Form: 8-K

Current report filing

October 24, 2012

Exhibit 99.2

 

 

 

 

For Immediate News Release

October 24, 2012

 

AVALONBAY COMMUNITIES, INC. ANNOUNCES

THIRD QUARTER 2012 OPERATING RESULTS


(Arlington, VA)  AvalonBay Communities, Inc. (NYSE: AVB) (the “Company”) reported today that Net Income Attributable to Common Stockholders (“Net Income”) for the quarter ended September 30, 2012 was $86,844,000. This resulted in Earnings per Share — diluted (“EPS”) of $0.89 for the quarter ended September 30, 2012, compared to EPS of $0.49 for the comparable period of 2011, an increase of 81.6%. For the nine months ended September 30, 2012, EPS was $3.13 compared to $1.33 for the comparable period of 2011, an increase of 135.3%.

 

The increase in EPS for the quarter ended September 30, 2012 over the prior year period is due primarily to an increase in Net Operating Income (“NOI”) from existing and newly developed and acquired communities, a gain on the acquisition of an unconsolidated entity, and a decline in net interest expense.  The increase in EPS for the nine months ended September 30, 2012 over the prior year period is due primarily to an increase in real estate sales and related gains in 2012, increased NOI from existing and newly developed and acquired communities, and a decline in net interest expense.

 

Funds from Operations attributable to common stockholders - diluted (“FFO”) per share for the quarter ended September 30, 2012 increased 23.1% to $1.44 from $1.17 for the comparable period of 2011.  FFO per share for the nine months ended September 30, 2012 increased 19.8% to $4.05 from $3.38 for the comparable period of 2011.   Adjusting for the non-routine items detailed in Attachment 14, FFO per share would have increased by 20.5% for the three months ended September 30, 2012 and 20.2% for the nine months ended September 30, 2012 over the prior year periods.

 

The Company’s FFO per share for the third quarter of 2012 exceeded the midpoint of the range for its third quarter 2012 outlook provided in July 2012. The better than expected results were driven by the Company’s recognition of its promoted interest in conjunction with the acquisition of our partner’s 70% interest in Avalon Del Rey, discussed in this release. Better than expected revenue from existing and newly developed communities also contributed to the outperformance.  These favorable variances were

offset in part by the timing of the Company’s capital markets activities, primarily interest and associated costs from the timing of the Company’s third quarter 2012 unsecured notes offering, which the Company previously expected would occur in the fourth quarter of 2012.

 

The following table provides a comparison of the Company’s actual results to the outlook provided in its second quarter 2012 earnings release in July 2012:

 

 

 

 

 

Third Quarter 2012 Results

Comparison to July 2012 Outlook

 

 

 

 

 

 

Per Share

 

 

 

 

 

FFO per share 3Q 2012 - July 2012 Outlook (1)

 

$      1.40 

 

 

 

 

 

Favorable Community Revenue

 

0.01 

 

 

 

 

 

Timing of capital markets activity (2)

 

(0.01)

 

 

 

 

 

Recognition of promoted interest in joint venture

 

0.04 

 

 

 

 

 

FFO per share 3Q 2012 reported results

 

$      1.44 

 

 

 

 

 

(1) Represents the mid-point of the Company’s July 2012 Outlook.

 

(2) Composed primarily of costs from the Company’s September 2012  $450 million unsecured notes offering.

 

 

 

Commenting on the Company’s results, Tim Naughton, CEO and President, said, “We had a strong third quarter as evidenced by 20% FFO per share growth. Operating fundamentals remain favorable as same-store NOI growth topped 7% for the sixth consecutive quarter and recently completed development communities continued to exceed our expectations.”

 

Operating Results for the Quarter Ended September 30, 2012 Compared to the Prior Year Period

 

For the Company, including discontinued operations, total revenue increased by $18,716,000, or 7.4% to $271,904,000.  For Established Communities, rental revenue increased 5.6%, attributable to increases in Average Rental Rates of 5.1% and Economic Occupancy of 0.5%. As a result, total revenue for Established Communities increased $10,424,000 to $194,883,000. Operating expenses for Established


 

 

 

Copyright Ó 2012 AvalonBay Communities, Inc. All Rights Reserved

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Communities increased $1,547,000, or 2.6%, to $60,316,000. Accordingly, NOI for Established Communities increased by 7.1%, or $8,876,000, to $134,567,000.

 

The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities for the third quarter of 2012 compared to the third quarter of 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2012 Compared to Q3 2011

 

 

 

Rental

 

 

Operating

 

 

 

 

 

% of

 

 

 

 

Revenue

 

 

Expenses

 

 

 

NOI

 

 

 

NOI (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New England

 

4.0%

 

 

6.3%

 

 

2.7%

 

 

18.9%

 

 

Metro NY/NJ

 

5.0%

 

 

3.5%

 

 

5.6%

 

 

30.4%

 

 

Mid-Atlantic

 

3.8%

 

 

4.0%

 

 

3.7%

 

 

13.1%

 

 

Pacific NW

 

10.0%

 

 

(8.2%

)

 

19.6%

 

 

3.7%

 

 

No. California

 

10.5%

 

 

(2.2%

)

 

15.9%

 

 

19.7%

 

 

So. California

 

4.7%

 

 

1.7%

 

 

6.2%

 

 

14.2%

 

 

Total

 

5.6%

 

 

2.6%

 

 

7.1%

 

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Total represents each region’s % of total NOI from the Company, including discontinued operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Results for the Nine Months Ended September 30, 2012 Compared to the Prior Year Period

 

For the Company, including discontinued operations, total revenue increased by $54,407,000, or 7.4% to $788,262,000. For Established Communities, rental revenue increased 6.0%, attributable to increases in Average Rental Rates of 5.8% and Economic Occupancy of 0.2%. Total revenue for Established Communities increased $32,400,000 to $572,530,000. Operating expenses for Established Communities increased $2,466,000, or 1.4%, to $175,050,000. Accordingly, NOI for Established Communities increased by 8.1%, or $29,934,000, to $397,480,000.

 

The following table reflects the percentage changes in rental revenue, operating expenses and NOI for Established Communities for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD 2012 Compared to YTD 2011

 

 

 

Rental

 

 

Operating

 

 

 

 

 

% of

 

 

 

 

Revenue

 

 

Expenses

 

 

 

NOI

 

 

 

NOI (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New England

 

4.6%

 

 

2.7%

 

 

5.6%

 

 

19.0%

 

 

Metro NY/NJ

 

5.6%

 

 

2.1%

 

 

7.2%

 

 

29.9%

 

 

Mid-Atlantic

 

4.2%

 

 

4.4%

 

 

4.2%

 

 

13.7%

 

 

Pacific NW

 

9.1%

 

 

(0.3%

)

 

13.6%

 

 

3.6%

 

 

No. California

 

10.3%

 

 

(0.1%

)

 

14.7%

 

 

19.6%

 

 

So. California

 

4.9%

 

 

(2.8%

)

 

8.8%

 

 

14.2%

 

 

Total

 

6.0%

 

 

1.4%

 

 

8.1%

 

 

100.0%

 

 

 

(1) Total represents each region’s % of total NOI from the Company, including discontinued operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Development Activity

 

During the third quarter of 2012, the Company started the construction of four communities: Avalon at Wesmont Station II, located in Wood-Ridge, NJ, Avalon Bloomingdale, located in Bloomingdale, NJ, AVA 55 Ninth, located in San Francisco, CA and Avalon Morrison Park, located in San Jose, CA. These four communities will contain 837 apartment homes when completed, and will be developed for an estimated Total Capital Cost of $258,900,000.

 

During the third quarter of 2012, the Company completed the development of two communities: Avalon North Bergen, located in North Bergen, NJ and Avalon Ocean Avenue, located in San Francisco, CA. These two communities contain 337 apartment homes and were constructed for an aggregate Total Capital Cost of $101,100,000.

 

The Company also acquired four land parcels during the quarter ended September 30, 2012 for an aggregate purchase price of approximately $51,300,000.  The Company has started, or anticipates starting construction in 2012 and 2013 on these four land parcels.

 

Redevelopment Activity

 

During the third quarter of 2012, the Company commenced the redevelopment of The Avalon, located in Bronxville, NY.  The Avalon contains 110 apartment homes and will be redeveloped for an estimated Total Capital Cost of $8,300,000, excluding costs incurred prior to redevelopment.

 

During the third quarter of 2012, the Company completed the redevelopment of five communities:  Eaves Foster City, located in Foster City, CA, Eaves Santa Margarita, located in Rancho Santa Margarita, CA, AVA Newport, located in Costa Mesa, CA, Avalon Wilton I, located in Wilton, CT and Avalon at Lexington, located in Lexington, MA. These five communities contain 1,034 apartment homes and were redeveloped for an aggregate Total Capital Cost of $32,100,000, excluding costs incurred prior to redevelopment.

 

Acquisition Activity

 

In July 2012, the Company acquired Avalon Del Rey, a 309 apartment home community which was owned by a joint venture in which the Company held a 30% ownership interest.  As part of this transaction the venture repaid the $43,606,000 variable rate note secured by the community.  The Company paid approximately $67,200,000 for its joint venture partner’s 70% interest as well as contributing its proportionate share of the note repayment to the venture.

 

In conjunction with the acquisition, the Company recognized income from its promoted interest of $4,055,000 included in joint venture income, and a


 


 

 

 

Copyright Ó 2012 AvalonBay Communities, Inc. All Rights Reserved

2



 


gain of $14,194,000, the amount that the fair value of the Company’s prior 30% ownership interest exceeded its carrying value.

 

Financing, Liquidity and Balance Sheet Statistics

 

At September 30, 2012, the Company had no amounts outstanding under its $750,000,000 unsecured credit facility.

 

At September 30, 2012, the Company had $713,984,000 in unrestricted cash and cash in escrow.

 

Unencumbered NOI as a percentage of total NOI generated by real estate assets for the nine months ended September 30, 2012 was 73%. Interest Coverage for the third quarter of 2012 was 5.5 times.

 

New Financing Activity

 

In July 2012 the Company completed the authorized issuance of shares of common stock under its second Continuous Equity Program (“CEP II”).

 

In August 2012, the Company commenced its third Continuous Equity Program (“CEP III”), under which the Company is authorized to sell up to $750,000,000 in shares of its common stock from time to time during a 36-month period.

 

A summary of activity for 2012 for the two programs is provided in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$500 million CEP II and $750 million CEP III

2012 Activity (1)

 

 

 

Shares

 

 

Average

 

 

Net

 

 

 

 

Issued

 

 

Price/Share

 

 

Proceeds

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q 2012

 

1,045,314

 

 

$      141.87

 

 

$ 146,069,000

 

 

YTD 2012

 

2,165,206

 

 

140.98

 

 

300,658,000

 

 

 

(1) Includes activity for CEP II through completion of the program in July 2012.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the three months ended September 30, 2012, the Company sold 729,991 shares at an average sales price of $142.09 per share, for net proceeds of $102,168,000 under CEP III.

 

In September 2012, the Company issued $450,000,000 principal amount of unsecured notes under its existing shelf registration statement.  The unsecured notes mature in September 2022 and were issued at a 2.95% coupon rate.  The notes have an effective interest rate of approximately 4.30%, including the effect of an interest rate hedge and offering costs.

 

Fourth Quarter and Updated Full Year 2012 Outlook

 

For the fourth quarter of 2012, the Company expects EPS in the range of $1.34 to $1.39.  The Company

expects EPS for the full year 2012 to be in the range of $4.47 to $4.52.

 

The Company expects Projected FFO per share in the range of $1.40 to $1.45 for the fourth quarter of 2012 and Projected FFO per share for the full year 2012 to be in the range of $5.45 to $5.50.

 

Fourth Quarter 2012 Conference Schedule

 

The Company is scheduled to participate in REITWorld hosted by NAREIT in San Diego, CA from November 13-15, 2012.  During this conference, Management may discuss the Company’s current operating environment; operating trends; development, redevelopment, disposition and acquisition activity; portfolio strategy and other business and financial matters affecting the Company. Details on how to access related materials will be available beginning November 9, 2012 on the Company’s website at http://www.avalonbay.com/events.

 

Other Matters

 

The Company will hold a conference call on October 25, 2012 at 1:00 PM ET to review and answer questions about this release, its third quarter 2012 results, the Attachments (described below) and related matters. To participate on the call, dial 1-855-367-4146 domestically and 1-763-416-6924 internationally, and use Conference ID:  34734741.

 

To hear a replay of the call, which will be available from October 25, 2012 at 5:00 PM ET to October 31, 2012 at 11:59 PM ET, dial 1-855-859-2056 domestically and 1-404-537-3406 internationally, and use Conference ID: 34734741.   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/email.

 

About AvalonBay Communities, Inc.

 

As of September 30, 2012, the Company owned or held a direct or indirect ownership interest in 205 apartment communities containing 60,101 apartment homes in nine states and the District of Columbia, of which 22 communities were under construction and seven communities were under reconstruction. The Company is an equity REIT in the business of


 


 

 

 

Copyright Ó 2012 AvalonBay Communities, Inc. All Rights Reserved

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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 http://www.avalonbay.com. For additional information, please contact Jason Reilley, Senior Manager of Investor Relations at 1-703-317-4681 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,” “anticipates,” “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: we may abandon development or redevelopment opportunities for which we have already incurred costs; adverse capital market conditions may affect our access to various sources of capital and/or cost of capital, which may affect our business activities, earnings and common stock price, among other things; 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; 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  or may not be available on favorable terms; we may be unable to obtain, or experience delays in obtaining, necessary governmental permits and authorizations; and increases in costs of materials, labor or other expenses may result in communities that we develop or redevelop failing to achieve expected profitability. 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, 2011 under the heading “Risk Factors” and under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements” and in subsequent quarterly reports on Form 10-Q. The Company does not undertake a duty to update forward-looking statements, including its expected fourth quarter and full year 2012 operating results. 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 14, “Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.”  Attachment 14 is included in the full earnings release available at the Company’s website at http://www.avalonbay.com/earnings.


 


 

 

 

Copyright Ó 2012 AvalonBay Communities, Inc. All Rights Reserved

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THIRD QUARTER 2012

 

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

Sequential Operating Information by Business Segment

 

Attachment 4

 

 

 

Market Profile

 

 

Quarterly Revenue and Occupancy Changes (Established Communities)

 

Attachment 5

Sequential Quarterly Revenue and Occupancy Changes (Established Communities)

 

Attachment 6

Year-to-Date Revenue and Occupancy Changes (Established Communities)

 

Attachment 7

Operating Expenses (“Opex”) (Established Communities)

 

Attachment 8

 

 

 

Development, Redevelopment, Acquisition and Disposition Profile

 

 

Development Communities

 

Attachment 9

Redevelopment Communities

 

Attachment 10

Summary of Development and Redevelopment Community Activity

 

Attachment 11

Future Development

 

Attachment 12

Summary of Disposition Activity

 

Attachment 13

 

 

 

Definitions and Reconciliations

 

 

Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms

 

Attachment 14

 

The following is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 as amended, 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, 2011 and the Company’s Quarterly Reports on Form 10-Q for subsequent quarters.

 

 

 

 

 

 

 

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  Attachment 1

AvalonBay Communities, Inc.

Selected Operating and Other Information

September 30, 2012

(Dollars in thousands except per share data)

(unaudited)

 

SELECTED OPERATING INFORMATION

 

 

 

Q3

 

Q3

 

 

 

YTD

 

YTD

 

 

 

 

 

2012

 

2011

 

% Change

 

2012

 

2011

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

$

86,844

 

$

44,824

 

93.7%

 

$

301,512

 

$

118,537

 

154.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per common share - basic

 

$

0.89

 

$

0.49

 

81.6%

 

$

3.14

 

$

1.34

 

134.3%

 

Per common share - diluted

 

$

0.89

 

$

0.49

 

81.6%

 

$

3.13

 

$

1.33

 

135.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds from Operations

 

$

140,247

 

$

107,587

 

30.4%

 

$

390,412

 

$

301,072

 

29.7%

 

Per common share - diluted

 

$

1.44

 

$

1.17

 

23.1%

 

$

4.05

 

$

3.38

 

19.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared - common

 

$

94,775

 

$

84,801

 

11.8%

 

$

280,945

 

$

241,876

 

16.2%

 

Per common share

 

$

0.9700

 

$

0.8925

 

8.7%

 

$

2.9100

 

$

2.6775

 

8.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

97,705,713

 

95,015,548

 

2.8%

 

97,705,713

 

95,015,548

 

2.8%

 

Outstanding operating partnership units

 

7,500

 

7,707

 

(2.7%)

 

7,500

 

7,707

 

(2.7%)

 

Total outstanding shares and units

 

97,713,213

 

95,023,255

 

2.8%

 

97,713,213

 

95,023,255

 

2.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares and participating securities outstanding - basic

 

97,253,008

 

91,810,788

 

5.9%

 

96,062,230

 

88,616,156

 

8.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted shares - basic

 

97,044,603

 

91,388,357

 

6.2%

 

95,742,676

 

88,312,930

 

8.4%

 

Average operating partnership units outstanding

 

7,500

 

7,707

 

(2.7%)

 

7,500

 

8,559

 

(12.4%)

 

Effect of dilutive securities

 

494,466

 

944,304

 

(47.6%)

 

651,382

 

878,009

 

(25.8%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding - diluted

 

97,546,569

 

92,340,368

 

5.6%

 

96,401,558

 

89,199,498

 

8.1%

 

 

 

DEBT COMPOSITION AND MATURITIES

 

CAPITALIZED COSTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

Non-Rev

 

 

 

 

Interest

 

Remaining

 

 

Cap

 

Cap

 

Capex

Debt Composition (1)

 

Amount

 

Rate (2)

 

Maturities (1)

 

 

Interest

 

Overhead

 

per Home

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conventional Debt

 

 

 

 

 

2012

 

$

205,213

 

Q312

$12,504

 

$6,670

 

$119

Long-term, fixed rate

 

  $

3,250,360

 

 

 

2013

 

$

336,849

 

Q212

$12,625

 

$6,682

 

$92  

Long-term, variable rate

 

9,000

 

 

 

2014

 

$

164,284

 

Q112

$12,320

 

$6,627

 

$52  

Variable rate facility (3)

 

–  

 

 

 

2015

 

$

418,189

 

Q411

$10,901

 

$6,165

 

$211

Subtotal, Conventional

 

3,259,360

 

5.6%

 

2016

 

$

262,807

 

Q311

$8,946

 

$5,893

 

$181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Debt

 

 

 

 

 

 

 

 

 

COMMUNITY INFORMATION

Long-term, fixed rate

 

181,922

 

 

 

 

 

 

 

 

 

 

 

 

Long-term, variable rate

 

367,935

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal, Tax-Exempt

 

549,857

 

3.8%

 

 

 

 

 

 

 

 

 

Apartment

 

 

 

 

 

 

 

 

 

 

 

 

Communities

 

Homes

Total Debt

 

  $

3,809,217

 

5.3%

 

 

 

 

 

Current Communities

 

183

 

53,487

 

 

 

 

 

 

 

 

 

 

 

Development Communities

 

22

 

6,614

 

 

 

 

 

 

 

 

 

 

 

Development Rights

 

31

 

8,837

 

(1) Excludes debt associated with assets classified as held for sale.

(2) Includes costs of financing such as credit enhancement fees, trustees' fees, etc.

(3) Represents the Company's $750 million unsecured credit facility, under which no amounts were drawn at September 30, 2012.

 

 

 

 

7



 

 

 

 

  Attachment 2

AvalonBay Communities, Inc.

Detailed Operating Information

September 30, 2012

(Dollars in thousands except per share data)

(unaudited)

 

 

 

Q3

 

Q3

 

 

 

YTD

 

YTD

 

 

 

 

 

2012

 

2011

 

% Change

 

2012

 

2011

 

% Change

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other income

 

$

269,371

 

$

241,286

 

11.6%

 

$

773,424

 

$

698,938

 

10.7%

 

Management, development and other fees

 

2,533

 

2,433

 

4.1%

 

7,852

 

7,085

 

10.8%

 

Total

 

271,904

 

243,719

 

11.6%

 

781,276

 

706,023

 

10.7%

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct property operating expenses, excluding property taxes

 

58,240

 

56,145

 

3.7%

 

166,644

 

159,493

 

4.5%

 

Property taxes

 

26,184

 

23,741

 

10.3%

 

75,641

 

70,908

 

6.7%

 

Property management and other indirect operating expenses

 

9,935

 

10,162

 

(2.2%)

 

31,917

 

29,553

 

8.0%

 

Total operating expenses

 

94,359

 

90,048

 

4.8%

 

274,202

 

259,954

 

5.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(33,985)

 

(42,659)

 

(20.3%)

 

(100,804)

 

(130,174)

 

(22.6%)

 

Loss on extinguishment of debt, net

 

--  

 

--  

 

--  

 

(1,179)

 

--  

 

(100.0%)

 

General and administrative expense

 

(8,372)

 

(6,087)

 

37.5%

 

(26,398)

 

(21,524)

 

22.6%

 

Joint venture income (1)

 

5,553

 

2,615

 

112.4%

 

9,801

 

3,513

 

179.0%

 

Investments and investment management expense

 

(1,582)

 

(1,328)

 

19.1%

 

(4,526)

 

(3,860)

 

17.3%

 

Expensed acquisition, development and other pursuit costs

 

(608)

 

(633)

 

(3.9%)

 

(1,749)

 

(2,636)

 

(33.7%)

 

Depreciation expense

 

(65,998)

 

(60,893)

 

8.4%

 

(193,434)

 

(180,953)

 

6.9%

 

Impairment loss

 

--  

 

(14,052)

 

(100.0%)

 

--  

 

(14,052)

 

(100.0%)

 

Gain on sale of land

 

--  

 

13,716

 

(100.0%)

 

280

 

13,716

 

(98.0%)

 

Gain on acquisition of unconsolidated real estate entity

 

14,194

 

--  

 

100.0%

 

14,194

 

--  

 

100.0%

 

Income from continuing operations

 

86,747

 

44,350

 

95.6%

 

203,259

 

110,099

 

84.6%

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations (2)

 

--  

 

327

 

(100.0%)

 

2,870

 

631

 

354.8%

 

Gain on sale of real estate

 

--  

 

--  

 

--  

 

95,049

 

7,675

 

1,138.4%

 

Total discontinued operations

 

--  

 

327

 

(100.0%)

 

97,919

 

8,306

 

1,078.9%

 

Net income

 

86,747

 

44,677

 

94.2%

 

301,178

 

118,405

 

154.4%

 

Net loss attributable to redeemable noncontrolling interests

 

97

 

147

 

(34.0%)

 

334

 

132

 

153.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

$

86,844

 

$

44,824

 

93.7%

 

$

301,512

 

$

118,537

 

154.4%

 

Net income attributable to common stockholders per common share - basic

 

$

0.89

 

$

0.49

 

81.6%

 

$

3.14

 

$

1.34

 

134.3%

 

Net income attributable to common stockholders per common share - diluted

 

$

0.89

 

$

0.49

 

81.6%

 

$

3.13

 

$

1.33

 

135.3%

 

 

(1)    Amounts for the three and nine months ended September 30, 2012 includes $4,055 for income from the Company’s promoted interest recognized upon acquisition of Avalon Del Rey.  Amount for the nine months ended September 30, 2012 also includes a gain of $1,471 related to the sale of three unconsolidated communities. Amounts for the three and nine months ended September 30, 2011 include $1,743 from the sale of an unconsolidated community.

 

(2)    Reflects net income for investments in real estate classified as discontinued operations as of September 30, 2012 and investments in real estate sold during the period from January 1, 2011 through September 30, 2012.  The following table details income from discontinued operations for the periods shown:

 

 

 

Q3

 

 

Q3

 

 

YTD

 

 

YTD

 

 

 

 

2012

 

 

2011

 

 

2012

 

 

2011

 

 

Rental income

 

  $

--  

 

 

  $

9,469

 

 

  $

6,986

 

 

  $

27,832

 

 

Operating and other expenses

 

--  

 

 

(5,988

)

 

(2,486

)

 

(17,277

)

 

Interest expense, net

 

--  

 

 

(1,311

)

 

(133

)

 

(3,922

)

 

Loss on extinguishment of debt

 

--  

 

 

--

 

 

(602

)

 

–

 

 

Depreciation expense

 

--  

 

 

(1,843

)

 

(895

)

 

(6,002

)

 

Income from discontinued operations

 

  $

--  

 

 

  $

327

 

 

  $

2,870

 

 

  $

631

 

 

 

 

 

 

 

8



 

 

 

 

 

Attachment 3

 

AvalonBay Communities, Inc.

Condensed Consolidated Balance Sheets

 

(Dollars in thousands)

(unaudited)

 

 

 

 

September 30,

 

 

December 31,

 

 

 

 

2012

 

 

2011

 

 

 

 

 

 

 

 

 

 

Real estate

 

  $

8,862,007

 

 

  $

8,243,720

 

 

Less accumulated depreciation

 

(2,013,104

)

 

(1,820,381

)

 

 

 

 

 

 

 

 

 

Net operating real estate

 

6,848,903

 

 

6,423,339

 

 

 

 

 

 

 

 

 

 

Construction in progress, including land

 

725,450

 

 

597,346

 

 

Land held for development

 

304,295

 

 

325,918

 

 

Operating real estate assets held for sale, net

 

--

 

 

78,427

 

 

 

 

 

 

 

 

 

 

Total real estate, net

 

7,878,648

 

 

7,425,030

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

664,133

 

 

616,853

 

 

Cash in escrow

 

49,851

 

 

73,400

 

 

Resident security deposits

 

25,242

 

 

23,597

 

 

Other assets

 

350,692

 

 

343,510

 

 

 

 

 

 

 

 

 

 

Total assets

 

  $

8,968,566

 

 

  $

8,482,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured notes, net

 

  $

1,899,208

 

 

  $

1,629,210

 

 

Unsecured facility

 

--

 

 

--

 

 

Notes payable

 

1,908,872

 

 

1,969,986

 

 

Resident security deposits

 

39,754

 

 

36,620

 

 

Liabilities related to assets held for sale

 

--

 

 

35,467

 

 

Other liabilities

 

392,654

 

 

402,152

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

  $

4,240,488

 

 

  $

4,073,435

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

7,203

 

 

7,063

 

 

 

 

 

 

 

 

 

 

Equity

 

4,720,875

 

 

4,401,892

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

  $

8,968,566

 

 

  $

8,482,390

 

 

 

 

 

 

 

 

 

9



 

 

 

 

 

Attachment 4

AvalonBay Communities, Inc.

Sequential Operating Information by Business Segment (1)

September 30, 2012

(Dollars in thousands)

(unaudited)

 

 

 

Total

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

 

 

Homes

 

September 30, 2012

 

June 30, 2012

 

March 31, 2012

 

December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

RENTAL REVENUE

 

 

 

 

 

 

 

 

 

 

 

Established (2)

 

31,734

 

  $

194,812

 

  $

190,196

 

  $

187,308

 

  $

186,051

 

Other Stabilized (2) (3)

 

7,868

 

38,222

 

35,455

 

34,485

 

33,759

 

Redevelopment (2)

 

3,942

 

23,855

 

22,820

 

22,372

 

22,254

 

Development (2)

 

7,838

 

11,345

 

6,690

 

3,458

 

2,199

 

Total Consolidated Communities

 

51,382

 

  $

268,234

 

  $

255,161

 

  $

247,623

 

  $

244,263

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSE

 

 

 

 

 

 

 

 

 

 

 

Established

 

 

 

  $

60,316

 

  $

57,748

 

  $

56,987

 

  $

56,707

 

Other Stabilized

 

 

 

13,524

 

12,936

 

12,083

 

13,050

 

Redevelopment

 

 

 

6,926

 

6,732

 

6,561

 

6,271

 

Development

 

 

 

3,658

 

2,937

 

1,876

 

1,068

 

Total Consolidated Communities

 

 

 

  $

84,424

 

  $

80,353

 

  $

77,507

 

  $

77,096

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI (2)

 

 

 

 

 

 

 

 

 

 

 

Established

 

 

 

  $

134,567

 

  $

132,531

 

  $

130,382

 

  $

129,405

 

Other Stabilized

 

 

 

25,691

 

23,244

 

22,705

 

21,344

 

Redevelopment

 

 

 

16,993

 

16,136

 

15,843

 

16,015

 

Development

 

 

 

7,690

 

3,757

 

1,584

 

1,134

 

Total Consolidated Communities

 

 

 

  $

184,941

 

  $

175,668

 

  $

170,514

 

  $

167,898

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE REVENUE PER OCCUPIED HOME

 

 

 

 

 

 

 

 

 

 

 

Established

 

 

 

  $

2,125

 

  $

2,085

 

  $

2,048

 

  $

2,037

 

Other Stabilized

 

 

 

1,689

 

1,638

 

1,607

 

1,627

 

Redevelopment

 

 

 

2,121

 

2,046

 

2,000

 

1,972

 

Development (4)

 

 

 

2,710

 

2,546

 

2,399

 

2,308

 

 

 

 

 

 

 

 

 

 

 

 

 

ECONOMIC OCCUPANCY

 

 

 

 

 

 

 

 

 

 

 

Established

 

 

 

96.3%

 

95.8%

 

96.1%

 

95.9%

 

Other Stabilized

 

 

 

96.5%

 

95.4%

 

95.6%

 

94.4%

 

Redevelopment

 

 

 

95.1%

 

94.4%

 

94.7%

 

95.6%

 

Development (5)

 

 

 

55.8%

 

40.8%

 

28.7%

 

26.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

STABILIZED COMMUNITIES TURNOVER

 

 

 

 

 

 

 

 

 

 

 

Current Year Period / Prior Year Period (6)

 

 

 

65.4% / 67.3%

 

56.4% / 55.8%

 

43.9% / 43.5%

 

46.0% / 45.4%

 

 

(1)

Excludes amounts related to communities that have been sold, or that are classified as held for sale.

 

 

(2)

See Attachment #14 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

 

 

(3)

Results for these communities for quarters prior to January 1, 2012 may reflect community operations prior to stabilization, including periods of lease-up, such that occupancy levels are below what would be considered stabilized.

 

 

(4)

Average revenue per occupied home for Development Communities includes only those assets with at least one full quarter of lease-up activity.

 

 

(5)

Economic Occupancy for Development Communities is calculated based on the communities currently generating revenue. For detail of occupancy rates for communities under construction, and communities for which construction has completed, but the community has not yet reached stabilized occupancy, see Attachment #9, Development Communities.

 

 

(6)

Turnover represents the annualized number of units turned over during the quarter, divided by the total number of apartment homes for communities with stabilized occupancy for the respective reporting period.

 

 

 

 

 

10



 

 

 

 

 

Attachment 5

 

AvalonBay Communities, Inc.

Quarterly Revenue and Occupancy Changes - Established Communities (1)

 

September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartment
Homes

 

Average Rental Rates (2)

 

Economic Occupancy

 

Rental Revenue ($000’s) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 12

 

Q3 11

 

% Change

 

Q3 12

 

Q3 11

 

% Change

 

Q3 12

 

Q3 11

 

% Change

New England

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boston, MA

 

4,719

 

  $

2,102

 

  $

2,005

 

4.8%

 

95.7%

 

95.9%

 

(0.2%)

 

  $

28,477

 

  $

27,219

 

4.6%

 

Fairfield-New Haven, CT

 

2,347

 

2,121

 

2,051

 

3.4%

 

95.5%

 

96.3%

 

(0.8%)

 

14,266

 

13,899

 

2.6%

 

New England Average

 

7,066

 

2,108

 

2,021

 

4.3%

 

95.7%

 

96.0%

 

(0.3%)

 

42,743

 

41,118

 

4.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metro NY/NJ

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY

 

4,027

 

2,924

 

2,791

 

4.8%

 

96.9%

 

96.2%

 

0.7% 

 

34,242

 

32,461

 

5.5%

 

New Jersey

 

2,246

 

2,081

 

2,000

 

4.1%

 

96.7%

 

96.3%

 

0.4% 

 

13,559

 

12,977

 

4.5%

 

Long Island, NY

 

1,620

 

2,456

 

2,378

 

3.3%

 

96.5%

 

95.8%

 

0.7% 

 

11,519

 

11,081

 

4.0%

 

Metro NY/NJ Average

 

7,893

 

2,588

 

2,482

 

4.3%

 

96.8%

 

96.1%

 

0.7% 

 

59,320

 

56,519

 

5.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid-Atlantic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington Metro

 

4,748

 

1,925

 

1,866

 

3.2%

 

95.9%

 

95.3%

 

0.6% 

 

26,296

 

25,340

 

3.8%

 

Mid-Atlantic Average

 

4,748

 

1,925

 

1,866

 

3.2%

 

95.9%

 

95.3%

 

0.6% 

 

26,296

 

25,340

 

3.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pacific Northwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seattle, WA

 

1,908

 

1,524

 

1,406

 

8.4%

 

96.2%

 

94.6%

 

1.6% 

 

8,397

 

7,631

 

10.0%

 

Pacific Northwest Average

 

1,908

 

1,524

 

1,406

 

8.4%

 

96.2%

 

94.6%

 

1.6% 

 

8,397

 

7,631

 

10.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northern California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Jose, CA

 

2,442

 

2,233

 

2,036

 

9.7%

 

95.5%

 

94.8%

 

0.7% 

 

15,618

 

14,144

 

10.4%

 

Oakland-East Bay, CA

 

1,699

 

1,758

 

1,625

 

8.2%

 

96.7%

 

95.4%

 

1.3% 

 

8,661

 

7,913

 

9.5%

 

San Francisco, CA

 

1,079

 

2,762

 

2,484

 

11.2%

 

96.8%

 

96.1%

 

0.7% 

 

8,656

 

7,735

 

11.9%

 

Northern California Average

 

5,220

 

2,188

 

1,995

 

9.7%

 

96.1%

 

95.3%

 

0.8% 

 

32,935

 

29,792

 

10.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles, CA

 

2,974

 

1,804

 

1,742

 

3.6%

 

97.4%

 

96.0%

 

1.4% 

 

15,687

 

14,935

 

5.0%

 

Orange County, CA

 

1,000

 

1,757

 

1,665

 

5.5%

 

95.8%

 

95.4%

 

0.4% 

 

5,050

 

4,767

 

5.9%

 

San Diego, CA

 

925

 

1,653

 

1,614

 

2.4%

 

95.5%

 

95.8%

 

(0.3%)

 

4,384

 

4,292

 

2.1%

 

Southern California Average

 

4,899

 

1,766

 

1,703

 

3.7%

 

96.8%

 

95.8%

 

1.0% 

 

25,121

 

23,994

 

4.7%

 

Average/Total Established

 

31,734

 

  $

2,125

 

  $

2,022

 

5.1%

 

96.3%

 

95.8%

 

0.5% 

 

  $

194,812

 

  $

184,394

 

5.6%

 

 

(1) Established Communities are communities with stabilized occupancy and operating expenses as of January 1, 2011 such that a comparison of 2011 to 2012 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 5.3% between years.

 

 

 

 

 

11


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attachment 6

 

AvalonBay Communities, Inc.

*Sequential Quarterly* Revenue and Occupancy Changes - Established Communities

 

September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartment
Homes

 

Average Rental Rates (1)

 

Economic Occupancy

 

Rental Revenue ($000’s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 12

 

Q2 12

 

% Change

 

Q3 12

 

Q2 12

 

% Change

 

Q3 12

 

Q2 12

 

% Change  

New England

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boston, MA

 

4,719

 

$

2,102

 

$

2,057

 

2.2%

 

95.7%

 

95.3%

 

0.4% 

 

$

28,477

 

$

27,762

 

2.6%

Fairfield-New Haven, CT

 

2,347

 

2,121

 

2,078

 

2.1%

 

95.5%

 

95.4%

 

0.1% 

 

14,266

 

13,965

 

2.2%

New England Average

 

7,066

 

2,108

 

2,064

 

2.1%

 

95.7%

 

95.3%

 

0.4% 

 

42,743

 

41,727

 

2.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metro NY/NJ

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY

 

4,027

 

2,924

 

2,891

 

1.1%

 

96.9%

 

96.5%

 

0.4% 

 

34,242

 

33,698

 

1.6%

New Jersey

 

2,246

 

2,081

 

2,045

 

1.8%

 

96.7%

 

96.0%

 

0.7% 

 

13,559

 

13,222

 

2.5%

Long Island, NY

 

1,620

 

2,456

 

2,394

 

2.6%

 

96.5%

 

96.4%

 

0.1% 

 

11,519

 

11,221

 

2.7%

Metro NY/NJ Average

 

7,893

 

2,588

 

2,548

 

1.6%

 

96.8%

 

96.3%

 

0.5% 

 

59,320

 

58,141

 

2.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid-Atlantic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington Metro

 

4,748

 

1,925

 

1,902

 

1.2%

 

95.9%

 

95.3%

 

0.6% 

 

26,296

 

25,825

 

1.8%

Mid-Atlantic Average

 

4,748

 

1,925

 

1,902

 

1.2%

 

95.9%

 

95.3%

 

0.6% 

 

26,296

 

25,825

 

1.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pacific Northwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seattle, WA

 

1,908

 

1,524

 

1,468

 

3.8%

 

96.2%

 

96.5%

 

(0.3%)

 

8,397

 

8,110

 

3.5%

Pacific Northwest Average

 

1,908

 

1,524

 

1,468

 

3.8%

 

96.2%

 

96.5%

 

(0.3%)

 

8,397

 

8,110

 

3.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northern California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Jose, CA

 

2,442

 

2,233

 

2,154

 

3.7%

 

95.5%

 

95.9%

 

(0.4%)

 

15,618

 

15,136

 

3.2%

Oakland-East Bay, CA

 

1,699

 

1,758

 

1,719

 

2.3%

 

96.7%

 

96.3%

 

0.4% 

 

8,661

 

8,436

 

2.7%

San Francisco, CA

 

1,079

 

2,762

 

2,672

 

3.4%

 

96.8%

 

96.3%

 

0.5% 

 

8,656

 

8,329

 

3.9%

Northern California Average

 

5,220

 

2,188

 

2,120

 

3.2%

 

96.1%

 

96.1%

 

0.0% 

 

32,935

 

31,901

 

3.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles, CA

 

2,974

 

1,804

 

1,794

 

0.6%

 

97.4%

 

95.7%

 

1.7% 

 

15,687

 

15,318

 

2.4%

Orange County, CA

 

1,000

 

1,757

 

1,716

 

2.4%

 

95.8%

 

95.1%

 

0.7% 

 

5,050

 

4,895

 

3.2%

San Diego, CA

 

925

 

1,653

 

1,622

 

1.9%

 

95.5%

 

95.1%

 

0.4% 

 

4,384

 

4,279

 

2.5%

Southern California Average

 

4,899

 

1,766

 

1,745

 

1.2%

 

96.8%

 

95.5%

 

1.3% 

 

25,121

 

24,492

 

2.6%

Average/Total Established

 

31,734

 

$

2,125

 

$

2,085

 

1.9%

 

96.3%

 

95.8%

 

0.5% 

 

$

194,812

 

$

190,196

 

2.4%

 

(1) Reflects the effect of concessions amortized over the average lease term.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attachment 7

 

AvalonBay Communities, Inc.

Year-to-Date Revenue and Occupancy Changes - Established Communities (1)

 

September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartment
Homes

 

Average Rental Rates (2)

 

Economic Occupancy

 

Rental Revenue ($000’s) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD 12

 

YTD 11

 

% Change

 

YTD 12

 

YTD 11

 

% Change

 

YTD 12

 

YTD 11

 

% Change  

New England

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boston, MA

 

4,719

 

$

2,062

 

$

1,954

 

5.5%

 

95.5%

 

95.9%

 

(0.4%)

 

83,608

 

79,521

 

5.1%

Fairfield-New Haven, CT

 

2,347

 

2,075

 

1,991

 

4.2%

 

95.7%

 

96.5%

 

(0.8%)

 

41,939

 

40,549

 

3.4%

New England Average

 

7,066

 

2,067

 

1,964

 

5.2%

 

95.5%

 

96.1%

 

(0.6%)

 

125,547

 

120,070

 

4.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metro NY/NJ

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY

 

4,027

 

2,887

 

2,714

 

6.4%

 

96.5%

 

96.1%

 

0.4%

 

100,934

 

94,528

 

6.8%

New Jersey

 

2,246

 

2,048

 

1,961

 

4.4%

 

96.4%

 

96.2%

 

0.2%

 

39,882

 

38,131

 

4.6%

Long Island, NY

 

1,620

 

2,409

 

2,333

 

3.3%

 

96.3%

 

96.2%

 

0.1%

 

33,832

 

32,713

 

3.4%

Metro NY/NJ Average

 

7,893

 

2,550

 

2,422

 

5.3%

 

96.4%

 

96.1%

 

0.3%

 

174,648

 

165,372

 

5.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid-Atlantic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington Metro

 

4,748

 

1,898

 

1,832

 

3.6%

 

96.0%

 

95.4%

 

0.6%

 

77,812

 

74,655

 

4.2%

Mid-Atlantic Average

 

4,748

 

1,898

 

1,832

 

3.6%

 

96.0%

 

95.4%

 

0.6%

 

77,812

 

74,655

 

4.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pacific Northwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seattle, WA

 

1,908

 

1,472

 

1,368

 

7.6%

 

96.6%

 

95.1%

 

1.5%

 

24,408

 

22,364

 

9.1%

Pacific Northwest Average

 

1,908

 

1,472

 

1,368

 

7.6%

 

96.6%

 

95.1%

 

1.5%

 

24,408

 

22,364

 

9.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northern California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Jose, CA

 

2,442

 

2,160

 

1,953

 

10.6%

 

95.8%

 

96.0%

 

(0.2%)

 

45,479

 

41,197

 

10.4%

Oakland-East Bay, CA

 

1,699

 

1,721

 

1,577

 

9.1%

 

96.3%

 

96.3%

 

0.0%

 

25,344

 

23,232

 

9.1%

San Francisco, CA

 

1,079

 

2,683

 

2,413

 

11.2%

 

96.4%

 

96.0%

 

0.4%

 

25,111

 

22,508

 

11.6%

Northern California Average

 

5,220

 

2,125

 

1,926

 

10.3%

 

96.1%

 

96.1%

 

0.0%

 

95,934

 

86,937

 

10.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles, CA

 

2,974

 

1,791

 

1,711

 

4.7%

 

96.5%

 

95.9%

 

0.6%

 

46,242

 

43,917

 

5.3%

Orange County, CA

 

1,000

 

1,719

 

1,623

 

5.9%

 

95.8%

 

95.9%

 

(0.1%)

 

14,828

 

14,020

 

5.8%

San Diego, CA

 

925

 

1,625

 

1,573

 

3.3%

 

95.4%

 

95.9%

 

(0.5%)

 

12,897

 

12,550

 

2.8%

Southern California Average

 

4,899

 

1,745

 

1,668

 

4.6%

 

96.2%

 

95.9%

 

0.3%

 

73,967

 

70,487

 

4.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average/Total Established

 

31,734

 

$

2,086

 

$

1,971

 

5.8%

 

96.1%

 

95.9%

 

0.2%

 

$

572,316

 

$

539,885

 

6.0%

 

(1) Established Communities are communities with stabilized operating expenses as of January 1, 2011 such that a comparison of 2011 to 2012 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 5.6% between years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13



 

 

 

 

 

 

Attachment 8

 

AvalonBay Communities, Inc.

Operating Expenses (“Opex”) - Established Communities (1)

September 30, 2012

(Dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Q3 2012

 

 

 

 

 

 

 

YTD 2012

 

 

 

Q3

 

Q3

 

 

 

% of

 

YTD

 

YTD

 

 

 

% of

 

 

 

2012

 

2011

 

% Change

 

Total Opex

 

2012

 

2011

 

% Change

 

Total Opex

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes (2) 

 

$

19,195

 

$

17,680

 

8.6%

 

31.8%

 

$

56,228

 

$

53,752

 

4.6%

 

32.1%

 

Payroll (3) 

 

13,864

 

13,323

 

4.1%

 

23.0%

 

41,306

 

39,596

 

4.3%

 

23.6%

 

Repairs & maintenance (4) 

 

10,609

 

11,080

 

(4.3%)

 

17.6%

 

29,574

 

29,365

 

0.7%

 

16.9%

 

Utilities (5) 

 

6,665

 

6,790

 

(1.8%)

 

11.1%

 

19,098

 

20,336

 

(6.1%)

 

10.9%

 

Office operations (6) 

 

6,295

 

6,607

 

(4.7%)

 

10.4%

 

18,725

 

19,833

 

(5.6%)

 

10.7%

 

Insurance (7) 

 

1,868

 

1,466

 

27.4%

 

3.1%

 

5,276

 

4,651

 

13.4%

 

3.0%

 

Marketing

 

1,820

 

1,823

 

(0.2%)

 

3.0%

 

4,843

 

5,051

 

(4.1%)

 

2.8%

 

Total Established Communities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses (8) 

 

$

60,316

 

$

58,769

 

2.6%

 

100.0%

 

$

175,050

 

$

172,584

 

1.4%

 

100.0%

 

 

 

(1) See Attachment #14 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

 

(2) Property taxes increased for the three and nine months ended September 30, 2012 primarily due to increases in rates and assessments.  The increase for the nine months ended September 30, 2012 is offset partially by refunds received in the current year.

 

(3) Payroll includes expenses directly related to on-site operations.  The increases for the three and nine months ended September 30, 2012 over the prior year periods are due primarily to increased compensation and benefits costs.

 

(4) The decrease in repairs & maintenance for the three months ended September 30, 2012 is due primarily to a decrease in resident turnover costs from the prior year.

 

(5) Utilities represents aggregate utility costs, net of resident reimbursements.  The decrease for the nine months ended September 30, 2012 from the prior year periods is due primarily to lower electric and gas expense.  The lower costs are driven by lower rates from negotiated contracts and benefits realized from the Company’s investment in energy efficient infrastructure as well as the mild winter experienced across the United States.

 

(6) Office operations includes administrative costs, land lease expense, bad debt expense and association and license fees. The decreases for the three and nine months ended September 30, 2012 from the prior year periods are due primarily to a decrease in bad debt expense as well as from  savings in telecommunications costs.

 

(7) Insurance costs consist of premiums, expected claims activity and associated reductions from receipt of claims proceeds. The increase over the prior year periods are due primarily to the policy renewals for property, general liability and worker’s compensation, as well as the timing of claims.  Insurance costs can exhibit volatility and timing of estimated and actual claim activity and the related proceeds received.

 

(8) Operating expenses for Established Communities excludes indirect costs for off-site corporate-level property management related expenses, and other support related expenses.

 

 

 

 

 

 

 

 

14

 



 

 

 

 

 

 

Attachment 9

 

AvalonBay Communities, Inc.

Development Communities as of September 30, 2012

 

Community Information

 

Number

 

Total

 

Schedule

 

Avg Rent

 

 

 

 

 

 

 

%

 

 

 

 

 

of

 

Capital

 

 

 

 

 

 

 

Stabilized

 

Per

 

%

 

%

 

%

 

Economic

 

 

 

 

 

Apt

 

Cost

 

 

 

Initial

 

 

 

Operations

 

Home

 

Comp

 

Leased

 

Occupied

 

Occ.

 

 

Development Name

 

Location

 

Homes

 

(millions) (1)

 

Start

 

Occupancy

 

Complete

 

(1)

 

(1)

 

(2)

 

(3)

 

(4)

 

(1) (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Under Construction:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. Avalon Green II

 

Greenburgh, NY

 

444

 

$  107.8

 

 

Q3 2010

 

Q3 2011

 

Q4 2012

 

Q2 2013

 

$  2,455

 

 

95.9%

 

87.8%

 

83.3%

 

67.2%

 

  2. Avalon at Wesmont Station I

 

Wood-Ridge, NJ

 

266

 

62.5

 

 

Q4 2010

 

Q1 2012

 

Q4 2012

 

Q2 2013

 

1,935

 

 

100.0%

 

90.2%

 

87.2%

 

63.1%

 

  3. Avalon Garden City

 

Garden City, NY

 

204

 

68.0

 

 

Q2 2011

 

Q2 2012

 

Q4 2012

 

Q2 2013

 

3,255

 

 

67.6%

 

70.1%

 

58.3%

 

27.8%

 

  4. Avalon Park Crest

 

Tysons Corner, VA

 

354

 

77.6

 

 

Q4 2010

 

Q3 2012

 

Q2 2013

 

Q4 2013

 

2,070

 

 

44.9%

 

44.1%

 

37.6%

 

15.5%

 

  5. Avalon Somerset

 

Somerset, NJ

 

384

 

79.5

 

 

Q4 2011

 

Q3 2012

 

Q4 2013

 

Q2 2014

 

1,965

 

 

12.5%

 

13.3%

 

5.5%

 

0.3%

 

  6. Avalon Irvine II

 

Irvine, CA

 

179

 

46.2

 

 

Q3 2011

 

Q4 2012

 

Q2 2013

 

Q4 2013

 

1,840

 

 

0.0%

 

4.5%

 

0.0%

 

0.0%

 

  7. Avalon Exeter

 

Boston, MA

 

187

 

114.0

 

 

Q2 2011

 

Q3 2013

 

Q1 2014

 

Q3 2014

 

4,335

 

 

-

 

-

 

-

 

-

 

  8. AVA Ballard

 

Seattle, WA

 

265

 

68.8

 

 

Q3 2011

 

Q2 2013

 

Q3 2013

 

Q1 2014

 

1,715

 

 

-

 

-

 

-

 

-

 

  9. Avalon Shelton III

 

Shelton, CT

 

251

 

47.9

 

 

Q3 2011

 

Q1 2013

 

Q3 2013

 

Q1 2014

 

1,745

 

 

-

 

-

 

-

 

-

 

10. Avalon Hackensack

 

Hackensack, NJ

 

226

 

47.2

 

 

Q3 2011

 

Q2 2013

 

Q4 2013

 

Q2 2014

 

2,555

 

 

-

 

-

 

-

 

-

 

11. AVA H Street

 

Washington, D.C.

 

138

 

35.1

 

 

Q4 2011

 

Q4 2012

 

Q2 2013

 

Q4 2013

 

2,065

 

 

-

 

-

 

-

 

-

 

12. Avalon West Chelsea/AVA High Line

 

New York, NY

 

715

 

276.1

 

 

Q4 2011

 

Q4 2013

 

Q1 2015

 

Q3 2015

 

3,300

 

 

-

 

-

 

-

 

-

 

13. Avalon Natick

 

Natick, MA

 

407

 

82.9

 

 

Q4 2011

 

Q2 2013

 

Q2 2014

 

Q4 2014

 

1,805

 

 

-

 

-

 

-

 

-

 

14. Avalon Mosaic

 

Tysons Corner, VA

 

531

 

120.9

 

 

Q1 2012

 

Q4 2013

 

Q3 2014

 

Q1 2015

 

1,930

 

 

-

 

-

 

-

 

-

 

15. Avalon East Norwalk

 

Norwalk, CT

 

240

 

45.5

 

 

Q2 2012

 

Q2 2013

 

Q1 2014

 

Q3 2014

 

1,840

 

 

-

 

-

 

-

 

-

 

16. Avalon Dublin Station II

 

Dublin, CA

 

255

 

73.0

 

 

Q2 2012

 

Q4 2013

 

Q2 2014

 

Q4 2014

 

2,080

 

 

-

 

-

 

-

 

-

 

17. Avalon/AVA Assembly Row

 

Somerville, MA

 

448

 

113.5

 

 

Q2 2012

 

Q4 2013

 

Q3 2014

 

Q1 2015

 

2,310

 

 

-

 

-

 

-

 

-

 

18. AVA University District

 

Seattle, WA

 

283

 

76.7

 

 

Q2 2012

 

Q1 2014

 

Q3 2014

 

Q1 2015

 

1,760

 

 

-

 

-

 

-

 

-

 

19. Avalon at Wesmont Station II

 

Wood-Ridge, NJ

 

140

 

24.8

 

 

Q3 2012

 

Q2 2013

 

Q4 2013

 

Q2 2014

 

1,940

 

 

-

 

-

 

-

 

-

 

20. Avalon Bloomingdale

 

Bloomingdale, NJ

 

174

 

31.1

 

 

Q3 2012

 

Q3 2013

 

Q1 2014

 

Q3 2014

 

1,955

 

 

-

 

-

 

-

 

-

 

21. Avalon Morrison Park

 

San Jose, CA

 

250

 

79.7

 

 

Q3 2012

 

Q1 2014

 

Q3 2014

 

Q1 2015

 

2,560

 

 

-

 

-

 

-

 

-

 

22. AVA 55 Ninth

 

San Francisco, CA

 

273

 

123.3

 

 

Q3 2012

 

Q2 2014

 

Q4 2014

 

Q2 2015

 

3,160

 

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal / Weighted Average

 

 

 

6,614

 

$ 1,802.1

 

 

 

 

 

 

 

 

 

 

$ 2,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed this Quarter:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 1. Avalon Ocean Avenue

 

San Francisco, CA

 

173

 

$ 59.4

 

 

Q4 2010

 

Q1 2012

 

Q3 2012

 

Q1 2013

 

$ 2,585

 

 

100.0%

 

96.5%

 

95.4%

 

62.8%

 

 2. Avalon North Bergen

 

North Bergen, NJ

 

164

 

41.7

 

 

Q4 2010

 

Q2 2012

 

Q3 2012

 

Q1 2013

 

2,055

 

 

100.0%

 

98.2%

 

97.6%

 

71.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal / Weighted Average

 

 

 

337

 

$ 101.1

 

 

 

 

 

 

 

 

 

 

$ 2,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Weighted Average

 

 

 

6,951

 

$  1,903.2

 

 

 

 

 

 

 

 

 

 

$ 2,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Projected NOI as a % of Total Capital Cost (1)

 

6.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Stabilized Development Communities Completed in Prior Quarters (6):

 

 

Asset Cost Basis (millions)

 

 

 

Source

 

 1. Avalon Rockville Centre

 

Rockville Centre, NY

349

 

$ 109.7

 

 

Capital Cost, Under Construction and Completed This Quarter

 

$ 1,903.2  

 

Att. 9

 

 2. AVA Queen Anne

 

Seattle, WA

 

203

 

54.6

 

 

Less: Remaining to Invest, Under Construction and Completed This Quarter

 

(961.2)  

 

Att. 11

 

 3. Avalon Cohasset

 

Cohasset, MA

 

220

 

55.0

 

 

Subtotal: Asset Cost Basis, Under Construction and Completed This Quarter

 

942.0  

 

 

 

 4. Avalon Andover

 

Andover, MA

 

115

 

26.6

 

 

Capital Cost, Prior Quarters Non-Stabilized Development Completions

 

245.9  

 

Att. 9

 

 

 

 

 

887

 

$ 245.9

 

 

Total Asset Cost Basis, Under Construction and Non-Stabilized Development

 

$ 1,187.9  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Income/(Deficit) for communities presented on this attachment was $7.7 million for Q3 2012.

 

(1)

See Attachment #14 - 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 October 19, 2012.

 

 

(3)

Includes apartment homes for which leases have been executed or non-refundable deposits have been paid as of October 19, 2012.

 

 

(4)

Physical occupancy based on apartment homes occupied as of October 19, 2012.

 

 

(5)

Represents Economic Occupancy for the third quarter of 2012.

 

 

(6)

Represents Development Communities completed in prior quarters that had not achieved Stabilized Operations for the entire current quarter.  These assets achieved 89.6% economic occupancy during the third quarter of 2012.

 

 

 

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 third quarter of 2012.

 

 

 

 

 

 

15



 

 

 

 

 

 

 

Attachment 10

 

AvalonBay Communities, Inc.

Redevelopment Communities as of September 30, 2012

 

Community Information

 

 

 

Total

 

Schedule

 

Avg

 

 

 

 

 

 

 

Number

 

Capital

 

 

 

 

 

 

 

 

 

Post-Renovated

 

Homes

 

 

 

 

 

of Apt

 

Cost (1)(2)

 

Acquisition /

 

 

 

 

 

Restabilized

 

Rent Per

 

Completed

 

      Community Name

 

Location

 

Homes

 

(millions)

 

Completion

 

Start

 

Complete

 

Ops (2)

 

Home (2)

 

@ 9/30/2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Under Redevelopment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Avalon Sunset Towers

 

San Francisco, CA

 

243

 

$   13.1

 

Q2 1996

 

Q4 2010

 

Q3 2013

 

Q1 2014

 

$   2,680

 

107

 

2. AVA Ballston

 

Arlington, VA

 

344

 

13.9

 

Q4 1993

 

Q3 2011

 

Q4 2012

 

Q2 2013

 

2,185

 

275

 

3. Avalon at Center Place

 

Providence, RI

 

225

 

6.7

 

Q2 1997

 

Q4 2011

 

Q4 2012

 

Q2 2013

 

2,425

 

221

 

4. AVA Cortez Hill (3)

 

San Diego, CA

 

299

 

10.5

 

Q1 1998

 

Q4 2011

 

Q4 2012

 

Q2 2013

 

1,690

 

270

 

5. Eaves San Jose

 

San Jose, CA

 

440

 

14.9

 

Q3 1996

 

Q4 2011

 

Q2 2013

 

Q4 2013

 

1,855

 

242

 

6. Eaves Fairfax

 

Fairfax, VA

 

141

 

4.9

 

Q2 1997

 

Q2 2012

 

Q4 2012

 

Q2 2013

 

1,740

 

99

 

7. The Avalon

 

Bronxville, NY

 

110

 

8.3

 

Q3 1999

 

Q3 2012

 

Q3 2013

 

Q1 2014

 

4,080

 

--

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal/ Weighted Average

 

1,802

 

$   72.3

 

 

 

 

 

 

 

 

 

$   2,200

 

1,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed this Quarter:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Eaves Foster City

 

Foster City, CA

 

288

 

$   7.0

 

Q1 1994

 

Q3 2011

 

Q3 2012

 

Q1 2013

 

$   2,045

 

288

 

2. Eaves Santa Margarita

 

Rancho Santa Margarita, CA

 

301

 

7.0

 

Q2 1997

 

Q3 2011

 

Q3 2012

 

Q4 2012

 

1,500

 

301

 

3. Avalon Wilton I

 

Wilton, CT

 

102

 

5.4

 

Q2 1997

 

Q4 2011

 

Q3 2012

 

Q4 2012

 

3,385

 

102

 

4. Avalon at Lexington

 

Lexington, MA

 

198

 

7.1

 

Q3 1994

 

Q4 2011

 

Q3 2012

 

Q4 2012

 

2,165

 

198

 

5. AVA Newport

 

Costa Mesa, CA

 

145

 

5.6

 

Q3 1996

 

Q4 2011

 

Q3 2012

 

Q4 2012

 

1,890

 

145

 

Subtotal/ Weighted Average

 

1,034

 

$   32.1

 

 

 

 

 

 

 

 

 

$   2,020

 

1,034

 

Total / Weighted Average

 

2,836

 

$ 104.4

 

 

 

 

 

 

 

 

 

$   2,135

 

2,248

 

 

 

 

 

 

 

(1)    Exclusive of costs incurred prior to Redevelopment.

 

(2)    See Attachment #14 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

 

(3)    As part of the budgeted redevelopment, the Company converted vacant retail space into 5 additional apartment homes.

 

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 third quarter of 2012.

 

 

 

 

 

 

16



 

 

 

Attachment 11

 

AvalonBay Communities, Inc.

Summary of Development and Redevelopment Community Activity (1) as of September 30, 2012

(Dollars in Thousands)

 

DEVELOPMENT

 

 

 

Apt Homes

 

Total Capital

 

Cost of Homes

 

 

 

Construction in

 

 

 

Completed &

 

Cost Invested

 

Completed &

 

Remaining to

 

Progress at

 

 

 

Occupied

 

During Period (2)

 

Occupied (3)

 

Invest (4)

 

Period End (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - 2010 Actual

 

1,730

 

$

404,910

 

$

578,159

 

$

466,991

 

$

296,292

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - 2011 Actual

 

1,086

 

$

525,391

 

$

298,259

 

$

804,231

 

$

578,809

 

 

 

 

 

 

 

 

 

 

 

 

 

2012 Projected:

 

 

 

 

 

 

 

 

 

 

 

Quarter 1 (Actual)

 

213

 

$

151,594

 

$

54,692

 

$

775,395

 

$

663,459

 

Quarter 2 (Actual)

 

698

 

189,325

 

189,201

 

896,049

 

652,000

 

Quarter 3 (Actual)

 

631

 

193,187

 

164,161

 

961,234

 

708,497

 

Quarter 4 (Projected)

 

438

 

179,216

 

109,140

 

782,018

 

699,975

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - 2012 Projected

 

1,980

 

$

713,322

 

$

517,194

 

 

 

 

 

 

REDEVELOPMENT

 

 

 

 

 

Total Capital

 

 

 

 

 

Reconstruction in

 

 

 

 

 

Cost Invested

 

 

 

Remaining to

 

Progress at

 

 

 

 

 

During Period (2)

 

 

 

Invest (4)

 

Period End

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - 2010 Actual

 

 

 

$

47,688

 

 

 

$

73,518

 

$

13,412

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - 2011 Actual

 

 

 

$

62,986

 

 

 

$

87,646

 

$

18,790

 

 

 

 

 

 

 

 

 

 

 

 

 

2012 Projected:

 

 

 

 

 

 

 

 

 

 

 

Quarter 1 (Actual)

 

 

 

$

15,307

 

 

 

$

67,657

 

$

25,158

 

Quarter 2 (Actual)

 

 

 

25,317

 

 

 

46,322

 

29,493

 

Quarter 3 (Actual)

 

 

 

26,305

 

 

 

26,878

 

16,953

 

Quarter 4 (Projected)

 

 

 

15,344

 

 

 

11,534

 

11,770

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - 2012 Projected

 

 

 

$

82,273

 

 

 

 

 

 

 

 

 

(1)

Data is presented for all communities currently under development or redevelopment.

 

 

(2)

Represents Total Capital Cost incurred or expected to be incurred during the quarter, year or in total. See Attachment #14 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

 

 

(3)

Represents projected Total Capital Cost of apartment homes completed and occupied, or projected to be occupied during the quarter or year. 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, or projected to be occupied during the quarter or year.

 

 

(4)

Represents projected Total Capital Cost remaining to invest on communities currently under construction or reconstruction.

 

 

(5)

2012 Quarter 3 (Actual) reflects construction in progress for communities under development and includes $23.8 million related to communities not currently under development or redevelopment.

 

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 third quarter of 2012.

 

 

 

17



 

 

 

Attachment 12

 

AvalonBay Communities, Inc.

Future Development as of September 30, 2012

 

 

DEVELOPMENT RIGHTS (1)

 

 

 

 

 

 

Estimated

 

Total Capital

 

 

# of Rights

 

Number

 

Cost (1) (2)

 

 

 

 

of Homes

 

(millions)

 

 

 

 

 

 

 

 

 

 

Development Rights as of 3/31/2012

 

34

 

 

9,415

 

 

$

2,804

 

 

 

 

 

 

 

 

 

 

 

Q2 2012 Additions

 

3

 

 

922

 

 

$

275

 

Q2 2012 Construction Starts

 

(4

)

 

(1,227

)

 

(308

)

Q2 2012 Adjustments to existing Dev Rights

 

-

 

 

(74

)

 

24

 

 

 

 

 

 

 

 

 

 

 

Development Rights as of 6/30/2012

 

33

 

 

9,036

 

 

$

2,795

 

 

 

 

 

 

 

 

 

 

 

Q3 2012 Additions

 

2

 

 

566

 

 

$

146

 

Q3 2012 Construction Starts

 

(4

)

 

(837

)

 

(259

)

Q3 2012 Adjustments to existing Dev Rights

 

 

 

 

72

 

 

(38

)

 

 

 

 

 

 

 

 

 

 

Development Rights as of 9/30/2012

 

31

 

 

8,837

 

 

$

2,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Development Rights by Market as of September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boston, MA

 

5

 

 

1,515

 

 

$

547

 

Fairfield-New Haven, CT

 

2

 

 

290

 

 

63

 

New York, NY (3)

 

3

 

 

1,405

 

 

545

 

New Jersey

 

8

 

 

2,131

 

 

468

 

Long Island, NY

 

1

 

 

303

 

 

76

 

Washington, DC Metro

 

3

 

 

885

 

 

216

 

Seattle, WA

 

3

 

 

739

 

 

174

 

Oakland-East Bay, CA

 

1

 

 

255

 

 

73

 

San Francisco, CA

 

1

 

 

182

 

 

85

 

Los Angeles, CA

 

3

 

 

911

 

 

342

 

San Diego, CA

 

1

 

 

221

 

 

55

 

 

 

 

 

 

 

 

 

 

 

Total

 

31

 

 

8,837

 

 

$

2,644

 

 

 

(1)

See Attachment #14 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

 

 

(2)

The Company currently owns land, which was originally acquired for $230 million, for the future development of 10 of 31 Development Rights.  Construction is expected to commence in 2012 or 2013 on 7 of the 10 Development Rights for which land is owned.

 

 

(3)

Includes development rights in Westchester County and Rockland County, NY.

 

 

 

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 third quarter of 2012.

 

 

 

18



 

 

 

Attachment 13

 

AvalonBay Communities, Inc.

Summary of Disposition Activity (1)

as of September 30, 2012

(Dollars in thousands)

 

 

 

 

 

 

 

 

Accumulated

 

 

 

Weighted Average

 

 

 

Number of

 

Gross Sales

 

 

 

Depreciation

 

Economic

 

Initial Year

 

Weighted Average

 

Communities Sold (2)

 

Price

 

GAAP Gain

 

and Other

 

Gain (Loss) (3)

 

Mkt. Cap Rate (3) (4)

 

Unleveraged IRR (3) (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1998 - 2002:

 

 

 

 

 

 

 

 

 

 

 

 

 

41 Communities

 

$

969,339

 

$

224,887

 

$

85,935

 

$

138,952

 

7.9%

 

14.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2003 - 2007:

 

 

 

 

 

 

 

 

 

 

 

 

 

33 Communities, 1 Office Building

 

$

1,649,678

 

$

787,521

 

$

126,149

 

$

661,372

 

4.9%

 

16.4%

 

9 Land Parcels (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2008:

 

 

 

 

 

 

 

 

 

 

 

 

 

10 Communities

 

$

564,950

 

$

284,901

 

$

55,786

 

$

229,115

 

5.1%

 

14.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009:

 

 

 

 

 

 

 

 

 

 

 

 

 

5 Communities, 2 Land Parcels (6)

 

$

193,186

 

$

68,717

 

$

16,692

 

$

52,025

 

6.5%

 

13.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010:

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Communities, 1 Office Building (6)

 

$

198,600

 

$

74,074

 

$

51,977

 

$

22,097

 

6.6%

 

9.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Communities, 3 Land Parcels (7)

 

$

292,965

 

$

287,132

 

$

156,233

 

$

130,899

 

5.1%

 

16.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Communities, 1 Land Parcel (8)

 

$

186,050

 

$

95,329

 

$

45,147

 

$

50,182

 

5.3%

 

11.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1998 - 2012 Total

 

 

 

 

 

 

 

 

 

 

 

 

 

97 Communities, 2 Office Buildings,

 

$

4,054,768

 

$

1,822,561

 

$

537,919

 

$

1,284,642

 

5.9%

 

14.7%

 

15 Land Parcels

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Activity excludes dispositions by Fund I and dispositions to joint venture entities in which the Company retains an economic interest.

 

 

(2)

For dispositions from January 1, 1998 through December 31, 2002 the Weighted Average Holding Period is 4.5 years, for dispositions from January 1, 2003 through December 31, 2007, the Weighted Average Holding Period is 7.6 years and for dispositions from January 1, 2008 through September 30, 2012 the Weighted Average Holding Period is 12.6 years.  For January 1, 1998 through September 30, 2012 the Weighted Average Holding Period is 8.5 years.

 

 

(3)

See Attachment #14 - Definitions and Reconciliations of Non-GAAP Financial Measures and Other Terms.

 

 

(4)

For purposes of this attachment, land and office building sales and the disposition of any real estate held in a joint venture for any or all of the Company’s investment period, are not included in the calculation of Weighted Average Holding Period, Weighted Average Initial Year Market Cap Rate, or Weighted Average Unleveraged IRR.

 

 

(5)

GAAP gains for sales during this period include our proportionate share of communities held by joint ventures and the recovery of any previously recognized impairment losses.

 

 

(6)

2009 and 2010 GAAP and Economic Gain include the recognition of approximately $2,770 and $2,675, respectively, in deferred gains for prior year dispositions, recognition of which occurred in conjunction with settlement of associated legal matters.

 

 

(7)

2011 results exclude the Company’s proportionate gain of $7,675 associated with an asset exchange.  2011 Accumulated Depreciation and Other includes $20,210 in impairment charges, recorded  in prior periods, on two of the land parcels sold.

 

 

(8)

2012 Accumulated Depreciation and Other includes $16,363 in impairment charges for the land parcel sold.

 

 

 

19



 

Attachment 14

 

 

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 attributable to common stockholders 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, impairment write-downs of depreciable real estate assets, write-downs of investments in affiliates which are driven by a decrease in the value of depreciable real estate assets held by the affiliate 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 attributable to common stockholders is as follows (dollars in thousands):

 

 

 

 

 

Q3

 

Q3

 

YTD

 

YTD

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

 $

86,844

 

$

44,824

 

$

301,512

 

$

118,537

Depreciation - real estate assets, including discontinued operations and joint venture adjustments

 

67,590

 

64,499

 

199,593

 

191,933

Distributions to noncontrolling interests, including discontinued operations

 

7

 

7

 

21

 

20

Gain on sale of unconsolidated entities holding previously depreciated real estate assets

 

--

 

(1,743)

 

(1,471)

 

(1,743)

Gain on sale of previously depreciated real estate assets

 

--

 

--

 

(95,049)

 

(7,675)

Gain on acquisition of unconsolidated real estate entity

 

(14,194)

 

--

 

(14,194)

 

--

 

 

 

 

 

 

 

 

 

FFO attributable to common stockholders

 

 $

140,247

 

$

107,587

 

$

390,412

 

$

301,072

 

 

 

 

 

 

 

 

 

Average shares outstanding - diluted

 

97,546,569

 

92,340,368

 

96,401,558

 

89,199,498

 

 

 

 

 

 

 

 

 

Earnings per share - diluted

 

 $

0.89

 

$

0.49

 

$

3.13

 

$

1.33

 

 

 

 

 

 

 

 

 

FFO per common share - diluted

 

 $

1.44

 

$

1.17

 

$

4.05

 

$

3.38

 

 

 

The Company’s results for the three and nine months ended September 30, 2012 and the comparable prior year periods include the non-routine items outlined in the following table:

 

20



 

Attachment 14

 

 

 

 

Non-Routine Items

Decrease (Increase) in Net income and FFO

(dollars in thousands)

 

 

 

Q3

 

YTD

 

Q3

 

YTD

 

 

2012

 

2012

 

2011

 

2011

 

 

 

 

 

 

 

 

 

Prepayment penalties and write off of deferred financing costs

 

$

-

 

$

1,853

 

$

-

 

$

-

Acquisition costs - consolidated and joint venture (1)

 

88

 

392

 

139

 

1,414

Gain on land sales

 

-

 

(280)

 

(13,716)

 

(13,716)

Joint venture promoted income (2)

 

(4,055)

 

(4,055)

 

-

 

-

Legal settlements and severance related costs

 

895

 

1,362

 

-

 

(400)

Interest income on escrow

 

-

 

-

 

-

 

(2,478)

Land impairments

 

-

 

-

 

14,052

 

14,052

 

 

 

 

 

 

 

 

 

Total non-routine items

 

$

(3,072)

 

$

(728)

 

$

475

 

$

(1,128)

 

 

 

 

 

 

 

 

 

Weighted average dilutive shares outstanding

 

97,546,569

 

96,401,558

 

92,340,368

 

89,199,498

 

 

(1)  Includes the Company’s proportionate share of acquisition costs for joint venture acquisitions.

(2) Represents promoted income related to the acquisition of Avalon Del Rey.

 

 

 

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 fourth quarter and full year 2012 to the range provided for projected EPS (diluted) is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Low

 

High

 

 

 

Range

 

Range

 

 

 

 

 

 

 

Projected EPS (diluted) - Q4 2012

 

$ 1.34

 

$ 1.39

 

Projected depreciation (real estate related)

 

0.67

 

0.72

 

Projected gain on sale of operating communities

 

(0.61)

 

(0.66)

 

 

 

 

 

 

 

Projected FFO per share (diluted) - Q4 2012

 

$ 1.40

 

$ 1.45

 

 

 

 

 

 

 

Projected EPS (diluted) - Full Year 2012

 

$ 4.47

 

$ 4.52

 

Projected depreciation (real estate related)

 

2.74

 

2.79

 

Projected gain on sale of operating communities

 

(1.76)

 

(1.81)

 

 

 

 

 

 

 

Projected FFO per share (diluted) - Full Year 2012

 

$ 5.45

 

$ 5.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 expenses, expensed development and other pursuit costs, net interest expense, gain (loss) on extinguishment of debt, general and administrative expense, joint venture income (loss), depreciation expense, impairment loss on land holdings, 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

 

21



 

Attachment 14

 

 

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.

 

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):  

 

 

 

 

 

Q3

 

Q3

 

Q2

 

Q1

 

Q4

 

YTD

 

YTD

 

 

 

2012

 

2011

 

2012

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$ 86,747

 

$ 44,677

 

$ 156,821

 

$ 57,609

 

$ 322,965

 

$ 301,178

 

$ 118,405

 

Indirect operating expenses, net of corporate income

 

7,396

 

7,743

 

8,617

 

8,036

 

8,096

 

24,049

 

22,490

 

Investments and investment management expense

 

1,582

 

1,328

 

1,499

 

1,446

 

1,266

 

4,526

 

3,860

 

Expensed acquisition, development and other pursuit costs

 

608

 

633

 

901

 

239

 

330

 

1,749

 

2,636

 

Interest expense, net

 

33,985

 

42,659

 

33,193

 

33,626

 

37,640

 

100,804

 

130,174

 

Loss on extinguishment of debt, net

 

--

 

--

 

--

 

1,179

 

1,940

 

1,179

 

--

 

General and administrative expense

 

8,372

 

6,087

 

8,316

 

9,710

 

7,847

 

26,398

 

21,524

 

Joint venture income

 

(5,553)

 

(2,615)

 

(2,073)

 

(2,175)

 

(1,607)

 

(9,801)

 

(3,513)

 

Depreciation expense

 

65,998

 

60,893

 

64,875

 

62,561

 

61,991

 

193,434

 

180,953

 

Impairment loss

 

--

 

14,052

 

--

 

--

 

--

 

--

 

14,052

 

Gain on sale of real estate assets

 

--

 

(13,716)

 

(95,329)

 

--

 

(273,415)

 

(95,329)

 

(21,391)

 

(Income) loss from discontinued operations

 

--

 

(327)

 

(1,152)

 

(1,717)

 

845

 

(2,870)

 

(631)

 

Gain on acquisition of unconsolidated real estate entity

 

(14,194)

 

--

 

--

 

--

 

--

 

(14,194)

 

--

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI from continuing operations

 

$ 184,941

 

$ 161,414

 

$ 175,668

 

$ 170,514

 

$ 167,898

 

$ 531,123

 

$ 468,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Established:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New England

 

$ 27,374

 

$ 26,650

 

$ 27,263

 

$ 26,631

 

$ 27,299

 

$ 81,268

 

$ 76,930

 

Metro NY/NJ

 

41,051

 

38,885

 

40,637

 

39,591

 

38,571

 

121,280

 

113,166

 

Mid-Atlantic

 

18,618

 

17,954

 

18,722

 

18,816

 

19,063

 

56,156

 

53,912

 

Pacific NW

 

5,984

 

5,003

 

5,651

 

5,572

 

5,229

 

17,207

 

15,145

 

No. California

 

24,316

 

20,979

 

23,235

 

22,793

 

21,917

 

70,344

 

61,317

 

So. California

 

17,224

 

16,220

 

17,023

 

16,979

 

17,326

 

51,225

 

47,076

 

Total Established

 

134,567

 

125,691

 

132,531

 

130,382

 

129,405

 

397,480

 

367,546

 

Other Stabilized

 

25,691

 

20,987

 

23,244

 

22,705

 

21,344

 

71,641

 

57,347

 

Development/Redevelopment

 

24,683

 

14,736

 

19,893

 

17,427

 

17,149

 

62,002

 

43,666

 

NOI from continuing operations

 

$ 184,941

 

$ 161,414

 

$ 175,668

 

$ 170,514

 

$ 167,898

 

$ 531,123

 

$ 468,559

 

 

 

 

22


 


 

Attachment 14

 

NOI as reported by the Company does not include the operating results from discontinued operations (i.e., assets sold during the period January 1, 2011 through September 30, 2012 or classified as held for sale at September 30, 2012).  A reconciliation of NOI from communities sold or classified as discontinued operations to Net Income for these communities is as follows (dollars in thousands):

 

 

 

 

 

Q3

 

Q3

 

YTD

 

YTD

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

$

 

$

327 

 

$

2,870 

 

$

631 

 

Interest expense, net

 

 

1,311 

 

133 

 

3,922 

 

Loss on extinguishment of debt

 

 

 

602 

 

 

Depreciation expense

 

 

1,843 

 

895 

 

6,002 

 

 

 

 

 

 

 

 

 

 

 

NOI from discontinued operations

 

$

 

$

 3,481 

 

$

 4,500 

 

$

 10,555 

 

 

 

 

 

 

 

 

 

 

 

NOI from assets sold

 

 

3,481 

 

4,500 

 

10,555 

 

 

 

 

 

 

 

 

 

 

 

NOI from discontinued operations

 

$

 

$

 3,481 

 

$

 4,500 

 

$

 10,555 

 

 

 

 

Projected NOI, as used within this release for certain Development 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 Communities, Projected NOI is calculated based on the first twelve months 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 minus projected stabilized economic vacancy and adjusted for projected stabilized concessions plus projected stabilized other rental revenue.  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.  Projected gross potential for Development Communities and dispositions is based on leased rents for occupied homes and management’s best estimate of rental levels for homes which are currently unleased, as well as those homes which will become available for lease during the twelve month forward period used to develop Projected NOI.  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 Communities, on an aggregated weighted average basis, assists investors in understanding management’s estimate of the likely impact on operations of the Development 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 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 associated with the Company’s apartment homes, 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.

 

23



 

Attachment 14

 

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):

 

 

 

 

 

Q3

 

Q3

 

YTD

 

YTD

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Rental revenue (GAAP basis)

 

$ 194,812

 

$ 184,394

 

$ 572,316

 

$ 539,885

 

Concessions amortized

 

59

 

794

 

354

 

3,577

 

Concessions granted

 

(53)

 

(97)

 

(139)

 

(1,231)

 

 

 

 

 

 

 

 

 

 

 

Rental revenue (with concessions on a cash basis)

 

$ 194,818

 

$ 185,091

 

$ 572,531

 

$ 542,231

 

 

 

 

 

 

 

 

 

 

 

% change -- GAAP revenue

 

 

 

5.6%

 

 

 

6.0%

 

 

 

 

 

 

 

 

 

 

 

% change -- cash revenue

 

 

 

5.3%

 

 

 

5.6%

 

 

 

 

Economic Gain (Loss) is calculated by the Company as the gain (loss) 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 (Loss) to be an appropriate supplemental measure to gain (loss) 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 (Loss) for each of the communities presented is estimated based on their respective final settlement statements.  A reconciliation of Economic Gain (Loss) to gain on sale in accordance with GAAP for the quarter ended September 30, 2012 as well as prior years’ activities is presented on Attachment 13.

 

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 or loss attributable to the Company before interest income and expense, income taxes, depreciation and amortization.

 

A reconciliation of EBITDA and a calculation of Interest Coverage for the third quarter of 2012 are as follows (dollars in thousands):

 

 

 

Net income attributable to common stockholders

 

$ 86,844

 

Interest expense, net

 

33,985

 

Depreciation expense

 

65,998

 

 

 

 

 

EBITDA

 

$ 186,827

 

 

 

 

 

Interest expense, net

 

$ 33,985

 

 

 

 

 

Interest coverage

 

5.5

 

 

 

 

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

 

24



 

Attachment 14

 

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, 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.  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.

 

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 nine months ended September 30, 2012 is as follows (dollars in thousands):

 

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Attachment 14

 

 

 

 

NOI for Established Communities

 

$ 397,480

 

NOI for Other Stabilized Communities

 

71,641

 

NOI for Development/Redevelopment Communities

 

62,002

 

NOI for discontinued operations

 

4,500

 

Total NOI generated by real estate assets

 

535,623

 

NOI on encumbered assets

 

145,099

 

NOI on unencumbered assets

 

390,524

 

 

 

 

 

Unencumbered NOI

 

73%

 

 

 

 

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 Operations, as defined below, as of the beginning of the prior year.  Therefore, for 2012, Established Communities are consolidated communities that have Stabilized Operations as of January 1, 2011 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.  While the Company establishes the classification of its communities on an annual basis, the Company may update the classification of its communities during the calendar year to the extent that its plans with regard to the disposition or redevelopment of a community change during the year.

 

Other Stabilized Communities are completed consolidated communities that the Company owns, which did not have stabilized operations as of January 1, 2011, but have stabilized occupancy as of January 1, 2012. Other Stabilized Communities do not include communities that are planning to conduct substantial redevelopment activities or that are planned for disposition within the current year. While the Company establishes the classification of its communities on an annual basis, the Company may update the classification of its communities during the calendar year to the extent that its plans with regard to the disposition or redevelopment of a community change during the year.

 

Development Communities are communities that are under construction during the current year. These communities may be partially or fully complete and operating.

 

Redevelopment Communities are communities where the Company owns a majority interest and where substantial redevelopment is in progress or is planned to begin during the current year.  Redevelopment is generally considered substantial when capital invested during the reconstruction effort is expected to exceed either $5,000,000 or 10% of the community’s pre-development basis and is expected to have a material impact on the community’s operations, including occupancy levels and future rental rates. While the Company establishes the classification of its communities on an annual basis, the Company may update the classification of its communities during the calendar year to the extent that its plans with regard to the disposition or redevelopment of a community change during the year.

 

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.

 

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Attachment 14

 

Stabilized/Restabilized Operations is defined as the earlier of (i) attainment of 95% physical occupancy for a full calendar quarter 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 management’s projected stabilized rents net of estimated stabilized concessions and including estimated stabilized other rental revenue.  Projected stabilized rents are based on one or more of the following:  (i) actual average leased rents on apartments leased through quarter end; (ii) projected rollover rents on apartments leased through quarter end where the lease term expires within the first twelve months of Stabilized Operations, and Market Rents on unleased homes.

 

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 controls the land through a ground lease or owns land to develop a new community.  The Company capitalizes related pre-development costs incurred in pursuit of new developments for which future development is probable.

 

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