Where You
Want to Be
2009 ANNUAL REPORT
AvalonBay Communities, Inc. is an equity REIT primarily engaged in developing, redeveloping, acquiring,
and managing quality apartment communities in high barrier-to-entry markets within the United States.
Our markets are located in the Northeast, Mid-Atlantic, Midwest, Pacific Northwest, and Northern and
Southern California. At year-end 2009, our total market capitalization was $10.7 billion. Over the last ten
years, the compound annual growth rate of our total shareholder return was 14.4% and the compound
annual growth rate of our dividend was 5.7% during the same time period. Our strategy is to be leaders in
customer insight, market research and capital allocation, delivering a range of multifamily offerings tailored
to serve the needs of the most attractive customer segments in the best-performing US submarkets.
AvalonBay Communities’ common shares are traded on the New York Stock Exchange under the ticker
symbol AVB and are included in the S&P 500 Index. More information about AvalonBay may be found on
our website at www.avalonbay.com.
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TOTAL SHA REHO L DER RE TURN (1)
NAV PER SHARE GROWTH (2)
FFO PER SHARE GROWTH ( 3)
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AVB Multifamily Sector Avg.
AVB Multifamily Sector Avg.
Source: SNL Financial
AVB Multifamily Sector Avg.
Source: SNL Financial, Green Street Advisors
COVER ANd OPPOSITE: VIEwS Of NEw YORk CITY fROM AVALON fORT GREENE.
LOCATEd IN dOwNTOwN BROOkLYN, ThIS 42-STORY dEVELOPMENT BEGAN
LEASING IN fOURTh QUARTER 2009 ANd CONTAINS 631 APARTMENT hOMES.
Where You
Want to Be
F o r ou r c u s t o m e r s , a s s o c i a t e s
& ou r sHa r eHo l d e r s
AVALONBAY COMMUNITIES, INC. 1
A v Al o n b u r bAn k , cA
2 AVALONBAY COMMUNITIES, INC.
T O O U R ShA R EhO LdE R S
W e began 2009 immersed in one of the most
years, and ended the year with a sense that
the worst had passed. Indeed, markets recovered robustly
challenging economic environments in 75
from troughs reached during early 2009, as the S&P 500
Index was up 26% for the year and the Morgan Stanley
REIT Index rose 29%. for AvalonBay, Total Shareholder
Return was 44% in 2009.
despite these improved returns, the economic and op-
erating environment we faced in 2009 left little room for
error. Our response to the challenges presented by last
year’s turmoil was supported by a strong balance sheet,
a proven long-term business strategy and more than 20
years of cycle-tested management experience. we ex-
pected apartment fundamentals to deteriorate through-
out the year at an accelerating pace and they did. As
the capital markets began to heal, we enhanced our fi-
nancial flexibility by improving liquidity, extending debt
maturities and adding equity to our capital structure. At
the same time, we kept our eye on the future and the im-
proving long-term fundamentals we expect will emerge.
By year-end, we had increased investment activity – both
development and acquisitions – to levels appropriate for
an emerging economic recovery.
Last year’s report, titled Built to Endure, described an or-
ganization with the experience and resources to preserve
value during periods of economic stress and to pursue
opportunities out of reach for others. This year, whether
you are an investor, an associate within our company, or
a resident in one of our communities, we believe Avalon-
Bay is Where You Want To Be: an organization alert and
responsive to challenging market conditions while being
prepared for the next phase of growth and opportunities.
In this letter, we’ll review results and how actions we took
last year position us for continued success. we will then
look at the demand/supply fundamentals influencing both
our business and our industry now and going forward.
This context will provide the backdrop for a discussion of
trends we see emerging with the new decade ahead that
will affect both our industry and our business.
Looking Back: 2009 In Review
Our early outlook anticipated a difficult operating envi-
ronment with revenue declining at an accelerating pace
for much of the year. while that early directional read
on operating trends was accurate, job losses exceeded
expectations and Net Operating Income (NOI) from our
Same Store portfolio decreased 7% for the year, slightly
more than our original outlook of 5%.
Earnings per Share (EPS) declined 63% to $1.93 from
lower NOI, reduced gains on asset sales and impairment
losses recognized as we re-scaled the business. funds
from Operations (ffO) decreased 4% to $3.89. Adjusting
for non-routine charges, operating ffO decreased 11%.
Unprecedented economic uncertainty called for caution,
and we responded in a number of ways:
• Anticipating weak operating fundamentals in 2009
and into 2010, we reduced investment activity and
development risk during 2009 by deferring new devel-
opment starts until the fourth quarter. By then, greater
visibility on the economy, the capital markets and the
prospect of improving fundamentals supported a
measured level of new development. Accordingly, we
broke ground on two communities in late 2009 at a
total cost of $65 million.
• we completed and delivered nine new communities,
totaling over 2,500 apartment homes for a Total Capi-
tal Cost of $800 million. At year-end 2009, we had
seven developments under construction – half the
volume underway at the prior year-end.
• we sold five assets, compared to 11 sold in the
prior year, for an aggregate price of $180 million.
These sales provided a total Economic Gain of $44
AVALONBAY COMMUNITIES, INC. 3
A v Al o n Mo r nInG S I D E P Ar k, nY
W He r e Yo u W a n t t o Be
We have a diverse, high-quality
portfolio of apartment homes
in the nation’s premier, supply-
constrained coastal markets.
To visit all our communities, go to www.avaloncommunities.com.
4 AVALONBAY COMMUNITIES, INC.
million, a 13% Unleveraged IRR on our investment
more than three years, allowing us to avoid additional se-
at a weighted average Initial Year Market Cap Rate of
cured debt and preserve access to the unsecured markets.
6.5% - evidence of long-term value creation.
• Redevelopment activity resulted in four completions
during the year for a Total Capital Cost of approxi-
mately $30 million (excluding costs incurred prior to
redevelopment). we started four redevelopments
with incremental estimated Total Capital Costs of
$50 million.
This investment activity was supported by significant fi-
nancing activity. we sourced over $1.7 billion of new capi-
tal in 2009, boosting liquidity, lowering interest rates and
FINANCIAL FLEXIBILITY
Fund II Equity
Commitments
$92 Million
Continuous
Equity
Program
$103 Million
Unsecured Debt
$500 Million
Dispositions
$193 Million
Secured Debt
$834 Million
reducing refinancing risk by extending durations. we is-
Source: Company Reports
sued unsecured debt, tendered for and redeemed unse-
cured notes, and launched a Continuous Equity Program
(CEP). These efforts left us with cash on hand and modest
during 2009 we issued $103 million of common stock
capital needs heading into 2010.
under the CEP. This program is an efficient and cost
effective source of equity capital and financial flexibility,
while refinancing activity for the year mitigated finan-
allowing us to better match investment with financing
cial and maturity risk, it also provided substantial cost
activity while mitigating pricing risk.
savings. The weighted average interest rate on all our
debt at the beginning of 2009 was 5.3%. By year-end,
Last year’s capital markets activity was extraordinary and
that same measure had dropped to 5.1% on $4 billion of
underscores not only the substantial improvement in
debt, representing an annual savings of $8 million per
the capital markets during the year but also the financial
year. floating rate debt declined to just 9% of our Total
strength and flexibility we enjoy with one of the stron-
Market Capitalization.
gest balance sheets in the REIT industry.
with these savings comes enhanced financial flexibility.
The issuance of unsecured debt in 2009 was our first in
The National Economy
and Apartment Fundamentals
M ODEST NE AR-TE RM MAT URIT IES
year’s job losses, which were unusual in scale and breadth
Our operating results in 2009 reflect the severity of last
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with no major metro area spared. during the first half of
2009, an average of 500,000 jobs were lost each month.
Losses continued into the second half of 2009 at a lesser
pace, with monthly job losses averaging 250,000. But the
damage was already done and, by year-end, unemploy-
ment reached 10%, further weakening renter demand.
while job losses continue, emerging GdP growth, healing
8
1
$
credit markets and rising consumer confidence suggest
2010 2011 2012 2013 2014 2015 2016 2017 2018
2010 will be a transition year. Experience teaches us that
Source: Company Reports
job growth lags GdP growth by three or four quarters. So
for 2010, we expect job losses early in the year will turn
AVALONBAY COMMUNITIES, INC. 5
W He r e Yo u W a n t t o Be
From product design to the level
of service in our communities,
we focus relentlessly on meeting
the needs of our customers—to
make their AvalonBay experience
Time Well Spent.
6 AVALONBAY COMMUNITIES, INC.
to job gains and apartment fundamentals will transition
a struggling economy slows household formation, it also
from weak to modestly positive during the year. Changes
creates pent-up demand for apartments that will be re-
in rental revenue historically lag employment changes by
leased once job growth resumes.
one to two quarters, suggesting a sustained positive im-
pact on rental revenue is unlikely until 2011.
The longer-term outlook supports our expectations for
a positive and compelling story, driven by historically
low levels of new construction and anticipated demand
from both economic recovery and demographic trends.
Between 2004 and 2007, construction starts for new mul-
tifamily rental product averaged 210,000 units per year.
By 2009, that number had fallen to 83,000 units and for
2010 we expect only 58,000 starts – a 70% decline from
2004-2007 levels.
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CONSTRAINE D SUPPLY (4)
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2004-07 Avg.
2009
2010
Source: Witten Advisors
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STRONG DEMAND FROM
FAVORABLE DEMOGRAPHICS
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4.0
3.0
2.0
1.0
0
2004-2009 2010-2015
Source: Census Bureau, National Multi-Housing Council
Looking Ahead: The New Decade
Over the last two decades, we’ve successfully steered
the company through several business cycles. while
apartment fundamentals will continue to operate within
cyclical ebbs and flows, the economic times we’re facing
are extraordinary and appear to be producing important
shifts impacting our industry:
• Shifts in Capital Formation. It will likely be harder to
raise capital and those companies with balance sheet
strength will disproportionately benefit. Going for-
Over the last four years, AvalonBay’s markets were less
ward, access to the public capital markets will be a sig-
impacted by the housing oversupply that crippled some
nificant competitive advantage, as increased regula-
other markets. Measured as a percentage of total housing
tion of the financial services industry may further
supply, new housing increased by 3.7% in our markets
constrain capital formation for private real estate
from 2005 through 2009 compared to 6.6% nationally.
owners. Most “merchant build” business models are
simply not viable in today’s environment, strengthen-
while these numbers suggest constrained supply, par-
ing the competitive environment for well-capitalized
ticularly for our high barrier coastal markets, it’s only part
public companies such as AvalonBay.
of the story. demographic trends suggest strong renter
demand is on the horizon. The population of young adults
• Shifts in Demand/Supply. for demand, we noted the
age 25 to 34 is expected to increase by 2.5 million over
demographic shift towards growth in younger age co-
the next five years, compared to1.6 million over the past
horts with higher propensities to rent. for supply, a
five years, a 60% increase. Individuals under 35 years
tougher credit environment will put further constraints
of age have the highest propensity to rent of any age
on new development for many of our competitors.
group, which bodes well for apartment demand. while
AVALONBAY COMMUNITIES, INC. 7
A v Al o n tIn t o n f Al lS, nJ
W He r e Yo u W a n t t o Be
With one of the strongest balance
sheets in the industry and a proven,
time-tested strategy, we are
well positioned for continued long-
term growth.
8 AVALONBAY COMMUNITIES, INC.
COM PE LL ING F UNDA MENTA L S IN F U TU RE YEARS (5)
400,000
300,000
200,000
100,000
0
-100,000
-200,000
2008
2009
2010
2011
2012
New Renter Demand New Apartment Supply
caution, we believe we are where we want to be to pursue
emerging opportunities:
• Liquidity. Our liquidity position is strong, leverage re-
mains modest by industry standards, and our commu-
nities remain
largely unencumbered, preserving
access to the unsecured debt markets. Based on
development and redevelopment activity currently
underway, we can meet all of our investment and
financing commitments well into 2012.
• Dividend. Our goal is to retain as much capital as pos-
sible while ensuring we cover the dividend from recur-
ring cash flow through all phases of the real estate
cycle. Over the past ten years, our regular quarterly
Source: Witten Advisors
dividend has increased 70% compared to a decline of
7% for the Multifamily Sector Average.
• Shift Toward Deleveraging. Increased stock price vola-
tility for REITs is in part related to leverage levels. while
OUTSIZED DIVIDEND GROWTH (6)
deleveraging has been and will continue to be painful for
some, well-capitalized public REITs are better-positioned
to reap the benefits of a simple, more equity-oriented
capital structure.
• Shifts in Government Policies. More government
regulation of energy use along with a greater focus
on environmental protection will likely have a signifi-
cant impact on urban growth patterns. Changes in
zoning to encourage greater density and proximity to
mass transit will benefit multifamily housing – particu-
larly those companies with a core competency in high-
density development like AvalonBay.
• Shifts in Rent vs. Buy Patterns. The housing correction
proved that the rise in U.S. homeownership was un-
sustainable. Since 2006, the U.S. homeownership
rate has dropped from its peak of approximately 69%
to about 67%, a gain of over 1.5 million potential renter
households. Indeed, historic government support for
homeownership could wane as policymakers conclude
that the nation is better served by a more balanced
housing policy.
Given these likely future trends, it’s fair to ask: how well is
AvalonBay positioned for the next decade? After a year of
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G
9
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2
-
9
9
9
1
80%
60%
40%
20%
0%
-20%
73%
-7%
AVB
Multifamily Sector Avg.
Source: Company Reports, SNL Financial
• Value Creation. A recovering economy, reduced con-
struction costs, expectations for a shortage of new
apartments and improving capital markets now sup-
port a modest level of new starts. At higher initial
yields, delivering new apartment homes into what we
expect will be a period of improving fundamentals
should provide outsized risk adjusted returns.
• Multiple Growth Platforms. In markets where develop-
ment is less attractive, we will allocate capital to re-
develop assets to enhance returns. In addition, we
have over $1 billion of capacity to pursue acquisitions
of existing assets in our markets through our invest-
ment management platform.
AVALONBAY COMMUNITIES, INC. 9
A v Al o n Ir vInE, cA
10 AVALONBAY COMMUNITIES, INC.
Conclusion
we entered the downturn in a strong position, with a
proven business strategy and sound financial foundation.
Today, the private “merchant build” model is under stress
and may not survive a new era of constrained capital for-
mation. But while the competitive landscape has changed,
new competitors will emerge. As the economic recovery
unfolds, the decisions we made last year position us well
to continue our long track record of outperformance.
we believe one of the most important aspects of our mis-
sion is to be a leader in capital allocation. Our strategy
of allocating capital to deliver a range of multifamily of-
ferings tailored to serve the needs of the most attractive
customer segments in the best performing US submar-
kets will serve our investors well. Going forward, as our
supply-constrained markets experience improving renter
demand as we expect, we would ask: where do you want
to be? whether through building, operating, upgrading or
acquiring high quality product in a risk-measured way, or
from thoughtful management of a strong balance sheet,
we believe we are on track to continue providing total
shareholder return and NAV growth near the top of the
15%
10%
5%
0%
-5%
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LONG-TERM OUTPERFORMANCE (1,2,3)
%
0
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0
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4
.
4
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%
7
.
2
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4
.
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8
.
4
%
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.
0
NAV
TSR
AVB Multifamily Sector Avg.
Source: Green Street Advisors, SNL Financial
And as always, thank you to our shareholders for their
continued support, to our associates for their extraordi-
nary efforts, and to our residents who have chosen to
make an AvalonBay community their home.
sector as we have done over the last decade.
BRYCE BLAIR, ChAIRMAN & CEO
In closing, we want to recognize Mike Meyer, who will
be retiring from our Board of directors this year. One of
the founders of AvalonBay Communities, Mike is a rec-
ognized leader in the real estate industry and has con-
tributed greatly to AvalonBay’s success through his prior
role as AvalonBay’s Executive Chairman and his long-
term service on our Board. we are grateful for his past
contributions and wish him the best.
AVALONBAY COMMUNITIES, INC. 11
A v Al o n AnAhE I M St
A D IuM, cA
12 AVALONBAY COMMUNITIES, INC.
NOTES
1.
Total Shareholder Return: The change in value over the period stated with all dividends reinvested. Total Shareholder Return is sometimes presented as the compound annual
growth rate. The Total Shareholder Return for each year within the timeframe presented may vary.
2.
Estimated NAV per Share Growth: The compound annual growth rate of Estimated NAV per Share as estimated by Green Street Advisors, Inc. during the periods indicated. Estimated
NAV per Share Growth for each year within the timeframe presented may vary.
3.
ffO per Share Growth: The compound annual growth rate of ffO per Share as reported during the period stated. ffO per Share Growth for each year within the timeframe presented
may vary. See page 15 for 10 year ffO reconciliation.
4.
US Multifamily Rental Construction Starts defined as construction starts per US Census Bureau data (historic data through 2009) and forecasts from witten Advisors (2010 forecast as
of 4Q 2009).
5.
New Renter demand defined as net apartment absorption (US) based on the year/year change in occupancy (US). New Apartment Supply defined as total US rental apartment
home completions. data and forecast from witten Advisors as of 4Q 2009.
6.
Includes regular dividends declared for each quarter of the ten years presented.
TABLE Of CONTENTS
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
33
Selected financial data
Management’s discussion and Analysis of financial Condition and Results of Operations
Quantitative and Qualitative disclosures About Market Risk
Changes in and disagreements with Accountants on Accounting and financial disclosure
Consolidated financial Statements
35
38
58
60
f-3
form 10-k Page
dEfINITIONS ANd RECONCILIATIONS Of NON-GAAP fINANCIAL MEASURES ANd OThER TERMS
This Annual Report 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. The definitions of non-GAAP financial measures and other terms not included
below (funds from Operations, Net Operating Income, Established/Same Store Communities) are contained in our Annual Report on form 10-k.
Net Asset Value (NAV) Per Share
The estimated market value of a company’s assets less the estimated market value of all current and long-term liabilities divided by the number of outstanding common shares and operating
partnership units.
Interest Coverage
EBITdA from continuing operations, excluding land gains and gain on the sale of investments in real estate joint ventures, divided by the sum of interest expense, net, and preferred dividends.
Interest Coverage is presented by the Company because it provides rating agencies and investors an additional means of comparing our ability to service debt obligations to that of other
companies. EBITdA is defined by the Company as net income before interest income and expense, income taxes, depreciation and amortization. EBITdA has been adjusted in the reconciliation
below to exclude $26,972,000 of costs associated with the tender offer completed in October 2009. A reconciliation of EBITdA and a calculation of Interest Coverage for the fourth quarter of
2009 are as follows (dollars in thousands):
Net income attributable to the Company
Interest expense, net
depreciation expense
depreciation expense (discontinued operations)
Tender offer costs
EBITdA (adj. for Tender offer costs)
EBITdA from continuing operations (adj. for Tender offer costs)
EBITdA from discontinued operations
EBITdA
EBITdA from continuing operations
Land gains
EBITdA from continuing operations (adj. for Tender offer costs), excluding land gains
Interest charges
Interest coverage
$32,394
42,107
55,392
1,200
26,972
$158,065
$117,078
40,987
$158,065
$117,078
(4,589)
$112,489
$42,107
2.7
AVALONBAY COMMUNITIES, INC. 13
Initial Year Market Capitalization Rate (Cap Rate)
Projected NOI of a single community for the first (or next succeeding) 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. Projected stabilized rental revenue represents management’s estimate of projected gross potential (based on leased rents for occupied homes and market
rents, for vacant homes) minus projected economic vacancy and adjusted for concessions. Projected stabilized operating expenses do not include interest, income taxes (if any), depreciation
or amortization, or any allocation of corporate-level property management overhead or general and administrative costs.
Leverage
Total debt as a percentage of Total Market Capitalization. Total Market Capitalization represents the aggregate of the market value of the Company’s common stock, the market value of the
Company’s operating partnership units outstanding (based on the market value of the Company’s common stock), and the outstanding principal balance of the Company’s debt. Management
believes that Leverage can be one useful measure of a real estate operating company’s long-term liquidity and balance sheet strength, because it shows an approximate relationship between a
company’s total debt and the current total market value of its assets based on the current price at which the Company’s common stock trades. Changes in Leverage also can influence changes
in per share results. A calculation of Leverage as of december 31, 2009 is as follows (dollars in thousands):
Total debt
Common stock
Operating partnership units
Total debt
Total Market Capitalization
$3,977,092
$6,694,343
1,260
3,977,092
$10,672,696
debt as % of capitalization 37.3%
Because Leverage changes with fluctuations in the Company’s stock price, which occur regularly, the Company’s Leverage may change even when the Company’s earnings, interest and debt
levels remain stable. Investors should also note that the net realizable value of the Company’s assets in liquidation is not easily determinable and may differ substantially from the Company’s
Total Market Capitalization.
Multifamily Sector Average
The Multifamily Sector Average is a weighted average based on Total Capitalization per SNL financial. The weighted average for “Total Shareholder Return” and “Outsized dividend Growth”
consists of AEC, AIV, BRE, CPT, EQR, ESS, hME, MAA, PPS and UdR. The weighted average for “ffO per Share Growth”consists of AEC, AIV, BRE, CPT, EQR, ESS, hME, MAA and UdR. The
weighted average for “NAV per Share Growth” includes all companies under Green Street Advisors, Inc.’s coverage for which data is available during each of the time periods presented and
consists of AEC, BRE, CPT, EQR, PPS and UdR.
Total Capital Cost
Includes all capitalized costs projected to be or actually incurred to develop the respective development or redevelopment community, or development right, including land acquisition costs,
construction costs, real estate taxes, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, all as determined in accordance
with GAAP. for redevelopment communities, Total Capital Cost excludes costs incurred prior to the start of redevelopment when indicated. with respect to communities where development
or redevelopment was completed in a prior or the current period, Total Capital Cost reflects the actual cost incurred, plus any contingency estimate made by management. Total Capital Cost
for communities identified as having joint venture ownership, either during construction or upon construction completion, represents the total projected joint venture contribution amount. for
joint ventures not in construction, Total Capital Cost is equal to gross real estate cost.
Economic Gain
The gain on sale in accordance with GAAP, less accumulated depreciation through the date of sale and any other non-cash adjustments that may be required under GAAP accounting.
Management generally considers Economic Gain to be an appropriate supplemental measure to gain on sale in accordance with GAAP because it helps investors understand the relationship
between the cash proceeds from a sale and the cash invested in the sold community. A reconciliation of Economic Gain to gain on sale in accordance with GAAP for the full year 2009 is
presented below (dollars in thousands):
Number of
Communities Sold
5 Communities
Gross Sales
Price
$179,675
GAAP Gain
$61,116
Accumulated
depreciation
and Other
$16,626
Economic
Gain
$44,490
Unleveraged IRR
Refers to the internal rate of return on sold communities 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 annual report 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.
14 AVALONBAY COMMUNITIES, INC.
Stock Performance Graph
The stock performance graph provides a comparison, from december 2004 through december 2009, of the cumulative total shareholder return (assuming reinvestment of dividends) among
the Company, the Standard & Poor’s (“S&P”) 500 Index, and a peer group index composed of 15 publicly-traded apartment REITs, including the Company (the “fTSE NAREIT Apartment REIT
Index”) based on an initial purchase price of $100. The fTSE NAREIT Apartment REIT Index includes only REITs that invest directly or indirectly primarily in the equity ownership of multifamily
residential apartment communities. Upon written request to the Company’s Secretary, the Company will provide any stockholder with a list of REITs included in the fTSE NAREIT Apartment
REIT Index. The historical information set forth below is not necessarily indicative of future performance. data for the fTSE NAREIT Apartment REIT Index and the S&P 500 Index were provided
to the Company by NAREIT.
STOCK PERFORMANCE
$200
$150
$100
$50
$0
2004
2005
2006
2007
2008
2009
AVB FTSE NAREIT Apartment REIT Index S&P 500 Index
Source: NAREIT Benchmarked at 12/04=$100
dec 2004
dec 2005
dec 2006
dec 2007
dec 2008
dec 2009
S&P 500 Index
fTSE NAREIT Apartment REIT Index
AvalonBay
$100
100
100
$105
115
123
$121
160
184
$128
120
137
$81
90
95
$102
117
137
Ten Year ffO Reconciliation
for the Year Ended
(dollars in thousands)
12-31--09
12-31-08
12-31-07
12-31-06
12-31-05
12-31-04
12-31-03
12-31-02
12-31-01
12-31-00
12-31-99
Net income
$155,647
$411,487
$358,160
$266,546
$310,468
$207,779
$262,503
$173,125
$248,997
$210,604
$172,276
dividends attributable to preferred stock
—
(10,454)
(8,700)
(8,700)
(8,700)
(8,700)
(10,744)
(17,896)
(40,035)
(39,779)
(39,779)
depreciation—real estate assets,
including discontinued operations and
joint venture adjustments
distributions to noncontrolling interests
including discontinued operations
Cumulative effect of change in accounting principle
Gain on sale of unconsolidated entities
Gain on sale of operating communities
funds from Operations attributable
to common stockholders
weighted average common shares
outstanding—diluted
221,415
203,082
184,731
165,982
163,252
159,221
129,207
143,026
128,086
120,208
108,679
66
—
—
216
—
280
—
391
—
(3,483)
(59,927)
(6,609)
1,363
—
—
3,048
(4,547)
—
1,263
1,601
1,559
1,759
1,975
—
—
—
—
—
—
—
—
—
—
(63,887)
(284,901)
(106,487)
(97,411)
(195,287)
(121,287)
(159,756)
(48,893)
(62,852)
(40,779)
(47,093)
$313,241
$315,947
$368,057
$320,199
$271,096
$235,514
$222,473
$250,963
$275,755
$252,013
$196,058
80,599,657 77,578,852 79,856,927 75,586,898 74,759,318 73,354,956 70,203,467 70,674,211
69,781,719 68,140,998 66,110,664
EPS—diluted
$1.93
$5.17
$4.38
$3.42
$4.05
$2.75
$3.60
$2.22
$3.02
$2.53
$2.03
ffO per common share—diluted
$3.89
$4.07
$4.61
$4.24
$3.63
$3.21
$3.17
$3.55
$3.95
$3.70
$2.97
AVALONBAY COMMUNITIES, INC. 15
AVALONBAY CORPORATE INfORMATION
BOARd Of dIRECTO RS
Bryce Blair
Chairman and CEO
AvalonBay Communities, Inc.
Bruce A. Choate (2,4,5)
President and CEO
watson Land Company
A real estate investment trust
John J. healy, Jr. (2,4,5)
founder and President
hyde Street holdings
A real estate investment trust
Gilbert M. Meyer (4)
President and CEO
Greenbriar homes Communities, Inc.
A residential developer and builder
Timothy J. Naughton (4)
President
AvalonBay Communities, Inc.
Lance R. Primis (1,3,5)
Managing Partner
Lance R. Primis and Partners, LLC
A management consulting firm
Peter S. Rummel (3,4)
Private Investor
h. Jay Sarles (2,3)
Private Investor
w. Edward walter (2,4)
President and CEO
host hotels & Resorts, Inc.
A real estate investment trust
1 Lead Independent director
2 Audit Committee
3 Compensation Committee
4 Investment and finance Committee
5 Nominating and Corporate
Committee
OffICERS
Bryce Blair
Chairman and CEO
Timothy J. Naughton
President
Thomas J. Sargeant
Chief financial Officer
Leo S. horey
Executive Vice President
Property Operations
Sean J. Breslin
Executive Vice President
Redevelopment and Asset
Management
Bill McLaughlin
Executive Vice President
development & Construction–
Northeast
Steve wilson
Executive Vice President
development & Construction–
west Coast and Mid-Atlantic
david w. Bellman
Senior Vice President
Construction–East Coast
deborah A. Coombs
Senior Vice President
Property Operations–
Northern CA, Pacific Nw
Jonathan B. Cox
Senior Vice President
development–
Mid-Atlantic, Mid-west
Lili f. dunn
Senior Vice President
Investments–National
frederick S. harris
Senior Vice President
development–NY
Joanne M. Lockridge
Senior Vice President
finance, Assistant Treasurer
and Assistant Secretary–National
J. Richard Morris
Senior Vice President
Construction–National
kevin P. O’Shea
Senior Vice President
Investment Management
Christopher L. Payne
Senior Vice President
development–Southern CA
Edward M. Schulman
Senior Vice President
General Counsel and
Secretary–National
Bernard J. ward
Senior Vice President
Property Operations–
East Coast, Mid-west
danyell d. Alders
Vice President
Property Operations–Southern CA
Trinity M. Blue
Vice President
Property Operations–Metro NY
Shannon E. Brennan
Vice President
Property Operations–
Mid-Atlantic
Alfred Brockunier III
Vice President
Construction–NY
duane w. Carlson
Vice President
Construction–Northern CA
Sean M. Clark
Vice President
Redevelopment and
Asset Management
Scott w. dale
Vice President
development–MA
Tsippora dingott
Vice President
Information Services–National
Mark forlenza
Vice President
development–CT
Brian E. fritz
Vice President
development–Pacific Nw
Patrick Gniadek
Vice President
Investments
karen A. hollinger
Vice President
Operations–National
Suzanne Jakstavich
Vice President
human Resources–National
Scott R. kinter
Vice President
Construction–Northeast
Ronald S. Ladell
Vice President
development–NJ
Lyn C. Lansdale
Vice President
Strategic Business Services–
National
Sarah k. Mathewson
Vice President
Property Operations–MA, RI
Mike f. Nootens
Vice President
Engineering–National
Michael J. Roberts
Vice President
development–MA
Robert S. Salkovitz
Vice President
Construction–Southern CA
keri A. Shea
Vice President
finance and Treasurer–National
Mona R. Stahling
Vice President
Operations–National
B. kevin Thompson
Vice President
Marketing–National
Matthew B. whalen
Vice President
development–Long Island
Philip M. wharton
Vice President
development–NY
16 AVALONBAY COMMUNITIES, INC.
fORM 10 -k
A copy of the Company’s annual report
on form 10-k as filed with the Securities
and Exchange Commission may be obtained
without charge by contacting Investor Rela-
tions.
S TOCk LIST INGS
NYSE–AVB
fOR wA Rd-L OOkING STATEM ENTS
This Annual Report contains “forward-
looking statements” within the meaning of
the Securities Act of 1933 and the Securities
Exchange Act of 1934. Please see our discus-
sion titled “forward-Looking Statements”
on page 55 of our Annual Report on form
10k for a discussion regarding risks associ-
ated with these statements.
AVALONBAY CORPORATE INfORMATION
San Jose, CA
400 Race Street
Suite 200
San Jose, CA 95126
Phone:
fax:
(408) 983-1500
(408) 287-9167
Seattle, wA
11808 Northup way
Suite w311
Bellevue, wA 98005
Phone:
fax:
(425) 576-2100
(425) 576-8447
Virginia Beach, VA
2901 Sabre Street
Suite 100
Virginia Beach, VA 23452
(757) 631-5000
Phone:
(757) 486-1063
fax:
woodbridge, NJ
woodbridge Place
517 Route One South
Suite 5500
Iselin, NJ 08830
Phone:
fax:
(732) 404-4800
(732) 283-9101
IN VE S TOR R ELAT IONS
Investor Relations
AvalonBay Communities, Inc.
Ballston Tower
671 N. Glebe Road
Suite 800
Arlington, VA 22203
Phone:
ir@avalonbay.com
(703) 329-6300 ext. 4747
wE BSITE
www.avalonbay.com
T RAN SfE R A GENT
BNY Mellon Shareowner Services
P.O. Box 358015
Pittsburgh, PA 15252-8015
(866) 230-0668
Phone:
INdE P E NdE NT A UdIT ORS
Ernst & Young, LLP
8484 westpark drive
McLean, VA 22102
Phone:
(703) 747-1000
hEAdQUARTERS
washington, dC
Ballston Tower
671 N. Glebe Road
Suite 800
Arlington, VA 22203
Phone:
fax:
(703) 329-6300
(703) 329-1459
REGIONAL Of fI CE S
Boston, MA
51 Sleeper Street
Suite 750
Boston, MA 02210
Phone:
fax:
(617) 654-9500
(617) 426-1610
Chicago, IL
180 North Arlington heights Road
Arlington heights, IL 60004
Phone:
fax:
(847) 342-0065
(847) 342-0075
Shelton, CT
1000 Bridgeport Avenue
Suite 258
Shelton, CT 06484
Phone:
fax:
(203) 926-2300
(203)-926-9744
Long Island, NY
135 Pinelawn Road
Suite 130 South
Melville, NY 11747
Phone:
fax:
(631) 843-0736
(631) 843-0737
Los Angeles, CA
16255 Ventura Boulevard
Suite 950
Encino, CA 91436
Phone:
fax:
(818) 784-2800
(818) 784-2810
Newport Beach, CA
4440 Von karman Avenue
Suite 300
Newport Beach, CA 92660
(949) 955-6200
Phone:
(949) 724-9208
fax:
New York, NY
275 Seventh Avenue
25th floor
New York, NY 10001
Phone:
fax:
(212) 370-9269
(212) 370-1415
San francisco, CA
185 Berry Street
Suite 3500
San francisco, CA 94107
(415) 284-9080
Phone:
(415) 546-4138
fax:
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Ballston Tower
671 N. Glebe Road
Suite 800 • Arlington • VA • 22203
www.avalonbay.com