AvalonBay Communities, Inc. For Immediate News Release July 18, 2000 AVALONBAY COMMUNITIES, INC. ANNOUNCES SECOND QUARTER 2000 OPERATING RESULTS (Alexandria, VA) AvalonBay Communities, Inc. (NYSE/PCX: AVB) reported today that Earnings per Share ("EPS") before gain on sale of communities for the quarter ended June 30, 2000 was $.44 (diluted) compared to $.37 (diluted) as previously reported for the comparable period of 1999, a per share increase of approximately 18.9%. For the six month period ended June 30, 2000, EPS before gain on sale of communities was $.88 (diluted) compared to $.45 (diluted) for the comparable period of 1999, a per share increase of approximately 95.6%. Funds from Operations ("FFO") for the quarter was $60,970,000 or $.90 per share (diluted) compared to $50,529,000 or $.77 per share (diluted) as previously reported for the comparable period of 1999, a per share increase of approximately 16.9%. FFO per share for the six months ended June 30, 2000 increased by 16.4% to $1.77 from $1.52 for the comparable period in 1999. EPS per common share (diluted) for the quarter ended June 30, 2000 decreased by $.20, or 25.0%, from the comparable period in 1999 to $.60. This decrease is primarily attributable to a decrease in gain on sale of communities. EPS per common share (diluted) for the six months ended June 30, 2000 increased by $0.27, or 30.7%, from the comparable period in 1999 to $1.15. The Company will hold a conference call on July 19, 2000 at 11:00 AM Eastern Time (EST) to review these results. The domestic number to call to participate is 1-800-952-4707. The international number to call to participate is 1-703-871-3077. The domestic number to hear a replay of this call is 1-888-266-2086, and the international number to hear a replay of this call is 1-703-925-2435 - Access Code: 4333196. Operating Results for the Quarter Ended June 30, 2000 Compared to the Prior Year Period Total revenue increased by $16,770,000, or 13.6% to $139,958,000, and earnings before interest, income taxes, depreciation and amortization ("EBITDA") increased by $13,664,000 or 17.8% to $90,439,000. The overall increase in revenue and EBITDA is primarily attributable to newly developed and redeveloped communities as well as operating improvements related to Established Communities. Established Communities Operating Results 2Q00 Compared to 2Q99 Rental Operating Revenue Expenses NOI ---------------------------------------------------- No. California 8.6% 1.2% 11.1% So. California 7.2% (2.1%) 11.6% Northeast 7.2% 9.6% 6.3% Mid-Atlantic 7.4% 6.0% 8.0% Midwest 5.6% (1.4%) 10.1% Pacific Northwest 16.1% (14.1%) 29.6% For Established Communities, rental revenue increased 7.7%, comprised of rental rate growth of 5.9% and an increase in economic occupancy of 1.8%. Total revenue increased $5,533,000 to $77,374,000. Operating expenses increased $835,000, or 4.0%. Accordingly, net operating income increased by $4,698,000 or 9.2%. Operating Results for the Six Months Ended June 30, 2000 Compared to the Prior Year Period Total revenue increased by $32,912,000, or 13.6% to $275,046,000, and EBITDA increased by $27,936,000 or 18.6% to $178,167,000. The overall increase in revenue and EBITDA is primarily attributable to newly developed and redeveloped communities as well as operating improvements related to Established Communities. Established Communities Operating Results YTD 00 Compared to YTD 99 Rental Operating Revenue Expenses NOI ---------------------------------------------------- No. California 7.7% (0.1%) 10.3% So. California 7.5% (2.1%) 12.2% Northeast 6.6% 5.3% 7.1% Mid-Atlantic 6.8% 4.0% 7.9% Midwest 5.2% 0.7% 8.0% Pacific Northwest 26.2% (1.8%) 39.7% For Established Communities, rental revenue increased 7.2%, comprised of rental rate growth of 5.6% and an increase in economic occupancy of 1.6%. Total revenue increased $10,210,000 to $152,650,000. Operating expenses increased $948,000, or 2.3%. Accordingly, net operating income increased by $9,262,000 or 9.1%. Development Activity During the second quarter, one development community, Avalon Willow (located in Mamaroneck, New York) was completed containing 227 apartment homes for a total investment of $46.8 million. The first full quarter of stabilized occupancy for this community will be the third quarter of 2000. Also during the second quarter, one development community, Avalon Manor (located in Freehold, New Jersey) commenced. When completed, this community will contain 296 apartment homes with a projected total investment of $33.1 million. Disposition Activity During the second quarter, the Company sold two existing communities. The net proceeds from the sale of these communities, which contain a total of 486 apartment homes, were approximately $26.1 million. The proceeds from the sale will be re-deployed to communities currently under construction or reconstruction. Recent Financing Activity Although there was no capital markets activity during the second quarter, the Company priced an offering of $150,000,000 of medium-term notes with a maturity of 8 years at an interest rate of 8.25%. Settlement was on Monday, July 17, 2000. About AvalonBay Communities, Inc. AvalonBay, named the NAHB Development Company of the year for 1998 and 1999 currently owns or holds an ownership interest in 134 apartment communities containing 39,050 apartment homes in twelve states and the District of Columbia, of which nine communities are under construction and six 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 Website 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, Executive Vice President and 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 are subject to certain risks and uncertainties, including, but not limited to, possible changes in 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, 1999 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements". Management generally considers 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 based on a definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") 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. Revised Definition of FFO For the six months ended June 30, 1999, the Company's previously reported FFO excluded a nonrecurring restructuring charge of $16,590 in conformance with the NAREIT definition of FFO calculations then in place ("Original Definition"). The Company has adopted NAREIT's new FFO calculation, pursuant to NAREIT's White Paper dated October 1999, which modifies the FFO calculation to include certain nonrecurring charges ("Clarified Definition"). Although both FFO calculations are presented on the attached financial statements, the Company believes the comparison of FFO using the Original Definition represents the best guide to investors of comparable operations and growth between years. Earnings Release Attachments The Company produces Earnings Release Attachments ("the Attachments") that provide detailed information regarding operating, development, redevelopment, disposition and acquisition activity. These Attachments are available via the Company's website and through e-mail distribution. Access to the Attachments through the Company's website is available at http://www.avalonbay.com/earnings. If you would like to receive future press releases via e-mail, please register at http://www.avalonbay.com/website/PressRegistration.nsf. Some items referenced in the earnings release may require the Adobe Acrobat 4.0 Reader. If you do not have the Adobe Acrobat 4.0 Reader, you may download it now at the following website address: http://www.adobe.com/products/acrobat/readstep.html. Copyright 2000 AvalonBay Communities, Inc. All Rights Reserved AVALONBAY COMMUNITIES, INC Company Profile at June 30, 2000 (Dollars in thousands except per share data) Selected Operating Information: Q2 00 Q2 99 % Change ----------- ----------- -------- FFO - Current Definition(1) $ 60,970 $ 50,529 20.7% Per common share - basic $ 0.91 $ 0.77 18.2% Per common share - diluted $ 0.90 $ 0.77 16.9% FFO - Former Definition(2) $ 60,970 $ 50,595 20.5% Per common share - basic $ 0.91 $ 0.77 18.2% Per common share - diluted $ 0.90 $ 0.77 16.9% Net income available to common stockholders $ 40,712 $ 52,977 (23.2%) Per common share - basic $ 0.61 $ 0.81 (24.7%) Per common share - diluted $ 0.60 $ 0.80 (25.0%) Dividends declared - common $ 37,215 $ 33,071 12.5% Per common share $ 0.56 $ 0.51 9.8% Total EBITDA $ 90,439 $ 76,775 17.8% Average shares outstanding - basic 67,031,890 65,355,505 Average shares outstanding - diluted 67,893,518 65,868,570 YTD 00 YTD 99 % Change ----------- ----------- -------- FFO - Current Definition(1) $ 119,584 $ 82,901 44.2% Per common share - basic $ 1.79 $ 1.27 40.9% Per common share - diluted $ 1.77 $ 1.26 40.5% FFO - Former Definition(2) $ 119,584 $ 99,491 20.2% Per common share - basic $ 1.79 $ 1.53 17.0% Per common share - diluted $ 1.77 $ 1.52 16.4% Net income available to common stockholders $ 77,939 $ 57,932 34.5% Per common share - basic $ 1.17 $ 0.89 31.5% Per common share - diluted $ 1.15 $ 0.88 30.7% Dividends declared - common $ 74,157 $ 65,766 12.8% Per common share $ 1.12 $ 1.02 9.8% Total EBITDA $ 178,167 $ 150,231 18.6% Average shares outstanding - basic 66,866,160 65,079,447 Average shares outstanding - diluted 67,500,205 65,563,727 (1) FFO is calculated based on NAREIT's October 1999 White Paper on FFO. Non-recurring charges of $16,590 for the six months ended June 30, 1999 were previously excluded. (2) As previously reported for the quarter and six months ended June 30, 1999. End