Avalon: Merger Agreement Avalon Bay 2900 Eisenhower Avenue 3rd Floor Alexandria, VA 22314 (703)329-6300 For Immediate Release San Jose, CA and Alexandria, VA June 4--Bay Apartment Communities, Inc. (NYSE: BYA) and Avalon Properties, Inc (NYSE: AVN) jointly announced that their stockholders approved the merger of the two companies at separate stockholder meetings held earlier today. Bay Apartment Communities, the surviving corporation, has been renamed Avalon Bay Communities, Inc. (the "Company") and will begin trading on Friday June 5, 1998 on the New York Stock Exchange and Pacific Stock Exchange under the ticker symbol "AVB." Pursuant to the merger agreement between the two companies, each Avalon common stockholder will receive .7683 shares of stock in Avalon Bay. In addition, Avalon Bay assumed outstanding liabilities of Avalon of approximately $646 million. Avalon's preferred stockholders will receive one share of Avalon Bay preferred stock for each share of Avalon preferred stock, with the same rights, preferences and privileges provided by the Avalon preferred stock. The liquidation value of the preferred stock that will be issued is approximately $218 million. "Avalon Bay provides a depth of management and national presence that could not have been achieved separately for many years," noted Gilbert M. Meyer, Executive Chairman of Avalon Bay. Richard L. Michaux, CEO of Avalon Bay added, "with 75% of Avalon Bay's assets in the top 10 apartment markets of the country, $848 million of high yielding development and reconstruction communities scheduled for delivery over the next 24 months and 22 future development communities in the pipeline, we believe Avalon Bay is well positioned to deliver earnings growth for the foreseeable future." Avalon Bay is an equity REIT operating in the high barrier-to-entry markets of the United States and owns 144 communities totaling 41,746 apartment homes in 29 distinct markets. The Company has 17 communities under development. For more information on Avalon Bay, visit the Company's website at http://www.avalonbay.com. For additional information, please contact Richard L. Michaux, CEO, (703) 317-4601 or Gilbert M. Meyer, Executive Chairman, (408) 260-3715. This announcement contains 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. The words "foreseeable," "expect," "anticipate," "estimate," "projected," "budgeted" and other similar expressions which are predictions of or indicate future events and trends that do not relate solely to historical matters, including information concerning the Company's future FFO estimates, identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are in some cases beyond the control of the Company and may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results. No assurance can be provided that the anticipated benefits of this merger will be realized. Factors that impact the Company's ability to meet these forward-looking statements include, but are not limited to, the market acceptance of the Company's new developments, local market conditions, the ability to achieve projected costs, occupancy levels and revenues, the ability to successful integrate the merged companies and other factors discussed periodically in the Company's reports filed with the Securities and Exchange Commission. Ends.