Form: 10-K/A

Annual report pursuant to Section 13 and 15(d)

July 23, 2003

 



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K/A

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

Commission file number 1-12672

AVALONBAY COMMUNITIES, INC.

(Exact name of registrant as specified in its charter)

     
Maryland
(State or other jurisdiction of
incorporation or organization)
  77-0404318
(I.R.S. Employer
Identification No.)

2900 Eisenhower Avenue, Suite 300
Alexandria, Virginia 22314
(Address of principal executive office, including zip code)

(703) 329-6300
(Registrant’s telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:

     
Common Stock, par value $.01 per share   New York Stock Exchange, Pacific Exchange
8.00% Series D Cumulative Redeemable Preferred Stock,
par value $.01 per share
  New York Stock Exchange, Pacific Exchange
8.70% Series H Cumulative Redeemable Preferred Stock,
par value $.01 per share
(Title of each class)
  New York Stock Exchange, Pacific Exchange
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

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   x   No   o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

             
Yes   x   No   o

The aggregate market value of the Registrant’s Common Stock, par value $.01 per share, held by nonaffiliates of the Registrant, as of June 28, 2002 was $3,239,807,363.

The number of shares of the Registrant’s Common Stock, par value $.01 per share, outstanding as of February 1, 2003 was 68,149,232.

Documents Incorporated by Reference


Portions of AvalonBay Communities, Inc.’s Proxy Statement for the 2003 annual meeting of stockholders, a definitive copy of which will be filed with the SEC within 120 days after the year end of the year covered by this Form 10-K/A, are incorporated by reference herein as portions of Part III of this Form 10-K/A.



 


 

Explanatory Note

AvalonBay Communities, Inc. (the “Company”) is filing this Form 10-K/A to amend its Annual Report on Form 10-K for the year ended December 31, 2002, which was filed with the Securities and Exchange Commission (the “SEC”) on March 11, 2003, (i) to update its historical financial statements for the fiscal years ended December 31, 2002, 2001 and 2000 in connection with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” and (ii) in connection with the filing of its Registration Statement on Form S-3 with the SEC on March 11, 2003, as thereafter amended.

From January 1, 2003 through March 31, 2003, the Company sold one community and reclassified six communities as real estate held for sale. In compliance with SFAS No. 144, the Company has reported the operations of these communities as discontinued operations in its quarterly report on Form 10-Q for the period ended March 31, 2003, including any comparable periods presented. Under SEC requirements, the same reclassification as discontinued operations is required for previously issued annual financial statements for each of the three years shown in the Company’s most recently filed Annual Report on Form 10-K, if those financial statements are incorporated by reference in subsequent filings with the SEC made under the Securities Act of 1933, even though those financial statements relate to periods prior to the date of sale or transfer. This reclassification has no effect on the Company’s reported net income available to common stockholders or funds from operations (“FFO”).

The following Items are amended in this Form 10-K/A, however, all Items have been presented in this Form 10-K/A in their entirety. This Form 10-K/A speaks as of the original filing date and, except as expressly provided above, has not been updated to reflect events occurring subsequent to the original filing date.

     
     Item 1.   Business
     Item 2.   Communities
     Item 3.   Legal Proceedings
     Item 6.   Selected Financial Data
     Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
     Item 7a   Quantitative and Qualitative Disclosures About Market Risk
     Item 15(a)(1)   Financial Statements

 


 

TABLE OF CONTENTS

                 
            PAGE
           
 
  PART I        
ITEM 1
  BUSINESS     1  
ITEM 2
  COMMUNITIES     8  
ITEM 3
  LEGAL PROCEEDINGS     34  
ITEM 4
  SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS     35  
 
           
 
  PART II        
ITEM 5
  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED        
 
       STOCKHOLDER MATTERS     36  
ITEM 6
  SELECTED FINANCIAL DATA     37  
ITEM 7
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL        
 
       CONDITION AND RESULTS OF OPERATIONS     40  
ITEM 7a
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT        
 
       MARKET RISK     57  
ITEM 8
  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     59  
ITEM 9
  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS        
 
       ON ACCOUNTING AND FINANCIAL DISCLOSURE     59  
 
           
 
  PART III        
ITEM 10
  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT     59  
ITEM 11
  EXECUTIVE COMPENSATION     59  
ITEM 12
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS        
 
       AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS     59  
ITEM 13
  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS     60  
ITEM 14
  CONTROLS AND PROCEDURES     61  
 
           
 
  PART IV        
ITEM 15
  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND        
 
       REPORTS ON FORM 8-K     62  
SIGNATURE
            67  
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
68  

 


 

PART I

This Form 10-K/A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Our actual results could differ materially from those set forth in each forward-looking statement. Certain factors that might cause such a difference are discussed in this report, including in the section entitled “Forward-Looking Statements” on page 40 of this Form 10-K/A.

ITEM 1.      BUSINESS

General

AvalonBay Communities, Inc. is a Maryland corporation that has elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes. We focus on the ownership and operation of upscale apartment communities (which generally command among the highest rents in their submarkets) in high barrier-to-entry markets of the United States. This is because we believe that, long term, the limited new supply of upscale apartment homes and lower housing affordability in these markets will result in larger increases in cash flows relative to other markets over an entire business cycle. These barriers-to-entry generally include a difficult and lengthy entitlement process with local jurisdictions and dense urban or suburban areas where zoned and entitled land (“in-fill locations”) is in limited supply. Our markets are located in the Northeast, Mid-Atlantic, Midwest, Pacific Northwest, and Northern and Southern California regions of the United States. We believe that we have penetrated substantially all of the high barrier-to-entry markets of the country.

At February 1, 2003, we owned or held a direct or indirect ownership interest in 137 operating apartment communities containing 40,179 apartment homes in eleven states and the District of Columbia, of which two communities containing 1,089 apartment homes were under reconstruction. In addition, we owned or held a direct or indirect ownership interest in 12 communities under construction that are expected to contain an aggregate of 3,429 apartment homes when completed. We also owned a direct or indirect ownership interest in rights to develop an additional 38 communities that, if developed in the manner expected, will contain an estimated 9,950 apartment homes. We generally obtain ownership in an apartment community by developing a new community on vacant land or by acquiring and either repositioning or redeveloping an existing community. In selecting sites for development, redevelopment or acquisition, we favor locations that are near expanding employment centers and convenient to recreation areas, entertainment, shopping and dining.

Our real estate investments consist of the following reportable segments: Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. Established Communities are generally operating communities that were owned and had stabilized occupancy and costs as of the beginning of the prior year. Other Stabilized Communities are generally all other operating communities that have stabilized occupancy and costs as of the beginning of the current year, but had not achieved stabilization as of the beginning of the prior year. Development/Redevelopment Communities consist of communities that are under construction, communities where substantial redevelopment is in progress or is planned to begin during the current year and communities under lease-up. A more detailed description of these segments and other related information can be found in Note 9, “Segment Reporting,” of the Consolidated Financial Statements set forth in Item 8 of this report.

Our principal financial goal is to increase long-term stockholder value by successfully and cost-effectively developing, owning and operating high-quality communities in our selected markets that contain features and amenities desired by residents, as well as by providing our residents with efficient and effective service. To help fulfill this goal, our investment policy is (i) to selectively develop, redevelop and acquire apartment communities in high barrier-to-entry markets with growing or high potential for demand and (ii) to selectively sell apartment communities that no longer meet our long-term strategy due to product type, location or relative potential for future value creation and redeploy the proceeds from those sales to develop and redevelop apartment communities. In implementing our investment policy, we endeavor to maintain a conservative capital structure to provide continuous access to cost-effective capital and ensure balance sheet flexibility.

During the three years ended December 31, 2002, we acquired 11 apartment communities, disposed of 16 apartment communities, and completed the development of 22 apartment communities and the redevelopment of seven apartment communities. We presently expect to decrease acquisition and development during 2003 as compared to

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prior years and to increase disposition activity during 2003 in response to current and anticipated real estate and capital market conditions. The level of disposition, acquisition or development activity, however, is heavily influenced by capital market conditions, including prevailing interest rates. As a result, we cannot assure you that assets can be sold on terms that we consider satisfactory. A further discussion of our development, redevelopment, disposition and acquisition strategy follows.

Development Strategy. We carefully select land for development and follow established procedures that we believe minimize both the cost and the risks of development. As one of the largest developers of multifamily apartment communities in high barrier-to-entry markets of the United States, we identify development opportunities through local market presence and access to local market information achieved through our regional offices. In addition to our principal executive offices in Alexandria, Virginia, we also maintain regional offices and administrative or specialty offices in or near the following cities:

  •   Boston, Massachusetts;
 
  •   Chicago, Illinois;
 
  •   New Canaan, Connecticut;
 
  •   New York, New York;
 
  •   Newport Beach, California;
 
  •   San Jose, California;
 
  •   Seattle, Washington; and
 
  •   Woodbridge, New Jersey.

After selecting a target site, we usually negotiate for the right to acquire the site either through an option or a long-term conditional contract. Options and long-term conditional contracts generally enable us to acquire the target site shortly before the start of construction, which reduces development-related risks as well as preserves capital. After we acquire land, we generally shift our focus to construction. Except for certain mid-rise and high-rise apartment communities where we may elect to use third-party general contractors or construction managers, we act as our own general contractor and construction manager. We believe this enables us to achieve higher construction quality, greater control over construction schedules and significant cost savings. Our development, property management and construction teams monitor construction progress to ensure high-quality workmanship and a smooth and timely transition into the leasing and operational phase.

During the development process, we generally act as our own construction manager and general contractor. We perform these functions directly (and not through a subsidiary) both for ourselves and for the joint ventures and partnerships of which we are a member or a partner. From time to time, in lieu of managing construction ourselves, we will hire a third-party construction manager, particularly for high-rise construction.

Throughout this report, the term “development” has been used to refer to the entire property development cycle, including pursuit of zoning approvals, procurement of architectural and engineering designs and the construction process. References to “construction” refer only to one element of the development cycle – the actual construction of the property.

Redevelopment Strategy. When we undertake the redevelopment of a community, our goal is to generally renovate and/or rebuild an existing community so that our total investment is significantly below replacement cost and the community is the highest quality apartment community or best rental value for an upscale apartment community in its local area. We have established procedures to minimize both the cost and risks of redevelopment. Our redevelopment teams, which include key redevelopment, construction and property management personnel, monitor redevelopment progress. We believe we achieve significant cost savings by acting as our own general contractor. More importantly, this helps to ensure high-quality design and workmanship and a smooth and timely transition into the lease-up and restabilization phase.

Throughout this report, the term “redevelopment” has been used to refer to the entire redevelopment cycle – planning and procurement of architectural and engineering designs, budgeting and actual renovation work. The actual renovation work is referred to as “reconstruction” and is only one element of the redevelopment cycle.

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Disposition Strategy. To optimize our concentration of communities in selected high barrier-to-entry markets, we sell assets that do not meet our long-term investment criteria when market conditions are favorable and redeploy the proceeds from those sales to develop and redevelop communities under construction or reconstruction. This disposition strategy acts as a source of capital because we are able to redeploy the net proceeds from our dispositions in lieu of raising that amount of capital externally by issuing debt or equity securities. When we decide to sell a community, we generally solicit competing bids from unrelated parties for these individual assets and consider the sales price and tax ramifications of each proposal. In connection with this disposition strategy, we disposed of one community during the period from January 1, 2002 through February 1, 2003. The net proceeds from the sale of this community were approximately $78,454,000. We expect to increase our disposition activity during 2003 in response to current and anticipated real estate and capital markets conditions. However, we cannot assure you that assets can be sold on terms that we consider satisfactory, or at all, or that market conditions will continue to make the sale of assets an appealing strategy.

Acquisition Strategy. Our core competencies in development and redevelopment discussed above allow us to be selective in the acquisitions we target. Between January 1, 2002 and February 1, 2003, we acquired two communities containing 706 apartment homes, one of which was acquired in connection with a forward purchase contract agreed to in 1997. The acquisition of these communities was designed to achieve rapid penetration into markets that are generally supply constrained and in which we desired an increased presence.

Property Management Strategy. We intend to increase operating income through innovative, proactive property management that will result in higher revenue from communities and controlled operating expenses.

Our principal strategies to maximize revenue include:

  •   strong focus on resident satisfaction;
 
  •   staggering lease terms such that lease expirations are better matched to traffic patterns;
 
  •   balancing high occupancy with premium pricing, and increasing rents as market conditions permit;
 
  •   managing community occupancy for optimal rental revenue levels; and
 
  •   applying new technology to optimize revenue from each community.

Controlling operating expenses is another way in which we intend to increase earnings growth. Growth in our portfolio and the resulting increase in revenue allows for fixed operating costs to be spread over a larger volume of revenue, thereby increasing operating margins. We aggressively pursue real estate tax appeals and control operating expenses as follows:

  •   receive and approve invoices on-site to ensure careful monitoring of budgeted versus actual expenses;
 
  •   purchase supplies in bulk where possible;
 
  •   bid third-party contracts on a volume basis;
 
  •   strive to retain residents through high levels of service in order to eliminate the cost of preparing an apartment home for a new resident and to reduce marketing and vacant apartment utility costs;
 
  •   perform turnover work in-house or hire third-parties, generally depending upon the least costly alternative; and
 
  •   undertake preventive maintenance regularly to maximize resident satisfaction and property and equipment life.

On-site property management teams receive bonuses based largely upon the net operating income produced at their respective communities.

We generally manage the operation and leasing activity of our communities directly (and not through a subsidiary) both for ourselves and the joint ventures and partnerships of which we are a member or a partner.

We are also pursuing ancillary services which could provide additional revenue sources. In general, as a REIT we cannot directly provide services to our tenants that are not customarily provided by a landlord, nor can we share in the income of a third party that provides such services. However, we can provide such non-customary services to residents if we do so through a “taxable REIT subsidiary,” which is a subsidiary that is treated as a “C corporation”

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and is therefore subject to federal income taxes. We have used taxable REIT subsidiaries on a limited basis, such as to receive a commission from a “preferred provider” maid service company used by residents.

Technology Strategy. We believe that an innovative management information system infrastructure is an important element in managing our future growth. This is because timely and accurate collection of financial and resident profile data will enable us to maximize revenue through careful leasing decisions and financial management.

We currently have investments in three technology companies. These investments were made with the belief that they would promote the development and application of technology and services which would improve the operating performance of our real estate holdings. Historically, our most significant technology investment has been Realeum, Inc., (“Realeum”), an entity engaged in the development and deployment of an on-site property management and leasing automation system that enables management to capture, review and analyze data to a greater extent than is possible using existing commercial software. To help monitor this investment, Thomas J. Sargeant, our Executive Vice President and Chief Financial Officer, is a director of Realeum. After consideration of our share of Realeum’s losses, the carrying value of our investment in Realeum has been reduced to zero as of December 31, 2002. We are also a member of Constellation Real Technologies LLC, (“Constellation”), an entity formed by a number of real estate investment trusts and real estate operating companies for the purpose of investing in multi-sector real estate technology opportunities. Our original commitment to Constellation was $4,000,000 but, as a result of an agreement among the members reducing the commitment due from each member, our commitment is currently $2,600,000, of which we have contributed $959,000 to date. The remaining unfunded commitment of $1,641,000 is expected to be funded over the next five years. Our third investment is in Rent.com, an internet-based rental housing information provider. The aggregate carrying value of our technology investments at February 1, 2003 was $1,404,000.

Financing Strategy. We have consistently maintained, and intend to continue to maintain, a conservative capital structure. At December 31, 2002, our debt-to-total market capitalization was 46.1%, and our permanent long-term floating rate debt, not including borrowings under the unsecured credit facility, was only 2.0% of total market capitalization. Market capitalization reflects the aggregate of the market value of common stock, the liquidation preference of preferred stock and the principal amount of debt.

Before planned construction or reconstruction activity begins, we intend to arrange adequate capital sources to complete such undertakings, although we cannot assure you that we will be able to obtain such financing. During 2002, substantially all of our construction and reconstruction activities were funded by the issuance of unsecured debt securities, net proceeds from asset sales and retained operating cash. In the event that financing cannot be obtained, we may have to abandon planned development activities, write-off associated pursuit costs and/or forego reconstruction activity. In such instances, we will not realize the increased revenues and earnings that we expected from such pursuits.

We estimate that a portion of our short-term liquidity needs will be met from retained operating cash and borrowings under our $500,000,000 variable rate unsecured credit facility. At February 28, 2003, $155,470,000 was outstanding, $15,529,000 was used to provide letters of credit and $329,001,000 was available for borrowing under the unsecured credit facility.

If required to meet the balance of our current or anticipated liquidity needs, we will attempt to arrange additional capacity under our existing unsecured credit facility, sell additional existing communities or land and/or issue additional debt or equity securities. A determination to engage in an equity or debt offering depends on a variety of factors such as general market and economic conditions, including interest rates, our short and long term liquidity needs, the adequacy of our expected liquidity sources, the relative costs of debt and equity capital, and growth opportunities. During the three years ended December 31, 2002, we issued an aggregate of approximately $1,100,000,000 principal amount of senior debt securities (including the issuance of medium-term notes), and we repaid an aggregate of $100,000,000 in principal of senior debt securities. In addition, we repaid an aggregate of $50,000,000 in principal of senior debt securities in January 2003. Also, during the three years ended December 31, 2002, in the aggregate our issuances and redemptions of preferred stock resulted in net redemptions of $276,375,000 (based on liquidation preference).

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While we believe we have the financial position to expand our short-term credit capacity and access the capital markets as needed, we cannot assure you that we will be successful in completing these arrangements, sales or offerings. The failure to complete these transactions on a cost-effective basis or at all could have a material adverse impact on our operating results and financial condition, including the abandonment of development pursuits.

We may, from time to time, enter into joint ventures (including limited liability companies) or partnerships through which we would own an indirect economic interest in less than 100% of the property or properties owned directly by such joint venture or partnership. As of February 1, 2003, we had an interest in 14 joint ventures or partnerships (including the six “DownREIT” partnerships referred to below) through which we have an indirect economic interest in 27 of our communities. Our decision whether to hold an apartment community in fee simple or to have an indirect interest in the community through a joint venture or partnership is based on a variety of facts and considerations, including: (i) the economic and tax terms required by a seller of land or of a community, who may prefer that (or who may require less payment if) the land or community is contributed to a joint venture or partnership; (ii) our desire to diversify our portfolio of communities by market, submarket and product type; (iii) our desire at times to preserve our capital resources to maintain liquidity or balance sheet strength; and (iv) our projection, in some circumstances, that we will achieve higher returns on our invested capital or reduce our risk if a joint venture or partnership vehicle is used. Any future investments in joint ventures or partnerships will not be limited to a specified percentage of our assets. Each joint venture or partnership agreement is individually negotiated, and our ability to operate and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture or partnership agreement.

We may, from time to time, offer shares of our equity securities, debt securities or options to purchase stock in exchange for property. During the three years ended December 31, 2002, we issued an aggregate of 361,835 units of limited partnership interest in DownREITs in connection with the acquisition of properties or communities. Our DownREIT partnerships are described further under Item 2, “Communities.”

While we emphasize equity real estate investments in apartment communities, we have the ability, which would be exercised in the discretion of our Board of Directors, to invest in other types of real estate, mortgages (including participating or convertible mortgages), securities of other REITs or real estate operating companies, or securities of technology companies that relate to our real estate operations or of companies that provide services to us or our residents, in each case consistent with our qualification as a REIT. On occasion, we own and operate retail space at our communities when either (i) the highest and best use of the space is for retail (e.g., street level in an urban area) or (ii) we believe the retail space will enhance the attractiveness of the community to residents. As of December 31, 2002, we had a total of 176,253 square feet of rentable retail space that produced gross rental revenue in 2002 of $2,255,960 (0.4% of total revenue). Any investment in securities of other entities is subject to the percentage of ownership limitations and gross income tests necessary for REIT qualification. Our current policy does not contemplate future investments in mortgages or deeds of trust.

We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers and do not intend to do so. At all times we intend to make investments in a manner as to qualify as a REIT unless, because of circumstances or changes to the Internal Revenue Code (or the Treasury Regulations), the Board of Directors determines that it is no longer in our best interest to qualify as a REIT.

Inflation and Deflation

Substantially all of our leases are for a term of one year or less, which may enable us to realize increased rents upon renewal of existing leases or the beginning of new leases. Such short-term leases generally minimize the risk to us of the adverse effects of inflation, although as a general rule these leases permit residents to leave at the end of the lease term without penalty and therefore expose us to the effect of a decline in market rent. Our current policy is generally to allow residents to terminate leases upon an agreed advance written notice and a lease termination payment, as provided for in the resident’s lease. Short-term leases combined with relatively consistent demand have allowed rents, and therefore cash flow from the portfolio, to provide an attractive inflation hedge. However, in a deflationary rent environment as is currently being experienced, we are exposed to declining rents more quickly under these shorter-term leases.

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Tax Matters

We filed an election with our initial federal income tax return to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and intend to maintain our qualification as a REIT in the future. As a qualified REIT, with limited exceptions, we will not be taxed under federal and certain state income tax laws at the corporate level on our net income to the extent net income is distributed to our stockholders. We expect to make sufficient distributions to avoid income tax at the corporate level.

Competition

We face competition from other real estate investors, including insurance companies, pension and investment funds, partnerships and investment companies and other apartment REITs, to acquire and develop apartment communities and acquire land for future development. As an owner and operator of communities, we also face competition for prospective residents from other operators whose communities may be perceived to offer a better location or better amenities or whose rent may be perceived as a better value proposition given the quality, location and amenities that the resident seeks. We also compete with the condominium and single-family home markets. Although we often compete against large sophisticated developers and operators for development opportunities and for prospective residents, real estate developers and operators of any size can provide effective competition.

Environmental and Related Matters

Under various federal, state and local environmental laws, regulations and ordinances, a current or previous owner or operator of real estate may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at the property and may be held liable to a governmental entity or to third parties for property damage and for investigation and remediation costs incurred by these parties as a result of the contamination. These damages and costs may be substantial. The presence of such substances, or the failure to properly remediate the contamination, may adversely affect the owner’s ability to borrow against, sell or rent the affected property. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination.

Certain federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos containing materials (“ACMs”) when such materials are in poor condition or in the event of reconstruction, remodeling, renovation, or demolition of a building. These laws may impose liability for release of ACMs and may provide for third parties to seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs. We are not aware that any ACMs were used in the construction of the communities we developed. ACMs were, however, used in the construction of several of the communities that we acquired. We have implemented an operations and maintenance program for each of the communities at which ACMs have been detected. We do not anticipate that we will incur any material liabilities as a result of the presence of ACMs at our communities.

We are aware that some of our communities have lead paint and have implemented an operations and maintenance program at each of those communities. We do not anticipate that we will incur any material liabilities as a result of the presence of lead paint at our communities.

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All of our stabilized operating communities, and all of the communities that we are currently developing or redeveloping, have been subjected to at least a Phase I or similar environmental assessment, which generally does not involve invasive techniques such as soil or ground water sampling. These assessments, together with subsurface assessments conducted on some properties, have not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material adverse effect on our business, assets, financial condition or results of operations. In connection with our ownership, operation and development of communities, from time to time we undertake remedial action in response to the presence of subsurface or other contaminants. In some cases, an indemnity exists upon which we may be able to rely if environmental liability arises from the contamination. There can be no assurance, however, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that environmental liability arises.

Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Although the occurrence of mold at multifamily and other structures, and the need to remediate such mold, is not a new phenomenon, there has been increased awareness in recent years that certain molds may in some instances lead to adverse health effects, including allergic or other reactions. To help limit mold growth, we educate residents about the importance of adequate ventilation and request or require that they notify us when they see mold or excessive moisture. We have established procedures for promptly addressing and remediating mold or excessive moisture from apartment homes when we become aware of its presence regardless of whether we or the resident believe a health risk is presented. However, we cannot assure that mold or excessive moisture will be detected and remediated in a timely manner. If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities.

Additionally, we have occasionally been involved in developing, managing, leasing and operating various properties for third parties. Consequently, we may be considered to have been an operator of such properties and, therefore, potentially liable for removal or remediation costs or other potential costs which could relate to hazardous or toxic substances. We are not aware of any material environmental liabilities with respect to properties managed or developed by us or our predecessors for such third parties.

     We cannot assure you that:

  •   the environmental assessments described above have identified all potential environmental liabilities;
 
  •   no prior owner created any material environmental condition not known to us or the consultants who prepared the assessments;
 
  •   no environmental liabilities have developed since the environmental assessments were prepared;
 
  •   the condition of land or operations in the vicinity of our communities, such as the presence of underground storage tanks, will not affect the environmental condition of our communities;
 
  •   future uses or conditions, including, without limitation, changes in applicable environmental laws and regulations, will not result in the imposition of environmental liability; and
 
  •   no environmental liabilities will develop at communities that we have sold for which we may have liability.

Other Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934 are available free of charge in the “Investor Relations” section of our website (www.avalonbay.com) as soon as reasonably practicable after the reports are filed with or furnished to the SEC.

We were incorporated under the laws of the State of California in 1978. In 1995, we reincorporated in the State of Maryland and have been focused on the ownership and operation of apartment communities since that time. As of December 31, 2002, we had 1,775 employees.

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ITEM 2.      COMMUNITIES

Our real estate investments consist of current operating apartment communities, communities in various stages of development, and land or land options held for development (“Development Rights”). The following is a description of each category:

  Current Communities are categorized as Established, Other Stabilized, Lease-Up, or Redevelopment according to the following attributes:

  •   Established Communities (also known as Same Store Communities) are communities where a comparison of operating results from the prior year to the current year is meaningful, as these communities were owned and had stabilized occupancy and costs as of the beginning of the prior year. We determine which of our communities fall into the Established Communities category annually as of January 1st of each year and maintain that classification throughout the year. For the year 2002, the Established Communities were communities that had stabilized occupancy and costs as of January 1, 2001 and are not conducting or planning to conduct substantial redevelopment activities, as described below, within the current year. We consider a community to have stabilized occupancy at the earlier of (i) attainment of 95% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment. Established Communities do not include communities that are currently held for sale or planned for disposition during the current year.
 
  •   Other Stabilized Communities are all other completed communities that have stabilized occupancy and are not conducting or planning redevelopment activities within the current year. Other Stabilized Communities therefore include communities that were either acquired or achieved stabilization after January 1, 2001 and that were not conducting or planning to start redevelopment activities within the current year. Other Stabilized Communities do not include communities that are currently held for sale.
 
  •   Lease-Up Communities are communities where construction has been complete for less than one year and where occupancy has not reached 95%.
 
  •   Redevelopment Communities are communities where substantial redevelopment is in progress or is planned to begin during the current year. Redevelopment is considered substantial when capital invested during the reconstruction effort exceeds the lesser of $5,000,000 or 10% of the community’s acquisition cost.

  Development Communities are communities that are under construction and for which a final certificate of occupancy has not been received. These communities may be partially complete and operating.

  Development Rights are development opportunities in the early phase of the development process for which we either have an option to acquire land or enter into a leasehold interest, for which we are the buyer under a long-term conditional contract to purchase land or where we own land to develop a new community. We capitalize all related pre-development costs incurred in pursuit of new developments for which we currently believe future development is probable.

8


 

As of December 31, 2002, our communities were classified as follows:

                       
          Number of   Number of
          communities   apartment homes
         
 
Current Communities
               
 
Established Communities:
               
   
Northeast
    27       7,196  
   
Mid-Atlantic
    18       5,154  
   
Midwest
    4       1,296  
   
Pacific Northwest
    3       907  
   
Northern California
    29       8,601  
   
Southern California
    10       3,004  
 
   
     
 
     
Total Established
    91       26,158  
 
   
     
 
 
Other Stabilized Communities:
               
   
Northeast
    11       3,040  
   
Mid-Atlantic
    2       960  
   
Midwest
    —       —  
   
Pacific Northwest
    8       2,152  
   
Northern California
    2       499  
   
Southern California
    5       1,890  
 
   
     
 
     
Total Other Stabilized
    28       8,541  
 
   
     
 
 
Held for Sale Communities (1)
    7       2,091  
 
Lease-Up Communities
    9       2,300  
 
Redevelopment Communities
    2       1,089  
 
   
     
 
 
Total Current Communities
    137       40,179  
 
   
     
 
Development Communities
    12       3,429  
 
   
     
 
Development Rights
    38       9,950  
 
   
     
 

(1)   Represents assets sold or transferred to held for sale during the period January 1, 2003 through March 31, 2003.

Our holdings under each of the above categories are discussed on the following pages.

9


 

Current Communities

The Current Communities are primarily garden-style apartment communities consisting of two and three-story buildings in landscaped settings. The Current Communities, as of February 1, 2003, include 106 garden-style, 17 high-rise and 14 mid-rise apartment communities. The Current Communities offer many attractive amenities including some or all of the following:

  •   vaulted ceilings;
 
  •   lofts;
 
  •   fireplaces;
 
  •   patios/decks; and
 
  •   modern appliances.

     Other features at various communities may include:

  •   swimming pools;
 
  •   fitness centers;
 
  •   tennis courts; and
 
  •   business centers.

We also have an extensive and ongoing maintenance program to keep all communities and apartment homes substantially free of deferred maintenance and, where vacant, available for immediate occupancy. We believe that the aesthetic appeal of our communities and a service oriented property management team focused on the specific needs of residents enhances market appeal to discriminating residents. We believe this will ultimately achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses.

10


 

These Current Communities are located in the following geographic markets:

                                                   
           
           
   
Number of
 
Number of
 
Percentage of total
   
communities at
 
apartment homes at
 
apartment homes at
   
 
 
   
1-1-02
 
2-1-03
 
1-1-02
 
2-1-03
 
1-1-02
 
2-1-03
   
 
 
 
 
 
                                                 
Northeast
    38       45       10,877       12,667       29.3 %     31.5 %
 
Boston, MA
    11       13       2,839       3,142       7.6 %     7.8 %
 
Fairfield County, CT
    11       13       2,939       3,350       7.9 %     8.3 %
 
Long Island, NY
    3       3       915       915       2.5 %     2.3 %
 
Northern New Jersey
    4       5       1,394       1,802       3.8 %     4.5 %
 
Central New Jersey
    3       4       1,144       1,440       3.1 %     3.6 %
 
New York, NY
    6       7       1,646       2,018       4.4 %     5.0 %
 
                                               
Mid-Atlantic
    21       22       6,422       6,754       17.2 %     16.8 %
 
Baltimore, MD
    4       4       1,054       1,054       2.8 %     2.6 %
 
Washington, DC
    17       18       5,368       5,700       14.4 %     14.2 %
 
                                               
Midwest
    9       9       2,624       2,624       7.1 %     6.5 %
 
Chicago, IL
    4       4       1,296       1,296       3.5 %     3.2 %
 
Minneapolis, MN
    5       5       1,328       1,328       3.6 %     3.3 %
 
                                               
Pacific Northwest
    12       12       3,159       3,159       8.5 %     7.9 %
 
Seattle, WA
    12       12       3,159       3,159       8.5 %     7.9 %
 
                                               
Northern California
    30       32       8,889       9,318       23.8 %     23.2 %
 
Oakland-East Bay, CA
    6       6       2,090       2,090       5.6 %     5.2 %
 
San Francisco, CA
    8       8       1,765       1,765       4.7 %     4.4 %
 
San Jose, CA
    16       18       5,034       5,463       13.5 %     13.6 %
 
                                               
Southern California
    16       17       5,257       5,657       14.1 %     14.1 %
 
Los Angeles, CA
    4       5       2,001       2,401       5.4 %     6.0 %
 
Orange County, CA
    8       8       2,022       2,022       5.4 %     5.0 %
 
San Diego, CA
    4       4       1,234       1,234       3.3 %     3.1 %
 
   
     
     
     
     
     
 
 
    126       137       37,228       40,179       100.0 %     100.0 %
 
   
     
     
     
     
     
 

We manage and operate all of the Current Communities. During the year ended December 31, 2002, we completed construction of 2,521 apartment homes in ten communities for a total cost of $466,600,000. The average age of the Current Communities, on a weighted average basis according to number of apartment homes, is 8.1 years.

Of the Current Communities, as of February 1, 2003, we own:

  •   a fee simple, or absolute, ownership interest in 112 operating communities, one of which is on land subject to a land lease expiring in March 2142;
 
  •   a general partnership interest in three partnerships that each own a fee simple interest in an operating community;
 
  •   a general partnership interest in four partnerships structured as “DownREITs,” as described more fully below, that own an aggregate of 17 communities;
 
  •   a membership interest in four limited liability companies that each hold a fee simple interest in an operating community; and
 
  •   a 100% interest in a senior participating mortgage note secured by one community, which allows us to share in part of the rental income or resale proceeds of the community.

11


 

We also hold a fee simple ownership interest in nine of the Development Communities, a membership interest in a limited liability company that holds a fee simple interest in a Development Community and a general partnership interest in two partnerships structured as “DownREITs” that each own one Development Community.

In each of the six partnerships structured as DownREITs, either we or one of our wholly-owned subsidiaries is the general partner, and there are one or more limited partners whose interest in the partnership is represented by units of limited partnership interest. For each DownREIT partnership, limited partners are entitled to receive an initial distribution before any distribution is made to the general partner. Although the partnership agreements for each of the DownREITs are different, generally the distributions per unit paid to the holders of units of limited partnership interests have approximated our current common stock dividend amount. Each DownREIT partnership has been structured so that it is unlikely the limited partners will be entitled to a distribution greater than the initial distribution provided for in the applicable partnership agreement. The holders of units of limited partnership interest have the right to present each unit of limited partnership interest for redemption for cash equal to the fair market value of a share of our common stock on the date of redemption. In lieu of cash, we may elect to acquire any unit presented for redemption for one share of our common stock. As of February 1, 2003, there were 975,751 DownREIT partnership units outstanding. The DownREIT partnerships are consolidated for financial reporting purposes.

12


 

Profile of Current, Development and Unconsolidated Communities (1)
(Dollars in thousands, except per apartment home data)

                                                             
                        Approx.           Year of   Average        
                Number of   rentable area           completion or   size        
    City and state   homes   (Sq. Ft.)   Acres   acquisition   (Sq. Ft.)        

 
 
 
 
 
 
       
   
CURRENT COMMUNITIES
                                                       
NORTHEAST
                                                       
Boston, MA
                                                       
 
Avalon at Center Place (10)
 
Providence, RI
    225       231,671       1.2       1997       1,030          
 
Avalon at Faxon Park
 
Quincy, MA
    171       175,494       8.3       1998       1,026          
 
Avalon at Lexington
 
Lexington, MA
    198       231,182       18.0       1994       1,168          
 
Avalon at Prudential Center
 
Boston, MA
    781       747,954       1.0       1968/1998       958          
 
Avalon Essex
 
Peabody, MA
    154       173,520       11.1       2000       1,127          
 
Avalon Estates
 
Hull, MA
    162       188,392       55.0       2001       1,163          
 
Avalon Ledges
 
Weymouth, MA
    304       315,554       58.0       2002       1,023          
 
Avalon Oaks
 
Wilmington, MA
    204       229,748       22.5       1999       1,023          
 
Avalon Oaks West
 
Wilmington, MA
    120       123,960       27.0       2002       1,033          
 
Avalon Orchards
 
Marlborough, MA
    156       186,500       23.0       2002       1,219          
 
Avalon Summit
 
Quincy, MA
    245       203,848       9.1       1996       832          
 
Avalon West
 
Westborough, MA
    120       147,472       10.1       1996       1,229          
Fairfield-New Haven, CT
 
 
 
 
                                               
 
Avalon at Greyrock Place
 
Stamford, CT
    306       201,500       3.0       2002       1,040          
 
Avalon Corners
 
Stamford, CT
    195       192,174       3.2       2000       986          
 
Avalon Gates
 
Trumbull, CT
    340       381,322       37.0       1997       1,122          
 
Avalon Glen
 
Stamford, CT
    238       221,828       4.1       1991       932          
 
Avalon Haven
 
North Haven, CT
    128       140,107       10.6       2000       1,095          
 
Avalon Lake
 
Danbury, CT
    135       166,231       32.0       1999       1,184          
 
Avalon New Canaan (6)
 
New Canaan, CT
    104       130,104       9.1       2002       1,251          
 
Avalon Springs
 
Wilton, CT
    102       158,259       12.0       1996       1,552          
 
Avalon Valley
 
Danbury, CT
    268       297,479       17.1       1999       1,070          
 
Avalon Walk I & II
 
Hamden, CT
    764       761,441       38.4       1992/1994       996          
Long Island, NY
 
 
 
 
                                               
 
Avalon Commons
 
Smithtown, NY
    312       363,049       20.6       1997       1,164          
 
Avalon Court
 
Melville, NY
    494       597,104       35.4       1997/2000       1,209          
 
Avalon Towers
 
Long Beach, NY
    109       124,836       1.3       1995       1,145          
Northern New Jersey
 
 
 
 
                                               
 
Avalon at Edgewater
 
Edgewater, NJ
    408       405,144       7.1       2002       993          
 
Avalon at Florham Park
 
Florham Park, NJ
    270       331,560       41.9       2001       1,228          
 
Avalon Cove
 
Jersey City, NJ
    504       574,675       11.1       1997       1,140          
 
Avalon Crest
 
Fort Lee, NJ
    351       371,411       13.1       1999       1,058          
 
The Tower at Avalon Cove
 
Jersey City, NJ
    269       241,825       2.8       1999       905          
Central New Jersey
 
 
 
 
                                               
 
Avalon at Freehold
 
Freehold, NJ
    296       317,608       42.3       2002       1,073          
 
Avalon Run East
 
Lawrenceville, NJ
    206       265,198       27.0       1996       1,287          
 
Avalon Watch
 
West Windsor, NJ
    512       485,871       64.0       1988       949          

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                     
                Average economic   Average        
            occupancy   rental rate    
        Physical  
 
  Financial
        occupancy at       $ per   $ per   reporting cost
    12/31/02   2002   2001   Apt (4)   Sq. Ft.   (5)

 
 
 
 
 
 
   
CURRENT COMMUNITIES
                                               
NORTHEAST
                                               
Boston, MA
                                               
 
Avalon at Center Place (10)
    94.7 %     96.2 %     96.1 %   $ 2,172     $ 2.03     $ 27,318  
 
Avalon at Faxon Park
    93.6 %     93.9 %     97.4 %     1,833       1.68       15,231  
 
Avalon at Lexington
    93.9 %     93.8 %     96.5 %     1,933       1.55       15,347  
 
Avalon at Prudential Center
    93.3 %     89.2% (2)     94.9% (2)     2,612       2.43 (2)     151,813  
 
Avalon Essex
    95.5 %     94.0 %     96.4 %     1,870       1.56       21,537  
 
Avalon Estates
    83.3 %     88.5 %     91.2% (3)     1,736       1.32       20,216  
 
Avalon Ledges
    71.1 %     37.5% (3)     N/A       1,603       0.58 (3)     35,527  
 
Avalon Oaks
    94.6 %     92.2 %     96.3 %     1,687       1.38       20,823  
 
Avalon Oaks West
    94.6 %     76.3% (3)     N/A       1,495       1.10 (3)     16,619  
 
Avalon Orchards
    93.0 %     63.1% (3)     N/A       1,546       0.82 (3)     20,835  
 
Avalon Summit
    88.2 %     90.7 %     96.8 %     1,375       1.50       16,748  
 
Avalon West
    95.0 %     92.1 %     97.8 %     1,625       1.22       10,921  
Fairfield-New Haven, CT
                                               
 
Avalon at Greyrock Place
    83.0 %     66.7% (3)     N/A       1,998       2.02 (3)     69,673  
 
Avalon Corners
    82.1 %     87.7 %     96.5 %     2,145       1.91       31,778  
 
Avalon Gates
    88.2 %     93.0 %     98.8 %     1,672       1.39       36,100  
 
Avalon Glen
    89.1 %     91.4 %     96.5 %     1,763       1.73       31,295  
 
Avalon Haven
    82.0 %     91.0 %     98.8 %     1,638       1.36       13,750  
 
Avalon Lake
    87.4 %     95.2 %     98.1 %     1,800       1.39       16,995  
 
Avalon New Canaan (6)
    69.2 %     31.0% (3)     N/A       2,852       0.71 (3)     32,050  
 
Avalon Springs
    79.4 %     86.1 %     95.9 %     2,777       1.54       16,873  
 
Avalon Valley
    90.3 %     96.4 %     99.0 %     1,646       1.43       26,059  
 
Avalon Walk I & II
    91.4 %     94.6 %     98.5 %     1,313       1.25       59,044  
Long Island, NY
                                               
 
Avalon Commons
    99.7 %     98.1 %     97.1 %     1,796       1.51       33,293  
 
Avalon Court
    99.4 %     98.9 %     99.3 %     2,201       1.80       59,272  
 
Avalon Towers
    99.1 %     97.6 %     99.0 %     2,850       2.43       16,913  
Northern New Jersey
                                               
 
Avalon at Edgewater
    90.2 %     71.9% (3)     N/A       2,167       1.57 (3)     74,590  
 
Avalon at Florham Park
    88.9 %     93.4 %     91.8% (3)     2,404       1.83       41,569  
 
Avalon Cove
    91.7 %     87.4 %     96.7 %     2,565       1.97       91,953  
 
Avalon Crest
    83.2 %     90.2 %     94.2 %     2,167       1.85       56,062  
 
The Tower at Avalon Cove
    91.5 %     85.6 %     96.6 %     2,364       2.25       49,659  
Central New Jersey
                                               
 
Avalon at Freehold
    89.9 %     80.7% (3)     N/A       1,560       1.17 (3)     34,307  
 
Avalon Run East
    93.7 %     93.0 %     97.2 %     1,658       1.20       16,272  
 
Avalon Watch
    92.8 %     92.0 %     96.7 %     1,378       1.34       29,597  

13


 

Profile of Current, Development and Unconsolidated Communities (1)
(Dollars in thousands, except per apartment home data)

                                                           
                        Approx.           Year of   Average      
                Number of   rentable area           completion or   size      
    City and state   homes   (Sq. Ft.)   Acres   acquisition   (Sq. Ft.)      

 
 
 
 
 
 
     
New York, NY
                                                     
 
Avalon Riverview I
 
Long Island City, NY
    372       332,940       1.0       2002       895        
 
Avalon Gardens
 
Nanuet, NY
    504       638,439       55.0       1998       1,267        
 
Avalon Green
 
Elmsford, NY
    105       113,538       16.9       1995       1,081        
 
Avalon on the Sound (8)
 
New Rochelle, NY
    412       372,860       2.4       2001       905        
 
Avalon View
 
Wappingers Falls, NY
    288       335,088       41.0       1993       1,164        
 
Avalon Willow
 
Mamaroneck, NY
    227       199,945       4.0       2000       881        
 
The Avalon
 
Bronxville, NY
    110       119,186       1.5       1999       1,085        
MID-ATLANTIC
 
 
 
 
                                             
Baltimore, MD
 
 
 
 
                                             
 
Avalon at Fairway Hills I & II
 
Columbia, MD
    720       724,253       42.1       1987/1996       1,005        
 
Avalon at Symphony Glen
 
Columbia, MD
    176       179,867       10.0       1986       1,022        
 
Avalon Landing
 
Annapolis, MD
    158       117,033       13.8       1984/1995       741        
Washington, DC
 
 
 
 
                                             
 
4100 Massachusetts Avenue
 
Washington, D.C.
    308       298,725       2.7       1982       970        
 
AutumnWoods
 
Fairfax, VA
    420       355,228       24.2       1996       846        
 
Avalon at Arlington Square I
 
Arlington, VA
    510       583,950       14.2       2001       1,145        
 
Avalon at Arlington Square II
 
Arlington, VA
    332       325,499       6.1       2002       980        
 
Avalon at Ballston — Vermont & Quincy Towers (7)
 
Arlington, VA
    454       420,242       2.3       1997       926        
 
Avalon at Ballston — Washington Towers
 
Arlington, VA
    344       294,786       4.1       1990       857        
 
Avalon at Cameron Court
 
Alexandria, VA
    460       467,292       16.0       1998       1,016        
 
Avalon at Decoverly
 
Rockville, MD
    368       368,446       25.0       1995       1,001        
 
Avalon at Dulles
 
Sterling, VA
    236       232,632       15.7       1986       986        
 
Avalon at Fair Lakes
 
Fairfax, VA
    234       285,822       10.0       1998       1,221        
 
Avalon at Fox Mill
 
Herndon, VA
    165       219,360       12.8       2000       1,329        
 
Avalon at Providence Park
 
Fairfax, VA
    141       148,211       4.0       1988/1997       1,051        
 
Avalon Crescent
 
McLean, VA
    558       613,426       19.1       1996       1,099        
 
Avalon Crossing
 
Rockville, MD
    132       147,690       5.0       1996       1,119        
 
Avalon Fields I & II
 
Gaithersburg, MD
    288       292,282       9.2       1998       1,050        
 
Avalon Knoll
 
Germantown, MD
    300       290,365       26.7       1985       968        
MIDWEST
 
 
 
 
                                             
Chicago, IL
 
 
 
 
                                             
 
200 Arlington Place
 
Arlington Heights, IL
    409       346,832       2.8       2000       848        
 
Avalon at Danada Farms (7)
 
Wheaton, IL
    295       350,606       19.2       1997       1,188        
 
Avalon at Stratford Green (7)
 
Bloomingdale, IL
    192       237,204       12.7       1997       1,235        
 
Avalon at West Grove (7)
 
Westmont, IL
    400       388,500       17.4       1967       971        
Minneapolis, MN
 
 
 
 
                                             
 
Avalon at Devonshire (7)
 
Bloomington, MN
    498       470,762       42.0       1988       945        
 
Avalon at Edinburgh (7)
 
Brooklyn Park, MN
    198       222,130       11.3       1992       1,122        
 
Avalon at Town Centre
 
Eagan, MN
    248       235,518       18.7       1986       950        
 
Avalon at Town Square
 
Plymouth, MN
    160       144,026       8.3       1986       900        
 
Avalon at Woodbury (7)
 
Woodbury, MN
    224       287,975       15.0       1998       1,286        

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                     
                Average economic   Average        
            occupancy   rental rate    
        Physical  
 
  Financial
        occupancy at       $ per   $ per   reporting cost
    12/31/02   2002   2001   Apt (4)   Sq. Ft.   (5)

 
 
 
 
 
 
New York, NY
                                               
 
Avalon Riverview I
    71.5 %     37.3% (3)     N/A       2,520       1.05 (3)     94,045  
 
Avalon Gardens
    95.4 %     90.7 %     94.3 %     1,863       1.33       54,265  
 
Avalon Green
    88.6 %     94.8 %     94.5 %     2,419       2.12       12,603  
 
Avalon on the Sound (8)
    94.2 %     87.7 %     35.5% (3)     2,182       2.11       91,614  
 
Avalon View
    92.7 %     95.3 %     98.4 %     1,343       1.10       18,290  
 
Avalon Willow
    92.1 %     90.3 %     95.5 %     2,276       2.33       47,000  
 
The Avalon
    96.4 %     96.0 %     97.8 %     3,373       2.99       31,228  
MID-ATLANTIC
                                               
Baltimore, MD
                                               
 
Avalon at Fairway Hills I & II
    95.2 %     95.0 %     96.8 %     1,121       1.06       44,855  
 
Avalon at Symphony Glen
    97.7 %     97.2 %     97.1 %     1,143       1.09       9,172  
 
Avalon Landing
    96.8 %     97.7 %     97.5 %     1,030       1.36       9,791  
Washington, DC
                                               
 
4100 Massachusetts Avenue
    81.5 %     88.4% (2)     96.4  %     1,822       1.66  (2)      36,028  
 
AutumnWoods
    93.1 %     93.8 %     95.7 %     1,134       1.26       30,928  
 
Avalon at Arlington Square I
    88.0 %     90.7 %     49.9% (3)     1,730       1.37       69,678  
 
Avalon at Arlington Square II
    68.4 %     40.1% (3)     N/A       1,619       0.66 (3)     42,405  
 
Avalon at Ballston — Vermont & Quincy Towers (7)
    87.4 %     90.9 %     95.3 %     1,456       1.43       47,169  
 
Avalon at Ballston — Washington Towers
    88.1 %     91.9 %     96.9 %     1,444       1.55       37,359  
 
Avalon at Cameron Court
    92.6 %     94.6 %     96.3 %     1,631       1.52       43,246  
 
Avalon at Decoverly
    94.6 %     92.7 %     97.0 %     1,327       1.23       31,772  
 
Avalon at Dulles
    96.2 %     92.2 %     95.5 %     1,069       1.00       12,164  
 
Avalon at Fair Lakes
    96.6 %     94.0 %     96.0 %     1,497       1.15       23,476  
 
Avalon at Fox Mill
    88.5 %     93.3 %     95.6 %     1,560       1.09       19,513  
 
Avalon at Providence Park
    96.5 %     96.0 %     96.4 %     1,271       1.16       11,299  
 
Avalon Crescent
    90.1 %     93.4 %     93.9 %     1,622       1.38       57,283  
 
Avalon Crossing
    92.4 %     94.0 %     95.3 %     1,740       1.46       13,895  
 
Avalon Fields I & II
    90.9 %     92.3 %     97.2 %     1,341       1.22       22,700  
 
Avalon Knoll
    96.3 %     95.0 %     97.8 %     1,067       1.05       8,609  
MIDWEST
                                               
Chicago, IL
                                               
 
200 Arlington Place
    91.7 %     92.3 %     95.1 %     1,190       1.30       49,962  
 
Avalon at Danada Farms (7)
    92.9 %     93.5 %     95.7 %     1,347       1.06       38,423  
 
Avalon at Stratford Green (7)
    86.5 %     91.5 %     95.2 %     1,339       0.99       21,949  
 
Avalon at West Grove (7)
    91.5 %     91.5 %     96.4 %     904       0.85       29,915  
Minneapolis, MN
                                               
 
Avalon at Devonshire (7)
    91.2 %     93.7 %     95.4 %     1,022       1.01       37,686  
 
Avalon at Edinburgh (7)
    93.4 %     93.6 %     96.5 %     1,138       0.95       18,559  
 
Avalon at Town Centre
    95.2 %     93.6 %     95.9 %     1,000       0.99       18,214  
 
Avalon at Town Square
    93.1 %     91.5 %     96.8 %     1,020       1.04       10,898  
 
Avalon at Woodbury (7)
    94.6 %     94.9 %     93.9 %     1,153       0.85       25,985  

14


 

Profile of Current, Development and Unconsolidated Communities (1)
(Dollars in thousands, except per apartment home data)

                                                             
                        Approx.           Year of   Average        
                Number of   rentable area           completion or   size        
    City and state   homes   (Sq. Ft.)   Acres   acquisition   (Sq. Ft.)        

 
 
 
 
 
 
       
PACIFIC NORTHWEST
                                                       
Seattle, WA
                                                       
 
Avalon at Bear Creek (7)
 
Redmond, WA
    264       288,250       22.0       1998       1,092          
 
Avalon Bellevue
 
Bellevue, WA
    202       164,226       1.7       2001       813          
 
Avalon Belltown
 
Seattle, WA
    100       80,200       0.7       2001       802          
 
Avalon Brandemoor (7)
 
Lynwood, WA
    424       453,602       22.6       2001       1,070          
 
Avalon Greenbriar
 
Renton, WA
    421       382,382       20.0       1987/1988       908          
 
Avalon HighGrove (7)
 
Everett, WA
    391       422,482       19.8       2000       1,081          
 
Avalon ParcSquare (7)
 
Redmond, WA
    124       127,236       1.9       2000       1,026          
 
Avalon Redmond Place (7)
 
Redmond, WA
    222       206,004       22.0       1997       928          
 
Avalon RockMeadow (7)
 
Mill Creek, WA
    206       240,817       11.5       2000       1,169          
 
Avalon WildReed (7)
 
Everett, WA
    234       259,080       22.3       2000       1,107          
 
Avalon WildWood (7)
 
Lynwood, WA
    238       313,107       15.8       2001       1,316          
 
Avalon Wynhaven (7)
 
Issaquah, WA
    333       424,604       11.6       2001       1,275          
NORTHERN CALIFORNIA
 
 
 
 
                                               
Oakland-East Bay, CA
 
 
 
 
                                               
 
Avalon at Union Square
 
Union City, CA
    208       150,140       8.5       1973/1996       722          
 
Avalon at Willow Creek
 
Fremont, CA
    235       197,575       3.5       1985/1994       841          
 
Avalon Dublin
 
Dublin, CA
    204       179,004       13.0       1997       877          
 
Avalon Fremont
 
Fremont, CA
    443       446,422       22.3       1994       1,008          
 
Avalon Pleasanton
 
Pleasanton, CA
    456       377,438       14.7       1988/1994       828          
 
Waterford
 
Hayward, CA
    544       451,937       11.1       1985/1986       831          
San Francisco, CA
 
 
 
 
                                               
 
Avalon at Cedar Ridge
 
Daly City, CA
    195       141,411       8.0       1975/1997       725          
 
Avalon at Diamond Heights
 
San Francisco, CA
    154       123,080       2.6       1972/1994       799          
 
Avalon at Nob Hill
 
San Francisco, CA
    185       109,238       1.4       1990/1995       590          
 
Avalon Sunset Towers
 
San Francisco, CA
    243       175,511       16.0       1961/1996       722          
 
Avalon Foster City
 
Foster City, CA
    288       222,276       11.0       1973/1994       772          
 
Avalon Pacifica
 
Pacifica, CA
    220       186,785       7.7       1971/1995       849          
 
Avalon Towers by the Bay
 
San Francisco, CA
    226       243,033       1.0       1999       1,075          
 
Crowne Ridge
 
San Rafael, CA
    254       221,525       21.9       1973/1996       872          
San Jose, CA
 
 
 
 
                                               
 
Avalon at Blossom Hill
 
San Jose, CA
    324       322,207       7.5       1995       994          
 
Avalon at Cahill Park
 
San Jose, CA
    218       218,245       3.8       2002       1,001          
 
Avalon at Creekside
 
Mountain View, CA
    294       215,680       13.0       1962/1997       734          
 
Avalon at Foxchase
 
San Jose, CA
    396       335,212       12.0       1986/1987       844          
 
Avalon at Parkside
 
Sunnyvale, CA
    192       199,353       8.0       1991/1996       1,038          
 
Avalon at Pruneyard
 
Campbell, CA
    252       197,000       8.5       1966/1997       782          
 
Avalon at River Oaks
 
San Jose, CA
    226       210,050       4.0       1990/1996       929          
 
Avalon Campbell
 
Campbell, CA
    348       326,796       8.0       1995       939          
 
Avalon Cupertino
 
Cupertino, CA
    311       293,328       8.0       1999       943          
 
Avalon Mountain View (6)
 
Mountain View, CA
    248       211,552       10.5       1986       853          

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                     
                Average economic   Average        
            occupancy   rental rate    
        Physical  
 
  Financial
        occupancy at       $ per   $ per   reporting cost
    12/31/02   2002   2001   Apt (4)   Sq. Ft.   (5)

 
 
 
 
 
 
PACIFIC NORTHWEST
                                               
Seattle, WA
                                               
 
Avalon at Bear Creek (7)
    93.9 %     94.3 %     94.2 %     1,164       1.01       34,437  
 
Avalon Bellevue
    98.0 %     92.5 %     63.5% (3)     1,131       1.29       30,633  
 
Avalon Belltown
    98.0 %     83.8 %     16.1% (3)     1,263       1.32       18,279  
 
Avalon Brandemoor (7)
    96.0 %     93.9 %     96.5% (3)     978       0.86       45,309  
 
Avalon Greenbriar
    93.4 %     91.0 %     92.2 %     807       0.81       36,259  
 
Avalon HighGrove (7)
    97.4 %     94.8 %     93.5 %     920       0.81       39,620  
 
Avalon ParcSquare (7)
    96.0 %     95.7 %     94.2 %     1,254       1.17       18,995  
 
Avalon Redmond Place (7)
    89.2 %     94.6 %     94.8 %     1,104       1.13       26,042  
 
Avalon RockMeadow (7)
    95.6 %     93.3 %     92.7 %     1,058       0.84       24,457  
 
Avalon WildReed (7)
    96.6 %     94.4 %     95.9 %     939       0.80       22,956  
 
Avalon WildWood (7)
    95.4 %     94.1 %     96.0% (3)     1,149       0.82       32,865  
 
Avalon Wynhaven (7)
    86.2 %     89.3 %     95.1% (3)     1,287       0.90       52,554  
NORTHERN CALIFORNIA
                                               
Oakland-East Bay, CA
                                               
 
Avalon at Union Square
    99.5 %     94.8 %     95.5 %     1,188       1.56       21,891  
 
Avalon at Willow Creek
    100.0 %     95.8 %     95.3 %     1,371       1.56       34,258  
 
Avalon Dublin
    96.6 %     94.9 %     94.4 %     1,417       1.53       26,742  
 
Avalon Fremont
    96.4 %     93.7 %     95.8 %     1,568       1.46       77,170  
 
Avalon Pleasanton
    96.5 %     95.7 %     92.8 %     1,313       1.52       60,522  
 
Waterford
    94.5 %     92.9 %     94.7 %     1,202       1.34       59,066  
San Francisco, CA
                                               
 
Avalon at Cedar Ridge
    96.9 %     96.6 %     96.5 %     1,475       1.96       25,530  
 
Avalon at Diamond Heights
    98.7 %     92.2 %     95.2 %     1,582       1.82       24,398  
 
Avalon at Nob Hill
    94.1 %     94.3 %     93.7 %     1,503       2.40       27,500  
 
Avalon Sunset Towers
    95.8 %     95.0 %     96.7 %     1,606       2.11       28,171  
 
Avalon Foster City
    95.8 %     96.6 %     92.1 %     1,457       1.82       42,852  
 
Avalon Pacifica
    97.7 %     95.9 %     97.3 %     1,471       1.66       31,298  
 
Avalon Towers by the Bay
    94.7 %     93.8 %     91.4 %     2,730       2.38       66,882  
 
Crowne Ridge
    92.9 %     93.4 %     97.1 %     1,448       1.55       31,050  
San Jose, CA
                                               
 
Avalon at Blossom Hill
    97.2 %     93.4 %     93.2 %     1,637       1.54       60,886  
 
Avalon at Cahill Park
    92.7 %     39.7% (3)     N/A       1,761       0.70 (3)     52,114  
 
Avalon at Creekside
    98.3 %     96.3 %     95.6 %     1,437       1.89       42,966  
 
Avalon at Foxchase
    97.9 %     94.9 %     95.6 %     1,342       1.50       58,822  
 
Avalon at Parkside
    97.9 %     95.8 %     95.6 %     1,756       1.62       37,853  
 
Avalon at Pruneyard
    98.0 %     94.9 %     95.9 %     1,341       1.63       31,850  
 
Avalon at River Oaks
    96.0 %     93.9 %     93.4 %     1,614       1.63       45,005  
 
Avalon Campbell
    92.5 %     93.1 %     93.1 %     1,594       1.58       60,009  
 
Avalon Cupertino
    95.2 %     93.9 %     96.3 %     1,868       1.86       49,098  
 
Avalon Mountain View (6)
    96.0 %     93.8 %     97.5 %     1,736       1.91       50,512  

15


 

Profile of Current, Development and Unconsolidated Communities (1)
(Dollars in thousands, except per apartment home data)

                                                             
                        Approx.           Year of   Average        
                Number of   rentable area           completion or   size        
    City and state   homes   (Sq. Ft.)   Acres   acquisition   (Sq. Ft.)        

 
 
 
 
 
 
       
 
Avalon on the Alameda
 
San Jose, CA
    305       299,722       8.9       1999       983          
 
Avalon Rosewalk
 
San Jose, CA
    456       450,252       16.6       1997/1999       987          
 
Avalon Silicon Valley
 
Sunnyvale, CA
    710       658,591       13.6       1997       928          
 
Avalon Sunnyvale
 
Sunnyvale, CA
    220       159,653       5.0       1987/1995       726          
 
Avalon Towers on the Peninsula
 
Mountain View, CA
    211       218,392       1.9       2002       1,035          
 
CountryBrook (7)
 
San Jose, CA
    360       323,012       14.0       1985/1996       897          
 
Fairway Glen
 
San Jose, CA
    144       119,492       6.0       1986       830          
 
San Marino
 
San Jose, CA
    248       209,465       11.5       1984/1988       845          
SOUTHERN CALIFORNIA
 
 
 
 
                                               
Los Angeles, CA
 
 
 
 
                                               
 
Avalon at Media Center
 
Burbank, CA
    748       530,114       14.7       1969/1997       709          
 
Avalon at Warner Center
 
Woodland Hills, CA
    227       191,645       6.8       1979/1998       844          
 
Avalon Westside Terrace
 
Los Angeles, CA
    363       229,296       4.8       1966/1997       632          
 
Avalon Woodland Hills
 
Woodland Hills, CA
    663       592,722       18.2       1989/1997       894          
 
The Promenade
 
Burbank, CA
    400       360,587       6.9       1988/2002       923          
Orange County, CA
 
 
 
 
                                               
 
Amberway
 
Anaheim, CA
    272       205,572       9.9       1983/1998       756          
 
Avalon at Laguna Niguel
 
Laguna Niguel, CA
    176       174,848       10.0       1988/1998       993          
 
Avalon at Pacific Bay
 
Huntington Beach, CA
    304       268,000       9.7       1971/1997       882          
 
Avalon at South Coast
 
Costa Mesa, CA
    258       208,890       8.9       1973/1996       810          
 
Avalon Huntington Beach
 
Huntington Beach, CA
    400       353,192       16.4       1972/1997       883          
 
Avalon Mission Viejo
 
Mission Viejo, CA
    166       124,600       7.8       1984/1996       751          
 
Avalon Newport
 
Costa Mesa, CA
    145       120,690       6.6       1956/1996       832          
 
Avalon Santa Margarita
 
Rancho Santa Margarita, CA
    301       229,593       20.0       1990/1997       763          
San Diego, CA
 
 
 
 
                                               
 
Avalon at Cortez Hill
 
San Diego, CA
    294       224,840       1.2       1973/1998       765          
 
Avalon at Mission Bay
 
San Diego, CA
    564       402,327       5.7       1969/1997       713          
 
Avalon at Mission Ridge
 
San Diego, CA
    200       208,100       4.0       1960/1997       1,041          
 
Avalon at Penasquitos Hills
 
San Diego, CA
    176       141,120       8.8       1982/1997       802          

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                     
                Average economic   Average        
            occupancy   rental rate    
        Physical  
 
  Financial
        occupancy at       $ per   $ per   reporting cost
    12/31/02   2002   2001   Apt (4)   Sq. Ft.   (5)

 
 
 
 
 
 
 
Avalon on the Alameda
    95.7 %     92.7 %     89.5 %     1,882       1.77       56,426  
 
Avalon Rosewalk
    96.7 %     92.7 %     91.9 %     1,609       1.51       78,210  
 
Avalon Silicon Valley
    94.1 %     92.2 %     91.2 %     1,895       1.88       120,851  
 
Avalon Sunnyvale
    98.2 %     95.2 %     94.9 %     1,429       1.87       34,897  
 
Avalon Towers on the Peninsula
    97.2 %     62.4% (3)     N/A       2,229       1.34 (3)     65,581  
 
CountryBrook (7)
    95.3 %     93.1 %     91.6 %     1,342       1.39       47,792  
 
Fairway Glen
    100.0 %     95.1 %     94.0 %     1,333       1.53       17,128  
 
San Marino
    96.8 %     93.7 %     91.0 %     1,369       1.52       34,065  
SOUTHERN CALIFORNIA
                                               
Los Angeles, CA
                                               
 
Avalon at Media Center
    94.5 %     90.3% (2)     83.8% (2)     1,127       1.44 (2)     75,508  
 
Avalon at Warner Center
    97.4 %     96.5 %     97.2 %     1,329       1.52       26,414  
 
Avalon Westside Terrace
    95.6 %     92.3 %     95.7 %     1,171       1.71       37,241  
 
Avalon Woodland Hills
    97.6 %     95.4 %     96.1 %     1,273       1.36       71,590  
 
The Promenade
    95.0 %     92.8% (3)     N/A       1,443       1.49 (3)     70,996  
Orange County, CA
                                               
 
Amberway
    96.7 %     95.7 %     93.9 %     1,003       1.27       21,400  
 
Avalon at Laguna Niguel
    99.4 %     96.8 %     96.1 %     1,232       1.20       20,957  
 
Avalon at Pacific Bay
    97.7 %     95.3 %     96.6 %     1,235       1.33       31,941  
 
Avalon at South Coast
    98.8 %     96.5 %     94.8 %     1,137       1.35       24,596  
 
Avalon Huntington Beach
    95.5 %     91.6 %     94.7 %     1,276       1.32       37,192  
 
Avalon Mission Viejo
    98.8 %     95.9 %     96.9 %     1,138       1.45       13,167  
 
Avalon Newport
    100.0 %     97.7 %     97.9 %     1,346       1.58       10,112  
 
Avalon Santa Margarita
    94.0 %     94.4 %     96.0 %     1,153       1.43       23,635  
San Diego, CA
                                               
 
Avalon at Cortez Hill
    96.3 %     92.5 %     84.0 %     1,216       1.47       34,368  
 
Avalon at Mission Bay
    97.0 %     96.2 %     97.1 %     1,242       1.67       66,060  
 
Avalon at Mission Ridge
    97.0 %     96.4 %     97.2 %     1,389       1.29       21,625  
 
Avalon at Penasquitos Hills
    95.5 %     95.2 %     95.9 %     1,105       1.31       14,323  

16


 

Profile of Current, Development and Unconsolidated Communities (1)
(Dollars in thousands, except per apartment home data)

                                                             
                        Approx.           Year of   Average        
                Number of   rentable area           completion or   size        
    City and state   homes   (Sq. Ft.)   Acres   acquisition   (Sq. Ft.)        

 
 
 
 
 
 
       
   
DEVELOPMENT COMMUNITIES
                                                       
 
Avalon at Flanders Hill
 
Westborough, MA
    280       299,978       62.0       N/A       1,099          
 
Avalon at Gallery Place I
 
Washington, DC
    203       183,326       0.5       N/A       903          
 
Avalon at Glen Cove South
 
Glen Cove, NY
    256       270,000       4.0       N/A       1,050          
 
Avalon at Grosvenor Station
 
North Bethesda, MD
    497       478,530       9.9       N/A       963          
 
Avalon at Mission Bay North
 
San Francisco, CA
    250       244,224       1.4       N/A       977          
 
Avalon at Newton Highlands
 
Newton, MA
    294       401,241       7.0       N/A       1,177          
 
Avalon at Rock Spring
 
North Bethesda, MD
    386       388,480       10.2       N/A       1,006          
 
Avalon at Steven’s Pond
 
Saugus, MA
    326       360,509       82.0       N/A       1,106          
 
Avalon Darien
 
Darien, CT
    189       242,311       30.0       N/A       1,282          
 
Avalon Glendale
 
Burbank, CA
    223       241,712       5.1       N/A       1,084          
 
Avalon on Stamford Harbor
 
Stamford, CT
    323       336,566       12.1       N/A       1,042          
 
Avalon Traville Phase I
 
North Potomac, MD
    200       231,800       23.8       N/A       1,159          
   
UNCONSOLIDATED COMMUNITIES
 
 
 
 
                                               
 
Avalon Arbor (9)
 
Shrewsbury, MA
    302       297,989       26.0       1991       986          
 
Avalon Bedford (8)
 
Stamford, CT
    368       331,655       4.6       1961/1998       819          
 
Avalon Grove (8)
 
Stamford, CT
    402       363,408       12.0       1996       906          
 
Avalon Run (6)
 
Lawrenceville, NJ
    426       443,168       9.0       1994       1,010          
 
Falkland Chase (8)
 
Silver Spring, MD
    450       341,859       22.7       1936/1993       760          

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                     
                Average economic   Average        
            occupancy   rental rate    
        Physical  
 
  Financial
        occupancy at           $ per   $ per   reporting cost
    12/31/02   2002   2001   Apt (4)   Sq. Ft.   (5)

 
 
 
 
 
 
   
DEVELOPMENT COMMUNITIES
                                               
 
Avalon at Flanders Hill
    N/A       N/A       N/A       N/A       N/A       35,855  
 
Avalon at Gallery Place I
    N/A       N/A       N/A       N/A       N/A       41,414  
 
Avalon at Glen Cove South
    N/A       N/A       N/A       N/A       N/A       16,777  
 
Avalon at Grosvenor Station
    N/A       N/A       N/A       N/A       N/A       40,146  
 
Avalon at Mission Bay North
    N/A       N/A       N/A       N/A       N/A       71,470  
 
Avalon at Newton Highlands
    N/A       N/A       N/A       N/A       N/A       27,629  
 
Avalon at Rock Spring
    N/A       N/A       N/A       N/A       N/A       36,787  
 
Avalon at Steven’s Pond
    N/A       N/A       N/A       N/A       N/A       23,230  
 
Avalon Darien
    N/A       N/A       N/A       N/A       N/A       13,537  
 
Avalon Glendale
    N/A       N/A       N/A       N/A       N/A       17,132  
 
Avalon on Stamford Harbor
    N/A       N/A       N/A       N/A       N/A       61,146  
 
Avalon Traville Phase I
    N/A       N/A       N/A       N/A       N/A       8,882  
   
UNCONSOLIDATED COMMUNITIES
                                               
 
Avalon Arbor (9)
    90.7 %     92.0 %     97.7 %     1,360       1.27       N/A  
 
Avalon Bedford (8)
    88.6 %     90.9 %     80.6% (2)     1,544       1.56       N/A  
 
Avalon Grove (8)
    85.8 %     84.9 %     95.2 %     2,155       2.02       N/A  
 
Avalon Run (6)
    92.5 %     91.4 %     97.1 %     1,431       1.26       N/A  
 
Falkland Chase (8)
    97.8 %     94.4 %     98.6 %     1,140       1.42       N/A  

(1)   For this table, Current Communities excludes communities held by unconsolidated real estate joint ventures, which are listed separately. We own a fee simple interest in the Current Communities listed, excepted as noted below.
 
(2)   Represents community which was under redevelopment during the year, resulting in lower average economic occupancy and average rental rate per square foot for the year.
 
(3)   Represents community that completed development or was purchased during the year, which could result in lower average economic occupancy and average rental rate per square foot for the year.
 
(4)   Represents the average rental revenue per occupied apartment home.
 
(5)   Costs are presented in accordance with generally accepted accounting principles. For current Development Communities, cost represents total costs incurred through December 31, 2002. Financial reporting costs are excluded for unconsolidated communities, see Note 6, “Investments in Unconsolidated Entities,” of the Consolidated Financial Statements set forth in Item 8 of this report.
 
(6)   We own a general partnership interest in a partnership that owns a fee simple interest in this community.
 
(7)   We own a general partnership interest in a partnership structured as a DownREIT that owns this community.
 
(8)   We own a membership interest in a limited liability company that holds a fee simple interest in this community.
 
(9)   We have a 100% interest in a senior participating mortgage note secured by this community, which allows us to share in part of the rental income or resale proceeds of the community.
 
(10)   Community is located on land subject to a land lease expiring in March 2142.

17


 

Features and Recreational Amenities — Current and Development Communities

                                                                                     
                                                                                Washer &
        1 BR   2BR   3BR                                   dryer

 
 
  Studios/                   Parking   hook-ups
        1/1.5 BA   1/1.5 BA   2/2.5/3 BA   2/2.5   3BA   efficiencies   Other   Total   spaces   or units
       
 
 
 
 
 
 
 
 
 
CURRENT COMMUNITIES (1)
                                                                               
 
NORTHEAST
                                                                               
 
Boston, MA
                                                                               
   
Avalon at Center Place
    103       —       111       5       —       6       —       225       345     All
   
Avalon at Faxon Park
    68       —       75       28       —       —       —       171       287     All
   
Avalon at Lexington
    28       24       90       56       —       —       —       198       355     All
   
Avalon at Prudential Center
    361       —       237       —       23       148       12       781       142     None
   
Avalon Essex
    50       —       62       —       —       —       42       154       259     All
   
Avalon Estates
    66       16       80       —       —       —       —       162       354     All
   
Avalon Ledges
    124       —       152       28       —       —       —       304       610     All
   
Avalon Oaks
    60       24       96       24       —       —       —       204       355     All
   
Avalon Oaks West
    48       12       48       12       —       —       —       120       233     All
   
Avalon Orchards
    69       12       75       —       —       —       —       156       312     All
   
Avalon Summit
    154       61       28       2       —       —       —       245       328     None
   
Avalon West
    40       —       55       25       —       —       —       120       145     All
 
Fairfield-New Haven, CT
                                                                               
   
Avalon at Greyrock Place
  104       91       99       12       —       —       —       306       459     All
   
Avalon Corners
    118       —       77       —       —       —       —       195       273     All
   
Avalon Gates
    122       —       168       50       —       —       —       340       580     All
   
Avalon Glen
    124       —       114       —       —       —       —       238       400     Most
   
Avalon Haven
    44       60       —       24       —       —       —       128       256     All
   
Avalon Lake
    36       —       46       —       —       24       29       135       382     All
   
Avalon New Canaan
    16       —       64       24       —       —       —       104       202     All
   
Avalon Springs
    —       —       70       32       —       —       —       102       153     All
   
Avalon Valley
    106       —       134       28       —       —       —       268       626     All
   
Avalon Walk I & II
    272       116       122       74       —       —       180       764       1,528     All
 
Long Island, NY
                                                                               
   
Avalon Commons
    128       40       112       32       —       —       —       312       538     All
   
Avalon Court
    172       54       194       44       30       —       —       494       1,110     All
   
Avalon Towers
    —       —       37       1       3       1       67       109       198     All
 
Northern New Jersey
                                                                               
   
Avalon at Edgewater
    158       —       190       60       —       —       —       408       872     All
   
Avalon at Florham Park
    46       —       107       117       —       —       —       270       611     All
   
Avalon Cove
    190       —       190       46       2       —       76       504       464     All
   
Avalon Crest
    96       —       131       67       —       —       57       351       364     All
   
The Tower at Avalon Cove
    147       24       74       24       —       —       —       269       263     All
 
Central New Jersey
                                                                               
   
Avalon at Freehold
    42       41       176       37       —       —       —       296       611     All
   
Avalon Run East
    64       —       106       36       —       —       —       206       345     All
   
Avalon Watch
    252       36       142       82       —       —       —       512       768     Most
                                                                                       
                                  Large                           Non-           Homes w/
                                  storage   Balcony,                   direct   Direct   pre-wired
          Vaulted                   or walk-in   patio, deck   Built-in           access   access   security
          ceilings   Lofts   Fireplaces   closet   or sunroom   bookcases   Carports   garages   garages   systems
         
 
 
 
 
 
 
 
 
 
CURRENT COMMUNITIES (1)
                                                                               
 
NORTHEAST
                                                                               
 
Boston, MA
                                                                               
   
Avalon at Center Place Avalon at Faxon Park
  None   None   None   Half   Some   None   No   No   No   None
   
Avalon at Lexington
  Some   Some   Some   All   All   None   No   Yes   No   All
   
Avalon at Prudential
  Some   Some   Some   Most   All   None   Yes   Yes   No   All
     
Center
  None   None   None   Most   Some   None   No   No   No   None
   
Avalon Essex
  None   Some   Some   All   All   None   No   Yes   Yes   All
   
Avalon Estates
  Some   Some   Some   All   All   None   No   Yes   Yes   All
   
Avalon Ledges
  None   Some   Some   All   Some   None   No   Yes   No   All
   
Avalon Oaks
  Some   Some   Some   All   All   None   No   Yes   No   All
   
Avalon Oaks West
  Some   Some   Some   All   All   None   No   Yes   No   All
   
Avalon Orchards
  None   Half   Some   Most   All   None   No   Yes   Yes   All
   
Avalon Summit
  None   None   None   None   All   None   No   Yes   No   None
   
Avalon West
  Some   Some   Some   All   Half   None   No   Yes   Yes   All
 
Fairfield-New Haven, CT
                                                                               
   
Avalon at Greyrock Place
None   None   None   All   All   None   No   No   Yes   All
   
Avalon Corners
  Some   Some   Some   All   All   None   No   Yes   No   All
   
Avalon Gates
  Some   Some   None   All   All   None   Yes   Yes   No   All
   
Avalon Glen
  Some   Some   Some   Half   Most   None   Yes   Yes   No   Most
   
Avalon Haven
  None   Some   Some   All   All   None   Yes   Yes   No   All
   
Avalon Lake
  Some   Some   Some   All   All   None   No   Yes   No   All
   
Avalon New Canaan
  None   Some   Some   All   All   None   No   Yes   Yes   All
   
Avalon Springs
  Half   Half   Most   All   All   None   No   No   Yes   All
   
Avalon Valley
  Some   Some   Some   All   All   None   Yes   Yes   No   All
   
Avalon Walk I & II
  Some   Some   Half   All   All   Some   Yes   No   No   Half
 
Long Island, NY
                                                                                 
   
Avalon Commons
  Some   Some   Some   All   All   None   No   Yes   No   All
   
Avalon Court
  Some   Most   Some   All   All   None   No   Yes   Yes   All
   
Avalon Towers
  None   None   None   All   Most   None   No   No   Yes   All
 
Northern New Jersey
                                                                               
   
Avalon at Edgewater
  None   Some   Some   All   All   None   No   No   Yes   Some
   
Avalon at Florham Park
  Most   None   Some   All   Some   None   No   No   Yes   All
   
Avalon Cove
  Some   Some   Some   All   Most   None   No   Yes   Some   All
   
Avalon Crest
  Some   Some   Some   All   All   None   No   Yes   Yes   All
   
The Tower at Avalon Cove
  None   None   None   Half   Some   None   No   Yes   No   All
 
Central New Jersey
                                                                               
   
Avalon at Freehold
  Some   Some   Some   All   All   None   No   Yes   No   None
   
Avalon Run East
  Some   Some   Some   All   All   None   Yes   Yes   Yes   All
   
Avalon Watch
  Some   None   Some   All   All   None   No   Yes   No   None

18


 

Features and Recreational Amenities — Current and Development Communities

                                                                                   
                                                                              Washer &
      1 BR   2BR   3BR                                   dryer

 
 
  Studios/                   Parking   hook-ups
      1/1.5 BA   1/1.5 BA   2/2.5/3 BA   2/2.5   3BA   efficiencies   Other   Total   spaces   or units
     
 
 
 
 
 
 
 
 
 
New York, NY
                                                                               
 
Avalon Riverview I
    184       —       114       —       31       43       —       372       128     All
 
Avalon Gardens
    208       48       144       104       —       —       —       504       1,008     All
 
Avalon Green
    25       24       56       —       —       —       —       105       179     All
 
Avalon on the Sound
    143       —       184       22       20       43       —       412       645     Most
 
Avalon View
    115       47       62       64       —       —       —       288       576     All
 
Avalon Willow
    150       77       —       —       —       —       —       227       379     All
 
The Avalon
    55       2       43       10       —       —       —       110       167     All
MID-ATLANTIC
                                                                               
Baltimore, MD
                                                                               
 
Avalon at Fairway Hills I & II
    283       223       154       60       —       —       —       720       1,137     All
 
Avalon at Symphony Glen
    86       14       54       20       —       —       —       174       266     All
 
Avalon Landing
    65       18       57       —       —       —       18       158       257     All
Washington, DC
                                                                               
 
4100 Massachusetts Avenue
    160       70       —       3       —       27       48       308       330     All
 
AutumnWoods
    220       72       96       —       —       —       32       420       727     All
 
Avalon at Arlington Square I
    211       20       226       53       —       —       —       510       949     All
 
Avalon at Arlington Square II
    172       —       116       44       —       —       —       332       563     All
 
Avalon at Ballston - Vermont & Quincy Towers
    333       37       84       —       —       —       —       454       498     All
 
Avalon at Ballston - Washington Towers
    205       28       111       —       —       —       —       344       415     All
 
Avalon at Cameron Court
    208       —       168       —       —       —       84       460       736     All
 
Avalon at Decoverly
    156       —       104       64       44       —       —       368       584     All
 
Avalon at Dulles
    104       40       76       —       16       —       —       236       493     All
 
Avalon at Fair Lakes
    45       12       125       26       26       —       —       234       505     All
 
Avalon at Fox Mill
    —       —       92       73       —       —       —       165       343     All
 
Avalon at Providence Park
    19       —       112       4       —       —       6       141       287     All
 
Avalon Crescent
    186       26       346       —       —       —       —       558       662     All
 
Avalon Crossing
    —       27       105       —       —       —       —       132       224     All
 
Avalon Fields I & II
    74       32       84       32       —       —       66       288       443     All
 
Avalon Knoll
    136       55       81       28       —       —       —       300       482     All
MIDWEST
                                                                               
Chicago, IL
                                                                               
 
200 Arlington Place
    142       89       148       —       —       30       —       409       650     All
 
Avalon at Danada Farms
    80       52       134       29       —       —       —       295       714     All
 
Avalon at Stratford Green
    45       9       108       21       —       —       9       192       437     All
 
Avalon at West Grove
    200       200       —       —       —       —       —       400       860     None
Minneapolis, MN
                                                                               
 
Avalon at Devonshire
    194       —       304       —       —       —       —       498       498     Most
 
Avalon at Edinburgh
    56       —       114       26       —       2       —       198       210     All
 
Avalon at Town Centre
    104       —       111       33       —       —       —       248       250     All
 
Avalon at Town Square
    76       —       68       12       —       —       4       160       162     All
 
Avalon at Woodbury
    41       —       147       36       —       —       —       224       513     All
                                                                                           
                              Large                           Non-           Homes w/        
                              storage   Balcony,                   direct   Direct   pre-wired
      Vaulted                   or walk-in   patio, deck   Built-in           access   access   security        
      ceilings   Lofts   Fireplaces   closet   or sunroom   bookcases   Carports   garages   garages   systems        
     
 
 
 
 
 
 
 
 
 
       
New York, NY
                                                                               
 
Avalon Riverview I
  None   None   None   Most   Some   None   No   Yes   No   Some
 
Avalon Gardens
  Half   Half   Some   All   Most   None   Yes   Yes   Yes   All
 
Avalon Green
  Some   Half   Some   All   All   None   Yes   No   No   All
 
Avalon on the Sound
  None   Some   None   Most   Some   None   No   Yes   No   Some
 
Avalon View
  Some   Some   Some   Most   All   None   Yes   No   No   None
 
Avalon Willow
  Some   Some   None   Most   All   None   No   Yes   Yes   All
 
The Avalon
  Some   Some   Some   Most   Half   None   No   Yes   No   All
MID-ATLANTIC
                                                                               
Baltimore, MD
                                                                               
 
Avalon at Fairway Hills I & II
  Some   None   Some   Some   All   Some   No   No   No   None
 
Avalon at Symphony Glen
  Some   None   Most   All   All   Half   No   No   No   None
 
Avalon Landing
  None   None   Most   Most   All   None   Yes   No   No   None
Washington, DC
                                                                               
 
4100 Massachusetts Avenue
  None   None   Some   Most   All   Some   No   Yes   No   None
 
AutumnWoods
  Some   None   Some   All   All   Some   Yes   No   No   None
 
Avalon at Arlington Square I
  Some   Some   Some   All   Some   Some   No   No   Yes   All
 
Avalon at Arlington Square II
  Some   Some   Some   Some   All   Some   No   No   No   All
 
Avalon at Ballston - Vermont & Quincy Towers
  None   None   None   Most   All   None   No   No   Yes   None
 
Avalon at Ballston - Washington Towers
  None   None   Some   Most   All   None   No   No   Yes   None
 
Avalon at Cameron Court
  Some   Some   Some   All   Most   None   No   Yes   Yes   All
 
Avalon at Decoverly
  Some   Some   Most   Most   All   None   No   No   No   None
 
Avalon at Dulles
  Some   None   Some   All   All   Some   No   No   No   None
 
Avalon at Fair Lakes
  Half   None   Half   All   Most   None   No   Yes   Yes   None
 
Avalon at Fox Mill
  Most   None   Most   All   All   None   No   No   Yes   All
 
Avalon at Providence Park
  None   None   Most   All   All   None   No   No   No   None
 
Avalon Crescent
  Some   Some   Half   Most   All   Some   No   Yes   Yes   All
 
Avalon Crossing
  Some   Some   Half   All   All   Some   No   Yes   Yes   All
 
Avalon Fields I & II
  Some   Some   Half   All   Most   None   No   Yes   No   All
 
Avalon Knoll
  Some   None   Half   All   All   Some   No   No   No   None
MIDWEST
                                                                               
Chicago, IL
                                                                               
 
200 Arlington Place
  None   None   None   All   Some   None   No   Yes   No   None
 
Avalon at Danada Farms
  None   None   Some   All   Some   Some   No   No   Yes   None
 
Avalon at Stratford Green
  None   None   Some   Most   Some   Some   No   Yes   Yes   None
 
Avalon at West Grove
  None   None   None   None   All   None   Yes   No   No   None
Minneapolis, MN
                                                                               
 
Avalon at Devonshire
  Some   None   Some   Most   Most   Some   No   Yes   Yes   None
 
Avalon at Edinburgh
  None   None   Some   Some   All   None   No   Yes   No   None
 
Avalon at Town Centre
  Some   None   Some   Some   All   None   No   Yes   No   None
 
Avalon at Town Square
  Some   None   Some   Some   All   None   No   Yes   No   None
 
Avalon at Woodbury
  None   None   Some   Some   Some   None   No   No   Yes   None

19


 

Features and Recreational Amenities — Current and Development Communities

                                                                                   
                                                                              Washer &
      1 BR   2BR   3BR                                   dryer

 
 
  Studios/                   Parking   hook-ups
      1/1.5 BA   1/1.5 BA   2/2.5/3 BA   2/2.5   3BA   efficiencies   Other   Total   spaces   or units
     
 
 
 
 
 
 
 
 
 
PACIFIC NORTHWEST
                                                                               
Seattle, WA
                                                                               
 
Avalon at Bear Creek
    55       40       110       59       —       —       —       264       470     All
 
Avalon Bellevue
    110       —       67       —       —       25       —       202       304     All
 
Avalon Belltown
    64       —       20       —       —       16       —       100       134     All
 
Avalon Brandemoor
    88       109       149       78       —       —       —       424       732     All
 
Avalon Greenbriar
    16       19       217       169       —       —       —       421       731     All
 
Avalon HighGrove
    84       119       124       56       8       —       —       391       713     All
 
Avalon ParcSquare
    31       26       55       5       7       —       —       124       196     All
 
Avalon Redmond Place
    76       44       67       35       —       —       —       222       384     All
 
Avalon RockMeadow
    28       48       86       28       16       —       —       206       308     All
 
Avalon WildReed
    36       60       78       60       —       —       —       234       462     All
 
Avalon Wildwood
    5       —       211       —       17       —       5       238       16     All
 
Avalon Wynhaven
    3       42       239       13       28       —       8       333       260     All
NORTHERN CALIFORNIA
                                                                               
Oakland-East Bay, CA
                                                                               
 
Avalon at Union Square
    124       84       —       —       —       —       —       208       210     None
 
Avalon at Willow Creek
    99       —       136       —       —       —       —       235       240     All
 
Avalon Dublin
    72       8       60       48       —       —       16       204       427     Most
 
Avalon Fremont
    130       81       176       —       56       —       —       443       830     All
 
Avalon Pleasanton
    238       —       218       —       —       —       —       456       856     All
 
Waterford
    208       —       336       —       —       —       —       544       876     Some
San Francisco, CA
                                                                               
 
Avalon at Cedar Ridge
    117       33       24       —       —       21       —       195       258     None
 
Avalon at Diamond Heights
    90       —       49       15       —       —       —       154       155     None
 
Avalon at Nob Hill
    114       —       25       —       —       46       —       185       104     None
 
Avalon at Sunset Towers
    183       20       20       —       —       20       —       243       244     None
 
Avalon Foster City
    124       123       1       —       —       40       —       288       490     None
 
Avalon Pacifica
    58       106       56       —       —       —       —       220       299     None
 
Avalon Towers by the Bay
    103       —       120       —       3       —       —       226       235     All
 
Crowne Ridge
    158       68       24       —       —       4       —       254       377     Some
San Jose, CA
                                                                               
 
Avalon at Blossom Hill
    90       —       210       —       24       —       —       324       562     All
 
Avalon at Cahill Park
    118       —       94       —       6       —       —       218       283     All
 
Avalon at Creekside
    158       128       —       —       —       8       —       294       376     None
 
Avalon at Foxchase
    168       —       228       —       —       —       —       396       719     All
 
Avalon at Parkside
    60       —       96       36       —       —       —       192       192     All
 
Avalon at Pruneyard
    212       40       —       —       —       —       —       252       395     All
 
Avalon at River Oaks
    100       —       126       —       —       —       —       226       354     All
 
Avalon Campbell
    156       —       180       —       12       —       —       348       588     All
 
Avalon Cupertino
    145       —       152       —       14       —       —       311       526     All
 
Avalon Mountain View
    108       —       88       52       —       —       —       248       248     All
 
Avalon on the Alameda
    113       —       164       —       28       —       —       305       558     All
 
Avalon Rosewalk I & II
    168       —       264       —       24       —       —       456       648     All
 
Avalon Silicon Valley
    338       —       336       18       15       3       —       710       1,400     All
 
Avalon Sunnyvale
    112       10       54       —       —       44       —       220       394     Some
 
Avalon Towers on the Peninsula
    90       —       115       —       6       —       —       211       512     All
 
CountryBrook
    108       —       252       —       —       —       —       360       694     All
 
Fairway Glen
    60       —       84       —       —       —       —       144       226     All
 
San Marino
    103       —       145       —       —       —       —       248       436     All
                                                                                   
                              Large                           Non-           Homes w/
                              storage   Balcony,                   direct   Direct   pre-wired
      Vaulted                   or walk-in   patio, deck   Built-in           access   access   security
      ceilings   Lofts   Fireplaces   closet   or sunroom