PRESENTATION MATERIALS
Published on March 11, 1998
EXHIBIT 99.5
Avalon Bay Communities, Inc.
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Transaction Summary
These materials contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Act of 1934. The words "except," "anticipate," "estimate" and other similar
expressions which are predictions of or indicate future events and trends
and which do not relate solely to historical matters, including information
concerning the companies' future FFO estimates, identify forward-looking
statements. Reliance should not be placed on forward-looking statements
because they involve known and unknown risks, uncertainties and other
factors which are in some cases beyond the control of the companies and may
cause the actual results, performance or achievements of the companies to
differ materially from anticipated future results, performance or
achievements expressed or implied by such forward looking statements.
Transaction Summary
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Overview
* Preeminent Luxury Apartment Company
* National High "Barrier-to-Entry" Strategy
* Significant Presence in Top 10 Apartment Markets
* Expanded Construction and Reconstruction Capabilities
* $3.7 Billion Total Market Capitalization
* Superior Shareholder Value Creation
Transaction Summary
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* Company Name: Avalon Bay Communities, Inc.
* Exchange Ratio: .7683 BYA Shares Issued per AVN Share
* Accretion: $0.15 per Share Estimated in 1999
* Dividend: Increased from $1.68 to $2.04 per Share
* Accounting Treatment: Purchase Accounting
* Board Composition: 9 Independents, 3 Members of Senior Management
* Headquarters: Alexandria, VA; Super-regional Offices in
San Jose, CA and Wilton, CT
* Anticipated Closing: June 1998
Transaction Summary
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Office of the Executive
Executive Chairman
Gilbert M. Meyer
Chief Executive Officer
Richard L. Michaux
(Line to Meyer)
President & C.O.O.
Charles H. Berman
(Line to Michaux)
Transaction Summary
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Senior Management
Executive Chairman
Gilbert M. Meyer
(line to Meyer)
Chief Executive Officer
Richard L. Michaux
(line to Michaux)
President & C.O.O.
Charles H. Berman
(line to Michaux)
CFO Development/ Property Operations Investments
Thomas J. Sargeant Acquisition Robert H. Slater Jeffrey B. Van Horn
(line to Michaux) Bryce Blair (line to Berman) (line to Michaux)
(line to Berman)
Integration Construction Administration
Max L. Gardner Morton L. Newman Debra Lynn Shotwell
(line to Michaux) (line to Berman) (line to Michaux)
Transaction Summary
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Merger Integration
* Management and Board Committed to Integration Process
* Merger Iintegration Firms Retained
* "Best Practices" Focus
* Relocation of President & C.O.O.
* Scaleable Information Systems
* Waiving Acceleration of Options and Grants
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Strategic Rationale
Strategic Rationale - Common Heritage
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* Identical High "Barrier-to-Entry" Strategies
* Similar Backgrounds as Investments Developers/Builders
* Consistent High Quality Asset and Resident Profile
* "Superior Resident Service" Ethic
* Similar Capital Structures and Financing Strategies
The Combined Company
Community Locations
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[Map of the United States indicating development
community, community, pre-sale community, corporate headquarters,
regional office]
Strategic Rationale - Market Strength
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1998 Top Ten Apartment Markets
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Metropolitan Area Bay Avalon Combined
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1. San Francisco x x
2. Orange County x x
3. Boston x x
4. San Jose x x
5. New York/Nassau Suffolk x x
6. San Diego x x
7. Oakland/East Bay x x
8. Seattle x x x
9. Los Angeles x x
10. Minneapolis x x
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Source: Jan/Feb Multi-Housing News, 1998.
Strategic Rationale -
Improved Geographic Diversification
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[Pie chart indicating geographic diversification]
Strategic Rationale - Management
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Outstanding Management
* "Local Sharpshooter" in All Markets
* Unparalleled Management Expertise
- Acquisition
- Development
- Construction
- Reconstruction
- Property Operations
* Significant Management Bench Strength
* Incentive Compensation to Encourage Employee Retention
Strategic Rationale - Credit Profile
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Improved Financial Flexibility
* Strong Financial Ratios
* Improved Stability of Cash Flows
* Broader Geographic Diversification
* Improved Liquidity
* Positive Response from Rating Agencies
Strategic Rationale - Improved Liquidity
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[Graph indicating Average Monthly Trading Volume of Bay ($46.71 million),
Avalon ($42.07 million) and Combined ($88.78 million)]
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Note: Average monthly trading volume for 1997
multiplied by the average daily price for the year.
Strategic Rationale - Synergies
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* Lower Cost of Capital
* Lower General and Administrative Expenses
- Corporate Governance
- Information and Accounting Systems
- Telecommunication
* Operating Efficiencies Due to Critical Mass
- Operating Expenses (Economies of Scale)
- Bulk Purchasing
- Insurance
- Alternative Revenue Sources
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Value Creation
Value Creation - Infrastructure
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* Coast-to-Coast Presence
* 11 Regional Offices and 1,600 Employees
* Operating History in 29 Supply-Constrained Markets
* Local Development and Acquisition Expertise
* Construction and Reconstruction Capabilities
* Proven Scaleable Systems
Value Creation - Financial Strength
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* Intelligent Balance Sheet
- Minimal Floating Rate Debt
- Low Leverage
- Staggered Maturities
* $60 Million FFO in Excess of Dividends in 1998
* $575 Million Existing Credit Lines
* Proven Access to Capital
Value Creation - Internal
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* 140 Communities; 40,506 Apartment Homes
* 8%+ "Same Store" FFO Growth
* $0.32 per Share Loss to Lease
* $0.05 per Share Loss to Reconstruction
* Greater Base for Non-Rental Revenue
Value Creation - External
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New Construction
($ in millions) Number of Number of Approximate Weighted Average
Communities Homes Cost Return
----------- -------- -------------- --------------
Completed 20 5,273 $554 12.0%(1)
In Construction 16 4,533 668 10.3%(2)
In Planning 19 5,200 694 N/A
----- --------- ---------- -------
Total 55 15,006 $1,916
=== ====== ======
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(1) Current Yield.
(2) Budgeted Yield.
Value Creation - External
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Reconstruction
Total
($ in Total
millions) Number of Number of Purchase Reconstructed Weighted Average
Communities Homes Price Cost Return
---------- ------ -------- ----------- ------------
Completed 18 4,358 $310 $ 349 10.2%(1)
In Re-
construction 24 7,455 563 720 9.4%(2)
Total 42 11,813 $873 $ 1,069
==== ======= ==== =======
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(1) Current Yield.
(2) Budgeted Yield.
Value Creation - Strategy
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* Focus on High Barrier-to-Entry Markets
* Reconstruction in Midwest and Eastern Regions
* Increase Construction and Reconstruction in
Pacific Northwest
* New Construction in the Midwest and Southern
California
* Urban, In-Fill Communities
* Establish Position as Buyer of Choice
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Financial Highlights
Financial Highlights - Capital Structure
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[Pie chart indicating capital structure]
Preferred Equity 9%
Common Equity 63% Debt 28%
$3.7 Billion Total Market Capitalization
Financial Highlights - Debt Composition
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[Pie chart indicating debt composition]
Fixed Rate Fixed Rate
Secured Debt Unsecured Debt
6% 45%
Fixed Rate
Tax-Exempt Debt Unsecured
36% Variable Rate Credit Facility
Tax-Exempt Debt 7%
6%
$1.0 Billion Total Debt
Financial Highlights - Debt Maturities
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[Graph indicating debt maturities for the years 1999
through 2037]
Financial Highlights - Financial Ratios
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Pro Forma 1997 (1)
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Fixed Charge Coverage (2) 3.5x
Debt to Total Market Cap 28%
LT Floating Rate Debt to Total Market Cap 2%
Debt & Preferred to Total Market Cap 37%
FFO Payout Ratio 69%
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(1) Pro forma as of December 31, 1997 as adjusted for offerings by either
company. Fixed charge coverage and FFO payout ratio are for the fourth
quarter of 1997.
(2) Without capitalized interest.
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Summary
Summary
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* Preeminent Luxury Apartment Home Company in the
U.S.
* Significant Presence in Top 10 Apartment Markets
* Shareholder Value Creation
- $0.07 per Share Accretion Estimated for
Remainder of 1998
- $0.15 per Share Accretion Estimated for 1999
- $0.36 Dividend Increase
- Lower Cost of Capital and Expanded Growth
Platform