Form: 8-K

Current report filing

April 30, 2008

 

Exhibit 99.2
AvalonBay Communities, Inc.
For Immediate News Release
April 30, 2008
AVALONBAY COMMUNITIES, INC. ANNOUNCES
FIRST QUARTER 2008 OPERATING RESULTS
(Alexandria, VA) AvalonBay Communities, Inc. (NYSE: AVB) reported today that Net Income Available to Common Stockholders for the quarter ended March 31, 2008 was $46,275,000. This resulted in Earnings per Share — diluted (“EPS”) of $0.60 for the quarter ended March 31, 2008, compared to $0.56 for the comparable period of 2007, a per share increase of 7.1%.
Funds from Operations attributable to common stockholders — diluted (“FFO”) for the quarter ended March 31, 2008 was $96,117,000, or $1.24 per share, compared to $89,118,000, or $1.11 per share, for the comparable period of 2007. FFO per share increased 11.7%, due primarily to contributions from improved community operating results and newly developed communities. FFO per share includes $0.01 per share for the quarter ended March 31, 2007 related to the sale of a land parcel. Adjusting for this land sale, FFO per share increased 12.7% over the prior year period.
Commenting on the Company’s results, Bryce Blair, Chairman and CEO, said, “Our strong FFO growth of 12.7% reflects the continued healthy fundamentals in our markets, the strength of our balance sheet and the contributions from our investment activity. The Company remains well positioned to continue to deliver earnings growth in 2008 and the financial flexibility to respond to challenging economic and capital markets conditions.”
Operating Results for the Quarter Ended March 31, 2008 Compared to the Prior Year Period
For the Company, including discontinued operations, total revenue increased by $19,482,000, or 9.9% to $216,188,000. For Established Communities, rental revenue increased 4.4%, comprised of an increase in Average Rental Rates of 4.1% and an increase in Economic Occupancy of 0.3%. As a result, total revenue for Established Communities increased $6,440,000 to $155,608,000. Operating expenses for Established Communities increased $1,966,000, or 4.2% to $49,310,000. Accordingly, Net Operating Income (“NOI”) for Established Communities increased by $4,474,000, or 4.4%, to $106,298,000.
The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities from the first quarter of 2007 to the first quarter of 2008:

 
1Q 08 Compared to 1Q 07
 
                                 
    Rental   Operating           % of
    Revenue   Expenses   NOI   NOI (1)
New England
    3.5 %     6.7 %     1.3 %     19.8 %
Metro NY/NJ
    3.3 %     6.7 %     1.7 %     24.3 %
Mid-Atlantic/Midwest
    3.1 %     2.2 %     3.6 %     17.2 %
Pacific NW
    7.9 %     0.2 %     11.2 %     4.6 %
No. California
    7.7 %     (0.5 %)     10.7 %     23.0 %
So. California
    3.3 %     7.2 %     1.9 %     11.1 %
 
                               
Total
    4.4 %     4.2 %     4.4 %     100.0 %
 
                               


 
(1)   Total represents each region’s % of total NOI from the Company, including discontinued operations.
Cash concessions are recognized in accordance with generally accepted accounting principles (“GAAP”) and are amortized over the approximate lease term, which is generally one year. The following table reflects the percentage changes in rental revenue on a GAAP basis and Rental Revenue with Concessions on a Cash Basis for our Established Communities:

         
    1Q 08 vs 1Q 07
Rental Revenue Change with Concessions on a GAAP Basis
    4.4 %
 
       
Rental Revenue Change with Concessions on a Cash Basis
    4.5 %


 
Copyright © 2008 AvalonBay Communities, Inc. All Rights Reserved

 


 

Development Activity
The Company commenced the development of Avalon Charles Pond during the first quarter of 2008. Avalon Charles Pond, located in Coram, NY, will contain 200 apartment homes when completed for an estimated Total Capital Cost of $46,500,000.
Investment Management Fund Activity
AvalonBay Value Added Fund, L.P. (the “Fund”) is a private, discretionary investment vehicle in which the Company holds an equity interest of approximately 15%.
During the first quarter of 2008, the Company completed the redevelopment of Avalon at Poplar Creek, located in Schaumburg, IL on behalf of the Fund. This community contains 196 apartment homes and was completed for a Total Capital Cost of $3,100,000, excluding costs incurred prior to the start of redevelopment.
During the first quarter of 2008, the Company commenced the redevelopment of South Hills Apartments, located in West Covina, CA on behalf of the Fund. South Hills Apartments contains 85 apartment homes and will be redeveloped for an expected Total Capital Cost of $4,400,000, excluding costs incurred prior to the start of redevelopment.
The Fund has invested $782,066,000 as of March 31, 2008. Management expects the Fund to invest approximately $36,000,000 of additional funds to redevelop the assets acquired. The investment period for the Fund concluded in March 2008. Accordingly, no new acquisitions for the Fund will be considered.
Financing, Liquidity and Balance Sheet Statistics
In February 2008, the Board of Directors authorized an increase of $200,000,000 in the common stock repurchase program, expanding the total amount the Company can acquire to $500,000,000. During the first quarter of 2008, the Company repurchased 482,100 shares at an average price of $87.42 per share, bringing the total amount of common stock repurchased under this program to approximately $300,000,000.
In January 2008, the Company repaid $50,000,000 of unsecured notes with an annual interest rate of 6.625% pursuant to their scheduled maturity.
As of March 31, 2008, the Company had $798,500,000 outstanding under its $1,000,000,000 unsecured credit facility. At March 31, 2008, the Company had unrestricted cash of $270,320,000, as well as cash in escrow of $128,190,000 which is available for development activity. Leverage, calculated as total debt as a percentage of Total Market Capitalization, was 32.8% at March 31, 2008. Unencumbered NOI for the year ended March 31, 2008 was 80.2% and Interest Coverage for the first quarter of 2008 was 4.1 times.
On March 31, 2008, the Company executed two separate five-year, interest only mortgage loans for an aggregate borrowing of approximately $264,697,000 at a weighted average effective interest rate of approximately 4.78%. One mortgage loan for approximately $170,125,000 is secured by Avalon at Arlington Square, located in Arlington, VA. The second mortgage loan for approximately $94,572,000 is secured by Avalon at Cameron Court, located in Alexandria, VA.
In April 2008, the Company executed a seven-year, interest only mortgage loan, borrowing approximately $110,600,000 at an effective interest rate of 5.48%. The mortgage is secured by Avalon Crescent, located in McLean, Virginia.
The Company used the net proceeds of approximately $373,286,000 from these three secured financings to pay down a portion of the outstanding balance on our unsecured credit facility in April 2008.
Also in April 2008, the Company redeemed $10,000,000 of its $150,000,000, 7.5% unsecured notes that mature in August 2009. The notes were redeemed for $10,287,500. The Company will include the excess cost paid over par, as well as the proportionate share of deferred financing charges for the notes redeemed as a charge to earnings in the second quarter of 2008.
Second Quarter 2008 Financial Outlook
For the second quarter of 2008, the Company expects EPS in the range of $1.94 to $1.98 and expects Projected FFO per share in the range of $1.22 to $1.26.
The Company expects to release its second quarter 2008 earnings on July 30, 2008 after the market closes. The Company expects to hold a conference call on July 31, 2008 at 1:00 PM EDT to discuss the second quarter 2008 results.
Second Quarter 2008 Conference/Event Schedule
The Company is scheduled to participate in the following conferences during the second quarter of 2008:

 
2Q 2008 Conference Schedule
 
     
Event/Conference   Date
AvalonBay New York Community Tour
  June 3
NAREIT Institutional Investor Forum
  June 4-6
Wachovia Securities Equity Conference
  June 23-27
 


 
Copyright © 2008 AvalonBay Communities, Inc. All Rights Reserved

 


 

The Company is scheduled to present and conduct a question and answer session at each of the conferences. Management may discuss the Company’s current operating environment; operating trends; development, redevelopment, disposition and acquisition activity; financial outlook and other business and financial matters affecting the Company. Details on how to access a webcast of each event and/or related materials will be available beginning June 1, 2008 on the Company’s website at http://www.avalonbay.com/events.
Other Matters
The Company will hold a conference call on May 1, 2008 at 1:00 PM EDT to review and answer questions about this release, its first quarter results, the Attachments (described below) and related matters. To participate on the call, dial 1-877-510-2397 domestically and 1-706-634-5877 internationally.
To hear a replay of the call, which will be available from May 1, 2008 at 3:00 PM EDT to May 8, 2008 at 11:59 PM EDT, dial 1-800-642-1687 domestically and 1-706-645-9291 internationally, and use Access Code: 42406161.
A webcast of the conference call will also be available at http://www.avalonbay.com/earnings, and an on-line playback of the webcast will be available for at least 30 days following the call.
The Company produces Earnings Release Attachments (the “Attachments”) that provide detailed information regarding operating, development, redevelopment, disposition and acquisition activity. These Attachments are considered a part of this earnings release and are available in full with this earnings release via the Company’s website at http://www.avalonbay.com/earnings. To receive future press releases via e-mail, please submit a request through http://www.avalonbay.com/pressrelease.
About AvalonBay Communities, Inc.
As of March 31, 2008, the Company owned or held a direct or indirect ownership interest in 183 apartment communities containing 52,167 apartment homes in ten states and the District of Columbia, of which 22 communities were under construction and eight communities were under reconstruction. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in high barrier-to-entry markets of the United States. More information may be found on the Company’s website at the following address http://www.avalonbay.com. For additional information, please contact John Christie, Senior Director of Investor Relations and Research at 1-703-317-4747 or Thomas J. Sargeant, Chief Financial Officer at 1-703-317-4635.
Forward-Looking Statements
This release, including its Attachments, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by the Company’s use of words such as “expects,” “plans,” “estimates,” “projects,” “intends,” “believes,” “outlook” and similar expressions that do not relate to historical matters. Actual results may differ materially from those expressed or implied by the forward-looking statements as a result of risks and uncertainties, which include the following: changes in local employment conditions, demand for apartment homes, supply of competitive housing products, and other economic conditions may result in lower than expected occupancy and/or rental rates and adversely affect the profitability of our communities; increases in costs of materials, labor or other expenses may result in communities that we develop or redevelop failing to achieve expected profitability; delays in completing development, redevelopment and/or lease-up may result in increased financing and construction costs and may delay and/or reduce the profitability of a community; debt and/or equity financing for development, redevelopment or acquisitions of communities may not be available on favorable terms; we may be unable to obtain, or experience delays in obtaining, necessary governmental permits and authorizations; or we may abandon development or redevelopment opportunities for which we have already incurred costs. Additional discussions of risks and uncertainties appear in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 under the headings “Risk Factors” and under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements.”
The Company does not undertake a duty to update forward-looking statements, including its expected operating results for the second quarter 2008. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community. The format and extent of future outlooks may be different from the format and extent of the information contained in this release.
Definitions and Reconciliations
Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and further explained on Attachment 13, “Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.” Attachment 13 is included in the full earnings release available at the Company’s website at http://www.avalonbay.com/earnings.
 
Copyright © 2008 AvalonBay Communities, Inc. All Rights Reserved

 


 

 
 
(AVALONBAY COMMUNITIES, INC. LOGO)
FIRST QUARTER 2008
Supplemental Operating and Financial Data
(GRAPHIC)
Avalon Dublin Station, situated in the East Bay suburb of Dublin, CA, contains 305 apartment homes and is expected to be completed in the second quarter of 2008 for a Total Capital Cost of $85.8 million. The community’s location adjacent to freeways and a Bay Area Rapid Transit (BART) station affords easy access to employment centers in San Francisco, Oakland and San Jose.
Avalon Dublin Station offers studios, 1, 2 and 3 bedroom apartment homes and townhomes featuring designer kitchens, washer and dryer in every home and spacious walk-in closets. Community amenities include a full-size outdoor swimming pool and spa with sundeck, a state-of-the-art fitness center with cardio theater, clubhouse with resident lounge and game room, bocce ball court and a poolside cucina.
 

 


 

 
 
FIRST QUARTER 2008
Supplemental Operating and Financial Data
Table of Contents
         
Company Profile
       
Selected Operating and Other Information
  Attachment 1
Detailed Operating Information
  Attachment 2
Condensed Consolidated Balance Sheets
  Attachment 3
 
       
Sub-Market Profile
       
Quarterly Revenue and Occupancy Changes (Established Communities)
  Attachment 4
Sequential Quarterly Revenue and Occupancy Changes (Established Communities)
  Attachment 5
 
       
Development, Redevelopment, Acquisition and Disposition Profile
       
Summary of Development and Redevelopment Activity
  Attachment 6
Development Communities
  Attachment 7
Redevelopment Communities
  Attachment 8
Summary of Development and Redevelopment Community Activity
  Attachment 9
Future Development
  Attachment 10
Unconsolidated Real Estate Investments
  Attachment 11
Summary of Disposition Activity
  Attachment 12
 
       
Definitions and Reconciliations
       
Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms
  Attachment 13
The following is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. The projections and estimates contained in the following attachments are forward-looking statements that involve risks and uncertainties, and actual results may differ materially from those projected in such statements. Risks associated with the Company’s development, redevelopment, construction, and lease-up activities, which could impact the forward-looking statements made are discussed in the paragraph titled “Forward-Looking Statements” in the release to which these attachments relate. In particular, development opportunities may be abandoned; Total Capital Cost of a community may exceed original estimates, possibly making the community uneconomical and/or affecting projected returns; construction and lease-up may not be completed on schedule, resulting in increased debt service and construction costs; and other risks described in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.
     
 

 


 

 
 
Attachment 1
AvalonBay Communities, Inc.
Selected Operating and Other Information
March 31, 2008

(Dollars in thousands except per share data)
(unaudited)

SELECTED OPERATING INFORMATION
                                 
    Q1     Q1              
    2008     2007     $ Change     % Change  
Net Income available to common stockholders
  $ 46,275     $ 44,345     $ 1,930       4.4 %
 
                               
Per common share — basic
  $ 0.60     $ 0.57     $ 0.03       5.3 %
Per common share — diluted
  $ 0.60     $ 0.56     $ 0.04       7.1 %
 
                               
Funds from Operations
  $ 96,117     $ 89,118     $ 6,999       7.9 %
Per common share — diluted
  $ 1.24     $ 1.11     $ 0.13       11.7 %
 
                               
Dividends declared — common
  $ 68,697     $ 67,694     $ 1,003       1.5 %
Per common share
  $ 0.8925     $ 0.85     $ 0.0425       5.0 %
 
                               
Common shares outstanding
    76,971,919       79,639,601       (2,667,682 )     (3.3 %)
Outstanding operating partnership units
    64,019       129,782       (65,763 )     (50.7 %)
 
                       
Total outstanding shares and units
    77,035,938       79,769,383       (2,733,445 )     (3.4 %)
 
                       
 
                               
Average shares outstanding — basic
    76,600,201       78,431,936       (1,831,735 )     (2.3 %)
Average operating partnership units outstanding
    64,019       144,586       (80,567 )     (55.7 %)
Effect of dilutive securities
    776,672       1,354,226       (577,554 )     (42.6 %)
 
                       
Average shares outstanding — diluted
    77,440,892       79,930,748       (2,489,856 )     (3.1 %)
 
                       

DEBT COMPOSITION AND MATURITIES
                                         
            % of Total   Average    
            Market   Interest   Remaining
Debt Composition (1)   Amount   Cap   Rate (2)   Maturities (1)
Conventional Debt
                            2008     $ 167,223  
Long-term, fixed rate
  $ 2,153,209       19.2 %             2009     $ 222,158  
Long-term, variable rate
    122,951       1.1 %             2010     $ 235,614  
Variable rate credit facility
    798,500       7.1 %             2011     $ 391,903  
                     
Subtotal, Conventional
    3,074,660       27.4 %     5.9 %     2012     $ 531,408  
                     
 
                                       
Tax-Exempt Debt
                                       
Long-term, fixed rate
    186,418       1.7 %                        
Long-term, variable rate
    419,883       3.7 %                        
                     
Subtotal, Tax-Exempt
    606,301       5.4 %     4.8 %                
                     
Total Debt
  $ 3,680,961       32.8 %     5.7 %                
                     
 
(1)   Excludes debt associated with communities classified as held for sale.
 
(2)   Includes costs of financing such as credit enhancement fees, trustees’ fees, etc.

CAPITALIZED COSTS
                         
                    Non-Rev
    Cap   Cap   Capex
    Interest   Overhead   per Home
     
Q108
  $ 19,663     $ 7,159     $ 4  
Q407
  $ 20,099     $ 7,180     $ 251  
Q307
  $ 19,193     $ 7,008     $ 93  
Q207
  $ 18,393     $ 6,684     $ 38  
Q107
  $ 15,433     $ 6,606     $ 9  

COMMUNITY INFORMATION
                 
            Apartment
    Communities   Homes
     
Current Communities
    161       45,151  
Development Communities
    22       7,016  
Development Rights
    46       13,266  
     
 

 


 

 
 
Attachment 2
AvalonBay Communities, Inc.
Detailed Operating Information
March 31, 2008

(Dollars in thousands except per share data)
(unaudited)
                         
    Q1     Q1        
    2008     2007     % Change  
Revenue:
                       
Rental and other income
  $ 210,200     $ 187,171       12.3 %
Management, development and other fees
    1,638       1,444       13.4 %
 
                 
Total
    211,838       188,615       12.3 %
 
                 
 
                       
Operating expenses:
                       
Direct property operating expenses, excluding property taxes
    49,564       44,983       10.2 %
Property taxes
    19,850       16,994       16.8 %
Property management and other indirect operating expenses
    10,097       8,439       19.6 %
Investments and investment management (1)
    1,719       2,024       (15.1 %)
 
                 
Total
    81,230       72,440       12.1 %
 
                 
 
                       
Interest expense, net
    (28,005 )     (23,186 )     20.8 %
General and administrative expense
    (8,119 )     (6,780 )     19.7 %
Joint venture income and minority interest expense
    (72 )     (535 )     N/A  
Depreciation expense
    (47,682 )     (42,014 )     13.5 %
Gain on sale of land
    —       545       (100.0 %)
 
                 
Income from continuing operations
    46,730       44,205       5.7 %
Income from discontinued operations (2)
    1,720       2,315       (25.7 %)
 
                 
Total discontinued operations
    1,720       2,315       (25.7 %)
 
                 
Net income
    48,450       46,520       4.1 %
Dividends attributable to preferred stock
    (2,175 )     (2,175 )     —  
 
                 
Net income available to common stockholders
  $ 46,275     $ 44,345       4.4 %
 
                 
Net income per common share — basic
  $ 0.60     $ 0.57       5.3 %
 
                 
Net income per common share — diluted
  $ 0.60     $ 0.56       7.1 %
 
                 
 
(1)   Reflects costs incurred related to investment acquisition, investment management and abandoned pursuits.
 
(2)   Reflects net income for communities classified as discontinued operations as of March 31, 2008 and communities sold during the period from January 1, 2007 through March 31, 2008. The following table details income from discontinued operations for the periods shown:
                 
    Q1     Q1  
    2008     2007  
Rental income
  $ 4,350     $ 8,091  
Operating and other expenses
    (1,334 )     (3,004 )
Interest expense, net
    (186 )     (692 )
Depreciation expense
    (1,110 )     (2,080 )
 
           
Income from discontinued operations
  $ 1,720     $ 2,315  
 
           
     
 

 


 

 
 
Attachment 3
AvalonBay Communities, Inc.
Condensed Consolidated Balance Sheets

(Dollars in thousands)
(unaudited)
                 
    March 31,     December 31,  
    2008     2007  
Real estate
  $ 6,359,332     $ 6,176,790  
Less accumulated depreciation
    (1,267,010 )     (1,219,410 )
 
           
Net operating real estate
    5,092,322       4,957,380  
 
               
Construction in progress, including land
    962,038       952,670  
Land held for development
    305,669       288,423  
Operating real estate assets held for sale, net
    97,642       98,709  
 
           
Total real estate, net
    6,457,671       6,297,182  
 
               
Cash and cash equivalents
    270,320       21,166  
Cash in escrow
    128,190       189,171  
Resident security deposits
    30,662       29,542  
Other assets (1)
    233,260       199,423  
 
           
Total assets
  $ 7,120,103     $ 6,736,484  
 
           
 
               
Unsecured senior notes, net
  $ 1,843,605     $ 1,893,499  
Unsecured facility
    798,500       514,500  
Notes payable
    1,036,461       773,803  
Resident security deposits
    43,037       41,638  
Liabilities related to assets held for sale
    30,503       30,340  
Other liabilities
    376,654       432,898  
 
           
Total liabilities
  $ 4,128,760     $ 3,686,678  
 
           
 
               
 
               
Minority interest
    19,652       23,152  
Stockholders’ equity
    2,971,691       3,026,654  
 
           
Total liabilities and stockholders’ equity
  $ 7,120,103     $ 6,736,484  
 
           
 
(1)   Other assets includes $1,074 and $891 relating to assets classified as held for sale as of March 31, 2008 and December 31, 2007, respectively.

 


 

 
 
Attachment 4
AvalonBay Communities, Inc.
Quarterly Revenue and Occupancy Changes — Established Communities (1)
March 31, 2008
                                                                                 
    Apartment                    
    Homes     Average Rental Rates (2)     Economic Occupancy     Rental Revenue ($000’s) (3)  
            Q1 08     Q1 07     % Change     Q1 08     Q1 07     % Change     Q1 08     Q1 07     % Change  
New England
                                                                               
Boston, MA
    3,067     $ 2,001     $ 1,964       1.9%     96.6%     95.6%     1.0%   $ 17,790     $ 17,291       2.9%
Fairfield-New Haven, CT
    2,284       2,061       2,005       2.8%     96.7%     95.2%     1.5%     13,653       13,089       4.3%
 
                                                           
New England Average
    5,351       2,027       1,982       2.3%     96.6%     95.4%     1.2%     31,443       30,380       3.5%
 
                                                           
Metro NY/NJ
                                                                               
New Jersey
    2,422       2,187       2,061       6.1%     95.7%     96.8%     (1.1% )     15,207       14,482       5.0%
New York, NY
    1,730       2,502       2,449       2.2%     96.6%     95.6%     1.0%     12,536       12,150       3.2%
Long Island, NY
    1,469       2,332       2,296       1.6%     96.1%     96.8%     (0.7% )     9,880       9,790       0.9%
 
                                                           
Metro NY/NJ Average
    5,621       2,321       2,241       3.6%     96.1%     96.4%     (0.3% )     37,623       36,422       3.3%
 
                                                           
 
                                                                               
Mid-Atlantic/Midwest
                                                                               
Washington Metro
    5,935       1,735       1,685       3.0%     96.0%     95.9%     0.1%     29,664       28,776       3.1%
Chicago, IL
    487       1,419       1,389       2.2%     96.9%     95.5%     1.4%     2,010       1,940       3.6%
 
                                                           
Mid-Atlantic/Midwest Average
    6,422       1,711       1,663       2.9%     96.1%     95.9%     0.2%     31,674       30,716       3.1%
 
                                                           
 
                                                                               
Pacific Northwest
                                                                               
Seattle, WA
    1,320       1,400       1,296       8.0%     95.9%     96.0%     (0.1% )     5,314       4,925       7.9%
 
                                                           
Pacific Northwest Average
    1,320       1,400       1,296       8.0%     95.9%     96.0%     (0.1% )     5,314       4,925       7.9%
 
                                                           
 
                                                                               
Northern California
                                                                               
San Jose, CA
    3,644       1,858       1,714       8.4%     97.1%     97.5%     (0.4% )     19,713       18,254       8.0%
San Francisco, CA
    1,608       2,151       2,030       6.0%     97.3%     95.7%     1.6%     10,095       9,380       7.6%
Oakland-East Bay, CA
    955       1,560       1,454       7.3%     97.0%     97.4%     (0.4% )     4,334       4,056       6.9%
 
                                                           
Northern California Average
    6,207       1,888       1,755       7.6%     97.1%     97.0%     0.1%     34,142       31,690       7.7%
 
                                                           
 
                                                                               
Southern California
                                                                               
Los Angeles, CA
    1,198       1,695       1,640       3.4%     96.8%     95.2%     1.6%     5,892       5,612       5.0%
Orange County, CA
    1,174       1,486       1,431       3.8%     96.6%     97.2%     (0.6% )     5,057       4,898       3.2%
San Diego, CA
    1,058       1,475       1,440       2.4%     94.3%     95.6%     (1.3% )     4,416       4,367       1.1%
 
                                                           
Southern California Average
    3,430       1,556       1,507       3.3%     96.0%     96.0%     0.0%     15,365       14,877       3.3%
 
                                                           
 
                                                                               
Average/Total Established
    28,351     $ 1,897     $ 1,822       4.1%     96.4%     96.1%     0.3%   $ 155,561     $ 149,010       4.4%
 
                                                           
 
(1)   Established Communities are communities with stabilized operating expenses as of January 1, 2007 such that a comparison of 2007 to 2008 is meaningful.
 
(2)   Reflects the effect of concessions amortized over the average lease term.
 
(3)   With concessions reflected on a cash basis, rental revenue from Established Communities increased 4.5% between years.

 


 

 
 
Attachment 5
AvalonBay Communities, Inc.
*Sequential Quarterly* Revenue and Occupancy Changes — Established Communities (1)
March 31, 2008
                                                                                 
    Apartment                    
    Homes     Average Rental Rates (2)     Economic Occupancy     Rental Revenue ($000’s) (3)  
            Q1 08     Q4 07     % Change   Q1 08   Q4 07   % Change   Q1 08     Q4 07     % Change
New England
                                                                               
Boston, MA
    3,067     $ 2,001     $ 1,986       0.8 %     96.6 %     96.4 %     0.2 %   $ 17,790     $ 17,613       1.0 %
Fairfield-New Haven, CT
    2,284       2,061       2,067       (0.3 %)     96.7 %     96.5 %     0.2 %     13,653       13,663       (0.1 %)
 
                                                 
New England Average
    5,351       2,027       2,020       0.3 %     96.6 %     96.4 %     0.2 %     31,443       31,276       0.5 %
 
                                                 
 
                                                                               
Metro NY/NJ
                                                                               
New Jersey
    2,422       2,187       2,162       1.2 %     95.7 %     95.9 %     (0.2 %)     15,207       15,062       1.0 %
New York, NY
    1,730       2,502       2,485       0.7 %     96.6 %     96.9 %     (0.3 %)     12,536       12,497       0.3 %
Long Island, NY
    1,469       2,332       2,342       (0.4 %)     96.1 %     95.1 %     1.0 %     9,880       9,812       0.7 %
 
                                                 
Metro NY/NJ Average
    5,621       2,321       2,308       0.6 %     96.1 %     96.0 %     0.1 %     37,623       37,371       0.7 %
 
                                                 
 
                                                                               
Mid-Atlantic/Midwest
                                                                               
Washington Metro
    5,935       1,735       1,727       0.5 %     96.0 %     96.5 %     (0.5 %)     29,664       29,654       0.0 %
Chicago, IL
    487       1,419       1,409       0.7 %     96.9 %     97.0 %     (0.1 %)     2,010       1,999       0.6 %
 
                                                 
Mid-Atlantic/Midwest Average
    6,422       1,711       1,703       0.5 %     96.1 %     96.5 %     (0.4 %)     31,674       31,653       0.1 %
 
                                                 
 
                                                                               
Pacific Northwest
                                                                               
Seattle, WA
    1,320       1,400       1,380       1.4 %     95.9 %     96.1 %     (0.2 %)     5,314       5,252       1.2 %
 
                                                 
Pacific Northwest Average
    1,320       1,400       1,380       1.4 %     95.9 %     96.1 %     (0.2 %)     5,314       5,252       1.2 %
 
                                                 
 
                                                                               
Northern California
                                                                               
San Jose, CA
    3,644       1,858       1,834       1.3 %     97.1 %     97.0 %     0.1 %     19,713       19,449       1.4 %
San Francisco, CA
    1,608       2,151       2,122       1.4 %     97.3 %     97.7 %     (0.4 %)     10,095       9,996       1.0 %
Oakland-East Bay, CA
    955       1,560       1,531       1.9 %     97.0 %     97.9 %     (0.9 %)     4,334       4,289       1.0 %
 
                                                 
Northern California Average
    6,207       1,888       1,862       1.4 %     97.1 %     97.3 %     (0.2 %)     34,142       33,734       1.2 %
 
                                                 
 
                                                                               
Southern California
                                                                               
Los Angeles, CA
    1,198       1,695       1,688       0.4 %     96.8 %     95.9 %     0.9 %     5,892       5,817       1.3 %
Orange County, CA
    1,174       1,486       1,477       0.6 %     96.6 %     96.2 %     0.4 %     5,057       5,009       1.0 %
San Diego, CA
    1,058       1,475       1,461       1.0 %     94.3 %     94.6 %     (0.3 %)     4,416       4,385       0.7 %
 
                                                 
Southern California Average
    3,430       1,556       1,546       0.6 %     96.0 %     95.6 %     0.4 %     15,365       15,211       1.0 %
 
                                                 
 
                                                                               
Average/Total Established
    28,351     $ 1,897     $ 1,884       0.7 %     96.4 %     96.4 %     0.0 %   $ 155,561     $ 154,497       0.7 %
 
                                                 
 
(1)   Established Communities are communities with stabilized operating expenses as of January 1, 2007 such that a comparison of 2007 to 2008 is meaningful.
 
(2)   Reflects the effect of concessions amortized over the average lease term.
     
 

 


 

 
 
Attachment 6
AvalonBay Communities, Inc.
Summary of Development and Redevelopment Activity (1) as of March 31, 2008
                                 
            Number     Number     Total  
            of     of     Capital Cost (2)  
            Communities     Homes     (millions)  
Portfolio Additions:
    (3 )                        
2008 Annual Completions
                               
Development
            12       3,937     $ 1,020.0  
Redevelopment
    (4 )     6       1,213       29.3  
 
                         
Total Additions
            18       5,150     $ 1,049.3  
 
                         
 
                               
2007 Annual Completions
                               
Development
            8       1,749     $ 440.7  
Redevelopment
    (4 )     5       1,847       32.9  
 
                         
Total Additions
            13       3,596     $ 473.6  
 
                         
 
                               
Pipeline Activity:
    (3 )                        
Currently Under Construction
                               
Development
            22       7,016     $ 2,209.7  
Redevelopment
    (4 )     8       2,120       79.1  
 
                         
Subtotal
            30       9,136     $ 2,288.8  
 
                         
 
                               
Planning
                               
Development Rights
            46       13,266     $ 3,914.0  
 
                         
Total Pipeline
            76       22,402     $ 6,202.8  
 
                         
 
(1)   Represents activity for consolidated and unconsolidated entities.
 
(2)   See Attachment #13 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(3)   Information represents projections and estimates.
 
(4)   Represents only cost of redevelopment activity, does not include original acquisition cost.
This chart contains forward-looking statements. Please see the paragraph regarding forward-looking statements on the Table of Contents page relating to the Company’s Supplemental Operating and Financial Data for the first quarter of 2008.
     
 

 


 

 
 
Attachment 7
AvalonBay Communities, Inc.
Development Communities as of March 31, 2008
                                                                                                         
            Percentage             Total     Schedule     Avg                        
            Ownership     # of     Capital                                     Rent                     % Occ  
            Upon     Apt     Cost (1)             Initial             Stabilized     Per     % Comp     % Leased     Physical     Economic  
            Completion     Homes     (millions)     Start     Occupancy     Complete     Ops (1)     Home (1)     (2)     (3)     (4)     (1) (5)  
                                                                    Inclusive of                                  
                                                                    Concessions                                  
                                                                    See Attachment #13                                  
Under Construction:                                                                                                
  1.    
Avalon Riverview North
New York, NY
    100 %     602     $ 174.6       Q3 2005       Q3 2007       Q2 2008       Q2 2008     $ 2,875       100.0 %     98.2 %     97.8 %     76.0 %
  2.    
Avalon Danvers (6)
Danvers, MA
    100 %     433       84.8       Q4 2005       Q1 2007       Q3 2008       Q1 2009       1,435       77.1 %     82.2 %     69.5 %     66.8 %
  3.    
Avalon on the Sound II
New Rochelle, NY
    100 %     588       180.5       Q1 2006       Q2 2007       Q2 2008       Q4 2008       2,305       100.0 %     75.9 %     73.3 %     53.0 %
  4.    
Avalon Meydenbauer
Bellevue, WA
    100 %     368       87.3       Q1 2006       Q1 2008       Q3 2008       Q1 2009       1,865       34.2 %     37.0 %     23.4 %     13.0 %
  5.    
Avalon at Dublin Station I
Dublin, CA
    100 %     305       85.8       Q2 2006       Q4 2007       Q2 2008       Q4 2008       1,860       86.9 %     59.3 %     52.8 %     23.3 %
  6.    
Avalon at Lexington Hills
Lexington, MA
    100 %     387       86.2       Q2 2006       Q2 2007       Q3 2008       Q1 2009       1,915       74.7 %     62.0 %     52.5 %     36.0 %
  7.    
Avalon Encino
Los Angeles, CA
    100 %     131       61.5       Q3 2006       Q3 2008       Q4 2008       Q2 2009       2,650       N/A       N/A       N/A       N/A  
  8.    
Avalon Warner Place (7)
Canoga Park, CA
    100 %     210       53.9       Q4 2006       Q1 2008       Q3 2008       Q1 2009       1,870       27.1 %     29.5 %     18.6 %     3.4 %
  9.    
Avalon Acton (8)
Acton, MA
    100 %     380       68.8       Q4 2006       Q4 2007       Q4 2008       Q2 2009       1,320       59.5 %     51.6 %     43.2 %     22.2 %
  10.    
Avalon Morningside Park (8)
New York, NY
    100 %     296       125.5       Q1 2007       Q2 2008       Q1 2009       Q3 2009       3,640       N/A       N/A       N/A       N/A  
  11.    
Avalon White Plains
White Plains, NY
    100 %     393       154.5       Q2 2007       Q3 2008       Q4 2009       Q2 2010       2,820       N/A       N/A       N/A       N/A  
  12.    
Avalon at Tinton Falls
Tinton Falls, NJ
    100 %     216       41.2       Q2 2007       Q2 2008       Q4 2008       Q2 2009       1,760       N/A       26.9 %     N/A       N/A  
  13.    
Avalon Fashion Valley
San Diego, CA
    100 %     161       64.7       Q2 2007       Q3 2008       Q4 2008       Q2 2009       2,380       N/A       N/A       N/A       N/A  
  14.    
Avalon Anaheim Stadium
Anaheim, CA
    100 %     251       102.7       Q2 2007       Q1 2009       Q3 2009       Q1 2010       2,530       N/A       N/A       N/A       N/A  
  15.    
Avalon Union City
Union City, CA
    100 %     438       125.2       Q3 2007       Q2 2009       Q3 2009       Q1 2010       1,895       N/A       N/A       N/A       N/A  
  16.    
Avalon at the Hingham Shipyard
Hingham, MA
    100 %     235       52.7       Q3 2007       Q3 2008       Q1 2009       Q2 2009       2,090       N/A       N/A       N/A       N/A  
  17.    
Avalon Sharon
Sharon, MA
    100 %     156       30.7       Q3 2007       Q2 2008       Q4 2008       Q1 2009       1,635       10.3 %     44.2 %     2.6 %     N/A  
  18.    
Avalon Huntington
Shelton, CT
    100 %     99       26.1       Q4 2007       Q4 2008       Q2 2009       Q3 2009       2,240       N/A       N/A       N/A       N/A  
  19.    
Avalon at Mission Bay North III
San Francisco, CA
    100 %     260       157.8       Q4 2007       Q3 2009       Q4 2009       Q2 2010       3,745       N/A       N/A       N/A       N/A  
  20.    
Avalon Jamboree Village
Irvine, CA
    100 %     279       78.3       Q4 2007       Q2 2009       Q4 2009       Q2 2010       2,060       N/A       N/A       N/A       N/A  
  21.    
Avalon Fort Greene
New York, NY
    100 %     628       320.4       Q4 2007       Q3 2009       Q3 2010       Q1 2011       3,605       N/A       N/A       N/A       N/A  
  22.    
Avalon Charles Pond
Coram, NY
    100 %     200       46.5       Q1 2008       Q4 2008       Q2 2009       Q4 2009       1,865       N/A       N/A       N/A       N/A  
       
 
                                                                                         
       
Total/Weighted Average
            7,016     $ 2,209.7                                     $ 2,355                                  
       
 
                                                                                         
       
Weighted Average Projected NOI
                                                                                               
        as a % of Total Capital Cost (1) (9)                     6.3 %   Inclusive of Concessions — See Attachment #13                                        
                                                             
                          % Economic                              
Non-Stabilized Development Communities:(10)                         Occ   Asset Cost Basis, Non-Stabilized Development                     Source
 
                                                           
Prior Quarter Completions:
                          (1)(5)   Capital Cost, Prior Quarter Completions           $ 58.7     Att.7
Avalon Bowery Place II (8)
            90     $ 58.7         Capital Cost, Current Completions             —     Att. 7
 
                              Capital Cost, Under Construction             2,209.7     Att. 7
 
                                                           
Total
      90     $ 58.7     96.2%   Less: Remaining to Invest, Under Construction                        
 
                                                     
 
                             
Total Remaining to Invest
    857.5             Att. 9
 
                             
Capital Cost, Projected Q2 2008 Starts
    ( 46.6 )           Att. 9, Footnote 5
 
                                                         
 
                                                (810.9 )        
 
                                                         
 
                             
Total Asset Cost Basis, Non-Stabilized Development
          $ 1,457.5          
 
                                                         
Q1 2008 Net Operating Income/(Deficit) for communities under construction and non-stabilized development communities was $4.8 million. See Attachment #13.
 
(1)   See Attachment #13 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(2)   Includes apartment homes for which construction has been completed and accepted by management as of April 25, 2008.
 
(3)   Includes apartment homes for which leases have been executed or non-refundable deposits have been paid as of April 25, 2008.
 
(4)   Physical occupancy based on apartment homes occupied as of April 25, 2008.
 
(5)   Represents Economic Occupancy for the first quarter of 2008.
 
(6)   Avalon Danvers experienced a fire in April 2007. The Company expects insurance proceeds will cover substantially all losses. The schedule cited above reflects delays associated with the fire.
 
(7)   This community was formerly known as Avalon Canoga Park.
 
(8)   This community is being financed in part by third-party tax-exempt debt.
 
(9)   The Weighted Average calculation is based on the Company’s pro rata share of the Total Capital Cost for each community.
 
(10)   Represents Development Communities completed in prior quarters that had not achieved Stabilized Operations for the entire current quarter. Estimates are based on the Company’s pro rata share of the Total Capital Cost for each community.
 
    This chart contains forward-looking statements. Please see the paragraph regarding forward-looking statements on the Table of Contents page relating to the Company’s Supplemental Operating and Financial Data for the first quarter of 2008.
 


 

 
 
Attachment 8
AvalonBay Communities, Inc.
Redevelopment Communities as of March 31, 2008
                                                                                         
                    Cost (millions)     Schedule     Avg     Number of Homes  
            # of     Pre-     Total                                     Rent             Out of  
    Percentage     Apt     Redevelopment     Capital     Acquisition /                     Restabilized     Per     Completed     Service  
    Ownership     Homes     Capital Cost     Cost (1)(2)     Completion     Start     Complete     Ops (2)     Home (2)     to date     @ 3/31/08  
                                                                    Inclusive of                  
                                                                    Concessions                  
                                                                    See Attachment #13                  
Under Redevelopment:
                                                                                       
 
                                                                                       
AvalonBay
                                                                                       
1. Avalon at
AutumnWoods
Fairfax, VA
    100 %     420     $ 31.2     $ 38.3       Q4 1996       Q3 2006       Q2 2008       Q4 2008     $ 1,370       408       5  
2. Essex Place
Peabody, MA
    100 %     286       23.7       34.5       Q3 2004       Q3 2007       Q2 2009       Q4 2009       1,295       53       14  
3. Avalon Redmond
Place
Redmond, WA
    100 %     222       26.3       31.3       Q3 1999       Q3 2007       Q4 2008       Q2 2009       1,515       142       22  
4. Avalon Woodland Hills

Woodland Hills, CA
    100 %     663       72.1       109.3       Q4 1997       Q4 2007       Q1 2010       Q3 2010       1,960       33       59  
5. Avalon at Diamond
Heights
San Francisco, CA
    100 %     154       25.3       30.2       Q2 1994       Q4 2007       Q4 2010       Q2 2011       2,445       22       1  
 
                                                                           
Subtotal
            1,745     $ 178.6     $ 243.6                                     $ 1,695       658       101  
 
                                                                           
Investment Management Fund
(The “Fund”)
                                                                                       
1. Avalon Paseo Place
Fremont, CA
    15 %     134       19.8       25.5       Q4 2005       Q2 2007       Q2 2008       Q2 2008       1,495       134       —  
2. Avalon Cedar Place
Columbia, MD
    15 %     156       21.0       25.0       Q4 2006       Q3 2007       Q4 2008       Q2 2009       1,300       63       11  
3. South Hills Apartments
West Covina, CA
    15 %     85       20.9       25.3       Q3 2007       Q1 2008       Q4 2008       Q2 2009       1,895       48       13  
 
                                                                           
Subtotal
            375     $ 61.7     $ 75.8                                     $ 1,505       245       24  
 
                                                                           
Total/Weighted
Average
            2,120     $ 240.3     $ 319.4                                     $ 1,660       903       125  
 
                                                                           
Completed this Quarter:
                                                                                       
Investment Management Fund
(The “Fund”)
                                                                                       
1. Avalon at Poplar Creek Schaumburg, IL
    15 %     196       25.2       28.3       Q2 2006       Q4 2006       Q1 2008       Q3 2008       1,225       196       —  
 
                                                                           
Grand Total/Weighted Average
            2,316     $ 265.5     $ 347.7                                     $ 1,625       1,099       125  
 
                                                                           
Weighted Average
Projected NOI as a % of
Total Capital Cost (2)
                            10.0 %   Inclusive of Concessions — See Attachment #13
                       
 
(1)   Inclusive of acquisition cost.
 
(2)   See Attachment #13 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
    This chart contains forward-looking statements. Please see the paragraph regarding forward-looking statements on the Table of Contents page relating to the Company’s Supplemental Operating and Financial Data for the first quarter of 2008.
 

 


 

 
 
Attachment 9
AvalonBay Communities, Inc.
Summary of Development and Redevelopment Community Activity (1) as of March 31, 2008

(Dollars in Thousands)
 
DEVELOPMENT (2)
                                         
    Apt Homes     Total Capital     Cost of Homes             Construction in  
    Completed &     Cost Invested     Completed &     Remaining to     Progress at  
    Occupied     During Period (3)     Occupied (4)     Invest (5)     Period End (6)  
Total - 2006 Actual
    1,527     $ 652,828     $ 311,155     $ 919,358     $ 626,034  
 
                                 
2007 Actual:
                                       
Quarter 1
    464     $ 167,109     $ 106,100     $ 908,630     $ 673,945  
Quarter 2
    724       240,036       165,064       974,266       798,358  
Quarter 3
    774       220,762       214,732       1,334,784       792,320  
Quarter 4
    578       338,951       178,371       1,038,879       924,761  
 
                                 
Total - 2007 Actual
    2,540     $ 966,858     $ 664,267                  
 
                                 
 
                                       
2008 Projected:
                                       
Quarter 1 (Actual)
    676     $ 179,408     $ 180,366     $ 857,491     $ 925,736  
Quarter 2 (Projected)
    886       212,694       214,514       644,797       862,920  
Quarter 3 (Projected)
    950       170,545       251,450       474,252       802,376  
Quarter 4 (Projected)
    631       133,510       198,105       340,742       723,816  
 
                                 
Total - 2008 Projected
    3,143     $ 696,157     $ 844,435                  
 
                                 
 
REDEVELOPMENT
                                 
            Total Capital             Reconstruction in  
    Avg Homes     Cost Invested     Remaining to     Progress at  
    Out of Service     During Period (3)     Invest (5)     Period End (6)  
Total - 2006 Actual
          $ 15,543     $ 14,991     $ 17,602  
 
                             
2007 Actual:
                               
Quarter 1
    63     $ 3,332     $ 21,704     $ 14,538  
Quarter 2
    105       3,014       24,290       16,403  
Quarter 3
    97       3,896       61,583       16,182  
Quarter 4
    77       8,370       69,136       30,683  
 
                             
Total - 2007 Actual
          $ 18,612                  
 
                             
 
                               
2008 Projected:
                               
Quarter 1 (Actual)
    112     $ 6,433     $ 65,666     $ 37,761  
Quarter 2 (Projected)
    107       12,399       53,267       34,446  
Quarter 3 (Projected)
    109       12,065       41,203       34,701  
Quarter 4 (Projected)
    73       10,414       30,789       25,270  
 
                             
Total - 2008 Projected
          $ 41,311                  
 
                             
 
(1)   Data is presented for all communities currently under development or redevelopment and those communities for which development or redevelopment is expected to begin within the next 90 days.
 
(2)   Projected periods include data for consolidated joint ventures at 100%. The offset for joint venture partners’ participation is reflected as minority interest.
 
(3)   Represents Total Capital Cost incurred or expected to be incurred during the quarter, year or in total. See Attachment #13 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(4)   Represents projected Total Capital Cost of apartment homes completed and occupied during the quarter. Calculated by dividing Total Capital Cost for each Development Community by number of homes for the community, multiplied by the number of homes completed and occupied during the quarter.
 
(5)   Represents projected Total Capital Cost remaining to invest on communities currently under development or redevelopment and those for which development or redevelopment is expected to begin within the next 90 days. Remaining to invest for Q1 2008 includes $46.6 million attributed to one anticipated Q2 2008 development start and $18.8 million related to three anticipated Q2 2008 redevelopment starts.
 
(6)   Represents period end balance of construction or reconstruction costs. Amount for Q1 2008 includes $1.5 million related to three unconsolidated investments in the Fund.
This chart contains forward-looking statements. Please see the paragraph regarding forward-looking statements on the Table of Contents page relating to the Company’s Supplemental Operating and Financial Data for the first quarter of 2008.
 
 

 


 

 
 
Attachment 10
AvalonBay Communities, Inc.
Future Development as of March 31, 2008
DEVELOPMENT RIGHTS (1)
                     
        Estimated     Total  
        Number     Capital Cost (1)  
Location of Development Right   of Homes     (millions)  
1.  
Randolph, MA
    276     $ 47  
2.  
Northborough, MA
    350       61  
3.  
Pleasant Hill, CA
    422       153  
4.  
Los Angeles, CA
    278       123  
5.  
Bellevue, WA
    396       135  
6.  
Norwalk, CT
    311       85  
7.  
North Bergen, NJ
    164       48  
8.  
Shelton, CT
    251       66  
9.  
Rockville Centre, NY
    349       129  
10.  
Chicago, IL Phase I
    491       173  
11.  
Wilton, CT
    100       24  
12.  
New York, NY
    678       307  
13.  
Camarillo, CA
    309       66  
14.  
Plymouth, MA Phase II
    69       17  
15.  
Seattle, WA
    204       65  
16.  
Dublin, CA Phase II
    405       126  
17.  
Seattle, WA II
    234       76  
18.  
West Long Branch, NJ
    180       34  
19.  
Brooklyn, NY
    825       443  
20.  
Cohasset, MA
    200       38  
21.  
Greenburgh, NY Phase II
    444       112  
22.  
Kirkland, WA Phase II
    189       60  
23.  
Canoga Park, CA
    299       85  
24.  
Irvine, CA Phase II
    179       57  
25.  
Wheaton, MD
    320       107  
26.  
Andover, MA
    115       21  
27.  
Irvine, CA Phase III
    170       73  
28.  
San Francisco, CA
    159       51  
29.  
Milford, CT
    284       45  
30.  
Highland Park, NJ
    119       36  
31.  
Stratford, CT
    146       23  
32.  
Oyster Bay, NY
    150       42  
33.  
Yonkers, NY
    400       88  
34.  
Concord, MA
    150       38  
35.  
Bloomingdale, NJ
    173       38  
36.  
North Andover, MA
    526       98  
37.  
Tysons Corner, VA
    439       121  
38.  
Roselle Park, NJ
    300       70  
39.  
Gaithersburg, MD
    254       41  
40.  
Chicago, IL Phase II
    491       141  
41.  
Alexandria, VA
    283       73  
42.  
Hackensack, NJ
    230       56  
43.  
Garden City, NY
    160       58  
44.  
Wanaque, NJ
    210       45  
45.  
Yaphank, NY
    343       57  
46.  
Rockville, MD
    241       62  
   
 
               
   
 
           
   
 
               
   
Total
    13,266     $ 3,914  
   
 
           
 
(1)   See Attachment #13 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
This chart contains forward-looking statements. Please see the paragraph regarding forward-looking statements on the Table of Contents page relating to the Company’s Supplemental Operating and Financial Data for the first quarter of 2008.
 
 

 


 

Attachment 11
AvalonBay Communities, Inc.
Unconsolidated Real Estate Investments as of March 31, 2008

(Dollars in Thousands)
                                                                             
                                AVB                                     AVB’s  
                # of     Total     Book     Outstanding Debt     Share  
Unconsolidated   Percentage     Apt     Capital     Value                     Interest     Maturity     of Partnership  
Real Estate Investments   Ownership     Homes     Cost (1)     Investment (2)     Amount     Type     Rate     Date     Debt (3)  
AvalonBay Value Added Fund, LP                                                                        
1.  
Avalon at Redondo Beach
    N/A       105     $ 24,447       N/A     $ 21,033     Fixed     4.87 %   Oct 2011   $ 3,197  
   
Los Angeles, CA
                                                                       
2.  
Avalon Lakeside
    N/A       204       18,054       N/A       12,056     Fixed     5.74 %   Mar 2012     1,833  
   
Chicago, IL
                                                                       
3.  
Avalon Columbia
    N/A       170       29,258       N/A       22,275     Fixed     5.48 %   Apr 2012     3,386  
   
Baltimore, MD
                                                                       
4.  
Avalon Redmond
    N/A       400       56,299       N/A       36,500     Fixed     4.96 %   Jul 2012     5,548  
   
Seattle, WA
                                                                       
5.  
Avalon Sunset
    N/A       82       20,802       N/A       12,750     Fixed     5.41 %   Feb 2014     1,938  
   
Los Angeles, CA
                                                                       
6.  
Avalon at Poplar Creek
    N/A       196       27,847       N/A       16,500     Fixed     4.83 %   Oct 2012     2,508  
   
Chicago, IL
                                                                       
7.  
Avalon at Civic Center (4)
    N/A       192       42,783       N/A       23,805     Fixed     5.29 %   Aug 2013     3,618  
   
Norwalk, CA
                                                                       
8.  
Avalon Paseo Place
    N/A       134       24,621       N/A       11,800     Fixed     5.74 %   Nov 2013     1,794  
   
Fremont, CA
                                                                       
9.  
Avalon at Yerba Buena
    N/A       160       66,786       N/A       41,500     Fixed     5.88 %   Mar 2014     6,308  
   
San Francisco, CA
                                                                       
10.  
Avalon at Aberdeen Station
    N/A       290       58,219       N/A       39,842     Fixed     5.64 %   Sep 2013     6,056  
   
Aberdeen, NJ
                                                                       
11.  
The Springs
    N/A       320       47,647       N/A       26,000     Fixed     6.06 %   Oct 2014     3,952  
   
Corona, CA
                                                                       
12.  
The Covington
    N/A       256       33,068       N/A       17,243     Fixed     5.43 %   Jan 2014     2,621  
   
Lombard, IL
                                                                       
13.  
Avalon Cedar Place
    N/A       156       22,645       N/A       12,000     Fixed     5.68 %   Feb 2014     1,824  
   
Columbia, MD
                                                                       
14.  
Avalon Centerpoint
    N/A       392       79,027       N/A       45,000     Fixed     5.74 %   Dec 2013     6,840  
   
Baltimore, MD
                                                                       
15.  
Middlesex Crossing
    N/A       252       37,808       N/A       24,100     Fixed     5.49 %   Dec 2013     3,663  
   
Billerica, MA
                                                                       
16.  
Avalon Crystal Hill
    N/A       168       38,104       N/A       24,500     Fixed     5.43 %   Dec 2013     3,724  
   
Ponoma, NY
                                                                       
17.  
Skyway Terrace
    N/A       348       74,685       N/A       37,500     Fixed     6.11 %   Mar 2014     5,700  
   
San Jose, CA
                                                                       
18.  
Avalon Rutherford Station
    N/A       108       36,374       N/A       20,587     Fixed     6.13 %   Sept 2016     3,129  
   
East Rutherford, NJ
                                                                       
19.  
South Hills Apartments
    N/A       85       21,827       N/A       11,762     Fixed     5.92 %   Dec 2013     1,788  
   
West Covina, CA
                                                                       
20.  
Colonial Towers/South Shore Manor
    N/A       211       21,765       N/A       13,455     Fixed     5.12 %   Mar 2015     2,045  
   
Weymouth, MA
                                                                       
   
 
                                                           
   
 
    15.2 %     4,229     $ 782,066     $ 118,838     $ 470,208                             $ 71,472  
   
 
                                                           
Other Operating Joint Ventures                                                                        
1.  
Avalon Chrystie Place I (5)
    20.0 %     361       128,855       23,658       117,000     Variable     1.88 %   Nov 2036     23,400  
   
New York, NY
                                                                       
2.  
Avalon at Mission Bay North II (5)
    25.0 %     313       123,685       29,520       105,000     Fixed     6.02 %   Dec 2015     26,250  
   
San Francisco, CA
                                                                       
3.  
Avalon Del Rey
    30.0 %     309       70,002       19,301       40,845     Variable     4.10 %   Sept 2009     12,254  
   
Los Angeles, CA
                                                                       
Other Development Joint Ventures                                                                        
1.  
Aria at Hathorne (6) (7)
    50.0 %     64       N/A     $ 4,576       4,081     Variable     4.88 %   June 2010   $ 2,041  
   
Danvers, MA
                                                                       
   
 
                                                             
   
 
            1,047     $ 322,542     $ 77,055     $ 266,926                             $ 63,945  
   
 
                                                             
   
 
            5,276     $ 1,104,608     $ 195,893     $ 737,134                             $ 135,417  
   
 
                                                             
 
(1)
  See Attachment #13 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
   
(2)
  These unconsolidated real estate investments are accounted for under the equity method of accounting. AVB Book Value Investment represents the Company’s recorded equity investment plus the Company’s pro rata share of outstanding debt.
 
   
(3)
  The Company has not guaranteed the debt of its unconsolidated investees and bears no responsibility for the repayment, other than the construction completion and related financing guarantee for Avalon Chrystie Place I associated with the construction completion and occupancy certificate.
 
   
(4)
  This community’s debt is a combination of two separate fixed rate loans which both mature in August 2013. The first loan totals $18,154 at a 5.04% interest rate and was assumed by the Fund upon purchase of this community. The second loan was procured in connection with the acquisition in the amount of $5,652 at a 6.08% interest rate. The rate listed in the table above represents a weighted average interest rate.
 
   
(5)
  After the venture makes certain threshold distributions to the third-party partner, the Company generally receives 50% of all further distributions.
 
   
(6)
  The Company has contributed land at a stepped up basis as its only capital contribution to this development. The Company is not guaranteeing the construction or acquisition loans, nor is it responsible for any cost over runs until certain thresholds are satisfied. The outstanding debt consists of two separate variable rate loans at a 4.88% interest rate. The first loan totals $2,830 and the second loan totals $1,251.
 
   
(7)
  After the venture makes certain threshold distributions to the Company, AVB receives 50% of all further distributions.

 


 

 
 
Attachment 12
AvalonBay Communities, Inc.
Summary of Disposition Activity (1) as of March 31, 2008

(Dollars in thousands)
                                                         
    Weighted                     Accumulated             Weighted Average      
Number of   Average     Gross Sales             Depreciation     Economic     Initial Year   Weighted Average
Communities Sold   Holding Period (2)     Price     GAAP Gain     and Other     Gain (3)     Mkt. Cap Rate (2) (3)   Unleveraged IRR (2) (3)
1998:
                                                       
9 Communities
          $ 170,312     $ 25,270     $ 23,438     $ 1,832       8.1 %     16.2 %
 
                                               
 
                                                       
1999:
                                                       
16 Communities
          $ 317,712     $ 47,093     $ 27,150     $ 19,943       8.3 %     12.1 %
 
                                               
 
                                                       
2000:
                                                       
8 Communities
          $ 160,085     $ 40,779     $ 6,262     $ 34,517       7.9 %     15.3 %
 
                                               
 
                                                       
2001:
                                                       
7 Communities
          $ 241,130     $ 62,852     $ 21,623     $ 41,229       8.0 %     14.3 %
 
                                               
 
                                                       
2002:
                                                       
1 Community
          $ 80,100     $ 48,893     $ 7,462     $ 41,431       5.4 %     20.1 %
 
                                               
 
                                                       
2003:
                                                       
12 Communities, 1 Land Parcel (4)
          $ 460,600     $ 184,438     $ 52,613     $ 131,825       6.3 %     15.3 %
 
                                               
 
                                                       
2004:
                                                       
5 Communities, 1 Land Parcel
          $ 250,977     $ 122,425     $ 19,320     $ 103,105       4.8 %     16.8 %
 
                                               
 
                                                       
2005:
                                                       
7 Communities, 1 Office Building,
3 Land Parcels (5)
          $ 382,720     $ 199,766     $ 14,929     $ 184,838       3.8 %     18.0 %
 
                                               
 
                                                       
2006:
                                                       
4 Communities, 3 Land Parcels (6)
          $ 281,485     $ 117,539     $ 21,699     $ 95,840       4.6 %     15.2 %
 
                                               
 
                                                       
2007:
                                                       
5 Communities, 1 Land Parcel (7)
          $ 273,896     $ 163,352     $ 17,588     $ 145,764       4.6 %     17.8 %
 
                                               
 
                                                       
2008:
                                                       
No sales as of March 31, 2008
          $ —     $ —     $ —     $ -                  
 
                                               
 
                                                       
1998 - 2008 Total
    6.6     $ 2,619,017     $ 1,012,407     $ 212,084     $ 800,324       6.0 %     15.8 %
 
                                               
 
(1)   Activity excludes dispositions to joint venture entities in which the Company retains an economic interest.
 
(2)   For purposes of this attachment, land sales and the disposition of an office building are not included in the calculation of Weighted Average Holding Period, Weighted Average Initial Year Market Cap Rate, or Weighted Average Unleveraged IRR.
 
(3)   See Attachment #13 — Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.
 
(4)   2003 GAAP gain, for purposes of this attachment, includes $23,448 related to the sale of a community in which the Company held a 50% membership interest.
 
(5)   2005 GAAP gain includes the recovery of an impairment loss of $3,000 recorded in 2002 related to one of the land parcels sold in 2005. This loss was recorded to reflect the land at fair value based on its entitlement status at the time it was determined to be planned for disposition.
 
(6)   2006 GAAP gain, for purposes of this attachment, includes $6,609 related to the sale of a community in which the Company held a 25% equity interest.
 
(7)   2007 GAAP gain, for purposes of this attachment, includes $56,320 related to the sale of a partnership interest in which the Company held a 50% equity interest.
 

 


 

 
Attachment 13
AvalonBay Communities, Inc.
Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms
This release, including its attachments, contains certain non-GAAP financial measures and other terms. The definition and calculation of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. The non-GAAP financial measures referred to below should not be considered an alternative to net income as an indication of our performance. In addition, these non-GAAP financial measures do not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered as an alternative measure of liquidity or as indicative of cash available to fund cash needs.
FFO is determined based on a definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). FFO is calculated by the Company as net income or loss computed in accordance with GAAP, adjusted for gains or losses on sales of previously depreciated operating communities, extraordinary gains or losses (as defined by GAAP), cumulative effect of a change in accounting principle and depreciation of real estate assets, including adjustments for unconsolidated partnerships and joint ventures. Management generally considers FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses related to dispositions of previously depreciated operating communities and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies. A reconciliation of FFO to net income is as follows (dollars in thousands):
 
                 
    Q1     Q1  
    2008     2007 (1)  
Net income
  $ 48,450     $ 46,520  
Dividends attributable to preferred stock
    (2,175 )     (2,175 )
Depreciation — real estate assets, including discontinued operations and joint venture adjustments
    49,785       44,685  
Minority interest, including discontinued operations
    57       88  
Gain on sale of previously depreciated real estate assets
    —       —  
 
           
FFO attributable to common stockholders
  $ 96,117     $ 89,118  
 
           
 
               
Average shares outstanding — diluted
    77,440,892       79,930,748  
EPS — diluted
  $ 0.60     $ 0.56  
 
           
FFO per common share — diluted
  $ 1.24     $ 1.11  
 
           
 
 
(1)   FFO per common share — diluted includes $0.01 for the three months ended March 31, 2007 related to the sale of a land parcel.

 


 

 
Attachment 13 (continued)
Projected FFO, as provided within this release in the Company’s outlook, is calculated on a basis consistent with historical FFO, and is therefore considered to be an appropriate supplemental measure to projected net income from projected operating performance. A reconciliation of the range provided for Projected FFO per share (diluted) for the second quarter of 2008 to the range provided for projected EPS (diluted) is as follows:
 
                 
    Low     High  
    range     range  
Projected EPS (diluted) — Q2 08
  $ 1.94     $ 1.98  
Projected depreciation (real estate related)
    0.66       0.68  
Projected gain on sale of operating communities
    (1.38 )     (1.40 )
 
           
Projected FFO per share (diluted) — Q2 08
  $ 1.22     $ 1.26  
 
           
 
NOI is defined by the Company as total property revenue less direct property operating expenses (including property taxes), and excludes corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management, net interest expense, general and administrative expense, joint venture income, minority interest expense, depreciation expense, gain on sale of real estate assets and income from discontinued operations. The Company considers NOI to be an appropriate supplemental measure to net income of operating performance of a community or communities because it helps both investors and management to understand the core operations of a community or communities prior to the allocation of corporate-level property management overhead or general and administrative costs. This is more reflective of the operating performance of a community, and allows for an easier comparison of the operating performance of single assets or groups of assets. In addition, because prospective buyers of real estate have different overhead structures, with varying marginal impact to overhead by acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or groups of assets.

 


 

 
Attachment 13 (continued)
A reconciliation of NOI (from continuing operations) to net income, as well as a breakdown of NOI by operating segment, is as follows (dollars in thousands):
 
                 
    Q1     Q1  
    2008     2007  
Net income
  $ 48,450     $ 46,520  
Indirect operating expenses, net of corporate income
    8,458       6,996  
Investments and investment management
    1,719       2,024  
Interest expense, net
    28,005       23,186  
General and administrative expense
    8,119       6,780  
Joint venture income and minority interest
    72       535  
Depreciation expense
    47,682       42,014  
Gain on sale of real estate assets
    —       (545 )
Income from discontinued operations
    (1,720 )     (2,315 )
 
           
NOI from continuing operations
  $ 140,785     $ 125,195  
 
           
 
               
Established:
               
New England
  $ 19,897     $ 19,639  
Metro NY/NJ
    25,568       25,137  
Mid-Atlantic/Midwest
    20,277       19,566  
Pacific NW
    3,824       3,440  
No. California
    25,626       23,139  
So. California
    11,106       10,903  
 
           
Total Established
    106,298       101,824  
 
           
Other Stabilized
    18,889       12,437  
Development/Redevelopment
    15,598       10,934  
 
           
NOI from continuing operations
  $ 140,785     $ 125,195  
 
           
 
NOI as reported by the Company does not include the operating results from discontinued operations (i.e., assets sold during the period January 1, 2007 through March 31, 2008). A reconciliation of NOI from communities sold or classified as discontinued operations to net income for these communities is as follows (dollars in thousands):
 
                 
    Q1     Q1  
    2008     2007  
Income from discontinued operations
  $ 1,720     $ 2,315  
Interest expense, net
    186       692  
Depreciation expense
    1,110       2,080  
 
           
NOI from discontinued operations
  $ 3,016     $ 5,087  
 
           
 
               
NOI from assets sold
  $ —     $ 2,454  
NOI from assets held for sale
    3,016       2,633  
 
           
NOI from discontinued operations
  $ 3,016     $ 5,087  
 
           
 

 


 

 
Attachment 13 (continued)
Projected NOI, as used within this release for certain Development and Redevelopment Communities and in calculating the Initial Year Market Cap Rate for dispositions, represents management’s estimate, as of the date of this release (or as of the date of the buyer’s valuation in the case of dispositions), of projected stabilized rental revenue minus projected stabilized operating expenses. For Development and Redevelopment Communities, Projected NOI is calculated based on the first year of Stabilized Operations, as defined below, following the completion of construction. In calculating the Initial Year Market Cap Rate, Projected NOI for dispositions is calculated for the first twelve months following the date of the buyer’s valuation. Projected stabilized rental revenue represents management’s estimate of projected gross potential (based on leased rents for occupied homes and Market Rents, as defined below, for vacant homes) minus projected economic vacancy and adjusted for concessions. Projected stabilized operating expenses do not include interest, income taxes (if any), depreciation or amortization, or any allocation of corporate-level property management overhead or general and administrative costs. The weighted average Projected NOI as a percentage of Total Capital Cost is weighted based on the Company’s share of the Total Capital Cost of each community, based on its percentage ownership.
Management believes that Projected NOI of the development and redevelopment communities, on an aggregated weighted average basis, assists investors in understanding management’s estimate of the likely impact on operations of the Development and Redevelopment Communities when the assets are complete and achieve stabilized occupancy (before allocation of any corporate-level property management overhead, general and administrative costs or interest expense). However, in this release the Company has not given a projection of NOI on a company-wide basis. Given the different dates and fiscal years for which NOI is projected for these communities, the projected allocation of corporate-level property management overhead, general and administrative costs and interest expense to communities under development or redevelopment is complex, impractical to develop, and may not be meaningful. Projected NOI of these communities is not a projection of the Company’s overall financial performance or cash flow. There can be no assurance that the communities under development or redevelopment will achieve the Projected NOI as described in this release.
Rental Revenue with Concessions on a Cash Basis is considered by the Company to be a supplemental measure to rental revenue in conformity with GAAP to help investors evaluate the impact of both current and historical concessions on GAAP based rental revenue and to more readily enable comparisons to revenue as reported by other companies. In addition, rental revenue (with concessions on a cash basis) allows an investor to understand the historical trend in cash concessions.
A reconciliation of rental revenue from Established Communities in conformity with GAAP to rental revenue (with concessions on a cash basis) is as follows (dollars in thousands):
 
                 
    Q1     Q1  
    2008     2007  
Rental revenue (GAAP basis)
  $ 155,561     $ 149,010  
Concessions amortized
    1,357       1,328  
Concessions granted
    (1,144 )     (1,313 )
 
           
 
               
Rental revenue (with concessions on a cash basis)
  $ 155,774     $ 149,025  
 
           
 
               
% change — GAAP revenue
            4.4 %
% change — cash revenue
            4.5 %
 
Economic Gain is calculated by the Company as the gain on sale in accordance with GAAP, less accumulated depreciation through the date of sale and any other non-cash adjustments that may be required under GAAP accounting. Management generally considers Economic Gain to be an appropriate supplemental measure to gain on sale in accordance with GAAP because it helps investors to understand the relationship between the cash proceeds from a sale and the cash invested in the sold community. The Economic Gain for each of the communities presented is estimated based on their respective final settlement statements. A reconciliation of Economic Gain to gain on sale in accordance with GAAP for both the three months ended March 31, 2008 as well as prior years’ activities is presented on Attachment 12.
Interest Coverage is calculated by the Company as EBITDA from continuing operations, excluding land gains and gain on the sale of investments in real estate joint ventures, divided by the sum of interest expense, net, and preferred dividends. Interest Coverage is presented by the Company because it provides rating agencies and investors an additional means of comparing our ability to service debt obligations to that of other companies. EBITDA is defined by the Company as net income before interest income and expense, income taxes, depreciation and amortization.

 


 

 
Attachment 13 (continued)
A reconciliation of EBITDA and a calculation of Interest Coverage for the first quarter of 2008 are as follows (dollars in thousands):
 
         
Net income
  $ 48,450  
Interest expense, net
    28,005  
Interest expense (discontinued operations)
    186  
Depreciation expense
    47,682  
Depreciation expense (discontinued operations)
    1,110  
 
     
 
       
EBITDA
  $ 125,433  
 
     
 
       
EBITDA from continuing operations
  $ 122,417  
EBITDA from discontinued operations
    3,016  
 
     
 
       
EBITDA
  $ 125,433  
 
     
 
       
EBITDA from continuing operations
  $ 122,417  
 
       
Interest expense, net
    28,005  
Dividends attributable to preferred stock
    2,175  
 
     
Interest charges
    30,180  
 
     
 
       
Interest coverage
    4.1  
 
     
 
Total Capital Cost includes all capitalized costs projected to be or actually incurred to develop the respective Development or Redevelopment Community, or Development Right, including land acquisition costs, construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, all as determined in accordance with GAAP. For Redevelopment Communities, Total Capital Cost excludes costs incurred prior to the start of redevelopment when indicated. With respect to communities where development or redevelopment was completed in a prior or the current period, Total Capital Cost reflects the actual cost incurred, plus any contingency estimate made by management. Total Capital Cost for communities identified as having joint venture ownership, either during construction or upon construction completion, represents the total projected joint venture contribution amount. For joint ventures not in construction as presented on Attachment 11, Total Capital Cost is equal to gross real estate cost.
Initial Year Market Cap Rate is defined by the Company as Projected NOI of a single community for the first 12 months of operations (assuming no repositioning), less estimates for non-routine allowance of approximately $200 — $300 per apartment home, divided by the gross sales price for the community. Projected NOI, as referred to above, represents management’s estimate of projected rental revenue minus projected operating expenses before interest, income taxes (if any), depreciation, amortization and extraordinary items. For this purpose, management’s projection of operating expenses for the community includes a management fee of 3.0% — 3.5%. The Initial Year Market Cap Rate, which may be determined in a different manner by others, is a measure frequently used in the real estate industry when determining the appropriate purchase price for a property or estimating the value for a property. Buyers may assign different Initial Year Market Cap Rates to different communities when determining the appropriate value because they (i) may project different rates of change in operating expenses and capital expenditure estimates and (ii) may project different rates of change in future rental revenue due to different estimates for changes in rent and occupancy levels. The weighted average Initial Year Market Cap Rate is weighted based on the gross sales price of each community.
Unleveraged IRR on sold communities refers to the internal rate of return calculated by the Company considering the timing and amounts of (i) total revenue during the period owned by the Company and (ii) the gross sales price net of selling costs, offset by (iii) the undepreciated capital cost of the communities at the time of sale and (iv) total direct operating expenses during the period owned by the Company. Each of the items (i), (ii), (iii) and (iv) are calculated in accordance with GAAP.
The calculation of Unleveraged IRR does not include an adjustment for the Company’s general and administrative expense, interest expense, or corporate-level property management and other indirect operating expenses.

 


 

 
Attachment 13 (continued)
Therefore, Unleveraged IRR is not a substitute for net income as a measure of our performance. Management believes that the Unleveraged IRR achieved during the period a community is owned by the Company is useful because it is one indication of the gross value created by the Company’s acquisition, development or redevelopment, management and sale of a community, before the impact of indirect expenses and Company overhead. The Unleveraged IRR achieved on the communities as cited in this release should not be viewed as an indication of the gross value created with respect to other communities owned by the Company, and the Company does not represent that it will achieve similar Unleveraged IRRs upon the disposition of other communities. The weighted average Unleveraged IRR for sold communities is weighted based on all cash flows over the holding period for each respective community, including net sales proceeds.
Leverage is calculated by the Company as total debt as a percentage of Total Market Capitalization. Total Market Capitalization represents the aggregate of the market value of the Company’s common stock, the market value of the Company’s operating partnership units outstanding (based on the market value of the Company’s common stock), the liquidation preference of the Company’s preferred stock and the outstanding principal balance of the Company’s debt. Management believes that Leverage can be one useful measure of a real estate operating company’s long-term liquidity and balance sheet strength, because it shows an approximate relationship between a company’s total debt and the current total market value of its assets based on the current price at which the Company’s common stock trades. Changes in Leverage also can influence changes in per share results. A calculation of Leverage as of March 31, 2008 is as follows (dollars in thousands):
 
         
Total debt
  $ 3,680,961  
 
     
Common stock
    7,429,330  
Preferred stock
    100,000  
Operating partnership units
    6,179  
Total debt
    3,680,961  
 
     
Total market capitalization
    11,216,470  
 
     
 
       
Debt as % of capitalization
    32.8 %
 
     
 
Because Leverage changes with fluctuations in the Company’s stock price, which occur regularly, the Company’s Leverage may change even when the Company’s earnings, interest and debt levels remain stable. Investors should also note that the net realizable value of the Company’s assets in liquidation is not easily determinable and may differ substantially from the Company’s Total Market Capitalization.
Unencumbered NOI as calculated by the Company represents NOI generated by real estate assets unencumbered by either outstanding secured debt or land leases (excluding land leases with purchase options that were put in place for governmental incentives or tax abatements) as a percentage of total NOI generated by real estate assets. The Company believes that current and prospective unsecured creditors of the Company view Unencumbered NOI as one indication of the borrowing capacity of the Company. Therefore, when reviewed together with the Company’s Interest Coverage, EBITDA and cash flow from operations, the Company believes that investors and creditors view Unencumbered NOI as a useful supplemental measure for determining the financial flexibility of an entity. A calculation of Unencumbered NOI for the three months ended March 31, 2008 is as follows (dollars in thousands):
 
         
NOI for Established Communities
  $ 106,298  
NOI for Other Stabilized Communities
    18,889  
NOI for Development/Redevelopment Communities
    15,598  
NOI for discontinued operations
    3,016  
 
     
Total NOI generated by real estate assets
    143,801  
NOI on encumbered assets
    28,469  
 
     
NOI on unencumbered assets
    115,332  
 
     
 
       
Unencumbered NOI
    80.2 %
 
     
 
Established Communities are identified by the Company as 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
 

 


 

 
Attachment 13 (continued)
Operations, as defined below, as of the beginning of the prior year. Therefore, for 2008, Established Communities are consolidated communities that have Stabilized Operations as of January 1, 2007 and are not conducting or planning to conduct substantial redevelopment activities within the current year. Established Communities do not include communities that are currently held for sale or planned for disposition during the current year.
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.
Redevelopment Communities are communities where substantial redevelopment is in progress or is planned to begin during the current year. For wholly-owned communities, 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 community’s acquisition cost. The definition of substantial redevelopment may differ for communities that are not wholly-owned.
Average Rental Rates are calculated by the Company as rental revenue in accordance with GAAP, divided by the weighted average number of occupied apartment homes.
Economic Occupancy is defined as total possible revenue less vacancy loss as a percentage of total possible revenue. Total possible revenue is determined by valuing occupied units at contract rates and vacant units at Market Rents. Vacancy loss is determined by valuing vacant units at current Market Rents. By measuring vacant apartments at their Market Rents, Economic Occupancy takes into account the fact that apartment homes of different sizes and locations within a community have different economic impacts on a community’s gross revenue.
Market Rents as reported by the Company are based on the current market rates set by the managers of the Company’s communities based on their experience in renting their communities’ apartments and publicly available market data. Trends in market rents for a region as reported by others could vary. Market Rents for a period are based on the average Market Rents during that period and do not reflect any impact for cash concessions.
Non-Revenue Generating Capex represents capital expenditures that will not directly result in revenue earnings or expense savings.
Stabilized/Restabilized Operations is defined as the earlier of (i) attainment of 95% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.
Average Rent per Home, as calculated for certain Development and Redevelopment Communities in lease-up, reflects (i) actual average leased rents for those apartments leased through the end of the quarter net of estimated stabilized concessions, (ii) estimated market rents net of comparable concessions for all unleased apartments and (iii) includes actual and estimated other rental revenue. For Development and Redevelopment Communities not yet in lease-up, Average Rent per Home reflects management’s projected rents.
Development Rights are development opportunities in the early phase of the development process for which the Company either has an option to acquire land or enter into a leasehold interest, for which the Company is the buyer under a long-term conditional contract to purchase land or where the Company owns land to develop a new community. The Company capitalizes related predevelopment costs incurred in pursuit of new developments for which future development is probable.