2,367		(0.7)	%	95.6	%	96.2	%	(0.6)	%	83,224		84,287		(1.3)	%			(0.5)	%

Northern California
San Jose, CA	3,840	3,180		3,171		0.3	%	94.8	%	96.4	%	(1.6)	%	104,238		105,595		(1.3)	%			(1.1)	%
Oakland-East Bay, CA	3,847	2,568		2,600		(1.2)	%	95.9	%	96.2	%	(0.3)	%	85,281		86,554		(1.5)	%			(1.2)	%
San Francisco, CA	3,675	3,595		3,605		(0.3)	%	93.3	%	96.0	%	(2.7)	%	110,935		114,416		(3.0)	%			(3.1)	%
Northern California	11,362	3,107		3,118		(0.4)	%	94.6	%	96.2	%	(1.6)	%	300,454		306,565		(2.0)	%			(1.9)	%

Southern California
Los Angeles, CA	11,492	2,380		2,471		(3.7)	%	95.4	%	95.5	%	(0.1)	%	234,761		244,123		(3.8)	%			(3.1)	%
Orange County, CA	2,821	2,210		2,211		0.0	%	95.7	%	96.1	%	(0.4)	%	53,721		53,959		(0.4)	%			(0.2)	%
San Diego, CA	2,066	2,188		2,192		(0.2)	%	96.1	%	95.6	%	0.5	%	39,098		38,975		0.3	%			0.3	%
Southern California	16,379	2,327		2,391		(2.7)	%	95.5	%	95.6	%	(0.1)	%	327,580		337,057		(2.8)	%			(2.2)	%

Expansion Markets	912	2,273		2,268		0.2	%	93.4	%	94.6	%	(1.2)	%	17,423		17,607		(1.0)	%			(1.1)	%

Total Established	69,477	$	2,652	$	2,674	(0.8)	%	94.7	%	95.9	%	(1.2)	%	$	1,571,325	$	1,603,729	(2.0)	%	(4)		(1.7)	%

(1) Established Communities are communities with Stabilized Operations as of January 1, 2019 such that a comparison of year to date 2019 to year to date 2020 is meaningful.

(2) Reflects the effect of residential concessions amortized over the average lease term.

(3) Represents the change in rental revenue if the Company were to exclude rental revenue from commercial activities.

(4) With residential concessions reflected on a cash basis, rental revenue from Established Communities decreased 3.3% from YTD 2019 to YTD 2020. See Attachment 13, table 8, for additional detail and a reconciliation.

Attachment 7

AvalonBay Communities, Inc.

Operating Expenses ("Opex") - Established Communities (1)

September 30, 2020

(Dollars in thousands)

(unaudited)


	Q3 2020		Q3 2019		% Change		Q3 2020 % of Total Opex		Year to Date 2020		Year to Date 2019		% Change		Year to Date 2020 % of Total Opex

Property taxes (2)	$	60,499	$	59,001	2.5	%	36.5	%	$	178,979	$	172,170	4.0	%	37.7	%
Payroll (3)	34,780		34,624		0.5	%	21.0	%	104,899		104,403		0.5	%	22.1	%
Repairs & maintenance (4)	30,424		28,472		6.9	%	18.4	%	79,752		79,569		0.2	%	16.8	%
Utilities (5)	16,484		14,986		10.0	%	10.0	%	44,077		43,681		0.9	%	9.3	%
Office operations (6)	13,087		12,056		8.6	%	7.9	%	38,579		36,393		6.0	%	8.1	%
Insurance	6,358		6,415		(0.9)	%	3.8	%	18,718		19,008		(1.5)	%	3.9	%
Marketing (7)	3,984		4,530		(12.1)	%	2.4	%	9,795		10,894		(10.1)	%	2.1	%
Total Established Communities Operating Expenses	$	165,616	$	160,084	3.5	%	100.0	%	$	474,799	$	466,118	1.9	%	100.0	%



(1)			Operating expenses for Established Communities exclude indirect costs for corporate-level property management and other support-related expenses.
(2)			Property taxes increased for the three and nine months ended September 30, 2020 over the prior year periods primarily due to increased assessments and rates across the portfolio, led by the Mid-Atlantic and New England. The increase for the nine months ended September 30, 2020 is also due to successful appeals in the prior year period in excess of those in the current year period.
(3)			Payroll costs increased for the three and nine months ended September 30, 2020 over the prior year periods primarily due to increased benefit costs and merit increases in associate compensation, partially offset by decreased incentive compensation and a reduction in the number of on-site leasing and management associates.
(4)			Repairs and maintenance increased for the three months ended September 30, 2020 over the prior year period primarily due to the increased turn costs and an increase in COVID-19 related costs for personal protective equipment and cleaning. COVID-19 related costs for the three and nine months ended September 30, 2020 were $591 and $2,176, respectively.
(5)			Utilities represents aggregate utility costs, net of resident reimbursements. The increases for the three and nine months ended September 30, 2020 over the prior year periods are primarily due to increased water and sewer and trash removal costs. The increase for the three months ended September 30, 2020 is also due to increased electric and gas consumption. The increase for the nine months ended September 30, 2020 is partially offset by decreases in gas and electric consumption due to warmer weather and closed amenities.
(6)			Office operations includes administrative costs, land lease expense and association and license fees. The increases for the three and nine months ended September 30, 2020 over the prior year periods are primarily due to increased bad debt expense associated with amounts due from residents for utility reimbursements, damage receipts and other related items.
(7)			Marketing costs decreased for the three and nine months ended September 30, 2020 from the prior year periods primarily due to decreased resident events and other incentives due to COVID-19, partially offset by increased internet advertising costs. The decrease for the nine months ended September 30, 2020 is also due to decreased call center costs related to centralized lead management initiatives.

Attachment 8

AvalonBay Communities, Inc.

Expensed Community Maintenance Costs and Capitalized Community Expenditures

September 30, 2020

(Dollars in thousands except per home data)

(unaudited)



		YTD 2020 Maintenance Expensed Per Home						Categorization of YTD 2020 Additional Capitalized Value (2)
Current Communities	Apartment Homes (1)	Carpet Replacement		Other Maintenance (3)		Total		Acquisitions, Construction, Redevelopment & Dispositions (4)			NOI Enhancing (5)(6)		Asset Preservation		YTD 2020 Additional Capitalized Value		NOI Enhancing Per Home (6)		Asset Preservation Per Home

Established Communities	69,477	$	98	$	1,802	$	1,900	$	16,648	(7)	$	18,922	$	53,320	$	88,890	$	272	$	767
Other Stabilized Communities	5,397	59		1,663		1,722		5,514		(8)	1,781		855		8,150		$	330	$	158
Development/Redevelopment Communities (9)	7,880	12		620		632		375,052			—		—		375,052		—		—
Dispositions (10)	—	—		—		—		(197,948)			—		—		(197,948)		—		—
Total	82,754	$	88	$	1,681	$	1,769	$	199,266		$	20,703	$	54,175	$	274,144	N/A		N/A


(1)						Includes consolidated communities and excludes communities that have been sold or that are classified as held for sale.
(2)						Policy is to capitalize expenditures for the acquisition or development of new assets or expenditures that extend the life of existing assets that will benefit the Company for periods greater than a year. Amounts presented exclude land activity, except to the extent reflected as a component of construction in progress for Development/Redevelopment Communities. Construction and redevelopment activity for Development/Redevelopment Communities include additions for land while under construction/redevelopment and reductions for land once placed in service and reflect a net reduction for the nine months ended September 30, 2020 of $105,600.
(3)						Other maintenance includes maintenance, landscaping and redecorating costs, as well as maintenance related payroll expense.
(4)						Includes the write-off of impaired assets and additional capitalized spend related to recognized casualty losses, if applicable.
(5)						Includes $172 in rebates received during the nine months ended September 30, 2020, primarily related to NOI Enhancing Capex incurred during prior years.
(6)						This Attachment excludes capitalized expenditures for the commercial component of communities, which the Company classifies as NOI Enhancing. Established Communities and Other Stabilized Communities exclude $1,586 and $7, respectively, related to commercial space.
(7)						Consists primarily of redevelopment spend at communities maintaining stabilized occupancy during the redevelopment.
(8)						Represents acquired communities, including those from joint venture partners, coupled with commitment close-outs and construction true-ups on recently constructed communities.
(9)						Includes communities that were under construction/reconstruction during the period, including communities where construction/reconstruction has been completed.
(10)						Includes the sale of condominiums at The Park Loggia.



Other Capitalized Costs
	Interest		Overhead
Q4 2019	$	12,664	$	11,250
Q1 2020	$	11,498	$	13,433
Q2 2020	$	11,019	$	11,050
Q3 2020	$	11,221	$	10,459

Attachment 9

AvalonBay Communities, Inc.

Development Communities as of September 30, 2020

(unaudited)



Community Information			Number	Total		Schedule						%		%		%			%
			of	Capital					Full Qtr	Avg Rent		Complete		Leased		Occupied			Economic
			Apt	Cost			Initial		Stabilized	Per									Occ.
Development Name		Location	Homes	(millions)		Start	Occupancy	Complete	Ops	Home		As of October 13, 2020							Q3 '20

	Communities Under Construction:
1.	Avalon Yonkers	Yonkers, NY	590	$	196	Q4 2017	Q3 2019	Q2 2021	Q4 2021	$	2,885	56	%	58	%		49	%	41	%
2.	AVA Hollywood (1)	Hollywood, CA	695	375		Q4 2016	Q4 2019	Q1 2021	Q3 2021	3,215		72	%	51	%		47	%	34	%
3.	Avalon Towson	Towson, MD	371	114		Q4 2017	Q1 2020	Q4 2020	Q3 2021	1,980		77	%	41	%		37	%	22	%
4.	Avalon Walnut Creek II	Walnut Creek, CA	200	113		Q4 2017	Q3 2020	Q4 2020	Q2 2021	3,115		73	%	70	%		57	%	26	%
5.	Avalon Doral	Doral, FL	350	116		Q2 2018	Q3 2020	Q4 2020	Q3 2021	2,165		63	%	35	%		21	%	5	%
6.	Avalon Old Bridge	Old Bridge, NJ	252	72		Q3 2018	Q3 2020	Q2 2021	Q3 2021	2,565		34	%	42	%		31	%	8	%
7.	Avalon 555 President	Baltimore, MD	400	139		Q3 2018	Q3 2020	Q3 2021	Q4 2021	2,615		9	%	1	%		—		—
8.	Avalon Newcastle Commons II	Newcastle, WA	293	107		Q4 2018	Q4 2020	Q3 2021	Q1 2022	2,460		—		2	%		—		—
9.	Kanso Twinbrook	Rockville, MD	238	66		Q4 2018	Q4 2020	Q2 2021	Q4 2021	1,710		—		6	%		—		—
10.	Avalon Harrison (1)	Harrison, NY	143	77		Q4 2018	Q2 2021	Q2 2022	Q3 2022	3,780		—		—			—		—
11.	Avalon Brea Place	Brea, CA	653	290		Q2 2019	Q1 2021	Q2 2022	Q3 2022	2,785		—		—			—		—
12.	Avalon Foundry Row	Owings Mills, MD	437	100		Q2 2019	Q1 2021	Q1 2022	Q3 2022	1,805		—		—			—		—
13.	Avalon Marlborough II	Marlborough, MA	123	42		Q2 2019	Q3 2020	Q4 2020	Q1 2021	2,545		64	%	63	%		49	%	22	%
14.	Avalon Acton II	Acton, MA	86	32		Q4 2019	Q3 2020	Q1 2021	Q2 2021	2,700		34	%	43	%		20	%	1	%
15.	Avalon Woburn	Woburn, MA	350	121		Q4 2019	Q3 2021	Q2 2022	Q3 2022	2,610		—		—			—		—
16.	AVA RiNo	Denver, CO	246	87		Q4 2019	Q1 2022	Q2 2022	Q4 2022	2,230		—		—			—		—
17.	Avalon Monrovia	Monrovia, CA	154	68		Q4 2019	Q1 2021	Q3 2021	Q4 2021	3,010		—		—			—		—
	Total / Weighted Average Under Construction		5,581	$	2,115					$	2,595

	Communities Completed this Quarter:
1.	Avalon Public Market	Emeryville, CA	289	$	175	Q4 2016	Q3 2019	Q3 2020	Q1 2021	$	3,410	100	%	92	%		87	%	74	%
	Communities Completed Subtotal/Weighted Average		289	$	175					$	3,410

	Communities Completed Subtotal/Weighted Average		5,870	$2,290						$	2,635

	Total Weighted Average Projected NOI as a % of Total Capital Cost			5.6%

Asset Cost Basis (millions) (2):
	Total Capital Cost, under construction and completed			$	2,437
	Total Capital Cost, disbursed to date			(1,886)
	Total Capital Cost, remaining to invest			$	551


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

(2)			Includes the communities presented and an additional community with 274 apartment homes representing $147 million in Total Capital Costs which has completed construction but not yet achieved Stabilized Operations for the full quarter. Q3 2020 NOI for these communities was $3.4 million.

Attachment 10

AvalonBay Communities, Inc.

Future Development as of September 30, 2020

(unaudited)



DEVELOPMENT RIGHTS



		Estimated	Total Capital
	# of Rights	Number	Cost
		of Homes	(millions)

Development Rights as of 12/31/2019	27	9,587	$	4,217

Q1 & Q2 2020
Q1 & Q2 Additions	2	420	137
Q1 & Q2 Construction starts	—	—	—
Q1 & Q2 Adjustments to existing Development Rights	(1)	(221)	(152)
Development Rights as of 6/30/2020	28	9,786	$	4,202

Q3 2020
Q3 2020 Additions	—	—	—
Q3 2020 Construction starts	(1)	(475)	(278)
Q3 2020 Adjustments to existing Development Rights	—	9	(17)
Development Rights as of 9/30/2020	27	9,320	$	3,907

Current Development Rights by Region as of September 30, 2020

New England	3	394	$	156
Metro NY/NJ	13	5,371	2,225
Mid-Atlantic	—	—	—
Pacific Northwest	3	1,122	443
Northern California	4	1,198	666
Southern California	—	—	—
Southeast Florida	1	254	95
Denver, CO	3	981	322
	27	9,320	$	3,907

Current Development Rights by Classification as of September 30, 2020

Conventional	21	6,165	$	2,083
Asset Densification	4	1,745	860
Public-Private Partnership	2	1,410	964
	27	9,320	$	3,907

Attachment 11

AvalonBay Communities, Inc.

Unconsolidated Real Estate Investments

September 30, 2020

(Dollars in thousands)

(unaudited)



Operating Communities
					NOI (1)(2)				Disposition Gains and Other Activity (1)(3)				Debt
		AVB		Apartment	Q3		YTD		Q3		YTD					Interest
Venture	Communities	Ownership		Homes	2020		2020		2020		2020		Principal (1)			Rate (4)

NYTA MF Investors LLC	5	20.0	%	1,301	$	8,570	$	28,663	$	—	$	—	$	395,939			3.88	%
Archstone Multifamily Partners AC LP	3	28.6	%	671	3,137		10,602		18,416		18,416		121,071				3.65	%
Multifamily Partners AC JV LP	2	20.0	%	529	2,462		8,777		—		—		111,653		(5)		6.00	%
MVP I, LLC	1	25.0	%	313	2,016		7,764		—		—		103,000				3.24	%
Brandywine Apartments of Maryland, LLC	1	28.7	%	305	1,195		3,592		—		—		21,158				3.40	%
Total Unconsolidated Real Estate Investments	12			3,119	$	17,380	$	59,398	$	18,416	$	18,416	$	752,821			4.06	%



Development Communities
				Projected
					Total Capital								% Complete
		AVB		Apartment	Cost				Initial		Avg Rent		As of
Venture	Location	Ownership		Homes	(millions) (1)			Start	Occupancy	Complete	Per Home		October 13, 2020

Avalon Alderwood MF, LLC	Lynnwood, WA	50.0	%	328	$	110		Q4 2019	Q4 2021	Q2 2022	$	2,295	—	%
Arts District Joint Venture (6)	Los Angeles, CA	25.0	%	475	276			Q3 2020	Q1 2023	Q4 2023	3,360		—	%
				803	$	386	(7)				$	2,925

(1)NOI, debt principal, disposition gains and other activity are presented at 100% ownership.

(2)NOI includes $237 and $1,484 in Q3 and YTD 2020, respectively, from one U.S. Fund community disposed of during the three months ended September 30, 2020. NOI excludes property management fees as the Company serves as the property management company for all ventures except Brandywine Apartments of Maryland, LLC.

(3)Disposition gains and other activity is composed primarily of gains on disposition of unconsolidated real estate investments, of which the Company's portion is included in joint venture income as presented on Attachment 1 - Condensed Consolidated Operating Information. The Company's portion of income from disposition gains and other activity for the three and nine months ended September 30, 2020 was $5,157, related to a disposition by the U.S. Fund.

(4)Represents the weighted average interest rate as of September 30, 2020.

(5)Borrowing is comprised of loans made by the equity investors in the venture in proportion to their equity interests.

(6)This development is expected to include 56,000 square feet of commercial space. The venture has secured a $165,600 variable rate construction loan, which is expected to fund 60% of the Total Capitalized Cost. The venture will commence draws under the loan subsequent to required equity contributions by the venture partners.

(7)Of this Total Capital Cost, the Company's remaining equity investment after expected loan proceeds is $48,600.

Attachment 12

AvalonBay Communities, Inc.

Debt Structure and Select Debt Metrics

September 30, 2020

(Dollars in thousands)

(unaudited)



DEBT COMPOSITION AND MATURITIES

				Average Interest Rate (1)		Principal Amortization Payments and Maturities (2)
Debt Composition		Amount				Year	Secured notes amortization and maturities		Unsecured notes maturities		Total

Secured notes						2020	$	1,285	$	—	$	1,285
	Fixed rate	$	409,649	3.8	%	2021	37,148		—		37,148
	Variable rate	471,450		1.7	%	2022	9,918		550,000		559,918
	Subtotal, secured notes	881,099		2.7	%	2023	10,739		600,000		610,739
						2024	11,677		450,000		461,677
Unsecured notes						2025	12,408		825,000		837,408
	Fixed rate	6,500,000		3.5	%	2026	13,445		775,000		788,445
	Variable rate	250,000		1.2	%	2027	251,180		400,000		651,180
	Subtotal, unsecured notes	6,750,000		3.4	%	2028	20,607		450,000		470,607
						2029	77,992		450,000		527,992
Variable rate facility (3)		—		—	%	Thereafter	434,700		2,250,000		2,684,700
Total Debt		$	7,631,099	3.3	%		$	881,099	$	6,750,000	$	7,631,099

SELECT DEBT METRICS

Net Debt-to-Core EBITDAre (4)

5.4x

Interest Coverage (4)

6.5x

Unencumbered NOI (4)

94%

Weighted avg years to maturity of total debt (2)

9.5



DEBT COVENANT COMPLIANCE

Unsecured Line of Credit Covenants		September 30, 2020		Requirement

	Total Outstanding Indebtedness to Capitalization Value (5)	30.7	%	<	65%
	Combined EBITDA to Combined Debt Service	6.01x		>	1.50x
	Unsecured Indebtedness to Unencumbered Asset Value	28.3	%	<	65%
	Secured Indebtedness to Capitalization Value (5)	3.9	%	<	40%

Unsecured Senior Notes Covenants (6)		September 30, 2020		Requirement

	Total Outstanding Indebtedness to Total Assets (7)	32.0	%	<	65%
	Secured Indebtedness to Total Assets (7)	3.6	%	<	40%
	Unencumbered Assets to Unsecured Indebtedness	328.1	%	>	150%
	Consolidated Income Available for Debt Service to the Annual Service Charge	6.72x		>	1.50x


(1)			Rates are as of September 30, 2020 and, for secured and unsecured notes, include costs of financing such as credit enhancement fees, trustees' fees, the impact of interest rate hedges and mark-to-market adjustments.
(2)			Excludes the Company's unsecured credit facility and any associated issuance discount, mark-to-market discounts and deferred financing costs if applicable.
(3)			Represents amounts outstanding at September 30, 2020 under the Company's $1.75 billion unsecured credit facility.
(4)			See Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
(5)			Capitalization Value represents the Company’s Combined EBITDA for operating communities that the Company has owned for at least 12 months as of September 30, 2020, capitalized at a rate of 6% per annum, plus the book value of Development Communities and real estate communities acquired. For discussion of other defined terms, see "Debt Covenant Compliance" in Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
(6)			The information about the Company’s unsecured senior notes covenants shows compliance with selected covenants under the Company’s 1998 Indenture, under which debt securities are outstanding with maturity dates through 2047, subject to prepayment or redemption at the Company’s election. See “Debt Covenant Compliance” in Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms. Different covenants apply to debt securities outstanding under the Company’s 2018 Indenture.
(7)			Total Assets represents the sum of the Company's undepreciated real estate assets and other assets, excluding accounts receivable. See "Debt Covenant Compliance" in Attachment 13 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

Attachment 13

AvalonBay Communities, Inc.

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

September 30, 2020

(unaudited)

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

Asset Preservation Capex represents capital expenditures that the Company does not expect will directly result in increased revenue or expense savings.

AVB Residential Benchmark represents the average monthly revenue collections as a percentage of amounts billed for the referenced day of the month for the period from April 2019 to March 2020.

Average Rent per Home, as calculated for certain Development Communities in lease-up, reflects management’s projected stabilized rents net of estimated stabilized concessions, including estimated stabilized other rental revenue and excluding projected commercial revenue. Projected stabilized rents are based on one or more of the following: (i) actual average leased rents on apartments leased through quarter end, (ii) projected rollover rents on apartments leased through quarter end where the lease term expires within the first twelve months of Stabilized Operations and (iii) Market Rents on unleased homes.

Average Rental Rates are calculated by the Company as rental revenue in accordance with GAAP, divided by the weighted average number of occupied apartment homes.

Debt Covenant Compliance ratios for the Unsecured Line of Credit Covenants show the Company's compliance with selected covenants provided in the Company’s Fifth Amended and Restated Revolving Loan Agreement dated as of February 28, 2019 and the Company’s Amended and Restated Term Loan Agreement dated February 28, 2019, which have been filed as exhibits to the Company’s SEC reports. The ratios for the Unsecured Senior Notes Covenants show only the Company's compliance with selected covenants provided in the Company’s Indenture dated as of January 16, 1998, as supplemented by the First Supplemental Indenture dated as of January 20, 1998, Second Supplemental Indenture dated as of July 7, 1998, Amended and Restated Third Supplemental Indenture dated as of July 20, 2000, Fourth Supplemental Indenture dated as of September 18, 2006 and Fifth Supplemental Indenture dated as of November 21, 2014 (collectively, the “1998 Indenture"), which have been filed as exhibits to the Company’s SEC reports. Different covenants apply to debt securities outstanding under the Company’s Indenture dated as of February 23, 2018, as supplemented by the First Supplemental Indenture dated as of March 26, 2018 and the Second Supplemental Indenture dated as of May 29, 2018 (collectively, the “2018 Indenture”), which have been filed as exhibits to the Company's SEC reports. Compliance with selected covenants under the 2018 Indenture is excluded from the presentation of Debt Covenant Compliance in this release.

The Debt Covenant Compliance ratios are provided only to show the Company’s compliance with certain covenants contained in the 1998 Indenture governing a majority of the Company's unsecured debt securities and in the Company’s Credit Facility and Term Loans, as of the date reported. These ratios should not be used for any other purpose, including without limitation to evaluate the Company’s financial condition or results of operations, nor do they indicate the Company’s covenant compliance as of any other date or for any other period. The capitalized terms in the disclosure are defined in the Indenture or the Credit Facility and the Term Loans, and may differ materially from similar terms (a) used elsewhere in this release and the Attachments and (b) used by other companies that present information about their covenant compliance. For risks related to failure to comply with these covenants, see “Risk Factors – Risks related to indebtedness” and other risks discussed in the Company’s 2019 Annual Report on Form 10-K and the Company’s other reports filed with the SEC.

Development Communities are communities that are either currently under construction, or were under construction and were completed during the current year. These communities may be partially or fully complete and operating.

Attachment 13

Development Rights are development opportunities in the early phase of the development process for which the Company either has an option to acquire land or enter into a leasehold interest, for which the Company is the buyer under a long-term conditional contract to purchase land, where the Company controls the land through a ground lease or owns land to develop a new community, or where the Company is the designated developer in a public-private partnership. The Company capitalizes related pre-development costs incurred in pursuit of new developments for which the Company currently believes future development is probable.

•Asset Densification Development Rights are when the Company develops additional apartment homes at existing stabilized operating communities the Company owns on land currently associated with those operating communities.

•Conventional Development Rights are when the Company either has an option to acquire the land or enter into a leasehold interest, for which the Company is the buyer under a long-term conditional contract to purchase land, where the Company controls the land through a ground lease or owns the land to develop a new community.

•Public-Private Partnership Development Rights are when the Company has (i) an option to acquire the land, (ii) an option to enter into a leasehold interest or (iii) entered into a long-term conditional contract to purchase the land, where the Company is the designated developer in a public-private partnership with a local government entity.

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

Economic Gain is calculated by the Company as the gain on sale in accordance with GAAP, less accumulated depreciation through the date of sale and any other adjustments that may be required under GAAP accounting. Management generally considers Economic Gain to be an appropriate supplemental measure to gain on sale in accordance with GAAP because it helps investors to understand the relationship between the cash proceeds from a sale and the cash invested in the sold community. The Economic Gain for disposed communities is based on their respective final settlement statements. A reconciliation of the aggregate Economic Gain to the aggregate gain on sale in accordance with GAAP for the wholly-owned operating communities disposed of during the three and nine months ended September 30, 2020 is as follows (dollars in thousands):


TABLE 1
	Q3 2020		YTD 2020
GAAP Gain	$	31,603	$	91,313

Accumulated Depreciation and Other	(18,026)		(41,081)

Economic Gain	$	13,577	$	50,232

Established Communities are consolidated communities in the markets where the Company has a significant presence, including the Company's Expansion Markets of Southeast Florida and Denver, Colorado, 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 Operations, as defined below, as of the beginning of the respective prior year period. Therefore, for 2020 operating results, Established Communities are consolidated communities that have Stabilized Operations as of January 1, 2019, are not conducting or are not probable to conduct substantial redevelopment activities and are not held for sale or probable for disposition within the current year.

Established Communities Collections are the collection rates based on individual resident and commercial tenant activity as reflected in the Company’s property management systems, and are presented to provide information about collections trends during the COVID-19 pandemic. Prior to the COVID-19 pandemic, the collections information provided was not routinely produced for internal use by senior management or publicly disclosed by the Company, and is a result of analysis that is not subject to internal controls over financial reporting. This information is not prepared in accordance with GAAP, does not reflect GAAP revenue or cash flow metrics, may be subject to adjustment in preparing GAAP revenue and cash flow metrics at the end of the three and nine months ended September 30, 2020. Additionally, this information should not be interpreted as predicting the Company’s financial performance, results of operations or liquidity for any period.

Attachment 13

EBITDA, EBITDAre and Core EBITDAre are considered by management to be supplemental measures of our financial performance. EBITDA is defined by the Company as net income or loss attributable to the Company before interest income and expense, income taxes, depreciation and amortization. EBITDAre is calculated by the Company in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), as EBITDA plus or minus losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property, with adjustments to reflect the Company's share of EBITDAre of unconsolidated entities. Core EBITDAre is the Company’s EBITDAre as adjusted for non-core items outlined in the table below. By further adjusting for items that are not considered part of the Company’s core business operations, Core EBITDAre can help one compare the core operating and financial performance of the Company between periods. A reconciliation of EBITDA, EBITDAre and Core EBITDAre to net income is as follows (dollars in thousands):


TABLE 2
	Q3
	2020
Net income	$	147,717
Interest expense, net, inclusive of loss on extinguishment of debt, net	53,144
Income tax benefit	(27)
Depreciation expense	175,348
EBITDA	$	376,182

Gain on sale of communities	(31,607)
Joint venture EBITDAre adjustments (1)	(1,773)
EBITDAre	$	342,802

Gain on other real estate transactions	(129)
Business interruption insurance proceeds	(282)
Advocacy contributions	1,308
Severance related costs	75
Development pursuit write-offs and expensed transaction costs, net	147
Gain on for-sale condominiums	(727)
For-sale condominium marketing and administrative costs	1,373
Asset management fee intangible write-off	82
Legal settlements	59
Core EBITDAre	$	344,708

(1) Includes joint venture interest, taxes, depreciation, gain on dispositions of depreciated real estate and impairment losses, if applicable, included in net income.

FFO and Core FFO are considered by management to be supplemental measures of our operating and financial performance. FFO is calculated by the Company in accordance with the definition adopted by NAREIT. FFO is calculated by the Company as Net income or loss attributable to common stockholders computed in accordance with GAAP, adjusted for gains or losses on sales of previously depreciated operating communities, cumulative effect of a change in accounting principle, impairment write-downs of depreciable real estate assets, write-downs of investments in affiliates which are driven by a decrease in the value of depreciable real estate assets held by the affiliate and depreciation of real estate assets, including adjustments for unconsolidated partnerships and joint ventures. By excluding gains or losses related to dispositions of previously depreciated operating communities and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating and financial performance of a company’s real estate between periods or as compared to different companies. Core FFO is the Company's FFO as adjusted for non-core items outlined in the table below. By further adjusting for items that are not considered by us to be part of our core business operations, Core FFO can help one compare the core operating and financial performance of the Company between periods. A reconciliation of Net income attributable to common stockholders to FFO and to Core FFO is as follows (dollars in thousands):

Attachment 13


TABLE 3
	Q3		Q3		YTD		YTD
	2020		2019		2020		2019
Net income attributable to common stockholders	$	147,703	$	279,677	$	486,502	$	618,324
Depreciation - real estate assets, including joint venture adjustments	174,505		165,673		527,491		495,249
Distributions to noncontrolling interests	12		11		36		34
Gain on sale of unconsolidated entities holding previously depreciated real estate	(5,157)		—		(5,157)		—
Gain on sale of previously depreciated real estate	(31,607)		(130,484)		(91,338)		(165,849)
FFO attributable to common stockholders	285,456		314,877		917,534		947,758

Adjusting items:
Joint venture losses	86		—		86		—
Business interruption insurance proceeds	(282)		(307)		(385)		(914)
Lost NOI from casualty losses covered by business interruption insurance	—		410		48		410
(Gain) loss on extinguishment of consolidated debt	(105)		93		9,333		602
Advocacy contributions	1,308		—		3,074		—
Severance related costs	75		895		2,115		2,267
Development pursuit write-offs and expensed transaction costs, net	147		85		3,536		1,689
Gain on for-sale condominiums (1)(2)	(727)		—		(8,174)		—
For-sale condominium marketing and administrative costs (2)	1,373		1,108		4,012		2,526
For-sale condominium imputed carry cost (3)	2,580		1,724		9,013		2,230
Gain on other real estate transactions	(129)		(73)		(328)		(374)
Legal settlements (4)	59		(3,093)		35		(4,071)
Income tax (benefit) expense (5)	(27)		11,184		(1,069)		11,178
Core FFO attributable to common stockholders	$	289,814	$	326,903	$	938,830	$	963,301

Average shares outstanding - diluted	140,603,722		139,852,674		140,702,803		139,438,064

Earnings per share - diluted	$	1.05	$	2.00	$	3.46	$	4.43
FFO per common share - diluted	$	2.03	$	2.25	$	6.52	$	6.80
Core FFO per common share - diluted	$	2.06	$	2.34	$	6.67	$	6.91

(1) Amount for the three and nine months ended September 30, 2020 includes the sale of seven and 59 residential condominiums at The Park Loggia, respectively.
(2) Aggregate impact of (i) Gains on for-sale condominiums and (ii) For-sale condominium marketing and administrative costs, is a net loss of $646 for Q3 2020 and a net gain of $4,162 for YTD 2020, and a loss of $1,108 and $2,526 for Q3 and YTD 2019, respectively, as shown on Attachment 1 - Condensed Consolidated Operating Information.
(3) Represents the imputed carry cost of the for-sale residential condominiums at The Park Loggia. The Company computes this adjustment by multiplying the Total Capital Cost of completed and unsold for-sale residential condominiums by the Company's weighted average unsecured debt effective interest rate.
(4) Amounts for 2019 include $3,126 in legal settlement proceeds related to a former Development Right.
(5) Amounts for 2019 consist of $6,645 related to GAAP to tax basis differences at The Park Loggia development and $4,539 related to the other activity the Company undertook through taxable REIT subsidiaries ("TRS"), including the disposition of two wholly-owned operating communities and expense for deferred tax obligations related to the Company's sustainability initiatives.

Attachment 13

Initial Year Market Cap Rate is defined by the Company as Projected NOI of a single community for the first 12 months of operations (assuming no repositioning), less estimates for non-routine allowance of approximately $300 - $500 per apartment home, divided by the gross sales price for the community. Projected NOI, as referred to above, represents management’s estimate of projected rental revenue minus projected operating expenses before interest, income taxes (if any), depreciation and amortization. For this purpose, management’s projection of operating expenses for the community includes a management fee of 2.25%. The Initial Year Market Cap Rate, which may be determined in a different manner by others, is a measure frequently used in the real estate industry when determining the appropriate purchase price for a property or estimating the value for a property. Buyers may assign different Initial Year Market Cap Rates to different communities when determining the appropriate value because they (i) may project different rates of change in operating expenses and capital expenditure estimates and (ii) may project different rates of change in future rental revenue due to different estimates for changes in rent and occupancy levels. The weighted average Initial Year Market Cap Rate is weighted based on the gross sales price of each community.

Interest Coverage is calculated by the Company as Core EBITDAre, divided by the sum of interest expense, net, and preferred dividends, if applicable. Interest Coverage is presented by the Company because it provides rating agencies and investors an additional means of comparing our ability to service debt obligations to that of other companies. A calculation of Interest Coverage for the three months ended September 30, 2020 is as follows (dollars in thousands):


TABLE 4

Core EBITDAre	$	344,708

Interest expense, net	$	53,249

Interest Coverage	6.5 times

Like-Term Effective Rent Change represents the percentage change in effective rent between two leases of the same lease term category for the same apartment. The Company defines effective rent as the contractual rent for an apartment less amortized concessions and discounts. Average Like-Term Effective Rent Change is weighted based on the number of leases meeting the criteria for new move-in and renewal like-term effective rent change. New move-in like-term effective rent change is the change in effective rent between the contractual rent for a resident who moves out of an apartment, and the contractual rent for a resident who moves into the same apartment with the same lease term category. Renewal like-term effective rent change is the change in effective rent between two consecutive leases of the same lease term category for the same resident occupying the same apartment.

Like-Term Lease Rent Change represents the percentage change in contractual rent between two leases of the same lease term category for the same apartment. Average Like-Term Lease Rent Change is weighted based on the number of leases meeting the criteria for new move-in and renewal like-term rent change. New move-in like-term lease rent change is the change in rent between the contractual rent for a resident who moves out of an apartment, and the contractual rent for a resident who moves into the same apartment with the same lease term category. Renewal like-term lease rent change is the change in rent between two consecutive leases of the same lease term category for the same resident occupying the same apartment.

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

Net Debt-to-Core EBITDAre is calculated by the Company as total debt (secured and unsecured notes and the Company's variable rate unsecured credit facility) that is consolidated for financial reporting purposes, less consolidated cash and cash in escrow, divided by annualized third quarter 2020 Core EBITDAre, as adjusted. A calculation of Net Debt-to-Core EBITDAre is as follows (dollars in thousands):

Attachment 13


TABLE 5

Total debt principal (1)	$	7,631,099
Cash and cash in escrow	(182,400)
Net debt	$	7,448,699

Core EBITDAre	$	344,708

Core EBITDAre, annualized	$	1,378,832

Net Debt-to-Core EBITDAre	5.4 times

(1) Balance at September 30, 2020 excludes $10,782 of debt discount and $38,968 of deferred financing costs as reflected in unsecured notes, net, and $14,636 of debt discount and $3,067 of deferred financing costs as reflected in notes payable on the Condensed Consolidated Balance Sheets.

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, joint venture (income) loss, depreciation expense, corporate income tax expense (benefit), casualty and impairment loss (gain), net, gain on sale of communities, (gain) loss on other real estate transactions, gain on for-sale condominiums, net of marketing and administrative costs and net operating income from real estate assets sold or held for sale. The Company considers NOI to be an important and appropriate supplemental performance measure to Net Income of operating performance of a community or communities because it helps both investors and management to understand the core operations of a community or communities prior to the allocation of any corporate-level property management overhead or financing-related costs. NOI reflects the operating performance of a community, and allows for an easier comparison of the operating performance of individual assets or groups of assets. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impact to overhead as a result of acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or groups of assets.

A reconciliation of NOI to Net Income, as well as a breakdown of NOI by operating segment, is as follows (dollars in thousands):

Attachment 13


TABLE 6
	Q3		Q3		Q2		Q1		YTD		YTD
	2020		2019		2020		2020		2020		2019
Net income	$	147,717	$	279,709	$	170,869	$	168,006	$	486,592	$	618,432
Indirect operating expenses, net of corporate income	23,837		20,195		23,407		22,799		70,043		62,935
Expensed transaction, development and other pursuit costs, net of recoveries	567		175		388		3,334		4,289		2,562
Interest expense, net	53,249		51,493		53,399		55,914		162,562		149,395
(Gain) loss on extinguishment of debt, net	(105)		93		268		9,170		9,333		602
General and administrative expense	13,985		12,769		15,573		17,320		46,878		45,440
Joint venture income	(5,083)		(1,643)		(512)		(1,175)		(6,770)		(780)
Depreciation expense	175,348		165,463		176,249		177,911		529,508		490,213
Income tax (benefit) expense	(27)		11,184		(1,133)		91		(1,069)		11,178
Gain on sale of communities	(31,607)		(130,484)		(35,295)		(24,436)		(91,338)		(165,849)
Gain on other real estate transactions	(129)		(73)		(156)		(43)		(328)		(374)
Gain on for-sale condominiums, net of marketing and administrative costs	646		1,108		(1,348)		(3,460)		(4,162)		2,526
NOI from real estate assets sold or held for sale	(720)		(3,404)		(1,133)		(1,719)		(3,572)		(16,161)
NOI	$	377,678	$	406,585	$	400,576	$	423,712	$	1,201,966	$	1,200,119

Established:
New England	$	49,089	$	54,244	$	52,835	$	53,680	$	155,604	$	158,801
Metro NY/NJ	75,193		82,602		77,284		83,661		236,138		248,530
Mid-Atlantic	56,190		62,430		60,041		64,655		180,886		185,431
Pacific NW	18,578		20,684		19,626		20,838		59,042		61,498
No. California	69,752		79,076		77,844		80,451		228,047		235,884
So. California	71,125		79,357		74,601		82,455		228,181		239,452
Expansion Markets	3,015		3,261		3,561		3,428		10,004		10,177
Total Established	342,942		381,654		365,792		389,168		1,097,902		1,139,773
Other Stabilized	22,834		20,125		23,108		23,496		69,438		52,091
Development/Redevelopment	11,902		4,806		11,676		11,048		34,626		8,255
NOI	$	377,678	$	406,585	$	400,576	$	423,712	$	1,201,966	$	1,200,119

NOI as reported by the Company does not include the operating results from assets sold or classified as held for sale. A reconciliation of NOI from communities sold or classified as held for sale is as follows (dollars in thousands):


TABLE 7
	Q3		Q3		Q2		Q1		Q4		YTD		YTD
	2020		2019		2020		2020		2019		2020		2019

Revenue from real estate assets sold or held for sale	$	1,449	$	6,094	$	1,933	$	2,777	$	4,063	$	6,159	$	28,116
Operating expenses from real estate assets sold or held for sale	(729)		(2,690)		(800)		(1,058)		(1,438)		(2,587)		(11,955)
NOI from real estate assets sold or held for sale	$	720	$	3,404	$	1,133	$	1,719	$	2,625	$	3,572	$	16,161

Attachment 13

NOI Enhancing Capex represents capital expenditures that the Company expects will directly result in increased revenue or expense savings, and excludes any capital expenditures for Redevelopment Communities.

Other Stabilized Communities are completed consolidated communities that the Company owns, which have Stabilized Operations as of January 1, 2020, or which were acquired subsequent to January 1, 2019. Other Stabilized Communities excludes communities that are conducting or are probable to conduct substantial redevelopment activities.

Projected NOI, as used within this release for certain Development Communities and in calculating the Initial Year Market Cap Rate for dispositions, represents management’s estimate, as of the date of this release (or as of the date of the buyer’s valuation in the case of dispositions), of projected stabilized rental revenue minus projected stabilized operating expenses. For Development Communities, Projected NOI is calculated based on the first twelve months of Stabilized Operations following the completion of construction. In calculating the Initial Year Market Cap Rate, Projected NOI for dispositions is calculated for the first twelve months following the date of the buyer’s valuation. Projected stabilized rental revenue represents management’s estimate of projected gross potential minus projected stabilized economic vacancy and adjusted for projected stabilized concessions plus projected stabilized other rental revenue. Projected stabilized operating expenses do not include interest, income taxes (if any), depreciation or amortization, or any allocation of corporate-level property management overhead or general and administrative costs. In addition, projected stabilized operating expenses for Development Communities do not include property management fee expense. Projected gross potential for Development Communities and dispositions is generally based on leased rents for occupied homes and management’s best estimate of rental levels for homes which are currently unleased, as well as those homes which will become available for lease during the twelve month forward period used to develop Projected NOI. The weighted average Projected NOI as a percentage of Total Capital Cost ("Weighted Average Initial Projected Stabilized Yield") is weighted based on the Company’s share of the Total Capital Cost of each community, based on its percentage ownership.

Management believes that Projected NOI of the Development Communities, on an aggregated weighted average basis, assists investors in understanding management's estimate of the likely impact on operations of the Development Communities when the assets are complete and achieve stabilized occupancy (before allocation of any corporate-level property management overhead, general and administrative costs or interest expense). However, in this release the Company has not given a projection of NOI on a company-wide basis. Given the different dates and fiscal years for which NOI is projected for these communities, the projected allocation of corporate-level property management overhead, general and administrative costs and interest expense to communities under development is complex, impractical to develop, and may not be meaningful. Projected NOI of these communities is not a projection of the Company's overall financial performance or cash flow. There can be no assurance that the communities under development will achieve the Projected NOI as described in this release.

Redevelopment Communities are consolidated communities where substantial redevelopment is in progress or is probable to begin during the current year. Redevelopment is considered substantial when (i) capital invested during the reconstruction effort is expected to exceed the lesser of $5,000,000 or 10% of the community’s pre-redevelopment basis and (ii) physical occupancy is below or is expected to be below 90% during or as a result of the redevelopment activity. Redevelopment Communities include one community containing 344 apartment homes that are currently under active redevelopment as of September 30, 2020.

Rental Revenue with Residential Concessions on a Cash Basis is considered by the Company to be a supplemental measure to rental revenue in conformity with GAAP to help investors evaluate the impact of both current and historical residential concessions on GAAP-based rental revenue and to more readily enable comparisons to revenue as reported by other companies. In addition, Rental Revenue with Residential Concessions on a Cash Basis allows an investor to understand the historical trend in residential cash concessions.

A reconciliation of rental revenue from Established Communities in conformity with GAAP to Rental Revenue with Residential Concessions on a Cash Basis is as follows (dollars in thousands):

Attachment 13


TABLE 8
	Q3		Q3			YTD		YTD
	2020		2019			2020		2019
Rental revenue (GAAP basis)	$	508,163	$	540,942		$	1,571,325	$	1,603,729
Residential concessions amortized	5,712		447			8,095		1,815
Residential concessions granted	(15,456)		(508)			(27,530)		(1,084)

Rental Revenue with Residential Concessions
on a Cash Basis	$	498,419	$	540,881		$	1,551,890	$	1,604,460

% change -- GAAP revenue			(6.1)		%			(2.0)		%

% change -- cash revenue			(7.9)		%			(3.3)		%

Stabilized Operations/Restabilized Operations is defined as the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.

Total Capital Cost includes all capitalized costs projected to be or actually incurred to develop the respective Development or Redevelopment Community, or Development Right, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, offset by proceeds from the sale of any associated land or improvements, all as determined in accordance with GAAP. Total Capital Cost also includes costs incurred related to first generation commercial tenants, such as tenant improvements and leasing commissions. For Redevelopment Communities, Total Capital Cost excludes costs incurred prior to the start of redevelopment when indicated. With respect to communities where development or redevelopment was completed in a prior or the current period, Total Capital Cost reflects the actual cost incurred, plus any contingency estimate made by management. Total Capital Cost for communities identified as having joint venture ownership, either during construction or upon construction completion, represents the total projected joint venture contribution amount. For joint ventures not in construction, Total Capital Cost is equal to gross real estate cost.

Unconsolidated Development Communities are communities that are either currently under construction, or were under construction and were completed during the current year, in which we have an indirect ownership interest through our investment interest in an unconsolidated joint venture. These communities may be partially or fully complete and operating.

Unencumbered NOI as calculated by the Company represents NOI generated by real estate assets unencumbered by outstanding secured notes payable as of September 30, 2020 as a percentage of total NOI generated by real estate assets. The Company believes that current and prospective unsecured creditors of the Company view Unencumbered NOI as one indication of the borrowing capacity of the Company. Therefore, when reviewed together with the Company’s Interest Coverage, EBITDA and cash flow from operations, the Company believes that investors and creditors view Unencumbered NOI as a useful supplemental measure for determining the financial flexibility of an entity. A calculation of Unencumbered NOI for the nine months ended September 30, 2020 is as follows (dollars in thousands):


TABLE 9
	Year to Date
	NOI
NOI for Established Communities	$	1,097,902
NOI for Other Stabilized Communities	69,438
NOI for Development/Redevelopment Communities	34,626
NOI from real estate assets sold or held for sale	3,572
Total NOI generated by real estate assets	1,205,538
NOI on encumbered assets	73,711
NOI on unencumbered assets	$	1,131,827

Unencumbered NOI	94		%

Attachment 13

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

The calculation of Unleveraged IRR does not include an adjustment for the Company’s general and administrative expense, interest expense, or corporate-level property management and other indirect operating expenses. Therefore, Unleveraged IRR is not a substitute for Net Income as a measure of our performance. Management believes that the Unleveraged IRR achieved during the period a community is owned by the Company is useful because it is one indication of the gross value created by the Company’s acquisition, development or redevelopment, management and sale of a community, before the impact of indirect expenses and Company overhead. The Unleveraged IRR achieved on the communities as cited in this release should not be viewed as an indication of the gross value created with respect to other communities owned by the Company, and the Company does not represent that it will achieve similar Unleveraged IRRs upon the disposition of other communities. The weighted average Unleveraged IRR for sold communities is weighted based on all cash flows over the investment period for each respective community, including net sales proceeds.

Form: 8-K

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