March 14, 2006 - 10-K: Annual report pursuant to Section 13 and 15(d)

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, 2005

Commission file number 1-12672

AVALONBAY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)


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

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

(703) 329-6300
(Registrants 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 (Title of each class)		New York Stock Exchange, Pacific Exchange New York Stock Exchange, Pacific Exchange (Name of each exchange on which registered)

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days.

Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants 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 Exchange registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).

Large accelerated filer x Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No x

The aggregate market value of the Registrants Common Stock, par value $.01 per share, held by nonaffiliates of the Registrant, as of June 30, 2005 was $5,921,051,876.

The number of shares of the Registrants Common Stock, par value $.01 per share, outstanding as of January 31, 2006 was 73,998,786.

Documents Incorporated by Reference

Portions of AvalonBay Communities, Inc.s Proxy Statement for the 2006 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 1a.	RISK FACTORS		7

ITEM 1b.	UNRESOLVED STAFF COMMENTS		14

ITEM 2.	COMMUNITIES		15

ITEM 3.	LEGAL PROCEEDINGS		38

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		39

PART II

ITEM 5.	MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		40

ITEM 6.	SELECTED FINANCIAL DATA		41

ITEM 7.	MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		44

ITEM 7a.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		62

ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		64

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		64

ITEM 9a.	CONTROLS AND PROCEDURES		64

ITEM 9b.	OTHER INFORMATION		64

PART III

ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT		65

ITEM 11.	EXECUTIVE COMPENSATION		65

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		65

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		66

ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES		66

PART IV

ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULE		67

SIGNATURES			73

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 61 of this Form 10-K. You should also review Item 1a., Risk Factors, for a discussion of various risks that could adversely affect us.

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 engage in the development, redevelopment, acquisition, ownership and operation of multifamily communities in high barrier-to-entry markets of the United States. 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. We focus on these markets 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. In addition to increasing the rental revenues of our operating assets, we believe these market attributes will increase the value of our operating assets and enable us to create additional value through the development and selective acquisition of multifamily housing.

At January 31, 2006, we owned or held a direct or indirect ownership interest in:

			140 operating apartment communities containing 40,939 apartment homes in ten states and the District of Columbia, of which two communities containing 506 apartment homes were under reconstruction;

			15 communities under construction that are expected to contain an aggregate of 4,062 apartment homes when completed; and

			rights to develop an additional 47 communities that, if developed in the manner expected, will contain an estimated 12,495 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 are consolidated for financial reporting purposes and 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 that 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 and high for-sale housing costs, (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 through our investment 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 more 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.

During the three years ended December 31, 2005, we acquired nine apartment communities, disposed of 25 apartment communities, and completed the development of 21 apartment communities and the redevelopment of four apartment communities. In anticipation of continued improvement in apartment fundamentals and to help position us for future growth, we increased our construction volume during 2005 (as measured by total projected capitalized cost at completion) and continued to secure new development opportunities, including the acquisition of land for future development. We also acquired communities that we believe we can redevelop or reposition, or take advantage of market cycle timing and improved operating performance, to create value. These communities were acquired through the institutional discretionary investment fund that we manage and own an interest in. As a result of strong capital flows to the industry and the strength of the condominium market, we also continued to dispose of assets at prices that enabled significant realized gains on cost.

In 2006, we expect our construction underway to exceed 2005 levels, and we will continue to selectively acquire additional communities through the Fund. We anticipate additional asset sales, but at reduced levels compared to 2005. 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, acquisition, property management and related strategies 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 office in Alexandria, Virginia, we also maintain regional offices and administrative or specialty offices in or near the following cities:

			Boston, Massachusetts;

			Chicago, Illinois;

			Long Island, New York;

			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 and preserves capital. However, we will acquire and hold land when business conditions warrant. Due to increased competition for land based on current market conditions, we have, at times, acquired land earlier in the development cycle or acquired land zoned for uses other than residential with the potential for rezoning. After we acquire land, we generally shift our focus to construction. Except for certain mid-rise and high-rise apartment communities where we may elect to use third-party general contractors or construction managers, we act as our own general contractor and construction manager. We 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 operating phase.

As competition for desirable development opportunities has increased in recent years, we have engaged in more complicated development pursuits. For example, at times we have acquired and may in the future acquire existing commercial buildings with the intent to pursue rezoning, tenant terminations or expirations and demolition of the existing structures. Generally, while we hold these buildings for development, the revenue from these operations, net of any operating expenses, is accounted for as a reduction in our investment in the development pursuit and not as net income. We have also participated, and may in the future participate, in master planned or other large multi-use developments where we commit to build infrastructure (such as roads) to be used by other participants or commit to act as construction manager or general contractor in building structures or spaces for third parties (such as municipal garages or parks). Costs we incur in connection with these activities may be accounted for as additional invested capital in the community or we may earn fee income for providing these services. Particularly with large scale, urban in-fill developments, we may engage in significant environmental remediation efforts to prepare a site for construction.

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 generally 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.

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 through our investment, and 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, or to help us achieve our desired product mix or rebalance our portfolio, we have acquired existing apartment communities. In 2005 we closed on the Fund, which during its investment period (ending no later than March 2008) will be our exclusive vehicle for acquiring apartment communities, subject to certain exceptions. Over the next several years, we expect to increase our acquisition activity through the Fund, focusing in particular on communities in our markets that can benefit from redevelopment, repositioning or market cycle 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; and

			managing community occupancy for optimal rental revenue levels.

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:

			we receive and approve invoices on-site to ensure careful monitoring of budgeted versus actual expenses;

			we purchase supplies in bulk where possible;

			we bid third-party contracts on a volume basis;

			we 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;

			we perform turnover work in-house or hire third-parties, generally depending upon the least costly alternative;

			we undertake preventive maintenance regularly to maximize resident satisfaction and property and equipment life; and

			we 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 use and continuously seek ways to improve technology applications to help manage our communities, believing that the accurate collection of financial and resident data will enable us to maximize revenue and control costs through careful leasing decisions, maintenance decisions and financial management.

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.

From time to time, we also pursue or arrange ancillary services for our residents to provide additional revenue sources or increase resident satisfaction. 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 or share in the revenue from such services 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 recommended vendor used by residents.

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, 2005, our debt-to-total market capitalization was 26.1%, and our long-term floating rate debt, not including borrowings under our unsecured credit facility, was 2.3% 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 companys long-term liquidity and balance sheet strength, because it shows an approximate relationship between a companys total debt and the current total market value of its assets based on the current price at which the companys 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.

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 of 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 invested in the AvalonBay Value Added Fund, L.P., a private, discretionary investment vehicle (the Fund), which will acquire and operate apartment communities in our markets. The Fund will serve, until March 16, 2008 or until 80% of its committed capital is invested, as the exclusive vehicle through which we will 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 will not restrict our development activities, and will terminate after a term of eight years, subject to two one-year extensions. The Fund has nine institutional investors, including us, with combined capital commitments of $330,000,000. A significant portion of the investments made in the Fund by its investors are being made through AvalonBay Value Added Fund, Inc., a Maryland corporation that will qualify as a REIT under the Internal Revenue Code (the Fund REIT). A wholly-owned subsidiary of the Company is the general partner of the Fund and has committed $50,000,000 to the Fund and the Fund REIT (of which approximately $11,600,000 has been invested as of January 31, 2006) representing a 15.2% combined general partner and limited partner equity interest. Under the Fund documents, the Fund has the ability to employ leverage through debt financings up to 65% on a portfolio basis, which, if achieved, would enable the Fund to invest up to $940,000,000.

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.

Other Strategies and Activities. While we emphasize equity real estate investments in rental apartment communities, we have the ability 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, 2005, we had a total of 269,289 square feet of rentable retail space that produced gross rental revenue in 2005 of $3,896,000 (0.55% of total revenue). If we secure a development right and believe that its best use, in whole or in part, is to develop the real estate with the intent to sell rather than hold the asset, we may, through a taxable REIT subsidiary, develop real estate for sale. At present, we expect to develop with the intent to sell, directly through a taxable REIT subsidiary or indirectly through a joint venture partnership, one or more parcels. Any investment in securities of other entities, and any development of real estate for sale, is subject to the percentage of ownership limitations, gross income tests, and other limitations that must be observed 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 apartment leases are for a term of one year or less. In an inflationary environment, this may allow us to realize increased rents upon renewal of existing leases or the beginning of new leases. Short-term leases generally minimize our risk from the adverse effects of inflation, although these leases generally permit residents to leave at the end of the lease term and therefore expose us to the effect of a decline in market rents. In a deflationary rent environment, we may be 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.

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 for both real estate assets and potential residents.

Environmental and Related Matters

As a current or prior owner, operator and developer of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances and also could be liable to third parties resulting from environmental factors at our communities. For some development communities, we undertake significant environmental remediation to prepare the site for construction. Environmental remediation efforts could expose us to possible liabilities for accidents or improper handling of toxins during construction. These and other risks related to environmental matters are described in more detail in Item 1a., Risk Factors.

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 Boards Nominating and Corporate Governance Committee, Audit Committee and Compensation Committee, as well as our Corporate Governance Guidelines and Code of Conduct, 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, 2005, we had 1,647 employees.

ITEM 1a. RISK FACTORS

Our operations involve various risks that could have adverse consequences, including those described below. This Item 1a includes forward-looking statements. You should refer to our discussion of the qualifications and limitations on forward-looking statements on page 61.

Development, redevelopment and construction risks could affect our profitability.

We intend to continue to develop and redevelop apartment home communities. These activities may be exposed to the following risks:

			we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities;

			we may abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in exploring those opportunities;

			we may incur costs that exceed our original estimates due to increased material, labor or other costs;

			occupancy rates and rents at a community may fail to meet our expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities;

			we may be unable to complete construction and lease up of a community on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues;

			we may be unable to obtain financing with favorable terms, or at all, for the proposed development of a community, which may cause us to delay or abandon an opportunity;

			we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties, such as the construction of shared infrastructure or other improvements; and

			we may incur liability if our communities are not constructed and operated in compliance with the accessibility provisions of the Americans with Disabilities Acts or the Fair Housing Act. Noncompliance could result in imposition of fines, an award of damages to private litigants, and a requirement that we undertake structural modifications to remedy the noncompliance. We are currently engaged in a lawsuit alleging noncompliance with these statutes. See Legal Proceedings.

We project construction costs based on market conditions at the time we prepare our budgets, and our projections include changes that we anticipate but cannot predict 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. Total capitalized cost includes all capitalized costs projected to be incurred to develop or redevelop a community, determined in accordance with GAAP, including:

			land and/or property acquisition costs;

			construction or reconstruction costs;

			costs of environmental remediation;

			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 or redevelopment communities complete lease-up will be sufficient to fully offset the effects of any increased construction or reconstruction costs.

Unfavorable changes in market and economic conditions could hurt occupancy or rental rates.

Local conditions in our markets significantly affect occupancy or rental rates at our communities. The risks that may adversely affect conditions in those markets include the following:

			plant closings, industry slowdowns and other factors that adversely affect the local economy;

			an oversupply of, or a reduced demand for, apartment homes;

			a decline in household formation or employment or lack of employment growth;

			the inability or unwillingness of residents to pay rent increases; and

			rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs.

Changes in applicable laws, or noncompliance with applicable laws, could adversely affect our operations or expose us to liability.

We must operate our communities in compliance with numerous federal, state and local laws and regulations, including landlord tenant laws and other laws generally applicable to business operations. Noncompliance with laws could expose us to liability. We are currently engaged in settling a lawsuit related to our handling of security deposits in California. See Legal Proceedings.

Compliance with changes in (i) laws increasing the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) rent control or rent stabilization laws or (iii) other governmental rules and regulations or enforcement policies affecting the use and operation of our communities, including changes to building codes and fire and life-safety codes, may result in lower revenue growth or significant unanticipated expenditures.

Short-term leases expose us to the effects of declining market rents.

Substantially all of our apartment leases are for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.

Competition could limit our ability to lease apartment homes or increase or maintain rents.

Our apartment communities compete with other housing alternatives to attract residents, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing in a particular area could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.

Attractive investment opportunities may not be available, which could adversely affect our profitability.

We expect that other real estate investors, including insurance companies, pension funds, other REITs and other well-capitalized investors, will compete with us to acquire existing properties and to develop new properties. This competition could increase prices for properties of the type we would likely pursue and adversely affect our profitability.

Insufficient cash flow could affect our debt financing and create refinancing risk.

We are subject to the risks associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. In this regard, we note that we are required to annually distribute dividends generally equal to at least 90% of our REIT taxable income, computed without regard to the dividends paid deduction and our net capital gain, in order for us to continue to qualify as a REIT, and this requirement limits the amount of our cash flow available to meet required principal and interest payments. The principal outstanding balance on a portion of our debt will not be fully amortized prior to its maturity. Although we may be able to repay our debt by using our cash flows, we cannot assure you that we will have sufficient cash flows available to make all required principal payments. Therefore, we may need to refinance at least a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that a refinancing will not be done on as favorable terms, either of which could have a material adverse effect on our financial condition and results of operations.

Rising interest rates could increase interest costs and could affect the market price of our common stock.

We currently have, and may in the future incur, variable interest rate debt. Accordingly, if interest rates increase, our interest costs will also rise, unless we have made arrangements that hedge the risk of rising interest rates. In addition, an increase in market interest rates may lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock.

Bond financing and zoning compliance requirements could limit our income, restrict the use of communities and cause favorable financing to become unavailable.

We have financed some of our apartment communities with obligations issued by local government agencies because the interest paid to the holders of this debt is generally exempt from federal income taxes and, therefore, the interest rate is generally more favorable to us. These obligations are commonly referred to as tax-exempt bonds and generally must be secured by communities. As a condition to obtaining tax-exempt financing, or on occasion as a condition to obtaining favorable zoning in some jurisdictions, we will commit to make some of the apartments in a community available to households whose income does not exceed certain thresholds (e.g., 50% or 80% of area median income), or who meet other qualifying tests. As of December 31, 2005, approximately 6.1% of our apartment homes at current operating communities were under use limitations such as these. These commitments, which may run without expiration or may expire after a period of time (such as 15 or 20 years) may limit our ability to raise rents aggressively and, in consequence, can also limit increases in the value of the communities subject to these restrictions.

In addition, some of our tax-exempt bond financing documents require us to obtain a guarantee from a financial institution of payment of the principal of, and interest on, the bonds. The guarantee may take the form of a letter of credit, surety bond, guarantee agreement or other additional collateral. If the financial institution defaults in its guarantee obligations, or if we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur under the applicable tax-exempt bonds and the community could be foreclosed upon.

Risks Related to Indebtedness.

We have a $500,000,000 revolving variable rate unsecured credit facility with JPMorgan Chase Bank and Wachovia Bank, N.A. serving as banks and syndication agents for a syndicate of commercial banks, and Bank of America, serving as bank and administrative agent. The credit facility prohibits us from paying dividends in amounts that exceed 95% of our funds from operations, provided that we may pay dividends in excess of 95% of our funds from operations as required to maintain our qualification as a REIT. Our organizational documents do not limit the amount or percentage of indebtedness that may be incurred. Accordingly, subject to compliance with outstanding debt covenants, we could incur more debt, resulting in an increased risk of default on our obligations and an increase in debt service requirements that could adversely affect our financial condition and results of operations.

The mortgages on those of our properties subject to secured debt, our unsecured credit facility and the indentures under which a substantial portion of our debt was issued contain customary restrictions, requirements and other

limitations, as well as certain financial and operating covenants including maintenance of certain financial ratios. Maintaining compliance with these restrictions could limit our flexibility. A default in these requirements, if uncured, could result in a requirement that we repay indebtedness, which could severely affect our liquidity and increase our financing costs.

Failure to generate sufficient revenue could limit cash flow available for distributions to stockholders.

A decrease in rental revenue could have an adverse effect on our ability to pay distributions to our stockholders and our ability to maintain our status as a REIT. Significant expenditures associated with each community such as debt service payments, if any, real estate taxes, insurance and maintenance costs are generally not reduced when circumstances cause a reduction in income from a community.

Debt financing may not be available and equity issuances could be dilutive to our stockholders.

Our ability to execute our business strategy depends on our access to an appropriate blend of debt and equity financing. Debt financing may not be available in sufficient amounts or on favorable terms. If we issue additional equity securities, the interests of existing stockholders could be diluted.

Difficulty of selling apartment communities could limit flexibility.

Federal tax laws may limit our ability to earn a gain on the sale of a community (unless we own it through a subsidiary which will incur a taxable gain upon sale) if we are found to have held, acquired or developed the community primarily with the intent to resell the community, and this limitation may affect our ability to sell communities without adversely affecting returns to our stockholders. In addition, real estate in our markets can at times be hard to sell, especially if market conditions are poor. These potential difficulties in selling real estate in our markets may limit our ability to change or reduce the apartment communities in our portfolio promptly in response to changes in economic or other conditions.

Acquisitions may not yield anticipated results.

Subject to the requirements related to the Fund discussed below, we may in the future acquire apartment communities on a select basis. Our acquisition activities and their success may be exposed to the following risks:

			an acquired property may fail to perform as we expected in analyzing our investment; and

			our estimate of the costs of repositioning or redeveloping an acquired property may prove inaccurate.

Failure to succeed in new markets or in activities other than the development, ownership and operation of residential rental communities may have adverse consequences.

We may from time to time commence development activity or make acquisitions outside of our existing market areas if appropriate opportunities arise. As noted in the business description above, we also own and operate retail space when a retail component represents the best use of the space, as is often the case with large urban in-fill developments. Also as noted in the business description above, we expect to develop, directly or through a joint venture partnership, one or more parcels with the intent to sell, which we believe represents the best use for those parcels. Our historical experience in our existing markets in developing, owning and operating rental communities does not ensure that we will be able to operate successfully in new markets, should we choose to enter them, or that we will be successful in these other activities. We may be exposed to a variety of risks if we choose to enter new markets, including an inability to evaluate accurately local apartment market conditions; an inability to obtain land for development or to identify appropriate acquisition opportunities; an inability to hire and retain key personnel; and lack of familiarity with local governmental and permitting procedures. We may be unsuccessful in owning and operating retail space at our communities or in developing real estate with the intent to sell.

Risks involved in real estate activity through joint ventures.

Instead of acquiring or developing apartment communities directly, at times we invest as a partner or a co-venturer. Partnership or joint venture investments involve risks, including the possibility that our partner might become insolvent or otherwise refuse to make capital contributions when due; that we may be responsible to our partner for indemnifiable losses; that our partner might at any time have business goals which are inconsistent with ours; and that our partner may be in a position to take action or withhold consent contrary to our instructions or requests. Frequently, we and our partner may each have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partners interest, at a time when we otherwise would not have initiated such a transaction.

Risks associated with our discretionary investment fund.

We have formed the Fund which, through a wholly-owned subsidiary, we manage as the general partner and to which we have committed $50,000,000, representing a 15.2% equity interest. This presents risks, including the following:

			investors in the Fund may fail to make their capital contributions when due and, as a result, the Fund may be unable to execute its investment objectives;

			our subsidiary that is the general partner of the Fund is generally liable, under partnership law, for the debts and obligations of the Fund, subject to certain exculpation and indemnification rights pursuant to the terms of the partnership agreement of the Fund;

			investors in the Fund holding a majority of the partnership interests may remove us as the general partner without cause, subject to our right to receive an additional nine months of management fees after such removal and our right to acquire one of the properties then held by the Fund;

			while we have broad discretion to manage the Fund and make investment decisions on behalf of the Fund, the investors or an advisory committee comprised of representatives of the investors must approve certain matters, and as a result we may be unable to cause the Fund to make certain investments or implement certain decisions that we consider beneficial;

			we are generally prohibited from making acquisitions of apartment communities outside of the Fund until the earlier of March 16, 2008 or until 80% of the Funds committed capital is invested, subject to certain exceptions; and

			we may be liable if either the Fund, or the REIT through which a number of investors have invested in the Fund and which we manage, fails to comply with various tax or other regulatory matters.

Risk of earthquake damage.

As further described in Item 2., Communities Insurance and Risk of Uninsured Losses, many of our West Coast communities are located in the general vicinity of active earthquake faults. We cannot assure you that an earthquake would not cause damage or losses greater than insured levels. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected community, as well as anticipated future revenue from that community. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. Any such loss could materially and adversely affect our business and our financial condition and results of operations.

A significant uninsured property or liability loss could have a material adverse effect on our financial condition and results of operations.

In addition to the earthquake insurance discussed above, we carry commercial general liability insurance, property insurance and terrorism insurance with respect to our communities on terms 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 managements 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 business and our financial condition and results of operations.

We may incur costs and increased expenses to repair property damage resulting from inclement weather.

Particularly in the Northeast and Midwest we are exposed to risks associated with inclement winter weather, including increased costs for the removal of snow and ice as well as from delays in construction. In addition, inclement weather could increase the need for maintenance and repair of our communities.

We may incur costs due to environmental contamination.

Under various federal, state and local environmental laws, regulations and ordinances, we may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at our properties and may be held liable to a governmental entity or to third parties for property or personal injury damages and for investigation and remediation costs incurred 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 our 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 renovation or demolition of a building. These laws may impose liability for release of ACMs and may allow 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 implement an operations and maintenance program at each of the communities at which ACMs are 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 operation. In connection with our ownership, operation and development of communities, from time to time we undertake substantial 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 or remediation costs exceed estimates. There can be no assurance, however, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that environmental liability arises.

Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Although the occurrence of mold at multifamily and other structures, and the need to remediate such mold, is not a new phenomenon, there has been increased awareness in recent years that certain molds may in some instances lead to adverse health effects, including allergic or other reactions. To help limit mold growth, we educate residents about the importance of adequate ventilation and request or require that they notify us when they see mold or excessive moisture. We have

established procedures for promptly addressing and remediating mold or excessive moisture from apartment homes when we become aware of its presence regardless of whether we or the resident believe a health risk is presented. However, we cannot assure that mold or excessive moisture will be detected and remediated in a timely manner. If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities.

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

We cannot assure you that:

			the environmental assessments described above have identified all potential environmental liabilities;

			no prior owner created any material environmental condition not known to us or the consultants who prepared the assessments;

			no environmental liabilities have developed since the environmental assessments were prepared;

			the condition of land or operations in the vicinity of our communities, such as the presence of underground storage tanks, will not affect the environmental condition of our communities;

			future uses or conditions, including, without limitation, changes in applicable environmental laws and regulations, will not result in the imposition of environmental liability; and

			no environmental liabilities will arise at communities that we have sold for which we may have liability.

Failure to qualify as a REIT would cause us to be taxed as a corporation, which would significantly reduce funds available for distribution to stockholders.

If we fail to qualify as a REIT for federal income tax purposes, we will be subject to federal income tax on our taxable income at regular corporate rates (subject to any applicable alternative minimum tax). In addition, unless we are entitled to relief under applicable statutory provisions, we would be ineligible to make an election for treatment as a REIT for the four taxable years following the year in which we lose our qualification. The additional tax liability resulting from the failure to qualify as a REIT would significantly reduce or eliminate the amount of funds available for distribution to our stockholders. Furthermore, we would no longer be required to make distributions to our stockholders. Thus, our failure to qualify as a REIT could also impair our ability to expand our business and raise capital, and would adversely affect the value of our common stock.

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. However, we cannot assure you that we are qualified as a REIT, or that we will remain qualified in the future. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial and administrative interpretations and involves the determination of a variety of factual matters and circumstances not entirely within our control. In addition, future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to qualification as a REIT for federal income tax purposes or the federal income tax consequences of this qualification.

Even if we qualify as a REIT, we will be subject to certain federal, state and local taxes on our income and property and on taxable income that we do not distribute to our shareholders. In addition, we may engage in activities through taxable subsidiaries and will be subject to federal income tax at regular corporate rates on the income of those subsidiaries.

The ability of our stockholders to control our policies and effect a change of control of our company is limited by certain provisions of our charter and bylaws and by Maryland law.

There are provisions in our charter and bylaws that may discourage a third party from making a proposal to acquire us, even if some of our stockholders might consider the proposal to be in their best interests. These provisions include the following:

Our charter authorizes our Board of Directors to issue up to 50,000,000 shares of preferred stock without stockholder approval and to establish the preferences and rights, including voting rights, of any series of preferred stock issued. The board of directors may issue preferred stock without stockholder approval, which could allow the board to issue one or more classes or series of preferred stock that could discourage or delay a tender offer or a change in control.

To maintain our qualification as a REIT for federal income tax purposes, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by or for five or fewer individuals at any time during the last half of any taxable year. To maintain this qualification, and to otherwise address concerns about concentrations of ownership of our stock, our charter generally prohibits ownership (directly, indirectly by virtue of the attribution provisions of the Internal Revenue Code, or beneficially as defined in Section 13 of the Securities Exchange Act) by any single stockholder of more than 9.8% of the issued and outstanding shares of any class or series of our stock. In general, under our charter, pension plans and mutual funds may directly and beneficially own up to 15% of the outstanding shares of any class or series of stock. Under our charter, our board of directors may in its sole discretion waive or modify the ownership limit for one or more persons. These ownership limits may prevent or delay a change in control and, as a result, could adversely affect our stockholders ability to realize a premium for their shares of common stock.

Our bylaws provide that the affirmative vote of holders of a majority of all of the shares entitled to be cast in the election of directors is required to elect a director. In a contested election, if no nominee receives the vote of holders of a majority of all of the shares entitled to be cast, the incumbent directors would remain in office. This requirement may prevent or delay a change in control and, as a result, could adversely affect our stockholders ability to realize a premium for their shares of common stock.

As a Maryland corporation, we are subject to the provisions of the Maryland General Corporation Law. Maryland law imposes restrictions on some business combinations and requires compliance with statutory procedures before some mergers and acquisitions may occur, which may delay or prevent offers to acquire us or increase the difficulty of completing any offers, even if they are in our stockholders best interests. In addition, other provisions of the Maryland General Corporation Law permit the Board of Directors to make elections and to take actions without stockholder approval (such as classifying our Board such that the entire Board is not up for reelection annually) that, if made or taken, could have the effect of discouraging or delaying a change in control.

ITEM 1b. UNRESOLVED STAFF COMMENTS

None.

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 consolidated 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. For the year 2005, the Established Communities are communities that are consolidated for financial reporting purposes, had stabilized occupancy and operating expenses as of January 1, 2004, are not conducting or planning to conduct substantial redevelopment activities and are not held for sale or planned for disposition within the current year. A community is considered 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.

			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. For communities that we wholly-own, redevelopment is considered substantial when capital invested during the reconstruction effort is expected to exceed the lesser of $5,000,000 or 10% of the communitys acquisition cost. The definition of substantial redevelopment may differ for communities owned through a joint venture arrangement.

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 approximately 60,000 square feet of office space in Alexandria, Virginia, for our corporate office, with all other regional and administrative offices leased under operating leases.

As of December 31, 2005, our communities were classified as follows:


	Number of		Number of
	communities		apartment homes
Current Communities

Established Communities:
Northeast		30		7,657
Mid-Atlantic		13		4,247
Midwest		3		887
Pacific Northwest		10		2,500
Northern California		30		8,758
Southern California		10		3,207

Total Established		96		27,256


Other Stabilized Communities:
Northeast		24		7,419
Mid-Atlantic		6		2,106
Midwest		3		809
Pacific Northwest		2		611
Northern California		2		445
Southern California		6		1,665

Total Other Stabilized		43		13,055


Lease-Up Communities		2		595

Redevelopment Communities		2		506


Total Current Communities		143		41,412


Development Communities		15		4,062


Development Rights		47		12,495

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. In January 2006, we disposed of two communities containing an aggregate of 473 apartment homes. The Current Communities, as of January 31, 2006, include 106 garden-style (of which 14 are mixed communities and include townhomes), 20 high-rise and 15 mid-rise apartment communities. The Current Communities offer many attractive amenities including some or all of the following:

			vaulted ceilings;

			lofts;

			fireplaces;

			patios/decks; and

			modern appliances.

Other features at various communities may include:

			swimming pools;

			fitness centers;

			tennis courts; and

			business centers.

We also have an extensive and ongoing maintenance program to keep all communities and apartment homes substantially free of deferred maintenance and, where vacant, available for immediate occupancy. We believe that the aesthetic appeal of our communities and a service oriented property management team, focused on the specific

needs of residents, enhances market appeal to discriminating residents. We believe this will ultimately achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses.

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
	1-1-05		1-31-06		1-1-05		1-31-06		1-1-05			1-31-06

Northeast		52		54		14,315		15,509		35.7	%		37.9	%
Boston, MA		17		17		4,127		4,352		10.3	%		10.6	%
Fairfield County, CT		16		16		4,108		4,375		10.2	%		10.7	%
Long Island, NY		4		3		1,171		915		2.9	%		2.2	%
Northern New Jersey		4		3		1,451		1,182		3.6	%		2.9	%
Central New Jersey		4		5		1,440		1,752		3.6	%		4.3	%
New York, NY		7		10		2,018		2,933		5.0	%		7.2	%

Mid-Atlantic		22		21		6,991		6,859		17.4	%		16.8	%
Baltimore, MD		6		6		1,224		1,224		3.0	%		3.0	%
Washington, DC		16		15		5,767		5,635		14.4	%		13.8	%

Midwest		5		6		1,500		1,696		3.7	%		4.1	%
Chicago, IL		5		6		1,500		1,696		3.7	%		4.1	%

Pacific Northwest		12		12		3,138		3,111		7.8	%		7.6	%
Seattle, WA		12		12		3,138		3,111		7.8	%		7.6	%

Northern California		32		31		9,424		8,892		23.5	%		21.7	%
Oakland-East Bay, CA		6		7		2,090		2,089		5.2	%		5.1	%
San Francisco, CA		9		9		2,015		2,015		5.0	%		4.9	%
San Jose, CA		17		15		5,319		4,788		13.3	%		11.7	%

Southern California		15		16		4,774		4,872		11.9	%		11.9	%
Los Angeles, CA		6		7		2,366		2,448		5.9	%		6.0	%
Orange County, CA		5		6		1,174		1,366		2.9	%		3.3	%
San Diego, CA		4		3		1,234		1,058		3.1	%		2.6	%


		138		140		40,142		40,939		100.0	%		100.0	%

We manage and operate all of our Current Communities. During the year ended December 31, 2005, we completed construction of 1,971 apartment homes in seven communities, acquired 604 apartment homes in four communities and sold 1,305 apartment homes in seven communities. The average age of our Current Communities, on a weighted average basis according to number of apartment homes, is 13.8 years. When adjusted to accommodate for redevelopment activity, the average age of our Current Communities is 8.6 years.

Of the Current Communities, as of January 31, 2006, we own:

			a fee simple, or absolute, ownership interest in 111 operating communities, four of which are on land subject to land leases expiring in July 2029, January 2062, April 2095 and March 2142;

			a fee simple ownership interest in an operating community which recently completed construction and will be transferred to a joint venture upon satisfaction of certain conditions;

			a general partnership interest in three partnerships that each own a fee simple interest in an operating community;

			a general partnership interest and an indirect limited partnership interest in the Fund, which owns a fee simple interest in eight operating communities;

			a general partnership interest in five partnerships structured as DownREITs, as described more fully below, that own an aggregate of 14 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 expiring in December 2026 and November 2089.

We also hold a fee simple ownership interest in 14 of the Development Communities, one of which will be subject to a joint venture ownership structure upon construction completion, in addition to a membership interest in one limited liability company that owns a Development Community, which is subject to a land lease expiring in December 2103.

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 January 31, 2006, there were 235,665 DownREIT partnership units outstanding. The DownREIT partnerships are consolidated for financial reporting purposes.

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.)		12/31/05			2005			2004			Apt (4)		Sq. Ft.			(5)

CURRENT COMMUNITIES

*NORTHEAST*
Boston, MA
Avalon at Center Place (11)	Providence, RI		225		222,834		1.2	1991/1997		990		92.0	%		95.6	%		94.9	%	$	2,129	$	2.05		$	28,470
Avalon at Crane Brook	Danvers & Peabody, MA		387		410,454		20.0	N/A		1,271		94.6	%		85.6	%(3)		40.4	%		1,317		1.06	(3)		54,311
Avalon at Faxon Park	Quincy, MA		171		175,649		8.3	1998		1,027		95.3	%		95.7	%		95.6	%		1,593		1.48			15,521
Avalon at Flanders Hill	Westborough, MA		280		299,828		62.0	2003		1,099		97.1	%		97.0	%		94.6	%		1,475		1.34			37,179
Avalon at Lexington	Lexington, MA		198		230,277		16.1	1994		1,163		95.5	%		97.1	%		97.1	%		1,737		1.45			15,833
Avalon at Newton Highlands (8)	Newton, MA		294		339,484		7.0	2003		1,177		96.3	%		96.0	%		88.8	%		2,136		1.77			56,628
Avalon at Prudential Center	Boston, MA		781		732,237		1.0	1968/1998		938		99.2	%		96.8	%(2)		96.3	%(2)		2,820		2.91	(2)		156,501
Avalon at Stevens Pond	Saugus, MA		326		381,825		82.6	2004		1,106		96.9	%		94.6	%		84.0	%(3)		1,586		1.28			54,306
Avalon at The Pinehills I	Plymouth, MA		101		151,712		6.0	2004		1,954		97.0	%		83.9	%		31.1	%		1,819		1.02			19,893
Avalon Essex	Peabody, MA		154		198,478		11.1	2000		1,289		97.4	%		96.6	%		96.8	%(3)		1,637		1.23			21,753
Avalon Estates	Hull, MA		162		193,418		55.0	2001		1,194		95.1	%		94.9	%		96.2	%		1,523		1.21			20,358
Avalon Ledges	Weymouth, MA		304		329,822		57.6	2002		1,023		93.8	%		94.3	%		94.1	%		1,438		1.25			36,271
Avalon Oaks	Wilmington, MA		204		229,752		22.5	1999		1,023		90.7	%		93.5	%		94.9	%		1,522		1.26			21,204
Avalon Oaks West	Wilmington, MA		120		133,376		27.0	2002		1,033		96.7	%		93.8	%		93.6	%		1,412		1.19			16,847
Avalon Orchards	Marlborough, MA		156		176,497		23.0	2002		1,219		98.1	%		97.2	%		95.0	%		1,503		1.29			21,076
Avalon Summit	Quincy, MA		245		224,418		8.0	1986/1996		916		96.3	%		95.2	%		95.7	%		1,229		1.28			16,975
Avalon West	Westborough, MA		120		147,472		8.0	1996		1,229		96.7	%		96.7	%		95.8	%		1,426		1.12			11,292
Essex Place	Peabody, MA		286		250,322		18.0	2004		875		97.2	%		96.3	%		91.7	%		1,008		1.11			23,728

Fairfield-New Haven, CT
Avalon at Greyrock Place	Stamford, CT		306		314,600		3.0	2002		1,040		99.0	%		97.6	%		96.6	%		1,983		1.88			70,341
Avalon Corners	Stamford, CT		195		192,174		3.2	2000		986		97.9	%		97.3	%		94.9	%		1,927		1.90			31,857
Avalon Danbury	Danbury, CT		234		235,320		36.0	2005		1,006		82.1	%		40.8	%(3)		0.0	%		1,912		0.78	(3)		35,291
Avalon Darien	Darien, CT		189		242,533		32.0	2004		1,282		95.8	%		97.7	%		84.2	%(3)		2,223		1.69			41,513
Avalon Gates	Trumbull, CT		340		379,282		37.0	1997		1,116		98.5	%		96.3	%		88.2	%		1,492		1.29			36,941
Avalon Glen	Stamford, CT		238		229,644		4.1	1991		965		99.2	%		98.0	%		95.6	%		1,761		1.79			32,013
Avalon Haven	North Haven, CT		128		139,972		10.6	2000		1,094		97.7	%		95.9	%		96.8	%		1,526		1.34			13,934
Avalon Milford I	Milford, CT		246		216,746		22.0	2004		886		98.4	%		93.9	%		47.3	%(3)		1,280		1.36			31,421
Avalon New Canaan (7)	New Canaan, CT		104		131,782		9.1	2002		1,251		92.3	%		96.4	%		93.2	%		2,676		2.04			24,319
Avalon on Stamford Harbor	Stamford, CT		323		323,587		12.1	2003		1,002		94.1	%		96.5	%		94.8	%		2,230		2.15			62,858
Avalon Orange	Orange, CT		168		163,238		9.6	2005		972		99.4	%		64.1	%(3)		5.6	%		1,436		0.95	(3)		21,931
Avalon Springs	Wilton, CT		102		158,259		12.0	1996		1,552		92.2	%		93.9	%		95.4	%		2,754		1.67			17,137
Avalon Valley	Danbury, CT		268		300,044		17.1	1999		1,070		98.1	%		94.9	%		95.6	%		1,603		1.36			26,193
Avalon Walk I & II	Hamden, CT		764		766,604		38.4	1992/1994		996		96.5	%		93.2	%		92.8	%		695		0.64			59,372

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.)		12/31/05			2005			2004			Apt (4)		Sq. Ft.			(5)
Long Island, NY
Avalon at Glen Cove South	Glen Cove, NY		256		261,425		4.0	2004		1,050		96.1	%		95.8	%		46.8	%(3)		2,139		2.01			67,575
Avalon Commons	Smithtown, NY		312		377,240		20.6	1997		1,209		98.4	%		97.4	%		97.7	%		1,966		1.58			33,602
Avalon Court	Melville, NY		494		596,942		35.4	1997/2000		1,208		96.8	%		96.8	%		95.4	%		2,270		1.82			59,685
Avalon Pines I	Coram, NY		298		362,124		32.0	2005		1,485		95.6	%		71.6	%(3)		8.3	%		1,716		1.01	(3)		50,312
Avalon Towers	Long Beach, NY		109		124,611		1.3	1990/1995		1,143		96.3	%		97.7	%(2)		97.0	%		3,209		2.74	(2)		21,184

Northern New Jersey
Avalon at Edgewater	Edgewater, NJ		408		428,611		7.6	2002		1,051		96.1	%		96.3	%		92.8	%		2,063		1.89			74,927
Avalon at Florham Park	Florham Park, NJ		270		330,410		41.9	2001		1,224		98.1	%		96.4	%		93.4	%		2,310		1.82			41,743
Avalon Cove	Jersey City, NJ		504		575,334		11.0	1997		1,142		97.2	%		97.5	%		96.2	%		2,436		2.08			92,564

Central New Jersey
Avalon at Freehold	Freehold, NJ		296		317,331		40.3	2002		1,072		97.0	%		95.6	%		95.3	%		1,657		1.48			34,526
Avalon Run East	Lawrenceville, NJ		206		257,938		27.1	1996		1,287		94.7	%		96.0	%		94.9	%		1,561		1.20			16,358
Avalon Run East II	Lawrenceville, NJ		312		341,320		70.5	N/A		1,095		96.8	%		87.6	%(3)		28.9	%		1,578		1.26	(3)		52,084
Avalon Watch	West Windsor, NJ		512		486,069		64.4	1988		949		95.7	%		95.3	%		94.4	%		1,325		1.33			30,137

New York, NY
Avalon Gardens	Nanuet, NY		504		608,842		62.5	1998		1,208		97.8	%		97.8	%		95.9	%		1,957		1.58			54,817
Avalon Green	Elmsford, NY		105		113,538		16.9	1995		1,081		98.1	%		96.3	%		94.2	%		2,064		1.84			12,826
Avalon on the Sound (11)	New Rochelle, NY		412		372,860		2.4	2001		905		96.4	%		96.2	%		93.0	%		2,125		2.26			116,359
Avalon Riverview I (11)	Long Island City, NY		372		332,947		1.0	2002		895		97.0	%		96.7	%		94.4	%		2,794		3.02			94,442
Avalon View	Wappingers Falls, NY		288		327,547		41.0	1993		1,137		92.4	%		92.7	%		93.6	%		1,327		1.08			19,099
Avalon Willow	Mamaroneck, NY		227		199,842		4.0	2000		880		99.6	%		96.4	%		95.0	%		1,969		2.16			47,394
The Avalon	Bronxville, NY		110		119,410		1.5	1999		1,085		98.2	%		96.4	%		94.8	%		3,263		2.90			31,335

*MID-ATLANTIC*
Baltimore, MD
Avalon at Fairway Hills I & II	Columbia, MD		401		386,344		23.8	1987/1996		1,005		97.7	%		94.7	%		95.7	%		1,108		1.09			22,389
Avalon at Fairway Hills III	Columbia, MD		342		337,683		20.2	1987/1996		1,005		94.9	%		91.1	%(2)		N/A			1,076		0.99	(2)		28,237
Avalon at Symphony Glen	Columbia, MD		176		179,880		10.0	1986		1,022		87.5	%		95.9	%		96.4	%		1,176		1.10			9,308
Avalon Landing	Annapolis, MD		158		117,033		13.8	1984/1995		741		100.0	%		97.2	%		96.2	%		1,100		1.44			10,028

Washington, DC
AutumnWoods	Fairfax, VA		420		355,228		24.3	1989/1996		846		93.6	%		95.2	%		96.6	%		1,147		1.29			31,218
Avalon at Arlington Square	Arlington, VA		842		901,120		20.1	2001		1,070		97.0	%		94.7	%		94.6	%		1,612		1.43			112,544
Avalon at Ballston Washington Towers	Arlington, VA		344		294,954		4.1	1990		857		99.1	%		97.2	%		97.0	%		1,501		1.70			37,950
Avalon at Cameron Court	Alexandria, VA		460		467,292		16.0	1998		1,016		98.9	%		95.3	%		95.1	%		1,593		1.49			43,445
Avalon at Decoverly	Rockville, MD		368		368,374		24.0	1991/1995		1,001		98.4	%		95.3	%		95.2	%		1,282		1.22			32,036
Avalon at Foxhall	Washington, DC		308		297,875		2.7	1982		967		95.8	%		94.3	%		91.8	%(2)		1,934		1.89			44,060
Avalon at Gallery Place I	Washington, DC		203		184,230		0.5	2003		903		97.0	%		95.6	%		73.5	%		2,076		2.19			48,816
Avalon at Grosvenor Station (8)	North Bethesda, MD		497		477,459		10.0	2004		963		98.4	%		95.7	%		68.0	%(3)		1,466		1.46			81,453
Avalon at Providence Park	Fairfax, VA		141		148,282		9.3	1988/1997		1,052		97.2	%		96.8	%		96.8	%		1,301		1.20			11,521
Avalon at Rock Spring (9) (11)	North Bethesda, MD		386		388,232		10.2	2003		1,006		96.6	%		94.9	%		88.9	%		1,539		1.45			46,035
Avalon at Traville	North Potomac, MD		520		573,717		47.9	2004		1,103		97.1	%		94.7	%		58.2	%(3)		1,470		1.26			69,891
Avalon Crescent	McLean, VA		558		613,426		19.1	1996		1,099		96.1	%		96.2	%		95.4	%		1,675		1.47			57,571
Avalon Fields I & II	North Potomac, MD		288		292,282		9.2	1998		1,050		94.4	%		95.2	%		97.0	%		1,296		1.22			22,750
Avalon Knoll	Germantown, MD		300		290,544		26.7	1985		968		99.3	%		95.8	%		94.8	%		1,078		1.07			9,199

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.)		12/31/05			2005			2004			Apt (4)		Sq. Ft.			(5)
*MIDWEST*
Chicago, IL
200 Arlington Place	Arlington Heights, IL		409		346,416		2.8	1987/2000		848		95.4	%		95.0	%		92.1	%		1,301		1.46			50,160
Avalon at Danada Farms (8)	Wheaton, IL		295		350,606		19.2	1997		1,188		94.2	%		95.6	%		93.6	%		1,289		1.04			38,556
Avalon at Stratford Green (8)	Bloomingdale, IL		192		237,084		12.7	1997		1,235		96.9	%		95.1	%		93.2	%		1,289		0.99			22,163
Avalon at West Grove (8)	Westmont, IL		400		388,500		17.4	1967		971		93.3	%		96.2	%		93.6	%		850		0.84			31,035

*PACIFIC NORTHWEST*
Seattle, WA
Avalon at Bear Creek (8)	Redmond, WA		264		288,250		22.2	1998		1,092		97.0	%		94.6	%		93.8	%		1,109		0.96			34,766
Avalon Bellevue	Bellevue, WA		202		167,069		1.7	2001		827		96.5	%		95.8	%		94.5	%		1,236		1.43			30,862
Avalon Belltown	Seattle, WA		100		82,418		0.7	2001		824		94.0	%		95.5	%		94.5	%		1,474		1.71			18,423
Avalon Brandemoor (8)	Lynwood, WA		424		453,602		27.0	2001		1,070		96.0	%		96.6	%		95.6	%		925		0.84			45,584
Avalon HighGrove (8)	Everett, WA		391		422,482		19.0	2000		1,081		96.4	%		94.9	%		95.6	%		888		0.78			39,776
Avalon Juanita Village (10)	Kirkland, WA		211		207,511		2.9	2005		983		94.8	%		45.4	%(3)		N/A			1,380		0.64	(3)		44,077
Avalon ParcSquare (8)	Redmond, WA		124		126,951		2.0	2000		1,024		96.0	%		95.4	%		94.4	%		1,293		1.20			19,244
Avalon Redmond Place (8)	Redmond, WA		222		211,450		8.4	1991/1997		952		95.5	%		96.4	%		95.3	%		1,033		1.04			26,167
Avalon RockMeadow (8)	Bothell, WA		206		243,958		11.2	2000		1,184		97.1	%		95.0	%		94.7	%		1,026		0.82			24,712
Avalon WildReed (8)	Everett, WA		234		259,080		23.0	2000		1,107		96.2	%		95.7	%		95.2	%		875		0.76			23,063
Avalon Wynhaven (8)	Issaquah, WA		333		424,803		11.6	2001		1,276		94.9	%		94.0	%		91.3	%		1,185		0.87			52,734

*NORTHERN CALIFORNIA*
Oakland-East Bay, CA
Avalon at Union Square	Union City, CA		208		150,320		8.5	1973/1996		723		98.6	%		96.9	%		95.6	%		1,031		1.38			22,513
Avalon at Willow Creek	Fremont, CA		235		191,935		13.5	1985/1994		817		97.9	%		96.9	%		95.5	%		1,236		1.47			35,614
Avalon Dublin	Dublin, CA		204		179,004		13.0	1989/1997		877		96.6	%		96.2	%		95.1	%		1,319		1.45			27,388
Avalon Fremont I	Fremont, CA		308		316,052		14.3	1994		1,026		98.4	%		96.3	%		95.3	%		1,456		1.37			55,906
Avalon Pleasanton	Pleasanton, CA		456		366,062		14.7	1988/1994		803		98.7	%		95.9	%		95.0	%		1,219		1.46			61,394
Waterford	Hayward, CA		544		452,043		11.1	1985/1986		831		95.6	%		94.9	%		93.0	%		1,125		1.28			60,892

San Francisco, CA
Avalon at Cedar Ridge	Daly City, CA		195		141,411		7.0	1972/1997		725		96.4	%		96.0	%		95.7	%		1,356		1.80			26,136
Avalon at Diamond Heights	San Francisco, CA		154		123,047		3.0	1972/1994		799		98.1	%		95.9	%		96.2	%		1,597		1.92			25,119
Avalon at Mission Bay North	San Francisco, CA		250		243,089		1.4	2003		977		97.6	%		95.5	%		94.2	%		2,636		2.59			92,646
Avalon at Nob Hill	San Francisco, CA		185		108,745		1.4	1990/1995		588		96.2	%		96.3	%		95.5	%		1,528		2.50			28,056
Avalon Foster City	Foster City, CA		288		222,364		11.0	1973/1994		772		97.9	%		97.0	%		96.2	%		1,255		1.58			43,338
Avalon Pacifica	Pacifica, CA		220		186,800		21.9	1971/1995		849		98.6	%		96.1	%		95.6	%		1,422		1.61			31,883
Avalon Sunset Towers	San Francisco, CA		243		171,800		16.0	1961/1996		707		95.9	%		97.4	%		96.0	%		1,613		2.22			28,731
Avalon Towers by the Bay	San Francisco, CA		226		243,090		1.0	1999		1,076		98.7	%		96.2	%		95.3	%		2,554		2.28			67,002
Crowne Ridge	San Rafael, CA		254		221,635		21.9	1973/1996		873		97.6	%		95.8	%		94.8	%		1,266		1.39			32,708

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.)		12/31/05			2005			2004			Apt (4)		Sq. Ft.		(5)
San Jose, CA
Avalon at Blossom Hill	San Jose, CA		324		323,496		7.5	1995		998		99.1	%		96.2	%		95.1	%		1,391		1.34		61,751
Avalon at Cahill Park	San Jose, CA		218		218,177		3.8	2002		1,001		95.4	%		97.1	%		95.6	%		1,716		1.66		52,525
Avalon at Creekside	Mountain View, CA		294		215,680		13.0	1962/1997		734		97.3	%		96.5	%		95.6	%		1,178		1.55		43,292
Avalon at Foxchase I & II	San Jose, CA		396		334,956		12.0	1988/1987		844		98.0	%		96.0	%		96.5	%		1,166		1.32		60,299
Avalon at Parkside	Sunnyvale, CA		192		203,990		8.0	1991/1996		1,062		99.5	%		97.4	%		97.0	%		1,535		1.41		38,042
Avalon at Pruneyard	Campbell, CA		252		197,000		8.5	1968/1997		782		98.0	%		97.0	%		97.6	%		1,165		1.45		31,954
Avalon at River Oaks	San Jose, CA		226		210,050		4.0	1990/1996		929		98.7	%		96.7	%		95.9	%		1,360		1.41		44,989
Avalon Campbell	Campbell, CA		348		326,796		10.8	1995		939		98.9	%		96.2	%		95.7	%		1,430		1.46		60,083
Avalon Cupertino	Cupertino, CA		311		293,726		8.0	1999		944		96.5	%		96.7	%		96.3	%		1,589		1.63		49,157
Avalon Mountain View (7)	Mountain View, CA		248		211,552		10.5	1986		853		96.4	%		95.1	%		96.5	%		1,482		1.65		51,189
Avalon on the Alameda	San Jose, CA		305		299,762		8.9	1999		983		98.7	%		95.2	%		95.3	%		1,701		1.65		56,481
Avalon Rosewalk	San Jose, CA		456		448,488		16.6	1997/1999		984		96.5	%		95.7	%		95.4	%		1,346		1.31		78,578
Avalon Silicon Valley	Sunnyvale, CA		710		653,929		13.6	1997		921		96.3	%		95.8	%		95.4	%		1,621		1.69		121,821
Avalon Towers on the Peninsula	Mountain View, CA		211		218,392		1.9	2002		1,035		99.5	%		96.7	%		95.5	%		2,231		2.09		65,750
CountryBrook (8)	San Jose, CA		360		322,992		14.0	1985/1996		897		98.3	%		96.8	%		95.4	%		1,236		1.33		48,656
San Marino	San Jose, CA		248		209,000		11.5	1984/1988		843		98.8	%		96.7	%		96.2	%		1,168		1.34		34,628

*SOUTHERN CALIFORNIA*
Los Angeles, CA
Avalon at Media Center	Burbank, CA		748		530,084		14.1	1961/1997		709		97.2	%		95.9	%		95.9	%		1,273		1.72		76,073
Avalon at Warner Center	Woodland Hills, CA		227		191,114		7.0	1979/1998		842		96.9	%		97.5	%		96.2	%		1,482		1.72		26,743
Avalon Glendale (11)	Burbank, CA		223		241,714		5.1	2003		1,084		92.8	%		95.7	%		86.1	%		2,048		1.81		40,233
Avalon Woodland Hills	Woodland Hills, CA		663		594,396		18.2	1989/1997		897		94.3	%		96.0	%		95.1	%		1,386		1.48		72,072
The Promenade	Burbank, CA		400		360,587		6.9	1988/2002		901		96.5	%		96.9	%		94.7	%		1,629		1.75		71,003

Orange County, CA
Avalon at Pacific Bay	Huntington Beach, CA		304		268,000		9.7	1971/1997		882		97.4	%		96.7	%		96.3	%		1,362		1.49		32,124
Avalon at South Coast	Costa Mesa, CA		258		207,672		8.0	1973/1996		805		99.2	%		97.2	%		95.8	%		1,256		1.52		25,247
Avalon Mission Viejo	Mission Viejo, CA		166		124,600		7.8	1984/1996		751		97.0	%		95.4	%		95.0	%		1,156		1.47		13,617
Avalon Newport	Costa Mesa, CA		145		122,415		6.6	1956/1996		844		98.6	%		97.5	%		95.9	%		1,455		1.68		10,353
Avalon Santa Margarita	Rancho Santa Margarita, CA		301		229,593		20.0	1990/1997		763		96.7	%		96.5	%		95.0	%		1,220		1.54		24,145

San Diego, CA
Avalon at Cortez Hill	San Diego, CA		294		226,140		1.4	1973/1998		769		95.6	%		95.0	%		97.0	%		1,352		1.67		34,531
Avalon at Mission Bay	San Diego, CA		564		402,285		12.9	1969/1997		713		95.9	%		95.1	%		95.2	%		1,322		1.76		66,194
Avalon at Mission Ridge	San Diego, CA		200		207,625		4.0	1960/1997		1,038		99.5	%		96.1	%		96.0	%		1,453		1.34		22,288

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.)		12/31/05			2005			2004			Apt (4)		Sq. Ft.			(5)

DEVELOPMENT COMMUNITIES

Avalon at Bedford Center	Bedford, MA		139		159,704		38.0	N/A		1,149		N/A			N/A			N/A			N/A		N/A			24,131
Avalon at Decoverly II	Rockville, MD		196		182,560		10.8	N/A		931		N/A			N/A			N/A			N/A		N/A			12,225
Avalon at Glen Cove North	Glen Cove, NY		111		101,161		1.3	N/A		911		N/A			N/A			N/A			N/A		N/A			4,684
Avalon at Lyndhurst	Lyndhurst, NJ		328		331,122		5.8	N/A		1,010		N/A			N/A			N/A			N/A		N/A			31,261
Avalon Wilshire	Los Angeles, CA		123		125,109		1.6	N/A		1,017		N/A			N/A			N/A			N/A		N/A			17,587
Avalon Camarillo	Camarillo, CA		249		233,267		10.0	N/A		937		N/A			N/A			N/A			N/A		N/A			34,330
Avalon Chestnut Hill	Chestnut Hill, MA		204		275,563		4.7	N/A		1,351		N/A			N/A			N/A			N/A		N/A			27,767
Avalon Chrystie Place II	New York, NY		206		162,000		1.1	N/A		786		N/A			N/A			N/A			N/A		N/A			30,067
Avalon Danvers	Danvers, MA		433		493,095		75.0	N/A		1,139		N/A			N/A			N/A			N/A		N/A			8,896
Avalon Del Rey (12)	Los Angeles, CA		309		284,636		5.0	N/A		921		N/A			N/A			N/A			N/A		N/A			56,570
Avalon Pines II	Corum, NY		152		185,954		42.0	N/A		1,223		N/A			N/A			N/A			N/A		N/A			18,709
Avalon Riverview North	Long Island City, NY		602		477,657		1.8	N/A		793		N/A			N/A			N/A			N/A		N/A
Avalon Shrewsbury	Shrewbury, MA		251		209,548		25.5	N/A		835		N/A			N/A			N/A			N/A		N/A			9,266
Avalon Woburn	Woburn, MA		446		483,995		56.0	N/A		1,085		N/A			N/A			N/A			N/A		N/A			6,104

UNCONSOLIDATED COMMUNITIES

Avalon at Poplar Creek (6)	Schaumburg, IL		196		178,490		12.8	1986		911		95.9	%		94.3	%(3)		N/A			1,058		1.10	(3)		N/A
Avalon Bedford (9)	Stamford, CT		368		311,873		4.6	1961/1998		819		97.3	%		94.9	%		94.2	%		1,530		1.71			N/A
Avalon Chrystie Place I (9)(11)	New York, NY		361		266,940		1.5	2005		739		92.2	%		62.5	%(3)		N/A			1,563		1.32	(3)		N/A
Avalon Columbia (6)	Columbia, MD		170		177,284		11.3	1989/2004		1,043		90.0	%		84.4	%(2)		91.1	%(3)		1,221		0.99	(2)		N/A
Avalon Grove (9)	Stamford, CT		402		365,252		5.1	1996		906		97.0	%		96.6	%		94.5	%		1,969		2.09			N/A
Avalon Lakeside (6)	Wheaton, IL		204		162,821		12.4	2004		798		96.9	%		79.6	%		90.0	%(3)		891		0.89	(2)		N/A
Avalon Redondo Beach (6)	Redondo Beach, CA		105		85,380		1.2	1971/2004		813		92.4	%		95.9	%		91.2	%(3)		1,779		2.10			N/A
Avalon Run (7)	Lawrenceville, NJ		426		443,168		9.0	1994		1,010		94.1	%		95.5	%		91.6	%		1,318		1.21			N/A
Civic Center (6)	Norwalk, CA		192		173,568		8.7	1987		904		97.4	%		98.6	%(3)		N/A			1,464		1.60	(3)		N/A
Fuller Martel (6)	Los Angeles, CA		82		71,846		0.8	1987		876		97.6	%		97.4	%(3)		N/A			1,610		1.79	(3)		N/A
Paseo Park (6)	Fremont, CA		134		105,900		7.0	1987		790		97.0	%		96.0	%(3)		N/A			1,165		1.41	(3)		N/A
Ravenswood at the Park (6)	Redmond, WA		400		340,448		24.0	1983/2004		851		97.0	%		93.9	%		87.7	%(3)		933		1.03			N/A
Avalon at Mission Bay North II (9)(11)(13)	San Francisco, CA		313		291,817		1.5	N/A		932		N/A			N/A	(3)		N/A			N/A		N/A	(3)		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, 2005. Financial reporting costs are excluded for unconsolidated communities, see Note 6, Investments in Unconsolidated Entities.

(6)		We own a 15.2% combined general partnership and indirect limited partner equity interest in this community.

(7)		We own a general partnership interest in a partnership that owns a fee simple interest in this community.

(8)		We own a general partnership interest in a partnership structured as a DownREIT that owns this community.

(9)		We own a membership interest in a limited liability company that holds a fee simple interest in this community.

(10)		This community recently completed construction and will be transferred to a joint venture upon satisfaction of certain conditions. We will, own a residual interest in the joint venture with a third party and will receive a property management fee for this community.

(11)		Community is located on land subject to a land lease.

(12)		This community will be subject to a joint venture arrangement upon construction completion.

(13)		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.

Features and Recreational Amenities Current and Development Communities

Washer &

Large

Non-

1 BR

2BR

3BR

dryer

storage or

Balcony,

direct

Direct

Homes w/ pre-

Studios /

Parking

hook-ups or

Vaulted

walk-in

patio, deck

Built-in

access

wired security

1/1.5 BA

2/2.5/3 BA

2/2.5 BA

3BA

efficiencies

Other

Total

spaces

units

ceilings

Lofts

Fireplaces

closet

or sunroom

bookcases

Carports

garages

systems

CURRENT COMMUNITIES (1)

NORTHEAST

Boston, MA

Avalon at Center Place

103

112

225

371

All

None

Some

None

Avalon at Crane Brook

162

175

387

658

All

Some

All

None

Yes

All

Avalon at Faxon Park

171

327

All

Some

Most

All

None

Yes

All

Avalon at Flanders Hill

108

120

280

589

All

Some

All

None

Yes

All

Avalon at Lexington

198

362

All

Some

Most

All

None

Yes

None

Avalon at Newton Highlands

294

551

All

Some

Most

None

All

Avalon at Prudential Center

361

242

149

781

538

None

Most

Some

None

Avalon at Stevens Pond

102

202

326

749

All

Some

All

None

Yes

All

Avalon at The Pinehills I

101

235

All

Most

Some

All

None

Yes

All

Avalon Essex

104

154

336

All

Some

Half

Most

All

None

Yes

All

Avalon Estates

162

345

All

Some

Half

Some

All

None

Yes

All

Avalon Ledges

124

304

594

All

Some

All

None

Yes

All

Avalon Oaks

204

394

All

Some

All

None

Yes

All

Avalon Oaks West

120

232

All

Some

All

None

Yes

All

Avalon Orchards

156

307

All

Some

All

None

Yes

All

Avalon Summit

154

245

359

None

Some

Most

None

Yes

None

Avalon West

120

285

All

Some

All

Half

None

Yes

All

Essex Place

246

286

450

Some

None

Some

None

Fairfield-New Haven, CT

Avalon at Greyrock Place

306

464

All

None

Most

All

None

All

Avalon Corners

118

195

273

All

Some

All

None

Yes

All

Avalon Danbury

112

234

All

None

Some

All

None

Yes

Some

Avalon Darien

189

443

All

Some

All

None

Yes

All

Avalon Gates

122

168

340

688

All

Some

Half

All

None

Yes

All

Avalon Glen

112

125

238

363

Most

Some

Most

Some

Yes

Most

Avalon Haven

128

256

All

Some

All

None

Yes

All

Avalon Milford I

184

246

426

All

Some

None

Some

All

None

Yes

All

Avalon New Canaan

104

194

All

Some

All

None

Yes

All

Avalon on Stamford Harbor

159

130

323

503

All

Some

All

Most

None

All

Avalon Orange

168

362

All

Some

All

None

Yes

All

Avalon Springs

102

264

All

Half

Most

All

None

Yes

All

Avalon Valley

106

134

268

637

All

Some

All

None

Yes

All

Avalon Walk I & II

272

116

122

156

764

1,411

All

Some

Most

All

None

Yes

Half

Long Island, NY

Avalon at Glen Cove South

124

256

366

All

None

Some

All

Some

None

Some

Avalon Commons

128

112

312

485

All

Some

All

None

Yes

All

Avalon Court

172

194

494

797

All

Half

Some

All

None

Yes

All

Avalon Pines I

220

298

1,094

All

Most

Some

Most

All

None

Yes

All

Avalon Towers

109

198

All

None

Most

None

Yes

None

Northern New Jersey

Avalon at Edgewater

158

190

408

872

All

Some

All

Half

None

Yes

Some

Avalon at Florham Park

162

270

583

All

None

Some

Most

Some

None

Yes

All

Avalon Cove

197

231

504

460

All

Some

All

Some

None

Yes

None

Central New Jersey

Avalon at Freehold

192

296

591

All

Some

Half

All

None

Yes

None

Avalon Run East

106

206

401

All

Some

Most

None

Yes

All

Avalon Run East II

148

312

500

All

Some

All

None

Yes

All

Avalon Watch

252

172

512

781

All

Some

None

Half

All

None

Yes

None

Features and Recreational Amenities Current and Development Communities

Washer &

Large

Non-

1 BR

2BR

3BR

dryer

storage or

Balcony,

direct

Direct

Homes w/ pre-

Studios /

Parking

hook-ups or

Vaulted

walk-in

patio, deck

Built-in

access

wired security

1/1.5 BA

2/2.5/3 BA

2/2.5 BA

3BA

efficiencies

Other

Total

spaces

units

ceilings

Lofts

Fireplaces

closet

or sunroom

bookcases

Carports

garages

systems

New York, NY

Avalon Gardens

208

144

104

504

1,382

All

Half

Some

All

Some

Yes

All

Avalon Green

105

208

All

Some

All

None

Yes

All

Avalon on the Sound

142

185

412

648

Most

Some

None

Most

Some

None

Yes

None

Avalon Riverview I

186

114

372

426

All

None

Some

None

Most

Some

None

Yes

None

Avalon View

112

288

598

All

Some

Most

All

None

Yes

None

Avalon Willow

151

227

371

All

Some

All

None

The Avalon

110

170

All

Some

Most

Half

None

Yes

All

MID-ATLANTIC

Baltimore, MD

Avalon at Fairway Hills I & II

185

100

401

283

All

Some

None

Most

Some

All

Some

None

Avalon at Fairway Hills III

146

342

522

All

Some

None

Most

Some

All

Some

None

Avalon at Symphony Glen

176

268

All

Some

None

Most

All

Most

Some

None

Avalon Landing

158

256

All

None

Most

All

None

Yes

None

Washington, DC

AutumnWoods

220

104

420

720

All

Some

None

Some

All

None

Yes

None

Avalon at Arlington Square

404

196

158

842

1,411

All

Some

All

Some

Yes

All

Avalon at Ballston Washington Towers

233

111

344

470

All

None

Some

Most

All

Some

None

Avalon at Cameron Court

208

168

460

897

All

Most

Some

All

Most

None

Yes

All

Avalon at Decoverly

156

168

368

627

All

Some

Most

All

None

Yes

None

Avalon at Foxhall

160

308

349

All

Some

None

Some

All

Some

Yes

None

Avalon at Gallery Place I

113

203

148

All

Some

None

Most

Some

None

Yes

None

Avalon at Grosvenor Station

265

185

497

746

All

Some

None

Most

None

Yes

All

Avalon at Providence Park

112

141

299

All

Some

None

Most

All

None

Avalon at Rock Spring

178

133

386

680

All

Some

Most

All

None

Yes

All

Avalon at Traville

190

232

520

1,062

All

Some

All

Most

Some

Yes

None

Avalon Crescent

186

346

558

989

All

Some

Most

All

Some

Yes

All

Avalon Fields I & II

112

288

461

All

Some

Most

None

Yes

All

Avalon Knoll

136

300

477

All

Some

None

Most

All

Most

None

MIDWEST

Chicago, IL

200 Arlington Place

232

147

409

650

All

None

Some

Half

None

Avalon at Danada Farms

132

134

295

555

All

None

Some

Most

Some

Yes

None

Avalon at Stratford Green

108

192

424

All

None

Some

Most

Some

Yes

None

Avalon at West Grove

200

400

594

None

Some

Half

None

Yes

None

PACIFIC NORTHWEST

Seattle, WA

Avalon at Bear Creek

110

264

515

All

Some

None

Most

All

Half

Yes

All

Avalon Bellevue

112

202

300

All

Some

Most

Some

None

Some

Avalon Belltown

100

118

All

None

Most

Some

None

Yes

Avalon Brandemoor

109

149

424

737

All

Some

None

Most

All

Some

Yes

All

Avalon HighGrove

119

124

391

721

All

Half

None

Most

All

Some

Yes

All

Avalon Juanita Village

211

355

All

Some

None

Most

Some

None

Yes

Some

Avalon ParcSquare

117

124

189

All

Some

None

All

None

Yes

Some

Avalon Redmond Place

222

161

All

Some

None

Most

All

None

Yes

None

Avalon RockMeadow

206

415

All

Some

None

Most

All

Some

Yes

All

Avalon WildReed

234

463

All

Some

None

Most

All

Some

Yes

All

Avalon Wynhaven

239

333

780

All

Most

Some

Most

Half

Most

None

Yes

All

Features and Recreational Amenities Current and Development Communities

Washer &

Large

Non-

1 BR

2BR

3BR

dryer

storage or

Balcony,

direct

Direct

Homes w/ pre-

Studios /

Parking

hook-ups or

Vaulted

walk-in

patio, deck

Built-in

access

wired security

1/1.5 BA

2/2.5/3 BA

2/2.5 BA

3BA

efficiencies

Other

Total

spaces

units

ceilings

Lofts

Fireplaces

closet

or sunroom

bookcases

Carports

garages

systems

NORTHERN CALIFORNIA

Oakland-East Bay, CA

Avalon at Union Square

124

208

296

None

Most

All

None

Yes

None

Avalon at Willow Creek

136

235

240

All

None

All

None

Yes

None

Avalon Dublin

204

428

Most

Some

None

Most

All

None

Yes

None

Avalon Fremont I

176

308

609

All

Some

None

Some

Half

All

None

Yes

All

Avalon Pleasanton

238

218

456

941

All

Some

None

Most

Some

All

None

Yes

None

Waterford

208

336

544

927

Some

None

All

None

Yes

None

San Francisco, CA

Avalon at Cedar Ridge

117

195

259

None

Some

None

Some

All

None

Yes

None

Avalon at Diamond Heights

154

155

None

Some

None

All

None

Yes

None

Avalon at Mission Bay North

148

250

191

All

None

Some

None

All

Most

Some

Yes

Some

Avalon at Nob Hill

114

185

105

None

Some

Most

Yes

None

Avalon Foster City

125

122

288

290

None

Most

All

Some

Yes

None

Avalon Pacifica

106

220

301

None

Some

All

None

Yes

None

Avalon Sunset Towers

183

243

244

None

Some

None

Yes

None

Avalon Towers by the Bay

103

120

226

212

All

None

Some

Half

Most

None

Crowne Ridge

158

254

404

Some

None

Some

None

All

None

Yes

None

San Jose, CA

Avalon at Blossom Hill

210

324

549

All

Some

None

Most

All

None

Yes

None

Avalon at Cahill Park

118

218

314

All

Some

None

All

Some

None

Yes

Avalon at Creekside

158

128

294

441

None

Some

None

Most

None

Yes

None

Avalon at Foxchase I & II

156

240

396

666

All

Some

None

ALL

All

None

Yes

None

Avalon at Parkside

192

353

All

Some

None

Half

All

Some

Yes

None

Avalon at Pruneyard

212

252

400

All

None

Half

None

Yes

None

Avalon at River Oaks

100

126

226

356

Most

None

Most

All

None

Yes

None

Avalon Campbell

157

179

348

454

All

Some

None

All

None

Yes

All

Avalon Cupertino

145

152

311

529

All

Some

None

Some

All

None

Yes

None

Avalon Mountain View

108

248

672

All

Some

None

Some

All

None

Yes

None

Avalon on the Alameda

113

164

305

534

All

Some

Most

All

None

Some

Yes

None

Avalon Rosewalk

168

264

456

684

All

Some

None

Some

ALL

All

Most

Yes

None

Avalon Silicon Valley

338

336

710

2,000

All

Some

All

Some

Yes

None

Avalon Towers on the Peninsula

117

211

307

All

Some

None

Most

All

None

Yes

None

CountryBrook

108

252

360

692

All

None

All

None

All

None

Yes

None

San Marino

102

146

248

439

All

Some

None

All

None

Yes

None

SOUTHERN CALIFORNIA

Los Angeles, CA

Avalon at Media Center

296

169

221

748

893

Most

Some

None

Some

None

Yes

None

Avalon at Warner Center

227

427

All

Some

None

Some

All

None

Yes

None

Avalon Glendale

121

223

519

All

None

Some

All

None

All

Avalon Woodland Hills

222

441

663

1,356

Some

None

Most

All

None

The Promenade

153

196

400

736

Some

All

Some

All

None

Features and Recreational Amenities Current and Development Communities

Washer &

Large

Non-

1 BR

2BR

3BR

dryer

storage or

Balcony,

direct

Direct

Homes w/ pre-

Studios /

Parking

hook-ups or

Vaulted

walk-in

patio, deck

Built-in

access

wired security

1/1.5 BA

2/2.5/3 BA

2/2.5 BA

3BA

efficiencies

Other

Total

spaces

units

ceilings

Lofts

Fireplaces

closet

or sunroom

bookcases

Carports

garages

systems

Orange County, CA

Avalon at Pacific Bay

144

104

304

492

All

None

All

None

Yes

None

Avalon at South Coast

124

258

428

Some

Half

None

Half

All

None

Yes

None

Avalon Mission Viejo

166

232

None

All

None

Yes

None

Avalon Newport

145

249

Most

Some

None

Some

Most

Some

Yes

None

Avalon Santa Margarita

160

141

301

521

All

None

All

None

Yes

None

San Diego, CA

Avalon at Cortez Hill

113

294

298

None

All

None

Avalon at Mission Bay

270

165

120

564

755

None

Some

All

None

Avalon at Mission Ridge

200

387

Most

None

Most

Yes

None

DEVELOPMENT COMMUNITIES

Avalon at Bedford Center

139

269

All

Some

All

None

Yes

None

Avalon at Decoverly II

106

196

327

All

Some

None

Some

All

None

Yes

None

Avalon at Glen Cove North

111

190

All

None

All

Some

None

Avalon at Lyndhurst

118

157

328

569

Most

Some

None

All

Most

None

Avalon Wilshire

123

350

All

None

All

Most

None

Yes

None

Avalon Camarillo

125

124

249

482

All

None

All

None

Yes

None

Avalon Chestnut Hill

204

427

All

None

Some

None

All

None

All

Avalon Chrystie Place II

206

131

All

None

Some

None

Yes

Some

Avalon Danvers

148

235

433

856

All

Some

None

Yes

None

Avalon Del Rey

190

119

309

623

All

None

Some

None

All

None

Yes

None

Avalon Pines II

102

152

135

All

Most

Some

All

None

Some

All

Avalon Riverview North

381

146

602

361

Some

None

Some

None

Yes

None

Avalon Shrewsbury

123

251

529

All

None

Some

None

All

None

Yes

None

Avalon Woburn

158

288

446

892

All

None

Some

All

Some

None

Yes

None

Features and Recreational Amenities Current and Development Communities

Community

Building

Buildings w/

entrance

Under-

Aerobics

Indoor /

security

controlled

ground

dance

Picnic

Walking /

Sauna /

Tennis

Fitness

Sand

outdoor

Clubhouse /

Business

systems

access

parking

studio

Car wash

area

jogging trail

Pool

whirlpool

court

Racquetball

center

volleyball

basketball

clubroom

center

Tot lot

Concierge

CURRENT COMMUNITIES (1)

NORTHEAST

Boston, MA

Avalon at Center Place

Yes

Avalon at Crane Brook

Some

Yes

Avalon at Faxon Park

None

Yes

Avalon at Flanders Hill

None

Yes

Avalon at Lexington

None

Yes

Avalon at Newton Highlands

All

Yes

Avalon at Prudential Center

None

Yes

Avalon at Stevens Pond

All

Yes

Avalon at The Pinehills I

None

Yes

Avalon Essex

None

Yes

Avalon Estates

None

Yes

Avalon Ledges

None

Yes

Avalon Oaks

None

Yes

Avalon Oaks West

None

Yes

Avalon Orchards

None

Yes

Avalon Summit

None

Yes

Avalon West

None

Yes

Essex Place

None

Yes

Fairfield-New Haven, CT

Avalon at Greyrock Place

All

Yes

Avalon Corners

All

Yes

Avalon Danbury

Some

Yes

Avalon Darien

None

Yes

Avalon Gates

None

Yes

Avalon Glen

None

Yes

Avalon Haven

All

Yes

Avalon Milford I

None

Yes

Avalon New Canaan

All

Yes

Avalon on Stamford Harbor

All

Yes

Avalon Orange

Some

Yes

Avalon Springs

Some

Yes

Avalon Valley

None

Yes

Avalon Walk I & II

None

Yes

Long Island, NY

Avalon at Glen Cove South

None

Yes

Avalon Commons

All

Yes

Avalon Court

All

Yes

Avalon Pines I

None

Yes

Avalon Towers

None

Yes

Northern New Jersey

Avalon at Edgewater

All

Yes

Avalon at Florham Park

None

Yes

Avalon Cove

Yes

Central New Jersey

Avalon at Freehold

None

Yes

Avalon Run East

All

Yes

Avalon Run East II

Yes

Avalon Watch

None

Some

Yes

Features and Recreational Amenities Current and Development Communities

Community

Building

Buildings w/

entrance

Under-

Aerobics

Indoor /

security

controlled

ground

dance

Picnic

Walking /

Sauna /

Tennis

Fitness

Sand

outdoor

Clubhouse /

Business

systems

access

parking

studio

Car wash

area

jogging trail

Pool

whirlpool

court

Racquetball

center

volleyball

basketball

clubroom

center

Tot lot

Concierge

New York, NY

Avalon Gardens

Some

Yes

Avalon Green

None

Yes

Avalon on the Sound

Yes

Avalon Riverview I

All

Yes

Avalon View

Some

Yes

Avalon Willow

Yes

The Avalon

All

Yes

MID-ATLANTIC

Baltimore, MD

Avalon at Fairway Hills I & II

None

Yes

Avalon at Fairway Hills III

None

Yes

Avalon at Symphony Glen

None

Yes

Avalon Landing

None

Yes

Washington, DC

AutumnWoods

None

Yes

Avalon at Arlington Square

None

Yes

Avalon at Ballston Washington Towers

All

Yes

Avalon at Cameron Court

All

Yes

Avalon at Decoverly

None

Yes

Avalon at Foxhall

None

Yes

Avalon at Gallery Place I

All

Yes

Avalon at Grosvenor Station

None

Yes

Avalon at Providence Park

None

Yes

Avalon at Rock Spring

None

Yes

Avalon at Traville

None

Yes

Avalon Crescent

None

Yes

Avalon Fields I & II

None

Yes

Avalon Knoll

None

Yes

MIDWEST

Chicago, IL

200 Arlington Place

All

Yes

Avalon at Danada Farms

None

Yes

Avalon at Stratford Green

All

Yes

Avalon at West Grove

None

Yes

PACIFIC NORTHWEST

Seattle, WA

Avalon at Bear Creek

None

Yes

Avalon Bellevue

Yes

Avalon Belltown

Yes

Avalon Brandemoor

All

Yes

Avalon HighGrove

None

Yes

Avalon Juanita Village

Some

Yes

Avalon ParcSquare

All

Yes

Avalon Redmond Place

None

Yes

Avalon RockMeadow

None

Yes

Avalon WildReed

None

Yes

Avalon Wynhaven

None

Yes

Features and Recreational Amenities Current and Development Communities

Community

Building

Buildings w/

entrance

Under-

Aerobics

Indoor /

security

controlled

ground

dance

Picnic

Walking /

Sauna /

Tennis

Fitness

Sand

outdoor

Clubhouse /

Business

systems

access

parking

studio

Car wash

area

jogging trail

Pool

whirlpool

court

Racquetball

center

volleyball

basketball

clubroom

center

Tot lot

Concierge

NORTHERN CALIFORNIA

Oakland-East Bay, CA

Avalon at Union Square

None

Yes

Avalon at Willow Creek

None

Yes

Avalon Dublin

None

Yes

Avalon Fremont I

None

Yes

Avalon Pleasanton

None

Yes

Waterford

None

Yes

San Francisco, CA

Avalon at Cedar Ridge

None

Yes

Avalon at Diamond Heights

None

Yes

Avalon at Mission Bay North

All

Yes

Avalon at Nob Hill

None

Yes

Avalon Foster City

Some

Yes

Avalon Pacifica

None

Yes

Avalon Sunset Towers

All

Yes

Avalon Towers by the Bay

None

Yes

Crowne Ridge

None

Yes

San Jose, CA

Avalon at Blossom Hill

None

Yes

Avalon at Cahill Park

All

Yes

Avalon at Creekside

Some

Yes

Avalon at Foxchase I & II

None

Yes

Avalon at Parkside

None

Yes

Avalon at Pruneyard

Yes

Avalon at River Oaks

None

Yes

Avalon Campbell

None

Yes

Avalon Cupertino

All

Yes

Avalon Mountain View

None

Yes

Avalon on the Alameda

None

Yes

Avalon Rosewalk

None

Yes

Avalon Silicon Valley

Some

Yes

Avalon Towers on the Peninsula

All

Yes

CountryBrook

None

Yes

San Marino

None

Yes

SOUTHERN CALIFORNIA

Los Angeles, CA

Avalon at Media Center

None

Yes

Avalon at Warner Center

None

Yes

Avalon Glendale

None

Yes

Avalon Woodland Hills

None

Yes

The Promenade

All

Yes

Features and Recreational Amenities Current and Development Communities

Community

Building

Buildings w/

entrance

Under-

Aerobics

Indoor /

security

controlled

ground

dance

Picnic

Walking /

Sauna /

Tennis

Fitness

Sand

outdoor

Clubhouse /

Business

systems

access

parking

studio

Car wash

area

jogging trail

Pool

whirlpool

court

Racquetball

center

volleyball

basketball

clubroom

center

Tot lot

Concierge

Orange County, CA

Avalon at Pacific Bay

None

Yes

Avalon at South Coast

None

Yes

Avalon Mission Viejo

None

Yes

Avalon Newport

None

Yes

Avalon Santa Margarita

None

Yes

San Diego, CA

Avalon at Cortez Hill

All

Yes

Avalon at Mission Bay

None

Yes

Avalon at Mission Ridge

None

Yes

DEVELOPMENT COMMUNITIES

Avalon at Bedford Center

None

Yes

Avalon at Decoverly II

None

Yes

Avalon at Glen Cove North

All

Yes

Avalon at Lyndhurst

All

Yes

Avalon Wilshire

All

Yes

Avalon Camarillo

None

Yes

Avalon Chestnut Hill

None

Yes

Avalon Chrystie Place II

All

Yes

Avalon Danvers

Some

Yes

Avalon Del Rey

All

Yes

Avalon Pines II

None

Yes

Avalon Riverview North

None

Yes

Avalon Shrewsbury

None

Yes

Avalon Woburn

Some

Yes

Development Communities

As of December 31, 2005, we had 15 Development Communities under construction. We expect these Development Communities, when completed, to add a total of 4,062 apartment homes to our portfolio for a total capitalized cost, including land acquisition costs, of approximately $1,025,200,000. You should carefully review Item 1a., Risk Factors, for a discussion of the risks associated with development activity.

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

homes

($ millions)

start

occupancy (2)

completion

stabilization (3)

Avalon Del Rey (4)

Los Angeles, CA

309

70.0

Q2 2004

Q1 2006

Q2 2006

Q1 2007

Avalon Camarillo

Camarillo, CA

249

47.2

Q2 2004

Q1 2006

Q2 2006

Q4 2006

Avalon at Bedford Center

Bedford, MA

139

25.3

Q4 2004

Q3 2005

Q2 2006

Q4 2006

Avalon Wilshire

Los Angeles, CA

123

46.6

Q1 2005

Q4 2006

Q1 2007

Q3 2007

Avalon at Mission Bay

North II (5)

San Francisco, CA

313

118.0

Q1 2005

Q4 2006

Q2 2007

Q4 2007

Avalon Pines II

Coram, NY

152

26.6

Q2 2005

Q1 2006

Q3 2006

Q1 2007

Avalon Chestnut Hill

Chestnut Hill, MA

204

60.6

Q2 2005

Q4 2006

Q1 2007

Q3 2007

Avalon at Decoverly II

Rockville, MD

196

30.5

Q3 2005

Q3 2006

Q2 2007

Q4 2007

Avalon Lyndhurst

Lyndhurst, NJ

328

78.8

Q3 2005

Q4 2006

Q2 2007

Q4 2007

10.

Avalon Shrewsbury

Shrewsbury, MA

251

36.1

Q3 2005

Q4 2006

Q2 2007

Q4 2007

11.

Avalon Riverview North

New York, NY

602

175.6

Q3 2005

Q3 2007

Q3 2008

Q1 2009

12.

Avalon Chrystie Place II

New York, NY

206

100.8

Q4 2005

Q1 2007

Q3 2007

Q1 2008

13.

Avalon at Glen Cove North

Glen Cove, NY

111

42.4

Q4 2005

Q2 2007

Q3 2007

Q1 2008

14.

Avalon Danvers

Danvers, MA

433

84.8

Q4 2005

Q1 2007

Q2 2008

Q4 2008

15.

Avalon Woburn

Woburn, MA

446

81.9

Q4 2005

Q1 2007

Q1 2008

Q3 2008

Total

4,062

1,025.2

(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. There can be no assurance that we will pursue to completion any or all of these proposed developments.



(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 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.



(5)		This community is being financed under a joint venture structure in which we hold a 25% equity interest. Approximately 80% of the total capitalized cost will be financed through a construction loan. This community is located on land subject to a ground lease which expires in December 2103.

Redevelopment Communities

As of December 31, 2005, we had two 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 $58,800,000, of which approximately $10,000,000 is the additional capital invested or expected to be invested during redevelopment and $48,800,000 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. You should carefully review Item 1a., Risk Factors, for a discussion of the risks associated with redevelopment activity.

The following presents a summary of these Redevelopment Communities:

Total cost

Number of

($ millions)

Estimated

apartment

Pre-redevelopment

Total capitalized

Reconstruction

reconstruction

restabilized

homes

cost

cost (1)

start

completion

operations (2)

Avalon at Fairway Hills III

Columbia, MD

336

23.3

29.4

Q4 2004

Q2 2006

Q4 2006

Avalon Columbia (3)

Columbia, MD

170

25.5

29.4

Q2 2005

Q2 2006

Q4 2006

Total

506

48.8

58.8

(1)		Total capitalized cost includes all capitalized costs projected to be or actually incurred to develop the respective Redevelopment Community, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, all as 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 by the Fund, which we wholly-owned until the admission of outside investors in 2005, reducing our ownership in this community and the Fund to 15.2%.

Development Rights

As of December 31, 2005, we are evaluating the future development of 47 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 17 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 12,495 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, 2005, there were cumulative capitalized costs (including legal fees, design fees and related overhead costs, but excluding land costs) of $31,467,000 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 $188,414,000 are reflected as land held for development as of December 31, 2005 on the Consolidated Balance Sheet of the Consolidated Financial Statements set forth in Item 8 of this report.

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.

You should carefully review Section 1a., Risk Factors, for a discussion of the risks associated with Development Rights.

The table on the following page presents a summary of the 47 Development Rights we are currently pursuing.


					Total
			Estimated		capitalized
			number		cost
	Location		of homes		($ millions) (1)
1.	New Rochelle, NY Phase II			588	$	184
2.	Bellevue, WA	(2)		368		84
3.	Dublin, CA Phase I	(2)		305		86
4.	New York, NY Phase III	(2)		96		56
5.	Lexington, MA			387		84
6.	Encino, CA	(2)		131		51
7.	Canoga Park, CA			210		47
8.	Acton, MA			380		71
9.	Hingham, MA			235		44
10.	Quincy, MA	(2)		146		24
11.	Wilton, CT	(2)		100		24
12.	Norwalk, CT			314		63
13.	Cohasset, MA			200		38
14.	Irvine, CA			290		63
15.	Northborough, MA			350		60
16.	New York, NY			299		121
17.	Plymouth, MA Phase II			81		17
18.	Tinton Falls, NJ			298		51
19.	Oyster Bay, NY			273		69
20.	White Plains, NY			408		138
21.	Sharon, MA			156		26
22.	Kirkland, WA Phase II	(2)		173		48
23.	Milford, CT	(2)		284		45
24.	Brooklyn, NY			397		186
25.	Greenburgh, NY Phase II			444		112
26.	Dublin, CA Phase II			200		52
27.	Dublin, CA Phase III			205		53
28.	Shelton, CT II			171		34
29.	Andover, MA	(2)		115		21
30.	West Haven, CT			170		23
31.	Union City, CA Phase I	(2)(3)		272		74
32.	Union City, CA Phase II	(2)(3)		166		46
33.	Hackensack, NJ			210		47
34.	Stratford, CT	(2)		146		23
35.	West Long Branch, NJ	(4)		216		36
36.	Plainview, NY			220		47
37.	Gaithersburg, MD			254		41
38.	Highland Park, NJ			285		67
39.	Camarillo, CA			376		55
40.	Pleasant Hill, CA	(4)		449		153
41.	Shelton, CT			302		49
42.	Wanaque, NJ			200		33
43.	Alexandria, VA	(2)(3)		282		56
44.	Wheaton, MD	(2)(3)		320		56
45.	Yaphank, NY	(2)