Form: 10-K

Annual report pursuant to Section 13 and 15(d)

March 15, 2005

 

 
 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-K

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

For the fiscal year ended December 31, 2004

Commission file number 1-12672

AVALONBAY COMMUNITIES, INC.

(Exact name of registrant as specified in its charter)


Maryland   77-0404318
(State or other jurisdiction of
incorporation or organization)
  (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
8.70% Series H Cumulative Redeemable Preferred Stock,
par value $.01 per share
  New York Stock Exchange, Pacific Exchange
New York Stock Exchange, Pacific Exchange
(Title of each class)   (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.

Yesx          Noo

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 or any amendment to this Form 10-K. o

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

Yesx          Noo

The aggregate market value of the Registrant’s Common Stock, par value $.01 per share, held by nonaffiliates of the Registrant, as of June 30, 2004 was $4,062,613,967.

The number of shares of the Registrant’s Common Stock, par value $.01 per share, outstanding as of February 28, 2005 was 72,725,148.

Documents Incorporated by Reference

Portions of AvalonBay Communities, Inc.’s Proxy Statement for the 2005 annual meeting of stockholders, a definitive copy of which will be filed with the SEC within 120 days after the year end of the year covered by this Form 10-K, are incorporated by reference herein as portions of Part III of this Form 10-K.

 
 

 


 

TABLE OF CONTENTS

             
        PAGE  
 
           
 
  PART I        
 
           
ITEM 1.
  BUSINESS     1  
 
           
ITEM 2.
  COMMUNITIES     7  
 
           
ITEM 3.
  LEGAL PROCEEDINGS     33  
 
           
ITEM 4.
  SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS     33  
 
           
 
  PART II        
 
           
ITEM 5.
  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED        
 
            STOCKHOLDER MATTERS     34  
 
           
ITEM 6.
  SELECTED FINANCIAL DATA     35  
 
           
ITEM 7.
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL        
 
            CONDITION AND RESULTS OF OPERATIONS     38  
 
           
ITEM 7a.
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT        
 
            MARKET RISK     55  
 
           
ITEM 8.
  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     57  
 
           
ITEM 9.
  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS        
 
            ON ACCOUNTING AND FINANCIAL DISCLOSURE     57  
 
           
ITEM 9a.
  CONTROLS AND PROCEDURES     57  
 
           
ITEM 9b.
  OTHER INFORMATION     57  
 
           
 
  PART III        
 
           
ITEM 10.
  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT     58  
 
           
ITEM 11.
  EXECUTIVE COMPENSATION     58  
 
           
ITEM 12.
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS        
 
            AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS     58  
 
           
ITEM 13.
  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS     59  
 
           
ITEM 14.
  PRINCIPAL ACCOUNTING FEES AND SERVICES     59  
 
           
 
  PART IV        
 
           
ITEM 15.
  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND        
 
            REPORTS ON FORM 8-K     60  
 
           
SIGNATURES
        65  

 


 

PART I

This Form 10-K 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, included in the section entitled “Forward-Looking Statements” on page 54 of this Form 10-K.

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 development, redevelopment, acquisition, ownership and operation of apartment communities in high barrier-to-entry markets of the United States. This is because we believe that, long term, the limited new supply of 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 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.

At February 28, 2005, we owned or held a direct or indirect ownership interest in 138 operating apartment communities containing 40,142 apartment homes in ten states and the District of Columbia, of which four communities containing 1,430 apartment homes were under reconstruction. In addition, we owned or held a direct or indirect ownership interest in ten communities under construction that are expected to contain an aggregate of 2,668 apartment homes when completed. We also owned a direct or indirect ownership interest in rights to develop an additional 49 communities that, if developed in the manner expected, will contain an estimated 13,491 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 operating expenses as of the beginning of the prior year. Other Stabilized Communities are generally all other operating communities that have stabilized occupancy and operating expenses 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, redeveloping, acquiring, 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, we regularly (i) monitor our investment allocation by geographic market and product type, (ii) develop, redevelop and acquire apartment communities in high barrier-to-entry markets with growing or high potential for demand, (iii) selectively sell apartment communities that no longer meet our long-term strategy or when opportunities are presented to realize a portion of the value created over the past business cycle and redeploy the proceeds from those sales, and (iv) endeavor to maintain a capital structure that is aligned with our business risks such that we maintain continuous access to cost-effective capital. Our long-term strategy is to deeply penetrate the high barrier-to-entry markets in our chosen regions with a broad range of products and services and an intense focus on our customer. A substantial majority of our current communities are upscale, which generally command among the highest rents in their markets. However, we also pursue the ownership and operation of apartment communities that target a variety of customer segments and price points, consistent with our goal of offering a broad range of products and services.

1


 

During the three years ended December 31, 2004, we acquired seven apartment communities, disposed of 17 apartment communities, and completed the development of 24 apartment communities and the redevelopment of three apartment communities. In anticipation of continued improvement in apartment fundamentals and stronger apartment demand, we have increased our development and acquisition volume. During 2004, we increased our level of acquisition activity in preparation of the closing of a discretionary investment fund. In addition, we continued to secure new development opportunities, bringing our pipeline for potential development opportunities to a new high. However, we continued with certain disposition activity when presented with opportunities to realize value. In 2005, we expect to continue acquisitions for the discretionary investment fund, particularly potential redevelopment communities, and to continue to be an opportunistic seller, while increasing our development activity over 2004 levels. The level of development, acquisition and disposition activity, however, is heavily influenced by capital market conditions, including prevailing interest rates. 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. However, we will acquire and hold land where business conditions warrant. 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 generally 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. 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.

Throughout this report, the term “development” is 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 to the actual construction of the property, which is only one element of the development cycle.

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 one of the highest quality apartment communities or best rental values for an 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.

2


 

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

Disposition Strategy. We sell assets when market conditions are favorable and redeploy the proceeds from those sales to develop, redevelop and acquire communities and to rebalance our portfolio across geographic regions. This also allows us to realize a portion of the value created over the past business cycle, as well as provides additional liquidity. We are then 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 of each proposal.

Acquisition Strategy. Our core competencies in development and redevelopment discussed above allow us to be selective in the acquisitions we target. From time to time, in order to achieve rapid penetration into markets that are generally supply constrained and in which we desire an increased presence and to help us achieve our desired product mix, or to rebalance our portfolio, we will acquire existing apartment communities. Over the next several years, we expect to increase our acquisition activity for a discretionary investment fund which we anticipate closing in early 2005, particularly potential redevelopment opportunities.

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 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;
  •   undertake preventive maintenance regularly to maximize resident satisfaction and property and equipment life; and
  •   aggressively pursue real estate tax appeals.

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” 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” vendor used by residents.

3


 

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.

Financing Strategy. We have consistently maintained, and intend to continue to maintain, a capital structure that is aligned to the business risks presented by our corporate strategy. At December 31, 2004, our debt-to-total market capitalization was 30.4%, and our long-term floating rate debt, not including borrowings under our unsecured credit facility, was 2.6% of total market capitalization. Total market capitalization reflects the aggregate of the market value of our common stock, the market value of our operating partnership units outstanding (based on the market value of our common stock), the liquidation preference of our preferred stock and the outstanding principal amount of our debt. We believe that debt-to-total market capitalization can be one useful measure of a real estate operating company’s long-term liquidity and balance sheet strength, because it shows an approximate relationship between a company’s total debt and the current total market value of its assets based on the current price at which the company’s common stock trades. However, because debt-to-total market capitalization changes with fluctuations in our stock price, which occurs regularly, our debt-to-total market capitalization may change even when our earnings and debt levels remain stable.

We estimate that a portion of our short-term liquidity needs will be met from retained operating cash and borrowings under our variable rate 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 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. A summary of debt and equity activity for the last three years is reflected on our Consolidated Statement of Cash Flows of the Consolidated Financial Statements set forth in Item 8 of this report.

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.

We have entered into, and may continue in the future to 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 community or communities owned directly by such joint venture or partnership. 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 factors 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. Investments in joint ventures or partnerships are not 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 have engaged in discussions with a limited number of institutional investors regarding the formation of a discretionary fund that would acquire and operate apartment communities. This fund would serve, for a period of three years from its initial closing date or until 80% of its committed capital is invested, as the exclusive vehicle through which we would acquire apartment communities, subject to certain exceptions. These exceptions include significant individual asset and portfolio acquisitions, properties acquired in tax-deferred transactions and acquisitions that are inadvisable or inappropriate for the fund, if any. The fund would not restrict our development activities and would terminate after a term of eight years, subject to two one-year extensions. As of February 28, 2005, we have acquired four communities with the intent of being owned by the fund, but which are currently consolidated and included in our operating results. We are currently targeting acquisitions for the fund where value

4


 

creation opportunities are present through one or more of the following: redevelopment activities, market cycle opportunities or improved property operations. We expect the fund to have equity commitments of up to $330,000,000 and the ability to employ leverage through debt financings up to 65% on a portfolio basis, which would enable the fund to invest up to $940,000,000. We would contribute 20% of the total equity up to $50,000,000. We expect closing on the equity funding during the first quarter of 2005. There can be no assurance as to when or if such a fund will be formed or, if formed, what its size, terms or investment performance will be.

The use of joint ventures and the discretionary investment fund described above creates risks for us. For example, an investor or co-venturer could have economic or business interests or goals that are inconsistent with our business and goals, could fail to fund capital commitments as contractually required, or could fail to approve decisions we advise for which their approval may be required, such as the timing of a sale of a property. In addition, when entering into a joint venture or the discretionary investment fund we undertake fiduciary duties and reporting and other obligations to co-venturers.

In addition, we may, from time to time, offer shares of our equity securities, debt securities or options to purchase stock in exchange for property.

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, 2004, we had a total of 331,384 square feet of rentable retail space that produced gross rental revenue in 2004 of $3,383,000 (0.5% 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.

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 and therefore our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms. 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 experienced over the last several years, we are exposed to declining rents more quickly under these shorter-term leases.

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. While we believe that we are organized and qualified as a REIT and we intend to operate in a manner that will allow us to continue to qualify as a REIT, there can be no assurance that we will be successful in this regard. Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code for which there are limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control.

5


 

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 apartment 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.

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 present. 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.

6


 

Additionally, we have occasionally been involved in developing, managing, leasing and operating various properties for third parties and have sold communities that we owned and operated to 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. In addition, the charters of our Board’s Nominating and Corporate Governance Committee, Audit Committee and Compensation Committee, as well as the Company’s Corporate Governance Guidelines, are available free of charge in that section of our website or by writing to AvalonBay Communities, Inc., 2900 Eisenhower Avenue, Suite 300, Alexandria, Virginia 22314, Attention: Chief Financial Officer.

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, 2004, we had 1,702 employees.

ITEM 2.          COMMUNITIES

Our real estate investments consist primarily of current operating apartment communities, communities in various stages of development (“Development Communities”) and Development Rights as defined below. Our current operating communities are further distinguished as Established Communities, Other Stabilized Communities, Lease-Up Communities and Redevelopment Communities. 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 operating expenses as of the beginning of the prior year. We determine which of our communities fall into the Established Communities category as of January 1st of each year and maintain that classification throughout the year, unless disposition plans regarding a community change. For the year 2004, the Established Communities were communities that had stabilized occupancy and operating expenses as of January 1, 2003 and were not conducting or planning to conduct substantial redevelopment activities, as described below, and were not held for sale or planned for disposition in 2004. 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.

7


 

  •   Other Stabilized Communities includes all other completed communities that have stabilized occupancy, as defined above. Other Stabilized Communities do not include communities that are conducting or planning to conduct substantial redevelopment activities within the current year.
 
  •   Lease-Up Communities are communities where construction has been complete for less than one year and where physical 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 related pre-development costs incurred in pursuit of new developments for which we currently believe future development is probable.

In addition, we own an aggregate of approximately 77,000 square feet of office space in Alexandria, Virginia and New Canaan, Connecticut, for our corporate office and a regional office, with all other regional and administrative offices leased under operating leases.

8


 

As of December 31, 2004, our communities were classified as follows:

                 
    Number of     Number of  
    communities     apartment homes  
Current Communities
               
 
               
Established Communities:
               
Northeast
    29       7,350  
Mid-Atlantic
    13       3,537  
Midwest
    3       887  
Pacific Northwest
    11       2,738  
Northern California
    29       8,745  
Southern California
    11       3,870  
 
           
Total Established
    96       27,127  
 
           
 
               
Other Stabilized Communities:
               
Northeast
    18       5,472  
Mid-Atlantic
    6       2,395  
Midwest
    1       409  
Pacific Northwest
    1       400  
Northern California
    3       679  
Southern California
    4       904  
 
           
Total Other Stabilized
    33       10,259  
 
           
 
               
Lease-Up Communities
    5       1,326  
 
               
Redevelopment Communities
    4       1,430  
 
           
 
               
Total Current Communities
    138       40,142  
 
           
 
               
Development Communities
    10       2,668  
 
           
 
               
Development Rights
    49       13,491  
 
           

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

Current Communities

Our Current Communities are primarily garden-style apartment communities consisting of two and three-story buildings in landscaped settings. The Current Communities, as of February 28, 2005, include 105 garden-style (of which 12 are mixed communities and include townhomes), 19 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.

9


 

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.

Our Current Communities are located in the following geographic markets:

                                                 
    Number of     Number of apartment     Percentage of total
    communities at     homes at     apartment homes at
    1-1-04     2-28-05     1-1-04     2-28-05     1-1-04   2-28-05
 
                                               
Northeast
    47       52       13,213       14,315       34.3 %     35.7 %
Boston, MA
    15       17       3,716       4,127       9.7 %     10.3 %
Fairfield County, CT
    14       16       3,673       4,108       9.5 %     10.2 %
Long Island, NY
    3       4       915       1,171       2.4 %     2.9 %
Northern New Jersey
    4       4       1,451       1,451       4.5 %     3.6 %
Central New Jersey
    4       4       1,440       1,440       3.7 %     3.6 %
New York, NY
    7       7       2,018       2,018       5.2 %     5.0 %
 
                                               
Mid-Atlantic
    20       22       6,423       6,991       16.7 %     17.4 %
Baltimore, MD
    4       6       1,054       1,224       2.7 %     3.0 %
Washington, DC
    16       16       5,369       5,767       13.9 %     14.4 %
 
                                               
Midwest
    4       5       1,296       1,500       3.4 %     3.7 %
Chicago, IL
    4       5       1,296       1,500       3.4 %     3.7 %
 
                                               
Pacific Northwest
    12       12       3,159       3,138       8.2 %     7.8 %
Seattle, WA
    12       12       3,159       3,138       8.2 %     7.8 %
 
                                               
Northern California
    33       32       9,568       9,424       24.8 %     23.5 %
Oakland-East Bay, CA
    6       6       2,090       2,090       5.4 %     5.2 %
San Francisco, CA
    9       9       2,015       2,015       5.2 %     5.0 %
San Jose, CA
    18       17       5,463       5,319       14.2 %     13.3 %
 
                                               
Southern California
    15       15       4,845       4,774       12.6 %     11.9 %
Los Angeles, CA
    5       6       2,261       2,366       5.9 %     5.9 %
Orange County, CA
    6       5       1,350       1,174       3.5 %     2.9 %
San Diego, CA
    4       4       1,234       1,234       3.2 %     3.1 %
 
                                               
 
                                 
 
    131       138       38,504       40,142       100.0 %     100.0 %
 
                                 

We manage and operate all of our Current Communities. During the year ended December 31, 2004, we completed construction of 2,135 apartment homes in seven communities, acquired 1,165 apartment homes in five communities and sold 1,360 apartment homes in five communities. In addition, we received payment in full for our interest in a senior participating mortgage loan secured by a 302 apartment home community. The average age of our Current Communities, on a weighted average basis according to number of apartment homes, is 8.5 years.

Of the Current Communities, as of February 28, 2005, we own:

  •   a fee simple, or absolute, ownership interest in 116 operating communities, four of which are on land subject to land leases expiring in January 2062, April 2095, May 2099 and 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 five partnerships structured as “DownREITs,” as described more fully below, that own an aggregate of 15 communities; and
  •   a membership interest in four limited liability companies that each hold a fee simple interest in an operating community, two of which are on land subject to land leases with one lease expiring in July 2029 and one lease expiring in November 2089.

10


 

We also hold a fee simple ownership interest in nine of the Development Communities, two of which will be subject to joint venture ownership structures upon construction completion, in addition to a membership interest in a limited liability company that owns one Development Community subject to a land lease which expires in December 2026.

In each of our five partnerships structured as DownREITs, either AvalonBay 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 all or some of their units for redemption for a cash amount as determined by the applicable partnership agreement and based on the fair value of our common stock. In lieu of a cash redemption by the partnership, we may elect to acquire any unit presented for redemption for one share of our common stock or for such cash amount. As of February 28, 2005, there were 494,071 DownREIT partnership units outstanding. The DownREIT partnerships are consolidated for financial reporting purposes.

11


 

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

                                                                                         
                                                    Average economic     Average        
                Approx.             Year of   Average     Physical     occupancy     rental rate     Financial  
        Number of     rentable area             completion/   size     occupancy at                     $ per     $ per     reporting cost  
    City and state   homes     (Sq. Ft.)     Acres     acquisition   (Sq. Ft.)     12/31/04     2004     2003     Apt (4)     Sq. Ft.     (5)  
 
                                                                                       
CURRENT COMMUNITIES
                                                                                       
 
                                                                                       
NORTHEAST
                                                                                       
Boston, MA
                                                                                       
Avalon at Center Place (9)
  Providence, RI     225       231,671       1.2     1991/1997     1,030       94.2 %     94.9 %     93.7 %   $ 2,097     $ 1.93     $ 28,238  
Avalon at Faxon Park
  Quincy, MA     171       175,494       8.3     1998     1,026       93.6 %     95.6 %     93.5 %     1,606       1.50       15,370  
Avalon at Flanders Hill
  Westborough, MA     280       299,978       62.0     2003     1,099       95.7 %     94.6 %     79.9 %(3)     1,477       1.30       37,076  
Avalon at Lexington
  Lexington, MA     198       231,182       16.1     1994     1,168       98.5 %     97.1 %     91.6 %     1,639       1.36       15,538  
Avalon at Newton Highlands (7)
  Newton, MA     294       401,241       7.0     2003     1,177       93.9 %     88.8 %     27.9 %(3)     1,999       1.30       56,317  
Avalon at Prudential Center
  Boston, MA     781       747,954       1.0     1968/1998     958       99.2 %     96.3 %(2)     92.0 %(2)     2,634       2.65 (2)     155,649  
Avalon at The Pinehills I
  Plymouth, MA     101       197,354       6.0     2004     1,954       61.4 %     31.1 %(3)     N/A       1,848       0.29 (3)     19,916  
Avalon Essex
  Peabody, MA     154       173,520       11.1     2000     1,127       95.5 %     96.8 %     93.1 %     1,632       1.40       21,656  
Avalon Estates
  Hull, MA     162       188,392       55.0     2001     1,163       95.1 %     96.2 %     92.9 %     1,496       1.24       20,345  
Avalon Ledges
  Weymouth, MA     304       315,554       58.0     2002     1,023       94.1 %     94.1 %     80.1 %     1,374       1.25       36,069  
Avalon Oaks
  Wilmington, MA     204       229,748       22.5     1999     1,023       95.6 %     94.9 %     92.2 %     1,481       1.25       20,981  
Avalon Oaks West
  Wilmington, MA     120       123,960       27.0     2002     1,033       95.0 %     93.6 %     91.7 %     1,411       1.28       16,813  
Avalon Orchards
  Marlborough, MA     156       186,500       23.0     2002     1,219       96.2 %     95.0 %     93.0 %     1,499       1.19       21,039  
Avalon Summit
  Quincy, MA     245       203,848       8.0     1986/1996     832       94.7 %     95.7 %     91.5 %     1,259       1.45       16,913  
Avalon West
  Westborough, MA     120       147,472       8.0     1996     1,229       95.8 %     95.8 %     89.1 %     1,384       1.08       11,117  
Avalon at Steven’s Pond
  Saugus, MA     326       360,509       82.0     2004     1,106       92.9 %     84.0 %(3)     18.4 %(3)     1,529       1.16 (3)     54,135  
Essex Place
  Peabody, MA     286       250,322       18.0     2004     875       88.8 %     91.7 %(3)     N/A       941       0.99 (3)     23,722  
 
                                                                                       
Fairfield-New Haven, CT
                                                                                       
Avalon at Greyrock Place
  Stamford, CT     306       201,500       3.0     2002     1,040       97.4 %     96.6 %     90.8 %     1,940       2.84       70,316  
Avalon Corners
  Stamford, CT     195       192,174       3.2     2000     986       97.9 %     94.9 %     92.1 %     1,842       1.77       31,840  
Avalon Darien
  Darien, CT     189       242,311       30.0     2004     1,282       97.9 %     84.2 %(3)     17.6 %(3)     2,215       1.45 (3)     41,465  
Avalon Gates
  Trumbull, CT     340       381,322       37.0     1997     1,122       95.6 %     88.2 %     81.5 %     1,493       1.17       36,731  
Avalon Glen
  Stamford, CT     238       221,828       4.1     1991     932       98.7 %     95.6 %     90.2 %     1,728       1.77       31,780  
Avalon Haven
  North Haven, CT     128       140,107       10.6     2000     1,095       97.7 %     96.8 %     95.9 %     1,498       1.32       13,771  
Avalon Lake
  Danbury, CT     135       166,231       32.0     1999     1,184       98.5 %     95.7 %     95.7 %     1,734       1.35       17,149  
Avalon Milford I
  Milford, CT     246       218,000       22.0     2004     886       83.3 %     47.3 %(3)     N/A       1,345       0.72 (3)     30,283  
Avalon New Canaan (6)
  New Canaan, CT     104       130,104       9.1     2002     1,251       96.2 %     93.2 %     82.4 %     2,591       1.93       24,319  
Avalon on Stamford Harbor
  Stamford, CT     323       336,566       12.1     2003     1,042       97.8 %     94.8 %     87.0 %(3)     2,137       1.94       62,840  
Avalon Springs
  Wilton, CT     102       158,259       12.0     1996     1,552       96.1 %     95.4 %     93.0 %     2,557       1.57       17,137  
Avalon Valley
  Danbury, CT     268       297,479       17.1     1999     1,070       97.0 %     95.6 %     96.0 %     1,648       1.42       26,101  
Avalon Walk I & II
  Hamden, CT     764       761,441       38.4     1992/1994     996       94.2 %     92.8 %     89.6 %     1,244       1.16       59,368  
 
                                                                                       
Long Island, NY
                                                                                       
Avalon at Glen Cove South
  Glen Cove, NY     256       270,000       4.0     2004     1,050       91.0 %     46.8 %(3)     N/A       1,854       0.82 (3)     66,712  
Avalon Commons
  Smithtown, NY     312       363,049       20.6     1997     1,164       99.4 %     97.7 %     98.1 %     1,898       1.59       33,464  
Avalon Court
  Melville, NY     494       597,104       35.4     1997/2000     1,209       95.1 %     95.4 %     96.7 %     2,268       1.79       59,527  
Avalon Towers
  Long Beach, NY     109       124,836       1.3     1990/1995     1,145       99.1 %     97.0 %     97.9 %     3,052       2.59       18,936  

12


 

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

                                                                                         
                                                    Average economic     Average        
                Approx.             Year of   Average     Physical     occupancy     rental rate     Financial  
        Number of     rentable area             completion/   size     occupancy at                     $ per     $ per     reporting cost  
    City and state   homes     (Sq. Ft.)     Acres     acquisition   (Sq. Ft.)     12/31/04     2004     2003     Apt (4)     Sq. Ft.     (5)  
Northern New Jersey
                                                                                       
Avalon at Edgewater
  Edgewater, NJ     408       405,144       7.1     2002     993       95.1 %     92.8 %     90.0 %     2,014       1.88       74,768  
Avalon at Florham Park
  Florham Park, NJ     270       331,560       41.9     2001     1,228       95.6 %     93.4 %     91.5 %     2,244       1.71       41,628  
Avalon Cove
  Jersey City, NJ     504       574,675       11.0     1997     1,140       97.8 %     96.2 %     89.5 %     2,240       1.89       92,484  
The Tower at Avalon Cove
  Jersey City, NJ     269       241,825       2.8     1999     905       97.4 %     95.6 %     91.9 %     1,982       2.11       49,867  
 
                                                                                       
Central New Jersey
                                                                                       
Avalon at Freehold
  Freehold, NJ     296       317,608       42.3     2002     1,073       95.3 %     95.3 %     91.3 %     1,592       1.41       34,534  
Avalon Run East
  Lawrenceville, NJ     206       265,198       27.0     1996     1,287       94.7 %     94.9 %     91.9 %     1,562       1.15       16,294  
Avalon Watch
  West Windsor, NJ     512       485,871       64.0     1988     949       91.2 %     94.4 %     92.4 %     1,340       1.33       30,096  
 
                                                                                       
New York, NY
                                                                                       
Avalon Gardens
  Nanuet, NY     504       638,439       55.0     1998     1,267       98.8 %     95.9 %     95.0 %     1,939       1.47       54,661  
Avalon Green
  Elmsford, NY     105       113,538       16.9     1995     1,081       89.5 %     94.2 %     92.9 %     2,087       1.82       12,672  
Avalon Riverview I (9)
  Long Island City, NY     372       332,940       1.0     2002     895       97.6 %     94.4 %     86.8 %     2,710       2.86       94,246  
Avalon View
  Wappingers Falls, NY     288       335,088       41.0     1993     1,164       94.8 %     93.6 %     93.7 %     1,320       1.06       18,706  
Avalon Willow
  Mamaroneck, NY     227       199,945       4.0     2000     881       98.2 %     95.0 %     92.9 %     1,991       2.15       47,116  
The Avalon
  Bronxville, NY     110       119,186       1.5     1999     1,085       96.4 %     94.8 %     93.6 %     3,178       2.78       31,227  
 
                                                                                       
MID-ATLANTIC
                                                                                       
Baltimore, MD
                                                                                       
Avalon at Fairway Hills I, II & III
  Columbia, MD     720       724,253       44.0     1987/1996     1,005       93.2 %     95.7 %     95.5 %     1,141       1.09       45,484  
Avalon at Symphony Glen
  Columbia, MD     176       179,867       10.0     1986     1,022       93.2 %     96.4 %     97.2 %     1,190       1.12       9,254  
Avalon Landing
  Annapolis, MD     158       117,033       13.8     1984/1995     741       93.7 %     96.2 %     96.2 %     1,054       1.37       9,946  
Hobbits Grove
  Columbia, MD     170       177,287       10.2     1989/2004     1,043       90.0 %     91.1 %(3)     N/A       1,221       1.07 (3)     25,188  
 
                                                                                       
Washington, DC
                                                                                       
AutumnWoods
  Fairfax, VA     420       355,228       24.2     1989/1996     846       96.9 %     96.6 %     93.6 %     1,082       1.24       31,056  
Avalon at Arlington Square
  Arlington, VA     842       909,449       18.9     2001     1,080       96.3 %     94.6 %     87.5 %     1,549       1.36       112,354  
Avalon at Ballston — Washington Towers
  Arlington, VA     344       294,786       4.1     1990     857       97.1 %     97.0 %     94.1 %     1,422       1.61       37,717  
Avalon at Cameron Court
  Alexandria, VA     460       467,292       16.0     1998     1,016       92.0 %     95.1 %     93.8 %     1,510       1.41       43,378  
Avalon at Decoverly
  Rockville, MD     368       368,446       25.0     1991/1995     1,001       95.1 %     95.2 %     95.4 %     1,278       1.21       31,887  
Avalon at Foxhall
  Washington, DC     308       298,725       2.7     1982     970       97.4 %     91.8 %(2)     62.1 %(2)     1,801       1.70 (2)     43,922  
Avalon at Gallery Place I
  Washington, DC     203       183,326       0.5     2003     903       94.6 %     73.5 %     33.6 %(3)     2,089       1.70       48,777  
Avalon at Grosvenor Station (7)
  North Bethesda, MD     497       478,530       9.9     2004     963       95.4 %     68.0 %(3)     20.6 %(3)     1,467       1.04 (3)     81,042  
Avalon at Providence Park
  Fairfax, VA     141       148,211       4.0     1988/1997     1,051       98.6 %     96.8 %     94.5 %     1,269       1.17       11,482  
Avalon at Rock Spring (8) (9)
  North Bethesda, MD     386       388,480       10.2     2003     1,006       91.7 %     88.9 %     51.8 %(3)     1,515       1.34       46,005  
Avalon at Traville
  North Potomac, MD     520       573,560       47.9     2004     1,103       92.5 %     58.2 %(3)     11.6 %(3)     1,413       0.75 (3)     68,960  
Avalon Crescent
  McLean, VA     558       613,426       19.1     1996     1,099       94.4 %     95.4 %     92.4 %     1,609       1.40       57,496  
Avalon Crossing
  Rockville, MD     132       147,690       5.0     1996     1,119       93.9 %     93.1 %     91.8 %     1,591       1.32       13,925  
Avalon Fields I & II
  North Potomac, MD     288       292,282       9.2     1998     1,050       93.1 %     96.6 %     93.9 %     1,283       1.22       22,723  
Avalon Knoll
  Germantown, MD     300       290,365       26.7     1985     968       94.0 %     94.8 %     94.4 %     1,073       1.05       8,882  

13


 

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

                                                                                         
                                                    Average economic     Average        
                Approx.             Year of   Average     Physical     occupancy     rental rate     Financial  
        Number of     rentable area             completion/   size     occupancy at                     $ per     $ per     reporting cost  
    City and state   homes     (Sq. Ft.)     Acres     acquisition   (Sq. Ft.)     12/31/04     2004     2003     Apt (4)     Sq. Ft.     (5)  
MIDWEST
                                                                                       
Chicago, IL
                                                                                       
200 Arlington Place
  Arlington Heights, IL     409       346,832       2.8     1987/2000     848       95.4 %     92.1 %     89.8 %     1,262       1.37       50,166  
Avalon at Danada Farms (7)
  Wheaton, IL     295       350,606       19.2     1997     1,188       93.2 %     93.6 %     91.3 %     1,269       1.00       38,503  
Avalon at Stratford Green (7)
  Bloomingdale, IL     192       237,204       12.7     1997     1,235       91.1 %     93.2 %     90.8 %     1,262       0.95       21,992  
Avalon at West Grove (7)
  Westmont, IL     400       388,500       17.4     1967     971       95.8 %     93.6 %     90.2 %     849       0.82       30,626  
Briarcliffe Lakeside
  Wheaton, IL     204       166,872       12.0     2004     818       89.7 %     90.0 %(3)     N/A       872       0.96 (3)     14,491  
 
                                                                                       
PACIFIC NORTHWEST
                                                                                       
Seattle, WA
                                                                                       
Avalon at Bear Creek (7)
  Redmond, WA     264       288,250       22.2     1998     1,092       96.2 %     93.8 %     91.9 %     1,105       0.95       34,692  
Avalon Bellevue
  Bellevue, WA     202       164,226       1.7     2001     813       96.5 %     94.5 %     93.8 %     1,174       1.37       30,868  
Avalon Belltown
  Seattle, WA     100       80,200       0.7     2001     802       95.0 %     94.5 %     94.9 %     1,378       1.62       18,467  
Avalon Brandemoor (7)
  Lynwood, WA     424       453,602       22.6     2001     1,070       97.4 %     95.6 %     91.8 %     871       0.78       45,388  
Avalon HighGrove (7)
  Everett, WA     391       422,482       19.0     2000     1,081       97.2 %     95.6 %     94.1 %     860       0.76       39,722  
Avalon ParcSquare (7)
  Redmond, WA     124       127,236       2.0     2000     1,026       96.8 %     94.4 %     95.9 %     1,290       1.19       19,220  
Avalon Redmond Place (7)
  Redmond, WA     222       206,004       8.4     1991/1997     928       95.9 %     95.3 %     92.1 %     983       1.01       26,118  
Avalon RockMeadow (7)
  Bothell, WA     206       240,817       11.2     2000     1,169       94.7 %     94.7 %     93.2 %     977       0.79       24,626  
Avalon WildReed (7)
  Everett, WA     234       259,080       23.0     2000     1,107       93.6 %     95.2 %     94.9 %     845       0.73       23,015  
Avalon WildWood (7)
  Lynwood, WA     238       313,107       15.8     2001     1,316       97.5 %     97.0 %     94.5 %     1,088       0.80       32,930  
Avalon Wynhaven (7)
  Issaquah, WA     333       424,604       11.6     2001     1,275       94.9 %     91.3 %     87.0 %     1,193       0.85       52,600  
Ravenswood at the Park
  Redmond, WA     400       340,448       24.0     1983/2004     851       89.3 %     87.7 %(3)     N/A       928       0.96 (3)     49,053  
 
                                                                                       
NORTHERN CALIFORNIA
                                                                                       
Oakland-East Bay, CA
                                                                                       
Avalon at Union Square
  Union City, CA     208       150,140       8.5     1973/1996     722       98.1 %     95.6 %     96.4 %     1,018       1.35       22,448  
Avalon at Willow Creek
  Fremont, CA     235       197,575       13.5     1985/1994     841       97.4 %     95.5 %     97.2 %     1,218       1.38       34,877  
Avalon Dublin
  Dublin, CA     204       179,004       13.0     1989/1997     877       95.6 %     95.1 %     94.4 %     1,274       1.38       27,082  
Avalon Fremont
  Fremont, CA     443       446,422       22.3     1994     1,008       95.9 %     95.3 %     95.8 %     1,397       1.32       77,913  
Avalon Pleasanton
  Pleasanton, CA     456       377,438       14.7     1988/1994     828       95.2 %     95.0 %     95.9 %     1,204       1.38       60,955  
Waterford
  Hayward, CA     544       451,937       11.1     1985/1986     831       96.0 %     93.0 %     93.3 %     1,091       1.22       60,021  
 
                                                                                       
San Francisco, CA
                                                                                       
Avalon at Cedar Ridge
  Daly City, CA     195       141,411       7.0     1972/1997     725       96.9 %     95.7 %     95.7 %     1,325       1.75       25,896  
Avalon at Diamond Heights
  San Francisco, CA     154       123,080       3.0     1972/1994     799       97.4 %     96.2 %     97.9 %     1,573       1.89       24,875  
Avalon at Mission Bay North (9)
  San Francisco, CA     250       244,224       1.4     2003     977       93.2 %     94.2 %     52.3 %(3)     2,439       2.35       78,832  
Avalon at Nob Hill
  San Francisco, CA     185       109,238       1.4     1990/1995     590       97.3 %     95.5 %     93.4 %     1,438       2.33       27,904  
Avalon Sunset Towers
  San Francisco, CA     243       175,511       16.0     1961/1996     722       96.3 %     96.0 %     95.5 %     1,559       2.07       28,601  
Avalon Foster City
  Foster City, CA     288       222,276       11.0     1973/1994     772       97.9 %     96.2 %     95.7 %     1,220       1.52       43,189  
Avalon Pacifica
  Pacifica, CA     220       186,785       21.9     1971/1995     849       95.9 %     95.6 %     95.8 %     1,407       1.58       31,517  
Avalon Towers by the Bay
  San Francisco, CA     226       243,033       1.0     1999     1,075       97.8 %     95.3 %     94.0 %     2,465       2.18       67,028  
Crowne Ridge
  San Rafael, CA     254       221,525       21.9     1973/1996     872       92.9 %     94.8 %     92.5 %     1,263       1.37       31,987  

14


 

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

                                                                                         
                                                    Average economic     Average        
                Approx.             Year of   Average     Physical     occupancy     rental rate     Financial  
        Number of     rentable area             completion/   size     occupancy at                     $ per     $ per     reporting cost  
    City and state   homes     (Sq. Ft.)     Acres     acquisition   (Sq. Ft.)     12/31/04     2004     2003     Apt (4)     Sq. Ft.     (5)  
San Jose, CA
                                                                                       
Avalon at Blossom Hill
  San Jose, CA     324       322,207       7.5     1995     994       96.6 %     95.1 %     96.8 %     1,390       1.33       61,053  
Avalon at Cahill Park
  San Jose, CA     218       218,245       3.8     2002     1,001       94.5 %     95.6 %     93.0 %     1,707       1.63       52,504  
Avalon at Creekside
  Mountain View, CA     294       215,680       15.0     1962/1997     734       93.9 %     95.6 %     95.7 %     1,171       1.53       43,064  
Avalon at Foxchase I & II
  San Jose, CA     396       335,212       12.0     1988/1987     844       97.2 %     96.5 %     97.7 %     1,174       1.34       59,750  
Avalon at Parkside
  Sunnyvale, CA     192       199,353       8.0     1991/1996     1,038       96.9 %     97.0 %     95.8 %     1,506       1.41       37,946  
Avalon at Pruneyard
  Campbell, CA     252       197,000       8.5     1968/1997     782       96.0 %     97.6 %     97.0 %     1,115       1.39       31,883  
Avalon at River Oaks
  San Jose, CA     226       210,050       4.0     1990/1996     929       96.9 %     95.9 %     95.9 %     1,337       1.38       44,990  
Avalon Campbell
  Campbell, CA     348       326,796       10.8     1995     939       96.6 %     95.7 %     94.0 %     1,416       1.44       60,078  
Avalon Cupertino
  Cupertino, CA     311       293,328       8.0     1999     943       99.7 %     96.3 %     95.2 %     1,546       1.58       49,109  
Avalon Mountain View (6)
  Mountain View, CA     248       211,552       10.5     1986     853       93.5 %     96.5 %     95.3 %     1,472       1.67       50,951  
Avalon on the Alameda
  San Jose, CA     305       299,722       8.9     1999     983       96.1 %     95.3 %     93.9 %     1,692       1.64       56,492  
Avalon Rosewalk
  San Jose, CA     456       450,252       16.6     1997/1999     987       95.6 %     95.4 %     96.6 %     1,372       1.33       78,408  
Avalon Silicon Valley
  Sunnyvale, CA     710       658,591       13.6     1997     928       96.3 %     95.4 %     93.8 %     1,591       1.64       121,407  
Avalon Sunnyvale
  Sunnyvale, CA     220       159,653       5.0     1987/1995     726       95.5 %     96.3 %     96.8 %     1,206       1.60       35,241  
Avalon Towers on the Peninsula
  Mountain View, CA     211       218,392       1.9     2002     1,035       96.7 %     95.5 %     94.4 %     2,107       1.94       65,696  
CountryBrook (7)
  San Jose, CA     360       323,012       14.0     1985/1996     897       96.4 %     95.4 %     93.3 %     1,215       1.29       48,513  
San Marino
  San Jose, CA     248       209,465       11.5     1984/1988     845       98.0 %     96.2 %     96.7 %     1,182       1.35       34,418  
 
                                                                                       
SOUTHERN CALIFORNIA
                                                                                       
Los Angeles, CA
                                                                                       
Avalon at Media Center
  Burbank, CA     748       530,114       14.7     1961/1997     709       96.0 %     95.9 %     94.6 %     1,192       1.61       75,838  
Avalon at Warner Center
  Woodland Hills, CA     227       191,645       6.8     1979/1998     844       98.7 %     96.2 %     95.0 %     1,382       1.57       26,480  
Avalon Glendale (9)
  Burbank, CA     223       241,712       5.1     2003     1,084       97.8 %     86.1 %     24.8 %(3)     1,877       1.49       40,135  
Avalon Redondo Beach
  Redondo Beach, CA     105       85,380       1.2     1971/2004     813       100.0 %     91.2 %(3)     N/A       1,715       1.92 (3)     24,119  
Avalon Woodland Hills
  Woodland Hills, CA     663       592,722       18.2     1989/1997     894       96.4 %     95.1 %     95.0 %     1,321       1.41       72,019  
The Promenade
  Burbank, CA     400       360,587       6.9     1988/2002     901       98.3 %     94.7 %     93.1 %     1,515       1.59       71,003  
 
                                                                                       
Orange County, CA
                                                                                       
Avalon at Pacific Bay
  Huntington Beach, CA     304       268,000       9.7     1971/1997     882       92.8 %     96.3 %     96.7 %     1,276       1.39       32,022  
Avalon at South Coast
  Costa Mesa, CA     258       208,890       8.9     1973/1996     810       96.1 %     95.8 %     95.3 %     1,183       1.40       25,045  
Avalon Mission Viejo
  Mission Viejo, CA     166       124,600       7.8     1984/1996     751       94.6 %     95.0 %     96.8 %     1,135       1.44       13,413  
Avalon Newport
  Costa Mesa, CA     145       120,690       6.6     1956/1996     832       96.6 %     95.9 %     96.2 %     1,400       1.61       10,116  
Avalon Santa Margarita
  Rancho Santa Margarita, CA     301       229,593       20.0     1990/1997     763       97.0 %     95.0 %     94.0 %     1,154       1.44       24,034  
 
                                                                                       
San Diego, CA
                                                                                       
Avalon at Cortez Hill
  San Diego, CA     294       224,840       1.2     1973/1998     765       98.0 %     97.0 %     94.6 %     1,255       1.59       34,400  
Avalon at Mission Bay
  San Diego, CA     564       402,327       12.9     1969/1997     713       96.5 %     95.2 %     96.1 %     1,286       1.72       66,103  
Avalon at Mission Ridge
  San Diego, CA     200       208,100       4.0     1960/1997     1,041       96.5 %     96.0 %     95.0 %     1,401       1.29       21,731  
Avalon at Penasquitos Hills
  San Diego, CA     176       141,120       8.8     1982/1997     802       97.2 %     96.6 %     93.2 %     1,171       1.41       14,725  

15


 

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

                                                                                         
                                                    Average economic     Average        
                Approx.             Year of   Average     Physical     occupancy     rental rate     Financial  
        Number of     rentable area             completion/   size     occupancy at                     $ per     $ per     reporting cost  
    City and state   homes     (Sq. Ft.)     Acres     acquisition   (Sq. Ft.)     12/31/04     2004     2003     Apt (4)     Sq. Ft.     (5)  
DEVELOPMENT COMMUNITIES
                                                                                       
 
                                                                                       
 
                                                                                       
Avalon at Bedford Center
  Bedford, MA     139       158,466       39.0     N/A     1,140       N/A       N/A       N/A       N/A       N/A       5,788  
Avalon at Crane Brook
  Danvers & Peabody, MA     387       491,870       20.0     N/A     1,271       N/A       N/A       N/A       N/A       N/A       53,486  
Avalon Camarillo
  Camarillo, CA     249       233,763       10.0     N/A     939       N/A       N/A       N/A       N/A       N/A       15,376  
Avalon Danbury
  Danbury, CT     234       235,320       36.0     N/A     1,006       N/A       N/A       N/A       N/A       N/A       19,316  
Avalon Del Rey
  Los Angeles, CA     309       284,196       5.0     N/A     920       N/A       N/A       N/A       N/A       N/A       28,010  
Avalon Juanita Village
  Kirkland, WA     211       210,134       2.9     N/A     996       N/A       N/A       N/A       N/A       N/A       27,327  
Avalon Orange
  Orange, CT     168       161,616       9.0     N/A     962       N/A       N/A       N/A       N/A       N/A       17,200  
Avalon Pines I
  Coram, NY     298       442,895       32.0     N/A     1,485       N/A       N/A       N/A       N/A       N/A       39,312  
Avalon Run East II
  Lawrenceville, NJ     312       341,152       70.0     N/A     1,095       N/A       N/A       N/A       N/A       N/A       45,741  
 
                                                                                       
UNCONSOLIDATED COMMUNITIES
                                                                                       
 
                                                                                       
 
                                                                                       
Avalon Bedford (8)
  Stamford, CT     368       331,655       4.6     1961/1998     819       96.7 %     94.2 %     88.9 %     1,514       1.58       N/A  
Avalon Chrystie Place I (9) (10)
  New York, NY     361       266,555       1.5     N/A     738       N/A       N/A       N/A       N/A       N/A       N/A  
Avalon Grove (8)
  Stamford, CT     402       363,408       12.0     1996     906       97.0 %     94.5 %     90.3 %     1,918       2.01       N/A  
Avalon on the Sound (8) (9)
  New Rochelle, NY     412       372,860       2.4     2001     905       97.3 %     93.0 %     92.0 %     2,085       2.14       N/A  
Avalon Run (6)
  Lawrenceville, NJ     426       443,168       9.0     1994     1,010       94.1 %     91.6 %     90.5 %     1,303       1.15       N/A  
 
                                                                                       
 
                                                                                       
 
                                                                                       


(1)   We own a fee simple interest in the 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, 2004. Financial reporting costs are excluded for unconsolidated communities, see Note 6, “Investments in Unconsolidated Entities.”
 
(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)   Community is located on land subject to a land lease.
 
(10)   This community is in development and is being financed under a joint venture structure with third-party financing, in which the community is owned by a limited liability company managed by one of our wholly-owned subsidiaries.

16


 

Features and Recreational Amenities - Current and Development Communities

                                                                                                                                                                 
                                                                            Washer                             Large     Balcony,                     Non-             Homes w/  
    1 BR     2BR     3BR                                     & dryer                             storage     patio                     direct     Direct     pre-wired  
    1/1.5     1/1.5     2/2.5     2/2.5             Studios/                     Parking     hook-ups     Vaulted                     or walk-in     deck or     Built-in     Car-     access     access     security  
    BA     BA     /3 BA     BA     3BA     efficiencies     Other     Total     spaces     or units     ceilings     Lofts     Fireplaces     closet     sunroom     bookcases     ports     garages     garages     systems  
   CURRENT COMMUNITIES (1)
                                                                                                                                                               
 
                                                                                                                                                               
NORTHEAST
                                                                                                                                                               
Boston, MA
                                                                                                                                                               
Avalon at Center Place
    103       —       111       5       —       6       —       225       371     All   None   None   None   Half   Some   None   No   No   No   None
Avalon at Faxon Park
    68       —       75       28       —       —       —       171       327     All   Some   Some   Some   All   All   None   No   Yes   No   All
Avalon at Flanders Hill
    108       —       142       30       —       —       —       280       589     All   None   Some   Some   All   Some   None   No   Yes   Yes   All
Avalon at Lexington
    28       24       90       56       —       —       —       198       362     All   Some   Some   Some   Most   All   None   Yes   Yes   No   All
Avalon at Newton Highlands
    90       46       92       56       4       6       —       294       540     All   Some   Some   Some   Most   Most   None   No   Yes   No   All
Avalon at Prudential Center
    361       —       237       —       23       148       12       781       538     None   None   None   None   Most   Some   None   No   No   No   None
Avalon at The Pinehills I
    12       —       73       16       —       —       —       101       246     All   Some   Some   Some   All   All   None   No   No   Yes   All
Avalon Essex
    50       —       62       —       —       —       42       154       336     All   Some   Some   Some   All   All   None   No   Yes   Yes   All
Avalon Estates
    66       16       80       —       —       —       —       162       345     All   Some   Some   Some   All   All   None   No   Yes   Yes   All
Avalon Ledges
    124       —       152       28       —       —       —       304       594     All   None   Some   Some   All   Some   None   No   Yes   No   All
Avalon Oaks
    60       24       96       24       —       —       —       204       394     All   Some   Some   Some   All   All   None   No   Yes   No   All
Avalon Oaks West
    48       12       48       12       —       —       —       120       232     All   Some   Some   Some   All   All   None   No   Yes   No   All
Avalon Orchards
    69       12       75       —       —       —       —       156       307     All   None   Half   Some   Most   All   None   No   Yes   Yes   All
Avalon Summit
    154       61       28       2       —       —       —       245       366     None   None   None   None   None   All   None   No   Yes   No   None
Avalon West
    40       —       55       25       —       —       —       120       285     All   Some   Some   Some   All   Half   None   No   Yes   Yes   All
Avalon at Steven’s Pond
    102       —       202       22       —       —       —       326       663     All   Some   Some   Some   All   All   Some   No   Yes   Yes   All
Essex Place
    50       190       —       —       —       —       46       286       450     Some   None   None   None   Some   Some   None   No   No   No   None
 
                                                                                                                                                               
Fairfield-New Haven, CT
                                                                                                                                                               
Avalon at Greyrock Place
    104       91       99       12       —       —       —       306       464     All   None   None   None   All   All   None   No   No   Yes   All
Avalon Corners
    118       —       77       —       —       —       —       195       273     All   Some   Some   Some   All   All   None   No   Yes   No   All
Avalon Darien
    77       —       78       32       —       —       2       189       472     All   Some   Some   Some   Some   All   None   No   No   Yes   All
Avalon Gates
    122       —       168       50       —       —       —       340       688     All   Some   Some   None   All   All   None   Yes   Yes   No   All
Avalon Glen
    124       —       114       —       —       —       —       238       363     Most   Some   Some   Some   Half   Most   None   Yes   Yes   No   Most
Avalon Haven
    44       60       —       24       —       —       —       128       256     All   None   Some   Some   All   All   None   Yes   Yes   No   All
Avalon Lake
    36       —       46       —       —       24       29       135       290     All   Some   Some   Some   All   All   None   No   Yes   No   All
Avalon Milford I
    184       —       62       —       —       —       —       246       426     All   Some   None   Some   All   All   None   Yes   Yes   No   All
Avalon New Canaan
    16       —       64       24       —       —       —       104       194     All   None   Some   Some   All   All   None   No   Yes   Yes   All
Avalon on Stamford Harbor
    159       —       130       20       —       14       —       323       623     All   Some   Some   Some   Most   All   None   No   No   No   All
Avalon Springs
    —       —       70       32       —       —       —       102       264     All   Half   Half   Most   All   All   None   No   No   Yes   All
Avalon Valley
    106       —       134       28       —       —       —       268       637     All   Some   Some   Some   All   All   None   Yes   Yes   No   All
Avalon Walk I & II
    272       116       122       74       —       —       180       764       1,411     All   Some   Some   Half   All   All   Some   Yes   No   No   Half
 
                                                                                                                                                               
Long Island, NY
                                                                                                                                                               
Avalon at Glen Cove South
    112       —       91       —       —       53       —       256       458     All   None   None   Some   Most   Some   None   No   No   No   Some
Avalon Commons
    128       40       112       32       —       —       —       312       485     All   Some   Some   Some   All   All   None   No   Yes   No   All
Avalon Court
    172       54       194       44       30       —       —       494       1,110     All   Some   Most   Some   All   All   None   No   Yes   Yes   All
Avalon Towers
    —       —       38       —       3       1       67       109       198     All   None   None   None   All   Most   None   No   No   Yes   None
 
                                                                                                                                                               
Northern New Jersey
                                                                                                                                                               
Avalon at Edgewater
    158       —       190       60       —       —       —       408       872     All   None   Some   Some   All   All   None   No   No   Yes   Some
Avalon at Florham Park
    46       —       107       117       —       —       —       270       581     All   Most   None   Some   All   Some   None   No   No   Yes   All
Avalon Cove
    190       —       190       46       2       —       76       504       464     All   Some   Some   Some   All   Most   None   No   Yes   Some   All
The Tower at Avalon Cove
    147       24       74       24       —       —       —       269       296     All   None   None   None   Half   Some   None   No   Yes   No   All
 
                                                                                                                                                               
Central New Jersey
                                                                                                                                                               
Avalon at Freehold
    42       41       176       37       —       —       —       296       591     All   Some   Some   Some   All   All   None   No   Yes   No   None
Avalon Run East
    64       —       106       36       —       —       —       206       401     All   Some   Some   Some   All   All   None   Yes   Yes   Yes   All
Avalon Watch
    252       36       142       82       —       —       —       512       781     Most   Some   None   Some   All   All   None   No   Yes   No   None

17


 

Features and Recreational Amenities - Current and Development Communities

                                                                                                                                                                 
                                                                            Washer                             Large     Balcony,                     Non-             Homes w/  
    1 BR     2BR     3BR                                     & dryer                             storage     patio                     direct     Direct     pre-wired  
    1/1.5     1/1.5     2/2.5     2/2.5             Studios/                     Parking     hook-ups     Vaulted                     or walk-in     deck or     Built-in     Car-     access     access     security  
    BA     BA     /3 BA     BA     3BA     efficiencies     Other     Total     spaces     or units     ceilings     Lofts     Fireplaces     closet     sunroom     bookcases     ports     garages     garages     systems  
New York, NY
                                                                                                                                                               
Avalon Gardens
    208       48       144       104       —       —       —       504       1,382     All   Half   Half   Some   All   Most   None   Yes   Yes   Yes   All
Avalon Green
    25       24       56       —       —       —       —       105       208     All   Some   Half   Some   All   All   None   Yes   No   No   All
Avalon Riverview I
    184       —       114       —       31       43       —       372       426     All   None   None   None   Most   Some   None   No   Yes   No   Some
Avalon View
    115       47       62       64       —       —       —       288       598     All   Some   Some   Some   Most   All   None   Yes   No   No   None
Avalon Willow
    150       77       —       —       —       —       —       227       371     All   Some   Some   None   Most   All   None   No   Yes   Yes   All
The Avalon
    55       2       43       10       —       —       —       110       167     All   Some   Some   Some   Most   Half   None   No   Yes   No   All
 
                                                                                                                                                               
MID-ATLANTIC
                                                                                                                                                               
Baltimore, MD
                                                                                                                                                               
Avalon at Fairway Hills I, II & III
    283       223       154       60       —       —       —       720       1,171     All   Some   None   Some   Some   All   Some   No   No   No   None
Avalon at Symphony Glen
    88       14       54       20       —       —       —       176       268     All   Some   None   Most   All   All   Half   No   No   No   None
Avalon Landing
    65       18       57       —       —       —       18       158       256     All   None   None   Most   Most   All   None   Yes   No   No   None
Hobbits Grove
    36       12       74       48       —       —       —       170             All   Some   Some   Some   Most   Most   None   No   No   No   None
 
                                                                                                                                                               
Washington, DC
                                                                                                                                                               
AutumnWoods
    220       72       96       —       —       —       32       420       720     All   Some   None   Some   All   All   Some   Yes   No   No   None
Avalon at Arlington Square
    383       20       342       97       —       —       —       842       1,411     All   Some   Some   Some   Some   Some   Some   No   No   Some   All
Avalon at Ballston -Washington
Towers
    205       28       111       —       —       —       —       344       470     All   None   None   Some   Most   All   None   No   No   Yes   None
Avalon at Cameron Court
    208       —       168       —       —       —       84       460       897     All   Some   Some   Some   All   Most   None   No   Yes   Yes   All
Avalon at Decoverly
    156       —       104       64       44       —       —       368       627     All   Some   Some   Most   Most   All   None   No   No   No   None
Avalon at Foxhall
    160       70       —       3       —       27       48       308       335     All   None   None   Some   Most   All   Some   No   Yes   No   None
Avalon at Gallery Place I
    111       77       —       4       —       11       —       203       125     All   Some   None   None   All   Some   None   No   No   No   None
Avalon at Grosvenor Station
    265       33       185       13       —       1       —       497       742     All   Some   Some   Some   Most   All   None   No   No   Yes   All
Avalon at Providence Park
    19       —       112       4       —       —       6       141       299     All   None   None   Most   All   All   None   No   No   No   None
Avalon at Rock Spring
    178       39       133       36       —       —       —       386       680     All   Some   Some   Some   Most   Most   Some   No   No   Yes   All
Avalon at Traville
    190       30       232       68       —       —       —       520       1,084     All   Some   Some   Some   Most   Most   Some   No   Yes   Yes   None
Avalon Crescent
    186       26       346       —       —       —       —       558       989     All   Some   Some   Half   Most   All   Some   No   Yes   Yes   All
Avalon Crossing
    —       27       105       —       —       —       —       132       224     All   Some   Some   Half   All   All   Some   No   Yes   Yes   All
Avalon Fields I & II
    74       32       84       32       —       —       66       288       461     All   Some   Some   Half   All   Most   None   No   Yes   No   All
Avalon Knoll
    136       55       81       28       —       —       —       300       477     All   Some   None   Half   All   All   Some   No   No   No   None
 
                                                                                                                                                               
MIDWEST
                                                                                                                                                               
Chicago, IL
                                                                                                                                                               
200 Arlington Place
    142       89       148       —       —       30       —       409       650     All   None   None   None   All   Some   None   No   Yes   No   None
Avalon at Danada Farms
    80       52       134       29       —       —       —       295       555     All   None   None   Some   All   Some   Some   No   No   Yes   None
Avalon at Stratford Green
    45       9       108       21       —       —       9       192       420     All   None   None   Some   Most   Some   Some   No   Yes   Yes   None
Avalon at West Grove
    200       200       —       —       —       —       —       400       599     None   None   None   None   None   All   None   Yes   No   No   None
Briarcliffe Lakeside
    101       61       30       12       —       —       —       204       355     None   None   None   Some   All   All   None   No   No   No   None
 
                                                                                                                                                               
PACIFIC NORTHWEST
                                                                                                                                                               
Seattle, WA
                                                                                                                                                               
Avalon at Bear Creek
    55       40       110       59       —       —       —       264       515     All   All   None   Most   All   All   Some   Yes   Yes   Yes   All
Avalon Bellevue
    110       —       67       —       —       25       —       202       300     All   None   Some   Some   All   All   None   No   No   No   None
Avalon Belltown
    64       —       20       —       —       16       —       100       134     All   None   None   None   All   Some   None   No   No   No   Some
Avalon Brandemoor
    88       109       149       78       —       —       —       424       732     All   Some   None   Most   All   All   Some   Yes   Yes   Yes   All
Avalon HighGrove
    84       119       124       56       8       —       —       391       721     All   Some   None   Most   Most   All   Some   Yes   Yes   Yes   All
Avalon ParcSquare
    31       26       55       5       7       —       —       124       189     All   None   None   None   All   All   None   No   No   No   All
Avalon Redmond Place
    76       44       67       35       —       —       —       222       384     All   Some   None   Most   All   All   None   Yes   Yes   No   None
Avalon RockMeadow
    28       48       86       28       16       —       —       206       415     All   Some   None   Most   Most   All   Some   Yes   Yes   Yes   All
Avalon WildReed
    36       60       78       60       —       —       —       234       463     All   Some   None   Most   Most   All   Some   Yes   Yes   No   All
Avalon Wildwood
    5       —       211       —       17       —       5       238       484     All   Some   None   Most   Some   Most   None   No   No   Yes   All
Avalon Wynhaven
    3       42       239       13       28       —       8       333       1,486     All   Most   Some   Most   All   All   None   Yes   Yes   Yes   All
Ravenswood at the Park
    162       124       86       28       —       —       —       400       624     All   Some   None   Some   Some   All   None   Yes   Yes   No   None

18


 

Features and Recreational Amenities - Current and Development Communities

                                                                                                                                                                 
                                                                            Washer                             Large     Balcony,                     Non-             Homes w/  
    1 BR     2BR     3BR                                     & dryer                             storage     patio                     direct     Direct     pre-wired  
    1/1.5     1/1.5     2/2.5     2/2.5             Studios/                     Parking     hook-ups     Vaulted                     or walk-in     deck or     Built-in     Car-     access     access     security  
    BA     BA     /3 BA     BA     3BA     efficiencies     Other     Total     spaces     or units     ceilings     Lofts     Fireplaces     closet     sunroom     bookcases     ports     garages     garages     systems  
NORTHERN CALIFORNIA
                                                                                                                                                               
Oakland-East Bay, CA
                                                                                                                                                               
Avalon at Union Square
    124       84       —       —       —       —       —       208       210     None   None   None   Most   All   All   None   Yes   No   No   None
Avalon at Willow Creek
    99       —       136       —       —       —       —       235       240     All   None   None   None   All   All   None   Yes   No   No   None
Avalon Dublin
    72       8       60       48       —       —       16       204       435     Most   Some   None   Most   All   All   None   No   Yes   No   None
Avalon Fremont
    130       81       176       —       56       —       —       443       892     All   Most   None   Some   Most   All   None   Yes   Yes   No   All
Avalon Pleasanton
    238       —       218       —       —       —       —       456       856     All   Some   None   Most   All   All   None   Yes   Yes   Yes   None
Waterford
    208       —       336       —       —       —       —       544       910     Some   Some   None   None   All   All   None   Yes   No   No   None
 
                                                                                                                                                               
San Francisco, CA
                                                                                                                                                               
Avalon at Cedar Ridge
    117       33       24       —       —       21       —       195       259     None   None   Some   None   Some   All   None   Yes   No   Yes   None
Avalon at Diamond Heights
    90       —       49       15       —       —       —       154       155     None   Some   None   None   All   All   None   No   Yes   No   None
Avalon at Mission Bay North
    148       —       95       6       —       1       —       250       198     All   None   Some   None   All   Some   None   No   Yes   No   None
Avalon at Nob Hill
    114       —       25       —       —       46       —       185       104     None   None   None   None   None   Some   Most   No   Yes   No   None
Avalon Sunset Towers
    183       20       20       —       —       20       —       243       244     None   None   None   None   None   Some   None   No   No   Yes   None
Avalon Foster City
    124       123       1       —       —       40       —       288       490     None   None   None   None   Most   Most   None   Yes   No   No   None
Avalon Pacifica
    58       106       56       —       —       —       —       220       329     None   None   None   Some   Some   All   None   Yes   Yes   No   None
Avalon Towers by the Bay
    103       —       120       —       3       —       —       226       235     All   Some   None   Some   Half   Most   None   No   No   Yes   All
Crowne Ridge
    158       68       24       —       —       4       —       254       396     Some   Some   None   Some   None   All   None   Yes   No   Yes   None
 
                                                                                                                                                               
San Jose, CA
                                                                                                                                                               
Avalon at Blossom Hill
    90       —       210       —       24       —       —       324       379     All   Some   None   None   Most   All   None   Yes   Yes   No   All
Avalon at Cahill Park
    118       —       94       —       6       —       —       218       283     All   Some   Some   Some   Most   All   None   No   Yes   No   None
Avalon at Creekside
    158       128       —       —       —       8       —       294       441     None   None   None   Some   None   Most   None   Yes   No   No   None
Avalon at Foxchase
    168       —       228       —       —       —       —       396       666     All   Some   None   None   Some   All   None   Yes   No   No   None
Avalon at Parkside
    60       —       96       36       —       —       —       192       351     All   Some   None   Half   All   All   Some   Yes   Yes   No   None
Avalon at Pruneyard
    212       40       —       —       —       —       —       252       400     All   None   None   None   None   Half   None   Yes   Yes   No   None
Avalon at River Oaks
    100       —       126       —       —       —       —       226       358     All   None   None   Most   All   All   None   No   No   Yes   None
Avalon Campbell
    156       —       180       —       12       —       —       348       454     All   Some   None   None   All   All   None   Yes   Yes   No   All
Avalon Cupertino
    145       —       152       —       14       —       —       311       501     All   Some   None   Some   Some   All   Some   No   Yes   No   None
Avalon Mountain View
    108       —       88       52       —       —       —       248       248     All   Some   None   None   Some   All   None   Yes   No   No   None
Avalon on the Alameda
    113       —       164       —       28       —       —       305       558     All   Some   None   Some   All   All   Some   No   Yes   No   All
Avalon Rosewalk
    168       —       264       —       24       —       —       456       705     All   Some   None   Some   Some   All   Most   Yes   Yes   No   All
Avalon Silicon Valley
    338       —       336       18       15       3       —       710       1,400     All   Some   Some   Some   Most   All   Some   No   Yes   No   None
Avalon Sunnyvale
    112       10       54       —       —       44       —       220       394     Some   None   None   None   All   All   None   No   No   Yes   None
Avalon Towers on the Peninsula
    90       —       115       —       6       —       —       211       512     All   None   None   None   Most   All   None   No   Yes   No   None
CountryBrook
    108       —       252       —       —       —       —       360       692     All   Some   None   All   None   All   None   Yes   Yes   No   None
San Marino
    103       —       145       —       —       —       —       248       439     All   Some   None   None   Most   All   None   Yes   No   No   None
 
                                                                                                                                                               
SOUTHERN CALIFORNIA
                                                                                                                                                               
Los Angeles, CA
                                                                                                                                                               
Avalon at Media Center
    296       102       117       12       —       221       —       748       910     Some   None   None   Some   Some   Some   None   Yes   Yes   No   None
Avalon at Warner Center
    88       54       65       20       —       —       —       227       449     All   Some   None   Some   Some   All   None   Yes   No   No   None
Avalon Glendale
    75       —       121       —       27       —       —       223       460     All   None   None   Some   All   All   None   No   Yes   No   All
Avalon Redondo Beach
    68       —       21       —       —       16       —       105       154     None   Some   Some   None   Some   All   None   No   Yes   No   None
Avalon Woodland Hills
    222       —       441       —       —       —       —       663       1,353     Some   None   Some   None   Most   All   None   No   No   No   None
The Promenade
    153       —       196       51       —       —       —       400       720     Some   None   Some   All   Some   All   None   No   No   No   None

19


 

Features and Recreational Amenities - Current and Development Communities

                                                                                                                                                                 
                                                                            Washer                             Large     Balcony,                     Non-             Homes w/  
    1 BR     2BR     3BR                                     & dryer                             storage     patio                     direct     Direct     pre-wired  
    1/1.5     1/1.5     2/2.5     2/2.5             Studios/                     Parking     hook-ups     Vaulted                     or walk-in     deck or     Built-in     Car-     access     access     security  
    BA     BA     /3 BA     BA     3BA     efficiencies     Other     Total     spaces     or units     ceilings     Lofts     Fireplaces     closet     sunroom     bookcases     ports     garages     garages     systems  
Orange County, CA
                                                                                                                                                               
Avalon at Pacific Bay
    144       56       104       —       —       —       —       304       485     All   None   None   None   Half   All   None   Yes   Yes   No   None
Avalon at South Coast
    124       —       86       —       —       48               258       426     Some   Half   None   None   Half   All   None   Yes   Yes   No   None
Avalon Mission Viejo
    94       28       44       —       —       —       —       166       243     None   None   None   None   None   All   None   Yes   Yes   No   None
Avalon Newport
    44       54       —       35       —       12       —       145       244     Most   Some   None   Some   Most   Most   Some   Yes   Yes   No   None
Avalon Santa Margarita
    160       —       141       —       —       —       —       301       515     All   None   None   None   None   All   None   Yes   Yes   No   None
 
                                                                                                                                                               
San Diego, CA
                                                                                                                                                               
Avalon at Cortez Hill
    114       —       83       —       —       97       —       294       292     None   None   None   None   None   All   None   No   No   Yes   None
Avalon at Mission Bay
    270       9       165       —       —       120       —       564       746     None   None   None   None   Some   All   None   No   Yes   No   None
Avalon at Mission Ridge
    18       1       98       83       —       —       —       200       381     Most   None   None   Most   Most   Most   None   No   Yes   No   None
Avalon at Penasquitos Hills
    48       48       80       —       —       —       —       176       273     All   None   None   All   Some   All   All   Yes   No   No   None
 
                                                                                                                                                               
  DEVELOPMENT COMMUNITIES
                                                                                                                                                               
 
                                                                                                                                                               
Avalon at Bedford Center
    52       —       87       —       —       —       —       139       264     All   None   Some   Some   All   All   None   No   No   Yes   Some
Avalon at Crane Brook
    160       12       177       38       —       —       —       387       737     All   Some   Some   Some   All   Some   None   No   Yes   No   All
Avalon Camarillo
    125       —       —       124       —       —       —       249       478     All   None   None   None   All   All   None   No   Yes   Yes   All
Avalon Danbury
    112       —       98       24       —       —       —       234       54     All   None   Some   Some   Some   All   None   No   Yes   No   Some
Avalon Del Rey
    190       —       —       119       —       —       —       309       602     All   None   Some   None   All   All   None   No   Yes   No   All
Avalon Juanita Village
    88       —       71       —       9       20       23       211       347     All   Some   None   None   Most   Most   None   No   Yes   Yes   Some
Avalon Orange
    112       —       28       28       —       —       —       168       358     All   Some   Some   Some   All   All   Some   Yes   No   No   All
Avalon Pines I
    72       —       220       —       6       —       —       298       1,094     All   Most   Some   Some   Most   All   None   No   Yes   Yes   All
Avalon Run East II
    72       36       148       56       —       —       —       312       697     All   Some   Some   Some   Most   All   None   No   Yes   Yes   All

20


 

Features and Recreational Amenities - Current and Development Communities

                                                                                                                                                         
            Community     Building                                                                                                                
    Buildings     entrance     entrance     Under-     Aerobics                     Walking /                                             Sand     Indoor /                          
    w/ security     controlled     controlled     ground     dance     Car     Picnic     jogging             Sauna /     Tennis     Racquet-     Fitness     volley-     outdoor     Clubhouse /     Business     Tot        
    systems     access     access     parking     studio     wash     area     trail     Pool     whirlpool     court     ball     center     ball     basketball     clubroom     center     lot     Concierge  
   CURRENT COMMUNITIES (1)
                                                                                                                                                       
 
                                                                                                                                                       
NORTHEAST
                                                                                                                                                       
Boston, MA
                                                                                                                                                       
Avalon at Center Place
  None   Yes   Yes   Yes   No   Yes   Yes   No   Yes   No   No   No   Yes   No   No   Yes   No   No   Yes
Avalon at Faxon Park
  None   No   Yes   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   Yes   No   Yes   No
Avalon at Flanders Hill
  All   No   Yes   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   Yes   Yes   No   Yes   No
Avalon at Lexington
  None   No   Yes   No   No   No   Yes   No   Yes   No   No   No   Yes   No   Yes   Yes   No   Yes   No
Avalon at Newton Highlands
  All   No   Yes   Yes   No   No   Yes   Yes   Yes   Yes   No   No   Yes   No   No   Yes   Yes   Yes   Yes
Avalon at Prudential Center
  None   No   Yes   Yes   No   No   Yes   No   No   No   No   No   No   No   No   Yes   No   No   Yes
Avalon at The Pinehills I
  None   No   No   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   Yes   No   No   No
Avalon Essex
  None   No   Yes   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   Yes   No   No   No
Avalon Estates
  None   No   No   No   No   No   Yes   Yes   Yes   Yes   No   No   Yes   No   No   No   Yes   Yes   No
Avalon Ledges
  All   No   Yes   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   Yes   Yes   No   Yes   No
Avalon Oaks
  None   No   Yes   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Oaks West
  All   No   Yes   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Orchards
  None   No   No   No   No   No   Yes   Yes   Yes   Yes   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Summit
  None   No   Yes   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   No   No   No   No
Avalon West
  None   No   Yes   No   No   No   Yes   No   Yes   No   No   No   No   No   Yes   Yes   No   Yes   No
Avalon at Steven’s Pond
  All   No   Yes   No   Yes   No   Yes   No   Yes   Yes   No   No   Yes   No   Yes   Yes   No   Yes   No
Essex Place
  None   No   No   No   No   No   Yes   Yes   Yes   No   Yes   No   No   No   Yes   No   No   Yes   No
 
                                                                                                                                                       
Fairfield-New Haven, CT
                                                                                                                                                       
Avalon at Greyrock Place
  All   Yes   No   Yes   No   No   Yes   No   Yes   No   Yes   No   Yes   No   No   Yes   Yes   Yes   Yes
Avalon Corners
  All   Yes   Yes   Yes   No   No   Yes   No   Yes   No   No   No   Yes   No   No   Yes   Yes   No   Yes
Avalon Darien
  None   No   No   No   No   No   Yes   Yes   Yes   No   No   Yes   Yes   No   No   Yes   Yes   Yes   No
Avalon Gates
  None   Yes   No   No   No   No   Yes   No   Yes   No   No   Yes   Yes   Yes   Yes   Yes   No   Yes   No
Avalon Glen
  None   No   Yes   Yes   No   No   No   No   Yes   No   No   Yes   Yes   No   No   Yes   No   No   Yes
Avalon Haven
  None   No   No   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Lake
  None   No   No   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   No   No   No   No
Avalon Milford I
  None   Yes   No   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon New Canaan
  All   No   Yes   No   No   No   Yes   Yes   Yes   No   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon on Stamford Harbor
  All   Yes   Yes   Yes   No   No   Yes   Yes   Yes   No   No   Yes   Yes   No   Yes   Yes   Yes   No   Yes
Avalon Springs
  All   No   No   No   No   No   Yes   Yes   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Valley
  None   No   No   No   No   No   Yes   No   Yes   No   No   No   Yes   No   Yes   Yes   No   Yes   No
Avalon Walk I & II
  None   No   No   No   Yes   No   Yes   Yes   Yes   No   Yes   Yes   Yes   No   Yes   Yes   No   Yes   No
 
                                                                                                                                                       
Long Island, NY
                                                                                                                                                       
Avalon at Glen Cove South
  Some   Yes   Yes   No   Yes   No   Yes   Yes   Yes   No   No   No   Yes   No   No   Yes   Yes   No   Yes
Avalon Commons
  All   No   Yes   No   No   No   Yes   No   Yes   No   No   No   Yes   No   Yes   Yes   Yes   Yes   No
Avalon Court
  All   Yes   Yes   No   No   Yes   Yes   Yes   Yes   No   No   Yes   Yes   No   Yes   Yes   Yes   Yes   No
Avalon Towers
  None   No   No   Yes   No   Yes   No   No   Yes   No   No   No   Yes   No   No   Yes   Yes   No   Yes
 
                                                                                                                                                       
Northern New Jersey
                                                                                                                                                       
Avalon at Edgewater
  All   Yes   Yes   Yes   No   No   No   No   Yes   No   No   No   Yes   No   No   Yes   Yes   No   Yes
Avalon at Florham Park
  None   No   No   No   No   No   No   No   Yes   No   No   No   Yes   No   No   Yes   No   No   No
Avalon Cove
  All   Yes   Yes   No   No   No   Yes   Yes   Yes   No   Yes   Yes   Yes   No   Yes   Yes   Yes   Yes   Yes
The Tower at Avalon Cove
  All   No   Yes   No   No   No   Yes   Yes   Yes   No   Yes   Yes   Yes   No   Yes   Yes   Yes   Yes   Yes
 
                                                                                                                                                       
Central New Jersey
                                                                                                                                                       
Avalon at Freehold
  None   No   No   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon Run East
  None   No   No   No   No   No   Yes   Yes   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Watch
  None   No   Yes   No   No   No   Yes   No   Yes   No   Yes   Yes   Yes   No   Yes   Yes   No   Yes   No

21


 

Features and Recreational Amenities - Current and Development Communities

                                                                                                                                                         
            Community     Building                                                                                                                
    Buildings     entrance     entrance     Under-     Aerobics                     Walking /                                             Sand     Indoor /                          
    w/ security     controlled     controlled     ground     dance     Car     Picnic     jogging             Sauna /     Tennis     Racquet-     Fitness     volley-     outdoor     Clubhouse /     Business     Tot        
    systems     access     access     parking     studio     wash     area     trail     Pool     whirlpool     court     ball     center     ball     basketball     clubroom     center     lot     Concierge  
New York, NY
                                                                                                                                                       
Avalon Gardens
  All   No   No   No   No   No   Yes   No   Yes   No   Yes   Yes   Yes   Yes   Yes   Yes   Yes   Yes   Yes
Avalon Green
  All   No   No   No   No   No   No   No   Yes   No   No   No   No   Yes   No   Yes   No   No   No
Avalon Riverview I
  All   Yes   Yes   No   No   No   Yes   Yes   No   No   No   No   Yes   No   No   Yes   Yes   No   Yes
Avalon View
  None   No   No   No   No   No   Yes   No   Yes   No   Yes   No   Yes   No   Yes   Yes   No   Yes   No
Avalon Willow
  All   Yes   Yes   Yes   No   No   Yes   No   Yes   No   No   Yes   Yes   No   No   Yes   Yes   No   Yes
The Avalon
  All   No   Yes   Yes   No   No   No   No   No   No   No   No   Yes   No   No   Yes   Yes   No   Yes
 
                                                                                                                                                       
MID-ATLANTIC
                                                                                                                                                       
Baltimore, MD
                                                                                                                                                       
Avalon at Fairway Hills I, II & III
  None   No   No   No   No   Yes   Yes   No   Yes   No   Yes   Yes   Yes   No   No   Yes   Yes   Yes   No
Avalon at Symphony Glen
  None   No   No   No   No   Yes   Yes   Yes   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Landing
  None   No   No   No   No   Yes   Yes   Yes   Yes   No   No   No   Yes   No   No   Yes   No   No   No
Hobbits Grove
  None   No   No   No   No   No   No   No   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
 
                                                                                                                                                       
Washington, DC
                                                                                                                                                       
AutumnWoods
  None   No   No   No   No   Yes   Yes   Yes   Yes   No   Yes   No   Yes   Yes   Yes   Yes   No   Yes   No
Avalon at Arlington Square
  Some   No   Yes   No   No   No   Yes   No   Yes   No   No   No   Yes   No   Yes   Yes   Yes   Yes   No
Avalon at Ballston - Washington
Towers
  None   Yes   Yes   Yes   No   No   Yes   No   Yes   No   Yes   No   Yes   No   No   Yes   No   No   Yes
Avalon at Cameron Court
  All   Yes   No   No   Yes   Yes   Yes   No   Yes   Yes   No   No   Yes   Yes   Yes   Yes   Yes   No   No
Avalon at Decoverly
  None   No   No   No   No   Yes   Yes   Yes   Yes   No   Yes   Yes   Yes   No   Yes   Yes   No   Yes   No
Avalon at Foxhall
  None   Yes   Yes   Yes   No   No   No   Yes   Yes   No   No   No   Yes   No   No   Yes   No   No   No
Avalon at Gallery Place I
  All   Yes   Yes   Yes   No   No   No   No   No   No   No   No   Yes   No   No   No   Yes   No   Yes
Avalon at Grosvenor Station
  All   Yes   Yes   Yes   No   Yes   Yes   No   Yes   No   No   No   Yes   No   No   Yes   Yes   No   Yes
Avalon at Providence Park
  None   No   No   No   No   Yes   No   No   Yes   No   No   No   Yes   No   No   Yes   Yes   No   No
Avalon at Rock Spring
  None   No   Yes   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon at Traville
  None   No   Yes   No   No   No   Yes   Yes   Yes   No   No   No   Yes   No   Yes   Yes   Yes   Yes   No
Avalon Crescent
  None   Yes   No   No   Yes   Yes   Yes   Yes   Yes   No   No   No   Yes   No   No   Yes   Yes   Yes   Yes
Avalon Crossing
  None   Yes   No   No   No   Yes   Yes   No   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Fields I & II
  All   No   No   No   No   Yes   Yes   No   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Knoll
  None   No   Yes   No   No   Yes   Yes   Yes   Yes   No   Yes   No   Yes   No   Yes   No   No   Yes   No
 
                                                                                                                                                       
MIDWEST
                                                                                                                                                       
Chicago, IL
                                                                                                                                                       
200 Arlington Place
  None   No   Yes   No   No   No   No   No   Yes   No   No   No   Yes   No   No   Yes   No   No   No
Avalon at Danada Farms
  None   No   No   No   No   No   No   No   Yes   No   No   No   Yes   No   No   Yes   Yes   No   Yes
Avalon at Stratford Green
  None   No   No   No   No   Yes   Yes   Yes   Yes   No   No   No   No   No   No   Yes   No   No   Yes
Avalon at West Grove
  None   No   Yes   No   No   No   Yes   No   Yes   Yes   No   Yes   Yes   No   No   Yes   Yes   Yes   No
Briarcliffe Lakeside
  None   No   Yes   No   No   No   No   Yes   Yes   No   No   No   Yes   No   No   Yes   Yes   No   No
 
                                                                                                                                                       
PACIFIC NORTHWEST
                                                                                                                                                       
Seattle, WA
                                                                                                                                                       
Avalon at Bear Creek
  All   Yes   No   No   No   No   Yes   Yes   Yes   Yes   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon Bellevue
  None   No   Yes   Yes   No   No   No   No   No   No   No   No   Yes   No   No   Yes   Yes   No   Yes
Avalon Belltown
  None   Yes   Yes   Yes   No   No   No   No   No   No   No   No   Yes   No   No   Yes   No   No   No
Avalon Brandemoor
  All   No   No   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon HighGrove
  None   No   No   No   No   No   No   No   Yes   Yes   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon ParcSquare
  None   Yes   Yes   Yes   No   No   No   Yes   No   No   No   No   Yes   No   No   Yes   Yes   No   No
Avalon Redmond Place
  None   No   No   No   No   Yes   No   Yes   Yes   Yes   No   No   Yes   No   No   Yes   No   Yes   No
Avalon RockMeadow
  None   No   No   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon WildReed
  None   No   No   No   No   No   Yes   Yes   Yes   Yes   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon Wildwood
  All   No   No   No   No   No   No   Yes   Yes   Yes   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon Wynhaven
  None   No   Yes   Yes   No   No   Yes   Yes   Yes   Yes   No   No   Yes   No   Yes   Yes   Yes   Yes   No
Ravenswood at the Park
  None   No   No   No   No   No   Yes   No   Yes   Yes   Yes   No   Yes   No   Yes   Yes   Yes   Yes   No

22


 

Features and Recreational Amenities - Current and Development Communities

                                                                                                                                                         
            Community     Building                                                                                                                
    Buildings     entrance     entrance     Under-     Aerobics                     Walking /                                             Sand     Indoor /                          
    w/ security     controlled     controlled     ground     dance     Car     Picnic     jogging             Sauna /     Tennis     Racquet-     Fitness     volley-     outdoor     Clubhouse /     Business     Tot        
    systems     access     access     parking     studio     wash     area     trail     Pool     whirlpool     court     ball     center     ball     basketball     clubroom     center     lot     Concierge  
NORTHERN CALIFORNIA
                                                                                                                                                       
Oakland-East Bay, CA
                                                                                                                                                       
Avalon at Union Square
  None   Yes   No   No   No   No   No   No   Yes   No   No   No   Yes   No   No   No   No   No   No
Avalon at Willow Creek
  Some   Yes   No   No   No   Yes   Yes   No   Yes   Yes   No   No   Yes   No   No   No   No   No   No
Avalon Dublin
  None   No   No   No   No   Yes   Yes   No   Yes   Yes   No   No   Yes   Yes   Yes   No   Yes   No   No
Avalon Fremont
  All   No   No   Yes   Yes   Yes   No   No   Yes   Yes   No   No   Yes   No   No   Yes   No   No   No
Avalon Pleasanton
  None   No   No   No   No   Yes   No   No   Yes   Yes   No   No   Yes   No   Yes   No   Yes   Yes   No
Waterford
  Some   Yes   No   No   No   Yes   No   No   Yes   Yes   No   No   Yes   No   Yes   No   No   Yes   No
 
                                                                                                                                                       
San Francisco, CA
                                                                                                                                                       
Avalon at Cedar Ridge
  None   No   No   No   No   No   No   No   Yes   Yes   No   No   Yes   No   No   Yes   No   No   No
Avalon at Diamond Heights
  None   No   Yes   Yes   No   No   No   No   Yes   Yes   No   No   Yes   No   No   Yes   No   No   No
Avalon at Mission Bay North
  All   Yes   Yes   Yes   Yes   No   No   No   No   No   No   No   Yes   No   No   Yes   No   No   Yes
Avalon at Nob Hill
  None   Yes   Yes   Yes   No   No   Yes   No   No   No   No   No   Yes   No   No   No   No   No   Yes
Avalon Sunset Towers
  All   Yes   Yes   Yes   No   Yes   Yes   No   No   No   No   No   No   No   No   No   No   No   No
Avalon Foster City
  Some   No   No   No   No   Yes   No   Yes   Yes   No   No   No   No   No   No   Yes   No   Yes   No
Avalon Pacifica
  None   No   No   No   No   No   No   No   Yes   No   No   No   Yes   No   No   No   No   No   No
Avalon Towers by the Bay
  None   Yes   Yes   Yes   No   No   No   No   No   Yes   No   No   Yes   No   No   Yes   Yes   No   Yes
Crowne Ridge
  None   No   No   Yes   No   No   No   Yes   Yes   Yes   No   No   Yes   No   No   No   Yes   No   No
 
                                                                                                                                                       
San Jose, CA
                                                                                                                                                       
Avalon at Blossom Hill
  None   Yes   Yes   No   No   Yes   No   No   Yes   Yes   No   No   Yes   No   No   No   Yes   No   No
Avalon at Cahill Park
  All   Yes   Yes   Yes   Yes   No   No   No   Yes   Yes   No   No   Yes   No   No   Yes   Yes   No   No
Avalon at Creekside
  Some   No   No   No   No   No   Yes   Yes   Yes   No   Yes   No   Yes   Yes   Yes   Yes   Yes   No   No
Avalon at Foxchase
  None   No   No   Yes   No   Yes   No   No   Yes   Yes   No   No   Yes   No   No   No   No   No   No
Avalon at Parkside
  None   No   No   Yes   No   No   Yes   No   Yes   Yes   No   No   Yes   No   Yes   Yes   Yes   Yes   No
Avalon at Pruneyard
  None   No   No   No   No   No   Yes   No   Yes   Yes   No   No   Yes   Yes   Yes   No   Yes   No   No
Avalon at River Oaks
  None   No   No   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   No   Yes   No   No
Avalon Campbell
  Some   Yes   Yes   Yes   Yes   No   Yes   Yes   Yes   Yes   No   No   Yes   Yes   No   No   Yes   Yes   No
Avalon Cupertino
  None   Yes   Yes   Yes   No   No   No   No   Yes   Yes   No   No   Yes   No   No   No   Yes   No   No
Avalon Mountain View
  None   No   No   Yes   No   Yes   Yes   No   Yes   No   No   No   Yes   No   No   No   Yes   Yes   No
Avalon on the Alameda
  All   Yes   Yes   Yes   No   No   No   No   Yes   Yes   No   No   Yes   No   No   No   No   No   No
Avalon Rosewalk
  None   Yes   No   No   Yes   No   Yes   Yes   Yes   Yes   No   No   Yes   No   No   No   Yes   No   No
Avalon Silicon Valley
  Some   Yes   Yes   Yes   Yes   No   Yes   No   Yes   Yes   Yes   No   Yes   No   Yes   Yes   Yes   Yes   Yes
Avalon Sunnyvale
  None   No   No   Yes   Yes   Yes   Yes   No   Yes   Yes   No   No   Yes   No   No   No   Yes   Yes   No
Avalon Towers on the Peninsula
  All   Yes   Yes   Yes   No   Yes   Yes   No   Yes   Yes   No   No   Yes   No   No   No   No   No   Yes
CountryBrook
  None   Yes   No   No   No   Yes   No   No   Yes   Yes   No   No   Yes   No   No   No   No   No   No
San Marino
  None   Yes   No   No   No   Yes   No   No   Yes   Yes   No   No   Yes   No   No   No   No   Yes   No
 
                                                                                                                                                       
SOUTHERN CALIFORNIA
                                                                                                                                                       
Los Angeles, CA
                                                                                                                                                       
Avalon at Media Center
  None   No   Yes   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   No   Yes   No   No
Avalon at Warner Center
  None   Yes   Yes   No   No   No   No   No   Yes   Yes   Yes   No   Yes   No   No   No   Yes   No   No
Avalon Glendale
  None   Yes   Yes   Yes   No   No   No   No   Yes   No   No   No   Yes   No   No   Yes   Yes   No   No
Avalon Redondo Beach
  None   Yes   Yes   Yes   No   No   No   Yes   Yes   No   No   No   Yes   No   No   Yes   No   No   No
Avalon Woodland Hills
  None   Yes   No   Yes   No   No   No   No   Yes   Yes   No   No   Yes   No   No   No   Yes   No   No
The Promenade
  None   Yes   Yes   Yes   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   Yes   Yes   Yes   No

23


 

Features and Recreational Amenities - Current and Development Communities

                                                                                                                                                         
            Community     Building                                                                                                                
    Buildings     entrance     entrance     Under-     Aerobics                     Walking /                                             Sand     Indoor /                          
    w/ security     controlled     controlled     ground     dance     Car     Picnic     jogging             Sauna /     Tennis     Racquet-     Fitness     volley-     outdoor     Clubhouse /     Business     Tot        
    systems     access     access     parking     studio     wash     area     trail     Pool     whirlpool     court     ball     center     ball     basketball     clubroom     center     lot     Concierge  
Orange County, CA
                                                                                                                                                       
Avalon at Pacific Bay
  None   Yes   No   No   No   No   No   No   Yes   Yes   No   No   Yes   No   No   No   Yes   Yes   No
Avalon at South Coast
  None   Yes   No   No   No   Yes   No   No   Yes   Yes   Yes   No   Yes   Yes   No   Yes   Yes   No   No
Avalon Mission Viejo
  None   Yes   No   No   No   No   No   Yes   Yes   Yes   No   No   Yes   No   No   No   Yes   No   No
Avalon Newport
  None   No   No   No   No   Yes   No   No   Yes   Yes   No   No   Yes   No   No   No   Yes   No   No
Avalon Santa Margarita
  None   No   No   No   No   No   Yes   Yes   Yes   Yes   No   No   Yes   No   No   No   No   Yes   No
 
San Diego, CA
                                                                                                                                                       
Avalon at Cortez Hill
  All   Yes   Yes   No   No   No   No   Yes   Yes   Yes   Yes   No   Yes   No   No   Yes   Yes   No   No
Avalon at Mission Bay
  None   Yes   Yes   Yes   Yes   Yes   No   No   Yes   Yes   Yes   No   Yes   Yes   Yes   Yes   Yes   No   No
Avalon at Mission Ridge
  Some   No   No   No   No   No   Yes   No   Yes   Yes   No   No   Yes   No   No   No   No   Yes   No
Avalon at Penasquitos Hills
  None   No   No   No   No   No   Yes   Yes   Yes   Yes   Yes   Yes   Yes   Yes   No   No   Yes   Yes   No
 
   DEVELOPMENT COMMUNITIES
                                                                                                                                                       
 
Avalon at Bedford Center
  None   No   No   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon at Crane Brook
  Some   No   Yes   No   No   No   Yes   No   Yes   No   No   No   Yes   No   Yes   Yes   Yes   Yes   Yes
Avalon Camarillo
  None   Yes   No   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   Yes   Yes   Yes   No
Avalon Danbury
  Some   No   Yes   No   No   No   Yes   Yes   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Del Rey
  All   Yes   Yes   No   No   No   No   No   Yes   No   No   No   Yes   No   No   Yes   Yes   No   No
Avalon Juanita Village
  Some   Yes   Yes   Yes   No   No   No   No   No   No   No   No   Yes   No   No   Yes   No   No   No
Avalon Orange
  None   No   Yes   No   No   No   Yes   No   Yes   No   No   No   Yes   No   No   Yes   No   Yes   No
Avalon Pines I
  None   No   No   No   No   No   Yes   Yes   Yes   No   Yes   No   Yes   No   Yes   Yes   No   Yes   No
Avalon Run East II
  None   No   No   No   No   No   Yes   Yes   Yes   No   Yes   No   Yes   No   Yes   Yes   No   Yes   No
   
  (1)    For the purpose of this table, Current Communities excludes communities held by unconsolidated real estate joint ventures.

24


 

Development Communities

As of December 31, 2004, we had ten Development Communities under construction. We expect these Development Communities, when completed, to add a total of 2,668 apartment homes to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $546,700,000. Statements regarding the future development or performance of the Development Communities are forward-looking statements. We cannot assure you that:

  •   we will complete the Development Communities;
  •   our budgeted costs or estimates of occupancy rates will be realized;
  •   our schedule of leasing start dates, construction completion dates or stabilization dates will be achieved; or
  •   future developments will realize returns comparable to our past developments.

You should carefully review the discussion under “Risks of Development and Redevelopment” included elsewhere in this Item 2.

25


 

The following table presents a summary of the Development Communities. We hold a direct or indirect fee simple ownership interest in these communities except where noted.

                                                         
                    Total                          
            Number of     capitalized                          
            apartment     cost (1)     Construction     Initial     Estimated     Estimated  
            homes     ($ millions)     start     occupancy (2)     completion     stabilization (3)  
  1.    
Avalon Run East II
Lawrenceville, NJ
    312       $49.3       Q2 2003       Q2 2004       Q2 2005       Q4 2005  
  2.    
Avalon at Crane Brook
Danvers & Peabody, MA
    387       55.9       Q3 2003       Q2 2004       Q1 2005       Q4 2005  
  3.    
Avalon Chrystie Place I (4)
New York, NY
    361       151.7       Q4 2003       Q3 2005       Q4 2005       Q2 2006  
  4.    
Avalon Pines I
Coram, NY
    298       48.7       Q4 2003       Q4 2004       Q3 2005       Q1 2006  
  5.    
Avalon Orange
Orange, CT
    168       22.4       Q1 2004       Q4 2004       Q3 2005       Q4 2005  
  6.    
Avalon Danbury
Danbury, CT
    234       35.6       Q1 2004       Q2 2005       Q4 2005       Q2 2006  
  7.    
Avalon Del Rey (5)
Los Angeles, CA
    309       70.0       Q2 2004       Q2 2005       Q4 2005       Q2 2006  
  8.    
Avalon at Juanita Village (6)
Kirkland, WA
    211       45.5       Q2 2004       Q3 2005       Q4 2005       Q2 2006  
  9.    
Avalon Camarillo
Camarillo, CA
    249       42.7       Q2 2004       Q3 2005       Q1 2006       Q3 2006  
  10.    
Avalon at Bedford Center
Bedford, MA
    139       24.9       Q4 2004       Q4 2005       Q2 2006       Q4 2006  
       
 
                                           
 
       
Total
    2,668       $546.7                                  
       
 
                                           

(1)   Total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees. Total capitalized cost for communities identified as having joint venture ownership, either during construction or upon construction completion, represents the total projected joint venture contribution amount.
 
(2)   Future initial occupancy dates are estimates.
 
(3)   Stabilized operations is defined as the earlier of (i) attainment of 95% or greater physical occupancy or (ii) the one-year anniversary of completion of development.
 
(4)   This community is being financed under a joint venture structure with third-party financing, in which the community is owned by a limited liability company managed by one of our wholly-owned subsidiaries. The total capitalized cost for this community includes costs associated with the construction of 89,000 square feet of retail space and 30,000 square feet for a community facility. Our portion of the total capitalized cost of this joint venture is projected to be $30,300,000 including community-based tax-exempt debt.
 
(5)   This community is currently owned by one of our wholly-owned subsidiaries, will be financed, in part or in whole, by a construction loan, and is subject to a joint venture agreement that allows for a 70% joint venture partner to be admitted upon construction completion.
 
(6)   This community is being developed by one of our wholly-owned, taxable REIT subsidiaries, and is subject to a venture agreement that provides for the transfer of 100% of the ownership interests to the joint venture upon construction completion.

26


 

Redevelopment Communities

As of December 31, 2004, we had four communities under redevelopment. We expect the total capitalized cost to complete these communities, including the cost of acquisition, capital expenditures subsequent to acquisition and redevelopment, to be approximately $229,300,000, of which approximately $40,300,000 is the additional capital invested or expected to be invested during redevelopment and $189,000,000 was incurred prior to redevelopment. Statements regarding the future redevelopment or performance of the Redevelopment Communities are forward-looking statements. We have found that the cost to redevelop an existing apartment community is more difficult to budget and estimate than the cost to develop a new community. Accordingly, we expect that actual costs may vary from our budget by a wider range than for a new development community. We cannot assure you that we will meet our schedule for reconstruction completion or restabilized operations, or that we will meet our budgeted costs, either individually or in the aggregate. See the discussion under “Risks of Development and Redevelopment” included elsewhere in this report.

The following presents a summary of these Redevelopment Communities:

                                                         
                    Total cost                      
            Number of     ($ millions)             Estimated     Estimated  
            apartment     Pre-redevelopment     Total capitalized     Reconstruction     Reconstruction     restabilized  
            homes     cost     cost (1)     start     completion     operations (2)  
  1.    
Avalon at Prudential Center
Boston, MA
    781       $133.9       $160.0       Q4 2000       Q2 2006       Q4 2006  
  2.    
Avalon Towers
Long Beach, NY
    109       17.3       21.5       Q3 2004       Q3 2005       Q3 2005  
  3.    
Avalon at Fairway Hills III
Columbia, MD
    336       23.3       29.4       Q4 2004       Q2 2006       Q4 2006  
  4.    
Briarcliffe Lakeside (3)
Wheaton, IL
    204       14.5       18.4       Q4 2004       Q1 2006       Q3 2006  
       
 
                                         
 
       
Total
    1,430       $189.0       $229.3                          
       
 
                                         

(1)   Total capitalized cost includes all capitalized costs projected to be incurred to redevelop the respective Redevelopment Community, including costs to acquire the community, reconstruction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated redevelopment overhead and other regulatory fees determined in accordance with GAAP.
 
(2)   Restabilized operations is defined as the earlier of (i) attainment of 95% or greater physical occupancy or (ii) the one-year anniversary of completion of redevelopment.
 
(3)   This community was acquired in 2004 and is currently owned by one of our wholly-owned subsidiaries. However, we expect to reduce our ownership in this community upon closing of the discretionary investment fund.

Development Rights

As of December 31, 2004, we are evaluating the future development of 49 new apartment communities on land that is either owned by us, under contract, subject to a leasehold interest or for which we hold a purchase option. We generally hold Development Rights through options to acquire land, although for fifteen of the Development Rights we currently own the land on which a community would be built if we proceeded with development. The Development Rights range from those beginning design and architectural planning to those that have completed site plans and drawings and can begin construction almost immediately. We estimate that the successful completion of all of these communities would ultimately add 13,491 apartment homes to our portfolio. Substantially all of these apartment homes will offer features like those offered by the communities we currently own. At December 31, 2004, there were cumulative capitalized costs (including legal fees, design fees and related overhead costs, but excluding land costs) of $37,007,000 relating to Development Rights that we consider probable for future development. In addition, land costs related to the pursuit of Development Rights (consisting of original land and additional carrying costs) of $166,751,000 are reflected as land held for development on the accompanying Consolidated Balance Sheet as of December 31, 2004.

27


 

The properties comprising the Development Rights are in different stages of the due diligence and regulatory approval process. The decisions as to which of the Development Rights to invest in, if any, or to continue to pursue once an investment in a Development Right is made, are business judgments that we make after we perform financial, demographic and other analyses. In the event that we do not proceed with a Development Right, we generally would not recover capitalized costs incurred in the pursuit of those communities, unless we were to recover amounts in connection with the sale of land; however, we cannot guarantee a recovery. Pre-development costs incurred in the pursuit of Development Rights for which future development is not yet considered probable are expensed as incurred. In addition, if the status of a Development Right changes, deeming future development no longer probable, any capitalized pre-development costs are written-off with a charge to expense.

Although the development of any particular Development Right cannot be assured, we believe that the Development Rights, in the aggregate, present attractive potential opportunities for future development and growth of long-term stockholder value.

Statements regarding the future development of the Development Rights are forward-looking statements. We cannot assure you that:

  •   we will succeed in obtaining zoning and other necessary governmental approvals or the financing required to develop these communities, or that we will decide to develop any particular community; or
  •   if we undertake construction of any particular community, that we will complete construction at the total capitalized cost assumed in the financial projections in the following table.

The table on the following page presents a summary of the 49 Development Rights we are currently pursuing.

28


 

                                 
                            Total
                    Estimated   capitalized
                    number   cost
        Location           of homes   ($ millions) (1)
  1.    
Los Angeles, CA
    (2)       123     $ 40  
  2.    
San Francisco, CA
    (4)       313       117  
  3.    
Newton, MA
    (2)       204       63  
  4.    
Rockville, MD Phase II
            196       28  
  5.    
Long Island City, NY Phase II and III
            602       176  
  6.    
Lyndhurst, NJ
    (2)       328       81  
  7.    
New York, NY Phase II and III
    (2)       308       142  
  8.    
New Rochelle, NY Phase II and III
            588       165  
  9.    
Coram, NY Phase II
    (2)       152       26  
  10.    
Bellevue, WA
            368       78  
  11.    
Shrewsbury, MA
            264       40  
  12.    
Wilton, CT
            100       24  
  13.    
Hingham, MA
            236       44  
  14.    
Glen Cove, NY
    (2)       111       32  
  15.    
Quincy, MA
    (2)       148       24  
  16.    
Plymouth, MA Phase II
            69       13  
  17.    
Dublin, CA Phase I
            304       72  
  18.    
Lexington, MA
            387       76  
  19.    
Andover, MA
            115       21  
  20.    
Encino, CA
    (2)       131       51  
  21.    
West Haven, CT
            170       23  
  22.    
Woburn, MA
            446       84  
  23.    
Danvers, MA
            428       80  
  24.    
Canoga Park, CA
            200       47  
  25.    
Tinton Falls, NJ
            298       51  
  26.    
Greenburgh, NY Phase II
            766       120  
  27.    
Seattle, WA
    (2)       194       54  
  28.    
Oyster Bay, NY
            273       69  
  29.    
Norwalk, CT
            312       63  
  30.    
College Park, MD
            320       44  
  31.    
Union City, CA Phase I
    (2)       230       58  
  32.    
Union City, CA Phase II
    (2)       209       54  
  33.    
Irvine, CA
            290       63  
  34.    
Stratford, CT
            146       23  
  35.    
Sharon, MA
            156       26  
  36.    
Gaithersburg, MD
            254       41  
  37.    
White Plains, NY
            430       149  
  38.    
Camarillo, CA
            376       55  
  39.    
Cohasset, MA
            200       38  
  40.    
Dublin, CA Phase II
            200       52  
  41.    
Dublin, CA Phase III
            205       53  
  42.    
Milford, CT
    (2)       284       45  
  43.    
Alexandria, VA
            282       56  
  44.    
Shelton, CT
            302       49  
  45.    
Wheaton, MD
    (2)(3)       320       56  
  46.    
Yaphank, NY
            254       43  
  47.    
Plainview, NY
            220       47  
  48.    
Rockville, MD
    (2)(3)       240       46  
  49.    
Tysons Corner, VA
    (2)(3)       439       101  
       
 
               
       
     Total
            13,491     $ 3,003  
       
 
               

(1)   Total capitalized cost includes all capitalized costs incurred to date (if any) and projected to be incurred to develop the respective community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees.
 
(2)   We own the land parcel, but construction has not yet begun.
 
(3)   Represents improved land encumbered with debt. The improved land consists of occupied office buildings and industrial space. NOI from incidental operations from the current improvements will be recorded as a reduction in cost basis as described in the Notes to the Consolidated Financial Statements included elsewhere in this report.
 
(4)   In December 2004, we entered into a joint venture agreement with an unrelated third-party for the development of Avalon at Mission Bay North II. We hold a 25% equity interest in this joint venture and we anticipate that approximately 80% of the total capitalized cost will be financed through a construction loan. This community, if developed, will be located on land subject to a ground lease which expires in December 2103.

29


 

Risks of Development and Redevelopment

We intend to continue to pursue the development and redevelopment of apartment home communities. Our development and redevelopment activities may be exposed to the following:

  •   we may abandon opportunities we have already begun to explore based on further review of, or changes in, financial, demographic, environmental or other factors;
  •   we may encounter liquidity constraints, including the unavailability of financing on favorable terms for the development or redevelopment of a community;
  •   we may be unable to obtain, or we may experience delays in obtaining, all necessary zoning, land-use, building, occupancy, and other required governmental permits and authorizations;
  •   we may incur construction or reconstruction costs for a community that exceed our original estimates due to increased materials, labor or other expenses, which could make completion of development or redevelopment of the community uneconomical;
  •   occupancy rates and rents at a newly completed development or redevelopment community may fluctuate depending on a number of factors, including competition and market and general economic conditions, and may not be sufficient to make the community profitable; and
  •   we may be unable to complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs.

The occurrence of any of the events described above could adversely affect results of operations and our payment of distributions to our stockholders.

Construction costs are projected by us based on market conditions prevailing in the community’s market at the time our budgets are prepared and reflect changes to those market conditions that we anticipated at that time. Although we attempt to anticipate changes in market conditions, we cannot predict those changes with certainty. Construction costs have been increasing, particularly for materials such as steel, concrete and lumber, and, for some of our Development Communities and Development Rights, the total construction costs may be higher than the original budget. We do not expect that these price increases will materially affect our current Development Communities. However, these increases may materially affect Development Rights where construction has not yet begun. Total capitalized cost includes all capitalized costs projected to be incurred to develop the respective Development or Redevelopment Community, determined in accordance with GAAP, including:

  •   land and/or property acquisition costs;
  •   construction or reconstruction costs;
  •   real estate taxes;
  •   capitalized interest;
  •   loan fees;
  •   permits;
  •   professional fees;
  •   allocated development or redevelopment overhead; and
  •   other regulatory fees.

Costs to redevelop communities that have been acquired have, in some cases, exceeded our original estimates and similar increases in costs may be experienced in the future. We cannot assure you that market rents in effect at the time new development communities or redevelopment communities complete lease-up will be sufficient to fully offset the effects of any increased construction or reconstruction costs.

30


 

Recent Developments

Sales of Existing Communities. We seek to increase our geographical concentration in selected high barrier-to-entry markets where we believe we can:

  •   apply sufficient market and management presence to enhance revenue growth;
  •   reduce operating expenses; and
  •   leverage management talent.

To achieve this increased concentration, we (i) sell assets that do not meet our long-term investment strategy or when capital and real estate markets allow us to realize a portion of the value created over the past business cycle and (ii) redeploy the proceeds from those sales to develop, redevelop and acquire communities. Pending such redeployment, we will generally use the proceeds from the sale of these communities to reduce amounts outstanding under our variable rate unsecured credit facility. On occasion, we will set aside the proceeds from the sale of communities into a cash escrow account to facilitate a nontaxable, like-kind exchange transaction. We sold five communities, containing a total of 1,360 apartment homes, during the period from January 1, 2004 through February 28, 2005. Net proceeds from the sale of these assets were $210,001,000.

Land Acquisitions. We carefully select land for development and follow established procedures that we believe minimize both the cost and the risks of development. During 2004, we acquired ten land parcels for an aggregate purchase price of $122,775,000. The land parcels purchased, which are currently held for future development, are as follows:

                                                 
                    Estimated   Total        
                    number   capitalized        
            Gross   of apartment   cost (1)   Date   Construction
            acres   homes   ($ millions)   acquired   start (2)
  1.    
Avalon Wilshire
    1.7       123     $ 40     June 2004     2005  
       
Los Angeles, CA
                                       
  2.    
Avalon Chestnut Hill
    4.7       204       63     December 2004     2005  
       
Newton, MA
                                       
  3.    
Avalon Lyndhurst
    5.8       328       81     May 2004     2005  
       
Lyndhurst, NJ
                                       
  4.    
Avalon Chrystie Place II (4)
    1.1       205       97     June 2004     2005  
       
New York, NY
                                       
  5.    
Avalon Encino
    2.0       131       51     July 2004     2005  
       
Encino, CA
                                       
  6.    
Avalon at Union Square I & II
    6.0       439       112     December 2004     2006  
       
Union City, CA
                                       
  7.    
Avalon Milford II
    42.0       284       45     April 2004     2007  
       
Milford, CT
                                       
  8.    
Avalon at Wheaton (3)
    3.4       320       56     May 2004     2007  
       
Wheaton, MD
                                       
  9.    
Avalon at Twinbrook (3)
    4.0       240       46     June 2004     2009  
       
Rockville, MD
                                       
  10.    
Avalon Tysons West (3)
    5.5       439       101     December 2004     2010  
       
Tysons Corner, VA
                                       
       
 
                           
       
Total
    76.2       2,713       $692                  
       
 
                           

(1)   Total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Development Community, determined in accordance with GAAP, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees.
 
(2)   Future construction start dates are estimates. There can be no assurance that we will pursue to completion any or all of these proposed developments.
 
(3)   Represents improved land encumbered with debt. The improved land consists of occupied office buildings and industrial space.
 
(4)   Represents land acquired for the second phase of Avalon Chrystie Place, as discussed in Development Communities, elsewhere in this report.

31


 

Insurance and Risk of Uninsured Losses

We carry commercial general liability insurance and property insurance with respect to all of our communities. These policies, and other insurance policies we carry, have policy specifications, insured limits and deductibles that we consider commercially reasonable. There are, however, certain types of losses (such as losses arising from acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in management’s view, economically impractical. If an uninsured property loss or a property loss in excess of insured limits were to occur, we could lose our capital invested in a community, as well as the anticipated future revenues from such community. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. If an uninsured liability to a third-party were to occur, we would incur the cost of defense and settlement with, or court ordered damages to, that third-party. A significant uninsured property or liability loss could materially and adversely affect our financial condition and results of operations.

Many of our West Coast communities are located in the general vicinity of active earthquake faults. A large concentration of our communities lie near, and thus are susceptible to, the major fault lines in California, including the San Andreas fault and the Hayward fault. We cannot assure you that an earthquake would not cause damage or losses greater than insured levels. In June 2004, we renewed our earthquake insurance. We have in place with respect to communities located in California, for any single occurrence and in the aggregate, $75,000,000 of coverage with a deductible per building equal to five percent of the insured value of that building. The five percent deductible is subject to a minimum of $100,000 per occurrence. Earthquake coverage outside of California is subject to a $200,000,000 limit, except with respect to the state of Washington, for which the limit is $65,000,000. Our earthquake insurance outside of California provides for a $100,000 deductible per occurrence. In addition, up to a policy aggregate of $3,000,000, the next $400,000 of loss per occurrence outside California will be treated as an additional deductible.

Our annual general liability policy and workman’s compensation coverage was renewed on August 1, 2004 and the insurance coverage provided for in these renewal policies did not materially change from the preceding year. Including the costs we estimate that we may incur as a result of deductibles, we expect the cost related to these insurance categories for the policy period from August 1, 2004 to July 31, 2005 to remain flat as compared to the prior period.

Our property insurance policy was scheduled to renew on December 1, 2005; however, in an effort to capitalize on declining insurance rates we elected to extend the first $15,000,000 layer of the policy by five months, thereby changing the renewal date for this layer to May 1, 2006. The remaining layers are currently scheduled to renew on December 1, 2005. We are currently in negotiations with all carriers to align the renewal dates. Based on this policy extension, we have seen a decline in insurance premiums for property coverage, which combined with the cost we may incur as a result of deductibles, we expect will result in declining overall insurance costs as compared to prior periods.

Just as with office buildings, transportation systems and government buildings, there have been reports that apartment communities could become targets of terrorism. In November 2002, Congress passed the Terrorism Risk Insurance Act (“TRIA”) which is designed to make terrorism insurance available. In connection with this legislation, we have purchased insurance for property damage due to terrorism up to $200,000,000. Additionally, we have purchased insurance for certain terrorist acts, not covered under TRIA, such as domestic-based terrorism. This insurance, often referred to as “non-certified” terrorism insurance, is subject to deductibles, limits and exclusions. Our general liability policy provides TRIA coverage (subject to deductibles and insured limits) for liability to third parties that result from terrorist acts at our communities.

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 present. 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

32


 

program to contain or remove the mold from the affected community and could be exposed to other liabilities. We cannot assure that we will have coverage under our existing policies for property damage or liability to third parties arising as a result of exposure to mold or a claim of exposure to mold at one of our communities.

We may elect to purchase insurance separate from our corporate or portfolio insurance policies for certain communities. Common insurance policies purchased are builder’s risk policies and owner controlled insurance policies (“OCIP”) that cover workers compensation and general liability risks for us and our enrolled contractors.

In March 2005, we will renew our directors and officers (“D&O”) insurance. We have met with several carriers in anticipation of this renewal. New carriers have entered the insurance market, increasing competition, and the capital capacity of existing carriers has expanded, resulting in a partial reversal of the significant premium increases experienced in recent years. However, the number and severity of recent and pending D&O claims may result in premium increases for this renewal.

Americans with Disabilities Act

The apartment communities we own and any apartment communities that we acquire must comply with Title III of the Americans with Disabilities Act to the extent that such properties are “public accommodations” and/or “commercial facilities” as defined by the Americans with Disabilities Act. Compliance with the Americans with Disabilities Act requirements could require removal of structural barriers to handicapped access in certain public areas of our properties where such removal is readily achievable. The Americans with Disabilities Act does not, however, consider residential properties, such as apartment communities, to be public accommodations or commercial facilities, except to the extent portions of such facilities, such as leasing offices, are open to the public. We believe our properties comply in all material respects with all present requirements under the Americans with Disabilities Act and applicable state laws. Noncompliance could result in imposition of fines or an award of damages to private litigants.

ITEM 3.      LEGAL PROCEEDINGS

As reported most recently in our Form 10-Q for the quarter ended September 30, 2004, we are currently involved in litigation with York Hunter Construction, Inc. and National Fire Insurance Company. A non-jury trial ended in April 2004 and on May 20, 2004, the court issued a ruling, finding that (i) York Hunter breached the Construction Management Agreement between it and the Company in failing to complete the project and abandoning the construction site and is therefore liable to the Company for consequential damages, and (ii) National Union, having failed to exercise its various rights to perform and complete, is liable to the Company for consequential damages. The Court issued a ruling dated October 6, 2004, awarding the Company approximately $1,250,000 plus interest. The Company has determined that it will file an appeal to seek an increase in the damage award.

Also as reported in our Form 10-Q for the quarter ended September 30, 2004, on June 6, 2003, a purported California class action lawsuit, Julie E. Ko v. AvalonBay Communities, Inc. and Does 1 through 100, was filed against the Company in California’s Los Angeles County Superior Court. The suit purports to be brought on behalf of all of the Company’s former California residents who, during the four-year period prior to the filing of the suit, paid a security deposit to the Company for the rental of residential property in California and had a portion of the deposit withheld by the Company, allegedly in excess of the damages actually sustained by the Company. The plaintiff seeks compensatory and statutory damages in unspecified amounts as well as injunctive relief, restitution, and an award of attorneys’ fees, expenses and costs of suit. The complaint seeking class certification was amended in March 2004 and the Company responded to the amended complaint on May 3, 2004. Due to the uncertainty of many critical factual and legal issues, including the viability of the case as a class action, it is not possible to determine or predict the outcome.

We are involved in various other claims and/or administrative proceedings that arise in the ordinary course of our business. While no assurances can be given, the Company does not believe that any of these outstanding litigation matters, individually or in the aggregate, will have a material adverse effect on the Company.

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS

No matter was submitted to a vote of our security holders during the fourth quarter of 2004.

33


 

PART II

ITEM 5.     MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is traded on the New York Stock Exchange (NYSE) and the Pacific Exchange (PCX) under the ticker symbol AVB. The following table sets forth the quarterly high and low sales prices per share of our common stock on the NYSE for the years 2004 and 2003, as reported by the NYSE. On February 28, 2005 there were 675 holders of record of an aggregate of 72,725,148 shares of our outstanding common stock. The number of holders does not include individuals or entities who beneficially own shares but whose shares are held of record by a broker or clearing agency, but does include each such broker or clearing agency as one recordholder.

                                                 
    2004     2003  
    Sales Price     Dividends     Sales Price     Dividends  
    High     Low     declared     High     Low     declared  
Quarter ended March 31
  $ 54.66     $ 46.72     $ 0.70     $ 40.31     $ 35.24     $ 0.70  
 
Quarter ended June 30
  $ 57.80     $ 48.30     $ 0.70     $ 44.45     $ 37.08     $ 0.70  
 
Quarter ended September 30
  $ 62.25     $ 55.89     $ 0.70     $ 48.00     $ 42.38     $ 0.70  
 
Quarter ended December 31
  $ 75.93     $ 59.90     $ 0.70     $ 49.71     $ 44.67     $ 0.70  

We expect to continue our policy of paying regular quarterly cash dividends. However, dividend distributions will be declared at the discretion of the Board of Directors and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors as the Board of Directors may consider relevant. The Board of Directors may modify our dividend policy from time to time. In February 2005, we announced that our