================================================================================ 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, 1999 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 [Y] 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. [X] The aggregate market value of the voting stock held by nonaffiliates of the Registrant, as of March 1, 2000 was $2,256,084,969. The number of shares of the Registrant's Common Stock, par value $.01 per share, outstanding as of March 1, 2000 was 65,871,094. Documents Incorporated by Reference ----------------------------------- Portions of AvalonBay Communities, Inc.'s Proxy Statement for the 2000 annual meeting of stockholders, a definitive copy of which will be filed with the SEC within 120 days after the year 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......................................................6 ITEM 3. LEGAL PROCEEDINGS...............................................30 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS.................31 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........................................32 ITEM 6. SELECTED FINANCIAL DATA.........................................33 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................36 ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................................................56 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................57 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.....................57 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT..................57 ITEM 11. EXECUTIVE COMPENSATION..........................................57 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................................57 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................57 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K........................................58 SIGNATURES ................................................................65 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. Our 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 this report, including in the section entitled "Forward-Looking Statements" on page 36 of this Form 10-K. ITEM 1. BUSINESS General AvalonBay Communities, Inc. is a Maryland corporation that has elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended. We focus on the ownership and operation of upscale apartment communities in high barrier-to-entry markets of the United States. These markets include Northern and Southern California and selected states in the Mid-Atlantic, Northeast, Midwest and Pacific Northwest regions of the country. AvalonBay is the surviving corporation from the merger of Avalon Properties, Inc. with and into Bay Apartment Communities, Inc. In connection with the merger, Avalon Properties, Inc. ceased to exist and we changed our name from Bay Apartment Communities, Inc. to AvalonBay Communities, Inc. As of March 1, 2000, we owned or held a direct or indirect ownership interest in 121 operating apartment communities containing 35,648 apartment homes in eleven states and the District of Columbia, of which four communities containing 1,455 apartment homes were under redevelopment. In addition to these operating communities, we also owned 12 communities under construction that will contain 3,173 apartment homes and rights to develop ("Development Rights") an additional 30 communities that, if developed as expected, will contain an estimated 8,624 apartment homes. We generally obtain 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, we favor locations that are near expanding employment centers and convenient to recreation areas, entertainment, shopping and dining. Our principal operating objectives are to increase operating cash flow and Funds from Operations, or FFO, and, as a result, long-term stockholder value. For a description of the meaning of FFO and its use and limitation as an operating measure, see the discussion titled "Funds from Operations" in Item 7 of this report. Our strategies and goals to achieve these objectives include: - generating consistent, sustained earnings growth at each community through increased revenue, by balancing high occupancy with premium pricing, and increased operating margins from aggressive operating expense management; - investing selectively in new development, redevelopment and acquisition communities in markets with growing demand and high barriers-to-entry; - disposing of communities in markets where we have limited market presence; and - maintaining a conservative capital structure to provide continued access to capital markets at a cost that is low enough in relation to the expected yields on our developments and redevelopments that financing of new undertakings is desirable. We believe that we can generally implement these strategies best by building, rebuilding, acquiring and managing upscale assets in supply-constrained markets while maintaining the financial discipline to ensure balance sheet flexibility. We believe that we can achieve high occupancy levels, increased rental rates and growth in cash flow, although we cannot provide assurance that these results will be achieved. Development Strategy. We carefully select land for development and follow established procedures that we believe 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, we identify development opportunities through local market presence and access to local market information achieved through our regional offices. In addition to our principal executive offices in Alexandria, Virginia, we also maintain regional offices and administrative or specialty offices in or near the following cities: 1 - San Jose, California; - Wilton, Connecticut; - Boston, Massachusetts; - Chicago, Illinois; - Los Angeles, California; - Minneapolis, Minnesota; - Newport Beach, California; - New York, New York; - Princeton, New Jersey; and - Seattle, Washington. After selecting a target site, we negotiate for the right to acquire the site either through an option or a long-term conditional contract. After we acquire land, we generally shift our focus to construction. Except for certain mid-rise and high-rise apartment communities where we have historically used third-party general contractors, we act as our own general contractor. We believe this enables us to achieve higher quality, greater control over schedules and significant cost savings. Our development and property management teams monitor construction progress to ensure high quality workmanship and a smooth and timely transition into the leasing and operational phase. Redevelopment Strategy. We selectively seek existing under-managed apartment communities in fully-developed neighborhoods and create value by substantially rebuilding these communities. When we undertake the redevelopment of a community, our goal is to rebuild the community so that our total investment is significantly below replacement cost and the community is the highest quality apartment community or best rental value for an upscale apartment community in its local area. We have established procedures to minimize both the cost and risks of redevelopment. Our redevelopment teams, which include key redevelopment, construction and property management personnel, monitor redevelopment progress. We believe we achieve significant cost savings by acting as our own general contractor. More importantly, this helps to ensure high quality design and workmanship and a smooth and timely transition into the lease-up and restabilization phase. Disposition Strategy. During 1998, we determined that we would pursue a disposition strategy for certain assets in markets that did not meet our long-term strategic direction. This disposition strategy also acts as a source of capital because we are able to redeploy the net proceeds from our dispositions in lieu of raising that amount of capital externally. Under this program, we solicit competing bids from unrelated parties for these individual assets, and consider the sales price and tax ramifications of each proposal. In connection with this disposition program, we have disposed of a total of 24 communities and a participating mortgage note since September 1998. The net proceeds from the sale of these assets were approximately $384,143,000. We intend to actively seek buyers for the remaining communities held for sale. We anticipate reinvesting capital obtained from dispositions of these assets into development of new communities and redevelopment of existing communities that offer greater investment returns and long-term growth potential than those communities identified for disposition. However, we cannot provide assurance that we will be able to complete our disposition strategy or that assets identified for sale can be sold on terms that are satisfactory to us. Acquisition Strategy. We have observed and been impacted by a reduction in the availability of cost effective capital beginning in the third quarter of 1998. As a result, we limited our acquisition activity in 1999 to the purchase of one community that we acquired on a presale basis in connection with a forward purchase agreement signed in 1997 with an unaffiliated party. The forward purchase agreement provided for the purchase of ten communities, primarily in the Pacific Northwest and Midwest regions of the country, to be developed. The remaining nine presale acquisitions are expected to close during the next 31 months for an estimated aggregate purchase price of $347.1 million. Together, these communities are expected to contain 2,753 apartment homes when completed. We will manage these communities after acquiring ownership. This expansion is consistent with our strategy to achieve long term earnings growth by providing a high quality platform for expansion while also providing additional economic and geographic diversity. We believe that the acquisition of these presale communities will enable us to achieve rapid penetration into supply-constrained markets. We believe that we have now targeted and penetrated substantially all of the high barrier-to-entry markets of the United States. 2 Property Management Strategy. We intend to increase earnings through innovative, proactive property management that will result in higher revenue from communities. Our principle strategies for maximizing revenue include: - intense focus on resident satisfaction; - increasing rents as market conditions permit; and - managing community occupancy for optimal rental revenue levels. 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. We are also pursuing ancillary services which could provide additional revenue sources. Controlling operating expenses is another way in which we intend to increase earnings growth. An increase in growth in our 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. We also aggressively pursue real estate tax appeals and scrutinize other operating costs. To control operating expenses we: - record invoices on-site to ensure careful monitoring of budgeted versus actual expenses; - purchase supplies in bulk where possible; - bid on third-party contracts on a volume basis; - perform turnover work in-house or hire third-parties generally depending upon the least costly alternative; and - undertake preventive maintenance regularly to maximize resident satisfaction and property and equipment life. In addition, we strive 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 utility costs. On a limited basis, we also manage properties for third parties, believing that doing so will provide information about new markets or provide an acquisition opportunity, thereby enhancing opportunities for growth. Technology Strategy. We believe that an innovative management information systems infrastructure will be an important element in managing our future growth. This is because timely and accurate collection of financial and resident profile data will enable us to maximize revenue through careful leasing decisions and financial management. We currently employ a proprietary company-wide intranet using a digital network with high-speed digital lines. This network connects all of our communities and offices to central servers in Alexandria, Virginia, providing access to our associates and to AvalonBay's corporate information throughout the country from all locations. We are currently engaged in the development of an innovative on-site property management system and a leasing automation system to enable management to capture, review and analyze data to a greater extent than is possible using existing commercial software. We have entered into a formal joint venture agreement, in the form of a limited liability company agreement, with United Dominion Realty Trust, Inc., another public multifamily real estate company, to continue development of these systems and system software, which are collectively referred to in this discussion as the "system." The system development process is currently managed by our employees, who have significant related project management experience, and the employees of the joint venturer. The actual programming and documentation of the system is being conducted by our employees, the employees of our joint venturer and third party consultants under the supervision of these experienced project managers. We currently expect that the total development costs over a three-year period will be approximately $7.5 million including hardware costs and expenses, the costs of employees and related overhead, and the costs of engaging third party consultants. These development costs will be shared on an equal basis by us and our joint venturer. Once developed, we intend to use the property management system in place of current property management information software for which we pay a license fee to third parties, and we intend to use the leasing automation system to make 3 the lease application process easier for residents and more efficient for us to manage. We currently project that the property management system will undergo an on-site test (i.e., a "beta test") during the third quarter of 2000 and that the system will be functional and implemented during 2001. The leasing automation system is currently in beta testing at two communities. We believe that when implemented the system will result in cost savings due to increased data reliability and efficiencies in management time and overhead, and that these savings will largely offset the expense associated with amortizing the system development costs and maintaining the software. We also believe that it is possible that other real estate companies may desire to use the system concept and system software that we are developing and that therefore there may be an opportunity to recover, in the future, a portion of our investment by licensing the system to others. However, at the present time these potential cost savings and ancillary revenue are speculative, and we cannot assure that the system will provide sufficient benefits to offset the cost of development and maintenance. We have never before engaged in the development of systems or system software on this scale and have never licensed a system concept or system software to others. There are a variety of risks associated with the development of the system, both for internal use and for potential sale or licensing to third parties. Among the principal risks associated with this undertaking are the following: - we may not be able to maintain the schedule or budget that we have projected for the development and implementation of the system; - we may be unable to implement the system with the functionality and efficiencies we desire on commercially reasonable terms; - we may decide not to endeavor to license the system to other enterprises, the system may not be attractive to other enterprises, and we may not be able to effectively manage the licensing of the system to other enterprises; and - the system may not provide AvalonBay with meaningful cost savings or a meaningful source of ancillary revenues. The occurrence of any of the events described above could prevent us from achieving increased efficiencies, realizing revenue growth produced by ancillary revenues or recovering our initial investment. Financing Strategy. We have consistently maintained, and intend to continue to maintain, a conservative capital structure, largely comprised of common equity. At December 31, 1999, debt-to-total market capitalization was 36.6%, and permanent long-term floating rate debt, not including borrowings under the unsecured facility, was only 1.6% of total market capitalization. We currently intend to limit long-term floating rate debt to less than 10% of total market capitalization, although that policy may change from time to time. We have observed and been impacted by a reduction in the availability of cost effective capital beginning in the third quarter of 1998. We cannot assure you that cost effective capital will be available to meet future expenditures required to begin planned reconstruction activity or the construction of the Development Rights. Before planned reconstruction activity or the construction of a Development Right begins, we intend to arrange adequate capital sources to complete such undertakings, although we cannot assure you that we will be able to obtain such financing. In the event that financing cannot be obtained, we may have to abandon Development Rights, write-off associated pursuit costs and forego reconstruction activity which we believe would have increased revenues and earnings. We estimate that a significant portion of our liquidity needs will be met from retained operating cash and borrowings under our $600,000,000 variable rate unsecured credit facility. At March 1, 2000, $203,500,000 was outstanding, $75,481,000 was used to provide letters of credit and $321,019,000 was available for borrowing under the unsecured facility. If required, to meet the balance of our liquidity needs we will need to arrange additional capacity under our existing unsecured facility, sell additional existing communities and/or issue additional debt or equity securities. While we believe we have the financial position to expand our short term credit capacity and support our capital markets activity, we cannot assure you that we will be successful in completing these arrangements, sales or offerings. The failure to complete these transactions on a cost-effective basis could have a 4 material adverse impact on our operating results and financial condition, including the abandonment of deferred development costs and a resultant charge to earnings. For the year ended December 31, 1999, FFO increased to $212,840,000 from $148,487,000 for the year ended December 31, 1998. FFO for the year ended December 31, 1998 reflects the operating results for Avalon through June 4, 1998 and for the combined company after that date. Inflation and Tax Matters Substantially all of our leases are for a term of one year or less, which may enable us to realize increased rents upon renewal of existing leases or the beginning of new leases. Such short-term leases generally minimize the risk to us 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. Our current policy is generally to permit residents to terminate leases upon an agreed advanced written notice and payment of a certain number of months rent, as stated in the resident's lease, 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. We filed an election with our initial federal income tax return to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and intend to maintain our qualification as a REIT in the future. As a qualified REIT, with limited exceptions, we will not be taxed under federal and certain state income tax laws at the corporate level on our net income to the extent net income is distributed to our stockholders. We expect to distribute all of our taxable income and therefore generally avoid income tax at the corporate level. 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. The owner or operator 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. 5 Certain federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos-containing materials, or 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 our ownership and operation of apartment communities, we potentially may be liable for such costs. We are not aware that any ACMs were used in connection with the construction of the communities developed by us. However, we are aware that ACMs were used in connection with the construction of certain communities acquired by us. We do not anticipate that we will incur any material liabilities in connection with the presence of ACMs at these communities. We currently have or intend to implement an operations and maintenance program for ACMs at each of the communities at which ACMs have been detected. All of our stabilized operating communities, and all of the communities that we are currently developing or redeveloping, 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 we believe will have a material adverse effect on our business, assets, financial condition or results of operations. We are not aware of any other environmental conditions which would have such a material adverse effect. However, we are aware that the migration of contamination from an upgradient landowner near Toscana, a community owned by us, has affected the groundwater there. The upgradient landowner is undertaking remedial response actions and as of December 31, 1999, a ground water treatment system had been installed. We expect that the upgradient landowner will take all necessary remediation actions and ensure the ongoing operation and maintenance of the ground water treatment system. The upgradient landowner has also provided an indemnity that runs to current and future owners of the Toscana property and upon which we may be able to rely if it incurs environmental liability arising from the groundwater contamination. We are also aware that certain communities have lead paint and we are undertaking or intend to undertake appropriate remediation. Additionally, prior to 1994, we had been occasionally involved in developing, managing, leasing and operating various properties for third parties. Consequently, we 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. We are not aware of any material environmental liabilities with respect to properties that we managed or developed for such third parties. We cannot provide assurance that: - the environmental assessments identified all potential environmental liabilities; - no prior owner created any material environmental condition not known to us 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 our 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 Our real estate investments as of March 1, 2000 consist primarily of stabilized operating apartment communities, communities in various stages of the development and redevelopment cycle and land or land options held for development. We classify these investments into the following categories: 6 Number of Number of communities apartment homes ----------- --------------- Current Communities 121 35,648 - -------------------- Stabilized Communities 117 34,193 Established Communities: 63 17,706 Northern California 25 6,461 Southern California 3 600 Mid-Atlantic 18 5,259 Northeast 16 4,888 Midwest 1 498 Other Stabilized Communities: 54 16,487 Northern California 10 2,988 Southern California 13 4,476 Mid-Atlantic 4 1,240 Northeast 16 5,111 Midwest 7 1,717 Pacific Northwest 4 955 Lease-Up Communities - - Redevelopment Communities 4 1,455 Development Communities 12 3,173 - ----------------------- Development Rights 30 8,624 (*) - ------------------ (*) Represents an estimate Current Communities are apartment communities that have been completed and have reached occupancy of at least 95%, have been complete for one year, are in the initial lease-up process or are under redevelopment. Current Communities consist of the following: 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 occurs earlier. Stabilized Communities are categorized as either Established Communities or Other Stabilized Communities. - Established Communities. Represents all Stabilized Communities owned by Avalon and, on a pro forma basis, those owned by Bay as of January 1, 1998, with stabilized operating costs as of January 1, 1998 such that a comparison of 1998 operating results to 1999 operating results is meaningful. Each of the Established Communities falls into one of six geographic areas including Northern California, Southern California, Mid-Atlantic, Northeast, Midwest, and Pacific Northwest regions. At December 31, 1999, there were no Established Communities in the Pacific Northwest. - Other Stabilized Communities. Represents Stabilized Communities as defined above, but which became stabilized or were acquired after January 1, 1998. Lease-Up Communities. Represents all communities where construction has been complete for less than one year and where occupancy has not reached at least 95%. 7 Redevelopment Communities. Represents all communities where substantial redevelopment has begun. Redevelopment is considered substantial when capital invested during the reconstruction effort exceeds the lesser of $5 million or 10% of the community's acquisition cost. Development Communities are communities that are under construction and for which a final certificate of occupancy has not been received. These communities may be partially complete and operating. Development Rights are development opportunities in the early phase of the development process for which we have an option to acquire land, that we are the buyer under a long-term conditional contract to purchase land, or with respect to which we own land on which we might in the future develop a new community. We capitalize all related pre-development costs incurred in pursuit of these new developments. Our 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, 2000, include 102 garden-style, 14 high-rise and 5 mid-rise apartment communities. The Current Communities offer many attractive amenities including some or all of the following: - vaulted ceilings; - lofts; - fireplaces; - patios/decks; and - modern appliances. Other features at various communities may include: - swimming pools; - fitness centers; - tennis courts; and - business centers. We also have an extensive and ongoing maintenance program to keep all communities and apartment homes free of deferred maintenance and, where vacant, available for immediate occupancy. We believe that excellent design and service oriented property management focused on the specific needs of residents enhances market appeal to discriminating residents. We believe this will ultimately achieve higher rental rates and occupancy levels while minimizing resident turnover and operating expenses. These Current Communities are upscale multifamily apartment communities located in the following six geographic markets: 8 Number of Number of apartment Percentage of total communities at homes at apartment homes at ------------------------ ------------------------- ----------------------- 1-1-99 3-1-00 1-1-99 3-1-00 1-1-99 3-1-00 ------ ------ ------ ------ ------ ------ NORTHERN CALIFORNIA 35 36 9,538 9,743 25.2% 27.3% Alameda County, CA 9 8 2,523 2,278 6.7% 6.4% Sacramento, CA 3 1 850 302 2.2% 0.8% San Francisco, CA 5 6 1,062 1,288 2.8% 3.6% San Mateo County, CA 3 3 703 703 1.9% 2.0% Santa Clara County, CA 15 18 4,400 5,172 11.6% 14.5% SOUTHERN CALIFORNIA 18 18 5,818 5,816 15.3% 16.3% Los Angeles, CA 6 6 2,563 2,561 6.8% 7.2% Orange County, CA 8 8 2,022 2,022 5.3% 5.7% San Diego, CA 4 4 1,233 1,233 3.2% 3.4% PACIFIC NORTHWEST 5 5 1,375 1,376 3.6% 3.9% Portland, OR 1 1 279 279 0.7% 0.8% Seattle, WA 4 4 1,096 1,097 2.9% 3.1% NORTHEAST 27 32 9,021 9,999 23.8% 28.0% Boston, MA 8 9 2,375 2,580 6.3% 7.2% Fairfield County, CT 7 9 2,234 2,637 5.9% 7.4% Hartford, CT 1 1 932 932 2.4% 2.6% Long Island, NY 3 3 575 575 1.5% 1.6% Northern New Jersey 5 6 2,008 2,268 5.3% 6.4% Westchester, NY 3 4 897 1,007 2.4% 2.8% MID-ATLANTIC 30 22 8,825 6,499 23.3% 18.3% Baltimore, MD 4 4 1,052 1,052 2.8% 3.0% Norfolk, VA 4 2 904 486 2.4% 1.4% Northern Virginia 10 8 3,711 2,847 9.8% 8.0% Richmond, VA 4 1 1,103 268 2.9% 0.7% Southern Maryland 7 6 1,747 1,538 4.6% 4.3% Washington, DC 1 1 308 308 0.8% 0.9% MIDWEST 12 8 3,334 2,215 8.8% 6.2% Chicago, IL 3 3 887 887 2.3% 2.5% Cincinnati, OH 1 -- 264 -- 0.7% -- Detroit, MI 1 -- 225 -- 0.6% -- Indianapolis, IN 2 -- 376 -- 1.0% -- Minneapolis, MN 4 5 1,102 1,328 2.9% 3.7% St. Louis, MO 1 -- 480 -- 1.3% -- ------ ------ -------- -------- -------- -------- 127 121 37,911 35,648 100.0% 100.0% ====== ====== ======== ======== ======== ======== We manage and operate all of the Current Communities. During the year ended December 31, 1999, we completed construction of 2,335 apartment homes in ten communities for a total cost of $391.6 million. The average age of the Current Communities, on a weighted average basis according to number of apartment homes, is approximately ten years. Of the Current Communities as of March 1, 2000 we own: - a fee simple, or absolute, ownership interest in 106 operating communities, one of which is on land subject to a 149 year land lease; - a general partnership interest in five partnerships that in the aggregate hold a fee simple interest in five other operating communities; - a general partnership interest in four partnerships structured as DownREITs, as described more fully below, that own an aggregate of nine communities; and - a 100% interest in a senior participating mortgage note secured by one community, which allows us to share in part of the rental income or resale proceeds of the community. 9 We also hold a fee simple ownership interest in 11 of the Development Communities and a membership interest in a limited liability company that holds a fee simple interest in one Development Community. In each of the four partnerships structured as DownREITs, either AvalonBay or one of our wholly-owned subsidiaries is the general partner, and there are one or more limited partners whose interest in the partnership is represented by units of limited partnership interest. For each DownREIT partnership, limited partners are entitled to receive distributions before any distribution is made to the general partner. Although the partnership agreements for each of the DownREITs are different, generally the distributions paid to the holders of units of limited partnership interests approximate the current AvalonBay common stock dividend rate. Each DownREIT partnership has been structured so that it is unlikely the limited partners will be entitled to a distribution greater than the initial distribution provided for in the partnership agreement. The holders of units of limited partnership interest have the right to present each unit of limited partnership interest for redemption for cash equal to the fair market value of a share of AvalonBay common stock on the date of redemption. In lieu of a cash redemption of a unit, we may elect to acquire any unit presented for redemption for one share of common stock. As of March 1, 2000, there were 966,822 units outstanding. The DownREIT partnerships are consolidated for financial reporting purposes. 10 PROFILE OF CURRENT AND DEVELOPMENT COMMUNITIES (DOLLARS IN THOUSANDS, EXCEPT PER APARTMENT HOME DATA) Approx. Year rentable built Average Number of area or size City and state homes (Sq. Ft.) Acres acquired (Sq. Ft.) - ------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (3) NORTHERN CALIFORNIA ALAMEDA COUNTY, CA Waterford Hayward, CA 544 451,937 11.1 1985/86 831 Hampton Place Fremont, CA 308 316,072 14.3 1992/94 1,026 Hacienda Gardens Pleasanton, CA 456 377,438 14.7 1988/94 828 Amador Oaks Dublin, CA 204 179,004 13.0 1989/97 877 Willow Creek Fremont, CA 235 197,575 3.5 1985/94 841 Alicante Fremont, CA 135 130,350 8.0 1992/94 966 Barrington Hills Hayward, CA 188 168,513 3.0 1986/94 896 Parc Centre at Union Square Union City, CA 208 150,140 8.5 1973/96 722 SACRAMENTO, CA Governor's Square Sacramento, CA 302 292,138 8.1 1976/97 967 SAN FRANCISCO, CA Crowne Ridge San Rafael, CA 254 221,525 21.9 1973/96 872 Sunset Towers San Francisco, CA 243 175,511 16.0 1961/96 722 City Heights San Francisco, CA 185 109,238 1.4 1990/95 590 Village Square San Francisco, CA 154 123,080 2.6 1972/94 799 Avalon Towers by the Bay San Francisco, CA 226 243,033 1.0 1999 1,075 Crossbrook Rohnert Park, CA 226 164,219 9.0 1986/94 727 SAN MATEO, CA Cedar Ridge Daly City, CA 195 141,411 8.0 1975/97 725 Regatta Bay Foster City, CA 288 222,276 11.0 1973/94 772 Sea Ridge Pacifica, CA 220 186,785 7.7 1971/95 849 SANTA CLARA COUNTY, CA Toscana Sunnyvale, CA 710 658,591 13.6 1997 928 Carriage Square San Jose, CA 324 322,207 7.5 1995 994 Canyon Creek Campbell, CA 348 326,796 8.0 1995 939 CountryBrook San Jose, CA 360 323,012 14.0 1985/96 897 The Arbors Campbell, CA 252 197,000 8.5 1966/97 782 Avalon at Creekside Mountain View, CA 294 215,680 13.0 1962/97 734 The Fountains at River Oaks San Jose, CA 226 210,050 4.0 1990/96 929 Parkside Commons Sunnyvale, CA 192 199,353 8.0 1991/96 1,038 Villa Mariposa Mountain View, CA 248 211,552 4.0 1986 853 San Marino San Jose, CA 248 209,465 11.5 1984/88 845 The Promenade Sunnyvale, CA 220 159,653 5.0 1987/95 726 Foxchase I & II San Jose, CA 396 335,212 12.0 1986/87 844 Glen Creek Morgan Hill, CA 138 112,987 6.0 1989 819 Fairway Glen San Jose, CA 144 119,492 6.0 1986 830 Centremark Cupertino, CA 311 293,328 8.0 1999 943 Avalon on the Alameda San Jose, CA 305 299,722 8.9 1999 983 Rosewalk at Waterford Park I San Jose, CA 300 297,696 10.8 1997 992 Rosewalk at Waterford Park II San Jose, CA 156 152,556 5.8 1999 978 Average economic Average occupancy rental rate (1) Physical -------------------------------------------------- Financial occupancy at $ per $ per reporting 12/31/99 1999 1998 Apt Sq. Ft. cost (2) - ---------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (3) NORTHERN CALIFORNIA ALAMEDA COUNTY, CA Waterford 96.9% 96.0% 97.3% 1,017 1.17 $57,777 Hampton Place 97.1% 95.1% 95.4% 1,459 1.35 $54,589 Hacienda Gardens 96.7% 95.4% 96.6% 1,181 1.36 $58,962 Amador Oaks 97.1% 95.1% 96.8% 1,279 1.39 $26,715 Willow Creek 96.6% 96.2% 96.4% 1,268 1.45 $33,644 Alicante 95.6% 96.2% 94.8% 1,382 1.38 $22,009 Barrington Hills 97.3% 97.6% 98.2% 1,095 1.19 $18,358 Parc Centre at Union Square 97.6% 97.4% 97.6% 1,035 1.40 $21,558 SACRAMENTO, CA Governor's Square 88.4% 87.5% Redev. 922 0.83 $20,991 SAN FRANCISCO, CA Crowne Ridge 94.1% 95.2% 96.7% 1,273 1.39 $30,439 Sunset Towers 96.7% 97.8% Redev. 1,363 1.85 $28,090 City Heights 95.7% 96.7% 98.5% 1,400 2.29 $27,392 Village Square 100.0% 98.5% 98.7% 1,406 1.73 $24,052 Avalon Towers by the Bay 99.1% 67.7% N/A 1,435 0.90 $65,863 Crossbrook 96.9% 97.7% 98.6% 880 1.18 $18,985 SAN MATEO, CA Cedar Ridge 98.5% 96.4% Redev. 1,327 1.76 $25,525 Regatta Bay 91.0% 92.7% 96.6% 1,313 1.58 $40,694 Sea Ridge 99.1% 97.5% 97.7% 1,306 1.50 $30,981 SANTA CLARA COUNTY, CA Toscana 98.0% 94.9% Lease-Up 1,827 1.87 $120,138 Carriage Square 97.5% 94.9% 96.4% 1,489 1.42 $60,652 Canyon Creek 98.3% 96.4% 97.0% 1,418 1.46 $59,829 CountryBrook 97.2% 96.2% 95.9% 1,245 1.34 $47,521 The Arbors 95.6% 91.3% Redev. 1,179 1.38 $31,562 Avalon at Creekside 91.5% Redev. Redev. 1,132 1.41 $37,778 The Fountains at River Oaks 98.7% 97.1% 96.7% 1,549 1.62 $45,570 Parkside Commons 97.4% 96.7% 96.3% 1,638 1.52 $37,371 Villa Mariposa 94.8% 95.5% 96.9% 1,583 1.77 $49,381 San Marino 98.8% 96.6% 97.3% 1,228 1.40 $33,486 The Promenade 97.3% 97.7% 95.8% 1,286 1.73 $34,341 Foxchase I & II 98.0% 96.8% 94.8% 1,167 1.33 $57,656 Glen Creek 87.7% 92.7% 95.0% 1,227 1.39 $18,337 Fairway Glen 97.9% 96.8% 94.1% 1,133 1.32 $17,047 Centremark 98.7% 88.7% N/A 1,743 1.64 $48,847 Avalon on the Alameda 96.4% 57.8% N/A 1,757 1.03 $55,809 Rosewalk at Waterford Park I 95.7% 95.6% 96.7% 1,529 1.47 $56,240 Rosewalk at Waterford Park II 98.7% 76.8% N/A 1,446 1.13 $21,621 11 PROFILE OF CURRENT AND DEVELOPMENT COMMUNITIES (DOLLARS IN THOUSANDS, EXCEPT PER APARTMENT HOME DATA) Approx. Year rentable built Average Number of area or size City and state homes (Sq. Ft.) Acres acquired (Sq. Ft,) - ------------------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA LOS ANGELES, CA ViewPointe Woodland Hills, CA 663 592,683 18.2 1989/97 894 Lakeside Burbank, CA 748 530,114 14.7 1969/97 709 Avalon Westside Terrace Los Angeles, CA 363 229,296 4.8 1966/97 632 Arbor Heights Hacienda Heights, CA 351 277,220 20.0 1970/97 790 Warner Oaks Woodland Hills, CA 227 191,629 6.8 1979/98 844 TimberWood West Covina, CA 209 190,200 8.4 1972/97 910 ORANGE COUNTY, CA SunScape Huntington Beach, CA 400 353,192 16.4 1972/97 883 Avalon at Pacific Bay Huntington Beach, CA 304 268,000 9.7 1971/97 882 Mill Creek Costa Mesa, CA 258 208,890 8.9 1973/96 810 Villa Serena Rancho Santa Margarita, CA 301 229,593 20.0 1990/97 763 Amberway Anaheim, CA 272 205,572 9.9 1983/98 756 Laguna Brisas Laguna Niguel, CA 176 174,848 10.0 1988/98 993 Lafayette Place Costa Mesa, CA 145 120,690 6.6 1956/96 832 Larkspur Canyon Mission Viejo, CA 166 124,600 7.8 1984/96 751 SAN DIEGO, CA Avalon at Mission Bay San Diego, CA 564 402,327 5.7 1969/97 713 Gateway Tower San Diego, CA 293 224,840 1.2 1973/98 767 Mission Woods San Diego, CA 200 208,100 4.0 1960/97 1,041 SummerWalk San Diego, CA 176 141,120 8.8 1982/97 802 PACIFIC NORTHWEST PORTLAND, OR Waterhouse Place Beaverton, OR 279 261,464 12.0 1990/97 937 SEATTLE, WA The Verandas at Bear Creek Redmond, WA 264 288,250 22.0 1998 1,092 Gallery Place Redmond, WA 222 206,004 22.0 1991/97 928 Avalon Ridge Renton, WA 421 382,382 20.0 1987/88 908 Avalon Westhaven Seattle, WA 190 149,700 9.0 1989/97 788 NORTHEAST BOSTON, MA Avalon at Prudential Center Boston, MA 781 747,954 1.0 1998 958 Longwood Towers Brookline, MA 334 315,802 4.2 1993 946 Avalon at Center Place Providence, RI 225 231,671 1.2 1997 1,030 Avalon Summit Quincy, MA 245 203,848 9.1 1996 832 Avalon at Lexington Lexington, MA 198 231,182 18.0 1994 1,168 Avalon at Faxon Park Quincy, MA 171 175,494 8.3 1998 1,026 Avalon West Westborough, MA 120 147,472 10.1 1996 1,229 Avalon Oaks Wilmington, MA 204 229,748 22.5 1999 1,023 Average economic Average occupancy rental rate (1) Physical -------------------------------------------------- Financial occupancy at $ per $ per reporting 12/31/99 1999 1998 Apt Sq. Ft. cost (2) - ---------------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA LOS ANGELES, CA ViewPointe 96.4% 94.4% Redev. 1,070 1.13 $70,829 Lakeside 95.2% 95.8% Redev. 829 1.12 $55,746 Avalon Westside Terrace 94.2% 85.8% Redev. 1,131 1.54 $36,807 Arbor Heights 94.3% 80.0% Redev. 793 0.80 $29,458 Warner Oaks 96.9% 82.4% Redev. 1,070 1.05 $26,068 TimberWood 96.7% 96.2% Redev. 963 1.02 $14,736 ORANGE COUNTY, CA SunScape 96.5% 95.0% Redev. 1,056 1.14 $36,985 Avalon at Pacific Bay 98.7% 82.3% Redev. 929 0.87 $31,692 Mill Creek 96.9% 93.8% 95.3% 1,009 1.17 $24,134 Villa Serena 98.0% 97.2% Redev. 937 1.20 $23,541 Amberway 96.7% 89.1% Redev. 807 0.95 $20,989 Laguna Brisas 99.4% Redev. 91.5% 954 0.92 $18,620 Lafayette Place 94.5% 94.3% Redev. 1,180 1.34 $10,089 Larkspur Canyon 97.6% 94.7% 95.0% 944 1.19 $12,854 SAN DIEGO, CA Avalon at Mission Bay 84.0% Redev. Redev. 966 1.15 $60,556 Gateway Tower 98.0% 97.3% 94.7% 935 1.19 $24,326 Mission Woods 97.0% 98.2% Redev. 1,097 1.03 $21,544 SummerWalk 96.6% 97.2% 96.4% 895 1.09 $14,097 PACIFIC NORTHWEST PORTLAND, OR Waterhouse Place 95.0% 88.2% Redev. 704 0.66 $20,671 SEATTLE, WA The Verandas at Bear Creek 94.7% 88.5% 86.0% 1,173 0.95 $34,382 Gallery Place 92.8% 91.4% Redev. 1,058 1.04 $25,934 Avalon Ridge 93.8% Redev. Redev. 662 0.63 $28,592 Avalon Westhaven 94.7% 86.7% Redev. 750 0.83 $12,519 NORTHEAST BOSTON, MA Avalon at Prudential Center 98.7% 98.4% 98.1% 2,047 2.10 $131,937 Longwood Towers 98.8% 98.3% 95.3% 1,704 1.77 $41,805 Avalon at Center Place 94.8% 96.1% 94.5% 1,912 1.78 $26,995 Avalon Summit 97.6% 96.3% 96.4% 1,092 1.26 $16,468 Avalon at Lexington 99.0% 96.5% 94.5% 1,681 1.39 $14,912 Avalon at Faxon Park 97.1% 96.5% 74.0% 1,519 1.43 $15,231 Avalon West 99.2% 96.7% 97.5% 1,444 1.14 $10,824 Avalon Oaks 96.6% 64.5% N/A 1,423 0.81 $20,574 12 PROFILE OF CURRENT AND DEVELOPMENT COMMUNITIES (DOLLARS IN THOUSANDS, EXCEPT PER APARTMENT HOME DATA) Approx. Year rentable built Number of area or City and state homes (Sq. Ft.) Acres acquired - ------------------------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CT Avalon Walk I & II Hamden, CT 764 761,441 38.4 1992/94 Avalon Glen Stamford, CT 238 221,828 4.1 1991 Avalon Gates Trumbull, CT 340 381,322 37.0 1997 Hanover Hall Stamford, CT 388 328,002 4.6 1961/98 Avalon Springs Wilton, CT 102 158,259 12.0 1996 Avalon Valley Danbury,CT 268 297,479 17.1 1999 Avalon Lake Danbury,CT 135 166,231 32.0 1999 HARTFORD, CT Avalon Pavilions Manchester, CT 932 849,680 46.3 1990/92 LONG ISLAND, NY Avalon Commons Smithtown, NY 312 363,049 20.6 1997 Avalon Towers Long Beach, NY 109 124,836 1.3 1995 Avalon Court Melville, NY 154 193,464 10.8 1997 NORTHERN NEW JERSEY Avalon Cove Jersey City, NJ 504 574,675 11.1 1997 The Tower at Avalon Cove Jersey City, NJ 269 241,825 2.8 1999 Avalon Watch West Windsor, NJ 512 485,871 64.0 1988 Avalon Crest Fort Lee, NJ 351 371,411 13.1 1999 Avalon Run East Lawrenceville, NJ 206 265,198 27.0 1996 WESTCHESTER, NY Avalon Gardens Nanuet, NY 504 638,439 55.0 1998 Avalon View Wappingers Falls, NY 288 335,088 41.0 1993 Avalon Green Elmsford, NY 105 113,538 16.9 1995 The Avalon Bronxville, NY 110 119,186 1.5 1999 MID-ATLANTIC BALTIMORE, MD Avalon at Fairway Hills I & II Columbia, MD 720 724,253 42.1 1987/96 Avalon at Symphony Glen Columbia, MD 174 178,267 10.0 1986 Avalon Landing Annapolis, MD 158 117,033 13.8 1995 NORFOLK, VA Avalon Birches Chesapeake, VA 312 283,920 20.9 1995 Avalon Pines Virginia Beach, VA 174 142,800 9.7 1996 NORTHERN VIRGINIA Avalon at Ballston - Vermont & Quincy Towers Arlington, VA 454 420,242 2.3 1997 Avalon Crescent McLean, VA 558 613,426 19.1 1996 Avalon at Ballston - Washington Towers Arlington, VA 344 294,786 4.1 1990 Avalon at Cameron Court Alexandria, VA 460 467,292 16.0 1998 AuturimWoods Fairfax, VA 420 355,228 24.2 1996 Avalon at Fair Lakes Fairfax, VA 234 285,822 10.0 1998 Avalon at Dulles Sterling, VA 236 232,632 15.7 1986 Avalon at Providence Park Fairfax, VA 141 148,211 4.0 1997 Average economic Average occupancy rental rate (1) Average Physical ------------------------------------- Financial size occupancy at $ per $ per reporting (Sq. Ft.) 12/31/99 1999 1998 Apt Sq. Ft. cost (2) - ---------------------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CT Avalon Walk I & II 996 98.6% 97.3% 97.2% 1,090 1.06 $58,634 Avalon Glen 932 93.3% 96.0% 97.7% 1,755 1.81 $30,723 Avalon Gates 1,122 95.3% 96.8% 98.4% 1,365 1.18 $35,765 Hanover Hall 845 95.9% 96.9% 90.9% 1,112 1.27 $38,895 Avalon Springs 1,552 99.0% 99.2% 99.3% 2,302 1.47 $16,629 Avalon Valley 1,070 99.6% 58.2% N/A 1,366 0.72 $25,195 Avalon Lake 1,184 99.3% 60.3% N/A 1,453 0.71 $16,680 HARTFORD, CT Avalon Pavilions 912 98.1% 97.0% 96.4% 908 0.97 $57,508 LONG ISLAND, NY Avalon Commons 1,164 97.8% 98.1% 98.8% 1,541 1.30 $33,255 Avalon Towers 1,145 98.2% 98.5% 96.7% 2,435 2.09 $16,434 Avalon Court 1,256 98.7% 98.2% 98.8% 1,772 1.39 $18,954 NORTHERN NEW JERSEY Avalon Cove 1,140 98.2% 95.3% 96.9% 2,470 2.06 $91,156 The Tower at Avalon Cove 905 98.1% 58.4% N/A 2,262 1.47 $47,144 Avalon Watch 949 99.0% 97.7% 97.5% 1,147 1.18 $28,738 Avalon Crest 1,058 95.7% 41.9% N/A 2,025 0.80 $54,893 Avalon Run East 1,287 96.6% 98.0% 97.3% 1,396 1.06 $16,247 WESTCHESTER, NY Avalon Gardens 1,267 99.6% 98.5% 81.1% 1,595 1.24 $54,138 Avalon View 1,164 100.0% 98.7% 97.9% 1,064 0.90 $17,931 Avalon Green 1,081 100.0% 99.3% 97.5% 2,001 1.84 $12,532 The Avalon 1,085 98.2% 63.3% N/A 1,550 0.90 $28,128 MID-ATLANTIC BALTIMORE, MD Avalon at Fairway Hills I & II 1,005 97.6% 97.5% 95.1% 914 0.89 $43,783 Avalon at Symphony Glen 1,025 94.8% 97.3% 96.9% 903 0.86 $8,506 Avalon Landing 741 98.1% 97.5% 97.8% 840 1.11 $9,425 NORFOLK, VA Avalon Birches 910 93.3% 93.9% 95.9% 754 0.78 $13,801 Avalon Pines 821 97.1% 96.4% 93.2% 699 0.82 $8,793 NORTHERN VIRGINIA Avalon at Ballston - Vermont & Quincy Towers 926 99.6% 97.5% 97.2% 1,178 1.24 $46,873 Avalon Crescent 1,099 98.0% 97.3% 97.3% 1,434 1.27 $57,252 Avalon at Ballston - Washington Towers 857 98.3% 97.7% 96.9% 1,214 1.38 $37,008 Avalon at Cameron Court 1,016 97.6% 97.4% 55.0% 1,335 1.28 $43,223 AuturimWoods 846 98.6% 98.0% 97.0% 957 1.11 $30,790 Avalon at Fair Lakes 1,221 98.3% 97.0% 72.9% 1,277 1.01 $23,461 Avalon at Dulles 986 99.2% 98.2% 97.7% 928 0.92 $11,744 Avalon at Providence Park 1,051 100.0% 98.1% 97.2% 1,039 0.97 $11,151 13 PROFILE OF CURRENT AND DEVELOPMENT COMMUNITIES (DOLLARS IN THOUSANDS, EXCEPT PER APARTMENT HOME DATA) Approx. Year rentable built Average Number of area or size City and state homes (Sq. Ft.) Acres acquired (Sq. Ft,) - ---------------------------------------------------------------------------------------------------------------------------- RICHMOND, VA Avalon Woods Richmond, VA 268 158,618 18.5 1994 592 SOUTHERN MARYLAND Avalon at Decoverly Rockville, MD 368 368,446 25.0 1995 1,001 Avalon Knoll Germantown, MD 300 290,365 26.7 1985 968 Avalon Fields I & II Gaithersburg, MD 288 292,282 9.2 1998 1,050 Avalon Crossing Rockville, MD 132 147,690 5.0 1996 1,119 WASHINGTON, D.C. 4100 Massachusetts Avenue Washington, D.C. 308 298,725 2.7 1982 970 MIDWEST CHICAGO, IL Avalon at Danada Farms Wheaton, IL 295 350,606 19.2 1997 1,188 Avalon at West Grove Westmont, IL 400 388,500 17.4 1967 971 Avalon at Stratford Green Bloomingdale, IL 192 237,204 12.7 1997 1,235 MINNEAPOLIS, MN Avalon at Devonshire Bloomington, MI 498 470,762 42.0 1988 945 Avalon at Edinburgh Brooklyn Park, MN 198 222,130 11.3 1992 1,122 Avalon at Town Centre Eagan, MN 248 235,518 18.7 1986 950 Avalon at Town Square Plymouth, MN 160 144,026 8.3 1986 900 Avalon at Woodbury Woodbury, MN 224 287,975 15.0 1999 1,286 DEVELOPMENT COMMUNITIES Avalon Corners Stamford, CT 195 192,174 3.2 N/A 986 Avalon Court North Melville, NY 340 403,640 24.6 N/A 1,187 Avalon Willow Mamaroneck, NY 227 199,945 4.0 N/A 881 Avalon at Fox Mill Herndon, VA 165 219,360 12.8 N/A 1,329 Avalon Essex Peabody, MA 154 173,520 11.1 N/A 1,127 Avalon Haven North Haven, CT 128 140,544 10.6 N/A 1,098 Avalon at Florham Park Florham Park, NJ 270 331,560 41.9 N/A 1,228 Avalon River Mews Edgewater, NJ 408 405,144 7.1 N/A 993 Avalon Bellevue Bellevue, WA 202 164,226 1.7 N/A 813 Avalon at Arlington Square I Arlington, VA 510 583,950 14.2 N/A 1,145 Avalon on the Sound New Rochelle, NY 412 372,860 2.4 N/A 905 Avalon Estates Hull, MA 162 182,736 55.6 N/A 1,128 Average economic Average occupancy rental rate (1) Physical ---------------------------------------------- Financial occupancy at $ per $ per reporting 12/31/99 1999 1998 Apt Sq. Ft. cost (2) - ------------------------------------------------------------------------------------------------------------- RICHMOND, VA Avalon Woods 95.9% 93.7% 95.3% 591 0.94 $8,661 SOUTHERN MARYLAND Avalon at Decoverly 96.2% 96.2% 96.8% 1,115 1.07 $31,258 Avalon Knoll 97.0% 96.5% 97.1% 871 0.87 $8,173 Avalon Fields I & II 96.5% 97.2% 89.4% 1,108 1.06 $22,664 Avalon Crossing 96.2% 97.2% 98.1% 1,472 1.28 $13,890 WASHINGTON, D.C. 4100 Massachusetts Avenue 95.5% 96.9% 97.9% 1,511 1.51 $35,143 MIDWEST CHICAGO, IL Avalon at Danada Farms 96.6% 93.8% 92.6% 1,373 1.08 $38,068 Avalon at West Grove 87.5% 91.1% 95.3% 844 0.79 $29,159 Avalon at Stratford Green 99.0% 97.4% 96.3% 1,277 1.01 $21,908 MINNEAPOLIS, MN Avalon at Devonshire 97.2% 97.2% 97.1% 915 0.94 $36,912 Avalon at Edinburgh 99.0% 96.2% 95.3% 1,023 0.88 $18,435 Avalon at Town Centre 95.6% 97.8% 98.5% 907 0.93 $17,936 Avalon at Town Square 98.8% 98.5% 97.5% 906 0.99 $10,753 Avalon at Woodbury 84.4% 84.6% N/A 1,210 0.80 $25,508 DEVELOPMENT COMMUNITIES Avalon Corners N/A N/A N/A N/A N/A $30,177 Avalon Court North N/A N/A N/A N/A N/A $38,511 Avalon Willow N/A N/A N/A N/A N/A $39,102 Avalon at Fox Mill N/A N/A N/A N/A N/A $18,883 Avalon Essex N/A N/A N/A N/A N/A $14,727 Avalon Haven N/A N/A N/A N/A N/A $3,033 Avalon at Florham Park N/A N/A N/A N/A N/A $16,880 Avalon River Mews N/A N/A N/A N/A N/A $20,747 Avalon Bellevue N/A N/A N/A N/A N/A $9,543 Avalon at Arlington Square I N/A N/A N/A N/A N/A $25,859 Avalon on the Sound N/A N/A N/A N/A N/A $4,022 Avalon Estates N/A N/A N/A N/A N/A $2,623 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 - --------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (3) 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 at Union Square 124 84 - - - Central Valley, CA Governor's Square 93 63 68 30 - San Francisco, CA Crown Ridge 158 68 24 - - Sunset Towers 183 20 20 - - City Heights 114 - 25 - - Village Square 90 - 49 15 - Avalon Towers by the Bay 103 - 120 - 3 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 Carriage Square 90 - 210 - 24 Canyon Creek 156 - 180 - 12 CountryBrook 108 - 252 - - The Arbors 212 40 - - - Avalon at Creekside 158 128 - - - The Fountains at River Oaks 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 - - CentreMark 145 - 152 - 14 Avalon on the Alameda 113 - 164 - 28 Rosewalk at Waterford Park I 96 - 192 - 12 Rosewalk at Waterford Park II 72 - 72 - 12 Studios / Washer & dryer Vaulted efficiencies Other Total Parking spaces hook-ups or units ceilings - ----------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (3) NORTHERN CALIFORNIA Alameda County, CA Waterford - - 544 876 Some Some Hampton Place - - 308 570 All Most Hacienda Gardens - - 456 856 All Some Amador Oaks - 16 204 427 Most Some Willow Creek - - 235 240 All None Alicante - - 135 260 All Some Barrington Hills - - 188 320 All Half Parc Centre at Union Square - - 208 210 None None Central Valley, CA Governor's Square 48 - 302 332 Some Half San Francisco, CA Crown Ridge 4 - 254 377 Some Some Sunset Towers 20 - 243 244 None None City Heights 46 - 185 104 None None Village Square - - 154 155 None Some Avalon Towers by the Bay - - 226 235 All Some Crossbrook - - 226 343 None Half San Mateo, CA Cedar Ridge 21 - 195 258 None None Regatta Bay 40 - 288 490 None None Sea Ridge - - 220 299 None None Santa Clara County, CA Toscana 3 - 710 1,400 All Some Carriage Square - - 324 562 All Some Canyon Creek - - 348 588 All Some CountryBrook - - 360 694 All Some The Arbors - - 252 395 All None Avalon at Creekside 8 - 294 376 None None The Fountains at River Oaks - - 226 354 All None Parkside Commons - - 192 192 All Some Villa Mariposa - - 248 421 All Some San Marino - - 248 436 All Some The Promenade 44 - 220 394 Some None Foxchase I and II - - 396 719 All Some Glen Creek - - 138 228 All Half Fairway Glen - - 144 226 All Some CentreMark - - 311 526 All Some Avalon on the Alameda - - 305 558 All Some Rosewalk at Waterford Park I - - 300 420 All Some Rosewalk at Waterford Park II - - 156 228 All Some Large storage Balcony patio Lofts Fireplaces or walk-in closet deck or sunroom Built-in bookcases - --------------------------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (3) NORTHERN CALIFORNIA Alameda County, CA Waterford None None All All None Hampton Place None Half Most All None Hacienda Gardens None Most None All None Amador Oaks None Most All All None Willow Creek None None All All None Alicante None Some All All None Barrington Hills None None All All Some Parc Centre at Union Square None Most All All None Central Valley, CA Governor's Square None Most Some All Some San Francisco, CA Crown Ridge None Some None All None Sunset Towers None None None Some None City Heights None None None Some Most Village Square None None All All None Avalon Towers by the Bay None Some Half Most None Crossbrook None Some None All None San Mateo, CA Cedar Ridge Some None Some All None Regatta Bay None None Most Most None Sea Ridge None Some Some All None Santa Clara County, CA Toscana Some Some Most All Some Carriage Square None None Most All None Canyon Creek None None All All None CountryBrook None All None All None The Arbors None None None Half None Avalon at Creekside None Some None Most None The Fountains at River Oaks None Most All All None Parkside Commons None Half All All Some Villa Mariposa None None Some All None San Marino None None Most All None The Promenade None None All All None Foxchase I and II None None Some All None Glen Creek None None All All None Fairway Glen None None None All None CentreMark None Some Some All Some Avalon on the Alameda None Some All All None Rosewalk at Waterford Park I None Some Some All Most Rosewalk at Waterford Park II None Some Most All Most Non-direct Direct Homes w/ pre-wired Carports access garages access garages security systems - ---------------------------------------------------------------------------------------------------------------- CURRENT COMMUNITIES (3) NORTHERN CALIFORNIA Alameda County, CA Waterford Yes No No None Hampton Place Yes Yes No All Hacienda Gardens Yes Yes Yes None Amador Oaks No Yes No None Willow Creek Yes No No None Alicante Yes No No All Barrington Hills Yes No No None Parc Centre at Union Square Yes No No None Central Valley, CA Governor's Square No Yes Yes None San Francisco, CA Crown Ridge Yes No Yes None Sunset Towers Yes No Yes None City Heights Yes Yes No None Village Square No Yes No None Avalon Towers by the Bay No No Yes All Crossbrook Yes No Yes None San Mateo, CA Cedar Ridge Yes No Yes None Regatta Bay Yes No No None Sea Ridge Yes Yes No None Santa Clara County, CA Toscana No Yes No All Carriage Square Yes Yes No All Canyon Creek Yes Yes No All CountryBrook Yes Yes No None The Arbors Yes Yes No None Avalon at Creekside Yes No No None The Fountains at River Oaks No No Yes None Parkside Commons Yes Yes No None Villa Mariposa Yes No No None San Marino Yes No No None The Promenade No No Yes None Foxchase I and II Yes No No None Glen Creek Yes No No None Fairway Glen Yes No No Some CentreMark No Yes Yes None Avalon on the Alameda No Yes No All Rosewalk at Waterford Park I Yes Yes No All Rosewalk at Waterford Park II Yes Yes No All 15 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 296 138 81 12 - Avalon Westside Terrace 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 - Avalon at Pacific Bay 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 Avalon at Mission Bay 270 9 165 - - Gateway Tower 113 - 83 - - Mission Woods 18 1 98 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 - 237 - 23 Longwood Towers 145 52 23 25 - Avalon at Center Place 103 - 111 5 - Avalon Summit 154 61 28 2 - Avalon at Lexington 28 24 90 56 - Avalon at Faxon Park 68 - 75 28 - Avalon West 40 - 55 25 - Avalon Oaks 60 24 96 24 - Studios/ Washer & dryer Vaulted efficiencies Other Total Parking spaces hook-ups or units ceilings - ----------------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA Los Angeles, CA ViewPointe - - 663 1,300 Some None Lakeside 221 - 748 909 Some None Avalon Westside Terrace 135 - 363 484 None None Arbor Heights 2 - 351 940 All None Warner Oaks - - 227 252 All Some TimberWood - - 209 400 Most Half Orange County, CA SunScape - - 400 790 None None Avalon at Pacific Bay - - 304 478 All None Mill Creek 48 258 300 Some Half Villa Serena - - 301 523 All None Amberway 62 - 272 454 None Some Laguna Brisas - - 176 335 None Some Lafayette Place 12 - 145 235 Most Some Larkspur Canyon - 62 166 166 None None San Diego, CA Avalon at Mission Bay 120 - 564 695 None None Gateway Tower 97 - 293 292 None None Mission Woods - - 200 384 Most None SummerWalk - - 176 176 All None PACIFIC NORTHWEST Portland, OR Waterhouse Place - - 279 445 All None Seattle, WA The Verandas at Bear Creek - - 264 470 All All Gallery Place - - 222 384 All Some Avalon Ridge - - 421 731 All Some Avalon Westhaven - - 190 198 Most None NORTHEAST Boston, MA Avalon at Prudential Center 148 12 781 142 None None Longwood Towers 81 8 334 210 Some None Avalon at Center Place 6 - 225 345 All None Avalon Summit - - 245 328 None None Avalon at Lexington - - 198 323 All Some Avalon at Faxon Park - - 171 287 All Some Avalon West - - 120 145 All Some Avalon Oaks - - 204 355 All Some Large storage Balcony patio Lofts Fireplaces or walk-in closet deck or sunroom Built-in bookcases ------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA Los Angeles, CA ViewPointe Some None Most All None Lakeside None Some Some Some None Avalon Westside Terrace None None None All Some Arbor Heights None None None Half None Warner Oaks None Some Some All None TimberWood None None All All None Orange County, CA SunScape None None Most Most None Avalon at Pacific Bay None None Half All None Mill Creek None None Half All None Villa Serena None None None All None Amberway None None None All None Laguna Brisas None All None Most None Lafayette Place None Some Most Most Some Larkspur Canyon None None None All None San Diego, CA Avalon at Mission Bay None None Some All None Gateway Tower None None None All None Mission Woods None Most Most Most None SummerWalk None All Some All All PACIFIC NORTHWEST Portland, OR Waterhouse Place None Most Some All None Seattle, WA The Verandas at Bear Creek None Most All All Some Gallery Place None Most All All None Avalon Ridge None Most All All Some Avalon Westhaven None All None All None NORTHEAST Boston, MA Avalon at Prudential Center None None Most Some None Longwood Towers None Some Most Some Some Avalon at Center Place None None Half Some None Avalon Summit None None None All None Avalon at Lexington Some Some Most All None Avalon at Faxon Park Some Some All All None Avalon West Some Some All Half None Avalon Oaks Some Some All All None Non-direct Direct Homes w/ pre-wired Carports access garages access garages security systems - ------------------------------------------------------------------------------------------------------------------- SOUTHERN CALIFORNIA Los Angeles, CA ViewPointe No No No None Lakeside Yes Yes No None Avalon Westside Terrace No No No None Arbor Heights Yes Yes No None Warner Oaks Yes No No None TimberWood Yes No No None Orange County, CA SunScape Yes Yes No None Avalon at Pacific Bay Yes Yes No None Mill Creek Yes Yes Yes None Villa Serena Yes Yes No None Amberway Yes Yes No None Laguna Brisas Yes No No None Lafayette Place Yes Yes No None Larkspur Canyon Yes Yes No None San Diego, CA Avalon at Mission Bay No Yes No None Gateway Tower No No Yes None Mission Woods No Yes No None SummerWalk Yes No No None PACIFIC NORTHWEST Portland, OR Waterhouse Place Yes Yes No None Seattle, WA The Verandas at Bear Creek Yes Yes Yes All Gallery Place Yes Yes No None Avalon Ridge Yes No No None Avalon Westhaven Yes No No None NORTHEAST Boston, MA Avalon at Prudential Center No No No None Longwood Towers No No No Some Avalon at Center Place No No No None Avalon Summit No Yes No None Avalon at Lexington Yes Yes No All Avalon at Faxon Park No Yes No All Avalon West No Yes Yes All Avalon Oaks No Yes No All 16 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 - --------------------------------------------------------------------------------------------------------------------------------- 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 - Avalon Valley 106 - 134 28 - Avalon Lake 36 - 46 - - Hartford, CT 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 The Tower at Avalon Cove 147 24 74 24 - Avalon Watch 252 36 142 40 - Avalon Crest 96 - 131 67 - Avalon Run East 64 - 106 36 - Westchester, NY Avalon Gardens 208 48 144 104 - Avalon View 115 47 62 64 - Avalon Green 25 24 56 - - The Avalon 55 2 43 10 - 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 120 - 192 - - Avalon Pines 90 24 60 - - Northern Virginia Avalon at Ballston - Vermont & Quincey Towers 333 37 84 - - Avalon Crescent 186 26 346 - - Avalon at Ballston - Washington Towers 205 28 111 - - Avalon at Cameron Court 208 - 168 - - AutumnWoods 220 72 96 - - Avalon at Fair Lakes 45 12 125 26 26 Avalon at Dulles 104 40 76 - 16 Avalon at Providence Park 19 - 112 4 - Studios/ Washer & dryer efficiencies Other Total Parking spaces hook-ups or units Vaulted ceilingsge - ----------------------------------------------------------------------------------------------------------------------------------- Fairfield County, CT Avalon Walk I & II - 180 764 1,528 All Some Avalon Glen - - 238 400 Most Some Avalon Gates - - 340 580 All Some Hanover Hall 104 - 388 405 None None Avalon Springs - - 102 153 All Half Avalon Valley - - 268 626 All Some Avalon Lake 24 29 135 382 All Some Hartford, CT Avalon Pavilions - - 932 1,631 All Some Long Island, NY Avalon Commons - - 312 538 All Some Avalon Towers 1 67 109 198 All None Avalon Court - - 154 292 All Some Northern New Jersey Avalon Cove - 76 504 460 All Some The Tower at Avalon Cove - - 269 299 All None Avalon Watch - 42 512 768 All Some Avalon Crest - 57 351 325 All Some Avalon Run East - - 206 345 All Some Westchester, NY Avalon Gardens - - 504 1,008 All Half Avalon View - - 288 576 All Some Avalon Green - - 105 179 All Some The Avalon - - 110 167 All Some MID-ATLANTIC Baltimore, MD Avalon at Fairway Hills I & II - - 720 1,137 All Some Avalon at Symphony Glen - - 174 266 All Some Avalon Landing - 18 158 257 All None Norfolk, VA Avalon Birches - - 312 562 All Some Avalon Pines - - 174 308 All Some Northern Virginia Avalon at Ballston - Vermont & Quinc - - 454 498 All None Avalon Crescent - - 558 662 All Some Avalon at Ballston - Washington Tower - - 344 415 All None Avalon at Cameron Court - 84 460 736 All Some AutumnWoods - 32 420 727 All Some Avalon at Fair Lakes - - 234 505 All Half Avalon at Dulles - - 236 493 All Some Avalon at Providence Park - 6 141 287 All None Large storage Balcony patio Built-in Lofts Fireplaces or walk-in closet deck or sunroom bookcases Carports - --------------------------------------------------------------------------------------------------------------------------------- Fairfield County, CT Avalon Walk I & II Some Half All All Some Yes Avalon Glen Some Some Half Most None Yes Avalon Gates Some None All All