================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 Commission file number 1-12672 AVALONBAY COMMUNITIES, INC. (Exact name of registrant as specified in its charter) -------------------- Maryland 77-0404318 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2900 Eisenhower Avenue, Suite 300 Alexandria, Virginia 22314 (Address of principal executive office, including zip code) (703) 329-6300 (Registrant's telephone number, including area code) -------------------- Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $.01 per share New York Stock Exchange, Pacific Exchange Preferred Stock Purchase Rights New York Stock Exchange, Pacific Exchange 8.50% Series C Cumulative Redeemable Preferred Stock, New York Stock Exchange, Pacific Exchange par value $.01 per share 8.00% Series D Cumulative Redeemable Preferred Stock, New York Stock Exchange, Pacific Exchange par value $.01 per share 9.00% Series F Cumulative Redeemable Preferred Stock, New York Stock Exchange, Pacific Exchange par value $.01 per share 8.96% Series G Cumulative Redeemable Preferred Stock, New York Stock Exchange, Pacific Exchange par value $.01 per share 8.70% Series H Cumulative Redeemable Preferred Stock, New York Stock Exchange, Pacific Exchange par value $.01 per share (Title of each class) (Name of each exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by nonaffiliates of the Registrant, as of March 1, 1999 was $2,015,257,270. The number of shares of the Registrant's Common Stock, par value $.01 per share, outstanding as of March 1, 1999 was 64,103,611. Documents Incorporated by Reference ----------------------------------- Portions of AvalonBay Communities Inc.'s Proxy Statement for the 1999 annual meeting of stockholders, a definitive copy of which will be filed with the SEC within 120 days after the end of the year covered by this Form 10-K, are incorporated by reference herein as portions of Part III of this Form 10-K. ================================================================================ TABLE OF CONTENTS PAGE ---- PART I ITEM 1. BUSINESS...................................................................................1 ITEM 2. COMMUNITIES................................................................................5 ITEM 3. LEGAL PROCEEDINGS.........................................................................29 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS...........................................29 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............................................................30 ITEM 6. SELECTED FINANCIAL DATA...................................................................31 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............................................34 ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......................................................................53 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............................................54 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...........................................54 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT............................................54 ITEM 11. EXECUTIVE COMPENSATION....................................................................54 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................................................54 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................54 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K..............................................................55 SIGNATURES ..........................................................................................60 PART I This Form 10-K 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 Company's actual results could differ materially from those set forth in each forward-looking statement. Certain factors that might cause such a difference are discussed in the section entitled "Forward-Looking Statements" on page 34 of this Form 10-K. ITEM 1. BUSINESS General AvalonBay Communities, Inc. (together with its subsidiaries, except as the context may otherwise require, the "Company") is a Maryland corporation that has elected to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended. The Company focuses on the ownership and operation of institutional-quality apartment communities in high barrier-to-entry markets of the United States. These markets are located in Northern and Southern California and selected states in the Mid-Atlantic, Northeast, Midwest and Pacific Northwest regions of the country. 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. In connection with the Merger, the Company changed its name from Bay Apartment Communities, Inc. to AvalonBay Communities, Inc. As of March 1, 1999, the Company owned or had an interest in 127 apartment communities containing 37,910 apartment homes in sixteen states and the District of Columbia, of which 13 communities containing 4,854 apartment homes were under redevelopment. The Company also owned 14 communities under development that will contain 3,262 apartment homes and rights to develop an additional 27 communities that, if developed, will contain an estimated 7,239 apartment homes. The Company obtains ownership in an apartment community by developing vacant land into a new community or by acquiring and either repositioning or redeveloping an existing community. In selecting sites for development, redevelopment or acquisition, the Company favors locations with close proximity to expanding employment centers and convenience to recreation areas, entertainment, shopping and dining. The Company's principal operating objectives are to increase operating cash flow and Funds from Operations ("FFO") and, as a result, long-term stockholder value. Management's strategies to achieve these objectives include: - - generating consistent, sustained earnings growth at each community through increased revenue (balancing high occupancy with premium pricing) and increased operating margins (from aggressive operating expense management); - - investing selectively in new acquisition, development and redevelopment communities in certain targeted market areas with high barriers-to-entry and, when appropriate, selectively disposing of communities which no longer meet the Company's investment objectives; and - - maintaining a conservative capital structure to provide continued access to capital markets at a low cost. Management believes that these strategies are generally best implemented by acquiring, building, rebuilding and managing institutional-quality assets in supply-constrained markets while maintaining the financial discipline to ensure balance sheet flexibility. Management believes that these strategies will lead to higher occupancy levels, increased rental rates and predictable and growing cash flow, although the Company cannot provide assurance that such results will be achieved. Acquisition and Disposition Strategy. The Company's acquisition strategy generally has focused on individual, opportunistic investments. During 1997, however, Bay and Avalon each completed significant portfolio acquisitions, Bay in Southern California and Avalon in the Midwest. In addition, during March 1998, Avalon announced that it had agreed to purchase ten communities to be developed (i.e., a purchase on a presale basis) from 1 an unaffiliated developer primarily in the Pacific Northwest and Midwest regions of the country. The presale acquisitions are expected to close during the next 9 to 42 months. The ten presale communities are to be acquired for an estimated aggregate purchase price of $387 million. Together, these communities are expected to contain 2,980 apartment homes when completed. The Company will manage these communities after acquiring ownership. This expansion is consistent with the Company's strategy to achieve long term earnings growth by providing a high quality platform for expansion while also providing additional economic and geographic diversity. These portfolio acquisitions achieved rapid penetration into supply-constrained markets new to Avalon and Bay. Management believes that through the Company's acquisition strategy, the Company has now targeted and penetrated many of the high barrier-to-entry markets of the United States. The Company expects to continue the disposition of assets that do not meet its long-term strategic vision. While current market conditions prevail, Management anticipates reinvesting capital obtained from dispositions into development and redevelopment of existing communities that offer greater investment returns and long-term growth potential than those communities identified for disposition. However, the Company cannot provide assurance that it will be able to complete its disposition strategy or that assets identified for sale can be sold on terms that are satisfactory to the Company. Development Strategy. Management's development strategy is to carefully select land for development and to follow established procedures that are designed to minimize both the cost and the risks of development. As one of the largest developers of multifamily apartment communities in high barrier-to-entry markets of the United States, the Company's regional offices identify development opportunities through their local market presence and access to local market information. In addition to the Company's principal executive offices in Alexandria, Virginia, the Company maintains super-regional offices in San Jose, California and Wilton, Connecticut. The Company also has regional acquisition, development, redevelopment, construction, reconstruction or administrative offices in or near Boston, Massachusetts; Chicago, Illinois; Minneapolis, Minnesota; New York, New York; Newport Beach, California; Princeton, New Jersey; Richmond, Virginia; and Seattle, Washington. After selecting a target site, the Company negotiates for the right to acquire the site either through an option or a long-term conditional contract. After land is acquired, the focus is generally shifted to construction. Except for certain mid-rise and high-rise apartment communities where third-party general contractors have historically been used, the Company has acted as its own general contractor. Management believes this achieves higher quality, greater control over schedules and significant cost savings. Construction progress is monitored by the development team and the property management team to ensure high quality workmanship and a smooth and timely transition into the leasing and operational phase. Redevelopment Strategy. The Company's redevelopment strategy is to selectively seek existing under-managed apartment communities in fully-developed neighborhoods and create value by substantially re-building them at significantly below replacement cost to a quality which is believed to be the highest quality apartment community or best rental value for an institutional-quality apartment community in its local area. Procedures have been established that are designed to minimize both the cost and risks of redevelopment. Redevelopment progress is monitored by redevelopment teams, which include key redevelopment, construction and property management personnel. The Company's Management believes significant cost savings are achieved by acting as its own general contractor. More importantly, this ensures high quality design and workmanship and a smooth and timely transition into the lease-up and re-stabilization phase. Property Management Strategy. Management intends to increase earnings through innovative, proactive property management that will result in higher revenue from communities. Intense focus on resident satisfaction, increasing rents as market conditions permit and managing community occupancy for optimal rental revenue levels comprise the Company's principal strategies for maximizing revenue. Generally, lease terms are staggered based on vacancy exposure by apartment type, so that lease expirations are better matched to each community's traffic patterns. On-site property management teams receive bonuses based largely upon the net operating income produced at their respective communities. The Company is also pursuing ancillary services which could provide additional revenue sources. Controlling operating expenses is another way in which Management intends to increase earnings growth. An increase in growth in the Company's portfolio and the resulting increase in revenue allows for fixed operating costs to be spread over a larger volume of revenue, thereby increasing operating margins. The Company also 2 aggressively pursues real estate tax appeals and scrutinizes other operating costs. Invoices are recorded on-site to ensure the careful monitoring of budgeted versus actual expenses, supplies are purchased in bulk where possible, third-party contracts are bid on a volume basis, turnover work is performed in-house or by third-parties generally depending upon the least costly alternative and preventive maintenance is undertaken regularly to maximize resident satisfaction and property and equipment life. In addition, the Company strives to retain residents through high levels of service in order to eliminate the cost of preparing an apartment home for a new resident and to reduce marketing and utilities costs. The Company also manages properties for third parties, believing that doing so will provide information about new markets or provide an acquisition opportunity, thereby enhancing opportunities for growth. Financing Strategy. The Company has consistently maintained, and intends to continue to maintain, a conservative capital structure, largely comprised of common equity. At December 31, 1998, debt-to-total market capitalization was 35.7%, and permanent long-term floating rate debt (not including borrowings under the Unsecured Facility) was only 1.4% of total market capitalization. Management currently intends to limit long-term floating rate debt to less than 10% of total market capitalization, although that policy may change from time to time. The industry and the Company have seen a reduction in the availability of cost effective capital over the last nine months. No assurance can be provided that cost effective capital will be available to meet future expenditures required to commence planned reconstruction activity or the construction of the Development Rights (as hereinafter defined). Before planned reconstruction activity or the construction of a Development Right commences, the Company intends to arrange adequate liquidity sources to complete such undertakings, although no assurance can be given in this regard. Management estimates that a significant portion of the Company's liquidity needs will be met from retained operating cash and borrowings under the Company's $600,000,000 variable rate unsecured credit facility (the "Unsecured Facility"). At March 1, 1999, $285,500,000 was outstanding, $30,200,000 was used to provide letters of credit and $284,300,000 was available for borrowing under the Unsecured Facility. To meet the balance of the Company's liquidity needs, it will be necessary to arrange additional capacity under the Company's existing Unsecured Facility, sell existing communities and/or issue additional debt or equity securities. While Management believes the Company has the financial position to expand its short term credit capacity and support such capital markets activity, no assurance can be provided that the Company will be successful in completing these arrangements, sales or offerings. If these transactions cannot be completed on a cost-effective basis, then a continuation of the current capital market conditions described herein could have a material adverse impact on the operating results and financial condition of the Company, including the abandonment of deferred development costs and a charge to earnings. Strong Earnings Growth Record. Earnings growth for 1998 was greater than the two predecessor companies would have achieved separately. This is reflected in the 17.5% increase in dividends declared for 1998 as compared to Bay's dividends for 1997 and a 21% quarter-to-quarter increase. Additionally, for the year ended December 31, 1998, FFO (reflecting the operating results for Bay through June 4, 1998 and for the combined company after that date) increased to $144,152,000 from $62,417,000 for the year ended December 31, 1997. Management generally considers FFO to be an appropriate measure of the Company's operating performance because it provides investors with an understanding of the Company's ability to incur and service debt and to make capital expenditures. Management believes that in order to facilitate a clear understanding of the Company's operating results, 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 3 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 is not necessarily indicative of cash available to fund cash needs. Further, FFO as disclosed by other REITs may not be comparable to the Company's calculation of FFO. Inflation and Tax Matters Substantially all of the leases at the Current Communities (as hereinafter defined) are for a term of one year or less, which may enable the Company to realize increased rents upon renewal of existing leases or commencement of new leases. Such short-term leases generally minimize the risk to the Company of the adverse effects of inflation, although as a general rule these leases permit residents to leave at the end of the lease term without penalty. The Company's current policy is to permit residents to terminate leases upon a 60-day written notice and payment of one month's rental as compensation for early termination. Short-term leases combined with relatively consistent demand allow rents, and therefore, cash flow from the portfolio to provide an attractive inflation hedge. The Company filed an election with its initial federal income tax return to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and intends to maintain its qualification as a REIT in the future. As a qualified REIT, with limited exceptions, the Company will not be taxed under federal and certain state income tax laws at the corporate level on its net income to the extent net income is distributed to the Company's stockholders. In addition, due to non-cash charges such as depreciation and amortization, the Company expects that the cash it will distribute to its stockholders will exceed its net income. Under current tax law, this excess, to the extent distributed, will be treated by stockholders as a non-taxable return of capital that will reduce the stockholders' basis in the shares of the Company's Common Stock. Environmental Matters Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required (in many instances regardless of knowledge or responsibility) to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at such property and may be held liable to a governmental entity or to third parties for property damage and for investigation and remediation costs incurred by such parties in connection with the contamination, which may be substantial. The presence of such substances (or the failure to properly remediate the contamination) may adversely affect the owner's ability to borrow against, sell or rent such property. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs it incurs in connection with the contamination. Certain federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos-containing materials ("ACMs") when such materials are in poor condition or in the event of construction, remodeling, renovation or demolition of a building. Such laws may impose liability for release of ACMs and may provide for third parties to seek recovery from owners or operators of real properties for personal injury associated with ACMs. In connection with its ownership and operation of the communities, the Company potentially may be liable for such costs. The Company is not aware that any ACMs were used in connection with the construction of the communities developed by the Company or by Avalon prior to the Merger. However, the Company is aware that ACMs were used in connection with the construction of certain communities acquired by the Company. The Company does not anticipate that it will incur any material liabilities in connection with the presence of ACMs at these communities. The Company currently has or intends to implement an operations and maintenance program for ACMs at each of the communities at which ACMs have been detected. All of the Company's stabilized operating communities, and all of the communities that are currently being developed or redeveloped, have been subjected to a Phase I or similar environmental assessment (which generally does not involve invasive techniques such as soil or ground water sampling). These assessments have not revealed any environmental conditions that the Company believes will have a material adverse effect on its business, assets, financial condition or results of operations. The Company is not aware of any other environmental conditions which would have such a material adverse effect. 4 However, the Company is aware that the migration of contamination from an upgradient landowner near Toscana, a community owned by the Company, has affected the groundwater there. The upgradient landowner is undertaking remedial response actions and the Company expects that the upgradient landowner will take all necessary remediation actions. The upgradient landowner has also provided an indemnity that runs to current and future owners of the Toscana property and upon which the Company may be able to rely if it incurs environmental liability arising from the groundwater contamination. The Company is also aware that certain communities have lead paint and the Company is undertaking or intends to undertake appropriate remediation or management activity. Additionally, prior to their respective initial public offerings, Bay and Avalon had each been occasionally involved in developing, managing, leasing and operating various properties for third parties. Consequently, each may be considered to have been an operator of such properties and, therefore, potentially liable for removal or remediation costs or other potential costs which could relate to hazardous or toxic substances. The Company is not aware of any material environmental liabilities with respect to properties managed or developed by either Bay or Avalon for such third parties. The Company cannot provide assurance that: - the environmental assessments identified all potential environmental liabilities; - no prior owner created any material environmental condition not known to the Company or the consultants who prepared the assessments; - no environmental liabilities developed since such environmental assessments were prepared; - the condition of land or operations in the vicinity of the Company's communities (such as the presence of underground storage tanks) will not affect the environmental condition of such communities; or - future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations) will not result in the imposition of environmental liability. ITEM 2. COMMUNITIES The Company's real estate investments as of March 1, 1999 consist primarily of apartment communities in various stages of the development cycle and land or land options held for development. Such investments can be divided into three categories: Number of Number of communities apartment homes ----------- --------------- Current Communities 127 37,910 Development Communities 14 3,262 Development Rights 27 7,239 (*) (*) Represents an estimate "Current Communities" are apartment communities where construction is complete and the community has either reached stabilized occupancy or is in the initial lease-up process or under redevelopment. Current Communities include the following sub-classifications: Stabilized Communities. Represents all Current Communities that have completed initial lease-up by attaining physical occupancy levels of at least 95% or have been completed for one year, whichever 5 occurs earlier. For evaluation purposes, the Company regards each Stabilized Community as falling into one of three categories: - West Coast Established Communities. Represents all Stabilized Communities owned by Bay as of January 1, 1997, with stabilized operating costs as of January 1, 1997 such that a comparison of 1997 operating results to 1998 operating results is meaningful. As of March 1, 1999, there were 22 West Coast Established Communities containing 5,702 apartment homes. - East Coast Established Communities. Represents all Stabilized Communities owned by Avalon as of January 1, 1997 and subsequently acquired by the Company in connection with the Merger, with stabilized operating costs as of January 1, 1997 such that a comparison of 1997 operating results to 1998 operating results is meaningful. As of March 1, 1999, there were 34 East Coast Established Communities containing 10,171 apartment homes. - Other Stabilized Communities. Represents Stabilized Communities as defined above, but which attained such classification or were acquired after January 1, 1997. As of March 1, 1999, there were 57 Other Stabilized Communities containing 16,473 apartment homes. Lease-Up Communities. Represents all Current Communities where construction has been complete for less than one year and the communities are in the initial lease-up process. As of March 1, 1999, there was currently one Lease-Up Community containing 710 apartment homes. Redevelopment Communities. Represents all Current Communities where substantial redevelopment has either begun or is scheduled to begin. Redevelopment is considered substantial when additional capital invested during the reconstruction effort exceeds the lesser of $5 million or 10% of the community's acquisition cost. As of March 1, 1999, there were 13 Redevelopment Communities containing 4,854 apartment homes. "Development Communities" are communities that are under construction and may be partially complete and operating and for which a final certificate of occupancy has not been received. "Development Rights" are development opportunities in the early phase of the development process for which the Company has an option to acquire land or owns land to develop a new community and where related pre-development costs have been incurred and capitalized in pursuit of these new developments. The Company's holdings under each of the above categories are discussed on the following pages. Current Communities The Current Communities are primarily garden-style apartment communities consisting of two-and three-story buildings in landscaped settings. The Current Communities, as of March 1, 1999, include 109 garden-style, 13 high-rise and 5 mid-rise apartment communities. The Current Communities offer many attractive amenities including vaulted ceilings, lofts, fireplaces, patios/decks and modern appliances. Other features, at various communities, include swimming pools, fitness centers, tennis courts and business centers. The Company also has an extensive and ongoing maintenance program to keep all communities and apartment homes free of deferred maintenance and, where vacant, available for immediate occupancy. Management believes that excellent design and service oriented property management focused on the specific needs of residents enhances market appeal to discriminating residents and will ultimately achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses. These Current Communities are institutional-quality multifamily apartment communities located in the following six geographic markets: 6 Number of Number of apartment Percentage of total communities at homes at apartment homes at --------------- ------------------------ ------------------------ 1-1-98 3-1-99 1-1-98 3-1-99 1-1-98 3-1-99 ------ ------ ------ ------ ------ ------ NORTHERN CALIFORNIA 37 35 9,900 9,538 64.1% 25.2% Alameda County, CA 9 9 2,523 2,523 16.3% 6.7% Central Valley, CA 5 3 1,502 850 9.7% 2.2% San Francisco, CA 5 5 1,062 1,062 6.9% 2.8% San Mateo County, CA 3 3 703 703 4.6% 1.9% Santa Clara County, CA 15 15 4,110 4,400 26.6% 11.6% SOUTHERN CALIFORNIA 14 18 4,850 5,816 31.4% 15.3% Los Angeles, CA 5 6 2,336 2,561 15.1% 6.8% Orange County, CA 6 8 1,574 2,022 10.2% 5.3% San Diego, CA 3 4 940 1,233 6.1% 3.2% PACIFIC NORTHWEST 3 5 691 1,376 4.5% 3.6% Portland, OR 1 1 279 279 1.8% 0.7% Seattle, WA 2 4 412 1,097 2.7% 2.9% NORTHEAST -- 27 -- 9,021 -- 23.8% Boston, MA -- 8 -- 2,375 -- 6.3% Fairfield County, CT -- 7 -- 2,234 -- 5.9% Hartford, CT -- 1 -- 932 -- 2.4% Long Island, NY -- 3 -- 575 -- 1.5% Northern New Jersey -- 1 -- 504 -- 1.3% Philadelphia, PA -- 4 -- 1,504 -- 4.0% Westchester, NY -- 3 -- 897 -- 2.4% MID-ATLANTIC -- 30 -- 8,825 -- 23.3% Baltimore, MD -- 4 -- 1,052 -- 2.8% Norfolk, VA -- 4 -- 904 -- 2.4% Northern Virgina -- 10 -- 3,711 -- 9.8% Richmond, VA -- 4 -- 1,103 -- 2.9% Southern Maryland -- 7 -- 1,747 -- 4.6% Washington, DC -- 1 -- 308 -- 0.8% MIDWEST -- 12 -- 3,334 -- 8.8% Chicago, IL -- 3 -- 887 -- 2.3% Cincinnati, OH -- 1 -- 264 -- 0.7% Detroit, MI -- 1 -- 225 -- 0.6% Indianapolis, IN -- 2 -- 376 -- 1.0% Minneapolis, MN -- 4 -- 1,102 -- 2.9% St. Louis, MO -- 1 -- 480 -- 1.3% ------ ------- ------------ ----------- ------------------------ 54 127 15,441 37,910 100.0% 100.0% ====== ======= ============ =========== ======================== All of the Current Communities are managed and operated by the Company. During the year ended December 31, 1998, the Company completed construction of 1,770 apartment homes in four communities for a total cost of $224.8 million. The average age of the Current Communities, on a weighted average basis according to number of apartment homes, is approximately nine years. Of the Current Communities, the Company held a fee simple ownership interest in 109 operating communities (one of which is on land subject to a 149 year land lease); a general partnership interest in four partnerships that hold a fee simple interest in four other operating communities; a general partnership interest in four partnerships structured as "DownREITs" that own 13 communities; and a 100% interest in a senior participating mortgage note secured by one community. In each of the four partnerships structured as "DownREITs", the Company is the general partner and there are one or more limited partners whose interest in the partnership is denominated in "units of limited partnership interest" ("Units"). For each DownREIT partnership, limited partners who hold Units are entitled to receive certain distributions (a "Stated Distribution") prior to any distribution that such DownREIT partnership makes to the general partner. The Stated Distributions that are paid in respect of the DownREIT Units currently approximate the dividend rate applicable to shares of Common Stock of the Company. Each DownREIT partnership has been 7 structured in a manner that makes it unlikely that the limited partners thereof will be entitled to any greater distribution than the Stated Distribution. Each holder of Units has the right to require the DownREIT partnership that issued a Unit to redeem that Unit at a cash price equal to the then fair market value of a share of Common Stock of the Company, except that the Company has the right to acquire any Unit so presented for redemption for one share of Common Stock. As of March 1, 1999, there were 894,144 Units outstanding. The DownREIT partnerships are consolidated for financial reporting purposes. 8 PROFILE OF CURRENT AND DEVELOPMENT COMMUNITIES (DOLLARS IN THOUSANDS, EXCEPT PER APARTMENT HOME DATA) Approx. rentable Average Physical Number of area Year built size occupancy City and State homes (Sq. Ft.) Acres or acquired (Sq. Ft,) at 12/31/98 - ------------------------------------------------------------------------------------------------------------------------------------ CURRENT COMMUNITIES (4) NORTHERN CALIFORNIA ALAMEDA COUNTY, CA Waterford Hayward, CA 544 451,520 11.1 1985/86 830 93.2% Hampton Place Fremont, CA 308 322,168 14.3 1992 1,046 96.4% Hacienda Gardens Pleasanton, CA 456 366,168 14.7 1988/94 803 93.2% Amador Oaks Dublin, CA 204 179,316 13.0 1989/97 879 94.6% Willow Creek Fremont, CA 235 192,700 3.5 1985 820 98.7% Alicante Fremont, CA 135 128,520 8.0 1992 952 94.1% Barrington Hills Hayward, CA 188 168,636 3.0 1986/94 897 97.3% Parc Centre Union City, CA 208 165,568 8.5 1973/96 796 96.2% Rivershore Bay Point, CA 245 206,290 12.0 1986/95 842 97.1% CENTRAL VALLEY, CA Governor's Square Sacramento, CA 302 292,336 8.1 1976/97 968 Redev. The Pointe Fairfield, CA 296 259,296 12.6 1991/95 876 96.6% Blairmore Rancho Cordova, CA 252 212,436 7.3 1986/94 843 94.8% SAN FRANCISCO, CA Crown Ridge San Rafael, CA 254 221,742 21.9 1973/96 873 95.7% Sunset Towers San Francisco, CA 243 172,044 16.0 1961/96 708 99.2% City Heights San Francisco, CA 185 109,335 1.4 1990/95 591 95.7% Village Square San Francisco, CA 154 126,434 2.6 1972/94 821 98.7% Crossbrook Rohnert Park, CA 226 163,850 9.0 1986/94 725 96.5% SAN MATEO COUNTY, CA Cedar Ridge Daly City, CA 195 141,375 8.0 1975/97 725 94.4% Regatta Bay Foster City, CA 288 212,544 11.0 1973/94 738 95.8% Sea Ridge Pacifica, CA 220 186,780 7.7 1971/95 849 97.3% SANTA CLARA COUNTY, CA Toscana Sunnyvale, CA 710 348,828 13.6 1998/96 491 Lease-Up Avalon at Town Center San Jose, CA 324 318,816 7.5 1995 984 90.4% Canyon Creek Campbell, CA 348 324,684 8.0 1995 933 97.4% CountryBrook San Jose, CA 360 323,280 14.0 1985/96 898 93.9% The Arbors Campbell, CA 252 197,064 8.5 1966/97 782 Redev. Creekside Mountain View, CA 294 215,796 13.0 1962/97 734 92.5% Rosewalk at Waterford Park I San Jose, CA 300 271,500 10.8 1997/96 905 94.0% The Fountains San Jose, CA 226 209,954 4.0 1990/96 929 95.6% Parkside Commons Sunnyvale, CA 192 199,296 8.0 1991/96 1,038 97.4% Villa Mariposa Mountain View, CA 248 209,312 4.0 1986 844 93.2% San Marino San Jose, CA 248 209,560 11.5 1984/88 845 98.0% The Promenade Sunnyvale, CA 220 159,720 5.0 1987/95 726 97.3% Foxchase I & II San Jose, CA 396 334,224 12.0 1986/87 844 93.4% Glen Creek Morgan Hill, CA 138 113,022 6.0 1989 819 87.0% Fairway Glen San Jose, CA 144 118,944 6.0 1986 826 93.8% Average Economic Average Occupancy Rental Rate (1) -------------------- ----------------- Financial $ per $ per Property reporting City and State 1998 1997 Apt Sq. Ft. EBITDA (2) cost (3) - --------------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (4) NORTHERN CALIFORNIA ALAMEDA COUNTY, CA Waterford Hayward, CA 97.3% 97.2% $ 964 $ 1.13 $ 4,457 $ 42,423 Hampton Place Fremont, CA 96.5% 98.0% 1,425 1.31 3,973 36,402 Hacienda Gardens Pleasanton, CA 97.0% 96.4% 1,148 1.39 4,476 35,332 Amador Oaks Dublin, CA 96.8% 96.2% 1,223 1.35 2,024 25,069 Willow Creek Fremont, CA 97.3% 97.9% 1,192 1.41 2,470 18,186 Alicante Fremont, CA 96.0% 97.9% 1,351 1.36 1,586 16,098 Barrington Hills Hayward, CA 98.4% 97.5% 1,006 1.10 1,437 15,798 Parc Centre Union City, CA 97.3% 95.8% 993 1.21 1,667 14,612 Rivershore Bay Point, CA 96.3% 96.9% 751 0.86 1,041 14,544 CENTRAL VALLEY, CA Governor's Square Sacramento, CA Redev. Redev. 825 0.80 1,554 26,825 The Pointe Fairfield, CA 96.9% 96.6% 868 0.96 1,992 18,667 Blairmore Rancho Cordova, CA 97.5% 97.6% 618 0.71 1,035 10,722 SAN FRANCISCO, CA Crown Ridge San Rafael, CA 96.0% 82.7% 1,169 1.29 2,370 30,450 Sunset Towers San Francisco, CA Redev. Redev. 1,275 1.76 2,436 27,907 City Heights San Francisco, CA 98.6% 98.3% 1,322 2.21 2,127 17,099 Village Square San Francisco, CA 99.0% 98.5% 1,310 1.58 1,826 13,196 Crossbrook Rohnert Park, CA 98.6% 98.6% 816 1.11 1,328 12,468 SAN MATEO COUNTY, CA Cedar Ridge Daly City, CA Redev. Redev. 1,204 0.96 1,010 25,454 Regatta Bay Foster City, CA 94.1% 96.3% 1,244 1.59 3,173 24,480 Sea Ridge Pacifica, CA 98.3% 98.1% 1,207 1.40 2,329 17,814 SANTA CLARA COUNTY, CA Toscana Sunnyvale, CA Lease-Up Lease-Up 2,573 2.33 7,634 119,652 Avalon at Town Center San Jose, CA 96.8% 97.5% 1,533 1.51 4,551 37,447 Canyon Creek Campbell, CA 97.6% 98.3% 1,406 1.47 4,552 35,933 CountryBrook San Jose, CA 96.6% 97.0% 1,231 1.33 3,572 33,522 The Arbors Campbell, CA Redev. Redev. 941 0.61 737 30,624 Creekside Mountain View, CA Redev. Redev. 1,097 1.43 2,601 29,717 Rosewalk at Waterford Park I San Jose, CA 96.9% 94.9% 1,564 1.67 4,165 29,508 The Fountains San Jose, CA 97.1% 98.3% 1,592 1.66 3,329 29,314 Parkside Commons Sunnyvale, CA 97.0% 98.0% 1,593 1.49 2,711 25,733 Villa Mariposa Mountain View, CA 97.7% 99.0% 1,537 1.78 3,663 21,787 San Marino San Jose, CA 97.3% 97.3% 1,213 1.40 2,537 20,034 The Promenade Sunnyvale, CA 96.8% 98.1% 1,273 1.70 2,554 19,253 Foxchase I & II San Jose, CA 96.1% 97.5% 1,188 1.35 4,271 30,258 Glen Creek Morgan Hill, CA 95.1% 98.0% 1,202 1.40 1,369 10,068 Fairway Glen San Jose, CA 95.6% 96.4% 1,126 1.30 1,268 9,499 9 PROFILE OF CURRENT AND DEVELOPMENT COMMUNITIES (DOLLARS IN THOUSANDS, EXCEPT PER APARTMENT HOME DATA) Approx. rentable Average Physical Number of area Year built size occupancy City and State homes (Sq. Ft.) Acres or acquired (Sq. Ft,) at 12/31/98 - ------------------------------------------------------------------------------------------------------------------------------------ SOUTHERN CALIFORNIA LOS ANGELES, CA Viewpointe Woodland Hills, CA 663 592,722 18.2 1989/97 894 Redev. Lakeside Burbank, CA 748 531,750 14.7 1969/97 711 Redev. Westwood Club Los Angeles, CA 363 229,416 4.8 1966/97 632 Redev. Arbor Heights Hacienda Heights, CA 351 277,290 20.0 1970/97 790 Redev. Warner Oaks Woodland Hills, CA 227 187,048 6.8 1978/98 824 Redev. TimberWood West Covina, CA 209 189,563 8.4 1972/97 907 96.7% ORANGE COUNTY, CA SunScape Huntington Beach, CA 400 352,800 16.4 1972/97 882 95.3% Pacifica Club Huntington Beach, CA 304 268,128 9.7 1971/97 882 85.0% Mill Creek Costa Mesa, CA 258 208,980 8.9 1973/96 810 91.5% Villa Serena Rncho Sta Margarita, CA 301 229,362 20.0 1990/97 762 97.3% Amberway Anaheim, CA 272 205,632 9.9 1983/98 756 Redev. Laguna Brisas Laguna Niguel, CA 176 176,000 10.0 1988/98 1,000 90.3% Lafayette Place Costa Mesa, CA 145 131,515 6.6 1956/96 907 97.9% Larkspur Canyon Mission Viejo, CA 166 124,832 7.8 1984/96 752 91.0% SAN DIEGO, CA Mission Bay Club San Diego, CA 564 402,132 5.7 1969/97 713 Redev. Cabrillo Square San Diego, CA 293 225,024 1.2 1973/98 768 97.0% Mission Woods San Diego, CA 200 212,000 4.0 1960/97 1,060 98.0% SummerWalk San Diego, CA 176 141,152 8.8 1982/97 802 95.5% PACIFIC NORTHWEST PORTLAND, OR Waterhouse Place Beaverton, OR 279 259,470 12.0 1990/97 930 Redev. SEATTLE, WA The Verandas at Bear Creek Redmond, WA 264 284,592 22.0 1998 1,078 73.1% Gallery Place Redmond, WA 222 206,016 22.0 1991/97 928 Redev. Avalon Ridge Renton, WA 421 432,000 20.0 1998 1,026 Redev. Avalon Westhaven Seattle, WA 190 150,100 9.0 1989/97 790 Redev. NORTHEAST BOSTON, MA Avalon at Prudential Center Boston, MA 781 734,753 1.0 1998 941 98.0% Longwood Towers Brookline, MA 333 226,000 4.2 1993 679 95.7% Avalon at Center Place Providence, RI 225 222,750 1.2 1997 990 90.9% Avalon Summit Quincy, MA 245 194,063 9.1 1996 792 95.9% Avalon at Lexington Lexington, MA 198 226,830 18.0 1994 1,146 91.4% Avalon at Faxon Park Quincy, MA 171 176,130 8.3 1998 1,030 94.7% Avalon West Westborough, MA 120 159,900 10.1 1996 1,333 95.8% FAIRFIELD COUNTY, CT Avalon Walk I & II Hamden, CT 764 760,740 38.4 1993/94 996 97.6% Avalon Glen Stamford, CT 238 221,685 4.1 1993/95 931 97.5% Avalon Gates Trumbull, CT 340 373,032 37.0 1997 1,097 97.4% Hanover Hall Stamford, CT 388 328,248 4.6 1998 846 90.7% Avalon Springs Wilton, CT 102 180,720 12.0 1997 1,772 100.0% Average Economic Average Occupancy Rental Rate (1) -------------------- ----------------- Financial $ per $ per Property reporting City and State 1998 1997 Apt Sq. Ft. EBITDA (2) cost (3) - --------------------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA LOS ANGELES, CA Viewpointe Woodland Hills, CA Redev. Redev. 996 0.95 4,406 68,190 Lakeside Burbank, CA Redev. Redev. 792 1.03 4,302 54,358 Westwood Club Los Angeles, CA Redev. Redev. 1,015 1.37 2,152 35,465 Arbor Heights Hacienda Heights, CA Redev. Redev. 748 0.81 1,673 25,623 Warner Oaks Woodland Hills, CA Redev. N/A 942 0.99 1,339 22,378 TimberWood West Covina, CA Redev. Redev. 826 0.78 938 14,713 ORANGE COUNTY, CA SunScape Huntington Beach, CA Redev. Redev. 945 0.92 2,382 36,966 Pacifica Club Huntington Beach, CA Redev. Redev. 874 0.92 1,949 27,934 Mill Creek Costa Mesa, CA 94.8% 95.9% 929 1.09 1,908 21,447 Villa Serena Rncho Sta Margarita, CA Redev. Redev. 872 1.12 1,811 19,798 Amberway Anaheim, CA Redev. N/A 736 0.89 1,401 18,734 Laguna Brisas Laguna Niguel, CA 90.0% N/A 944 0.85 995 18,614 Lafayette Place Costa Mesa, CA Redev. Redev. 1,056 1.03 1,046 15,485 Larkspur Canyon Mission Viejo, CA 94.0% 91.5% 864 1.08 1,014 12,737 SAN DIEGO, CA Mission Bay Club San Diego, CA Redev. Redev. 863 1.15 3,759 45,839 Cabrillo Square San Diego, CA 92.7% N/A 879 1.06 1,396 23,703 Mission Woods San Diego, CA Redev. Redev. 971 0.73 1,079 21,209 SummerWalk San Diego, CA 96.4% 95.1% 831 1.00 1,066 12,722 PACIFIC NORTHWEST PORTLAND, OR Waterhouse Place Beaverton, OR Redev. Redev. 680 0.64 1,089 18,446 SEATTLE, WA The Verandas at Bear Creek Redmond, WA 86.0% N/A 1,228 0.98 1,387 34,491 Gallery Place Redmond, WA Redev. Redev. 1,001 0.99 1,755 25,287 Avalon Ridge Renton, WA Redev. N/A 790 0.56 947 26,799 Avalon Westhaven Seattle, WA Redev. Redev. 700 0.82 878 11,540 NORTHEAST BOSTON, MA Avalon at Prudential Center Boston, MA 98.1% N/A 1,896 1.98 5,167 130,585 Longwood Towers Brookline, MA 98.3% N/A 1,592 2.30 2,372 51,519 Avalon at Center Place Providence, RI 93.8% N/A 1,838 1.74 1,550 35,707 Avalon Summit Quincy, MA 97.3% N/A 1,050 1.29 1,276 21,724 Avalon at Lexington Lexington, MA 94.2% N/A 1,679 1.38 1,624 19,650 Avalon at Faxon Park Quincy, MA 97.0% N/A 1,439 1.35 1,349 14,630 Avalon West Westborough, MA 97.7% N/A 1,375 1.01 816 14,294 FAIRFIELD COUNTY, CT Avalon Walk I & II Hamden, CT 98.2% N/A 1,051 1.04 3,998 80,336 Avalon Glen Stamford, CT 97.7% N/A 1,682 1.76 1,999 45,856 Avalon Gates Trumbull, CT 98.3% N/A 1,303 1.17 2,173 37,852 Hanover Hall Stamford, CT 90.9% N/A 1,110 1.19 250 37,670 Avalon Springs Wilton, CT 99.4% N/A 2,224 1.25 1,256 16,934 10 PROFILE OF CURRENT AND DEVELOPMENT COMMUNITIES (DOLLARS IN THOUSANDS, EXCEPT PER APARTMENT HOME DATA) Approx. rentable Average Physical Number of area Year built size occupancy City and State homes (Sq. Ft.) Acres or acquired (Sq. Ft,) at 12/31/98 - ------------------------------------------------------------------------------------------------------------------------------------ HARTFORD, CT Avalon Pavilions Manchester, CT 932 849,700 46.3 1993 912 95.4% LONG ISLAND, NY Avalon Commons Smithtown, NY 312 374,360 20.6 1997 1,200 100.0% Avalon Towers Long Beach, NY 109 124,805 1.3 1995 1,145 97.3% Avalon Court Melville, NY 154 190,576 10.8 1997 1,238 98.7% NORTHERN NEW JERSEY Avalon Cove Jersey City, NJ 504 546,390 11.1 1997 1,084 98.6% PHILADELPHIA, PA Avalon Watch Lawrenceville, NJ 512 487,424 64.0 1993 952 96.1% Avalon Chase Marlton, NJ 360 312,840 58.5 1996 869 93.9% Avalon Run East Lawrenceville, NJ 206 260,670 27.0 1996 1,265 99.0% WESTCHESTER, NY Avalon Gardens Nanuet, NY 504 647,778 55.0 1998 1,285 99.0% Avalon View Fishkill, NJ 288 286,560 41.0 1993 995 98.6% Avalon Green Greenburgh, NY 105 115,930 16.9 1995 1,104 100.0% MID-ATLANTIC BALTIMORE, MD Avalon at Fairway Hills I & II Columbia, MD 720 723,455 42.1 1993/96 1,005 97.0% Avalon at Symphony Glen Columbia, MD 174 178,350 10.0 1993 1,025 97.7% Avalon Landing Annapolis, MD 158 117,078 13.8 1995 741 96.8% NORFOLK, VA Avalon Birches Chesapeake, VA 312 262,920 20.9 1995 843 91.0% Avalon at Hampton I & II Hampton, VA 418 406,467 29.8 1993 972 91.2% Avalon Pines Virginia Beach, VA 174 142,854 9.7 1996 821 90.8% NORTHERN VIRGINIA Avalon at Ballston - Vermont & Arlington, VA 454 420,908 2.3 1997 927 97.1% Quincy Towers Avalon Crescent McLean, VA 558 623,270 19.1 1997 1,117 97.3% Avalon at Park Center Alexandria, VA 492 382,200 8.5 1994 777 94.5% Avalon at Ballston - Washington Arlington, VA 344 294,808 4.1 1993 857 96.5% Towers Avalon at Cameron Court Alexandria, VA 460 488,496 16.0 1998 1,062 98.3% AutumnWoods Fairfax, VA 420 355,320 24.2 1996 846 97.9% Avalon Park Manassas, VA 372 302,808 26.0 1993 814 97.9% Avalon at Fair Lakes Fairfax, VA 234 288,225 10.0 1998 1,232 96.6% Avalon at Dulles Sterling, VA 236 231,752 15.7 1993 982 97.0% Avalon at Providence Park Fairfax, VA 141 147,472 4.0 1997 1,046 95.7% RICHMOND, VA Avalon at Gayton Richmond, VA 328 282,408 27.6 1993 861 92.4% Avalon at Boulders Richmond, VA 284 313,782 32.1 1996 1,105 88.4% Avalon Station Fredericksburg, VA 223 210,331 15.9 1994 943 91.9% Avalon Woods Richmond, VA 268 158,669 18.5 1994 592 89.6% Average Economic Average Occupancy Rental Rate (1) -------------------- ----------------- Financial $ per $ per Property reporting City and State 1998 1997 Apt Sq. Ft. EBITDA (2) cost (3) - --------------------------------------------------------------------------------------------------------------------------------- HARTFORD, CT Avalon Pavilions Manchester, CT 97.5% N/A 887 0.95 3,960 84,767 LONG ISLAND, NY Avalon Commons Smithtown, NY 98.5% N/A 1,487 1.22 2,352 34,872 Avalon Towers Long Beach, NY 98.3% N/A 2,393 2.05 966 21,453 Avalon Court Melville, NY 98.4% N/A 1,691 1.34 1,478 18,907 NORTHERN NEW JERSEY Avalon Cove Jersey City, NJ 98.3% N/A 2,353 2.13 6,327 94,061 PHILADELPHIA, PA Avalon Watch Lawrenceville, NJ 98.1% N/A 1,115 1.15 2,763 57,333 Avalon Chase Marlton, NJ 95.7% N/A 959 1.06 1,462 31,338 Avalon Run East Lawrenceville, NJ 97.4% N/A 1,343 1.03 1,305 21,466 WESTCHESTER, NY Avalon Gardens Nanuet, NY 95.5% N/A 1,511 1.12 3,671 53,434 Avalon View Fishkill, NJ 98.4% N/A 1,024 1.01 1,334 26,625 Avalon Green Greenburgh, NY 98.3% N/A 1,971 1.76 970 16,515 MID-ATLANTIC BALTIMORE, MD Avalon at Fairway Hills I & II Columbia, MD 96.0% N/A 878 0.84 2,812 61,299 Avalon at Symphony Glen Columbia, MD 98.0% N/A 871 0.83 672 12,757 Avalon Landing Annapolis, MD 98.2% N/A 797 1.06 530 12,384 NORFOLK, VA Avalon Birches Chesapeake, VA 95.6% N/A 747 0.85 1,075 18,016 Avalon at Hampton I & II Hampton, VA 91.7% N/A 654 0.62 1,078 23,134 Avalon Pines Virginia Beach, VA 92.2% N/A 698 0.78 467 11,483 NORTHERN VIRGINIA Avalon at Ballston - Vermont & Arlington, VA 97.8% N/A 1,123 1.18 2,425 61,852 Quincy Towers Avalon Crescent McLean, VA 97.2% N/A 1,364 1.19 3,968 60,327 Avalon at Park Center Alexandria, VA 96.7% N/A 952 1.18 2,260 46,725 Avalon at Ballston - Washington Arlington, VA 96.7% N/A 1,177 1.33 1,878 43,108 Towers Avalon at Cameron Court Alexandria, VA 81.2% N/A 1,278 0.98 2,425 42,777 AutumnWoods Fairfax, VA 97.8% N/A 917 1.06 1,895 40,547 Avalon Park Manassas, VA 97.4% N/A 743 0.89 1,235 25,496 Avalon at Fair Lakes Fairfax, VA 95.4% N/A 1,242 0.96 1,500 23,225 Avalon at Dulles Sterling, VA 98.1% N/A 893 0.89 998 18,721 Avalon at Providence Park Fairfax, VA 97.3% N/A 1,001 0.92 599 14,680 RICHMOND, VA Avalon at Gayton Richmond, VA 92.3% N/A 689 0.74 899 19,365 Avalon at Boulders Richmond, VA 90.0% N/A 755 0.61 800 16,834 Avalon Station Fredericksburg, VA 94.9% N/A 703 0.71 661 12,759 Avalon Woods Richmond, VA 95.2% N/A 581 0.93 660 11,131 11 PROFILE OF CURRENT AND DEVELOPMENT COMMUNITIES (DOLLARS IN THOUSANDS, EXCEPT PER APARTMENT HOME DATA) Approx. rentable Average Physical Number of area Year built size occupancy City and State homes (Sq. Ft.) Acres or acquired (Sq. Ft,) at 12/31/98 - ------------------------------------------------------------------------------------------------------------------------------------ SOUTHERN MARYLAND Avalon at Decoverly Rockville, MD 368 368,446 25.0 1995 1,001 97.0% Avalon Knoll Germantown, MD 300 290,400 26.7 1993 968 96.0% Avalon Fields I & II Garithersburg, MD 288 302,804 5.7 1996 1,050 97.2% Avalon Crossing Rockville, MD 132 154,488 5.0 1996 1,170 97.7% Avalon at Lake Arbor Mitchellville, MD 209 170,052 18.0 1995 814 95.7% WASHINGTON, DC 4100 Massachusetts Avenue Washington, D.C. 308 298,345 2.7 1994 969 99.4% MIDWEST CHICAGO, IL Avalon at Danada Farms Wheaton, IL 295 350,581 19.2 1997 1,188 97.3% Avalon at West Grove Westmont, IL 400 388,400 17.4 1997 971 97.0% Avalon at Stratford Green Bloomingdale, IL 192 237,204 12.7 1997 1,235 97.4% CINCINNATI, OH Avalon at Montgomery Cinciannati, OH 264 231,800 17.0 1997 878 92.8% DETROIT, MI Avalon Heights Madison Heights, MN 225 206,970 17.1 1997 920 96.0% INDIANAPOLIS, IN Avalon at Willow Lake Indianapolis, IN 230 228,708 20.0 1997 994 92.6% Avalon at Geist Lawrence, IN 146 160,554 18.0 1997 1,100 91.1% MINNEAPOLIS, MN Avalon at Devonshire Bloomington, MI 498 470,774 42.0 1997 945 93.8% The Gates of Edinburg Brooklyn Park, MN 198 222,130 11.3 1998 1,122 93.4% Avalon at Town Centre Eagan, MN 246 233,562 18.7 1998 949 96.8% Avalon at Town Square Plymouth, MN 160 144,026 8.3 1998 900 99.4% ST. LOUIS, MO Avalon at Oxford Hill St. Louis, MO 480 463,680 34.0 1998 966 91.0% DEVELOPMENT COMMUNITIES Avalon Towers by the Bay San Francisco, CA 226 248,148 1.0 N/A 1,098 N/A CentreMark Cupertino, CA 311 294,828 8.0 N/A 948 N/A Paseo Alameda San Jose, CA 305 308,355 8.9 N/A 1,011 N/A Rosewalk at Waterford Park II San Jose, CA 156 153,192 5.8 N/A 982 N/A Avalon Oaks Wilmington, MA 204 208,692 22.5 N/A 1,023 N/A Avalon Valley Danbury, CT 268 286,760 17.4 N/A 1,070 N/A Avalon Corners Stamford, CT 195 185,835 3.2 N/A 953 N/A Avalon Lake Danbury, CT 135 159,804 32.0 N/A 1,184 N/A Avalon Court North Melville, NY 340 405,280 24.6 N/A 1,192 N/A The Tower at Avalon Cove Jersey City, NJ 269 243,445 2.8 N/A 905 N/A Avalon Willow Mamaroneck, NY 227 213,009 4.1 N/A 938 N/A The Avalon Bronxville, NY 110 119,350 1.5 N/A 1,085 N/A Avalon Crest Fort Lee, NJ 351 367,692 13.0 N/A 1,048 N/A Avalon at Fox Mill Herndon, VA 165 220,275 12.8 N/A 1,335 N/A Average Economic Average Occupancy Rental Rate (1) -------------------- ----------------- Financial $ per $ per Property reporting City and State 1998 1997 Apt Sq. Ft. EBITDA (2) cost (3) - --------------------------------------------------------------------------------------------------------------------------------- SOUTHERN MARYLAND Avalon at Decoverly Rockville, MD 97.3% N/A 1,077 1.05 2,005 41,218 Avalon Knoll Germantown, MD 97.1% N/A 835 0.84 1,107 23,410 Avalon Fields I & II Garithersburg, MD 92.4% N/A 1,066 0.93 1,393 27,193 Avalon Crossing Rockville, MD 98.5% N/A 1,424 1.20 1,005 18,337 Avalon at Lake Arbor Mitchellville, MD 95.3% N/A 891 1.04 653 14,275 WASHINGTON, DC 4100 Massachusetts Avenue Washington, D.C. 98.5% N/A 1,450 1.47 2,060 46,300 MIDWEST CHICAGO, IL Avalon at Danada Farms Wheaton, IL 96.7% N/A 1,286 1.05 1,758 49,960 Avalon at West Grove Westmont, IL 95.4% N/A 830 0.82 1,244 34,327 Avalon at Stratford Green Bloomingdale, IL 96.8% N/A 1,236 0.97 1,094 28,698 CINCINNATI, OH Avalon at Montgomery Cinciannati, OH 92.3% N/A 706 0.74 695 20,721 DETROIT, MI Avalon Heights Madison Heights, MN 95.4% N/A 838 0.87 702 20,824 INDIANAPOLIS, IN Avalon at Willow Lake Indianapolis, IN 91.4% N/A 744 0.68 675 20,181 Avalon at Geist Lawrence, IN 91.9% N/A 872 0.73 476 16,148 MINNEAPOLIS, MN Avalon at Devonshire Bloomington, MI 96.9% N/A 884 0.91 1,663 48,523 The Gates of Edinburg Brooklyn Park, MN 95.3% N/A 978 0.83 834 23,862 Avalon at Town Centre Eagan, MN 98.8% N/A 869 0.90 819 23,634 Avalon at Town Square Plymouth, MN 98.3% N/A 872 0.95 498 14,212 ST. LOUIS, MO Avalon at Oxford Hill St. Louis, MO 90.2% N/A 696 0.65 1,197 39,438 DEVELOPMENT COMMUNITIES Avalon Towers by the Bay San Francisco, CA N/A N/A N/A N/A N/A 37,139 CentreMark Cupertino, CA N/A N/A N/A N/A N/A 48,441 Paseo Alameda San Jose, CA N/A N/A N/A N/A N/A 39,120 Rosewalk at Waterford Park II San Jose, CA N/A N/A N/A N/A N/A 18,201 Avalon Oaks Wilmington, MA N/A N/A N/A N/A N/A 15,029 Avalon Valley Danbury, CT N/A N/A N/A N/A N/A 12,024 Avalon Corners Stamford, CT N/A N/A N/A N/A N/A 11,756 Avalon Lake Danbury, CT N/A N/A N/A N/A N/A 9,274 Avalon Court North Melville, NY N/A N/A N/A N/A N/A 11,315 The Tower at Avalon Cove Jersey City, NJ N/A N/A N/A N/A N/A 33,146 Avalon Willow Mamaroneck, NY N/A N/A N/A N/A N/A 27,003 The Avalon Bronxville, NY N/A N/A N/A N/A N/A 12,885 Avalon Crest Fort Lee, NJ N/A N/A N/A N/A N/A 38,233 Avalon at Fox Mill Herndon, VA N/A N/A N/A N/A N/A 4,838 12 FEATURES AND RECREATIONAL AMENITIES - CURRENT AND DEVELOPMENT COMMUNITIES 1 BR 2BR 3BR ----------------------------------------------------------------------------- 1/1.5 BA 1/1.5 BA 2/2.5/3 BA 2/2.5 BA 3BA - -------------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (4) NORTHERN CALIFORNIA Alameda County, CA Waterford 208 -- 336 -- -- Hampton Place 88 -- 176 -- 44 Hacienda Gardens 238 -- 218 -- -- Amador Oaks 72 8 60 48 -- Willow Creek 99 -- 136 -- -- Alicante 42 81 -- -- 12 Barrington Hills 48 -- 140 -- -- Parc Centre 124 84 -- -- -- Rivershore 44 -- 145 56 -- Central Valley, CA Governor's Square 93 63 68 30 -- The Pointe 130 28 138 -- -- Blairmore 114 40 98 -- -- San Francisco, CA Crown Ridge 158 68 24 -- -- Sunset Towers 183 20 20 -- -- City Heights 114 -- 25 -- -- Village Square 90 -- 49 15 -- Crossbrook 88 30 108 -- -- San Mateo, CA Cedar Ridge 117 33 24 -- -- Regatta Bay 124 123 1 -- -- Sea Ridge 58 106 56 -- -- Santa Clara County, CA Toscana 338 -- 336 18 15 Avalon at Town Center 90 -- 210 -- 24 Canyon Creek 156 -- 180 -- 12 CountryBrook 108 -- 252 -- -- The Arbors 212 40 -- -- -- Creekside 158 128 -- -- -- Rosewalk at Waterford Park I 96 -- 192 -- 12 The Fountains 100 -- 126 -- -- Parkside Commons 60 -- 96 36 -- Villa Mariposa 108 -- 88 52 -- San Marino 103 -- 145 -- -- The Promenade 112 10 54 -- -- Foxchase I and II 168 -- 228 -- -- Glen Creek 58 -- 79 -- 1 Fairway Glen 60 -- 84 -- -- Washer & dryer Studios / Parking hook-ups or Efficiencies Other Total spaces units - ------------------------------------------------------------------------------------------------------------------------------ CURRENT COMMUNITIES (4) NORTHERN CALIFORNIA Alameda County, CA Waterford -- -- 544 876 Some Hampton Place -- -- 308 570 All Hacienda Gardens -- -- 456 856 All Amador Oaks -- 16 204 427 Most Willow Creek -- -- 235 240 All Alicante -- -- 135 260 All Barrington Hills -- -- 188 320 All Parc Centre -- -- 208 210 None Rivershore -- -- 245 761 None Central Valley, CA Governor's Square 48 -- 302 332 Some The Pointe -- -- 296 504 All Blairmore -- -- 252 452 All San Francisco, CA Crown Ridge 4 -- 254 377 Some Sunset Towers 20 -- 243 244 None City Heights 46 -- 185 104 None Village Square -- -- 154 155 None Crossbrook -- -- 226 343 Some San Mateo, CA Cedar Ridge 21 -- 195 258 None Regatta Bay 40 -- 288 490 None Sea Ridge -- -- 220 299 None Santa Clara County, CA Toscana 3 -- 710 1,400 All Avalon at Town Center -- -- 324 560 All Canyon Creek -- -- 348 588 All CountryBrook -- -- 360 660 All The Arbors -- -- 252 395 All Creekside 8 -- 294 376 None Rosewalk at Waterford Park I -- -- 300 420 All The Fountains -- -- 226 354 All Parkside Commons -- -- 192 192 All Villa Mariposa -- -- 248 421 All San Marino -- -- 248 436 All The Promenade 44 -- 220 394 Some Foxchase I and II -- -- 396 719 All Glen Creek -- -- 138 228 All Fairway Glen -- -- 144 226 All Large Balcony storage patio Vaulted or walk- deck or ceilings Lofts Fireplaces in closet sunroom - ------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (4) NORTHERN CALIFORNIA Alameda County, CA Waterford Some None None All All Hampton Place Most None Half Most All Hacienda Gardens Some None Most None All Amador Oaks Some None Most All All Willow Creek None None None All All Alicante Some None Some All All Barrington Hills Half None None All All Parc Centre None None Most All All Rivershore Some None Some Half All Central Valley, CA Governor's Square Half None Most Some All The Pointe None None Most Most All Blairmore None None Some Half All San Francisco, CA Crown Ridge Some Some Some None All Sunset Towers None None None None Some City Heights None None None None Some Village Square Some None None All All Crossbrook Half None Some None All San Mateo, CA Cedar Ridge None Some None None All Regatta Bay None None None Most Most Sea Ridge None None Some Some All Santa Clara County, CA Toscana Some Some Some Half All Avalon at Town Center Some None None Most All Canyon Creek All Some None All All CountryBrook Some None All None All The Arbors None None None None Half Creekside None None Some None Most Rosewalk at Waterford Park I Half None Some Some All The Fountains None None Most All All Parkside Commons Some None Half All All Villa Mariposa Some None None Some All San Marino Some None None Most All The Promenade None None None All All Foxchase I and II Some None None Some All Glen Creek Half None None All All Fairway Glen Some None None None All Non- Homes w/ direct Direct pre-wired Built-in access access security bookcases Carports garages garages systems - ---------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (4) NORTHERN CALIFORNIA Alameda County, CA Waterford None Yes No No None Hampton Place None Yes Yes No All Hacienda Gardens None Yes Yes Yes None Amador Oaks None No Yes No None Willow Creek None Yes No No None Alicante None Yes No No Some Barrington Hills Some Yes No No None Parc Centre None Yes No No None Rivershore None Yes No No None Central Valley, CA Governor's Square Some No Yes Yes None The Pointe None Yes No No None Blairmore None Yes No No None San Francisco, CA Crown Ridge None Yes No Yes None Sunset Towers None Yes No Yes None City Heights Most Yes Yes No None Village Square None No Yes No None Crossbrook None Yes No Yes None San Mateo, CA Cedar Ridge None Yes No Yes None Regatta Bay None Yes No No None Sea Ridge None Yes Yes No None Santa Clara County, CA Toscana None No Yes No All Avalon at Town Center None Yes Yes No All Canyon Creek None Yes Yes No All CountryBrook None Yes Yes No None The Arbors None Yes Yes No None Creekside None Yes No No None Rosewalk at Waterford Park I Most Yes Yes No All The Fountains None No No Yes None Parkside Commons Some Yes Yes No None Villa Mariposa None Yes No No None San Marino None Yes No No None The Promenade None No No Yes None Foxchase I and II None Yes No No None Glen Creek None Yes No No None Fairway Glen None Yes No No Some 13 FEATURES AND RECREATIONAL AMENITIES - CURRENT AND DEVELOPMENT COMMUNITIES 1 BR 2BR 3BR ----------------------------------------------------------------------------- 1/1.5 BA 1/1.5 BA 2/2.5/3 BA 2/2.5 BA 3BA - ------------------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA Los Angeles, CA Viewpointe 222 -- 441 -- -- Lakeside 296 133 86 12 -- Westwood Club 126 -- 102 -- -- Arbor Heights 213 -- 134 2 -- Warner Oaks 89 54 64 20 -- TimberWood 32 50 63 64 -- Orange County, CA SunScape -- 36 324 40 -- Pacifica Club 144 56 104 -- -- Mill Creek 124 -- 86 -- -- Villa Serena 160 75 66 -- -- Amberway 114 48 48 -- -- Laguna Brisas -- -- 176 -- -- Lafayette Place 44 54 -- 35 -- Larkspur Canyon 32 28 44 -- -- San Diego, CA Mission Bay Club 270 9 165 -- -- Cabrillo Square 112 -- 84 -- -- Mission Woods 18 99 -- 83 -- SummerWalk 48 48 80 -- -- PACIFIC NORTHWEST Portland, OR Waterhouse Place 99 38 138 4 -- Seattle, WA The Verandas at Bear Creek 55 40 110 59 -- Gallery Place 76 44 67 35 -- Avalon Ridge 16 19 217 169 -- Avalon Westhaven 94 82 6 8 -- NORTHEAST Boston, MA Avalon at Prudential Center 361 -- 241 -- -- Longwood Towers 144 52 23 25 -- Avalon at Center Place 103 -- 111 5 -- Avalon Summit 154 61 28 2 -- Avalon at Lexington 28 21 93 56 -- Avalon at Faxon Park 68 -- 75 28 -- Avalon West 40 -- 55 25 -- Fairfield County, CT Avalon Walk I & II 272 116 122 74 -- Avalon Glen 124 -- 114 -- -- Avalon Gates 122 -- 168 50 -- Hanover Hall 68 146 -- 70 -- Avalon Springs -- -- 70 32 -- Hartford, CT Washer & dryer Studios / Parking hook-ups or Efficiencies Other Total spaces units - ------------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA Los Angeles, CA Viewpointe -- -- 663 1,300 Some Lakeside 221 -- 748 909 Some Westwood Club 135 -- 363 484 None Arbor Heights 2 -- 351 772 All Warner Oaks -- -- 227 252 Some TimberWood -- -- 209 400 Most Orange County, CA SunScape -- -- 400 790 None Pacifica Club -- -- 304 478 All Mill Creek 48 258 300 Some Villa Serena -- -- 301 523 All Amberway 62 -- 272 454 None Laguna Brisas -- -- 176 335 None Lafayette Place 12 -- 145 235 Most Larkspur Canyon -- 62 166 166 None San Diego, CA Mission Bay Club 120 -- 564 769 None Cabrillo Square 97 -- 293 283 None Mission Woods -- -- 200 200 Most SummerWalk -- -- 176 176 All PACIFIC NORTHWEST Portland, OR Waterhouse Place -- -- 279 445 All Seattle, WA The Verandas at Bear Creek -- -- 264 470 All Gallery Place -- -- 222 384 All Avalon Ridge -- -- 421 712 All Avalon Westhaven -- -- 190 191 All NORTHEAST Boston, MA Avalon at Prudential Center 29 150 781 142 None Longwood Towers 81 8 333 210 Some Avalon at Center Place 6 -- 225 345 All Avalon Summit -- -- 245 328 None Avalon at Lexington -- -- 198 323 All Avalon at Faxon Park -- -- 171 287 All Avalon West -- -- 120 145 All Fairfield County, CT Avalon Walk I & II -- 180 764 1,528 All Avalon Glen -- -- 238 400 Most Avalon Gates -- -- 340 580 All Hanover Hall 104 -- 388 405 None Avalon Springs -- -- 102 153 All Hartford, CT Large Balcony storage patio Vaulted or walk- deck or ceilings Lofts Fireplaces in closet sunroom - ------------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA Los Angeles, CA Viewpointe None Some None Most All Lakeside Some None Some Some Some Westwood Club None None None None All Arbor Heights None None None None Half Warner Oaks Some None Some Some All TimberWood Half None None All All Orange County, CA SunScape None None None Most Most Pacifica Club None None None Half All Mill Creek Half None None Half All Villa Serena None None None None All Amberway Some None None None All Laguna Brisas Some None All None Half Lafayette Place Some None Some Most Most Larkspur Canyon None None None None All San Diego, CA Mission Bay Club None None None Some All Cabrillo Square None None None None All Mission Woods None None Most Most Most SummerWalk None None All Some All PACIFIC NORTHWEST Portland, OR Waterhouse Place None None Most Some Most Seattle, WA The Verandas at Bear Creek All None Most All All Gallery Place Some None All All All Avalon Ridge Some None Most Most All Avalon Westhaven None None All All All NORTHEAST Boston, MA Avalon at Prudential Center None None None Most Some Longwood Towers None None Some Most Some Avalon at Center Place None None None Half Some Avalon Summit None None None None Most Avalon at Lexington Some Some Some Most All Avalon at Faxon Park Some Some Half All All Avalon West Some Some Some All Half Fairfield County, CT Avalon Walk I & II Some Some Half All All Avalon Glen Some Some Some Half Most Avalon Gates Some Some None All All Hanover Hall None None None Some All Avalon Springs Half Half Most All All Hartford, CT Non- Homes w/ direct Direct pre-wired Built-in access access security bookcases Carports garages garages systems - -------------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA Los Angeles, CA Viewpointe None No No No None Lakeside None Yes Yes No None Westwood Club None No No No None Arbor Heights None Yes Yes No None Warner Oaks None Yes No No None TimberWood None Yes No No None Orange County, CA SunScape None Yes Yes No None Pacifica Club None Yes No No None Mill Creek None Yes Yes Yes None Villa Serena None Yes Yes No None Amberway None Yes No No None Laguna Brisas None No No No None Lafayette Place Some Yes Yes No None Larkspur Canyon None Yes Yes No None San Diego, CA Mission Bay Club None No Yes No None Cabrillo Square None No No Yes None Mission Woods None No Yes No None SummerWalk All Yes No No None PACIFIC NORTHWEST Portland, OR Waterhouse Place None Yes Yes No None Seattle, WA The Verandas at Bear Creek Some Yes Yes Yes All Gallery Place None Yes Yes No None Avalon Ridge None Yes No No None Avalon Westhaven None Yes No No None NORTHEAST Boston, MA Avalon at Prudential Center None No No No None Longwood Towers Some No No No Some Avalon at Center Place None No No Yes None Avalon Summit None No Yes No None Avalon at Lexington None Yes Yes No All Avalon at Faxon Park None No No Yes All Avalon West None No Yes Yes All Fairfield County, CT Avalon Walk I & II Some Yes No No Half Avalon Glen None Yes Yes No Most Avalon Gates None Yes Yes No All Hanover Hall None No Yes No None Avalon Springs None No No Yes All Hartford, CT 14 FEATURES AND RECREATIONAL AMENITIES - CURRENT AND DEVELOPMENT COMMUNITIES 1 BR 2BR 3BR ----------------------------------------------------------------------------- 1/1.5 BA 1/1.5 BA 2/2.5/3 BA 2/2.5 BA 3BA - -------------------------------------------------------------------------------------------------------------------------------- Avalon Pavilions 472 168 220 72 -- Long Island, NY Avalon Commons 128 40 112 32 -- Avalon Towers -- -- 37 1 3 Avalon Court 34 -- 76 44 -- Northern New Jersey Avalon Cove 190 -- 190 46 2 Philadelphia, PA Avalon Watch 252 36 142 40 -- Avalon Chase 132 48 156 24 -- Avalon Run East 64 -- 106 36 -- Westchester, NY Avalon Gardens 208 48 144 104 -- Avalon View 113 51 60 64 -- Avalon Green 25 24 56 -- -- MID-ATLANTIC Baltimore, MD Avalon at Fairway Hills I & II 269 237 154 24 36 Avalon at Symphony Glen 86 14 54 20 -- Avalon Landing 65 18 57 -- -- Norfolk, VA Avalon Birches 186 -- 126 -- -- Avalon at Hampton I & II 178 66 120 54 -- Avalon Pines 90 24 60 -- -- Northern Virginia Avalon at Ballston - Vermont & Quincy 335 35 84 -- -- Avalon Crescent 186 -- 372 -- -- Avalon at Park Center 384 -- 108 -- -- Avalon at Ballston - Washington Towers 205 31 108 -- -- Avalon at Cameron Court 208 -- 168 -- -- AutumnWoods 220 72 96 -- -- Avalon Park 140 40 152 -- -- Avalon at Fair Lakes 45 12 125 26 26 Avalon at Dulles 104 40 76 -- 16 Avalon at Providence Park 19 -- 112 4 -- Richmond, VA Avalon at Gayton 156 54 88 30 -- Avalon at Boulders 90 -- 179 15 -- Avalon Station 68 31 100 24 -- Avalon Woods 200 -- 48 -- -- Washer & dryer Studios / Parking hook-ups or Efficiencies Other Total spaces units - --------------------------------------------------------------------------------------------------------------------------------- Avalon Pavilions -- -- 932 1,631 All Long Island, NY Avalon Commons -- -- 312 425 All Avalon Towers 1 67 109 198 All Avalon Court -- -- 154 292 All Northern New Jersey Avalon Cove -- 76 504 455 All Philadelphia, PA Avalon Watch -- 42 512 768 All Avalon Chase -- -- 360 800 All Avalon Run East -- -- 206 345 All Westch