AvalonBay: Financial News Release For Immediate Release March 10, 2000 AVALONBAY COMMUNITIES DECLARES INCREASE IN COMMON STOCK DIVIDEND, FILING OF FORM 10-K AND AMENDMENT TO SHAREHOLDER RIGHTS AGREEMENT (Alexandria, VA) AVALONBAY COMMUNITIES, INC. (NYSE/PCX Symbol: AVB) announced today that its Board of Directors declared an increase in the Company's common stock dividend for the first quarter of 2000. The first quarter dividend will be $.56 per share of common stock and will be payable on April 17, 2000, to stockholders of record as of the close of business on April 3, 2000. This increase represents approximately a 10% increase over the dividend for the first quarter of 1999. Richard L. Michaux, Chief Executive Officer and President, commented that "the first quarter dividend increase reflects our strong performance during 1999 and our continued strong prospects for 2000. We expect that at this dividend level, dividend distributions will now approximate 100% of our taxable income, and we note that 1999 dividends represented a payout ratio of only 64% of 1999 funds from operations." By aiming to distribute 100% of taxable income, the Company's goal is to retain as much cash flow as possible to finance its development pipeline while avoiding corporate level income taxes. The Company also announced the declaration of dividends on the Company's Series C, Series D, Series F, Series G and Series H Cumulative Redeemable Preferred Stock for the first quarter of 2000. The Series C, Series D and Series H Cumulative Redeemable Preferred Stock dividends are 53.125 cents per share, 50 cents per share and 54.375 cents per share, respectively, and are payable on June 15, 2000 to all Series C, Series D and Series H stockholders of record as of June 1, 2000. The Series F Cumulative Redeemable Preferred Stock dividend is 56.25 cents per share. The Series G Cumulative Redeemable Preferred Stock dividend is 56 cents per share. The Series F and Series G Cumulative Redeemable Preferred Stock dividends are payable on May 15, 2000 to all Series F and Series G stockholders of record as of May 1, 2000. The Company also announced that on March 10, 2000, it filed its Annual Report on Form 10-K for the year ended December 31, 1999. The financial presentation in the Form 10-K has been revised from that previously announced and reported to reflect a change in the manner of accounting for the June 1998 merger of Avalon Properties, Inc. and Bay Apartment Communities, Inc. This change increased 1998 and 1999 diluted net income per share and resulted in no change in diluted funds from operations per share for those years. As a result of the change in accounting, the Company's fully diluted net income per share for 1998, which was previously reported as $1.37, increased to $1.84, and the Company's fully diluted income per share for 1999, which was previously announced as $1.50, increased to $2.00. As noted above, diluted funds from operations per share did not change as a result of the change in accounting. The change in accounting, which was made following discussions with the SEC, is described more fully in the Form 10-K. The Company also announced an amendment to its Shareholder Rights Agreement to increase from 10% to 15% the limitation on ownership of the Company's common stock as applied to certain types of institutional investors. As a result of the amendment, pension plans meeting certain criteria under the Internal Revenue Code and investment companies registered under the Investment Company Act of 1940 may acquire or seek to acquire beneficial ownership of up to 15% of the outstanding shares of the Company's common stock without violating the ownership limit set forth in the Company's articles of incorporation or becoming "Acquiring Persons" or otherwise causing a "Distribution Date" to occur (as such terms are defined in the Shareholder Rights Agreement). A summary of the Shareholder Rights Agreement, as amended, is provided in the Company's Form 8-A/A that was filed with the SEC on February 28, 2000. In addition to that summary, copies of the Shareholder Rights Agreement and the amendment have been filed with the SEC as well. About AvalonBay AvalonBay owns or holds an ownership interest in 133 apartment communities containing 38,821 apartment homes in 12 states and the District of Columbia, of which presently 12 communities are under construction and 4 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. Information regarding "forward-looking statements" and the meaning and use of the term "funds from operations": Any statements in this release which are not statements of historical fact are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Any such forward-looking statements contained in this release are statements that are subject to risks and uncertainties. Factors which could cause actual results or events to differ materially from those in the forward-looking statements include, but are 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 in 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" and elsewhere in that report. 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. The Company believes that in order to facilitate a clear understanding of the operating results of the Company, FFO should be examined in conjunction with net income as presented in the Company's consolidated financial statements. FFO is determined in accordance with a definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, and is defined as net income (loss) computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation of real estate assets and after adjustments for unconsolidated partnerships and joint ventures. FFO does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indication of the Company's performance or to net cash flows from operating activities as determined by GAAP as a measure of liquidity, and FFO is not necessarily indicative of cash available to fund cash needs. Further, FFO as calculated by other REITs may not be comparable to the Company's calculation of FFO. Copyright 2000 AvalonBay Communities, Inc. All Rights Reserved End