Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

August 4, 2021

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended June 30, 2021
Commission file number 1-12672
AVALONBAY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
 
Maryland   77-0404318
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
 
4040 Wilson Blvd., Suite 1000
Arlington, Virginia 22203
(Address of principal executive offices, including zip code)
(703) 329-6300
(Registrant's telephone number, including area code)  
(Former name, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, par value $0.01 per share AVB New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days.
Yes                     No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes                     No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes                     No

APPLICABLE ONLY TO CORPORATE ISSUERS
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:

139,616,764 shares of common stock, par value $0.01 per share, were outstanding as of July 31, 2021.


Table of Contents
AVALONBAY COMMUNITIES, INC.
FORM 10-Q
INDEX
 
  PAGE
PART I - FINANCIAL INFORMATION  
   
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
     
 
     
 
     
 
     
 
   
   
   
   
 
   
   
   
   
   
   
   
   




Table of Contents


AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
  6/30/2021 12/31/2020
  (unaudited)  
ASSETS    
Real estate:    
Land and improvements $ 4,442,708  $ 4,394,298 
Buildings and improvements 17,549,286  17,231,275 
Furniture, fixtures and equipment 965,741  924,583 
  22,957,735  22,550,156 
Less accumulated depreciation (5,907,270) (5,700,179)
Net operating real estate 17,050,465  16,849,977 
Construction in progress, including land 773,938  989,765 
Land held for development 100,106  110,142 
For-sale condominium inventory 220,022  267,219 
Real estate assets held for sale, net   16,678 
Total real estate, net 18,144,531  18,233,781 
Cash and cash equivalents 297,036  216,976 
Cash in escrow 190,069  96,556 
Resident security deposits 32,350  30,811 
Investments in unconsolidated real estate entities 227,953  202,612 
Deferred development costs 49,335  55,427 
Prepaid expenses and other assets 220,916  207,715 
Right of use lease assets 154,435  155,266 
Total assets $ 19,316,625  $ 19,199,144 
LIABILITIES AND EQUITY    
Unsecured notes, net $ 6,705,513  $ 6,702,005 
Variable rate unsecured credit facility    
Mortgage notes payable, net 828,120  862,332 
Dividends payable 224,282  224,897 
Payables for construction 66,315  93,609 
Accrued expenses and other liabilities 295,771  274,699 
Lease liabilities 177,448  181,479 
Accrued interest payable 48,974  49,033 
Resident security deposits 58,576  55,928 
Liabilities related to real estate assets held for sale   311 
Total liabilities 8,404,999  8,444,293 
Commitments and contingencies
Redeemable noncontrolling interests 3,039  2,677 
Equity:    
Preferred stock, $0.01 par value; $25 liquidation preference; 50,000,000 shares authorized at June 30, 2021 and December 31, 2020; zero shares issued and outstanding at June 30, 2021 and December 31, 2020
   
Common stock, $0.01 par value; 280,000,000 shares authorized at June 30, 2021 and December 31, 2020; 139,618,254 and 139,526,671 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
1,396  1,395 
Additional paid-in capital 10,670,564  10,664,416 
Accumulated earnings less dividends 272,398  126,022 
Accumulated other comprehensive loss (36,339) (40,250)
Total stockholders' equity 10,908,019  10,751,583 
Noncontrolling interests 568  591 
Total equity 10,908,587  10,752,174 
Total liabilities and equity $ 19,316,625  $ 19,199,144 
 
See accompanying notes to Condensed Consolidated Financial Statements.
1

Table of Contents
AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(Dollars in thousands, except per share data)
  For the three months ended For the six months ended
  6/30/2021 6/30/2020 6/30/2021 6/30/2020
Revenue:    
Rental and other income $ 560,935  $ 575,479  $ 1,111,194  $ 1,176,123 
Management, development and other fees 808  926  1,685  1,933 
Total revenue 561,743  576,405  1,112,879  1,178,056 
Expenses:    
Operating expenses, excluding property taxes 141,622  131,090  281,673  263,083 
Property taxes 70,776  67,013  140,186  134,039 
Expensed transaction, development and other pursuit costs, net of recoveries 1,653  388  1,483  3,722 
Interest expense, net 56,104  53,399  108,717  109,313 
Loss (gain) on extinguishment of debt, net   268  (122) 9,438 
Depreciation expense 184,472  176,249  367,769  354,160 
General and administrative expense 18,465  15,573  35,817  32,893 
Casualty and impairment loss 1,177    1,177   
Total expenses 474,269  443,980  936,700  906,648 
Income from investments in unconsolidated entities 26,559  512  26,092  1,687 
Gain on sale of communities 334,569  35,295  388,296  59,731 
Gain on other real estate transactions, net 32  156  459  199 
Net for-sale condominium activity (647) 1,348  (1,560) 4,808 
Income before income taxes 447,987  169,736  589,466  337,833 
Income tax (expense) benefit (10) 1,133  745  1,042 
Net income 447,977  170,869  590,211  338,875 
Net income attributable to noncontrolling interests (24) (41) (35) (76)
Net income attributable to common stockholders $ 447,953  $ 170,828  $ 590,176  $ 338,799 
Other comprehensive income:    
Loss on cash flow hedges (822) (1,461) (822) (19,064)
Cash flow hedge losses reclassified to earnings 2,366  2,301  4,733  4,250 
Comprehensive income $ 449,497  $ 171,668  $ 594,087  $ 323,985 
Earnings per common share - basic:    
Net income attributable to common stockholders $ 3.21  $ 1.21  $ 4.23  $ 2.41 
Earnings per common share - diluted:    
Net income attributable to common stockholders $ 3.21  $ 1.21  $ 4.23  $ 2.41 

See accompanying notes to Condensed Consolidated Financial Statements.
2

Table of Contents
AVALONBAY COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollars in thousands)
  For the six months ended
  6/30/2021 6/30/2020
Cash flows from operating activities:
Net income $ 590,211  $ 338,875 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation expense 367,769  354,160 
Amortization of deferred financing costs 3,675  3,720 
Amortization of debt discount 1,320  833 
(Gain) loss on extinguishment of debt, net (122) 9,438 
Amortization of stock-based compensation 13,185  11,870 
Equity in loss of, and return on, unconsolidated real estate entities and noncontrolling interests, net of eliminations 2,989  3,705 
Real estate casualty loss 831   
Abandonment of development pursuits 685  2,095 
Unrealized gain on terminated cash flow hedges (2,654)  
Cash flow hedge losses reclassified to earnings 4,733  4,250 
Gain on sale of real estate assets (412,060) (59,930)
Gain on for-sale condominiums (706) (7,446)
Increase in resident security deposits, prepaid expenses and other assets (16,329) (13,595)
Increase in accrued expenses, other liabilities and accrued interest payable 15,102  (19,058)
Net cash provided by operating activities 568,629  628,917 
Cash flows from investing activities:
Development/redevelopment of real estate assets including land acquisitions and deferred development costs (325,692) (383,139)
Acquisition of real estate assets, including partnership interest (118,572)  
Capital expenditures - existing real estate assets (57,157) (51,858)
Capital expenditures - non-real estate assets (2,584) (14,461)
Decrease in payables for construction (27,294) (11,547)
Proceeds from sale of real estate, net of selling costs 575,431  132,882 
Proceeds from the sale of for-sale condominiums, net of selling costs 48,655  155,217 
Mortgage note receivable lending (113) (209)
Mortgage note receivable payments 1,556  2,238 
Distributions from unconsolidated real estate entities 22,331   
Investments in unconsolidated real estate entities (27,356) (14,251)
Net cash provided by (used in) investing activities 89,205  (185,128)
Cash flows from financing activities:
Issuance of common stock, net 2,372  1,613 
Dividends paid (444,572) (437,326)
Issuance of mortgage notes payable   51,000 
Repayments of mortgage notes payable, including prepayment penalties (34,734) (56,852)
Issuance of unsecured notes   1,296,581 
Repayment of unsecured notes, including prepayment penalties   (958,680)
Payment of deferred financing costs   (11,276)
Receipt (payment) for termination of forward interest rate swaps 6,962  (25,135)
Payment to noncontrolling interest (33) (42)
Payments related to tax withholding for share-based compensation (13,228) (14,750)
Distributions to DownREIT partnership unitholders (24) (24)
Distributions to joint venture and profit-sharing partners (164) (218)
Preferred interest obligation redemption and dividends (840) (600)
Net cash used in financing activities (484,261) (155,709)
Net increase in cash, cash equivalents and cash in escrow 173,573  288,080 
Cash, cash equivalents and cash in escrow, beginning of period 313,532  127,614 
Cash, cash equivalents and cash in escrow, end of period $ 487,105  $ 415,694 
Cash paid during the period for interest, net of amount capitalized $ 101,703  $ 103,328 
See accompanying notes to Condensed Consolidated Financial Statements.
3

Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

The following table provides a reconciliation of cash, cash equivalents and cash in escrow reported in the Condensed Consolidated Statements of Cash Flows (dollars in thousands):
For the six months ended
6/30/2021 6/30/2020
Cash and cash equivalents $ 297,036  $ 322,817 
Cash in escrow 190,069  92,877 
Cash, cash equivalents and cash in escrow reported in the Condensed Consolidated Statements of Cash Flows $ 487,105  $ 415,694 

Supplemental disclosures of non-cash investing and financing activities:

During the six months ended June 30, 2021:

As described in Note 4, "Equity," 151,186 shares of common stock were issued as part of the Company's stock-based compensation plans, of which 56,545 shares related to the conversion of performance awards to common shares, and the remaining 94,641 shares valued at $16,687,000 were issued in connection with new stock grants; 1,561 shares valued at $274,000 were issued through the Company's dividend reinvestment plan; 74,726 shares valued at $13,228,000 were withheld to satisfy employees' tax withholding and other liabilities; and 709 restricted shares with an aggregate value of $140,000 previously issued in connection with employee compensation were canceled upon forfeiture.

Common stock dividends declared but not paid totaled $222,901,000.

The Company recorded an increase of $528,000 in redeemable noncontrolling interest with a corresponding decrease to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.

The Company recorded an increase to accrued expenses and other liabilities of $822,000 and a corresponding adjustment to accumulated other comprehensive loss, and reclassified $4,733,000 of cash flow hedge losses from other comprehensive income (loss) to interest expense, net, to record the impact of the Company's derivative and hedge accounting activity.

During the six months ended June 30, 2020:

The Company issued 164,526 shares of common stock as part of the Company's stock-based compensation plans, of which 96,317 shares related to the conversion of performance awards to restricted shares, and the remaining 68,209 shares valued at $15,150,000 were issued in connection with new stock grants; 1,183 shares valued at $217,000 were issued through the Company's dividend reinvestment plan; 73,089 shares valued at $14,750,000 were withheld to satisfy employees' tax withholding and other liabilities; and 4,050 restricted shares with an aggregate value of $685,000 previously issued in connection with employee compensation were canceled upon forfeiture.

Common stock dividends declared but not paid totaled $224,482,000.

The Company recorded a decrease of $325,000 in redeemable noncontrolling interest with a corresponding increase to accumulated earnings less dividends to adjust the redemption value associated with the put options held by joint venture partners and DownREIT partnership units.

The Company recorded an increase to accrued expenses and other liabilities of $98,000, an increase in prepaid expenses and other assets of $178,000 and a corresponding adjustment to accumulated other comprehensive loss, and reclassified $4,250,000 of cash flow hedge losses from other comprehensive income (loss) to interest expense, net, to record the impact of the Company's derivative and hedge accounting activity.

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


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AVALONBAY COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.  Organization, Basis of Presentation and Significant Accounting Policies

Organization and Basis of Presentation

AvalonBay Communities, Inc. (the "Company," which term, unless the context otherwise requires, refers to AvalonBay Communities, Inc. together with its subsidiaries), is a Maryland corporation that has elected to be treated as a real estate investment trust ("REIT") for federal income tax purposes under the Internal Revenue Code of 1986 (the "Code"). The Company focuses on the development, redevelopment, acquisition, ownership and operation of multifamily communities in New England, the New York/New Jersey metro area, the Mid-Atlantic, Southeast Florida, Denver, Colorado, the Pacific Northwest, and Northern and Southern California. The Company is pursuing opportunities in new expansion markets of Dallas and Austin, Texas, and Charlotte and Raleigh-Durham, North Carolina.

At June 30, 2021, the Company owned or held a direct or indirect ownership interest in 272 operating apartment communities containing 80,958 apartment homes in 11 states and the District of Columbia. In addition, the Company owned or held a direct or indirect ownership interest in 16 communities under development that are expected to contain an aggregate of 4,791 apartment homes when completed, as well as The Park Loggia, which contains 172 for-sale residential condominiums, of which 96 have been sold as of June 30, 2021, and 66,000 square feet of commercial space, of which 87% has been leased as of June 30, 2021. The Company also owned or held a direct or indirect ownership interest in land or rights to land on which the Company expects to develop an additional 23 communities that, if developed as expected, will contain an estimated 7,802 apartment homes.

The interim unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements required by GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company's 2020 Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the operating results for the full year. Management believes the disclosures are adequate to ensure the information presented is not misleading. In the opinion of management, all adjustments and eliminations, consisting only of normal, recurring adjustments necessary for a fair presentation of the financial statements for the interim periods, have been included.

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

Earnings per Common Share

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares outstanding during the period. All outstanding unvested restricted share awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common shareholders and, accordingly, are considered participating securities that are included in the two-class method of computing basic earnings per share ("EPS"). Both the unvested restricted shares and other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company's earnings per common share are determined as follows (dollars in thousands, except per share data):
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  For the three months ended For the six months ended
  6/30/2021 6/30/2020 6/30/2021 6/30/2020
Basic and diluted shares outstanding    
Weighted average common shares - basic 139,373,963  140,450,744  139,332,575  140,413,857 
Weighted average DownREIT units outstanding 7,500  7,500  7,500  7,500 
Effect of dilutive securities 269,176  279,916  261,451  330,974 
Weighted average common shares - diluted 139,650,639  140,738,160  139,601,526  140,752,331 
Calculation of Earnings per Share - basic    
Net income attributable to common stockholders $ 447,953  $ 170,828  $ 590,176  $ 338,799 
Net income allocated to unvested restricted shares (902) (390) (1,267) (817)
Net income attributable to common stockholders, adjusted $ 447,051  $ 170,438  $ 588,909  $ 337,982 
Weighted average common shares - basic 139,373,963  140,450,744  139,332,575  140,413,857 
Earnings per common share - basic $ 3.21  $ 1.21  $ 4.23  $ 2.41 
Calculation of Earnings per Share - diluted    
Net income attributable to common stockholders $ 447,953  $ 170,828  $ 590,176  $ 338,799 
Add: noncontrolling interests of DownREIT unitholders in consolidated partnerships 12  12  24  24 
Adjusted net income attributable to common stockholders $ 447,965  $ 170,840  $ 590,200  $ 338,823 
Weighted average common shares - diluted 139,650,639  140,738,160  139,601,526  140,752,331 
Earnings per common share - diluted $ 3.21  $ 1.21  $ 4.23  $ 2.41 
 
Certain options to purchase shares of common stock in the amount of 292,544 were outstanding as of June 30, 2021, but were not included in the computation of diluted earnings per share because such options were anti-dilutive for the period. All options to purchase shares of common stock outstanding as of June 30, 2020 are included in the computation of diluted earnings per share.

Derivative Instruments and Hedging Activities

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

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Legal and Other Contingencies

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

Use of Estimates

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

Reclassifications

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

For-Sale Condominium Inventory

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

Leases

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

lessor of residential and commercial space within its apartment communities; and
lessee under (i) ground leases for land underlying current operating or development communities and certain commercial and parking facilities and (ii) office leases for its corporate headquarters and regional offices.

Lessee Considerations

The Company assesses whether a contract is or contains a lease based on whether the contract conveys the right to control the use of an identified asset, including specified portions of larger assets, for a period of time in exchange for consideration. The Company’s leases include both fixed and variable lease payments, which are based on an index or rate such as the consumer price index (CPI) or percentage rents based on total sales. Lease payments included in the lease liability include only fixed lease payments including fixed amounts that depend on an index or rate. For leases that have options to extend the term or terminate the lease early, the Company only factored the impact of such options into the lease term if the option was considered reasonably certain to be exercised. The Company determined the discount rate associated with its ground and office leases on a lease by lease basis using the Company’s actual borrowing rates as well as indicative market pricing for longer term rates and taking into consideration the remaining term of each of the lease agreements.

Lessor Considerations

The Company evaluates leases in which it is the lessor, which are composed of residential and commercial leases at its apartment communities, and determined these leases to be operating leases. For lease agreements that provide for rent concessions and/or scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease, which, for residential leases, is generally one year. Some of the Company’s commercial leases have fixed-price renewal options, and the lessee may be able to exercise its renewal option at an amount less than the fair value of the rent at such time. The Company only includes renewal options in the lease term if, at the commencement of the lease, it is reasonably certain that the lessee will exercise this option.

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

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Revenue and Gain Recognition

Revenue from contracts with customers is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration that the Company expects to be entitled to for those goods and services. The majority of the Company’s revenue is derived from residential and commercial rental income and other lease income, which are accounted for under ASC 842, Leases, discussed above. The Company's revenue streams that are not accounted for under ASC 842 include (i) management fees, (ii) rental and non-rental related income and (iii) gains or losses on the sale of real estate.

The following table provides details of the Company’s revenue streams disaggregated by the Company’s reportable operating segments, further discussed in Note 8, “Segment Reporting,” for the three and six months ended June 30, 2021 and 2020. Segment information for total revenue has been adjusted to exclude the real estate assets that were sold from January 1, 2020 through June 30, 2021, or otherwise qualify as held for sale as of June 30, 2021, as described in Note 6, "Real Estate Disposition Activities" (dollars in thousands):
  For the three months ended
Same Store Other
Stabilized
Development/
Redevelopment
Non-
allocated (1)
Total
For the period ended June 30, 2021
Management, development and other fees and other ancillary items $   $   $   $ 808  $ 808 
Rental and non-rental related income (2) 1,922  395  186    2,503 
Total non-lease revenue (3) 1,922  395  186  808  3,311 
Lease income (4) 498,719  29,104  22,890    550,713 
Business interruption insurance proceeds          
Total revenue $ 500,641  $ 29,499  $ 23,076  $ 808  $ 554,024 
For the period ended June 30, 2020
Management, development and other fees and other ancillary items $   $   $   $ 299  $ 299 
Rental and non-rental related income (2) 1,848  482  78    2,408 
Total non-lease revenue (3) 1,848  482  78  299  2,707 
Lease income (4) 520,753  24,160  7,290    552,203 
Business interruption insurance proceeds 96        96 
Total revenue $ 522,697  $ 24,642  $ 7,368  $ 299  $ 555,006 

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  For the six months ended
Same Store Other
Stabilized
Development/
Redevelopment
Non-
allocated (1)
Total
For the period ended June 30, 2021
Management, development and other fees and other ancillary items $   $   $   $ 1,685  $ 1,685 
Rental and non-rental related income (2) 3,571  821  327    4,719 
Total non-lease revenue (3) 3,571  821  327  1,685  6,404 
Lease income (4) 993,569  55,443  40,156    1,089,168 
Business interruption insurance proceeds          
Total revenue $ 997,140  $ 56,264  $ 40,483  $ 1,685  $ 1,095,572 
For the period ended June 30, 2020
Management, development and other fees and other ancillary items $   $   $   $ 690  $ 690 
Rental and non-rental related income (2) 3,462  1,073  137    4,672 
Total non-lease revenue (3) 3,462  1,073  137  690  5,362 
Lease income (4) 1,065,425  48,600  14,044    1,128,069 
Business interruption insurance proceeds 96        96 
Total revenue $ 1,068,983  $ 49,673  $ 14,181  $ 690  $ 1,133,527 
__________________________________
(1)Revenue represents third-party management, asset management and developer fees and miscellaneous income and other ancillary items which are not allocated to a reportable segment.
(2)Amounts include revenue streams related to leasing activities that are not considered components of a lease, including but not limited to, apartment hold fees and application fees, as well as revenue streams not related to leasing activities, including but not limited to, vendor revenue sharing, building advertising, vending and dry cleaning revenue.
(3)Represents all revenue accounted for under ASC 606.
(4)Amounts include all revenue streams derived from residential and commercial rental income and other lease income, which are accounted for under ASC 842.

Due to the nature and timing of the Company’s identified revenue streams, there are no material amounts of outstanding or unsatisfied performance obligations as of June 30, 2021.

Lease Revenue Reserves

The Company assesses the collectability of its lease revenue and receivables on an on-going basis. Under ASC 842, Lease Accounting, the Company assesses the probability of receiving all remaining lease amounts due on a lease by lease basis, reserving for revenue and the related receivables for those leases where collection of substantially all of the remaining lease payments is not probable. Subsequently, the Company will only recognize revenue to the extent cash is received. If the Company determines that collection of the remaining lease payments becomes probable at a future date, the Company will recognize the cumulative revenue that would have been recorded under the original lease agreement.

In addition to the specific reserves recognized under ASC 842, the Company also evaluates its lease receivables for collectability at a portfolio level under ASC 450, Contingencies – Loss Contingencies. The Company recognizes a reserve under ASC 450 when the uncollectible revenue is probable and reasonably estimable. The Company applies this reserve to the population of the Company’s revenue and receivables not specifically addressed as part of the specific ASC 842 reserve.

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COVID-19 Pandemic

In March 2020, the World Health Organization designated COVID-19 as a pandemic. While the Company has taken various actions in response to the COVID-19 pandemic, the ultimate impact on its consolidated results of operations, cash flows, financial condition and liquidity will depend on (i) the duration and severity of the pandemic, (ii) the effectiveness of vaccines and the rate of vaccinations, (iii) the duration and nature of governmental responses to contain the spread of the disease and assist consumers and businesses, (iv) consumer and business responses to the pandemic, including preferences for where and how to live and work, and (v) how quickly and to what extent normal economic and operating conditions can resume. Because of this uncertainty, any estimate of the expected impact of the COVID-19 pandemic on results of operations, cash flows, financial condition, or liquidity for periods beyond the six months ended June 30, 2021 is uncertain.

As of June 30, 2021, the Company assessed the collectibility of the outstanding lease income receivables as a result of the impact of the COVID-19 pandemic on its residential and commercial lease portfolios. The Company recorded an aggregate offset to income for uncollectible lease revenue for its residential and commercial portfolios of $15,065,000 and $20,099,000 for the three months ended June 30, 2021 and 2020, respectively, and $33,710,000 and $24,279,000 for six months ended June 30, 2021 and 2020, respectively, under ASC 842 and ASC 450.

2.  Interest Capitalized

The Company capitalizes interest during the development and redevelopment of real estate assets. Capitalized interest associated with the Company's development or redevelopment activities totaled $8,362,000 and $11,019,000 for the three months ended June 30, 2021 and 2020, respectively, and $17,161,000 and $22,517,000 for the six months ended June 30, 2021 and 2020, respectively.

3.  Mortgage Notes Payable, Unsecured Notes, Term Loans and Credit Facility

The Company's mortgage notes payable, unsecured notes, variable rate unsecured term loans (the "Term Loans") and Credit Facility, as defined below, as of June 30, 2021 and December 31, 2020 are summarized below. The following amounts and discussion do not include the mortgage notes related to the communities classified as held for sale, if any, as of June 30, 2021 and December 31, 2020, as shown in the accompanying Condensed Consolidated Balance Sheets (dollars in thousands) (see Note 6, "Real Estate Disposition Activities").
  6/30/2021 12/31/2020
Fixed rate unsecured notes (1) $ 6,500,000  $ 6,500,000 
Term Loans (1) 250,000  250,000 
Fixed rate mortgage notes payable - conventional and tax-exempt (2) 380,030  408,964 
Variable rate mortgage notes payable - conventional and tax-exempt (2) 465,050  470,850 
Total mortgage notes payable and unsecured notes and Term Loans 7,595,080  7,629,814 
Credit Facility    
Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility $ 7,595,080  $ 7,629,814 
_____________________________________
(1)Balances at June 30, 2021 and December 31, 2020 exclude $9,577 and $10,380, respectively, of debt discount, and $34,910 and $37,615, respectively, of deferred financing costs, as reflected in unsecured notes, net on the accompanying Condensed Consolidated Balance Sheets.
(2)Balances at June 30, 2021 and December 31, 2020 exclude $14,083 and $14,478, respectively, of debt discount, and $2,877 and $3,004, respectively, of deferred financing costs, as reflected in mortgage notes payable, net on the accompanying Condensed Consolidated Balance Sheets.

The following debt activity occurred during the six months ended June 30, 2021:

In January 2021, the Company repaid $27,795,000 principal amount of 5.37% fixed rate debt secured by Avalon San Bruno II at par in advance of its April 2021 maturity date.

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At June 30, 2021, the Company has a $1,750,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the “Credit Facility”) which matures in February 2024. The Credit Facility bears interest at varying levels based on (i) the London Interbank Offered Rate (“LIBOR”) applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.) and (ii) the rating levels issued for our unsecured notes. The current stated pricing for drawn borrowings is LIBOR plus 0.775% per annum (0.88% at June 30, 2021), assuming a one month borrowing rate. The annual facility fee for the Credit Facility remained 0.125%, resulting in a fee of $2,188,000 annually based on the $1,750,000,000 facility size and based on the Company's current credit rating.

The Company had no borrowings outstanding under the Credit Facility and had $2,599,000 and $2,900,000 outstanding in letters of credit that reduced the borrowing capacity as of June 30, 2021 and December 31, 2020, respectively. In addition, the Company had $36,682,000 and $32,079,000 outstanding in additional letters of credit unrelated to the Credit Facility as of June 30, 2021 and December 31, 2020, respectively.

In the aggregate, secured notes payable mature at various dates from March 2027 through July 2066, and are secured by certain apartment communities (with a net carrying value of $1,373,062,000, excluding communities classified as held for sale, as of June 30, 2021).

The weighted average interest rate of the Company's fixed rate secured notes payable (conventional and tax-exempt) was 3.8% at both June 30, 2021 and December 31, 2020. The weighted average interest rate of the Company's variable rate secured notes payable (conventional and tax-exempt), including the effect of certain financing related fees, was 1.6% and 1.7% at June 30, 2021 and December 31, 2020, respectively.

Scheduled payments and maturities of secured notes payable and unsecured notes outstanding at June 30, 2021 are as follows (dollars in thousands):
Year Secured notes
principal payments
Secured notes maturities Unsecured notes and Term Loans maturities Stated interest rate of unsecured notes and Term Loans
2021 $ 2,414  $ —  $ —  N/A
2022 9,918  —  450,000  2.950  %
100,000 
LIBOR + 0.90%
2023 10,739  —  350,000  4.200  %
250,000  2.850  %
2024 11,677  —  300,000  3.500  %
150,000 
LIBOR + 0.85%
2025 12,408  —  525,000  3.450  %
300,000  3.500  %
2026 13,445  —  475,000  2.950  %
300,000  2.900  %
2027 15,880  236,100  400,000  3.350  %
2028 20,707  —  450,000  3.200  %
2029 11,742  66,250  450,000  3.300  %
2030 12,384  —  700,000  2.300  %
Thereafter 176,078  245,338  600,000  2.450  %
350,000  3.900  %
300,000  4.150  %
300,000  4.350  %
  $ 297,392  $ 547,688  $ 6,750,000   
 
The Company was in compliance at June 30, 2021 with customary financial covenants under the Credit Facility, the Term Loans and the Company's fixed rate unsecured notes.
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4.  Equity