Avalon: Earnings News Release AvalonBay Communities, Inc. For Immediate News Release April 22, 1999 AVALONBAY COMMUNITIES, INC. ANNOUNCES FIRST QUARTER 1999 OPERATING RESULTS (Alexandria, VA) AvalonBay Communities, Inc. (NYSE/PCX Symbol: AVB) reported today that Funds from Operations ("FFO") for the quarter ended March 31, 1999 was $48,860,000 or $.75 per share (diluted) compared to $19,736,000 or $.68 per share (diluted) for the comparable period of 1998, a per share increase of approximately 10.3%. AvalonBay Communities, Inc. (the "Company") is the surviving corporation from the merger (the "Merger") of Avalon Properties, Inc. ("Avalon") with and into the Company (sometimes hereinafter referred to as "Bay" before the Merger) on June 4, 1998. The first quarter 1999 results reflect the operating results of the surviving corporation, whereas the first quarter 1998 results reflect the operating results of Bay before the Merger. The Company will hold a conference call on April 22, 1999 at 11:00 a.m. Eastern Time to review these results. The number to call to participate is (612) 332-0228. To hear a replay of this call, please call (USA) (800) 475-6701 or (International) (320) 365-3844 - Access Code: 442374. Operating Results for the Quarter Ended March 31, 1999 Compared to the Prior Year Period Total revenue increased by $73,229,000, or 161.5% to $118,559,000, and earnings before interest, income taxes, depreciation and amortization ("EBITDA") increased by $44,439,000 or 153.3% to $73,427,000. The overall increase in revenue and EBITDA is primarily attributable to the Merger of Avalon with and into the Company on June 4, 1998. Newly developed, redeveloped and acquired communities as well as operating improvements related to Established Communities also contributed to the overall increase in revenue and EBITDA. Established Communities consist of all communities owned by Bay with stabilized occupancy levels and operating costs at January 1, 1998, and on a pro forma basis, those communities owned by Avalon at January 1, 1998 with stabilized occupancy levels and operating costs as of that date, such that a comparison of 1998 operating results to 1999 operating results is meaningful. Net income available to common stockholders was $9,862,000 or $.15 per share (basic and diluted) compared to $8,950,000 or $.34 per share (basic and diluted) for the prior year period. First quarter 1999 results include non-recurring charges totaling $16,524,000 primarily attributable to certain management and other organizational changes announced in the first quarter of 1999. The anticipated recurring annual cost savings attributable to these organizational changes total $3,500,000. For Established Communities, on a pro forma basis, average rental rates increased 5.1%, economic occupancy declined .5%, resulting in rental revenue growth of 4.6%. Total revenue increased $2,702,000 to $63,296,000. Operating expenses increased $959,000 or 5.6%. Expense growth was adversely impacted by (i) a change in an accounting policy whereby the threshold for capitalization of community improvements for the west coast portfolio was increased from $5,000 per occurrence to $15,000 per occurrence and (ii) severe winter weather in the Northeast, Mid-Atlantic and Midwest regions as compared to the prior year. Accordingly, net operating income increased by $1,743,000 or 4.0%. The table that follows summarizes the percentage change in first quarter 1999 operating results for Established Communities, on a pro forma basis, by region compared to the prior year period (positive percentage changes relate to increases, whereas negative percentage changes relate to decreases): Established Communities Operating Results by Region Percentage Change in 1Q99 Compared to 1Q98 Average Number Rental Economic Rental Operating Region of homes Rates Occupancy Revenue Expenses NOI -------------------------------------------------------------------------- No. California 6,461 4.4% (2.4%) 2.0% 6.8% 0.3% So. California 600 10.3% 0.5% 10.8% (0.1%) 16.8% Northeast 5,248 5.1% 1.0% 6.1% 4.9% 6.1% Mid-Atlantic 5,631 5.4% 0.6% 6.0% 5.4% 6.3% Midwest 498 5.3% (1.3%) 4.0% 7.6% 1.4% Development, Redevelopment and Acquisition Activity During the first quarter, one new development community, CentreMark, located in the San Jose, California area was completed containing 311 apartment homes for a total investment of $49 million. The Company expects this community to reach stabilized occupancy during the second quarter of 1999 with an estimated yield of 10.9%. Disposition Activity During the first quarter, the Company sold one existing community, Blairmore, located in the Central Valley, California area. Net proceeds from the sale of the 252 apartment home community were approximately $13 million. The proceeds will be re-deployed to development and redevelopment communities. Financing Activity In January 1999, the Company issued $125 million of medium-term notes that bear interest at 6.58% payable semi-annually on February 15 and August 15 and will mature on February 15, 2004. About AvalonBay Communities, Inc. AvalonBay, named the NAHB Development Company of the year for 1998/1999 and the Property Management Company of the Year for 1996/1997, currently owns or holds an ownership interest in 138 apartment communities containing 40,219 apartment homes in sixteen states and the District of Columbia, of which thirteen communities are under construction and twelve communities are under reconstruction. AvalonBay is an equity REIT in the business of developing, redeveloping, acquiring and managing multifamily apartment communities in high barrier-to-entry markets of the United States. More information on AvalonBay may be found on AvalonBay's Web Site at http://www.avalonbay.com. For additional information, please contact Richard L. Michaux, President and Chief Executive Officer at (703) 317-4602 or Thomas J. Sargeant, Chief Financial Officer at (703) 317-4635. This release 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. The forward-looking statements contained in this release are statements that involve risks and uncertainties, including, but not limited to, the demand for apartment homes, the effects of economic conditions, the impact of competition and competitive pricing, changes in construction costs, the results of financing efforts, potential acquisitions under agreement, the effects of the Company's accounting policies and other matters detailed 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, 1998 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements". Management generally considers Funds from Operations ("FFO") to be an appropriate measure of the operating performance of the Company because it provides investors an understanding of the ability of the Company to incur and service debt and to make capital expenditures. FFO is determined in accordance with a definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts which may differ from the methodology for computing FFO used by other REITs, and, accordingly, the Company's calculation of FFO may not be comparable to such other REITs. AVALONBAY COMMUNITIES, INC Company Profile at March 31, 1999 (Dollars in thousands except per share data) Selected Operating Information: Q1 99 Q1 98 % Change ----------- ----------- ---------- Funds from Operations $ 48,860 $ 19,736 147.6% Per common share - basic $ 0.75 $ 0.71 5.6% Per common share - diluted $ 0.75 $ 0.68 10.3% Net income available to common stockholders $ 9,682 $ 8,950 10.2% Per common share - basic $ 0.15 $ 0.34 (55.9%) Per common share - diluted $ 0.15 $ 0.34 (55.9%) Dividends declared - common $ 32,695 $ 11,003 197.1% Per common share $ 0.51 $ 0.42 21.4% Total EBITDA $ 73,427 $ 28,988 153.3% Average shares outstanding - basic 64,863,179 26,172,571 Average shares outstanding - diluted 65,213,620 29,165,062 Copyright (c) 1999 AvalonBay Communities, Inc. All Rights Reserved Ends.